There's a post-coal scenario for the Hunter's mining towns that no one wants. This scenario is called welfare dependence. When a district becomes reliant on welfare it's very difficult for the district to crawl its way back to prosperity. Welfare dependence is intergenerational, as we see in many communities worldwide.
Of course, it's not actually a district that is welfare dependent, rather it is households in a district. There are three main types of welfare dependency in Australian households. One is reliance on the age pension. The others come from unemployment payments and disability benefits.
The availability of government transfer payments, the catch-all term for these schemes, is the mark of a prosperous, fair-go country. Government transfers provide a reward for life-long taxpayers in retirement, and income for those unable to find work or those who are unable to work.
But when a district's employment base is stripped away and nothing much emerges in its place, then transfer payments can form a disproportionately large amount of local income. And what was simply a social payment or a safety net for a few households becomes everyone's problem.
Fortunately, so far, the Hunter doesn't have district-wide welfare dependency, although there are areas of concern. My analysis of the latest Australian Taxation Office data shows a pattern of welfare dependency in certain suburbs and towns in Newcastle, Lake Macquarie and the Hunter more broadly.
The suburbs and towns recording the highest rates of government transfer payments are pretty much the same suburbs and towns at the top of the list two decades ago. In general, these are the places with the lowest rates of workforce participation and the highest concentrations of elderly residents.
Yet, in and around Newcastle and Lake Macquarie, simply living in a postcode with higher rates of welfare dependency doesn't matter a great deal. Young people from these suburbs who do well at school and undertake post-school training have no geographical limits to their success as adults.
But in towns with higher rates of welfare dependency further away from city life, dependence on government transfers becomes worrying. Local shopping degrades, professional services shut down, house buyers disappear, local role models are scarce, life chances for young people get eroded.
Already, Hunter coal towns show vulnerability to the demographic problems associated with welfare dependency. The size of the working-age population in Muswellbrook Shire is being shaved. Drive-in drive-out miners spend their wages and pay their mortgages in postcodes to the east. The number of children in the shire is falling. And the typical farmer is around retirement age. Indeed, were it not for a substantial increase in Muswellbrook folk aged 55 years and above, the shire's population would have been in decline at the 2021 census.
Not surprisingly, Muswellbrook is rising on the table of welfare dependency in the Hunter. The end of mining in Muswellbrook without major transition programs and assistance will likely throw up another case study of decline and dependency: working-age families leaving town, fewer pay cheques per household, more men on disability support, a greater proportion of the population on the pension.
From international experience, we know welfare-dependent towns get desperate for jobs. Locals welcome jail beds, data centres, work-for-the-dole schemes, rehabs, feed lots, every job is welcome. These are the backs-to-the-wall options forced on former mining towns around the world.
The way to avoid the dependency scenario is clear, and it is available right now.
An orderly end to coal mining with staged training opportunities for workers in advance of closures, and district-wide reframing of local economies, avoids the pathway to welfare dependency. The Newcastle Herald ('Mine employees busy preparing for life beyond coal,' 15/9) profiled the best practices of BHP in its exit of the Mount Arthur mine. Planned interventions like this need to be mandatory.
Regulators and politicians need to step up.
