As Australia prepares for a general election later this year, one of the major points of contention is the matter of how the billions generated by Australia’s mining boom is distributed.

In one corner is the powerful mining lobby, backed by some of the world’s largest resources companies. In the other, a Labor government and union movement seeking to spread the profits to the wider community.

In what could be a re-run of the controversy that shaped the Australian political landscape in 2010, the mining industry is again threatening to use its deep pockets to shutdown any real debate about the issue.

Fuelled by the insatiable Chinese demand for iron ore and coal, Australia’s seemingly endless mining boom has sustained the nation’s economy through a global recession.

It has also seen the nation leap up the rankings of the world’s richest countries. In 2011-2012, Australia’s economy grew by 3.7 per cent compared with a G7 average of about 1.4 per cent in 2012.

From the earliest days of white settlement in the late eighteenth century, Australia’s economy has been largely dependent on its abundance of natural resources and primary industries.

But the current mining boom – focused on the remote Pilbara desert region in north-west Australia – is unique in that is has exposed widening income inequality and fostered a national debate about the direction of Australia’s economy.

Serious questions are being asked about how much the nation has actually benefited from the flourishing resources sector, and about the threat to democracy posed by the bullying behaviour of the mining lobby.

A new campaign, spearheaded by the Construction, Forestry, Mining and Energy Union (CFMEU), articulates this growing disquiet.

With the election date now set for 14 September, it wants to make sure that all political parties commit to better management of mining profits for the benefit of all Australians.

“The mining boom has created opportunities for many Australians, but it has left many more behind, badly hurting job-rich sectors such as manufacturing, tourism and education,” says CFMEU National Secretary Michael O’Connor.

“This campaign is about refocusing the policies of the main political parties so the big opportunities of the boom can be seized: to reduce unemployment; provide training and jobs to a new generation of Australian workers; and invest in the communities most affected.”

There is no doubt that, handled correctly, mining profits could provide a massive windfall for Australia. But key sections of the economy are missing out.

“When the boom ends – and inevitably all booms end because of their nature – we don’t want to be left as just a quarry or a farm or simply a nice place to visit,” the Secretary of the Australian Council of Trade Unions (ACTU), Dave Oliver, said recently.

“We want to ensure that we’ve got good sound, viable industries in place.”

Manufacturing, which employs 13 per cent of private sector workers, is the most obvious example.

Over the past 10 years, while direct employment in mining has almost tripled to 263,000 at the end of last year, one in 10 manufacturing jobs has been lost, and the manufacturing workforce has fallen to 972,000.

The strength of mining has also increased the value of the Australian dollar, putting immense pressure on Australian manufacturers who are faced with cheaper imports and increasingly expensive exports.

In addition, the mining sector has been criticised for turning it back on local industry when placing its multi-billion dollar orders for machinery, transportation and services.

Fly-in fly-out culture

The concerns about giving short-term work to skilled migrants rather than locals has also been well-documented. There has been a rapid rise in the use of 457 temporary migration visas, which grew by almost 60 per cent in the first quarter of this financial year.

In addition, mining companies want to use Enterprise Migration Agreements to allow them to bypass the employment of Australian workers in exchange for less expensive foreign workers for specific projects.

The first of these was granted to Australian mining tycoon Gina Rinehart and her Roy Hill project last year, although unions subsequently convinced the government to establish an online Resource Sector Jobs Board to make sure Australian workers were given every opportunity first.

In recent weeks, the Federal Government tightened the 457 visa system in response to union complaints that it was being used to exploit foreign workers and undermine established pay agreements and labour conditions.

Residents of mining communities have also raised the alarm about the dark side of the boom. Historically, the development of mines in remote regions was accompanied by the construction of nearby townships to accommodate workers and their families. But the prevalent fly in-fly out (FIFO) culture is destroying that.

Mining companies are no longer interested in investing in local communities and infrastructure. Long-term resource towns are being turned into work camps.

New developments have minimal services and infrastructure, and once proud local communities have witnessed an exodus of permanent residents who can no longer afford accommodation in areas where high mining wages have driven up the cost of living.

An inquiry by a House of Representatives select committee found that FIFO work practices are eroding the liveability of established regional communities and towns.

Not surprisingly, the influential industry body, the Minerals Council of Australia (MCA), disputes this.

“Mining is not hollowing out the regions in which it operates – it is boosting incomes, attracting families and reducing unemployment,” said MCA Chief Executive Officer, Mitch Hooke.

Taxes and character assassinations

Three years ago, the Labor Government sought to spread the profits from mining more widely with a profits-based tax called the Resources Super Profits Tax (RSPT).

The RSPT was conceived to be placed at a rate of 40 per cent on mining profits above the long-term bond rate of six per cent, with concessions for previous year’s losses, exploration costs and other write-offs.

It was to have funded an across-the-board cut in the corporate tax rate, higher contributions to private pension accounts, and a range of infrastructure projects in rural Australia.

But the plan incurred a massive backlash from the mining industry, which was unwilling to give up extra profits. The mining sector pulled together a slick multi-million dollar advertising campaign that mortally damaged the then Prime Minister Kevin Rudd.

The public faces of that campaign were three of Australia’s most notorious mining magnates – Andrew Forrest of the Fortescue Metals Group, Clive Palmer of Mineralogy and the aforementioned Rinehart.

Most of the campaign funding came from multinationals like BHP Billiton, Rio Tinto and Xstrata.

Following a leadership change in June 2010, the new Labor leader and Prime Minister Julia Gillard made “fixing” the RSPT her first priority and negotiated a watered down version of the tax called the Minerals Resource Rent Tax (MRRT).

The MRRT is effectively a tax rate of 22.5 per cent on profits above seven per cent, but applies only to the iron ore and coal sectors. The MRRT has been a flop. In the first half of this financial year it brought in just 126 million Australian dollars (129.9 million US dollars) in revenue – well-below the projected two billion first year earnings.

None of the big mining companies have paid any tax, and despite raking in billions of dollars in annual profits, the big two of Rio Tinto and BHP Billiton are unlikely to for many years to come. In the three years since the RSPT debacle, Australia’s mining magnates have gone from strength to strength – particularly Rinehart.

Last year, Forbes Magazine named her the world’s richest woman with wealth estimated at 18 billion US dollars. Rinehart has extremely conservative views, and has gained a platform for them by investing heavily in television and newspapers. She gained infamy last year when she compared overpaid and lazy Australian workers to Africans “willing to work for less than $2 a day”

Last year, Australia’s Treasurer Wayne Swan, drew attention to the bullying behaviour of the mining magnates in an essay titled “The 0.01%.”

“A handful of vested interests that have pocketed a disproportionate share of the nation’s economic success now feel they have the right to shape Australia’s future to satisfy their own self-interest,” he wrote.

The more established multinational mining groups like Rio Tinto and BHP Billiton are less easy to stereotype, but have for years pursued policies which undermine job security, unionisation and rural communities.

Now, Prime Minister Julia Gillard is facing growing calls to revise the tax and remove the loophole that allows mining companies to claim a tax credit to offset future tax liabilities.

The Greens Party, which formed a coalition with Labor in 2010, has always called for tougher taxes for mining companies.

Two weeks ago, the Greens ended their formal alliance with Labor, citing the mining tax dispute as a key factor. But the mining lobby has threatened all-out war if the tax is amended.

In a pre-emptive strike, it recently took out full page newspaper advertisements claiming it already pays 20 billion Australian dollars every year in taxes and royalties. Mitchell Hooke of the MCA has warned “all bets are off” – a barely veiled threat to the government.

All this is taking place in context of federal election that will be held in mid-September. There is little doubt that the conservative Liberal-National Party opposition, already riding high in the polls, will side with the mining industry, as it did in 2010. Only time will tell which way Australian voters choose to go.