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Tuesday, 6 December 2016
$1bn for the Adani coalmine? Ordinary Australians understand economics better than Turnbull
If Malcolm Turnbull does provide $1bn in taxpayer support to the Adani Carmichael coalmine via the Northern Australia Infrastructure Facility (NAIF) it will show that while the prime minister may have lost many things in the past 12 months, he has not lost his agility. The man who once staked his leadership on the need for Kevin Rudd’s carbon price will be the champion of subsidising the world’s largest new coalmine.
Never before has one announcement destroyed so many political cliches, so quickly, for so little political gain. In offering public money to subsidise the major cause of climate change, the PM simultaneously kills the idea that the Coalition is concerned about excessive public spending AND that they believe the world is committed to reducing greenhouse gas emissions. So much for faith in the market, the need to embrace the technologies of the future and the idea that our cities are the engine of prosperity and productivity.
At 40km long and 10km wide, the size of the Adani coalmine is simply beyond most people’s comprehension. If you stood on top of the tallest building in Australia you wouldn’t be able to see as far as the open cut pits would stretch. But it is not just the size of the mine that is incomprehensible, it is the economics and the politics.
As the world moves away from its reliance on coal, a raft of Australian politicians seem determined to place large taxpayer bets that things are going to turn around. China’s coal consumption peaked in 2014; the UK is closing all its remaining coal fired power stations within nine years; and consumption of coal across Europe has halved since 1990. And yet the Australian government hopes that emerging economies like Vietnam will embrace coal. They might, but they probably will not.
Building new coalmines in a flat world market for coal simply pushes down the market share and market price for existing coalmines. Just as Uber is cutting into the market share of the taxi industry, starting new coalmines in Queensland will hurt workers in, and owners of, coalmines in NSW and the rest of Queensland. The silence of these mine owners makes as little sense as the Coalition’s new found enthusiasm for industry subsidies.
But it is not just other coalmines that will be harmed by the construction of the Adani coalmine. The economic modelling commissioned by Adani themselves concludes that building the world’s largest coalmine in remote Queensland will “crowd out” hundreds of manufacturing jobs as mines need people with similar skills and there isn’t time to train up new apprentices.
Despite the fact that Adani’s own economists have sworn under oath that the mine will create less than 1,500 jobs, the federal government, the Queensland premier and the Adani public relations machine all claim that the project would create 10,000 or more jobs. Unlike Adani’s economists, these public boosters for the project do not have to make their claims in front of a judge.
There is also a remarkable silence about the fact that Adani plans to employ as many robots as it can and as few people as possible. According to Adani Mining’s CEO, “All the vehicles will be capable of automation. When we ramp up the mine, everything will be autonomous from mine to port. In our eyes, this is the mine of the future.”
There are more than 140,000 unemployed people in Queensland and the Queensland unemployment rate would remain well above the national average with or without the environmental devastation of the Adani Carmichael mine. There is no doubt that the public wants action to create jobs, but there is also no doubt that the vast majority of the public would prefer that taxpayers’ money be used to do almost anything other than subsidise an enormous new coalmine.
According to a poll commissioned by The Australia Institute, the public is highly supportive of increased public investment in the infrastructure and services that are both used by, and employ, most Australians.
The polling showed:
62% of respondents say more jobs would be created by funding schools and hospitals in existing cities and towns, instead of spending it on fossil fuel infrastructure in remote areas.
Few Australians support the idea that northern Australia is the government’s biggest infrastructure priority, with more people thinking southern Australia needed more funding.
75% would prefer the funding to go towards renewable energy instead of infrastructure for coal companies. That included 79% of respondents in Queensland, where most current NAIF proposals are located.
And finally, asked about priorities for the NAIF, the least popular options were coal ports, coal rail and gas pipelines, while the most popular options were health, education and renewable energy.
Since his near death experience at the last election and the subsequent re-emergence of One Nation in Australia, Malcolm Turnbull has been dragged steadily away from his original agenda and back towards that of Tony Abbott and Barnaby Joyce. But the poll described above makes clear that the more the prime minister does to appease the conservatives in his party room, the further he moves away from the constituencies that made him prime minister.
A world that is reducing greenhouse gas emissions needs less coalmines, not more. The fact that the Adani mine is not economically viable without public subsidies should send a powerful signal to the conservatives in the Coalition that they are backing the wrong horse. But rather than listen to the market, or the voters, the Turnbull government is listening to itself.
Every billion dollars spent on fossil fuel subsidies is a billion dollars that is not spent on schools, hospitals, broadband connections and public transport. Building infrastructure to improve the functionality of cities and towns, including but not limited to those in the north, is a better long-term job creator than subsidising another coalmine. What’s more, research shows that ordinary Australians understand this economic reality better than the Turnbull government.
Any project can be made economic with enough government subsidy. Creating one of the world’s largest coalmines, which will create very few jobs, is the last thing taxpayers should be paying for. Ben Oquist is the Executive Director of The Australia Institute.
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