Extract from ABC News
Updated
The claim
The need for jobs in Central Queensland has been one of the key arguments made in favour
of opening the Adani Carmichael coal mine and developing the thermal
coal deposits of the Galilee Basin more broadly, despite environmental
and economic arguments against the moves.
In an interview on RN Breakfast,
host Fran Kelly asked National Party Deputy Leader Bridget McKenzie
about the outlook for the development of the Galilee Basin, in light of
mining companies such as BHP signalling moves away from investment in thermal coal. Senator McKenzie said she hoped to see the Galilee Basin opened up, with communities throughout Central Queensland having been "resounding in standing up for their local jobs, their local industries".
"And that includes thermal coal exports. We know there are 54,000 people employed in that industry..." Senator McKenzie said.
"We need to realise that the export of thermal coal is actually going to be part of our economy and our regional communities going forward."
Are there 54,000 people employed in the thermal coal mining industry?
RMIT ABC Fact Check investigates.
The verdict
Senator McKenzie's claim doesn't check out.There are two Australian Bureau of Statistics employment data sets against which the claim can be tested.
The Labour Account, which publishes industry information drawn from employers, shows that in the financial year 2017-18, there were around 38,100 people employed in coal mining overall.
The Labour Force Survey, which is based on data sourced from employees, shows that in the four quarters to February 2019, there was an average of 52,600 people employed in coal mining overall.
However, both of those figures include people employed in metallurgical and brown coal mining, in addition to thermal coal mining.
BHP's statements, and the questions Senator McKenzie was addressing, related solely to thermal coal.
In terms of employment in thermal coal mining, the numbers would be much lower.
Fact Check was unable to find a definitive figure, but there is no data to support the claim that there are 54,000 people employed in thermal coal mining.
Experts told Fact Check that trying to isolate the figures for thermal coal mining is problematic as some mines produce both thermal and metallurgical coal.
Senator McKenzie quoted one set of ABS employment statistics ...
A spokesman for Senator McKenzie told Fact Check the minister's source was Australian Bureau of Statistics (ABS) Labour Force Survey data for the quarter to February 2019. The figure of 54,000 used by the minister was based on an average of the last 12 months, the spokesman said.This publication shows the number of people employed in coal mining overall, including thermal coal and other types of coal.
"Even though the discussion mentions thermal coal, the employment and value figures the minister refers to are for both thermal and met coal," the spokesman said.
Data from the four quarters to February 2019, the latest available when Senator McKenzie made her claim, presented as an annual average shows there were 52,600 people employed in coal mining overall in Australia. However, according to the ABS, the Labour Force Survey is no longer the most accurate data set to use for assessing employment by industry.
... but a more definitive ABS data set places the numbers much lower
A spokesman for the ABS told Fact Check the relatively recently introduced Labour Account is now the best source of information on employment by industry.The latest available Labour Account data for the coal mining industry is for the year to June 2018.
Published in March 2019, this was also the latest available data when Senator McKenzie made her claim.
The data shows that in the 2017-18 financial year, there were around 38,100 people employed in the coal mining industry overall. Again, that estimate includes thermal coal and other types of coal.
Why the ABS now recommends the Labour Account
Traditionally, the Labour Force Survey has been the only measure of employment by industry over time.However, according to the ABS, industry-specific information is not one of the core elements of the survey.
A spokesman for the ABS told Fact Check the survey was primarily designed to measure the labour force status of the population: whether people are employed, unemployed, or not in the labour force, and the key demographics of those people, including their sex, age, region and full-time or part-time status.
The Labour Account, on the other hand, has been "specifically designed to produce industry estimates that present the most coherent picture of the Australian labour market", the spokesman said.
First released in July 2017, the results of the still "experimental" Labour Account are based on a range of data sources and labour market statistics, including the Labour Force Survey.
"It provides an estimate of the number of jobs, hours worked, and associated labour income that align very well with industry measures of output in the economy. In the future it is expected to lead to improvements in the measurement of productivity," the spokesman said.
The reason for the Labour Account's relative strength over the Labour Force statistics, according to the ABS, is that the industry information is "generally drawn from how the business is officially categorised, rather than how employees describe the business".
"The Labour Account shows that there are a number of people in the labour market who, when responding to the Labour Force Survey, will describe the business they are in as being in coal mining when they are actually working in other industries, some of which may have supply-chain relationships with coal mining," he said.
"For example, an employee of a business engaged in engineering construction who works on a coal mine site may incorrectly describe their industry of employment as coal mining and not construction."The advice from the ABS is that, where available, data from the Labour Account should be used as the most definitive measure.
"The ABS is conscious that this is a new data source and that it will take some time for the broad range of analysts and users to familiarise themselves with it, and its comparative strengths over the longstanding industry estimates from the Labour Force Survey," the spokesman told Fact Check.
The traditional Labour Force Survey and Jobs in Australia statistics will continue to provide insights into the characteristics and distribution of people and their jobs in the labour market, according to the ABS.
Accommodating the new data set
Ben Phillips, Principal Research Fellow at the Centre for Social Research and Methods at the Australian National University, told Fact Check there is "no doubt the ABS is spot on in thinking that their Labor Account data is a more accurate reflection of the number of persons directly employed within the coal mining industry".Associate Professor Phillips noted that the Labour Account data is "somewhat out of date now compared to the Labor Force Survey", making it "quite likely that the 38,000 Labour Account figure would be a little higher for coal today".
Fabrizio Carmignani, Dean (Academic) of the Griffith Business School at Griffith University, told Fact Check the conceptual framework of the Labour Account is "very appropriate for macro analysis, and should result in better quality data".
Professor Carmignani did note that the Labour Account was limited in terms of making international comparisons, and the level of disaggregation of the data.
"The key issue here is that we now have two sources of labour data. One is good for some purposes, the other is good for other purposes, and the two do not match," Professor Carmignani said.
"The difference [in employment numbers] between the two sources does leave me a bit uncomfortable," he said.
In a February 2019 Statement on Monetary Policy, The Reserve Bank said when it comes to industry employment figures, the Labour Account has a number of potential advantages over the Labour Force Survey:
"The industry classification in the Labour Account aligns better with the measurement of industry value-added in the national accounts, and so the Labour Account should contribute to better estimates of industry productivity growth. The Labour Account also takes a more comprehensive approach to estimating the amount of labour employed in each industry, for instance by including the employment of non-resident visa holders."
However, given the Labour Account is "a new release and is still considered experimental, the Bank will continue to monitor industry employment trends in both releases, as well other sources of information on industry trends from business liaison and business surveys", the Reserve Bank said.
Coal production in Australia
As explained by the federal government agency Geoscience Australia, coal is broadly separated into the categories of brown or black, with each having different properties and uses.Brown coal is only used domestically while the majority of black coal is exported.
Black coal is further broken down into different categories: thermal (or steaming) coal and metallurgical (or coking) coal.
Thermal coal is primarily used to generate electricity, while metallurgical coal is used in the production of steel.
Statistics published by the Department of the Environment and Energy show that in 2016-17, Australia produced around 442 million tonnes of black coal, 89 per cent of the total, and around 57 million tonnes of brown coal, 11 per cent.
Black coal is chiefly produced in Queensland and New South Wales, which together accounted for 98 per cent of black coal production.
Looking at black coal, statistics published by the Department of Industry, Innovation and Science show that in the same year, 2016-17, Australia produced more thermal coal (262 million tonnes) than metallurgical coal (187 million tonnes), a ratio of 58 per cent thermal coal to 42 per cent metallurgical coal.
The latest figures available, for 2017-18, are similar, showing that Australia again produced more thermal coal (267 million tonnes) than metallurgical coal (183 million tonnes), a ratio of about 60 per cent to 40 per cent.
A report commissioned by the Minerals Council of Australia from research firm Commodity Insights also puts thermal coal production at 60 per cent of black coal production and metallurgical at 40 per cent.
While two different data sets are involved, putting them together suggests that a little over half — around 53 per cent — of Australia's total coal production is thermal coal.
Breaking down the employment numbers
Neither the Labour Account nor the Labour Force Survey identifies the numbers of people employed in mining particular types of coal.Academic experts, industry associations and private companies contacted by Fact Check were not able to point to another source for this information.
Experts provided Fact Check with state government and private company data showing employment numbers for coal mines in Queensland and New South Wales. Some of the material indicated whether a mine produced thermal coal alone, coking coal alone, or both.
John Rolfe from the School of Business and Law at CQUniversity told Fact Check: "There is no ideal data set for this, but you can have a go at matching it up from official data sets. Just match the mines to employees and distinguish by coal type produced."
However, he added: "Many mines have multiple seams, and the coal from different seams might be allocated to thermal and coking coal ... from the same mine, which makes it impossible to distinguish employment by coal type precisely."
The Labour Force Survey statistics are broken down by state. This is useful in assessing Senator McKenzie's claim, as almost all (98 per cent) black coal in Australia is located and produced in Queensland and New South Wales, and those two states produce no brown coal. (The Labour Account does not publish state-level employment information.)
Annual averaged data for the year to February 2019 showed combined employment numbers in those two states were 48,500, or 92 per cent of employment.
Thermal and metallurgical coal is found in both states, so while the state employment data is useful, it is insufficient to produce an estimate of employment in thermal coal mining.
Labour intensity of mining thermal coal versus metallurgical coal
Experts told Fact Check there is little to no difference in the labour intensity of mining thermal and metallurgical coal.Peter Colley, National Research Director in the Mining and Energy Division of the Construction, Forestry, Maritime, Mining & Energy Union (CFMMEU), told Fact Check that while there are "different methods available for open cut and underground mining, there's no distinction between thermal and coking coal in terms of mining methods".
"While some mines do have higher mining costs due to the geology of the mine, freight costs and technology used, there isn't a difference in productivity on the basis of thermal versus coking," Mr Colley said.
It's worth noting that some mines produce both thermal and metallurgical coal. And as Mr Colley told Fact Check, thermal coal can sometimes be "washed" to create coking coal.
Professor Rolfe also told Fact Check that "in general, there is not a lot of difference in extraction between thermal and coking coal".
A spokesman for Glencore Coal told Fact Check that the mining of one type of coal does not generate more employment than the other.
Rather than being related to the type of coal being mined, employment numbers would depend on factors including the mining method used, the design of the mine, the geology of the area, the quality of the coal and technical challenges faced.
Estimating thermal coal employment
So, what does all this mean for estimating the number of people employed in thermal coal mining in Australia?Whichever way it's approached, there is no data to support the claim that there are 54,000 people employed in that industry.
The ABS Labour Account places the entire coal mining industry at around 38,000, at last count.
And while the statistics less favoured by the ABS, the Labour Force Survey, place the number at around 53,000, that still accounts for more than the thermal coal mining industry.
While Fact Check cannot present a definitive number, it is possible to make a rough estimate based on the following information, noting that the information relates to different time periods:
- Queensland and New South Wales account for 98 per cent of black coal production and no brown coal production;
- About 92 per cent of coal mining employees work in those states, according to the Labour Force Survey;
- Thermal coal accounts for around 60 per cent of black coal production, and
- There is little to no difference in the labour intensity of mining thermal and metallurgical coal.
As mentioned, the Labour Account, which draws on information provided by business and is regarded by the ABS as being a more accurate reflection of industry employment, does not publish a state breakdown.
If the breakdown were proportionally the same as the Labour Force breakdown, a rough estimate of the employment figure for thermal coal mining using the Labour Account would be closer to 21,000.
However, it is important to keep in mind the comments from experts that the same mines can produce thermal and metallurgical coal.
Economic and technological considerations
Associate Professor Phillips told Fact Check there would be "a large number of persons employed indirectly through coal mining, and obviously coal mining does add significantly to our exports and overall income of the nation, so considering the broader impacts of coal mining is also important".In terms of employment prospects in new coal mines, Frank Jotzo, director of the Centre for Climate and Energy Policy at the Australian National University Crawford School of Public Policy, said "newer mines tend to be much more highly automated than older mines".
"Mines naturally close down at some stage to be replaced by new mines, and those newer mines will employ fewer people. We're looking at an inevitable reduction of coal mining jobs, even if the industry maintains the same production levels."
Principal researcher: Lucinda Beaman, Sydney Editor
factcheck@rmit.edu.au
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