Australian tourism visitors have dropped by around 250,000 over the last decade, as more Australians holiday overseas, and overseas tourists go elsewhere. This is during a 20% boom in global tourism over the last decade.
Since the beginning of the mining boom, Australia’s rural sector has lost $43.5 billion in export income. This includes $14.9 billion in 2010-11 alone. These losses have occurred because the mining boom has forced the Australian dollar to historic highs. The beef industry took a $2 billion dollar hit last year alone.
Manufacturing job losses are announced with depressing regularity, with well over 120,000 manufacturing jobs disappearing since the GFC.
Adding fuel to the fire, the mining boom has created an acute skills shortage. This is simple supply and demand. If you plan to build $260 billion dollars’ worth of mining projects at once, it will create enormous demand for a narrow set of skills that are also important to other industries. This makes it much harder for other businesses to recruit and retain employees.
These businesses will also have to compete with the inflated wages being offered by the miners. The economic consultants for Clive Palmer’s China First mine acknowledged this impact alone would cost around 3000 jobs in manufacturing and tourism, and that’s just one mine!
Hooke’s concern about Australian jobs is especially interesting when you consider that the coal mining industry is highly capital intensive, and a very small employer. It employs around 38,000 people nationally, less than a third of one percent of the workforce, compared to around one million in manufacturing, half a million in tourism and 327,000 in agriculture.
With a capital-intensive industry crowding out labour-intensive industries, it seems likely that the net effect of the expansion of the coal industry will be job losses for Australia as a whole.
Crowding out of these industries also means a loss of tax that these industries would have been paying. The mining industry pays an effective corporate tax rate of around 13.9%, compared to the industry average of 21%.
To take the latest year available, 2009-10, mining companies paid $6.8 billion in company tax, amounting to just 2.2% of government receipts.
The coal industry also pays around $4 billion dollars a year in royalties to the states. Although royalties are technically considered taxes, the minerals are the raw materials of mining in the same way that wheat is for a baker, or bricks to a builder. Bakers and builders pay market prices for their raw materials, and the costs are not considered as a tax.
The difference is that the Australian people own those minerals, and the state government sells the minerals to mining companies on our behalf. It is hard to imagine that if the minerals were owned by a private company, like bricks or wheat, they would be sold for around 7% of their market value. This special treatment of the mining industry could be seen as a huge subsidy in itself.
As it stands mining is highly subsidised, to the tune of at least $5 billion dollars a year, which makes subsidies to manufacturing look modest.
Mitch Hooke’s claim that “the proposal to stop Australian coal exports won’t stop global coal use” is true, as far as it goes. But no one would seriously suggest that it would. Other countries will continue to export coal.
What it will do is drive up the coal price considerably, because Australia is the world’s largest coal exporter. In fact, Australia has a larger share of the world’s coal exports than Saudi Arabia does of oil, and no one would doubt the effect on global oil prices of Saudi Arabia reducing its oil exports.
This will have the effect of our customer countries – primarily Japan, Taiwan and India – reconsidering investing in coal for their energy infrastructure.
Luckily they already are. India has had to scrap huge coal power plants due to coal price fluctuations and difficulties in securing enough coal that have led to massive blackouts. This has led to rapid ramping up of solar targets to 10GW by 2017.
This shift to renewable energy is gaining pace around the globe with renewable energy investment exceeding fossil fuel in 2011. This is an unstoppable trend, and is great for the developing nations who will be able to avoid dependence on volatile and ever increasing fossil fuel prices, and the myriad of health and pollution problems associated with burning coal.
This article was co-authored by Mark Ogge. Mark is the Public Engagement Officer at Canberra-based think tank, The Australia Institute. His work involves communication of key research findings about the impacts of the mining industry on other crucial sectors of the Australian economy, especially manufacturing, tourism, education and agriculture.
Richard Denniss is an adjunct professor, Crawford School at Australian National University.
This article first appeared at The Conversation.
