Monday, June 06, 2011

The impact of the carbon tax will be how small?

For mining, it won't even touch the sides

The impact of the carbon tax on the mining industry will be “trivial” - so small that for practical purposes it will be “invisible,” according to one of Australia’s leading labour market economists.

Professor Bruce Chapman is president of the Economic Society of Australia and director of policy at the Australian National University’s Crawford school of government.

In a report released this morning entitled How many jobs is 23,510 really? he attempts to put into perspective a claim by the Minerals Council that a carbon trading system would cut by around 24,000 people the number than would be employed in the mining industry.

“Something like 370,000 people every month go from not having a job to having a job, and something like 365,000 people every month do the opposite,” he told the Herald.

“That’s the change every month. The Minerals Council has projected its change over a period of ten years.”

“The additional outflow would be 5 people for every 10,000 who would have left in the month anyway. I am happy to call that invisible. I was going to draw a graph of it for the report but I couldn’t - you can’t draw a graph because the effect is too tiny.”

“What it says is the carbon price debate should have nothing to do with job loss figures. The labour market issue should be seen to be irrelevant. It is not interesting, it is not something we should spend any further effort analysing"...

The report prepared for the Australia Institute also challenges the assumption that any mining workers who did lose their jobs would fall into unemployment.

Using data from the household income and labour dynamics survey Professor Chapman finds that in the previous mining boom an enormous 26 per cent of mining industry employees left the industry each year.

“On average around 36 per cent of people employed in mining are inflows, having arrived that year. Around 26 per cent are outflows - they won’t be there the next year,” he said.

“This extraordinary mobility suggests strongly that any supposed job losses would be dwarfed by natural attrition.”

The seven-year longitudinal study finds that workers leaving mining almost always go to other jobs.

“Nobody who left mining after 2001 was unemployed when observed a year later,” the report says. “The vast majority of those leaving mining sector employment were employed in other jobs in all the years following.”

“When you talk about job losses people think about about jobs actually being cut whereas the industry is talking about jobs that would not be created. You also think about people being sacked and going into long-term unemployment and becoming destitute. In the mining industry that is not correct,” Professor Chapman said.

The report says the misuse of big-sounding jobs claims to describe very small effects is widespread.

“As an example the release of the Murray Darling Basin Plan encouraged assessments of direct job in the range of around 3,500 to 12,000. The Climate Institute has claimed that a shift in production towards cleaner energy will result in around 34,000 net new jobs in the Australian power sector by 2030,” the report says. “Obviously the issue relates to both sides of the carbon price debate.”

On Thursday before the Senate economics committee Treasury chief economist David Gruen defended the department’s decision to model the carbon tax assuming no change in the unemployment rate saying over the long term much bigger economic shocks had been shown to make no change to employment rates.

Published in today's SMH and Age

Recasting the Mining Job Loss Debate

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