Closing all coal mines in Australia would cost the country’s economy
between A$29 billion and A$36 billion a year, the Minerals Council of
Australia (MCA) has said, citing a report by economic analysts Sinclair
Davidson and Ashton de Silva. The report also found each job in the coal
industry would cost 6.5 jobs in the economy as a whole, with almost
200,000 jobs threatened if coal mining was banned, as proposed by Greens
leader Bob Brown.
“The loss of corporate income tax and increase in welfare payments would
constitute a negative A$6-billion impact on the federal budget. For
every A$1 of income lost in the coal mining industry, A$3.92 of income
will be lost in the economy as a whole,” Davidson warned. He further
noted that a modest decline in coal exports during the first quarter of
this year was blamed for the negative economic growth, with Treasurer
Wayne Swan saying, at the time, that around A$9 billion was lost in
revenue as a result of the weather-related issues that affected coal
mining in the beginning of this year.
“On the other hand, we show that coal exports increased dramatically
during the recent financial crisis. Without that increase in coal
exports, Australia would almost certainly have experienced a recession
with, at least, three consecutive quarters of negative economic growth,”
Davidson added.
The report also found that Australia’s comparative advantage in coal
exports has eroded in the past ten years, which Davidson and De Silva
attributed to poor policy developments in Australia. “It is clear that
policy makers have little regard for mining and this has encouraged poor
policy making. Coal mining performs well despite the poor policy
environment. It is clear, however, that poor policy will over time
undermine Australia’s economic opportunities.”
However, Davidson said that at present, those policies have not been a
deliberate attempt to undermine the industry. “The Greens, and to a
lesser extent the government, propose policies that are deliberately
intended to disadvantage coal mining. We argue that given the
competitive nature of the world coal market the cost of those policies
should be incurred in Australia, and will give rise to few, if any
global environmental benefits.”
The federal government was currently considering two policy changes that
would directly affect the coal mining industry. The first was the
introduction of a 30% mineral resources rent tax on the super profits of
coal and iron-ore producers. The second policy consideration was the
introduction of a carbon tax, which has caused miners and industry
bodies to warn of severe job losses and revenue loss expectations.
“The argument that renewable energy could easily replace coal-powered
energy is fanciful,” scoffed Davidson. “Australia has little installed
capacity in renewable energy compared with coal-powered energy. In
addition, renewable energy is very expensive and technologically
uncertain.” Black and brown coal remains the dominant fuel source in
Australia, and accounts for around 38% of production, with gas
accounting for a further 23% of electricity production. Around 5% of the
total energy mix is made up from renewable energy sources.