That’s the self-explanatory headline for my latest piece in the Brisbane Times (reproduced in the other Fairfax papers, I think). Text is over the fold.
Ever since taking office the Palaszczuk government has been walking a tightrope with respect to the Adani Group’s proposed Carmichael mine in the Galilee Basin. On the one hand, it’s obvious that the project is both environmentally disastrous and economically dubious. The government has been keen to avoid putting public money into this mess. On the other hand, if the project falls over, as still appears quite likely, the government is keen to avoid the blame. The supposed benefits of 10 000 jobs and billions of dollars in royalties make an appealing case to voters at any time and particularly with the mining boom on the edge of failing.
For most of the past eighteen months, Ms Palaszczuk and her government have managed the tightrope act successfully, but now it appears to be on the verge of falling. Adani is pushing for a ‘holiday’ from royalties which might last as long as nine years. If the government accepts, the project may go ahead, but the promised benefits to the Queensland public will disappear into the never-never.
The holiday is supposed to be temporary, but that’s unlikely. The mine is always going to be marginal at best, so any attempt to extract royalties in the future, let alone collect those foregone during the holiday, will raise the threat of closure. What Queensland government, having put so much into the project, would be willing to take the blame for its failure?
Meanwhile, the project proponents are still touting the 10 000 jobs. Adani’s own expert admitted in court that the modelling technique used to derive this number was unsound, and estimated the real figure at less than 1500. But that number refers to the full version of the project, commonly described as involving an investment of $22 billion. With most major banks having rejected the projected, that version has been scrapped, or at least deferred indefinitely.
The ‘first stage’ currently being discussed involves a total investment of around $5 billion, of which the Australian public is supposed to contribute at least a billion dollars. There doesn’t appear to be any public modelling of the jobs created by this cut-down proposal, but simple arithmetic suggests that the number is likely to be in the hundreds rather than the thousands, at least once the initial construction phase is over. So, we may easily end up with the worst of all worlds: no royalties and few jobs for a project that will contribute massively to environmental destruction both locally and globally.
Even a few hundred jobs would make a positive difference to centres in regional Queensland. But, with over a billion dollars of public money already on the table, and almost certainly more to come, we could do a lot better than subsidise a railway line and coal mine. The list of options is long, but it’s worth spelling out a few possibilities.
First, we could make a start on addressing the housing affordability crisis with a return to building public housing. Recently released maps of rental affordability have shown that this problem is just as severe in regional Queensland as in many parts of the South-East. Spending money on public housing used to be ruled out by free market dogma, but the willingness to throw money at Adani shows that this dogma is no longer operative. With a focus on low-cost options, a fund of a billion dollars could finance the construction of 500 houses a year for ten years. And, at the end of the ten years, the public would own a substantial stock of housing. By contrast, money given or lent to Adani is probably gone for good. The chance that the mine will be profitable enough to pay back its debts is marginal at best.
Another option would be to admit that, rather than being unpredictable disasters, cyclones and the associated floods are a regular part of life in North Queensland, likely to get worse rather than better in the future. Another option would be to admit that, rather than being unpredictable disasters, cyclones and the associated floods are a regular part of life in North Queensland, likely to get worse rather than better in the future. Instead of making special arrangements every time, we could set up a permanent core workforce to work on disaster preparedness and form the nucleus of a rebuilding effort in the aftermath of cyclones.
If these ideas are too innovative, we could simply spend the money on the services that make up the core business of governments, like schools, police services, roads and parks. At a cost of $100 000 per worker (including various on-costs) a billion dollars would be enough to fund 1 000 jobs for 10 years, almost certainly more than Adani’s cut down scheme will deliver.
The world, including India, and even the Adani corporation itself, is moving away from coal at an accelerating rate. Rather than throw away huge sums of public money in an attempt to resist the future, we should be thinking about how best to manage it. Regional Queensland has vast potential, and, with a renewed willingness to undertake public investment, we have the chance to realise that potential. We shouldn’t throw it away on a doomed project that will leave us with, at best, a stranded asset and a legacy of massive environmental damage.