Monday, June 20, 2011

Let punters beware of business carbon claims

Sometimes I suspect many business people regard it as quite ethical to lie and mislead the public, provided they're lying in the shareholders' interests. And when you're laying it on thick to pressure some government into giving you a special deal or an exemption from some measure, you're always doing it for the shareholders. What's in the nation's interests - and whether your special deal would damage the nation's interests - is not your concern.

Often, any special concession you screw out of the pollies will come at the expense of those businesses and industries that don't get a similar concession, but there seems to be an honour among thieves that requires those who'd lose from the success of another industry's lobbying to keep their traps shut.

For a rival industry to point out how exaggerated or self-serving the lobbying industry's claims are is just not done. Governments - and the citizens, taxpayers and consumers whose interests they represent - are regarded as fair game. If the totality of business's success in ducking its responsibilities leads to the country being badly governed, that's just bad luck for the country.

Businesses on the make invariably seek to pressure governments by putting the frighteners on the public. And this means they often claim the government measure they're objecting to would lead to huge job losses. This has the additional advantage of frightening their own employees, and so getting the union to join them in the fight.

In the old days, businesses would pluck some big-sounding figure out of the air, but these days the fashion is to pay one of Canberra's many firms of economists-for-hire to do some ''independent'' modelling.

Any economist who can't juggle the assumptions until they get the kind of findings their client is hoping for isn't trying. And economists have no code of ethics that might inhibit them in making sure their customers are happy with the ''independent report'' they paid for.

If you come up with a big-sounding figure for supposed job losses, you can be reasonably sure the media will trumpet the figure in shocked tones. You can also be sure few if any journalists will subject your claims to examination to see how credible they are. Why spoil a good story? I didn't say it, they did. If it's wrong, blame them, not me. All I'm doing is acting as a messenger, recording both sides of the debate. It's not my job to act as a censor.

(This is tosh. Messengers don't decide which messages they'll deliver and which they won't; which they'll shout from the rooftops and which they'll whisper. Every aspect of the reporting and editing process involves judgments about what goes in and what hits the cutting-room floor. It's clear the media is often happy to pass on to its paying punters without comment information it either knows is misleading or hasn't bothered to inquire into.)

With Julia Gillard, the Greens and the independents busy deciding on the precise form their hybrid carbon tax/emissions trading scheme will take, it's open season for industries lobbying for special favours.

Last week it was the turn of the Australian Coal Association, which produced a report prepared by the economic consultants ACIL Tasman claiming that putting a price on ''carbon'' (greenhouse gas emissions) would lead to the loss of 4700 jobs by 2020-21 from existing coalmines in NSW and Queensland. Counting the flow-on effects to other industries would increase the loss to 14,100.

As well, applying emissions pricing to potential new mines would eliminate 25 to 37 per cent of potential new jobs. This, too, would cause much larger losses to the wider economy when flow-on effects were taken into account.

I suspect the key assumption driving these results is the assumed rise in the real price of carbon. After starting at $19 a tonne in 2012-13, it would leap to $47 a tonne in 2016-17, reaching $57 a tonne in 2021-22. But these figures are pure supposition.

The next thing to remember is that almost all the estimates of ''lost'' jobs you see don't involve any actual decline in the number of people employed in an industry. Rather, they refer to the extent to which employment grows by less than it otherwise would.

Whether deliberately or through ignorance, this distinction is almost always lost in translation - as the ''independent'' consultants surely know it will be. But if these job ''losses'' were labelled more carefully the punters would find them much less alarming.

We're in the early stages of a resources boom, which will involve the establishment of new coalmines and the expansion of existing mines. It's no doubt true the imposition of a significant carbon price will cause there to be less expansion than otherwise. But the notion we could see a lot of out-of-work coalminers is fanciful.

If I had enough money I'd happily pay for every industry lobby group in the country to commission an ''independent'' report on the wider, multiplier effects of their industry. I reckon they'd add up to a mighty lot more than 100 per cent of gross domestic product or total employment.

So never take notice of such claims. They're mere puffery. In the coalminers' case they're built on the assumption that money not invested in mining would be left under the bed rather than invested in some other value-adding and job-creating activity. And that everyone who loses their job as a result of the closure of a mine never works again.

In any case, 4700 job ''losses'' may sound a lot, but in the context of an economy of 11.4 million workers, with hundreds of thousands of people moving between jobs and total employment growing by at least 250,000 a year, it's microscopic.