$1.32 billion / 24.4 jobs = $54,098,361 per job
By Michael Griffin
Concerns about the environmental costs and damage to the nationally and globally significant Great Barrier Reef by the Adani Group’s Carmichael mine in Queensland, the world’s biggest coal mine, have been expressed. Yet the now discredited claims regarding the economic benefits that the mine will create persist. Claims that the mine will create 10,000 local jobs were made during the last Queensland election campaign in an Adani funded television advertising campaign and have since been repeated on numerous occasions by both Federal and Queensland politicians desperate to rally support for the project on behalf of Adani and despite the fact that the claim for the amount of jobs created has now been proven false.
In his January 2015 Report to the Land Court of Queensland, Adani’s own expert, Jerome Fahrer, stated that the claims for 10,000 jobs were ‘deficient’ yet the uncorrected claims for 10,000 jobs and other benefits, including an alleged $22 billion in royalties and taxes generated for the Queensland and Federal governments to spend on ‘social wellbeing’, persist.
In the report, Adani’s own expert, Fahrer, states:
Over the life of the project it is projected that on average around 1,464 employee years of full time equivalent direct and indirect jobs will be created.
The life span of the mine has now been estimated to variously range between 25 years and 60 years and not the 150 years Adani misleadingly claimed in its initial publicity.
To understand the real economic benefits the Adani mine will generate, if any, the statement by Fahrer needs to be unpacked and viewed in the context of the various subsidies, royalty exemptions, waivers of clean-up costs, free water entitlements and low interest loans Adani will receive from the Queensland and Federal Governments – not to mention the loss of tourist jobs caused by the predicted destruction of the reef caused by the mine.
The Australian Public Service Commission (APSC) defines ‘full time equivalent’ (FTE) employment in Appendix A of its workplace metrics webpage in the following way:
The number of full time employees directly employed by the organisation at a point in time. Part-time employees are converted to full-time equivalents.
The APSC website goes on to give the formula by which FTE is calculated. It says:
Number of fulltime employees plus total part-time hours divided by standard full time hours.
To put it simply, the number of part-time hours worked by any employees are combined to make up the equivalent in full time hours and then added to any other full time hours worked and then the total hours are then divided by the standard or legal fulltime hours (38 hours per week or 1,976 hours per year).
It is notable that Adani’s own report does not say that a more modest 1,464 full-time jobs will be created and continuously maintained at all times of the mine’s operation as some politicians now claim is how Fahrer’s statement should be interpreted. But that interpretation is a misconception. Fahrer’s statement clearly indicates that the 1,464 direct and indirect employee years of full time equivalent work the mine will allegedly generate will be created over the whole course of the life span of the mine. This means that the 1,464 total years of work created will be worked across the whole 25 to 60 year life span of the mine and not all at once. If we assume that employees will work fulltime in such a workplace, it is apparent that each year an individual employee works at the mine will represent one employee year and further that, if that same individual employee works for multiple years over the course of the mine’s operation, then that same employee’s further years of employment would also be counted in addition to the first year within the total of 1,464 employee years touted as the total work to be created by the mine over the course of its life.
Hence, a single employee can contribute multiple years of work in the total 1,464 years such that if that same employee works 25 years at the mine then that one and the same employee will contribute 25 of the total 1,464 employee years of work to be undertaken over the course of the mine’s lifetime. It follows that if multiple employees work multiple years at the mine then the total amount of 1,464 employee years can be taken up very quickly by only a handful of full time employees. It is clear that the entire total of 1,464 employee years could be taken up, for example, by 1,464 employees working fulltime for only one year or, alternatively, by half that amount of employees, that is, 732 employees, working full time for two years and so on and so on. In fact, when elaborated over a 25 year lifespan for the mine, the 1,464 years of total indirect and direct work created averages out to only 58.5 employees working a standard full time 38 hour week for that 25 years.
Let’s be clear. To estimate the equivalent full time jobs the mine will create over its life span we simply need to divide the total estimated employee years of 1,464 years work into the years of life for the mine. Thus, If only 1,464 years of work were created by the mine during a 25 year period, then we divide 1,464 by 25 years and we can see that only 58 equivalent full-time ongoing jobs and 1 part-time job of 19 hours will be created by the Adani mine for the whole of that 25 years.
Further, if the life span for the mine is at the upper estimated range of 60 years then the amount of permanent ongoing full time jobs created and maintained is even less. In fact, it would take only 24.4 full time employees to make up the 1,464 years of work over a 60 year life span for the mine. That is, if only 1,464 years of work were created by the mine during a 60 year period then only 24 ongoing full-time jobs and 1 part-time job of 15 hrs and 2 mins would be created and maintained by the Adani mine in that 60 year period.
How such low employment outcomes can be achieved at the mine is apparent from the statements made by Jeyakumar Janakaraj CEO of the Adani Groups Australian operations in the Mining Global online newsletter. These statements are inconsistent with what Jeyakumar Janakaraj claims for the ‘social benefits’, tax generating potential and ‘sustainability’ credentials for the mine. He states that:
We will be utilising at least 45 four hundred tonne driverless trucks. All vehicles will be capable of automation. We will ramp up the mine, everything will be automated from mine to pit. In our eyes, this will be the mine of the future.
In other words, the 10,000 jobs initially promised by Adani, no doubt to secure its initial government permissions and to gain public support for the massive project, was never an honest claim and was always a defective estimate. The mine and its port will provide nominal benefits to the local communities and the nation in which it is situated. Between 24 and 58 jobs fulltime jobs at best for a public spend of $1.32 billion is far from a good result for the public. As these jobs are likely to be in robotics, IT and computer based it is most unlikely that Adani will find any local workers within proximity of the mine site with the experience and skills to perform the jobs created. Moreover, Australians will be stuck with cleaning up the mess Adani leaves behind when it eventually evades its responsibilities, with a destroyed natural wonder and with the loss of the 70,000 tourism jobs that the reef would have generated over the life span of the mine.
Furthermore, the use of the words ‘full-time equivalent’ by Fahrer leaves it open to conclude that many, if not all, jobs created by Adani at its mine will be part time or casual but when combined together the hours worked in those casual and part time jobs will add up to a total of 1,464 years of work.
Even more intriguing is the fact that Fahrer also uses the words ‘direct and indirect’. This means that not all of the meagre 24 to 58 jobs created over the years of operation will be at the mine site or locally placed as they will be off site ‘indirect’ jobs servicing the mine. These jobs could be at some distance from the mine site and far outside the local area and would thereby provide little opportunities and social benefits to people in communities in proximity to the mine.
What person in their right mind who genuinely has the interests of their fellow country-men at heart could seriously consider such an arrangement?
One would expect that, before politicians start touting the benefits of a project and contributing vast amounts of public assets and funds to it, they would, at least, try to understand what Fahrer’s statement actually means. A reasonable person would think that such an understanding would be mandatory when the amount sought to be committed to the project is public money in the order of over $1.32 billion dollars. That amount is made up of a $1 billion low interest loan of federal public funds, a maximum of $320 million in foregone Queensland state royalties and a licence to effectively drain an underground aquifer dry by the extraction of 297 billion litres of precious groundwater and a further 12 billion litres of river water from the local rivers free of charge while requiring the return of only 6 % of that water to the environment. The amount does not include the loss of interest incurred by the Government due to the low interest rate on any loan that could have been made at a higher rate to a more beneficial and profitable enterprise and nor does it include the loss of tourist jobs due to the inevitable degradation and destruction of the reef. Nor does it include the losses incurred by the agricultural sector by the loss of water and farming land.
For any politician to make a decision on a project involving the high level of public expenditure and the inevitable environmental destruction as this one involves without having a full understanding of the costs and benefits of the proposal, would not only be an act of gross irresponsibility, it would also result in a decision made contrary to the national interest and to the doctrine of responsible government imposed by The Constitution. Moreover, it would also indicate that the government officials and politicians who made the decision are incapable of simple arithmetic and unfit to govern and occupy the positions they do.
A simple and limited cost/benefit analysis of the Adani mine, taking into the account only the jobs created and the amounts of public funds involved – made up of the billion dollar low interest loan from the public purse and the $320 million of forgone Queensland state royalties initially contemplated – indicates that the effective subsidy from the public purse for each job created by the Adani mine far exceeds that given to the high employment generating motor vehicle manufacturing industry which subsidy the LNP withdrew causing the ongoing loss of 200,000 jobs into the future.
Doing the sums it becomes clear that the effective subsidy for each of the 24.4 jobs created by the mine over a 60 year life span would be $54,098,361 for each job over that 60 year period. Yes that’s a whopping $54 million and almost $1 million per year for each job over 60 years! The subsidy for each of the 58 jobs created by the mine over a 25 year life span would be $22,758,620 for each job over the 25 year period. That is, nearly $1 million per job per year for 25 years! And, as mentioned, this analysis does not take into consideration the other mining subsidies, tax deductions, waived water licence fees or loss of jobs in the tourist industry that Adani operation will no doubt cause or obtain from compliant state and Federal government officials incapable of understanding simple arithmetic. Such huge sums for so little gain cannot be justified by even the simplest cost/benefit analysis.
Even when the more recently announced reduced level of Queensland state royalty deferment is taken into account in place of the initial $320 million initially touted, the amount of effective subsidy to Adani using assets belonging to the Australian people, the project and its benefits do not stack up go scrutiny.
The expenditure is not in the national interest and is contrary to the doctrine of responsible government in The Constitution. Such spending would be an unacceptable risk to public finances and, should the decision to advance the subsidies and concessions be made favourably to Adani in these circumstances, that decision would constitute a compete dereliction of duty, would be completely irresponsible and would constitute reprehensible government conduct.
Any politician who thinks the Adani mine project is worthwhile on the figures so far publicised or who fails to understand a simple cost/benefit analysis of the project, is clearly blessed with a degree of idiocy making them unfit to be entrusted with any responsibility in the government of a nation. It would clearly be bad economic management to advance, forego and waive such large amounts for so little gain.
In conclusion, it is useful to consider that there is an international law doctrine referred to as the doctrine of ‘odious debt’. This doctrine of odious debt holds that debt incurred by a government in the name of the people but that was not spent for a legitimate purpose for the benefit of the people is voidable and liable to be paid personally by the members of government who caused the debt to arise. Given the debt the LNP claim Australia is facing and their endless borrowings through unnecessary bond issuances that increases that debt, their waste of public funds on unproductive programs and their corporate tax cuts – all of which reduce the nation’s capacity to pay its debts – the Australian public would do well to consider applying the doctrine of odious debt to Turnbull and Palaszczuk and their neo-con parliamentary cronies in order to have them personally pay any amounts they have wastefully advanced to Adani back to their respective treasuries for repayment of debt that Australia and Queensland would not have incurred but for their exceptionally poor economic management, judgement and irresponsible, irrational and biased decision making.