An analysis of the economic impacts of the China First mine

by Richard Denniss

The proposal by Waratah Coal to build one of the world’s largest coal mines which will transport its coal through the Great Barrier Reef, in the middle of a mining boom, and at a time when the world is attempting to reduce greenhouse gasses has obviously not been without some controversy.

However, despite the obvious social and environmental costs associated with such a mine being approved the widespread notion in some circles is that the economic benefits of the mine are so large that the costs are worth incurring.

This paper argues that while the profits flowing to the owners of this mine, which is rather accurately known as the ‘China First Project’, will be substantial, the net economic benefits to Australia will, at best, be small. Indeed, this paper highlights that even the mine’s proponents concede that there will be substantial economic costs for significant parts of the broader economy. Indeed, according to the Economic Impact Statement commissioned by Waratah Coal to help make the case for the China First mine the consequences of the mine’s approval for the broader economy include:

• 3,000 jobs will be lost across Queensland and Australia, particularly in manufacturing, agriculture and tourism.

• $1,249.4 million of manufacturing activity will be lost.

• Inflation will rise.

• Small and medium sized businesses will be hit with higher bills for payroll and rent. This will result in some of them shutting down.

• Housing affordability will decline for those who are not employed in the new mine.

• Wealth will become less evenly distributed, with most of the benefits accruing to those employed in the China First mine.

While some may argue that such claims are predictable coming from the opponents of the development of the world’s largest coal mine, few could fail to be surprised to learn that these are the claims being made by the mine proponents themselves. That is, as the following sections make clear, the AEC Group, the economic consultants commissioned by the proponents of the China First mine, provide evidence to support all of the claims made above.

While Queensland Premier Anna Bligh has described the proposed mine as a ‘shot in the arm’ for the Queensland economy, the proponent’s own economic modelling suggests that it might be more like a ‘shot in the head’ for the broader Queensland economy.

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