Seeing through the dust: Coal in the Hunter Valley economy

by Rod Campbell

The Hunter Valley produces and exports large volumes of coal. Supporters of the industry portray it as a ‘vital economic engine room’ and ‘the bedrock of the Hunter’s economy’. In contrast to coal proponents’ claims, however, economic profiles of the region emphasise that the Hunter has a diversified, modern economy, without any one dominant sector, and that the service sectors are the major employers.

The coal industry’s public statements invariably emphasise its apparent economic importance. Claims are usually made in absolute terms – tonnes of coal, numbers of jobs, total royalties paid and so on.  But when the industry is placed in context we see that:

  • Only five per cent of Hunter Valley jobs are in the coal industry – in other words, 95 per cent of Hunter workers do not work in the coal industry.
  • Only two per cent of NSW government revenue comes from coal royalties – the other 98 per cent comes from other sources.

The coal industry’s regular economic claims give the public an inflated impression of its importance. To investigate the difference between public perception and the reality of the industry’s role in the Hunter economy, The Australia Institute conducted a survey of 1,001 Hunter residents. Key results indicate that:

  • respondents think the coal industry employs four times more people than it does
  • respondents think coal royalties are ten times more important than they are
  • strong majorities of respondents answered that the coal industry has a negative effect on the Hunter’s:
    • air quality and health
    • water and bushland
    • other industries.

Even though survey respondents had a heavily inflated impression of the coal industry’s economic importance, only a minority – 37 per cent – felt that the industry’s economic contribution outweighed the other costs it imposed on the community. Eighty-three per cent of Hunter residents do not want to see the industry expand, while 41 per cent would like to see it decrease or be phased out.

A smaller coal industry would have only minor impacts on the future Hunter economy. According to economic modelling commissioned by Regional Development Australia – Hunter, long-term adverse conditions for the coal industry would have minimal effect on employment (zero to 1.2 per cent) and minor impacts on economic output (0.2 to four per cent).

The people of the Hunter Valley – and NSW decision makers – should realise that an ever-expanding coal industry is not essential to the economic future of the Hunter. Stopping the expansion of the Hunter coal industry and beginning to reduce its output levels will not cause widespread unemployment or problems for state finances – it would, in fact, be likely to improve air quality, health and environmental impacts and bring benefits for other industries.

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