New Resources Minister Josh Frydenberg hasn’t been shy since his appointment. Last week he was flagging that the government’s northern Australia loan fund could be used to prop up dodgy projects like the Carmichael coal mine. On the weekend, he was arguing that there was a “powerful moral case” for more coal mining.

Morality — or at least a twisted version of morality in which inflicting massive economic damage on coming generations is good — might be all that coal has currently, with Goldman Sachs declaring that new investment was no longer needed in the industry because demand had peaked.

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Better yet, today Frydenberg was wandering outside his portfolio — specifically, into that of his colleague Michaelia Cash, who has inherited Employment from the now-dispensed with Eric Abetz. Frydenberg told the Australian Financial Review:

“In the resources sector it costs 50 per cent more in Australia to have an energy project than if you were to have one on the US Gulf Coast … Malcolm Turnbull is absolutely right to point to industrial relations as one area where it does cost business and ultimately it does cost jobs.”

And Sunday penalty rates “need to be looked at”, he continued, reflecting the Productivity Commission’s draft recommendation that they be lowered to Saturday levels. So Frydenberg is happy to cherry-pick the PC recommendations, ignoring its overall finding that the IR system is flexible and that its capacity to offset weaker employment growth with lower wages had been important in cushioning the economy against shocks — which the Reserve Bank has also noted.

As for penalty rates that apparently “cost jobs”, a look at the recent Australian Bureau of Statistics data on industry employment suggests a peculiar fact. Employment in the sector most affected by penalty rates, food and beverage services, has been growing strongly in recent years: between the August quarter of 2010 and the August quarter this year, total employment has grown more than 13%. And the sub-sector you would expect to be most affected by penalty rates, part-time employment, has also grown over 13%. In comparison, the total employment market has grown by 6% in the same period. Growing at the twice the speed of the overall economy, or costing jobs — you be the judge.

As for that claim about resources sector projects costing 50% more than ones in the US — Crikey readers have encountered it before. In 2012, we took apart an appalling piece of nonsense from the Business Council called Pipeline or Pipedream, which contained a spurious comparison of construction costs in Australia and in southern parts of the US. The comparison, we learnt, reflected currency differences (the dollar was above parity with the US dollar in 2012; it’s now around US$0.70), the huge size of the US construction industry — just one state, Texas, employs the equivalent of more than half the entire Australian construction industry — and the fact that the Gulf Coast construction industry relies heavily on illegal Mexican immigrants for labour, with the consequence that it has a vastly higher workplace fatality rate than Australia.

Undeterred, the BCA relied on the comparison for another report, Securing Investment in Australia’s Future in 2013, where the claims that Australian projects cost 50% more than Gulf Coast projects were made with no reference to the many problems of the comparison, beyond an admission “some significant factors are beyond the influence of policy or business actions. Chief amongst these is the remote location of many resource projects as well as the appreciation of the Australian dollar against other currencies.”

Perhaps Frydenberg thinks there’s a “powerful moral case” for having US-style industrial relations laws and a massive supply of illegal immigrants to help prop up an ailing resources sector.

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Peter Fray
Peter Fray
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