I woke up on the weekend to hear the ABC introduce a news a story declaring the mining industry had been the ‘backbone of the Queensland economy’. There was no substantiation of the claim. It wasn’t even presented as a claim, simply a fact to be asserted and nationally broadcast.
Even at the peak of the mining boom, the mining industry contributed about the same revenue to the Queensland state budget as car registration. In terms of employment, mining topped out at only 3% of the workforce. Health and community services employed three and half times as many people as mining.
In recent years, at the same time that the Queensland mining industry shed a quarter of its workforce, employment conditions improved in the sunshine state, with jobs growth hitting a seven-year record high, and unemployment now coming down.
And despite talk of Queensland as a mining state, as Saul Eslake pointed out at the Queensland Jobs Growth Summit, mining is not only a small employer in Queensland but also accounts for a smaller share of the state economy compared to Australia overall.
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Political debate in Australia is too often completely disconnected from the economic reality. Despite the fact that the health sector is the biggest employer in Australia, no prime minister has ever said that doctors and aged care workers are the “bedrock” or “backbone” of the Australian economy.
Yet services like health are driving jobs growth. In the two years to the end of 2015, as the Queensland mining industry shed 22,000 jobs, employment in health and community services increased by 43,000. It typifies the “economy in transition” that PM Malcolm Turnbull speaks so much about.
In fact, at the same time four other industries each created more jobs than were lost in mining: health, education, professional services and services related to tourism. All up, the net growth in all Queensland service industry jobs was six times as large as the jobs that the miners have lost in that period. And in the Commonwealth government projections, while mining continues to decline there is ongoing jobs growth, driven by services — along with construction and some parts of manufacturing.
Everyone who looks at the employment data ends up with the same story about where the new jobs are and will come from, John Quiggin said at the Jobs Growth Summit. Some leaders are now telling this story.
Opening the summit, Queensland Treasurer Curtis Pitt acknowledged that while mining jobs were declining, there was jobs growth and it was all about services, while Deputy Premier Jackie Trad, in her keynote, highlighted the growth and opportunities in knowledge industry jobs.
But too many politicians — and journalists — have trouble distinguishing the small workforce and changing fortunes of the mining industry from the prospects for the economy and jobs growth overall.
The public relations campaigns of the mining industry may offer some explanation for the political obsession with such a small employer. There appears to be an inverse relationship between the amount certain industries talk about the jobs they provide, plus their willingness to inflate the numbers, and the number of jobs they actually provide.
But I think the problems run deeper. Despite all of their talk about economic management and technological change, much of our political class is stuck in the 18th century worldview that the “export of things” is economically important and services are not. This idea — known as mercantilism, as it elevated the political significance of the merchants who once exported the things — has long been abandoned by economists.
Speaking in 2014, the former head of Treasury Dr Ken Henry both summarised and then dismissed the “mercantilist narrative” that underlies our political obsession with the “special” role of digging things up and selling them. In Henry’s words:
“The narrative goes like this: reforms that enhance productivity and cut costs, including labour costs, build international competitiveness; international competitiveness drives exports; exports drive growth; growth drives jobs; and jobs support living standards.
“This narrative is neither uniquely Australian nor modern. With its focus on exports as the foundation of living standards, it is strongly redolent of the mercantilism that Adam Smith set out to discredit in The Wealth of Nations published in 1776.
“All economists reject mercantilist nostrums. But most of those engaged in Australia’s economic reform program since 1983 demonstrated little aversion to harnessing mercantilist rhetoric in the pursuit of loftier goals.”
There are far more jobs in health, education and tourism than there are in mining. Indeed, nation-wide more people work in McDonald’s than work in coal mining. Australia has a diverse and modern economy, and Queensland is no different, with four in five jobs in services.
There is no economic reason that politicians should think that jobs in mining are “more important” than jobs in (or exports from) education or tourism.
But the problem with the outdated belief that mining jobs are “special”, or “real jobs”, while services aren’t is that politicians who believe it are responsible for crafting the policy settings. These settings will guide or impede the changes underway in the Australian economy right now, where coal — a small employer — recedes further and other industries provide the vast bulk of new jobs.
Even though the expansion of the mining industry is causing direct and indirect harm to Queensland’s greatest tourism asset, the Great Barrier Reef, politicians actually justify such short-sighted destruction on the basis that it is “good for the economy”.
Government policy settings and industry assistance can help provide the conditions for industries to increase employment, but the first much-needed step for governments making these decisions is to understand which industries are and will continue to be the real opportunities for jobs growth.