Because Adani’s Carmichael coal mine project is primarily seen as an issue about coal, climate inaction and the death of the Great Barrier Reef, the extraordinary nature of what governments are doing to encourage the project has received less attention than it should have.
It’s barely three years since the Abbott government virtually chased General Motors and Toyota out of Australia, because the age of entitlement was over. According to the Productivity Commission, we spent around $2 billion a year in tariffs and direct assistance supporting an industry that, in its last years, was employing around 40-50,000 people but which a few years earlier had employed up to 80,000.
Since then, the tide has swung dramatically back toward protectionism as state and federal governments have rushed to find local projects to lavish cash on — projects that make car manufacturing look like value for money.
The Queensland government is deferring around $320 million in royalties from Adani’s coal mine, in a royalty “holiday” to help the project along. To the extent that it enabled Adani to, bizarrely, declare that it had decided to go ahead — if it could find some more money — this worked. Despite the insistence of the Queensland government, Queensland taxpayers are unlikely to ever see that $320 million — why on earth would the corrupt, tax-dodging Adani ever pay a cent if all it needed to do was warn that the end of the royalty holiday would make the mine unviable and lead to job losses?
Politicians always find ways to tell themselves they’re not really engaging in protectionism. It’s always a “special case”. Or the industry just needs some initial assistance, but once it develops it will stand on its own two feet. Or there are “flow on benefits”. State governments are particularly good at devising ways to kid themselves, whether it’s long-term electricity subsidies for smelters, or paying millions to the grubby spivs of Formula 1 to stage a race on Melbourne, or give tax concessions to multinationals to base offices and plants locally. Annastacia Palaszczuk’s reassurance that the royalty holiday will end and Adani will stump up is just another version.
Losing $320 million to employ, by the company’s own admission, 1460 workers isn’t too bad an outcome — that’s around $220,000 per job in total — we used to spend around $10,000 a year on car workers. But that’s before you factor in the lazy billion from the aptly named NAIF that perpetually outraged resources minister Matt Canavan wants to throw at the rail line to get the coal from the middle of Queensland to a port — a handout that either is crucial to the project, or just a nice extra, depending on which day you ask Adani. That makes it around $900,000 a job. And that’s not counting assistance the Queensland government has already given to the company so far.
We’ve swapped the age of entitlement for the age of largesse, it seems.
Palaszczuk’s royalties holiday, however, gets the Carmichael problem off her back and puts it squarely on Malcolm Turnbull’s. Queensland is crucial to the next federal election — not to mention the small matter of the looming Queensland state election. Palaszczuk can tell Queensland voters that she’s bent over backwards for Adani; any failure from here will be down to the failure of the federal government to spend a billion dollars on concrete sleepers and (overpriced Australian) steel tracks.
It’s a policy race to the bottom that dodgy multinationals like Adani exploit to perfection. Dangle the prospect of jobs in front of electorally desperate politicians like Palaszczuk and Turnbull and they fall over themselves to deliver handouts. Taxpayers, meanwhile, lose out. But taxpayers have always lost out when it comes to protectionism in Australia. And these days, when it comes to the cost per subsidised job, they lose out far more than they used to.