Monday, January 31, 2011

Jobs at a Gunns joint foreign owned Pulp Mill? - Judge for yourself.

UTAS economics professor Graeme Wells recently wrote ......" I would argue that, in terms of the RPDC guidelines for economic analysis the case – that Gunns’ proposal is in the best interests of Tasmanians – has never been made.2 Particularly in the present context, it is worth remembering that one of the RPDC requirements was that there should be an examination of ‘any government supplied benefits that have or will be supplied to the proponent to make the project viable or reduce its risk exposure’. Before the RPDC process was scuttled in 2007 a number of analysts, including Naomi Edwards3 and me, warned of the risk to taxpayers arising from the fragility of Gunns’ financial model. Apart from the need for ongoing subsidies we pointed out that, in the Tasmanian political environment, the pulp mill would be ‘too big to fail’ and that, one way or another, taxpayers would be left carrying the can if the real world price of pulp continued its long-term downward trend and/or the Australian dollar continued to appreciate.
Gunns’ economic consultants would have none of that sort of talk.
In his expert witness statement to the RPDC, Gunns’ consultant Jon Stanford said:
...‘A number of submissions focus on the supposed financial risks of the pulp mill. My response to this is that it is difficult to see why this is anything other than a matter for Gunns and the company’s financiers. There is no obvious reason why government or the community generally has a legitimate interest in the projected rates of return of major industrial projects. Obviously if the mill does not go ahead because of financial risks, or if it goes ahead and fails, then the projected economic benefits will not eventuate. I have undertaken a large number of economic impact studies of major investment projects and I have never included an analysis of project risks when evaluating and reporting the economic outcomes.‘

and from Mike Cassidy's pulp mill jobs expose......."Pulp mills overseas might provide some guide as to real employment figures for locals. In Brazil, the fully functioning $1.5billion Veracel pulp mill is reported to “employ only 741 people in its factory and plantations. The workers at Veracel are highly qualified. No less than 42% … have university degrees” [19]. The local Brazilian people who generally have fewer qualifications are complaining bitterly that these jobs do not benefit people from the region. There is no evidence to say that the situation in Tasmania will be any different from Brazil. So far, the tally of direct jobs for Tasmanians is fewer than 500 for two and half years in construction, plus a possible 234 in operations for the 24-year life of the project. See Figure 2, number of direct Tasmanian jobs (shaded) and overseas and interstate jobs in construction and operation of the proposed pulp mill. This looks a lot less than the many thousands spruiked by former Minister Tony Burke and Gunns’ media spokesman Matt Horan.
Job losses from existing industries displaced by the pulp mill
The pulp mill will ‘crowd out’ existing Tasmanian businesses and quash potential developments according to Wells Economic Analysis [20]. It locks the State into an undifferentiated bulk commodity market at the expense of businesses based on scarce, unique and distinctive attributes of Tasmania"........

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