Mill may cost state jobs and $3.3bn

Matthew Denholm | August 23, 2007

THE Gunns pulp mill could destroy more jobs and wealth than it creates, a new economic analysis of the project suggests.
A report by local and national economists, prepared for a Tasmanian business roundtable and released last night, suggests the $2billion mill could cause a net economic loss to the state.
A group of businesses in the Tamar Valley, angered at the Tasmanian Government’s refusal to conduct a cost benefit study or risk analysis of the controversial project, commissioned their own.
Conducted by Wells Economic Analysis, headed by University of Tasmania economist Graeme Wells, and the Melbourne-based Economist@Large, it was presented to members of the state’s upper house last night.
Gunns’s analysis, conducted by Monash University, predicts the project will add $6.7billion, or 2.5per cent, to the Tasmanian economy and an additional $894million in extra tax revenue between 2008-2030.
Gunns projects 284 permanent jobs when the mill is operating and almost 700 direct jobs on average during construction.
The new report says Gunns has double-counted the tax benefits and failed to show $847.3million in subsidies to the project.
‘The proponents have only provided a benefit analysis to the Tasmanian economy — they have not factored in risks and costs,” it concludes.
It says these include the risk air emissions of fine particulates from the mill will add to local air pollution, exposing the local population to the danger of increased respiratory disease. It quantifies the extra cost to the health system at $350million.
The report estimates the cost to the economy of converting additional agricultural land to plantations to feed the mill with woodchips, including lost farming output, to be $403million.
Risks to the fishing industry from the mill’s daily release of 64,000tonnes of effluent into Bass Strait was quantified.
“As a medium risk scenario (it) could cost the industry $693.5million and 700 job losses over the (30-year) life of the project,” the report concludes.
Based on a survey of tourist businesses by the Tasmanian Tourism Industry Council, the economists said a medium-risk scenario of lost business resulting from the mill shows a loss of $1.1billion and 1044 jobs over 30 years. This was based on 34per cent of tourism businesses saying the mill would directly and negatively impact on their trade, and 58per cent saying Tasmania’s “clean, green” image would be damaged by the project.
The report found that the project could end up being a $3.3billion drain: “On a range of realistic scenarios, the pulp mill project may cause an economic loss to the state.”