Kevin Bloody Wilson interprets the response to our submission
In December 2011 we made a submission on the economic assessment of the Kevin’s Corner coal project in Queensland. We pointed out that:
- No cost benefit analysis (CBA) had been undertaken
- Input-output analysis is not an appropriate methodology for decision making
- The input-output analysis undertaken had serious flaws
Almost a year later we have had a response to our submission, which, thanks to its brevity, can be reproduced here in its entirety:
The Economic Impact Study and assessment provided in Section 23 and Appendix V of the EIS comply with the Terms of Reference for the Kevin’s Corner Coal Project as determined by the Coordinator General. The Terms of Reference for the Kevin’s Corner Coal Project does not require a cost benefit analysis be undertaken at this point of the Project. [The proponents Hancock Galilee Pty Ltd] consider the level of assessment meets the requirements of the prescribed Terms of Reference for the Project and provides enough information for an appropriate economic assessment to be undertaken. (p155)
The terms of reference (ToR) don’t specifically require CBA, but certainly doesn’t preclude it:
The analysis should describe both the potential and direct economic impacts including estimated costs, if material on industry and the community. (p51)
How do you know if a cost (or benefit) is material if you haven’t quantified it?
It is disappointing that the ToR didn’t require CBA and allowed input-output analysis, given the Queensland Dpt Infrastructure and Planning’s Project Assurance Framework states:
Purpose and nature of cost-benefit analysis
The primary method of economic evaluation of public sector policies and projects is cost- benefit analysis. Input-output methodology (or the use of multipliers) is not a preferred methodology for economic evaluations.
Cost-benefit analysis generally assesses the impact of a project on the economic welfare of the community, and is therefore a key element in any public sector [economic] analysis. (p18)
This is a perfect example of how economics is completely given the finger by planning processes, despite abundant advice on how it can be incorporated. Economic assessment of major projects in Queensland and beyond is routinely relegated to obscure appendices, conducted by proponent-commissioned consultants and subject to minimal scrutiny or ignored completely. Australian economists should be appalled by this. We certainly are. I think Kevin Bloody Wilson would be too.
Here is our submission to the Supplementary Environmental Impact Statement saying much the same thing.
