Institute challenges claims of regional benefits from CSG

Beef Central, 17/02/2012

An independent policy ‘think tank’ has challenged gas company Santos’ claims that coal seam gas will deliver a once-in-a-generation economic opportunity for regional New South Wales.

Santos recently commissioned the Allen Consulting Group to study the economic impacts of developing Coal Seam Gas in North West NSW.

Santos vice president Eastern Australia, James Baulderstone, said the report showed that allowing the natural gas industry to develop in NSW would deliver “once-in-a generation economic opportunities for the state, especially in regional areas.”

Expected benefits quoted in the report included an increase in Northwest NSW’s gross regional product by $470m per year, increase in state regional product of $821m, the creation of approximately 2900 ongoing full-time positions and an additional five gigalitres (5000 megalitres) of treated water from coal seams which would boost total agricultural production in the region by nearly 1pc per annum.

However, after analysing the report The Australia Institute has challenged Santos’ claims.

It says that on the contrary, the economic modelling shows that the benefits to the local economy will be quite small, and the major beneficiaries will be the owners of Santos who predominantly reside outside the development area.

The Institute said the Allen report was based on a number of “systematically generous assumptions” and concealed more about proposed CSG developments than it revealed.

It said the modelling showed that only 30 new gas jobs would be created in the operational phase of the development, and 570 new public sector jobs would be created.

Nor did the report provide discussion to explain how the relatively small number of actual gas jobs would create nearly $1 billion in additional economic activity for NSW, the institute said.

Its interpretation of the modelling results and the likelihood that most gas would be used for export suggested that the developments would ‘crowd out’ $646 million in other exports by driving the value of the Australian dollar higher. This in turn would cause the loss of 5770 jobs in the non-mining industries.

“Whereas proponents of other large developments such as the China First coal mine in Queensland, concede that their mine will lead to the loss of thousands of jobs in manufacturing, the Allen Report provides no clear discussion of the net macro-economic consequences of the development.”

In response Santos has accused the Australia Institute of ‘completely misrepresenting’ the employment creation data in the Allen Report, which it said was based on the Monash Multi-Region Forecasting model, which was widely used by Commonwealth and State Treasuries and the Garnaut review.

Santos said the company was already employing more than 80 people across NSW, and 1800 people across its entire Santos GLNG project. In the past three months alone it had recruited 230 employees and had another 230 positions on offer. 

To view the Allen Report commissioned by Santos click here

To view the Australia Insitute Report analysis of the Allen Report click here


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