Yesterday, the French owners, ENGIE, announced they would be closing the Hazelwood brown coal power station in the Latrobe Valley, Victoria. Press announcements immediately focussed on job losses, the plight of the workers and possible future electricity price increases. But environmentalists – and hopefully the society – have been hoping and praying for this closure for YEARS! This is EXACTLY the type of jobs we want to lose, the type of industry we want to lose. This is a wonderful good news story. Let me explain.
From an environmental perspective, Hazelwood is the most emissions-intensive power plant in Victoria and I’m reliably informed, one of the worst in the whole world. Closing it has an immediate – positive – effect on carbon emissions, for the same power output. From a country perspective, as we seek to get to 100% (yes, 100%) renewable energy, plants like Hazelwood are dinosaurs and NEED to be closed down, sooner rather than later, to force us to focus on the future, which is renewables.
From a business perspective, the plant has been in run down phase for some time. A 2014 bushfire caused part of the plant to catch fire and the town of Morwell was engulfed in smoke for weeks, with significant respiratory problems. A class action for health issues from this fire was investigated, but did not proceed.
From an industry perspective, Hazelwood contributes 4% of Australia’s total electricity generation, but Australia has several more efficient generators which are underutlilised. And it has been clear for years that Hazelwood would close in the foreseeable future. This is not a major surprise, except the timing is quicker than might have been expected.
From an employment perspective, despite the headline ‘1,000 people’ in the Financial Review, Hazelwood actually employs around 450 people, with 300 contractors. Anyway, ENGIE has announced it will need around 250 people to close down and rehabilitate the site, this work running into the mid-2020s, so it seems only a net 200 people will lose their jobs…and they are said to be getting an AVERAGE of $330,000! Nice pay if you can get it!
From a contractor perspective, if you become a contractor you get higher pay, but have higher risk. Given the choice, most people are happy to take the contractor pay and the risk. In this case, the ultimate risk of loss of contract has occurred. But how many contractors are working 100% at ENGIE? The definition of a contractor for Australian tax purposes requires the person to have no more than 80% of their income from one source, so these contractors should have some other income sources.
From a timing perspective, the closure of Hazelwood has been speculated on for YEARS. People have had plenty of time to think about their options. Some/many will have already moved or changed jobs.
From a city perspective, BHP closed much larger steel mills in Woollongong and Newcastle and these cities managed to reinvent themselves, in the face of their single, very major employer closing. Geelong has done the same, losing Alcoa, Shell, Ford and International Harvester. Morwell should be able to evolve. Its community needs to be very proactive, but there ARE choices. In addition, the State government is providing $260m to the area for infrastructure, business incentives and worker support. Even the Federal government is supplying $43m. That’s more than $1m per job lost! I might just go and live there for the money!
Summary: This is Great News for the Country!
This is a wonderful example of media doom and gloom. Instead of reporting the great news of the closure of the most carbon-emissions intensive electricity generator in the country, we are fed the story of loss of some jobs that we knew were doomed anyway. Further, the number is exaggerated to make the negative story seem bigger. Of course we all feel sorry for people losing their jobs. But most working people these days have lost a job once or more and have experienced the need to reinvent ourselves. And very few of us received $300,000, government-paid counselling and more for something that should have been seen coming.