Carbon price vs privatisation — what's worse for the Latrobe?

A key report commissioned by the federal and Victorian governments into the future of the Latrobe Valley has found that, regardless of the impacts of a carbon price, the region faces long-term structural challenges across its key big-employing growth sectors such as health care and agriculture.

That should have been the lead for media reports on a new report released yesterday into the restructuring of the Latrobe Valley region. AAP, in a piece run in the Herald Sun under the headline “Call for action on Vic's Latrobe Valley” got it pretty right. The Australian had, shall we say, a different take.

“Carbon tax ‘a threat to power jobs', says report” screamed the headline. “Deep uncertainty among the Latrobe Valley power generators and potential sweeping cuts to the local economy and employment have been sheeted home to the new carbon pricing regime,” began John Ferguson's article. On and on it went about the impact of a carbon price on power generation jobs.

The few people who will bother to read the report will find Ferguson's article bears minimal relationship to it. For a start, the report makes the interesting point that electricity and coal mining, even combined, are only the sixth-biggest employer in the region. Health, retail, agriculture, construction and education all employ significantly more people in the region than coal and electricity, although that sector is just ahead of health care as the largest sector by output.

And the impact of the carbon price? “The introduction of a national carbon price will drive substantial change in the Latrobe Valley's economy over the next decade and beyond,” the report concludes. But the committee overseeing the report “believes that regardless of the short-term uncertainty associated with the introduction of the Commonwealth government's Clean Energy Future (CEF) policy including the Contract for Closure program, there will be major structural change in the Latrobe Valley's power generation sector over the next decade and beyond.” It also notes that the region is still recovering from the Kennett government's privatisation.

But wait – still recovering? How could that be? We'll be coming up to 20 years since privatisation. Well, see, the impact of privatisation in the Latrobe Valley was massive.

According to another report cited by the committee from 2011, employment in the utilities sector in the region fell from more than 8000 jobs in 1986 to less than 1800 in 2001. Full-time employment fell 9 per cent in the region between 1994 and 2001. The current number of electricity sector employees in the Latrobe Valley is 1570, with another 1000 contractors. Even if a carbon price were to wipe out the entire electricity sector in the region in one go, it would have much less than half the impact of Jeff Kennett's privatisation.

Which, needless to say, failed to attract such widespread concern about job losses among commentators.

The report recommends that, in order to ensure workers displaced by structural change, including the carbon price and possible closure of a generation facility, can move into growth sectors such as health and agriculture, skills and training should be a priority. As well, infrastructure investment should be better co-ordinated, private sector investment should be facilitated and the region's “liveability” should be targeted.

For anyone who's read regional development reports before, there's very little that's new. The Latrobe Valley is in the fortunate position of having growth industries already present – a lot of regional communities have to work out ways to lure growth industries into the area – which means the challenge is primarily of reskilling its workforce and ensuring investment continues to flow into the area. But let's not allow any of that to sully a good anti-carbon price yarn.