JobSlayer: gas giants grab $300million subsidy then axe 3000 workers

Mar 7, 2021

The Government touts gas as being a key plank of JobMaker, its Covid-19 recession recovery plan. To help “support jobs” the government has given the gas industry $300 million of taxpayers’ money in subsidies. In return, the industry has cut about 3000 workers, more than 10% of it workforce, in a boom production year. 

For months the Federal Government has been talking up its “gas-fired recovery”, a key plank of both its “JobMaker Plan” and Australia’s recovery from the Covid-19 recession.

“Gas will help re‑establish a strong economy as part of the Government’s JobMaker plan, making energy affordable for families and businesses and supporting jobs (emphasis added).”

So announced Prime Minister Scott Morrison’s press release on September 15, 2020.

To support this “gas-fired recovery”, taxpayers have shelled out about $300 million to the gas industry since October last year. This includes $52.8 million in the 2020 Federal Budget, a $50 million exploration subsidy to the gas industry in the Northern Territory, and $174 million to upgrade roads in the Northern Territory for use by fracking vehicles.

3000 workers lose jobs in $82bn boom year

And how has the gas industry repaid Australian taxpayers for this largesse? By cutting the jobs of some 3000 workers – or about 10.5% of its workforce, according to the Australian Bureau of Statistics (ABS) quarterly Labour Force statistics.

The ABS paper shows that on average the oil and gas industry employed about 3000 fewer workers in 2020 than it did in 2019.

The widespread job losses also occurred during a record year for gas production in Australia, with production in 2019-20 up by 10% from the previous year, and the value of production exceeding $82 billion.

The Australia Institute has just released a report “When the going get tough … the gas industry sacks workers”, which details the full extent of the job losses in the gas industry.

The report’s figures are backed up by media reports over that period detailing more than 2600 job cuts, most of which were announced by the companies themselves. Actual job losses are likely to been even higher as it is unlikely that all the job cuts have been reported.

These included job losses at all the key industry players, including Chevron (510 jobs cut, one-quarter of its workforce), Shell, Woodside (1200 jobs cut), Oil Search (one-quarter of its workforce), Origin (10% of the company’s integrated gas business), Santos, INPEX (465 jobs cut), and ExxonMobil (at least 150 jobs cut).

Job cuts after major faults found

Some job cuts occurred even after major faults were found at their facilities that should have prompted an increase in maintenance staff.

Chevron, for example, cut 410 jobs even after maintenance checks revealed serious faults in the gas processing equipment at the its Gorgon LNG export plant. The revelation prompted the Australian Manufacturing Workers Union to call for an immediate shutdown of the Gorgon plant.

As to the job cuts, AMWU secretary Steve McCartney said:

“At a time when all hands should be on deck to fix the catastrophic mess Chevron has made … it decides to sack workers. If anything it should be hiring more skilled local people.”

Woodside, the third largest LNG exporter in Australia and the largest Australian-based LNG export company, cut a massive 1,200 jobs. In March last year the Australian Workers Union reported that Woodside had cut 900 jobs from its Pluto LNG project and its Karratha gas plant “without a word of explanation or a dollar of compensation”.

The national secretary of the AWU, Daniel Walton, described Woodside’s treatment of its workers as “brutal and cold”, noting that:

“The nation of Australia has been spectacularly good to Woodside over recent years. You’d think it’s now time for Woodside to return just a little of the favour.

“Summarily sending hundreds of workers back to the airport without a word of explanation is just a woeful abdication of responsibility during this pandemic crisis. Woodside is being an appalling corporate citizen by refusing to lift a finger to help.”

Polls repeatedly show that the Australian public believes the fossil fuel industries employ far more workers than is the case. The Australia Institute’s Climate of the Nation survey last year found Australians overestimate employment in the gas industry by a factor of 40.

A tiny employer

The reality is that in good times or bad, the oil and gas industry is a tiny employer in Australia, employing just 0.2% of the workforce, or some 28,200 workers on average. Compare this with service sectors such as health care and education, which employ 14% and 9% of the workforce respectively.

However, the Federal Government appears to have fallen hook, line and sinker for the industry’s marketing spin.

Consider the November 2020 report by consultancy EY, commissioned by the gas industry lobby group APPEA. The report “Australia’s oil and gas industry: kickstarting recovery from COVID-19”  opens with the following claim:

“Australia’s oil and gas industry has helped weather the country from more damaging economic fallout from Covid-19 by supporting jobs, preserving energy security and delivering steady export income.”

The report provides no data on how many people are employed by the oil and gas industry or how employment numbers have changed during the pandemic.

The EY report goes on to describe Australia’s oil and gas businesses as being “remarkably resilient”, and “prime movers” that had “helped limit the ongoing economic damage to the country”.

But as the evidence above shows, far from helping Australia “weather the economic fallout” of the pandemic, the oil and gas industry has sacked workers at a rate far greater than the rest of the economy.

If all industries had cut their workforce at the same rate as the oil and gas industry, Australia would have an additional 1.3 million unemployed workers and 15 per cent unemployment.

It is a waste of taxpayers’ money for the Federal Government to subsidise this industry as a way to create jobs.

As the report notes:

“These initiatives represent a transfer of wealth from Australian taxpayers to multinational oil and gas giants who provide few benefits to Australians. Supporting virtually any other industry would be a more effective way to create jobs.”

The full report is available here.

Mark Ogge is principal advisor at independent think-tank the Australia Institute. @MarkOgge

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