Australian mining industry scare tactics must not prevent introduction of windfall profits tax

The allegations are serious. Wilkie says a whistleblower provided him with documents that allegedly revealed coal companies in Australia were using "fraudulent" quality reports for their exports and paying bribes to overseas officials to keep the matter secret.

This level of alleged misconduct is shocking, but when it comes to the coal industry, they certainly have form.

The mining industry has a long and distinguished history of using dodgy economic modelling and outright lies to exaggerate its contribution to Australian employment and tax receipts.

This is the same industry that regularly claims it creates 'over 1 million jobs' when the ABS says it employs just a small fraction of that.

The latest doozy was courtesy of the Australian Resources and Energy Employer Association (AREEA) that claimed: "Australia's resources industry provides employment for over 1 million people." The number of actual mining jobs in Australia is 266,300, Australian Bureau of Statistics figures show. That's for the whole mining industry. Coal mining jobs sit closer to around 44,000. Oil and gas employs just 21,200.

It's no wonder people are losing faith in our democracy. We can't have a proper debate about policy on climate, tax or industrial relations when the mining industry keeps making outrageous claims like this.

In fact, the ABS was so concerned about the misuse of such job "multipliers" of the type used by the resources industry, it stopped publishing them, stating: "Their inherent shortcomings make them inappropriate for economic impact analysis. These shortcomings mean that (input-output) multipliers are likely to significantly overstate the impacts of projects or events."

But it's not just the ABS; the mining industry itself knows these numbers are dodgy. Once when asked in court if their use of employment multipliers "had a tendency, known to economists for a very, very long time, to overstate benefits" of the new mines they want to build, the mining industry's own economic expert responded: "Yes." This admission under oath is significant. Why? Because while it might be good business to lie in the media, lie in advertising scare campaigns, and lie to policy-makers - it's a crime to lie to a judge.

So why does the mining industry do it? Because they get away with it, and it works.

All industries interact with each other and economic models - when used cautiously - can help explain how. But there is nothing cautious about the way the mining industry uses multipliers to keep suggesting minor employers like the fossil fuel sector are, in fact, major employers. Except when they are under oath, of course.

The Australia Institute's Climate of the Nation report is the country's longest-running survey of public attitudes to climate change and it shows Australians regularly overestimate the jobs created by the fossil fuel industry, as well as how much it contributes to the Australian economy. Australians overestimate the size of coal mining employment by a factor of 33, and oil and gas industry employment by a factor of 58.

Put simply, that means thanks to the resources industry's best efforts, Australians have been misled into believing the oil and gas industry employs just under one in 10 workers across the economy. The reality is, if the Australian workforce was simplified to 100 people, oil and gas would not employ 10 of them, it would employ less than half of one person. It's the same when it comes to overestimating the contribution of the coal, gas and oil to GDP. The reality of the mining industry's contribution is miniscule compared to what most Australians have been led to believe.

Why does it matter? Because fake news harms our democracy. The fossil fuel industry has used dodgy economic modelling and exaggeration because it creates political power for them.

The mining industry is already threatening more big scare campaigns if it doesn't get its way. From attempting to avoid industrial relations reforms, to avoiding paying its fair share of taxes, the threat of a big scare campaign seems to always be just one public policy disagreement away.

They have now threatened to run a big scare campaign if the federal government does not rule out a windfall profits tax.

Now let's be clear, the gas industry, in particular, is raking in massive windfall profits, driven largely by Russia's war on Ukraine. Australia Institute research shows these windfall profits to be anywhere between $26 billion and $40 billion.

A windfall profits tax is an absolute economic no-brainer, most economists believe. In fact, the UK's conservative government imposed a windfall profits tax back in May to help fund cost-of-living support for UK households. It is expected to raise £5 billion (A$8.95 billion) in its first year.

With gas companies essentially profiteering from the war in Ukraine, it's past time for the Australian government to follow suit and implement a windfall profits tax of our own.

However, we can't have a proper democratic debate about tax reform in Australia if every time a reform idea is floated, Australians get bombarded with big industry scare campaigns. Fake news and dodgy modelling harm our democracy by saying any such reform would impact millions of jobs and irreparably damage GDP (spoiler alert: it won't).

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People can only make decisions with the information they are provided. That's why the resources industry loves fake news and fears a debate fuelled by facts.

So, before you fall victim to the next big mining scare campaign, it's worth keeping in mind the facts. The fact is the health, retail, professional services, construction and education sectors each employ over 1 million people. That's right - each. So that's over 5 million jobs across those sectors.

Next time you see an advert big noting mining's contribution to the Australian economy, remember it's just the industry having a tantrum. And like dealing with any bully, don't give them the satisfaction of giving in.