YOU don’t need to read tea leaves to know that it is highly likely that the owners of Hazelwood power station will announce its closure — this week, according to the Herald Sun. While the timing of an announcement has been anyone’s guess, the impact of Hazelwood’s closure shouldn’t be. To insist things will be business as usual is naive and reckless.
To start with, Hazelwood directly employs more than 800 people and, with contractors, there are potentially 1000 jobs at stake.
The Latrobe Valley already has an unemployment rate that is trending upwards. In June this year, when unemployment rates in Bendigo, Ballarat and Shepparton were falling below the national average, with some under 5 per cent, the Latrobe-Gippsland region’s unemployment rate was already at 9 per cent.
Then consider that the four Latrobe Valley power stations represent about 10 per cent of the Latrobe Valley’s employment base.
Power station jobs have a huge impact on the rest of the region’s economy. The Committee for Gippsland researched the link between small businesses and power stations in its Our Region Our Future report. There is a direct and sizeable link.
A local newsagent told me this week he sells about $2000 worth of newspapers to one power station each year. That’s before power station workers individually drop by his shop each morning to buy a newspaper, smokes … and the list goes on. That spending adds up to a $500 million shot into the arm of the Victorian economy every year.
A lot has been said about the impact of a closure on the electricity market and power prices, with attention sharpened in the wake of South Australia’s blackouts.
With the decline in Victoria’s manufacturing industry, there is less demand in the market at the moment, which means security of supply concerns are not as high as they might have been a couple of years ago. That said, there will be an impact on prices. As Danny Price from Frontier Economics says, the mistake people make when assessing the impact of Hazelwood’s closure is they say there will be enough electricity generation to meet the demand … but you are effectively taking out a major competitor from the market.
A Hazelwood closure would constrict supply and make the remaining three Latrobe Valley power stations — where Victoria will still look to for the majority of its baseload electricity for decades to come — more viable.
Therein lies the conflict. Yes, we need to lower carbon emissions. That needs to be done in the most efficient manner possible. Technology has to come before ideology and governments should focus on fuel and technology neutral responses to this challenge. Carbon capture and storage offers one important part of the answer.
The Intergovernmental Panel on Climate Change says it will be 138 per cent more expensive to meet the Paris climate conference agreements without the use of CCS. But there are plenty of activist groups shouting it down because it uses coal, albeit in a more efficient way. It is a self-defeating argument for these groups that risks further jobs.
A power station closure shouldn’t be used as a Trojan horse to leave the Latrobe Valley’s 500 years worth of coal resource stranded beneath the earth. Aside from electricity generation, there are hundreds of jobs and millions of dollars in revenue for Gippsland through projects such as coal to hydrogen for electricity fuelled cars, or import replacement coal to fertiliser that will go straight to Australian farms.
Gippsland and the Latrobe Valley can’t afford to have job and investment opportunities ripped away by ideological activists who have no regard for the region beyond their own closure crusade.
If there is an imminent closure in the wings, Gippsland needs the Victorian and Federal governments to work as partners with the region. Gippslanders will have a low tolerance for any whiff of politics in this process.
There will need to be a transitional strategy led by state and federal government. One of its priorities has to be an immediate pipeline of infrastructure projects. That serves two purposes. One, as a buffer for the immediate job losses in the construction of these projects and two, to fast-track the development of other industries Gippsland thrives at, whether that be in education, transport or healthcare.
Despite challenges, Gippsland has world-class industries in manufacturing, agribusiness and resources. Victoria needs them for its own success.
Country Australia has battled through bushfires and floods. But Gippsland has been asked to see off bushfires, floods as well as restructure and recession.
The Latrobe Valley has a community of resilient, can-do people. Victoria needs to be invested in their future. The rest of the state will need this region fighting fit for the long run.