06/02/2022

(AU RMIT ABC Fact Check) Angus Taylor Says The Carbon Tax Destroyed One In Eight Manufacturing Jobs. Is He Correct?

RMIT ABC Fact Check - Principal researcher: David Campbell

Minister for Industry, Energy and Emissions Reduction Angus Taylor says one in eight manufacturing jobs were destroyed when the carbon tax was introduced. (ABC News: Ian Cutmore)
The claim

As climate change shapes up as an election battleground, the Coalition has accused Labor of trashing the economy when last in government with its 2012 climate policy, the carbon tax.

Minister for Industry, Energy and Emissions Reduction Angus Taylor has led the charge, claiming that the policy wiped out roughly 12 per cent of Australia's manufacturing workforce.

"When the carbon tax went into place in this country, one in eight manufacturing jobs was destroyed," Mr Taylor said during an October 2021 interview.

Is that correct? RMIT ABC Fact Check investigates.

The verdict

Mr Taylor is wrong.

When the carbon tax went into place, manufacturing employed 947,500 people. 

By the time of its repeal two years later, that number had shrunk by 32,300 (3.4 per cent), with one in 29 workers affected.

Manufacturing job losses also continued in the years after the carbon tax was scrapped, though not on the scale claimed by Mr Taylor.

Manufacturing jobs were declining in Australia long before Labor came to government. (ABC News: Caroline Winter)
By contrast, roughly one in eight (127,000) jobs were lost across roughly six years of Labor government — a period that includes nearly five years before the carbon tax was introduced. Importantly, experts told Fact Check that these job losses could not be solely attributed to Labor or the carbon tax. 

For one thing, they said, manufacturing as a share of total employment had been falling for decades.

Moreover, the downward trend would have been exacerbated during Labor's term by both declining investment in the sector and the global financial crisis.

Cause and effect?

The Coalition has several times linked the carbon tax to the destruction of manufacturing jobs.

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Referring to Labor, Mr Taylor told parliament in November 2021 that "one thing we can be sure of is that they're always going to love a carbon tax that destroys jobs".

"[W]hen those opposite were in power: one in eight manufacturing workers lost their jobs", he said.

"That was 128,000 Australians who lost their livelihoods. And, of that 128,000, 110,000 were apprentices. One in five apprentices lost their jobs, and that was a result that followed on from those opposite putting in place a carbon tax."

Similarly, Treasurer Josh Frydenberg claimed in December that the "last time [Labor] had a go at climate policy … we lost one in eight manufacturing jobs and Australians got the carbon tax".

What was the 'carbon tax'?

The "carbon tax" was Labor's short-lived carbon pricing mechanism, which reduced Australia's carbon footprint by forcing the nation's largest emitters to pay for their greenhouse gas emissions.

Introduced on July 1, 2012 under prime minister Julia Gillard, the scheme lasted just two years before it was abolished under Tony Abbott's new Coalition government. It ceased on June 30, 2014.

When the Coalition came to power in September 2013, Labor had been in government for nearly six years and the carbon tax in operation for 14 months. 

The available jobs data
Employment data from the ABS is a net figure which does not specify how many jobs were destroyed compared to how many were offset by job creation. (ABC News: Marco Catalano)
The Australian Bureau of Statistics publishes employment data by industry each quarter, with figures available for February, May, August and November.

As these dates do not align with the July 1 introduction of the carbon tax, and because November 2012 reflects the first full quarter of ABS data, Fact Check has taken August 2012 as the starting point. (Taking May 2012 as the starting point does not alter the outcome.)

Generally speaking, Fact Check prefers trend data published by the ABS and has used the most recent available.

However, as the bureau stopped publishing its trend series in February 2020, this analysis also refers to seasonally adjusted data. The most recent available when Mr Taylor made his claim covers the period to August 2021.

It’s worth noting that the data provides a snapshot of net employment. It does not show whether manufacturing jobs lost were offset by others that were created, or vice versa.

So, what happened to manufacturing jobs?

According to the trend data, manufacturing employed 947,500 people in August 2012.

Mr Taylor claimed the carbon tax cost one in eight of them their jobs (12.5 per cent).

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The data shows that by August 2014, when the carbon tax was repealed, the industry had lost 32,300 people, or one in 29 workers (3.4 per cent).

The decline continued after the scheme was scrapped, with the industry shedding a further 29,500 workers by November 2015 and taking the total fall to 6.5 per cent.

Employment has since risen and fallen several times. At no point in the trend series did manufacturing fall to more than 7.3 per cent from its level when the carbon tax went into place.

Equivalent to roughly one in 14 workers, that lowest point came in May 2019, five years after the pricing scheme was repealed.

And while the seasonally adjusted series shows larger falls, none took employment to 12.5 per cent below August 2012 levels, as Mr Taylor claimed.

Rather, the lowest point was in November 2020, when manufacturing jobs were 11.1 per cent below August 2012 levels.



Fact Check contacted Mr Taylor's office for the source of the claim but did not receive a response.

However, the trend data reveals that manufacturing jobs declined by 127,000 (12.1 per cent) across Labor's entire term, from just over one million in November 2007 to 922,000 in August 2013. 

This suggests Mr Taylor may have attributed every job lost across roughly six years of Labor to the carbon tax.

What the experts say

So, is Mr Taylor justified in attributing the net loss of manufacturing jobs to the carbon tax alone?

Jeff Borland, a labour economist at the University of Melbourne, said it was "a ridiculous statement" to say that all 128,000 jobs lost under Labor were due to the carbon tax.

Not only were many of these jobs lost before the pricing scheme was introduced, he said, but also manufacturing employment had been falling well before Labor was in government, with the industry's share of total employment declining steadily since the mid 1970s.

This was a long-run trend "driven by completely separate factors" such as automation and globalisation, Professor Borland explained.



On top of that, Labor's term straddled the global financial crisis, which would have hit manufacturing particularly hard.

"[I]f you actually look at the data on numbers of people employed, recessions or downturns are always a period when the destruction of manufacturing jobs seems to be concentrated", Professor Borland said.

Alan Duncan, director of Curtin University's Bankwest Curtin Economics Centre, told Fact Check that Mr Taylor's statement "doesn't pass scrutiny".

He supplied analysis showing that roughly 30,000 jobs were lost during the two years of the carbon tax, noting that "manufacturing jobs had been falling well before the carbon tax was introduced, with the initial decline driven by the global financial crisis in 2008 and 2009" and that investment in the industry had also fallen by nearly 40 per cent from the end of 2011 to mid 2014.

"The GFC and declining manufacturing investment are likely to have had a much larger effect on jobs in the manufacturing sector than the carbon tax," Professor Duncan said.



In an email to Fact Check, Frank Jotzo, director of the Australian National University's Centre for Climate and Energy Policy, said there was "no basis to ascribe any significant change in employment to the existence of the carbon price".

Moreover, he said it was "nonsensical to ascribe the entirety of employment changes during [2008 to 2013] to the carbon pricing mechanism that existed during [2012 to 2014]".

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