Unconventional gas developments can crowd-out existing industries and negatively impact on existing land users such as farmers and tourism operators. This can lead to downturns in those industries and result in local job losses. The new jobs the fracking industry can bring should't come at the expense of existing jobs. Farming and tourism can't easily resume in areas after the last profitable gigajoule of gas has been extracted, fracking operations have ceased and the companies have gone.
Fracking also brings other risks to communities that are directly affected by their operations. The costs to communities include:
- infrastructure and services shortages as residents compete with company employees and FIFO workers for existing community assets
- cost of living and affordability impacts as the cost of food and basic services rise to meet demand; housing shortages increase rents and house prices to unsustainable levels forcing out some locals; and the value of properties closest to gas developments diminish
- pressures on existing businesses as skilled and experienced employees are lost to higher paying gas company jobs
- the social pressures associated with an influx of a temporary FIFO workforce
The longer-term costs to the wider Tasmanian community raise questions about:
- the rise in public health costs, the true nature of which many not become truly apparent for years
- the potential productivity cost of work days lost due to sickness and ill-health among families living near gasfields
- the additional costs to taxpayers and ratepayers for road and bridge maintenance and repair
- the additional costs of providing adequate policing and other emergency services, especially in rural areas
- the additional cost burden of regulating the industry; carrying out routine water, air and soil quality monitoring and testing; and the costs of pursuing and prosecuting breaches
- the insurability of fracking companies and the adequacy of security bonds in the event of a further downturn in world oil prices or the fortunes of individual oil and gas companies; and their ability to 'make good' and permanently cap and abandon depleted wells
In Tasmania, our prosperity is inextricably linked to our ability to produce high-quality, safe, clean produce. Our branding as clean and green grants us access to high-end export markets for our produce.
There are numerous large and small specialist enterprises that springboard their brand off Tasmania's clean, green reputation. Some major companies, such as James Boag (from the pure waters of Tasmania) and Cascades (fresh mountain water used to make fine ales and beers) have based their advertising and marketing campaigns around Tasmania's fresh, clean image. Seafood businesses such as salmon and oyster farmers market their catch as premium product from "the most pristine waters in all of the world".
Submissions to the government's Review of Fracking from established businesses operating in Tasmania highlighted the devastation fracking would wreak on their operations.
- Truffles of Tasmania and Houston's Farm said it would make their business unviable overnight
- Weston Farm's submission raised concerns about contamination events and questioned the how toxic flowback waste would be dealt with
- Dairy Tas raised numerous concerns, ranging from increased competition for local labour to the implications for dairy farm food safety plans and the heightened risk of biosecurity breaches
- Wine Tasmania said fracking would adversely affect the Tasmanian wine brand
- TFGA, the representative body for member farmers and primary producers in the state, said fracking would affect the sector and harm farming communities
UTAS said that unconventional gas development would threaten the viability of the Greenhill Observatory in the Southern Midlands, and almost certainly void the University's investment. Tourism operations in the Midlands and other areas impacted by fracking would be legitimately entitled to question the effect a highly visible, industrial scale fracking operation would have on the long-term viability of their businesses.
Our pristine wilderness areas and our clean, green brand have helped to make our island a hugely popular tourist destination. Fracking jeopardises our tourism industry and the ability of our high-end producers to export to mainland and international markets. Our existing industries can't 'co-exist' with an invasive, toxic industry that will industrialise our farmlands - and the spectacular scenery that growing numbers of tourists put on their 'must see' list.
Instead of investing in local communities and training and qualifying locals for work on mining projects, fracking companies tend to drain skilled and experienced employees from local businesses. Labour is sourced from farms, mechanics from local garages and other existing businesses.
In its submission to the Government's Review on Fracking Dairy Tas has acknowledged that fracking could have an impact on dairy operators if they have to compete with the high wages paid to employees on - albeit temporary - gasfield jobs.
The Australian Institute's submission to the February 2015 Inquiry into Unconventional Gas (Fracking) reported on research carried out by the mining industry in Queensland's Darling Downs. The research found that:
- Local manufacturing and agricultural businesses in particular invest significant time and resources in training their staff, only to lose them to high wage mining positions
- Local businesses are forced train new staff, and to compete with the higher paying mining industry in both recruiting and retaining staff
- This cycle leads to significant disruption and increased costs for long-term local businesses, which are effectively paying for much of the training of resource industry employees
Instead of employing local residents, the jobs associated with the fracking boom are often outsourced to workers from other states. And local businesses could be even more disadvantaged: Those that deal in tourism or agriculture could have to contend with the risk of environmental disasters. Even if everything goes off without a hitch, consumers could be hesitant to purchase products grown near fracking sites.
In microeconomic theory, the opportunity cost of a choice to pursue a particular course, in this case fracking for shale gas in Tasmania, is the value of the alternatives that will be foregone by choosing fracking. First and foremost, as the International Energy Agency warns, the opportunity cost of the golden age of gas will slow the urgent need to change to renewable energy sources, which has dire implication for our climate.
At a local level, opportunity cost can be considered in terms of:
- The loss of investment from industries that don't want their company name, product or brand associated with a toxic industry like fracking
- The loss of long term sustainable industries and businesses that aren't compatible with fracking and are forced out
- The loss of new business creation and entrepreneurship from Tasmanians who don't initiate small business start-ups in their local areas
- The public services, programs and infrastructure foregone when government tax receipts and revenue is expended instead on rising health costs, regulatory costs, emergency services and law enforcement costs, road maintenance costs, etc