Econobabble

The golf course development proposal show Scanlons have been using what’s called “outsourced modelling” (using a case study from another development without any research into the feasibility of such a proposal in this specific context). In this case, they use an example of a golf course development on the North East coast of Tasmania (Barnbougle Dunes Golf Course) and in fact appear to be working closely with that venture’s developer, Greg Ramsay. The Hudson report included in the proposal says “Input – Output Tables for the Limestone Coast Region of South Australia have been sourced as a methodology for assessing the economic impacts”.

Our suspicion is that contrary to the developers’ claim of creating jobs and increasing tourism for the region, they actually only want to re-zone the land from ‘private’ to ‘residential development’ so as to make a fast buck.

We took our concerns to Richard Denniss, Chief Economist of The Australia Institute and author of Econobabble.

"Econobabble" book by Richard Denniss
“Econobabble” book by Richard Denniss

Econobabble is for those who, deep down, have never believed that it makes sense, economic or otherwise, to help poor people by slashing public spending on the services they need. It’s for those who have a sneaking suspicion that it would be cheaper to avoid the effects of climate change than to let them happen and then ‘adapt’. And it’s for those who think it would be more efficient to reduce unemployment than to ship jobs offshore or blame those who are out of work”.

The Australian Institute Responds

Here’s what Richard and his colleagues told us in response to the development proposal:

I have had a quick look at both the report and the economic ‘modelling’ which is nothing more than guesswork. You are right that this is all about property development and nothing about tourism. Have a look at the Hudson report – it’s pretty straight forward and a close reading will give you all the arguments you need – barely any economics required.

1) The assumption about a 2% increase in international tourism and 5% increase in domestic tourism is sheer guess work. The reference to a Tasmanian golf course is irrelevant – they make no case for why what happened in Tasmania would likely be relevant in SA.

2) They talk about the resort and ‘increased tourism promotion’ attracting visitors… who is paying for that? What would the benefits of the promotion of the region be?

3) The economics of the golf course are a joke – an estimated 25 rounds per day! That’s 7 groups of 4… you couldn’t pay for the greenkeepers or water.

4) A little bit of economics – the potential benefits to the region cannot be added to the existing size of the state economy. Most of the tourists are domestic which means extra holidays at the golf course mean less holidays on Kangaroo Island… the report makes no mention of this loss to other parts of the SA economy.

5) A little bit of economics – the use of ‘input output’ models such as the one used by Hudson has been widely criticized by the Treasury, the Productivity Commission and the Australian Bureau of Statistics for giving an exaggerated impression of the size of projects. The ABS describe the practice as biased and say specifically that these models are “Not applicable for small regions” (see The Use and Abuse of Economic Modelling) as it only ‘adds’ and never ‘subtracts’.

I hope that helps – your instincts are spot on – I would keep asking questions about how much of the $5 million ‘club house and accommodation’ will be spent on the club house and how much on apartments. What is the likely sale price of those?

You can hear more about the prevalence of econobabble from Richard Denniss and his team via their Follow the Money podcast.

So, you see, we were already concerned about the disruption to the environment by an unnecessary golf course and felt there were far better ways to increase employment and income to the region without causing harm to the area’s unique habitat. Now we’re convinced this is yet another greed-fuelled move toward personal profit that threatens the natural environment and abuses any trust it may have built with the local community.

It’s got to be stopped. Join our campaign and help us remind the Minister and the SA Governor, His Excellency the Honourable Hieu Van Le AC (who ultimately decides on the proposal) that destroying acres of Country on shonky data and the flimsy promise of a handful of jobs is bad enough, but lying to the community while doing it is shameful.