An Economic Analysis of FRDC Investment in Workplace Health and Safety (Cluster 22)

Background

The health and safety of those working in the fishing industry (including wild catch, aquaculture and post-harvest sectors) is an important social sustainability indicator for the industry. Each State has an Occupational Health and Safety Act that can impose high penalties for failing to provide a safe place of work. In 2005/06, marine fishing had an incidence rate (workers compensation claims per 1000 employees) of 22.8, while aquaculture had an incidence rate of 37.6. These represented a decrease in the incidence rate of 16% and 44% respectively since 2000/01. However preliminary data for 2006/07 indicated that there had been a sharp increase in the marine fishing rate to 45.6, and that the aquaculture rate had declined slightly to 35.5.

There is no clear data available for the post-harvest sector (handling and processing). However, the incidence rate for the more widely defined food, beverage and tobacco manufacturing was 32.9 in 2007/08.

There are three projects in this cluster, each focusing on a very specific issue in the fishing industry. The first relates to the incidence of skin infections in western rock lobster fishermen, the second relates to diving practices in the pearl industry, and the third relates to occupational health and safety for the post-harvest seafood industry.

Lessons Learnt for Future Investment

There were two lessons leant from this analysis. Firstly, investments that result in improvements to the quality of life of individuals, through improved health and safety or reduced stress, can yield significant benefits due to the value placed on quality of life through willingness to pay studies.

Secondly, this cluster of investments did not directly relate to any of the rural R&D priorities, and part of the projects only related to one of the FRDC KPIs. Despite this, the projects were of great importance to their target industries and significant benefits have been demonstrated. In the case of the former there would appear to be a significant inconsistency in the Australian government’s stated R&D priorities as the government is placing pressure on RDCs to fund public goods research including social outcomes. In the case of the latter (FRDC challenges), the decision to fund these projects may have been taken prior to these priorities/KPIs being established. However, it is surprising that there was no challenge that fitted these investments as FRDC has always supported investment in social research.

Conclusions

Investment was made in a total of three projects within the cluster with the FRDC contribution approximating 61% of the total costs involved (nominal terms).

Both private and public benefits have been identified as arising from the investment. On the basis of the 11 benefits identified, and equal weighting for each benefit, it could be concluded that public benefits to Australia could make up 27% of the total benefits. Two benefits have been quantified, however there were a number of smaller benefits that were not quantified and the investment criteria estimated are probably an underestimate of the total benefits from the cluster.

Given the framework used and the assumptions made, the investment criteria estimated for the cluster were positive with the total investment of $0.75 million (present value terms) estimated to return an expected present value of benefits of $5.1 million, yielding an expected net present value estimate of $4.4 million and a benefit-cost ratio of 6.8 to 1 (expressed in 2008/09 $ terms and using a 5% discount rate; benefits estimated over 30 years from the final year of investment).