The G7, woke corporates and the end of capitalism
The Spectator, 9 June 2021
The Bank of International Settlements, the G7 Finance Ministers and the Australian Securities and Investment Commission have amped up carbon emissions-based “climate risk” warnings to Australian firms. This represents a new triumphal procession of green activism through international business institutions.
Environmental crusaders’ colonisation of business is most evident in that nadir of wokeism, the annual Davos meetings, attended (remotely this year) by business leaders who pay up to £480,000 to listen to nagging strictures of figures like Greta Thunberg and Prince Charles.
ScoMo and Josh’s irrational exuberance
The Spectator, 1 June 2021
Last week the Australian Bureau of Statistics released figures showing new private capital expenditure rose 6.3 per cent in the March quarter.
Treasurer Josh Frydenberg told parliament, “Manufacturing investments had the biggest jump for 16 years. This is the product of our policies.”
Well, yes. There are lies, damned lies and statistics.
If the increase in manufacturing investment was to be welcomed, it also has to be recognised as a cherry on a paper maché ice cream. In aggregate terms, the value of new private investment in the March quarter 2021 was just one per cent above that of a year earlier.
Will we get mugged by the return of inflation?
The Spectator, 19 May 2021
The recent lift in the United States annual inflation rate to 4.2 per cent, the highest in ten years, has caused fears that the massive injection of money into the economy (33 per cent in the latest month) might now be igniting a general lift in prices. Below is the Consumer Price Index (in red) and money growth (in black). ....Read more ..... pdf
Enjoy the sugar hit as we flirt with economic ruin
The Australian, 17 May 2021
Economic growth requires political stability and secure property rights. Its drivers include low taxation, an educated, skilled workforce, and technological innovation. But the overwhelming influence for nations such as Australia is investment in business activities, roads and other infrastructure.
The budget papers note that Australia has weathered the COVID crisis better than other nations. Treasury maintains, “new business investment has picked up alongside Australia’s broader economic recovery, supported by government policy incentives implemented in response to the pandemic”. In fact, Australia actually shows a disturbing trend in the business investment component of GDP. .....Read more ..... pdf
Budget week is looming - as are electric shocks over power prices and reliability
The Spectator, 5 May 2021
Last month energy minister Angus Taylor cited analysis by the Australian Energy Market Operator showing falls in wholesale electricity to nine-year lows as “an outstanding result [that] demonstrates how effective the Government’s actions have been”. For example, he said, “In New South Wales, prices fell to $38/MWh, down from $86/MWh in the corresponding quarter in 2020”.
Self-serving distortion is unremarkable among politicians and the true situation is far less rosy. For a start, added to the wholesale price are other elements, one of which, environmental charges, has shown a rapid increase in recent years as a result of the subsidies that have fed wind and solar into the system. In NSW the environmental .....Read more ..... pdf
Higher prices, lower competitiveness as Daniel Andrews goes it alone on emissions
The Spectator, 3 May 2021
Victoria has announced its intent to go much further than the federal government in requiring the substitution of renewable energy for the much cheaper and more secure energy that is provided from its endless supplies of high-quality brown coal. Compared with the national policy of reducing emissions by 26 to 28% by 2030, Victoria is opting for a 45 to 50% reduction. Not only does this introduce another variation on what should be a national energy policy but it consigns Victoria to further losses of industrial competitiveness and households to higher energy costs.
Victoria’s intervention in the energy markets is long-standing. The state’s brown coal reserves have formed the basis for its electricity generation for 60 years. Gradually that generation became to be seen as a means of providing jobs and the union-controlled power .....Read more ..... pdf
Climate follies: more than half a billion new spending to keep Joe Biden off our backs
The Spectator, 22 April 2021
The Government is desperate to appear to be doing more in the run-up to Joe Biden’s Climate Summit for Thursday US time. While professing support for decarbonisation, the Prime Minister is looking to spend money in ways that do as little damage as possible to the economy.
Commendably, Scott Morrison has said Australia would not, “look to reduce our own emissions by shutting down our existing export industries like agriculture, aluminium, coal and gas”.
Per capita, Australia is already the world’s biggest spender on wind and solar, two expensive electricity sources that have negative value because, supported by subsidies, they drive out lower-cost coal and gas. Our subsidy-supported national spending on wind and solar is twice that of Japan and the US, three times that of Germany and .....Read more ..... pdf
Joe Biden’s bid to enforce climate club
The Australian, 22 April 2021
The urgency of the Biden administration in pursuing green policies signifies the prominence of the issue in terms of world diplomacy and domestic policies in the US, Australia and elsewhere.
Even though the long-planned UN Climate Change Conference will take place later this year in Glasgow, the Biden administration determined that it would call a two-day online conference, scheduled to begin on Thursday US time, addressing the issue of energy, climate change and the actions it deems necessary.
Big government is watching you
The Spectator, 16 April 2021
Sexual issues have come to dominate the news cycle. This week’s headlines have been dominated by Christine Holgate. Last week sexual harassment formally become a ground for dismissal in Australian workplaces, with both parliamentarians and judges subject to the Sex Discrimination Act, in measures unveiled by Scott Morrison and Attorney-General Michaelia Cash in response to Sexual Discrimination Commissioner, Kate Jenkins’ Respect@Work report on workplace sexual harassment.
Like walruses being driven off a Siberian cliff by a handful of polar bears, ministers in the Morrison government are scrambling to avoid femocratic attacks on real or imagined male bad behaviour.
Let us give thanks to politicians for correcting our failings
Catallaxy Files, 9 April 2021
Discovering and exterminating the hidden code in words is yet another reason why we lesser people need the wisdom and perspicuity of those we elect to Parliament. Politicians’ extraordinary intellects see the Big Picture and are able to garnish our incomes to correct our misconceptions.
Most of us will have seen ads like the one where a father watching his son competing in a team sport urges him to “stop playing like a girl!”. Some old geezer, castigates him by asking “what is wrong with playing like a girl”? While the father might simply have been urging his son to be more competitive, perhaps misunderstanding that girls on average are just as strong, run just as fast, and jump just a high as boys, he was .....Read more
EU strongarming Australia on CO2
Online Opinion, 1 April 2021
The EU has long sought to impose its carbon dioxide abatement policies on the rest of the world. A major setback to this was the Copenhagen climate summit in 2009 where Kevin Rudd sought to play a major role. Clearly operating under the EU Commission's strategy, the European Ambassador in Canberra Australia, Michael Pulch, has been making increasingly aggressive threats to Australian market access.
He now says we will face tariffs unless we further lift the penalties we place on the use of the low cost, high CO2 emitting coal that accounts for two-thirds of our electricity generation. In recent developments, the EU Parliament has lifted the bloc's emission reduction ambitions to 55 per cent below the 2005 level (Australia's remain at 26-28 percent ...Read more
Why we must beware American senescence
The Spectator, 1 April 2021
Sometime in the next five years, the Chinese economy will overtake that the United States. China’s workforce may already have peaked but still has surplus labour in the 25 per cent of people working in agriculture, a share that is likely to fall to under 5 per cent. Savings, the engine of growth, as a share of China’s GDP remain well in excess of 40 per cent – twice that of the US (and Australia).
By 2030, the Chinese economy, even if its growth rate falls to 5.5 per cent, will be 15 per cent greater than the US. The US will see its growth rate stagnate to below 1.5 per cent under a Democratic Administration seeking income redistribution, diversion of capital to unproductive venues like renewable energy, allocating vast sums to raise .....Read online ..... pdf
An Extended Romp Down the Green Garden Path
Quadrant, 24 March 2021
If you have ever wondered how green absurdities become articles of faith and public policy, look no further than the mainstream and specialist media, which has long ignored the maxim that if something seems too good to be true then it probably is. Case in point: the rise of Sanjeev Gupta and, just at the moment, the state of the “green steel” titan’s empire as it wobbles on the brink. For those who haven’t been following the story, the BBC has a very good primer on the Indian tycoon’s woes, albeit focusing almost exclusively on his UK operations.
Closer to home, those who look askance at the way woke world fantasies of cheap renewable energy are endorsed with taxpayer cash will know of Gupta from his much-lauded arrival in Whyalla, the .....Read online
Saving the Portland smelter: one problem solved, others created
Catallaxy Files, 20 March 2021
With its rescue package of a low-cost electricity supply for Victoria’s Portland aluminium smelter, the Commonwealth and Victorian governments have reprieved the smelter from a hangman’s scaffold that they themselves built.
The Portland aluminium smelter, along with Tomago (NSW), Boyne Island (Queensland) and Bell Bay (Tas), is among the nation’s highest value-adding manufacturing facilities. Aluminium smelting accounts for about 12 per cent of total electricity usage.
These facilities located to Australia during the 1980s in response to our dependable, coal-based electricity supply, which became .....Read online
Green Eurocrats threaten our industries
The Spectator, 17 March 2021
The EU has long sought to impose its carbon dioxide abatement policies on the rest of the world. A major setback to this was the Copenhagen climate summit in 2009 where Kevin Rudd sought to play a major role.
Clearly operating under the EU Commission’s strategy, the European Ambassador in Canberra Australia, Michael Pulch, has been making increasingly aggressive threats to Australian market access. He now says we will face tariffs unless we further lift the penalties we place on the use of the low cost, high CO2 emitting coal that accounts for two-thirds of our electricity generation.
Why did Cormann get the top job at the OECD? His track record shows he won’t upset woke globalists
The Spectator, 15 March 2021
Having gone to considerable lengths in lobbying for one of our very own, former finance minister Mathias Cormann, to become Secretary-General of the Paris based OECD, the Government — at least the international set – would be very pleased with itself.
Unfortunately, the OECD has long outlived its former fervour for economic rationalism: balanced budgets, low tariffs, and small government that leaves competitive free markets to be the essential supply force (with agriculture always an exception given the protectionism of its key European membership).
The Cormann factor
Catallaxy Files, 14 March 2021
The OECD in times gone by was the spearhead of economic reform promoting smaller government, free trade, dismantling of industry support (with agriculture always an exception given the protectionism of Europe and Japan).
In more recent times it has focussed on decarbonisation, gender issues (there is a “gender portal” and many lectures about how progress-on-gender-equality-is-too-slow). The OECD is also – probably always was – a proponent of Keynesian stimulus. The present Secretary General is the Mexican socialist José Ángel Gurría.
When Matthias Cormann threw his hat into the ring for the .....Read online
No upside for electricity customers in the early closure of coal generators
The Spectator, 10 March 2021
The announcement that EnergyAustralia’s Yallourn power station in Victoria is to close in 2028, two to four years earlier than had been expected, is an inevitable outcome of the subsidies that governments provide to wind and solar. Yallourn supplies one-fifth of Victoria’s electricity and about eight per cent of that in the National Electricity Market.
The rapid expansion of wind and solar – all of which is subsidised – has seen their market share lift from virtually nothing 20 years ago, to over 20 per cent. Because it is subsidised and receives payment even when (as is increasingly the case) wholesale prices are negative .....Read online .....pdf
If Craig Kelly wants to strike while the iron’s hot…
The Spectator, 28 February 2021
When he resigned from the Liberal Party last week, Craig Kelly signalled that he would be seeking to highlight the catastrophic consequences of failed energy dogmas. Indeed, he flagged that energy policy was the one area where he could well vote against the government.
Kelly will have his work cut out in assessing what to target among the $7 billion a year multitudinous subsidy schemes for renewables overseen by ministers more intent on placating green activism than restoring a low cost, reliable electricity supply and green activists actually controlling state government policy.
A warning on windpower from deep in the heart of Texas
The Spectator, 17 February 2021
Were the South Australian blackouts in 2016 precursors to those that have occurred in Texas during the past few days?
In both cases, an electricity system that has been force-fed with subsidised wind and solar suddenly failed. The total blackout that was seen in South Australia was more severe than the Texas failure but in both cases wind and solar played a prominent role. Those renewables normally account for 23 per cent of the electricity in Texas. This is somewhat less than in South Australia where wind/solar is half of supply but the inherent intermittency of wind in South Australia is cushioned by links to Victorian coal.
No, the climate wars aren’t over
The Spectator, 11 February 2021
For over a dozen years, shills in the media and among the subsidy-seekers have been declaring the ‘climate wars’ to be dead. Yet the disputes over policy involving reducing carbon dioxide emissions, having previously dethroned prime ministers Rudd, Gillard and Turnbull, continue to be central to Australian politics. Anthony Albanese has indicated, notwithstanding Jennie George warning about the ALP losing its worker constituency by getting too cosy with the greens, that he will embrace legislation for “net zero” emissions.
Pressure is on as developed world champions net zero
The Australian, 4 February 2021
Energy and greenhouse gas emissions are once again central to political turmoil in Australia.
The opposition has moved Mark Butler, its most active promoter of the “green revolution”, from climate change and energy policy control but offered no indication that its policy will change. Indeed, Butler’s replacement, Chris Bowen, has warned jobs will be decimated if the nation does not move away from carbon-intensive industries.
In expressing faith in renewable energy, such views portray a remarkable incuriosity about why all the world’s rapidly growing economies, including China, India and Vietnam, are using coal, not .....Read online .....pdf
Energy prices: the new fault line in politics
The Spectator, 28 January 2021
Energy has emerged as the clear new faultline in Australian politics. We see today Anthony Albanese is removing his fellow Left faction member Mark Butler from the environment portfolio in a bid to boost not just Labor’s electability, but his chances of survival. Yet the issue is not just a matter for the ALP.
The Nationals are saying they want to see 800,000 new manufacturing jobs in the next 15 years. This is less ambitious than at first sight but it would mean over a fifth of new jobs being created in the sector that has seen its share of jobs shrink from 15 to 7 per cent over the past 30 years.
ScoMo runs up the white flag on carbon
The Spectator, 25 January 2021
It was only at midday Friday The Spectator Australia asked Will Australia face carbon tariffs under the Biden regime? By that evening, the Prime Minister had pre-empted any trade war with an immediate surrender or, as his spin on the front page of The Weekend Australian put it, declaring that the “Politics of carbon has ended“.
The Biden Administration’s flurry of energy and carbon emission-related measures during its first day have had an immediate effect on Australian policy, with Scott Morrison declaring that political debate about reaching a carbon-neutral future is over.
Will Australia face carbon tariffs under the Biden regime?
The Spectator, 22 January 2021
Day 1 of the Biden Presidency saw the reversal of several of the Trump administration’s environmental policies, including tighter vehicle emissions standards, a moratorium on oil and natural gas leases in the Arctic National Wildlife Refuge and revoking the permit for expanding and re-routing the Keystone oil pipeline from Canada to the Gulf of Mexico. Biden also announced that the United States will re-join the Paris Climate Accord and has previously raised the possibility of a carbon tax.
These and other measures are likely to undermine the conditions that have given low electricity costs to many parts of the US and made the US an oil and gas net exporter for the first time in 60 years.
Why is so much big business leaning left – and what will it mean for jobs and growth?
The Sepctator, 18 January 2021
One of the truly remarkable developments over the past half-century is the reversal and the relative flows of electoral funding going to parties of the right and parties of the left.
Fifty years ago, parties of the right had a colossal advantage tempered only by support of the left by unions. In the recent United States election, the Democrats outraised and outspent the Republicans almost to two to one. Open Secrets adds, “Even when excluding the money spent by billionaire presidential candidates Michael Bloomberg and Tom Steyer, Democratic candidates and groups have spent $5.5 billion compared to Republicans’ $3.8 billion.” But that is also remarkable in so far as two billionaire candidates were seeking to represent the Democ .....Read more .....pdf
Yes, the energy system is broken – but because of ministers, bureaucrats and regulators rush to renewables
The Spectator, 7 January 2021
Kerry Schott, head of the Energy Security Board, the most senior of the dozen or so Australian regulatory bodies, is scolding state ministers for trying to “speed up” what she sees as an inevitable transition to renewable energy.
Schott’s focus on state interventions is a response to the new assertiveness of state government in providing renewable subsidies through power purchasing agreements with renewable suppliers and forcing vast increases in expenditure on transmission and on-grid management.
Doug Anthony, not the Hayseed of Popular Memory
Quadrant Online, 23 December 2020
For a period of nearly six months in 1979, as the Trade Department’s chief economist, I was seconded to become Deputy PM Doug Anthony’s Acting Principal Private Secretary. Nowadays the position is called Chief of Staff but in those far-off times ministerial staff were only one quarter as numerous as today. The job meant speech writing and providing briefings on other departments’ Cabinet submissions.
Anthony himself, though affecting the air of a hayseed, was well read and open to different ideas. He was appalled at the Whitlam Government’s policy excesses — though the extremism of some of those have been since surpassed by Coalition governments! Naturally, he shared none of the Whitlam government’s hostility to the mining industry which led it to micro-managing price negotiations, but it was not until the .....Read more
The state have hijacked power policy – and activists are coming for the sceptic’s seats
The Spectator, 17 December 2020
State governments have now taken control of electricity policy from the Commonwealth. Although state control potentially allows alternative approaches to be tested and compared, all states currently have similar policies. They are signing purchasing agreements with renewable suppliers and requiring customers to fund the associated transmission, batteries and pumped hydro, which is needed to shore up the intrinsically erratic supply that wind and solar generation entails. Energy Ministers Matt Kean in New South Wales and Lily D’Ambrosio in Victoria are now doubling down on the renewable energy-oriented policies pioneered by South Australia, policies that delivered crippling outcomes in terms of price and reliability.
Adding to our climate change woes, Garnauteconomics is back
Catallaxy Files, 11 December 2020
Now that they have assured themselves of a Biden victory, the forces profiting from Australian deindustrialisation – the woke and subsidy seekers – are rampant. The AFR has long benefitted from its renewable energy clients. Today it featured Garnauteconomics in urging we impose further burdens on the economy by intensifying the assault on modern energy.
Net zero emissions is the modern clarion call. Oblivious to this requiring a carbon tax of $190 per MWh tax according to the IEA estimated or $650 per MWh estimated in an NZ government analysis, Garnaut urges us to push ahead with new impositions, saying the
big risk to Australia is that it will be left isolated from its .....Read more
Subsidies drain power from the electricity market
The Australian, 2 December 2020
Last week’s virtual Climate and Energy Summit screened politicians, industry leaders and bureaucrats, many of whom have been responsible for destroying the world’s most competitive electricity industry. The sledgehammer has been subsidies through regulations and government spending, which are running at $7bn a year.
Speakers included US Democratic Party activist Audrey Zibelman, who came to Australia as a refugee from the 2016 Trump victory and is returning as a Google executive to help refill the Washington swamp. Zibelman heads the Australian Energy Market Operator, which she transformed into a policymaking body fostering increased renewable energy supplies by spending $17.4bn on new .....Read more .....pdf
Will a Biden win put pressure on our power prices – and more – with climate demands?
The Spectator, 18 November 2020
Australia will face much-increased pressure to increase its greenhouse gas emissions abatement if Joe Biden is inaugurated as president on 20 January next year; pressures that may even encourage us to redefine our economic and political relationships.
Biden’s “Climate 21 policies” is his blueprint to reorientate the economy towards the climate-change programs that are central to his political manifesto. Climate 21 would establish a National Climate Council to move the U.S. and global economy to a low-carbon trajectory. A Biden Administration will rejoin and revitalise the Paris Agreement and will publish a four-year Climate Ambition Agenda containing action plans for “greenhouse gas mitigation”.....Read more .....pdf
Joel Fitzgibbon’s departure shows the new fault line in Australian politics
The Spectator, 11 November 2020
Joel Fitzgibbon’s resignation as shadow minister for resources and agriculture and his departure to the Labor backbench is symptomatic of the new fault-line in politics.
Belief in catastrophic climate change activates policies for agriculture, energy, manufacturing, product standards, recycling and water – all the way to zoology. Irrespective of the absence of human-induced climate change and climate emergencies – bushfires, hurricanes, coral loss, heat waves etc – alarmists’ control over government institutions, the education establishment and the media has led many people to unquestioningly accept the imminence of harmful human-induced climate change. ..... Read more .....pdf
Joe Biden’s Green New Deal is a setback for jobs and income
The Australian, 11 November 2020
Last week’s was America’s most important election, but it also has profound implications for Australia. The Green New Deal is what most distinguishes the Democrats’ program from that of President Donald Trump.
As Jennifer Oriel has noted, Kamala Harris and Alexandra Ocasio-Cortez plan to use energy policy not only to fundamentally reshape the American economy but as a means of redistributing wealth and income to “low-income communities, indigenous peoples, and communities of colour”.
With the Green New Deal, the Democrats’ policy target is focused on zero net emissions of CO2. This means eliminating coal and gas and sharply winding back oil consumption. Nuclear power as an alternative has no place. .....Read more ..... Pdf
Has climate change replaced socialism as the dominant political divide?
Catallaxy Files, 11 November 2020
With the US Presidential election still undeclared and the ALP joining the Liberals in tearing itself apart on climate policies and support for renewables, I had two pieces published today.
The first in the Australian (ungated version here) observed how a Biden victory “will bring increased pressure on us to introduce more regulations, subsidies and other measures to reduce domestic emissions. One upshot, aside from higher household electricity bills, will be closure or contraction of Australian industries previously benefiting from low cost energy. A corollary is lower living standards.”
Subsidies Blowing in the Wind
Quadrant Online, 29 October 2020
Victoria Bitter, Bunnings and miner South32 have joined the banks in being the latest to proclaim their carbon free emissions, signalling a certainty, at least from firms’ PR departments, that the future belongs to renewables. Nations around the world – the latest being South Korea – are committing to carbon neutrality thirty years hence. The triumph of renewables was seemingly underlined by South Australia going from zero to hero. On Sunday 11 October, solar alone powered the whole state for an hour, apparently wiping away the dudgeon renewables incurred by causing a statewide blackout in September 2016.
With all the creativity involved in finding ways to avoid reporting Hunter Biden’s laptop contents, the righteous within the media ..... Read more
Read the report on the cost of climate policies and renewables:
How Daniel Andrews added another $400 million to the power bill
The Spectator, 16 October 2020
The Andrews Government is not telling us but it looks like they’ve lost the taxpayer some $400 million in long term power purchasing
contracts. Only a year ago they claimed they’d made a $285 million
profit on those same contracts.
Last November, Victoria’s Auditor–General’s Office waved through 15-
year contracts signed by the state’s Department of
Environment, Land, Water and Planning for renewable energy. The contracts were on a “contract-for difference” basis, under which a price is agreed and the supplier pays the difference to the government if the spot price is higher, while the government pays the difference to the supplier if it is lower. ..... Read more ..... pdf
National Water Week reveals a policy drought
The Spectator, 23 October 2020
This is National Water Week. Its theme is “Reimagining our Water Future”. Proclaiming water to be one of the seven priority areas for agriculture Minister David Littleproud says “In agriculture it’s a case of just add water”. In fact, water and infrastructure is the seventh priority behind “stewardship”, a euphemism for climate change. Stewardship “reforms will empower farmers to diversify their income and earn credits under the $2 billion Climate Solution Fund”. In other words, it offers farmers a chance to earn income by avoiding farming.
In an apparent consensus, both the actual and shadow minister for agriculture have endorsed a National Farmers Federation “Roadmap” to almost double agricultural output by 2030.
Budget 2020: Government keeps feeding poison to the power system
The Spectator, 10 October 2020
The budget allocated $8.7 million to assist the Vales Point generator in New South Wales in a $100 million upgrade that is now virtually complete. The funding is so conditional that it is unlikely to be used, yet the decision has sparked outrage from the wind and solar lobby — a lobby lubricated by $7 billion a year in subsidies, one thousand times that conditionally offered to Vales Point.
The subsidies to wind and solar come directly from the taxpayer and, indirectly, from regulations that force consumers unwittingly to accept growing proportions of high-cost wind and solar within their electricity supplies.
New wind and solar generation being built in spite of low prices
Catallaxy Files, 5 October 2020
Why, in spite of a glut, are new renewables still being built?
2020, like 2019, will see $9 billion spent on new (large scale) wind and solar generators. That is over 6 GW in each year (Hazelwood was 1.6 GW but could run for 90 per cent of the time, whereas wind runs at 33 per cent and solar less).
An apparent anomaly is that, though the Commonwealth’s Large-Scale Generation Certificate (LGC) subsidy for wind and grid-supplied solar continues to be paid to existing supplies, it is not abvailable for new supplies. It is capped at 33,000 GWh, a level which will be surpassed by supply reaching 40,000 GWh in 2021. New supplies can only get a Commonwealth subsidy by buying out existing facilities.
A Fool’s Bargain Trades Gold for Green
Quadrant Online, 28 September 2020
Australia’s green-ink profligacy is evident in great abundance in Energy Minister Angus Taylor’s First Low Emissions Technology Statement – 2020, grandly proclaiming “global leadership in low emissions technologies”. Masquerading as a technology fix to all our problems in ‘decarbonating’ the economy, it contained hand-outs from the Australian taxpayer for worthless returns. It:
offered funding for researchers into the ever-elusive modern Philosophers’ Stone, energy (and not the nuclear version) from hydrogen.
promised even more subsidies to capture and bury carbon dioxide from burning coal and gas.
said how essential it is to provide more funding for ..... Read more
Ms Zibelman Pulls the Plug
Quadrant Online, 3 October 2020
Audrey Zibelman, the American head of the Australian Energy Market Operator (AEMO), one of the electricity industry’s four national regulators, is to leave before her contract expires to join a Google startup. The other national agencies regulating the industry are the Australian Energy Regulator (AER), the Australian Electricity Market Commission (AEMC) and the Energy Security Board (ESB).
Zibelman’s announced departure was not accompanied by universal praise. One significant electricity industry player, Danny Price, the head of Frontier Economics, has long been dismissive of her understanding of how markets work best. Though not hostile to her stance in support of renewables, Price said, “I think it is time that we have a respected, competent Australian engineer running AEMO, not ..... Read more
Inside the federal by-election you may not have heard about
The Spectator, 25 September 2020
Due to the impending Queensland state election, there has been little discussion about the federal seat of Groom, which is now vacant following the resignation of John McVeigh. Centred on Toowoomba, Groom is a seat which the Coalition had a 70-30 two-party preference at the last election.
Matt Canavan is said to be mulling over the switch from the Senate and relocating his family 600 kilometres down the A3 from his home in Rockhampton. Though the candidate would be ‘Liberal National’, if he did contest the seat, he would be pressured to sit in the Liberal rather than the National Party room, though he could insist on a Nat filling his Senate vacancy.
Canavan is said to be unwilling to switch to the Liberals but doing so would suit his purposes if he is to make a future run at the prime ministership.
In this respect, Henri de Bourbon comes to mind. A Protestant, he was offered the French throne in 1593 conditional on him becoming a Catholic. “Paris is well worth a mass”, he allegedly said. Crowned King Henri IV a year later, ruling with “weapon in hand and arse in the saddle”, he oversaw a ..... Read more ..... pdf
Bludgeoning the electricity industry corpse: the government’s technology policy
Catallaxy Files, 23 September 2020
Compounding the further retreat from a rational energy policy that the government announced last week, this week the government announced the curiously titled ‘First Low Emissions Technology Statement’.
The statement flags further interventions in energy supply and elsewhere to reduce greenhouse gas emissions.
I have a critique of the policy proposals in the Spectator, The low emissions technology statement: a (hydrogen) bomb. Essentially, the Statement involves an $18 billion ten-year program of support for:
• R&D and energy funding, the highlight of which is funding hydrogen R&D, the “stretch” goal of which is get hydrogen at $2 per kilogram in order to displace fossil fuels; even if achievable this would price hydrogen at over $16 per gigajoule, three times the cost of the natural gas it is supposed to supplant!
• Measures, costing at least $15 billion, to ameliorate the adverse effects of high cost and unstable wind and solar, now comprising 15 per cent ,,,,, Read more
The low emissions technology statement: a (hydrogen) bomb
The Spectator, 23 September 2020
Matt Canavan’s lucid insights published in the Australian this week show how little understanding politicians and officials have of the electricity industry where supply must exactly equal demand and into which they have “force-fed” intrinsically unreliable, high cost renewables. This created a Frankenstein made more monstrous by every additional piece of tinkering.
Yesterday’s Low Emissions Technology statement and announcements last week show the government pursuing a further iteration of its tragic energy policy. It is sinking the industry deeper into a morass of central planning and control conditioned by carbon dioxide mitigation.
Angus Taylor now defines policy as resting on five pillars: clean hydrogen; energy storage; green steel and aluminium; Carbon Capture and Storage; and soil carbon projects. It is supported by $1.9 billion in new expenditure commitments.
All of these pillars can only exacerbate the migration of the electricity industry from the low-cost competitive energy which created present living standards. The new agenda maintains the ascendency of raucous climate activists and venal renewable energy subsidy seekers in replacing cheap .... Read more ..... pdf
This week’s big energy announcements? Just another nail in the coffin of low-cost power
The Spectator, 17 September 2020
The government’s energy policy announced this week is another milestone in the demise of what was once the world’s lowest-cost energy market. The slow fuse priming the bomb was lit in 2001, when Prime Minister John Howard Mandatory Renewable Energy Target (MRET) requiring electricity retailers to include two per cent of exotic renewables (wind and solar) into their electricity supply. This gave a 50 per cent subsidy – paid for by customers — to these renewables.
At that time renewables were confidently forecast to be fully competitive within a few years. Twenty years later wind and solar still require assistance to compete with fossil fuels and their further shortcomings of variable power supply have become more evident.
But policy augmentations from John Howard’s modest interventions mean wind and solar are now are responsible for over a fifth of demand. And the MRET subsidies remain in place, compounded by additional support in the form of assistance for transmission, grants and soft loans –- in all, the equivalent to $13 billion a year. Aside from this cost, these measures bring about highly volatile prices –- especially in the current COVID-abnormal era.
Moreover, by forcing coal generators to operate uneconomically with stop-start operations both increasing overhead expenses and adding to wear and tear, government interventions have raised costs for those generators, which remain the dominant sources of supply. This is making them ..... Read more ....pdf
Can democracy survive an increasingly biased media?
The Spectator, 16 September 2020
The ACCC is seeking to force Google and Facebook to pay for the media content they redistribute which has led to their capturing the advertising revenue that previously went to newspapers. The issue is ostensibly one of bargaining imbalance but behind it is the notion that social media is undermining a vigorous free press.
The struggle for freedom of expression was not one of “the people” but one of what we would today call the liberal elites seeking to promote their political preferences. It developed in England and in 1640 the press became free, allowing the Puritans to campaign against the Crown. Having executed the king, the Puritans quickly reimposed censorship in 1643. This lapsed 50 years later and in what would become the United States, de facto press freedom was formally established in a 1734 trial fronted by Alexander Hamilton; it was enshrined in the First Amendment in 1791. Many other nations have adopted this, mostly without practicing it.
Most people, especially the press itself, see unbiased freedom of reporting as a buttress against tyranny. Objectivity in newspapers, however, only emerged during the middle of the nineteenth century due to advertisers coming to dominate the media’s finances and generally seeking that ..... Read more ..... pdf
Governments have made this recession worse. They can’t now impede recovery
The Spectator, 2 September 2020
A 7 per cent fall in GDP during the June quarter is pretty much to have been expected. Led by spending falls on transport (down over 80 per cent) and in cafes (down 56 per cent), household spending was down 12 per cent.
But there is no shortage of demand – the household saving rate has shot up from 6 per cent to nearly 20 per cent. Though precautionary saving is doubtless a factor, people have limited opportunities to spend their money rather than being short of funds.
The consumption foregone in the recent quarter is lost – and further losses will be recorded during the current quarter. And there will be lasting changes in demand, including a permanent dip in demand for office facilities, which will require building modifications and adaptations. Nonetheless, the crisis has not impacted the fundamental production base of the economy — its facilities and skills. Left to itself output will mend and do so quite rapidly – the high pent-up savings, low interest rates will help considerably in this respect. ..... Read more ..... pdf
Biden’s handlers track away from lunacy in energy policy
Catallaxy Files, 1 September 2020
Joe Biden’s new claim to be in favour of law and order is not the only area where the Democrats are tracking away from the radical left. Among the crazy policies that the Democrats have been promoting (with disastrous consequences in California) are a conversion of the US electricity system to wind/solar even faster than Australia’s.
I touched on Biden’s energy policy in the September edition of Climate News.
In May, Biden announced a Dream Team of climate advisers co-chaired by Alexandria Ocasio-Cortez, “the avatar of the Green New Deal”, and John Kerry, architect of the Paris climate accord. One former adviser not included is Hillary Clinton’s presumptive Energy Secretary, Audrey Zibelman who, since Turnbull fingered her to head the Australian Energy Market Operator, has been mustering new regulatory accretions for electricity in the Australian National Market.
The Dream Team, which also included Rep. Kathy Castor, the chair of Nancy Pelosi’s Select Committee on the Climate Crisis, seemed to presage .....Read more
We can still have a V-shaped corona recovery. Here’s how
The Spectator, 11 August 2020
The shutdown in Victoria is devastating the state economy retarding the national recovery.
The data on which to assess the actual downturn and longer-term national costs is confusing.
Measured GDP has seen a reduction of only 2.75 per cent. But this is largely a consumption-based measure and has been underpinned by JobKeeper/JobSeeker payments that represent borrowing from the future. Such payments unsupported by production cannot continue for long in spite of the hopes of Modern Monetary Theory supporters and the illusions of leftists who think the economy produces irrespective of government measures.
A better measure of reduced output is the number of hours worked, which are down 9.4 per cent. This is imperfect because, on the one hand, largely unproductive public sector employees have been unaffected and, on the other hand, so also have the most productive jobs in mining, agriculture, processing industries, telecommunications and finance.
In terms of costs that have been imposed, government supporting actions will have increased debt by some $330 billion. The average Australian ..... Read more
How a Premier should shoulder the burden of office
The Spectator, 3 August 2020
We can but wish…
“It’s only fair”, Victorian Premier Dan Andrews said as he announced that he and his Cabinet would work for no payment over the course of the Phase 4 Shutdown he’d just introduced.
“Backbench MPs and their staff, who like a million other Victorians are unable to go to work, will surrender their salaries and accept the same JobSeeker payment as other workers no longer able to earn a living. We are seeking to introduce the same conditions for all state public servants other than those in ‘front-line’ positions performing services that are even more critical in these troubling times.”
The Premier continued, “As a government, we believe in equally sharing the pain that we, as decision makers, have visited upon the state as a whole. And the measures will assist in alleviating some of the costs to the economy stemming from these actions.” ..... Read more ..... pdf version
The Spectator, 28 July 2020
The International Energy Agency is just another international agency that Australia finances in order to receive advice that, if taken, would cripple the economy. At the latest Clean Energy summit, IEA’s agitator-in-chief Fatih Birol continued to push for a COVID 19 recovery with its central theme involving substituting high cost renewable energy for coal.
Birol does not stop at exhorting his flock to stop building new coal fired power stations but urges a decarbonisation program for the existing ones as well as for steel plant, cement factories and other emission-intensive facilities. Mentioning carbon capture and storage and hydrogen, he described finding the technologies to do this as “big homework”. Big homework it is! For coal, the massive Australian government spending on CCS – including bankrolling the highly secretive Carbon Capture and Storage Institute – would deliver electricity at three times the cost of existing High Efficiency ..... Read more .....pdf version
Sorry Alan, but Modern Monetary Theory is a load of cobblers
The Spectator, 20 July 2020
Alan Kohler considers the current crisis provides the ideal laboratory for applying the catchily titled Modern Monetary Theory — MMT. He sees this as a paradigm change whereby the government just keeps spending money with little concern for debt in order to maintain employment. He considers this to be a modern version of the stimulus to counteract a downturn, one that goes much further than policies favoured by Keynesian economics.
Keynesian economics is a prescription for ironing out the peaks and troughs in an economic cycle. It would never have achieved its current popularity had it been seen as the permanent stimulus that Kohler advocates. Even in its pure form it had become discredited in bringing about “stagflation” in the 1970s rather than its intendedeconomic recovery. And in the Global Financial Crisis in 2007, Australia recovered not from the wasteful Kevin Rudd/Ken Henry stimulus policy of “Go hard, go early, go households” but from a genuine increase in demand brought about by the booming Chinese economy.
Keynesian policy prescriptions as advocated by Keynes himself, at least in his later years, contra Rudd/Ken Henry, involved investment spending to provide a platform of higher future incomes. The problem with this is that government is likely to be wasteful its allocations and such ..... Read more .....pdf version
On the Road to Ruin for no Good Reason
Quadrant Online, 12 July 2020
This week’s announced closure of New Zealand’s only aluminium smelter presents the shape of things to come for Australia. Aluminium producers gravitated to these shores, attracted by some of the lowest electricity prices in the world. Those prices appeared to be sustainable, founded as they were on extensive low-cost and well-situated coal resources.
A wake-up call might have been the closure six years ago of the Port Henry smelter near Geelong. Although an old facility, no suggestion of it being replaced was entertained. Already, with carbon taxes and governments determined to reject coal in favour of subsidising high-cost and unreliable wind, the bounty of new, world-class new aluminium smelters had become a history lesson.
Things have only grown worse.
Australia’s energy politics, in the form of subsidies and other favours to renewables — constantly punted as being on the cusp of being competitive with coal or gas — have left our own remaining smelters requiring government assistance to stave off bankruptcy. Hence, we have government subsidies in place to counteract the damage done by other subsidies!
Australia’s energy interventions come in three flavours:
1 Direct Commonwealth and state payments to renewables and vaunted new sources, with hydrogen ..... Read more
Do we want to follow St Jacinda and price our industry out of existence?
The Spectator, 10 July 2020
Rio Tinto’s announced closure of its aluminium smelter in New Zealand due to uncompetitive power prices this week is a reminder of the vulnerability of Australia’s four remaining smelters, all of which face sharply higher prices courtesy of government energy policies. With energy costs comprising about a third of their total costs, smelters are industry’s bellwethers of future energy competitivenessand all four of Australia’s are on national suicide watch.
As a result of subsidies to wind and solar, these expensive and unreliable energy sources have caused high customer costs, both directly and indirectly, while also diverting the nation’s investment resources into avenues that actually damage the economy.
Commonwealth and state subsidies to wind and solar energy are running at just under $7 billion a year. $4 billion of these are as a result of requirements imposed on consumers by the Commonwealth’s Renewable Energy Target and its similar provisions for roof-top installations and measures taken by state governments. Some $2 billion of assistance to renewables comes from direct subsidies.
Albo’s Claytons climate policy switch
The Spectator, 24 June 2020
Kevin Rudd, in ranting against “the faceless men of the factions” claims among the ALP successes that, “We ratified the Kyoto Protocol, (in 2007) legislated a Mandatory Renewable Energy Target now delivering 20 per cent clean energy, and legislated twice for a carbon price only to be defeated by the Liberal-Green coalition”.
Rudd’s measures accelerated the trend to subsidised wind and solar, the upshot of which became clear in 2016. At that time, the increased market share of difficult-to-control intermittent generation finally forced the departure from the market of two very significant coal generators, the Northern in South Australia and Hazelwood in Victoria. The upshot was first, the collapse of the South Australian electricity supply system, demonstrated the vulnerability of a system that is dependent on renewables, and secondly the doubling of the wholesale costs of electricity. ..... Read more ..... pdf version
A Democracy if We Can Keep It
Quadrant Online, 18 June 2020
In an AFR column, former Liberal leader Alexander Downer has reprised a conversation with the late Lord Carrington in which Britain’s one-time Home Secretary suggested democracy would struggle to survive. It was a view Downer rejected at the time but of which he is not now so sure. I have visited this theme in the past – for example here, here and here — and in these times of madness, when popular movements demand the sacking of entire police forces and an incident in Minneapolis sees statues of Captain Cook vandalised in Australia, I return to the theme with a marked degree of pessimism.
The reverence for democracy arose only over the last a century or so. Prior to then, rule by consent – especially with regard to taxation – had been common, as affirmed in 1215 by Magna Carta. But that did not mean rule by the people. The great Greek philosophers were acutely aware of the deficiencies of mob rule in Athens, and American revolutionaries of the eighteenth century were similarly concerned that the gentle tyranny of King George could be replaced with something much, much worse. Their belief was in life, liberty and property. John Adams wrote:
Property is surely a right of mankind as really as liberty … The moment the idea is admitted into society that property is not as sacred as the laws of God, and that there is not a force of law and public justice to protect it, anarchy and tyranny commence.
Like it or not, Australia needs Donald Trump
The Spectator, 18 June 2020
It is difficult to imagine a more critical juncture in Australian history:
We confront a world downturn, accompanied by a new kind of cold war between the United States and China,
Our international protector, the US is going through a crisis of confidence, if not a populist revolution, that is engulfing the rule of law while within the Democratic Party, younger progressives and socialists are displacing moderates.
Australia’s helicopter money, response to COVID-19 has further damaged an economy weakened by decades of punitive energy and environmental regulatory measures undermining its comparative advantage in manufacturing, agriculture and mining. At the same time, these productive sectors have been carrying an increasing burden of social services. All this is compounded by the military folly of selecting politically correct soldiers and hardware.
President Trump right now is trailing by 13 points in the polls. The constellation of forces creating this are the virulently hostile Democrat establishment, pushed further by the rising influence of its younger green left, supported by anti-capitalist organisations like Sunrise and Antifa. They also include the Never Trumpers who preferred the corrupt Clintons and now acquiesce in a Democrat candidate under radical ..... Read more ..... pdf version
Coronavirus: We can’t spend our way to wealth
The Australian, 11 June 2020
In addressing the effects of the pandemic lockdown, the Morrison government has injected $84bn under the JobKeeper and JobSeeker programs and another $688m for home renovations. The Reserve Bank of Australia has, in addition, engineered cheap loans of at least $90bn, and possibly much more.
Though sometimes referring to these measures as a stimulus, the government would deny it is going down the same path as Kevin Rudd, who spent $200bn attempting, ineffectually, to combat the global financial crisis.
A justification for this generous support is that shutdown policies causing workers to be evicted from their jobs were taken in the national interest. But now we face an economic slump.
While the federal bureaucracy, and Treasury in particular, is full of credentialed economists, they are, for the most part, Keynesian — and therefore to counter a fall in output they prescribe demand stimuli through government spending, or tax cuts unmatched by spending cuts.
An Endlessly Renewable Source of Green Agitprop
Quadrant Online, 9 June 2020
Stoking the fires of renewable energy’s purported advantages is the International Renewable Energy Agency (IRENA), an intergovernmental outfit whose chief purpose is to serve as a spigot for endless propaganda. Its official message is that fossil fuel is an archaic source of electricity now being battered by upstart competitors wind and solar. Bear in mind that world electricity supply pans out at 38 per cent for coal, 23 per cent gas and 26 per cent hydro/nuclear. Wind/solar supply 10 per cent.
IRENA tirelessly advocates for renewables, saying they “could form a key component of economic stimulus packages in the wake of the COVID-19 pandemic.” And in the purple prose so common with these green-spruiking agencies it claims, “Scaling up renewables can boost struggling economies. It can save money for consumers, pique the appetites of investors and create numerous high-quality new jobs.” Investment in renewables is amplified by other benefits, the story goes, as it is alleged to bring “health, sustainability and inclusive prosperity.” When it comes to renewables, no snake-oil salesman of old could hold a carbon-neutral candle to the likes of their modern green-lipped urgers.
IRENA would have us see renewable power installations as a key component of economic stimulus packages in the wake of the COVID-19 ..... Read more
Is a COVID based slump causing an energy policy re-think?
Catallaxy Files, 2 June 2020
I have a piece in the Spectator this morning that builds upon the challenging commentaries by Senator Canavan and Craig Kelly calling for termination of subsidies to renewables and leaving the Paris Agreement under which Australia agreed to reduce its greenhouse gas emissions. These measures, and those earlier under the Kyoto Accord, drive up energy costs and are destroying manufacturing which would be flourishing under the low energy costs we could have.
Some in the ALP, especially Joel Fitzgibbon representing a coal mining seat, also agree.
Australian electricity supply has, in the course of 20 years, moved from just about the cheapest in the world to one of the most expensive. The present relative position is indicated by this graph. ..... Read more
If we want to rebuild manufacturing post coronavirus, we need to cut the cost of energy
The Spectator, 2 June 2020
In one of the most challenging commentaries by a senior politician, former resources minister Matt Canavan, advocates leaving the Paris Agreement under which Australia has agreed to take actions that will reduce its greenhouse gas emissions. He argues that Australia cannot afford to meet the treaty obligations which require replacing electricity generated from coal by expensive wind and solar. The subsidies this requires drive up the cost of energy and, with our high wage economy, prevents us having a vibrant manufacturing sector.
Steep electricity price increases have undermined the nation's ..... Read more
Energy policy disaster continues; more intervention, less market
Catallaxy Files, 21 May 2020
The Commonwealth keeps pressing policy issues that, on the one hand, dilute the spending egregiously allocated to renewables but then divert it to the failed carbon capture and storage (CSS) adventure and to the highly speculative unleashing of cheap energy from hydrogen. It released a report of an activist-stacked and serviced committee chaired by Grant King that promoted this, as well as inching the nation closer to a cap-and-trade emission reduction program. I wrote this piece for The Spectator yesterday.
In a new initiative, the government has again appointed another committee of people who are wedded to the green energy revolution to advise on new gee-wizz tech issues. It will get the answers it expects to get and embark on another spending spree.
The government has also provided yet another “road map” compiled by the environment department for a grateful minister. This favours gas (which it says is cheaper than coal – an absurd statement regarding Australia) and the colossally expensive pumped storage option. Like all previous reports it predicts the dawn of an era when renewables will be the cheapest form of energy but does say they need to be “firmed” by attendant supplies of controllable energy (hence gas and pumped storage). ..... Read more
Why is the Morrison Government leaving the back door open to a carbon tax?
The Spectator, 20 May 2020
As part of the ABC’s climate conspiracy agenda, Four Corners this week highlighted the “anger” at the government from the senior mandarins from its failure to deliver their goal of a carbon tax. Their preferred approach was notwithstanding the tax rate would today have to be $US100 per tonne, a staggering $80 billion a year impost.
Also unmentioned was government action on the chimaera of climate change that presently costs over $4 billion a year in regulatory and direct funding. Included in this are regulatory requirements to support wind and large-scale solar (at a cost this year of $1.1 billion) and rooftop solar which this year is costing $1.7 billion.
There are two components of the Commonwealth’s Climate Solutions Package of direct spending budget on emission reductions. The first is a “$2 billion Climate Solutions Fund to support Australian farmers, businesses and communities to adopt new technologies that reduce ..... Read more ..... pdf version
Gassed-Up and Light-Headed for Hydrogen
Quadrant Online, 11 May 2020
There can be no doubting the reversion of businesses’ political advice to self-interested advocacy, in contrast to the glory days of 40 years ago. At that time there was a strong push for deregulation, but industry leaders have since backslid into promoting their particular interests, seeking subsidies (especially for energy) and, not unrelatedly, virtue-selling to deflect NGO criticism and its associated damage to share prices. I have a piece in The Spectator that addresses this.
The advice from businesses and their representatives is now best politely ignored. Firms willvirtue-signal but in acting on the advice they proffer – usually focussing on calls for some form of carbon tax – they face the test of the marketplace. As I note, business success is dominated by iron laws of profit. Those leaders who implement measures that veer too close to the quicksands of virtue-signalling will be swallowed by it.
In today’s AFR, the superb Joe Aston illustrates this by focussing on Rio Tinto which, having sold its coal interests, has recently assumed the pole position among the climate alarmists. Rio is, with Shell and BHP, dominant among the international Energy Transitions Commission (ETC) which this month has ..... Read more
Whatever happened to economic leadership from business?
The Spectator, 11 May 2020
Having reached the pinnacles of their profession, business leaders have earned the right to speak with authority and have become accustomed to having that authority recognised. Their success stems from mastering the intricacies of their own firm: what to buy and sell, how to make savings, what product innovations to adopt and so on. But these skills rarely metamorphose into political leadership – indeed Donald Trump might be unique in this respect among world statesmen.
A key reason for this is that business leaders have one overriding goal, maximising the wealth of their shareholders, whereas political success measures are diffuse.
Not having time to master wider political issues, business leaders tend to relate national interests to those of their firm, immortalised as “What’s good for General Motors is good for America”, in the (misquoted) words of a former GM president. Beyond this, business leaders ..... Read more ..... pdf version
The COVID lockdown and spendathon – was it worth it and what is to be done?
Catallaxy Files, 7 May 2020
I have a piece in Quadrant where I estimate the person-years lives saved in Australia at 80,000. Each person-year is worth, on the government’s data, $219,000, hence saving is quantified at $17 billion.
The cost in outlays and lost production I estimate at $235 billion, fourteen fold the benefits in lives saved.
If however the initial health experts estimates of likely deaths without a lockdown had proved accurate the value of the lives saved would have been $526 billion, ostensibly far in excess of the costs incurred.
But we have to be wary of applying these high values per life saved in the context of very large numbers since costs per person become increasingly unaffordable as the numbers to be saved increase. More importantly, we have to have a better fix on health projections than one that, in this cas ..... Read more
The Lockdown Strategy Called to Account
Quadrant Online, 7 May 2020
Writing in The Australian, Janet Albrechtsen has pointed out that the statistical value of life used in regulatory assessment is $4.9 million for someone expected to live another 40 years — $213,000 per year Such measures are income-dependent; in the US the value was put at $9 million and a 2012 study for Turkey put it at five and a half years per capita income or $59,000. Such measurements offend self-righteous claims that “every life is priceless” but such notions, if followed, would impose costs that would bring about other and additional loss of lives.
While Albrechtsen’s column is written in the context of coronavirus expenditure, she does not extend it to examining the worthiness of..... Read more
Revealed: the true cost of our stimulus spending
The Spectator, 7 May 2020
Relative to GDP Australian government spending to address COVID-19 has been among the highest in the world.
The Morrison government seems pleased to have been a world leader in mortgaging the future to combat the crisis. Its package, totalling $320 billion, comprises five elements:
The PM’s initially announced health spending $2.4 billion
JobKeeper and JobSeeker business support $168.78 billion
Credit support$125 billion
Access to superannuation$0.876 billion
Income support$23.839 billion
A COVID-19 economic recovery program
Catallaxy Files, 23 April 2020
While the green left will use the crisis to march us to lower living standards and greater losses of liberty, the Commonwealth Government is making the right noises about reducing the tax and regulatory measures that have held us back. But do they know where to start?
The tax reforms are easy: pare back company taxes and other imposts on production.
I offered some advice in regulatory refom in an article published in the Spectator. These regulatory sins comprise areas where real economic dividends can be made, collectively greater than the losses by the Commonwealth’s generosity with our savings and future incomes. These are
Strip Back the Fair Work Commission’s functions to become similar to those in other jurisdictions: oversighting issues of unfair dismissal and human rights abuses etc.
Align land regulations for new housing development with those in Germany and US States like Texas, the Carolinas and Ohio, thereby reducing the cost of a new home by $200,000.
Curtail the creation of new national parks and address other land use measures that prevent farming, mining and logging in vast tracts of ...... Read more
Scott, Josh and Mathias: here’s how you get us out of this mess
The Spectator, 22 April 2020
The Morrison government has flagged tax cuts and aggressive deregulation as part of a pro-business road to economic recovery. A focus on stimulating rapid growth on the other side of the coronavirus pandemic is expected to guide October’s federal budget. — AAP report, April 20.
Future government action must focus strongly upon savings as a result of the 15 per cent of GDP ($340 billion) that has been spent on combating coronavirus.
Fifty years ago, the Commonwealth budget accounted for 18.3% of GDP. In the years since then, even before the current spending spree, the share had grown to 24.6%. Right now, with an extra $340 billion budgeted, the share of GDP will have become 35 %.
Green Snouts Sniff a COVID Windfall
Quandrant Online, 16 April 2020
The Pope, deprived of the counsel of Cardinal Pell, the Church’s most astute voice, foolishly called coronavirus “nature’s response” for failures to act on climate change. It was, therefore, hardly surprising that coronavirus would be recruited to push for additional renewable energy subsidies to reinforce those that have already created today’s high cost, low quality electricity.
Coal Wire, an anti-fossil fuel publication, was quick to swoop on a Harvard study that said the pollutant PM2.5 exacerbated coronavirus and that coal power stations were an important source of the pollutant. Actually less than 5 per cent of PM2.5 particulate emissions come from energy production.
Also fast out of the blocks was the anti-fossil fuel head of the Paris based International Energy .....Read more
Does the Morrison government have the skills to lead us out of the recession it has created?
The Spectator, 16 April 2020
The $320 billion in costs the Australian government has incurred to sustain and stimulate the economy in light of the COVID-19 crisis is money spent for consumption without it attracting any corresponding production. It is a permanent loss that can only be retrieved by increased production. Two areas where reform could compensate for this loss of revenue are the cessation of wasteful spending and regulations in water and energy, where total savings of $50 billion are available.
But in addition to these direct savings, removal of these regulatory and taxpayer costs would unleash even larger productivity benefits in the two sectors.
For water, in Australia’s most important irrigation area, the Murray Darling Basin, the government’s actions in buying up 20 per cent of irrigators’ water for spurious environmental purposes has brought a tenfold increase in the water price, and hence its cost to farmers. At least $7 billion could be saved by the government reselling the water it holds to irrigators and recalling the funds yet to be spent.
ScoMo’s gone as crazy as Kev, but we can still save the economy
The Spectator, 2 April 2020
When the Prime Minister and Treasurer appointed Stephen Kennedy as the Treasury Secretary, they opted for a bureaucrat who had been the architect of Turnbull’s potentially disastrous carbon tax. They would also have known him to have been a senior adviser on Kevin Rudd’s exorbitant spendathon following the 2008 global financial crisis.
Unsurprisingly, the Secretary of the Treasury recommended that the government implement a “Full Rudd” coronavirus program, suggesting the British approach was insufficiently stimulatory. Ministers need little encouragement to embark on spending sprees but in times past Treasury used to be a brake on their ambitions.
Australia’s spending now totals $320 billion. At 14 per cent of GDP this is a magnitude similar to that of the UK program, though larger than that of the US at least fivefold that of Japan, Canada, Korea, Norway or New Zealand. Commonwealth spending programs go well beyond maintaining the nation’s businesses and sustaining those who are unemployed and extends into Keynesian economic stimulus territory. The stimulus effect will be ..... Read more ..... pdf version
Emergency Measures in Need of an Exit Strategy
Quadrant, 25 March 2020
It started with Mirko Bagaric in The Australian — “Release super to boost economy” — who, while justifiably railing against the superannuation funds’ fees, argued that allowing people to access 10 per cent of their super could inject up to $300 million into the economy. Mirko has separately suggested that the actual amount might be $150 billion.
Treasurer Josh Frydenberg has accepted a watered-down version of this, which he thinks might inject $27 billion into the economy by allowing people to access $20,000 of their superannuation savings, interestingly, over two years, an indication that the malaise won’t be over soon. This is part of the fiscal package which is now at $189 billion. That’s 9.7 per cent of today’s GDP but considerably more down the road, with GDP contracting by maybe 20 per cent.
Much of the expenditure, that which seeks to cushion the costs to those worst affected, is sensible. But, even so, there has to be be an exit strategy. We have doubled the dole, for example, but when do we return it to previous levels?
Some of the money is conjured up by the Reserve Bank, which is buying shares and bonds to depress interest rates. This “quantitative easing” ..... Read more
Revealed: the Deep Green State
The Spectator, 24 March 2020
A story in the Guardian demonstrates the impotence of government against the Deep State machinery that it nominally controls.
This involved an attempt, in line with government policy, to divert money from the Emissions Reduction Fund to less harmful activities than efficiency-undermining promotion of green energy that it normally funds. The case under review was an attempt by Delta Energy to get some $14 million support for refurbishing its Vales Point plant, an outcome that would extend the plant’s life (and incidentally reduce its greenhouse gas emissions). The Guardian notes that “energy baron” Trevor St Baker is a part owner of the plant.
The Emissions Reduction Fund was set up by the Abbott Government following its election in 2013. Its Environment Minister, Greg Hunt, was an avid promoter of “direct action” which involves buying out firms’ greenhouse gas emissions rather than reducing emissions by taxing coal. In fact, buying out emissions simply funds canny firms who can offer a good story, while providing negligible effects on total emissions, since the cashiered production ..... Read more pdf version
Danandrewstan: two steps forwards, one step back as energy security matters more than ever
The Spectator, 18 March 2020
The latest energy policy from the Victorian government is to place a constitutional ban on fracking and coal seam gas exploration but once again permit the search for conventional gas in the state.
The proposed policy was developed in consultation with an industry/activist Independent Stakeholder Advisory Panel. The panel was chaired by the Lead Scientist, Amanda Caples, a pharmacologist, who was previously responsible for developing the state’s “strategic industry growth plans”. In announcing the policy, the Premier said it was “a science-based approach”. Presumably, he had in mind political science.
The exploration bans were first implemented in 2012 by the Coalition government under the then minister for energy — and now opposition leader — Michael O’Brien. For the Coalition back in 2012 seeking to blunt opposition from green radicals, a ban on new gas supplies seemed like good cynical policy.
How to Make Things a Whole Lot Worse
Quadrant Online, 17 March 2020
Deaths from coronavirus were up yesterday (March 16) on the previous day. Although death rates lower than one per cent are being quoted, the macro data (deaths/deaths-plus-recoveries) is 8 per cent, and 15 per cent in Australia (see the chart below). Hopefully that will improve. Otherwise, if Angela Merkel is correct in estimating that 60 per cent of humankind will eventually contract the disease, we can expect over 300 million deaths. Tomas Pueyo’s brilliant analysis suggests a death rate levelling off at 3-5 per cent for countries or areas that are unprepared, but one-tenth of this for those quickly identifying and isolating those affected, and intensely treating the 20 per cent who develop the most serious symptoms. Among the latter are South Korea and China outside of Wuhan, the coronavirus’ origin and epicentre.
Despite an inevitably horrendous death toll the world will recover, leaving the virus as just another background killer, like its garden-variety cousin influenza.
For the present, the world is now in a very deep economic depression. There is no shortage of consumer demand but the basis of that demand, income from the supply of goods and services, has been or soon will be sharply curtailed. ..... Read more
Coronavirus: Pump-priming is economic folly
The Australian, 17 March 2020
In normal times we have a healthy disdain for the insights and capabilities of our political leaders. In Australia, the commentariat has just emerged from agendas that blamed them for not acting fast enough to combat the bushfire crisis — even having contributed to it — and from looting taxpayer funds to curry favour with voters in the sports rorts saga. In the US, half the population thinks their President is so corrupt that he should be placed on trial.
Yet suddenly, with the coronavirus crisis, politicians and their advisers are thought to have powers and the wisdom to turn back tides and lead us out of the wilderness.
The US is focused on stopping the spread of the disease, finding a cure and easing the discomfort of those afflicted. Britain, like Australia, has added measures to assist business with investment support. .....Read more pdf version
The Coronavirus stimulus package: not just another trip down the Swanee?
The Spectator, 12 March 2020
We have mixed messages on coronavirus: Angela Merkel has said 60-70 per cent of Germans will contract the disease, while the latest data from China and South Korea shows new cases having peaked and, in the case of China, recoveries closing in on new cases.
Aside from spending on health precautions and seeking to staunch the spread, what do governments do?
The Trump Administration is talking about ensuring those thrown out of work are looked after financially – the equivalent of community action in medieval plagues when stricken villages were isolated but fed by those nearby. In a rare flash of economic lucidity, Senate Democratic leader Chuck Schumer said the government should focus on guaranteeing paid sick leave for infected workers and extending unemployment insurance for people put out of work. But Trump is also urging the Federal Reserve to embark on a financial stimulus.
Australian politicians look likely to avoid panicky measures involving economic stimulus. Hopefully this means they have learned from past ..... Read more
The last thing we need now is more costly climate virtue signalling
The Spectator 10 March 2020
Desperate to attend the September 2020 Glasgow climate change summit with a positive program, the Coalition government continues to promote, at the expense of national living standards, elitist-appealing measures that force lower greenhouse gas emissions.
The new elixir is to boost investment in CO2-free hydrogen technologies which, if not mystical, hardly require funding from Australian taxpayers. New support measures add to the $1.5 billion annual funding of a bewildering acronymic gaggle of institutions (including CEFC, ARENA, CER and CSIRO) and at least $2 billion in subsidies to wind and solar.
The Glasgow meeting is the third phase of climate change programs.
The first phase was established by the Kyoto Agreement in 1997, in which rich nations pledged to stabilise their emissions. Although only ..... Read more
Toilet paper shortages – why is Australia not a net exporter?
Catallaxy Files, 7 March 2020
It was a relief to learn that Australia is 80 per cent self-sufficient in toilet paper and there is, therefore, no need for panic buying.
But hang on a minute. First, that 80 per cent is for a market that has suddenly grown – perhaps doubled. So, there may indeed be a shortage.
What should be more worrisome is that Australia is only 80 per cent self-sufficient in an industry sector which we should be a massive net exporter. We actually import 50 per cent more wood and paper products than we export.
In days of yore, governments were always looking for value-added industries that could leverage off our natural advantages. Because we had cheap energy and bauxite, we were world leaders in aluminium production and this led to fantasies that we’d become a key part of the global supply chains for industries like automobiles (engines) and – I kid you not – for windmills (blades). Governments sank considerable funding into these ventures.
They were doomed by the labour market arrangements that, with the connivance of governments and the legal system, have priced Australia .....Read more
George Calombaris gets done like a dinner
The Australian, 14 February 2020
George Calombaris is a victim of the Australian regulatory state. The failure of his restaurant businesses has been greeted by a mixture of schadenfreude that a tall poppy has been exposed for having cheated his employees, and tut-tutting for not being sufficiently alive to the regimen under which his industry’s labour hire regulations operate.
In between, there have been pointed remarks about how other miscreants — for example, the ABC — have not been subject to the indignation that a commercial operator has faced for not having paid his staff in accordance with the labyrinthine government-specified rates.
There are three points that better describe what has taken place.
First, other than in the context of the highly regulated labour arrangements that cover the Australian hospitality industry, there was no fraud involved. The employees agreed on a package of wages, hours and other responsibilities; they were for the most part seasoned workers ..... Read more .....pdf version
One Word: ‘Klobuchar’
Quadrant, 14 February 2020
When the US Presidential polls had the triumvirate of Biden, Saunders and Warren (above) vying for the November 2020 date with destiny, President Trump was sitting pretty. As the poll leader, Biden was a known quantity. He was showing his age in mangling words, he had a legacy as an Obama failure, was an insider in an era when this is poison, and had a son who had benefitted immensely from his patronage and protection in getting paid handsomely for a job in Ukraine for which, aside from his father’s political clout, he was utterly unqualified. He would have been crushed by Trump’s relentless pressure as the campaign progressed.
Elizabeth Warren adoption of far-left socialist ideas combined with a fraudulent invention of indigeneity would have likewise been a victim of Trump’s acidic bluntness. Trawling the depths of wokeness (“reparations for gay couples”) she would have ended the campaign humiliated.
Bernie Sanders has never pretended to be anything other than a Communist sympathiser. He encapsulates the anti-Americanism that is ..... Read more
How the rise of environmental politics is threatening traditional allegiances – and world trade
The Spectator, 10 February 2020
Some 172 years ago Karl Marx opened the modern era of politics in proclaiming that a spectre was haunting Europe. The spectre he referred to was in the title of his “Communist Manifesto”.
Marx was talking in the context of the series of political disturbances in major European capital cities in 1848. He interpreted these as bookending the ancien regime, the evolution from which had been brutally signalled in 1789 with the French Revolution and perhaps even back in 1649 when Charles I paid the price for his “high crimes and misdemeanours”. Marx saw the events of 1848 as presaging revolution and a new era of peace and prosperity where private property would be abolished and income would be earned “by each according to his abilities” and apportioned “to each according to his needs”.
Democracy becoming dominated by the politics of envy?
Catallaxy Files, 24 January 2020
Among the attendees of the recent Mont Pelerin Society were Steve K, Sinclair and me. A great many issues were discussed in the debate on liberty, efficiency, their friends and enemies.
I have a piece in today’s The Australian, which summarised my view of the more important take-aways. They include
No attendees doubted market capitalism’s higher efficiency and ability to deliver growth, including for the benefit of poorer members of society. But recent developments have undermined confidence that the model will continue to prevail.
These include the resumption of growth in the size of government and a weakening of property rights by, for example, the seizure of land usages rights. In Australia, government actions to reduce greenhouse gas emissions through planning laws and measures that restrain commercial activity include the increase in regulatory intrusions and permissions, like those that resulted in the Adani coalmine taking nine years to be ..... Read more