Regulation Articles

Regulatory attacks bringing a sad demise of the Australian economy

Catallaxy Files, 4 September 2019

The Australian economy has been flagging for many years now. Over the past year we actually saw a decline in GDP per capita and per hour worked. There are many reasons for this but all come back to government intervention – excess spending on unproductive welfare measures, over-taxation of business income and the general regulatory morass that has come to characterise economic management.

Support from vested interests a cost to the economy

Herald Sun 24 June 2016

Getting back to parochial matters, the following is my take on the Victorian Andrews Government political playbook as published in the Herald Sun this morning A benefit of election campaigns is that while they are in progress politicians don’t have access to the legislative and regulatory levers. Election campaigns and caretaker government mean politicians can only talk about “fairness” or “reconciliation” or how they are going “to create the modern dynamic 21st century economy”. Governments

Superannuation funds’ “ethical” investment behaviour

Catallaxy Files, 30 May 2018

The debate ignited by the Productivity Commission over the effectiveness of superannuation funds as pension funds contains some enigmatic facets. One is that the funds themselves, especially the trade union dominated “Industry Funds”, tend to make their investment choices overwhelmingly at arms-length on the advice of professionals. Many funds use the same advisers hence might be expected to have a similar portfolio. Moreover, in that respect, the work of the trustees is confined to selecting

Wage regulations: yet another measure undermining living standards

Catallaxy Files, 23 April 2018

The unions have found a cause in Barry’s– a brother and sister run café in Melbourne’s Northcote. United Voice got a big enough crowd to fill a TV screen to protest against “wage theft”. The café was paying casual staff the (lower) permanent staff rate but giving them free coffees and meals. The ABC, which as a taxpayer financed supplier can readily afford to pay the wage rates designated by some isolated umpire, was offering great publicity to the union campaign.

Australia’s Crony Capitalism Inc.

Quadrant Online, 25 October 2017

Many of us have a nostalgia for the days, commencing with the Hawke-Keating competition reforms, when there was a phalanx of business people calling for deregulation, privatisation and smaller government. Prior to the 1980s the manufacturing groups were calling for more support against imports, including stopping “dumping” a policy approach that Australia took to global heights. Farmers were not too bothered about import protections, which raised their costs, but certainly wanted more subsidie

Gas and electricity crises need deregulation not more interventions

Catallaxy Files, 27 September 2017

It is perhaps a little cruel to apply the epithet, “The best energy minister we have” to the likeable Josh Frydenberg, especially since he alone with Tony Abbott actually writes his own media pieces. In today’s AFR he writes about the unfolding gas crisis. While he cannot blame the Queensland government, where the ALP has followed the Coalition in permitting gas exploration, he blames the ALP under Gillard for permitting too many exports and the Andrews government for forbidding gas exploratio

Fish farming: a new project’s approval illustrates regulatory weaknesses

Catallaxy Files,12 May 2017

Yesterday the Commonwealth government gave environmental approval to Project Sea Dragon, a $2 billion scheme involving prawn farming in the North. According to reports it will increase the national prawn catch by 55 per cent and employ 1400 people in activities that deliver real worth involving willing customers. Revenues of over $1.25 billion a year are expected. This involves a welcome change from the negative value-adding that has been par for the course with subsidised wind farms, Snowy

Billions wasted in economy sapping energy regulations

Catallaxy Files, 16 December 2016

Each year the energy regulator, the Australian Energy Market Commission (AEMC), publishes data on the make-up of electricity costs for households. This breaks down costs into three categories: environmental, regulated networks and wholesale/retail. In Queensland federal environmental policies cost the average household $63 and state based schemes a further $128, adding 7 per cent to household electricity bills. NSW consumers get off more lightly: Commonwealth environmental schemes cost them $72 with state schemes a further $37. Victorians pay only $48 in subsidies for the Commonwealth schemes and $33 for the state schemes, while South Australians pay $62 for the Commonwealth schemes and $93 for those of the state government. But these are only the direct costs. The environmental regulations bring three other classes of cost. The first of these is resulting in the closure of coal-fuelled power stations because increasing amounts of volatile subsidised “must-run” wind forces them into stop-start operations. This undermines the economics of generators designed to provide stable supplies of base load power. The latest forced closure is the Victorian Hazelwood facility. Hazelwood’s shut down is estimated by the AEMC to bring about wholesale price increases of 55 per cent next year in Victoria and Tasmania, and lesser price rises in other jurisdictions. That comes to about $200 per Victorian household. The renewables subsidies will drive further such closures which will add to these costs.

The dangers of underestimating coal

The Spectator Australia, 18 September 2016

According to research commissioned by The Australia Institute if we ban all new coalmines, allowing coal production to fall from 420 million tonnes annually to under 50 million tonnes, we would see a trivial 0.6 per cent fall in GDP. To arrive at such numbers TAI commissioned Victoria University to use a garbage-in-garbage-out analysis with fungible labour, capital and technology. The model’s construction means that any industry’s demise assumes factors of production just slip back to their next best use. Other industries will fill coal’s export hole and renewables will replace it in domestic electricity production. Under such assumptions we could prove trivial losses from other capital embargos. This would be the case, for example, if we were to pursue another TAI objective and ban all investment in agriculture (leaving the industry to comprise only wine and organics on the non-irrigated slivers of land not reserved as natural parks or aboriginal reserves). Comparable modelling outcomes would emerge from the TAI’s more ambitious anti-mining objective whereby new investment in mining as a whole was to be banned.

Support from vested interests a cost to the economy

Herald Sun 24 June 2016, and Catallaxy Files 24 June 2016

A benefit of election campaigns is that while they are in progress politicians don’t have access to the legislative and regulatory levers. Election campaigns and caretaker government mean politicians can only talk about “fairness” or “reconciliation” or how they are going “to create the modern dynamic 21st century economy”. Governments already take nearly 40 per cent of our income, mainly for welfare spending, and Commonwealth regulations cost us an additional 11 per cent. Come July 3, whoever wins the federal election will inevitably add to the already towering tax/spending and regulatory burdens. For Victorians the Commonwealth’s impositions compound those of a state government addicted to ever increasing levels of spending and regulation.

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