Saturday, December 26, 2009

Let's face it: the ETS is dead

By financial journalist Terry McCrann

TONY Abbott almost singlehandedly put the Emissions Trading Scheme on life support. Now Copenhagen has killed it stone cold, motherless dead. Climate change minister Penny Wong, who is too emotionally committed to it to accept that truth, will carry it into the new year.

A responsible prime minister would give the ETS a decent Christian burial. And it has to be a formal state funeral. A Treasury that was not so absolutely compromised by a bizarre combination of religious zeal, institutional pomposity and basic incompetence would be gently but persistently and emphatically advising the government that the ETS was no longer a good idea. If indeed it ever was.

While an argument could have been mounted before Copenhagen for moving towards an ETS, that is not possible after the chaos in doleful Hamlet's hometown that produced the "China solution".

There will be no global agreement to cut emissions of carbon dioxide. Formally, it was "Chindia" -- China and India. But China is the elephant in that pairing. And in any event, nothing that President Barack Obama might have promised in Copenhagen was ever going to be endorsed by the US Senate, as it has to be.

While we wouldn't have quite seen a replay of the 95-0 vote that rejected the Kyoto Treaty in 1997, there is zero prospect of the US adopting either binding CO2 emission targets or a cap-and-trade policy, their name for an ETS.

So we have a situation post-Copenhagen, where the two countries that between them are responsible for nearly half of all global emissions of CO2 are not committed to cutting emissions, far less binding targets. And more pointedly, they won't have an ETS.

It is the latter that makes any move by Australia to have an ETS even more senseless than before. We would become ground zero for every spiv and main-chancer that would have an emission permit or million in their pocket to sell us. Indeed, even "respectable" Wall Streeters would be -- correction, are -- salivating over the next big thing.

Two things simply cannot be denied about Copenhagen. Australia locking in its ETS wouldn't have made the slightest difference to the outcome. Not even Kevin Rudd is delusional enough to believe that if only he and Penny had been able to arrive with their bit of paper, China would have agreed to destroy its future.

Secondly, but for Abbott's aggression -- helped in no small part by Malcolm Turnbull's overweening arrogance -- we would have been locked into a bad policy and a disastrous process, which is even worse. The ETS.

It's time the business community woke up from its dozy slumber, with the doziest of all being the Business Council. This is something they should be able to understand. Copenhagen has shattered any prospect of a local ETS delivering the "certainty" they crave. Now it would only be the certainty of the grave. That of carbon export and permit volatility and rip-offs.

That's the export of jobs, businesses and investment to other places that had no price on carbon dioxide. Those "other places" are essentially the rest of the world except for Europe -- which doesn't matter and in any event has totally debased the permits system, just as it has cynically approached the whole sorry climate saga, starting with Kyoto.

Our ETS could only work as part of a properly regulated and audited global system in which at the very minimum the US, the second-biggest emitter, participated. Even then it would still have been extremely volatile, open to manipulation and outright rorting: the very antithesis of certainty. Without the US, an Australian ETS is an invitation to chaos.

Are our Australian Federal "Carbon Cops" Police going to control the permits that would fall from the sky like confetti from Africa, Asia and Russia? Do you sincerely believe that ASIC, Australia's Simply Ineffective (corporate) Cop, is a match for the masters of Wall St manipulation? They couldn't nail Jodee Rich and Andrew Forrest. But never fear, they'll be right on top of global real-time trading in complex permit derivatives.

It remains extraordinary that any government could embark on a policy that directly attacked its own country. The "production" of carbon dioxide is the absolute foundation of not just our economy but our modern society. It is an ironic comment on the crass stupidity of both our politicians and our bureaucrats that if they'd actually succeeded at Copenhagen, they would have succeeded in destroying our future export growth.

The issue of emission cuts has to be cut free from the dead parrot, the ETS. That leaves one or both of Abbott's direct action emission cuts or a carbon tax. If we believe we have to join hands with the rest of the world in a mutual suicide pact, let us at least choose the more efficient method.


Public hospital doctor operating 'blind' led to woman's premature death

A QUEENSLAND grandmother suffered a premature death due to a litany of failures by a rogue doctor who operated "blind" without equipment allowing him to see properly, a coronial inquest has found. In a case that sparked an apology from Queensland Health, Coroner Anne Hennessy cleared Gold Coast doctor Robin Holland of criminal negligence over the 2007 death of Yvonne Davidson, of Emerald, at Rockhampton Base Hospital.

But the coroner's report identified a raft of errors with the tracheotomy operation, including a "faulty or missing" power lead on a bronchoscope, a visual device with lights to help staff see.

The report found Dr Holland, a qualified doctor now believed to be working at a Gold Coast private facility, had failed to sign his job acceptance contract after starting as a locum six months earlier. It was this error that brought the case to light earlier this year after several locum doctors at Rockhampton and Bundaberg failed to complete their credentialling properly.

The coroner's report found Dr Holland failed to comply with protocol for the procedure at the hospital, despite evidence showing staff had told him about the protocol document. He could not recall the warnings. Ms Hennessy also blamed poor communication between staff, including Dr Holland's failure to note that nurses had problems with a carbon dioxide monitor which was not working properly. "Dr Holland did not properly listen to the nursing staff who were bringing the terms of the protocol to his attention," the report said. "In relation to the requirement to use the bronchoscope, Dr Holland informed the nurse that he would perform the procedure blind."

But Ms Hennessy found there was insufficient evidence to begin a criminal action, saying the Medical Board had already banned him from performing similar operations. She found that Mrs Davidson, 75, died of pneumonia but the operation had been an influence. "Whilst the procedure did not directly cause Mrs Davidson's death, autopsy indications were that death was hastened by the procedure," she said.

The report called for Queensland Health to ensure locum doctors have orientation at different hospitals and that tracheotomy operations require a bronchoscope and not be performed on weekends. Queensland Health yesterday said the case was still being investigated by the Medical Board and recommendations were still being implemented.


Catholics divided in the House

THE Catholic Church, traditionally a Labor heartland, is fast colonising the Liberal Party. A Herald analysis shows as many Catholics on the front bench of the Federal Opposition as that of the Government. A poll of the federal cabinet and the shadow cabinet showed six Catholics in each, or about 30 per cent. Catholics are 26 per cent of the general population.

The Leader of the Opposition, Tony Abbott, is a staunch Catholic who studied for the priesthood as a young man. His shadow treasurer, Joe Hockey, is also a Catholic and recently gave a talk at the Sydney Institute on his religious beliefs, "In Defence of God". Both men were educated at Jesuit-run schools, as was the Opposition education spokesman, Christopher Pyne.

The Prime Minister, Kevin Rudd, was raised a Catholic but now attends Anglican services every Sunday. When he was recently photographed leaving the Catholic Mary MacKillop Memorial Chapel in North Sydney, where he reportedly took Communion, Mr Abbott accused him of "exploiting" his religious beliefs to score political points.

The debate over religion in politics comes as a Herald/Nielsen poll found 84 per cent of people agreed with the statement "religion and politics should be separate" - though three-quarters did not care whether politicians identified themselves as Christian or not.

Opposition MPs were more forthcoming about their faith than Labor MPs. Of the 20 members of shadow cabinet, 18 identified as Christian and two did not comment. None identified as atheist or non-believers.

The Labor cabinet was more diverse. Two members - the Health Minister, Nicola Roxon, and the Industry Minister, Kim Carr - said they were "not religious". Six identified as Catholic, including the Small Business Minister, Craig Emerson, the Energy Minister, Martin Ferguson, and the Minister for Employment Participation, Mark Arbib. Several Labor politicians said they were "non-practising", including the Deputy Prime Minister, Julia Gillard, who said through a spokeswoman that she was a "non-practising Baptist" and "not religious".

The Leader of the House, Anthony Albanese, said he was a non-practising Catholic, and Chris Bowen identified himself as a non-practising Methodist. No one from the shadow cabinet nominated themselves as "non-practising". And no one from either side said they held a non-Christian faith.

The Finance Minister, Lindsay Tanner, said he was an "agnostic Anglican", and the Opposition industry spokeswoman, Sophie Mirabella, said she was married in the Anglican church but had a Greek Orthodox ceremony to please her aged mother.


Surge in wealth as markets bounce back

AUSTRALIANS have enjoyed the fastest growth in household wealth for more than a generation, as the rebound on stock markets has given back almost half the money people lost in the global financial crisis.

Financial accounts issued by the Bureau of Statistics on Christmas Eve show that even excluding real estate, households' net financial assets shot up by a record $147 billion or 17 per cent in the September quarter alone. It is the sharpest rise in household wealth since the bureau began to measure it 21 years ago, driven by the fastest rebound on global stock markets since the false dawn in the middle of the Great Depression. Households put just $1.3 billion of new money into the stock market in September, yet soaring stock prices lifted the value of their direct holdings by $52 billion.

Super funds did better still. They invested a net $900 million in the market over the three months, but at the end of the quarter the value of their holdings had climbed by $71 billion. The entire new investment in the market for the quarter was an unremarkable $29 billion - 75 per cent of it from foreign investors - yet it generated a phenomenal $245 billion rise in market valuations. The total valuation placed on the market jumped 23 per cent, from $1080 billion to $1325 billion. In the six months from the end of March to the end of September, the market valuation shot up by 41 per cent or $385 billion.

Rises like this the world over have sparked fears of a new asset price bubble, as investors with access to cheap money have used it to drive up values.

Goldman Sachs, which now borrows from the US Federal Reserve at nominal rates, has made so much from its market investments this year that in the nine months to September it set aside $US16.7 billion for staff pay and bonuses - $US527,000 per employee.

The Australian market has since stabilised, still roughly 30 per cent below its 2007 peak. But the crisis has seen a significant shift in ownership: foreign investors now own 40 per cent of Australian shares, up from 33 per cent at the height of the boom. The foreign investors' stake dwarfs the 25 per cent of shares now owned by super funds and insurance companies, let alone the 17 per cent owned directly by households.

Similarly, the crisis has brought about a significant shift in where households put their money. Two years ago, our shares were worth $431 billion, but we had just $370 billion in bank deposits. By September, our shareholdings had dropped to $327 billion, while our bank deposits had swollen to $507 billion.

Superannuation remains Australians' largest financial asset (the definition excludes housing) but not even the record market surge between March and September, and $80 billion of net super contributions in the past year, was enough to return our stake to pre-crisis levels. Two years ago, private sector superannuation assets were worth $1152 billion. But 18 months later, despite all the new money, those assets had shrunk to $896 billion, before climbing back to $1065 billion by the end of September.

Apart from bank deposits, the only household asset that has grown during the crisis has been the amount of unfunded superannuation the federal and state governments owe to their past and present employees. In just two years, that has climbed from $170 billion to $200 billion.

Households' total financial assets grew by $180 billion in the September quarter, or a cool $8200 per head in three months. At just over $2.4 trillion, they are now almost back to their pre-crisis level two years earlier. But households' liabilities have also grown in that time, adding almost $200 billion of new borrowing in the past two years. Household debt, which was $1.2 trillion going into the crisis, is now just under $1.4 trillion, or $175,000 per household.

The bottom line is that households' net financial assets are still short of pre-crisis levels. They peaked in September 2007 at $1245 billion and then shrank to $786 billion by March 2009, a loss of almost $460 billion. But in the six months to September, with only $12.4 billion of net new saving on our part, our net assets grew by $220 billion, or 28 per cent, to close the third quarter worth $1006 billion, back where they were at the end of 2006.


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