Monday, July 18, 2016

Greenie-inspired policies cause chaos in Australia's electricity supply

No reserve capacity to support periods of peak demand, after various coal-fired plants were shut down with nothing to replace them and all new investment is diverted into useless windmills, meaning big price leaps now happening during periods of high demand.  Wanton destruction of Australia's infrastructure

A “PERFECT storm” has hit the wholesale electricity market, with households just beginning to feel its ferocity.

Many big businesses are already being severely buffeted, leading to calls for government intervention to limit job losses and damage to the economy.

Those large users buy their electricity on the spot market where prices were substantially higher last financial year than in 2014-15 (NSW they rose 46 per cent, in South Australia 57 per cent, Queensland 14 per cent and Victoria 52 per cent). These increases, however, are dwarfed by the rises since July 1: 79 per cent in NSW, 514 per cent in SA, 38 per cent in Queensland and 96 per cent in Victoria.

Households’ power is mostly priced on the futures market, with a third purchased 12 to 24 months before new retail tariffs are set and the balance in the 12 months before. Recent movements and forward prices from data supplied by ASX Energy put the wholesale cost of power about two cents per kilowatt hour higher in NSW and Victoria for the next three years.

That could add $120 to annual bills within two years. The increase in Queensland is set to be about $100. But in SA a likely 4c/kWh increase in wholesale costs may leading to a bill surge of $240 annually. Households there, and to a lesser extent in NSW, have already started to feel the consequences of the wholesale market chaos via prices rises that took effect on July 1.

One of the nation’s leading experts on electricity prices, Grattan Institute energy program director Tony Wood, said “we are seeing the beginning of the real cost of changes we have imposed on our electricity system”.

Mr Wood said a “dog’s breakfast” of climate change policies dating back to the first Rudd government had contributed to rising prices because investors haven’t known types of generation capacity to support.

Even as an advocate for renewable energy, he said Australia should be running more on gas and “cleaned-up” black coal and less on wind and solar, which currently can’t provide reliable supply.

Mr Wood said the electricity market was responding to rising demand and falling supply, as well as a jump in the cost of gas needed to run gas-fired power plants.

“Those three factors are coming together to create a perfect storm,” Mr Wood, a former Origin Energy executive, said. “No-one forecast this.”

A source at a major electricity retailer agreed: “I don’t think anyone in the industry saw this coming. It’s serious.”

The body that represents large energy users such as Woolworths, ANZ Bank, BlueScope Steel and Crown casino, said the cost of electricity is now holding Australia back.

“It’s gone from being a competitive advantage 15 years ago to now being a burden on the economy due to high cost,” said Energy Users Association of Australia chairman Brian Morris.

“We have to take energy out of the political agenda. It’s a national issue,” Mr Morris said. “We need both sides of politics, the state and federal governments, all pulling in the same direction on this.”

He called on the Council of Australian Governments (COAG) Energy Council to take the lead and provide “guidance” to the electricity market.


Pauline Hanson: Press Council head slams media 'feeding frenzy'

The media have gone into a "feeding frenzy" over Independent MP Pauline Hanson and were to blame for resulting damage to Australia's reputation, according to the head of the Australian Press Council.

Professor David Flint, addressing the ninth conference of the Samuel Griffith Society in Perth yesterday, said such damage could not be blamed on politicians.

"It was media indulging in its own fantasies, believing its own stories, which turned Ms Hanson into a spectre stalking the land," he said.

"Her message was presented in some quarters as if it were the voice of Satan. In fact, her views are more moderate than manyright-wing parties in Western Europe," he said.

Media create the "race debate"

The media have done enormous damage to our reputation by portraying Australia as a racist country. They picked up on a few words of Pauline Hanson about being 'swamped by Asians' and turned them into the greatest beat up of the decade.

In his excellent book, "Among the Barbarians - the Dividing of Australia", author and journalist, Paul Sheehan puts the blame squarely on the media for the racist image of Australia. He quotes author, Helen Dodd:

Styled as the 'race debate', it was never a debate among average Australians. It was written, orchestrated and performed by the media. The media have peddled the idea that Australia is a racist country so widely that our Asian neighbours are beginning to accept this twisted reporting as fact and the media have now placed Australia in a precarious position.

Sheehan says (P165):

Trevor Watson, a former head of ABC radio, crystallised the problem at a conference on the Australian news media in 1996. 'Today the emphasis seems to be on conflict and sensation. The objective doesn't seem to be to inform the public any more, it seems to be to entertain the public through some sort of conflict.' He described Australia as a tolerant, non-racist country but a very different impression was given to Australia 's Asian neighbours by the media's coverage of the Hanson debate. The Hanson public relations disaster for Australia in Asia was largely media-made.

The West Australian.

Most of the recently published letters to the editor are anti-Hanson. On Friday 19 June all of the published letters were anti-Hanson. Yet on the same day, radio 6PR commentator, Howard Sattler (one of the few commentators to give Ms Hanson a fair go) interviewed an analyst who had tabulated over 700 radio talk-back calls throughout Australia in the past week and who reported that Hanson calls were running at around 70% in her favour.

The West Australian editorials are virulently anti-Hanson. Andre Malan, chief head-kicker at the West, has written a series of scurrilous anti-Hanson articles. When I wrote a letter to the editor in response, it was naturally not published.

The Australian

The Weekend Australian June 20-21, 1998 has gone quite crazy with anti-Hanson paranoia. While the editorial piously lectures John Howard on how to eradicate Pauline Hanson as if she were a type of virus, page after page of slanted articles set out to denigrate her.

Commentator Shelley Gare goes right over the top by suggesting Pauline Hanson is having it off with various unnamed persons. This exposes the incredible hypocrisy of the media. There has always been an unwritten media rule not to report on the after-hours activities of our esteemed representatives in Canberra . If it wasn't for this hypocritical censorship then perhaps at least one Prime Minister may not have made it to the Lodge. Yet Ms Gare is quite prepared to set tongues wagging with her nasty little piece.


Exciting time to be an Australian conservative!

Centre-right social progressives might not like social conservatism. But there has never been a more exciting time to be an Australian conservative!

Liberal Party moderates like the Prime Minister Malcolm Turnbull need conservatives — like Senator Corey Bernardi — if they are to have any hope of prosecuting their economic reform agenda. However, some of us knew that running on a socially progressive and economically dry program bereft of conservative values was a losing strategy long before election night rolled around.

At a lunch last month with a cast of sound members and fellow travellers of the centre-right, we enjoyed the customary sport of an election season — noting around the table our fearless predictions of the federal poll outcome.

The general consensus was that the Turnbull government would be safely returned but with a loss of five seats, at best, or maybe 10 seats, at worst. Up against Bill Shorten’s Labor Party, the Coalition would record a comfortable majority, with the thinking being — straight out of Liberal Party HQ — that support in the critical marginal seats was holding up.

I was the only person that predicted a Labor victory “by a few seats.” With the Turnbull government having been narrowly returned by the barest of margins, my prediction wins the prize for being closet to the pin.

Yes. I crow. But I do so to highlight the significance of the election result concerning the ongoing ‘little local difficulties’ on the centre-right between the moderate and conservative factions.

My prediction was based on the feeling that I simply did not know on what issues the Australian people were being asked to return the Turnbull government. ‘Jobs and growth’ struck me as an uninspiring and yet risky campaign slogan that only a merchant banker could love. Along with ‘innovation’, I thought it might struggle to resonate with the Australian electorate.

These concerns were reinforced when I watched Mr Turnbull give an address at the Menzies Research Centre. It was a good speech that outlined the elements of his ‘plan’ to secure Australia’s economic future through jobs, growth and innovation.

Politically, it would have been a fine speech if given by the Treasurer, or another minister in a senior economic portfolio. The problem, however, was that this was the Prime Minister’s stump speech. It was a cerebral address pitched to appeal to people’s sense of reason and logic, located above their necks. Unfortunately, in politics, people tend to vote based on the emotions located between their neck and their knees, and usually centred around either their guts or hip pockets.

That speech, together with the general tone of the Coalition’s campaign, was indicative of the Prime Minister’s unwillingness to do the hard political yards that would make it possible for him to implement his economic agenda. Labor’s disarray on border protection, the ‘fairness’ controversy over Duncan Storrar, and the Safe Schools farrago now all look like missed opportunities.

On all these issues — ‘boats, bludgers and bendy gender’ — the Prime Minister had nothing to say during the campaign. Running on this kind of triple appeal, pitched to the sensible centre of average voters, strikes me as the kind of strategy that would have won the hearts and minds of middle Australia; and especially among disaffected conservative Coalition supporters angered by the removal of Tony Abbott.

But tacking to the so-called ‘hard right’ on social issues was a no-go zone for Prime Minister Turnbull.

Moderates need the kind of political instincts that conservatives possess to win government and get the chance to implement a dry economic agenda. Because as the Turnbull campaign proved,  running a dry agenda in isolation is a recipe for electoral disaster.

This is not a surprise outcome. No government in Australian history — not even the much sainted Hawke-Keating and Howard-Costello governments of the era of reform in the 1980s and 1990s — has ever explicitly campaigned on an ‘economically rationalist’ agenda. John Hewson, before Turnbull, was the only Liberal leader who tried … and catastrophically lost the ‘unloseable’ 1993 election.

That was only the second federal election won in its own right by the Labor Party since 1990. The other was the 2007 ‘Work Choices’ election. Both victories were based on Labor running hard on bread and butter issues; a portent we have seen repeated with Shorten’s successful ‘Medi-Scare’ tactic during the 2016 campaign.

The lessons of all this history and recent history seem to be this: the Labor Party does well when it runs a traditional hip pocket campaign. The Coalition does poorly — and plays into Labor’s hands — when it is wedged on ‘economically rationalist’ policies. Furthermore, we now know that  the Coalition wedges itself when,  as Turnbull did, it runs on a dry economic agenda alone and ditches any pretence to represent its conservative base; whose values, of course, are much pretty much closely aligned with much of middle Australia.

Running on the social agenda preferred by the left-aligned ABC, Fairfax and the universities — as Turnbull implicitly did by omission and remaining silent on the heartland conservative issues noted above — is a political dead end for the centre-right because these groups and these issues have little influence over the marginal voters who actually determine who forms government. As the shedding of more than one-million votes for the Liberal Party has comprehensively proven, tacking to the left means you lose more friends on the centre-right than you gain on the centre-left.

The election result speaks for itself.  The Australian people were lukewarm at best about the combination of social progressivism and economic rationalism that was offered to them — which turned out to be a doubly losing hand for the Coalition. Moreover, the pretext on which Abbott was removed last October — that his unfashionable social conservatism was getting in the way of Turnbull governing and reforming effectively — has now been exposed as a fantasy, blind to hard political realities, as it always was.

The fact that there are many conservatives on the centre-right is not, and never was, the major impediment to economic reform. The problem with economic reform is that the centre-right has not — anywhere in the world —come up with a viable political strategy to scale back unsustainable health, education, and welfare entitlements. The overarching lesson of the election, however, is the vital importance of the broad church on the centre-right as the foundation of an election-winning strategy that makes reform and good government at least possible.


The tax issues were mishandled in the election
Michael Potter 

The recriminations about the election are well under way, but have largely excluded discussion about tax -- an unfortunate omission.

The tax burden was expected to go up under either major party, but by much more under the ALP; going well above its previous all-time high. This point was first made by the CIS and then in the Financial Review.

The ALP's plans were for the tax burden to reach levels $9.7 billion above the previous record set by the Coalition in 2005 -- despite the ALP criticising the Coalition for this earlier record tax burden. The coming burden was set to hit 24.8% of GDP in a decade, which is $19.2 billion above the cap (23.7% of GDP) that the ALP previously, and frequently, argued it would adhere to.

These contradictions were missed in the campaign, with the overall tax burden rarely discussed.

There was also pretty facile discussion of individual taxes. Unfortunately, it might seem that the company tax cut was poor politics. However, it was  good policy : perhaps even  great policy. But, like many other major reforms -- such as cutting tariffs and privatisation -- it is not good politics in the short term. The political benefits show up in the longer term.

Politically, perhaps the Coalition should have proposed a company tax cut fully funded by base broadening measures, if any still exist, or (preferably) cuts to business subsidies. This would have forestalled the fallacious arguments that big business, foreigners and rich people gain most from the tax cut.

The Coalition also failed to argue against proposed tax hikes. The Coalition largely did not challenge the ALP's policy to reinstate the 2% temporary deficit levy on high income earners. And why was the Coalition largely silent on the ALP's proposed large increase in capital gains tax? Why didn't they argue this would cripple innovation, small business retirement plans, and plans to make Australia a financial centre, while overtaxing most capital gains?

The debate over negative gearing was slightly better, but the focus was often on whether the rich or the poor benefit, even though the arguments were often wrong and largely second order to the debate over the policy itself.

Overall, a lamentably poor campaign for those wanting a better tax system with lower tax levels.


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