Tuesday, January 02, 2018

Australia's greenhouse gas emissions increase for third consecutive year

These figures are very dodgy. There is no way such a figure could be directly measured. They are estimated by adding together the amount of cement produced, the amount of coal mined and the number of sheep farting etc.  There are many ways that could be inaccurate. Such figures could be fairly good at enabling year to year comparison but fluctuating commodity prices are a big influence on Australia's economic activity so are probably much less accurate than world figures, where losses and gains are more likely to average out

And what does it matter anyway?  Belief in global warming is just climate bigotry -- impervious to any evidence about the  truth or falsity of the theory

New Environment Department figures shows gas emissions grew by 0.7 per cent last financial year, which has been blamed on an increase in gas production and exports.

That comes after a 0.8 per cent increase during the 2015/16 financial year, which was accompanied with a warning Australia was not on track to meet its 2030 emissions reduction target.

But Energy Minister Josh Frydenberg said the latest data showed the Federal Government was expected to achieve its 2020 climate change target reduction of 294 million tonnes compared to 2000 levels.

In a statement, Mr Frydenberg said Australia was, "[continuing] to close the gap on the 2030 target" despite the annual increase in gas emissions.

"Australia beat its first Kyoto Protocol target by 128 million tonnes of emissions, and updated data released today by the Department of Environment and Energy shows Australia's emissions are now at their lowest level in 28 years on a per capita and GDP basis," Mr Frydenberg said.

Opposition energy spokesman Mark Butler said the Government's revised emissions targets for 2030 would only be 5 per cent below 2005 levels.

"Ignoring land sector emissions, 2030 emissions are projected to be almost 10 per cent higher than 2005 levels," Mr Butler said.

The Environment Department's long-awaited review of climate change policy found Australia accounted for 1.3 per cent of global carbon emissions.

Mr Frydenberg said the report proved the Federal Government had the right mix of policies to meet climate change goals, while also securing reliable and affordable power supply.

He said the emissions reduction fund was now, "one of the world's largest domestic carbon offset markets" with more than 191 million tonnes of abatement secured with an average of price of $11.90 per tonne.

The department report also considered the role of international emissions trading, with the Federal Government now giving "in-principle support".

This would allow businesses that have low emissions to sell excess usage to other organisations that have higher pollution rates, which may help reduce compliance costs.

"The final decision on the timing and appropriate quantity and quality limits will be taken by 2020 following further consultation and detailed analysis," Mr Frydenberg said.

Climate Council chief executive Amanda Mackenzie said the latest figures showed Australia risked becoming, "the global climate laggard".


2018: Crunch time for Australia’s economic renewal

Company tax a big issue

As many of us enjoy the holiday ritual of heading to the beach to unwind and recharge, we can reflect on a year that ends in better shape than it began.

Despite frustrating Senate intransigence and a revolving door of federal MPs tripped up by citizenship issues, many more Australians have found work and non-mining business investment is turning the corner. A national plan for reliable, sustainable and affordable energy exists, and our budget position is on the mend. Green shoots are appearing.

During the break we cannot afford to lose this hard-won momentum; we cannot rest on reform.

Next year, the Australian community is counting on us to develop the conditions to compete globally, create and expand businesses, generate the jobs of the future, improve productivity, help lift sluggish economic growth and deliver higher wage growth.

We cannot sleepwalk during the summer while other nations surge ahead, re-energising their economies after the global financial crisis.

This time last year I described US President Donald Trump’s platform of aggressive company tax cuts and deregulation as a global game changer. The Business Council of Australia has spent the past 12 months sounding the alarm on the dangers to the nation of a seismic tax shift in the US. Those risks are now a reality. Congress has green-lighted a drop in the US company tax rate by 14 percentage points to 21 per cent almost overnight. The modest plan for Australian business, which remains bog­ged in the Senate, proposes a gradual reduction in the tax rate of five percentage points across a decade.

Our company tax rate has been frozen for 16 years while the rest of the world has pushed us further down the international leaderboard. Without urgent action, our competitiveness is at risk; next year is crunch time for Australia.

The Trump tax cuts represent a de facto tax increase on all Australian businesses as we battle for global investment. Safeguarding Australian jobs, living standards and economic growth will require action to keep us competitive. The government’s enterprise tax plan will help do that. The International Monetary Fund and Treasury are clear: without reform we will see capital sucked out of the Australian economy.

The US is not alone in moving to supercharge its economy. Belgium is close to passing legislation to reduce its company tax rate and even France, which traditionally has put high taxes on business, has announced a significant reduction from 33 per cent to 25 per cent.

The average company tax rate across the OECD is 24 per cent and falling. The average across Asia is 21 per cent. Britain is moving to 17 per cent.

There is a plan on the table to ensure Australia doesn’t slip further behind. Next year, let’s just get on with it.

As we head into the new year, business knows it, too, must get its house in order. We will continue to tackle the lightning rod issues that bug the community.

With many Australians worried about the rapid pace of technological change, business understands we must take ownership of the transition already under way in our workplaces.

We need to explain the impact of new technologies and ensure workers have the skills for the years ahead. This will be a major focus of the Business Council during the coming months.

Another area of concern we worked through this year was addressing the complaint that big business failed to trade fairly with small business.

In response, we developed the Australian Supplier Payment Code. This voluntary industry-led initiative sets fair terms to pay small business suppliers within 30 days. The combined turnover of signatories so far to the code is $400 billion, and these organisations employ nearly 400,000 people.

The BCA and the Council of Small Business Organisations of Australia also signed a memorandum of understanding, committing us to work collaboratively on issues such as taxation and workplace relations.

We recognise the best policies are those that encourage the growth of all existing businesses and help create new businesses.

We must now remind Australians of the enormous contribution business — large and small — makes to their lives every day.

From the people serving at the checkout to the truck drivers and the workers on the front desks, business keeps the country running. We are pivotal to creating jobs, expanding the economy and delivering the wealth and economic prosperity the community shares.

Business employs 10 million of the 12 million working Australians. The tax businesses and their employees pay provides about $235 billion, or 60 per cent, of the taxes that underpin the services we want and expect. Business represents almost six million mums and dads who own shares in Australian companies that pay dividends and taxes. It’s where our superannuation is invested.

Business isn’t a villain; it’s absolutely essential to our economy.

Without business, the world would be a very, very different place. An anti-business agenda would spell disaster for the country. There would be little job creation, let alone wage growth. The best way to boost wages is through productivity improvements, a more competitive economy and a focus on growth.

This means creating an environment that allows business to thrive. We need to reduce the unnecessary red tape and regulations that cripple Australian businesses from responding and adapting to economic change.

We also need to be armed with a well-trained and highly skilled workforce.

Earlier this year, I took the unusual step for a chief executive of the BCA in calling for a new form of protectionism. By this I didn’t mean winding back the clock and retreating to trade barriers and inefficient industry subsidies. Instead, I want to see Aus­tralia protect our capacity to com­pete on a global stage, protect our ability to develop new businesses and expand existing ones that can export around the world. We need to safeguard our ability to innovate and to protect the creation of rewarding, high-paying jobs.

This new Australian protectionism can help ensure we are the most skilled, the most trained and the most resilient people on earth. Why shouldn’t this be our aim? Australians deserve nothing less.

As technology transforms the economy, we need to future-proof ourselves. But first we need to rebuild our tertiary education system, tearing down the silos between higher education and vocational education and training.

Next year, the BCA will continue to press the case for a single tertiary funding system to ensure no Australian falls through the cracks of a changing workforce.

The VET sector is the main vehicle for training workers for some of Australia’s biggest employers and industries. It will be crucial in retraining and expanding the skills of workers for the jobs of the future. By shifting to one tertiary funding system, we can help break the stigma that a vocational qualification is any less prestigious than a university degree. It is not.

I am proposing each Australian be given — and be in control of — their own portable lifelong skills account.

This would enable them to study short courses and modules from a university or a VET provider to build on their existing qualifications, essentially piecing together the credentials they need for the new world of work.

I am urging all parties to focus on the holistic reform of the tertiary sector to ensure it is more responsive to the demands of future workplaces and the skills mix workers will need.

As we enter the new year, we have an opportunity to build on the tentative signs of economic renewal under way.

The release last week of the mid-year economic and fiscal outlook confirms Australia’s revenue growth overwhelmingly is driving the improved budget position.

If parliament is unwilling to support the government in its efforts to restrain expenditure, then business will need to do the heavy lifting on delivering economic growth.

The outlook forecasts economic growth of 2.5 per cent in 2017-18, lifting to 3 per cent in 2018-19. We can no longer continue to accept annual growth with a two in front of it.

The IMF warned last month Australia’s economic recovery was lagging that of other major countries. Now, more than ever, we must pull out all stops to accelerate economic growth and boost investment to ensure businesses can generate revenue and stronger growth.

We cannot simply tread water. Let’s pick up the pace and make real progress in narrowing the gap with our global rivals. Let’s bring it home next year. Introducing a fairer, competitive company tax system that ensures Australian businesses are no longer forced to compete with one arm tied behind their backs is a good starting point.

Regaining our global compet­itiveness is not about statistics; it’s about protecting our quality of life.

It’s about restoring Australians’ sense of hope, rekindling their aspirations for themselves and their family. It’s about ensuring they have a good job and can build a better life.

We want every single Australian to have the opportunity to realise their potential. We want Australians to be rewarded for their hard work, ambition and drive, and to feel that together we are moving ahead.


Australia's least-competitive industries earning big profits

Economists have no quarrel with businesses making profits. The shareholder-owners who provide the financial capital needed to sustain those firms are entitled to a return on their investment, one that reflects not only the (opportunity) cost of their capital, but also the riskiness of the particular business they're in.

Economists call such a return on equity "normal profit". But sometimes the various barriers to new firms entering a market limit competition, allowing the incumbents to make profits in excess of those needed to induce them to stay in the industry.

These are called "super-normal" profits (super as in "above"). Now get this: the other name for super-normal profits is "rents" – economic rents, to be precise.

We're used to thinking of rent-seekers as businesses or industries that ask governments for special treatment. But it's common for rents to be sought in situations that have nothing to do with government favours.

One of the most informative pieces of economic research undertaken last year was conducted by Jim Minifie, of the Grattan Institute, who made detailed estimates of the economic rents being earned in particular industries – something no government agency would be game to do.

He focused on the two-thirds of the economy made up by the "non-tradable private sector", excluding export and import-competing industries and the public sector.

He found that the annual return on equity in the most competitive part of this sector averaged 10 per cent. That compares with returns exceeding 30 per cent in internet publishing, which includes online classified advertising of homes, jobs and cars.

Then came internet service providers on 25 per cent and wired telecom on a fraction less. Supermarkets were on about 23 per cent, sports betting on 22 per cent, liquor retailing on 19 per cent, and wireless telecom and (get this) private health insurance on about 18 per cent.

Delivery services and fuel retailing are on 15 per cent, with banking not far behind on 14 per cent, level pegging with electricity distribution and airport operations.

But the rate of an industry's super-normal profit or economic rent isn't the same as its absolute amount. Most industries with very high rates of profit are quite small.

Measured in dollar terms, the most rents are in banking, followed by supermarkets, electricity distribution (just the local poles and wires), wired and wireless telecom.

Minifie estimates that rents account for 20 per cent of the non-tradable private sector's total annual after-tax profits of $200 billion. This is equivalent to more than 2 per cent of gross domestic product.

Another way to judge the significance of super-normal profits is to express them as "mark-ups" – as proportions of total sales.

The average mark-up across the whole non-traded private sector is 2 per cent. So, if rents were eliminated, but costs didn't change, average prices would fall by 2 per cent.

Within that average, however, the mark-up in internet publishing is 26 per cent. Then come airport operations on 20 per cent, wired telecom on 19 per cent and electricity distribution on 12 per cent.

Further down the league table, electricity transmission – the high-voltage power lines, not the local poles and wires – has an estimated mark-up of 7 per cent.

But get this: the banks' mark-up is just 4 per cent and the supermarkets' is a bit over 3 per cent.

How come, when super-profits account for more than half the supermarkets' total profit? Because supermarkets are a high-volume, low-margin business (as are banks).

Minifie notes that Coles and Woolworths are so big they achieve huge economies of scale. And, as dairy farmers well know, they achieve further cost savings by using their market power to force down the prices they pay their suppliers.

Trick is, they pass much of these cost savings on to their customers, but keep enough of them to remain highly profitable.

Coles and Woolies have substantially higher profit margins than their smaller rival IGA, even though their average prices are lower than IGA's prices. So the big two's costs must be a lot lower than IGA's.

The list of industries with the highest super-profits reminds us how badly governments have stuffed-up the national electricity market, how much better they could be doing in controlling the prices of monopoly businesses such as Telstra, airports and port terminals, and in charging for liquor and gambling licences, not forgetting the indulgent treatment of private health funds.


Turnbull and Shorten face the battler factor in 2018

The political signposts this month show the coming year will provide some pretty brutal lessons for our political elites, at state and federal level. Whether they pay attention is up to them. On past experience, they probably won’t.

Signpost No 1

The New England by-election of December 2

An extraordinary swing towards Barnaby Joyce, despite his Kiwi citizenship woes, confirms that a candidate who can connect with voters at a grassroots level can overcome any number of hurdles.

This seat in northern NSW teems with a demographic readers will recall as “Howard battlers”. This group is socially conservative, has a lower-than-average income due partly to a heavy reliance on commonwealth welfare cheques, and tends to live in regional areas or on the urban fringes.

They are the digitally disrupted, out of work or underemployed as a result of declining or automating manufacturing. And they are the closest thing Australia has to Trump and Brexit voters.

Joyce’s rural reawakening had him talking about the sorts of issues we used to hear on ABC radio’s Country Hour in the 1960s: export prices, local jobs, farm debt, and bringing the Canberra public service closer to the voters and taxpayers it is meant to serve.

There seemed to be a focus on the local positives and a lack of the debilitating and mutually destructive negative campaigning that helped erode primary vote support for the Coalition and the Labor Party last year down to the lowest levels in their history: 42.1 per cent and 34.7 per cent respectively.

The impact of this style of campaigning can be measured by the result, which was a 7.2 per cent swing to Joyce, despite by-elections normally going against the government of the day.

And this in a state where at the last state election our modelling showed the Nationals brand was on the nose, as the local Liberals weren’t voting for the Coalition’s junior member. They certainly did this time, as did many working-class Labor voters. It turns out that, compared with last year, Joyce won more votes from country families of the sort that used to dominate the old Queensland Howard battler profile back in the noughties.

These voters re-elected the old populist ALP premier Peter Beat­tie in February 2004 with 56.4 per cent of the two-party-preferred vote and then, eight months later, returned John Howard as the Coalition prime minister with 57.2 per cent of the 2PP vote.

Voters for Joyce included a large bloc of welfare recipients chasing cheaper housing on the outskirts of town, middle-income male tradies, male hospitality workers, renters, European migrants and — the clincher — traditional Labor voters. We even noted the presence of public servants, presumably including those who at first didn’t want to move from Canberra (check out our online map at elaborate.net.au, where the swing map shows you the impact of each demographic group and how it helped).

The battler demographic is strongest in Queensland and NSW. One Nation hoovered them up as Senate primary votes last year. One Nation’s impact on the Coalition primary vote is stark. According to quarterly state breakdowns of Newspoll published in The Australian on Tuesday, the Coalition’s primary vote in NSW fell from 41.9 per cent at the federal election last year to 35 per cent in the three months to December. And the Liberal National Party’s primary vote in Queensland since last year’s federal election is down from 43.2 to 32 per cent.

In the same timeframe, One Nation’s primary vote in NSW has lifted from 0.6 per cent at the federal election last year to 10 per cent in the three months to December. In Queensland, it has moved from 5.5 per cent to 15 per cent.

If you want to see where such voters live, drive through Longman, the highly marginal federal electorate north of Brisbane where Labor’s Susan Lamb may face a by-election early next year due to a possible referral over British citizenship. Labor won the seat last year on One Nation preferences.

If, next year, the LNP fails to hold or improve on its 2016 vote in this seat, you can be sure the Coalition cannot win enough seats to survive the next federal election, due by mid-May 2019. The Howard battler voting bloc represents 13 per cent of Queensland voters and holds the key to the outcome of the next federal election. Members such as Joyce are a defence against its defection.

Signpost No 2

The Bennelong by-election of December 16

When political commentators look at voting trends, they can be too quick to point to religion or ethnicity as a driver of voting behaviour. Working-class Australians are apparently a bit harder to notice for some commentators, who more readily spot a Muslim in traditional dress. Similarly, a young, second-generation Australian professional family becomes a Chinese voter. This is more of a comment on the commentator than the group in question.

The significance of the same-sex marriage process became apparent when our research at Australian Development Strategies broke down the Bennelong vote booth by booth.

The contest involved a sitting member, John Alexander, whose 2016 vote we modelled as being about 7 per cent above what it should have been.

In other words, Alexander turned a 53 per cent Liberal seat into a 60 per cent seat because 7 per cent of typical Labor voters liked him enough to vote for him.

Many of these voters would have been of Chinese ancestry, as Bennelong is the seat with the highest percentage of Chinese speakers in the country, at 20 per cent. So, if the Chinese like you in Bennelong, you’re doing OK. And according to my source of advice on China, a professional of Chinese and Australian ancestry, Alexander appealed because “he’s had a distinguished national career as a sportsperson, and he’s an older bloke with some grey hair and a Western name”.

At the by-election we saw a roughly 5 per cent swing against Alexander. Commentators seized on how the Chinese community voted, especially in view of the federal government’s recently unveiled foreign interference laws. We also had just seen the demise of young ALP senator Sam Dastyari, who, it is fair to say, is pretty close to a few members of Australia’s Chinese community, as indeed are many other politicians.

To give credit where it’s due, Labor opponent and former NSW premier Kristina Keneally did her best, putting on the Chinese favourite colour red whenever possible. But she was relentlessly negative about pretty much anything to do with her opponents.

Yet when we had a look at modelling the result, Chinese ethnicity faded from significance. The swing against the Coalition was largely driven by the progressive left, including groups that opposed holding the same-sex marriage pleb­iscite but ended up voting Yes. The swing against Alexander was also the result of the conservative demographics in Bennelong — those who supported the No position in the plebiscite and who then opposed the limited amendments to the Marriage Act passed on December 7, little more than a week before the by-election.

The working-class religious right didn’t flirt with the Australian Conservatives in Bennelong: it just voted Labor, joining the progressive left.

You’d have to say it takes a particular set of political campaigning skills for a government to come up with a non-binding plebiscite supported by more than six out of 10 Australians that still costs it votes the week after the enabling legislation was passed.

The only thing that held the government vote together in Bennelong in the last week of the campaign was the big group of mainstream middle-class Australians who voted Yes to same-sex marriage and are still wondering what the fuss was about.

The lesson here for the government next year is that sometimes you lose more in the long run from always following the soft option — in this case a plebiscite. Think banking royal commission.

Across both seats, New England and Bennelong, we saw a range of swings of up to 12 per cent for and against the Coalition, but an average swing to the Coalition of about 1 per cent.

This was in a sample of two seats out of 150, one urban, one mixed rural and provincial, with the same sitting members. The idea that you can apply the swing in Bennelong to a swing pendulum and call this a landslide for the opposition makes sense to Bill Shorten and Keneally, but not to me.

The trends in by-elections early next year — we could see them in the Labor-held seats of Batman (Victoria), Fremantle (Western Australia), Braddon (Tasmania) and Longman (Queens­land), the Xenophon seat of Mayo (South Australia), and perhaps the Coalition seats of Chisholm (Victoria) and Mitchell (NSW) — will depend to a great extent on the state of the labour market at the time. And the battlers.

Signpost No 3

The December 19 Newspoll

This showed 46 per cent of South Australians support Nick Xenophon as premier and 32 per cent support his SA Best candidates. In theory, this means South Australian voters on March 17 may elect Xenophon as premier and prove voters have a choice when inept political machines and factional timeservers keep dishing them up profoundly underwhelming leaders and opposition leaders.

Now, there’s a tough option for our political class in Canberra.

At the moment, given the extraordinary level of hostility to the major parties in SA and the corresponding support for Xenophon’s party, the SA seat of Mayo would easily be retained by Rebekha Sharkie if she were able to run.

A by-election in the inner Melbourne seat of Batman, reportedly without a Coalition candidate, would be won easily by the Greens.

My Tasmanian sources tell me local “rough diamond” Jacqui Lambie could win the northwestern provincial seat of Braddon if she ran against Labor’s Justine Keay, as the conservative Tasmanian Liberals have an unfortunate tendency to put up candidates who can win preselections but not elections.

The Liberal Party’s federal vote in Western Australia has been improving since the demise of the unpopular Barnett state government, but this will not have an impact on Labor’s Josh Wilson holding Fremantle in an early by-election, as the seat is safe Greens-Labor.

The Liberals probably could facilitate a Greens victory by not running — but that would require the Liberals admitting they couldn’t win, and this probably would be beyond them.

Longman would be retained by Labor’s Lamb, given the bureaucrats now running the Queensland LNP are busy trying to pretend they did a great job in losing the state election last month, if only they could stop people talking about it in public. So I’ll do it for them. The combined LNP was a good idea when we had optional preferential voting in Queensland elections. Now we don’t, and this has made the LNP country candidates more fearful of One Nation and the LNP urban candidates more vulnerable to the Greens and Labor, as we saw in the recent state election results.

This is why rural LNP members such as George Christensen and Keith Pitt have threatened to quit the LNP, and why LNP urban state MP Scott Emerson lost Maiwar to the Greens.

If Labor was comfortably returned in Longman it would be a sign the game was up for the Coalition, as Longman is a blue-ribbon Howard battler seat. If Labor can win and hold this demographic, the party can win regional Queensland and urban fringe seats across the nation.

Chisholm could be interesting if Liberal MP Julia Banks somehow found herself up for a by-election, which I think is unlikely given the referral mechanisms likely to be employed. It’s a bit of a Melbourne sister seat to Bennelong, with a very strong aspirational Chinese community focused on educational opportunities in local state schools and has a large migrant community.

Its base level of support for Labor in our model is about 54 per cent and Banks won it last year with a strong personal vote of about 6 per cent. The odds would favour Labor winning narrowly in a by-election.

Alex Hawke would easily retain the NSW safe Coalition seat of Mitchell if he were forced to face a by-election, although I can’t see that happening.

Overall, you’re looking at mixed bag here, with Labor losing up to three seats to Greens or independents and the Liberals under threat in Chisholm, with no chance of winning back Mayo from the Nick Xenophon Team.

This means Labor is the party likely to be going backwards federally next year, putting pressure on Shorten, a bloke looking increasingly like a Labor version of former Liberal prime minister Billy McMahon, a man renowned for his skill at white-anting leaders and self-serving political intrigues, if not for his popularity or electoral success.

The worst that could happen here would be for Malcolm Turnbull to lose Shorten as Opposition Leader because his replacement would be Anthony Albanese and that would spell big trouble for the Coalition. I think this is likely to happen, probably just before the next federal election, as we saw in New Zealand — and closer to home in 1983, when Bill Hayden surrendered the ALP leadership to Bob Hawke.

Longer term, if the next federal election isn’t held until early 2019, we can expect to see continuing Labor governments in Queensland, Western Australia, Victoria and possibly South Australia, and probably a new Labor government in Tasmania, where Opposition Leader Rebecca White looks like she can win in May.

These will be a plus for the federal Coalition, as big-spending, ideologically driven Labor state governments become vote losers for Labor’s federal candidates when local voters find all the red overdue notices hidden behind the kitchen dresser and their taxes start to rise.

The really heavy lead in the saddlebags for the federal Coalition is the big-spending and highly factionalised Coalition government in NSW, whose vote will drop during the next 18 months in direct proportion to the drop in house prices and associated state revenues.

This is why I would expect to see the Prime Minister hang on for his federal election until the last possible date of mid-May 2019, after the NSW election set for March 23. At that time, we can expect the federal government to reach for the personal income tax cuts, as for Labor this is a promise too hard to match, given its spending commitments to public sector unions. Against Shorten as alternative prime minister, this could be enough.


Posted by John J. Ray (M.A.; Ph.D.).    For a daily critique of Leftist activities,  see DISSECTING LEFTISM.  To keep up with attacks on free speech see Tongue Tied. Also, don't forget your daily roundup  of pro-environment but anti-Greenie  news and commentary at GREENIE WATCH .  Email me  here

1 comment:

Paul said...

The success of Shane Knuth on the Tablelands was also a good example of a candidate connecting with the grass-roots through sheer hard work.