Chesty Bonds – another iconic brand, now made in China

The Chesty Bond singlet, something of an iconic Australian brand, used to be made in Australia, but is now made in China.

Chesty Bonds: now made in China

I find that a little sad, but I suppose it’s a sign of the times.

I seem to recall hearing on the news the other week that manufacturing as a percentage of Australia’s Gross Domestic Product had fallen from 12% to 8% in recent years, and figures on TradingEconomics.com appear to back that up.

Buy your kids a job - Buy Australian, in Richmond

At least one group of manufacturers get massive subsidies: the car industry. How much? This Productivity Commission report noted:

The estimated total net subsidy equivalent for the automotive industry of $1.13 billion is equivalent to $23 500 per worker, based on employment levels of 48 000 (based on employment data classified by ANZSIC codes drawn from ABS 2007a).

Wow. And that was in 2008… recent grants would imply it’s jumped since then.

And now for some economics and politics

This might not be everybody’s cup of tea, but there was some fascinating reading on economics and politics in last week’s media, and since I have nothing else for you, here it is in my blog:

Bernard Keane on Access Economics’ poor record on forecasts:

Then there was Access’s early 2009 warning that it would be “impossible to avoid a recession“. The Rudd government promptly did exactly that.

Michael Pascoe on why Abbott’s opposition to the Resources Rents (Mining) Tax is flawed:

The immediate test of whether a party is fit to govern is the minerals resources rent tax (MRRT). In economic terms, it’s a no-brainer, which is why the opposition’s stance is such a worry. Either there are no brains, or the leadership is so pathetically shallow that they are prepared to damage the country to get the keys to the Lodge.

Laurie Oakes agrees, and also discusses the Opposition’s stance on other issues:

Pointing to Australia’s Budget deficit, the Opposition Leader thundered: “Why is the Government planning to provide money it does not have to prop up the eurozone, which is the world’s biggest economy?”

ABBOTT knew – or should have known – that Australia’s contribution to the IMF would be in the form of a loan, with no impact on the Budget bottom line. In fact, it will earn interest.

Federal issues

I would hope that everyone is actually considering what issues matter to them, and deciding how to vote on that basis, rather than just blindly voting for one side or the other.

Of course, it’s not just a matter of chosing Labor or Coalition, particularly in the upper house. It may well be that The Greens get close to having the balance of power in the Senate.

Here are some quick and not-necessarily very well thought out notes on a few Federal election issues.

The economy, the budget and the GFC

Seems to me that the Australian economy didn’t suffer as much in the GFC due to the management of past governments of both sides, going back a decade or more.

The relatively well-regulated banking sector (compared to places like the US), put in by Hawke/Keating and maintained by Howard ensured the financial institutions didn’t collapse as they did in some countries. Howard handed over a healthy surplus to Rudd.

Yes, the government’s in debt now, due to stimulus spending which appeared to work in terms of keeping unemployment levels down.

The schools stimulus? People are complaining, and there were definitely problems with the implementation, but my kids’ current and past schools both benefited from new buildings, so it’s not like it didn’t have its plusses… and only 2.7% of schools complained. Ditto the home insulation scheme (see below).

To draw a possibly shaky analogy, the stimulus spending is a bit like Y2K — people complained that the effort expended wasn’t worth it because they didn’t see big problems eventuate. When Y2K happened, I saw small problems, and it was pretty obvious to me that if the work hadn’t been done, there would have been HUGE problems.

To quote Joseph Stiglitz (some guy who’s won a Nobel Prize for economics):

If you hadn’t spent the money, there would have been waste. The waste would have been the fact that the economy would have been weak, there would have been a gap between what the economy could have produced and what it actually produced – that’s waste. You would have had high unemployment, you would have had capital assets not fully utilised – that’s waste. So your choice was one form of waste verses another form of waste. And so it’s a judgment of what is the way to minimise the waste. No perfection here. And what your government did was exactly right. So, Australia had the shortest and shallowest of the downturns of the advanced industrial countries.

Both sides claim they’ll get the budget back into surplus within a few years, so I don’t see a major problem here. Again, it’s not like we’re in the deep hole the US or Greece or plenty of others are in. I don’t at all have a problem with borrowing to make worthwhile investments. Heck, most of us do it.

As for claims the coalition are better economic managers, it seems Joe Hockey keeps making mistakes in his statements on the matter.

Emissions and environment

This is my major problem with both major parties: they don’t have a coherent plan to cut emissions; just vague and/or not-very-impressive goals.

Labor’s insultation insulation scheme was a great idea — it hit the buttons of stimulus spending to help employment, and real action to reduce energy use and emissions. (Someone should publish a study on how much energy it’s saving this winter.) But it was terribly badly implemented, with cowboy operators taking advantage, resulting in unsafe work, numerous fires and the tragic deaths of installers.

The Coalition say they’ll meet their emissions reduction target. But their target of 5% reduction (from 1990 levels) by 2020 is pathetic.

Population and immigration

Demographer Peter McDonald warns that we are blaming migrants for our failure to plan cities properly. I couldn’t agree more.

If we choose to do it and manage it well, Melbourne could become bigger in population, without PT becoming unusable, and without sacrificing livability. Other cities have managed it. Whether that’s what we want is the question; not where the people come from.

Given such a tiny proportion of immigration is refugees arriving by boat, neither party is really addressing the real issues here. And any promise to cut migration is pretty empty, given it’s already dropping rapidly.

National Broadband Network

The distorted, out of sync video of Julia Gillard’s press conference via a broadband connection from Cairns shown on ABC News 24 on the 4th of August was evidence that some parts of the country are missing out on the biggest benefits of high-speed broadband.

Gillard live from Cairns via dodgy broadband

Maybe it’s not a problem if the Real Julia is out-of-sync and suffering from MPEG compression artefacts, or if the kids in the outback can’t watch HD Youtube of someone’s cat. It might be a problem if it were a connection set up between a patient and a medical specialist though. And it may well hold back development of high-tech industry (and more importantly, high-tech assisting other industries) in some parts of the country.

But while I’m convinced of the benefits of a high-quality high-speed broadband network, I’m in two minds about whether $43 billion of public money should be paying for it, since in the next decade, wouldn’t the major telecommunications companies be able and willing to provide the type of service proposed, at least in urban areas where it’s likely to be profitable?

Perhaps the point is to leapfrog anything what could be provided by the private sector, and trigger high-tech economic growth, as well as essentially replace the current (degrading) copper network. Evidently the implementation study shows it would be worthwhile.

I suppose (at first glance) the Coalition are proposing something a lot less impressive, aimed at getting more of the country up to the current standards (ADSL2+ and similar), rather than a bold new super-fast Fibre-To-The-Premises-type future. Certainly it seems to be getting flak for proposing too much reliance on wireless, as well as older technology including copper wire, and not providing fast enough speeds.

The Net filter

I think the whole idea of the filter is flawed, like some kind of luddites destroying looms. And the proposed implementation — with a secret list — wasn’t going to work.

The emphasis should be on providing opt-in tools and education (such as: parents not placing computers in kids’ bedrooms, but in public parts of the house), and taking down the publishers of dodgy material.

As such, the Coalition announcing they wouldn’t implement it is a positive move, and credit to them for it.

High-speed rail

If Melbourne to Sydney is the 4th (or 3rd, depending on who you ask) busiest air-corridor in the world, there must be an opportunity here. Get the trip to less than 4 hours (but preferably closer to 3), and it’d be competitive with air. (The poster-boy for this is, of course, London to Paris.)

Of course, it should go via Canberra — in fact Sydney to Canberra should probably be the first stage, to relieve Sydney airport. (In fact maybe if trains between the two ran every 15 minutes and the trip was about an hour, Canberra should become Sydney’s second airport?). But Canberra to Melbourne presents big problems (a lot of extra cost) with mountains getting in the way, unless you take a big detour.

Interesting that after a push from the Greens, Labor has announced they’ll do a feasibility study if elected. But they appear to be talking about Sydney to Canberra in 2.5 hours, not one. And Sydney to Melbourne in 6 hours, not 4. Hmmmmm.

(If I ran the world, airlines would be convinced to invest in high-speed rail so they could keep moving people and making money but avoid emissions taxes.)

Other PT funding

Labor announced they would fund Brisbane’s Petrie to Redcliffe railway; the Coalition matched it.

Things have obviously changed since the days when the Coalition refused to fund urban public transport, which is good to see. The Rudd government funded most of Victoria’s Regional Rail Link. Whether either side will pledge more projects remains to be seen. Doing so in a targetted manner might well provide them with the kind of direct action against climate change that they seem to want to fund.

Update 7:55am. Labor have just announced they will fund Sydney’s Parramatta to Epping rail link.

Other stuff

Check this great piece by Annabel Crabb on how the campaigning works.

That’s all I have so far. Thoughts?

Stuff I’ve learnt from Radio National

Often when I listen to Radio National, I’ll learn something I didn’t know before. In this case, I was listening to Saturday Extra last week.

Cutting power consumption?

One item talking about electricity efficiency noted that enormous amounts of money are being invested in distribution networks, instead of being spent on measures to cut consumption (and thus GHG emissions) so you don’t need to upgrade distribution (or at least not as much).

GERALDINE DOOGUE: In the Lend Lease proposal… they say for every dollar spent on demand management, studies have shown the need for investment in energy infrastructure is deferred or reduced by $6.50. …

TOM CAWLEY (Energy Efficiency Council): In California what they’ve done is spent a lot of the money that would be spent on the electricity infrastructure on energy efficiency. And it’s easy to do in California because the power companies are vertically integrated. That is that the same company owns the power station, owns the power lines, and owns the retailers. We don’t have that situation in Australia…

GERALDINE DOOGUE: Keith Orcharison, who’s been a very prominent commentator over many years, writing in Business Spectator last week wrote something I think most of us wouldn’t know: that there will be forty to fifty billion outlayed in the next four to five years on distribution and transmission network systems. …

TOM CAWLEY: There’s no business case for the distributors to spend money on energy efficiency. There’s no structure for them to do that. … The other problem here is that with energy efficiency, you’re talking about [spending] at the point of use. Now, if demand keeps growing, then they need to keep spending money on infrastructure to deliver that energy. The idea is that if we can spend that money at the usage point, then we can reduce the demand.

So basically the electricity industry is structured in such a way that they can’t do the sensible thing and spend those billions on making electricity consumption more efficient; instead they have to assume demand will grow and so all that money goes into building capacity to distribute more power.

That’s just silly.

The mining “super tax”

Who coined the phrase “super tax” in its current context (that is, a proposed 40% tax on “super profits” on the mining sector)? According to a search of Google News (hardly the most scientific method, I know) It appears to have been Joe Hockey, shadow treasurer, quoted in an AAP report on April 24th.

With a nickname like that, it’s no wonder the mining companies joined in.

But it was interesting to hear the Financial Review’s Laura Tingle talking about it — both the negatives and the positives, which haven’t really got an airing:

LAURA TINGLE: The resources we’ve got in the ground are a finite item, they’re owned by all of us, and therefore when people go to buy them, you should try to get a return to the taxpayer for that…

There is a very potent argument to say… well, even if it does slow the pace of resources development a bit, that’s not a bad thing because we’ve got infrastructure problems, skilled workforce problems flowing from the resources boom in the rest of the economy, and it helps even-out the level of activity across the economy, so you don’t have interest rates rising, you don’t have the exchange rate making the rest of business uncompetitive.

(The issues around infrastructure were echoed the other day on 774 when the editor of The Weekly Times, I forget his name, noted that rail transportation of grain had dropped markedly, in part because so many grain hopper carriages are elsewhere serving the mining industry instead.)

And Tingle made the point that the government’s done an absolutely hopeless job attempting to tell people what the benefits are, so it’s not surprising that the Opposition and the mining companies have dominated the debate.

It’d be nice to see this debate become a little less one-sided. It’s hard to gain an informed view when one side is completely dominating.