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