Who is laughing now?

I am.

Nick Xenophon was joking around just this week about being in violation of s44 – but not really peeps, just a joke.

Yes. Well.

South Australian Senator Nick Xenophon has been told he is a UK citizen and is to refer himself to the High Court.

Senator Xenophon confirmed today that the British Home Office notified him overnight he was a “British Overseas Citizen,” due to his father’s birth in the then British territory of Cyprus.

Senator Xenophon, whose father came to Australia in 1951 had been awaiting confirmation from as to whether he was a citizen by descent.

Standing outside the British Hotel in Adelaide, he told reporters: “The circumstances of this are bizarre and rare.” He said the Home Office had admitted it was a “rare peculiarity.”

Nick the foreigner.

Posted in Politics | 88 Comments

Weird times in the energy market

Recent electricity contracts

AGL have announced a contract for electricity from the Queensland 453 MW Coopers Gap Wind Farm at an offtake price of less than $60/MWh (real) for an initial five years, with an apparent option to extend this at the same or a lower price for another five years.  The suppliers are a consortium of the Future Fund, QIC and AGL (which retains 20 per cent ownership). AGL originally owned the project (which is to cost $850 million and is scheduled for completion in 2020) and had spent $22 million on it.

This comes after Origin agreed to buy all of the power generated by the 550 MW Stockyard Hill wind farm and the associated Renewable Energy Certificates (RECs) for a “price of below $60/MWh”.

The price of $60 per MWh is difficult to understand since:

  • It is lower than the commonly understood cost of wind – Minister Frydenberg in his presentation to the Coalition Party Room put the price at $92 per MWh plus $16 per MWh to pay for intermittency (see this P. 18)
  • The renewable program, by forcing the closure of baseload powers station, particularly the 550 MW Northern Power Station in South Australia and Victoria’s 1,600 MW Hazelwood facility, has boosted wholesale prices of energy; for the past year and a half, average prices were around $90 per MWh compared with under $40 previously.
  • RECs presently give wind an additional $85 per MWh, meaning at present it would be worth $175 per MWh less the intermittency insurance; forward prices place a value in 2021 of the RET at $48 per MWh and for energy $78 per MWh.

Minister Frydenberg’s estimated intermittency insurance is too low in view of the RET programs’ increased quantities of wind.  But assuming the real number is $25 per MWh, the AGL and Origin projects earn a net $150 per MWh (90+85-25) in today’s market, or $101 per MWh (78+48-25) in the expected market of 2021.  And the price of electricity is, if firms’ statements of intent are correct, likely to continue to be boosted by the future anticipated coal generation closures (AGL has said it will close the 2000 MW Liddell station in 2022).

Another way of looking at the two contracts in view of the 2021 $48 forward price for large scale certificates, the $60 price AGL and Origin are paying for wind energy and their ability to sell the associated certificates means they are therefore buying the energy at a net cost of $12!

This complexity is absent with the South Australian Government’s purchases of the Tesla batteries, and the solar thermal plant using molten salt to offer some storage.

The latter, with a nominal capacity of 125 MW, is to cost $650 million, with $110 of this paid for by a Commonwealth grant courtesy of an unrelated deal done with Nick Xenophon.  It is to provide electricity to government users at $78 but the supplier, SolarReserve would also receive a contribution from the renewable certificates worth $48 per MWh.  Even so, the price seems too low given the poor performance of its first plant near Las Vegas.

Developments under the National Market

Government intervention in the wholesale market (chiefly the Renewable Energy Target (RET) for windfarms and large solar and the lesser subsidy for rooftop solar) has destroyed the market as a means of signalling the appropriate investment. From the mid 1990s at the outset of the National Energy Market, we had privatisation and corporatisation that resulted in massive labour shedding from the previously state owned and essentially union run electricity generators.  The Victorian generators were manned by less than 15 per cent of those previously employed and lesser but still significant reductions in excess labour use were made in other states.

At the same time the generation facilities were made to work more efficiently, sometimes with some refurbishment, with the result that the de facto production capacity was lifted by about one fifth.  In the six years to 2005 prices in NSW, Queensland and Victoria averaged under $37 per MWh, probably half the level of the (notional) price that applied under the previous integrated supply system.  Prices moved upwards after that as a result first of the drought and then with the introduction and rescinding of the carbon tax.

Subsidised wind and solar has an initial price depressing effect as the subsidy brings these sources to bid into the market all their availability, with a guaranteed return; any energy earnings are a bonus. In 2015, energy prices were below $37 per MWh.

But then we saw the culmination of wind depressing the price bringing generator closures, most importantly the 550 MW Northern Power Station in South Australia and Victoria’s 1,600 MW Hazelwood facility.  The stations had been starved of capital by their owners as a result of the poor price available.  In the case of Northern, the facility, which at only 30 years old was relatively modern, was destroyed by the State Government to prevent any possible rescue.

The present position

The upshot of the government policies is 2017 and 2018 wholesale prices averaging around $90 per MWh.  That level has become the new norm, compared with a price of around $55 for a system, like that prior to 2002, which is fundamentally coal based with hydro and gas for peak loads.  This has a crucifying effect on industry competitiveness and means the economy’s future structure must become less productive with lower living standards.

That aside, the renewables cannot provide the continuously despatchable certainty that is needed for reliable supply. The Finkel solution to ensuring baseload by forcing coal stations to stay on line even when they are unprofitable cannot work.  What the government will be forced to do is conduct an open tender for baseload power with a guaranteed future price.  This will see new (coal) power stations conforming to some politically correct and over-expensive design, thereby preventing a catastrophe without returning us to the low prices that a market-driven system would provide.

But returning to the wind power contracts that have been written.  At $60 per MWh this is electricity cheaper than the Finkel claimed cost of fossil sourced supply.  The obvious question is, in that case why do we need the forced subsidies from consumers to wind that the RET brings? On current prices, abolishing the subsidies (see this P. 20) would bring annual savings to the consumer of $2 billion from the renewable schemes plus a further similar amount from other subsidies on and off budget.

Posted in Uncategorized | 41 Comments

On Brandis v Hanson

So Senator Hanson turned up in the Senate chamber dressed in a burqa.  To be clear, I don’t think she was making a point about the plight of women in Islam. Rather I suspect – along with George Brandis – that she was engaging in a cheap stunt to make a political point about Muslims. Quite rightly, he called her out on it. But I completely disagree with what he said at this point of his comments:

Senator Hanson, for the last four years, I have had responsibility pre-eminently among the ministers subject to the Prime Minister for national security policy. And I can tell you, Senator Hanson, that it has been the advice of each director-general of security with whom I have worked and each commissioner of the Australian Federal Police with whom I have worked that it is vital for their intelligence and law-enforcement work that they work cooperatively with the Muslim community. And to ridicule that community, to drive it into a corner, to mock its religious garments is an appalling thing to do and I would ask you to reflect on what you have done.

I have no doubt that what he said is factually correct – but nonetheless we are led to believe that our national security is reliant on the subjugation of (some) Muslim women.*  There are many aspects of religious practice that are troubling in a liberal democracy. The burqa is one such practice – now I understand that there are arguments suggesting that the burqa isn’t a religious requirement for Muslim women. Okay. The fact of the matter is that the practice of wearing a burqa is widespread amongst Muslim women. The far more important issue is why they wear them.

If Muslim women voluntarily wore the burqa then there is no problem – people can more or less wear what they like in our society. I have no doubt that many Muslim women do voluntarily choose to wear the burqa or similar garments. I am more confident of this being the case in liberal democracies than not. What does become a problem is when women do not voluntarily wear the burqa.  Now we have an information problem: how we tell the difference between the two cases? Where do we err? Do we suppress the rights of women who want to wear the burqa, or do we tolerate that some women are being coerced in what we hope is a free and open society?

These are troubling questions – Senator Hanson is, I suspect, uninterested in those questions and Senator Brandis should have stopped his answer by saying:

We have about 500,000 Australians in this country of the Islamic faith. And the vast majority of them are law-abiding, good Australians. Senator Hanson, it is absolutely consistent with being a good, law-abiding Australian and being a strict, adherent Muslim.

Paul Kelly in the Weekend Australian makes a bad mistake while pointing out that Senator Hanson was wrong in what she did.

Hanson’s stunt in the Senate was appalling for two reasons — it was an abuse of parliament (which should review its guidelines in relation to religious garments) and it mocked Islam as a faith, since Hanson is not a Muslim and was seeking, in effect, to denigrate the wearing of the burka. This event must not be repeated. 

So far, so good. But then:

No senator should be allowed into the chamber dressed in that way. No senator should be allowed to speak without the chamber first knowing their identity by sight.

That is itself Senator Hanson’s argument; if no person can enter the Senate dressed like that, why should they walk in street dressed like that, and so on.  It should not be repeated because it was profoundly disrespectful to a large group of law-abiding citizens.

* This is also the argument that Tony Abbott and George Brandis used to renege on their promise to repeal s18c.

Posted in Cultural Issues, Politics | 116 Comments

Open Forum: August 19, 2017

Posted in Open Forum | 957 Comments

David Brewer – The idle Conversation about wind power

Many people continue to use the wrong metrics to assess the economics of renewables, both because they have not got to grips with what sort of product electricity is, and because they misunderstand the reasoning of economic actors in the electricity market.  The result is a distorted debate based on meaningless comparisons.

A classic example is at The Conversation here, though the same site has posted numerous similarly misleading “FactChecks”.  They all focus on comparing the costs of electricity from wind or coal, but this only shows that they literally do not know what they are talking about.

The first thing to understand – which The Conversation does not – is that electricity is not like pairs of shoes that can be sold at the same price tomorrow as today.  The product consumers demand is not a quantity of megawatt hours but the continuous supply of electricity – its permanent availability to them in whatever quantity they require.  This necessity for continuous supply places a premium on “despatchable” power from fossil-fuel, nuclear or hydro plants.  This type of power is more valuable than power that cannot be controlled (wind, solar), and much more valuable than power that cannot even be predicted (especially wind).  Moreover, power that is rapidly despatchable (hydro, some gas turbines) in response to sudden surges in demand or unexpected failures at other plants is more valuable still for its ability to plug gaps at short notice.

These differences in the value of different types of electricity already render The Conversation’s comparison of coal and wind power per megawatt hour useless.  And rectifying its analysis is not, as pretended, just a matter of adding in “balancing costs” such as additional rapidly despatchable sources, extra storage capacity, or upgraded transmission equipment.  For the insertion of a low-quality, unreliable source into the grid also reduces the efficiency and increases the cost of baseload power from coal or other sources which need to operate continuously to be efficient.

This leads to a second major unappreciated fact, which is that suppliers do not make economic decisions based on costs.  Instead they make decisions based on the estimated difference between costs and revenue.  If wind power can underbid baseload coal whenever the wind is blowing, existing coal stations won’t start up, and new ones won’t be built, because they cannot operate efficiently being turned on and off all the time, and therefore cannot generate enough revenue to justify operation or construction as the case may be.  This in turn leads to a higher and higher percentage of unreliable power in the mix, with eventual blackouts.

The only way of assessing the true cost of wind and solar is to look at the overall electricity price before and after renewables are added to the mix.  Once you do that you find overwhelming evidence from all over the world that markets with even modest shares of power from intermittent renewables have considerably higher prices than those without.  That this is not a coincidence is confirmed by both the tightness of the correlation, and the equally impressive correlations over time within the same market – as the share of renewables increases, the price of electricity goes up, and it goes up very sharply with even 20-30% of nameplate capacity, or 5-10% of energy output, sourced from wind.

All this means that the analysis at The Conversation that:

in March 2016…the Australian Capital Territory government conducted its second “wind auction”. The government uses wind auctions to buy contracts for future energy supplies. The lowest price in the 2016 auction yielded around $60/MWh in current prices. This figure is based on a flat rate of $77/MWh for 20 years and assuming around 3% inflation, which is the upper end of Australia’s inflation rate target of 2-3%…

 Based on recent prices for newly installed wind power of around $60-70/MWh, and recent price projections for new supercritical coal power at around $75/MWh, it is reasonable to say that – as things stand today – wind power would be cheaper than coal as a new-build source of electricity.

 …is just tripe.  It is tripe, first, because the coal price buys a continuous reliable supply whereas the wind price buys power whenever the wind is blowing – even when demand is low, so that taking the wind power means shutting down a coal plant that would operate more efficiently if it kept going.

It is tripe, secondly, because wind power should never be bought on a 20-year contract in the first place.  Since it is intermittent and unreliable, it should be traded only on a spot basis.  But if it were traded on a spot basis, its price would tend to zero as its availability increased.  That applies both to the share of wind in total capacity, and to how hard the wind happens to be blowing at any given time: the general rule would always be that wind power would be cheapest when there was most of it.  In this perspective, the $60/MWh figure is best seen not as a market price, reflecting supply and demand, but rather as the floor level of a price support scheme which must be paid regardless of the market value of wind power at the times when it is available.

Electricity is not unique in the time-dependence of its value.  Transport offers similar examples, e.g. Uber fares, or plane fares.  Imagine a company that conducts an auction to supply 100 return air trips for its staff from Sydney to Melbourne in 2018.  Bidder A asks when do you want them, and when told, undertakes to meet the demand to provide all the tickets at peak periods, on Sundays and Fridays between 3 pm and 7 pm, on 12 hours’ notice, so that employees can spend whole weeks in one city or the other at the drop of a hat.  Bidder B says we can supply 100 return trips all right, but we’ll give you two hours’ notice when each plane is leaving and if you haven’t got anyone who wants to go, tough.  Oh, and by the way, the flight can be at 2 am.  Does the company then give two hoots whether Bidder A’s tickets are $10 more than Bidder B’s?

The bottom line is that any comparison between prices per MWh of wind and coal is meaningless. The only valid comparison is between the system price of electricity with and without wind power.  Once you focus on that you immediately see that wind is totally uneconomic – and that is without considering the potential huge direct and indirect losses from the blackouts it will cause.

Posted in Guest Post | 44 Comments

The Taliban of the modern American left

The American Civil War ended a long long time ago, but the American left has now decided to refight the war when slavery has vanished and racist attitudes in the US are at an all-time low, of course absolutely forgetting that it was only Democrats who were members of the KKK when the KKK was a force to be reckoned with. World War II ended in 1945, but the American left seeks to refight this war as well in its march against fascism which disappeared seventy years ago only to re-emerge during the 1960s among the New Left. The Cold War against Russian communism ended at the end of the 1980s, but the American left has decided to refight the war against Russia now that it is no longer a communist state. And, not to be forgotten is that the slave states were all Democrat, that the left was utterly opposed to entering the second World War until communist Russia itself was attacked by the National Socialist Workers Party of Germany, and that during the Cold War the greatest defenders of mutual coexistence with Russia – that is, appeasement – were Democrats. Now they are revisiting these ancient long-settled issues in the midst of our present battles conveniently forgetting which side they were on when these issues were actually current. And what is the big issue of our time right now? Radical Islam. And who are its friends. Why, once again, it is the self-same Democrats who have been the perennial enemies of freedom, as they most certainly are again.

In the whole of the United States at the present time, there would hardly be as many as 100,000 “Nazis” or members of the Klan, who would have about as much political clout as a modern prohibitionist. Their sole value in today’s world are as background props for Democrats to parade themselves as soldiers of virtue, when they are actually America’s greatest danger. Here is an interesting take on it all, from a source who knows, truly knows, where the enemies of today really are. From Criticism grows over Netanyahu’s response to US neo-Nazism.

Criticism grew Thursday over Israeli Prime Minister Benjamin Netanyahu’s limited response to a US white supremacist rally and President Donald Trump’s controversial remarks about it, with calls for him to speak out against anti-Semitism. . . .

So far, Netanyahu’s only response to the weekend white supremacist rally in Charlottesville, Virginia that ended in bloodshed was a tweet on Tuesday that many saw as vague.

“Outraged by expressions of anti-Semitism, neo-Nazism and racism. Everyone should oppose this hatred,” Netanyahu posted in English.

A Facebook post by Netanyahu’s son Yair further raised eyebrows.

He denounced “neo-Nazi scum,” but added that they were “dying out” and seemed to suggest left-wing counter-protesters “who hate my country” were a growing threat.

So where are we now? To show how anti-whatever they are, Next on Liberal’s List for Destruction- Confederate Carvings at Stone Mountain Memorial. Which reminds me of the same deranged mentality displayed by the Taliban in destroying the Buddhist statues of Bamiyan. Sickening vandalism but ruthless displays of an arrogant disregard for anything other than their own will to power.

Who are the actual fascists, the actual brown shirts, the actual Nazis of the moment? They are by close analogy the Democrats and their violent “Antifa” allies. And there are millions who will take their path as they are guided on their stupefied way by our ignorant and historically illiterate modern journalists whose vacuous writings are little different in their truth content and direction than the average weekly postings of Der Stürmer had been in the 1920s.

Posted in American politics, Politics of the Left | 156 Comments

The radical right in 1987

A blast from the past, discovered in my archives, something that I probably wrote for CIS Policy a few years ago. A review of The Radical Right: A World Directory. A Keesing’s Reference Publication, Longman, 1987. 500 pp.

This compilation is a companion volume to such titles as Revolutionary and Dissident Movements of the World and State Economic Agencies of the World. Intellectually it is on a par with the Guinness Book of Records or the Courage Book of Victorian Football League Scores. Its fundamental weakness is revealed by following up the question “What does it mean to be ‘right’ or ‘radical right’ in this book?”

The introduction specifies but does not define three “broad and overlapping strands” of thought which qualify for admission. These are “ultraconservatism”, “anti-communism” and “right-wing extremism”. Also listed are fifteen attitudes or attributes which are supposed to be “commonly but not exclusively” found among the radical right. These range from support for violence as a political tactic, white supremacy and national xenophobia, to admiration for heroism, rejection of class conflict and anti-communism. Economic issues do not rate a mention.

Some of these stances, notably anti-communism and rejection of class conflict, would appear to be fairly respectable and so organisations which espouse them could reasonably wonder why they are listed among fascist or quasi-fascist groups. It is hard to avoid the impression that this is a thoroughly muddle-headed venture, showing yet again the unhelpful nature of the one-dimensional ‘left – right’ map of ideological space.

With this limitation in mind the directory makes interesting reading. There are over 3000 entries in 85 countries from Afghanistan to Zimbabwe. Upper Volta and North Korea are missing but the USSR is not, with 25 groups, almost all based in the US.

At first sight this catalogue appears to be a depressing reminder of the continued appeal of racism, violence and xenophobic nationalism. However on closer inspection it shows the transitory nature of many organizations devoted to these causes. In Australia the list of 33 defunct organizations is much longer than the list of six active groups, which includes the Victorian Council for Civil Liberties. One of the reasons for the demise of these groups would appear to be the wastage rate of leaders in violent clashes with police and rival factions. We are informed that one Thomas Messenger, leader of a Melbourne neo-nazi group, was killed in a shootout with police in 1985. Numerous similar episodes are reported overseas.

The UK has 53 active organizations, of which the National Front is probably the best known, with 78 defunct organizations and some dozens of “minor groups active in recent years”. France is better served with 69 active groups. Belgium, with a smaller population than Australia, has a hefty 29 active groups. Nicaragua does even better on a per capita basis with 19 groups for 3 million people, though none are based on home soil. Belize with practically no people (163,000) has none, though two groups are listed as defunct. There are some surprises. The US National Agricultural Press Association is on the list and one of the three organisations listed in Uraguay is the British Schools Old Boys Society.

The US appears to be the stronghold of this activity with 170 substantial groups and a similar number of fringe organizations, from the Aaronic Order to a publication called World War Three Battlecry. However this tally is inflated by entries such as the Republican Party, The Public Interest and Reason Foundation. In the UK we find Salisbury Review (edited by Roger Scruton), the Conservative Party and the Libertarian Alliance.

Given the non-fascist inclusions overseas, one would expect to find among the Australian entries the Institute for Public Affairs, the Centre for Independent Studies, and the National Party. [2017 Strangely this review only named The Victorian Council for Civil Liberties and none of the other five active groups noted above]. There is a mention, without any names, of “employer groupings engaged in sophisticated union-busting activities”. This will be news to the employer groupings because the most strenuous efforts to the abuses of union power (not union busting) have been isolated campaigns such as Mudginberri and Dollar Sweets which did not really involve employer groupings at all.

One hopes that if this exercise is repeated the nonsense entries will be eliminated and more of the organizations will be in the “defunct” category.

Posted in Rafe | 23 Comments

The rules are for other people

President of the Rule of Law Institute of Australia, Robin Speed:

While the High Court is considering this matter, no politician should be required to resign or stand down. Australia is governed by the rule of law not by the rule of allegations.

I suspect he is making a not guilty until proven guilty argument; nobody should describe politicians as being “innocent”. Ordinarily that would be the correct conclusion.

But … Some of the politicians who have resigned from the Parliament were clearly and unambiguously in breach of the Constitution. Some who have not resigned are also in clear and unambiguous breach of the Constitution. Okay – they’re hoping that the High Court “clarifies” the law – what we mere citizen-voters may consider to be a change to the Constitution in a manner other than that described in s128 of the Constitution.

What I found most challenging is this statement:

Here the allegation is of a breach of a provision, with no suggestion that it might possibly affect the carrying out of the person’s duties as a Parliamentarian or member of cabinet.

But that is precisely what section 44 suggests (emphasis added):

Any person who is under any acknowledgment of allegiance, obedience, or adherence to a foreign power, or is a subject or a citizen or entitled to the rights or privileges of a subject or a citizen of a foreign power … shall be incapable of being chosen or of sitting as a senator or a member of the House of Representatives.

So the PM and the speaker of the House and president of the Senate all know that there are people in the House and Senate who may very well be sitting as MPs and Senators in breach of the Constitution and do nothing until the High Court rules on the matter? Sure some of them are in a situation where the facts are in dispute and they should not be denied their day in court, but in any other profession all these people would be on “gardening leave” until that day.  Why hasn’t the Governor-General asked for an explanation?

Posted in Politics | 47 Comments

I knew they were out to lunch …

… but had no idea how truly out of it they are. From the front page of today’s AFR.

Liberal MPs despairing at the mounting crises plaguing the government are starting to question the political judgment of the Prime Minister’s office and whether the Coalition can win the next election.

They must live in the tightest, most self-contained bubble ever constructed.

Posted in Federal Politics | 35 Comments

Australia’s Workplace Relations Framework: the Case for Reform

Martin Ferguson and Jennifer Hewett at the Sydney Institute. The podcast.

See Bill Hutt in Revivalist 4 for some historical background on the role of trade unions in relation to wage fixing, law and order and productivity.

Posted in Economics and economy, Rafe, Unions | 2 Comments