So there I was scrolling through my twitter feed when I saw this:
Something u wont see reported in The Australian #CarbonEmissions.New report finds insulation scheme will save billions http://www.abc.net.au/radionational/programs/breakfast/new-report-finds-insulation-scheme-will-save-billions/4258678 …
The tweet was referring to a September Radio National segment on the benefits of home insulation.
The ‘new’ report mentioned in that segment can be found here.
The thermal insulation of ceilings has long been recognised as one of the most significant and cost effective means for improving the thermal performance of residential buildings. Such insulation has been demonstrated to:
• Improve thermal comfort for the occupants
• Reduce space conditioning energy consumption
• Reduce heating and cooling fuel costs to householders
• Reduce greenhouse gas emissions associated with space conditioning
• Mitigate against the impact of peak loads on power supply networks
• Improve health outcomes for occupants
• Improve the value of the property
I have no doubt that list is correct – yet all those benefits, with the possible exception of the greenhouse gas reduction, are private benefits. They are good reasons why individuals should pay to insulate their own homes.
Yet that isn’t what the report suggests.
Historically, both nationally and internationally a number of barriers have meant that the market has failed to significantly increase the proportion of insulated homes, despite considerable investment in marketing programs. ICANZ believes that all governments should therefore continue to include ceiling insulation retrofit as a key policy measure for reducing residential energy use.
But what happened the last time government tried this?
In 2009-10 the Commonwealth government, as part of its response to the GFC initiated the Home Insulation Program (HIP). The objective of the HIP was to retrofit ceiling insulation to the uninsulated dwellings of Australia. Unfortunately that program encountered difficulties and was terminated half way through leaving an estimated 0.8 – 1.4 million households without ceiling insulation.
Hundreds of house fires and four deaths are decribed as having “encountered difficulties”. But we digress …
In hindsight, it is little wonder that the program encountered difficulties. In an average year, approximately 200,000 new and existing dwellings are fitted with ceiling insulation (75% new dwellings and 25% retrofit of existing dwellings). In the first year of the HIP, 1.2 million existing dwellings were retrofitted – a six-fold increase in the level of delivery previously managed by the industry. The capacity of the industry was clearly overstretched and, unsurprisingly, less than optimal outcomes resulted. The rapid growth in demand for labour (a goal of the program in the context of the global financial crisis) led to some poor outcomes in terms of opportunistic business practices and reduced levels of staff training.
This time those hundreds of house fires and four deaths are described as “less than optimal outcomes”. That is, of course, true. Not to mention the 700,000 or so inspections that had to occur. But read on …
The issues with the HIP related to the design of the program delivery and NOT the measure itself. The schools program (also a stimulus measure initiated in 2009) experienced similar shortcomings related to the pace of its delivery, including cost overruns and defects in roofs, despite this there is no suggestion that governments will abandon the building of new school facilities into the future.
Okay – fair comment. People paying to put insulation into their own homes is not a problem and the private sector can and should be able to do that. The issue becomes the government paying to put insulation into homes quickly. Government cannot do that well and should not do that either. Just as the report indicates there were problems with the school halls too – that wasn’t a bug it was a feature.
Good Lord.
Oh no.
C.L.
4 Jan 13 at 4:56 pm
So who were the architects of these great ideas? When such stupid policies produce these types of outcomes the policy creators should have to stand before parliament and explain why they fucked up. Not that they didn’t, why they did. Humble these sorts of errors through personal responsibility and perhaps those idiots will think much more carefully in the future.
John H.
4 Jan 13 at 5:02 pm
I learned long ago that *anything* is used by lefties to ‘prove’ market failure. Most bills that are drafted claim market failure, and when you dig into the details it usually either a single safety incident, or people choosing to spend their money else where.
The government could have partly subsidised home insualtion, instead they made it completely free. It wasn’t an increase in demand that caused the deaths, it was the scramble by every man and his dog to grab the free $$$. I had to put up a sign as I was sick of people coming to my door offering free insulation.
Mundi
4 Jan 13 at 5:06 pm
Why should the government use the money taken from taxpaying workers to provide “free” or even subsidised insulation? What is the rationale?
Gab
4 Jan 13 at 5:09 pm
What is the rationale?
Securing the next election. It may have even been one of those critical little things that got the fools over the line. Political expediency – people died, money wasted, houses burned, so again, bring the relevant people before the nation to explain why they fucked up.
John H.
4 Jan 13 at 5:15 pm
Market failure of course gab. The evil power companies suppresses the little insualtion battlers and tricked Australians into not buying insulation. The righteous government are protecting our interest by forcing our children to pay for our insulation – it will even save us billions! In fact with all the money we saved the government is surely now entitled to run even more program’s – as they have proven to be such wise investors.
Mundi
4 Jan 13 at 5:17 pm
Wiping your arse improves health outcomes for the individual and benefits too for wider society. Government should get on to it.
ar
4 Jan 13 at 5:37 pm
Really ?
How ?
jumpnmcar
4 Jan 13 at 5:40 pm
Oh dear. Leftists just will not learn.
It is their need to be the “boss man” that drives their dictatorial pronouncements. They know better than all of us.
That being said, if there must be government compulsion, then change the building codes to mandate roof insulation in new dwellings and allow owners of rental properties to claim the full amount as a tax deduction rather than amortise it. The rest of the country can pay for their own. (disclaimer I don’t own a rental but I did live in one 20 years ago with no insulation…twas nasty!)
Billy the Kidder
4 Jan 13 at 5:52 pm
The only problem with that, ar, is that Nanny Roxon would probably mandate that only single-ply recycled paper be used so as to be ‘environmentally aware’.
Brian of Moorabbin
4 Jan 13 at 5:57 pm
“yet all those benefits, with the possible exception of the greenhouse gas reduction, are private benefits. They are good reasons why individuals should pay to insulate their own homes.”
Precisely; so less well off taxpayers who can’t afford their own home subsidise those who are well enough off to do so and to add insult to injury they also have to pay higher electricity costs to re-imburse the well off who input their subsidised solar power into the grid. Yet more moonbeams from the greater policy lunacy inspired by the anthropogenic global warming hysteria that has captured Labor’s mind.
Anthony
4 Jan 13 at 5:58 pm
There is a deeper more subtle agenda.
Central governments have the resources to come up with perfectly sound macroeconomic arguments “If we can just get everyone to do X, by incentivising $Y then we will save $Z!”
But take smart meters for example. On an individual house by house basis, the “cost/benefit” of having a smart meter fitted may simply not appear because that individual house may have other, bigger fish to fry more economically. Every household, every individual enjoys a unique combination of costs, and therefore a unique set of opportunities to economise, and here’s my point: setting those priorities is the prerogative of a free individual. In other words, resources are finite, and therefore you should be allowed to decide what you worry about and how you spend your money and which costs you want to reduce to improve your overall bottom line and quality of life. The skill and manner in which you set those priorities is actually an expression of your character and competence as you make your way through life. It is a precious thing.
When a government decides “You vill be insulated” they take away that freedom and autonomy. And there are people whose reaction is “Oh well, if the government says it’s a good idea…” and their children look up to them. They incrementally increase the number of people who think that their resources are not actually theirs, but are rather beholden to the “common good” and its trusty avatar the government. Bit by bit they are turning everyone into a population of slaves.
We must fight.
Ooh Honey Honey
4 Jan 13 at 6:04 pm
Didn’t Bambi describe Benghazi as something akin to a ‘less then optimal outcome’?
“Here’s what I’ll say. If four Americans get killed, it’s not optimal.”
Toiling Mass
4 Jan 13 at 6:09 pm
The left demands we improve the environmental sustainability of housing with such things as insulation, expensive fittings and even taxpayer-subsidised solar panels.
When this inevitably increases the price of housing so that the affordability index worsens they call it a market failure.
Lying pieces of crap, really.
Jack Lacton
4 Jan 13 at 6:11 pm
Errr…Could somebody please remind me how many million dollars in compensation did the A.L.P. pay from its’ own funds, to the families of each of the four young men that their “silver batt installation program” killed?
Who delivered the heartfelt, grovelling apology for the deaths of those men – was it Peter (“How can he sleep while his batts are burning?”) Garrett? or Kevin Rudd? or Juliar Gillard?
Nope! The A.L.P. welshed on both the compo payout AND on the apology.
The obvious message here is that the next time some unfortunate Australian is killed in a workplace accident, their employer should invoke the “A.L.P. precedent” and welsh on their liability to the victim’s family, just like the A.L.P. has done in this disgraceful case.
The same people who emptied the A.W.U.’s Goldfields Fatal Accidents and Death Fund, are involved in this scamming of the bereaved families of insulation installers.
One thing about the A.L.P. – at least they are consistent.
Up The Workers!
4 Jan 13 at 6:16 pm
Can’t see any of these type of schemes being popular again, people saw first hand the stuff-ups and expense.
candy
4 Jan 13 at 6:18 pm
It was an example of a phenomenon well known to public servants, called “get the money out the door so we can announce something.”
A long time ago I was associated with a Commonwealth grants program (which shall remain nameless) that was actually set up with proper guidelines, criteria, priorities etc – unlike the pink batts and school halls. This program was aimed at a particular constituency which was influential and considered itself hard-done-by.
Well, the applications came in, and most of them were complete rubbish. They could be summed up as “just give us the money and ask no questions.” However, some were approved, but as is normal, things didn’t always go to plan. In particular, some staged projects which involved progress payments took longer than expected.
Next thing was, the Budget cycle came around, and we had to justify “underspending” on the program. A nanosecond later, a furious person from the Minister’s office was on the phone, demanding that we lift our game and get the money out so that the Minister could make more announcements and not risk losing any money in the next Budget.
Well, we moved a few progress payments forward and approved a few marginal projects (most of which duly failed.)
That happened on a program that was reasonably well thought out and planned. Pink batts and school halls didn’t even have that veneer of consideration before someone stood on top of the building and rained down notes, for purely political purposes.
Under the current arrangements, politicians are like compulsive gamblers who have hold of your credit card.
johanna
4 Jan 13 at 6:20 pm
From when Howard was booted out to now this ‘government’ has turned around a $20 billion black into a $262 billion red. And that excludes the NBN, arguably, the biggest white elephant ever, which is not on the books.
The BER added about $12 billion to that with estimates noting the prices paid were inflated by up to 60% and that outcomes were often useless such as putting buildings in schools which were subsequently closed or where the school had no use for the building.
The point is the BER, Pink batts, cash for clunkers, the various price watches, GFC handouts etc have generated debt with no tangible or lasting benefit to the Australian economy.
And all this is before consideration of the AGW expenditure which would include the various FITs which have and will cost $billions, the CO2 tax itself, the vast new bureaucracies, the $billions in RET subsidies and government grants to lying climate scientists.
The real question is how can Australia insulate itself from ever having another ALP/green government.
cohenite
4 Jan 13 at 6:31 pm
And then there’s over $1 billion in the budget – such as it is – supporting the asylum seeker debacle they created. And then there’s the deaths at sea…
Gab
4 Jan 13 at 6:35 pm
If they cut the tax on cigarettes the poor would have more money in their pockets which they could choose to spend on insulation.
Forester
4 Jan 13 at 6:38 pm
That’s a Hobson’s choice; smoking in bed will likely set you on fire as will the insulation done under the auspices of the government.
cohenite
4 Jan 13 at 6:47 pm
cohenite
says
” BER, Pink batts, cash for clunkers, the various price watches, GFC handouts etc have generated debt with no tangible or lasting benefit to the Australian economy.”
Oh goodness me and now they have just realised they need to get single mothers to pay for it.
Compassionate party? Garbage. The quickfix party who listen to rotten modellers and look for media opportunities
Yes.
Alice
4 Jan 13 at 7:07 pm
” When such stupid policies produce these types of outcomes the policy creators should have to stand before parliament and explain why they fucked up.”
It’s called question time.
“The real question is how can Australia insulate itself from ever having another ALP/green government.”
Get your black shirt on and take to the streets!
Pedro
4 Jan 13 at 7:12 pm
Re: Government Ineptitude.
I am just so fucking pleased that the CFA website will be able to handle the traffic in the footy season.
Meanwhile, on days like this, I just sit here among the gum-trees scanning the horizon for smoke in the old fashioned way.
Leigh Lowe
4 Jan 13 at 9:12 pm
My understanding is that with the smart meter you only get cheaper electricity after 9PM and before 7AM, so it is largely useless to any normal family. That’s precisely why you can expect to be forced into one.
I’m pretty sure that gross debt figure does include the NBN. They can’t use budget tricks to get that down, unless they find some other way to borrow money.
Tel
4 Jan 13 at 9:27 pm
Talking about insulation, I am at the mother in laws in Sydney. She said she had some old red wine in the garage and I could have what I wanted. It was mainly port, champagne and whisky. But their were about half a dozen bottles of red that were luckily stored on its side – as they were corked. I picked out the only three reasonable bottles in the collection and just drank a wonderful 1990 Seaview, McLaren Vale, Cabernet Sauvignon, apparently worth $154 a bottle according to the internet. Bloody beautiful – long and smooth with great legs and as soft as a recently fluffed down pillow on a cold evening. Another 1990 and 1996 (not Seaview) are making their way back to Canberra with me. Bwahahahahahahaha. Oh, BTW, this has nothing to do with insulation. Sorry to derail this worthy topic.
John Comnenus
4 Jan 13 at 9:50 pm
This government likes its budget tricks but the NBN isn’t one of them.
sdfc
4 Jan 13 at 10:04 pm
The NBN is not a debt in the budget figures; it is being financed through the issue of specific bonds which have a guaranteed return of 7% compared to 4% for normal bonds.
The government figure for the cost of the NBN is $27 billion, although experts reckon it will be closer to $70 billion.
In terms of take up this is the situation as at June 2012:
I guess you are technically right about the NBN being part of the Gross Debt but I also think there are enough peculiarities about it to make a good case for it not being part of that debt; on principle.
cohenite
4 Jan 13 at 10:19 pm
So that is the next trick – back to roof insulation?
Here is a tip troops, if you have a brick house with a tiled roof then you are going to be in a hotbox unless you have airconditioning.
If you have a brick house with a metal roof with good sarking – then you are going to be in a hotbox, unless you have airconditioning.
If you live in a Queenslandet style house, framed in redgum with old style sliding windows, then you will live in a semi-hotbox, and aircon is a blessing.
This whole thing with insulating your roof is a furphy, unless you have good insulation in your framing and have a good verandah or extended eave line, your house will get hot without aircon.
Carpe Jugulum
4 Jan 13 at 10:22 pm
There will be a continued effort to stuff the insulation debacle down the memory hole, and then to re-invent the story as a triumph of both Keynesian policy and Labor compassion for poor folk.
I’ve seen a couple of useful idiots already trying it on – trying to say the insulation project was acually a success.
Try telling that the families of the dead or the families that lost their house.
brc
4 Jan 13 at 10:31 pm
The NBN is on the balance sheet I’m afraid.
sdfc
4 Jan 13 at 10:32 pm
No it’s not, SDFC.
JC
4 Jan 13 at 10:41 pm
And so it begins…
Gab
4 Jan 13 at 10:43 pm
JC is correct, it ain’t on the books.
Otherwise the budget would have a blowout that would make a maggot gag.
Carpe Jugulum
4 Jan 13 at 10:52 pm
Well, I hope one of you financial types can clear this up. Is the NBN part of the budget or the debt as described by the bond issue?
cohenite
4 Jan 13 at 10:58 pm
Yep Roger that Mr Armstrong.
The NB fucking N is off balance sheet because it is a (cough) ….. “commercial enterprise” which is expected to generate a bank interest RoI by year ten of operation.
OK ….. now moving on to the prime swampland …. um ….. coastal property we have for sale ……..
Leigh Lowe
4 Jan 13 at 11:00 pm
NBN is off budget, but on the balance sheet.
Sinclair Davidson
4 Jan 13 at 11:04 pm
The sad part about the stimulus is that even if we accept that the stimulus policies improved the economy and stopped us going into recession, what are the outcomes did society get from it?
- An insulation scheme that killed multiple people, caused many house fires and caused an increase in dodgy insulators.
- Schools received many new halls which they did not need and did not address the real problems that schools are facing (i.e. TEACHING THE FUCKING KIDS)
- Set top boxes were paid for or subsidised (?) by the Government for elderly people and were bought from overseas wholesalers and not from locally owned companies such as Harvey Norman, where they could have sold the set top boxes for much cheaper.
The saddest part about the stimulus was that the government sent out cheques to families where much of it went into the bank and had little effect into stimulating the economy. As a result of this, we have far greater net debt and a degrading condition of the budget.
Andrew
4 Jan 13 at 11:10 pm
Sinclair
Investment in the NBN is not an operating expense.
Andrew
Direct cash injections are the most effective method of stimulating the economy in the short run.
sdfc
4 Jan 13 at 11:23 pm
But did they? The evidence is certainly against it’s stimulating effect.
Andrew
4 Jan 13 at 11:26 pm
You lost me at ‘investment’.
cohenite
4 Jan 13 at 11:29 pm
In essence, the NBN is being funded by a series of equity injections from the government to a public corporation over time. NBN Co is part of the public non-financial corporations (PNFC) sector, whereas what we commonly think of ‘the government’ being the general government sector (GGS). All of the talk of the NBN being off-budget just means that it doesn’t explicitly appear directly on the GGS cash flow statement. It does appear on the GGS balance sheet though, but it doesn’t affect net debt because the equity injections are just swapping one type of asset (cash, which is currently being raised by borrowing) for equity in NBN Co. As to what is done with the equity injections, that appears on the PNFC cash flow statements and balance sheets.
Hope that clarifies things a bit…
The stuff about NBN co generating a commercial return is farcical (basically the red underpants gnome deems a commercial return to be little more than the government bond rate), but that is another issue.
Skuter
5 Jan 13 at 12:00 am
What evidence Andrew?
sdfc
5 Jan 13 at 12:07 am
Sorry, before, where I said cash flow statement, I meant operating statement. The gory details are here for those that are really interested.
Skuter
5 Jan 13 at 12:30 am
“What is the rationale?”, asks several Cat posters.
Part of the answer is that there are widespread cognitive limitation among consumers which prevent them optimising, even where the benefits and costs are private. We know this is a “Libertarian-approved idea” because Steve Kates keeps using it to explain why no-one buys his product – right-wing fantasy – even though they would be better off if they did.
William Bragg
5 Jan 13 at 12:46 am
William Bragg, what’s the other part of the answer? PCP?
Skuter
5 Jan 13 at 12:55 am
Skute
That’s probably correct in that it goes through the balance sheet. However there is a real demand for funds by the government which is taken out of the market and it gets designated as a balance sheet item instead of a cash expense.
It’s basically an accounting gimmick though.
JC
5 Jan 13 at 1:00 am
Braggs
Fantasy? Are you self aware?
Two days ago you were peddling a JFK conspiracy theory and yesterday you were supporting the Iranian regime hanging gays and stoning women.
You nutball Braggs.
Answer Skuter’s question.
JC
5 Jan 13 at 1:03 am
It doesn’t get taken out of the market. That’s silly. It’s a perfectly elastic currency.
sdfc
5 Jan 13 at 1:05 am
Are you on stupid drugs this evening, SDFC.
The government issues bonds which means the lenders have a claim on the government.
It doesn’t permanently sure, as you should know.
JC
5 Jan 13 at 1:08 am
Deficit spending ends up in private bank accounts. The interest payments are comparatively very small.
sdfc
5 Jan 13 at 1:12 am
So in that case, why not print enough of this magic pudding ‘perfectly elastic’ currency to buy every citizen a five bedroom mansion, a Ferrari and a pet shitzu? Monetising government spending is the key to prosperity according to sdfc-onomcs…
Skuter
5 Jan 13 at 1:17 am
Deficit spending brings forward consumption and lowers investment. It’s basically cannibalizing investment.
JC
5 Jan 13 at 1:20 am
Actually no Skuter. I think the goverenment should borrow in the market.
That the currency is perfectly elastic is a seperate issue. Rising private sector debt has the same monetary effect.
sdfc
5 Jan 13 at 1:20 am
WTF does that even mean? Elastic? We’re not talking about what holds up underwear, SDFC.
If the corner store grows bust I don’t owe the bank any money, dopey. I do when the government borrows.
JC
5 Jan 13 at 1:23 am
No JC. That is baseless. Higher national income is a positive for investtment.
sdfc
5 Jan 13 at 1:23 am
So JC, your argument is you don’t like it.
sdfc
5 Jan 13 at 1:25 am
So you’re an MMTer SDFC. Interesting.
Finally decided to come out of that dirty closet.
JC
5 Jan 13 at 1:25 am
No I refuted your stupid point that government borrowing and private sector borrowing is all da same.
It isn’t.
JC
5 Jan 13 at 1:26 am
Actually no. There is a big hint a few comments up.
sdfc
5 Jan 13 at 1:26 am
Absolutely JC. In an emotional sense.
sdfc
5 Jan 13 at 1:27 am
Sdfc, the currency is elastic in the sense that the central bank can create as much of it as it wants, but you can’t make people hold it.
Skuter
5 Jan 13 at 1:36 am
The central bank is not the only money creator. Commercial banks create money by creating deposits. They do this by lending.
sdfc
5 Jan 13 at 1:40 am
So banks have no capital limitations predicated on their equity?
How do banks create money supply, SDFC.
Show us.
JC
5 Jan 13 at 1:44 am
JC
You’re kidding. I’ve been through this before. When a bank lends it creates a deposit.
sdfc
5 Jan 13 at 1:52 am
What planet are you on? You’re now saying that loans are registered on the Liability side the balance sheet?
Are you okay?
JC
5 Jan 13 at 1:55 am
You are a very silly person. The loan is the asset side the deposit is the liability side. This is basic monetary economics.
sdfc
5 Jan 13 at 2:00 am
I am. But I’m not the one contradicting myself. You are.
In the earlier comment you said :
No it doesn’t you idiot. It creates a loan and you corrected yourself in the last comment after I highlighted to stupidity.
JC
5 Jan 13 at 2:05 am
Your..
JC
5 Jan 13 at 2:06 am
Who is contradicting themselves? The loan is a deposit. The Austrians, Post-Keynesians, Friedman all understand this. Though not Friedman now obviously.
sdfc
5 Jan 13 at 2:10 am
SDFC
A bank has to have a surplus on it’s liability side or is able to access funds before it can make a loan.
That’s the first order.
A loan is not a deposit, you dope. It’s a fucking loan. it resides on the liability side, not the asset side.
Now stop it with the crap as you’re starting to homerize this stuff.
And you don’t want to go full retard like that other idiot.
JC
5 Jan 13 at 2:20 am
AFDC is correct and JC is ignorant. Under our current system the bank creates a deposit ex nihilo by lending.
Nick De Cusa
5 Jan 13 at 5:22 am
sdfc that is. It’s pitiful when grown ups cannot handle the basics of money and banking.
Nick De Cusa
5 Jan 13 at 5:24 am
A bank needs no “surplus ” to make a loan under current arrangements. We will all die of old age prior to JC identifying what he means by “surplus” in this new fantasy of his. He himself has used the word without any clear notion of what he means by it.
The bank can make the loan in this way because it has mutual loan agreements with other banks.
Nick De Cusa
5 Jan 13 at 5:31 am
That’s bogus accounting, all assets should be marked to market on a regular basis. The NBN is working under the presumption that investment is risk free, which obviously it isn’t. Since NBN shares are not openly traded, the mark to market should be done on standard Commonwealth basis (which is highly conservative) like any normal public asset. The inevitable markdown should be showing on the balance sheet as a loss (if they could be bothered doing the markdown).
None of that affects the gross debt figure (the $260 billion) but I do understand that the NBN bonds were a separate issue… has anyone found how many actual NBN bonds have been sold? Are they listed as a separate total somewhere, or do they get rolled in with all bonds?
Are NBN bonds actually unique in any way (other than the name)?
Tel
5 Jan 13 at 5:41 am
If I take cash into a bank, they mark that as a deposit.
When the bank loans me money, I take the cash out of that bank… which might quite likely end up as a deposit in some other bank when I spend the cash.
Tel
5 Jan 13 at 5:53 am
Tel, I agree with you regarding NBN co. I’m just explaining how things are actually done. As far as I understand, Rudd and Conroy initially announced that the NBN would be funded by separately identifiable ‘Aussie infrastructure bonds’, however, over time this changed and it was decided that these ‘special’ bonds would merely be standard CGS and rolled into the total. There are more details in either statement 7 or 8 (asset and liability management) in budget paper no 1 in the last four or so budgets but I can’t be arsed looking it up now…
Skuter
5 Jan 13 at 6:10 am
Indeed – Enronesque financing at its best.
Sinclair Davidson
5 Jan 13 at 9:09 am
Perhaps a minor point in the overall scheme of matters … we have a heavily regulated “electricity market” in which there is not congestion pricing (to consumers) for distribution network use. That sounds like a circumstance likely to give rise to an externality to me.
Always thought the “stimulative” effect of these policies was classical smoke and mirrors “visibility” effects, but that in the case of the HiP there might be a modicum of policy sense to it.
Pyrmonter
5 Jan 13 at 9:18 am
Pyrmonter, ‘congestion’ pricing is something which is capable of being used as an excuse for not delivering a service, and needs to be carefully evaluated. For example, governments and electricity companies are keen to implement ‘smart meters’, which are a means of excusing inadequate electricity services while charging us more for unavoidable peaks. Greenie governments want ‘congestion charges’ in cities because they hate cars and don’t want to build roads.
I agree that peaks and troughs are a legitimate part of any pricing policy. But whenever I hear the words ‘congestion charges’, I hold my money tight. It usually means we are going to charge you more while providing less, in a highly regulated environment.
johanna
5 Jan 13 at 9:42 am
“Direct cash injections are the most effective method of stimulating the economy in the short run.”
Direct cash injections are the quickest way of increasing GDP figures if the money is quickly spent. But “stimulating” is a weasel word in this context. There seems little evidence that the cash injections lead to a lasting change in economy. You have to distinguish between cushioning a temporary demand shock and dealing with lasting supply-side shocks and demand shocks.
As we now look at the prospect of the second recession in 5 years, I’m thinking that the govt’s past efforts are being shown up.
Also SFDC, the RBA was pretty quick to counter-balance the stimulus spending with rate rises.
Pedro
5 Jan 13 at 9:45 am
Sinclair, as far as I’m aware, the true death toll from the HIP is 7, not 4. Three family members died in a house fire in Wagga directly caused by faulty instillation under the program. I was annoyed at the time that the MSN avoided discussing this issue, avoided scrutinising the government over the issue, or adding these 3 deaths to the total when discussing the HIP policy disaster thereafter. It’s easy to understand your error.
Rohan
5 Jan 13 at 10:45 am
Rohan – thanks for the update.
Sinclair Davidson
5 Jan 13 at 11:00 am
Judith Sloan’s article in The Australian (below) explains how the stimulus was a dud in ‘stimulating’ economy.
http://www.theaustralian.com.au/opinion/columnists/governments-fiscal-stimulus-a-dud/story-fnbkvnk7-1226505621262
Andrew
5 Jan 13 at 11:15 am
Johanna – when you say “an excuse for not delivering a service”, you’re buying into the “socialise our losses (and expenses)” line beloved of the agri-politicians and suburban lobbyists of the right, who are, in Hayek’s terms, “socialists” in every the same sense as their left wing counterparts. just because something is “infrastructure” doesn’t mean it is any more or less immune to cost/benefit analsyise than any other collective investment decision.
As an inner city non-driving classical liberal without air con, I fail to see why roads, or power supplies, should operate on an “open access” basis, without both marginal costing for congestion and lifetime average cost recovery, and in particular why I should be loaded up with costs (especially for electricity network infrastructure) I won’t use.
Pyrmonter
5 Jan 13 at 11:57 am
Exactly. We’re talking lifestyle here both in the middle and at the margins or extremes. The greens want both reduced; and the government is softening up the punters for the cutbacks and blackouts with bullshit talk about goldplating and the idea that peaks in electricity demand and supply are flexible and can be moved; the lie of that is here.
The idea that there is apeak demand for electricity which can be reduced is a lie and the main justification for smart meters which are abominations.
As Anton Lang explains:
In short there is no distinction between base and peak because the power that supplies the peak must do so at a moment’s notice and must be kept on permanent standby.
What Gillard means when she says goldplating is people being able to draw that peak power when they want and need to; waht smart meters will do is make it prohibitedly expensive to life what we now know as anormal life; the only solution will be to not switch the power on.
Pyrmonter, you’re wrong, and next time you’re trapped in a lift without air con enjoy yourself.
cohenite
5 Jan 13 at 12:34 pm
Pyrmonter, given todays technology, its hard to see why anything should operate on an open access basis. The only reason seems to be that open access is of course welfare. Its hard to judge exactaly but given the state and federal budgets, its seems that familes who pay no tax benefit by about $3,500 per person per year due to open access infrastructure.
mundi
5 Jan 13 at 1:12 pm
That distribution network buys at an average of 5c per kWh and sells at an average of 25c per kWh (i.e. a 400% markup). The only externality here is how a monopoly can be allowed to exploit an essential service so blatantly and get away with it.
Tel
5 Jan 13 at 1:24 pm
In most states, the transmission and distribution networks are owned by the government. They are monopolies predominantly because they are state owned companies. Also, there are significant costs involved in transmitting and distributing electricity, particularly over large distances so to compare generation costs with the costs of distributed electricity is a bit misleading. The returns on their assets are all regulated.
Skuter
5 Jan 13 at 5:58 pm
Bird, stop being a pedantic idiot. By surplus I mean that the bank has to have or reasonably expects it’s liability side of the balance sheet to cover the new loan (asset)
Balance sheets are new to you?
Most people would have understood. You of course have a problem because economics was never your strength.
It may, it may not.
JC
5 Jan 13 at 6:08 pm
Nick
That JC has no idea how the monetary system works has been well established for some time now.
Tel
When a bank extends you a loan, it creates a deposit in your bank account. If you withdraw it and spend it, then it becomes a deposit in someone else’s bank account.
Andrew
So your evidence is an opinion piece by Judith Sloan. The retail sales and household consumption expenditure data suggests the payments had a significant impact on household consumption during a period when real national income was falling as a result of the global recession.
sdfc
5 Jan 13 at 7:29 pm
Hmmmmm – No. In fact quite the opposite.
Sinclair Davidson
5 Jan 13 at 7:35 pm
Well, no. But Judith’s piece demonstrates my point and discusses the economic impact based on the recent ANU study.
Andrew
5 Jan 13 at 8:54 pm
Sinclair
Your trend excercise suggests the sharp increase in evidence from the sa figures pushed the trend higher, nothing surprising or particularly useful there. The is a reason the ABS stopped publishing trend measures at the time of the handouts.
Andrew
There are studies to back any argument you want to make. Judith picked that study to highlight because it is in accord with her beliefs.
I prefer to look at the data myself. Sinclair’s paper shows the jump in retail spending.
sdfc
6 Jan 13 at 1:20 am
Cohenite – don’t confuse power production with distribution. The open access (or rather, average cost priced access) is to the distribution system. I’m curious about your idea that demand is entirely unresponsive to price: I’ve never encountered a vertical demand curve, perhaps someone could explain how and why it might emerge? This sounds like the academic possibility of a giffen good … but I don’t think there’s ever been one observed.
Sinc and Judith Sloan are better economists than me – any thoughts, either on D-curves, or the wider issue of the elasticity of consumer electricity demand?
Pyrmonter
6 Jan 13 at 4:20 pm