Peak coal in China?

With new measures to cap coal use and restrict imports of low quality coal in China, it appears the tide is turning against the coal exporters. The Institute of Economics and Financial Analysis (IEEFA)’s demand analysis shows how China’s coal demand could surprise people by peaking in 2016 and then decline gradually thereafter, driven by efficiency measures, increased renewables, hydro, gas and nuclear and tougher policies to cut air pollution.

That is from a report in The Australian.

But there is a major problem with the analysis – several actually, but I want to focus on just one.

Today Tim Buckley published a break down of the sources of Chinese electricity production at Renew Economy.

Chinese Peak demand

Surprisingly he interprets this as supporting the argument that coal demand will peak in 2016.

What we see is that nearly 65% of all electricity production came from coal and over a third of new electricity production came from coal too. For all the talk about renewables new coal production accounted for 2.5 times the increase in wind power and nearly 3 times the increase in solar power. All those coal powered power plants are still going to need coal as an input after 2016.

The anti-coal lobby are trying to create the impression that global demand for coal is shrinking, when at very best all they can show is that on current trends the rate of increase in the demand for coal might decline over time. That is a very different proposition.

Posted in Divestment, Mining | 25 Comments

Leyonhjelm on the Abbott betrayal

The left may be the noisiest of complainers, but there is no group Tony Abbott has let down in a more brazen way than the classical liberal wing of his own party.

If you doubt this statement, I urge you to look up a speech he made to the Institute of Public Affairs little more than two years ago about his decision to repeal just a few of the worst elements of the Racial Discrimination Act.

In announcing his backdown last month, Abbott was quoted as saying, “I want the communities of the country to be our friend, not our critic”.

A group of Muslim representatives demonstrated exactly how effective this tactic is by refusing to meet him to discuss terrorist threats. It turns out that just like everybody else in history, our Muslim friends have interpreted appeasement by political leaders as weakness.

Far from making friends or influencing people, Abbott’s failure to do anything about the Racial Discrimination Act has not only appalled the libertarians in his own party, but earned the contempt of people it was meant to protect.

That’s from The Drum.

Posted in Federal Politics, Freedom of speech | 31 Comments

Consumer policy: Xenophon calls for price rises while Harper seeks reductions

Nick Xenophon while not a socialist is one of those politicians who are perplexed that competition can bring benefits rather than costs in terms of jobs. He has previously unloaded against discount milk in supermarkets and now wants to stop supermarkets selling cheap bread, claiming that if they do the independent outlets will go out of business.

Bread regulation has some history. Until Victoria’s radical free market government led by Joan Kirner sought to repeal the legislation in 1991, bread needed the Minister’s permission if it was to be carted more than 48.3 kilometers. There were increasing grumbles that the Minister was exercising that discretion all too readily.

The provision’s repeal was opposed by the coalition Opposition which claimed that it would damage rural bakeries, which “directly employ about 600 people and the latest move will effectively lead to the loss of hundreds of jobs”. (Hansard, May 1991, p.1902). The repeal bill did not actually pass but this is not the only archaic regulation that has fallen into disuse.

More significantly the Ian Harper Chaired Competition Policy Review has issued a 330 page horse-choker seeking to push deregulation along. The Harper report does not share Xenophon’s aspirations for competition controls to boost consumer prices.

Among its recommendations are:
• a final elimination of shop trading hours (the Victoria ALP actually wants to increase the number of public holiday closures in a sop to Shop, Distributive and Allied Employee’s Union which is financing their election campaign – restricting trading hours means more triple time working hours)
• legalisation of the Uber private tax service, a move bitterly opposed by the Victorian Taxi Services Commission under that paragon of deregulation Graeme Samuel, former head of the ACCC
• removal of taxi plate numbers, the existence of which boosts fare costs (and provides a fruitful environment for Uber to exploit); a difficulty here is that though the restraint should never have been introduced, it has created a property right the Victorian Government is following a course whereby this is gradually eroded in value;
• a considerable relaxation of planning and zoning restraints
• deregulation of prices in gas and electricity.

The report ventures into the tortured world of “essential facilities” where the National Competition Council has championed attempts by firms to coat-tail on the Pilbara rail lines of BHPB and Rio. During a decade of litigation the NCC has failed in this vain attempt to socialise private assets in pursuit of its version of the common good. Harper wisely recommends the NCC be disbanded and replaced by an advisory body.

Not for the first time, detailed proposals for reforming the Trade Practices Act are offered. Unfortunately the abolition of the ACCC is not canvassed.

Some less persuasive proposals are:
• Repeal Part X of the CCA which gives exemption to shipping conferences. These conferences can never engage in monopolistic gouging as the number of competing lines and the existence of non-conference lines means that predatory competitors are constantly circling outside of the conferences looking to see if they can exploit any such attempts (and within the conferences, the independent firms will also cheat on their partners by offering discounts should the rates be set too high). Harper was obviously mindful of Adam Smith’s stricture, “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” Had they read the next sentences they would have discovered the correct policy approach Smith counselled against intervention by the authorities saying, “In a free trade an effectual combination cannot be established but by the unanimous consent of every single trader, and it cannot last longer than every single trader continues of the same mind.”
• Bans on parallel import restrictions. Harper likens these to import tariffs rather than an attempt by IP owners to exploit as much as possible the value of their property by engaging in discriminatory pricing; this characterisation however provokes ferocious arguments from within the camp of the good and righteous.

Posted in Uncategorized | 26 Comments

Guest Post: Is the Aldabra banded snail a denier? – B.P. Terpstra

We need to talk. From NPR (“Purple snail may be climate change casualty” by John Nielsen, August 2007):

A snail you’ve probably never heard of on the far side of the world was declared extinct this week. Normally, that wouldn’t be worth mentioning. But this was not your typical extinction; it may be the first tied directly to global warming.

The Aldabra banded snail lived on the Seychelles Islands in the Indian Ocean. Biologist Justin Gerlach of Oxford University says it had very pretty shell: dark, purplish blue with an orange band around.

And, from Nature (“Snail sayonara” by Robin Wilkinson, September 2007):

The Aldabra banded snail (Rachistia aldabrae), last seen alive in 1997, has been driven to extinction by reduced rainfall associated with climate change, according to new research.


R. aldabrae now has the unfortunate distinction of being one of the few species whose extinction can be attributed directly to climate change, rather than indirect effects such as habitat change. Gerlach believes that further species surveys on the atoll will likely show the impact of reduced rainfall on biodiversity.

But then there’s this. In recent days, from The Times (of London): 

Snail ‘wiped out by climate change’ is alive and well.

I think the peer-reviewed Justin Gerlach got a little carried away. But so too did some campaigning journalists – and that’s concerning.

Posted in Guest Post | 31 Comments

Tony Naughton Memorial PhD Scholarship

In July 2013 my former head of school, Tony Naughton, passed away unexpectedly. To commemorate his life and contribution to RMIT our school established a memorial PhD scholarship.

Applications for 2015 are now open.

Posted in Education | 3 Comments

1.8 per cent v 2.0 per cent: is this a joke?

I can’t believe the solemn commentary about the tosh coming out of the G20 Finance Ministers meeting.  Surely no one believes this underlying “modelling” by the IMF/OECD which purports to link the change to countries’ GDP arising from a series of ill-defined policy changes, most of which will never be implemented?

Talk about spurious precision.  We are told to believe that the Cairns ‘reform agreement’ will only add 1.8 per cent to global growth over the next five years rather than 2.0 per cent. Why would anyone take this seriously?

And when it comes to Australia’s proposed reforms, we are going to spend $125 billion on infrastructure projects, most of which have been neither properly evaluated nor ranked, and we are going to implement industrial relations reforms.

Sure: evidently commissioning the Productivity Commission to look at aspects of the industrial relations regulations must amount to reform.  And even in this case, the government has been delaying and delaying the commissioning of this review.

The truth is that the Abbott government has no appetite for industrial relations reform or micro-economic reform in general.

When it comes to what is on the IR books so to speak, it is pretty thin:

  • Reinstatement of the ABCC
  • Revised right of entry rules
  • Revised greenfield provisions (don’t do it: resort to arbitration is a backward step)
  • Stronger anti-bullying provisions (I’m not joking here)
  • Revised individual flexibility agreement provisions
  • An appellate body to sit on top of the Fair Work Commission.

None of this has been achieved a year on and progress is likely to be slow.  With the possible exception of the ABCC (and the fines will need to be significantly upped otherwise the CFMEU will just regard the fines as the cost of doing business to be extorted from compliant employers), the other changes are not significant.

The act will remain the same, the regulatory bodies will be the same and  staffed by the same former trade union officials, the awards will continue to constrain small businesses and higher costs are coming down the pike through the pay equity provisions (watch out service providers).

I say just make up a number: forget 1.8 per cent.  I’m thinking 0.0000000000001 per cent.  At least it’s not negative.


Posted in Uncategorized | 19 Comments

Monday Forum: September 22, 2014

Posted in Open Forum | 819 Comments

Fuelwatch again

The Abbott government is revisiting some of the dumber policies of the Rudd-Gillard era. Today it is petrol pricing.

Although the ACCC already has the power to act immediately against Big Petrol when it believes consumer law has been broken — as evidenced by its recent actions over shopper dockets and price data-sharing between service-station chains — it doesn’t currently have a mechanism to highlight issues that while not illegal, could still be a rip-off.

The ultimate regulatory agency wet-dream; they won’t even need to convince a judge of illegality any more, just decide for themselves what private industry should and shouldn’t do.

But this caught my eye:

The next fuel challenge for Messrs Billson and Sims is to help consumers find servos with the lowest prices. News Corp Australia understands the ACCC may be developing a website, app or other tool. Neither man would say.

We’ve been here before – the original FuelWatch scheme and then the GroceryWatch scheme. As my correspondent HG points put, the ACCC are in the process of suing the one organisation (Informed Sources) who have the petrol price expertise to actually develop such an app.

If the government were smart (LoL) they would take the ACCC as far away from petrol pricing as possible. So far the only thing the ACCC has managed to do is increase prices for price-sensitive consumers by intervening in the petrol voucher discount scheme.

(HT: HG)

Posted in Economics and economy, Federal Politics | 22 Comments

Negative gearing – some basic facts

The Australian reports:

THE vast majority of property investors taking advantage of negative gearing are “mum and dads” earning less than $80,000 a year, countering the long-held view that the property investment measure was a tax lurk for the rich.

That is consistent with some analysis I did a few years ago, but didn’t get around to writing up. Looking at ATO statistics for the financial year 2008-09 I calculated who was benefiting from negative gearing.

The graph shows cumulative share of taxpayers declaring net rent income (both the number and the dollar amount).

Negative gearing 1

Eighty per cent of taxpayers declaring net rent as income earn less than $80,000. While 80% of the dollar figure for net rent is earned by taxpayers earning less than $100,000.

Posted in Taxation | 18 Comments

Torture, judges, and ASIO

The Australian is reporting that Senators Leyonhjelm and Day have concerns that the wording of new national security legislation will permit ASIO agents to torture suspects.

To be clear – the new legislation doesn’t require ASIO agents to torture suspects, but neither does it expressly forbid them from doing so. That is an important omission because it allows a judge to substitute his or her opinion as to what the legislation should have contained.

Having watched a judge interpret the law to maximise the authority and power of a statutory agency last Friday, I can see no reason why we should trust the judiciary to interpret the ASIO act so that it does not contain the power to torture suspects. George Brandis has reassured us that torture cannot happen.

But Senator Brandis said yesterday that was impossible because operations involving torture cannot be authorised under the current ASIO Act.

“Under no circumstances has ASIO ever or would ASIO ever be authorised to torture,” he told reporters in Brisbane.

“This is not something that any Australian government agency, no matter what the circumstances, could ever do.”

The problem with Brandis, of course, is that he has already lied to us over the issue of 18C – so he simply cannot be believed on this issue.

There is a very simple solution to concerns that ASIO will gain powers to torture and that is to create an explicit prohibition in the ACT. To explicitly state that any act of torture will be lead to a prosecution of the individuals involved. Furthermore, following the massive loophole the judge found last Friday (ASADA didn’t need to use its powers, or lack thereof, if they simply cooperated with another party that had the very power ASADA lacked), that ASIO cannot cooperate with any other agency that does permit torture, or similar activities, for the purposes of gaining information.

The fact that the government is dragging the chain on this issue reflects very poorly on their intentions.

Update: Victory.

I don’t want the discussion of this important issue to be diverted by an issue that is effectively a red herring. So this morning in consultation with the director-general and in consultation with the prime minister, I’ve decided to add an explicit prohibition in relation to torture so far as concerns special intelligence operations.

Posted in Federal Politics | 102 Comments