Institute for Private Enterprise » NSW State Politics

Can Electricity Prices be Reduced?

Des Moore — Thu, 31 Jan 2019 12:14:43 +0000

Will Electricity Prices Be Allowed by Governments to Fall?

The improvement in the Coalition’s Newspoll on 29 January (still down at 47/53 TPP) has almost been forgotten and questions continue as to whether Morrison is able to address the “two big things” (quit Paris accord and slash immigration) needed to give the Coalition a chance. The need for quitting the Paris accord has been enhanced by what has happened under heat waves in Victoria, South Australia and now NSW.

Since my 29/1 Commentary the possibility of the Coalition establishinga policy which would, as promised, allow lower electricity prices to happen and be sustained continues to be highly unlikely– except of course if government controls are able to be imposed legally and producers/retailers are compensated for a proportion of the existing higher costs which would otherwise be met by consumers of electricity, but with taxpayers then having to pay the costs. As indicated in the this article (Forward Electricity Prices Increase), at present futures markets are operating on the basis that the increasing reliance on renewables under announced policies will mean that there will be periods when major shortages of supply occur given that states have policies which will rely on up to 50 per cent of power coming from renewable and prices will have to increase to choke off a proportion of demand (the discussion in the article is confused because the author and the AFR itself supports existing policy).

This is basically what happened during last week’s heat wave and little wind power and which led to a sudden major increase in costs. It is reported that Victorian and South Australian consumers of electricity had to pay additional costs of about $1bn for just two days last week, which indicates the frailty of existing policies operated by those two states (see Power Costs Increase by $1bn in Two Days) and which other states also operate. Indeed, NSW has today experienced blackouts which appear less than in Melbourne but which include outages (and additional costs) in hospitals (see Blackouts in NSW Too).

Note that Federal Resources Minister Canavan said that this occurrence “justifies investment in reliable sources of power, such as coal-fired power”. But he fails to recognise that the private sector will not make any such investments under the existing climate change policy which aims to reduce usage of coal. Note also that the climate “expert” employed by The Australian, Graham Lloyd, comments that “Renewable energy might be the cheapest option to build but it makes sense only if there is power available when it is needed”(see Graham Lloyd on Renewable). But he doesn’t canvass a reduction in usage of renewable or a basic problem with policies.

The “solution” of course is to withdraw from the Paris accord which Turnbull signed on our behalf (sic) and, instead, adopt a climate change policy which preferably eliminates any target for using renewable or reducing carbon emissions but at least reduces such targets to a major extent. Properly handled, that would provide a major weapon with which to fight the election given that Labor has adopted an even larger bunch of targets to use renewable and to reduce carbon emissions. But Morrison has first to indicate that his government is now not in agreement with CC policies adopted under Turnbull.

Las Vegas & Widening of Police Assessments But No Gas Policy

Des Moore — Tue, 03 Oct 2017 11:53:35 +0000

Such details as are available for the Las Vegas killer (causing 59 deaths and 527 injuries) do not suggest he was directly influenced by ISIS, although that body claims responsibility (it obviously suits it to claim responsibility for deaths in the US). However, the killer (Paddock, white) may have been indirectly influenced by that body’s jihadist policy of killing those perceived to be opposed to Islam. For details of Paddock’s life, see Vegas Killer’s Background.

Coinciding with the US killings are two reports of terrorist action in France and Canada (2 deaths and 5 injured) and a report that “Last week Islamic State released a new recording, supposedly of leader Abu Bakr al-Baghdadi — whom the Russians believed dead — exhorting followers to strike at the West” (see IS Attacks in France & Canada). Australia is of course subject to a possible attack.

Interestingly, while last evening’s 6.30 TV news on SBS reported Las Vegas and these other two incidents, the 7.00 ABC TV news reported only on Las Vegas and failed to mention either the French or Canadian incidents or the report of a Baghdadi statement. Nor did it mention them on ABC Radio News this morning. But it did not forget to discuss the gun control issue in the US.

An important development here (presumably prompted by Las Vegas) is today’s report that the recently appointed (30 March) NSW Police Commissioner Fuller is claiming that his establishment of a “fixated persons unit” of 17 in the NSW police force has, in the last six months, resulted in 6 people having been charged and 32 investigated in regard to terrorist activity or threats (see NSW Policy on Combating Terrorism).It appears that (sensibly) this unit is responsible for preventing attacks by terrorists and by those who become obsessed with other extreme views about perceived threats from sources other than religious ones. This has led to the establishment of a close relationship between NSW police and health officials, including the Chief Psychiatrist. The latter is reported as saying that they only share health information when they are convinced there is potential for serious harm.

It may be that the 15 year old, charged last week with two counts of attempted murder for allegedly driving a car strait at individuals in Swanston St, is a fixated person. Contrary to initial reports, however, it is now being said that he does not have a mental health problem (see Melbourne Attacker Not Mentally Ill).

In his response, Turnbull has been fast off the mark in announcing that State and territory leaders will meet on Thursday for a special national security summit. “We must constantly improve our laws and our techniques to stay ahead of those who seek to do us harm” (see extracts Aus Meeting of PM & States on National Security). It is to be hoped that Turnbull will tell the meeting that, while Islamic Extremism is the most serious source of terrorism facing Australia, counter-terrorist policies should be extended to counter this not only through intelligence agencies but also through police action of the type adopted by the NSW establishment of a fixated persons unit.

Gas Policy Went Missing

Last week Turnbull said that the agreement on additional domestic gas supplies would be concluded today and would be legally binding. So far, however, there has been no indication of what has happened or will happen to this in the period ahead. Parliament resumes in two weeks time.

Bolt on Grand Mufti

Des Moore — Thu, 07 Jul 2016 22:20:59 +0000

In my Commentary of 3 July I drew attention to the statement by the Australian leader of Muslims, Grand Mufti Mohammed, that “no person can ever change” Islam’s rejection of homosexuality and to my letter published in The Australian expressing concern about the statement and the implications of it for Islamic support of sharia law and jihadism.

Andrew Bolt has now elaborated on the Grand Mufti’s statement and argued that it implies support not only for Sheik Shady’s view on homosexuality but that criticism of a Muslim cleric is to “criticise Islam itself and risk death. Shut up or else”. Bolt rightly concludes below that “Turnbull and other community leaders must address this with frankness, or else Pauline Hanson will. The time for evasion is over”.

Unfortunately, in a short address to a function on the end of Ramadan, NSW Premier Baird has adopted an approach saying “we must stand up against any form of racial vilification” and, when questioned after the function, refused to condemn remarks by the Muslim speaker, Samier Dandan, attacking “the media and the rise of far-right political parties and hate preachers in Parliament” (see Baird on Islam). Separately, a report indicates that girls of Muslim parents are now wearing the hijab well before they reach puberty, when according to one Muslim spokesman it is a religious obligation. He suggested that “the more you persecute us, the more we will become closer to our religion” (see Children Choosing hijabs ‘against Isalmophobia’)

GW, Temperatures & RET – Mar 30 2015

Des Moore — Mon, 30 Mar 2015 10:44:03 +0000

One or two aspects of the NSW election result are of some importance, as are developments on climate change policies.

First, although some sections of the media drew attention to the swing in NSW of 9-10 per cent against the Coalition, the result of 53 to 34 seats (prelim) was a good one for it. The 2011 result gave them 69 to 20 seats but the extent of that win reflected the realisation of the electorate that the Labor Party had been performing abominably under a heavily unionised leadership. True, the new Labor leader (Foley) was also heavily unionised and this should have meant a better result for the Coalition. But Premier Mike Baird gave little attention to the damaging effects of the exercise of union power and, as an avowed religious man (also favouring a Republic), is unlikely to push for reform in workplace relations. Nor is he likely to question the need for action to reduce emissions.

Second, although the result is seen as a victory for the Greens (who may have increased their Legislative Assembly seats from 1 to 4), it seems that any such increase in seats will have come from Labor, which astonishingly gave the Greens preference in vote cards (see Andrew Bolt article below).

Third, related to this Greens “victory” is the opposition both it and Labor gave to coal-seam gas. However, as pointed out in The Australian article below, the Greens do not appear to have won votes in areas where CSG and coal mining generally were active. This sends a message to the Baird Government to remove the freezing of CSG licences and promote the development in NSW of much needed gas based on US developments where, properly regulated, there is no substantive evidence of adverse effects on water supplies.

Fourth, the announcement that the forum examining temperatures published by the BOM will examine submissions by outside experts (even though that is not in their terms of reference) indicates how badly environmental policy is being run by Environment Minister Hunt and his Parliamentary Secretary Baldwin. It has been well known for a considerable time that many experts have justifiably questioned the “adjustments” made by the BOM to the recorded data and that the published figures may overstate the increase in temperatures since 1910 by as much as 0.4C ie half the increase over the past century or so. What is needed is a proper inquiry that includes some of the many climate experts from outside those committed to global warming. This is now of particular importance given that analyses are being prepared for the IPCC conference in December and that new emissions targets are being considered by the government.

Fifth, associated with the temperature fiasco is the wrangling over the RET policy. As with the temperature inquiry there should be a proper inquiry into whether, with the growing questioning of the supposed threat of dangerous warming, this costly renewables policy should be phased out at the federal level. Again, this is relevant to the IPCC conference.

Climate Change, Terrorism and Privatisation

Des Moore — Tue, 10 Jun 2014 23:32:49 +0000

The Fairfax press has continued its attacks on Abbott through disputes over climate change policy (and ridicule), with today’s Age even making what seems a ridiculous suggestion that Abbott is seeking an “alliance to thwart President Obama on climate change policy”. This does not mean Abbot is not seeking support from other countries, including his sympathetic host country, Canada, that have no carbon tax. But to suggest he is an alliance seeker is absurd.

It seems a pity, though, that Abbott is praising Obama’s proposal on the ground that he is taking “direct action” like Australia. He could better be using an article in the Washington Post which concludes that “whether it would affect the world’s climate is more questionable”. The author, Robert Samuelson (who I have met), is no right winger but, unlike some of our local media, he is critical of all proposals by governments which do not stand up to close examination. He points out that market forces have already reduced the electricity industry’s use of coal from 50% at Obama’s base line of 2005 to 39% in 2013, replacing it with cheaper gas. And the US Environment Protection Agency has predicted coal usage would fall to 31% by 2030. In short, the 30% target could well occur naturally and without what seems, as the author says, a “hugely complex” operation involving state governments and likely legal actions. In short, the scheme seems largely symbolic and with little substance.

I have included below both the Samuelson article and, for comparison, two from the Fairfax press.

Abbott has also made an important address in Canada supporting intelligence gathering and implying that he will not be making any apology for doing so. This may be taken as confirmation that his meeting with Yudhoyono at the start of his trip did not require an apology and contrasts with Obama’s apology to Merkel for tapping her mobile.

The Australian reports that a study commissioned by the NSW Treasury and conducted by Ernst & Young has found that States with privatised electricity (poles and wires) have experienced real reductions in electricity prices whereas States with government electricity have experienced large price increases. This publication of an in-depth analysis is a good example of what governments should do when they are considering major policy changes, as the NSW and Queensland governments are planning with regard to electricity. While there will be controversy over the conclusion, if handled well by the relevant Premiers and Ministers it should greatly help the two states in improving their finances and productivity.

Various subjects

Des Moore — Thu, 15 May 2014 12:43:52 +0000

As might be expected, the whingers about the treatment of certain elements of government assistance have emerged, with Labor leading the way (The Australian’s editorial – not included below – can’t find any Labor acknowledgement of a budget problem) and the Premiers not far behind (see Andrew Bolt’s critique of them below). Also, The Age naturally finds it unfair.

However, there now seems wide recognition of the reality that, overall, this is not a “tough” budget and that increased revenue from tax increases, mainly from bracket creep, is a major contributor to the estimated reduction in the deficit.

The government will test the various opponents by seeking to have the budget passed in time to create a double dissolution threat. Between now and July there will be an ongoing battle to “sell” the budget and, if necessary, to attempt some horse trading.

Good news that Boko Haram is going to be listed by Australia as a terrorist organisation and that Duncan Lewis will succeed David Irvine at ASIO.

More Liberal party problems with ICAC in NSW, including a threatened jail sentence.

Unfortunately, I have been unable to access digitally the AFR photo of Mal Brough offering Clive Palmer in Parliament a glass of water while he is asleep during question time. How unfair!

Never Mind the Budget: The Corruption Inquiries Are More Interesting

Des Moore — Wed, 14 May 2014 12:39:06 +0000

On the eve of the budget the media’s attention has been diverted to the corruption/irresponsible behaviour inquiries by the Heydon Royal Cn, the Hanger Royal Cn (into deaths from the botched batts program) and the NSW ICAC inquiry (another Liberal MP gone).

The Heydon Royal Cn is of particular interest for the HR Nicholls Society, which is holding a conference in Brisbane on Saturday 17 May on “Stopping the Decline: Our Urgent Jobs Plan”. Speakers at that conference will reveal the adverse effects on employment (and on social relationships) emanating not only from the current Fair Work regulatory arrangements and administration but the earlier regulations too. Queensland Attorney-General Jarrod Bleijie will give the dinner address at dell’Ugo on Southbank.

Some evidence given (under oath) by “bagman” Ralph Blewitt to the Heydon RC has already received publicity. But it illustrates pointedly the powers unions have been able to exercise by promising minimal disputes – in return for “donations” to the supposed union cause. In effect, union leaders were able to exercise monopolistic powers over selected companies –and they appear to have retained those powers in certain areas.

Note that all major media sources have reported the opening of the Heydon RC, although The Age covered it only on page 6 and the AFR on page 10. The ABC also ran it but ensured its listeners were aware of Gillard’s claim that she was unaware of what the slush fund was used for.

Various subjects

Des Moore — Sat, 03 May 2014 11:48:49 +0000

Yesterday’s resignation of the NSW Police Minister (a former policeman) after questioning at ICAC has been accompanied by a warning from ICAC that there are likely to be more “exposures” of promises by Liberal ministers (or shadows when in Opposition) for favoured treatment of businesses in return for donations.

In Victoria the Premier has defended favoured treatment of a businessman (under a grants scheme supposedly designed to help expand businesses and jobs in regions) but there has been no overt indication there of any resultant donations from the businessman. An application by Opposition Leader Andrews to IBAC (Victoria’s equivalent to ICAC in NSW) to investigate was rejected on the ground that “no evidence of wrongdoing is identified”.

At the federal level, the proposed deficit levy and continued speculation that, despite assurances that there will be a range of expenditure reduction measures in the budget, the budget will not be seen as making an effective start to the spending problems inherited from Labor. This speculation is helped by the very small spending reductions proposed by the Audit Commission for the pre-election period and a speech by Hockey yesterday that included an assurance this is “not going to be an austerity budget, but it is going to be a prudent budget”. Any claim that the era of entitlements is starting to end will likely be seen as premature.

It is not surprising, therefore, to see the emergence of “advance” critics – and not only the usual ones (including the Opposition) who fear the Audit Commission’s analyses will result in a reduction adversely affecting them or their lobby group. A few more responsible commentators have added to their already expressed concerns about a likely shortfall in reductions, the need for a deficit levy and the accompanying broken promise, the last minute reduction by Abbott in his parental leave scheme, and his pre-election guarantees (see articles by Shanahan and Kenny below). The poor polling of the Coalition, in the face of what seems an ineffective opposition (including its critique of a deficit levy on the high income group), probably mainly reflects the poor handling of these aspects of the lead up to the budget.

Various subjects

Des Moore — Tue, 29 Apr 2014 11:40:52 +0000

Advance commentaries are appearing about desirable budget outcomes, with Henry Ergas setting the pace below. But most of the commentary seems based on Keynesian analysis with warnings against “large cuts” that would allegedly damage the economy and which have little regard to the likely increase in confidence from such cuts. Rumours that there will be an increase in taxation, possibly a levy on higher incomes, have not been scotched.

More revelations are appearing of favours extended by ministers in NSW to Liberal Party donors and, as Shanahan suggests, that party is “starting to carry the corruption can for the NSW Labor Party”. Today’s session of ICAC confirmed that – and there is more to come.

The Victorian Premier has defended a large government grant to a wealthy owner of a meat works in his electorate by saying that he had “no input into the decision” and that the previous Labor government in Victoria had made similar grants to the same business.

The formal withdrawal by economist Richard Tol from the authors contributing to the IPCC team – he was a so-called Lead Author of the important just published “Summary for Policy Makers” – exposes the unconvincing nature of the drafting of arguments used in the document. This is reinforced by another lead author who says that government representatives would not adopt texts that were scientific if they were counter to political objectives. These problems with IPCC texts were already known but it is significant that lead authors are “going public” in ways that further reduce the credibility of the IPCC.

The relatively peaceful progress of the election in Afghanistan is encouraging.

Various subjects

Des Moore — Thu, 24 Apr 2014 11:38:18 +0000

In an earlier message I referred to the implication that the NSW Liberal Party seemed too susceptible to persuasive activity by lobbyists seeking decisions on appointments to government agencies or the award of government contracts without proper contracting procedures. As noted by Shanahan below, although Abbott imposed last year a ban on lobbying by party officials, his new announcement suggests lobbying still succeeds in having a high level of influence.

Whether Abbott’s new policy of expanding registrations of lobbyists of all forms will have the desired effect is open to question. For one thing, it scarcely seems appropriate to give the head of Prime Minister’s department the responsibility for determining who is and who is not a lobbyist per se. More importantly, reduced lobbying will come if there is a reduction in the role of government (ie fewer government-financed projects), and the publication of the qualifications of appointments to government agencies.

The AFR article below illustrates the continued unwarranted disruptive union activity in the building industry and the important role being played by the new head of the FWBC in combating that activity, even with the limited powers available as a result of Labor’s amendments. It also illustrates the need for a completely different approach to the existing regulation applying in sectors outside the building industry viz one that allows individual contracts and prevents union disruption.

The decision to announce the purchase of a further 58 F 35 joint-strike fighters is a welcome start to reversing the decline (relative to GDP) in defence expenditure and, judging by ASPI expert Davies’s comments, confirmation of a top notch acquisition. It is presumably also partly designed to paint a different expenditure picture to the stringent one being conveyed by Hockey. However, most of the payments for the fighters seem likely to fall outside the normal forward estimates period and after the next election. One hopes that by then Abbott will not have repeated his “no cuts” nonsense.

More on the action being taken by extremist green groups to restrict the production of food. This obstruction warrants an inquiry and a tightening of regulations of such groups to protect farmers and other food producers.