Institute for Private Enterprise » G20

US Wins at G20; Morrison Meets Trump; Germany Fails To Successfully Employ Renewables; Stone on Immigration

Des Moore — Sun, 02 Dec 2018 06:05:20 +0000

US Wins at G20 and Morrison Performs Well

Although there has been a “final statement” by leaders attending the meeting of the G20 in Argentina, the text does not seem available on the web and nor does the communique. However, some media are reporting on what was agreed. The outcome on trade was expected to reveal something on the what has been described as a dispute between the US and China (but which has implications for all trading nations). It appears that the US did succeed at G20 in obtaining agreement that the present arrangements need to be changed. The words reported as being used in the communiqué are as follows

“International trade and investment are important engines of growth, productivity, innovation, job creation and development,” the communique says. “We recognise the contribution that the multilateral trading system has made to that end. The system is currently falling short of its objectives and there is room for improvement.”(see G20 Meeting According to the Guardian)

The US also appears to have successfully downplayed the notion that globalised agreements on policy issues are the way to go.According to the Guardian report, in particular “speaking off the record, a senior US official told reporters the US “specifically preserved and explained our position for why we’re withdrawing from the job-killing Paris agreement”. The official claimed to have seen signs of “the coalition fraying” among some signatories to the Paris deal, “like Turkey, like Saudi Arabia, like Russia”. Separately, it is reported that all except the US agreed on retaining Paris, although some only agreed reluctantly (the next IPCC meeting starts in Poland tomorrow). Note also the downplaying of the role of the IMF.

Historically, international meetings such as the G20 (which started with meetings every six months but these are now only yearly) have in practice had little effect on policy decisions made by individual countries, particularly by the US. Under Trump’s Presidency the US will be even more “nationalist” in its influence (particularly through his White House adviser, John Bolton) and, even with the establishment of China as a more influential nation internationally, there is no sign of “globalisation” of policies.

However, the meetings do provide an opportunity for smaller countries such as Australia to meet with the larger countries and let their leaders know of any bilateral support or opposition. Morrison took advantage of this in his 25 minute meeting with Trump, which occurred because Trump cancelled his sideline meeting with Putin because of Russia’s attack on the Ukraine navy. While it appears that Morrison failed to use the opportunity to explain why Turnbull ceased to be PM, he seems to have indicated support for the US on trade and on its policy on Iran and terrorism generally. According to Weekend Australian, “the Trump administration views Mr Morrison as a hardliner on border protection and has looked favourably on the Prime Minister’s pushback against Iran and his review considering shifting Australia’s embassy from Tel Aviv to Jerusalem”.

Trump certainly gave Morrison a big tick (see Morrison’s Meeting with Trump) and he should now use that to his advantage in Parliament and in enunciating Liberal policies. But as The Australian’s political editor points out, he can’t do it all himself. Rather, “Morrison needs to broaden that argument into a strategy based on policies that have been worked through with his colleagues and give his fractured followers something to focus on apart from each other” (see Shanahan on Morrison). As I argued in my Commentary last Thursday, Morrison needs to indicate that Turnbull’s (losing) policies have been changed and, in particular, his energy policy must ensure that electricity prices will fall substantially not through the so-called big stick approach but through a competitive market.

Energy Policy

On Energy Policy, there are recent developments which reinforce the views of skeptics on policies reducing CO2 emissions. These include

An assessment by a German analyst that “More and more people are about to realize, that supplying the world with stable energy from sun and wind only, will be impossible. Germany took on the challenge to show the world how to build a society based on green energy. They have now hit the wall. Germany has not reduced CO2 emissions over the last 10 years despite huge investments in green energy production capacity” (see Interesting Comment on Renewable Energy);
An assessment by a local physicist of the composition of C02 suggests that not only are ocean sources and plant sources independent but only some 27% of fossil fuel emissions remain in the atmosphere;
An analysis by Swedish sea level expert Nils-Axel Morner indicates that, contrary to IPCC reports, the rate of increase in sea levels has not increased.
Increased analysis showing mistakes in official temperature measurements which falsely show a faster increase in temperatures and a failure to acknowledge that the cause of increases is importantly due the natural causes.

The Morrison government could reduce the sympathetic beliefs by sections of the public, including last week’s street rallies by 10 year old children, that temperature and other weather changes are due mainly to human-caused production of fossil fuels. That would require a publication of a comprehensive report authored mainly by skeptics and should help the government justify the modification of existing targets of emissions and renewable.

Stone on Immigration

I have previously drawn attention to arguments advanced by Stone for a substantive reduction in immigration rates and for not signing up to the UN playing a role in advising on immigration policy. He has now published an article in Spectator complimenting Morrison on the government’s decision that Australia will join the US, Israel, Austria, the Czech Republic, Poland, Croatia, Hungary and Bulgaria in refusing to sign the UN’s ‘Global Compact on Migration’. At the same time he asks why the UN proposal to provide advice on refugees has been signed by Australia and why Morrison’s announcement to consider a reduction of only 30,000 from the immigration target of 190,000 (see Stone on Immigration). He points out that “Australia not only has a large and exceptionally costly refugee and other humanitarian resettlement program, but also makes contributions to countries (e.g., Jordan) where refugees are encamped, and in many cases to their countries of origin (most notably, Afghanistan)”.

Activism by Turnbull

Des Moore — Sun, 23 Jul 2017 03:58:39 +0000

Turnbull on the “loose”

As I experienced a bout of flu, I have had a “enforced” quiet period for a week (my last Commentary was on Monday 17 July). During that past week, however, it was impossible not to notice Turnbull being unusually active on a number of political fronts attempting to improve the Coalition’s — and his own– polling. My conclusion is that any improvement is unlikely: rather the opposite.

His most important decision was to announce a major change in Ministerial responsibilities which, he claims, implements a major reform and was presented as a “big” policy announcement. But, as discussed further below, it involves no reform and is designed more to combat the accusation that he has neglected the conservative side of the Coalition and to show Abbott and his cohorts that he (Turnbull) can do more than just debate possible major reforms, as he did before with possible tax reforms. Looking back, it seems likely that, while overseas at the G20 meeting (7-8 July) and an official visit to France and the UK shortly after, Turnbull was using discussions with various leaders to help develop an activist strategy designed to lift his appeal back home.

An obvious issue requiring attention was Turnbull’s climate policy and his response to the Finkel report, but his only public comment on such policy after returning from overseas was his 15 July address to the LNP convention in Brisbane. At that convention he said nothing about Finkel but told the assembly how important coal is. Interestingly, this was reportedly greeted with applause, but Turnbull has yet to give any hint as to just how important coal might be in his policy, if of any significance at all.

His proposal to establish a new Ministry of Home Affairs headed by Immigration Minister Dutton will maintain there the responsibility for immigration but will also assume responsibility for ASIO, Australian Federal Police and two other security/intelligence agencies. Despite claims that such a possible change has been under Turnbull’s consideration for some time, these announced changes lacked detail and will not become operative until early next year (assuming the needed legislative changes pass the Senate). Thus Turnbull’s Media Release concludes by saying:

“These reforms are significant and complex; they will take time to fully implement. Planning to implement the changes to the Australian Intelligence Community, the establishment of the Home Affairs portfolio and the strengthening of the Attorney-General’s portfolio will be undertaken within the Department of the Prime Minister and Cabinet. The Attorney-General, the Minister for Immigration and Border Protection as Minister-designate for Home Affairs, and the Minister for Justice will work with the Department of the Prime Minister and Cabinet to develop these plans with a view to their implementation from early 2018” (see Turnbull Release on Home Affairs, 18 July).

On that very same day, the AFR reported that Turnbull’s activism had experienced difficulty at a private dinner in persuading senior businessmen to assist with Coalition funding. According to this report, “Malcolm Turnbull upbraided the business leaders for not helping out more with donations and generally not being more vocal in advocating the government’s agenda. This invited complaints from the corporate leaders that much of the government’s agenda was not friendly to them. One CEO listed as examples the imposition of the bank tax, the implementation of changes to section 46 of the Competition and Consumer Act, or an effects test, an ongoing aversion towards substantial industrial relations reform, and even the decision to phase in company tax cuts over 10 years, putting big business last”. Note that “Mr Turnbull’s attempts to reforms energy policy were also discussed at length” (see Turnbull V Corporates).

Then, on 20 July The Australian reported Abbott as saying “the new ministry… was a ‘massive bureaucratic change’ and challenged the Mr Turnbull to reveal what advice he’s been given to support the new department. “The advice back then was that we didn’t need the kind of massive bureaucratic change which it seems the Prime Minister has in mind, and I can only assume that the advice has changed since then,” Mr Abbott told 2GB. “No doubt the Prime Minister will give us more information in due course about the official advice that he’s had on this.”

“Turnbull then hit back at Abbott’s claims that he was advised against a national security overhaul during his time as prime minister, saying he has received no objections to the home affairs super ministry from security agencies. He denied he received advice from agencies urging him not to go ahead with the super portfolio”. ‘No. The answer is I have not received objections from our agencies,’ Mr Turnbull told 3AW. ‘Again, the bottom line is that I’m the Prime Minister. I make these decisions’. “This is essentially a question of getting the national security architecture in the best shape to keep Australians safe. “We do not design these arrangements for bureaucratic convenience. We design them in order, we make changes always to optimise them so that our agencies can do a better job to keep Australians safe. That’s the objective.”

Also on 20 July, Andrew Bolt wrote “WHAT a scandal if Malcolm Turnbull has indeed given Peter Dutton control of all our big security agencies just to stay Prime Minister. That may seem a conspiracy theory, but Attorney-General George Brandis has given a joke of an excuse for this huge concentration of power. Turnbull has stripped Brandis of responsibility for the spy agency, ASIO, and given it to Dutton, the powerful conservative keeping Tony Abbott off Turnbull’s back. Dutton, now the Immigration Minister, will over the next year also get the Australian Federal Police and other security agencies to become the new Home Affairs Minister.

Brandis on Tuesday was made to publicly approve of the changes he’d privately resisted, and offered a humiliating self-criticism of the kind given by Chinese prisoners. Brandis suggested that losing ASIO was just what he deserved after neglecting our safety”. ‘Though my focus has been on national security, it has not been able to be an exclusive focus,’ he admitted. ‘There are always other things within the Attorney-General’s portfolio which also occupy my attention.’ But Dutton ‘can give 100 per cent of his time and his attention to national security’. “Which is false. Dutton is no more able to give national security ‘100 per cent of his time’ than was Brandis” (for full text of Bolt, see Bolt Explains Reasons For Home Affairs).

On 22 July, Paul Maley of The Australian claimed there has been no Cabinet agreement on the net merits of such changes. Indeed,” a picture is emerging of a rushed, shambolic process that critics across the government believe was driven by political expediency rather than good policy … some of the key ministers affected by the changes were not told of the Prime Minister’s decision to go with the idea, which had been under consideration for some time, until just a few days before Tuesday’s announcement” (see Turnbull’s Own Decision on Home Affairs, 22 July). If this report is correct, it would seem that Turnbull pushed the decision almost as a matter of desperation.

Greg Sheridan, who has probably more knowledge and contact with the workings of overseas intelligence agencies than any other journalist (or serious commentator on foreign policy), is extremely critical of Turnbull’s decision and suggests that “ The politics of this all have a long way to run”. He rightly concludes that while “Turnbull may well think he is shoring up his support in his party’s right wing. It’s a way of dealing with the Abbott problem without dealing with Abbott. But it looks too unstable and embodies such poor process that it is unlikely to be effective”. Sheridan also notes that

”Four structural factors make its re-election extremely difficult. First, there is the mathematics of its one-seat majority, Labor’s necessary gains are so small. Second, there is the disunity in the party, which is extremely unlikely to go away. Third, Labor will enjoy a huge funding advantage and a similar massive advantage from the de facto third-party endorsements of policy positions from all the quasi-government bodies it has created or staffed with people who share a centre-left world view, which the Coalition in government has done nothing to change. And finally, in our hyper-driven social media environment, six years of Coalition government will seem to the electorate like a lifetime” (see Sheridan on Home Affairs 22 July).

Conclusion

While Abbott raised a serious question about Turnbull’s decision to establish a Home Affairs Ministry, so too have many other commentators, most notably Greg Sheridan. Whatever the effect on Newspoll, that would have to be attributed to Turnbull himself. But Opinion Poll effects aside, the “initiative” by Turnbull must surely be interpreted as foolish and likely to add to the Coalition’s electoral problems. Sheridan’s comment that “it looks too unstable and embodies such poor process that it is unlikely to be effective” is a let off. It smacks of a leader who doesn’t know which way he is going but is trying desperately to survive as leader. That, after all, is Turnbull’s principal interest. As Henry Ergas wrote in Weekend Australian, it is somewhat ironic that Turnbull received a prize honouring a man (Disraeli) of whom it is said that “he never thought seriously of anything except his career” (see Ergas on Disraeli).

Energy & Climate Policy AND Turnbull

Des Moore — Tue, 11 Jul 2017 13:41:12 +0000

Yesterday Environment Minister Frydenberg had a lead article published in The Australian in which he argued that “in order to create a more affordable and stable energy system, the states need to lift their game — business as usual is not an option” (see Frydenberg on States Energy Policies). I submitted a letter arguing that “the same comment might be made about the Commonwealth’s policy game”, but it was not published.

Today, Judith Sloan has an excellent critique published in The Australian (see Sloan On Frydenberg) and, keying off her article, I have submitted a slightly amended version of my earlier letter. This runs as follows

“Judith Sloan rightly says that the Turnbull government is sending out a clear message on energy policy that Australia must “get used to sky-high electricity prices and the loss of energy-intensive manufacturing” (Opinion 11/7).

Under present policy, 23 per cent of power would be obtained from renewable by 2020 (now 15 per cent), with CO2 emissions being reduced by 26-28 per cent by 2030 (they are now down about 10 per cent on 2005 levels). This ensures higher prices and a less reliable power system. And, as Turnbull has described the Finkel report as meritorious, these targets would become much higher as Finkel’s recommendations are implemented.

Meantime, we know that the three biggest emitters who attended G20 (China, US, and India) have policies which would not reduce their CO2 emissions before 2030. Hence, whether under policies adopted by the States or the Commonwealth, by then Australian businesses would face much higher domestic energy costs and major international competitors with relatively lower costs. Given that we are a minor emitter, is this a future our governments should be seeking?”.

This follows an editorial in Weekend Australian which, while noting that Turnbull was yet to comment on concerns being expressed by some parliamentary colleagues, argued that “when he arrives home (from G20) he needs not only to speak Mr Abbott’s name but also to deal with this shambles”. In my Commentary on Sunday 9 July I referred to the accompanying excellent article by Chris Kenny arguing that “the determination of energy policy is a major test for Turnbull and the Coalition”, that “Abbott makes a lot of sense, especially to mainstream voters worried about the impact of power prices on household budgets or business cash flows” and that “if we really want the cheapest and most reliable electricity we would concentrate on thermal baseload generation and forget emissions”.

My Commentary added that “the suggestion by some Ministerial colleagues that Tony Abbott’s expressions of concern are the cause of the shambles is laughable. As you point out, Abbott’s involvement relates mainly to the last fortnight and follows a lengthy period of polling by the Coalition suggesting a party still led by Malcolm Turnbull would be highly unlikely to win the next election. In a word, the problem is not Abbott but the policies pursued by Turnbull”.

I also noted Turnbull’s failure of leadership, particularly on an important policy needing to differ from Labor’s, could if continued further worsen the Coalition’s polling and ensure Labor’s win. The Newspoll published yesterday shows that, while the TPP is unchanged at 47/53, Turnbull’s personal approval rating as Better PM has fallen to 41 while Shorten’s has risen to 33, and the gap has thus narrowed from 13 to 8. Yesterday also saw an article by Andrew Bolt concluding that “ even Australia’s Chief Scientist Alan Finkel admitted last month that Australia is so small that even if we stopped all our emissions we’d still make no real difference to the climate. ‘Virtually nothing’ is how Finkel put it. So check your monster electricity bill again. You are paying hundreds of dollars a year more for fake fixes to a fake catastrophe. People are losing their jobs and pensioners are shivering in cold homes thanks to one of the greatest political frauds in our history. It’s criminal” (See Bolt on Global Warming).

Two other relevant analyses are attached, both indicating the lack of substantial support for policies directed at reducing CO2 emissions. The first is a press release on a commissioned analysis by Alan Moran on the Finkel report which argues that it is based on unreliable and unrealistic assumptions and forecasts, that “over regulation and implementation of the now discredited climate change policies such as the RET, is the reason Australia’s electricity has become so costly over the past few years,” and that “we can expect it to become even more costly under present policies, and prohibitively so, should the Finkel recommendations of increasingly greater subsidies on unreliable electricity sources be adopted.”

The second is a report by James Delingpole, who is now London Editor of Breitbart News (which supported Trump in the Presidential election) and has made a presentation at the IPA, referring to a“peer-reviewed study by two scientists and a veteran statistician (which) looked at the global average temperature datasets (GAST) which are used by climate alarmists to argue that recent years have been ‘the hottest evah’ and that the warming of the last 120 years has been dramatic and unprecedented. What they found is that these readings are ‘totally inconsistent with published and credible U.S. and other temperature data.’ That is, the adjusted data used by alarmist organizations like NASA, NOAA, and the UK Met Office differs so markedly from the original raw data that it cannot be trusted”.

Turnbull is about to return home after making an address at a London Think-tank, Policy Exchange, which Wikepedia describes as “Centre Right”. The Australian says that Turnbull’s key message from his address is that the Liberal Party has never been a conservative party and that he strongly defended his own centrist governing style. Whatever might be construed from the past, he does not seem to have dealt with the concerns of many Parliamentary colleagues (and others) that he has been off-centre to the left and that this is not consistent with the Liberal Party objective of a small government and less regulated economy and society. The debate seems likely to continue.

More Concern Expressed About Turnbull & G20 Meeting Doesn’t Seem Global

Des Moore — Sun, 09 Jul 2017 03:18:02 +0000

Turnbull’s Policies, Not the Liberal Party’s

My last Commentary (on Thursday) argued that a number of reports/comments in The Australian added to the increased recognition that the policies being pursued by Turnbull are often not consistent with Liberal Party objectives and that “it is difficult to envisage that Turnbull could make a come-back for the Coalition before the election whereas appointing a replacement in the near future would give it a reasonable chance”. I have now written a letter to The Australian with the same theme and pointing out that it is laughable to see the suggestion by some Ministerial colleagues that the cause of Turnbull’s problem is the expressions of concern in the last fortnight by Tony Abbott. My letter says that “the problem is not Abbott but the policies pursued by Turnbull”.

In part it reflects an editorial in Weekend Australian which, while noting that Turnbull is yet to comment on concerns being expressed by parliamentary colleagues, “when he arrives home (from G20) he needs not only to speak Mr Abbott’s name but also to deal with this shambles” (see OZ Editorial July 8-9). But my letter also argues along similar lines to the excellent article by Chris Kenny, who once worked in Turnbull’s office, that the determination of energy policy is a major test for Turnbull (see Kenny on Energy Policy, 8 July). Following extracts from Kenny’s article are pertinent:

“Energy is the most crucial and volatile policy issue in national politics. In the wake of Finkel, we await a detailed plan from the government. It will be a defining factor in whether the economy can reclaim confidence, rekindle growth and diversify. It will determine whether the Coalition has a chance of remaining in office beyond the next election. And it will be critical in resolving or unleashing the titanic policy and personal struggle between Turnbull and his aggrieved predecessor.

Tony Abbott talks a big game on electricity now he is free from the constraints of office or cabinet solidarity… exposes him to charges of hypocrisy, changeability and opportunism….but Abbott makes a lot of sense, especially to mainstream voters worried about the impact of power prices on household budgets or business cash flows.

The core policy challenge is described by Turnbull as a “trilemma”: meeting three criteria of affordable energy, secure supplies and reduced emissions. The fatal flaw is that reducing emissions is precisely what has made power more expensive and less reliable. If we really want the cheapest and most reliable electricity we would concentrate on thermal baseload generation and forget emissions. And if we really want lower emissions and refuse to embrace nuclear, we must accept higher prices and less reliability”.

Relevant too is the question of whether a greater use of batteries, often mentioned by Turnbull, might help support the use of power from renewable. Premier Weatherill made a bit thing of the offer by Tesla Motors, already the beneficiary of $5 billion of taxpayer subsidies from various sources, to build 100 megawatts (*or 129 megawatt hours) of battery storage in South Australia. An analysis by Brett Hogan of the IPA suggests this would provide 6 minutes of electricity for South Australia and the cost (if met by SA taxpayers) would be over 15 times the annual the cost of keeping South Australia’s last coal-fired power station open a little longer (see South Aust Use Of Batteries)..

G20 Meeting

The meeting of 20 world leaders at Hamburg, attended by Turnbull, has received considerable publicity, a good deal of it related to ant-capitalist street protests and injuries to a large number of police. One wonders why Chancellor Merkel’s government chose a city renowned for demonstrations by groups supporting alternative cultures and opposed to the globalisation supported by Merkel herself.

The most important “outcome” is the address made by Trump in Poland before the meeting started. Trump used the occasion to get across that his government’s concern is not confined to America alone but to “Our own fight for the West does not begin on the battlefield — it begins with our minds, our wills, and our souls. Today, the ties that unite our civilisation are no less vital, and demand no less defence, than that bare shred of land on which the hope of Poland once totally rested. Our freedom, our civilisation, and our survival depend on these bonds of history, culture, and memory… I declare today for the world to hear that the West will never, ever be broken. Our values will prevail. Our people will thrive. And our civilisation will triumph” (see Trump in Warsaw). I suspect that Trump decided on this as a useful predecessor to the meeting, given that he knew the US was in a minority but could at the same time remind some other participants of their past role and America’s “saving” of Europe.

Of course, much has also been made of the US decision to withdraw from the Paris Accord on climate change and the separate section referring to this in the Communique, viz

“We take note of the decision of the United States of America to withdraw from the Paris Agreement. The United States of America announced it will immediately cease the implementation of its current nationally-determined contribution and affirms its strong commitment to an approach that lowers emissions while supporting economic growth and improving energy security needs. The United States of America states it will endeavour to work closely with other countries to help them access and use fossil fuels more cleanly and efficiently and help deploy renewable and other clean energy sources, given the importance of energy access and security in their nationally-determined contributions.

The Leaders of the other G20 members state that the Paris Agreement is irreversible. We reiterate the importance of fulfilling the UNFCCC commitment by developed countries in providing means of implementation including financial resources to assist developing countries with respect to both mitigation and adaptation actions in line with Paris outcomes and note the OECD’s report “Investing in Climate, Investing in Growth”. We reaffirm our strong commitment to the Paris Agreement, moving swiftly towards its full implementation in accordance with the principle of common but differentiated responsibilities and respective capabilities, in the light of different national circumstances and, to this end, we agree to the G20 Hamburg Climate and Energy Action Plan for Growth as set out in the Annex”.

Much of the media commentary attempts to portray this as meaning that the US was “isolated”. But there no reports of heated exchanges at the meeting of leaders or at the meeting which drafted the communiqué. Arguably, it is the other 19 countries which are going their own way in interpreting the Paris Accord. Note that both paragraphs above acknowledge that in effect there are “nationally determined contributions”, which in the case of the two biggest emitters who attended G20 (China and India) do not aim to actually reduce their emissions before 2030. In short, the assertion of isolation is meaningless, just as is the statement that “the Paris Agreement is irreversible” by the other G20 members, none of whom are punishable under the Accord is they fail to meet their pledges.

Importantly, the reference to nationally determined policies also appears under the section dealing with migration. That includes the following

We emphasise the sovereign right of states to manage and control their borders and in this regard to establish policies in their own national interests and national security, as well as the importance that repatriation and reintegration of migrants who are not eligible to remain be safe and humane. We commit to countering migrant smuggling and trafficking in human beings and we are determined to take action against people smugglers and traffickers.

This will doubtless have been “pushed” by the UK and is important to that country, as it is to Australia.

Overall, it is difficult to see that this G20 meeting decided anything of substance as “global” policy. As in the past, there was much discussion but the important policy decisions continue to be left to nations.

Could Turnbull’s Polling Improve?

Des Moore — Wed, 05 Jul 2017 23:30:10 +0000

Changes Justified on Energy Policy Under Turnbull

In my Commentary on Tuesday I drew attention to new reasons for implementing major changes in the Turnbull government’s policies directed at reducing C02 emissions and increasing the usage of renewable. These included

The admission by three prominent warmists that there is no acceptable explanation for the “pause” in temperatures since around 2000 and, hence, a much reduced basis for any such policies ;
Recent research showing that, while a (new) high-efficiency, low emissions coal-fired power plant costs $2.2bn, the subsidies on a power project using renewable costs $3bn;
A survey, reported in an article published by the NY Times, showing that 1,600 coal plants are planned in 62 countries and this makes it “virtually impossible to meet the goals set in the Paris climate accord”.
The Australian’s publication of my letter pointing out that adoption of the recommendation by Finkel for greatly expanded usage of renewable would mean higher electricity prices and much less usage of coal.

Further developments relevant to energy policy since Tuesday include

A decision by a Canadian court that one of the three prominent warmists (Mann) is in contempt of court for refusing to show documents in support of his claim that his method of measuring temperatures shows a significant increase in the late 20th century whereas a prominent sceptic (Ball) used widely accepted public data which show much lower temperature levels in this period (see Mann Loses Court Case). The legal case arose because Ball made disparaging comments about Mann’s published work and Mann decide to sue him (legally) for defamation. The case has been widely regarded as a test for one of the most prominent warmists and, while the refusal to show documents cannot be taken as proof that his views are wrong, it will be seen as yet another reason for scepticism;
An article in Quadrant by Tony Thomas indicating that the Trump administration has taken extensive measures to unwind the restrictions/regulations imposed on sources of power reliant on fossil fuels. These measures include the dumping of Obama’s “Clean Power Plan” designed to bump up household electricity rates by 14%, approval of the Keystone pipeline from Alberta to Illinois/Texas, revocation of Obama’s ban on new coal leasing on federal lands (which involve 40% of US coal production), the dumping the US’s Paris Climate commitments by Obama, and the abolition of “hundreds of thousands of hours of red-tape energy regulations – including on fracking”. Thomas also refers to a recent public speech by Trump in Washington indicating support for using nuclear energy and approval of exports of natural gas (see Trump Doctrine on Energy). Although such changes have been little mentioned in Australian media, they draw attention to the limited extent even absence of such polices under the Turnbull government and the increasing competitiveness that will result for US industry;
An article by Paul Kelly suggesting that “Turnbull has reached the decisive stage on devising a long-run energy policy”. However, Kelly appeared to favour a policy based on the Finkel report rather than the freezing of renewable usage at 15 per cent as proposed by Tony Abbott and he judged that Turnbull “will carry the party room”. Kelly did not seem to recognise that an implementation of Finkel would mean further increases in electricity prices and further reductions in the usage of economic coal-fired plants. My letter to The Australian pointing this out was not published.

Developments in Concerns About Turnbull’s Continuance

The failure of any coherent response by the Turnbull government to the Finkel report has added to the increased recognition that the policies being pursued by Turnbull are often not consistent with Liberal Party objectives and this is reflected in seemingly mounting opposition to the continuance of Turnbull as PM. The next Newspoll on Monday may provide an indication of the extent of it. Indications of concern about policies include

Increasing expressions of policy concern by Tony Abbott and his indication of support for an alternative conservative “manifesto”, with visits to electorates held by the Liberal Party including to Assistant Treasurer Sukkart’s Deakin electorate where a not inconsiderable crowd attended. He took the opportunity of the G20 meeting in Germany (which is being attended by Turnbull) to argue that European countries seem incapable of exercising effective border controls although mentioning that Austria, Denmark, Sweden and Norway have re-introduced some controls.
There have been complaints from some Government ministers, and from some media commentators who have locked themselves into a “No Abbot” view, that Abbott’s intervention is undermining the Coalition’s election chances. But his intervention only started a couple of weeks ago and Turnbull’s poor polling has been running for many months ;
A report that Liberals holding rural seats are concerned that they do not have any seats in Cabinet whereas Nationals have five;
A decision by the Roseville Liberal Party to invite Cory Bernardi to a fund raiser and to give an address on “Is the Party Over?”;
The decision by The Australian to publish an article by John Stone entitled “Newspoll Figures Clearly Say Malcolm’s Time Is Up”. Previously Stone’s articles on Newspolls have been published in Spectator and have mainly drawn attention to the continuing TPP gap being experienced by the Coalition On this occasion he drew particular attention to how long the Coalition has been substantially behind on a sustained basis and to how it has performed on primary votes (ie not simply on a TPP basis).

Stone points out that “on both these metrics, Turnbull’s performance in terms of bad polling while PM has already far exceeded the worst that Abbott recorded”. He has “now been consistently behind in Newspoll by four or more percentage points (that is, 48 Coalition, 52 Labor, or worse) for 14 polls in a row” and the Coalition’s primary vote has “now been at a catastrophic 37 per cent or less for eight successive Newspolls (and below 40 per cent for 14 consecutive polls)” (see Stone on Turnbull).

Those supporting the continuance of Turnbull have so far largely ignored his “bad polling” as Stone describes it and have argued that Abbott cannot now be an alternative, that there is nobody else to replace Turnbull, or that the election is not until next year and that electors will then realise that Shorten could not sensibly be elected. Whether they will change their minds on the basis of Stone’s analysis or perhaps with a further deterioration in polling remains to be seen. But it is difficult to envisage that Turnbull could make a come-back for the Coalition before the election whereas appointing a replacement in the near future would give it a reasonable chance.

Turnbull’s First Year

Des Moore — Sun, 11 Sep 2016 03:28:55 +0000

As the end of the first year of Turnbull’s Prime Ministerialism draws nigh, assessments of his performance are appearing in the media from various quarters. The Weekend Australian’s lead article reports former Treasurer Peter Costello as not directly criticising Turnbull but as calling on the Liberal Party to “explain better its agenda, motivations and priorities” and to “smash the high-tax cheer squad”. The AFR has even published a survey of the views of 50 people regarding his achievements and, in the range from A to F, has awarded him only a D+ (see Results Turnbull’s AFR Survey). In fact, almost all commentators in the media (including journalists themselves) have reservations about Turnbull’s contribution to the political debate and to where Australia is or should be heading. While they tend to focus on how he has been performing recently against Shorten or on specific issues, rather than the longer term and broader perspective, this suggests that there may not be a ready recovery of Turnbull’s personal polling in the current session of Parliament. This despite Shorten’s poor handling of the contradiction of Labor’s foreign policy in statements made by Shadow Minister Senator Dastyari.

Of course, Turnbull should be helped by his numerous appearances in the media from his many meetings with world/regional leaders at the G20, EAS, and Pacific Islands Forum. Indeed, one suspects this was a factor in his decision to attend the Pacific Island Forum notwithstanding that it occurred immediately after the other two conferences were scheduled to discuss issues of seemingly greater importance, not to mention domestic issues. I note that even though he was still in Micronesia after the Pacific Islands Forum there, Turnbull felt impelled to respond almost immediately to the achievements questions/ comments and to ensure that the media reported his claim that he has “a long list of achievements”.

Below I consider some aspects of the Turnbull “reign” and his recent performance while overseas.

G20 and other Conferences

My last Commentary focussed on the G20 conference and drew attention to some inferences from the bilateral meetings and/or the press briefings by some leaders. The post G20 conferences attended by Turnbull have covered the East Asia Summit in Laos and the Pacific Islands Forum (the EAS has 18 members who meet annually after the meeting of the 10 members of ASEAN, which does not include Western countries or Japan or China). He is probably the only leader of the 20 to have attended all three and it seems fair to suggest that he envisaged that he would receive considerable favourable publicity in Australian media just from meeting other world or regional leaders. Which he has.

He probably also envisaged that there would be few “difficult” policy issues for which he would be potentially open to criticism in Parliament on his return. This also appears to be the case, although that is probably mainly because most of our media is unable to adequately assess what Australia’s policies should be in the longer term. An example of this is the report by David Crowe in Friday’s Australian (see this article on Crowe’s Article on Turnbull Overseas). Crowe, who is one of the more sensible and intelligent journalists, wrote that Turnbull was wrongly criticised (by Andrew Bolt) a year ago for favouring a “political” solution to the Syrian situation. I have responded to that in a letter published in the Weekend Australian (see Letter on Crowe Article) by suggesting that ISIS is unlikely to be defeated unless attacked militarily. My letter also refers to other issues to which it appears Turnbull did not adequately address, such as:

While the US is supporting the so-called rebels in Syria, Turnbull is not reported as responding to Putin’s comment that he (Putin) was fighting for the “legitimate” government in Syria (which Putin regards as Assad) or to his question to Turnbull “who are you fighting for?”. (Separately, Turnbull has not indicated what Putin said when Turnbull told him that those responsible for shooting down the Malaysian airline should be brought to justice);
Turnbull’s comments that Australia does not have to choose between positions taken on the South China sea dispute by China and the US raise doubts about the US alliance. Of course, Australia does not have to agree with every US policy. But given that the US has declared that part of the sea area should continue legally to be open to traffic, that the US has sent ships through, and that Turnbull has supported the arbitral decision on access to the sea, any decision by Australia to support the Chinese position would run counter to the US alliance (Turnbull has also refused to indicate whether or not Australia intends to send a ship through);

To divert, it should be added here that Turnbull is not the only leader to make inadequate responses on international policy issues. Obama has also used the back-up of threatening “serious consequences” if North Korea continues to send missiles into seas which are outside its legitimate zone or if nothing is done to overcome the Syrian war. Whether this response to the latest (and largest ever) NK nuclear explosion underground will produce any effective tightening of sanctions must be doubted. Similarly, it is questionable whether there will be any substantive effect from yesterday’s reported agreement between the US and Russia regarding a Syrian ceasefire starting tomorrow: the Russian foreign minister, Lavrov, said only that the Syrian regime had been informed of the terms of the arrangement and was prepared to adhere to them and US Secretary of State, Kerry, did no more than say that the deal is dependent on the adherence of all parties, both regime and opposition, and is not built on trust – “It is an opportunity and not more than that until it becomes a reality”. The trouble is that the reality of aggressive action by countries like China and Russia (and even by tiny NK too) will only be countered if the other side is itself prepared to take aggressive action which would not be acceptable domestically except in dire circumstances.

It should be added here that at the Pacific Forum Turnbull announced a grant of $300 mn to help combat global warming (see Pacific Island’s Assistance for C Change). The references to C Change in his statement are highly sympathetic to the dangerous warming thesis and arguably go beyond his election promise to the National Party not to make new commitments. See also below for comments on international developments on that issue.

AFR Survey on Attitudes to Turnbull

As a component of the Fairfax Press, albeit with a more middle of the road approach, it is rather surprising that the Financial Review has given such attention to the D+ result from a survey of the views of 50 individuals about Turnbull’s performance in his first year as PM. The AFR’s accompanying article to the survey -“MUST TRY HARDER” – discusses some of the views of those surveyedand publishes in AFR WEEKEND a summary of the views of 7 of those surveyed. Below is the published view of John Stone, who along with academic economist Nick Economou awarded a “Fail”, while one of the seven surveyed and published awarded an E, three a D, and only two gave a C. Of course, surveys are open to different interpretations but the extent of the questioning is of considerable interest as are the views (only published digitally) ofall the various individuals surveyed (see Views of Individual Respondents to AFR Survey). The lack of any coherent attention to economic reforms emphasises the need for the Turnbull government to do more to “sell” the message.

John Stone How do you rate the PM’s Performance (F)

Former Qld Nats, 1987-90, Secretary to the Treasury, 1979-84.

Category Economists.

What are the prime minister’s greatest achievements in the past year?
Apart from succeeding (at last!) in becoming PM it is hard to think of anything that could be called an ‘achievement’. Some might say that winning the recent election was one such, but to adapt the verdict on the Duke of Marlborough’s victory over the French at Malplaquet, many more such achievements like that and the Liberal Party will be undone.

What is the prime minister’s greatest missed opportunity in the past year?
His failure, time after time, to provide the leadership, including the new “economic narrative”, that he promised on September 14 last year.

What should Mr Turnbull do over the next year?
Focus, firstly, on bringing the budget deficit under control; secondly, the cause of freedom of speech by moving to amend Section 18C of the Racial Discrimination Act (which would involve backing down his present obduracy on that matter) thereby helping to heal the split within his party.

Further comments on Mr Turnbull’s first year in power
Twelve months of dithering from beginning to end.

Climate Change

Some media attention has been given to the fact that newly elected Senator Malcolm Roberts (a member of the Hanson group) is a sceptic on global warming with considerable expertise about the issues. He is scheduled to give his maiden speech on Tuesday 13 September at 5.00 pm and the speech can be heard live online or after the speech here. It is hoped that, with an elected MP, Australian media might start to give more attention to sceptical views and to the reality that no consensus exists on the so-called science backing the dangerous warming thesis.

It is relevant that in the UK at least one newspaper regularly publishes a column by sceptic Christopher Booker, whose excellent books Scared to Death (2007) and The Global Warming Disaster (2010) expose the defects in that thesis and the enormous waste of public money being spent on subsidising alternative energies. Equally unwarranted is the subsidisation of protective measures against natural disasters because they are said to be increasing: even the last IPCCC report said that does not appear to be the case. Attached is Booker’s recent article on the Paris agreement (Booker in Sunday Telegraph), which he claims will not stop the building of new coal-fired power stations sufficient to “ensure that their CO2 emissions will rocket”. While this may seem an exaggeration, Booker has a good record of exposing the problems with global warming. Turnbull should improve his knowledge of climate change by inviting Booker to come to Australia and address some business functions in particular.

G20 a Success ? Clinton Behind in Latest Poll

Des Moore — Tue, 06 Sep 2016 23:21:10 +0000

The G20 Meeting

Can there be any question that the G20 meeting in China was not “a success”? The length of the communiqué (7000 words!) and the policies approved might seem to establish it was (see G20 Communiqué). Indeed, it is difficult to find anything missing from the endorsed policies. But one wonders how the discussion of them by 20 leaders could possibly have been covered in the two days and whether any of those endorsed policies will replace those currently being implemented at home. All the more so given that there were numerous important bilaterals on the sidelines.

Perhaps the most interesting of those for us outsiders was the 90 minute “huddle” between Obama and Putin, with the photo of them published in The Australian and the suggestion that their dark faces meant they were engaging in a “double-chested shirt-fronting” (see Obama meets Putin). What was clear is that Putin again had a “win”. Obama tried to explain that there are “gaps in the trust” between countries but failed to indicate what he is going to do about Russia siding with Assad in Syria while the US is siding with Syrian rebels and the Kurds. Some will remember that early on Obama said Assad had to go but, with his no troops on the ground policy, he did nothing much about it.

Other (separate) reports suggest that Russia may be interfering in the US Presidential election by hacking Democrat material and disrupting the electoral system. The latter have not performed well in previous elections. One report suggests that Putin would like to have Trump win because this would weaken the US.

Obama also had a bad G20 experience with the Chinese. In failing to provide him with stairs to leave his plane Chinese President Xi gave him what might be regarded as a farewell message (“bring your own stairs”). Separately, Xi also arranged a gathering of ships at Xi’s “South China” sea bases to coincide with the G20 meeting while, at the same time, North Korea sent off another warning by despatching three missiles into the Japan sea (one wonders what happens if one of NK’s missiles hits Japan, accidentally of course!). There has been a suggestion that NK was encouraged by China to take such action. Philippine President also joined in by describing Obama as a son of a whore.

Whatever, Obama is being treated (by China and others) as a “lame” President and is being recognised as a President who frequently did not do what he said he would.

Unlike Abbott’s threat, Turnbull offered no shirt-front when he reportedly told Putin that those responsible for shooting down the Malaysian airline should be brought to justice. We do not know what Putin’s response was (he should accept responsibility of course) but he did say apparently that Syria required a “political” solution, which would of course include Russia. While it is difficult to find exactly what Turnbull had to say, he appears to have made some comments which are questionable or inconsistent with policies actually adopted on the home front. For instance, while indicating that Australia expected that China should act lawfully in the South China sea dispute, he was reported as saying “we are a thoroughly independent nation. And we don’t have to choose between China and the United States” (the ANU’s Hugh White, who is reported as having advised Turnbull before he became PM, has advocated entering an agreement with China!). Turnbull has so far refused to send an Australian ship through the South China sea which is legally open to traffic. While also supporting free trade and indicating that “protectionism is not a ladder to get us out of the low growth path”, Turnbull omitted to mention the protectionist measures Australia has taken under his regime.

This is of course one of the problems with such international conferences: leaders say one thing at the conference but in practice do something different. I remember helping draft a free trade type speech for Malcolm Fraser to give at a Commonwealth conference held in Nigeria but MF did not follow through at home.

What can be selected from the communiqué? Fortunately, there are no growth or employment targets. But Turnbull will be able to draw on the wide range of policy options when seeking support for domestic policies. It is said, for example, that ”innovation is a key driver” and the launch of the Hangzhou Action Plan is said to have “updated our growth strategies”. There is also support for “international tax cooperation to achieve a globally fair and modern international tax system and to foster growth, including advancing on-going cooperation on base erosion and profits shifting (BEPS)”.

However, climate change and the Paris agreement do not rate a mention until a short para 43 of the 48 para communiqué. The agreement obligates states to take concrete measures to curb emissions that supposedly contribute to higher temperatures. It takes effect once at least 55 nations accounting for at least 55 percent of global emissions ratify it. Only 23 countries, accounting for 1.08 percent of emissions, had done so prior to the G20. Presumably the media report that Xi and Obama signed an agreement to reduce emissions will be counted even though, legally, the US has to have Congressional approval.

Clinton’s Health/Emails & Her Polling Down

Clinton’s health problems continue to be a focus in the Presidential election and, with the further release by the FBI of 58 emails sent while she was Secretary of State, the national average polling in her favour has fallen from 6 to 4 percentage points. Those who look on her unfavourably have increased by 7 points to 59 percent, with Trump on 60 per cent (see Clinton Emails 6 Sept 2016). CNN (which favours Clnton) has today released a poll showing Trump ahead by 2 percentage points. If this is sustained it will be interesting to hear the reactions of world leaders and in particular those who continue to support the dangerous warming threat.

Turnbull & G20, Iran Threat, Andrews Poll Down; Obama’s Dr on Hilary

Des Moore — Tue, 06 Sep 2016 09:25:37 +0000

Turnbull – Mis-Managing Parliament but Will G20 Help

While Turnbull himself could not be blamed for the absence of three ministers and other Coalition MPs at the end of Thursday’s Reps session, he must have failed to emphasise to the whips and others the importance of attending the first session after an election result which he had publicised as providing a majority. The absence of 10 Coalition MPs allowed Labor (which had obviously planned to take advantage of any absences) to indicate that this is another example of Turnbull of mis-management. And this theme has been taken up in the media too, including one suggestion that Turnbull lacks a “wingman” to support him in Parliament. Perhaps the failure to sack the Chief Whip, Pyne, illustrates the problem.

As one prominent journalist comments “you have to hand it to Malcolm Turnbull and his emergency reserves of optimism. Following the omnishambles of missing ministers and lost votes that capped his first week in the 45th parliament like a glistening pellet of bat guano on the gateau, the PM kicked off his interview with Neil Mitchell on Melbourne radio 3AW yesterday thus: ‘Good morning, Neil, great to be with you.’ It was an early high, after which the only direction was down. And as climbers of Everest will tell you, descent is the most dangerous bit. Instead of scree [rocky slopes] and crevasses, the PM encountered ‘losing control’, ‘rabble’, ‘farce’, ‘how the hell’, ‘supposedly in control of the house’, ‘lack of organisation’, and ‘lack of commitments’. By the time he came to chat with a pack of journalists, he dispensed with ‘great to be with you’ and stuck to a plain ‘hello’ (see James Jeffrey on Turnbull).

Will Turnbull have an opportunity to recover some of this initial ground lost from the imminent G20 meeting in China? In an article in The Australian (see below) he mistakenly argues that the “agenda of co-ordinated reform is more important than ever”. The reality is that members of G20 mostly focus on the domestic policies they have (separately) decided to pursue rather than the policies supposedly agreed at the meetings and included in the communiqués. An analysis by the prominent Cato think-tank in Washington DC (see this article on G20) points out that “Domestic policies and institutional settings contribute to advancing the G20’s agenda, but these settings do not appear to depend on the G20 summit process in a measurable way.” When in Treasury, for a period I advised the Australian Treasurer attending similar annual meetings held by the IMF and those meetings had similar insignificant influences on either domestic policies or on any “coordinated reform” that might occur incommuniqués. It would be surprising if the reference in Turnbull’s article to multi-national tax avoidance attracted much attention at the G20 meeting. One issue not mentioned in that article –debt problems – should be included in the communiqué but may not be favoured by the Chinese host.

Another example of the problems faced by Turnbull is the digging up by journalists of stories which seem to illustrate his indecisions but also denials by him which appear to be incorrect. A frequent contributor to The Australian, Professor Peter Van Olsen, has published a book entitled “The Turnbull Gamble” which caused Turnbull to accuse him in question time of making up stories about discussions in cabinet but for which Van Olsen claims to have multiple sources (see Van Olsen on Turnbull). There are other examples mentioned in the attached article which detract from Turnbull’s authority as PM.

Iran Nuclear Deal

I have previously expressed concern at the US/Iran nuclear deal which is claimed to be a major foreign policy achievement by Obama. An article in yesterday’s Australian adds to that concern in revealing that Iran appears to have been allowed (secretly) to keep enough uranium to convert for use in weapons (see Exemptions in Iran nuke deal).

This reinforces the presentation at an AIJAC lunch which I attended. The presenter, Simon Henderson, from the Washington Institute has published on Nuclear Iran: A Glossary of Terms but spoke mainly about Saudi Arabia on which he clearly has considerable knowledge and is writing about the likely successor to the 80 year old King Fahd. He argued that SA is relatively stable and unlikely to experience a coup but is concerned about the threat from Shia Iran. We were told that senior Canberra officials (to whom he and Colin Rubenstein had spoken) wrongly assumed there are “moderates” amongst those running Iran (perhaps that explains why Julie Bishop visited the country). I asked whether the nuclear arrangements with Iran had led to other Middle Eastern countries taking steps to acquire nuclear weaponry. He said there have been no overt indications but that SA appears to have some agreement with Pakistan that provides access to the Pakistan cache. Interestingly, he also referred to the establishment of “talks” between SA and Israel, apparently reflecting the Saudi’s concern with Iran and the need for “friends”.

Hillary’s Health

Here is a report that Obama’s “long-time” doctor has said that Hillary Clinton should undergo a “thorough neurological examination” to see if she has lasting damage from a Dec. 2012 concussion she suffered after a fall. He also raised numerous questions during an interview over Donald Trump’s health. While the latter continues to be about 7 points behind in polling, most commentators say it is not over.

Andrews Polling

Yesterday’s Age published the first polling I have seen on Andrews and his government. While his government is ahead on a TPP basis (51/49), the Opposition leader, Matthew Guy, is ahead on preferred Premier (see Andrews Polling Collapses). Given the recent poor performance by Andrews, it is surprising that the Opposition is not polling better. There seems to be a reluctance to make more use of the close relationship of Labor with unions, which includes Jane Garrett who is quite close to Andrews in polling on who would be the best leader of the Labor Party. Garrett is reported as having a close relationship with the CFMEU ie one is tempted to say that the main existing issue with the Victorian government is which union should be given preference.

Economic Outlook

Des Moore — Wed, 02 Mar 2016 12:00:52 +0000

At a time when in January the IMF revised down its global GDP forecast for 2016 from 3.6% to 3.4%, and also forecast a fall of 9.5% in non-oil commodity prices (after a fall of 17.4% last year), Treasurer Scott Morrison is justified in repeating his boast that today’s December quarter GDP increase of 0.6% (seasonally adjusted) shows Australia is continuing to grow well above the average in the OECD. In fact, the trend in GDP growth has edged up slightly since 2013.

He is also correct in justifying his opposition (with apparently that of his German counterpart) at last weekend’s meeting of the G20 to the IMF’s call for another round of stimulus. The report in the AFR below quotes him as rejecting that as “short-term measures designed merely to bring forward demand …were not a substitute for implementing the necessary structural reforms”. Note also the comment made by Treasury Secretary Fraser (see Treasury Head on Short Term stimulus)

“Challenging governments at both the state and federal level to back the right projects, Mr Fraser said it would be wrong to rely on such spending as a “source of short-term stimulus for the economy. “While conceptually appealing, especially when the cost of borrowing is relatively low, the scope for fast-acting infrastructure projects to provide short-term fiscal stimulus is very limited,” he said in a speech to infrastructure investors published by Treasury on Monday. “The ideal fiscal stimulus is one that leads to rapid and broad-based increases in demand in order to soak up space capacity.”

But with the annual rate of growth still running at only about 2.5% pa the Turnbull Government urgently needs to get its own structural reforms started instead of dithering. The measure of success should not be that we are doing better than an OECD average that is pulled down by European countries whose economic policies leave much to be desired. Relevant is last night’s 7.30 report interview with John Howard who made one feel “if only we could have him back”. Of course, it is easy for an ex-PM to comment now but his remarks sent a message to “get going” with reforms, viz

“Now, what Malcolm Turnbull decides to do at the next election is a matter for him, but we mustn’t lose sight of the need for going back to taxation reform. And of course – you mentioned it briefly – at some point this country has to return to industrial relations reform. The problem with the Australian economy at the moment is that it’s very sluggish on the supply side. We need more activity in areas of competition. We need to revisit industrial relations reform. We do, of course, need to do things on tax reform”.

A close look at today’s National Accounts also reveals warning signals that threaten a slow-down in growth unless reforms are started. In particular, the fall in private business investment in the non-mining sectors compared with last year accompanied by a continued downward trend in the profit share, and the further fall in the terms of trade, do not bode well for private enterprises. Also, while private expenditure on consumption has held up well, the fall in national disposable income (GDP adjusted to allow for the drop in the terms of trade) means that consumers are relying to an increased extent on drawing down savings, the returns on which are declining. Indeed, the sharp decline in yields on government bonds suggests a search for safety rather than risk an investment in equities (see this graph showing the marked decline in yields from 4% in 2014 to 2.4% now).

Behind the praised December quarter GDP figure is a message – Australia’s competitive position needs to be lifted both internally and externally through reforms that reduce the role of government.

The more so when the sharp decline in yields onthe government bonds suggests a search for safety rather than risk an investment in equities (see attached graph showing the decline in yields from 4% in 2014 to 2.4% now). The downward trend in business investment in non-mining over the past year also suggest additional risk aversion in the business sector (total investment including mining in real terms was 18% lower in the December half year 2015 than in the same period of 2014).

Islamism Problem Recognised – CC Target Puzzle

Des Moore — Thu, 03 Dec 2015 03:37:12 +0000

US Defence/Military Policy

Today’s news suggests that the US has made an important change in the handling of the Syrian/Iraq war. The US Defense Secretary, Ash Carter, is reported as stating that the US will “deploy a specialized expeditionary targeting force to Iraq to launch unilateral raids” and “put even more pressure” on ISIS. U.S. special operation forces will conduct operations in Iraq “at the invitation of the Iraqi government” and be in position “to conduct unilateral operations into Syria,” Carter said. “We’re at war. We’re using the might of the finest fighting force the world has ever known,” Carter told the House Armed Services Committee. “Tens of thousands of U.S. personnel are operating in the broader Middle East region, and more are on the way. ” (see “US Policy Change on Syria/Iraq?”).

As yet, the background to this decision is not clear. But the implication is that after Paris Obama has been forced politically to agree to put troops on the ground. Whether it is coincident or not, today’s Australian has published an extract from a speech in the US by Rupert Murdoch on Monday emphasising the recent failure of the US to play a leadership role and the development of ‘a deep distaste for the slow descent of the country” (see “LET US CELEBRATE, NOT SNEER AT, AMERICA’S CONTRIBUTION TO A BETTER WORLD”).

The potential implications for Australia are considerable if the US is effecting a changed military policy and Turnbull feels obliged to follow suit.

Islamism

In my previous Commentary on Sunday I referred to the TV interview by Josh Frydenberg acknowledging that Australia has a “significant minority of extremist” Islamists and that “religion is part of the problem”. Several colleagues subsequently supported his remarks.

Today’s Australian runs a generally supportive article by editor-at-large Paul Kelly which implies the need for policy changes by the Turnbull government viz, “the public feels under threat. It has every reason for this sentiment” (see “Honest Discussion On Islam’s Role In Terror Is Needed”). Note also the reference by Kelly to the statement by UK PM Cameron at the UN, made even before the Paris attacks, that “we have to root out the extremist preachers that are poisoning the minds of young Muslims in our country”.

By contrast, although French Premier Hollande has received considerable TV coverage for his world-wide visits which supposedly attempted to persuade other leaders to put troops on the ground, he has apparently done nothing domestically to tackle the Islamist problem. The attached article reports that a clear majority of French voters want to put troops on the ground and that 60-70% French see their Islamists as “unwilling to commit to the rule of law … and as responsible for their own failed integration”(see “Hollande’s choice war in Middle East over battle on homefront”).

Climate Change

It is a bit early to predict the outcome of the Paris conference on Climate Change but one cannot by-pass the comment by an SBS reporter last evening that the 80 page draft communiqué is a shambles. Two aspects are worth noting.

First, it appears that a decision has been made that the draft will not be finalised by major world leaders. They seem to have already gone home and there is no indication that they will be coming back in a fortnight’s time. In short, those world leaders want to avoid the shemozzle that occurred five years ago at Copenhagen when according to Kevin Rudd the then Chinese Leader then refused to play ball on the final day and left Kevin, Obama and other looking very foolish indeed (presumably Rudd managed to secure attendance at the first day of this year’s conference because he might be in line for a UN job).

Second, it also appears that the main aim is not to obtain agreement on emissions reductions but to achieve what Hunt describes as “the important thing is the five-yearly reviews” (see “Carbon target review ‘a win for Paris’”) . The realisation that India had already refused to agree to an arrangement that might require a start point of reduced emissions, and that China will not start reducing the level of emissions until 2030, has presumably signalled to participants that no meaningful global agreement can be reached to reduce emissions.

Interestingly, the best PM Turnbull could tell the conference was that “our 2030 target represents real economic effort, and will halve our per capita emissions – one of the biggest reductions of any G20 country. We will meet and beat our 2020 emissions reduction target”. He made no reference to the stated aim of reducing emissions by 26-28 per cent by that time and, because his government is unable to make any criticism of “the science”, proffered no excuse for adopting a lower target than Opposition Leader Shorten’s 50 per cent reduction other than “it is heroic”.

Worth noting is that the only interviewees the ABC decided to have to tell its audience were Kevin Rudd and Erwin Jackson. No serious question was asked of either and no sceptic was interviewed.