Institute for Private Enterprise » Labor Party

Robin Hood & Costs of Inaction

Des Moore — Wed, 08 May 2019 11:26:36 +0000

As Election Time Approaches Shorten Proposes Increasingly Unrealistic Policies

Part of my upbringing involved learning nursery rhymes one of which covered the life of Robin Hood. In those days Robin Hood was portrayed, at least to me, as an outlaw who lived in the forest and whose income came either from the proceeds of his attacks on the local town or from those passing through the forest. But he was portrayed as a hero because he (supposedly) gave the proceeds to the poor. It was only later that I realized that RH’s “fair go” came from failing to allow the local sheriff from observing the law and protecting those who maintained it.

In her article today Janet Albrechsten portrays Shorten as like a Robin Hood who is promising a plethora of “fair go’s” if he receives the necessary votes on May 18. But use of that term inevitably creates problems. Albrechtsen also makes the important point that his historical Labor approach to government is not in Labor’s tradition as represented by Hawke and Keating but more like Whitlam’s. My (considerable) experience of Whitlam is that, while he is still regarded as Labor’s icon, under his regime it was a complete shambles. That led to him only winning an internal challenge from Jim Cairns by one vote and forced him to make Cairns the Treasurer of Australia. But economic management went adrift.

If Shorten wins on May 18, it is likely that his government’s regime would operate similarly to Whitlam’s, although it would be difficult to be as bad. Shorten would likely be followed fairly quickly by left Anthony Albanese becoming the leader (in the internal election in 2013, which included party members as well as members of Parliament, Albanese got more votes than Shorten but not have enough under this system to obtain the Opposition leadership). The large number of policy changes under Shorten, would cause internal disruption even within the Labor party and would be likely to force him out. It would almost certainly make economic management much harder and could see a recession.

Albrechtsen draws attention to policies which are focused on distributional issues and which would cause concern within the party as well as outside it. This would be particularly so in regard to industrial relations, which PM Morrison has dodged in the debates between him and Shorten. By “industrial relations” I include the latter’s policies on relativities between sections of the workforce , such as child care. In my previous Commentary I suggested that Morrison needed to attack the large economic deficiencies in many of these items, including the overall effect on the economy. But while he handled the specifics well in tonight’s debate, he again failed to drive home the inadequacies for the economy.

One of these inadequacies is Shorten’s attempt to dodge the adverse economic effects of his climate policy. His refusal to acknowledge that his policy would have no such effect without taking account of the (unstated) costs of inaction left open a wide area of exposure of which Morrison did not make use. My letter published in today’s Australian obviously (see below) did not reach Morrison or his advisers.

Climate plan costs unjustified

Letter published By The Australian,12:00AM May 8, 2019

You report that, when asked on ABC’s Q&A program about the costs of his environmental policies, Opposition Leader Bill Shorten told host Tony Jones that “you can’t have a debate about climate change without talking about the costs of inaction”.

Well, let’s have a debate about the costs of inaction.

Perhaps the best expert asked to estimate the costs of inaction was Dr Ross Garnaut, who published two long reports for the government on the dangerous warming threat. His conclusion was that the most likely cost of inaction was that dangerous warming would occur in the next century.

One wonders whether Shorten agrees with Garnaut’s best estimate and, if not, when he predicts dangerous warming would start. It is dumb for the Opposition leader to rely on a Garnaut-like estimate but at the same time justify aggressive costs being incurred before 2030 with his economically damaging proposal to reduce emissions by 45 per cent.

Des Moore, South Yarra

Uncertainty in Labor’s Policies; Islamic Threat

Des Moore — Thu, 25 Apr 2019 09:48:13 +0000

What Are Labor’s Policies?

Today’s Australian has published considerable material on the failure of Labor to clearly enunciate its policies. I have previously drawn particular attention to Labor’s failure to publish aggregates alternative to those in the Coalition’s budget and to costings for the economy of its global warming policy. This defect remains.

But the recent emergence of many questions about Labor’s policies on specific policy issues has opened the way for much wider challenges to be made. The opening up of this area should also allow Morrison to reduce his announcements of funding small projects, which appear too much as vote buying, and focus more on attacking Shorten. It has also led The Australian to inter alia run the main letters column today with the heading Uncertainty Surrounds Labor’s Announced Policies. I was fortunate in having my epistle included as “lead letter” – as set out below.

Uncertainty Surrounds Labor’s Announced Policies

Letter Published in The Australian, April 25, 2019 (Bits in square brackets omitted by Ed).

Those closely following the election had been expecting that after Easter Labor would publish proposed budget aggregates and their costings – just as the Coalition did in its budget. No such luck. What we are getting are reports that material distributed by some Labor candidates omit to mention Shorten is their leader.

This may reflect the failure of Labor to decide [internally] on detailing the reasons for some of its decisions. Take the decision to require half of new vehicles to be electric by 2030.

It now appears that the recording of high electric sales in Norway [(much tinier than Australia)] may be due [importantly] to a near 100 per cent sales tax there on non-electric cars. Would Labor provide that “incentive” here?

Then there is the proposed Adani coal mine, for which the Coalition has given approval to all legal federal requirements.

But despite having said that he is being “governed by the law”, Shorten is not prepared to accept such approvals. Instead, he says this proposed investment by an Indian company is a matter for the Queensland government. Does this mean that Labor would cease to have the federal government determine foreign investment policy?

The foregoing are not the only Labor policy issues which are uncertain. Decision time has surely arrived.

Des Moore, South Yarra, Vic

I also include in this Commentary some very brief references to recent commentaries on some other specific issues, viz

After humming and hawing Shorten now says he would not review environmental decisions made by the Coalition. Yet at the same time Labor would not sign the “pledge” by the largest union, the CFMEU, tosupport the coalmining industry and, in implied support for the proposed Adani mine, for “coalmining developments that meet regulatory requirements”. Contrary to Shorten, some Labor candidates say they would leave the question of reviews open (see Shorten Says No Adani Review);
Shorten leaves open the possibility of tax reductions for those on high incomes (see this article);
Wong (Shadow Minister for Foreign Affairs) refuses to answer questions on the Australia-US alliance, Taiwan and refugees (see this article);
GetUp has removed its extraordinary ad denying (in effect) that Abbott is a surf life saver and, while agreeing with the removal, Abbott’s main challenger (Stegall) amazingly denies she has any connection with GetUp (see this article);
How can Shorten’s promise to alleviate the cost of living be met with the latest zero increase in the cost (see this article)?

The other two attachments reflect, firstly, the differences of view about the role of Muslims in the Sri Lankan bombings and the over 300 killings . As Andrew Bolt points out, it has exposed a general refusal of the political left to openly “admit” that one Islamic aim is to eliminate Christians, which is now certain in the case of the Sri Lankan killings. Of particular interest is the possibility that the SK killings are a revenge for the killings of Muslims in Christchurch New Zealand. Bolt’s analysis is revealing in identifying prominent politicians, including Obama and Hilary Clinton, who have refused to even acknowledge that the death of Christians has been the aim (see Bolt on Denials of Muslims in Sri Lankan).

The second attachment outlines the extent of persecution of Christians and the widespread failure of believers in Christianity to do much about it. The author is Bill Muelenberg who is an expert in Jihadism and who worked in the Institute of Public Affairs when I was also there. He points out that “there have been 34,891 deadly Islamic terror attacks since 9/11. That occurred 6,431 days ago. So we are now averaging five and a half such attacks each day since then. It is getting worse”(see attached Sri Lanka, Jihadist Massacres, and Western Denial).

In an earlier Commentary I have also written about Mark Durie who has written a new book, THE QUR’AN AND ITS BIBLICAL REFLEXES, which convincingly argues that the Koran requires Muslims to kill non-Muslims.

Coalition Election Campaign Starts Poorly

Des Moore — Sun, 14 Apr 2019 11:33:11 +0000

Is Coalition Able to Persuade Electorate of Dangers in Labor’s Program?

The campaign for the election on 18 May started officially on11 April although statements of policy had been made prior to that, as had media assessments. Two prominent conservative commentators had in fact already indicated their view that Labor will win.

Terry McCrann wrote on 11 Apr “One thing is absolutely crystal clear about the election. If Labor wins — as to me, seems certain — it will hit the ground running, straight after the election, in June”. He added that “it has a program to dramatically increase taxes on negative gearing, franking credits, capital gains and trusts; it will not cut the company tax on big companies from 30 per cent, which is now very uncompetitive, with the US down to 21 per cent, and will revisit the cut on medium-sized companies; it will also further squeeze especially small and medium-sized businesses with the so-called “living wage”; and then there’s the whole issue of power prices, which will just continue to increase and increase at an accelerating rate under Labor’s so-called climate change policy” (see McCrann Says Coalition Won’t Win).

Andrew Bolt doesn’t rule out the remote possibility of a Coalition win but argues that Morrison must upgrade himself and the Coalition. He asks “Where on earth is your mongrel? Your fight? Your big wake-up-Australia cry? You’re starting behind, remember. Three seats short of a majority already, and with every poll saying you’re headed for a hiding”. Bolt adds that the Coalition also faces a starting point that the “polls show they’ve been itching to do for two and half years – to vote out this brawling, divided Coalition Government that’s given us three different Prime Ministers but next to no wage growth”. Yet, he asks, “what does Morrison do in his first and most important speech of the election campaign? What a snooze-fest” (see Bolt Says Morrison Must Attack Labor Policies).

The Weekend Australian’s editorial does not predict the likely winner of the election campaign but points out that, while “the Prime Minister is offering to boost incomes through a larger economy, running on his party’s traditional values, such as hard work, enterprise and aspiration”, the Opposition Leader promises to “radically change an economic system … Labor’s method is more spending on services, funded by new taxes on high earners, property owners, retirees and investors. To raise award wages for some workers, Mr Shorten will hand more power to unions and revamp the terms by which the industrial umpire determines the minimum wage. This is old-school Labor, buried in 1983 after Bob Hawke won office: redistribution to promote equality. ‘When everyday Australians are getting a fair go, then this economy hums’, Mr Shorten said on Thursday in a backyard appeal to voters”itorial (see OZ Editorial).

In short, there is a wide view that a win for Labor would likely mean a major change in how the economic system operates, with a bigger role for government services, a major deterrent to private investment and a slower rate of economic growth. Australia would move away from America and towards the European Union (sic) from which some members are trying to escape. This possibility should provide a basis for a Coalition attack.

What is the Likely Effect of Labor’s Proposed Expansion In Government

The extent to which government might expand under Labor is indicated by its proposed increase in the level of taxation to almost 26 per cent of GDP over the next ten years. At this level Labor would be the highest taxing government ever: the previous highest was 24.3% of GDP in 2005-06 (see AFR Quotes Treasury Estimates Of Australia Being Highest Taxer Under Labor).

By contrast, the Coalition’s 2019/20 budget estimate for taxation is 23.3% of GDP and that is not estimated to increase over the following three years. It also has a self-imposed undertaking to not increase taxation to more than 23.9% of GDP. Note that if tax levels were at Labor’s 26% of GDP next year that would mean total taxation of about $520bn, or about $60bn or 13% more than estimated by the Coalition ie this would be about an increase in the size of government at the Federal level.

There are precedents for large increases in the size of the Federal government in Australia.

First, when the Labor government was in office under Hawke from March 1982, taxation levels increased in the four years from 1982-83 to 1986-87 by no less than about 60% in real terms. In 1986-87 taxation revenue reached the same level as is estimated next year – 23.3% of GDP – up from 21.7% in 1982-83. At the same time, moreover, the budget deficit increased and ran at a much higher level, which led then Treasurer Keating to warn that Australia was in danger of being regarded as a banana republic. Then, thanks mainly to then Labor Finance Minister Walsh, action was taken to reduce spending for three years in a row (from 27.0 % to 22.9 % of GDP) and a budget surplus also followed for three years. An almost complete reversal of budget policy.

Second, in response to the global financial crisis originating in the US, the first Rudd government (2007-10) moved the budget from a surplus of 1.7% of GDP to a deficit of 2.1% in 2008-09 and deficits and relatively high levels of spending continued into the next few years. Whether this had any substantive effect in “saving” the economy remains in dispute. But Australia’s relatively strong banking system and high levels of trade with China certainly helped maintain growth and prevent any recession. Then, despite expenditure reductions by the Abbott government in 2014-15, deficits continued at relatively high levels under the Turnbull government (2015-18) until 2017-18 when that government brought the deficit down to 0.5% of GDP. However, expenditures remained at the relatively high level of 24.5% of GDP in that year and have continued at around that level even after the Morrison government took office in August 2018 and produced the 2019-20 budget.

In short, Hawk’s attempt in the 1980s to effect a large increase in the size of government did not succeed and nor can Rudd claim success in his attempt to adopt a Keynesian increase in spending and deficits in response to the global financial crisis which centred in the US. The Australian economy was primarily “saved” by our relatively strong banking system and our trade with China. However, under Labor and Turnbull, taxation levels have crept up again to over 23% of GDP since 2018-19 and we now face the prospect that Labor would increase that further to 26% of GDP at some time over the next ten years.

Conclusion

Labor’s proposal to increase the level of taxation to 26% of GDP, and to concentrate increases on those on high incomes, is likely to have adverse effects on investment and economic growth (see Uren’s Analysis Shows Labor’s Taxes Increase More Than Spending Plans). Such adverse effects would also come if Labor proceeds with reductions in emissions and increases in renewables at both the Federal and State levels. History also suggests that Labor finds it difficult to, as Morrison has said, “manage money”. Also, while it claims to be aiming for bigger budget surpluses than the Coalition, it is unclear as to how much it will aim to exceed the Coalition’s present estimate of about 0.5% of GDP.

As to the budget overall, we can speculate that with Labor having, say, a 1% GDP budget surplus and 26% of GDP from tax, that leaves 25% of GDP for spending. This is only about 0.5% of GDP higher than the Coalition’s estimates for each of the four years to 2022-23. It suggests that Labor’s additional spending for each of those years might not be much greater than present Coalition estimates. Still the opportunity is there for the Coalition to attack Labor’s proposed increases in levels of taxation and spending, reminding the electorate of Labor’s failures with higher levels of spending in the past and the adverse economic effects of higher levels of taxation. This requires Morrison to stop announcing “handouts” and concentrate on informing the electorate of the problems with Labor’s proposals.

Polling Shifts for Parties

Des Moore — Sun, 07 Apr 2019 22:46:17 +0000

Polling Improves Coalition’s Position But Still Leaves Them Struggling

Two new polls tell different stories, one favouring the Coalition but the other not.

First, Newspoll shows the Coalition’s TPP as up by two percentage points with Labor’s down the same two points compared with the March 7-10 poll. Hence the Coalition is up from 46 to 48 while Labor’s is down from 54 to 52 now. Also, while the primary votes ( before taking account of preferences from other parties) for the Coalition have improved (from 36 to 38), Labor’s have fallen (from 39 to 37). These send out a hopeful signal to the Coalition.

Newspoll also shows an improvement of two percentage points in Morrison’s net satisfaction rate (from 43/45 to 45/43) and, although Shorten’s also increased that was only by one point (36/51 to 37/51). As to who is regarded as better PM, Morrison improved from 43 to 46 while Shorten fell from 36 to 35.

The National Political Editor of The Australian describes this as a “bounce” for the Coalition (see Benson Says Newspoll Gives Coalition a Bounce) although it is still well below even the 50.4% vote it reached in the double dissolution election in 2016 when Turnbull was leader. That election gave the Coalition only a one seat majority in the Lower House of 150 and it had a swing against it of 3.5%. In the Senate the Coalition had 30 seats, Labor 26 and others had a record 20. In other words, the Coalition needs to do much more than catch up to Labor if it is to be able to at least control a Lower House which will have several independents as well.

Second, an Ipsos poll run by the Sydney Morning Herald ( the timing is presumably designed to display competition) shows that on a TPP basis the Coalition has fallen since its last poll in February 12-15 from 49 to 47. By contrast, over the same period Labor has increased from 51 to 53. Ipsos also shows a reduced net satisfaction rate for Morrison (from 49/40 to 48/39).

The Newspoll is generally regarded as a more accurate and reliable poll and Ipsos operates less frequently than Newspoll. It’s result is also questionable on this occasion given that its poll reported 41% believed the budget was a “fair” one and only 29% thought it wasn’t. More generally, the Budget appears to have been well received and it would be unlikely to have caused a fall for the Coalition. In fact, Labor would seem to have been more likely to have had a fall given the announcement of a policy requiring half of motor vehicles to become electrified by 2030 (there are now less than 1%) and the failure to provide details of how the proposal will proceed and what it will cost. These and other developments suggest that the Ipsos poll is not an accurate reflection of the views of the electorate.

As pointed out in my previous Commentary (see in particular Coalition’s Budget & Labor’s Reply on 6 April), while Labor has announced many policies there has been little back up so far on the costs whereas the Coalition has published a comprehensive budget and Labor has had access to the Parliamentary Budget Office which should have allowed it to publish estimates of the costs of major items of spending and major tax changes. Given the general dissatisfaction with the plethora of announcements on new policies, it would not be surprising if an increasing proportion of the electorate now wants more back-up.

I refer again to Terry McCrann’s piece of April 6 arguing that “Labour has a two-stage strategy to destroy Australia”. He lists policies announced by Labor which call on the Coalition to publicly attack and demand costs if it is to have a chance of winning the election.

Des Moore

How to Solve the Dangerous Warming Threat

Des Moore — Thu, 21 Mar 2019 22:29:44 +0000

How to Solve The Dangerous Warming Threat

I am presenting a Commentary which has no attachments because their inclusion would make it difficult to circulate the Commentary with the attachments and because I can send an attachment to those who wish to see it. The whole Commentary with attachments will also be in my web site.

When controversial policy issues come under discussion in the public arena, there are often weird suggestions proposing government action. And the media publicises a supposed issue to give the impression that ““something needs to be done”. Take for example the idea that action to solve the dangerous warming threat might come if school children miss school one day and parade down the streets all over the country (and in other countries too) with placards instructing our elected politicians that urgent action is required. This is just what has happened. But has this publicity simply led to the school children going back to school and are people a bit tired of being told that much quoted models “prove” that climate change action is needed by government? Do such models actually so prove.

Climate expert and prominent journalist James Delingpole points out that climate scientist Bjorn Lomborg has a model which shows that even spending $1.5 trillion would reduce temperatures by only 0.04 of a degree by the end of the century (see Spending $1.5 trillion Estimated to Reduce Temps By only 0.048 Of a Degree by Century’s End). “Those kids are protesting on the basis of one massive lie”, Delingpole claims.

Of course, there are lots of other models, some taking a different view.

A model predicting future temperatures has been made by the Australian National University’s School of Art and Design with colleagues from the ANU Climate Change Institute. It purports to show that, unless emissions of greenhouse gases are much reduced, temperatures in 2050 will be so high that winters will cease to exist! (see No More Winters?). Even the Reserve Bank has jumped on the band wagon and published an article arguing that changes in climate may have adverse effects not simply at the time they occur but later too. According to this theory, “we need to think in terms of trend rather than cycles in the weather”. Yet no evidence is provided to justify this claim and there is no model. I have written to the bank asking that this analysis not be treated as official bank policy (see RBA Publishes Surprise Pre-election Analysis of CC). In a more comprehensive article in The Australian, Judith Sloan describes the analysis as “superficial and speculative” (see Sloan on RBA’s Surprise Pre-election Analysis of CC).

Then along comes another climate expert by the name of Brian Fisher who has just published a model showing the cost for Australia of achieving targeted emissions reductions by 2030 ranging from $70 billion for the Coalition to $1.2 trillion for Labor. He doesn’t predict what happens to temperatures but, although now retired, he previously advised both Labor and Coalition governments on climate policy. Yet a few days ago Labor rejected Fisher’s analysis this time. But as a poll just published in today’s Australian shows that support for Labor’s policy drops from 61 points to 9 in circumstances where implementing this policy would reduce projected 2030 wages by $9000 a year — or about $347 a fortnight – as Fisher’s analysis indicates. It seems possible that Labor (and the Coalition) could now decide to lower their emissions reductions targets so as to ensure that children keep their pocket money (see Modelled Economic Effects Show Costly for CC Policy).

Any such changes might also lead to more questioning of teachers by children about what the various model show about likely future temperatures. Assuming teachers are honest, they would have to admit that 102 of the (average of) temperature predictions by different experts (sic) show temperatures much higher than what happened with actual temperatures as used in IPCC reports (which uses temperature measurements that also overstate the actuals because of faulty measurements).

The difference between actual temperatures and those predicted from models is shown in a graph based on research by US climate scientists Roy Spencer and John Christy, both of whom have made presentations to US Congress committees. This graph is included in a short article headed “Climate Warming/Change Theory Reviewed”. It was written in Melbourne by The Climate Study Group (sponsored by Richard Morgan) and published in the Herald Sun (see Graph on CC).

The averages of world temperature (a mid-tropospheric measurement) of the 102 prediction models shown in the top line of the graph have risen from 0.0 degree in 1975 to about 0.8 degree in 2014 while actual temperatures ( as used by the IPCC) have only risen by about 0.2 degree over the same period. Thus the average predictors have temperatures rising about four times more than the actual temperatures. By contrast, if the actual temperatures continued to increase at about the same rate as they have been since 1975, by 2100 world temperatures would be only about 0.4 degree higher than now. In short, it is difficult to accept that such a small increase in likely future temperatures justifies government action to spend trillions of dollars on substituting costly sources of power for the usage of much cheaper coal.

It is relevant that, following President Trump’s appointment of physicist Dr Will Happer to head a Commission to review (in effect) the science of climate change, a very large number of climate experts has written expressing support for the project. In the second paragraph they say

“In our view, an independent review of these reports is long overdue. Serious problems and shortcomings have been raised repeatedly in the past by highly-qualified scientists only to be ignored or dismissed by the federal agencies in charge of producing the reports. Among major issues that have been raised and that we hope the commission will scrutinize: the models used have assumed climate sensitivities to CO2 concentrations significantly higher than recent research warrants; the models used have predicted much more warming than has actually occurred; predictions of the negative impacts of global warming have been made based on implausible high-end emissions scenarios; the positive impacts of warming have been ignored or minimized; and surface temperature data sets have been manipulated to show more rapid warming than has actually occurred. An underlying issue that we hope the commission will also address is the fact that so many of the scientific claims made in these reports and by many climate scientists are not falsifiable, that is, they cannot be tested by the scientific method.

It goes without saying that this is the kind of policy approach we need in Australia. It also shows that there are many climate experts and/or climate scientists who do not accept the dangerous warming thesis and the need for massive government spending on reducing the usage of coal. In previous Commentary I have argued that in Australia a much reduced target for emissions (and for renewable) would have virtually no effect on total world emissions which are increasing mainly because of the policies adopted by two of the biggest emitters and the announced intention to withdraw from Paris by the US. Our political leaders have missed the opportunity to (validly) save government spending and the welfare of our citizens.

Coalition Remains in Serious Trouble

Des Moore — Fri, 01 Mar 2019 01:34:30 +0000

Newspoll & Subsequent Policy Announcements Suggest Coalition Still in Serious Trouble

Due to a major technical problem which put my computer out of action for two days (possibly caused by a hacker I was advised) I am now in a catch-up position in regard to circumstances where numerous pre-election statements have been floated around by both major sides of politics. It has almost seemed like a new policy per day, which seems unlikely to have attracted votes because of the limited attention by the Coalition to explaining benefits. One commentator even described Morrison as a Muppet and, despite his increased media appearance, it is difficult to see a closing of the polling gap next time.

The February Newspoll left the Coalition on a 47/53 TPP for the third successive time and showed a fall in Morrison’s net satisfaction rate from minus 2 to minus 4 (Shorten’s also fell to a similar extent). This polling occurred despite expectations that Labor would be adversely affected politically over the passage of the Medivac bill instigated by Labor/Phelps/Greens and passed because the government had lost its control of the lower House. This legislation allows refugees and asylum-seekers to be fast-tracked to Australia for medical treatment on the orders of two doctors and involves an effective loss of border control decisions by a Minister, although the concern seems more about what would be likely to happen under a left wing Labor government than about the exploitation of the Medivac.

In fact, instead of a Labor win, Morrison appears initially to have instigated a favourable course of action by announcing that existing asylum seekers on Manus/Nauru will be transferred to Christmas Island and this initially secured approval from Shorten. However, Shorten has since backed away from his “approval” and it is not clear if the possible “misuse” of the legislation can be made there too.

That aside, Morrison has responded to pressure from within the Coalition, and of course from Labor’s accusations (and from some media “experts”) that it is taking no action on climate change or to fulfill its undertaking to reduce electricity prices. Morrison has apparently decided to make various day by day announcements designed to convey the impression that action is being taken. But the measures announced would be unlikely to involve any significant reduction in prices (unless accompanied by increased subsidies) and are suddenly focused on increasing the Coalitions’ reliance on renewable as a major part of its CC policy, viz

“the Prime Minister said the government’s support for big hydro projects was vital and economically prudent, as Australia’s energy market “continues to transition towards renewables”. “If you want to have a renewables future, you’ve got to have big batteries like this, and the commercial element of that is quite compelling and that’s what the numbers so far have shown,” he said. “We get the economic harvest, we get the jobs harvest, we get the energy harvest, and we get the renewable and the sustainable energy harvest that delivers on our environmental commitments.” The opposition said the government’s commitment to hydro power “only make sense under Labor’s renewable energy policies” (see Morrison Announces More on Renewables).

However, in the same article Energy Minister Angus Taylor claimed the new energy efficiency measures would cut energy bills while lowering carbon emissions. “We know that businesses and community groups are struggling under the weight of high power prices,” he said. “That’s why we’re taking strong steps to ensure they get the practical support that they need to reduce their energy use without reducing productivity.”

True, the reduction in emissions from the (newly announced) shift to renewable would in themselves favour lower prices. But renewable additions would also add to costs (including of course the additional back-ups needed in case renewable are not available) and would be unlikely to lead to lower prices overall (see also Coalition Climate Policy).

It was particularly disheartening to see on Sky News that there was agreement amongst participant that Turnbull’s decision to expand Snowy Hydro was endorsed by Morrison as a major component of his latest climate change policy. No account seemed to be taken of the much higher cost of such expansion compared with the cost of producing the electricity using fossil fuels. As Judith Sloan points out, “were the electricity market not so distorted, there would not be any economic case for Snowy 2.0. The project has been around for many years and it never stacked up. The cost and the execution risk made it a complete non-starter. The fact the Coalition government refuses to unpick the distortions in the market, rather than adding to them by promoting Snowy 2.0, is a sad indictment of where energy policy has landed. And, by the way, for the sort of investment being devoted to Snowy 2.0, you could get several high efficiency, low emissions coal-fired plants” (see Sloan Says Snowy2.0 Fairy Story).

Many others have concluded that the Snowy2.0 should not be started but it seems likely that bureaucrats in PM&C and Environment have promoted the case.

In considering possible electricity price reductions, it is pertinent to note that under policies adopted by the various states in recent years (which have been based on the perceived need to reduce the usage of coal because of the supposed danger from higher temperatures):

The adoption of such policies has been a major contributor since 2010-11 to a trebling in average wholesale electricity prices, rising from about $30-40 per MM to about $80-110 per MM;
While businesses and households would be unlikely to have experienced similar such increases at the retail level (data for retail prices back to 2010-11 are not readily available), they would undoubtedly have increased since 2010-11 at a much faster rate than pre 2010-11;
The retail figures available for 2017-18 show an increase of more than 10% on the previous year according to figures published by theAustralian Energy Market Commission (AEMC), which was set up by the Council of Australian Governments through the Ministerial Council on Energy in 2005. In the current year the AEMC estimates a reduction of about 3% followed by another reduction of about 9% in 2019-20. The AEMC says the estimated falls since 2017-18 are “driven primarily by wholesale costs” but details of these estimated costs are not readily obtainable.
At this stage it is difficult to see any significant price reductions except by the Federal government establishing the Default price it has canvassed and by enforcing a maximum price at a lower level. Such a policy, said to be operated by regulation and claimed not to require legislation, would imply that there is inadequate competition in the current market and that seems to have been assumed in regard to the major generators. But no explanation has been given as to why the ACCC could not act to enforce competitive measures rather than the government itself establish a regulatory direct.

Ispos Poll Shows Big Improvement in Coaliton Polling

Des Moore — Mon, 18 Feb 2019 08:57:19 +0000

Has the Tide Really Turned?

Today’s polling, not by NewspolI but by Ispos for Fairfax press, must have come as a bit of a surprise to those associates with that media group, as it also has for those supporting the Coalition. Most of the latter have been expecting an improvement in the Morrison government’s polling from the 46/54 TPP result last December but not by three percentage points to a 49/51 TPP. That is close enough to the election result in July 2016 under Turnbull (50.4/49.6) to lead the Fairfax media (and the ABC) to downplay it as much as they can.

But they also find it difficult to explain away the two percentage point increase in Morrison’s performance rate since December which means he is now a nine percentage points better performer than Shorten (49/40) and ten percentage points more preferred than Shorten as PM. (Strangely, Ispos have asked to interview me tomorrow morning, to which I have agreed).

Of course, this polling may be only a “one off” and we have to wait until the next Newspoll (which is probably next Monday) to see if it also shows a big improvement in the Coalition’s electoral hopes. But there can be no doubt that this poll provides a major “scare” to Shorten and Labor. Even the leftish political editor of the Fin Review has had to acknowledge this (see Coorey Says Test of Nerve For Labor). Note his comment on last week’s debate on whether to allow “exceptions” to border controls, viz

“There was a great deal of trepidation within the party last week over whether it had done the right thing by opening the door on boats, an entrenched political weakness which has cost it at least two elections this century”.

As I argued in last Friday’s Commentary, “Morrison’s attack on Shorten for showing weakness in handling Caucus is obviously correct (as the emergence of Deputy Albanese on TV suggests) and provides a useful stick for Morrison to use and argue that, if Labor were to win the election, they would again allow border controls to be breached. Morrison has already established that up to 300 refugees have obtained the approval of doctors to be transferred to Australia. It seems likely that under Labor border controls would be eased and smugglers would again penetrate access in one way or another”.

It is not only the AFR which is having to pull its horns in. As Andrew Bolt points out in his article in today’s Herald Sun:

“So how to stop them? Labor’s media shills offer two fixes. First, suggests The Age: “The turnback policy is cited by experts and insiders as the most effective deterrent … It would be prudent to buttress this barrier.” Pardon? Turning back boats is the Tony Abbott policy which The Age was still damning in 2015 as “morally repugnant”, and “ruthless and despicable”. It’s a policy many on Labor’s Left still hate. So why did turnbacks go from “morally repugnant” to something The Age wants more of? Why? Because The Age knows Labor has put sugar on the table for the people smugglers, and if boats now turn up it could lose the unlosable election. That’s why many Leftist journalists also insist Prime Minister Scott Morrison stop saying Labor has weakened our borders. He’s giving people smugglers ideas, they say. Guardian Australia’s Murphy even accused Morrison of “looking like you are whistling up new boats for a bit of cheap partisan advantage”.

Many leftist journalists insist Prime Minister Scott Morrison stop saying the policy has weakened Australia’s borders. How crazy. The Liberals now can’t inform voters that Labor’s policy is dangerous? And how dumb do journalists think the bosses of those multimillion-dollar people smuggling cartels are? They don’t need Morrison to tell them what Labor has done — especially not with activists celebrating at high decibels” (see Bolt on Fairfax Support for Labor).

Bolt’s article today would have been written before the editorial in today’s Age, which has done some backtracking even to acknowledging with mixed views that “There is, however, a legitimate issue for this election about whether the ALP is the better party to manage asylum seekers. The left of the party has only accepted Mr Shorten’s approach with great reluctance”. The Age adds that it “reported from Indonesia on Saturday that asylum seekers stranded there since 2013 said the bill had not made them more inclined to take the risk of boarding boats, but one source, long known to this organisation for having links to people smuggler networks, said that if the ALP won government, Mr Shorten could face a test of his nerve”. But it then makes the astonishing addition that there is no reason why the ALP cannot face down the challenge from people smugglers just as resolutely as the Coalition, apparently forgetting what happened to attempts to control borders under the Rudd/Gillard/Rudd governments! (see the full text of today’s Age editorial, which should surely lead to a change in editor of a paper which claims it is “independent always”).

Of course, the asylum seeker issue is only one of several explanations for the narrowing of Shorten’s lead in the polls.As today’s Age also acknowledges, Shorten “may also be suffering from some of his tax policies. Many voters, including, surprisingly, 30 per cent of ALP voters, are worried about his plans to end cash refunds of franking credits. Still, it is the issue of asylum seekers that appears to be weighing most heavily on the electorate. To maintain his lead, Mr Shorten will have to prove his mettle both to voters here and also to those waiting in Indonesia for a sign of weakness”.

As electorally beneficial as the border control issue is likely to be, Morrison can’t rely only on using that as a stick to beat Shorten with. Other policies need to be finalized and presented, including the budget before the election.

Minority Govt Problems; Over-rule Qld Labor’s Refusal on Adani Coal Mine

Des Moore — Sat, 16 Feb 2019 05:08:59 +0000

The Problem Facing Morrison’s Minority Government

In yesterday’s Commentary I drew attention to Labor’s success in forcing legislation through Parliament which allowed asylum seekers on Nauru and Manus Island to “doctor” themselves to Australia for treatment without ministerial approval (except for security reasons). I added that “it also remains to be seen how long he can run a minority government where there is an opposition which is able to force legislation right through Parliament and effectively change the Coalition’s policies on other matters too” .

I added that “there has already been a (failed) attempt today to establish a Royal Commission on some failure of access to disabilities and there will inevitably be a debate on aspects of the budget set to be presented in early April. That would provide Labor/Greens with opportunities to have amendments to the budget passed through Parliament not by the Coalition but by the Opposition”.

Some recipients of Commentary indicated that they did not understand my analysis and in particular my (and others) view that an early election might be called. Today we have an illustration of what I meant. A report in Weekend Australian reports that

Scott Morrison is on track for an unprecedented second defeat on a key piece of legislation within two weeks, with Labor “confident” of passing a small-business policy in an alliance with Greens and independents. The government was considering last night how to deal with another potential loss on the floor of the House of Representatives after it suffered the first defeat on legislation in nearly 80 years with the passage of Labor’s refugee medivac bill on Tuesday. The Prime Minister faces internal spotfires as rebel Nationals MPs threaten to support Labor’s small-business overhaul in a damaging move that could split the Coalition, test the leadership of Deputy Prime Minister Michael McCormack and undermine Mr Morrison’s authority (see More Challenges to Minority Government).

As Parliament is sitting again from 18-21 February before the budget there are likely to be further attempts to “govern” by Labor/Greens, including in regard to the alleged need for more “action” on climate change. Then there is the period after the budget but before the election when Parliament will again be sitting from 4-18 April and when more attempts at governing by Labor/Greens/et al would be likely to occur.

All this suggests that it would be in Morrison’s own interests to call an early election, not now but as soon as possible after the budget has been presented.

Qld Left Labor Runs The State & Is Stopping Adani Coal Mine From Starting

Readers will be aware that the Indian owners of the Adani coal proposal in Queensland have been seeking approval for 7 years and thought they had it only to find that the Queensland Labor government has made a last minute attempt to stop it by asking an active environmentalist to advise whether the risk to an endangered finch would be too great. He duly did so advise.

Today’s Weekend Australian reports that “an extraordinary alliance of industry, unions and councils were last night in talks to lobby for Premier Annastacia Palaszczuk’s intervention to save the project that promises thousands of jobs. The contentious review of Adani’s black-throated finch management plan was ordered by Environment Minister Leeanne Enoch’s department in December, just weeks after Adani announced it had funding for the mine. The findings of the review — chaired by Brendan Wintle, a Melbourne University academic associated with anti-coal activism — are set to delay construction of the mine, which cannot begin without state approval of the plan to protect the endangered bird. After Ms Trad yesterday called on Adani to “engage in the process” led by Professor Wintle, Adani chief executive Lucas Dow claimed the review’s “misinformed and conflicting findings” demonstrated the report was biased and must be scrapped. In a letter to the government, Mr Dow outlines five key areas where he says the review contradicts the previous evidence accepted by the Environment Department, which had workshopped the plan with the company over 18 months and seven drafts before it was submitted” (see Morrison Cautions on Adani)

Unfortunately, the best that Scott Morrison could respond yesterday was to caution “the state government against “playing games” with jobs in north Queensland, which already suffered high unemployment before it was ravaged by floods this month. “I think the people of Queensland are dealing with enough at the moment without having decisions to take away their jobs,” the Prime Minister said.“We support the mining industry. We want to see mining jobs and we want to be able to see projects stand on their two feet and be given a go on the basis of their commercial realities.”

Given the changeable voting in Queensland for federal elections Morrison should be weighing in much more strongly. My attempt failed to have published a suggested response published. However, that suggested response may be worth repeating here, viz

It is not surprising that Queensland’s Labor government has established an inquiry into the dangers from an Adani coal mine to a finch. As you point out, that government is controlled by the left-wing and the Premier is just a front ( “Labor can no longer pretend it supports Adani”, 15/2). And, as shown by its behavior in forcing Shorten to edge open border controls without proper ministerial decisions, the left-wing constitutes a real threat to governing Australia federally if constituents are fooled into voting Labor in May.

The Morrison government needs to find ways of attracting the attention of voters to what they are in for if Labor wins. One possible way of getting their attention would be to adopt the same strategy as Clive Palmer has in full scale adverts on TV and published media. Of course, by presenting such rubbish in such a way Palmer is now losing the attention of voters.

A Coalition adverts strategy would be structured to identify the many problems in the policies already announced by Labor, such as border openings, increases in taxation and unbelievable reductions in emissions by 2030. It is not too early to start a Palmer-like strategy now.

There are other possibilities, including asking a credit rating agency to examine Queensland’s rating. Queensland’s LNP opposition has undertaken to restore the AAA rating which Labor lost and it could play that role with Federal support. It might even be possible for the Federal government to use its external affairs power to approve the mine by saying it is important for Australia’s foreign relations with India and its foreign investment policy that it go ahead.

It is in the interests of the Morrison government, both economic and political, to do as much as it can to have the Adani mine started.

Border Controls; Early Election Now Likely

Des Moore — Thu, 14 Feb 2019 01:11:34 +0000

Morrison Says No Early Election – But For How Long Can He Run A Minority Government

On Tuesday I referred to Andrew Bolt’s suggestion on Sky News that the decision by Labor to push legislation through the lower House allowing asylum seekers on Nauru and Manus Island to “doctor” themselves to Australia for treatment without ministerial approval and, by obtaining court approval, to then “recuperate” here for a indefinite period. With the support of the Greens et al, this legislation has now passed the Senate too but, despite his strong attack on Shorten and accusation that he has broken what had seemed a bipartisan agreement on border control, Morrison has said that he will not call an early election. Even so, Bolt tonight again repeated on Sky News his advocacy of an early election by taking advantage of the policy windfall provided by Labor.

Morrison’s attack on Shorten for showing “weakness” in handling Caucus is obviously correct (as the emergence of Deputy Albanese on TV suggests) and provides a useful stick for Morrison to use and argue that, if Labor were to win the election, they would again allow border controls to be breached. Morrison has already established that up to 300 refugees have obtained the approval of doctors to be transferred to Australia (see Possible Effects of Labor Legislation on Refugeesand Bolt Says Labor’s Legislation Allows Asylum Seekers to Come To Aus). It seems likely that under Labor border controls would be eased and smugglers would again penetrate access in one way or another (see Sheridan Says Labor Shameful).

But as electorally beneficial as it would likely be, Morrison can’t rely only on using such a stick. Other policies need to be finalized and presented, including the budget.

It also remains to be seen how long he can run a minority government where there is an opposition which is able to force legislation right through Parliament and effectively change the Coalition’s policies on other matters too. There has already been a (failed) attempt today to establish a Royal Commission on some failure of access to disabilities and there will inevitably be a debate on aspects of the budget set to be presented in early April. That would provide Labor/Greens with opportunities to have amendments to the budget passed through Parliament not by the Coalition but by the Opposition.

Labor’s success in obtaining the passage of legislation on Manus/Nauran refugees has changed the management of government picture and makes it more realistic for the Coalition to think of an early election. This is not simply to take advantage of its win on border control strategy but to avoid the potential loss of control of Parliament and its own policies.

Energy Policy

I have already criticized the energy policy developed by Energy Minister Taylor particularly its retention of the targets for reducing emissions and his support for increased usage of renewable and the emergence of estimates of much higher costs for the latter than previously thought. I have also questioned the use of divestiture powers by a minister who would be doing so on the basis that he accepted advice that a company displayed “market disconduct” and was not allowing prices to fall.

Reports emerged this afternoon that, instead of voting on a bill to give effect to Taylor’s “model” (sic), Treasurer Frydenburg has announced that the divestiture power would become a component of election policies. He is reported as saying that

“Our legislation to prohibit energy market misconduct is an important reform that aims to hold the big energy companies to account and drive competition in the market and lower prices for consumers. We will be taking this policy to the election which forms our response to the ACCC inquiry into retail electricity prices. It was on the Labor Party’s watch when they were last in government that electricity prices doubled and now they are obstructing key reforms which save money for Australian families and businesses” (see Coalition Says Big Sticks Policy Now To Be Taken to The Election).

The report also makes it clear that had the government attempted to pass the bill now it would have faced major amendments from Labor. This seems to confirm that there is likely to be an early election – possibly immediately after the budget.

Newspoll Lift Helpful But Coalition Has a Long Way to Go

Des Moore — Tue, 29 Jan 2019 10:24:15 +0000

Helpful Lift in Coalition Newspoll But Still Well Behind

Today’s first Newspoll for 2019 shows a helpful improvement for the Coalition in its TPP gap from 45/55 in early December to 47/53 but Morrison’s “Satisfactory” rate as PM went down from 42 to 40 and his “Dissatisfaction” rate went up from 45 to 47. By contrast, the “Satisfactory” and “Dissatisfaction” rates for Shorten each improved by a point and left him only 3 rates behind Morrison. In the “Better PM” rate Morrison also dropped a point while Shorten’s rate was unchanged, albeit at 7 points behind Morrison. This Newspoll was taken during the period when three ministers announced they would not stand at the next election (see Newspoll TPP Loss Reduced to 53/47).

One might say that the improvement in the Coalition’s TPP is not cancelled out by the deterioration in satisfaction and better PM rates. But the improved TPP has also to be assessed by noting that it is still suggests a 3.4 per cent swing against the government since the July 2016 double dissolution election won by Turnbull by one vote. Remember also that the Turnbull government itself experienced a swing against it then of over 3 per cent ie the Coalition has a lot of ground to make up.

The NSW State election on 23 March (for all seats in the lower house) will provide the next electoral test for the Coalition, although there will also be more Newspolls before then.

In my Commentary on 27 January I argued that Morrison needed to get cracking on enunciating policies asap and drew particular attention to the problems arising from existing energy and climate change policies, including of course the large blackouts in Victoria. Commentary concluded that “the cost of producing more power, and reducing electricity prices, would also be reduced if the existing policy of reducing emissions from coal usage was either dropped or substantially reduced and the non-binding agreement in Paris was dropped or reduced”. I also argued that increased usage of renewable is not the way to reduce electricity prices.

Note too that, according to Simon Benson at News, Morrison believes that the Coalition’s attack on Labor’s negative gearing and dividend imputation policies “represent a significant vulnerability in Labor’s economic argument”. But the (correct) attack on such policies is likely to have only a limited effect on polling.

So far there is no sign of any movement on the most important policies and Morrison’s announcement today of tax concessions for small businesses, apparently at a cost of $750mn , is only touching the edges of policy (see Morrison Announces Tax Concessions for Small Businesses). Equally, to meet his prediction that there will be an increase in jobs of 1.25 mn over the next five years (similar to Abbott’s successful prediction), appropriate policies and circumstance will need to be in place.

In today’s Herald Sun et al, Terry McCrann says “Sorry Scott and Josh, but there ain’t anything you can do to stop it. Labor is going to win the federal election. The two of you, and especially Scott, won’t do the two big things that are so critical to Australia’s future and, properly argued “axe-the-tax style”, could at least make a fight of it. That’s to slash immigration and walk away from the Fake Paris Climate Accord” ( see McCrann: Labor will Shutdown Lights/Economy)

Morrison needs to address in a substantive way the “two big things” mentioned by McCrann.