Kev, Just Tell the Truth About Petrol Prices!

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It's particularly galling to listen to the Federal Opposition voicing concern about high petrol prices and the effect they're having on "battling families."

Give me a break! I don't recall similar concerns from the same rabble regarding the effect of "Work Choices" on the battling constituency.

It's hard to feel sympathy for the government, though. They've been running scared of the issue since the last significant rise in international oil prices. Instead of levelling with the population and explaining the true situation regarding energy supplies, they've dodged the issue and dug themselves a deeper hole in the process.

It's about time the government told the truth about energy prices. That energy's going to get a lot more expensive due to supply shortages. That the carbon trading scheme will compound the effect. That peoples lifestyles are going to change dramatically as cheap energy becomes a distant happy memory.

The government should be stating the unpleasant truth and challenging the opposition's ludicrous populist policies.

If the government doesn't start acknowledging the truth and planning for the inevitable, the consequences will be dire.

The return of the Labor government after 11 long years of miserable conservative rule saw "The Pigs" take holiday. The 'fire in the belly' (read 'indigestion') caused by more than a decade of the Howard government had subsided. With it went any inclination to add to this blog.

The antics of the Federal Opposition and some questionable policy decisions by the government have rankled to the extent that the urge to write has returned. If those urges persist is another matter.

The first stirrings were caused by the bleats of the well off to sensible means testing of government handouts.

The issue that finally forced me back to the keyboard was the pathetic responses from both sides of the parliament regarding the rapid increases in energy prices.

Brendan Nelson's policy to reduce the price of petrol by five cents per litre was a cheap grab for popularity, a stance begging to be ridiculed by the government. Rudd should have emphasised that the oil price is set by supply and demand in the global energy market, and thumped the Opposition's lunatic policy that would increasing the demand of a limited resource.

That the government seems spooked by Nelson's announcement, to the extent that they've mooted the possibility that petrol prices may be reduced by re-jigging the calculation of GST, is gutless, narrow minded policy of the worst kind.

If the government is worried by the issue, and they should be for other than political reasons, then they should be proposing that fuel taxes be used for sensible medium term measures that will lower fuel demand. Here's a few suggestions:

  1. Revamp tax on new cars to make economical vehicles cheaper.
  2. Remove the tax concession on new off road vehicles.
  3. Revamp the novated car lease tax scheme by removing the incentive to drive further to reduce tax.
  4. Provide tax breaks if you use public transport to get to work.

Sensibly, the government should increase fuel excise to reinforce the issue, because, apart from climate change (which is related), exceeding the limits of oil production (Peak Oil) is likely to be the defining issue of the 21st century.

The Opposition's Rudd - Burke Email Beat Up

Couldn't they think of something better?

A tactic to divert attention from tonight's Four Corners, and one that's failed dismally judging by the pre-publicity.

Too Early For a Second Sydney AFL Team

Imagine it's the middle of winter.

Walk into any Sydney pub or club sporting two or more TVs on a Saturday night. One will be tuned to the Rugby League. Invariably, any others will be showing any sport other than the AFL.

I'm constantly amazed that the punters would prefer to watch a marbles tournament rather that the indigenous football code, but that's the reality in Sydney. This city of five million can comfortably support one AFL team, but after two decades, the sport is still a curiosity to the majority of Sydney residents.

Support for a particular sporting code is a cultural phenomenon, one which propagates primarily from parent to child. Support for the Swans is growing slowly as the original supporters, ones like myself who gained their interest through some interstate connection, transfer that interest to their kids.

It's a slow process, but over 20 years the Swans may have gained enough rusted on fans to survive the immanent and inevitable form slump.

There's no way the city can support two mediocre teams.

The AFL hierarchy are dead wrong if they think that a second team can be introduced in Western Sydney within five years. Perhaps they'll avoid the mistakes made when the Swans relocated, but however they do it, they'll still be competing with the established Swans franchise for that rare Sydney commodity ... the committed AFL supporter.

Opposition's A Bitch, Brendon

Gerard Henderson in today's SMH remarked that conservatives don't do opposition well.

He's being a bit unfair on his team. It's not limited to the conservatives, they all struggle during the first term. What conservatives do well in opposition is never lose their 'born to rule' mentality.

This was shown all too clearly by Brendon Nelson's bleating about the lack of consultation over the content of tomorrow's "Stolen Generations" apology. Ignoring that they could have delivered the apology themselves, his attitude is particularly galling given the contempt they showed the other side when they were in power.

From where I stand, things couldn't be better. Rudd has deftly wedged the conservatives over the apology and in doing so, has probably condemned Nelson's leadership. He's already being compared to Simon Crean.

Brendon's about to learn the real pain of opposition.

Baring a Lazarus like comeback from Peter Costello, I'm going to enjoy the right wing of the Liberal Party coming to terms with promoting the only other viable leader, Malcolm Turnbull.

So much to look forward to!

"Clean Coal" Re-examined

With attention focussed on the amount of carbon dioxide (CO2) released into the atmosphere by coal fired power stations, coal mining companies are desperate to find ways of maintaining the viability of the industry in the era of CO2 induced climate change and carbon trading.

One method being considered is to use CO2 Geo-Sequestration, sometimes known as "Carbon Capture." It is one of a number of "Clean Coal" technologies that reduce CO2 emissions.

The concept's simple enough. Just capture the C02 after the coal's burnt, cool and compress it, then push it down the nearest convenient hole in the ground, where it will forever remain out of sight and out of mind. Sounds easy, but there are a number of difficult technical hurdles.

For a start, there's a lot of CO2 produced. The power stations in New South Wales burn millions of tons of coal a year. The weight of CO2 produced is 3.7 times the weight of the carbon in the coal. That's a hell of a lot of material to be safely disposed of.

Next, it's not that easy to separate the CO2 from the flue gas of a conventional power station. A lot of it is nitrogen plus other gasses which are largely inert in the combustion process, and you don't want to be adding those to the already large amount of CO2 you're trying to get rid of. For that reason, carbon capture may not be the 'bolt on solution' for conventional power stations that everyone hoped. It may mean building completely new plants that burn coal in pure oxygen, negating the need to separate the flue gasses, but markedly increasing the capital cost of the process.

And lastly, sites that can safely store the material are not readily available. Certain geological structures are required, and they're not always were the coal is burnt. If not close, the energy required to compress and transport the the CO2 to suitable sites will further increase the costs.

Despite the problems, Carbon Capture (along with nuclear energy) has been the darling of conservative governments. Until now.

THE [Australian] Government is facing a tough decision over whether to continue funding the world's leading clean coal experiment after the Bush Administration ended its commitment to the $US1.8 billion ($2 billion) project, citing massive budget blow-outs.

The US move is a grave setback for the Australian coal industry's hopes that a commercially-viable clean coal plant would be built in the foreseeable future. The US-led FutureGen project was embraced by the Howard government which pledged $15 million to it shortly before last year's election.

This is a surprising development considering that the current US administration is sympathetic to the fossil fuel industry. Not to be outdone, the former Australian government supported Carbon Capture at the expense of other environmentally friendly energy solutions.

Hopefully, this development marks the end to governments trying to pick green energy technology winners. If makes more sense for all technologies to be in the mix and receive equal opportunity to receive government research funding.

Who knows? Carbon capture may be a viable green technology, but it needs to be evaluated on an equal footing with all other technologies, whether they be nuclear or windmills.

Economic Lunacy - Avoiding Recession by Increasing Debt

Below is a diagram showing the state of the US Current Account deficit. It’s not a pretty sight. (Click to enlarge)


The economic good times we’ve been enjoying for the last decade or so has (arguably) been driven by the willingness of the US to go into debt. It’s certainly been good for Australia as we sell increasing amounts of raw materials to China to be manufactured into the goods that the Americans haven’t got the funds to buy.

A lot of experts have been sanguine about this situation, reasoning that it’s ok as long as the US can service the repayments. That, though, was before the Sub Prime lending fiasco, which threatens the foundations of the US economy. Worryingly, the US reaction to the Sub Prime crises is more of the same.

The fear of going into recession is understandable. However, it seems stupid to risk a much more serious consequences down the line by propping up the bad debts that caused the problem in the first place. Reducing interest rates and providing tax handouts will only make the debt problem worse. At some stage, US creditors are going to move to protect their money. If that happens in conjunction with rising energy prices, the recession we're desperately trying to avoid would have seemed very mild indeed.

Footnote: It’s interesting to note that the first dip in the graph above was a result of Ronald Reagan’s economic policies, and the subsequent recovery was the work of that “liberal” president, Bill Clinton. Who said conservative’s make better economic managers?

Infrastructure is a Government Responsibility

My few regular readers know I'm concerned with the effects of climate change. I have little doubt in the science that points to the detrimental effects of loading the atmosphere with carbon.

Despite the current wet spell, Sydney's dams are only 60% full and half the state is still drought effected. We'll have to wait and see if the current La Nina phenomenon lasts long enough to further improve the situation, but trends show that the dryer El Nino periods are getting longer and consequently, the countryside dryer.

Why then, you may well ask, haven't I subscribed to "green" electricity and installation of water tanks? Both are within my means. The answer is that I'm reluctant to make it easier for the authorities to shirk their responsibilities for the provision of basic infrastructure and the imposition of charges to tackle climate change.

Consumers who take the laudable action of paying extra for green power or pay hundreds (or thousands) of dollars to install water tanks deserve praise, but their effects are puny in the larger scheme of things and make it easier for the government to abrogate their responsibilities.

The effects of climate change are felt by everyone and the mitigation costs should also be borne by the community at large. More so than the provision of small subsidies as happens now.

Electricity authorities should have fixed and mandated levels of green energy generation, with the extra costs met by all consumers. Why should the concerned few pay extra and still wear the effects of coal fired power?

Water tanks installed on private property should be no different from the public dams, water mains, pumping stations and (dare I say it) desalination plants. They should be paid for and maintained by the water authorities from the revenues collected from water consumers. Water taken from the tanks should be metered or calculated by some other mechanism, and added to the householders water bill.

I'm sure that many more households would be willing to install tanks if an equitable scheme was devised, perhaps saving the authorities the huge sums needed to expand existing facilities. Not very altruistic sentiments, I know, but I'm willing to donate land for water storage and pay increased costs for power if the conditions are acceptable.

Tax Cut Rethink?

Kevin Rudd's comments that we should increase savings may be the first indication that the government is rethinking the tax give-aways planned for this year's budget.

With inflation on the rise and the Reserve Bank poised to increase interest rates, now is not the right time to provide a tax break.

Given that the planned tax cuts are a result of the previous government trying to buy its way back into office, and the mood of the electorate was for the revenues to be used to restore services that were neglected by Howard and Co, I think the government would be forgiven if they reneged on at least a portion of the cuts.

Alternatively, they could cut the tax rates while simultaneously increasing the percentage of compulsory superannuation contributions.

Rudd is keeping faith with the voters by staying true to his election promises, no matter how outlandish. That faith will be tested if the promised cuts are provided only to be removed by the Reserve Bank.

Floods and Speed Cameras

We're back!

We spent the festive season with extended family in the Northern Rivers district of New South Wales. The drought was well and truly broken while we were there ... think torrential rain, wild surf and local flooding.

On our return, and as luck would have it, we beat the flooding of the Pacific Highway by a couple of hours.

It's been eight years since I've done the drive north from Sydney to Queensland. The highway has improved with some nice stretches of dual carriageway, but a lot of it is still the two lane goat track remembered from decades ago. I suppose that's why the authorities have chosen to regularly punctuate the inferior bits with fixed speed cameras.

The cameras are effective in making this driver aware of his speed, but you have to wonder their overall effectiveness when Victoria scored the worst road toll between Christmas and New Year. This is the state littered with cameras, but unlike other states, they don't warn drivers of their location, a move that various road safety "know it alls" have been advocating for years.

When you consider that Victoria has arguably the best roads and the strictest road laws in the country, their woeful Christmas road toll shows that punitive measures aimed at drivers don't always have the desired results.

And one other thing ... Would the NSW authorities please get some consistency when allocating speed limits on dual carriageways. Various sections of the Pacific Highway were posted at either 100 or 110 km/h with no noticeable difference in layout or facilities. These can lead to nasty consequences during periods of double demerits.

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