Catallaxy Files

A piece of mine in the Spectator on-line addressed if and how the re-elected government might extract the nation from the parlous circumstances energy and climate policy measures have created for the nation.

After recounting all the enmities that Minister Angus Taylor had unearthed within the industry, I continued

With all these protagonists Taylor is clearly doing something right.  Chief among these is building upon Frydenberg’s attempt to restore legitimacy to coal by providing some form of government support.  This had become necessary because politics, having undermined the market, now needs to bolster coal in order to provide increasingly necessary firm power (which it can do far more cheaply than gas as a result of state policy driven regulatory induced shortages) and the risks to new investment by additional subsidies to renewables bringing further penalties on fossil fuel generators.

Taylor avoided the “C word” in re-legitimising coal, opting instead for the “F word” – calling for “firming” capacity.  But this subterfuge contributed to his losing control of the agenda.  His long list of 66 proposals included 10 involving coal, but he subcontracted short list’s preparation to his department, which having swallowed the kool aid of renewables, whittled down the targets to 12 only one of which included any reference to coal.

Since his re-appointment in a more extended portfolio, Minister Taylor has moved to clarify his position.  He has announced a reliability requirement on generators.  This is actually unnecessary since both retailers and generators have tremendous incentives to avoid exposure to very high prices.  However he has used these requirements to demand AGL’s NSW Liddell plant be kept in production or expanded. He has also signalled support for a new coal plant at Collinsville as well as for refurbishing Vales Point in NSW.

But, uncertain though the coal expansions are, he has many other problems in re-creating the low cost industry that previously prevailed, not the least being state governments refusing any retreat from green policies.  In addition, his refusal to end the subsidies to renewables on grounds that they are no longer costly is ill-advised and not borne out by the data.

For the wholesale market Mr Taylor is targeting a $70 per MWh price for 2022, which is hardly ambitious, being one third above the level that would prevail if coal had not been demonised and comparable to the baseload futures price.  While recognising the fundamental issue is state government opposition to new coal plant and to new gas developments, he has reiterated his intent to address phantom issues of “manipulation of wholesale markets, price gouging in the retail markets and derivatives market”.

Meanwhile, the regulators are confronting the damage to reliability that the displacement of coal has caused. The market operator, AEMO, is calling for new expenditures to offset the deleterious effects on grid reliability caused by household and other small-scale weather-dependent generating facilities and its forecast coming exit of coal plant.  Unfortunately, AEMO does not suggest those facilities causing the increased risk to the system should be required to incur the resultant costs.  Such an outcome may however be required as a result of reviews the AEMC, the rule-making body.

It may be possible for the policies being promoted to avoid a further reduction in the industry costs.  But even then, it must be inevitable that the new cost levels will mean the departure of the energy intensive industries like smelting that were originally attracted to Australia by low cost electricity.  And the cost uplift will further challenge the  competitiveness of most other industries that transform basic mineral and agricultural resources.

Yes.  It is very amusing to watch the Labor Party tear itself to shreds.  So much for cuts and chaos.

But at least the ALP is beating itself up over personalities and not polices.  It makes great theater and also evidences that their conclusion from the recent election was that it was the messaging that was bad and not the message.  Good luck in 3 years.

But get this.  As reported in the Oz it seems that Tim Wilson has run afoul of his colleagues because …. because he seems to want to let the Liberal Party members pick their representatives:

Colleagues are understood to be angry at Mr Wilson’s alleged refusal to support Ms Henderson.

Mr Wilson said he had not spoken out against Ms Henderson’s Senate bid but would not say whether he endorsed the former Corangamite MP to succeed Senator Fifield.

…

“I support a democratic pre­selection process of party ­members.”

Oh and Mr Wilson seems to have offended colleagues because he had the temerity, the gaul, this hide to dare to question the conduct of monetary policy by the Mandarins of Martin Place:

Mr Wilson’s criticism of the RBA yesterday angered colleagues who said it was not the backbencher’s place to be dictating monetary policy to the independent central bank.

Mr Wilson yesterday was quoted in The Australian Financial Review as saying the “merit of continuing to lower interest rates as a stimulus is specious” because it would hurt people’s savings and not help people get into the property market.

…

One Liberal colleague said the bank was independent and there had been a long-held tradition of politicians not telling it what it should do on ­monetary policy.

Honestly.  If people think that Parliamentary representatives should be selected by the people rather than the factional hacks, they don’t belong in the Australian Parliament.  And especially so if they think that public administrative agencies should be accountable to the public.

Fair dinkum.  Which party does Mr Wilson think he belongs to?

A couple of months ago, TAFKAS attended a forum held at the UTS school of journalism on the subject of public broadcasting. Conveniently, the the UTS school of journalism sits physically next to the ABC’s head quarters in Ultimo; the ABC and UTS buildings are literally right next door. The forum was held in the, TAFKAS kids you not, the Guthrie Theatre.

Most likely because of geography and content, the audience was full of ABC and SBS staff.

Before the forum commenced, while TAFKAS was fiddling with his telephone, he overheard a particular conversation between some of the ABC staff present. One gentleman, who looked not much older than 30-35 commented to his colleagues that he had just returned from 9 months of leave. Said gentleman also declared to his colleagues that one of his first engagements upon his return was to meet with his manager because, notwithstanding his 9 months of leave, his annual leave balance was still too high necessitating him taking more leave.

Clearly there is no further efficiencies to be had.

But the on the panel were 4 eminent speakers including Cat and former ABC Director Judith Sloan and the ABC’s head of news, Gaven Morris. There were 2 other panels whose names TAFKAS can’t remember; one was a lawyer and the other (TAFKAS thinks) was a member of some government review of media.  Essentially a very capable and eminent group.

TAFKAS  remembers that Gaven Morris was particularly passionate about public interest journalism (that is, the kind of deep and quality journalism that may not attract commercial advertising). The other thing that Morris and one of the other panelists (not Judith) were passionate about was Australian content in the Australian media.

Given the subject of the forum was the future of public broadcasting, no-one seemed to provide a case for the actual existence of public broadcasting.  Not public good.  Not market failure.  Not media diversity.  Not government propaganda.  It seemed most interesting that the only justifications presented for public broadcasting did not require the existence of public broadcasting.  It is evident that public interest journalism and Australian media content requirements can be delivered through many means other than public broadcasting.

To wit, there has been much written and said on the Cat and other places about the ABC. Its bias. Its inefficiency. Its inner city centricity.

Various reform options have been canvassed including privatising, defunding and just shutting down. Much has been said about both options, especially given our Dear Doom Lord Leader has co-written a book advocating for such. But while TAFKAS would like to see both or either of these options advanced, he does not think that they are politically palatable. At least for the time being.

TAFKAS, in an earlier incarnation, suggested a structural separation of the ABC between content production and content distribution. No one has taken TAFKAS’ structural separation idea on board, so here is another one.

Why not create a giant ABC regulatory and licencing regime that will apply to the ABC. A regime that will include things like:

• A public broadcasting licence regime with special conditions which can be modified administratively;
• A public broadcasting remuneration and accountability regime;
• A public broadcasting efficiency regulator and energy use regulator;
• A Public Broadcasting Content Diversity Commissioner within the Human Rights Commission.

Yes for sure this would be piling crap upon crap. But it would necessitate a significant diversion of ABC management time and resources into compliance and away from the business of producing whatever the ABC produces. And the government should not given them 1 extra cent of resources to do this.

If this regulatory response sounds familiar, it is similar to the regulatory environment most Australian businesses have to navigate – additional overhead for no additional value or social or economic outcomes. If nothing else, it might result in some empathy from the ABC as to the cost and overhead of the regulations they generally advocate on everyone else.

Yes, yes, yes. This is a complete waste of public resources. But that is what contemporary government is about. Taking tax payer resources to make a mess and then rather than go into reverse, keep piling in more tax payer resources to fix the mess the first attempt caused; and on and on.

OK Cats.  Close your eyes, pretend it is May 2020.  Watch the following you tube video and make the following changes:

• Replace references to Prime Minister with Opposition Leader
• Replace references to the Liberal Party with the Labor Party
• Replace references to Communications Minister with Shadow Whatever Minister Bill Shorten is appointed to
• Replace references to the Government with the Opposition
• Replace references to Malcolm Turnbull with Bill Shorten
• Replace references to Tony Abbott with Anthony Albanese

Change the names and titles and you have TAFKAS’ prediction