Lindsay Tanner’s Sideshow:

Samantha Maiden writes: Re. “Breaking the embargo proves Tanner’s point about media sideshow” (yesterday, item 16). Scribe “Publicity Manager” Emma Morris is in the wrong game if she is aggrieved about getting coverage of Lindsay Tanner’s Sideshow in Australia’s biggest selling newspaper.

When I rang her a few weeks ago, I made a light-hearted quip about the book having a go at a colleague, and informed her upfront not to send me the book because I wanted to pursue it as a news story, unfettered by agreeing to any embargo. But the remarks she then attributes to me in relation to this matter are a figment of her imagination and Ms Morris should correct the record.

So comprehensive were Scribe’s security measures to protect the book and the commercial interests of those it had sold the extract rights to, the first twenty pages can be viewed on Google books. In fact, I can inform Crikey readers keen to nab a copy that the “embargoed” book is for sale this very minute at Dymock’s in Canberra — for $32.95.

Unlike the scores of journalists and media outlets who will ask for a freebie copy without writing a word, we probably delivered Scribe the most-read publicity it will have for the book all week. I enjoyed the book and no doubt my coverage will encourage other paying readers to do likewise.

P.S. I notice Crikey is giving away Sideshow as a freebie with subscriptions. If this is an arrangement through Scribe, surely this commercial relationship with the publisher should be disclosed in the article published.

Tax … and a Carbon Tax:

Gavin R. Putland writes: Bill Williams (yesterday, comments), in point 3 of his 10-point plan to re-elect the Gillard government, suggests that income tax be replaced by dividends from Australian shares, which the Commonwealth would buy up over a period of 20 years, financing the acquisition through an expenditure cut — which of course would make the whole enterprise politically impossible.

But eliminating income tax shouldn’t take 20 years and doesn’t require an expenditure cut. Any company would gladly issue or surrender shares to the Commonwealth in order to free itself from tax — the more so because it would avoid not only the actual tax paid, but also the compliance cost and the deadweight cost (i.e. the value of otherwise viable business opportunities that are rendered unviable by tax).

What about personal tax on dividends? That’s even simpler: the shareholders could surrender an appropriate fraction of their shares.

What about employees’ PAYE tax remitted by the company? Well, if the employees continued to receive their current NET wages and salaries but the company no longer had to remit the tax thereon, then the avoided tax would feed into the values of shares, ensuring that the revenue could be replaced by an appropriate share issue.

What about GST remissions? A few more shares would take care of that.

We haven’t yet considered self-employed individuals and unlisted companies. But they too could buy their way out of the tax system by surrendering some of their assets to the Commonwealth.

In all cases, the surrender of shares or other assets would be a matter of negotiation. You wouldn’t be LEGALLY obliged to get out of the tax system. You would simply discover that you need to get out in order to remain competitive with those who have already done so.

What’s not to like?

John Bushell writes: Oh the nervous nellies are coming out of the woodwork now! Consider the following:

1) Fossil fuels are, by definition, finite in their supply. That is, irrespective of new discoveries, higher prices and new extraction technologies the following will occur with respect to each fuel:

  • Supply will peak and fall behind demand.
  • Supplies of the fuels will eventually be exhausted.

(The International Energy Agency has finally conceded that Peak Oil will occur in approximately 2014.)

2) Therefore, sooner or later, substitutes for fossil fuels will have to be found to provide 100% of our energy needs. These technologies will include renewable energy and nuclear energy (where the technology can produce usable fuel).

3) Delay in moving to these alternative technologies will result in “double negatives”:

  • Increasing CO2 emissions that will make the job of reducing greenhouse gas emissions effectively progressively harder and more expensive.
  • Increasing costs to repair damage caused by increasing frequency and violence of extreme weather events.

4) Thus the only real question is: “Do we move to alternative technologies to reduce greenhouse gasses before or after fossil fuel supplies have peaked?”

5) The above question should not be too difficult to answer but it is being thoroughly confused by the fossil fuel industry making every effort to delay serious investment in alternative technologies. Now why would they do this? Of course once any commodity becomes scarce the price rises and makes extraction of windfall profits easier.

So if you want to walk into a deadly economic and environmental trap, resist the carbon tax!  If you don’t, support the carbon tax with minimal (preferably no) free permits and make industry sweat its assets so that (for example) fossil fuel electricity generators become ENERGY PROVIDERS and motor vehicle  manufacturers become TRANSPORT PROVIDERS.

Mick Peel writes: It seems to me that a couple of things should be simplified to within an inch of their life in the “public debate”.

Firstly, as to the issue of switches to the fuel mix in electricity generation (the overwhelmingly main aim of the tax), the system for electricity dispatch and distribution in the National Electricity Market (NEM), which links Queensland, NSW, Victoria, SA and Tasmania into a network, is a “pooled dispatch market”. Generators (no matter what fuel type) place bids to supply at half hour intervals into the system.

These bids are allocated a preference by the market to meet system demand (i.e. to match electricity use in the NEM regions) for the particular interval. The lowest cost bids are allocated first, followed by the next lowest, until the market is cleared at the last bid to meet the system’s requirement (i.e. the marginal cost of the last unit to balance the market becomes the wholesale price for the NEM region).

With, say for example, a $30/t cost on emissions from generators, suddenly a combined-cycle gas turbine (CCGT) generator slips into the market to supply base load power ahead of a brown coal fired generator (as the CCGT unit’s bid will be lower than the brown coal unit’s supply price once the cost of their respective emissions are factored in). That’s how the carbon tax works on changing the fuel mix.

As for the higher cost at the other end (where the electricity is used), some of this would be absorbed into operating costs of the generation/transmission/distribution firms, while for consumers, that’s where this compensation stuff comes in (delivered by the revenue from the impost on higher emissions generators).

The basic (and non-political) reason why households get a larger share of compensation than, say, businesses: The price elasticity of household electricity demand is quite low, around -0.1 (hat tip to Julian Turecek for this figure), meaning that a 20% increase in price leads to a 2% reduction in demand.

The addition of a carbon price into the cost of electricity is unlikely to have much impact on consumption unless carbon prices were to be very high. Whereas in the case of businesses whose energy costs make up a fair whack of their total costs, the incentive to reduce consumption (e.g. by installing solar panels, replacing end-of-life equipment with new energy efficient stuff, improving insulation etc.) should be preserved. The “tax” we would then be paying is the pass-through of some of these costs into the goods and services that we buy (where incentives are greater).

Apple:

Mac user Garry Muratore writes: Re. “Why Apple will (eventually) fail — the industry guarantees it” (yesterday, item 20). John Addis wrote: “…it was Jobs’ control freakery that helped Apple lose its lead in desktop computers to the evil Microsoft in the early ’90s.”

Jobs must have been controlling the “freakiness” via telepathy, as he did not rejoin Apple until late 1996 after the acquisition on NexT, and was not appointed CEO until Gil Amelio departed in mid 1997. From 1998 Apple returned to profitability, in the main due to Job’s innovation and control.

The “lost lead” in desktops to Microsoft was probably more to do with Amelio and Spindler before him.

Inaccurate, un-researched Apple bashing is what News Ltd does well, not what I have come to expect from Crikey.

The Royal Wedding:

Dave Krantz, Assistant Editor at the NT News, writes: Re. “Media briefs: a right royal comp … Grimshaw’s mags swipe … Couric quits CBS …” (yesterday, item 17). It’s outrageous that the comprehensive NT News coverage in the lead up to the royal wedding did not get a mention. All legitimate yarns of course.

Peter Fray

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