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Sep 25, 2017


Departing Minerals Council of Australia head Brendan Pearson

In one of the more improbable moments of our peculiar economic times, it turns out you can be too pro-minerals for the Minerals Council of Australia. The head of the MCA, Brendan Pearson, has moved on after the council’s biggest member, BHP, very publicly distanced itself from Pearson’s relentless support for coal.

BHP is currently embarked on a big campaign to repair a corporate image badly soiled by constant tax avoidance, a dam disaster that killed 17 people in Brazil, bribery allegations and the trashing of $10 billion in shareholder wealth through dud investments. As part of this, last week BHP backed a Clean Energy Target and cleared its throat about continuing membership of the MCA. Within days, Pearson was gone. Easy decision, really — which would you prefer to lose, a CEO or your biggest member?

But what might be lost in the focus on BHP is that the Minerals Council has become increasingly embarrassing as a lobby group. Just this year alone, the council has:

  • Launched a campaign to call for industrial relations reform in mining despite independent data showing massive productivity growth in mining and the sector having less than half of the wages growth of the private sector;
  • Launched a campaign for nuclear power in Australia just as a major new nuclear power plant was being abandoned in the US; and
  • Launched yet another coal campaign — although this time they avoided using hard figures after Crikey busted them in 2014 for inflating the number of coal miners.

Don’t be too upset for Pearson, though. Non-senator for coal Matt Canavan has called for the boys from the black stuff to look after their man — echoing Tony Abbott’s demand before the last election that the mining industry find a job for Ian Macfarlane, which they duly did. As the Good Book suggests, we expect Pearson will be welcomed into the lobbyist afterlife by his coal masters with, “Well done, good and faithful servant!”


Sep 12, 2017


AGL boss Andy Vesey yesterday pledged to “consider” keeping the Liddell power station open for another five years, or sell it after its planned closure date in 2022 in a meeting with PM Malcolm Turnbull and Energy Minister Josh Frydenberg.

Turnbull and Frydenberg claimed the meeting as a success, but they do not seem to have brought Vesey to their side.

“Short term, new development will continue to favour renewables supported by gas peaking. Longer term, we see this trend continuing with large scale battery deployment enhancing the value of renewable technology. In this environment, we just don’t see new development of coal as economically rational, even before factoring in a carbon cost,” Vesey said in a statement.

The proposals will go to the AGL board, and the company will report back with what it decides. Delta Electricity has been touted as a possible buyer for the coal-fired power plant, but there are already Australian lessons about what could lie in store for those considering prolonging the life of Liddell after 50 years.

[Abbott’s Hazelwood intervention defies reality]

When Hazelwood power station in the Latrobe Valley was shut down in March this year, there was a last-minute push for the government to take over the plant, mainly from former PM Tony Abbott. What the push ignored was just how much money would have been required to repair the plant in order to keep it open. Five of the eight boilers were in need of repairs, with expensive boiler tubes required to be replaced by WorkSafe notices. French company Engie estimated that it would cost at least $400 million just to get Hazelwood to a point where it complied with safety requirements, and operating costs would be extra.

In Western Australia, taxpayers are counting the cost of redeveloping the Muja coal-fired power plant, only for the government to announce that it will be closing the plant in September next year. The former Liberal government under premier Colin Barnett announced in 2009 that the plant would be re-opened, at a cost of $150 million. That cost blew out by $310 million and an extra 18 months on its timeline, with the plant now to be closed anyway.

Last week Australian chief scientist Alan Finkel said the cost to extend the life of a coal-fired power station for 10 years longer than its expected life could be in the $500 million-$600 million range. AGL says it has already spent $123 million on upgrading the power plant since purchasing it from the New South Wales government in 2015, and the company anticipates it will spend another $159 million “to improve reliability at Liddell before it closes” in 2022. Problems with boiler tubes meant that the plant didn’t run at full capacity during a heatwave in February this year.

[Hazelwood closure won’t kill the Latrobe Valley — it’s already dead]

Frank Jotzo, director of the Centre for Climate Economics and Policy at the Australian National University, told the ABC yesterday it didn’t make business sense to keep Liddell open, “given the fact that keeping Liddell open by everything that we hear from the engineering experts would require major investment to keep that plan open for longer”.

Just how much, he said, was unknown. “We can’t look inside the plant and inside the company to know [how much], but the estimates that are being bandied about are half a billion upwards, perhaps up to a billion dollars investment needs to keep that plant running for perhaps an extra 10 years past 2022.”

Jotzo told Crikey that investing the hundreds of millions required to buy Liddell and keep it open isn’t attractive for energy companies.

“A really massive amount of money would need to be invested and the business case for that seems very questionable because you would need to recoup all of that investment over a five year period”

He also warned that while we can’t see what is going on within AGL when it comes to Liddell directly, we can see the effects that ad hoc intervention by governments in Australia will have on the energy sector.

“Where you have a federal government coming in and very strongly trying to force particular investment or divestment decisions … it really goes against the fundamentals of a market based system and it is really big problem for market based investors.”

“You just get a situation where you don’t know what will happen and it becomes harder and harder to make a decision because you don’t know if the government will come along again.”

Simon Holmes a Court, senior adviser at the Energy Transition Hub at the University of Melbourne says AGL is likely to report that the best option is to replace Liddell with a mix of renewables, gas and pumped hydro. With the demonstration solar thermal plant built in 2012 also located at Liddell and the existing grid connection, some of AGL’s proposal might well be on the existing Muswellbrook site.

“Liddell has been very sick for years — it’s in worse shape than Hazelwood was. Arguably Liddell has never been a reliable generator, so if you wanted it to operate it reliably for another five years you’d need to make a very significant investment, and your chances of making that back are small.”

The costs involved with replacing equipment and maintaining Liddell are at a minimum and don’t include other costs a potential buyer would have to take on — including rehabilitating the site and employee obligations when it eventually shuts down.

New South Wales

Sep 6, 2017


A recent episode of ABC television’s satire Utopia featured political spivs trying to convince the fictional Nation Building Authority to endorse anti-competitive conditions on a multibillion-dollar port asset sale. Head of that authority, Tony Woodford — played beautifully by Rob Sitch — resisted valiantly. Shortly thereafter, a newspaper review criticised Utopia thus:

“… the writers of Utopia make their point by reducing pivotal players in the policy formation process to idiots. (They) are straw men, delivering obviously untenable arguments, which guide the viewer to think no one in government knows what they are talking about. It’s a lazy critique, but the writers get away with it because the viewers are entirely sympathetic. Lampooning ‘those clowns in Canberra’ is hardly a controversial undertaking.”

If only that sniffy assessment were accurate. 

It would be better for the TV reviewer to see our “policy formation process” — in ports at least — as it is today: an altar at which we worship at our own peril.

Within a week of Utopia’s port episode airing, the full bench of the Federal Court ruled to introduce price regulation at the coal port of Newcastle, which had been privatised a few years earlier. The court ruled the port’s monopoly features — left unaddressed in the privatisation — created undue risks of anti-competitive outcomes in coal.

This decision is a bombshell for Australia’s ports, and potentially other monopoly infrastructure — especially privatised infrastructure. It confirms the ACCC’s stated intentions for greater port competitiveness:

“… what the ACCC is concerned about is governments seeking to boost one-off sale proceeds through privatisation processes at the expense of creating a competitive market structure or putting in place appropriate regulation to curb monopoly pricing. This effectively provides one-off proceeds but places a ‘tax’ on future generations of Australians”.

There might yet be an appeal to the High Court. No doubt privatisation zealots and the usual infrastructure cheerleaders will be apoplectic and cry “sovereign risk” from the rooftops. The people who bought Newcastle’s port, including organisations that look after superannuation funds, may suffer.

This is worse than the situation satirised in Utopia in several respects. In the Utopia episode, the head of the Nation Building Authority fought a good fight and saw off the worst anti-competitive elements in the privatisation agreement. In doing so, he was helping avoid the sort of decision the court has just imposed on Port of Newcastle.

It is the New South Wales government that is primarily to blame for Newcastle — not the “Canberra clowns” referred to by Utopia’s reviewer. But as culprits for port problems, Canberra is also at fault; it has been insufficiently involved in protecting constitutional objectives for ports. Far from a byword for the “policy formation process”, as far as ports and their privatisation are concerned, the federal infrastructure department has become a watchword for sloth.

Third, and by far the worst, there was no suggestion that the port satirised in Utopia would be hamstrung by trading restrictions made in secret by the government for the benefit of another private port owner. This arrangement is more easily imagined in some 1970s African dictatorship, yet it happened at Newcastle.

In real life, the private owners of Port of Newcastle — generally regarded as one of the most modern and professionally run coal ports in the world — will be hamstrung in dealing with price regulation, because the secret 50-year trade restriction on this port prevents Newcastle’s owners from diversifying revenue streams into profitable container trades for another 47 years. Such diversification would have been necessary in any event for Newcastle — a city with a population larger than all of Tasmania. It would also greatly assist in reducing congestion in Sydney.

Blocked from this solution, some might argue Newcastle’s new owners should just make savings elsewhere. Where? Over half the cost of moving a container through an Australian port lies in road freight (see successive Bureau of Infrastructure, Transport and Regional Economics Waterline reports). These costs remain the sole responsibility of road agencies to fix, yet they have been rising across Australia’s ports unchecked for years, even as stevedoring, tugs, customs fees and other costs inside the port gate have fallen. In 2012, the prime minister and premiers agreed to trials which were to occur in the hinterland of such ports to resolve these road problems. Subsequently, quietly, these trials were dropped by the road agencies.

Another win for the “policy formation process”, in which none of the pivotal players are idiots.

With help from Canberra, the New South Wales government also managed to agree to a roughly $20 billion WestConnex project, which was expected to improve freight efficiency, but which does not yet have a plan to link to Port Botany, despite passing almost past this port’s front door. Yet again, very professional port managers and truck operators as well as the community and the economy all suffer from bureaucratic sloth.

*Read the rest of this article at John Menadue Pearls and Irritations


*Luke Fraser is the founder and principal of a transport policy and investment advisory. In 2012 he was appointed to the board of the Prime Minister and Premiers Road Reform Project. Prior to this he was a national freight industry chief executive.


Aug 31, 2017


Australia isn’t the only country where coal-fired power stations are shutting down, investors are reluctant to build new ones and there are concerns about the stability of the power grid as renewables dramatically expand. The United States has a similar problem. Only, for the Americans, the shutdown of coal-fired power has been driven not by regulatory uncertainty about climate action but by the surge in shale gas production, the availability of gas-fired power plants and the failure of energy demand to resume its healthy pre-financial crisis growth.

But the current presence of a self-proclaimed saviour of coal in the Oval Office has done nothing to change the investment environment for coal-fired power. Total new projects for coal-fired power are a fraction of the capacity that’s been shut down in the last five years, and some of those projects are on hold. As one investment analyst told Scientific American, “environmental risk might not be a risk for four years, obviously referring to the presidential administration, or eight years. But when you’re building 30- to 50-year-type assets they’re certainly a high risk for carbon.”

Investors in Australian infrastructure plainly share that reservation about coal. Denialism and obstruction of climate action won’t hold sway forever. They might not even hold sway beyond late next year.

Perversely, however, that opens a window for a resolution of the climate wars. Following Labor’s shift to accept the second-rate solution of a Clean Energy Target (a carbon pricing scheme will deliver the most efficient carbon abatement, with least cost to consumers and taxpayers, but Malcolm Turnbull is too weak to deliver it), the main difference between the major parties now is whether a Clean Energy Target threshold is set at a level that excludes any coal-fired power, even much-hyped ultra-supercritical generators — say at 700 tonnes of carbon per megawatt hour — or higher, enough to allow new generation coal-fired power, say 800 tonnes.

The Finkel Review argued that the threshold be driven by Australia’s emissions abatement target — which currently is an unambitious 26-28% of 2005 levels by 2030. The political reality is that it will be driven by what Malcolm Turnbull can get through his restive partyroom. And a CET with a threshold at 800 or 830 tonnes, that notionally gave the hilariously misnamed “clean coal” technology a chance, would be much more likely to get through the partyroom even with denialists and Luddites like Abbott and Abetz raising hell.

Problem is, would Labor support it? Here’s a suggestion: Labor should back a higher target. Yes, the opposition has already compromised. No, it doesn’t owe Malcolm Turnbull anything. Yes, further compromise isn’t consistent with the bleak reality that we need to do a whole lot more than we’re doing to prevent catastrophic climate change.

But the trade-off would be no public funding for new coal-fired power. Coal would have to stand or fall on its merits. Coal spruikers insist that coal has a big role to play in our energy future. Well, let’s see if investors agree. Let the market decide if coal can play any role other than as a burdensome and toxic legacy.

It’s highly unlikely any investor will put their hand up. The maths simply won’t add up — partly because even under a high-threshold CET, coal-fired power isn’t very attractive, partly because it will take so long to build a new plant, which is likely to be beset by delays, cost blowouts and regulatory problems, and partly because investors know that a new plant may well be a stranded asset as soon as 2030, let alone by 2050.

It would be a win for Turnbull, which the opposition might want to resist, but Labor should reflect on the last time they played hardball with Turnbull on climate action, in 2009: it resulted in the removal of Turnbull, whose measure Kevin Rudd easily had, and his replacement by Tony Abbott, who proved anything but the easybeat Labor assumed he was. Labor thinks it has Turnbull’s measure again. Does it want to see him replaced by another figure — not Abbott, maybe not even Peter Dutton, but who might prove the kind of surprise Tony Abbott did?

Turnbull can tell the denialists and coal obsessives in his ranks that he’s paved the way for coal to play a role in our energy future. And he can do so knowing that few investors are likely to want to facilitate that role, but that they have a clear understanding of the rules of the energy game going forward, enabling them to invest with certainty — in renewables, in batteries, perhaps in gas if we can sort out that debacle.

It’s a compromise, but a rhetorical one only. Coal is dying.

Crikey Worm

Jul 27, 2017



One Nation Senator Malcolm Roberts is fond of making a grand show to public servants in Senate estimates hearings about the importance of transparency and showing empirical evidence to back up sound policy on climate change, but when it comes to the issue of his citizenship, we are expected to take his word for it. He has released a statutory declaration claiming that he has renounced any Indian and British citizenship (he was born in India to a British father) but he is refusing to follow the lead of other politicians in releasing the documents proving it. He claims he is concerned that the documents will be manipulated. Sounds legit.

BuzzFeed News yesterday published documents that appeared to show that Roberts had traveled on a UK passport in the mid-1950s as a child. His claim he had renounced his citizenship is also contradicted by a statement his former staffer Sean Black gave to Guardian Australia last year that the senator had only ever held one citizenship.

The farce is compounded because Roberts is intending to try to get the Senate President and the Speaker to instigate an inquiry to ensure other MPs and senators are not dual citizens. Will that include himself?


It’s still not entirely clear how LNP Senator Matt Canavan‘s mother Maria was able to get her son Italian citizenship without his knowledge. ABC Lateline host Emma Alberici (who has Italian dual citizenship) went to the Italian embassy in Sydney yesterday and was told that adults had to get their own application in, and parents couldn’t do it on their behalf. But The Daily Telegraph reports today that Italian Resident Abroad forms from 2010 — a few years after Canavan’s mother applied — show parents can apply on behalf of their children without that child’s knowledge or consent, but then quotes an official who suggests Canavan would have to be there in person to sign the form.

Canavan has shown all the documents in question to Attorney-General George Brandis and Prime Minister Malcolm Turnbull, the paper reports.

Italian citizens are eligible to vote in elections and referendums, but the Tele suggests those forms were all sent to Canavan’s mother’s place for the past 10 years. And she never thought to mention it?

For those keeping tabs on other MPs, Concetta Fierravanti-Wells has shown she renounced her Italian citizenship in 1994, while Steve Ciobo has said he never held it.


Treasurer Scott Morrison is expected to back keeping current coal-fired power stations in existence for as long as possible in a speech in Adelaide today. He will say he doesn’t believe clean coal is a solution, however.

The Business Council of Australia, meanwhile, suggests it will be very unlikely that companies will make new investments in coal, and suggests it is a myth that investing in coal would drive power prices down to levels they were at five years ago.

Morrison is also expected to take up the fight to Opposition Leader Bill Shorten on inequality, suggesting things aren’t as bad as Shorten claims them to be, and fairness isn’t about taking from those who have earned simply to even the score. Raising taxes further would be a “lazy, cynical, envy tax”.


NSW MP charged over improperly accessing electoral roll to send a letter to someone on Twitter

Cassie Sainsbury expected to take a plea deal today

NSW Labor heads for ‘untidy solution’ to Israel-Palestine support


Canberra: The trial commences for the protesters who glued their hands to seats in the House of Representatives during question time in November.

Sydney: Foreign Minister Julie Bishop, Defence Minister Marise Payne and UK Foreign Secretary Boris Johnson and UK Defence Secretary Michael Fallon will hold the annual AUKMIN talks. Johnson will deliver the annual Lowy lecture tonight.

Melbourne: Dimitrious Gargasoulas, who is alleged to have driven his car up onto Bourke Street Mall, will appear in court on an unrelated charge. AAP reports at his last appearance he “went on a strange court rant blaming ‘the illuminati’ and claiming to have been set up because he holds the key to Freemasons treasure”.

Brisbane: Stop Adani protesters will attempt to occupy the Commonwealth Bank’s offices in Brisbane.


We can’t trust Trump on trade relations — David Uren (The Australian $): “The interests of Australia and of the Asian region are best served by continuing to engage as constructively as possible with Trump and members of his team, as Bishop has been doing, while working hard to conclude a successful RCEP trade deal as a demonstration to the US that multilateralism lives.”

Timing of Matt Canavan’s Italian crisis could not be worse for Adani or Santos — Matthew Stevens (Australian Financial Review $): “As resources minister, Canavan has been a fierce advocate of the Adani project. And, while he was the man with ministerial authority over NAIF, Canavan appeared to be in prime position to be able to translate that general support into something much more targeted and tangible.”

Citizenship rules make no sense since most of us come from somewhere else — Peter Martin (The Age): “We’re all of us a bit foreign, apart from the few First Australians whose families have avoided intermarriage. There’s room for debate about the size of Australia’s population, but not room for debate about whether we are Australian.”


With a tap of his all-powerful “Tweet” button, Donald Trump has fired the first shot in a new American culture war. Across three tweets this morning, Trump announced that “the United States Government will not accept or allow…” “….Transgender individuals to serve in any capacity in the U.S. Military.” The pause between the first and the second tweets left some at the Pentagon waiting anxiously, fearful the president was about to launch a military strike on North Korea.

In 2016, the Obama administration allowed transgender people to serve openly, and there are now thought to be at least 2500 and as many as 15,000 transgender soldiers doing so. White House press secretary Sarah Huckabee Sanders was coy about what would happen to these people, and threatened to shut down her briefing as reporters continued to probe on the topic.

Trump cited health costs as a justification for the move but, as The Washington Post noted, the US military spends five times as much on Viagra as it does on medical care for transgender troops. In fact, it seems the announcement was an effort to win over conservative House Republicans, as the White House barters support for its legislative priorities.


A confidential UN report has accused Saudi Arabia of being responsible for a helicopter attack on a boat carrying Somali migrants that left 42 people dead. The March attack occurred off the coast of Yemen, where Saudi Arabia has taken a major role in combating the Iranian-supported Houthi insurgency. — Reuters

The European Union has voiced concerns about a bill passed by the US House of Representatives that would put Russia under new sanctions. EU Commission President Jean-Claude Juncker warned that if passed by the Senate and signed off by the president, the sanctions could threaten European energy supplies. — BBC

Just in case you haven’t been driven crazy by auto-play videos in Fairfax articles and on your Facebook timeline, Google has also started experimenting with the notoriously irritating feature. Some searches that return a video result are now allowing the clip to play automatically. — The Guardian


What happened in Ohio proves that Trump is only going to get worse (Mother Jones): “At this point, the idea of a maturing, pivoting Trump sounds foolish. (In truth, it always was.) But that doesn’t mean Trump can’t change. As his prospects grow bleaker and bleaker, the last 12 hours suggest his cultural power plays may grow darker and darker, too.”

An overdose, a young companion, drug-fueled parties: The secret life of USC med school dean (LA Times): “In another (video), Puliafito uses a butane torch to heat a large glass pipe outfitted for methamphetamine use. He inhales and then unleashes a thick plume of white smoke. Seated next to him on a sofa, a young woman smokes heroin from a piece of heated foil.”

The lonely crusade of China’s human rights lawyers (New York Times Magazine): “For lawyers who veer into sensitive areas of the law, the pressure is applied slowly; it begins with a simple invitation to tea from the police. What kinds of cases are you working on? an officer asks. Do you know what your colleague has been up to lately? How are your children finding their new teacher?”

Man in the middle (The Weekend Australian Magazine): “I resented the pressure not to report what I saw; I was covering the Middle East as an Australian journalist in the belief that events should be reported as you find them.”


Tips and rumours

Jul 20, 2017


From the Crikey grapevine, the latest tips and rumours …

Fifield addresses NBN’s coffee addiction. Communications Minister Mitch Fifield has rounded on the NBN in a humorous speech to the telecommunications industry last night. In a nod to Prime Minister Malcolm Turnbull’s Donald Trump impression at the Midwinter Ball, Fifield acknowledged that the speech could be leaked, but he would still do his best to continue the tradition of a roast with the ACOMM Awards address.

In reference to the $437,000 spent by NBN Co on coffee machines, Fifield also announced the Telecommunications Act amendment “Pay for Your Own Coffee, Bill, Bill 2017”. NBN Co’s CEO is Bill Morrow. Fifield said all coffee machines would be removed from the offices and there would be two components to coffee pricing:

“The AVC, or Aggregated Virtual Coffee charge, which would be calculated according to the size of the coffee cup, and also the CVC, or the Calculated Virtual Coffee charge, which would be calculated according to how much coffee is actually poured into the cup.”

Staff would no longer be able to buy coffee from the cafe, and the charges would be regulated by the ACCC, Fifield joked.

“Before anyone accuses the government of introducing new regulations just to support the business model of one provider, it must be remembered that NBN Co’s unsustainable coffee costs are all a result of the gold-plated coffee machines installed by the NBN under the previous Labor government.”

Labor’s Michelle Rowland and Ed Husic also attended the awards, but Fifield said Greens communications spokesman Scott Ludlam was an apology (probably because of his resignation).

Rewriting history. Is the history of the Eureka Stockade about to become another front in Australia’s culture wars? The Institute of Public Affairs has released research saying that the trade union movement shouldn’t claim the uprising in the Ballarat goldfields as part of their history, as it was really about individual workers wanting lower taxes — more like Australia’s own Boston Tea Party (and we know how claiming the history of that has gone in the US). In a release today about the video “Australia’s Own Tea Party Revolution” the IPA’s Dr Bella d’Abrera says: “The battle that won Australians the right to vote was a revolt against higher taxes”. We wait to see if it catches on.

Hello, sweetie. The internet reacted with a mixture of elation and fury this week to the news that the new Doctor Who would be played by Jodie Whittaker. One of the most famous fans of the British time-travelling series is Queensland LNP MP George Christensen, who has even campaigned to have episodes of the show filmed in Australia. We wanted to get Christensen’s view on Whittaker’s selection, as it is well known that all Whovians have strong opinions on their favourite Doctors. Christensen’s staff told us he didn’t have time to give us his assessment as he is travelling and dealing with more pressing matters. All we have to go on is this Pinterest-worthy tweet: “Time will tell. It always does.”

Coal is dead (well, deader than it already is). Brace yourselves, Malcolm Turnbull, Barnaby Joyce, Tony Abbott and Matt Canavan: someone is going to say something really negative about coal. Rail Group CSX, one of America’s biggest carriers of coal, reported its second-quarter profit overnight Wednesday, and its high-profile CEO Hunter Harrison says fossil fuels have no future. So certain of this was he, that he told analysts CSX will not buy another rail locomotive to pull coal trains.

“Fossil fuels are dead,” Harrison said. “That’s a long-term view. It’s not going to happen overnight. It’s not going to be in two or three years. But it’s going away, in my view.” He’s not saying CSX will not stop carrying coal, but it won’t be investing in the business from now on. In the US context, it’s not great news for US President Donald Trump, who in his Make America Great campaign promised to put “an end to the war on coal”. The White House is attempting to revive the American coal industry by dropping environmental regulations and abandoning the Paris climate agreement. Big business isn’t listening, even those making money out of coal.

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Tips and rumours

Jul 10, 2017


From the Crikey grapevine, the latest tips and rumours …

How to act presidential. There are some professions and areas of business where accusations of sexism would hinder one’s career aspirations and upward mobility. The Young Liberal movement is not one of those areas. Ms Tips hears that Xavier Boffa, the president of the Melbourne University Liberal Club who told a woman she was not invited to a club event because it would make some of the men uncomfortable, has now been elected president of the Australian Liberal Students Federation. The ALSF is the national body that links university Liberal clubs and counts many prominent MPs among its former members. In April The Age reported one of the women in the Melbourne University Liberal Club said Boffa had sent her a text saying he hadn’t invited her to an event because “a couple of the guys were a bit uncomfortable about inviting a chick”. Boffa confirmed to Fairfax that he had sent the message. Then vice-president of the ALSF Blake Young said “the sort of rubbish we’ve heard from Xavier’s comment is the sort of thing we’ve tried to expunge”. But, as is becoming increasingly obvious, this kind of thing isn’t expunged, and it is no barrier to gaining seniority.

G20 At Bernie’s a hit. While the government and journalists scramble to pretend the G20 meeting actually achieved something, we noted with pleasure that we’re continuing our Weekend At Bernie’s-style effort to claim Australia’s most famous contribution to the annual talkfest is still alive. Back in 2014, when Tony Abbott hosted the G20 in Brisbane (that’s the meeting where Abbott’s promise to “shirtfront” Vladimir Putin never materialised, and people like Barack Obama enraged Abbott by insisting on saying climate change was real), the government boasted about our achievement of obtaining a G20 commitment to 2% growth. This always struck us as reminiscent of governments that, having run out of ideas, go to an election on a campaign slogan like “Go for growth”, as if they normally “go for recession” but had changed tack. The 2% commitment was dead in the water before the leaders had even left Brisbane, but Mathias Cormann is on the waterskis desperately trying to pretend it’s alive, reporting over the weekend that the G20 had achieved a mighty 1.2% growth. Better yet, it was so successful, the G20 has “enthusiastically and unanimously endorsed” a suggestion by Cormann that another growth target be set at next year’s meeting. Some advice for our Finance Minister: Weekend At Bernie’s 2 was a dud.

Ready for his close-up? Prime Minister Malcolm Turnbull has been having a great time posting photos of himself and all his international besties at the G20 forum over the weekend, but we couldn’t help but notice a bit of a pattern. While there’s a photo of him taking a selfie with Canadian PM Justin Trudeau, some happy snaps of Turnbull, his wife, Lucy, and French President Emmanuel Macron and his wife, there’s no such selfie with US President Donald Trump. We know after that phone call, that Turnbull and Trump aren’t great mates, but has the passive aggression been turned up a notch between the two leaders? Whenever Trump features in Turnbull’s pics on social media (generally taken by his official photographer, Sahlan Hayes), he is generally not looking his best. In one photo on Instagram, Trump seems to be in the middle of saying something, while in another posted to Twitter he is also caught mid-sentence. It’s the kind of power play teenage girls would make — is it too much to suspect it of the PM’s social media team?

No ‘coal bias’ at your ABC. Won’t somebody please think of the coal? That’s what right-wing backbench Senator Eric Abetz wants to know. In Senate estimates in May, Abetz asked why the ABC had reported “with glee” about the decline in coal prices, but not about the rise in coal prices. In response last week, the ABC stated that a 2016 review found that it is “the ABC’s responsibility to reflect the world as it is” and that coal mining and commodities had been in a downturn.

The ABC then pointed to several news articles since where the public broadcaster had — contrary to Abetz’s claims — reported on the rebound in coal prices. There are more links here, here, here and even here if Abetz is lost.

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Jun 26, 2017


Commonwealth Bank of Australia CEO Ian Narev

Are you partying like it’s 2010? Because sovereign risk is back, people, big time. We haven’t seen “sovereign risk” (or, as ordinary people call it, democracy) invoked so much since Labor’s mining tax, which was supposedly going to bring the mining boom to a crunching halt as investors fled to Zambia, Ghana and Mozambique.

Today, The Australian Financial Review, or as we know it, the Sovereign Risk Times, carried a warning from Commonwealth Bank head Ian Narev that sovereign risk is increasing “exponentially” in Australia (yes, that fast!) and worried investors now viewed the country as an uncertain investment environment. All over one perfectly sensible bank tax, and a second not-so-sensible and much smaller one — like most spin-offs, South Australia’s bank tax is a dud and getting bad reviews, although the way the banks are carrying on, you’d think it was Joanie Loves Chachi.

Those “sovereign risk” sentiments chime with those of mining giant Glencore, which at the end of May warned “the investment environment in Australia has materially changed” and that uncertainty, including uncertainty about energy suppliers, might force it to leave Australia.

Fortunately, some investors are still prepared to invest in Australian assets in the energy and resources sector. Rio Tinto is currently enjoying a bidding war for its New South Wales coal mines. It fielded an early offer from Chinese giant Yancoal, but there’s another giant that has entered and turned the sale into an auction, plainly unconcerned about the lack of certainty in Australia. And that’s … Glencore.

See, Rio wants out of coal (plainly it doesn’t share the optimism of the government about coal’s major role in the of Australia and humanity in general). Chinese group Yancoal made an offer for the assets a few months ago with a staged payment system totalling US$2.45 billion. Just over two weeks ago, Glencore popped up with an offer of its own of US$2.55 billion. Rio thought about that bid and then knocked it back, claiming the Yancoal bid offered more certainty (Rio’s biggest shareholder is Chinese aluminum company, Chinalco, Rio sold the Simandou iron ore project in Guinea to Chinalco, and it has the Stern Hu debacle in the background of its dealings with China — in other words, Rio is very sensitive about alienating China).

But on Friday night, Glencore upped its offer to US$2.67 billion (over A$3.5 billion) all paid upfront. And to sweeten the deal further, Glencore said it would pay Rio $US225 million if the deal was blocked by regulators here or overseas. Yancoal has only offered US$22 million. Rio is currently thinking about the offer.

As usual when it comes to cries of “sovereign risk”, it pays to ignore the bleating of companies — especially mining companies — and keep an eye on where the money is going.


Jun 15, 2017


At least one climate denialist is prepared to admit the truth of their position on electricity. Far-right Queensland MP George Christensen wants governments to return to the power-generation industry and build coal-fired power plants.

We knew they hated market-based policies and preferred big government — thus the loathing of a carbon price, and its replacement with Direct Action, under which bureaucrats picked winners to get handouts. But Christensen has gone the full socialist, with governments building and owning industry.

That’s where you end up when you back coal-fired power, but investors are not prepared to do the same. Investors won’t put their money into coal, but Christensen et al will happily put your money into coal.

How much would it cost? New ultra-supercritical “clean coal” plants cost a couple of billion dollars a go, at least. But you’d need a lot of them, especially if you wanted to meet the carbon emissions abatement goal to which Tony Abbott committed Australia when prime minister, because no matter how many prefixes like super, ultra, advanced, hyper and mega you put in front of these plants, they still produce a lot of emissions, meaning there are only limited net reductions from taking existing coal-fired plants offline and replacing them with new ones.

How much would taxpayers be up for? Earlier this year, Dylan McConnell of the Melbourne Energy Institute had a crack at estimating the cost of achieving the kinds of emissions reductions claimed for clean coal by Coalition coal spruikers like Matt Canavan, which are around 27%. In McConnell’s estimate, you won’t get any change from $60 billion.

[Matthewson: Turnbull should crash through on Finkel — he’s crashing anyway]

And that wouldn’t come from the capital account of the budget — it would go straight onto the budget deficit bottom line. Unless the coal spruikers decided that consumers and business must pay high enough prices to recover the full cost of all those billions, plus a small return on the investment — which would entail dramatically higher prices than available from renewable energy sources.

And the costs of coal-fired power would be even higher than that because it is an inflexible power source, unable to ramp up when energy from renewable sources drops at night or when there’s no wind. Leaving these new plants not running part of the time would drive prices up even more. Which Green MP or radical sandal-wearing leftist claims that? Erm, the employer peak body Australian Industry Group’s Principal National Adviser.

Of course, that problem could be addressed by taking renewable sources of power offline so that coal-fired power could operate continuously without needing interruptions for intermittent sources. That would bring the per MW/h cost down a little. But then you’d have to replace all that renewable capacity you’ve removed with still more new coal-fired stations. More cash please, taxpayers! Plus a few billion in compensation for the operators of renewable energy sources whose plants you disconnected.

You’d also have to ban renewables altogether. After all, they’ll be cheaper — probably significantly cheaper — than coal-fired power and businesses and consumers might prefer to use them. But then they’d compete with the government’s new coal-fired power supplies and recreate the ramp-up problem you had before you took all the renewable sources out of the grid. So best just to ban all non-coal-fired power.

That’s the proper Soviet way, of course: government controls everything, private enterprise not allowed.

Or you can build the things and run them at a loss, pumping out carbon emissions when no one needs their power, watching them become ever more obsolete as other energy technologies get cheaper and cheaper, a vast dead weight on the budget papers.

If Christensen and Co. really want to go down the Soviet path, they can do it far more efficiently and effectively: simply force LNG exporters to provide enough gas to the east coast energy market to drive gas-fired power prices down to an affordable level. Gas-fired power is far more flexible than coal, has much lower emissions, and — best of all — it’s a fossil fuel as well, so there’s no concern about those filthy renewables. And you don’t have to ban anything except LNG exporters selling gas at an international price.


Feb 27, 2017


Just like his broadband policy, Prime Minister Malcolm Turnbull has said he wants energy policy to be technology neutral. Perhaps he should re-examine his broadband policy before embarking on clean coal projects.

When Turnbull kicked off his 2017 by targeting Labor on energy prices and security, he said the government needed to be technology agnostic — meaning coal was just as good as wind farms and gas and solar. Or as Barnaby Joyce put it, he treats every electron as equal.

The line was familiar for anyone who had covered Turnbull back in the day when he was shadow communications minister because it was the exact same approach he adopted for broadband. Rather than continue the future-proof fibre-to-the-premises project, the Coalition decided to put a stop to it and to try to use a mish-mash of technologies to achieve faster (than currently available) broadband quicker, and at a lower cost. Labor is made of “fibre zealots” who only want one particular type of technology while the Coalition’s approach meant NBN Co could choose whatever worked best in a particular area.

[Essential: it’s agreed — NBN officially a dud]

Some components of his proposal, like the Optus and Telstra cable networks, could be upgraded quickly and everyone would be on it by the end of 2016, he claimed. In reality, it has been nowhere near as simple. The process of investigating alternatives that ultimately haven’t panned out has cost the company millions of dollars and delayed the promised upgrade by years.

In the company’s half-year report earlier this month, NBN said that the Telstra component of the cable network was only made commercially available in June this year, and that as of the end of December last year, is available to just 158,938, with only 14,615 houses actually connected to it. A far cry from the more than 3 million Turnbull had promised in opposition.

Worse still, as the leaked documents that led to an AFP raid on ALP headquarters during an election campaign revealed, the Optus cable was just simply not up to the job — something predicted by technology advocates before the election but ignored by Turnbull in his pursuit of the technology-neutral approach. NBN had wasted years and millions on it.

In response to a recent question on notice from estimates, NBN revealed it had spent $4.2 million on its trial for the Optus cable it ultimately abandoned. Some 24,000 homes will still be connected on this network, but another 95,000 will now instead be connected by a different type of technology. As of the end of October last year, just 4000 homes were accessing the internet on this service. That $4 million isn’t a huge amount in the context of a $50 billion network, but it raises questions about what the company could have achieved if it hadn’t been so focused on being “technology neutral”.

[NBN tax paves way for privatisation]

The cable network was supposed to be the easiest component of the network upgrade, according to Turnbull, but it now appears to have been one of the most complex.

Given the reluctance to fund the construction of new coal-fired power plants, and the potential high cost in retro-fitting existing coal power plants to be “clean”, the government could find itself having to put up the cash to fund the project — just like it did with NBN — and being left with something that just isn’t up to the job, just like the NBN.

In the NBN debate, Turnbull did his best to reframe it from being a debate about what technology would suit Australia in the future to one about what is the fastest way to improve Australians’ internet access today. The energy debate is headed in a similar direction. Invest in renewable energy for Australia’s long-term future, or focus on the immediate need for cheap and reliable power through risky investment in retrofitting old technology.