Thursday, May 31, 2012

The carbon tax will cost how much?

Me on ABC Adelaide 891, Wednesday May 30

11 minutes, play or CLICK THEN CLICK AGAIN to download mp3




Summing up the Treasury modelling:



Some detail:


Table 1: Price impacts for a $23 carbon price in 2012‑13*
CPI subgroup
Contains
Average price impact
($ per week)
Price Impact (Per cent)
Dairy and related products
Milk
<0.10
0.4

Cheese

Ice cream and other dairy products
Bread and cereal products
Bread
<0.10
0.4

Cakes and biscuits

Breakfast cereals

Other cereal products
Meat and seafoods
Beef and veal
0.10
0.4

Lamb and mutton

Pork

Poultry

Bacon and ham

Other fresh and processed meat

Fish and other seafood
Fruit and vegetables
Fruit
0.10
0.4

Vegetables
Non‑alcoholic drinks and snack food
Soft drinks waters and juices
0.10
0.4

Snacks and confectionery
Meals out and takeaway foods
Restaurant meals
0.20
0.4

Takeaway and fast foods
Other food
Eggs
<0.10
0.4

Jams, honey and sandwich spreads

Tea, coffee and food drinks

Food additives and condiments

Fats and oils

Food  — not elsewhere classified
Alcoholic drinks
Beer
0.10
0.2

Wine

Spirits
Tobacco
Tobacco
<0.10
0.2
Men's clothing
Men's outerwear
<0.10
0.2

Men's underwear, nightwear and socks
Women's clothing
Women's outerwear
<0.10
0.2

Women's underwear nightwear and hosiery
Children's and infants' clothing
Children's and infants' clothing
<0.10
0.2
Footwear
Men's footwear
<0.10
0.2

Women's footwear

Children's footwear
Accessories and clothing services
Accessories
<0.10
0.4

Clothing services and shoe repair
Rents
Rents
0.40
0.6




Utilities
Electricity
4.60
7.9

Gas and other household fuels

Water and sewerage
Other housing
House purchase
0.90
0.6

Property rates and charges

House repairs and maintenance
Furniture and furnishings
Furniture
0.10
0.4

Floor and window coverings

Towels and linen
Household appliances utensils and tools
Major household appliances 
0.20
0.8

Small electric household appliances 

Glassware, tableware and household utensils

Tools
Household Supplies
Household cleaning agents
<0.10
0.3

Toiletries and personal care products

Other household supplies
Household Services
Childcare 
<0.10
0.3

Hairdressing and personal care services

Other household services
Health services
Hospital and medical services
0.10
0.3

Optical services

Dental services
Pharmaceuticals
Pharmaceuticals
<0.10
0.3
Private motoring
Motor vehicles
0.40
0.3

Automotive fuel

Motor vehicle repair and servicing

Motor vehicle parts and accessories

Other motoring charges
Urban transport fares
Urban transport fares
<0.10
0.5
Communication
Postal
0.20
0.5

Telecommunication
Audio, visual and computing
Audio, visual and computing equipment
<0.10
0.4

Audio, visual and computing media and services
Books, newspapers and magazines
Books
<0.10
0.3

Newspapers and magazines
Sport and other recreation
Sports and recreational equipment
0.20
0.3

Toys, games and hobbies

Sports participation

Pets, pet food and supplies

Pet services including veterinary

Other recreational activities
Holiday travel and accommodation
Domestic holiday travel and accommodation
0.30
0.5

Overseas holiday travel and accommodation
Education
Preschool and primary education
<0.10
0.3

Secondary education

Tertiary education
Insurance services
Insurance services
<0.10
0.3
Other
**
0.90
**
Total Expenditure

9.90
0.7
*Note: estimating the impact on household goods and services has been undertaken across broad product categories and the estimates represent the average price impact across each category. Within each category there will be a range of goods with different levels of direct and indirect emission intensity, for instance due to the source of the electricity used in the production of a particular company or for a particular type of good.
** The ‘other’ category is comprised of a range of household expenditures expected to increase in price by around a quarter of a per cent, which represents an average increase in prices for services across the general economy. Analysis of these products is difficult due to data limitations — many of these products are not included in the CPI basket of goods and services, for example — such that specific price increases cannot be determined. Examples of these products include life insurance premiums, fees for some financial services, gambling and outright purchases of dwellings.
Source:  Treasury



Carbon Price Claims - Guide for Business




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Wednesday, May 30, 2012

The ABS cull - the stats headed for the tip

Have your say, before it's too late

Job vacancy figures, capital expenditure figures and building approval counts are set for the chop in a major shakeup of what the Australian Bureau of Statistics does, one it says will concentrate its work on “essential” statistics at a time of “shrinking real resources”.

Others with an uncertain future include disability services, house price indicies and motor vehicle sales. Details are at the National Statistical Service website: nss.gov.au Submissions are due by September 14.

In today's Age

UPDATE: The ABS today.

Good afternoon,

You may have noticed reports in some sections of the media today suggesting that a range of official statistics, including economic statistics, may be under threat as part of the Essential Statistical Assets for Australia initiative that was released yesterday by the ABS. The purpose of this note is to reassure that there are no plans to cut any ABS or other statistics as a result of this initiative.

The aim of the initiative is to identify a small core set of statistics to target for potential future investment because of their broad application and critical use for decision-making.

Clearly, the wider range of official statistics produced and used across Australia are still important. They will continue to be so, and will continue to be produced, managed and invested in.

The list released this week is a preliminary one, aimed to generate discussion and debate and we'd welcome your input. Further information about the initiative and how to contribute to the discussion can be found on www.nss.gov.au



HERE'S THE SHORTER LIST:







The ABS Hit List- Consultation Paper



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Build the NBN if you must, but please don't destroy working assets

Wednesday column

The Optus high speed cable internet network is a national asset. Comprising 25,000 kilometres of coaxial cable strung across 550,000 poles in Sydney, Melbourne and Brisbane supported by 7000 kilometres of fibre the provided Telstra with its first genuine competition, putting its own wires direct into half a million homes.

Telstra fought back with FoxTel, Optus got burnt and has probably never recovered the cost of stringing the cables. But from an economic point of view what’s important is that the asset exists. Its costs have been sunk. What Optus has now is an asset that costs relatively little to operate and can deliver peak download speeds of 100 Mbps - far faster anything on Telstra’s copper wires.

Right now it has 496,000 customers. It is within connecting distance of another one million meaning that for very little cost Optus or a buyer of the network could provide a very fast very cheap internet service to as many as 1.4 million households - a service far faster than ADSL.

Only a vandal would destroy such an asset. Only a seriously confused regulator would allow it happen.

NBN Co has asked the Australian Competition and Consumer Commission to let it pay Optus a reported $800 million to shut the network down. The only precedent for the destruction of infrastructure on such a massive scale is the $4 billion NBN Co is to pay Telstra to rip out its copper network, transfer its customers to the national broadband network and remove the internet from the cables it uses to deliver FoxTel.

In no other industry would the ACCC approve such an agreement not to compete. In no other industry would it countenance a bribe to decommission working infrastructure.

Mid last year it approved the Telstra deal. This week it published a draft decision approving the Optus deal.

In terms of national assets the Optus decision is arguably worse than the Telstra decision...
Telstra will decommission its copper phone lines street by street as the NBN cables are switched on. While there will be a loss of competition, copper probably isn’t able to compete with fibre over the long-term. By contrast the Telstra and Optus coaxial cables are as good as new. They were strung up in the last half of the 1990s. They are already fast and capable of being made faster. They cost almost nothing to maintain. They are something that should not be destroyed wantonly.

The Telstra coaxial cables won’t be. It has only agreed to disconnect the internet from them. It could put it back as soon as changed legal or political circumstances allow. The Optus coaxial cables are scheduled for destruction. The ACCC’s decision will have physical consequences. It should not be taken lightly.

And yet the ACCC gives every indication that its decision could have gone either way. It was “finely balanced”, according to chairman Rod Sims in Monday’s statement.

Its decision to approve the agreement was based on weighing carefully “clear public benefits” against “a potentially large but less clear detriment”.

The main “clear benefit” is odd. The Commission says the agreement will “avoid the cost of operating the Optus network to provide a service the NBN is also able to provide”. Would we apply it elsewhere? Should Virgin shut down its airline network to avoid the cost of operating a service Qantas is also able to provide? Should Woolworths shut down its network to avoid the cost of operating a service Woolworths is also able to provide? Of course they shouldn’t. We normally value competition.

Some will argue that wiring up houses is different. Frontier Economics, the consultant used by Optus in its submission to the ACCC says fixed broadband services are a natural monopoly - they shouldn’t be provided twice. But Optus cable network is already in place. It costs next to nothing to keep it in place. It is NBN Co which is planning to duplicate it. Given its plans and the rate at which it is duplicating infrastructure right now, its complaint against “inefficient infrastructure duplication” is simply strange.

In truth is competition that worries NBN Co, not inefficiency. It is paying $800 million to remove a competitor, not out of a public concern about inefficiency.

With its last big fixed line competitor out of the way the only market restraint on its prices and quality of service will be wireless internet, and it’s on to that as well.

The Optus agreement given a preliminary tick by the ACCC prevents Optus from advertising wireless data services within the area served by its existing cables in a way which is “expressly critical of or makes any express adverse statement about the performance or functionality of the NBN where such a statement is misleading or deceptive or involves the making of a false or misleading representation in contravention of the Australian consumer law”.

The ACCC waived it through because it essentially meaningless, requiring Optus to do no more than obey the law. But it indicates how deeply concerned NBN Co is at the prospect of competition, or as it puts it “cherry picking”. Competition would force it to provide value, and its national pricing structure would force it to provide it to all Australians. Its $36 billion cost base won’t allow it. That’s why it needs to destroy perfectly good working infrastructure. It’s why I think the ACCC needs to think again.

In today's Sydney Morning Herald and Age


RELATED READING: Why the ACCC should NOT authorise the NBN-Optus arrangement
Former ACCC Commissioner Stephen King


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Monday, May 28, 2012

Why not rush to the polls? Two theories on best for labor



Strategy 1:

Labor will get slaughtered whatever happens. The Coalition is likely to win control of the Senate as well. The best way to stop this is to call a House of Representatives election as soon as possible this year (after changing labor leaders) so the Reps election is not held with the Senate election.

The Coalition will win in the Reps, begin implementing its program, become unpopular, and then probably not win control of the Senate when the half Senate election is held as scheduled next year.

Labor will be better off than if it had waited.

For this to work Labor would need to deny Tony Abbott the opportunity to call a double dissolution by ensuring none of his bills were blocked, which would mean voting in favour of bills to repeal the carbon tax and the mining tax (because “the people had spoken”).


Strategy 2:

Applying Strategy 1 will mean the carbon tax will scarcely operate. It’ll be abolished just after it begins and the public discover that it is not so bad after all. It will forever go down in history as a bad idea.

If instead Labor waits out its full term until late next year the public will have had a year to evaluate the carbon tax and might just find Tony Abbott was scaremongering when he said it would destroy Whyalla, kill the mining “stone dead” and so on. Few people would want to bother removing it (just as one year on few people wanted to bother removing the GST).

Furthermore, although half the Senate would be elected with the Reps in late 2013, the new Senators would not take office until July 2014 -- two years into the carbon tax, and more importantly only one year away from 2015 when it is legislated to be replaced with an emissions trading system (which will probably have a lower carbon price).

Relief will be at hand. Anger over the carbon tax will be old hat. Abbott might even have second thoughts about resubmitting to the Senate bills to abolish it.

In any event the history books will record that it was a good reform, killed by a zealot, rather than a bad one killed by the people.


Mmmm...




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Why is Gina importing workers direct? Because we won't go there

COMMENT

Why was Gina Rinehart given special government approval to bring around 1700 foreign construction workers to Western Australia’s remote Pilbra? Because Australians won’t go there - not in big numbers, no matter how big the mining boom.

The Bureau of Statistics says in the past financial year a net 6163 Australians crossed the Nullarbor to live in Western Australia. That’s a trickle of just 18 Australians per day - slap bang in the middle of the biggest mining boom in a century.

By contrast a net 30,800 overseas migrants streamed into Western Australia - 84 per day. The new workers servicing Western Australia’s mining boom overwhelmingly come from overseas, not because Australians can’t move to Western Australia (there are no legal restrictions on movement between states) but because Australians won’t.

So fast is direct overseas migration to Western Australia swelling that in the most recent quarter for which figures are available Western Australia welcomed almost as many net migrants as NSW, Australia’s traditional gateway.

Asked Friday why when workers were being laid off in eastern states there was any need for Western Australia to import its own an exasperated special minister of state said he would “love workers to come to Western Australia from across the Nullarbor”...

Sadly, “the reality of the Western Australian resources sector is we tend to carry out more successful recruitment across the Indian Ocean than we do across the Nullarbor,” said Gary Gray.

Before taking up his current role as special minister of state Mr Gray was the parliamentary secretary for western and northern Australia. In 2010 he presented the report that recommended the creation of Enterprise Migration Agreements.

The problem it found was huge undersupply of the skilled workers needed to build resource projects, made all the worse because Australians were reluctant to head west. Enterprise Migration Agreements weren’t a particularly important part of the solution. The important things were skilling up Australians, funding a fly-in fly-out coordinator and building affordable housing.

For most projects the existing so-called 457 visas worked well in sourcing skills from overseas. But for a small number of “mega” projects an enterprise agreement struck ahead of time could ensure there was a project at all.

Gina Rinehart’s Roy Hill project is the first. It is unlikely to deprive Australian workers of their jobs.

In today's Sydney Morning Herald and Age



Me on JJJ Hack, Monday May 28:

6 minutes, play or CLICK THEN CLICK AGAIN to download mp3





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