Where states' rights stop. The environment

I am a big believer in states’ rights, but you’ve got to know where to stop.

If there’s one thing the Abbott government’s Commission of Audit got right it’s that our system of eight separate states and territories is a strength rather than a weakness. It ensures that our decision-makers ride the same trams, use the same schools and get treated in the same hospitals as the rest of us.

And they compete with each other. Victorians are always looking north, south and west to pick out the best of what’s happening elsewhere. Western Australia tried out industrial relations reform before we did, South Australia gave women the right to vote and stand for office, Tasmania was a lone beacon for many years on daylight saving and Victoria led the way in making seat belts and helmets for motorcyclists compulsory.

By completing, each state strengthens the whole. If an innovation in one state doesn’t work, it stays there and doesn’t damage the rest. If it does work, it spreads and makes the rest stronger. A paper commissioned by former premier Steve Bracks for the Council for the Australian Federation described Australia as a ship with eight separate watertight compartments: “When a leak is sprung in one compartment, the cargo stowed there may be damaged, but the other compartments remain dry and keep the ship afloat”, it said.

In contrast the single national school curriculum proposed by Julia Gillard could have put us on the wrong track for years. One of its selling points was that individual states didn’t deviate. Yet it built on the deviations they had made to date, such as NSW striking out on its own and making Australian history compulsory in high school. Without experimentation the curriculum would have become weaker.

But you’ve got to know where to stop.

Malcolm Fraser put a stop to states rights over the environment almost 40 years ago. A big believe in states rights himself, as Coalition prime minister he overrode Queensland to end sand mining on Fraser Island. Seven years later Labor’s Bob Hawke went all the way to the High Court to override Tasmania on its plan to dam the Franklin River. They did this because national assets such as the Great Barrier Reef and the Tasmanian wilderness belong to all of us. They matter to all of us, and not just to the citizens of states keen to attract industry and earn mining royalties.

Twenty years on John Howard introduced the Environmental Protection and Biodiversity Conservation Act. It declared once and for all that the Commonwealth as well as the states had a legitimate interest in the environment within their borders, and between their borders. Migratory birds, groundwater and the Murray Darling River system don’t respect lines on maps.

The Howard government banned broad-scale tree clearing in Queensland, expanded to 33 per cent the proportion of the Great Barrier Reef protected from fishing, and took control of the Murray Darling Basin.

Its Labor successor tried to stop cattle grazing in Victoria’s Alpine National Park, something Abbott’s environment minister Greg Hunt has since approved.

But until now no Australian government has seriously countenanced the proposition that the environment was a matter solely for the states. Even the Gillard government, which experimented with devolution in an effort to counter “green tape”, gave up after it realised state governments wouldn’t impose the same high standards as the Commonwealth.

Now the Abbott government is legislating for what it calls a “one-stop shop”...

Billed as a “major step forward in the government's commitment to reduce red tape” the law would devolve responsibility for environmental approvals to “the most appropriate level of government”.

Abbott and Hunt believe the appropriate level is state government, and if it chooses to delegate, local government, raising the spectre of at least eight “one-stop shops”, each with different approval processes and none of them necessarily inclined to protect the national environment.

Peter Cosier of the Wentworth Group of Concerned Scientists put it this way in evidence to the Senate last week: “I have actually worked in local government, I am a fan of local government. They have a very important role to play. I cannot imagine many local councils, though, would accept that they have a mandate to make a judgement as to whether or not something affects a matter of national environmental significance.”

The Commonwealth has already signed draft agreements with NSW, Queensland and Western Australia to devolve its powers. It says it will retain “call-in powers” which it can use to override states about to approve something that will cause serious or irreversible environmental damage. But the rules say they’ll have to be used before the state makes the decision. And under the law they’ll have little ability to monitor the decisions the states are about to make.

The Wentworth Group said it was aware of no other countries that delegated environmental approvals in a similar way.

Perhaps we can trust the Queensland government to protect the Great Barrier Reef, even though its premier Campbell Newman says Queensland “is in the coal business”. Perhaps we can trust South Australia not to destroy the Great Artesian Basin, even though it is desperately short of money and anxious for mines. But state governments are elected to pursue state rather than national interests. That’s why we have them.

The environment is a national interest. The tragedy of Abbott’s legislation is that if he is office long enough it will come back to bite him. Australians will hold the national government to account for what happens to the Australian environment whether or not it tries to claim it has passed the responsibility to somebody else.

In The Age and Sydney Morning Herald

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Dumbing down the ABS. Like driving at night dimming the lights.

We’re mining our socks off. And that’s good, right? In the first ten months of the previous financial year we moved $46.2 billion of iron ore. In the first ten months of this one we moved $64.3 billion.

The surge is putting GDP back on track. This time last year our gross domestic product was growing at an annual pace of 2.5 per cent. Now it’s 3.5 per cent, about the long-run average. And that’s good too, right?

The best and least likely place to discover that it isn’t necessarily alright is a new book entitled GDP: A Brief but Affectionate History by British economist Diane Coyle.

In it, she pays special attention to Australia.

Measuring GDP is not like measuring the height of a mountain or length of a river, she says. GDP is a concept; the total value of all the goods and services produced in a nation over a particular period of time. But what’s a good or a service? One of founders of the concept in the 1940s, US economist Simon Kuznets originally didn’t want to include advertising. It was persuasion rather than a product, he said. Unpaid housework isn’t included because isn’t valued (on the market) but paid housework is. Teaching in government schools is included (at a guestimate of its value) even though it isn’t bought and sold, and so on. It’s messy,  and even if it wasn’t it would take no account of other measures at least as important.

No less an authority than the Australian Bureau of Statistics says so. “While movements in the volume measure of GDP are an important indicator of economic growth, there is no single measure that can describe all aspects of the wellbeing of Australians,” it says.

So it creates a separate scorecard, Measures of Australia's Progress. It looks beyond GDP to assess the other things that are important, among them “the quality of the environment, the wellbeing of the population in terms of health, education, work, housing and economic resources, and the way people live together in society”.

The initiative has entranced Coyle.

“The data are collected and published once a year on a traffic light system - red is getting worse, green is getting better,” she told a US radio interviewer. “And last year it was very clear that GDP growth is going great in Australia, and that was green. And resource depletion had worsened, so that was red.”

“And actually, isn't that trade-off really clear?,” she enthused. “Australians know that they are digging up the mineral resources of the country to have GDP growth now. They still would carry on doing it, but at least they know they did it.”

Until now. On Thursday the Bureau of Statistics axed Measures of Australia's Progress and shrunk or axed another twelve projects, most involving the collection of social or industry statistics...

It needs to save $50 million. It is losing 116 staff. The cuts are not, as you might expect, primarily the result of the Coalition's attempt to get the budget back to surplus. They are the result of repeated cuts by Labor in the guise of efficiency dividends. Before he retired in January the head of the Bureau pleaded with the government for an extra $300 million to “keep the lights on”. Its 30-year old technology systems were barely coping. “The overall situation has been progressively impacting on the time and effort required to produce key official statistics on time and to the quality expected by our users and now seriously compromises our longer-term sustainability,” he wrote.

He didn’t get the extra funding and he hasn’t yet been replaced. Economies have pushed the response rate to the flagship employment survey to its lowest level ever. The employment survey is best monthly indication of how the Australian economy is traveling. But in at least one sense it is the least reliable it has ever been. It’s as if the government is navigating an economic highway while dimming the lights.

And starving itself of fuel. The budget papers say the Tax Office will lose 2329 staff in the coming financial year on top of the 626 it is losing this year. The cuts come as it’s been given extra work introducing the temporary budget repair levy and winding up the carbon and mining taxes. It’ll probably check fewer returns and think twice about expensive court cases. If not now, then later. “The budget papers signal further reductions in the out years,” the Commissioner has warned staff.

The Australian Securities and Investments Commission is meant to protect us against outright fraud. Its budget will be cut 12 per cent in 2014-15. It will lose 209 of its 1782 staff, also a cut of 12 per cent.  Its surveillance activity “will substantially reduce across the sectors we regulate and in some cases will stop,” its Chairman told a Senate hearing last week. “For obvious reasons” he didn’t want to identify the industries that no longer be checked.

We need protection from dodgy financial planners. Our government needs income. And we all need to know where we are going. An obsession with cuts to return the budget to surplus is starving us of all three. It would be nice to think our leaders had thought it through.

In The Age and Sydney Morning Herald


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How is Australia the best address on earth? Play with the sliders

Go here: oecdbetterlifeindex.org

Pick what's important to you, and see how we do:

Australia, as seen by the OECD Better Life Index

"Australia performs exceptionally well in measures of well-being, as shown by the fact that it ranks among the top countries in a large number of topics in the Better Life Index.

Money, while it cannot buy happiness, is an important means to achieving higher living standards. In Australia, the average household net-adjusted disposable income is 28 884 USD a year, more than the OECD average of 23 047 USD a year. But there is a considerable gap between the richest and poorest – the top 20% of the population earn six times as much as the bottom 20%.

In terms of employment, over 73% of people aged 15 to 64 in Australia have a paid job, above the OECD employment average of 66%. Some 79% of men are in paid work, compared with 67% of women. People in Australia work 1 693 hours a year, less than most people in the OECD who work 1 776 hours. Almost 14% of employees work very long hours, much higher than the OECD average of 9%, with 21% of men working very long hours compared with just 6% for women.

Having a good education is an important requisite for finding a job. In Australia, 73% of adults aged 25-64 have earned the equivalent of a high-school degree, close to the OECD average of 74%. This is truer of men than women, as 76% of men have successfully completed high-school compared with 71% of women. This difference is higher than the OECD average and suggests women’s participation in higher education could be strengthened. Australia is nonetheless a top-performing country in terms of the quality of its educational system. The average student scored 519 in reading literacy, maths and science in the OECD’s Programme for International Student Assessment (PISA). This score is higher than the OECD average of 497, making Australia one of the strongest OECD countries in students’ skills. On average in Australia, girls outperformed boys by 9 points, in line with the average OECD gap.

In terms of health, life expectancy at birth in Australia is almost 82 years, two years higher than the OECD average of 80 years. Life expectancy for women is 84 years, compared with 80 for men. The level of atmospheric PM10 – tiny air pollutant particles small enough to enter and cause damage to the lungs – is 14 micrograms per cubic meter, considerably lower than the OECD average of 21 micrograms per cubic meter. Australia also does well in terms of water quality, as 91% of people say they are satisfied with the quality of their water, higher than the OECD average of 84%.

Concerning the public sphere, there is a strong sense of community and high levels of civic participation in Australia, where 94% of people believe that they know someone they could rely on in time of need, higher than the OECD average of 90%. Voter turnout, a measure of public trust in government and of citizens’ participation in the political process, was 93% during recent elections; this figure is the highest in the OECD where the average is 72%. There is little difference in voting levels across society; voter turnout for the top 20% of the population is 94% and for the bottom 20% it is 92%, a much narrower difference than the OECD average gap of 12 percentage points and suggesting there is broad social inclusion in Australia’s democratic institutions

In general, Australians are more satisfied with their lives than the OECD average, with 84% of people saying they have more positive experiences in an average day (feelings of rest, pride in accomplishment, enjoyment, etc) than negative ones (pain, worry, sadness, boredom, etc). This figure is higher than the OECD average of 80%."



In the Sydney Morning Herald:

Australia has scored the unofficial title of the best address on earth for the third year running in an OECD survey of what constitutes good living.

The so-called Better Life Index ranks the 34 developed nations that make up the Organisation for Economic Co-operation and Development on eleven criteria it says contribute to good living.

When all eleven are given equal weight Australia is rated the best developed nation in the world, narrowly beating Sweden and Canada.

But the OECD says there is no such thing as an absolute Number 1. It allows users of its website to weight the criteria as they see fit.

If work-life balance is given the most weight, Australia becomes one of the worst developed nations in which to live. The organisation says more than 14 per cent of Australian workers put in more than 50 hours a week, way above the OECD average of 9 per cent. Men do it much more than women, 21 per cent working long hours compared to 6 per cent of working women. Denmark has the best work-life balance. Only 2 per cent of its workers put in more than 50 hours per week.

The OECD rates Australia number one when it comes to “civic engagement”. More than 70 per cent of Australians say they trust their political institutions. Around 93 of registered voters turn up to vote, the highest proportion in the OECD. It says while voter turnout “is indeed compulsory and strongly enforced, it is nevertheless a useful measure of citizen engagement”.

Australia is also the second-healthiest of the developed nations, beaten only by New Zealand. Some 85 per cent of Australians describe their health as good. Australia’s life expectancy at birth is 82 years, almost a year longer than the United Kingdom’s and more than three years longer than the United States...

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Australia’s household income is mid-range, although comfortably above the OECD average. Access to housing is rated as the fourth-best. Australian households spend an average of 19 per cent of their income on keeping a roof over their heads, slightly less than the OECD average of 21 per cent. But the quality of the housing is just about the world’s best. At 2.3 rooms per person Australia is beaten only by Canada.

Australia’s natural environment is rated eighth-best. Sweden, the United Kingdom, Norway, Iceland, Denmark, Germany and Finland are rated higher. The organisation says urban air pollution is getting worse.

Australians are nonetheless happy. When asked to rate their general satisfaction with life on a scale from 0 to 10, Australians come up with an average score of 7.2, way above the OECD average of 6.6. And the score is pretty consistent across the nation. Men and women are equally happy. Australians without secondary education are only a little less happy than Australians with university degrees, reporting an average score of 7.1 instead of 7.4. Around 84 per cent of Australians report having more positive experiences than negative ones in an average day.

Two thirds of Australians reported having helped a stranger in the last month, well above the OECD average of 48 per cent.
94 per cent of Australians believe they know someone they could rely on in a time of need, also above the


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Officially our lives are mostly better

That's what the ABS finds when it attempts to look beyond GDP

Our lives are - almost - better than ever; so much so that we’re spending an increasing amount of time out of the country.

The latest Bureau of Statistics annual measure of the quality of our lives shows things are getting better across a range of fronts that extend beyond the financial.

We are more healthy, more educated and more likely to be in work than a decade ago and we earn more and have more saved. But our productivity is going backwards along with our air quality and biodiversity.

The ABS admits there’s much about our standard of living it can’t yet measure. It would like to be able to report on social cohesion, democracy and governance and the quality of our land, oceans and rivers, but it hasn’t yet found an encompassing measure for each. It lists them as important in Measures of Australia’s Progress 2011 and says it’s still looking for a way to way to turn each into a number.

The number it uses for health is life expectancy at birth. An Australian girl born today can expect to live 83.9 years, 2.1 years more than a a decade before. A boy born now can expect 79.3 years, 3.1 years more than a decade ago.

The measure for education is the proportion of people aged 25 to 64 years with a vocational or higher education qualifications... It has climbed from 50 to 63 per cent over the past decade driven mainly by a jump in the proportion with a university degree from 18 to 27 per cent.

The Bureau finds the unemployment rate the most useful measure of the likelihood of being in work. Even after increasing in recent months it is still far lower than it was a decade ago at 5.3 per cent, down from 6.8 per cent.

Income per person has soared 22 per cent above inflation in the past decade, even after tapering off in response to the global financial crisis. Wealth per person has climbed from $285,700 to $308,500 after adjustment for inflation - a jump of 8 per cent.

The Bureau’s encompassing measure for housing - rental affordability for low income earners - has stayed roughly flat for the past decade. The proportion of gross household income handed over in rent remains steady at 28 per cent.

Productivity - regarded as steady in the Bureau’s last update published a year ago - is now clearly heading down. The Bureau says its broadest measure, multi-factor productivity, is going backwards at the rate of 1 per cent per year.

The indicator thought to best point to biodiversity in native plants, animals and organisms is the number of threatened fauna species. It has climbed from 332 to 432 over the past decade. Just under half are listed as vulnerable and around two-fifths endangered or critically endangered.

Greenhouse gas emissions - the indicative measure of air quality - have climbed 13 per cent over the decade to 2009 from 483.2 million tonnes of carbon dioxide equivalent to 545.8 million tonnes. The good news is that they have slipped below their peak of 550.8 million tonnes in 2008.

Separately-released figures show we are fleeing the country as never before. A record 664,900 of us left Australia for short-term holidays or work in August, meaning that if each remained out of the country for a month all through August 1 in every 34 Australians would have been outside the country.

Departures were nowhere near matched by visitors coming in. Only 491,000 visitors came this way in August. Visitor numbers haven’t hit 500,000 since last November.

Published in today's SMH


IMPROVING

HEALTH
Life expectancy of newborn up 2.6 years

EDUCATION
Proportion of 25-64 year olds with higher qualifications up from 50% to 63%

WORK
Unemployment rate down from 6.8% to 5.3%

INCOME
Real national income per person up from $37,400 to $45,600

WEALTH
Real national net worth per person up from $285,700 to $308,500


STAYING STEADY

HOUSING
Rental affordability for low income households unchanged


GETTING WORSE

PRODUCTIVITY
Multifactor productivity sliding since 2003-04

BIODIVERSITY
Number of threatened fauna species up from 332 to 432

ATMOSPHERE
Greenhouse gas emissions up 13%


ABS Measures of Australia's Progress, Changes over past decade



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Biomass of popularly eaten fish

Weep. In his book The Plundered Planet Paul Collier makes the point that overfishing should be the easiest of all global co-operation problems.

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The Economics of Happiness movie

It's got a great title.



And it features our own Clive Hamilton.

Details here: theeconomicsofhappiness.org

It premiered in Australia last night in Brisbane. It screens tonight and Tuesday in Melbourne, then then Thursday in Sydney. Details here.


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Where Gillard gets the Greens wrong

Never has it been more important to understand the Greens. Never has a prime minister had less of a clue.

From July the Greens will decide which bills become law and which don’t. The prime minister says they "will never embrace Labor’s delight at sharing the values of every day Australians, in our cities, suburbs, towns and bush, who day after day do the right thing, leading purposeful and dignified lives, driven by love of family and nation”. Maybe, but that’s not what they will be called on to do.

They will be asked to vote on tax bills, on corporate regulation and on all manner of measures relating to economic management.

There are clues as to how they will vote, and if we are to believe her, the prime minister has missed every one.

Gillard thinks the Greens don’t get economics. They “wrongly reject the moral imperative to a strong economy,” she told the Whitlam Institute.

Her sidekick Anthony Albanese says they “tend to be a grab-bag of issues, tend not to have a coherent policy that adds up”.

Her resources minister Martin Ferguson says they want to “sit under the tree and weave baskets with no jobs”.

Its a forgivable impression until you examine what their supporters actually think...

Asked to rate issues in order of importance in an Essential Media poll in January more Greens rated economic management number one than rated protecting the environment number one.The gap was closer amongst Greens voters than other voters, but the point is there was a difference - Greens put the economy number one.

Polled in November about a specific issue - regulation of the banks, Greens voters were on every measure more closer to economic orthodoxy than Labor voters.

Asked if banks should be restricted to lifting rates only in line with Reserve Bank, 87 per cent of Labor voters said yes. Even amongst Coalition voters 82 per cent said yes. But amongst Greens voters the result was 73 per cent, suggesting they are more likely to have studied economics.

Asked if bank fees should be kept to the cost of providing the service, 93 per cent of Labor and also 93 per cent of Coalition voters agreed. Only 90 per cent of Greens voters thought so.

Asked about a cap on bank salaries 88 per cent of Labor voters were for it. Coalition voters were far less keen at 83 per cent. In the middle, less in favour of hobbling the market than Labor voters although more so than Coalition voters, were the Greens at 86 per cent.

The views of Greens supporters are not outside the mainstream, except that they are likely to be more in touch with orthodox economics than the mainstream.

Greens voters are far more likely than either Labor or the Coalition to support higher taxes on mining profits, a view in line with the International Monetary Fund, the Henry Review and the Australian Treasury.

They are less likely than the majors to be fussed about a return to a budget surplus by exactly 2012-13 (as are orthodox economists although interestingly slightly keener than labor voters on spending cuts in the budget to come.

They are more likely than Labor voters to act against self interest. Only 17 per cent of Labor voters would accept a tax on products purchased online form overseas. A higher 19 per cent of Greens voters would.

And they know more.

An astonishing 10 per cent of Labor voters and 12 per cent of Coalition votes are deluded enough to think half our migration intake is boat people. Only 6 per cent of Greens voters think so.

They are accepting of the mainstream scientific position on climate change - that it is happening and caused by human activity; far more accepting than supporters of either Labor or the Coalition.

And they believe market mechanisms rather than regulations are the best way to get emissions down.

Their tax policies echo those of the Henry Tax Review. Tax breaks for high income earners would go, fringe benefits tax concessions that encourage the needless driving of cars would be scrapped and capital gains would no longer be tax-preferred over other returns from saving.

All income received in whatever form would be taxed at the standard rate and the scales would be rejigged to remove the high effective rates faced by Australians trying to get off welfare.

Henry would do this by flattening the scales and making the first $25,000 earned tax-free.

The Greens aren’t so sure about that, but neither are Labor of the Coalition. The point is that on nearly every area where the Greens diverge from Henry, the Coalition and Labor do too.

On most of the areas where then Coalition and Labor are reluctant to embrace Henry the Greens are keen to.

The big parties won’t touch the Private Health Insurance Rebate. The Greens would kill it, as would Henry.

The big parties aren’t attracted to a death duty. The Henry Review is, and the Greens would bring it in with a threshold of $5 million and an exemption for the family home, farm and small business.

The big parties are grudging about making the mammoth superannuation tax concessions more progressive. Henry isn’t, and the Greens would do it, after a “full review”.

This isn’t an argument in favour of the Greens policies, although as it happens I find them attractive. It is an argument that they fit within the economic mainstream. They are coherent, readily available on the web, and far more than a grab-bag from a “party of protest” that sits “under the tree and weave baskets with no jobs”.

If the Greens have got it wrong on economics, then so too have the economics text books they seem to have read and so too has Ken Henry.

Their real position is important because it is their real position that will determine what gets passed into law in the two to three years ahead, not the misleading dumbed-down characterisations of a prime minister and ministers who should know better.

Published in today's SMH and Age


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We think globally, don't act at all. The OECD on Australians

Considering energy costs when buying houses - Least overall

Believing individual actions can make a difference - Least overall

Using appliances in standby mode - Least overall

Proper disposal of hazardous household waste - Least overall

Use of the car to go shopping - Highest overall

Use of water per person - Highest after Canada

Satisfaction with tap water - Least apart from Mexico and Korea

We're in love with our cars, we leave electric appliances on standby, we don't like drinking our tap water and we can't see that much point in saving the environment.

The latest OECD comparison of the environmental behaviour of housholds in 10member nations puts Australia at or near the bottom on most of the questions asked.

Entitled Greening Household Behaviour the survey excludes the United States and United Kingdom but includes countries similar to Australia such as Canada and France as well as less similar nations such as Mexico and Korea.

When it comes to concern we are up the most worried. Between 40 and 50 per cent of Australians are "very concerned" about a range of issues from waste generation to air pollution to climate change. By contrast in the least concerned nations, Netherlands and Norway, the ratings are between 20 and 30 per cent.

But we are relatively unprepared to believe we can do anything about it. Almost 5 per cent of us think there's no point in taking action as individuals or households, more than in any nation surveyed, and twice the 2.5 per cent in Canada and 2 per cent in Mexico.

In our homes we use more water than anyone apart from Canadians. When we buy our homes we are the least likely to take into account their energy costs... Only 20 per cent of us make the calculation compared to 30 per cent of Italians and 50 per cent of Czechs.

We are the most likely to leave our appliances on in standby mode and one of the least likely to turn down the heat. On the plus side we are the most likely to recognise an energy efficiency label although only middle of the range when it comes to actually installing energy efficient products products.

Our recycling services are among the world's best, but we are the least likely of the nations surveyed to recycle household plastic, paper and glass and the second least likely to recycle metal. When it comes to hazardous waste we are the least likely to dispose of batteries properly and the second least likely to dispose of medicines properly.

The Organisation for Economic Co-operation and Development finds us one of the least satisfied with our with tap water of the 10 nations surveyed (only Mexico and Korea think less of their water) but also one of the least ready to reach for the bottle. An extraordinary 88 per cent of Canadians drink bottled water compared to 30 per cent of Australians.

And we adore our cars. With 2.6 per family we are beaten only by Italy, which has 2.7. Some 85 per cent of us use our cars to get to shops, more than anyone else.

Published in today's SMH and Age


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Time to consider the implications of the $8 floor fan

Stuart Washington's important piece in today's SMH:

A friend pointed out an electric floor fan he bought at Bunnings the other day to beat the recent heat, asking me to guess the price

You know the thing, a fan on a stand with a rotating head, standing about a metre tall with a wire guard to ensure small fingers aren't clipped.

"I don't know, $80? Maybe $90?" was my best guess.

My friend explained the fan's shelf price was $12. But when he got it to the counter, there was a special and it only cost $8.

Now, don't expect from here on a tirade about the perils of discounting for retailers. Nor should you expect a critique of the recent controversy over internet shopping versus the so-called brick-and-mortar retailers.

What I want to explore is a sense of unease about just how a fully functioning electric floor fan lands from China and can be sold for about $8.

The unease I feel about where the profit from an $8 floor fan lies - and don't get me wrong, this is still a column about business and profits - feeds a deeper unease about a broken pricing system.

And I believe failures in pricing are posing grave dangers to what we know as capitalism...

Now it's a long way from a cheapo floor fan to grave misgivings about the future of capitalism itself, so I will try to explain.

How much do you reckon the individual components of a floor fan cost? Let me say from the outset, I have no idea.

However let's say there is some metal in the electric motor and cabling (to my knowledge these things can't be made of plastic yet).

Then there are some petrochemicals necessary to create the polymers for the plastic that cases the motor and makes up the floor stand.

Then, of course, labour is a component, being the price of labour "embedded" in the final product.

What a piece of work is a fan, to badly paraphrase Shakespeare.

Here you have the world's great extraction industries - mining and oil - and the world's largest labour pool. Combined, they give you a fan that sits in the corner of your front room and cools you on a blistering Sydney summer day.

Now let's think what also sits in the fan's price. There is packaging. There is transport from China. There is the cost of the store's advertising. There is the additional cost of the store labour that stacks the shelves and operates the checkouts.

Wow! All this for just $8. It's better than a Demtel advertisement.

Anyone else starting to wonder how this is happening? As a capitalist, I want a profit from the fan for the mining industry, the oil industry, the manufacturer of the plastic, the manufacturer of the motor, the packaging supplier, the distributor and the retailer.

But I just don't see it - unless inputs are being ridiculously cheaply priced.

Now, I understand various arguments can be levelled against my example. For instance, the retailer is "loss leading" with the fan, and therefore there is no profit in the $8 price.

But I think there are enough examples of absurdly low prices around the place to allow me to draft the fan (pun not intended) for my argument.

My argument is that the floor fan is an indicator of a world in which certain inputs are not being accurately priced.

I don't think the metals that went into the fan were priced properly. Nor were the petrochemicals. I will leave labour for another day.

Funny things start to happen when you don't price things properly. For example, the global financial crisis was a great example of what happened when people did not put the right price on money by offering absurdly low interest rates.

The mispricing encouraged short-term behaviours - think of, say, private equity's bid for Qantas - that were not sustainable over the longer term.

Capitalism, incidentally, has never promised to be sustainable. Karl Marx raised fears about the inherent instability of capitalism, long before his shaggy visage was shackled to the baggage of 20th-century communism.

John Maynard Keynes held similar fears about what we all now know as the ups and downs of the business cycle. Indeed, Keynes's great contribution to economic thinking was to encourage government spending to ward off the worst effects of downturns. The goal of the spending was to address fears of capitalism becoming so unstable it would cease to exist.

Despite a lurch towards Keynesian thinking, economics in recent decades has been dominated by the austere belief that markets will generally sort themselves out.

But they don't sort themselves out when prices are wrong in the first place.

Going back to the $8 floor fan, my fear is that there is nothing in the price reflecting the allocation of precious resources. There is nothing in the price reflecting the depletion of those resources.

It's a cheapo throwaway fan, and there's plenty more where that came from, is the current thinking.

Our current economics fail us when it comes to the issue of resource depletion. Our economics also fail us when it comes to the issue of environmental impacts from resource depletion. And yes, those environmental impacts include emissions from the manufacture of the fan.

We are lacking an economic framework that joins Adam Smith's profit maximisers with what we now understand as the broader impacts of our economic endeavours.

Despite the momentary thrill of an $8 floor fan, I believe we are all poorer for failing to recognise its full price.

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Ah memories. Today Gillard will ditch Cash for Clunkers

Let's see. What's left of the other ideas she came up with on the run during the campaign?

The Peoples' Assembly?

The Timor Solution?


Michelle has the story.

Gillard will announce details at the National Press Club, 12.30 pm AEDT


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Buying Christmas presents?

More at The Story of Stuff. Sorry.



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Books for Christmas

From my other blog, Peter's Bookshelf:

Six months of panic - Trevor Sykes

Few Australian writers can match Trevor Sykes' understanding of the murkier waters of Australian business, as readers of his Pierpont column and his magisterial works The Bold Riders and Two Centuries of Panic have shown.

He has now turned his eagle eye on what has become known as the GFC, and the waves of panic that began with the subprime crisis in America and flowed with tsunami-like force across Europe, Asia and Australia. This was a crisis which was borne from an excess of greed, and immorality, and Sykes singles the Wall Street banks out for particular blame.

He explains how the subprime phenomenon came about, and how the fall of Lehman brothers marked the beginning of the slide. Inevitably the crisis reached Australia, with Centro and MFS the first dominoes in the chain. With the same blowtorch he earlier applied to the likes of Alan Bond he dissects the questionable dealings which caused the fall of high flyers like Allco, Babcock and Brown, ABC and many more, and summarises the pain and harm caused by the myriad small companies and individuals feeding from the frenzy.

Zombie Economics - John Quiggin

In the graveyard of economic ideology, dead ideas still stalk the land.

The recent financial crisis laid bare many of the assumptions behind market liberalism--the theory that market-based solutions are always best, regardless of the problem. For decades, their advocates dominated mainstream economics, and their influence created a system where an unthinking faith in markets led many to view speculative investments as fundamentally safe. The crisis seemed to have killed off these ideas, but they still live on in the minds of many--members of the public, commentators, politicians, economists, and even those charged with cleaning up the mess. In Zombie Economics, John Quiggin explains how these dead ideas still walk among us--and why we must find a way to kill them once and for all if we are to avoid an even bigger financial crisis in the future.

The Plundered Planet - Paul Collier

Paul Collier's The Bottom Billion was greeted as groundbreaking when it appeared in 2007. The Economist wrote that it was "set to become a classic," the Financial Times praised it as "rich in both analysis and recommendations," while Nicholas Kristof of the New York Times called it the "best nonfiction book so far this year."

Now, in The Plundered Planet, Collier builds upon his renowned work on developing countries and the poorest populations to confront the global mismanagement of nature. Proper stewardship of natural assets and liabilities is a matter of planetary urgency: natural resources have the potential either to transform the poorest countries or to tear them apart, while the carbon emissions and agricultural follies of the rich world could further impoverish them. The Plundered Planet charts a course between unchecked profiteering on the one hand and environmental romanticism on the other to offer realistic and sustainable solutions to dauntingly complex issues.

Sex, Lies and Pharmaceuticals - Ray Moynihan

Hard-hitting and provocative, this powerful expose of the birth of a new 'disease' - and the multi-million dollar machine unleashed to market - takes us inside the corridors of medical power from Paris to Melbourne to Manhattan to witness the creation of 'female sexual dysfunction' as a twenty-first century epidemic.

The characters in this corporate thriller are the global drug giants, the doctors and psychologists working with them, and the critics trying to untangle medical science from marketing who argue the new disorders of desire are a misleading and dangerous distraction from the real problems in sexual relationships.

I really really really really recommend each.



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"Suffice it to say, the Minister was not well served by his department" - Our mismanaged crisis

We got the big decisions right. But the small ones...

Extracts from the Auditor General's excoriating findings about Rudd's Green Loans scheme:

"22. The primary cause for the administration problems encountered by the program was, to a very large extent, an absence of effective governance by the Department of Environment (DEWHA) during the program’s design and early implementation. DEWHA had no previous experience in designing and delivering a program with features similar to the Green Loans program. As a multi-faceted ‘greenfields’ program with a fixed budget and variable (and untested) demand, the Green Loans program required greater oversight than the department’s business-as-usual activities. However, this did not occur.

23. From the start of the program, DEWHA assigned day-to-day program management responsibility to sub-executive level officers who had little program delivery experience. As such, program management was devolved to too low a level within DEWHA without sufficient active engagement by executive management. A steering committee was established in November 2008 to oversee the program in response to departmental concerns about the appropriateness of the procurement practices being applied... The committee became inactive at the time the Green Loans program was launched, and was not replaced.

24. The program’s visibility to DEWHA’s senior executives was poor. This was not aided by quarterly status reports providing a false sense of assurance that the program was being managed within an agreed planning framework. In addition, the former Minister received incomplete, inaccurate and untimely briefings on program design features and implementation progress, challenges and risks. Suffice it to say here, the former Minister was not well served by his department in this respect during the period from July 2008 to late 2009 due to the poor quality briefings he received.

25. Key program management plans, including in relation to risk management, procurement, IT and communications, were never finalised and endorsed by executive management. Subsequently, DEWHA encountered difficulties in all these areas. In addition, in the first 18 months of the program there was no accurate costing of the program or monitoring of its budget. An examination of the program’s budget in early 2010 led to the realisation that the program had exceeded its 2009–10 program budget and would require an additional $100 million to fully fund the Government’s policy commitments over the program’s life...

30. Given the considerable volume of transactions for assessments, loans and payments that would be undertaken under the program, appropriate IT support systems were critical to the effective management of the program. However, e-Gateway was procured too late to allow for its smooth introduction from the launch of the program. Consequently, DEWHA had to hastily establish temporary support systems (many of which are now permanent), which required greater manual processing, introduced greater room for error and came at considerable cost...

The unanticipated demand for assessments overwhelmed the temporary support systems in late 2009 and early 2010 leading to the delays experienced by assessors and householders. Alternative workarounds put in place to reduce pressure on the contact centre, did not have the desired impact and created booking backlogs and significant data integrity issues, some of which are yet to be fully resolved. Further, prepayment checks of assessor invoices have either not been completed or sufficiently documented to demonstrate that only valid invoices have been paid. DCCEE is currently undertaking data cleansing and payment reconciliation projects to identify and correct data errors, and has advised that paid invoices that do not meet program requirements will be referred to its compliance area for possible recovery action."

Read the full horrific Audit Office report.

It's making me think Godwin Grech was right.

Here's what Godwin said to an earlier audit inquiry.

"When I returned to Treasury in September 2008, just as the Global Financial Crisis got into full swing, it soon became clear that Treasury officers were being asked to prepare policy option papers on highly complex and economically significant issues at a speed that was, in my view, dangerous.

Policy papers would be commissioned in the morning, usually after a meeting or discussion between the Prime Minister, Treasurer, Dr Henry and a few others, and would then be considered by much the same group either later that day or the following day, with decisions often being taken on measures involving billions in actual expenditure or in contingent liabilities.

There was little, if any testing of alternative options, with often only rubbery estimates or forecasts prepared to support possible approaches.

The normal policy development disciplines had broken down, with many policy options, certainly those that I had exposure to, being developed without any real opportunity by the Department of Finance and Deregulation to undertake proper costings, if at all. Relevant portfolio departments were either not involved in the policy development process or were given very limited information or opportunity to contribute.

The OzCar SPV was developed in this environment. As I was very uncomfortable preparing policy papers which contained options that had not been properly costed and which I could not be sure would even be viable, I began to rely on a small network of 2 or 3 highly experienced former Treasury officers who I had known for the best part of 20 years and who had genuine policy expertise in the areas that I lacked. This was especially in costings and fiscal implications of options, as well as to the political viability of possible approaches.

I saw little point in putting up a policy option to the Prime Minister and the Treasurer if it could not ‘fly’ politically – even if the numbers seemed broadly accurate. I would therefore ‘roadtest’ a few ideas and options with my small trusted network so that the risks of developing half baked policy options involving contingent liabilities of $2 billion or more was reduced.

Although this may not have been consistent with normal practice, the operating environment was hardly normal. It was in many respects chaotic and dysfunctional and suffering from the stress of overload.

By comparison the much-criticised BER was exceptionately well managed.


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Henry: We've only just begun (to properly value the environment)

Treasury boss Ken Henry has taken a swipe at the work of his own department as well as others on valuing the environment saying much of it is flawed and fails to give proper weight to the importance of retaining Australia's unique biodiversity.

Fresh from producing the as-yet-unreleased Henry Tax Review and in the midst of preparing the 2010 Budget Dr Henry told an environment conference in Sydney that the part of his Intergenerational Report that had received the least attention was the section on environmental sustainability.

But not only did the well-being of future generations depend in large part on the environmental resources left to them from this generation, the environment was likely to become more important to them than it is to us.

"It is very likely that improvements in our material wealth and our understanding of the environment will enhance our appreciation and enjoyment of the environment over time," he told the conference. "There seems great scope, for example, for developing new or improved food crops, medicines and industrial products from our biological diversity."

Market valuations of forests and farmland underplayed their real value because many of their benefits were too far in the future to be taken into account in prices. Asking people how much they would be prepared to pay to preserve parts of the environment had been found to result in bizarre conclusions including that preserving blue whales is more important than preserving all whales...

"The idea of blue whales evokes a richer mental image than the idea of whales in general," he said.

A practical conservationist, Dr Henry helped draft the Henry Review's tax discussion paper while on working holiday in central Queensland caring for northern hairy nosed wombats. In 2008 in a personal capacity he is reported to have helped draft a submission opposing plans to cull 500 kangaroos on urban grassland in Canberra.

He told the conference the problem with consulting experts was that they too often gave advice on areas beyond that expertise. In Canberra a panel of grassland ecologists had been asked to "offer advice on the difficult ethical question of whether it is more humane to kill a kangaroo than it is to relocate it."

"Ethics too requires expertise," he told the conference. "And it is an expertise that should not be assumed to be positively correlated with scientific training."

"We in the Treasury, who are often called on by governments to offer such assessments are very aware of the risks in claiming too much," he said.

Published in today's SMH and Age

Ken Henry Speech to the Environment Business Australia Forum


And here's the much loved and missed Karen Carpenter: (She had only just begun)




And don't doubt that she could perform live -- what a precious, tormented talent:





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James Hardie - the video and audio

Matt Peacock's interview on today's Radio National Breakfast is here.

Gee it's worth a listen.

I learned that James Hardie even stole its name. It has no connection with the loved yachtsman, winemaker and republican Sir James Hardie.

It sought out older Australians as workers because it thought they would die before their asbestosis became apparent.

The video of Matt's Monday 7.30 Report story is here. Click on broadband or dial-up at the right of the screen.

Or click on this link. It should start the video immediately.

Killer Company: James Hardie Exposed, by Matt Peacock

Read more >>

Australia's James Hardie - close to evil

It's in the book, out now.

As the author Matt Peacock explained to me over a cup of coffee in Parliament House, you can trace every stage of James Hardie's asbestos production process and find a trail of death that is continuing still, in places most people - quite reasonably - don't suspect.

Such as carpet.

The hessian bags that carried the asbestos James Hardie transported were subsequently sold to carpet companies (among others) who used them to make carpet underlay.

Only now, two or three decades later, is that carpet being ripped up and replaced.

The Australian workers or families who rip up their carpets are being exposed to asbestos fibres and a high risk of a painful lingering death.

Here's the extract from my friend Matt Peacock's formidable book, printed in the Weekend Australian:

Bernie Banton, the former James Hardie employee who died from cancer in 2007, became the public face of victims of the company's asbestos products but, as Matt Peacock writes, the company spread the risk across the community -- where it remains

IN late 2005 James Hardie's embattled chairwoman Meredith Hellicar spoke warmly to me of a letter of support she'd received from an elderly woman. "This wonderful 93-year-old woman ... was married to two James Hardie plant managers in a row," Hellicar said. "She said they both loved asbestos. One of her husbands lined their driveway with asbestos."

For Hellicar, the letter provided reassurance that she was continuing an honourable company tradition set by her predecessor John Reid and his family, one that reflected the best moral corporate behaviour. But what neither Hellicar, nor anyone else from Hardie, said publicly was that such innocuous-looking driveways might kill. They are yet another part of the deadly legacy kept secret from an unsuspecting public by a company determined to minimise its legal liabilities.

The corporate culture of deceit identified by the NSW special commission of inquiry headed by David Jackson QC in 2004 developed many decades ago and persists to this day. Hardie's victims will continue to accumulate because the company has never told the full truth about the asbestos hazards left in its wake. Some, quite literally, have been swept under the carpet.

Until the 1970s it had been common practice to build such domestic driveways, paths and garage floors using Hardie's asbestos waste. The company encouraged its employees to help themselves to the "fines", as it was called. The compacted waste still remains in people's driveways. I have seen one in a quiet suburban street bordering the old industrial area of Elizabeth in Adelaide, where the Hardie factory had produced its asbestos pipes and sheets. It had the appearance of concrete, with its grey colour and hard surface. Only a close examination at the edges revealed the telltale fraying fibres, glistening in the grime.

According to Neil Gilbert, the former Hardie engineer who established Hardie's dust extraction system and medical surveillance scheme before quitting in 1971, thousands of driveways would have been built this way, but he shrugged at the suggestion that something should be done about it.

"That's fate," he told me. "I know where there's one or two. It would take a massive amount of publicity to track them down. Most people wouldn't recognise them. You couldn't tell the difference between it and concrete."

One of Hardie's biggest fears has been that litigation against it could extend beyond simply paying for the deaths and injuries it has caused to cleaning up the dangerous materials it has left behind. "The establishment of a broadly defined duty to remediate, whether at common law or by statute, could have a catastrophic effect on the company," Hardie's litigation manager Wayne Attrill warned in 2001, just before the company shed its asbestos subsidiaries and moved offshore. The prospect of such claims for remediation also featured in the early discussions held by Hardie's counsel Peter Shafron and Michael Gill when they first canvassed the idea of separating the company's asbestos subsidiary. In the protracted battle with the NSW government that followed, Hardie extracted unique legal protection from just such a duty.

No one knows how many people have been exposed to lethal doses of Hardie's asbestos waste. What is certain is that many thousands could have been; what is equally certain is that the company has known that their lives have been endangered.

For Hardie, the driveways were part of a bigger problem. Thousands of tonnes of its asbestos waste were dispersed in all sorts of places: in rivers and creeks, on vacant blocks, on roadways, even on football ovals. Wherever fill was needed, Hardie's waste was available.

The practice was made even more dangerous because a large percentage of the waste came from moulded products such as pipes, which had contained the deadly brown and blue asbestos.

As a Hardie memo in 1977 about its Camellia factory in Sydney noted: "It is understood that our dust was a sought-after item and was even sold. It was particularly useful for light duty paths, garage floors and general filling.

"Our reject and broken scrap was also very useful as a filling for driveways, etc in many of the market gardens west of our factory."

Father John Boyle, whose father worked at the factory, remembered the asbestos driveway and garage floor from his family house near Parramatta. His mother, Molly, had helped his father lay the asbestos waste and for years later used to sweep the garage floor clean: "I know well what it looks like. It's a fibrous, powdery material that along with water becomes as hard as concrete. It was a cheap fill and in those days it probably wasn't seen to be so bad.

"It's good for 10 or 20 years, but then it breaks up, and that's when the fibres are released. From the mid-70s James Hardie knew about them but didn't warn people."

In fact Hardie had known long before that, but it was only during the 70s that it began to do anything about it. The company's reaction, as Boyle noted, was not to alert people to the dangers; instead, it set about quietly stopping the practice.

Boyle's mother died from mesothelioma. She had also been exposed to asbestos from her husband's overalls, but it seemed likely that her greatest exposure was from the driveway and garage floor. Hardie settled her compensation claim.

I asked Hellicar if she was concerned about the possible danger to the public, especially given that children could be exposed. She was quick to answer: "If you're saying, `Should James Hardie pay for a clear-up?' No, at the end of the day. And why no? Because we cannot be a bottomless pit.

"The fact of the matter is ... this was not some James Hardie conspiracy to foist a product on the world. Governments were there, companies were there. We all were party to this great new product and at some point we have to just all recognise there was a big mistake made about asbestos."

APART from the driveways and paths that employees and others were encouraged to construct, the company also had deposited bulk asbestos waste in a multitude of locations across the country.

I first became aware of the practice in 1978, when former Hardie engineer Fred Sandilands contacted me after my ABC radio series about the industry had aired and I helped publicise his story.

Sandilands was 49 and had worked at Hardie for most of his life. He had remarried in 1975 and left the company to start a new life in Singapore, where he got a job with Humes, another asbestos manufacturer. After a medical check-up at Humes he was told that he had mesothelioma. He called me just after he had returned to Australia.

He knew he was dying. He spoke calmly, but slowly, as one suffering a lot of pain. Sandilands expressed disbelief that the company for which he had felt so much affection could be so tough in its compensation negotiations with him. The enormity of the Hardie cover-up was dawning on him. As his death grew closer it weighed on his mind.

Sandilands had supervised the dumping of thousands of tonnes of asbestos waste throughout the suburbs surrounding Hardie's Sydney factory. When his story went public in the newspapers and on ABC TV, Hardie's chairman Reid circulated a letter to shareholders and staff because, he wrote, "unfortunately the facts have not always been presented in full or objectively". Under the heading "Setting the Record Straight", Hardie set out a response carefully crafted by its PR consultant, Bill Frew: "Because the small amount of asbestos fibres in our products is locked in by cement, it cannot escape into the atmosphere as dust, and therefore poses NO RISK TO HEALTH."

Behind the scenes, Hardie and the Health Commission were scrambling for cover. There were many more sites than the two mentioned. Frank Stewart, the NSW health minister, urged householders not to be alarmed. "Asbestos dust does pose a health hazard, but it requires exposure over a long period of time," he said soothingly and inaccurately. The government soon identified dump sites at other Sydney suburbs, among them North Rocks, Wentworthville, Granville, Silverwater, Homebush and Parramatta Park.

Early this decade, Hardie waste in Perth was still being dug up in the road and rail reserves at Burswood, where the company had dumped it from its nearby factory. Other landfill excavated from Goodwood Parade in Riverdale to help construct a new freeway was discovered to be "massively contaminated". West Australian health authorities expressed surprise but played down any possible dangers, expressing satisfaction that test results had demonstrated "no risk to public health".

Federal and state government authorities had failed to regulate the safe disposal of asbestos until the late 70s. Hardie had been able to exploit this omission.

The practice was the same throughout the country. Hardie knew the public was at risk. Its secret monitoring in Adelaide during November 1974 revealed that even 20 minutes after tipping had stopped, there was an asbestos dust count of 30 fibres per cubic centimetre. Hardie's nominal safe level of exposure for a worker during a shift in its factories at the time was four fibres per cubic centimetre, soon to be halved. Hardie's dust committee warned of "the harm that such an event could cause to the company's good public relations" if the news leaked out.

The number of people killed by Hardie products in the course of their work, whether in the company's factories or outside, was sooner or later likely to become public knowledge. So, too, was information about the products that had killed them.

Many at the top of the firm, though, were also aware of those less visible potential hazards, in places such as driveways and dumps, where most of those exposed would have no knowledge of its presence. Yet time and again Hardie directors and executives chose silence. One example starkly demonstrates the company's continuing failure to warn the public of a danger that still lingers, possibly in thousands of homes.

For many decades the millions of tonnes of raw asbestos shipped into Australia and transported from mines at Wittenoom in Western Australia and Woodsreef and Baryulgil in NSW were carried in hessian bags. Once the asbestos had been emptied from the bags, many millions were recycled for other uses. Cleaning the bags did not make them safe.

John Downes worked for the Active Bag Company, based near Sydney's Mascot airport, for about three years until 1965. Downes, who later developed asbestosis, remembered picking up hessian bags from Hardie's factory at Camellia. His company sent two trucks over to the factory every week, each of which returned with 10 bales on the back containing 800 to 1500 hessian bags.

After the bags were tumbled in a machine to remove the obvious raw asbestos, Downes said, they were sold to various firms for use as "carpet underlay or onion bags". Just this company alone would have processed about a quarter of a million asbestos bags every year.


This is an edited extract from Killer Company: James Hardie Exposed by Matt Peacock, ABC Books, $35, available from September 1. Peacock will appear on September 13 at the Brisbane Writers Festival, which runs from September 9 and is co-sponsored by The Australian.

ASBESTOS USE AND ITS EFFECTS

ASBESTOS is a fibrous mineral used for heat and fire protection and for insulation.

It was used in many kinds of products, including airconditioning ducts, ceiling tiles, bitumen-based waterproofing such as malthoid or roofs, floors and brickwork, roof tiles, cement render, oven door seals, compressed asbestos used in brakes and gaskets, compressed asbestos panels for floorings, verandas and demountable buildings, electric heat banks, flexible hoses, fire-door insulation, fire blankets, beverage and wine filters, insulation around the heating elements in hair dryers, lift shafts, pipe insulation and other products.

It was banned from all further use in 2003.

There is no safe level of asbestos fibre inhalation and cancer from it can take decades to develop.

www.adfa.org.au

www.health.qld.gov.au/asbestos/about--asbestos/default.asp

Read more >>

Forget nuclear power, we should be worried about expanding the Olympic Dam uranium mine

"To use a non-medical term, these proposals are mind-blowing in the potential risks to this and to future generations"


Sir Gustav Nossal
Fiona Stanley
Peter Doherty
and others

Their actual submission is below. First, here's The Advertiser's report:

MILES KEMP

August 18, 2009

SCIENTISTS and doctors including a Nobel Prize-winner and two Australians of the year have warned of the "mind-blowing risk" of the Olympic Dam expansion.

The State Government is taking public submissions on the BHP mine's environmental impact statement and the experts warn of arsenic, mercury and uranium which will enter undergroundwater and the atmosphere.

The 15 have written to the State Government warning that up to 5.5 million tonnes of toxic waste in dams with an area of 4000ha will reach ground water within 150 years and dust storms could blow thousands of tonnes from the 242 million tonnes of waste into the atmosphere and all over the state for hundreds of years.

"To use a non-medical term, these proposals are mind-blowing in the potential risks to this and future generations," the letter states.

"There will be direct adverse health impacts and also impacts on future generations."

A spokesman for BHP said the company was studying all the submissions to the EIS and would respond to all of the documents in a supplementary EIS.

The medical experts recommend the project be delayed until after health impact studies can be undertaken and that BHP be made to put aside funds to pay for the health effects for "centuries".

The letter is signed by, among others, Nobel Prize-winner and Australian of the Year Professor Peter Doherty, Australians of the Year Professor Gustav Nossal and Professor Fiona Stanley, former Dean of the University of Adelaide Medical School Professor Bob Douglas and Executive Dean of Health Sciences at Flinders University Professor Michael Kidd.

The experts also point out that South Australia may have to rely on the Great Artesian Basin water below the mine if the Murray becomes unusable.

The toxic waste created by the mine represents 5.5 million standard-size trailers of toxic acids stored in dams 15 times the area of Adelaide's CBD as well as another 242 million trailers of solid material.

Roxby Submission


BHP's Environmental Impact Statement
BHP promotional video

Read more >>