The Henry Tax review should be out this afternoon, presumably available from their website.
Peter Martin has a series of posts on the issue that should fill the intervening hours if you just can’t wait. Aside from the foreshadowing of a change to the way miners are taxed, the big orchestrated leak so far relates to changes to superannuation, with the taxation regime to be altered in a more progressive direction and the levy to be increased to 12% from its present 9.
Post links to anything interesting review-related you find, and I’m sure one of the LP crew will update this post as appropriate!
Oh, and Western Austraila, go ahead, secede. I dare you…
It will be interesting to see how the increase in compulsory super is presented, because it is in effect a 3% cut in wages received in the hand. If it is not fully compensated by tax cuts, then it should act as a damper on inflation, which in turn would relieve the pressure for the Reserve Bank to keep on raising interest rates.
But I am not an economist! So other people will have a better understanding of how all this fits together than me.
It will be interesting to see how the increase in compulsory super is presented, because it is in effect a 3% cut in wages received in the hand. If it is not fully compensated by tax cuts, then it should act as a damper on inflation, which in turn would relieve the pressure for the Reserve Bank to keep on raising interest rates.
But I am not an economist! So other people will have a better understanding of how all this fits together than me.
I saw that ABC news item about secession when it was posted yesterday, and thought that it must have been a pretty boring day in the office for some journalist. Utter bullshit, I’m sure.
I saw that ABC news item about secession when it was posted yesterday, and thought that it must have been a pretty boring day in the office for some journalist. Utter bullshit, I’m sure.
Yep, its a 3% wage cut, and a highly regressive policy that hits low-wage workers hardest; they should be ashamed of themselves listening to the superanuation lobby spivs. But then most of the arguments put for compulsory superannuation are economic fallacies.
I don’t think it’ll have a big impact on inflation either way, but to the extent it drives up employer costs it will drive prices up.
Yep, its a 3% wage cut, and a highly regressive policy that hits low-wage workers hardest; they should be ashamed of themselves listening to the superanuation lobby spivs. But then most of the arguments put for compulsory superannuation are economic fallacies.
I don’t think it’ll have a big impact on inflation either way, but to the extent it drives up employer costs it will drive prices up.
If it is just 3% comes off take home pay but is added on to Super, nothing much will change for me. Except for grumbling from from those staff who see it as a pay cut (i.e. all of them).
If it is just 3% comes off take home pay but is added on to Super, nothing much will change for me. Except for grumbling from from those staff who see it as a pay cut (i.e. all of them).
Well, ordinarily I wouldn’t, but seeing as you’ve raised it… I wrote a couple of thoughts about secession yesterday, if you’re interested.
Well, ordinarily I wouldn’t, but seeing as you’ve raised it… I wrote a couple of thoughts about secession yesterday, if you’re interested.
The 3% change is potentially handy, but still annoying. The whole “$XXXk package” thing annoys me already. Why not include payroll tax while you’re at it? But I’ve already spent a couple of years dumping spare income into the biggest tax con I’ve got available.
I’m most enthused by the resource tax and super changes – both are in the “not before time” category. The con of paying 48% marginal or 15% into a self managed super fund is a sick joke on people with low incomes.
The 3% change is potentially handy, but still annoying. The whole “$XXXk package” thing annoys me already. Why not include payroll tax while you’re at it? But I’ve already spent a couple of years dumping spare income into the biggest tax con I’ve got available.
I’m most enthused by the resource tax and super changes – both are in the “not before time” category. The con of paying 48% marginal or 15% into a self managed super fund is a sick joke on people with low incomes.
derrida derider @ 3
Sorry, but I can’t let that pass without strenuously replying that I think you’re talking out of your arse.
Firstly I can’t see much room for doubt that one of the things that protected Australia during both the recent collapse in available global capital and during last decade’s attacks on Asian currencies was the comparatively high levels of private (superannuation) savings that provide a constant ‘enforced’ local supply of investment capital that has to go somewhere.
Hell, go to Greece and tell all the people who have lost their jobs – and the tens of thousands more who will lose them because of a failure of confidence in their ability to pay their debts – that the proportion of national savings to debt doesn’t count.
Secondly, so long as the total costs to businesses are revenue positive for them – and the indications are they will be – then why should they care whether costs are to do with compulsory super or pre-profit taxes and levies or post profit tax or any other area of their financial activity?
In fact surely a system that directly provides large amounts of private capital looking for investment opportunities is infinitely preferable to the alternative for providing financial security for an ageing population – government taxing more to pay more pensions?
derrida derider @ 3
Sorry, but I can’t let that pass without strenuously replying that I think you’re talking out of your arse.
Firstly I can’t see much room for doubt that one of the things that protected Australia during both the recent collapse in available global capital and during last decade’s attacks on Asian currencies was the comparatively high levels of private (superannuation) savings that provide a constant ‘enforced’ local supply of investment capital that has to go somewhere.
Hell, go to Greece and tell all the people who have lost their jobs – and the tens of thousands more who will lose them because of a failure of confidence in their ability to pay their debts – that the proportion of national savings to debt doesn’t count.
Secondly, so long as the total costs to businesses are revenue positive for them – and the indications are they will be – then why should they care whether costs are to do with compulsory super or pre-profit taxes and levies or post profit tax or any other area of their financial activity?
In fact surely a system that directly provides large amounts of private capital looking for investment opportunities is infinitely preferable to the alternative for providing financial security for an ageing population – government taxing more to pay more pensions?
I think the rest of Australia’s economy will be better off without WA. Without thier iron ore, our dollar will fall to US 70cents, and the Western Australian currency, let’s call it the Bourkie after their state’s puppet master, will rise to $1.40 US. Imagine thier farmers only getting 130 Bourkies per tonne of wheat, whereas Australia minus WA’s farmers are getting $260 per tonne. A WA accountant preparing one’s tax might charge $100 Bourkies per hour, whereas a Western Australian citizen could outsource their accounting to Sydney or Adeliade for $150 Australian per hour, equivalent to only $75 Bourkies per hour. Their mining would swallow up all their manufacturing, agriculture and service industries, and when in the future there is an inevitable mining downturn, their economy would crash. It’s not like they’re free enough of corruption to be able to build stable banks to see them smoothly through a downturn. Meanwhile, Australia minus WA, with our lower exchange rate, will see manufacturing, agriculture, and services all do a bit better, and support the knock-on industries in cities and townships. Telstra might decide that at US 70cents, it’s easier to build thier next call centre in Australia rather than outsource it to India, for example.
I think the rest of Australia’s economy will be better off without WA. Without thier iron ore, our dollar will fall to US 70cents, and the Western Australian currency, let’s call it the Bourkie after their state’s puppet master, will rise to $1.40 US. Imagine thier farmers only getting 130 Bourkies per tonne of wheat, whereas Australia minus WA’s farmers are getting $260 per tonne. A WA accountant preparing one’s tax might charge $100 Bourkies per hour, whereas a Western Australian citizen could outsource their accounting to Sydney or Adeliade for $150 Australian per hour, equivalent to only $75 Bourkies per hour. Their mining would swallow up all their manufacturing, agriculture and service industries, and when in the future there is an inevitable mining downturn, their economy would crash. It’s not like they’re free enough of corruption to be able to build stable banks to see them smoothly through a downturn. Meanwhile, Australia minus WA, with our lower exchange rate, will see manufacturing, agriculture, and services all do a bit better, and support the knock-on industries in cities and townships. Telstra might decide that at US 70cents, it’s easier to build thier next call centre in Australia rather than outsource it to India, for example.
From ABC Online.
From ABC Online.
see http://www.businessspectator.com.au/bs.nsf/Article/Henry-review-resource-tax-40-SGC-to-12-company-tax-pd20100502-537BJ?OpenDocument&src=hp1
for a summary of Henry Tax Review
see http://www.businessspectator.com.au/bs.nsf/Article/Henry-review-resource-tax-40-SGC-to-12-company-tax-pd20100502-537BJ?OpenDocument&src=hp1
for a summary of Henry Tax Review
The ABC link is http://www.abc.net.au/news/stories/2010/05/02/2888088.htm?section=justin
The ABC link is http://www.abc.net.au/news/stories/2010/05/02/2888088.htm?section=justin
dd, care to explain why you think so?
dd, care to explain why you think so?
DD – Increasing the superannuation guarantee to 12% over the decade starting in July 2013 will erode your take home pay. But not by much because superannuation is taken out of gross pay and taxed at 15% and your take home pay was taxed at your marginal tax rate that is probably 30% but could be as high as 46%.
DD I remember the days when quite lowly professionals all got taxed at 48% on incomes with far less buying power than $180,000.
Superannuation is no longer going to be the savings vehicle of choice of the wealthy as additional contributions will be taxed if there is more than $500,000 in the super fund. In fact superannuation is going to be an alternative to the aged pension paying out pensions of $20,000. Fortunately the super changes are grandfathered. Personally I think an income of $20,000 is insufficient to allow an older person who is not working to live in frugal comfort as utilities bills rise unless the person has access to a Health Care Card for pharmaceuticals and bulk billed medical treatment
DD – Increasing the superannuation guarantee to 12% over the decade starting in July 2013 will erode your take home pay. But not by much because superannuation is taken out of gross pay and taxed at 15% and your take home pay was taxed at your marginal tax rate that is probably 30% but could be as high as 46%.
DD I remember the days when quite lowly professionals all got taxed at 48% on incomes with far less buying power than $180,000.
Superannuation is no longer going to be the savings vehicle of choice of the wealthy as additional contributions will be taxed if there is more than $500,000 in the super fund. In fact superannuation is going to be an alternative to the aged pension paying out pensions of $20,000. Fortunately the super changes are grandfathered. Personally I think an income of $20,000 is insufficient to allow an older person who is not working to live in frugal comfort as utilities bills rise unless the person has access to a Health Care Card for pharmaceuticals and bulk billed medical treatment
Bah, WA pulls this secession act every so often. It’s a nuclear option (in the sense that they can’t afford to do it), just useless barking on behalf of their corporate masters. It’s a tiresome, obdurate parochialism that utterly fails in its objective: to make any Easterner care a fig.
Bah, WA pulls this secession act every so often. It’s a nuclear option (in the sense that they can’t afford to do it), just useless barking on behalf of their corporate masters. It’s a tiresome, obdurate parochialism that utterly fails in its objective: to make any Easterner care a fig.
Absolutely nothing on housing affordability, that actually surprises me quite a lot.
I am concerned the stupid “2 speed economy” rhetoric is about to bear some rather poisonous fruit.
Why not a “super profit tax” on musicians who crack the big time? Mega successful artists? lotto winners?
The government is talking about penalizing the most successful sector of the economy and using that money to “pick winners” elsewhere. Forrest had it right, this will result in greater foreign ownership of Australian resources. In addition it sends a signal to the mining sector worldwide that the Australian government sees the sector as a cash cow, with no surety they wont change the rules again.
This sector takes decades to produce new projects, and the downside of a bad call requires large reserves of cash. This will make Australian miners less resilient to bad decisions, slow new projects, and reduce employment in the sector.
I dont know if Swan has killed the golden goose, but hes given it a hefty kick.
An example of the scale of losses a couple of bad decisions can cause.
BHP Billiton’s decision to slash 6000 jobs worldwide, mothball and take a $US3.7 billion ($5.7 billion) write-down on its disastrous Ravensthorpe nickel venture, and fess up to a $US333 million hedging blunder, will have big implications for the mining, mining services and contracting sectors.
http://www.theaustralian.com.au/news/executive-lifestyle/ravensthorpe-rout-hits-sector/story-e6frga8o-1111118628209
Absolutely nothing on housing affordability, that actually surprises me quite a lot.
I am concerned the stupid “2 speed economy” rhetoric is about to bear some rather poisonous fruit.
Why not a “super profit tax” on musicians who crack the big time? Mega successful artists? lotto winners?
The government is talking about penalizing the most successful sector of the economy and using that money to “pick winners” elsewhere. Forrest had it right, this will result in greater foreign ownership of Australian resources. In addition it sends a signal to the mining sector worldwide that the Australian government sees the sector as a cash cow, with no surety they wont change the rules again.
This sector takes decades to produce new projects, and the downside of a bad call requires large reserves of cash. This will make Australian miners less resilient to bad decisions, slow new projects, and reduce employment in the sector.
I dont know if Swan has killed the golden goose, but hes given it a hefty kick.
An example of the scale of losses a couple of bad decisions can cause.
BHP Billiton’s decision to slash 6000 jobs worldwide, mothball and take a $US3.7 billion ($5.7 billion) write-down on its disastrous Ravensthorpe nickel venture, and fess up to a $US333 million hedging blunder, will have big implications for the mining, mining services and contracting sectors.
http://www.theaustralian.com.au/news/executive-lifestyle/ravensthorpe-rout-hits-sector/story-e6frga8o-1111118628209
Bah 2 u 2, ewe2!
Postcard to Mr. Ken Henry
From West Australian Citizenry:
Please tell them in the ACT
We carried you through the GFC
We’re sick of all this spending spree
Using over there our GST
So Sunday please make sure there’ll be
Rewards for every mining company.
Or this the second time ’twill be
W.A. becomes secessionary!
Then the world will really see
What it means to dig for victory!
Bah 2 u 2, ewe2!
Postcard to Mr. Ken Henry
From West Australian Citizenry:
Please tell them in the ACT
We carried you through the GFC
We’re sick of all this spending spree
Using over there our GST
So Sunday please make sure there’ll be
Rewards for every mining company.
Or this the second time ’twill be
W.A. becomes secessionary!
Then the world will really see
What it means to dig for victory!
Mole, mining companies are extracting a resource that belongs to all of us. Somehow or other they have should pay for the privilege, above and beyond the normal company tax rate. The question is then the terms of that payment.
I don’t see why a profit-based charge is somehow inherently more objectionable than the present schemes.
In the case of Ravensthorpe, I don’t know the details but in principle the new tax scheme might have helped; as the Raventhorpe mine clearly wasn’t making a decent profit, there wouldn’t have been much tax on it, and thus leaving it in production would have been made more viable.
Mole, mining companies are extracting a resource that belongs to all of us. Somehow or other they have should pay for the privilege, above and beyond the normal company tax rate. The question is then the terms of that payment.
I don’t see why a profit-based charge is somehow inherently more objectionable than the present schemes.
In the case of Ravensthorpe, I don’t know the details but in principle the new tax scheme might have helped; as the Raventhorpe mine clearly wasn’t making a decent profit, there wouldn’t have been much tax on it, and thus leaving it in production would have been made more viable.
Robert Merkel
The point of bringing up ravensthorpe was to point out the risk involved in minerals exraction.
Western mining used to be a company on par with BHP, the shattered rump of that company was brought out a few years ago. They made 1 bad business decision related to hedging.
They may have survived if theyd had more cash on hand, its unlikely from what iread about the hedging mistake.
In a nutshell thsi is what happened.
They hedged gold for about 2years out and signed contracts to provide x amount of gold at that price. Their flagship gold project didnt produce the required amount of gold. Im mining that leaves the company contracted to supply the gold buying gold on the market to supply their customer any shortfall. At the same time the price of gold went up. Caught with poor production, selling what they produced at below market and buyiong more at above their production cost ruined them.
They went from a huge company with a large smount of ground in production to a 3 mine show which limperd along until their takeover.
Take 40% of BHP’s “super windfall profit” then crunch the numbers on the Ravensthorpe losses.
Another example. A major gold producer I worked at built a new gold plant (St Ives Goldfields), they built it based on buying new ground. The fiugures they used were from examining old WMC drill cores, which showed significant amounts of reasonable grade ore. WMC had been exracting nickel from that area before they went bust.
The new mill was built, mining commenced, and the company went into crisis mode.
The ground they had based their projections on had allready been mined for nickel. No-one had physicaly checked the area. They went and found holes in the ground. If it hadnt been for golds remarkable 6 year run they would have mothballed the whole plant.
As it was pretty well every person in a position of authority was sacked over the next 6 months.
The company I work for went from record prices in Nickel in the last few years to nearly closing down last year because of a price slump caused by the GFC.
They brought forward an extremely expensive piece of development work by a year and a half while the boom was on. If they hadnt done that this mine would have shut during the GFC. Despite nickel prices being very good again the other 2 mines in my area which shut havent re-opened. Mines arent easy to switch on/off.
And again why not a “fantasticly tallented artist/musican/lotto winner” windfall tax?
I know it sounds a lot like special pleading, but this is a high risk/high return sector. Either this will result in fewer projects starting, or it will lead to more company collapses. Either way the projections for the tax coming in is likely to taper off.
Robert Merkel
The point of bringing up ravensthorpe was to point out the risk involved in minerals exraction.
Western mining used to be a company on par with BHP, the shattered rump of that company was brought out a few years ago. They made 1 bad business decision related to hedging.
They may have survived if theyd had more cash on hand, its unlikely from what iread about the hedging mistake.
In a nutshell thsi is what happened.
They hedged gold for about 2years out and signed contracts to provide x amount of gold at that price. Their flagship gold project didnt produce the required amount of gold. Im mining that leaves the company contracted to supply the gold buying gold on the market to supply their customer any shortfall. At the same time the price of gold went up. Caught with poor production, selling what they produced at below market and buyiong more at above their production cost ruined them.
They went from a huge company with a large smount of ground in production to a 3 mine show which limperd along until their takeover.
Take 40% of BHP’s “super windfall profit” then crunch the numbers on the Ravensthorpe losses.
Another example. A major gold producer I worked at built a new gold plant (St Ives Goldfields), they built it based on buying new ground. The fiugures they used were from examining old WMC drill cores, which showed significant amounts of reasonable grade ore. WMC had been exracting nickel from that area before they went bust.
The new mill was built, mining commenced, and the company went into crisis mode.
The ground they had based their projections on had allready been mined for nickel. No-one had physicaly checked the area. They went and found holes in the ground. If it hadnt been for golds remarkable 6 year run they would have mothballed the whole plant.
As it was pretty well every person in a position of authority was sacked over the next 6 months.
The company I work for went from record prices in Nickel in the last few years to nearly closing down last year because of a price slump caused by the GFC.
They brought forward an extremely expensive piece of development work by a year and a half while the boom was on. If they hadnt done that this mine would have shut during the GFC. Despite nickel prices being very good again the other 2 mines in my area which shut havent re-opened. Mines arent easy to switch on/off.
And again why not a “fantasticly tallented artist/musican/lotto winner” windfall tax?
I know it sounds a lot like special pleading, but this is a high risk/high return sector. Either this will result in fewer projects starting, or it will lead to more company collapses. Either way the projections for the tax coming in is likely to taper off.
Contrary to discuss above the increase to the Superannuation Guarantee will be employer funded.
It is a 3% wage rise, but paid to a Super Fund rather than to the employee.
Simple.
Contrary to discuss above the increase to the Superannuation Guarantee will be employer funded.
It is a 3% wage rise, but paid to a Super Fund rather than to the employee.
Simple.
Eratosthenes @7, who said national savings doesn’t count? What I’m denying is that compulsory super has raised national savings very much. Firstly, household savings is only one component of national savings – and if you’re worried about national debt it’s aggregate national savings that count. Secondly, basically the only people you can force to save in deregulated credit markets are those who don’t have access to credit – ie, the poor. And there are two things about making the poor save:
(1) 12% of bugger all income is bugger all, so their net addition to national savings is truly puny; and
(2) you’re ripping money off them when you KNOW they’re poor on the off-chance that they’ll still be poor when you propose to give it back.
For everyone else, it just means they take a bigger mortgage (or borrow against their existing home equity) cos both they and their banks know they don’t have to have it fully paid off before retirement. That’s one of the factors driving up house prices.
If you really believe we have deficient national savings (something that IMO is only arguable at best) then a far fairer and more efficient way to boost it would be by running a large fiscal surplus that is put into a sovereign wealth fund.
AS I said, most arguments for compulsory super rest on economic fallacies – that savibgs and dissavings aren’t fungible, that the reason people don’t do personal savings is because they don’t know their own best interest and Canberra legislators know that interest, and that feasible levels of retirement saving would save future tapxayers a motza. All three are demonstrably false.
Eratosthenes @7, who said national savings doesn’t count? What I’m denying is that compulsory super has raised national savings very much. Firstly, household savings is only one component of national savings – and if you’re worried about national debt it’s aggregate national savings that count. Secondly, basically the only people you can force to save in deregulated credit markets are those who don’t have access to credit – ie, the poor. And there are two things about making the poor save:
(1) 12% of bugger all income is bugger all, so their net addition to national savings is truly puny; and
(2) you’re ripping money off them when you KNOW they’re poor on the off-chance that they’ll still be poor when you propose to give it back.
For everyone else, it just means they take a bigger mortgage (or borrow against their existing home equity) cos both they and their banks know they don’t have to have it fully paid off before retirement. That’s one of the factors driving up house prices.
If you really believe we have deficient national savings (something that IMO is only arguable at best) then a far fairer and more efficient way to boost it would be by running a large fiscal surplus that is put into a sovereign wealth fund.
AS I said, most arguments for compulsory super rest on economic fallacies – that savibgs and dissavings aren’t fungible, that the reason people don’t do personal savings is because they don’t know their own best interest and Canberra legislators know that interest, and that feasible levels of retirement saving would save future tapxayers a motza. All three are demonstrably false.
Steve @ 19 – do you have a reference to that? I haven’t been able to find it stated explicitly anywhere who will be paying the extra 3%. But Swan is quoted on the ABC as saying that if the Libs block the new mining taxes it will make the compulsory super changes unaffordable – and that implies that its actually going to be funded by the government.
From the ABC:
Steve @ 19 – do you have a reference to that? I haven’t been able to find it stated explicitly anywhere who will be paying the extra 3%. But Swan is quoted on the ABC as saying that if the Libs block the new mining taxes it will make the compulsory super changes unaffordable – and that implies that its actually going to be funded by the government.
From the ABC:
Chris @21, no it doesn’t imply the govt will be funding the super increase, it implies the two will be presented to Parliament in the same Bill.
Chris @21, no it doesn’t imply the govt will be funding the super increase, it implies the two will be presented to Parliament in the same Bill.
The additional 3 per cent super take is not paid by the government. It is paid by employers. It is effectively a pay rise for employees – albeit phased in very, very gradually over a decade. The additional 3 per cent contribution to super comes out of pre-tax pay and is taxed at a concessional 15 per cent.
Swan is not saying the resource rent tax will pay for the compulsory super. He’s saying the super package (which does include some additional tax expenditures such as restoring the $50,000 limit on contributions for over 50s, but means testing it) is a take-it-or-leave it proposition tied to the resource tax.
This is the federal government’s attempt to stop Australia succumbing to Dutch disease – the tendency for resource booms to hollow out the rest of the economy by soaking up capital, labour and forcing interest rates and the exchange rate higher than they would normally be. It’s quite a sensible reform.
The additional 3 per cent super take is not paid by the government. It is paid by employers. It is effectively a pay rise for employees – albeit phased in very, very gradually over a decade. The additional 3 per cent contribution to super comes out of pre-tax pay and is taxed at a concessional 15 per cent.
Swan is not saying the resource rent tax will pay for the compulsory super. He’s saying the super package (which does include some additional tax expenditures such as restoring the $50,000 limit on contributions for over 50s, but means testing it) is a take-it-or-leave it proposition tied to the resource tax.
This is the federal government’s attempt to stop Australia succumbing to Dutch disease – the tendency for resource booms to hollow out the rest of the economy by soaking up capital, labour and forcing interest rates and the exchange rate higher than they would normally be. It’s quite a sensible reform.
Rebekka & Mr Denmore – I should have included a bit more of the quote:
If the government isnt’ funding the SGC increase (and its mentioned above explicitly) then why mention that its only doable if it can be funded?
Perhaps he’s just being misquoted but as written its implying a financial link between the mining tax and the SGC increase (or perhaps thats just what he wants the public to think and get credit for what the employers will have to pay). The full article is here.
If it is just funded by employers then I imagine it’ll most likely just come out of future wage rises. The increase is over such a long period it shouldn’t have much of an impact on employment.
Rebekka & Mr Denmore – I should have included a bit more of the quote:
If the government isnt’ funding the SGC increase (and its mentioned above explicitly) then why mention that its only doable if it can be funded?
Perhaps he’s just being misquoted but as written its implying a financial link between the mining tax and the SGC increase (or perhaps thats just what he wants the public to think and get credit for what the employers will have to pay). The full article is here.
If it is just funded by employers then I imagine it’ll most likely just come out of future wage rises. The increase is over such a long period it shouldn’t have much of an impact on employment.
This is the federal government’s attempt to stop Australia succumbing to Dutch disease – Mr Denmore
Of course if we have a high national savings rate then our CAD would tend to close because we’d be funding domestic investment ourselves. Net result: an even higher dollar. As an answer to Dutch disease, boosting domestic savings is a non-answer – the arguments for and against doing this are on quite different grounds. Though as I keep saying, super aint doing much to boost national savings anyway.
This is the federal government’s attempt to stop Australia succumbing to Dutch disease – Mr Denmore
Of course if we have a high national savings rate then our CAD would tend to close because we’d be funding domestic investment ourselves. Net result: an even higher dollar. As an answer to Dutch disease, boosting domestic savings is a non-answer – the arguments for and against doing this are on quite different grounds. Though as I keep saying, super aint doing much to boost national savings anyway.
That may be Chris. In 2013 this will mean a $1,000 per wee employee costs another $42 but the money won’t go to the employee.
For cash flow based small businesses (eg, pubs) that are under bank imposed covenants, it means for every 22 staff on the payroll, one will be retrenched to pay for the increase.
That may be Chris. In 2013 this will mean a $1,000 per wee employee costs another $42 but the money won’t go to the employee.
For cash flow based small businesses (eg, pubs) that are under bank imposed covenants, it means for every 22 staff on the payroll, one will be retrenched to pay for the increase.
Mole @ 15: “The government is talking about penalizing the most successful sector of the economy and using that money to “pick winners” elsewhere.”
A developed national economy should not be a monoculture. Monocultures are unstable, terminally vulnerable in downturns, and exclude large sectors of the population at the best of times. This should help to maintain balance.
“this will result in greater foreign ownership of Australian resources.”
That’s already there, isn’t it? But since this is OUR irreplaceable resources that we are talking about while they’re in the ground, those who take them might at least pay decent royalties in compensation for future opportunity costs.
“In addition it sends a signal to the mining sector worldwide that the Australian government sees the sector as a cash cow, with no surety they wont change the rules again.”
1. All economic activity is a potential cash cow for governments.
2. The resources are under Australian soil, and are not going to move overseas in a huff. Come here and mine them under Australian rules, or don’t, as you see fit.
That immobility of the externalisable input is the special feature of resource extraction industries.
3. Of course they might change the rules again. So? All the rest of us live with it.
Mole @ 15: “The government is talking about penalizing the most successful sector of the economy and using that money to “pick winners” elsewhere.”
A developed national economy should not be a monoculture. Monocultures are unstable, terminally vulnerable in downturns, and exclude large sectors of the population at the best of times. This should help to maintain balance.
“this will result in greater foreign ownership of Australian resources.”
That’s already there, isn’t it? But since this is OUR irreplaceable resources that we are talking about while they’re in the ground, those who take them might at least pay decent royalties in compensation for future opportunity costs.
“In addition it sends a signal to the mining sector worldwide that the Australian government sees the sector as a cash cow, with no surety they wont change the rules again.”
1. All economic activity is a potential cash cow for governments.
2. The resources are under Australian soil, and are not going to move overseas in a huff. Come here and mine them under Australian rules, or don’t, as you see fit.
That immobility of the externalisable input is the special feature of resource extraction industries.
3. Of course they might change the rules again. So? All the rest of us live with it.
Oh, and the extra 3% is NOT a wage increase – it’s more likely a wage cut. It adds 3% to employer costs which MUST either slow the rate of growth in employment or (more likely) get passed on to workers through a slower rate of growth in wages – ie be a real wage cut. Sorry, there’s no free lunch here.
Oh, and the extra 3% is NOT a wage increase – it’s more likely a wage cut. It adds 3% to employer costs which MUST either slow the rate of growth in employment or (more likely) get passed on to workers through a slower rate of growth in wages – ie be a real wage cut. Sorry, there’s no free lunch here.
@ 18
Mole, all you are doing is describing the risks of doing business in the mining sector, which are completely irrelevant as regards to the proposed increase in the tax rate. You’re at pains to describe basis risk and possible constraints on capital rationing, but these are issues for mining companies irrespective of the amount of tax they have to pay.
I think you’re looking at this particular proposal far too simply: that there’s a 10% increase in tax and by extension it must be business-prohibitive. But there’s fine print associated with the proposal – tax credits for State royalties, deductions/adjustments for certain capex, etc. – which may go some ways to offsetting any ‘headline negatives’. And to be honest, this afternoon has been littered with commentators focusing on easy-to-convey points of contention without adequately understanding all of the details, structure and context of the Government’s announcements.
@ 23
Mr Denmore’s last paragraph is compelling; I’d advise commentators looking for a cheap destructive point on this so-called ‘tax grab’ to re-read and understand this point. Bridgestone certainly won’t be paying tax in this country anymore.
@ 18
Mole, all you are doing is describing the risks of doing business in the mining sector, which are completely irrelevant as regards to the proposed increase in the tax rate. You’re at pains to describe basis risk and possible constraints on capital rationing, but these are issues for mining companies irrespective of the amount of tax they have to pay.
I think you’re looking at this particular proposal far too simply: that there’s a 10% increase in tax and by extension it must be business-prohibitive. But there’s fine print associated with the proposal – tax credits for State royalties, deductions/adjustments for certain capex, etc. – which may go some ways to offsetting any ‘headline negatives’. And to be honest, this afternoon has been littered with commentators focusing on easy-to-convey points of contention without adequately understanding all of the details, structure and context of the Government’s announcements.
@ 23
Mr Denmore’s last paragraph is compelling; I’d advise commentators looking for a cheap destructive point on this so-called ‘tax grab’ to re-read and understand this point. Bridgestone certainly won’t be paying tax in this country anymore.
I think that’s an arguable proposition, DD. Or are Australians somehow different from the idiots that thought American house prices could never go down?
I think that’s an arguable proposition, DD. Or are Australians somehow different from the idiots that thought American house prices could never go down?
Oh, and bringing it all back to the Henry Review – look what that Review had to say about raising the compulsory super contribution to 12%. It explicitly rejected it as hurting low income earners (see page 11); the same argument I made @20 above.
Oh, and bringing it all back to the Henry Review – look what that Review had to say about raising the compulsory super contribution to 12%. It explicitly rejected it as hurting low income earners (see page 11); the same argument I made @20 above.
Andyc
Mining is massively important to our export sector, much less important to our general economy.
We are such a long way from a monoculture its silly to bring it up.
From wiki.
“Mining contributes about 5.6% of Australia’s Gross Domestic Product. This is up from only 2.6% in 1950, but down from over 10% at the time of federation in 1900. In contrast, mineral exports contribute around 35% of Australia’s exports”
As for numbers employed directly
“Despite its export importance, the mining sector employs only a small proportion of the workforce – roughly 129,000 Australians, representing only about 1.3% of the total labour force”
And its significantly more than just holes in the ground as well.
“A large proportion of mines worldwide make use of Australian-developed computer software, such as specialised Enterprise resource planning software by Mincom Limited and geology/mine planning software by Maptek Pty Ltd. Australia’s mining services, equipment, and technology exports are over $2 billion annually”
Dont try and dress up a tax grab as “correcting a 2 speed economy”.
Its nice to think it retains its value sitting in the ground, but it doesnt do anything till its dug up and processed. Making it less profitable for Australian companies to extract will ensure more foreign ownership of Australian resources.
As for your last point, I trust youd be just as casual if the goverment decided it should stop all tax breaks for the Australian movie industry on the grounds “That immobility of the externalisable input is the special feature of showbiz industries.
If you want less of something you tax it, or do people here think that only applies to ciggies and booze?
Andyc
Mining is massively important to our export sector, much less important to our general economy.
We are such a long way from a monoculture its silly to bring it up.
From wiki.
“Mining contributes about 5.6% of Australia’s Gross Domestic Product. This is up from only 2.6% in 1950, but down from over 10% at the time of federation in 1900. In contrast, mineral exports contribute around 35% of Australia’s exports”
As for numbers employed directly
“Despite its export importance, the mining sector employs only a small proportion of the workforce – roughly 129,000 Australians, representing only about 1.3% of the total labour force”
And its significantly more than just holes in the ground as well.
“A large proportion of mines worldwide make use of Australian-developed computer software, such as specialised Enterprise resource planning software by Mincom Limited and geology/mine planning software by Maptek Pty Ltd. Australia’s mining services, equipment, and technology exports are over $2 billion annually”
Dont try and dress up a tax grab as “correcting a 2 speed economy”.
Its nice to think it retains its value sitting in the ground, but it doesnt do anything till its dug up and processed. Making it less profitable for Australian companies to extract will ensure more foreign ownership of Australian resources.
As for your last point, I trust youd be just as casual if the goverment decided it should stop all tax breaks for the Australian movie industry on the grounds “That immobility of the externalisable input is the special feature of showbiz industries.
If you want less of something you tax it, or do people here think that only applies to ciggies and booze?
Rob
Yes I am, mining is high risk. The government cant legislate out the risk, nor is it there job.
But they can legislate out the high return side of it, and increase that risk by imposing “windfall” taxes.
The mine Im currently at was started for somewhere around 10 million dollars. In the 5-6 years Ive been here it has extracted over a BILLION dollars worth of nickel. The profit on that is under 10%. It employs around 400 people directly/contractors, and who knows how many indirectly. Its the best run mine/business Ive worked on by far, efficent, treats its staff well, and is run safely, to the extent of shutting down otherwise profitable sections of the mine when ground conditions became bad.
Rob
Yes I am, mining is high risk. The government cant legislate out the risk, nor is it there job.
But they can legislate out the high return side of it, and increase that risk by imposing “windfall” taxes.
The mine Im currently at was started for somewhere around 10 million dollars. In the 5-6 years Ive been here it has extracted over a BILLION dollars worth of nickel. The profit on that is under 10%. It employs around 400 people directly/contractors, and who knows how many indirectly. Its the best run mine/business Ive worked on by far, efficent, treats its staff well, and is run safely, to the extent of shutting down otherwise profitable sections of the mine when ground conditions became bad.
@ 31
Without getting technical, the link is not to the Tax Review …
Nevertheless, your point, derrida derider, is moot. You’ll be hard-pressed to find anyone on here who’d disagree that an increase in SGC is to the detriment of low income earners.
But time and again it’s a short-termist standpoint: how does a low income earner maintain a decent standard of living in retirement, without an excessive burden on the public purse? And in the same breath we’ve got people lobbying for cuts to the Commonwealth revenue base!
@ 31
Without getting technical, the link is not to the Tax Review …
Nevertheless, your point, derrida derider, is moot. You’ll be hard-pressed to find anyone on here who’d disagree that an increase in SGC is to the detriment of low income earners.
But time and again it’s a short-termist standpoint: how does a low income earner maintain a decent standard of living in retirement, without an excessive burden on the public purse? And in the same breath we’ve got people lobbying for cuts to the Commonwealth revenue base!
Thanks, Robert, for correctly using the word ” secede” re WA. I know I’m a pedant but I’ve seen “succeed” used on so many other blogs that it was starting to get up my nose! It’s right up there with the use of “loose” instead of “lose” and vice-versa. Can’t anyone spell these days?
Thanks, Robert, for correctly using the word ” secede” re WA. I know I’m a pedant but I’ve seen “succeed” used on so many other blogs that it was starting to get up my nose! It’s right up there with the use of “loose” instead of “lose” and vice-versa. Can’t anyone spell these days?
I don’t know why this blog tolerates Trolls like Mole.
Cut them loose.
I don’t know why this blog tolerates Trolls like Mole.
Cut them loose.
@ 33
Troll… I mean Mole:Yes, you are what? I don’t remember asking you a question. Your axiom re: risk is profound.
@ 33
Troll… I mean Mole:Yes, you are what? I don’t remember asking you a question. Your axiom re: risk is profound.
“For cash flow based small businesses (eg, pubs) that are under bank imposed covenants, it means for every 22 staff on the payroll, one will be retrenched to pay for the increase”
Assuming that you have extra staff, which I assume is unlikely. Either that or prices will go up (and then you might not need part of that extra staff member), or you will not make such a large profit.
“For cash flow based small businesses (eg, pubs) that are under bank imposed covenants, it means for every 22 staff on the payroll, one will be retrenched to pay for the increase”
Assuming that you have extra staff, which I assume is unlikely. Either that or prices will go up (and then you might not need part of that extra staff member), or you will not make such a large profit.
CMMC, mole has a different point of view which often adds a lot to a discussion. Just because you disagree with him this time (as I have in the past) doesn’t mean he isn’t worth listening to.
CMMC, mole has a different point of view which often adds a lot to a discussion. Just because you disagree with him this time (as I have in the past) doesn’t mean he isn’t worth listening to.
Mole @ 32:
“Mining is massively important to our export sector, much less important to our general economy.”
You’d already said that it is the most successful sector of our economy. I agree: successful enough to have a distorting effect on all sorts of things, including house prices in WA, a blase attitude to not processing ore here since shipping vast amounts of raw stuff out is profitable enough, and even the very perception of what ‘Geology’ means in Oz. You’ve put your finger on something with the ‘export’ comment. I was disgusted when I arrived here nearly two decades ago, and found out how much unprocessed ore is shipped straight out of the country without being smelted or made into anything here. That is very wasteful conversion of irreplaceable physical resources into disproportionately little wealth for Australia as a whole.
“Its nice to think it retains its value sitting in the ground, but it doesnt do anything till its dug up and processed.”
It’s irreplaceable natural capital. I’d sooner that much more was done with it by and for Australians later, than wasteful exploitation now.
“Making it less profitable for Australian companies to extract will ensure more foreign ownership of Australian resources.”
Aren’t most of the big extractors foreigners anyway? I thought most Australian companies were small and exploration-oriented, selling to the big overseas operators once they’d found something significant. But in any case, if they’re just going to export raw ore cheap, I don’t really care where they are based.
“As for your last point, I trust youd be just as casual if the goverment decided it should stop all tax breaks for the Australian movie industry on the grounds “That immobility of the externalisable input is the special feature of showbiz industries.”
??? Film stars are mobile, so are screenplay writers, directors, producers, etc. They’re not stuck in the ground. Sets can be built most places. The only immobile inputs that our film industry has are the distinctive features of the weather, landscape and wildlife. In general, those do not get permanently used up by film-making. You are comparing apples and chicken bones.
“If you want less of something you tax it, or do people here think that only applies to ciggies and booze?”
Deterring undesirable behaviour is not the only reason for taxation. Recovery of costs is another, including the opportunity cost of no longer have a resource available later, when it could have been value-added and used more wisely. And since an equal society is a social good, progressive taxation of those making large profits is also good. If you want to be in the society, pay the subscription at the appropriate rate.
Mole @ 32:
“Mining is massively important to our export sector, much less important to our general economy.”
You’d already said that it is the most successful sector of our economy. I agree: successful enough to have a distorting effect on all sorts of things, including house prices in WA, a blase attitude to not processing ore here since shipping vast amounts of raw stuff out is profitable enough, and even the very perception of what ‘Geology’ means in Oz. You’ve put your finger on something with the ‘export’ comment. I was disgusted when I arrived here nearly two decades ago, and found out how much unprocessed ore is shipped straight out of the country without being smelted or made into anything here. That is very wasteful conversion of irreplaceable physical resources into disproportionately little wealth for Australia as a whole.
“Its nice to think it retains its value sitting in the ground, but it doesnt do anything till its dug up and processed.”
It’s irreplaceable natural capital. I’d sooner that much more was done with it by and for Australians later, than wasteful exploitation now.
“Making it less profitable for Australian companies to extract will ensure more foreign ownership of Australian resources.”
Aren’t most of the big extractors foreigners anyway? I thought most Australian companies were small and exploration-oriented, selling to the big overseas operators once they’d found something significant. But in any case, if they’re just going to export raw ore cheap, I don’t really care where they are based.
“As for your last point, I trust youd be just as casual if the goverment decided it should stop all tax breaks for the Australian movie industry on the grounds “That immobility of the externalisable input is the special feature of showbiz industries.”
??? Film stars are mobile, so are screenplay writers, directors, producers, etc. They’re not stuck in the ground. Sets can be built most places. The only immobile inputs that our film industry has are the distinctive features of the weather, landscape and wildlife. In general, those do not get permanently used up by film-making. You are comparing apples and chicken bones.
“If you want less of something you tax it, or do people here think that only applies to ciggies and booze?”
Deterring undesirable behaviour is not the only reason for taxation. Recovery of costs is another, including the opportunity cost of no longer have a resource available later, when it could have been value-added and used more wisely. And since an equal society is a social good, progressive taxation of those making large profits is also good. If you want to be in the society, pay the subscription at the appropriate rate.
@36
Mole is not trolling. You seem to be.
@36
Mole is not trolling. You seem to be.
Only a lefty could think that somehow one industry has to be taxed more than any other.
And these are the people who go on always about equality.
I agree with Mole, if we are going to have differential taxation for various industries, let’s tax those lefty wankers in the film industry, but only after removing all their subsidies. After all these people are using our Australian stories, or so some luvvie said, so they should pay extra in tax to use something that belongs to us all.
Academics of a left wing persuasion should also pay a super tax. After all they are using university space that belongs to us all and are so keen to give governments money.
Only a lefty could think that somehow one industry has to be taxed more than any other.
And these are the people who go on always about equality.
I agree with Mole, if we are going to have differential taxation for various industries, let’s tax those lefty wankers in the film industry, but only after removing all their subsidies. After all these people are using our Australian stories, or so some luvvie said, so they should pay extra in tax to use something that belongs to us all.
Academics of a left wing persuasion should also pay a super tax. After all they are using university space that belongs to us all and are so keen to give governments money.
Tom (8). Instead of the Bourkie, you may like to re-consider the name for the WA currency if that resource-rich State seceeds. Maybe, in deference to the memory of the late lamented Treasurer, Troy Buswell, it could be called the SNIFF (Splash Now It’s For Free).
Tom (8). Instead of the Bourkie, you may like to re-consider the name for the WA currency if that resource-rich State seceeds. Maybe, in deference to the memory of the late lamented Treasurer, Troy Buswell, it could be called the SNIFF (Splash Now It’s For Free).
But time and again it’s a short-termist standpoint: how does a low income earner maintain a decent standard of living in retirement, without an excessive burden on the public purse – Rob @34
Well they don’t maintain a decent standard of living if we take money off them at the time when we know for a fact they’re low income, while they may or may not be low income later in their life. I reckon a lot of people starting out to raise a young family on a low income would benefit a lot more from 9% more wages now than they would from a retirement lump sum – but we don’t give them the choice because we arrogantly claim to know better than them how to distibute their own money over their lifetime.
And the “excessive burden on the public purse” bit is plain false. Australia’s age pension is very cheap and will stay that way, with or without super – mainly because payment rates are not earnings-related but flat-rate. On Treasury’s own projections we’ll be spending a smaller proportion of national output on our age pension in 2040 than the Americans do in 2010, and less than half of what the Germans do in 2010. And given the design of our pensions means test, you have to have an awful lot of super before you significantly cut into age pension expenditure – as Treasury modelling also makes clear.
Robert @34, that document is every bit as much part of the Henry Review as today’s release – the fact the government won’t talk about it notwithstanding. Read the superannuation section in today’s released report and you’ll see they basically say “we’re not discussing these issues again in this report because we said it all in the report we released last year” – ie that paper.
But time and again it’s a short-termist standpoint: how does a low income earner maintain a decent standard of living in retirement, without an excessive burden on the public purse – Rob @34
Well they don’t maintain a decent standard of living if we take money off them at the time when we know for a fact they’re low income, while they may or may not be low income later in their life. I reckon a lot of people starting out to raise a young family on a low income would benefit a lot more from 9% more wages now than they would from a retirement lump sum – but we don’t give them the choice because we arrogantly claim to know better than them how to distibute their own money over their lifetime.
And the “excessive burden on the public purse” bit is plain false. Australia’s age pension is very cheap and will stay that way, with or without super – mainly because payment rates are not earnings-related but flat-rate. On Treasury’s own projections we’ll be spending a smaller proportion of national output on our age pension in 2040 than the Americans do in 2010, and less than half of what the Germans do in 2010. And given the design of our pensions means test, you have to have an awful lot of super before you significantly cut into age pension expenditure – as Treasury modelling also makes clear.
Robert @34, that document is every bit as much part of the Henry Review as today’s release – the fact the government won’t talk about it notwithstanding. Read the superannuation section in today’s released report and you’ll see they basically say “we’re not discussing these issues again in this report because we said it all in the report we released last year” – ie that paper.
You are right, but crushing a major industry is not the way to get diversification. All that does is turn you into a has-been wealthy nation.
If you want to do this you need to do it at the front end- with the mining leases. But, while the government could in principle “sell” every tonne of ore that is mined to the miners, in practice it would mean you simply don’t have a viable mining industry. And really, in practice it would be just another tax.
You are right, but crushing a major industry is not the way to get diversification. All that does is turn you into a has-been wealthy nation.
If you want to do this you need to do it at the front end- with the mining leases. But, while the government could in principle “sell” every tonne of ore that is mined to the miners, in practice it would mean you simply don’t have a viable mining industry. And really, in practice it would be just another tax.
DD is correct.
The increase in the super guarantee will simply represent a switch from wage income (wages will now grow more slowly over that period) to a form of non-wage income that cannot be accessed until retirement. Some of the enforced increase in savings will simply substitute for existing planned saving because savings are fungible. Finally, the policy will effectively increase the labour tax wedge, which countless studies have found is bad for employment. The aggregate impact on national savings is likely to be minimal.
DD is correct.
The increase in the super guarantee will simply represent a switch from wage income (wages will now grow more slowly over that period) to a form of non-wage income that cannot be accessed until retirement. Some of the enforced increase in savings will simply substitute for existing planned saving because savings are fungible. Finally, the policy will effectively increase the labour tax wedge, which countless studies have found is bad for employment. The aggregate impact on national savings is likely to be minimal.
To those enjoying calling me a troll.
I work in mining, I have worked in the initial startup of the curent company, which went from 5 blokes through to the 300 or so it now employs.
Ive been in charge of purchasing while it was getting off the ground, and am currently in a training/safety role.
But please make some crap up and spin it at me.
Sorry if this comes across a bit short but Im a little over being called a troll on such a regular basis.
“But in any case, if they’re just going to export raw ore cheap, I don’t really care where they are based.”
Its what the market demands. One attempt at value adding (the BHP briquette plant in port Hedland) cost BHP hundreds of millions. Lucky they had enough cash/assets to afford the writedown eh?
I dont come here and piss on the furniture, I come here for a bit of debate and to learn things from people whos opinions I might not agree with, but in most cases make a good arguement for their position.
To those enjoying calling me a troll.
I work in mining, I have worked in the initial startup of the curent company, which went from 5 blokes through to the 300 or so it now employs.
Ive been in charge of purchasing while it was getting off the ground, and am currently in a training/safety role.
But please make some crap up and spin it at me.
Sorry if this comes across a bit short but Im a little over being called a troll on such a regular basis.
“But in any case, if they’re just going to export raw ore cheap, I don’t really care where they are based.”
Its what the market demands. One attempt at value adding (the BHP briquette plant in port Hedland) cost BHP hundreds of millions. Lucky they had enough cash/assets to afford the writedown eh?
I dont come here and piss on the furniture, I come here for a bit of debate and to learn things from people whos opinions I might not agree with, but in most cases make a good arguement for their position.
this is just tribalism. who cares who processes it? why should it matter if it is an aussie or a chinamen unless you are a racist.
this is just tribalism. who cares who processes it? why should it matter if it is an aussie or a chinamen unless you are a racist.
LO44 …
This depends on the view that those who would benefit from super would in practice have the kind of leverage to extract this surplus income — a view that recent wage awards don’t bear out.
Again, this is doubtful in practice. The bottom 2-3 deciles tend to spend all disposable income and save very little. Even above these deciles into middling incomes proper there’s very little evidence of substantial saving, apart from the kind of enforced saving those who have mortages make in paying off their homes.
LO44 …
This depends on the view that those who would benefit from super would in practice have the kind of leverage to extract this surplus income — a view that recent wage awards don’t bear out.
Again, this is doubtful in practice. The bottom 2-3 deciles tend to spend all disposable income and save very little. Even above these deciles into middling incomes proper there’s very little evidence of substantial saving, apart from the kind of enforced saving those who have mortages make in paying off their homes.
drscroogemduck @46: no it isn’t ‘tribalism’. It is seeking maximum benefit from resources in hand, before they are passed on to others. These resources start as part of Australia, and once they’ve left Oz, we stop earning from them. For the moment, the human population of the planet is divided geographically and politically into a range of different states with different politicial and social systems, and it is up to each one to prioritise the well-being of its own people, since some of the interests of the others will necessarily conflict. None of that is anything to do with racism.
drscroogemduck @46: no it isn’t ‘tribalism’. It is seeking maximum benefit from resources in hand, before they are passed on to others. These resources start as part of Australia, and once they’ve left Oz, we stop earning from them. For the moment, the human population of the planet is divided geographically and politically into a range of different states with different politicial and social systems, and it is up to each one to prioritise the well-being of its own people, since some of the interests of the others will necessarily conflict. None of that is anything to do with racism.
Well, I had a read of the executive summary on the final report of the review. There was a lot of changes there, big focuses on removing small, inefficient and constraining taxes (Stamp duty, payroll, luxury car, super tax) and replacing them with efficient taxes that focused on promoting positive earning, spending and saving habits (land tax instead of stamp duty, resource rent tax replacing royalties, road use tax instead of registration).
They are difficult ideas in places, but it’s truly reform minded, and quite possibly beneficial for many of us in society. Which makes the announcement by the government all the more disappointing, It’s a soft target beat-up (big miners, smokers) mixed in which changes that are designed only to win votes (Super changes), that weren’t even recommended in the first place.
Recently I read a post from Mark that with a lack of options we will have to return labor in the end, but Rudd must go. I agree, but it just won’t matter in the end. If our governments are not going to implement true reform that will benefit the nation, just for the sake of not annoying a few key demographics; then It would matter who is in, were not going anywhere.
PinkyOz
Well, I had a read of the executive summary on the final report of the review. There was a lot of changes there, big focuses on removing small, inefficient and constraining taxes (Stamp duty, payroll, luxury car, super tax) and replacing them with efficient taxes that focused on promoting positive earning, spending and saving habits (land tax instead of stamp duty, resource rent tax replacing royalties, road use tax instead of registration).
They are difficult ideas in places, but it’s truly reform minded, and quite possibly beneficial for many of us in society. Which makes the announcement by the government all the more disappointing, It’s a soft target beat-up (big miners, smokers) mixed in which changes that are designed only to win votes (Super changes), that weren’t even recommended in the first place.
Recently I read a post from Mark that with a lack of options we will have to return labor in the end, but Rudd must go. I agree, but it just won’t matter in the end. If our governments are not going to implement true reform that will benefit the nation, just for the sake of not annoying a few key demographics; then It would matter who is in, were not going anywhere.
PinkyOz
@ 45
I apologise Mole – I was being facetious using the strikeout over ‘Troll’. Mate I have no doubt you are heavily involved in the mining caper, and I hope it continues to be a prosperous venture for you.
@ 45
I apologise Mole – I was being facetious using the strikeout over ‘Troll’. Mate I have no doubt you are heavily involved in the mining caper, and I hope it continues to be a prosperous venture for you.
I don’t thgink anybody should be ‘cut loose’ from LP. One of the great things about this blog is its diversity of opinion. Keep up the contrarianism, Mole. It works for me. I can’t speak for anyone else.
I don’t thgink anybody should be ‘cut loose’ from LP. One of the great things about this blog is its diversity of opinion. Keep up the contrarianism, Mole. It works for me. I can’t speak for anyone else.
Oh yeah. Bring it on.
Oh yeah. Bring it on.
Indeed Liam … distance and road intensity-based pricing is something I’ve favoured for a long while.
I’d like the calculus to take account of emissions including Co2, tare, driver competence and compliance and existence or absence of actively serviced parallel public transport corridors in the time travelled, but the above would be a reasonable start.
I’d be happy for the value of this revenue to be put into removing other vehicle operation imposts and excises. I’d also like real time infringement cautions and notices, ignition lock out for PCA and remote vehicle shut down in the case of theft or criminal flight using a motor vehicle.
Indeed Liam … distance and road intensity-based pricing is something I’ve favoured for a long while.
I’d like the calculus to take account of emissions including Co2, tare, driver competence and compliance and existence or absence of actively serviced parallel public transport corridors in the time travelled, but the above would be a reasonable start.
I’d be happy for the value of this revenue to be put into removing other vehicle operation imposts and excises. I’d also like real time infringement cautions and notices, ignition lock out for PCA and remote vehicle shut down in the case of theft or criminal flight using a motor vehicle.
Interestingly, the press commentary this morning from both right and left is unequivocally critical of Rudd for fudging the chance at true and lasting reform. Ross Gittins is particularly venomous:
I’m not sure whether the government’s generally underwhelming response to the Henry review is a reflection of Rudd’s inherent timidity or more a statement on the grim state of politics in western democracies right now.
Thanks to a proliferation of real-time news sources and the possibility of instant punditry, governments and their minders spent a disproportionate time seeking to manage the 24-hour news cycle. Losers from any courageous policy change can be especially noisy and troublesome.
Allied to this is the new Republican-inspired wrecking mentality of Abbott and his gang, aided by a shamelessly partisan mainstream media – particularly the Murdoch press and its echo chamber at the ABC.
In this vicious and unrelenting climate and less than six months out from a federal election, it is no wonder that Rudd and Swan have taken a cautious approach.
The pundits say a crash-or-crash-through politician like Whitlam or Keating would never have done it this way. But Whitlam or Keating did not govern in the world we have now.
Interestingly, the press commentary this morning from both right and left is unequivocally critical of Rudd for fudging the chance at true and lasting reform. Ross Gittins is particularly venomous:
I’m not sure whether the government’s generally underwhelming response to the Henry review is a reflection of Rudd’s inherent timidity or more a statement on the grim state of politics in western democracies right now.
Thanks to a proliferation of real-time news sources and the possibility of instant punditry, governments and their minders spent a disproportionate time seeking to manage the 24-hour news cycle. Losers from any courageous policy change can be especially noisy and troublesome.
Allied to this is the new Republican-inspired wrecking mentality of Abbott and his gang, aided by a shamelessly partisan mainstream media – particularly the Murdoch press and its echo chamber at the ABC.
In this vicious and unrelenting climate and less than six months out from a federal election, it is no wonder that Rudd and Swan have taken a cautious approach.
The pundits say a crash-or-crash-through politician like Whitlam or Keating would never have done it this way. But Whitlam or Keating did not govern in the world we have now.
The government is approaching an election in which it is likely to strengthen its grip on authority, unless it makes a mistake. If the terms of the game don’t change, it wins the senate and the chance to set its own agenda.
Big reform proposals now change the terms of the game without there being any prospect of a significant upside in August. Doing things that offend nobody inclined to vote for them and please some, and that give Abbott the chance to be cast as ignorant spoiler gives it everything it wants. The election is probably less than three months away.
What was Rudd to do?
This is not an endorsement of the choice — certainly this is not all one would want to say about public policy in this area — but it is an explanation, especially since Abbott has made clear that he will try to obstruct this too and with Fielding and Xenophon onside can do so. As with the ETS, what possible point could there be to pressing ahead now, especially when in practice, he couldn’t get this larger agenda many of us think worth working through put to a vote?
This is pretty much what I would have advised had my job been to get the Rudd government re-elected with a senate majority rather than to give people like me who are interested in public policy a warm inner glow.
The government is approaching an election in which it is likely to strengthen its grip on authority, unless it makes a mistake. If the terms of the game don’t change, it wins the senate and the chance to set its own agenda.
Big reform proposals now change the terms of the game without there being any prospect of a significant upside in August. Doing things that offend nobody inclined to vote for them and please some, and that give Abbott the chance to be cast as ignorant spoiler gives it everything it wants. The election is probably less than three months away.
What was Rudd to do?
This is not an endorsement of the choice — certainly this is not all one would want to say about public policy in this area — but it is an explanation, especially since Abbott has made clear that he will try to obstruct this too and with Fielding and Xenophon onside can do so. As with the ETS, what possible point could there be to pressing ahead now, especially when in practice, he couldn’t get this larger agenda many of us think worth working through put to a vote?
This is pretty much what I would have advised had my job been to get the Rudd government re-elected with a senate majority rather than to give people like me who are interested in public policy a warm inner glow.
Acceptance of the 12% levy represents a change in quality of the existing political economy of Australia but by no means can it be assessed legitimately as a change in kind from the Keating settlement.
Australian wage and salary earners will have about 25% more of their earnings under compulsory administration by the superannuation industry.
Will this fact induce Australians to be more vigilant and knowledgeable than they are now about the nature of this industry and how it manages their funds?
Probably not. Nothing interesting to see here folks. Move on.
Everything else being equal, this new provision does represent a modest tax cut for wage earners. But the benefits of that tax cut will not be enjoyed by wage earners until retirement.
Meantime, the superannuation industry cements its role as managers of huge sums for investment. Their taxed advantage status is analogous to the privilege of tax exempt status once enjoyed by gold miners. Exploitation of that privilege can only be regulated by caps imposed on contributions to superannuation. This is a strange state of affairs when levels of investment need to be regulated by government.
Acceptance of the 12% levy represents a change in quality of the existing political economy of Australia but by no means can it be assessed legitimately as a change in kind from the Keating settlement.
Australian wage and salary earners will have about 25% more of their earnings under compulsory administration by the superannuation industry.
Will this fact induce Australians to be more vigilant and knowledgeable than they are now about the nature of this industry and how it manages their funds?
Probably not. Nothing interesting to see here folks. Move on.
Everything else being equal, this new provision does represent a modest tax cut for wage earners. But the benefits of that tax cut will not be enjoyed by wage earners until retirement.
Meantime, the superannuation industry cements its role as managers of huge sums for investment. Their taxed advantage status is analogous to the privilege of tax exempt status once enjoyed by gold miners. Exploitation of that privilege can only be regulated by caps imposed on contributions to superannuation. This is a strange state of affairs when levels of investment need to be regulated by government.
Well said, Mr Denmore. And of course the very pundits who are advocating stronger action would be first in line to criticise whatever that action happened to be.
Well said, Mr Denmore. And of course the very pundits who are advocating stronger action would be first in line to criticise whatever that action happened to be.
Liam @ 52 – I too think its a good idea, but didn’t the road congestion tax recommendation get ruled out by the government?
Fran @ 53 said:
All great until someone decides to start remote shutting down cars for fun. They do have such things in the US – I believe for extra security for those who only marginally qualify for car loans. And they have had problems with the wrong cars getting turned off
Liam @ 52 – I too think its a good idea, but didn’t the road congestion tax recommendation get ruled out by the government?
Fran @ 53 said:
All great until someone decides to start remote shutting down cars for fun. They do have such things in the US – I believe for extra security for those who only marginally qualify for car loans. And they have had problems with the wrong cars getting turned off
So said Tony and don’t we just know it. Labor should grab those words and use them over and over while flashing up a list of all he has pooh-poohed with nary a thought.
So said Tony and don’t we just know it. Labor should grab those words and use them over and over while flashing up a list of all he has pooh-poohed with nary a thought.
I am most intrigued by the new RSPT, which seems to me to fall most heavily on the coal companies. Is it intended to function as a de facto carbon tax?
I am most intrigued by the new RSPT, which seems to me to fall most heavily on the coal companies. Is it intended to function as a de facto carbon tax?
Re secession; Norman Moore has been talking about that for as long as I can remember. As hobby horses go, this one must be bloody exhausted… talk about using any old excuse to peddle tired tin-foil hat ideas.
Moore is a lunatic and should be treated as such.
Re secession; Norman Moore has been talking about that for as long as I can remember. As hobby horses go, this one must be bloody exhausted… talk about using any old excuse to peddle tired tin-foil hat ideas.
Moore is a lunatic and should be treated as such.
Chris@58 …
All great until someone decides to start remote shutting down cars for fun. They do have such things in the US – I believe for extra security for those who only marginally qualify for car loans. And they have had problems with the wrong cars getting turned off
Well plainly we would want this to be exclusively in the hands of police or of people specifically nominated by the vehicle’s registered owner. Such events would have to be logged and referred to an authorised request, as in the case of probable unauthorised or illegal motor vehicle use.
Chris@58 …
All great until someone decides to start remote shutting down cars for fun. They do have such things in the US – I believe for extra security for those who only marginally qualify for car loans. And they have had problems with the wrong cars getting turned off
Well plainly we would want this to be exclusively in the hands of police or of people specifically nominated by the vehicle’s registered owner. Such events would have to be logged and referred to an authorised request, as in the case of probable unauthorised or illegal motor vehicle use.
Fran @ 62 – just a brief comment since its a bit off topic, but remote disabling from a technical point of view is very high risk. You have these units which are installed in all cars and easily accessible by anyone. So they’ll get pulled apart with both the software and hardware very closely analysed. Just one tiny security bug – hardware or software – or some breakthrough in cryptography research and all cars are suddenly vulnerable with likely the only fix to replace all of the units in all the cars. Manufacturer’s experiences with DRM are a good example of how unlikely it is that anyone will get it completely correct (all the high profile ones have been broken).
Fran @ 62 – just a brief comment since its a bit off topic, but remote disabling from a technical point of view is very high risk. You have these units which are installed in all cars and easily accessible by anyone. So they’ll get pulled apart with both the software and hardware very closely analysed. Just one tiny security bug – hardware or software – or some breakthrough in cryptography research and all cars are suddenly vulnerable with likely the only fix to replace all of the units in all the cars. Manufacturer’s experiences with DRM are a good example of how unlikely it is that anyone will get it completely correct (all the high profile ones have been broken).
Chris@63
That’s certainly something you’d want to look at … but our experience now with our second iteration of the DER laptops we are rolling out has shown that the security has been very robust.
You could have the transponders sealed so that if tampered with they would simply scrub all of their data and even overwrite the BIOS. Multiple passive RFID would allow the car to be tracked after an alert.
Encryption standards are very good these days and of course you’d want biometric ID.
Chris@63
That’s certainly something you’d want to look at … but our experience now with our second iteration of the DER laptops we are rolling out has shown that the security has been very robust.
You could have the transponders sealed so that if tampered with they would simply scrub all of their data and even overwrite the BIOS. Multiple passive RFID would allow the car to be tracked after an alert.
Encryption standards are very good these days and of course you’d want biometric ID.
Still working through it but so far it’s relentlessly and thoroughly convincing. A pretty impressive achievement. Interestingly it is also a mildly neoliberal document, at least so far as neoliberalism is concerned with tax (flattening the income tax scales; large cuts to company tax and suggesting an end to imputation; abolishing inefficient things like payroll tax, stamp duties and luxury car tax; suggesting a broadening of the consumption tax base (Judas!); pervasive user-pays road pricing and so on). Which makes the immediate Rudd/Swan response all the more disappointing. Even the defensible aspect of the Super Profits tax, being the redistribution of wealth from resources companies to non-resources companies (in recognition of the appreciating currency) is underwhelming as that accounts for only one-third of funds raised. But my it is very very clever politics.
BBB
Still working through it but so far it’s relentlessly and thoroughly convincing. A pretty impressive achievement. Interestingly it is also a mildly neoliberal document, at least so far as neoliberalism is concerned with tax (flattening the income tax scales; large cuts to company tax and suggesting an end to imputation; abolishing inefficient things like payroll tax, stamp duties and luxury car tax; suggesting a broadening of the consumption tax base (Judas!); pervasive user-pays road pricing and so on). Which makes the immediate Rudd/Swan response all the more disappointing. Even the defensible aspect of the Super Profits tax, being the redistribution of wealth from resources companies to non-resources companies (in recognition of the appreciating currency) is underwhelming as that accounts for only one-third of funds raised. But my it is very very clever politics.
BBB
Meantime, the superannuation industry cements its role as managers of huge sums for investment. Their taxed advantage status is analogous to the privilege of tax exempt status once enjoyed by gold miners. Exploitation of that privilege can only be regulated by caps imposed on contributions to superannuation. This is a strange state of affairs when levels of investment need to be regulated by government.
Couldn’t agree more. When are we going to see some real reform in super management?
Meantime, the superannuation industry cements its role as managers of huge sums for investment. Their taxed advantage status is analogous to the privilege of tax exempt status once enjoyed by gold miners. Exploitation of that privilege can only be regulated by caps imposed on contributions to superannuation. This is a strange state of affairs when levels of investment need to be regulated by government.
Couldn’t agree more. When are we going to see some real reform in super management?
@ 68
patrickg, I think the Cooper Review of superannuation is to be finalised mañana.
@ 68
patrickg, I think the Cooper Review of superannuation is to be finalised mañana.
I think what we really see through all this is the total lack of creativity or vision or will to implement much meaningful. Sure the super thing is seen as good for workers but by and large the whole tax review thing has been a bit underwhelming. Perhaps given that Rudd and Swan are committed to assisting wealthy housing investors before people buying their first home says a lot. Business as usual really. .
I think what we really see through all this is the total lack of creativity or vision or will to implement much meaningful. Sure the super thing is seen as good for workers but by and large the whole tax review thing has been a bit underwhelming. Perhaps given that Rudd and Swan are committed to assisting wealthy housing investors before people buying their first home says a lot. Business as usual really. .
“You are right, but crushing a major industry”
Hey you’re not really Mitch Hook are you. I mean that’s so OTT it would do well on the Somme. The “moaners” sorry “minors” sorry “miners” will probably never have to worry about it. Tones Team will take care of it in the Senate.
“You are right, but crushing a major industry”
Hey you’re not really Mitch Hook are you. I mean that’s so OTT it would do well on the Somme. The “moaners” sorry “minors” sorry “miners” will probably never have to worry about it. Tones Team will take care of it in the Senate.
Henry the Great of Oz
He’s not a National party man,
With left or right not partisan.
He does his best for his country
Whoever his PM might be.
Notwithstanding early meeting
With ‘the Man’ the great Paul Keating,
With whom he hatched the GST,
For Labor that was not to be.
The Liberal leader Mr Howard
Won victory by that tax empowered.
Encouraging Rudd’s spending spree
He saved us from the GFC.
With his careful public servant’s
Polite protocol observance
He squashed the bumptious Mr. Joyce
Without the need to raise his voice.
His wombat work behind the scenes
Wins him ‘Brownie’ points with Greens.
Now we have his mighty tax review.
Whatever next will this man do?
The pundits like to guess, but then
Who knows what is beyond our Ken?
Henry the Great of Oz
He’s not a National party man,
With left or right not partisan.
He does his best for his country
Whoever his PM might be.
Notwithstanding early meeting
With ‘the Man’ the great Paul Keating,
With whom he hatched the GST,
For Labor that was not to be.
The Liberal leader Mr Howard
Won victory by that tax empowered.
Encouraging Rudd’s spending spree
He saved us from the GFC.
With his careful public servant’s
Polite protocol observance
He squashed the bumptious Mr. Joyce
Without the need to raise his voice.
His wombat work behind the scenes
Wins him ‘Brownie’ points with Greens.
Now we have his mighty tax review.
Whatever next will this man do?
The pundits like to guess, but then
Who knows what is beyond our Ken?
I am going to post a comment that I made at JQ’s Solar Penetration thread because it brings up a relevent issue to tax changes at the end.
Earlier on, another commenter made a comment about using electricity to replace all energy, ie convert transport energy consumed to joules and then to kilowatts, to see how much energy is required for a total transition to electricity. The figure is quite huge. But there is a fallacy in the argument and I asked the other commenter if she could see what it was. I bring this up because a lot of other people have fallen into the same trap.
The fallacy is in the fact that internal combustion engines are not efficient in the conversion of energy. In fact for a petrol engine only 25% of the energy in the fuel is used to drive the vehicle forward. Electric motors are up to 95% efficient (brushless DC) on the other hand so a direct energy conversion is overstating the energy to travel the same distance petrol to electric by a factor of at least 3.ie the increase in the energy infrastructure to service light transport is not as massive as some have made it to seem.
That is why this vehicle
http://www.gizmag.com/volkswagen-milano-taxi-electric-vehicle/14891/?utm_source=Gizmag+Subscribers&utm_campaign=88dc79d9cd-UA-2235360-4&utm_medium=email
will travel 300 kilometres on a just 45 Kwhrs of energy. And that energy charge (tank fill) at today’s prices will cost just $8.55 instead of $30.00 for petrol. Add that cost efficiency to the greatly reduced serving costs for running an electic vehicle ie no oil changes or tuneup or timing belt changes etc required.
Just to tantalise, at 2 tank fills per week, to run a small 4 door, petrol will cost $3120 per year against $860 per year for electricity. Over 10 years that is petrol $31,000 against $8,600 for electric. A family cashflow difference of $22,000. In this comparison it is safe to say that the cost of running batteries is balanced against the cost of servicing a petrol engine, though it is probably cheaper to run batteries including several replacements.
Now if most or all of that electricity comes from roof top solar PV you can see that the real cost of family energy hardware and running costs is not a simple picture.
I was thinking about the VW Milano formula in the shower, and with its 300 klm range and 120 kph top speed it fits very well with my vehicle useage envelope. It also fits very well with my distant city student daughters needs. It even works well with the intercity 900 klm commute with its 1 hour to 80% battery fill rate. For that trip it means taking two 80 minute stops along the way ie two very good rests which would almost be the minimum adviseable for a long haul trip, and not that much more than would be taken any way with normal tank fill and coffee stops. Speed wise the whole Sydney Melbourne route has a 110 kph speed limit which on my recent trips I found I did not exceed using the cruise control and it was fast enough.
That brings up the costing flaw in my above argument. The argument is correct for today’s situation, but the costing does not consider road useage charges as electricity does not contain an excise component. Food for thought.
I am going to post a comment that I made at JQ’s Solar Penetration thread because it brings up a relevent issue to tax changes at the end.
Earlier on, another commenter made a comment about using electricity to replace all energy, ie convert transport energy consumed to joules and then to kilowatts, to see how much energy is required for a total transition to electricity. The figure is quite huge. But there is a fallacy in the argument and I asked the other commenter if she could see what it was. I bring this up because a lot of other people have fallen into the same trap.
The fallacy is in the fact that internal combustion engines are not efficient in the conversion of energy. In fact for a petrol engine only 25% of the energy in the fuel is used to drive the vehicle forward. Electric motors are up to 95% efficient (brushless DC) on the other hand so a direct energy conversion is overstating the energy to travel the same distance petrol to electric by a factor of at least 3.ie the increase in the energy infrastructure to service light transport is not as massive as some have made it to seem.
That is why this vehicle
http://www.gizmag.com/volkswagen-milano-taxi-electric-vehicle/14891/?utm_source=Gizmag+Subscribers&utm_campaign=88dc79d9cd-UA-2235360-4&utm_medium=email
will travel 300 kilometres on a just 45 Kwhrs of energy. And that energy charge (tank fill) at today’s prices will cost just $8.55 instead of $30.00 for petrol. Add that cost efficiency to the greatly reduced serving costs for running an electic vehicle ie no oil changes or tuneup or timing belt changes etc required.
Just to tantalise, at 2 tank fills per week, to run a small 4 door, petrol will cost $3120 per year against $860 per year for electricity. Over 10 years that is petrol $31,000 against $8,600 for electric. A family cashflow difference of $22,000. In this comparison it is safe to say that the cost of running batteries is balanced against the cost of servicing a petrol engine, though it is probably cheaper to run batteries including several replacements.
Now if most or all of that electricity comes from roof top solar PV you can see that the real cost of family energy hardware and running costs is not a simple picture.
I was thinking about the VW Milano formula in the shower, and with its 300 klm range and 120 kph top speed it fits very well with my vehicle useage envelope. It also fits very well with my distant city student daughters needs. It even works well with the intercity 900 klm commute with its 1 hour to 80% battery fill rate. For that trip it means taking two 80 minute stops along the way ie two very good rests which would almost be the minimum adviseable for a long haul trip, and not that much more than would be taken any way with normal tank fill and coffee stops. Speed wise the whole Sydney Melbourne route has a 110 kph speed limit which on my recent trips I found I did not exceed using the cruise control and it was fast enough.
That brings up the costing flaw in my above argument. The argument is correct for today’s situation, but the costing does not consider road useage charges as electricity does not contain an excise component. Food for thought.
@ 73
BilB, so what’s your point? Should Dr. Henry have recommended a tax on
conventional combustion technology, the VW Milano oryour water consumption given your lengthy musings in the shower …@ 73
BilB, so what’s your point? Should Dr. Henry have recommended a tax on
conventional combustion technology, the VW Milano oryour water consumption given your lengthy musings in the shower …BilB
Despite our differences on other matters, which we won’t revisit here, your post above is plausible.
On the battery question, the Better Place model sounds like a good solution — people simply pull into a centre (which could be an adjunct of part of an existing service station) and switch their depleted battery for one that has been recharged, for a fee based on the differential between their remaining capacity and the capacity of the new battery plus a charge to cover the usage of the battery and handling. The facilities as a whole could provide a ready reserve of despatchable power for load balancing, reducing the need for redundancy within the system, buying power at off-peak rates and selling it back during the peak. Anyone who had rooftop PV to charge their car battery would in effect be getting the bonus, along with any that anyone got by buying their power overnight.
As to road-based charging, I don’t see this as such a problem for EV feasibility. They still get the benefit of reductions in other charges. Personally, as I’ve argued elsewhere I’d like the model inter alia to take account of emissions, which would obviously be zero in a purely electric vehicle. Another approach would be to give those operating partially or fully electric vehicles a credit representing the excise they might have paid if the vehicle had been a fully conventional vehicle.
Some questions do linger though. How technically feasible would it be to source 45KwH or power each week from rooftop PV? And even if ultimately, one could, does it really matter if they use this power to drive their cars or run their refrigerators and air con? So ghow feasible would it be to produce enough surplus power to do it all? What would the cost-benefit implications be then?
BilB
Despite our differences on other matters, which we won’t revisit here, your post above is plausible.
On the battery question, the Better Place model sounds like a good solution — people simply pull into a centre (which could be an adjunct of part of an existing service station) and switch their depleted battery for one that has been recharged, for a fee based on the differential between their remaining capacity and the capacity of the new battery plus a charge to cover the usage of the battery and handling. The facilities as a whole could provide a ready reserve of despatchable power for load balancing, reducing the need for redundancy within the system, buying power at off-peak rates and selling it back during the peak. Anyone who had rooftop PV to charge their car battery would in effect be getting the bonus, along with any that anyone got by buying their power overnight.
As to road-based charging, I don’t see this as such a problem for EV feasibility. They still get the benefit of reductions in other charges. Personally, as I’ve argued elsewhere I’d like the model inter alia to take account of emissions, which would obviously be zero in a purely electric vehicle. Another approach would be to give those operating partially or fully electric vehicles a credit representing the excise they might have paid if the vehicle had been a fully conventional vehicle.
Some questions do linger though. How technically feasible would it be to source 45KwH or power each week from rooftop PV? And even if ultimately, one could, does it really matter if they use this power to drive their cars or run their refrigerators and air con? So ghow feasible would it be to produce enough surplus power to do it all? What would the cost-benefit implications be then?
What I was saying, Fran, is that in the short term electric vehicles will have a free ride on road maintenance contributions, but that is not sustainable in the long run.
The exchange battery concept is unlikely to be a strong solution, and for a whole lot of reasons. What is more likely is that parking lots will have an increasing number of parking slots with metered charging. There are good commercial reasons to do this. The key one being that once someone plugs in their car you know that they will be there for an hour at least and preferably in your shop. This could give rise to the only recharge parking. The 300 klm range of the VW vehicle will dramatically reduce range related buying resistance.
My old boating buddy up in Gulgong has just increase his system to 4kw capacity, or conservatively 140Kwhrs per week. His neighbour got all excited about it and went out to order a 6Kw system. And that is with the current medium efficiency Solar PV panels. It does not matter how the energy is used, it is really about making the connection that the combination of electric cars and solar PV are able to pay for themselves at an ever faster rate once all of the efficiencies are put together. I think that the combination of solar PV electric cars and gas for cooking and some heating will be the power combination in the near term.
Once this reality sinks in then think this through with the 10Kw system that I am involved with and you will see that the future is nothing like what we all imagined just a few years ago.
What I was saying, Fran, is that in the short term electric vehicles will have a free ride on road maintenance contributions, but that is not sustainable in the long run.
The exchange battery concept is unlikely to be a strong solution, and for a whole lot of reasons. What is more likely is that parking lots will have an increasing number of parking slots with metered charging. There are good commercial reasons to do this. The key one being that once someone plugs in their car you know that they will be there for an hour at least and preferably in your shop. This could give rise to the only recharge parking. The 300 klm range of the VW vehicle will dramatically reduce range related buying resistance.
My old boating buddy up in Gulgong has just increase his system to 4kw capacity, or conservatively 140Kwhrs per week. His neighbour got all excited about it and went out to order a 6Kw system. And that is with the current medium efficiency Solar PV panels. It does not matter how the energy is used, it is really about making the connection that the combination of electric cars and solar PV are able to pay for themselves at an ever faster rate once all of the efficiencies are put together. I think that the combination of solar PV electric cars and gas for cooking and some heating will be the power combination in the near term.
Once this reality sinks in then think this through with the 10Kw system that I am involved with and you will see that the future is nothing like what we all imagined just a few years ago.
That was patron only recharge parking
That was patron only recharge parking
Work on it Rob 74, you will figure it out. Your young, you have time.
Work on it Rob 74, you will figure it out. Your young, you have time.
BilB said:
I actually don’t see these tow approacghes as being in inherent conflict. The obvious advantage of the Better Place model include
a) shorter lead time to roll this out than car park-based recharging
b) lower risk that any individual will be stuck with a faulty battery; capacity to identify flaws and improve overall battery performance
c) more intensive usage of batteries (so better return on embedded costs)
d) greater convenience than possible by real-time recharging — changeover times could be comparable with or better than petrol refuelling.
e) costs of acquiring associated load balancing advantages as above spread across large user base in ways that maximise energy efficiency
So while it is possible and evben likely that within 15 years there may well be many car parks where one can recharge while parked, getting to first base — a large number of people willing to have battery only vehicles, including in commercial settings — will almost certainly imply this kind of infrastructure, IMO.
BilB said:
I actually don’t see these tow approacghes as being in inherent conflict. The obvious advantage of the Better Place model include
a) shorter lead time to roll this out than car park-based recharging
b) lower risk that any individual will be stuck with a faulty battery; capacity to identify flaws and improve overall battery performance
c) more intensive usage of batteries (so better return on embedded costs)
d) greater convenience than possible by real-time recharging — changeover times could be comparable with or better than petrol refuelling.
e) costs of acquiring associated load balancing advantages as above spread across large user base in ways that maximise energy efficiency
So while it is possible and evben likely that within 15 years there may well be many car parks where one can recharge while parked, getting to first base — a large number of people willing to have battery only vehicles, including in commercial settings — will almost certainly imply this kind of infrastructure, IMO.
The problem is the variety of battery types efficiencies and charge histories. The problem will not be as bad as it is for cell phones but there will be a similar array of types to suit the huge variety of vehicle design solutions. If both Ford and Holden were pumping out electric vehicles now I would say that there might be a chance for the exchange battery system to work. What I do expect is that the vehicle range will improve some more again and the whole idea of needing to fill up away from home will disappear. You do not fill up your vehicle at home each night now because you are not allowed to. But to recharge each night or at work during the day is totally easy.
The problem is the variety of battery types efficiencies and charge histories. The problem will not be as bad as it is for cell phones but there will be a similar array of types to suit the huge variety of vehicle design solutions. If both Ford and Holden were pumping out electric vehicles now I would say that there might be a chance for the exchange battery system to work. What I do expect is that the vehicle range will improve some more again and the whole idea of needing to fill up away from home will disappear. You do not fill up your vehicle at home each night now because you are not allowed to. But to recharge each night or at work during the day is totally easy.
EV vehicle charging
http://www.gizmag.com/telekom-austria-phonebooth-charging-stations/15002/?utm_source=Gizmag+Subscribers&utm_campaign=9600477ad2-UA-2235360-4&utm_medium=email
What will work and what will not will be decided primarily by the market.
EV vehicle charging
http://www.gizmag.com/telekom-austria-phonebooth-charging-stations/15002/?utm_source=Gizmag+Subscribers&utm_campaign=9600477ad2-UA-2235360-4&utm_medium=email
What will work and what will not will be decided primarily by the market.