Governments spending money to stimulate the economy is all the rage nowadays. The Federal Government’s just done $10 billion of it. Obama is being urged to do it on a gargantuan scale. The Chinese have apparently promised 800 billion dollars of it over the next two years.
So what’s Australia’s most incompetent state government decide to do? Raise taxes, cut services, and cut back planned infrastructure spending. You’d swear Rees, and NSW Treasurer Eric Roozendaal, are taking their tax policies from Herbert Hoover.
To be fair, there are some good ideas, most notably peak-hour congestion tolling on the Harbour Bridge. But in the large, this is pushing NSW into recession, not out of it. And it’s probably going to be the Federal Government’s job to tip more money into NSW to make up the difference. Thanks, Nathan, for helping to make Malcolm Turnbull look prescient.
Only a fraction of the Earth’s carbon is present in the biosphere at any one time. Volcanoes spew more of it out. River deltas and coal formation sequesters some more. But a lot of carbon dioxide is taken out of the air by reacting with rocks. Mineral sequestration has been proposed as a safe way of disposing of concentrated CO2 from electricity generation. But what if we could somehow increase the rate at which rocks absorbed CO2 from the atmosphere?
That’s precisely what one Dutch professor has proposed; mine rocks rich in a mineral called Olivine, and add it to soils in the tropics, or along beaches in tropic latitudes. An earlier paper suggests the substitution of crushed olivine rocks for lime as a fertilizer. The costs? Professor Schuiling estimates in the order of 10 Euro per tonne of CO2 sequestered. Even at twice the price, it’s still cheap.
Again, there are undoubtedly considerable gaps between equations in a scientific paper and actually doing this on a large scale, not least the potential for environmental side effects of this process. But it’s the kind of thing we should be seriously looking in to.
Well, the car industry plan has been announced. I haven’t had a chance to read the report yet, but it seems very much along the lines of what was suggested in the Bracks Review.
One thing to keep in mind is that two-thirds of the Aussie car industry is owned by Ford and General Motors. Those companies are in a whole world of hurt - they’re burning through over $2 billion a month in cash each at the moment - and they’re about to ask for a massive bailout from the US government. The potential consequences for their Australian subsidiaries may not be pretty.
Some earlier thoughts on the review here and here.
It was not without significance that Wayne Swan chose to release the Mid Year Economic and Fiscal Outlook on Wednesday - the day the news cycle (and the attention of political junkies) was focused on the election of Barack Obama. Whether or not you think Swan’s timing was calculated, it’s significant in that the shape of Australian politics also morphed - although in a minor key compared to what were world-historical events in the United States.
Laura Tingle, writing in today’s Financial Review, mapped the new political terrain neatly - the post-election “blame the Howard government” game is over. We’re no longer talking about the legacy of interest rate rises (and what about that “always higher under Labor” line?) and inflation. We’re no longer bemoaning the lack of investment in human capital and infrastructure in the Howard years and seeking to rectify it while the good times last. Because we’re about to find out what “beyond the mining boom” is like without the luxury of its dividends to spend in the cause of diversifying our economic base and an ambitious innovation strategy.
As Wayne Swan said, it’s the time for hard choices.
It remains true that we’re much worse placed to weather an economic downturn because of the policy laziness and wasteful spending and disinvestment of the Howard years than we might be. But it’s now up to Labor to demonstrate it can steer us into a better future. In many ways, opportunities for reform and a change in philosophy present themselves in a recessionary climate - as Paul Keating would know well - and Kevin Rudd’s statements today about avoiding “extreme capitalism” in the childcare sector mean more than they say on the surface. There are going to some shifts in economic thinking ahead - and some of the neo-Keynesian signs of the global financial crisis’ wake will write themselves into our economic narrative in this country as well.
Continue reading ‘The day politics changed’
Hardly any great surprise here:
An investigation by the Victorian Education Department has cleared the principal who allowed artist Bill Henson to scout St Kilda Park Primary School for talent of any wrongdoing.
The State Government is also refusing to ban Henson from future playground visits.
The question that needs to be asked now is why John Brumby was so quick to issue the now apparently customary and/or compulsory loud condemn, before he had even initiated an investigation. Either Brumby was insincere and joining the populist outrage crew because, hey, that’s what all pollies apparently do, or his judgement on matters pertaining to schools sucks when it comes to the results of a professional investigation and assessment of the circumstances. Either way, it’s a bad look. And either way, it raises the question of prejudging an inquiry Brumby himself called for. Not a particularly distinguished chapter in the story of Victorian governance and politics, I’d suggest.
Related posts: The extensive archive of posts on Henson and discussion on LP can be accessed here.
Amongst the other stuff that almost went without notice over the past few days, the Victorian parliament passed legislation covering carbon sequestration, with the support of both Labor and the Coalition.
One of the stronger critiques of CCS is who has responsibility for the greenhouse gases thus sequestered, and over what timescale. While there are good reasons to expect CO2 sequestered in depleted gas fields to stay there, the consequences of leakage, particularly sudden leakage, are potentially very severe. While the legislation essentially hands control of the entire process to the Minister responsible, it does make clear that, ultimately, the greenhouse gas sequestered becomes the property - and thus the responsibility - of the Victorian government, something Greens Upper House MP Greg Barber covered in his speech on the matter (as the slightly paranoid parliamentary website warns us, this is a proof transcript and may contain the odd error).
Continue reading ‘Carbon sequestration bill passed in VIC parliament’
I didn’t get a chance to link to this post during the American campaign, but I thought that Scott’s piece at Grodscorp on why a lot of Australians get into American elections with so much fervour was a top class piece of work. Other cogent explanations were offered, but the comparative level of excitement - and entertainment - is certainly one of them:
Conversely, can you imagine Kevin Rudd standing in front of 50,000 people in a sports stadium, making a stirring speech about his dreams and aspirations for Australia, causing every person in the audience and the millions watching on the telly to feel a tingling sense of national pride and hope for their country? Can you imagine John Howard visiting an army base, attracting tens of thousands of supporters, and bringing tears to the eyes of those assembled as he spoke of patriotism and sacrifice for an ideal? Can you imagine Steve Fielding being interviewed by a news program and looking dumbstruck when asked what newspapers he reads? “Well, just the Bible, Katie,” he’d say. “It’s got all the information in it that I’ll ever need.”
Of course, just as it’s true that many Americans rightly vote not on the basis of the putative celebrity status of candidates but for compelling public reasons, we Australians do get passionate about what matters to our collective future and our lives in the political sphere. But, I think, the point retains its force.
So yesterday, Wayne Swan was accused of releasing the midyear budget review on Presidential election day to draw attention away from the projections on growth and unemployment, the media tut-tutted because he couldn’t instantly recall the inflation number and had to consult notes, and Malcolm Turnbull accused him of lacking credentials on “economic management”. Just another day in Canberra…
Elsewhere: Gary Sauer-Thompson on the mid-year economic outlook.
Since we last looked at the Arctic ice coverage the equinox has been passed, the sun has set and the sea is icing up again quite nicely considering the ice loss fell just short of the 2007 record.
Continue reading ‘Arctic update II’
Published in Australiana,
Climate change,
Developing world,
Economics,
Environment,
Foreign Elections,
Foreign policy,
Government,
Immigration,
International,
Markets,
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Politics,
Sociology and
USA .
Director of the Centre for Policy Development Miriam Lyons writes:
Barack Obama’s victory represents a watershed in American history, but it will also have ramifications around the world. Before I head out to celebrate I thought I’d just bash out a few quick notes on some of the policy implications for Australia of this momentous turnaround in the state of US politics:
Climate change
Today’s election result heralds the rise of Green Keynesianism. The US economy is in the toilet and smart economists are advocating direct investment over a more consumer-based fiscal stimulus. Democrats in Congress got a head start last year with the Green Jobs Act, and elements of the President-elect’s energy and environment policies look a lot like a ‘Green New Deal’. This from Time Magazine:
He wants to launch an “Apollo project” to build a new alternative-energy economy. His rationale for doing so includes some hard truths about the current economic mess: “The engine of economic growth for the past 20 years is not going to be there for the next 20. That was consumer spending. Basically, we turbocharged this economy based on cheap credit.” But the days of easy credit are over, Obama said, “because there is too much deleveraging taking place, too much debt.” A new economic turbocharger is going to have to be found, and “there is no better potential driver that pervades all aspects of our economy than a new energy economy … That’s going to be my No. 1 priority when I get into office.”
Calls for a Green New Deal are also starting to gain traction in the UK - and the UN. This can only help the chances of Australia’s version of the Apollo alliance, which released the ‘Green Gold Rush’ report last week calling for investment in green-collar jobs growth.
The Obama campaign’s target for emissions cuts was 80% by 2050 - a fair way ahead of Oz Labor’s as-yet-unaltered election promise of 60% by 2050. With the Arctic ice-sheet melting rapidly even an 80% target is too low for a developed country like the US, but it should certainly give Professor Ross Garnaut reason to revise his pessimism about the likely outcome of the Copenhagen round of climate negotiations. It’s worth noting that the Obama campaign’s climate and energy platform specifically called for 100% auctioning of permits.
Continue reading ‘Guest Post by Miriam Lyons: What does an Obama win mean for Australia?’
There’s been a lot of discussion over the last few weeks about whether today’s vote would signal the end of the Reagan era. That discussion had two interlinked referents - the combination of militarism and small government rhetoric (if not practice) which marked Reaganite governance and the enduring electoral pattern Reagan’s win in 1980 ushered in. It may well be that these predictions are on the money, though we’ll need a few more electoral cycles to be sure (and one very useful thing the Obama administration could do would be reform of the voting process, which might make a fair bit of difference in and of itself). Certainly the red state/blue state frozen electoral map has begun to shift - with the state level strength in the West for the Democrats now translating nationally and the South becoming more competitive (and as Cliff Shecter observes, the demographics in Texas and South Carolina are heading in the same direction):
In other words, Barack Obama and the Democrats are a national party now, while the GOP has become regionalised and fallen behind the times. What a difference a few years can make. It will now be up to Obama and other leading Democrats to solidify these gains through smart politics and smarter policy. So we can all breathe a bit easier, by putting the Bush years behind us forever.
What’s a little surprising is that in the midst of these debates, there’s been little discussion of the exact significance and dimensions of the repudiation of Bushism. As publius says at Obsidian Wings:
Any way you slice it, the 2008 election should be seen as a massive repudiation of the George W. Bush administration.
And not just in psephological terms, as the Republican right may have driven Hispanic voters away for a long time. Let’s make no mistake about it. The collision of neo-con Republicanism and reality has not been kind to the latter. Publius again:
…recent events have repeatedly proven the progressive “sphere” more correct than the conservative “sphere.” Progressives’ policy assumptions seem to jibe better with empirical reality than the fairy tale world inhabited by many in the conservative sphere. In short, in the laboratory of ideas, progressives are winning.
Continue reading ‘US election: End of the Bush era’
It’s all over, red rover, and Barack Obama, with 200 electoral votes in the bag and enough in the bag to come from the West Coast and Midwest to come, has won the presidential election. Lots of interesting stuff still to come, including the all important Senate races and the ballot iniatives, and the size of the victory both in the electoral college and in the popular vote. And the turnout, which is looking huge.
What’s intriguing about this win is that Obama will exercise influence immediately. George W. Bush is the lamest of lame ducks, and arrangements have already been made for the next president to participate in shaping economic policy, and former Times Economics Editor Anatole Kaletsky thinks that influence will make a difference quickly:
If tomorrow’s election delivers a clear economic mandate to a competent new Administration, the financial markets will soon stabilise — and the US economy could recover surprisingly quickly from the blundering incompetence of Henry Paulson and George W. Bush.
Obama will be naming cabinet members and other key administration figures very quickly, and we won’t have the traditional waiting game for policy and names to trickle out before mid January.
How will he govern? One of the most interesting comments he’s made is when he told Jon Stewart that difficult times enable a President to achieve big things. There’s a bit of an FDR game in play, perhaps, with the modest promises of the campaign potentially being eclipsed by the pressure of events. We’ll see - expectations will certainly be high.
Related posts: The archive of all US election 2008 posts at LP can be accessed here.
Update [by Mark]: The text of Obama’s speech is here.
Amongst the myriad other things that Barack Obama (touch wood) will have to deal with, it’s negotiating a successor to the Kyoto Protocol that’s of the greatest long-term importance.
While it’s always risky to equate campaign positions with how a politician will actually govern, the noises from the Obama campaign have been reasonable. This is particularly so given the peculiar American fixation with “energy independence”. Their policy position is straightforward: domestically, an 80% cut by 2050 through cap-and-trade, with 100% auctioning of permits. Internationally, they want to re-engage with the “UNFCC – the main international forum dedicated to addressing the climate problem”. They will also create a Global Energy Forum of the world’s largest emitters “to focus exclusively on global energy and environmental issues”. It’s still inadequate, certainly, but it’s a heck of a lot closer to the ballpark than the current administration.
Meanwhile, the other big polluters have been starting to firm up their positions pre-Copenhagen (or, technically, pre the next round of talks in Poland in December), but the road to a deal is as clear as mud at this point. While a number of eastern European countries - and Italy - have tried to renege on Europe’s commitments to a 20% cut in emissions by 2020, the broader EU seems to be holding firm on its position. But the biggest unknown is China. China recently released its own white paper on climate change. It details in some detail, and without sugarcoating, the potential domestic effects on climate change. It also details a large number of domestic policies to reduce emissions growth. But as far as international targets go, it’s extremely vague, with lots of praise for the Clean Development Mechanism but very little about what it might take for the Chinese to sign up to anything stronger.
It seems like there’s lots of horsetrading to go before - if - we get a deal in Copenhagen.
As Peter Wood notes, the Treasury modeling for the Carbon Pollution Reduction Scheme contains some rather dodgy assumptions: as he puts it: “There is no way in hell that the international community could accept a 5% reduction from Australia that corresponds to a 550 ppm target, or 15% corresponding to a 510 ppm target. These targets would involve Australia free-riding on other countries emission reductions.” On that basis, you’d have to agree with Peter that Australia’s standard approach to climate change negotiations - attempt to negotiate a position that involves doing as little as possible - is likely to continue.
However, there is a fair bit of good news in the Treasury report. As previously noted, paying developing countries for permits is likely going to be a major source of “our” emissions reductions for some time. I don’t have a huge problem with this; emissions are a global problem, and paying for clean technologies in developing countries is likely to be a win for both us and those developing countries. So getting a deal that ensures the largest pool of permits available for purchase is in Australia’s direct financial interest. But there’s more: the Treasury modeling seems to indicate that it’s not only Australia who benefits from joining a deal now, rather than later. According to Box 5.4 of the Treasury report:
Subsequently, when these developing economies join the global emissions trading scheme, their mitigation costs are higher than if they had joined earlier. A larger part of the economy now has to adjust to the emission price, resulting in larger distortions or allocative efficiency losses in the economy and larger declines in returns to capital.
In contrast, those that join the global trading scheme at or near the beginning receive a relative benefit once all regions join. As a result of the larger declines in returns to capital experienced in delayed-entry economies, early-entry economies receive relatively more investment, leading to higher levels of capital stock.
Continue reading ‘Modelling says: do a deal, and make it a good one’
The Federal Government is going to restore the ability of universities to levy a compulsory student services charge of up to $250 per student per annum.
However, according to Federal Youth Minister Kate Ellis, student organisations or unions will not be managing the funds and the services to be funded:
Ms Ellis said university administrations were better placed to manage services like health, childcare, counselling and club funding.
Continue reading ‘Taxation without representation is Federal Government policy on student services’
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