Australian Politics 2016-04-30 15:49:00

‘Perilous’: Bureau of Meteorology boss Rob Vertessy exits with climate warning

The report below is carefully worded but it still gives the absurd impression that global warming will increase drought.  It won’t.  It would increase floods as warmer seas evaporate off more water.  The drought in the Southern states is part of an iregular oscillation that sees rain move North and South in turns.  It is the North that is getting the rain at the moment.  Where I live in the North it is raining nearly every day lately, when the normal pattern is for rain mainly in January,  February and March.  See here

UPDATE: As I write this, it is raining like Billy-o outside. And we are now in May. Most unseasonable. We have definitely got the rain that the Southerners are missing. Don’t ask me how or why that happens but it is a normal feature of the Australian climate

Australia faces a “perilous” water security future from climate change even as the Turnbull government eyes budget cuts to water programs and CSIRO halves climate investment, Rob Vertessy, the outgoing head of the Bureau of Meteorology, says.

Reservoirs in the Murray-Darling basin are now close to their lowest levels since the Millennium Drought and Tasmania is also facing “serious” issues”, Dr Vertessy told Fairfax Media on Friday, his final day as the bureau’s chief.

“Water shortage is a problem and climate change is going to be intensifying the drought and flood cycle,” he said, noting that water demand is increasing. “Australia faces a really perilous water security challenge in the future.”

The bureau now had “the world’s best water information service”, including precise stream-flow forecasting, that boasts a return on investments of between twofold and ninefold, despite the early stage of many projects, Dr Vertessy, a hydrologist by training, said. A drop in funding would result in a sharp reduction of services.

Facing criticism at home and abroad, CSIRO last week announced that it would instead form a special climate science centre of 40 staff under its Oceans and Atmosphere division. About 45 of the remaining 100 scientists in two key programs will lose their jobs and the future of those remaining is uncertain.

The need to boost global warming research was only going to increase. In Australia’s case, the threats included lengthening and intensifying fire seasons, worse heatwaves and more intense storms.

“Unless we start slowing down our [greenhouse gas] emissions and really mitigating them completely in the next few decades, there’s going to be a lot of environmental shocks to the planet,” Dr Vertessy said. Human societies and ecosystems “are being pushed to the edge of sustainability”.

The advance of technology promises ever more accurate weather prediction. The bureau will soon begin using a new supercomputer that promises 18 times faster data processing, and within three years, a 30-fold increase.

The resulting higher resolution capability would allow the bureau to scale forecasts down to 1.5 kilometres from 4 kilometres now, allowing an improvement in severe weather warnings.


Sub deal stupid, wasteful and purely political

Though Turnbull effectively had no choice.  Not building the subs in Adelaide would have caused big vote losses for him in South Australia and would therefore have lost him the election

It is telling that when the Prime Minister announced that Australia will spend $50 billion or more on 12 new submarines he was flanked by the South Australian-based federal Minister for Industry, Christopher Pyne. Since the start of the Future Submarine project, the key driver has been pacifying the shipbuilding industry in Adelaide.

One of the most persistent myths in the case of the subs is that spending $50 billion in Adelaide will automatically help the economy of South Australia and thereby is in the national interest.

There are several flaws in this argument.

First, the premium paid for an Australian build is substantial. RAND Corporation estimated that it was 30%-40%, however it could be much higher. The challenges of the troubled Air Warfare Destroyer project are instructive: the project is plagued by cost overruns, poor delineation of authority between Defence and the AWD partners, and scheduling issues.

The AWD price tag has nearly doubled, increasing by billions of dollars. The build for the original Collins Class submarines also ran over time and over budget. Cost overruns of just 10% could see the premium for an Australian built submarine comfortably exceeding $10 billion. As this must be funded by extra taxation, it represents a significant deadweight loss.

Much like the failed automotive manufacturing industry, protection for one industry comes at the expense of higher costs for all other industries. This economic law doesn’t cease to apply simply because the industry is defence.

Second, defence manufacturing involves significant spending on technology rather than labour. Most of the cost of the Future Submarine will be spent on components, many of which will be imported. Less than 3,000 workers will be employed in the build and supply chain.

Moreover these are highly specialised jobs, requiring specific training and preferably experience. Defence industry policy simply isn’t a good area for government dollars if your primary objective is reducing unemployment.

Finally, we cannot ignore the opportunity cost involved in this acquisition. By committing $50 billion to submarines, the money available for other projects (or even just for efficiency generating tax cuts) will be lessened. Too often these nation building projects come with nation crippling price tags.


Capital gain tax changes more dangerous than negative gearing changes
If England was a nation of shopkeepers as Napoleon is said to have asserted, modern Australia is a nation of landlords. The popularity of small-scale residential bricks-and-mortar investment, and the national obsession with the ups and downs of house prices, explains why negative gearing is such a hot button issue.

Negative gearing and capital gains tax concessions are often lumped together by the taxation hunters and gatherers, but they are vastly different beasts. There is little basis to attack negative gearing — which is simply an application of the principle that expenses incurred in earning income should be tax deductible — but even less to cut the capital gains discount. Increasing capital gains tax by half (by cutting the discount from 50% to 25%) would apply much more broadly than any change to negative gearing and be more damaging, but the objections are barely heard above the negative gearing commotion.

The principle that capital gains should not be taxed like recurrent income is recognised almost universally by discounts or lower tax rates, or in some cases by complete tax exemptions. Australia’s 50% discount is unexceptional.

It is often said that the Howard government, when it introduced the discount, ‘halved’ capital gains tax. It did nothing of the kind. It replaced indexation for inflation (effectively a discount in a different form) with a 50% discount, and abolished the averaging provision that reduced the effect of large, lumpy capital gains pushing taxpayers into higher tax brackets. The net effect relative to the previous regime was ambiguous, and in fact CGT revenue held up.

Cutting the discount to 25% would result in the harshest CGT regime Australia has ever had. The exact comparisons depend on rates of capital gain and inflation, but in many situations where the real return is low, the effective CGT rate would be higher with a 25% discount than it was under the indexation regime.

And those advocating a 25% discount are not advocating a return to the averaging provision to soften the blow.

Capital gains tax should be left alone, and the indications are that it will be in next week’s budget.


Australia’s first nuclear waste dump to be located on former Liberal senator’s land

Australia’s first nuclear waste dump will be located in a remote part of South Australia, on land partly owned by a former Liberal senator.

Resources Minister Josh Frydenberg confirmed the government’s intention to acquire 100 hectares of Barndioota station, 130 kilometres north-east of Port Augusta, for the storage of low-level and intermediate radioactive waste.

It followed four months of community consultation and an expert panel assessment of six shortlisted sites around the country, voluntarily nominated by their owners. Three of the potential sites were in SA, while there was one each in New South Wales, Queensland and the Northern Territory.

“Overwhelmingly, the strongest support was in this site,” Mr Frydenberg told ABC Radio National on Friday. “This is a long-term solution to a long-term problem.”

The minister said the Barndioota site excelled based on its geological settings, technical capability and access to transport – it is close to a railway line. But further technological, environmental and safety assessments would need to be conducted before it could finally be confirmed.

Former Liberal senator and state Liberal Party president Grant Chapman is a part-owner of the 25,000 hectare cattle station. In 1996, he chaired a Senate committee whose majority endorsed a national repository for radioactive waste.

It is almost 40 years since such a facility was first proposed under the Fraser government for the storage of radioactive material arising from medical, scientific and industrial endeavours.

Mr Frydenberg said that although Mr Chapman had volunteered his property for consideration, he had not been involved in the assessment process. “Obviously Grant Chapman had no say in the final outcome, it was all done at arm’s length,” he said.

Nor would the owners stand to gain much financially, since land in the remote area was very cheap and the government only intended to acquire about 100 hectares.

“Even if you’re getting four times the value of your property, you’re only talking about a few thousand extra dollars,” Mr Frydenberg said.

Surrounding communities, including the township of Hawker about 30 kilometres away, will be given $2 million in compensation, to be allocated as required by a regional committee.

When the Barnidoota site was shortlisted in November, local Indigenous groups voiced their strong disapproval. Spokeswoman Jillian Marsh told The Australian people were “shocked” about the possibility of a nuclear waste dump being imposed on the area. “We want no further expansion of the ­nuclear industry,” she said.

It is understood the site is held under a perpetual lease and cannot be subject to a native title claim.

The Greens’ nuclear spokesman Scott Ludlam said he was “gobsmacked” at the government’s decision, predicting it would face the same battles against Indigenous community leaders as the protracted, failed bid for a dump site in Muckaty, in the Northern Territory.

“I’m really surprised that the government thinks this is an appropriate curse to pursue,” he said. “It will be fought to a standstill.”

Senator Ludlam visited the site several weeks ago and said traditional owners there were “unequivocal in their opposition” to the idea. He said governments on both sides of politics had proceeded on the “wrong premise” that the best way to handle nuclear waste was to “chuck it at a convenient remote site and walk away from it”.

“If that’s the answer you came to then you must be asking the wrong question,” he said. “How come after 60 years the industry still doesn’t have a containment and isolation solution for this material?”


Government targets dole bludgers using sickies

Jobless welfare recipients feigning illness to avoid working are on the federal government’s hit list.

More than 70,000 people are using medical certificates from doctors claiming they are too sick to work because they have depression, anxiety, muscular-skeletal problems, drug addiction and alcohol dependence.

“We are investigating that further to see how we can crack down on that,” Treasurer Scott Morrison told Sydney radio 2GB on Tuesday.

Mr Morrison said the number of those on the disability support pension has been reduced under the coalition.  “These payments are there for people who really need them, not for those who want a loan on the taxpayer.”


Chinese supermarket chain Winha woos Australian farmers

Three years ago Chinese supermarket chain Winha had no customers. Now it has 800,000. By the end of the year it hopes to have one million, and it has Australian farmers in its sights.

Winha says it is one of the first companies in China to use the country’s historic free trade agreement with Australia to help grow its business.

Its chairman Jackie Chung was in Australia last week with a small delegation to negotiate directly with farmers to supply its boutique supermarkets in Guangdong, China’s most populous province.

Despite Australian farmers heaping praise on the China Australia Free Trade Agreement (ChAFTA), which took effect in December, Mr Chung said the deal had a relative low profile in China.

“A lot of Chinese aren’t aware of the FTA,” Mr Chung said. “Out of a population of 1.4 billion, 30 per cent would know about it.”
And Mr Chung hopes this lack of understanding will help give his company an edge over its competitors.

He says the agreement has allowed Winha to effectively become its own exporter and importer. It has set up an Australian subsidiary to buy Australian products that it will sell directly into China through its supermarket chains.

Mr Chung and other Winha representatives travelled to Shepparton in Victoria’s Goulburn Valley on Friday and signed two memorandums of understanding with cherry and pear growers.

He already has a supply agreement with a Melbourne-based infant formula manufacturer and hopes to strike similar deals with beef farmers and health supplement companies.

e said the FTA had also allowed Winha to slash the customs process for imported Australia, which normally takes six months to a year, to between two and three months, therefore securing supply before its competitors.

“In a free market, competition is inevitable, but being the first movers, we have an advantage,” he said.

When asked why he chose Australia over other food exporting nations, it was a question about density and regulation.

Density, because there is plenty of land relative to people in Australia, which makes for safer and greener food production, and the country’s regulatory standards ensured it stayed that way.

“Australia is the only country in the world that regulates vitamin production like drugs. Therefore, Australia has very high standards when it comes to food consumption and because of the FTA Australian products have become more competitive,” Mr Chung said.

But buying directly of Australian farmers isn’t about saving money by cutting out the middle men – it acts as a certificate of authenticity.

“In China there are a lot of distributors that import poor quality foods that they are pretending to be good quality food.

“I hope to correct that market. We are actually sourcing from the source and breaking down the distribution network.”

Winha has a registered member base of 800,000 customers. It expects that number to hit one million in the next six months, and two million in the next 18 months.

The growth hinges on the company expanding its product range, which attracts more customers. And the more customers it gets, the quicker it can grow its inventory.

“Its a self-fulfilling prophecy.”

Winha, which is listed in the US, is also considering a float on the ASX in the future to further strengthen it ties with Australia.