Suspending Belief In This Climate Of Hot Air

Piers Akerman
December 20 2008

This year will go down in history as the one in which the Australian Government decided to pay people for producing hot air.

That's the gist of Prime Minister Kevin Rudd's long-awaited program to combat the as-yet- unproven theory of human-induced global warming.

Not only are Australians to be paid, but also the Rudd government's wealth-redistribution package will ensure that some get paid more for doing less to reduce their reliance on fossil fuels.

The stench surrounding the plan - like the stink of rotting fish - is only getting worse.

Not only are single people going to pay more than their share, but also the ranks of the Rudd government's beloved "working families" have been significantly thinned by Treasurer Wayne Swan to ensure that greater numbers of middle- and low-income earners will be caught in Labor's climate-change trap.

So much for the cliched "ladder of opportunity" Saint Kevin offered during his mendacious election campaign last year.

Just seven months ago, Swan defined a "working family" as a household earning less than $80,000 a year but, according to the tables accompanying the Government's white paper, single people earning $40,000 or more will be hit.

The document also makes the assumption (wrongly) that the emissions trading scheme's cost-of-living effect is a "one-off" in 2010 (it isn't, because Treasury modelling shows that the permit price grows by 4 per cent in real terms every year) and that the carbon price in 2010 will be $25 per tonne (it may be higher).

Single-income childless couples who earn more than $65,000 a year will also be hit, as will self-funded retirees earning more than $50,000 and those dual-income couples on a 70:30 income split who are earning between $45,000 and $60,000 and have no dependent children. Many other individuals will also not be fully compensated but they didn't qualify as "working families" under the Swan definition as they earned too much.

Astonishingly, this single greatest change to Australia's economic framework also fails to take into account the global financial meltdown. There is nothing on the effects on employment over the near-to-medium term.

The Rudd government is again asking the electorate to suspend belief and, seriously, assume that its scheme will not cost a single job. And given the regime's extraordinary popularity in the opinion polls, it would seem that most Australians are prepared to believe anything.

The white paper trades further on this lack of questioning.

It gives no further Treasury modelling on the scheme the Government intends to implement, no analysis of the costs of the unconditional 5 per cent reduction in emissions from the 2000 level if other nations do not follow suit; indeed, it gives no definition of what would constitute an "international agreement" to justify the 15 per cent cut it proposes.

For example, what would happen if President-elect Barack Obama pushed for a US plan but the US Senate failed to ratify his bill?

Would the Rudd government then decide that this still constituted an agreement?

Like FuelWatch and GroceryWatch and computers for every child, this is the stuff of fantasies and morning television shows.

Rudd intends to introduce the legislation into Parliament in May, when the Budget comes down, with passage in the same sitting. Not only is this an unworkable timetable - given the need for a Senate inquiry, transparency, accountability and thorough public discussion - but so far, there is also very little detail.

The Rudd government claims that it has rushed its bill to give business some certainty, but the lack of information gives the lie to that claim.

Small businesses, which employ more than 3.8 million people, have all but been ignored, yet they will be paying hugely escalating electricity prices even with the 5 per cent cut.

According to Treasury's modelling, they will pay around 111 per cent more in 2020 relative to business as usual; that is, wholesale electricity prices will double.

The Rudd government is setting Australia up for increased unemployment and is also plunging the nation into levels of debt not seen since Labor was last in office 12 years ago.

The budget surplus left by the Howard-Costello government is gone and financial analysts now estimate that the level of Australian government debt will reach nearly $100 billion by 2010.

Seven months ago, Rudd was pledging to keep Australia in modest surplus, saying "the challenge we've got is responsible economic management".

That challenge has obviously defeated him. Even Rudd's appeal for Australians to go out and "spend, spend, spend" this Christmas has more than a whiff of desperation about it, let alone a total lack of fiscal prudence.

As a wise fellow once advised, even a bargain is only ever a bargain if you're buying something you actually need.

http://blogs.news.com.au/dailytelegraph/piersakerman/index.php/dailytelegraph/comments/suspending_belief_in_this_climate_of_hot_air/


Warmest Regards

Bonzo

On Dec 24, 3:00�pm, "oonbz" wrote:

Piers Akerman
December 20 2008
This year will go down in history as the one in which the Australian Government decided to pay people for producing hot air.

Well, if this turned out to be the first time Piers Akerman had been right about something, since he worked out at ten that buckles and velcro tabs were a lot easier to work with than shoe laces, he'd be in for a pretty good year in 2009.
Scientific studies have shown that Piers Akerman is personally responsible for 1% of Australia's greenhouse gas emissions associated with "stationery" energy and 10% of pungent heavy breathing.

That's the gist of Prime Minister Kevin Rudd's long-awaited program to combat the as-yet-unproven theory of human-induced global warming.

Akerman of course doesn't read things that hurt his brain, which is why he says's it's unproved.

Not only are Australians to be paid, but also the Rudd government's wealth-redistribution package will ensure that some get paid more for doing less to reduce their reliance on fossil fuels.

An assertion he doesn't actually develop in the space below.

The stench surrounding the plan - like the stink of rotting fish - is only getting worse.

Akerman smells rotting fish, because as the saying goes, the fish stinks from the head". It started when Akerman chowed down on some story out of the Heartland Institute and it simply died in his mouth.

Not only are single people going to pay more than their share, but also the ranks of the Rudd government's beloved "working families" have been significantly thinned by Treasurer Wayne Swan to ensure that greater numbers of middle- and low-income earners will be caught in Labor's climate-change trap.
So much for the cliched "ladder of opportunity" Saint Kevin offered during his mendacious election campaign last year.

He can't even get his slogan attributions right. The "ladder of opportunity" was Latham's slogan, not Rudd's. His mind is still stuck in 2004. I wonder if he still thinks the coalition will "keep interest rates at record lows"?
<snip ramble>

Small businesses, which employ more than 3.8 million people, have all but been ignored, yet they will be paying hugely escalating electricity prices even with the 5 per cent cut.

Actually, the end users of the services will be paying any of this impact, and then only if the business doesn't find ways to use energy more efficiently or with fewer emissions.

According to Treasury's modelling, they will pay around 111 per cent more in 2020 relative to business as usual; that is, wholesale electricity prices will double.

Of course, not all of the expenses in operating a business are energy- related and those that reduce the energy intensity of their businesses will get a competitive advantage.

The Rudd government is setting Australia up for increased unemployment and is also plunging the nation into levels of debt not seen since Labor was last in office 12 years ago.

So tired and so specious. As every government in the OECD now acknowledges, debt is one of the tools that states can use to ensure to mitigate financial downturns which would, in the end, cost more to deal with than the secondary attempts to mainatin balanced budgets. The analogy between personal debt and the debt of states is a very poor one, and the Australian experience post-1996 bears this out.
The world had suffered an economic downturn in 1992, and government revenues fell in Australia and costs rose as more were unemployed or underemployed but when conditions in the world began to rebound in the period post-1996 Australia began recovering too. The Howard government continued to run deficits as late as 2001 but as world resource prices surged, the budget went into surplus. Ironically, if the government had spent more on port and rail infrastructure and spent up on training in the future growth areas -- education, resources, hospiatility and tourism --then Australia would have ridden the surge in world economic activity better and produced even higher surpluses, albeit they'd have had less impressive budgets in the period up to 2001. Had they, instead of flogging off Telstra for quick cash, reconfigured the business so as to lay the foundations for the roll out of high speed data services, they'd have had a weaker bottom line in the short term but the benefits long term would have been significant.
This is the main problem with the analogy between the budgets of persons and states. A person has a limited working life a fairly limited scope to raise income, and of course, there is only one beneficiary. States on the other hand, are of long duration, and can spread benefits and costs across generations.
Akerman, like so many of the simplistic deadheads of the right doesn't understand this point and prattles on like some fire and brimstone preacher about how somehow debt is an inherent evil. He utterly ignores the one part of the analogy that is sound -- that debt is OK if the total costs of ownership including debt are less than the toal advantages of ownership to the holder of the asset and one can service the debt without cost to other vital obligations.

The budget surplus left by the Howard-Costello government is gone

This was a *projected* surplus rather than an actual one. The coalition has not specified a single spending program in FY2008-9 that they'd abandon or cut back and indeed, earlier this year they were calling for a 5 cents per litre cut in fuel excise and demanded massive rises in pensions, and criticised Rudd for being stingy. They opposed means testing solar panel rebates and the baby bonus.
So one may pardon those who snicker as they wring their hands over the state of the projected surplus.

and financial analysts now estimate that the level of Australian government debt will reach nearly $100 billion by 2010.

What would it be if Australian unemployment reached 10%? If the as yet unspecified coalition program were implemented?

Seven months ago, Rudd was pledging to keep Australia in modest surplus,

"over the economic cycle"

saying "the challenge we've got is responsible economic management".
That challenge has obviously defeated him.

Not yet because the economic cycle is as yet, incomplete.

Even Rudd's appeal for Australians to go out and "spend, spend, spend" this Christmas has more than a whiff of desperation about it, let alone a total lack of fiscal prudence.

Yet neither Akerman nor the coalition specifies what would amount to fiscal prudence. And haven't we wandered a long way from the ostensible point -- emissions trading?

As a wise fellow once advised, even a bargain is only ever a bargain if you're buying something you actually need.

That's plainly absurd. People profit from trading in things they don't need all the time. Indeed, if you "need" them then your ability to extract a bargain from acquiring them is to that extent lower.
Not that Akerman could tell wisdom from witlessness.
Fran

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Warmest Regards
Bonzo