With the final approval of the Adani Carmichael coal mine now apparently imminent, it is important to ask how it has seemingly defied the assessment of experts that it is not financially viable.
After all, it’s only a week since the Chinese owner of another mine planned for the Galilee Basin, the China Stone mine, suspended its bid for mining leases because of commercial considerations.
But such a purely financial analysis ignores the political forces driving the development of the coal industry in both India and Australia.
Mates in India, mates in Australia
In short, both are locked into what I describe as a model of crony capitalism, in which special deals are handed out to projects such as Adani that tip the scales in favour of development.
The actions of China and Japan in deploying enormous state power to export their respective coal technologies to Southeast Asia strengthens the hands of those pushing such developments.
In my recent book, Adani and the war over coal, I outline a network of power that for several decades has promoted the development of Australia’s coal resources in the interests of national and international corporations.
The mining companies, then the big four banks became part of it, lending billions in the rush to develop Australian coal mines as Asian countries sought to lock in long-term supplies. The Minerals Council of Australia, the New South Wales Minerals Council and the Queensland Resources Council, with their collective close ties to both political parties, handled public relations.
Yet they have faced resistance from the rise of an anti-Adani movement that links grassroots environmentalists, peak environmental lobby groups and progressive organisations such as GetUp!
By mid-2018, these campaigners seemed to have backed the Carmichael mine into a cul de sac by scaring off both Australian and foreign investors. They had also pressured the Queensland government to withdraw its support for a loan to the project from the Commonwealth government’s Northern Australia Infrastructure Facility.
Then Adani surprised them by announcing that it would scale back the project and fund it from its own resources. On the face of it this seemed unlikely, but it had help.
Adani and Modi have history
The chairman and founder of the Adani group, Gautam Adani, has had a long relationship with the recently re-elected Prime Minister of India, Narendra Modi.
Modi played a decisive role in paving the way for Adani’s latest mega deal: selling coal-fired power from a plant in the Indian state of Jharkhand to nearby Bangladesh.
The power for Bangladesh is set to be fired by Carmichael coal. Many Australians would be concerned to learn that our coal is to be used to power one of the most climate-challenged countries on the planet, but we have this on the authority of Adani’s previous Australian-based chief executive, Jeyakuma Janakaraj.
Twelve days before the 2019 Indian election date was announced, the Modi government gave approval for an Adani project in Jharkhand to become the first designated power project in India to get the status and benefits of a Special Economic Zone, saving Adani billions of dollars in taxes, including clean energy taxes.
The Indian state will provide land, infrastructure and water for the project and shoulder the burden of pollution. The cost of the power to Bangladesh is not expected to be cheap.
Will we be asked for more?
Adani’s form suggests it might come back to Australia for more. Following the re-election of the Morrison government it is already being speculated that the pro-coal Minister for Resources, Matt Canavan, will revisit the original proposal for a billion-dollar government-sponsored loan from the Northern Australia Infrastructure Facility to construct the railway from the Galilee Basin to the Abbot Point coal port.
The Adani saga points to a critical flaw in the Paris climate agreement. It is an agreement between nation states, but what those states do is often determined by arrangements between politicians and private companies that feel no particular obligation to keep global warming to less than two degrees.
We are pawns in a larger, climate-destroying game.
Our “state of the states” series takes stock of the key issues, seats and policies affecting the vote in each of Australia’s states.
We’ll check in with our expert political analysts around the country every week of the campaign for updates on how it is playing out.
Victoria
Nick Economou, Senior Lecturer in the School of Political and Social Inquiry at Monash University
The first week of the 2019 election campaign is complete. So far the contest is looking like a dour football match between two defensive teams. Both Opposition Leader Bill Shorten and Prime Minister Scott Morrison have campaigned in marginal seats in the famed “western Sydney”, where – according to legend – national elections are won or lost.
By midweek, both leaders had made it to Victoria, where there might not be many genuinely marginal seats, but the Victorian Liberal party is really anxious about the number of mid-range seats like Deakin, Flinders and even Higgins, which might be lost if an anti-Liberal swing commensurate with the state election should be repeated on May 18.
The two major party leaders have sought to reinforce the themes that underpinned the budget and budget-in-reply. The government hopes swinging voters will be enticed to vote Liberal with promises of tax cuts and warnings about Labor’s fiscal profligacy. Labor seeks to appeal to voters on health policy with grand commitments to addressing the challenges of cancer. These policy espousals occur against a backdrop of visits to marginal electorates where traps await for even the most experienced politicians.
In the seat of Reid, with its significant Chinese community, Morrison greets someone in Mandarin only to discover they are Korean. Shorten, meanwhile, meets someone suffering from cancer and who wants to know (for the benefit of the television crews, no doubt) why state Labor has done so little after promising to boost health funding at the last two state elections.
The early loss of some major party candidates has been the only really interesting thing to happen so far. Labor has lost its candidate for Curtin, Melissa Parke, following revelations that she had criticised Israel in a speech she had previously made on Middle Eastern politics. Criticising Israel is hardly the thing Labor wants to be known for when it is seeking to defend marginal seats such as Macnamara in Victoria.
The Liberal party has lost two candidates as well. In a reminder of the ongoing section 44 debacle, Liberal candidates for the Labor-held seats of Lalor and Wills, Kate Oski and Vaishali Gosch, have had to withdraw. Apparently doubts about their citizenship status arose from questionnaires they filled in for the Australian Electoral Commission as part of the nomination process.
Given that the parliamentary Joint Standing Committee on Electoral Matters figured that up to 50% of Australians have been potentially disqualified from being candidates thanks to the High Court, something like this was bound to happen.
New South Wales
Chris Aulich, Adjunct Professor at the University of Canberra
At this stage of the campaign, Labor appears likely to hold about the same number of NSW seats as it did in 2016. A possible Labor loss in the city seat of Lindsay, where Labor’s Emma Husar isn’t recontesting, could be offset by wins in Gilmore or Reid, where sitting Liberal members Ann Sudmalis and Craig Laundy aren’t recontesting either. A small swing of less than 2.5% against the Coalition is needed for Labor to win Robertson, Banks and Page, but currently, the swing isn’t anticipated to be enough for the seats to change hands.
The Coalition has the advantage of the recent strong win at state level in NSW, although its win was marred by a backlash against the Nationals in many regional seats. The Coalition now faces the risk of losing regional seats to several strong independent candidates, such as Rob Oakeshott in Cowper and, less likely, Kevin Mack in Farrer.
In the city seat of Warringah, Liberal Party polling reveals a swing of about 12% against Tony Abbott, who is facing a serious challenge from independent Zali Steggall. If that swing were realised at the election, Steggall would win the seat from Abbott. While Steggall will gain some advantage from GetUp’s targeting of Abbott, the former prime minister has support from the Advance Australia lobby, which has already claimed that Steggall is a “fake” independent.
The battlelines are drawn between traditional and modern conservatives in this seat, with the focus on issues like climate change adaptation, refugee policy and foreign aid. After a feisty first candidates’ debate last month, and recent complaints by Steggall that Advance Australia has “sexualised” her advertising hoardings, this seat promises a close and bare-knuckle contest.
The loss of any of these seats would make Scott Morrison’s task of winning government more difficult. With redistributions since the 2016 elections, the Coalition notionally holds 73 seats in the new 151-member house and cannot afford to lose any seats.
This week we also include seats in the ACT. Redistribution has added a third seat to the ACT, and all seats now have new boundaries. The notional swings needed by the Coalition vary from 9% to 13%, suggesting comfortable wins to Labor. But the Greens are hopeful their candidate in central Canberra, environmentalist and musician Tim Hollo, may be able to capture sufficient votes from the young, urban dwellers in the electorate to win.
In the Senate, the status quo of one seat for Labor and one for the Coalition is likely to remain with Labor’s Katy Gallagher, who is expected to be returned after losing her seat over dual citizenship. Liberal Zed Seselja only needs 33% of the two-party preferred vote to secure a quota and hold his seat.
Queensland
Maxine Newlands, Senior Lecturer in Political Science at James Cook University
The federal government’s final go-ahead for Adani’s groundwater management plan has sparked a large scale grassroots campaign pushing back against the two major parties in Herbert.
The LNP, ALP, and Katter’s Australia Party all support the mega mine. Herbert incumbent ALP’s Cathy O’Toole is on record saying:
If this project has gone through the processes and the regulatory requirements and it’s passed, as it appears it has, it will go ahead, and it will be good for jobs in this city.
The Greens are running on a Stop Adani ticket. Millennials and the undecided voters will play an important role in this election as climate change and mining jobs become key election issues.
An Australia Institute report this week shows that 68% of Queenslanders want strong government action on climate change, 50% want no new coal mines, and 64% are looking for a rapid transition to 100% renewable energy. Leichhardt in far north Queensland, one of the eight LNP electorates on a majority of less than 4%, sees climate change as a major issue.
Last federal election, preference votes from minor parties – mainly One Nation – helped get Labor over the line in Herbert. With One Nation yet to declare a candidate in Herbert, Labor’s early seeming rejection of a preference deal with Palmer’s United Australia Party (UAP) could backfire.
Labor assumed that Palmer would still owe A$70 million dollars to the Herbert community. That all changed on Monday with Palmer’s announcement he will repay wages owed to Queensland Nickel workers.
Palmer has announced he will run for the Senate, and he has nominated local rugby league star Greg Dowling as his candidate for Herbert. With no sign of a One Nation putting up candidates in Herbert, it could come down to a tight race between LNP, ALP, the Greens and the minor parties of UAP and Katter’s Australia Party. Rejecting a preference deal with UAP could be harmful to Labor, if Palmer’s payback bounce and recruiting of local sports star wins him votes come May 18.
Down south and Liberal incumbent Peter Dutton is facing a different challenge. Dutton’s role in Malcolm Turnbull’s undoing is still fresh in the minds of Dickson voters. As Michelle Grattan has pointed out:
Nationally, Peter Dutton will have a big footprint in the campaign. It won’t be a helpful one for Morrison.
Dickson is one of the eight marginal LNP seats with a majority of less than 4%. The campaigning there is already getting down to personality politics. Labor has taken the lead with a social media campaign weaponising Dutton’s role in the spill. Comments Dutton made about Labor candidate’s Ali France’s disability will not help shore up support.
Ian Cook, Senior Lecturer of Australian Politics at Murdoch University
Scott Morrison has his work cut out for him when it comes to convincing West Australians to accept his core message to voters: that they should reelect the Liberal-National Coalition government because they’re better economic managers than Labor.
He has two main problems. First, voters in Western Australia threw Colin Barnett’s Liberal-National Coalition government out in 2017, in part, because of its economic record. Second, many West Australians felt that their quality of life declined during the mining boom, so they know that lots of good economic data doesn’t necessarily mean that everyone’s lives will improve.
Economic management wasn’t the only issue that resulted in the Barnett government’s loss. Tension between the Coalition parties and the preference deal with One Nation didn’t help. But Labor focused part of their campaign on the Coalition government’s economic mismanagement during that election. And voters responded.
The evidence that conservative governments are just naturally better at managing an economy is thin, and there is just as much evidence that the reverse it true, as economics professor James Morley has pointed out. But the idea won’t go away as long as the economic orthodoxy is that governments shouldn’t interfere in the economy. And Australians believes that Coalition governments don’t interfere. Both views are open to question.
While other Australians may not question these assumptions about economic management, their recent experience with a Coalition government means that many West Australians will question them, and they’ll need convincing that they shouldn’t.
On the second problem, many West Australians recall a time when the economy was booming. Mining booming. And few of us felt better off, and many felt worse off. Of course it didn’t help that state governments, of both parties, increased utilities charges during this period. But the boom meant that the price of housing became ridiculous (and destined to crash), rentals were very hard to come by and, applying the definitive cappuccino test, we were paying more for our coffees than anyone else in Australia.
We had a two-speed economy shoved in our faces and one takeaway from this was that everyone doing well is not just about the economy doing well. The prime minister will get a chance to explain how I’ve gotten things terribly wrong when he appears in the first of the Leaders’ Debate in Perth on April 29.
South Australia
Rob Manwaring, Senior Lecturer in Politics and Public Policy at Flinders University
Political memories can be short. At the last federal election, perhaps the single biggest factor shaping voting patterns was the impact of Nick Xenophon’s Centre Alliance. For many years, Xenophon was a mainstay of South Australian politics, with a canny knack for finding appeal. The ubiquitous politician was both a longstanding member of the SA parliament, first elected in 1997, and then a federal senator from 2008 to 2017. Xenophon, at one stage touted as a future premier for South Australia, left Canberra to try and make a splash at the 2018 state election.
Three years ago, at the national level, the Centre Alliance were poised to become a third force in South Australian politics, and a key disruptor to the major parties. In 2013, Xenophon’s team picked up a remarkable 24.9% of the vote, and in 2016 this was a still an impressive 21.3% of the vote. Last time out, the Centre Alliance had one member of the House of Representatives – Rebekha Sharkie picking off Liberal Jamie Briggs in Mayo, and three Senate positions. In terms of vote share, just over 250,000 South Australians voted for the the Centre Alliance.
But what now? With the charismatic Xenophon off the stage, it remains unclear what will happen to their vote share. While Sharkie is likely to hold off the challenge from Georgina Downer again, and it’s unclear how much impact the Centre Alliance will have. They are running three candidates, including Sharkie, for the lower house. Skye Kakoschke-Moore will be their lead Senate candidate.
At best, they seem to be angling to play a key kingmaker role in the Senate, making noises about limiting a potential Labor government’s franking credits and negative gearing policies. Yet, this seems a reactive campaign, and lacks Xenophon’s ability to pick key outlier issues. Moreover, where will moderate liberal and conservative voters find their voice?
Tasmania
Richard Eccleston, Professor of Political Science and Director of the Institute for the Study of Social Change at the University of Tasmania
Labor now holds four of the five House of Representatives seats on the Apple Isle. With popular independent Andrew Wilkie’s vice-like grip on Tasmania’s fifth seat, the recently renamed electorate of Clark (formerly Denison), the chance of a Coalition upset next month seems remote.
But Tasmanian voters have ignored national trends, and delivered more than their fair share of upsets in recent elections, so there must be an outside chance that the Coalition could claw back a seat against the national tide.
Labor’s Ross Hart holds Bass, which takes in Launceston and much of North East Tasmania, by a reasonably comfortable 5.4%. But history suggests Labor shouldn’t be complacent given the electorate has been a graveyard for political careers in recent years. The last time a sitting member was returned for a second term was back in 2001, with the last five elections delivering big swings and unprecedented volatility.
The Liberals will be pinning their hopes on Bridget Archer, the mayor of the working class town of George Town, near Launceston. Archer may be the circuit breaker the Liberals need. She has a high profile in a community traditionally dominated by Labor, and, unlike the vocal conservative Andrew Nikolic who lost the seat in 2016, she won’t have to run the gauntlet of a national GetUp! campaign.
Scott Morrison has visited Bass twice in recent weeks, and a new poll commissioned by a forest industry group put the Liberals in front on a two-party preferred basis. But this result may have been skewed by the design of the poll and its focus on the future of forestry, an industry long championed by the Liberals in Tasmania.
On the other side of the ledger, Labor’s commitment to more funding for health and education, and greater tax relief for lower income households, is more likely to resonate with the electors of Bass than the Coalition’s emphasis on smaller government, and retaining concessions for property investors and self-funded retirees.
While the smart money is on Labor’s Ross Hart holding Bass, history suggests that we shouldn’t rule out an upset on election night.
The Morrison government has ticked off on the groundwater management plan for the proposed Adani coal mine, an important but not a final step for the central Queensland project receiving the go-ahead.
The decision, taken by Environment Minister Melissa Price, comes after intense pressure from Queensland Liberal National Party members, including a threat by senator James McGrath to publicly call for Price’s resignation if she failed to treat the Adani project fairly.
But the Adani decision will not help Liberals fighting seats in the south, with strong anti-Adani campaigns in some key electorates.
Price said in a statement on Tuesday: “CSIRO and Geoscience Australia have independently assessed the groundwater management plans for the Carmichael Coal Mine and Rail Infrastructure project”, and both had confirmed the revised plans…
Opposition Leader Bill Shorten has taken a further step toward opposing the proposed Queensland Adani coal mine as he starts campaigning for the Batman byelection, where Labor is fighting off a strong challenge from the Greens.
Shorten was appearing with Labor’s candidate Ged Kearney, who on Friday resigned as ACTU president to contest the byelection.
Shorten seized on a Guardian Australia report that said Adani put in “an altered laboratory report” when appealing a fine for contamination of wetlands near the Great Barrier Reef.
Shorten said he had become increasingly sceptical of Adani in recent months.
If Adani was “relying on false information, that mine does not deserve to go ahead”.
He called on the government to investigate the claim, and said that if it didn’t, Labor in government would do so.
Kearney said she did not see the mine going ahead. “I know Adani are not good employers,” she said.
Adani will be a big issue in the byelection, with the Greens running hard on it and a grassroots campaign underway. Directly behind Shorten at his news conference demonstrators held up “Stop Adani” signs. A big protest is planned in Canberra when parliament resumes next week.
Earlier this week, Shorten hardened his position on the mine, telling the National Press Club: “We’re certainly looking at the Adani matter very closely. If it doesn’t stack up commercially or if it doesn’t stack up environmentally it will absolutely not receive our support.”
Last year, Shorten was looking on the positive side of the project. In May he said: “There’s no point having a giant coal mine if you wreck the reef but, on the other hand, if the deal does stack up, if the science safeguards are there, if the experts are satisfied, then all well and good and there’ll be jobs created.”
But he did not support the government giving a loan subsidy for the railway that would support the mine.
Greens leader Richard Di Natale tweeted on Friday:
Meanwhile, the Greens moved to up the ante for Labor on the issue of power, releasing a policy calling for the return of the national electricity grid into public ownership, beginning with the acquisition of the interconnectors between regions.
It said the cost of acquiring the five privately owned interconnectors would be A$2.8 billion. “A return to complete public ownership can ensure investment decisions are made in the public interest, not in the interests of profit,” the policy says.
Kearney said renationalisation was worthy of consideration but Shorten was dismissive, saying it was not going to happen.
The coal mine proposed for Queensland’s Galilee Basin by Indian mining giant Adani has been a moveable feast, with many stories about its scale, purpose, financing, job prospects, and commerciality. The prospect of a return of the Palaszczuk government in Queensland is effectively the death knell for the project.
Labor has so pledged to block a concessional, taxpayer-funded loan, while embracing a significantly expanded program to develop regional solar thermal power in the state.
It seems the proposal has been reduced in scale, with the original A$21 billion plan reined back to just its initial stage, costing about A$5 billion. Its purpose has changed from exporting coal to India’s Adani Power, to now possibly shipping coal to Bangladesh and Pakistan. Its job prospects are confusing with early estimates well in excess of 10,000, down more recently to fewer than 1,500, after Adani admitted that the mine’s operations will be heavily automated.
The project’s financing has been under a continuous cloud given the scale of the debts of the Adani Group, and the reluctance of global banks in a world transitioning to low-emission technologies. All of this is complicated by the potential for concessional finance from the Northern Australia Infrastructure Fund (NAIF) and Chinese money. As a high-cost, low-grade coal project, its commerciality has bounced around, given variations in “offtake prices” and expectations on coal futures prices.
The latest version is that the project has been scaled down from some 60 metric tonnes per year (mtpa) to about 25mtpa, requiring an extra investment of some A$2 billion for the mine development, and A$3.3 billion for the rail link to the export terminal at Abbot Point, but avoiding the need to expand Abbot Point. Adani Enterprises is already financially strapped, with net debt exceeding market capitalisation, and the Adani family needing to refinance Abbot Point. The Adani family has already spent some A$3.5 billion on acquiring the deposit and developing their Australian project to date.
So with virtually no capacity to inject additional equity, the focus is on whether even this scaled-down proposal can be financed by additional debt? This is why a government-sponsored concessional loan of up to A$1 billion from the NAIF to build the rail link has been seen as crucial to the project moving forward. It could be accepted by potential financiers as low-cost, high-risk “quasi equity”. It would also effectively hand Adani a monopoly position in standard gauge rail, in turn creating monopoly conditions at Abbot Point.
A more recent constraint on sentiment towards to the project has come from the Indian government’s rapidly changing attitudes to future power generation, accelerating the transition from coal-fired power to renewables. Recent statements by RK Singh, India’s Minister of Power and New and Renewable Energy have confirmed that India can exceed its target of 275 gigawatts of renewable energy by 2027, a massive shift from its historic reliance on coal.
This accelerates the likely end to coal imports by India, which has seen the Adani project seek alternative markets in Bangladesh and Pakistan.
Indeed, there is now documentary evidence of an electricity offtake agreement with the Bangladeshi government’s power board, setting a contractual “cost plus plus” supply of low-quality imported coal delivered at prices that are likely to approach 50% above the current coal spot price. But even at the current futures price of about US$80 per tonne, the Carmichael mine could be cashflow-positive.
Funding the Carmichael mine
Can the Adani group hope to raise the necessary additional debt? This is a two-pronged challenge – the family needs to refinance Abbot Point requiring some A$1.5 billion over the next 12 months, and the A$5 billion-plus project itself.
It looks like the family had to enlist the services of second-tier investment bank Jeffries to initiate a bond refinancing for Abbot Point – to be rated just above junk bond status. However, Jefferies reportedly pulled out within a week, its reasoning unstated.
With some 20 to 30 global banks, including Australia’s big four, having ruled out financing the mine, and Indian banks strapped for capacity, the focus has shifted to Chinese group CMEC as a potential financier, against likely Bangladesh or Pakistani alternatives. However, even with such offtake agreements the project’s longer–term viability is questionable.
Obviously the Chinese Communist Party, and other Chinese authorities, will need to think carefully about the potential consequences of getting involved now that the project lacks direct financial support from state and federal governments in Australia. This is especially so when the issue of Chinese influence and involvement in Australia generally, and in our politics specifically, is becoming controversial.
I also suspect that the federal Labor opposition may now adopt a position against the Adani project, in light of Queensland’s state election result.
The bottom line for financing is an assessment of the longer-term risks with Adani Enterprises, the family, and the project. Both the company and the family are already heavily exposed financially, and the project is a high-cost, high-risk one.
Bearing in mind the Paris climate agreement, the rapidly falling costs of reliable renewables, and India’s shifting energy strategy, the development of any new coal mine is certainly a very big call.
I suspect that the Adani project is already a stranded asset, and definitely not worthy of either Australian taxpayer support or Chinese investment.
Interactive: what the Adani coal mine means for Queensland
Queensland election campaigns often focus on bigprojects for the regions, such as for roads, power plants and mines. But research suggests that mega projects, such as in gas and coal, have not transformed skills or improved employment prospects in regional Queensland.
Take away the temporary booms from construction and other short-term jobs, and employment growth overall is no better than before the global financial crisis. Certainly Queensland’s regions are no more resilient. Instead of these mega projects, what’s needed are new sources of economic value in knowledge, services, and technology.
These projects fell far short of generating new skills and enduring businesses in the regions. Continuing dependence on resources and agriculture also creates its own vulnerabilities, as both are challenged by market and investment volatility, and increased climate risk.
Overall the focus on mega projects has weakened social and economic resilience in communities across Queensland. Resilience refers to the capacity of regional communities to handle risks and manage change. Resilient regions deepen and diversify their economies.
Megaproject sugar highs
Annual construction spending in the resources sector peaked at A$36.6 billion in Queensland in 2013-14, and has dropped by 70% since. Unemployment has doubled in Queensland’s northern, central and outback regions.
The impact is seen in Townsville, Rockhampton, and Gladstone, who are now pitching to become bases for “Fly In Fly Out” workers. Rather than drive their own local economic development, these cities are punting on the next big mining project.
Gladstone is already the pin-up of the construction boom-bust development model. The port city boasts a highly trained workforce in alumina and aluminium processing, cement, liquid natural gas and chemical manufacturing. Still, it waits on the next big mining construction boom.
What regional Queensland really needs is politicians to abandon short-term economic fixes, in favour of a sustainable long term vision. Policies would have greater impact if they focused on skills and enterprise training. Stronger regional collaboration to broker opportunities for smart businesses is essential.
Just north of Brisbane, Moreton Regional Council is showing the way by transforming a former industrial site into a university campus. Tertiary education will come to the fast growing region along with a research and technology park, creating the jobs of the future.
Regional Queensland can also learn from the European Commission’s “smart specialisation” structural assistance programs that help regions build knowledge-based competitive industries through strategic public funding and support for research and development etc.
By 2020, smart specialisation in Europe is expected to deliver 15,000 new products to market, 140,000 new startups and 350,000 new jobs.
Integral to the European strategy is strong collaboration between the research and university sectors, and regional industries. Strong cooperation between levels of government is key to the success. The industries are as varied as cheese manufacturing in Spain, new transport systems in Finland, and materials manufacturing in France.
The Europeans have found that changing business culture and boosting entrepreneurship are just as important to creating opportunity as large infrastructure projects.
What Queensland should do
Queensland should rethink its big projects for a big country approach. Regional jobs that depend on project investment without generating local income are not sustainable. Small business and community must be restored to centre stage in development strategy.
Small and medium businesses collectively account for more than 99% of all business in Queensland, and three times as many people work in the state’s A$20 billion manufacturing sector (169,000) as work directly in the resources sector (48,000).
But small and medium businesses lack the profile of the “big end of town”, and the large resources companies have been effective at selling the narrative that they are central to the A$300 billion Queensland economy.
The priority for developing Queensland’s regions should be investment that generates small business growth, local income, new skills and communities. Particular emphasis has to be given to attracting and retaining talented people.
The state government can best help regional Queensland by heeding the Productivity Commission’s call to help regional Australia adapt and exploit the opportunities of ever present change. This requires greater local initiative, making the most of competitive strengths, and training people to better engage with the world.
The global services sector is a $US47 trillion industry. For regional Queensland to tap into this sector will require skills in fields as diverse as big data, biotechnology, genetics, robotics, communications, and digital manufacturing.
This approach challenges the current politically dominated top down model of regional development. It’s a vision for regional Queensland that extends beyond resources, agriculture, tourism and construction to the people themselves.
This week’s Newspoll, conducted 9-12 November from a sample of 1630, gave Labor a 55-45 lead, a one point gain for Labor since last fortnight, and their largest Newspoll lead since February. Primary votes were 38% Labor (up 1), 34% Coalition (down 1), 10% One Nation (up 1) and 9% Greens (down 1). This is Turnbull’s 23rd consecutive Newspoll loss as PM, 7 short of Abbott.
29% were satisfied with Turnbull’s performance (down 2), and 58% were dissatisfied (down 1), for a net approval of -29. Shorten’s net approval was up five points to -19. The biggest story in the personal ratings was Turnbull’s lead as better PM over Shorten narrowing from 41-33 to 36-34, by far Turnbull’s lowest Newspoll lead over Shorten since he ousted Abbott to become PM.
This result will increase leadership speculation, and hard right commentators will say the Coalition should return to a proper conservative leader. However, while this is Turnbull’s worst better PM rating, Shorten often led Abbott while Abbott was PM. The better PM measure favours incumbents more than would be expected given voting intentions.
Newspoll asked a best Liberal leader question with three options: Turnbull, Julie Bishop and Peter Dutton. Bishop led Turnbull 40-27, with 11% for Dutton. Among Coalition voters, Turnbull was ahead 42-39 with 7% for Dutton. Dutton won 24% with One Nation voters.
If we count Labor/Greens as left, and Coalition/One Nation as right, there has been little change between the total left and right votes in the last six Newspolls. The total left vote has been 47% in all six, and the total right 44-45%. One Nation’s preference flow to the Coalition is likely to be stronger than the 50% at the 2016 election, which Newspoll uses, so Labor’s two party lead is probably overstated.
The fall in Turnbull’s better PM lead is likely due to the citizenship debacle, with voters thinking he has lost control of the situation. By 45-42, voters favoured changing the Constitution to allow dual citizens to run for Parliament.
The Bennelong by-election will be held on 16 December. Former NSW Premier Kristina Kenneally today announced she would contest the by-election for Labor. Kenneally has a high public profile. While Labor was smashed at the 2011 NSW election, the damage was done long before Kenneally became Premier, and she has not been blamed for that loss. Kenneally appears to be a very good choice for Labor.
With Essential and YouGov below confirming the trend in Newspoll, Kevin Bonham’s poll aggregate is now at 54.2% two party to Labor, a 1.0 point gain for Labor since last week, and Labor’s best for this term.
Lambie’s probable disqualification will un-un-elect McKim
Two weeks ago, I wrote that Tasmanian Liberal Senator Stephen Parry’s disqualification would see One Nation’s Kate McCulloch defeat Green Nick McKim for the 12th and final seat, reversing the 2016 election result.
Jacqui Lambie has revealed she has a Scottish father, and has resigned from the Senate. If both Parry and Lambie are disqualified, the Senate recount reverts to electing McKim instead of McCulloch. So it now appears that the High Court will not have to rule on whether an elected Senator who has done nothing wrong himself can be unelected.
SSM plebiscite polling
The result of the same sex marriage plebiscite will be declared at 10am Melbourne time tomorrow. In Newspoll, 79% said they had voted, up 3 since last fortnight. Of these 79%, Yes led 63-37 (62-35 from the 76% who had voted last fortnight).
In Essential, 45% thought the postal survey a bad process that should not be used in the future, 27% a good process that should be used in the future, and 19% a good process that should not be used.
If Yes wins, 58% in YouGov thought the government should pass a law legalising same sex marriage straight away, 18% ignore the result, and 14% wait before passing a law. By 46-42, voters thought MPs who personally oppose same sex marriage should vote for the bill.
Essential 54-46 to Labor
This week’s Essential, conducted over the last two weeks from a sample of 1820, gave Labor a 54-46 lead, a one point gain for Labor since last week. Primary votes were 38% Labor, 36% Coalition, 9% Greens, 8% One Nation and 3% Nick Xenophon Team. Additional questions use one week’s sample.
Turnbull’s net approval was down 11 points to -12 since October, and Shorten’s net approval was down six points to -13. Unlike Newspoll, Turnbull maintained a 40-28 lead as better PM (42-28 in October).
By 44-40, voters thought Turnbull’s proposal to resolve the dual citizenship crisis did not go far enough. By 49-30, they thought disqualified MPs should repay public funding of their election campaigns. By 44-31, voters disapproved of privatising the NBN when completed.
This week’s YouGov poll, conducted 9-12 November from a sample of 1034, gave Labor a 52-48 lead by respondent preferences, a 3 point gain for Labor since last fortnight. Primary votes were 34% Labor (up 1), 31% Coalition (down 5), 11% Greens (up 1) and 11% One Nation (up 2). By previous election preferences, this poll would be about 55-45 to Labor.
Hanson had a 48-45 unfavourable rating (50-42 in early September). Greens leader Richard di Natale had a 33-29 unfavourable rating (39-26). Nick Xenophon had a 53-28 favourable rating (52-28). Abbott had a 56-36 unfavourable rating (57-34).
By 61-16, voters thought a full audit into all parliamentarians regarding dual citizenship a good idea. By 63-26, they thought it unacceptable to legally avoid paying tax. By 55-27, voters said they would not take part in a tax avoidance scheme, which is probably not an honest assessment.
Qld ReachTEL poll of One Nation voters, and more Galaxy seat polls
A ReachTEL poll of over 3400 voters was conducted for the Sunday Mail. From the Poll Bludger’s write-up and comments, it appears this poll was of just One Nation voters, not all voters. Sky News reported this poll as 52-48 to the LNP, but they appear to have extrapolated One Nation preferences in this poll (74.5% to LNP), and applied those preferences to other polls.
If 3 in 4 One Nation preferences are going to the LNP, Labor has shot itself in the foot by changing the electoral system from optional preferential to compulsory preferential voting last year. Labor can hope that this poll had self-selection issues, with hard right One Nation supporters more likely to participate than those who are simply disillusioned with both major parties.
In deputy Premier Jackie Trad’s South Brisbane, the Greens had a 51-49 lead over Trad according to a Galaxy poll taken last week. However, this poll assumes that LNP voters will assign their own preferences, rather than follow their party’s How-to-Vote card. In practice, over half of major party voters follow the card. With the LNP putting the Greens behind Labor on all its cards, Trad should retain South Brisbane easily.
In Burdekin, the LNP had a 51-49 lead over Labor, a 2 point swing to the LNP since the 2015 election.
Following Moore’s alleged sex encounter with 14-y/o, Alabama Senate race tightens
The Alabama Senate by-election will be held on 12 December. Last Thursday, the Washington Post reported that extreme right Alabama Senate candidate Roy Moore had had a sexual encounter with a 14 year-old girl when he was 32.
The three polls taken since this revelation are between a 4-point lead for Democrat Doug Jones, and a 10-point lead for Moore, averaging at Moore by 2 points. There have been 12-point shifts in Jones’ favour from the previous editions of both JMC and Emerson, and a 5-point shift in Opinion Savvy.
What happens next depends on whether voters quickly get over the scandal, or whether it festers, and continues to damage Moore. If the former happens, Moore should win comfortably, but the latter outcome would give Jones a real chance. An example of a scandal that festered in Australia was Bronwyn Bishop’s Choppergate affair.
There’s still plenty of time to go in the current Queensland state election campaign, but early signs from the social media trail offer some encouragement for Labor premier Annastacia Palaszczuk. She is receiving considerably more retweets than Liberal Opposition Leader Tim Nicholls, and chatter about the controversial Adani mine project has declined in recent days.
Twitter and Facebook are now a standard part of the campaigning toolkit for all major parties. Previous state and federal campaigns suggest that voters who’ve already seen a party’s messages in their social media feeds may be a little more open to a chat when the local candidate comes doorknocking. (Labor’s internal review of its 2013 campaign stresses the combination of online and in-person campaigning, for example.)
On Twitter, we’ve identified 60 Labor and 48 Liberal National Party candidates, as well as central party and campaign accounts. The Greens are represented by 34 accounts, while One Nation and Katter’s Australian Party each have only a handful of tweeting candidates. Combined, over the first two weeks of the campaign, they’ve sent some 3,300 tweets in total, and received some 54,000 @mentions and retweets.
Twitter @mentions and retweets per party, 30 Oct. to 12 Nov. 2017. Axel Bruns / QUT Digital Media Research Centre
These are far from evenly distributed, however. @mentions of parties and politicians tend to favour the incumbent, and this is not surprising: more of the debate on social media and elsewhere will be about the track record of the current government, rather than about the promises of the opposition.
It’s the retweets that tell a more remarkable story. The nearly 7,000 retweets for Labor candidates’ tweets amount to more than twelve times the 570 retweets received by the LNP. During an election campaign, retweets usually do indicate some level of endorsement.
The pattern in this election is considerably different from recent elections. In 2016, for example, the incumbent federal Coalition received far fewer retweets than the Labor opposition. In the 2015 Queensland election, Campbell Newman’s incumbent Liberal National Party government also struggled to attract retweets for its messages.
These patterns do not point to a significant mood for change or substantial willingness amongst Twitter users to promote the LNP’s campaign messages. Conservative commentators may want to chalk this up to a purported left-wing bias in the Australian Twittersphere – but that claim is not borne out by our analysis, showing Twitter contains sizeable communities of both left-wing and right-wing supporters.
Adani and One Nation generate heat for the major parties
Labor also seems to have weathered the early onslaught of critical coverage well.
The first week of the campaign saw a substantial volume of debate about the controversial Adani mine project, which divides opinion between the southeastern population centres around Brisbane (where concerns about environmental impacts are high) and the regional centres near the mine (which anticipate greater job prospects from the mine).
During week one some 1,500 tweets per day, both by and to candidates, contained the word “Adani”. Hashtags related to the controversy (#adani, #stopadani, #coralnotcoal, and others) were the most prominent topical hashtags in our overall dataset, in addition to generic tags like #qldvotes, #qldpol, and #auspol.
The story is further complicated by the fact that, in his role at PricewaterhouseCoopers, Premier Palaszczuk’s partner was involved in Adani’s application for a A$1 billion loan. Palaszczuk announced at the end of the first week of campaigning that she would veto that loan if the application were successful.
Judging by our Twitter data, this veto threat appears to have neutralised the Adani debate to some extent. “Adani” tweets by and to candidates declined from 1,500 to less than 600 in week two. The overall volume of tweets by and to these accounts has also dropped from over 5,000 to some 3,700 per day in week two.
This shift in position may indicate that Labor believes that supporting Adani will lose more votes in the southeast than it will gain further north. Our social media patterns seem to bear out this view.
Meanwhile, with Pauline Hanson’s much-publicised arrival on the campaign trail the second week has seen more discussion about the role that One Nation may play in the next parliament. In particular, the announcement on the evening of Friday 10 November that the LNP will preference One Nation over Labor in more than half the seats in Queensland has already generated substantial debate. Some 20% of tweets by and to candidates on the following Saturday included keywords related to One Nation and/or preferencing.
While the LNP announcement – after the evening news on a Friday – was probably timed to minimise media scrutiny of its decision, it remains to be seen whether this debate will carry over into the third week of the campaign. Labor will no doubt seek to exploit this preference arrangement to attract traditional conservative voters who remain critical of One Nation.
And finally, if you’re still uncertain about which hashtag to use to join the debate: in tweets by and to candidate accounts, plain old #qldvotes leads #qldvotes2017 by more than ten to one so far. It’s a landslide.
Even though Queensland Premier Annastacia Palaszczuk announced she would be vetoing the around A$1 billion loan to Adani for a rail link to its proposed Carmichael coal mine, funds could still flow to the company.
Currently in caretaker mode for the Queensland election, the premier would need the consent of the opposition party to exercise such a right. That is very unlikely given the LNP’s longstanding support of Adani’s mine.
This means any veto could not be exercised until late November, or more realistically, December 2017.
As the Northern Australia Infrastructure Facility (NAIF) loan doesn’t need state approval (but rather explicit veto) it could also mean the money will make its way to Adani, without any direct action by the state government.
How would Commonwealth money make its way to Adani?
The NAIF body was established in 2016 and administers A$5 billion in Commonwealth funds. It’s been empowered to award grants to the northern states and Northern Territory for infrastructure projects. Practically, however, these jurisdictions are used as financial conduits to pass this money to large corporations operating in northern Australia.
The NAIF is established under the “tied-grants” provision of the Constitution, Section 96, which states:
…the [Commonwealth] parliament may grant financial assistance to any state on such terms and conditions as the [Commonwealth] parliament thinks fit.
This section was intended to provide for a short-term (around ten years) mechanism for central funds to be granted to the new states affected by the restructuring of national public finances, after federation. However, the Commonwealth parliament continued to use this section well into the 20th century (and increasingly today) to grant funds to cash-strapped states.
Over time, the Commonwealth started to impose terms that required the states do things that were outside of the Commonwealth’s legislative power – such as education or, indeed, infrastructure development.
The early-20th-century High Court concluded that this was acceptable, as long as the state technically consented to the terms and conditions of the grant.
… commence consultation with the relevant jurisdiction as soon as practicable after receiving an investment proposal
In Adani’s case, the Investment Rules indicate that the “jurisdiction” is the “state or territory the infrastructure project is located”, namely Queensland. The state government after reviewing project and investment may provide:
… written notification that financial assistance should not be provided to a project.
If that is the case then the NAIF is not permitted to provide the grant money to the applicant (Adani). But that doesn’t mean the state hasn’t consented to the loan.
The problem is that the High Court has never really addressed what the word “state” means in Section 96. Specifically who should the money be paid to: the “parliament of the state”; “government of the state” or, as seems to be implied in the Palaszczuk statements the “premier of the state”?
Conventionally, when we talk of “state consent” to funds, we envision a complex process by which money is paid into a central state fund under the control of state parliament. However, the NAIF legislation appears to allow for merely the state government to consent in a very minimal way, simply by passing the money directly to Adani without the state parliament ever reviewing or approving the transaction.
The NAIF legislation also doesn’t specify who in the government might consent. To date, it is the treasurer who seems to have been most actively involved in working with the NAIF, and indeed Adani. It seems that, so long as the state has been “consulted”, unless it takes active steps to stop the loan, it will go ahead.
Does Palaszczuk have a ‘veto’ power?
The premier’s reasoning for the veto is a continuation of her government’s legacy of having “no role to date in the federal government’s NAIF Loan Assessment Process for Adani” and no “role in the future”.
These statements seem to be contrary to earlier ones by the Queensland treasurer, Curtis Pitt, that the government would “do what is required” to facilitate Commonwealth funds going to Adani. In fact, as early as November 2016, Pitt declared in state parliament:
Since we came to office, we have been working very closely with the Commonwealth government to facilitate … the NAIF – in North Queensland… It is through the NAIF facility, which the state wholeheartedly supports, that Adani can get the infrastructure support that it needs.
As a result, it would seem that everything needed to pass the NAIF funds to Adani is provided for. The only thing to actively stop it is a formal, written statement by Palaszczuk to the NAIF refusing the loan (not to the prime minister as she claimed). Given Palaszczuk’s statement that she intends to write this statement, it is clear that no formal notice has yet been issued to the NAIF.
However, it would seem that a “Master Facility Agreement” between Queensland and the NAIF has already been agreed to and set up. This agreement seems to envision the treasurer of Queensland passing the money to Adani, without it ever going into the state’s bank accounts. Hence, in May this year, the Queensland treasurer confirmed that:
Our role, for constitutional reasons, is the legal financing contract, the loan agreement including the drawdown and timing, repayment of interest — all of those things have to have state involvement constitutionally.
So, unless the Queensland opposition takes the very unlikely step of agreeing to a veto, Palaszczuk would appear to lack the power to issue one herself until after the election.
In the interim, NAIF has no legal restrictions on issuing the loan and, with the apparent agreement of the Queensland treasury, this money is likely to flow through to Adani. While Palaszczuk can say her government gave no active assistance to Adani, without active measures to block the loan, it would certainly be a silent partner in the process.
A Queensland Galaxy poll, conducted probably on 1-2 November from a sample of 900, gave Labor a 52-48 lead, a one point gain for Labor since an early August Galaxy. Primary votes were 35% Labor (steady), 32% LNP (down 4), 18% One Nation (up 3) and 9% Greens (up 2). The Queensland election will be held in three weeks, on 25 November.
41% approved of Premier Annastacia Palaszczuk (up 2), and 42% disapproved (down 2), for a net approval of -1. Opposition leader Tim Nicholls had a net approval of -12, up two points.
This poll is bad for the LNP, not just in vote shift terms, but because it undermines perceptions that the LNP can win a parliamentary majority without One Nation. There are likely to be many normally conservative voters in south-east Queensland who will vote Labor if they believe the only alternative is an LNP/One Nation government.
Labor has other advantages. Palaszczuk is relatively popular, the Federal Coalition is unpopular, and Nicholls was the Treasurer during Campbell Newman’s government, in which there were drastic job cuts to the public service.
Why I believe Labor’s Adani support is a vote loser
Labor’s support for the Adani coal mine is a vote loser for them on both the left and right. On the left, Adani is a high priority issue for the Greens and Labor’s left-wing activists. That means activists will be less enthusiastic about on-the-ground campaigning.
While Newspoll assumes Greens preferences will flow to Labor at an 80% rate, some Greens will be so disappointed with Labor over Adani that they will preference the LNP. If Labor only wins 70%, not 80%, of Greens preferences, their two party vote will be about a point lower.
The LNP and One Nation will always be able to outflank Labor from the right. People who want the Adani coal mine are likely to trust these two parties over Labor. Had Labor rejected Adani soon after winning office in early 2015, the Adani issue would probably be dead now; instead, it has continued to fester.
While working class voters in general prefer jobs to environmental concerns, Adani is likely to create far fewer jobs than the 10,000 advertised, and will cost tourism jobs. Had Labor opposed the mine, they could have forcefully made these arguments. Jobs created through renewable energy projects would be far better politically for a left-wing party.
One Nation is an anti-establishment party, which will perform best when the two major parties appear close. By sticking with Adani, Labor is playing into One Nation’s hands. One Nation’s preferences are likely to assist the LNP on cultural grounds.
Palaszczuk announced yesterday that she would veto Commonwealth funding for the Adani mine through the Northern Australia Infrastructure Fund. This announcement should encourage left-wing activists, and ensure a strong flow of Greens preferences to Labor.
As the LNP will not veto the NAIF funding, there is now a clear distinction between Labor and the LNP over Adani, so it is possible that the two major parties will regain support from One Nation.
Many commentators think Palaszczuk’s announcement will cost Labor in regional Queensland, but those people who like Adani are unlikely to trust Labor on this issue no matter how pro-Adani Labor is.
Kearney said renationalisation was worthy of consideration but Shorten was dismissive, saying it was not going to happen.
This approach challenges the current politically dominated top down model of regional development. It’s a vision for regional Queensland that extends beyond resources, agriculture, tourism and construction to the people themselves.
What happens next depends on whether voters quickly get over the scandal, or whether it festers, and continues to damage Moore. If the former happens, Moore should win comfortably, but the latter outcome would give Jones a real chance. An example of a scandal that festered in Australia was Bronwyn Bishop’s Choppergate affair.
And finally, if you’re still uncertain about which hashtag to use to join the debate: in tweets by and to candidate accounts, plain old #qldvotes leads #qldvotes2017 by more than ten to one so far. It’s a landslide.
In the interim, NAIF has no legal restrictions on issuing the loan and, with the apparent agreement of the Queensland treasury, this money is likely to flow through to Adani. While Palaszczuk can say her government gave no active assistance to Adani, without active measures to block the loan, it would certainly be a silent partner in the process.
Many commentators think Palaszczuk’s announcement will cost Labor in regional Queensland, but those people who like Adani are unlikely to trust Labor on this issue no matter how pro-Adani Labor is.
Random Thoughts 