View from The Hill: A tax cut that will ‘pay your rego’


Michelle Grattan, University of Canberra

The Turnbull government has produced a budget that it hopes it can sell as appealing for voters while appearing fiscally responsible.

Its income tax cuts target lower and middle earners in the early stages, delivering a benefit of up to $530 a year for them. If this seems modest, Scott Morrison was anxious to point out that it could pay your car rego, your quarterly electricity bill or half a dozen tanks of petrol.

In the longer run, the cost is not so modest – $140 billion over a decade. While some relief is delivered in the near term, it’s worth noting the structural change, scrapping the 37% bracket, is not timed until 2024-25 – which is beyond the next two elections.

Asked why the government didn’t prioritise attacking debt and deficit over tax relief, the Treasurer told journalists in the budget lock up that it was because “I respect taxpayers”. This was not “spending” – it was people being able to keep their own money, he said.

But in this budget, it was vital for the government that it be seen to be fair dinkum about fiscal repair. Thus it has brought the return to balance forward by a year – a surplus of $2.2 billion is forecast for 2019-20.
It might be minuscule but the surplus is there, in that year, to make a point, including to the ratings agencies. The budget also has net debt peaking in this financial year, a little sooner than previously predicted.

On the spending side, the budget is restrained, with initiatives targeted. It has an eye to older voters with several measures, including increasing the number of high level home care places by 14,000 at a cost of $1.6 billion over the budget period. This is perhaps less dramatic than it seems, because in part it represents a reconfiguration of aged care – more people want to stay in their own homes, rather than move to residential care facilities.

In seeking savings and revenue, a pre-election budget must tread carefully. There are not swingeing cuts. But there are some familiar and soft targets: “social welfare debt recovery”, “encouraging self-sufficiency for newly arrived migrants”, and “streamlining services for refugees”.

The revenue quest includes combatting illicit tobacco, in yet another crackdown on the black economy. Whether the estimated billions will all be collected remains to be seen.

There are forgotten people in this budget, those without electoral or other clout. Most notably, the Newstart benefit for the unemployed has yet again not been raised despite widespread recognition of its inadequacy.

While the budget will come in for its share of criticism, looked at overall it is designed not to offend an electorate that has already turned off the government.

Though people will be pleased to get a tax cut, they are unlikely to be grateful to the government for it. Rather, they will probably be more inclined to see it as simply their due.

But the budget does reinforce the fact that tax is to be a central battleground for the election.

Labor has plenty of money available for its competing tax package, especially in the longer term, because it has set itself against the government’s expensive tax cuts for big business, and so can use these funds for its tax and spending plans.

On income tax, the most intense competition will be around middle and lower earners, on whom the government has concentrated in the early stage of its package.

More generally, the government is pinning a good deal of hope on being able to brand its opponents as high taxers, with their crackdown on negative gearing, trusts and the like.

Hence Morrison’s tax “speed limit”, set at 23.9% of GDP. It’s not a number that is likely to have much resonance with the ordinary voter – nevertheless Labor will face a challenge to persuade people that the tax hikes it does propose are both fair and justified.

The ConversationHow effective this budget will be in helping shape the election debate won’t become clear until we have a detailed counterpoint to it, in the form of Labor’s pitch to the electorate.

Michelle Grattan, Professorial Fellow, University of Canberra

This article was originally published on The Conversation. Read the original article.

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Infographic: Budget 2018 at a glance



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Wes Mountain/The Conversation, CC BY-ND

Jenni Henderson, The Conversation and Wes Mountain, The Conversation

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The Conversationhttps://cdn.theconversation.com/infographics/257/992dfa7926e7347e420475c1588b27f38e4586ee/site/index.html

Jenni Henderson, Section Editor: Business + Economy, The Conversation and Wes Mountain, Deputy Multimedia Editor, The Conversation

This article was originally published on The Conversation. Read the original article.

Morrison’s budget tax plan is another missed opportunity


Richard Holden, UNSW

Even though this year’s budget is pretty good politics and reasonable economics, on almost every front, it is a missed opportunity to be bold.

Last year’s budget was a bank-bashing bombshell, with 4-5% of profits for five of Australia’s biggest banks yanked away, not for financial stability reasons, but because, as Treasurer Scott Morrison hinted at the budget press conference, people don’t like the banks very much.

With that populist mission accomplished, this year’s budget is more mundane.

The much-vaunted return to surplus is now planned for 2019-20 at just 0.1% of GDP. In 2017-18 we are told to expect a deficit of 1% of GDP ($18.2 billion). That’s before the forecast 3% real GDP growth from 2018-19 onward kicks in. An heroic assumption.

Compare that to an actual of 2.1% in 2016-17. That topline forecast is not insane, but it is certainly bullish. One is tempted to ask the Treasurer whether he would bet a year’s salary that real GDP will be above 3% compared to below that. I suspect he wouldn’t.

A new personal income tax plan

Having previously introduced, but not wholly managed to get through the Senate, a 10-year plan to reduce the company tax rate from 30% to 25%, this year the government has a seven-year “Personal Income Tax Plan”.

Under the “PIT plan” (pun absolutely intended) the number of tax brackets will be reduced from five to four. By 2024-25 the tax-free threshold will remain at $18,200 and a 19% tax rate will apply up to income of $41,000, at which point the 32.5% rate will kick in. The top marginal rate of 45% will apply to incomes above $200,000.

One good thing the plan does address (at least in part) is “bracket creep,” where wage growth coupled with fixed tax thresholds, leads taxpayers to pay more. Under the new plan, 94% of Australians will pay no more than a 32.5% marginal tax rate. That compares to 63% of Australians who pay that rate or less, under existing policy settings.

In terms of tax relief, it’s relatively modest. A person earning $50,000 will be $530 better off in 2018-19. Because of changes to the Low and Middle Income Tax Offset, this falls to $215 for someone earning $120,000 (and less still beyond that).

Now $530 post-tax dollars, for someone on $50,000 a year, isn’t nothing. But it doesn’t really make up for wage growth so sluggish (2.2% on average last year) that it barely keeps up with inflation.

This is all part of the government’s newly announced, but thoroughly leaked, mantra that taxes should be no more than 23.9% of GDP. The rationale is, as the budget papers put it “so we do not unfairly burden Australians, nor allow taxes to chase ill-disciplined spending”.

In some sense that’s a fair point, but the 23.9% is completely unscientific. It appears to be the average of what tax as a share of GDP was during the Howard government, which has left most economic commentators wondering “so what?”

The black economy and superannuation

There’s a “crackdown” on the black economy with a $10,000 limit on cash transactions. Who knows how that will be enforced. Perhaps our good friends the banks will start complying with anti-money laundering provisions.

In any case, I prefer a $0 limit on cash transactions by transitioning over three years to a cashless Australia. That would likely raise $5-6 billion a year every year, maybe more.

The sneakiest thing of all is taxing tobacco 12 weeks earlier upon entry into Australia, rather than at present when it leaves the warehouse. That will boost tax receipts once, and once only, in 2019-20 by $3.27 billion. Without that timing trick the return to surplus would be pushed back a year to 2020-21.

Having attacked retirement savings last year, the government is now “reuniting Australians with lost super”. Hard to be against that, but hard to get too excited either. Exit fees on superannuation accounts will also be banned, which is a very good idea and should help consolidation of accounts.

One step better would be making it a net zero cost to transfer all banking arrangements (mortgage, accounts, credit cards, etc) from one bank to another, through a mandate on banks and a subsidy for customers. That would help with competition in the banking sector, which has come under recent scrutiny.

Another small but sensible initiative is increasing the Pension Work Bonus from $250 to $300 per fortnight, which permits pensioners to earn up to that amount without affecting their pension eligibility.

On a more disappointing note there is a reasonably large amount of fanfare but very little substance about “backing regional Australia”. There is $200 million for a third round of the Building Better Regions Fund to support infrastructure on top of the $272 million from the Regional Growth Fund.

That’s fine but falls well short of a systematic plan for regional infrastructure and does not address regional unemployment, particularly youth unemployment, in a meaningful way. Tackling that would require the kind of place-based policies like targeted wage subsidies and reduced payroll taxes that I have advocated before.

There are a host of so-called “integrity measures” to do with taxation. There’s the oft-talked about tightening of thin capitalisation rules, whereby companies load worldwide debt onto an Australian entity to increase interest charges in Australia, instead of in low taxing jurisdictions like Ireland. This is in addition to other attempts to get multinationals to pay more tax. These are more likely to get multinationals to pay lawyers more, but it’s now customary padding in every budget.

The ConversationThe forecasts are pretty rosy in this year’s budget, but they always are. Overall, it’s a hard budget to hate, and a hard budget to like. But it is a classic political pre-election budget.

Richard Holden, Professor of Economics and PLuS Alliance Fellow, UNSW

This article was originally published on The Conversation. Read the original article.

Gonski review reveals another grand plan to overhaul education: but do we really need it?


Glenn C. Savage, University of Western Australia

Today’s release of the report from the Review to Achieve Educational Excellence in Australian Schools (also known as Gonski 2.0) proves sceptics both right and wrong. In many ways, the report reflects a smorgasbord of popular ideas that have been doing the rounds for some time.

These include Professor John Hattie’s mantra that young people should gain “a year of learning growth from a year of schooling”, along with other claims about the importance of quality teachers, early years learning and school leadership.




Read more:
Gonski review attacks Australian schooling quality and urges individualised teaching approach


One could be forgiven for seeing these arguments as yawn-worthy: not because they’re wrong, but because they have been repeated ad nauseum.

Despite this, the report is also deeply radical in scope and vision, especially in its focus on overhauling core aspects of curriculum, assessment and reporting.

In doing so, it places significant faith in the power of data, evidence, technology and personalisation of learning to drive improvement, and help the nation cast off the shackles of its “industrial model” of schooling.



The Conversation/Federal government, CC BY-ND

A radical rethink of curriculum, assessment and reporting

While the report makes recommendations across a variety of areas, its most radical lie in the areas of curriculum, assessment and reporting. Central to these is an argument that the current national curriculum, which is organised into year levels rather than levels of progress, leaves some students behind, fails to extend others, and limits opportunities to maximise student learning growth.

This strongly echoes recent work by Professor Geoff Masters. He has argued for a re-visioning of the way we assess students to better focus on student growth.

The report portrays the traditional year level curriculum as a relic of the 20th century industrial model of schooling, ill-suited to producing adaptive and personalised learning experiences. Instead, it argues for a shift away from the year level curriculum. It recommends that over the next five years, the national curriculum be reformed to present both learning areas and general capabilities as “learning progressions”.

This will ensure, the report argues, individual student achievement can be better understood and catered for, rendering schools more agile and adaptive to personal needs.

Accompanying this major change is a recommendation to introduce new reporting arrangements that not only focus on attainment, but also highlight “learning gain”. This is designed to ensure young people and parents don’t just have information on where young people sit relative to so-called “lockstep” level years. They would get more tailored information about individual progress.

What else does it recommend?

The report makes a number of other recommendations to supplement these major changes, including but not limited to:

  • Establish a national research and evidence institute to coordinate and disseminate best practices. This is essentially identical to Labor’s promise to create an Evidence Institute for Schools if elected.

  • Develop an online and on-demand formative assessment tool, to be based on revised national curriculum learning progressions. This would help teachers monitor student progress in real time and better tailor teaching.

  • Introduce a national Unique Student Identifier for all students to be used throughout schooling. This would enable the consistent tracking of students if they move between schools or systems.

  • Prioritise literacy and numeracy, particularly in the early years, to ensure young people have the necessary foundations.

  • Conduct a comprehensive national review into years 11 and 12, with a focus on objectives, curriculum, assessment provisions and delivery structures.




Read more:
An education research institute won’t take politics out of the classroom


These proposed changes, particularly those resting on technological advancements, will powerfully open the door to edu-businesses. They will also create new opportunities for edu-preneurs whose work seeks to profit from translating “what works” into action in the classroom.

We need to be careful not to stray too far from addressing inequalities in Australian schooling through re-distributive funding.
Shutterstock

Do we need another grand plan?

The idea that a radical national overhaul of curriculum, assessment and reporting is the primary way to stop Australia’s declining student achievement feels a bit Groundhog Day.

This was exactly the logic that drove the creation of the national curriculum in the late 2000s, and led to other unprecedented national reforms. These include NAPLAN, the My School website, and national teaching standards.

The problem is, despite time, resources and investments committed to revolutionising Australian schooling, these grand designs have done nothing to stop declining student achievement.

So, before we charge forth into the reform wilderness, serious debate should be had about whether these radical plans pass muster, and whether it’s worth the investment to put Australian schooling under another round of major surgery when the last round had minimal impact.

As part of this, we need to (once again) question whether the contemporary reform fever does any more than treat symptoms while deeper structural conditions continue to ensure, as the original Gonski report put it, unacceptable links between a young people’s socioeconomic backgrounds and levels of achievement.

We need to be careful not to stray too far from where the first Gonski report started out. That is: addressing inequalities in Australian schooling through re-distributive funding.

This is not to suggest pursuing personalised or adaptive learning is a fruitless endeavour. But all the personalisation in the world means nothing without a commitment to equality of opportunity for all young people.

Oh… and will it ever actually happen?

There are significant political hurdles to be overcome before the report’s recommendations can be translated into action.

This endeavour will begin on Friday, when federal education minister Simon Birmingham will meet state and territory education ministers to discuss the report. Nearly all the recommendations relate to state responsibilities. The federal government needs to secure their support to translate the recommendations into a national response.

Birmingham faces state ministers, not to mention senior bureaucrats, who are already suffering reform fatigue from the last decade of national reform – many who have limited appetite for further major changes. It’s also very likely for resistance to come from within schools, where long-standing habits and cultures are difficult to break.

Ultimately, the whole Gonski debate started with money, and that may very well be where it ends. The federal funding of schools will be a crucial tool in Birmingham’s bargaining kit and will largely determine whether the report’s recommendations come to fruition.




Read more:
The passage of Gonski 2.0 is a victory for children over politics


The ConversationThat said, even money might not be enough this time around. What is now at stake is not just some tinkering at the edges, but a monumental rethink of the teaching and learning process.

Glenn C. Savage, Senior Lecturer in Education Policy and Sociology of Education, and ARC DECRA Fellow (2016-19), University of Western Australia

This article was originally published on The Conversation. Read the original article.

AGL’s plan to replace Liddell is cheaper and cleaner than keeping it open


span>Kriti Nagrath, University of Technology Sydney

The Commonwealth government called last week for AGL Energy to consider selling its Liddell power station to rival Alinta.

Federal Energy Minister Josh Frydenberg has raised concerns that the scheduled 2022 shutdown of Liddell will affect New South Wales’ energy reliability. It’s suggested the sale would provide a way to keep the ageing power station open past the end of its normal 50-year operating life.

However, AGL responded to government concerns in December 2017 by releasing a replacement plan. Liddell’s theoretical maximum output is 1,800 megawatts (MW), but the firm capacity – the power that can be relied upon at peak time – is 1,000 MW. AGL is confident this can be replaced by a mix of improved efficiency, renewables and demand response.

AGL’s proposal unpacked

Late last year, in response to the Commonwealth government’s pressure, AGL updated its Liddell replacement plan. The updated plan includes generator efficiency upgrades, new natural gas and renewable energy generation capacity, and demand response.

This plan builds on the planned 2022 closure of the Liddell station. Phased investments in new, low-emissions generation and upgrades to existing generation will replace the 1,000 MW of coal-fired power by:

  • increasing the capacity of AGL’s nearby Bayswater coal-fired power station by 100MW
  • installing 750MW of high-efficiency gas power (at potential sites in Newcastle and/or elsewhere in NSW)
  • adding 1,600MW of new renewable generation capacity (wind and solar farms)
  • providing 100MW of firm capacity from demand response and 250MW from battery storage.

The replacement portfolio is split into three stages. The first aims for 550MW of new generation: 300MW from two solar power plants, to be built by third-party developers, and 250MW from a new gas peaking power station located at Newcastle (or other suitable sites in NSW).

Further, AGL has already approved 650MW of wind projects. The Bayswater efficiency upgrade will add 100MW to the capacity without burning any additional coal.

This, along with the 20MW of demand response, will provide the “firm capacity” required to meet existing customer needs, in line with the federal National Energy Guarantee. The “firm capacity factor” is the proportion of the installed capacity (the theoretical maximum) that can be relied upon to be available at peak time.

The next two stages will progressively add new capacity from renewables, battery storage and demand response to meet the energy needs of AGL’s potential uncontracted customers. Stage 2 and Stage 3 feasibility is expected to start by 2020 and 2021 respectively, for a 2022 delivery.

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AGL is relying on the market

AGL’s Liddell replacement plan is designed to provide an equivalent amount of energy and dispatchable power at a similar level of reliability.

The plan’s total investment of A$1.36 billion is more than the A$920 million estimate of the 2027 Liddell extension plan, but once operating and fuel costs are included the average cost of replacement generation is more affordable at A$83 per megawatt hour (MWh), compared with extending the life of Liddell at A$106 per MWh.

Levelised cost of energy based on information sourced by AGL including: the capital cost of the Liddell life extension works as advised by Worley Parsons (Advisian). AGL’s discount rate in line with their commercial target returns. Westpac Banking Corporation’s forecast of the Newcastle coal price discounted based on the lower calorific value required for power station coal. A carbon emissions cost has been included as per AEMO’s ‘moderate’ 2015 scenario.
AGL’s NSW Generation Plan

Though the replacement plan has an installed capacity of 2,900MW, it accounts for a firm capacity of 1,000MW.

The Australian Energy Market Operator has endorsed AGL’s Liddell replacement plan. It said the plan provides more than enough energy and capacity to meet the potential shortfall created by the closure if AGL completes all three stages by the 2022 deadline.

Some of this plan is already under way, as the AGL board has approved the upgrades at Bayswater and Liddell and the new solar and wind power plants. However, the next two stages are dependent on market signals and investments other companies make in new resources.

If stages 2 and 3 of AGL’s plan are not undertaken in time and other market players do not invest, there could be a reliability gap that results in supply interruptions. While this is unlikely to occur, this is exactly the type of problem that the government’s National Energy Guarantee is supposed to fix. The guarantee envisions that retailers carry the responsibility of meeting the required amount for dispatchable energy. Failure to do so would invite financial penalties, with the energy market operator stepping in as the procurer of last resort.

However, AGL has proposed an adequate plan to meet the gap that the Liddell closure would create. It’s ultimately improbable that regulator intervention will be needed.

That said, AGL’s plan is not necessarily the best plan. There are other lower-emission options that are more cost-effective.

The ConversationA study by the Institute for Sustainable Futures (which I have contributed to) proposes a third “clean energy package”, including renewable energy, energy efficiency, energy storage, demand response and flexible pricing. Rather than selling Liddell, if the Commonwealth is looking for low-cost and reliable solutions, this is the approach it should be pursuing.

Kriti Nagrath, Senior Research Consultant, University of Technology Sydney

This article was originally published on The Conversation. Read the original article.

Subsidies for renewables will go under Malcolm Turnbull’s power plan


Michelle Grattan, University of Canberra

The government is set to unveil its long-awaited energy plan that would scrap subsidies for renewables and impose obligations on power companies to source a certain proportion of “reliable” supply.

While the plan emphasises reliability and reducing power prices, the government is also confident it would allow Australia to meet its commitments under the Paris climate change agreement.

Cabinet considered the scheme on Monday night. It goes to the Coalition partyroom on Tuesday morning, before being announced later in the day.

It follows months of uncertainty and internal pressures within the Coalition over the future of energy policy, as the government battles to head off the risk of blackouts as well as to quell mounting voter anger at soaring bills.

In a report released on Monday the Australian Competition and Consumer Commission said residential electricity prices have increased by 63% on top of inflation in the last decade, with network costs being the major contributor.

As the government has flagged for a week, its plan rejects the clean energy target recommended in June by Chief Scientist Alan Finkel, to which Malcolm Turnbull initially appeared favourably disposed.

Ironically, the alternative scheme has been worked up by the Energy Security Board, a new body that was established on a recommendation from the Finkel inquiry.

Under the scheme, power companies would have twin obligations imposed on them by the government.

  • They would be required to get a certain amount of power from “reliable” sources – whether coal, gas, hydro, or batteries.

  • They would also have to source another amount that was consistent with lowering emissions in line with Australia’s international commitments. Australia has signed up to reducing greenhouse gas emissions to 26–28% below 2005 levels by 2030.

It would be up to the companies as to how they met the obligations put on them.

The plan assumes that prices would be driven down because the scheme would give the certainty that investors have been looking for, so supply would increase.

The Coalition party meeting will be given an estimate of the expected savings on power bills, which would be more than the A$90 annual household saving estimated under the Finkel target.

The scheme is expected to appeal to the right in the Coalition because there are no subsidies for renewables, making for a level playing field – coal is treated the same as wind and solar.

The present renewable energy target would continue until its expiry in 2020, after which there would be no new certificates issued under it.

The Energy Security Board has on it an independent chair, Kerry Schott, and deputy chair, Clare Savage, as well as the heads of the Australian Energy Market Operator (AEMO), the Australian Energy Regulator, and the Australian Energy Market Commission.

The ABC reported that Drew Clarke, a former chief-of-staff to Turnbull and former head of the communications department, will become AEMO’s chair. This would be an appointment by the Council of Australian Governments.

In Question Time, Opposition Leader Bill Shorten accused Turnbull of “caving in” to Tony Abbott by rejecting a clean energy target.

Turnbull said the government “will deliver a careful energy plan based on engineering and economics, designed to deliver the triple bottom line of affordability, reliability and meeting our international commitments. And that is in stark contrast to the ideology and the idiocy that have been inflicted on us for years by the Australian Labor Party.”

Abbott, speaking on 2GB, said that “we’ve got a big policy problem” that needed to be addressed. This included “continued heavy subsidies for unreliable power”, lack of new coal-fired baseload power, bans on gas and a lack of incentives for farmers to go along with gas development, and bans on nuclear power.

Abbott said the problem over the last few years was that “we haven’t been running a system for affordability and reliability, we’ve been running a system to reduce emissions. It’s given us some of the most expensive power in the world and this is literally insane, given that we are the country with the largest readily available reserves of coal, gas and uranium.”

The ConversationMonday’s Newspoll found that 63% thought taxpayer-funded subsidies for investment in renewables should be continued; only 23% thought they should be removed. But 58% said they would not be prepared to pay any more for electricity in order to implement a clean energy target to foster more renewable energy sources.

Michelle Grattan, Professorial Fellow, University of Canberra

This article was originally published on The Conversation. Read the original article.

How hard will Tony Abbott run against the Finkel plan?



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The government faces a hard internal sell on the Finkel plan, not least to Tony Abbott.
Mick Tsikas/AAP

Michelle Grattan, University of Canberra

Bedding down an energy security policy based broadly on the Finkel model is now crucial for Malcolm Turnbull. But the issue will also test Tony Abbott’s judgement and influence, in what has long been a marquee area of difference between the two men.

Abbott is poking and prodding at the Finkel plan, raising questions and doubts about it.

He told 2GB’s Ray Hadley on Monday that two criteria were essential when judging the chief scientist’s proposal for a clean energy target (CET) that, his report says, “will encourage new low emissions generation [below a threshold level of carbon dioxide per megawatt hour] into the market in a technology neutral fashion”.

Abbott’s criteria were:

  • Did Finkel’s scheme take the pressure off power prices?

  • Did it allow coal to continue?

“My anxiety, listening to reports of the report and this statement that they’re going to reward clean or low emissions fuels while not punishing high emissions fuels, is that it’s going to be a magic pudding,” Abbott said.

“Now we all know that there is no such thing as a magic pudding. And if you are rewarding one type of energy, inevitably that money has got to come from somewhere – either from consumers or taxpayers”.

“And if it’s from consumers, well it’s effectively a tax on coal and that’s the last thing we want”.

For Abbott, the magic word “tax” conjures up his glory days of fighting the Labor government’s “carbon tax”.

Labels can make a lot of difference. As Abbott’s former chief-of-staff Peta Credlin said earlier this year of the carbon tax: “It wasn’t a carbon tax, as you know – it was many other things in nomenclature terms. We made it a carbon tax. We made it a fight about the hip pocket and not about the environment. That was brutal retail politics.”

The CET is not a “tax”, and Finkel argues that consumers will be better off than if the status quo continues – a status quo that businesses and most other stakeholders consider not to be an option.

But the scheme would disadvantage coal relative to renewables – and the extent of the disadvantage will be crucial in the debate within Coalition ranks.

In a softening up exercise, Energy Minister Josh Frydenberg lobbied backbenchers individually about the Finkel plan before Friday’s release. Government sources say the feedback is good and believe there is a strong majority that believes Finkel offers a potential way forward.

But the chairman of the government’s backbench environment and energy committee, Craig Kelly, a hardliner, wants more work done “by a couple of other independent organisations”.

In the end, the argument may come down to how “Finkel” is interpreted and the precise form in which it would be translated into practice.

Tuesday’s Coalition meeting is set to provide the first indication of whether the government’s optimism about the positive reception of the plan is solidly based.

The Nationals are vital, given their passion for coal and their original role in mobilising Coalition feeling against an emissions trading scheme. Their general position is they can live with the Finkel framework but it will be a matter of the detail, notably the threshold, with its implications for coal.

Deputy Prime Minister Barnaby Joyce is on board, based on his pragmatic assessment that this is better than possible future alternatives. He said on Friday: “I think that if we don’t bed this down, you can see what’s happening in England or anywhere else. If you lose the election, you’re going to get a worse outcome.

“So I’d rather bed down an outcome that secures coal miners, that secures coal-fired power, because I strongly believe in its capacity to provide baseload power that fulfils our obligations in international treaties.

“If we can do that and make sure Mr and Mrs Smith get cheaper power, then of course I’m going to consider that.”

Outspoken Nationals George Christensen is waiting on more information. “I’ve got some mixed thoughts,” he says of Finkel’s plan, and wants to talk further to Frydenberg.

“I’m comfortable with measures to bring down electricity prices. But I’m not comfortable with anything like an emissions trading scheme, or a derivative thereof” – and he is not sure whether this proposal is a “derivative”.

The position of the Liberal critics will be much weakened if the Nationals get behind the Finkel plan.

Abbott will have to make a call about the mood of his colleagues and decide how hard to go on this issue in coming weeks. This area has been a signature one for him and his weakness would be highlighted if he could only attract a handful of naysayers.

The ConversationObviously, the stakes are a great deal higher for Turnbull. If things went badly for Turnbull in his pursuit of the Finkel option, it would be a major disaster for him and his government. When it comes to emissions policy, Turnbull is always walking on the edge of a sinkhole.

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Michelle Grattan, Professorial Fellow, University of Canberra

This article was originally published on The Conversation. Read the original article.

$89b shipbuilding plan is a major step forward – but sovereignty remains a problem


File 20170518 24325 7fkw17
The naval shipbuilding plan is undoubtedly a major step forward for industrial capability in Australia.
AAP/David Mariuz

Graeme Dunk, Australian National University

Australia’s long-awaited naval shipbuilding plan, released earlier this week, claims it is a national endeavour: The Conversation

… larger and more complex than the Snowy Mountains Hydro-Electric Scheme and the National Broadband Network.

Irrespective of this particular claim’s validity, the investment of A$89 billion for nine new frigates, 12 submarines and 12 offshore patrol vessels is a substantial commitment to Australia’s security. The plan is a comprehensive approach to establishing a continuous program for building these platforms in Australia.

Apart from the future introduction of these and other vessels into service, one of the plan’s key outcomes is a “sovereign Australian capability to deliver affordable and achievable naval shipbuilding and sustainment”. The development of a sovereign capability is stated as “the government’s clear priority”.

But what is sovereignty in this context? And is it attainable from the naval shipbuilding plan?

Two clear weaknesses

The plan has two interconnected weaknesses when it comes to sovereignty.

First, the Australian defence industry environment is dominated by companies whose parentage and ultimate control rest offshore. This is not necessarily a bad thing. But given the shipbuilding plan’s focus on Australian jobs and resources, it is a reality that needs confronting.

To that end one might have expected to see, both in this document and in earlier ones, a definition of Australia’s defence industry – what it is and, importantly, what it is not.

The UK’s 2005 description of its defence industry embraces the combination of local and offshore companies contributing to defence outcomes in terms of:

… where the technology is created, where the skills and intellectual property reside, where the jobs are created and sustained, and where the investment is made.

A similar definition for Australia would provide a foundation for sovereignty in the shipbuilding environment to be properly assessed. The plan suggests the Australian subsidiaries of offshore companies will be considered as sovereign without discussing how local control might be maintained, and how Australian sensitivities might be tackled.

The proposed definition for defence industry also highlights the second weakness of the shipbuilding plan: it is focused on building and sustaining the structural component (the “float” and “move” aspects), rather than the total capability the ship or submarine represents.

The lists of skills cited as necessary are those primarily associated with building and sustaining the structure. The shipbuilding plan gives scant coverage to the important combat system and weapons elements upon which the war-fighting capability rests.

The plan does not address the industrial capabilities necessary for the local maintenance and improvement of these ships. Access to the detailed design information for the combat and sensor systems in particular is required so that such systems can be upgraded locally if required. An offshore equipment supplier may not give the same priority to our needs.

The plan for naval shipbuilding in Australia says it will source many systems of the future frigate and other naval platforms from the US. However, the closest it gets to recognition of this reality in the context of sovereignty is that:

Australia’s alliance with the US, and the access to advanced technology and information it provides, will remain critical.

The plan therefore implies that sovereignty is sought for the “float” and “move” aspects of the naval capabilities, but not necessarily for the important “fight” aspects. This means the systems elements of ships and submarines will be tackled in some other context – outside the naval shipbuilding plan.

More than just ‘doing stuff’

The naval shipbuilding plan is undoubtedly a major step forward for industrial capability in Australia.

A successful implementation will provide significant benefits for the Navy in terms of force structure, for industry in terms of a long-term enterprise upon which to grow overall capability and capacity, for innovation, for workers in terms of continuity of effort, and for the development of shipbuilding-related STEM skills. These are all worthy outcomes.

But sovereignty is more than just “doing stuff” in the country.

If the plan really wanted to tackle sovereignty, it should have provided a foundation on which aspects of industrial and operational sovereignty could be properly assessed, prioritised and managed. It would also have addressed the systems aspects of ships, rather than just the structure.

Graeme Dunk, PhD Candidate, Australian National University

This article was originally published on The Conversation. Read the original article.

Turnbull unveils Snowy plan for pumped hydro, costing billions



Image 20170315 20537 1vbjvyr
The Snowy Hydro scheme already provides back-up energy to NSW and Victoria.
AAP

Michelle Grattan, University of Canberra

In its latest move on energy policy, the Turnbull government has unveiled a plan to boost generation from the Snowy Hydro scheme by 50%. The Conversation

The government says the expansion, which it has labelled the Snowy Mountains Scheme 2.0, would add 2,000 megawatts of renewable energy to the National Electricity Market. This would be enough to power 500,000 homes.

Claiming the upgrading would be an “electricity game-changer”, Prime Minister Malcolm Turnbull said that in one hour it would be able to produce 20 times the 100 megawatt-hours expected from the battery proposed this week by the South Australian government, but would deliver it constantly for almost a week.

Turnbull flew to the Snowy early Thursday to formally announce the plan. The commonwealth is a minority shareholder in the Snowy Hydro, with a 13% stake. New South Wales and Victoria have 58% and 29% stakes respectively.

The government, through the Australian Renewable Energy Agency (ARENA), would examine several sites that could support large-scale pumped hydroelectric energy storage in the area, Turnbull said.

Energy Minister Josh Frydenberg said the cost would run into “billions of dollars”. It is being suggested it would be around A$2 billion. Frydenberg avoided being tied down on when it would be completed.

He said three new tunnels were being looked at, stretching 27 kilometres for the pumped hydro-facility. It would not involve new dams, but connect existing reservoirs and recycle water.

The plan had the potential to ensure there would be the needed renewable energy supply for those on the east coast at times of peak demand, Frydenberg said.

Tony Wood, energy program director at the Grattan Institute, cautioned that the plan would involve technical and economic issues, including whether it could make money, and to what extent it could contribute to solving the short-term power crisis.

“This isn’t some sort of magic panacea,” Wood told the ABC. Some hard-headed thinking was needed on what it would do and how it would work.

Turnbull said: “The unprecedented expansion will help make renewables reliable, filling in holes caused by intermittent supply and generator outages.

“It will enable greater energy efficiency and help stabilise electricity supply into the future,” he said – adding that this would ultimately mean cheaper power prices.

He said successive governments at all levels had failed to put in place the needed storage to ensure reliable supply.

“We are making energy storage infrastructure a critical priority to ensure better integration of wind and solar into the energy market and more efficient use of conventional power.”

Turnbull said an “all-of-the-above” approach, including hydro, solar, coal and gas, was critical to future energy supplies.

Snowy Hydro already provided back-up energy to NSW and Victoria and could extend to South Australia when expanded, he said. The expansion would have no impact on the supply of irrigation water to NSW, South Australia and Queensland.

The feasibility study for the expansion is expected to be completed before the end of this year, with construction starting soon after, he said.

https://www.podbean.com/media/player/kwxda-68af74?from=yiiadmin

Michelle Grattan, Professorial Fellow, University of Canberra

This article was originally published on The Conversation. Read the original article.

Hundreds of Asylum-Seekers Are on Hunger Strike Over Australia’s Resettlement Plan


TIME

Nearly 700 detainees, or almost two-thirds of those held in an Australian offshore detention center on Papua New Guinea’s (PNG) Manus Island, are on hunger strike to protest Canberra’s plan to permanently resettle them on the island.

The hunger strike comes in the wake of a vow by Australia’s recently-appointed Immigration Minister, Peter Dutton, that Manus Island detainees would “never arrive in Australia,” reports the Sydney Morning Herald.

During the past week, hundreds of detainees have abstained from food, and some from water, over the government’s plan to move them to the nearby town of Lorengau. As many as 14 have sown their lips together, the Herald says.

Visiting Australian medical staff and refugee rights groups say that health facilities on Manus Island center are not equipped to handle the hunger strike.

“They don’t have the capacity to handle a hunger strike of even one tenth of that size,”…

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