Trade tensions between Australia and China have escalated to the point where China has placed an 80.5% tariff on Australian barley imports, beginning this week.
China has been a huge market for Australian barley. It accounted for more than 70% of Australia’s exports between 2015 and 2018 and in 2016–17 it bought almost 6 million tonnes.
While China’s imports fell to 2.5 million tonnes last financial year, this was still more than half of Australia’s total barley exports, worth about A$600 million to Australian farmers.
The tariff on Australian barley won’t hurt China much. It can simply buy from other countries such as France, Russia, Argentina and Canada.
In terms of Australia’s total volume of exports (more than A$450 billion annually) the likely losses are not huge. But it is meaningful and painful to Australia’s barley industry.
It is important this matter be resolved.
But the broader issue is how to avoid ongoing conflict with our biggest trading partner. Doing that means understanding what the barley dispute is really about. Because it’s unlikely to really be about barley.
What is China upset about?
It would be reasonable to deduce China’s recent actions stem from Australia’s advocacy for an investigation into the source of the COVID-19 pandemic – something first raised by foreign minister Marise Payne and championed by Prime Minister Scott Morrison, along with the United States and other countries.
But there is a longer history of simmering tensions between the two nations.
There is, for example, Australia’s exclusion of Chinese company Huawei from building our 5G telecommunications network. This is a matter China’s ambassador to Australia, Cheng Jingye, called a “sore point and thorny issue” as recently as February.
Another view is that it is about trade issues – that China is accusing Australia of dumping in retaliation for Australia’s use of global anti-dumping provisions against China.
Dumping is essentially price discrimination, in which a producer sells a product to an export market at a lower price than it sells it at home. As such, it is often condemned as ‘unfair trade practice’ which accords exporters a competitive advantage over producers of similar goods in the market of importation.
Australia has been a keen user of the World Trade Organisation’s rules against dumping. Many Chinese industries have been targeted under anti-dumping cases brought by Australia (and other countries), including steel, aluminium products, solar panels, and even copy paper.
So perhaps this is a case of “what goes around comes around”.
In any event, it is shaping up to be a thorny issue for Australia.
Australia’s trade minister, Simon Birmingham, has rightly disagreed with China’s characterisation of Australia as dumping barley, saying: “We reject the basis of this decision and will be assessing the details of the findings while we consider the next steps”.
Australia will take this case to the WTO and argue it has not subsidised barley being exported. But these cases are tricky to prove, can take substantial time (likely more than a year and possibly much longer). In the meantime, China can impose duties, with dire consequences for imports of Australian barley.
Always in breach?
Precisely because it is difficult to determine the underlying economics of whether dumping is taking place, there is almost always an argument to be made that a country is dumping some product some of the time.
That leaves countries like China with a trigger to pull more or less any time they want.
This is a similar trick to that used by authoritarian regimes to control their populations. If citizens have essentially always broken some obscure law on the books, they are free from prosecution only by the good grace of the regime in power.
One reading of events is that China is using a version of this tactic in international trade against Australia.
The importance of the WTO
All of this points to the importance of dispute resolution through international bodies.
Sure, anti-dumping cases may be tricky, but resolving such cases quicker would help prevent the threat of such cases being used as bargaining chips.
So, too, would a more precise set of economically based rules about what constitutes dumping in practice, and how to measure it robustly and transparently.
These are matters not only to be determined in free-trade deals between countries but also for international bodies like the WTO.
Australia has acted with dismay to China’s decision to impose punitive mostly “anti-dumping” tariffs of 80.5% on imports of Australian barley.
The culmination of an 18-month investigation, China’s move threatens to wipe out Australian barley exports to China, worth A$600 million in 2019, unless China withdraws the measure either unilaterally or following a successful challenge at the World Trade Organisation (WTO).
However poorly justified, there are precedents for what China has done, many of them from Australia.
Australian anti-dumping and countervailing measures by country, March 2020
Australia was among the first wave of countries to adopt anti-dumping legislation alongside Canada, New Zealand, the United States and Britain in the early years of the 20th Century.
It remains a prolific user of the system compared to other countries, with an outsized number of measures imposed against imports from one country, China, and imports of one product, steel.
What are anti-dumping measures?
One way to think about anti-dumping measures is the international equivalent of domestic measures intended to combat predatory pricing.
Guidance from the Australian Competition and Consumer Commission says that while it is usually okay to sell goods at a below-cost price, “it may be illegal if it is done for the purpose of eliminating or substantially damaging a competitor”.
But in the case of international anti-dumping measures, there is no need to prove purpose.
It suffices that an investigation finds the imported goods were sold below their corresponding price in the home market and that this caused or threatened to cause harm to a domestic industry producing the same sort of goods (known as “like products”).
Chinese steel, glass, cables and A4 copy paper
Technically, Australia imposes two types of measures: “anti-dumping measures”, which are additional duties on so-called dumped imports which are held to have injured Australian industry, and “countervailing measures” which are additional duties on subsidised imports that have injured Australian industry.
They are currently in place or proposed against Chinese wind towers, glass, electric cables, chemicals, herbicides, A4 copy paper and aluminium products, as well as steel.
In theory, WTO rules only allows anti-dumping measures for limited periods (China’s measures on barley have been imposed for five years) but in practice, once in place these measures can be difficult to remove.
They shield us from cut-throat competition
In the broader context of Australia’s relationship with China, they play an important role, shielding Australian import-competing industries from the full and potentially crushing impact of free trade with China.
One aspect of their use that has been particularly galling to Chinese officials is Australia’s failure to follow through on a commitment it made during the China-Australia Free Trade Agreement negotiations to treat China as a market economy for the purpose of anti-dumping investigations.
The concession was seen as highly significant by China and would have made it harder for Australia to conclude that some goods were not being sold at fair prices.
Australia’s continued use of anti-dumping measures has come under repeated criticism from the Productivity Commission, almost entirely on the basis of economic efficiency arguments.
However, these criticisms ignore a number of important concerns, including the need to keep these measures so they can be used to hit back against other countries that use them. It would make little sense to remove them until other big users agreed to do the same.
Another important consideration, which has received greater attention during the current coronavirus crisis, is the need for – systemic resilience. If Australia becomes totally reliant on other countries for (say) steel, it’ll have less ability to get it when it is needed.
Before asking ourselves whether we are prepared to liberalise or do away with our current anti-dumping regime, we need to be able to answer the very important question of whether we are equally prepared to do away with our domestic steel, aluminium, paper and other industries.
I suspect that the answer to this question is no.
There are of course other ways to reinforce these industries or shield them from import competition, but it is more than likely that none would be as effective as the current system of anti-dumping duties. We have kept them because we still have some use for them.
Clubs, pubs, movie theatres and gyms will be closed and restaurants will only be able to provide takeaways in draconian measures to fight the spread of coronavirus announced by Scott Morrison late Sunday night.
But schools will stay open, after Morrison wrestled to keep federal and state governments on the same page on one of the most controversial issues in the COVID-19 debate.
The crackdown on social gathering places was agreed by federal and state leaders at their national cabinet meeting earlier in the evening.
This followed a day of confusion, with differences between NSW and Victoria on the one hand and the federal government on the other over shutdowns and schools.
Earlier, the premiers of the two biggest states had announced they were shutting down non-essential services and activities over the next 48 hours. The ACT followed suit.
The premiers’ actions seemed in part to force the federal government’s hand.
It is not clear how much further (if any) the “shutdowns” in the two states will go beyond the baseline of closures set at the national cabinet.
In his afternoon statement, Victorian premier Daniel Andrews said the state was bringing forward school holidays to start Tuesday (rather than Friday) with a decision on whether schools will reopen to be taken on medical advice. NSW Premier Gladys Berejiklian said she would have something to say about schools on Monday morning.
The Prime Minister pushed back over schools, anxious to keep them open for educational reasons and to maintain the numbers of health workers. It has been estimated that closing schools could cut the health workforce by 30%.
Morrison said from midday on Monday a range of facilities where social gatherings took place would be closed or have their operations curtailed. He envisaged this would last six months.
Pubs, registered and licensed clubs will be shut (excluding bottle shops attached to these venues), as well as hotels (excluding accommodation)
Gyms and indoor sporting venues will be closed
Cinemas, entertainment venues, casinos, and night clubs will shut
Restaurants and cafes will be restricted to takeaway and/or home delivery
Religious gatherings cannot go ahead and places of worship are to close. Funerals in enclosed spaces can proceed only with very small groups and where the 1 person per 4 square metre rule applies.
“This should highlight to all Australians how serious this is,” Morrison said.
He said there was no change in the medical advice that schools should remain open. Leaders agreed children should go to school on Monday and “committed to re-open schools at the end of the school break, subject to the advice of the Australian Health Principal Protection Committee”.
“I don’t want to see our children lose an entire year of their education, ” Morrison said. “That’s what we’re talking about here. This is very serious. If you’re a four year old child at pre-school, you don’t get your four years old year back”.
“What we will be doing, though, is allowing parents to the end of this year’s school term to be able to keep their children home where they choose to. But for all of those parents who wish to send their children to school for an education at the school, those schools will remain open”.
Asked about Andrews’ comments about reviewing the schools position after the holidays, Morrison said: “the Premier has reaffirmed his commitment this evening that is the intention of the Victorian government to reopen schools subject to the health advice at that time”.
He stressed to parents who decided to keep their children home that they “must take responsibility for those children.
“It’s not an excuse for them to go down the shopping centre or to go and congregate somewhere else or potentially put themselves in contact with the vulnerable and elderly population. If you choose to keep your child at home, you are responsible for the conduct and behaviour of your children.”
Morrison said the coming school holidays “will not be a holiday as it is normally known”.
“There will not be trips interstate. … There will not be congregating up at the trampoline venue.” There had to be very strict rules around social distancing, he said.
“This is a critical time. An absolutely critical time. The decisions that parents make, that we all make, over the course of the next few weeks in particular could very seriously determine the trajectory that Australia continues to go on in relation to the coronavirus”.
He “implored” Australia to follow the advice about distancing and size of gatherings.
Federal and state governments have been shaken by the rapid rise in virus cases – now well above 1000 – and by the crowds on Friday and Saturday on Bondi beach and at bars and clubs.
“On the weekend, what we saw was a disregard of those social distancing practices as people turned up to the beach in large numbers, crammed venues in our major cities.
“This sent a very clear message to premiers, chief ministers and myself that the social distancing practices are not being observed as well as they should be”.
Morrison said the leaders did not now have any confidence that people, notably the young, would refrain from congregating in pubs and clubs and the like.
“We have no confidence that [guidelines on social distancing] will be followed”.
“If guidelines can’t be followed, then for public health reasons we now need to take a further action which shuts those gatherings down.
”‘They are the principal places of social gatherings which are at greatest risk”.
By the end of Sunday, Morrison’s $66 billion stimulus package had been considerably overshadowed by a new stage of restrictions, driven by public flouting of social distancing guidelines and the determination of NSW and Victoria to see more drastic action.
But while there has been a quantum leap in the measures in the battle against the virus, there remains a lack of clarity and Monday is likely to see more public frenzy of one sort of another.
Morrison insisted “all members of that national cabinet have reaffirmed our commitment to just how important the national cabinet is to ensure that all governments are working closely together.”
He is trying to keep the national cabinet – an unprecedented beast in Australian political history – in lockstep. We’ll see whether he has actually managed to do so when the premiers have more to say.
A suite of new measures aimed at slowing the spread of the coronavirus COVID-19 have been announced by federal and state governments in the last 24 hours.
We’ve collated the regulations in an infographic below – but it’s important to remember the situation is rapidly changing.
The regulations clearly proscribe some activities but are silent on others. So we asked two infectious disease researchers to reflect on some common scenarios.
They stressed the basics apply in any situation – wash your hands regularly with soap and water, practice good cough and sneeze etiquette, stay away from others if you’re unwell and try to reduce contact with others. Where contact is required, we should stay at least 1.5 metres apart from other people (one researcher, Ian M. Mackay said 2 metres would be better).
However, there’s often no single correct answer. All we can do is make the best decision we can in line with the medical evidence, the directions from government, and our own abilities and priorities. Difficult choices lie ahead for all of us.
Ian M. Mackay, researcher on rare viral threats to public and environmental health: Walking the dog should be fine. If you were to walk past someone who was actually sick, you’d be classed as a “casual contact” just by going past them. If you had a face-to-face conversation within 2 metres of them, you’d be classed as a “close contact” just because you have had that face-to-face conversation. So really, the advice is: just keep walking, don’t stop or chat.
Sanjaya Senanayake, infectious diseases physician: Yes, that wouldn’t be a problem. Just try to avoid very crowded areas and keep your distance from other people by staying at least 1.5 metres apart. I think, in this climate, to have some physical outdoor exercise, if you can, is a good idea. If it’s a dog park with lots of dogs running around while their owners stand around and chat, just be careful to stay at least 1.5 metres apart from the other owners.
Can I have a friend over?
Ian M. Mackay, researcher on rare viral threats to public and environmental health: It’s better not to. When we are sharing the same room for two hours or more you can increase your risk, even if you are 2 metres apart. Prolonged time in the same room is a real risk so it’s better not to be spending a long time together.
If you decide to do it, you need to be 2 metres apart, your house needs to be really clean, don’t share any utensils, wash your hands a lot.
It’s better, though, if you can put that off and have the conversation by phone or Zoom, FaceTime or Skype.
Sanjaya Senanayake, infectious diseases physician: If you’re aiming for true social isolation, there’s a risk with every encounter you have. But if it’s just one friend and you are both well and you practice good hand hygiene and stay at least 1.5 metres apart when chatting, it could be okay. There’s a risk but you can reduce the risk.
You could possibly avoid food that has been touched by other people. Maybe bring your own food and drink.
Should I have my child’s tutor over?
Ian M. Mackay, researcher on rare viral threats to public and environmental health: It would be better not to have that happen. Even if they are more than 2 metres, it’s prolonged exposure in an enclosed room and that tutor may have visited many other houses or travelled by public transport. The tutor and the child are both at risk – as well as anyone they subsequently encounter. Remember, people can be infected but still look well.
It would be better if that could be done remotely.
Sanjaya Senanayake, infectious diseases physician: I think it’s probably OK, as long as the tutor is well and the child and tutor can work together without sitting too close. The same principles apply – good hand hygiene and stay at least 1.5 metres apart if anyone is unwell.
Should my child have a playdate?
Ian M. Mackay, researcher on rare viral threats to public and environmental health: For now, at least until we know more, that should stop as well.
Not even if both the kids and their families have been mostly staying home. Social distancing means keeping away. Kids have close contact relationships – they don’t keep their distance from each other – and they are random and, in this context, unreliable. It would be better to stop playdates and look for other ways our kids can interact with their friends. But watch the type and amount of social media use.
We have to be serious about this stuff and that means doing as much as we can to break any chains of transmission.
Sanjaya Senanayake, infectious diseases physician: With kids, it depends greatly on the age of the kids.
For very young kids, I would say no. Younger kids are more likely to have close contact and may not be so good with hand hygiene. You just can’t trust young kids to follow the rules of good hygiene and distancing. It’s mostly about minimising the contact and trying to use other options as much as possible, such as FaceTime, Skype and Zoom. For older kids, they are likely to rely on their social media networks and that’s probably for the best.
Can my kid play at the park with a friend?
Ian M. Mackay, researcher on rare viral threats to public and environmental health: There’s risk. It’s better to be out in the open air than in a room, because you have lot of air, often moving air, to dilute any droplets that may come from coughing or spitting when you talk and shout. But when you start doing stuff together – especially in areas with shared shiny surfaces like a public barbecue or play equipment – it gets risky. Steer clear of play equipment and water fountains, for example.
It’s better if you are keeping apart at a distance outside. But the risk isn’t zero.
Sanjaya Senanayake, infectious diseases physician: If they are young kids, they are still likely to have close contact with each other so I’d approach with caution.
Can I have in-home visit by a service provider, for example a health worker who assists a person with a disability?
Ian M. Mackay, researcher on rare viral threats to public and environmental health: That is a tough one. The health care worker should probably wear a mask as they are at higher risk of acquiring an infection because they are visiting so many people. A health care worker would be more aware of infection control than most people but they would need to be able to keep themselves and the people they visit safe.
If you do have an in-home visit you need to clean the house as much as possible, wash hands and do whatever you can to reduce the risk.
Sanjaya Senanayake, infectious diseases physician: That is a difficult one. That will need to be looked at by health authorities.
A health care worker should not come to your house if they are unwell. If they are coming, they should call ahead and make sure the person they are visiting is also well before they arrive to provide care.
There will have to be exceptions, of course, because otherwise people who need to have dressings changed and so on they will need to come to hospital and that’s not ideal.
Health care workers are being heavily educated about when they should be tested, because they are at risk of COVID-19. If there’s a lot of COVID-19 transmission in that particular community, the health care worker should wear appropriate PPE (personal protective equipment) even if the person they are visiting is not obviously sick.
Can the cleaners come over?
Ian M. Mackay, researcher on rare viral threats to public and environmental health: No. Clean your own house. They may be professional cleaners but they are not professionals at infection control.
And cleaning may need to be more frequent than usual. You may need to be cleaning your house more than once a week so just get used to that idea.
Sanjaya Senanayake, infectious diseases physician: Yes, I think the cleaners can come over. But if you have cleaners in your house, you should try to go out while the cleaners are there and let them do their work. Go for a walk outside, while staying at least 1.5 metres away from others.
What about sending kids to school?
Ian M. Mackay, researcher on rare viral threats to public and environmental health: Many states are doing slightly different things with regards to schools.
I am very conscious we don’t want to drain essential workforces because some would need to stay home. So I think what NSW is doing – where parents are advised to keep kids home if they can and only send kids to school if they have no other option – is probably the best option for now.
We’ve heard there’s no reason to believe children are transmitting the virus – but there’s also no reason to believe they won’t be. If we are serious about flattening the curve, schools need to be in the picture, and we need to reduce the number of kids at school.
The risks are then to the teachers who are going to be repeatedly exposed to children who may more become infected in greater numbers as time goes on. That’s a real concern for them and for the fact they may then inadvertently be spreading virus in the community. There is no easy answer on schools which is why the issue is being constantly reassessed as we learn more.
Sanjaya Senanayake, infectious diseases physician: I still don’t think we really understand the epidemiology of infection of kids. The downside of broadscale school closures is people will have to stay home with their kids, especially for health workers. And if that’s unnecessary then it’s not ideal. I don’t know the right thing to do. It’s a tough one.
Can I go for a walk with a friend or friends?
Ian M. Mackay, researcher on rare viral threats to public and environmental health: I would advise against that. We know asymptomatic transmission happens. It may happen from spitting while talking. If you are walking alongside someone and having a chat, then there is risk. If you are out in the open moving air, that reduces your risk but it’s really better to pick up the phone. You can even be on the phone and going for a walk together in separate places, or on other sides of the road and wave to each other. It is really hard but we need to get creative right now. It’s time to get very serious about doing everything you can to reduce transmission.
Testing has been limited so we may in fact have a lot more community spread than we realise right now.
Sanjaya Senanayake, infectious diseases physician: If you are outside, you have a lot of air currents to make things more safe for you. I stood at least 1.5 metres from someone and walked with them and I think that’s feasible. Just try to stay at least 1.5 metres apart.
Or go to a neighbour’s house and knock on the door but then stay at least 1.5 metres apart from them while you chat.
Should I get takeaway?
Ian M. Mackay, researcher on rare viral threats to public and environmental health: Takeaway is a good idea because it supports small business, is a treat in tough times and it takes the stress off having to cook and find food. The issue, of course, is the risk of contaminated surfaces.
The best idea is once you have got the food in the house, put the bag down and open it up. Then go away and wash your hands properly before you handle the food. Then come back and take out the food with clean hands, and then get rid of the bag. Then wash your hands again. Then away you go.
That’s not 100% foolproof because there’s still some risk, but you reduce the risk with each step.
And the social distancing rules apply all the time, whatever you are doing – whether its waiting for food or walking the dog – stay 2 metres away from other people.
Sanjaya Senanayake, infectious diseases physician: It’s a hard one. I have been wondering this, too. It’s not just getting the takeaway, its about congregating while you wait for the food to be ready. Try to maintain at least 1.5 metres distance from anyone else. If you are less than 1.5 metre from anyone but you’re there for less than 15 minutes it doesn’t count as a “close contact”.
You have to wonder: is the food contaminated with virus particles? You have to hope the staff at the restaurant aren’t working while sick and they are practising good hygiene. You and I can’t police that.
Whatever choices you make on these issues, remember it’s about risk mitigation. Hardly anything is ever zero risk. And sometimes these choices are hard.
Aboriginal Australians … are not within the reach of the ‘aliens’ power conferred by s 51(xix) of the Constitution.
The outcome of the decision is clear for one of the men, Brendan Thoms, who is a registered native title holder. As such, it is beyond the power of the Commonwealth to deport him.
However, the majority was divided on the question of whether the other plaintiff, Daniel Love, was an Aboriginal person as a question of fact, and so did not make a finding about whether or not he was an “alien”.
This case is significant. In some regards, it is about questions of deportation and immigration. But, crucially, it is a constitutional law case grappling with the deeper question of whether Aboriginal and Torres Strait Islander Australians can be aliens and therefore excluded from the Australian state.
Although the decision applies to only a small number of people – Indigenous Australians who are not citizens – it has a broader impact in recognising the special status of Indigenous Australians in Australia.
Love, a Kamileroi man, was born in Papua New Guinea to an Aboriginal father and PNG mother. He moved to Australia in 1984 when he was five years old, but never applied for citizenship. After serving a 12-month sentence for assault occasioning bodily harm, his permanent residency visa was cancelled by the government. He was in detention but was released in 2018 pending the High Court’s decision.
Thoms, a Gunggari man and declared native title holder, was born in New Zealand to an Aboriginal mother and New Zealand father. He has lived in Australia since 1994. Like Love, his visa was cancelled after he served part of an 18-month sentence for a domestic violence assault. He has remained in immigration detention pending the court’s decision.
The Commonwealth has maintained that since the men are not citizens of Australia, the minister for Home Affairs has the power to cancel their visas and deport them. Under Section 51 (xix) of the Constitution, the Commonwealth has the power to make laws relating to “naturalisation and aliens”.
However, lawyers for the two men argued that although they are not citizens, they cannot be aliens – and therefore cannot be deported.
As a question of law, an alien is a person who owes allegiance to another country because they were born there. For people recognised as Aboriginal Australians, with longstanding connections to community, culture and traditional land, this implies they do not belong in their own country.
as a member of the Aboriginal race of Australia and the child of an Australian citizen … [he] is not an alien.
This argument suggests a new category of person described as “non-citizen non-aliens”. And under this special category, the lawyers argued, the minister would not have the constitutional right to deport them.
The basis of the men’s argument, therefore, rests on the connection of Aboriginal and Torres Strait Islander people to their country and the obvious implication of belonging.
Impact for Indigenous Australians
The court’s decision is good news for Indigenous Australians, as it expresses a new form of relationship between Indigenous people and the state – that of a “non-citizen, non-alien”.
The category will protect Aboriginal and Torres Strait Islander Australians born overseas, ensuring they will not lose their right to traditional lands because of an accident of birth. The decision upholds the law’s recognition of the importance of Indigenous Australians’ connection to, and rights over, their lands.
But it does mean that a person must be able to prove their Aboriginality before the court as a question of fact.
Because Thoms is a native title holder, his circumstances were clear. The majority was divided, however, on Love’s status as an Aboriginal person, as he is not a native title holder. And there was ultimately no finding as to whether he qualifies as an alien under the law.
The case also highlights the ongoing challenges for Indigenous Australians in their fight for proper legal recognition in relations with the state.
The minister ignored the implications of these men’s Aboriginality in seeking to deport them. And the Commonwealth argued before the High Court that these men did not belong in Australia – that they were aliens. Further, three of the seven judges agreed with that argument and decided there was no special category for “non-citizen, non-aliens”.
The fact this case was brought at all indicates that the relationship between Indigenous Australians and the state remains unresolved.
Despite the majority decision, it seems First Nations peoples’ close connection with the land is still not enough on its own to guarantee their ongoing rights to be part of Australia, and to retain their ties to community and country.
This decision will be recognised as a milestone for Indigenous Australians. But the closeness of the decision and the qualified finding in relation to Love’s case means this question of belonging for non-citizen Indigenous people will likely be raised again.
Last week the body that governs Australia’s energy market released a draft proposal to introduce a demand response mechanism to the wholesale electricity market.
It argues the proposal will unearth some electricity users’ “latent flexibility” to prices in the extremely volatile wholesale market, and that this will potentially promote more efficient use of electricity, more secure power systems, and lower prices.
The move comes after nearly two decades of sustained campaigning, which prompts the question: why doesn’t such a useful-sounding mechanism already exist?
It’s a good question. If this demand-response mechanism does what it is claimed to do, it could be a significant development for the electricity markets in southern and eastern Australia. But the actual proposal is eye-wateringly complex and there is reason to be circumspect.
What is proposed and how does it work?
The Australian Energy Market Commission’s determination is that new market participants, to be known as “Demand Response Service Providers” (DRSPs), will be allowed to offer hypothetical demand reductions into the wholesale market at prices they determine. If the price they offer for such reductions is less than the price at which the market clears, the DRSPs will be paid the market price, as if they were a generator, for these hypothetical reductions.
One obvious difficulty here is the fact that the reductions are hypothetical. They are the difference between the customers’ demand if they did not respond to an enticement to reduce demand – the “baseline” – and their actual demand. Customers (and DRSPs) have an incentive to overstate the baseline, as this increases the volume of the reductions they offer and, if accepted, get paid for.
DRSPs profit from the demand reductions they sell, and so they have an incentive to seek out customers who are willing to reduce demand relative to the baseline.
Retailers that sell electricity to DRSPs’ customers will buy (from the wholesale market) the actual volume of electricity consumed and also the hypothetical demand reduction, and pay the wholesale price for both. The retailer charges the customer for the actual demand and charges the DRSP for the demand reduction at a regulated price equal to the 12-month load-weighted average wholesale price.
This will typically leave the retailer out of pocket by an amount equal to the difference between the actual wholesale price at which they have “bought” the demand reductions, and the 12 monthly weighted average wholesale price (which will almost certainly be lower, because demand reductions will occur when wholesale prices are higher than average)
Retailers will seek to recover the shortfall from the DRSPs’ customers or, more likely, from all their customers. To the extent that they are unable to recover the shortfall, retailers are likely to try to offload those of their customers that are paid to reduce demand.
This is a simplified description of the arrangement. The complexity of the actual data and money flows between customers, DRSPs, retailers, the energy market operator, network service providers and regulators is enough to provoke a nose-bleed from the most seasoned corporate lawyers.
By now, I am sure you are wondering why all the bother with baselines and hypothetical reductions. Why not simply pay customers for actual load reductions? The answer, in short, is that the pool of possible directly contracted customers is small.
If demand response is to be extended to thousands of customers – as this proposal seeks to do – setting baselines and hence hypothetical demand reductions, with all their unwelcome consequences, is unavoidable.
Will it work?
I am not sure. It is certainly punishingly complex. The energy market operator and regulator will have their hands full ensuring that baselines are not set at a level that prints money for DRSPs and their customers, at the expense of retailers and other electricity users. If the market operator and regulator achieve this without imposing undue cost and administrative burden, this demand-response proposal has promise.
It will be fascinating to see whether DRSPs can indeed flush out the “latent flexibility” in a manner that is advantageous to themselves, the latently flexible, and the rest of us. Like many others, I will be watching with interest.
Update: Following publication, the AEMC clarified they intended to refer to the 12 month load-weighted average wholesale price of energy, rather than the simple average price. The article has been updated to reflect this.
Scott Morrison has announced a major change in Liberal party rules to
ensure a prime minister who wins an election serves the full term,
unless two thirds of the party decides otherwise.
Morrison said the Liberal party had heard the public and was responding.
The entire party understood “the frustration and the disappointment
that Australians have felt when governments and prime ministers that
they have elected, under their authority, under their power, have been
taken from them through the actions of politicians here in Canberra,”
he said at a joint news conference with Liberal deputy Josh Frydenberg
on Monday night.
This had happened with the Liberal party as well as Labor, Morrison
said. “We acknowledge it and we take responsibility for it.”
The Australian people were “sick of it and we’re sick of it and it has to stop,” he said.
The Liberal party was “willingly and enthusiastically putting this
constraint to return the power of these decisions about who is prime
minister in this country to the Australian people.”
Morrison described the rule change as historic and the biggest in the
74 years of the party’s history.
Frydenberg said: “The changes in Australian prime ministers over the
last decade has diminished the parliament and its representatives in
the eyes of the public. The Liberal party has listened to the
Australian people and the Liberal parliamentary party has responded
Earlier, Liberal members of the ministry approved the new rule, before
it went to an evening special meeting of the Liberal parliamentarians.
Morrison discussed the proposed change with former prime minister John
Howard, but not with Malcolm Turnbull.
He briefed Tony Abbott who was the first speaker from the floor.
Strongly supporting the proposal, Abbott – who lost the prime
ministership before he had served a full term – thanked Morrison for
bringing him into his confidence.
Morrison said the change was carried by consensus. He declined to be
drawn on differences expressed within the meeting.
He said he had asked the party whips, Nola Marino and David Bushby, to
work up a proposal. He’d had a view for some time that something
needed to be done.
The party meeting discussed whether the threshold should be two thirds
or three quarters. There was some questioning about the position of a PM who had the weight of the party against them but was just under the threshold for change.
But speakers who had differences on the detail made it clear they would swing in behind what was finally decided.
The Labor party already has rules that restrain leadership changes
including of an opposition leader, although they could be altered by a
simple majority of caucus.
In August after the ousting of Turnbull, Kevin Rudd urged the Liberals to
follow Labor’s example “to prevent rolling political chaos.”
Howard said then “I don’t think changing the rules is a good idea”, adding “What’s the point of bringing in rules if, in any event, they can be set aside?”
Morrison said the Liberal rule on prime ministers was tougher because
it would take a two thirds majority to alter it. But it does not cover
Husar is now on personal leave and the issue is being investigated by the Labor Party.
As we are hit by scandal after scandal involving political staff, from Barnaby Joyce and his love affair, to Michaelia Cash and her leaking adviser, it is time to take a closer look at these political staffers and their role in our democratic system.
Who are staffers and what do they do?
There are two main categories of political staff. The first is ministerial advisers, who advise ministers and parliamentary secretaries on their ministerial portfolio. The second is electorate officers, who assist MPs in carrying out their local duties of representing the people who voted for them.
Unlike the neutral and impartial public service, these staffers are political and partisan, focused on electoral success for their party. They are often young apparatchiks, sometimes with their own political ambitions.
So, is tasking electorate staff with child- and dog-minding acceptable?
These officers are hired to support MPs in administrative, communications and financial matters as they represent their constituents. Dog-walking and child-minding are not part of an MP’s professional role, and therefore should not be part of the deal.
Although Husar’s job advertisement refers to her staff supporting her personal and family obligations, this is not appropriate. Staffers are publicly funded, and the taxpayer should not have to pick up the bill for an MP’s family life. This should be funded through her personal funds, from her (very generous) salary as an MP.
How are MPs and electorate officers regulated?
Both ministers and ministerial advisers are subject to a Statement of Standards. This sets out a code of conduct to achieve the expected standards of behaviour.
But these standards do not apply to MPs who are not ministers. They also do not apply to electorate staff.
There is therefore a regulatory vacuum for federal MPs and electorate officers, without even a code of conduct regulating their behaviour. Yet MPs and electorate officers are publicly funded. This is a gap that should be fixed.
Despite discussions that have persisted for three decades, we still do not have an MPs’ code of conduct at the federal level. This means that MPs have no formalised guidance about the appropriate boundaries of behaviour, or about avoiding conflicts of interest. Likewise, electorate officers lack a code of behaviour. This is a glaring omission.
Politicians drag their heels on reforming the system because they benefit from having nonexistent regulations or lax rules. They can claim they acted appropriately or within any vague rules, or blame their staff if things go wrong.
This is why we have so many controversies involving ministers, MPs and their staff hitting the headline news – but remarkably few about remedial action or law reform.
Equivalent jurisdictions such as the United Kingdom and Canada have a code of conduct for their MPs.
As public trust in ministers and MPs falls, it is necessary to look to reform our political institutions. Examining parliamentary integrity systems and the regulation of political advisers would be a very good place to start.
Victorian Premier Daniel Andrews has announced a suite of reforms to the state’s political donations system. It includes:
a cap on donations by individuals, unions and corporations of A$4,000 over a four-year parliamentary term;
public disclosure of donations above $1,000;
a ban on foreign donations; and
real-time disclosure of donations.
Harsh penalties will be imposed on those who breach the rules, with fines of up to $44,000 and two years in jail.
These proposals follow several dubious events, including Liberal Party fundraiser Barrie Macmillan allegedly seeking to funnel donations from a mafia boss to the party after Opposition Leader Matthew Guy enjoyed a lobster dinner with the mafia leader.
… help put an end to individuals and corporations attempting to buy influence in Victorian politics.
Are these reforms good?
The proposed reforms will significantly improve Victoria’s donations system.
The caps on donations will level the playing field and reduce the risk of corruption in the state’s political system. It will prevent rich donors from exerting greater influence over politicians than those who lack the means to do so. Parties will no longer be able to rely on these wealthy donors to fund their election campaigns.
The caps equally target individuals, unions and corporations, meaning that money cannot be channelled through shady corporate structures to evade the rules. However, donations can still be channelled through the federal level, where there are no caps.
Real-time disclosures, which have already been introduced in Queensland, will improve the timeliness of disclosures. Combined with the lower disclosure threshold of $1,000, these are commendable steps towards enhancing transparency.
Election campaigns are currently funded by a mix of public funding and private donations. As there will be caps on private donations, public funding of Victorian elections from taxpayers’ pockets will need to increase.
There will be debate as to the level of public funding that should be given. Public funding should adequately compensate parties, but not be overly generous or allow them to rort the system.
Detractors may argue that, in the age of social media, there may be cheaper ways for political parties to get their messages across, so less public funding would be needed.
It is tricky to work out how to allocate public funding between established political parties, minor parties and new parties. There is also a question of whether public funding should cover activities such as policy development and party administration.
But public funding is already part of Australia’s system. In the 2016 federal election, $62.8 million of public funding was provided, which is about half of federal campaign costs.
Victoria’s move toward more public funding is not unprecedented. New South Wales already has caps on political donations of $5,800 per party and $2,500 for candidates, as well as a ban on donations from property developers and those in the tobacco, liquor and gambling industries. This was accompanied by an increase in public funding of elections, amounting to about 80% of campaign costs.
In Europe and Canada, there are high levels of public funding: between 50% and 90% of costs.
Another worry is that enterprising people and businesses might still circumvent the rules through creative means.
In the US, super PACs (political action committees) are special interest groups involved in fundraising and campaigning that are not officially affiliated with political parties. These groups can raise unlimited sums of money from corporations, unions, associations and individuals, and then spend this money to overtly advocate for or against political candidates.
If this possibility is not regulated in Australian jurisdictions, then our system will remain broken.
How can we improve our national system?
Australia’s political donations system remains fragmented. Ideally, we would have a uniform system with tough rules at both the federal and state levels, so that donors cannot easily evade the rules by channelling their money through more lax jurisdictions.