Budget 2017: government goes hard on gas and hydro in bid for energy security


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Gas infrastructure and exploration attracted the lion’s share of new energy announcements in the 2017 federal budget.
Sean Heatley/Shutterstock.com

Hugh Saddler, Australian National University; Alan Pears, RMIT University; Roger Dargaville, University of Melbourne, and Tony Wood, Grattan Institute

The budget contains several measures designed to boost energy security, including: The Conversation

  • A$90 million to expand gas supplies, partly through increased unconventional gas exploration

  • a potential Commonwealth buyout of an expanded Snowy Hydro scheme

  • up to A$110 million for a solar thermal plant at Port Augusta

  • monitoring of gas and electricity prices by the Australian Competition and Consumer Commission.

Below, our experts react to the measures.

Gas price problem far from solved

Roger Dargaville, Deputy Director, Melbourne Energy Institute, University of Melbourne

The budget contains a broad range of funding in energy-related areas, with a significant focus on gas resources, making A$78 million available for onshore unconventional gas exploration and reform in the gas markets, and A$7 million for studies into new gas pipelines to South Australia, from both Western Australia and the Northern Territory.

Interestingly, there is A$110 million in equity available (but not guaranteed) for a solar thermal plant in Port Augusta. And most notably, the government has proposed purchasing the Snowy Hydro Scheme from the New South Wales and Victorian governments, ensuring that the scheme stays in public hands.

The budget also includes A$13 million for CSIRO to improve energy forecasting tools, and A$8 million for the ACCC to investigate consumer energy pricing issues.

Overall, the budget highlights the government’s desire to do something about gas prices, but offers little to make a significant difference to a very difficult problem. Gas market reform and new pipelines are unlikely to reduce the exposure of the domestic market to price rises driven by international exports.

Importantly, there is little new funding in the budget directly relating to reducing carbon emissions and meeting the pledges made in the Paris Agreement (a 26-28% emission reduction relative to 2005 levels by 2030). Also noteworthy is the fact that funding for the carbon capture and storage flagship ceases in 2018-19.

‘On energy this budget is small fry’

Tony Wood, Energy Program Director, Grattan Institute

The budget does little more on energy than endorse the government’s deal with Senator Nick Xenophon on corporate tax cuts, complemented by modest commitments to energy security, more gas and better regulation.

Government facilitation of gas development and beefing up the energy capability of the Australian Energy Regulator and the ACCC are simple logic, and the one- off payment to pensioners to help with electricity bills will be welcomed by them.

Major public funding for further feasibility studies is a little more questionable. If the gas crisis can’t galvanise support from pipeline companies and gas consumers for pipelines, why would governments reach a different conclusion?

And finally, one can only speculate as to why the federal government is contemplating buying out the NSW and Victorian governments’ share of Snowy Hydro. Presumably it is because the feds are concerned about securing support for the proposed expansion.

In summary, on energy this budget is small fry ahead of major policy decisions that rest on the forthcoming Finkel Review of the National Electricity Market next month, and the climate change policy review later in the year.

A step towards radical energy reform?

Hugh Saddler, Honorary Associate Professor, Centre for Climate Economics and Policy, Australian National University

Few announcements in the budget speech are more emblematic of complete policy reversal than the announcement that the Commonwealth would buy the shareholdings in Snowy Hydro Limited of the governments of NSW (58%) and Victoria (29%), to add to the 13% currently owned by the Commonwealth. This comes almost exactly 11 years after Prime Minister John Howard, responding to vociferous public opposition, pulled the plug on plans by all three governments for a public float of their entire shareholdings. What is more, Treasurer Scott Morrison has now announced that, once owned by the Commonwealth, Snowy Hydro would remain in public ownership.

This announcement of course accompanies the government’s Snowy 2.0 proposal, for a fivefold increase in the Snowy scheme’s current 500 megawatt pumped storage capacity (at Talbingo). This was used, after commissioning in 1974, to allow inflexible coal fired power stations to operate with constant output levels day and night, but is now almost never used. This presumably reflects commercial decisions by Snowy Hydro, as it trades in the National Electricity Market.

The rationale for Snowy Hydro 2.0 is to facilitate operation of a grid with a high share of renewable generation, by smoothing out variations in wind and solar supply. Does this announcement mean that the government envisages moving away from a strictly commercial approach to using the assets of the Snowy scheme? Is this a first step towards radical restructuring, or even dismantling, of the National Electricity Market?

Stronger legislation needed

Alan Pears, Senior Industry Fellow, RMIT University

The detailed A$265 million energy package includes a number of useful measures to strengthen the weak regulatory culture of the energy sector that has allowed our energy crisis to evolve. But it is still limited: strong legislative reform and active support of emerging competitors will also be needed. It is a modest investment compared with recent multibillion-dollar energy cost increases. If it is successful, it will deliver vary large net benefits to the economy by limiting energy price increases. Unfortunately, past efforts to fix the energy situation have largely failed to deliver real outcomes: we need clear objectives for outcomes, and a mechanism to implement contingency strategies if they are not achieved.

In a context of increasing urgency for stronger action on climate, and the reality that the global “burnable carbon” budget is very limited, investment to encourage more gas development seems misplaced. More emphasis on energy efficiency, renewables and smart energy systems would make much more sense. Energy efficiency already saves billions on energy costs and could save much more, while renewable energy is becoming cheaper than fossil fuel alternatives. They also help to achieve our climate targets. And fossil fuels are responsible for almost three-quarters of Australian emissions, so we need strong action to meet our international obligations.

The extension of the A$20,000 tax write-off for small business spending on equipment is a measure that, at least for small businesses, offsets a significant barrier to investment in energy efficiency. Firms will also be able to continue to claim the write-off to improve the economics of investments in on-site renewable energy and storage. Of course, the problem still remains for spending over A$20,000 by small businesses, and for larger businesses.

The energy security plan, which includes funding for ACCC to police energy industry behaviour is only a small step towards fixing the disastrous failures of energy policy and a transition to a 21st century energy policy framework. Much more will need to be done.

Hugh Saddler, Honorary Associate Professor, Centre for Climate Economics and Policy, Australian National University; Alan Pears, Senior Industry Fellow, RMIT University; Roger Dargaville, Deputy Director, Melbourne Energy Institute, University of Melbourne, and Tony Wood, Program Director, Energy, Grattan Institute

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

Budget 2017-18 brings welfare crackdown and increased defence and security funding: experts respond



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The Australian Federal Police will receive $321.4 million over four years for a range of measures.
AAP/Lukas Coch

Ben Spies-Butcher, Macquarie University; Andrew Carr, Australian National University; Andrew Dodd, Swinburne University of Technology; John Rice, University of Adelaide; Les Field, UNSW, and Robin Davies, Australian National University

The government hopes to save A$632 million over five years from 2016-17 by strengthening penalties for non-compliance in Work for the Dole programs. Failure to meet requirements will result in suspended payments, and then escalating penalties. The Conversation

Defence spending will rise to 2% of GDP by 2020-21 as the government increases spending by $50 billion over the forward estimates. The Australian Federal Police will receive $321.4 million over four years to support counter-terrorism, and operations against organised drug imports, violent criminal gangs, cybercrime and serious financial crimes.

Foreign aid has risen with inflation to $3.9 billion in the budget, and will rise again to $4.01 billion in 2018-19. However, it will remain at that level for the following two years.

The current broadcaster licence fees will be replaced with new ones, costing the government $414.5 million over the forward estimates.

The Conversation’s experts respond to these and other aspects of the budget below.


A populist attack on welfare recipients

Ben Spies-Butcher, Senior Lecturer in Economy and Society, Department of Sociology, Macquarie University

For a budget that has shifted considerable ground in areas like education and health – and, to a lesser extent, housing – it strongly plays to existing Coalition themes on welfare. These reinforce punitive welfare measures and the divide between the “deserving” and the “undeserving” poor.

There are some mildly positive reforms for older Australians – enabling access to state concessions – and some additional funds to assist single parents return to work. However, it is strongly punitive towards many of the most vulnerable.

The budget seeks to save $4 billion in new “integrity” and “mutual obligation” reforms. There is no funding to increase what is now a tragically low unemployment benefit (Newstart). Instead, there are new enforcement measures. These are largely constructed around drug and alcohol use. They include measures to force more recipients to access their money through a “cashless welfare card” that directs how people spend their money.

More surprisingly, there are harsh measures that include trials of drug tests, harsher breaching rules (that often leave recipients with no income), and even restrictions on accessing support for disabilities related to substance use.

That reflects a very strong populist attack on some of the most vulnerable. It also reaffirms an important political dynamic in Australia: when we frame action for everyone (as we do with health, education and housing), it is much easier to achieve equitable action. And when action is focused on the very poor, the political instinct is to attack.


Aid gets another cut, but not the unkindest

Robin Davies, Associate Director, Development Policy Centre, Crawford School of Public Policy, Australian National University

The Coalition once again cut overseas aid, as it has done now for several years running. However, the cuts in this budget will not be felt for another two years and are smaller in annual terms than those inflicted in the previous two years.

Aid spending will, as promised last year by Foreign Minister Julie Bishop, increase in line with CPI in 2017-18, rising from $3.8 billion to $3.9 billion, and also in 2018-19, when it will reach $4 billion.

For the following two years, though, the indexation of aid to CPI will be suspended and the resulting savings, $303 million, redirected to “other policy priorities” of the government. CPI indexation, according to the government, will resume thereafter.

Since coming to power in late 2013, the Coalition has fashioned five aid budgets, starting with its revision of Labor’s 2013-14 aid budget. In addition, it has now set notional bottom lines for the next three, out to 2020-21.

Over these aid budgets, aid has been or will be cut in real terms six times. The biggest cuts were in the last two budgets, 2015-16 and 2016-17, where aid was cut by 20.2% and 7.4% respectively.

After the reprieve in 2017-18 and 2018-19, when there will no real growth in aid, the cuts resume in 2019-20 and 2020-21 at the modest rate of 2.5% per year. The cumulative cut in aid from 2013-14 to 2020-21 will be 32.8%: basically one-third.

Australia’s aid as a proportion of its gross national income will stagnate at the historically low level of 0.22% for several years, and could fall to 0.2% by 2020-21. Australia’s aid generosity is now very far below the OECD average of 0.32%. We rank 17th among our peer countries on this measure.

It appears that The Australian was taking some dramatic licence when it reported, just before the budget, that:

The Turnbull government will divert foreign aid funds to boost Australia’s intelligence agencies as part of its escalation of the war on terror.

However, it had the basic story about right.

The Coalition pledged in late 2013 to increase aid in line with inflation. Last year, implying that it had finished cutting aid, it revived that pledge.

However, the Coalition has only maintained aid in real terms in two of eight years. While it cannot be claimed that aid is funding domestic policing or foreign intelligence, these are prominent among the “other policy priorities” the government is able to pursue by cutting aid.


No news is good news for defence

Andrew Carr, Senior Lecturer in Strategic and Defence Studies, Australian National University

Defence wasn’t expecting anything in tonight’s budget, and didn’t get it. The 2016 Defence White Paper and the 2016-17 budget both proposed minimal changes for defence in 2017-18. This was not because of a lack of support, but because the ten-year funding plan to raise the defence budget to match 2% of GDP by 2020-21 is largely backloaded, and because the Department of Defence is struggling to spend the funds it already has.

The 2017-18 budget papers’ main change was an efficiency reclaim of $304.1 million over the next four years, aimed at:

… reductions in the numbers of consultants and contractors used in Defence, as well as limiting the costs of non-operational overseas and business travel.

There is also $350 million in support for Veterans Health – an important and popular measure that was announced two days ago.

Freed of the need to devote new significant resources, the treasurer’s speech confidently reiterated the government’s commitment to the 2% target. While there are underlying issues with the notion of tying defence spending with the health of your economy — namely the worse the global situation, the easier the 2% target becomes – this stability itself is welcome.

Over the last decade, defence has seen significant promises of spending and some harsh cuts on budget night. So no news is good news.

Many will also be pleased to see the return to surplus remains a priority. While not a defence measure, this provides additional flexibility and resilience, which could be important for Australia’s security in the unpredictable Trump era.


Government levels the playing field for traditional media

Andrew Dodd, Program Director – Journalism, Swinburne University of Technology

There are no big shocks for the ABC in this budget, as the national broadcaster is only one year into its current round of triennial funding. SBS has won a cash injection to make up for lost advertising revenue, and broadcasters in general have won a reprieve from licence fees.

However, it’s women’s sport on pay TV that seems to have done best of all out of the 2017 budget.

The government has levelled the playing field for media companies that are struggling to compete against internet-based media by abolishing licence fees for broadcasters and datacasters that use broadcast spectrum. However, it is also broadening the revenue base through a new regime of apparatus licence fees for broadcasting spectrum. The change is estimated to cost $414.5 million over the forward estimates period.

The budget provides a “transitional support package” for those licensees who will be left worse off. The Treasury estimates state this:

… support package is estimated to have a cost of $24.8 million over the forward estimates period.

And the Australian Communications and Media Authority will receive a small cash injection to make the transitional support package work.

The budget is also providing $30 million over four years to support:

… underrepresented sports on subscription television, including women’s sports, niche sports, and sports with a high level of community involvement and participation.

In addition, $6 million will be spent over two years to support the development of Australian film and television content.

SBS will get $8.8 million in 2017-18 to:

… restore revenue that could not be raised due to the delayed passage of legislation, which would allow SBS further flexibility in the way it advertises.


Science flies under the radar

Les Field, Vice-President & Deputy Vice-Chancellor (Research), UNSW

Science has largely flown under the radar in a restrained budget, with no big spending measures and no major cuts apart from the university funding changes announced last week.

It is pleasing to see an astronomy partnership with the European Southern Observatory that will ensure Australia’s access to world-leading optical astronomy facilities, as well as new funding and administrative improvements in health and medical research, including the first investments from the Medical Research Future Fund.

It is also positive that the tried-and-tested CRC program will benefit from the government’s advanced manufacturing industry focus. But it was disappointing that the budget didn’t include any of the recommendations of the review of the R&D tax incentives.

There are small decreases in indexation of funding across the forward estimates equating to savings of several million dollars per year in agencies such as ANSTO and CSIRO, and funding programs such as the ARC and NHMRC. These will certainly be absorbed, but will add to the challenge of doing important science and innovation in areas of critical national importance.

The science sector will now look ahead to the 2030 Strategy for Science and Innovation, to be finalised by the end of the year, and the government’s response to the Research Infrastructure Roadmap – which will determine priorities for new capital investment.

John Rice, Adjunct Professor, University of Adelaide

As far as science is concerned the 2017 budget could be described as 2014 budget-lite. There is no vision for the role of science and technology in Australia’s future. Instead what stands out are the cuts to universities and to the CSIRO.

The National Innovation and Science Agenda (NISA) made the 2016 budget very exciting, even if a little disconcerting. There wasn’t much new money behind it and what there was largely reversed the disasters of 2014 and 2015.

But NISA was the kind of vision that we ought to expect from a budget, a vision for the economic direction of the country, one that can guide its productive capacity, meet current challenges and show the way to continuing prosperity.

Where did that vision go? There is none of it in the 2017 budget.

A less-than-enthusiastic electorate reminded politicians there needs to be more to an innovation-driven economy than everyone developing an app. Clearly the average citizen needed to understand where innovation-driven automation and other labour productivity improvements leave them in relation to earning a living.

If the 2017 budget does nothing else it confirms that the government has not risen to these challenges, and has lost its faith. In the face of the electoral blowtorch it has simply melted away.

There are a few modest and sensible initiatives that are a legacy of the 2016 rush of blood. Their gestation has been so long, like the activation of the Medical Research Futures Fund, that you would have expected an elephant rather than a mouse, but they are positive moves nonetheless.

What is seriously disappointing is the cutting of funding to the universities and to the CSIRO. Universities contribute probably more than three-quarters of Australia’s basic research. University research is seriously underfunded, and the underfunding is made up via transfers from other areas, particularly teaching. The cuts will make this worse, which leaves no room, let alone incentive, to engage university research and teaching more with industry.

What this budget represents for science is a retreat from any serious vision for an innovation-based economy, and a return to the unthinking cost cutting of the 2014-15 budgets.

Ben Spies-Butcher, Senior Lecturer in Economy and Society, Department of Sociology, Macquarie University; Andrew Carr, Senior Lecturer in Strategic and Defence Studies, Australian National University; Andrew Dodd, Program Director – Journalism, Swinburne University of Technology; John Rice, Adjunct Professor, University of Adelaide; Les Field, Secretary for Science Policy at the Australian Academy of Science, and Senior Deputy Vice-Chancellor, UNSW, and Robin Davies, Associate Director, Development Policy Centre, Crawford School of Public Policy, Australian National University

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

Brussels airport attacks are not just a matter of airport security


Ivano Bongiovanni, Queensland University of Technology

The deadly terror attack in Brussels has again raised the issue of safety and security at airports. But expanding the “security bubble” around airports might not be the best response.

Europe barely had the time to recover from the horror of the Paris attacks last November before another of its capital cities was hit at its heart, presumably by ISIS terrorists.

In a devastated Brussels, investigations are running at full speed and authorities are already flooded with questions about the vulnerability of their critical infrastructure.

Unfortunately, this refrain seems to resurface every time a terrorist attack achieves its goals.

Traditionally, governments respond to these events by setting higher security standards. In this sense, modern airports epitomise the significant improvements that have been achieved in security over the past decades, especially after the September 11 attacks in the US in 2001.

Screening

Security screening has proved to be an effective deterrent against acts of terror such as hijacking and bombing. Following a procedure that is typical of security risk management, the security bubble around the vulnerable element – in this case, the airplane – has been progressively expanded in order to keep malicious individuals out.

The sterile area in a modern airport is among the most secure places on Earth. However, the terminal buildings can still be threatened, such as when the Glasgow airport was hit by a vehicle ramming attack in 2007.

In the aftermath, more stringent regulations were put into place to prevent vehicles from getting too close to the terminal buildings. Thus the security bubble was further expanded.

Even so, in 2011 two suicide bombers managed to kill more than 30 people at Moscow’s Domodedovo airport by walking into the baggage claim area and activating their Improvised Explosive Devices (IEDs). This was an act strikingly similar to what just happened in Brussels.

Increase security?

What should be our response to the latest attack? In the next few days we will probably hear more requests for strengthened airport security. Some might argue for a further expansion of the security bubble in order to cover the check-in area or entrance of the terminal buildings.

Would that be an effective solution? I don’t think so, for three main reasons.

First, the costs associated with the implementation of such a security system would largely outweigh the benefits; the bigger the area, the more expensive its protection.

Second, the associated operational disruptions would require some time (and a lot of patience) to be contained. When the perceived threats are low, people tend to consider security measures as an annoyance rather than a safeguard. Most of time, security awareness is not an ingrained mindset.

Third, and most important, the effectiveness of this new security system would still be questionable. Expanding the bubble would just move its boundaries outwards, with no guarantee that a new attack won’t happen on its edge.

For example, if security were increased before reaching the check-in at the airport, that might cause crowds to gather outside the main doors, and this would present a new target for terrorist attack.

So expanding the bubble would be just another symmetric response to an issue that has proven highly asymmetric.

This last point, in particular, emphasises that the Brussels’ airport attacks are not just a matter of airport security. They involve the need to reconsider our perception of modern security risks.

Where people gather

Airport security works very well these days. The problem is that, especially in some countries, any gathering involving more or less large crowds is a vulnerable target for terrorist attack.

Sport events, public transport, concerts, and even the queue in front of a museum, constitute a potential target for malicious individuals.

This requires governments to adopt a different approach to security. Security management needs to be performed at an asymmetric level, penetrating our societies and engaging terrorists at the individual level.

Random security checkpoints, enhanced intelligence networks and additional investments in street-level security technologies are some examples of asymmetric countermeasures that should be strengthened.

Technology, in particular, seems to be a powerful ally in our fight against terrorism. Especially when technological development is associated with the reduction of security costs.

The Conversation

Ivano Bongiovanni, PhD Candidate in Airport Safety and Security; Sessional Academic in Strategic Management, Queensland University of Technology

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

Check your Google security settings, receive 2GB of free Drive storage


Gigaom

Here’s an easy way to get 2GB of Google Drive storage: In the next week, head to Google’s security checkup page and follow the instructions. On February 28, Google will credit your account with the additional cloud storage space. The security checkup takes less than 5 minutes to complete, and it’s simple — it asks you what your backup email address is, whether any recent account activity is odd, and to review the various apps you’ve given Google account permissions to (there are probably a lot.) Sure, 2GB of additional Google Drive space isn’t a ton (you get 15GB for free), but you probably should review your security settings anyway.

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Through a PRISM darkly: Tracking the ongoing NSA surveillance story


Gigaom

It was a relatively quiet week for internet news until Guardian blogger Glenn Greenwald dropped a bombshell on Thursday, with a story that showed the National Security Agency was collecting data from Verizon thanks to a secret court order. But that was just the beginning: the Washington Post later revealed an even broader program of surveillance code-named PRISM, which involved data collection from the web’s largest players — including Google (s goog), Facebook (s fb) and Apple (s aapl) — and then the Wall Street Journal said data is also being gathered from ISPs and credit-card companies.

This story is moving so quickly that it is hard to keep a handle on all of the developments, not to mention trying to follow the denials and non-denials from those who are allegedly involved, and the threads that tie this particular story to the long and sordid history of the U.S. government’s…

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