What we really can't afford

Again we hear the empty rhetoric.  Barnaby Joyce on the carbon tax: "we can't afford this toxic tax".  "Australia cannot afford this tax right now".

Here's what we cannot afford, people:

We can't afford extra energy in weather events leading to the largest cyclone to ever hit Queensland

We can't afford an increase in temperature leading to more frequent bushfires

We can't afford extreme weather events leading to 150mm of rain in an hour (unprecedented in Australia)

We can't afford more frequent wild weather events such as the tornadoes in Joplin, Missouri

We can't afford to have the sea levels rise - just ask anyone in Kiribati!

This is the gravity of the situation.  Do nothing now, and in fifty years it will cost so much more to act urgently.  We are merely complaining about a tax we don't like.  Consider the alternatives above.  THAT is the real cost.



Carbon lies - this is getting sickening

I've really started to get fed up on the misinformation spewing forth from the Coalition on the Carbon Tax.  Greg Hunt went on 7.30 on Tuesday (24 April) with news about the "Direct Action" plan.

This is fair enough.  It seems the coalition have been quite keen to step forward and label the government's plan as a "Toxic Tax" that will cause the end of the world and businesses to go broke.  Have you noticed that this is Tony Abbott's strategy - "The Unnecessary Carbon Tax".  "This Toxic Tax".  "This will impose more strains on everyone's cost of living".  At least he keeps it simple...

It's high time some of the alternative plans were looked at.  "Direct Action" is nothing more than subsidising certain companies to do very little.  As Greg Hunt contends, a reduction by 5% of 2000 CO2 emission levels (our completely arbitrary target set a few years ago after Kyoto) could be achieved by "... storing carbon, it could be [by] capturing waste coalmine gas, it could be [by] cleaning up landfills. Whatever is lowest cost, we'll do that".

Nice to see such a simple solution.  Pity the Grattan Institue have completely debunked these so-called solutions as being totally innefectual.  What it means is that there are vested interests who will be the beneficiaries of these subsidies who are keen to see the Abbott side of politics instilled in power!   If that happens they will benefit from billions of dollars in free money handed out by the government, and WILL KEEP POLLUTING with very little change to our total CO2 emissions.

Greg Hunt then went on to say "we will, over four years, for example, spend $3.2 billion on our approach. That's offset by $50 billion of savings."  This is the cost of "Direct Action" over the forward estimates (budget preditions for the next four complete financial years) as stated by Greg Hunt.  However less than a minute later, he is asked by Chris Uhlmann: "and $3.2 billion you are saying now will cover the cost of that increased gas price - for how long?"  (I yell at the screen - "he's already answered that, four years") but Greg Hunt has the audacity to answer thus: "We were looking at a period out to 2020..."

Greg, I make that nine years, and about sixty seconds earlier, mate, you were saying four years.  

The Carbon Tax is a response to a problem.  Okay, governments can do nothing, bury their heads in the sand and pretend everything is okay.  The UK government has not decided on this course of action.  Germany plans to be the biggest renewable energy user in the world by the end of the decade.  What are we going to do in Australia?  If we follow the ALP's stance we will have a tax on pollution shifting the cost on to the polluters themselves, and this will then transition to a cap-and-trade system in three to five years.  If we follow the coalition's stance then very little will happen, except that quite a few very large polluters will be subsidised by the government to keep polluting, and the tab to clean up that mess will be picked up by the government from a revenue stream that doesn't exist.

(If you listen to Greg Hunt (see his 7.30 interview) the funding will come from budget savings (savings=cuts) so what that means is you'll get less services from the government, and in return, the savings (cuts) will be transferred to the polluters, instead of the people that probably needed the government services in the first place).

Again, Liberal policy is to give government assistance to people who do not need government assitance.  As if big power generators, steel-makers and aluminium smelters cannot pay their own way.   They will close down and sack staff based on purely financial grounds, the impost of a carbon tax isn't going to make one iota of difference because of the materiality of the changes.

Speaking of materiality, on Monday, Tony Abbott went to a welding company in Queanbeyan.  Here he was describing the impact of the "Toxic Tax" as "the firm will pay an extra $4,000 in power [bills per year] ... ".  (It is clear he's using the annual figure because he also mentions "$1,000 a quarter" in the press conference).

Let's do the maths.  The owner of the welding firm also spoke and said they employ forty people.  Let's do some approximations here and estimate the annual wages bill at say $1,000 a week for 40 employees for 50 weeks a year and you're looking at $2,000,000 a year in wages alone.  Plus naturally there are other expenses.  This company must be paying out close to $10 million a year in total expenses, and a $4,000 increase in electricity prices is going to send them to the wall or at least put jobs at risk??   This is what Tony Abbott is seriously contending!

To look at it another way, if this business decided to give a $10 a week pay rise to TEN of its employees (cost: $5,200 annually) this would send them to the wall or they'd have to sack other staff.  This is greater than the $4,000 increase in electricity costs.  These contentions are just scare tactics, and if you are being suckered in by them it's only because Tony can keep a straight face as he contends absolute baloney so well.

No mention is made of the fact that with the Australian dollar sitting up at $US1.05, the cost of fuel for this company is about 30% cheaper than it otherwise would have been six months ago.   Nah, you can't mention that, because that might just indicate that the government is managing the country well enough that other people are now prepared to pay a premium for the Aussie dollar.

And yes, a high Aussie dollar means our exports are less competitive, 'tis true.  However since Australia has always had a balance of payments deficit (throughout our entire history) this means we import more than we export, so overall a higher Aussie dollar is better for the country than a lower Aussie dollar, plain and simple.

Nah, this incompetent government is bringing in an unnecessary toxic tax that will put jobs at risk and impose costs on us all that we can't afford.

The cost of climate change is borne by our children and grand-children.  They will view us with absolute contempt and disdain if we can't solve the problem now and leave it all up to them.  But perhaps maybe they'll be a less selfish generation - they'll HAVE to be in order to survive.

Numeracy

I just remind all readers to be aware of the numbers game and how easily it is to lose track of the real issues when people are quoting figures at you.

Remember back in 2000 when the GST was introduced?  The pollies were going out and buying baskets of groceries and comparing prices before and after the GST.  Yes, at that time some things were taxed at the 22-1/2% wholesale sales tax, 12-1/2% and 32-1/2%.

Go buy a basket of dog food, and lo and behold, under a GST that 32-1/2% wholesale sales tax rate gives you an actual saving!  Go buy fruit and vegetables and you're paying 10% more.  (Well Meg Lees got her way and the GST stayed off Fruit and Veg - so what I ask).

All these comparisons were done and a whole lot made of the findings.  But people were not really taking the right information into account.  Okay, you can muck around by comparing taxes at different rates and on wholesale and retail prices and you get different numerical outcomes.

The one thing that wasn't being discussed at the time was the most important thing, and the NAME of the tax gave it away.  "Goods and SERVICES tax".  Okay, there'd be a change to the tax rates on goods, but on SERVICES, the current rate was zero, and ten per sent of the retail was going to be added to all services.

Now you'd be taxed on getting your hair cut, buying movie tickets, getting the car serviced, paying for the services of a professional person (lawyer, accountant, etc), taxi fares, plumbing services, electricity supplies, petrol (in addition to all other taxes), and so on and so on ad infinitum.

Never mind the goods side of things - mathematically they will vary a little.  Worry about the services side of things, where everyone is worse off.   And all income the tax cuts promised simply never eventuated.  Bracket creep was given back, but essentially income tax revenue remained almost the same!

This is just a reminder to worry about materiality.  You may hear incredible stories about how power bills will increase under a carbon tax, and this is usually because they will include an actual quantum (eg electricity bills will increase by $50,000 a year for this particular business).  Ask instead what PERCENTAGE increase is this going to be (and according to Treasury it's around 15% for electricity.  For food it's estimated at a 1.2% increase).

The figures are then easy to work out.  Say your business currently spends $80,000 a year on electricity.  This means it will cost an extra $12,000 a year for power.   Don't mention the existing $80,000 and a $12,000 increase sounds massive, doesn't it?   Honest reporting would say the bills will rise from $80,000 to $92,000 per year.  (Power is probably the highest increase of all commodities, because it emits a massive amount of carbon in its production).

This is, of course, assuming you still use coal to make the electricity...  Generate your electricity from gas, and already the carbon cost is halved.  Generate it using hydro, wind or solar and you pay virtually NO carbon tax at all (which is the whole point of the exercise)!

Long Term Unemployed

After the budget last night you can definitely see none of the pollies have been unemployed for any great length of time.

I want to impress on them the depression involved in long term unemployment.  It's not as simple as "get a job" in many cases.  I've been looking for work in the past and applying for jobs willy nilly.  Over a six month period in 2001, I applied for about 140 jobs.  I got about 35 no-thank-you replies from the employers, and the rest were just ignored.  I'm not sure what's worst.  An employer taking out a classified ad in the employment columns is sometimes subjected to over a hundred applications, and some small employers simply don't have the resources to reply.  But then again, each of those applications has been the result of an investment of maybe a couple of hours time from the applicants, so they probably do at least deserve acknowledgement.

What IS bad, however is the arrival of a no-thank-you letter, as it's a constant reminder that you are not wanted by that particular employer.  A few letters are fair enough, but when they keep going for month after month, it certainly leads to depression.  All you can do is pick yourself up off the ground and keep applying for more jobs, but that's something that's often easier said than done.

Worse, I suppose is when you happen to actually land an interview.  The hopes rise, and you get yourself in to the employer on time and with a shiny face.  This often involves quite a few hours of your time, plus the cost of travel to and from the workplace.  In many cases, unfortunately, the employers didn't even have the manners to call back and say I was unsuccesful after an interview.  I can live with ignoring an unsuccesful written application, but after an unsuccesful interview, where you've gotten yourself along to the employer's place of business at your expense and on your own time, a reply is definitely warranted.  How many people are they interviewing, for goodness sake?

To impose on the long term unemployed the requirement to apply for ten jobs a fortnight is crazy.  For a start, I'd doubt there'd be ten jobs a fortnight I'd have any prospect of applying for in the first place.  This means you'd have to be applying for jobs that you've got no hope of getting.  Crazy for the employer who has to deal with the applications (shred them?) and crazy for the applicant who is going to be constantly reminded of his or her unemployability.

As I mentioned, each no-thank-you letter can be taken as a personal slight.  That's yet another employer who doesn't want to employ me.  Assuming about a 30% reply rate, that's three letters a fortnight arriving in the mailbox reminding you of yet another employer who doesn't want to give you a job.  That might be all right for a month or two, but it'd be downright demoralising after a year.

What would the pollies know about this, however?  Well, they could ask us.