Is society better off with strikes?

 From a tweet by Alan Kohler

Serious question: Is society better off with strikes, or without them? Australia is now a society without strikes; it is bipartisan policy that a government body must decide whether workers can withdraw their labour, and it’s virtually impossible to do it. Employers can always withhold their money, but workers cannot withhold their work unless some government employees say they can, which means there can never be balanced negotiations.

[From his piece in The New Daily]  I would point out that the "progressive" opposition in Australia is the Australian Labor Party (ALP), which fully supports preventing workers from striking.


The charts come from responses to his tweet and from his article.

Australia's dodgy carbon offsets

From The New Daily.

July 5 was a big day. As well as being the planet’s hottest day ever, it was when the Bureau of Meteorology put the chance of an El Niño at 70 per cent this year, so it’s going to get worse, soon, and Bloomberg New Energy Finance estimated that it will cost the world US$196 trillion to achieve net zero by 2050.

As you contemplate that trio of troubles, you might want to make yourself even more miserable with a website called the Carbon Integrity Explorer, as I’ve been doing.

It lets you examine in detail the regeneration projects in Australia that are behind the Australian Carbon Credit Units (ACCUs) issued by the Clean Energy Regulator (CER). These native forest regeneration projects are the largest project in the scheme, accounting for around 30 per cent of all ACCUs issued to date.

Buying ACCUs allows companies to offset their carbon emissions to meet emission reduction obligations under the Labor government’s new carbon pricing scheme without reducing their emissions.

I spent an absorbing, increasingly dismal few hours over the weekend clicking on random abatement projects, trying to find any in which the tree cover had materially increased, and is therefore responsible for removing some carbon dioxide from the atmosphere. Most of these projects were registered in 2015-16 but a large proportion of them claim they started in 2010-2012, so plenty of time for trees to have grown.

I found one, and only one, on the Eyre Peninsula in South Australia. It’s called the Arbon-Tooligie Human Induced Regeneration project, and covers 7863 hectares, which is very small. Tree cover has increased, and 148,397 ACCUs have been issued to its promoters, currently worth $29.75 apiece, or a total of about $4.5 million.

For every other project I clicked on, the tree cover had either decreased, or the increase was “negligible”. Yet they had all also been issued with ACCUs, hundreds of thousands of them, worth millions of dollars.

A group of academics at Australian National University led by Professor Andrew Macintosh has gone through all the projects on the Carbon Integrity Explorer so you and I don’t have to.

Here are their results:

To summarise: 27.5 million ACCUs, worth $825 million at today’s spot market price, have been issued for projects where the tree cover has decreased, or the increase has been negligible.

And to qualify as an “increase”, the trend in tree cover only has to be an increase of 0.25 per cent per year, which is hardly going to save the planet.

Two questions arise: First, what happens when the regulator eventually gets around to inspecting the projects to see whether they genuinely reduced atmospheric carbon? And second, what the hell is going on?

As to the first question: The rules require that by the 15th year of the project, 90 per cent of area that has been credited must have regenerated and have forest cover. If the credited area doesn’t have forest cover by then, proponents might have to hand back the ACCUs they have received.

To choose one at random – the 24,806 ha Wapweelah Regeneration Project near Bourke in New South Wales, which was registered in August 2015 and has produced a healthy crop of 441,526 ACCUs for its promoters, currently worth $13.2 million.

Yet its tree cover has decreased, and its integrity is assessed as “high risk” by the Explorer because most of the credited area has never been comprehensively cleared, its tree cover has gone backwards and the trends in tree cover in the credited areas are worse than those in the area surrounding the property.

Most of these projects are owned by farmers who have been persuaded by ACCU brokers like the firm called Climate Friendly to supplement their income by regenerating native forests in areas that have never been comprehensively cleared by reducing grazing pressure from livestock or feral animals like goats. They call it carbon farming.

According to the CER website, the “contractor” for the Wapweelah project is Phillip Ridge, who I learn from Google is the owner of the “iconic” Jandra Station near Bourke with his wife Di and four kids.

Phil and Di Ridge have until 2030 to get forest cover on this project from its current levels, of around 22 per cent, up to 90 per cent, even though it has been essentially static since the project was first registered. If they can’t, they might have to hand back their ACCUs.

The Ridges would be just one of dozens of farming families in a state of extreme “regulatory risk”. The CER doesn’t have to demand the return of ACCUs if the abatement of a project doesn’t measure up, but it can, and the farmers have no way of knowing whether they will.

In any case, the carbon abatement that was supposed to have happened largely doesn’t appear to exist. This means the steel manufacturer (or other emitter) who bought the ACCUs has been allowed to continue to emit but there has been no offsetting reduction in emissions elsewhere.

Meanwhile the brokers who organised the deal for the farmers and took their cut are long gone.

As for the bigger question of what the hell is going on here, I really have no idea, but I suspect it’s called politics.

Climate Change Minister Chris Bowen happily promotes the government’s emissions reduction credentials but given the amount of offsets that are being doled out for regenerating native forests in the desert that either aren’t regenerating or would have regenerated anyway without the projects, it’s hard to escape the conclusion that the appearance of doing something is a lot more important than actually doing something.

And with an El Niño on the way, a lot of the trees that have been counted up to now will either die when Australia burns or die in the drought we’re about to have.

Apart from anything else, the CER, and therefore the government, is going to have some tough decisions over the next few years – either demand that drought-stricken farmers like the Ridges spend millions on ACCUs so they can hand them back or let the non-existent abatement stand.

Meanwhile, the government is facing a very awkward shortfall in its emissions reduction target.

The chairman of the new Net Zero Authority, Greg Combet, has the task of making net zero happen by 2050 by cajoling, bullying or paying the companies in the safeguard mechanism to cut their emissions by 4.9 per cent per year, as promised by the Prime Minister.

For airlines, cement and steel manufacturers and other big emitters still waiting for a technology breakthrough to rescue them, it will be all about buying ACCUs to offset their emissions rather than actually reducing them, because they can’t. And of course they’ll be passing on the cost of the ACCUs to their customers.

But what if the offsets don’t offset?

According to Carbon Integrity Explorer, 27.5 million – or about half of the ACCUs issued so far – don’t offset.

This is going to be one of those train crashes that everybody involved can see coming, but they are hiding their eyes, hoping to make it through till tomorrow.

Everybody --- almost everybody --- now pretends to believe that we need to slash emissions by 2030.   Yet, as the Ozzie offsets furphy shows, they don't really care, and they're not in fact going to introduce policies or take actions which will achieve this.  The ALP (Labor Party) is supposed to be a progressive party, "committed" to cutting emissions and reaching net-zero by 2050.  But Labor is still authorising new coal mines and gas fields, whose emissions, even in Australia, will dwarf existing emissions from all other sources.  Meanwhile, the purported fall in emissions as a result of offsets is in fact not happening.  

Greenwashing.  Lies.  Hypocrisy.

Death by degrees

From The New Daily

Far from implementing the vision of COP26 in Glasgow, as intended, COP27 in Egypt signed the death warrant for 1.5 degrees.

That number was the ambition of COP21 in Paris: Keeping warming to 2 degrees above pre-industrial age global mean temperatures, and preferably 1.5 degrees.

Over the seven years since then, the world’s politicians and business leaders have been quietly slinking away from that while saying the opposite. It’s suicide by politics.


That has been exposed in Egypt with a deal on cash bribes to poor countries, but little else.

Keeping warming to 1.5 degrees now looks impossible, and according to David Karoly, one of Australia’s leading climate scientists, there’s an 80 per cent chance of 2 degrees, while 3 degrees is 50/50.

What’s more, says Karoly, given that the sea is cooler than the land, a global mean temperature rise of 2 degrees means at least 3 degrees on the land, where we all live. And 3 degrees global mean equals an unliveable 4 degrees on land.

Last year the Australian Academy of Science published a report co-authored by David Karoly, titled: Risks to Australia of a 3-degree Warmer World.

It makes confronting reading, especially considering this is now a 50 per cent likelihood.

So the question is: At what percentage likelihood of disaster, agreed by most scientists, should a government seriously prepare for it? Wait till it’s 100 per cent? How about 80 per cent? If you knew there was a 50 per cent chance of a cyclone hitting your house, would you at least board up the windows?

Australia’s exports of fossil fuels represent about 17 per cent of GDP and the tax revenue from the companies doing it would come close to paying for the defence budget, or the Commonwealth public service.

Over the next 20-30 years, this revenue will disappear as the world heats up and switches to renewables at the same time, with increasing urgency.


What is the plan to deal with the consequences of 2-3 degrees of warming, as laid out by the Academy of Science, along with the loss of one-sixth of the national GDP and a big chunk of government revenue?

The answer, apparently, is that Australia will be a “renewable energy superpower”, which Prime Minister Anthony Albanese has been saying for a few years.

It is a meaningless slogan.

The only realistic prospect for renewable energy exports is hydrogen, and in that product Australia has nothing like the scale or competitive advantages it has in coal and LNG.

“Green hydrogen” is produced by applying renewable energy to water through electrolysis that separates the oxygen and hydrogen. It requires an enormous investment – a desalination plant, electrolyser and a machine to combine the hydrogen with nitrogen to produce ammonia for export, plus another machine at the other end to split the ammonia into hydrogen and nitrogen again.

We have no greater access to water and nitrogen than anybody else, and while we have a lot of sunshine, that’s unlikely to offset the disadvantage of distance from the main markets.

The “green steel” industry that some are pushing for the Pilbara, using hydrogen to replace coking coal in furnaces, would cost between $700 billion and $1 trillion, according to a mining CEO who has done the numbers.

Australia urgently needs to start planning to replace 15-20 per cent of GDP over the next two decades, and it won’t be achieved by the repetition of a political slogan.

It will only be done through hard, sustained policy grind, detailed planning, careful focusing of taxpayers’ money and benchmarking Australia against its competitors, and then doing better than them in costs and tax.

Fundamentally, politicians can’t afford to think too far ahead. Australia’s ridiculous two- to three-year terms are shorter than most, but even four- to five-year terms are too short for the gap between political cost and the political benefit in dealing seriously with global warming, as opposed to appearing to.

But even leaving aside the reduction in GDP and tax revenue, the long-term cost of inaction is chilling, as set out by the Academy of Science last year.

Here are a few quotes from that report:

• “Under 1.5 degrees of global warming, heatwaves would occur three times a year with each event lasting on average 7.5 days. With global warming of 2 degrees, heatwaves would occur at least four times a year, on average lasting 10 days. At 3 degrees of global warming, heatwaves would happen as often as seven times a year, with events lasting 16 days on average.”
• “The average lifetime of a cyclone is likely to extend by 12-24 hours as global mean surface temperature increases from 2 degrees to 3 degrees of global warming.”
• “Fire risk (driven by record heat, dryness, and fuel, see case study, p.34) will increase by 30 per cent or more in south-eastern Australia.”
• “The majority (approximately 70–90 per cent) of the world’s tropical coral reefs are projected to disappear at even low levels of warming of 1.5 degrees.”
• “A 3 degrees global temperature increase would reduce yields of key crops by between 5 and 50 per cent, depending on crop and location”.

So, scientists are being quite specific about what we’re facing … with a 50-80 per cent probability.

It’s time to consider removing decisions about climate change from the short-term political cycle. Perhaps increase the funding of the Climate Change Authority and give it the power to make independent decisions like the Reserve Bank, or at least public recommendations.

An independent statutory body, perhaps the CCA, needs to be responsible for preparing Australia for extreme weather and more disasters, including the problem of flood insurance, or the lack of it, which is with us now.

As for developing a plan to replace Australia’s fossil fuel exports, that lies with Treasurer Jim Chalmers and Industry and Science Minister Ed Husic because money will be needed, as well as long-term planning.

To direct the spending, they should set up a process, perhaps a royal commission, to establish priorities and, yes, pick some winners.

After COP27, there is no longer any doubt about what’s coming.

Source: NOAA

America, Britain, Russia, China -- down the gurgler

(Source)

From The New Daily

Has there ever been a time when the world’s four leading nations were in a bigger mess than they are now?

Each, in its own way, is destroying itself, although the chosen methods are all a bit different. But it always has to do with leadership.

And while it makes those of us who managed to sack our ratbags [Australia has voted out its right-wing LNP coalition]look stable by comparison, that won’t help if the US, Britain, China and Russia keep going down the paths they’re on. Their misery will be everyone’s.

Two of them – Russia and China – are being brought undone by autocracy while the two liberal democracies are either undermining the functioning of democracy itself (America) or are floundering in economic fallacy (the UK).

Undone by autocracy

The impending downfall, or at best disorder, of these four is the second emergency the world faces, the first being global warming.

Russia is destroying itself with the most disastrous invasion since Napoleon took his army into Russia in winter.

There is no scenario in which Russia comes out of the Ukraine war in anything other than a shambles, especially if Putin is unwise enough to drop an atomic bomb somewhere in Ukraine.

Win or lose, the revulsion over Russia’s war crimes will isolate and cripple the country for years, if not decades; the only positive outcome is if Putin is overthrown quickly and his replacement helps Ukraine to rebuild.

China is doing it by doubling down on autocracy and appointing Xi Jinping for a third term as president and general secretary of the Communist Party.

Financial Times columnist Martin Wolf argued convincingly last week that this is a “tragic error”, and that the “despot will become increasingly isolated and defensive, even paranoid”. The next 10 years of Xi, Wolf says, will be worse than the last.

Peter Coy in The New York Times calls Xi the second coming of Mao Zedong, whom China took decades to get over, and was finally getting somewhere when Xi came along.

Xi is now dispensing with the consent of the governed, the basis of all political stability.

China’s zero-COVID policy is an example (along with Russia’s invasion of Ukraine) of the folly that goes unchallenged when you have a despotic leader.

China is no longer a high-growth economy and has the added problem of an ageing population and declining workforce.

But it’s not just those things dragging down China. Its reliance on investment to power its economy is backfiring – its growth is top down and debt-funded, not bottom up and consumer driven, which is the only solid basis for economic stability.

And with Xi’s demand that Taiwan must be incorporated into the motherland, China is flirting with crushing sanctions and the end of its export economy.

Financial strife

The UK is doing it first through Brexit, and now the misguided attachment to neoliberal ideology of its new prime minister, elected by 81,326 Conservative Party members, or 0.12 per cent of the UK’s population, and who they are all stuck with until January 2025.

It’s a lesson that a functioning democracy requires an electable, responsible opposition, which the UK did not have in 2019, resulting in a landslide for the dishevelled Boris Johnson, who then had to be sacked for repeated misdemeanours.

Maybe Liz Truss can turn things around, including her own staunch ideas, but that seems very unlikely. She dumped the worst of the tax cuts, it’s true, but apart from that she is still accelerating up an economic cul-de-sac.

And it’s not just this term of Parliament: The UK’s GDP growth was more or less zero for 20 years before the pandemic.

Why? Because of austerity imposed by a succession of conservative governments, including ones labelled Labour.

It turns out that zero public investment and cutbacks to government spending to fund tax cuts equal zero economic growth.

Truss said at the Conservative Party conference that she has three priorities – growth, growth and growth – but saying it don’t make it so.

Last week The Economist wrote: “If the prime minister realises how much trouble she is in, she is not showing it … the risk is growing that a bodged set of tax cuts will be followed by a cartoonish mix of deregulation and posturing.”

America, O America

And finally, America, O America. Its downfall is disguised by the strength of the US dollar, suggesting relative economic success.

Normally a declining empire would also have a declining currency, like ancient Rome and modern UK, but if you were just looking at the US dollar, up 23 per cent in 12 months, you would think America is at the peak of its powers.

But it’s an illusion – America is committing suicide by splitting itself in two and seems in no mood for reconciliation.

Donald Trump got 47 per cent of the vote in 2020 and still has a 41.6 per cent approval rating, even though he’s an obvious crook.

Two-thirds of Republicans want Trump back as president and 70 per cent think Joe Biden did not legitimately win the 2020 election. And as I mentioned in this column last week, half of American Republicans still think Democrat leaders are paedophiles!

The US is as divided and ungovernable as the most tribal African nations, and this is now becoming reflected in its institutions.

Specifically the Supreme Court will be under the control of right-wing extremists for decades unless Biden increases the number of judges, which seems unlikely, and has itself become a kind of second legislature. The constitutional separation of powers is now both meaningless, since the court is itself a political body, and a liability.

As Edward Luce wrote in the Financial Times last week: “Hostility between the two Americas has created an existential mindset that has made an albatross of its constitution.”

The only reason the United States looks remotely OK and its currency is doing well is that its rivals look worse.

Without a national electoral commission like Australia, the US has to guard its democracy from the Republicans’ concerted efforts to subvert it, and reach some kind of agreement on both sides of politics that the other side is not an evil enemy seeking to destroy the country.

Without it, the place will remain paralysed and divided, and maybe something much worse given the 400 million or so guns that they have.

How fantastic it is to live in Australia, where bad governments and prime ministers get thrown out.

And although we have some pretty ferocious arguments, and have made a mess of energy policy as a result, most of us don’t regard the political opposition as an enemy or disagreement as existential … at least since Tony Abbott was tossed out.

Unfortunately, we are spectators to the efforts at self-destruction going on elsewhere, and will be participants in their misery when they eventually succeed.

Alan Kohler writes twice a week for The New Daily. He is also editor in chief of Eureka Report and finance presenter on ABC news

Long term asset class returns

This chart is from an interesting article in The New Daily, an Australian newspaper which was started by union super funds to counter the pernicious influence of the Murdoch Press.

Note that this is the total return, i.e., includes rents and dividends.  If you own your own house, you would obviously not get a rent return, but on the other hand, you would have saved yourself the rent you would have paid.  Note that the returns for less risky/less volatile investments, such as bonds and cash are over the long term much lower than from the riskier/more volatile investments.  Also, observe that the returns over these 96 years for residential property and shares are practically identical, but there are long periods, sometimes decades long, when they diverge.  Finally, the chart is drawn using a log scale.