Sheridan on Australia Labour’s carbon tax scheme

Greg Sheridan is Foreign Editor of The Australian – and thus obviously not an expert on climate science or energy policy. But as best I can tell, he gets the Aussie politics right in this editorial:

(…) There is also something profoundly offensive to democratic practice in the way the Gillard government has shovelled out vast amounts of public money to long-term friends of the Labor Party, such as Garnaut and Tim Flannery, so that, with a wholly spurious and confected institutional credibility, they can declare: government good, opposition bad.

Garnaut tells us that Australia is a laggard on climate policy, in danger of being left behind, that we have done less than other developed countries. But the Productivity Commission, restricted to surveying a group of countries already skewed towards those who would do more on greenhouse emissions, finds that we are about in the middle, that our efforts are fully commensurate with the US and China.

These conclusions cannot both be true. One is right, one is wrong.

Like Garnaut, I have no qualifications or expertise in climate science, but I have followed a lot of international agreements through several decades of work in international affairs. One thing I know for sure is that grandiloquent pledges to lofty goals are never met. Part of the dishonesty of the Garnaut report is that it takes the windiest, or to put it more politely, most ambitious, pledges of other countries and accepts them as proven policy.

(…) I travel a good deal in Asia, the US and the Middle East, and climate change barely figures in the popular debates in those countries, which means that their governments are not under much pressure to do anything.

As with the illegal immigrants debate, you have to triple-check everything the government says to you on this matter. Canada is listed in the government’s Fact Sheet as having a carbon price. In fact, Canada’s Prime Minister Stephen Harper just won the first clear-cut victory for the Conservatives in 25 years by promising no carbon tax or ETS. The Fact Sheet is referring to vastly less effective state-based carbon taxes within Canada. The same is true for the misleading material about the US. The Fact Sheet begins with a lie. It says: “All countries – and all the major emitters – are acting now to reduce greenhouse gas emissions.” Later on it sheepishly admits the contradictory reality, that China’s emissions are set to continue to rise massively for many years to come. Japan has delayed an ETS indefinitely and South Korea is not planning to introduce one for several years, yet both are frequently presented as though they do have such schemes.

Read the whole thing. If Greg had just finished reading the Hartwell Paper I think his theme would have been much the same. When I first scanned his column I thought “he must have been reading Roger Pielke Jr.”

For some more background on climate/energy policy that will actually work, please see my recent post “Why will China buy your plan?

In counter-terrorism terms, Indonesian jails are a mess

(…) None of the terrorists interviewed nominates poverty or alienation or, even in the general Western sense, injustice as the springboard to violent jihad. Instead, all the terrorists, even those who have recanted violent jihad, see their choices in predominantly religious terms. When they do cite injustice, it is only in the sense that they see Muslims as persecuted. Some of the terrorists went to religious schools, some to more secular schools. Some had university educations, others didn’t have much formal education.

But every one of them saw violent jihad as a religious duty for Muslims. This ought to have some salutary effect on the Australian debate. (…)

A sobering analysis from foreign editor Greg Sheridan, based on new research produced by Carl Ungerer at the Australian Strategic Policy Institute. The report is titled “Jihadists in Jail, Radicalisation and the Indonesian Prison Experience”. You can download the report here [PDF].

Ben Heard: Decarbonise South Australia

It’s very uplifting for me to see real-world, doable activism instead of the normal feel-good-ism. Ben Heard is going to decarbonise South Australia. If you live there, lend a hand. If you don’t live in SA you’ll be able to contribute through the website.

The first thing you need to know is that this is more than a website, it is a mission. The purpose of Decarbonise SA is to form a collective of like-minded people who will drive the most rapid possible decarbonisation of the economy of South Australia, with a primary focus on the electricity supply.


Australian dollar carry trade – get to the exits early

Australian money manager John Hempton assesses Aussie price levels about the same way we see them:

(…) I write to make an observation – one for all the currency speculators out there. We stopped for a meal on the way South. South of Sydney (hence with cooler water) is the unfashionable part of the New South Wales coast. A beach-town cafe in decidedly middle class Kiama – and without water views is now as expensive as a cafe on the Upper West Side of Manhattan. (The fish and chips are better in Kiama though.)

Some of this price level is due to wage structure – but most of it is new. Australia is just expensive and getting more so – and the Central Bank (justifiably) feels the need to raise interest rates. Australia is now a very expensive place to visit and I do not recommend it except for the very wealthy.

It’s hard to call the end of the Australian bubble – but the boom and prices have gone far beyond rational. I don’t see what breaks it other than an end to the Chinese construction boom. These prices are the downside of being China’s coal and iron ore mine. In America I saw no obvious inflation between trips. On the South Coast of New South Wales I can’t say the same thing.

If you are an Australian and you are not in the process of shifting 25 percent of your asset base offshore you are probably remiss. And if you are a currency speculator liking the carry on Australian government bonds then it has been a great trade but I hope you get to the exits early.

Read the whole thing »

Australian housing & household sector update

ANZ bank has posted their slideshow presentation on Australian residential real estate. The ANZ analysts’ position is that “Australian, US and UK residential property market fundamentals have very little in common…”

The rising household debt to income, and housing prices vs. rental rates look bubbly to us. Maybe this time “really is different” at least in Australia. OTOH, a new investor is sure to be smashed if the China boom gets pricked.

Australia non-performing loans are low

Australia house prices vs US + UK

The most important characteristic of the Australian market is probably the demographics — population has grown faster than housing supply:

Australian dollar: higher or lower?

From the RBA Statement on Monetary Policy:

Another factor influencing the outlook for Australia is the exchange rate. Since the August Statement, the Australian dollar has appreciated by around 6 per cent on a trade-weighted basis, to be 45 per cent above its trough in late 2008 and at its highest level in real terms in the post-float period (Graph 90). The appreciation that has taken place over recent years has had a dampening effect on some sectors of the economy, particularly in import-competing and export-oriented industries such as manufacturing, farming, tourism and education. However, the appreciation has occurred in the context of strong global demand for Australia’s resource exports and the significant interest rate differential with the major advanced economies. If developments in global financial markets resulted in a significant further appreciation that was unrelated to these factors, it would likely result in both growth and inflation being lower than in the central forecast.

Australia property bubble?

On a first inspection it is looking frothy in Oz. In House values across the capital cities rpdata displays thematic maps of capital cities showing price vs. location. Here’s one example, which is the most “affordable” among the capitals, our home port of Hobart, Tasmania:

Rental yields do not look good at all:

More on the Aussie market here: The high price of punting on property. The RBA (Reserve Bank of Australia) Statement on Monetary Policy for Nov 2010 has quite a bit of data on residential properties. Such as this summary of dwelling prices:

How is the above Aussie data different from this USA data? Here is another rpdata summary graphic that makes the comparison. An obvious difference is the Aussie prices haven’t yet collapsed (this looks a lot like the chart for Spain). How long can the resource boom keep the Aussie prices so high? What happens when China has an oops?

And just for my records, here are the capital city relative house-inflation charts (Hobart is too small to rate a curve):