Showing posts with label regional australia. Show all posts
Showing posts with label regional australia. Show all posts

Monday, October 25, 2021

Morrison's deal: Nationals rewarded for agreeing to harm the regions

Let me be sure I’ve got this right. Scott Morrison is ending his Coalition’s deep divisions over climate change by agreeing to pay billions in regional boondoggles in return for the Nationals refusing to lift their veto of any increase in Australia’s commitment to reduce emissions by 2030.

The usual way blackmail works is that the blackmailer returns to you something you really value in return for you paying the blackmailer an arm and a leg.

But the way Morrison’s deal with Barnaby Joyce and the Nationals will work is that Morrison – or rather, the taxpayer – spends billions on projects of doubtful value in return for the Nats’ agreeing to nothing more than symbolism: to reduce carbon emissions to net zero by 2050, which will be after all the signatories are dead and gone.

The first point is that agreeing to net zero emissions in 29 years’ time is a decoy and a fig leaf if that’s all you do. To make it real you have to make a commitment you can be held to: a much bigger progress payment in the next nine years to 2030.

That, of course, is what the Glasgow conference is about. The major countries agreed on net zero months ago (as have all our premiers and many of our business and industry groups). That’s just the price of admission to the room.

What you do in the room is proudly announce the big increase in your commitment over what you promised at the Paris meeting in 2016. Those few leaders unwilling to commit to a significant increase will be pilloried as “free-riders” (aka bludgers) on the other countries – and rightly so. You’re a brave man, Scott.

But the second point is more important: all of us will be worse off if Australia’s selfish delinquency damages the global effort to limit the extent of global warming, but the biggest losers will be the small businesses and voters the Nats’ claim to represent – the regions.

The regions will be the biggest losers because, of all the industries, agriculture will be the hardest hit by continuing global warming. Farmers’ loss of freedom to keep clearing land will the least of their worries.

But the regions lose also because we don’t get on with expanding our renewable energy industries – most of which happens in the regions – and lose any “first-mover advantage” in establishing the new generation of manufacturing industries processing hydrogen, clean steel, clean aluminium, and even clean cement using all-renewable electricity. This, too, will happen in the regions.

That is, we don’t get on with generating the new, well-paid and skilled jobs for mine and gas workers to move on to as the rest of the world stops buying our coal and gas.

The amazingly perverse nature of Morrison’s deal with the Nationals – we pay them for refusing to allow us to get on with protecting ourselves against the world’s turn away from fossil fuels – has been brought to our attention in a study by Matt Saunders and Dr Richard Denniss, of the Australia Institute, All Pain No Gain, released today.

They argue that whatever the final cost of the deal turns out to be – no doubt a lot more than its announced cost – it will be far exceeded by the cost to the economy of us not acting earlier to reduce emissions.

To put it the other way, modelling commissioned from Deloitte Access Economics by the Business Council of Australia finds there would be significant benefits to the economy if we lifted our target to reducing our emissions by 46 per cent by 2030.

Comparing this with other modelling by Deloitte, the authors calculate that the additional benefits over the next 50 years would have a “net present value” (the value in today’s dollars of all the incomings and outgoings over the next 50 years) of more than $210 billion.

Now, I never take modelling results too literally, but the Business Council’s argument does make sense. The higher target leads to increased investment in renewables, which increases growth and jobs, as well as greatly reducing the cost of electricity (because, once you’ve built the plant, the cost of extra solar and wind energy is negligible).

Morrison’s excuse for not increasing the 2030 target is that, without the coming new technology, this would force choices and cost jobs. But he’s got that the wrong way round.

As the Business Council (and the Grattan Institute before it) have explained, forcing the pace in industries where the technology is already well-developed – electricity and electric vehicles – leaves more time for the technology to be developed in other industries.

With friends like the chancers of the National Party, the regions need Morrison to see more sense.


Wednesday, August 14, 2013

City and country problems all demand higher taxes

At last we've settled on an election issue of substance: did Kevin Rudd use notes in the TV debate and was this against the rules? And that's not all: did he rustle his notes and, if so, was this deliberate or just a nervous mannerism?

The two leaders' aim in the debate was the same as their aim in this campaign: to make it to election day while giving as few commitments as possible about what they'll do in the next three years.

I wouldn't mind so much if they were trying to stay unencumbered, able to respond to any eventuality. But actually they're trying to create the illusion that everything they have planned will solve our problems without any price to be paid.

Tony Abbott keeps telling us about all the taxes he plans to abolish but not how he'll cover the loss of revenue, except to say he'll get rid of government waste. Sure.

In response to Rudd's embarrassing "cheap scare campaign" on the goods and services tax he assured us that "the GST is not going to change", but avoided answering a question on how long that guarantee would last.

By the end of the next day, however, the pressure had become irresistible and he ruled out changing the GST for as long as an Abbott government lasts. In modern campaigning, tough issues aren't debated, they're closed off.

And on when Sydney will get a second airport, both men are evasive. In the 40 years since Gough Whitlam asserted "you're getting Galston", successive governments have pushed the decision aside.

These guys touch on matters of concern to ordinary people's ordinary lives but they rarely get to grips with them. Consider the findings of the latest Ipsos Mind and Mood report on differences between the city and the country, Life in Two Australias. A series of 16 group discussions in Sydney, Melbourne, Tamworth, Townsville and Bunbury finds that, whatever their complaints, country people prefer the country and city people prefer the city, though country people do seem more effusive.

They see their lives as low-stress, with friendly faces, open spaces and manageable mortgages. It's a cleaner environment where their kids can get dirty. Parents feel their kids get great formal education but are also more rounded and grounded in their social and communication skills.

"Skinny-dipping, fishing, four-wheel driving, open fires and bartering were cherished aspects of a free-range, unconstrained regional lifestyle," the researchers, led by Dr Rebecca Huntley, report.

And the big drawback? "It is healthier to live in the country unless you're sick." Poorer access to good quality health services was a key disadvantage of regional centres, sending the sick onto long local waiting lists or down the highway in search of help in the city.

Although country participants felt they had a monopoly on community spirit, city people valued social inclusion and connection with their neighbourhoods. And though their green spaces and open places may be smaller, they're valued.

The high cost of housing and rising living costs were key motivations for considering a move to the regions. Country life looks attractive to stressed-out city residents, young families and retirees.

But could they leave family and friends? What about the horror stories of inadequate country health services? Would there be enough shops and enough entertainments to keep them amused? And would they be welcomed? "Rumours of gossip-laden, judgmental, close-knit social networks that could be hard to break into fed fears of potential social isolation," the researchers find.

How does this discussion of ordinary life fit with the preoccupations of the election campaign? Well, it's clear adequate healthcare and access to doctors is a major concern for country people.

But health is one of the issues being closed off. There's a lot more needing to be spent. But Labor is being pilloried for its increased spending (on health as much as anything) and the focus is on criticising tax increases, cutting company tax, abolishing new taxes and swearing never to increase old ones.

For city-siders, however, the big issue is roads and public transport. "The lengthy commute in bumper-to-bumper traffic is literally driving people out of our capital cities to regional Australia in hope of recovering wasted hours spent in the car each day," the researchers say. City drivers feel forced to take to their cars because of inadequate public transport, while country people envy their trains, trams, buses and taxis.

Ah, here we may have found a match. Although Rudd hasn't had much to say about roads and transport, Abbott says he hopes he'll become known as an infrastructure prime minister and reels off a list of city road projects he wants to fund.

Sorry, but I'm not convinced. The Coalition doesn't seem to have learnt what I thought everyone realised by now: building more expressways solves congestion only for long as it takes more people to switch to driving their cars.

The problem is reduced only by improved public transport. But Abbott would revert to the view that the feds don't finance urban public transport projects.

So leave it to the states. But they've just had their finances crimped by his promise never to repair the premiers' biggest but ailing source of revenue, the GST.

And both sides' belief that government debt is evil condemns us to a life of inadequate public infrastructure.

Wednesday, September 15, 2010

Our deprived country folk, and other myths

So, we're back to worrying about RARA - rural and regional Australia. Thanks to the newly acquired political leverage of the two country independents, we're now being told the regions haven't been given their fair share and, in future, "equity principles" should prevail.

There's a lot of righteous indignation on the part of many country people and, I suspect, quite a bit of sympathy on the part of city folk. But there are also a lot of misconceptions.

Many people have the impression there has been a continuous flow of people leaving the country for the big city. It's not that simple. The capital cities' share of Australia's population hasn't been increasing. While there has been a flow of people leaving inland regions for the cities, there's also been a flow of people - particularly the retired - leaving the cities for coastal regions. So many coastal towns and cities (such as Rob Oakeshott's Port Macquarie) have been growing strongly. Their problem is not declining population but keeping up with the increasing needs of an ever-bigger population.

Even with the inland regions it's not simply a matter of everyone leaving for the big city. In many cases it's people leaving small towns and villages for bigger regional centres (such as Tony Windsor's Tamworth).

Leaving aside the sea change factor, people have been drifting from country to city for the best part of a century. Why? Because of the increasing mechanisation of agriculture. There is unceasing pressure for farmers to use more and better machines to replace human labour. Our farms produce more than they ever have, but need fewer people to do it.

With the increased use of expensive machinery there's continuing pressure for individual farms - including dairy farms - to be bigger to better exploit economies of scale. That is, for farmers to sell out to their bigger neighbour and find work elsewhere - in the nearest regional centre or in the state capital.

The pressure comes in the form of their bigger neighbours being able to operate profitably despite falling real prices for their produce - prices at which smaller, less efficient producers can't survive. Real prices fall not so much because of the rapacious behaviour of Woolworths and Coles but because market forces - competition between producers - cause the benefit of economies of scale to be passed on to end consumers (via the much traduced Woolies and Coles). In a well-functioning market economy it's not the producers who win, it's the consumers.

Country people don't enjoy seeing people leaving the district, and small farmers don't enjoy being forced off the land. But are these long-standing trends a bad thing? They're the product of the capitalist system (you're not a socialist, are you?) and the technological advance it fosters and exploits (nor a Luddite?).

The notion that the regions should be given a fair go is appealing, even to city slickers. But what is fair? Country people are convinced they're being ripped off: they pay all this tax, but the city people spend most of it on themselves and send only a trickle back to the regions.

One small problem: it ain't true. For a start, on a per-person basis country people pay less tax than city people do. That's because incomes in rural areas are generally lower and they have a higher proportion of retired people.

What would be a fair distribution of government spending - equal amounts per person in country and city? Actually, governments spend more per person in the country than they do in the city. According to calculations by a government agency, spending on hospitals is 7 per cent higher in moderately accessible regions than in the highly accessible capital cities.

In remote areas the cost differential per person rises to 14 per cent and in very remote areas to 44 per cent.

For schools, spending per student is 12 per cent higher in moderately accessible regions, 34 per cent higher in remote areas and 60 per cent in very remote. The story for spending on policing is similar.

But how is this possible when it's so clear the quality of these services in country areas is less than the quality people receive in the city? It's possible because the cost of delivering services in the regions is so much higher relative to the (small) number of people for whom the services are being provided (and relative to the number of country taxpayers).

It's much cheaper to deliver services to people when they're all crammed together in a big city. Citysiders have economies of scale working for them, whereas country people have scale economies working against them. That's no one's fault, it's just a fact of nature.

When governments install some new and expensive facility in the big city, tens of thousands of people are able to take advantage of it and so reduce its cost per person (and per taxpayer). Were such a facility installed in some small town, the cost per person assisted would be remarkably high. Even if it were installed in a big regional centre, the cost per person would still be a lot higher.

So now you know why facilities are so much better in the cities than in the region: hard economics. If you say that's not fair and people in the country deserve equality in the quality of services provided, you're saying you want city taxpayers' subsidy to country taxpayers to be even greater than it is (so you are a socialist, are you?).

Most Australians crowd into big cities and they do so for good reasons: more and better-paying jobs, plus better services, both public and private. They put up with the drawbacks of city living: much higher housing costs, unpleasant commuting, congestion, tar and cement, and less feeling of community.

Country people prefer living in the regions for the opposite sets of reasons. It's a free country and that choice is up to them.