Coal seam gas & property rights
In recent months there has been an increasingly heated discussion about the future of “coal seam methane” (CSM) in Queensland. In simple terms, CSM is extracted from an underground coal bed by pumping out the surrounding water, which releases the methane held in the coal bed (more details here). Given that this involves relatively less destructive mining and that the CSM industry has been an important economic success, some people see it as a good thing.
But not the Greens.
The Greens complain that CSM extraction uses up valuable farm land, reduces food security, creates low-quality waste water, may negatively impact the underground water supply, may harm endangered species and will increase our greenhouse gas emissions. Of these complaints, it seems to me that only one is a real problem.
Election fallout
I’m not sure whether a hung parliament is good or bad for the country, but it’s great for political tragics who get to pontificate about the various twists and turns.
The situation as it stands is 73 for Lib/Nat, 72 for Labor, 1 Green, 1 left-leaning independent (Wilkie), and 3 rural independents (Katter, Oakshott, Windsor). It is reasonable to assume that the Green and Wilkie will side with Labor, which means that the 3 rural independents will decide the outcome. While all come from the conservative side of politics, they do not have a good relationship with the National Party and in many instances their interests seem to align more closely with Labor (they all want more NBN funding and two want a carbon price). In all the confusion about the eventual winner, there has been less consideration about whether winning is a good thing. It may be that the forming government for the next year is a poisoned chalice. Time will tell.
Confused economics
In the rough & tumble of an election campaign, it can be very difficult to differentiate between sensible sentiments and silly spin. This is doubly true for economic commentary, which is mediocre at the best of times. Here is my “idiots guide” to the economic issues of the campaign:
Saved from recession
This is partly true, but misleading. As my previous analysis has shown, the stimulus spending didn’t increase economic growth, it just brought it forward. When the stimulus came out, economic growth went up by about 1.4%, but then six months later it went down by about the same amount… leaving us no better off. The problem is that this small re-arrangement of growth has cost us over $60 billion.
What will happen in Queensland?
How will Queenslanders vote in the 2010 federal election? I don’t know. Election watchers love to over-analyse events and make detailed predictions based on their reading of the tea-leaves, but in my opinion the best indicator of what will happen comes from the betting markets. So I will spare you my own guesses, and instead outline what the markets are saying about how Queensland will vote.
Barnaby Joyce nominated a five seat gain for the LNP in Queensland – mentioning Longman (s/e Qld), Flynn (rural), Leichardt (rural), Dawson (coastal) and the new seat of Wright (s/e Qld). Centrebet agrees with four of these, with the exception being Longman (which is being contested by 20-year-old Wyatt Roy for the LNP).
The federalist argument against the mining tax
There are lots of good reasons to be opposed to the proposed new mining tax — because it increases the size of government, because it punishes explorers and innovative businessmen for the “crime” of success, because it will hurt the industry with flow on consequences to jobs and investment funds, and because it increases the political risk of investing in Australia.
But one of my major concerns with this proposed new tax is that it further undermines and damages our federal system of government.
The end of my campaign
I will no longer be standing as the Liberal National Party candidate for Griffith.
Benefit-cost analysis for the ETS
Last month I gave a presentation at the 4th International Conference on Climate Change in Chicago. This is an overview of what I said.
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Over the last few years there has been a vigorous debate about climate change and the Australian government’s proposed climate policy — an emissions trading system (ETS). A handful of studies have been done to assess the impact of an ETS, the most famous being the Garnaut Report and the Treasury modeling. Surprisingly, none of these studies have included the results of a benefit-cost analysis.
Good policy requires more than good intentions and spending lots of money. Critically, good policy needs to have more benefits than costs. This may seem like a simple and self-evident statement, but it is one that is often ignored in politics. Before we embrace an ETS as a way to “do something” we need to first carefully assess the consequences of the policy and check whether the benefits exceed the costs.
Mining super-tax
There has been a lot of ink spilt about Labor’s proposed mining super-tax. Much of the debate has been the typical name calling, emotional appeals to the vibe, or citing of authority… which means many people are none the wiser. I suggest there are four issues at play here, and it is necessary to consider them independently.
1. How should resources be paid for?
The government claims ownership of Australia’s underground resources. This is sometimes incorrectly reported as “the people” owning the resources, but of course you and I have no right to sell or control those assets, so that is a meaningless semantic trick. Unless you’re an unreconstructed communist, “the government” is not the same thing as “the people”. But putting that word game aside, the government claims ownership, and therefore they want compensation for the use of those resources.
One of the questions raised by the Henry review is about how the government should be compensated for the use of those resources — a fixed sum (royalty), percentage of revenue (revenue tax), or percentage of profits (profits tax). I have no strong view on this, but there seems to be a general preference for us to switch to a profits tax. This was the main point of the “economists letter”. (Though some details clearly need to be worked out, such as the cut-off points for a “super” profit, the exclusion of interest repayments as a cost, and the taxpayer exposure to business losses.)
4th International Conference on Climate Change
Last week I ventured over to Chicago to participate in the 4th International Conference on Climate Change, hosted by the Heartland Institute. I had attended the 2nd conference as a co-sponsor (via the Australian Libertarian Society), but this time I was going as a speaker.
Heartland had generously allowed me to set up an Australian panel, and I arranged a session including myself, Senator Cory Bernardi and Joseph Clark. It turned out that Australia was well represented at the conference, with many speakers (including Alan Moran, Ian Plimer, Bob Carter & others) and a handful of other notables (Tim Andrews, Ron Manners).
Cory spoke about the politics of the ETS in Australia, and Joe offered an innovative take on the role of insurance markets with regards to climate change. My speech was a benefit-cost analysis of the ETS… showing that even using the most dramatic of the warmanista estimates, the ETS simply has more costs than benefits.
Unfortunately, I didn’t get to see as many presentations as I would have liked, though Pat Michaels and Steve McIntyre were good value. I certainly don’t endorse everything that was said at the conference (I think some “skeptics” over-state their case) but I find these conferences enjoyable and often full of interesting people.
All the videos are now available online at the Heartland website.
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