Home > Economics - General > Economists statement on Queensland asset sales

Economists statement on Queensland asset sales

November 24th, 2009

I’m one of a group of more than 20 academic and business economists who have put together a statement criticising the Queensland government’s case for asset sales and arguing that we need a proper public debate. The group includes some of Australia’s leading economists, including Joshua Gans, Stephen King, Warwick McKibbin and Adrian Pagan, as well as ten professors of economics from UQ, and more from other Queensland universities. But maybe the most surprising, and heartening, signature is that of Henry Ergas who has been one of my sparring partners on many occasions, most recently a debate on whether government should be the ultimate risk manager, held by the UQ Alumni Association (Henry won, by popular vote). Although Henry has been a strong supporter of privatisation in many instances where I have opposed it, we agree that these issues should be decided on the basis of costs and benefits, and not by spurious claims that privatisation provides governments with money they can invest in schools and hospitals.

Update I just did an interview on Madonna King’s ABC Radio program, and have promised to debate the issue with Andrew Fraser. I will also probably do a TV interview.

p.p1 {margin: 0.0px 0.0px 0.0px 0.0px; font: 12.0px ‘Century Schoolbook’}
p.p2 {margin: 0.0px 0.0px 6.0px 0.0px; text-align: justify; font: 12.0px ‘Century Schoolbook’}
p.p3 {margin: 0.0px 0.0px 0.0px 0.0px; text-align: justify; font: 12.0px ‘Century Schoolbook’}
p.p4 {margin: 0.0px 0.0px 6.0px 0.0px; text-align: justify; font: 12.0px ‘Century Schoolbook’; min-height: 15.0px}
p.p5 {margin: 0.0px 0.0px 0.0px 0.0px; text-align: justify; text-indent: 40.0px; font: 12.0px ‘Century Schoolbook’}
p.p6 {margin: 0.0px 0.0px 0.0px 0.0px; text-align: justify; text-indent: 40.0px; font: 12.0px ‘Century Schoolbook’; min-height: 15.0px}
p.p7 {margin: 0.0px 0.0px 0.0px 0.0px; font: 14.0px ‘Century Schoolbook’}
p.p8 {margin: 0.0px 0.0px 0.0px 0.0px; text-align: center; font: 12.0px ‘Century Schoolbook’; min-height: 15.0px}
span.s1 {font: 12.0px ‘Century Schoolbook’}

Press Release: Queensland Government Case For Asset Sales ‘Economically Unsound’; Informed Public Debate Needed

A group of prominent Australian academic and business economists has issued a statement describing the case presented by the Queensland government in support of its proposed asset sales as ‘economically unsound’ and ‘based on spurious claims’ The statement concludes that ‘The people of Queensland deserve a robust and well-informed public debate over the costs and benefits of privatisation. So far they have not received it.’

The group encompasses a broad range of views on the merits of privatisation  —some might favour it in particular cases whilst others would be less likely to. However, all are agreed that such important decisions should be made on the basis of well-informed discussion. Important issues include whether the private or public sector would be the most efficient managers, which would be the best bearers of the business risk and the best ways for the enterprise to meet social as well as financial objectives.

The group includes twelve professors of economics from four leading Queensland universities and nationally prominent academic and business economists including current and former members of the Board of the Reserve Bank of Australia.

Statement by academic and business economists on the Queensland government’s case for asset sales

Decisions on the sale or retention of public assets have important implications for competition and public policy, as well as for the fiscal position of governments. These decisions cannot  be resolved on the basis of general ideological arguments for or against public ownership, and require informed public debate in each case. The normal lines of economic debate include whether a given business is more efficiently operated in the private or public sector, the appropriate allocation of risk and the extent to which the enterprise is required to pursue social as well as financial objectives.

The signatories of this statement have a range of views on the appropriate balance between the public and private sectors and on the merits of privatisation in particular cases. However, we share the view that these questions should be resolved on the basis of well-informed discussion of the economic and social costs and benefits of privatisation, and not on the basis of spurious claims that asset sales represent a costless source of income to governments.

The arguments put forward by the Queensland government in its booklet ‘Facts and Myths on Asset Sales’ do nothing to promote a well-informed debate. Two central claims are particularly, and sadly, noteworthy. In relation to five public assets proposed for sale, the ”Facts and Myths”  booklet states

 Keeping these businesses would cost the Government $12 billion over the next five years. That’s $12 billion spent on new coal trains and new wharves that can’t be spent on roads, schools or hospitals.

This claim is economically unsound. Forgoing income generating investments, and borrowing an equal amount to fund investments that return no additional revenue, leaves the government with no flow of income to service the associated debt. The necessary income must be raised by increasing taxes or cutting expenditure.

Selling public assets will improve the public sector’s fiscal position only if the price realised for the assets exceeds the value of the income stream that the asset would otherwise generate for the public sector. In this respect, the ‘Facts and Myths’ booklet states

The total return from all five businesses in 2008-09 was approximately $320 million
 When the sale process is completed, it is anticipated the Government will save $1.8 billion every year in interest payments.

This is an invalid, apples-and-oranges comparison. The $320 million figure consists solely of dividend payouts, excluding retained earnings, tax-equivalent payments and the interest paid by the government business enterprises to service their debts.

The $1.8 billion represent the interests that would be saved, at a rate of about 6 per cent, if the state realised $15 billion from the asset sale and avoided $12 billion in new investment.  Most of this interest would be serviced out of the revenues of the GBEs, and can therefore not be compared with dividends derived from earnings after the payment of interest and tax.

The people of Queensland deserve a robust and well-informed public debate over the costs and benefits of privatisation. So far they have not received it.

Signatories

Harry Campbell, Professor of Economics, University of Queensland

Tim Coelli, Adjunct Professor of Economics, University of Queensland

Henry Ergas, Economic Consultant, Canberra

John Foster, Professor of Economics, and former Head of School, University of Queensland

Paul Frijters, Professor of Economics, QUT

Joshua Gans, Professor of Economics, Melbourne Business School

Ross Guest.Professor of Economics, Griffith University,

Nicholas Gruen, CEO, Lateral Economics

Christopher Joye, Managing Director, Rismark International

Stephen King., Dean, Faculty of Business and Economics, Monash University, former Commissioner ACCC

Andrew McLennan, Australian Professorial Fellow in Economics, University of Queensland

Flavio Menezes, Professor and Head of School of Economics, University of Queensland

Christopher O’Donnell, Professor and Deputy Head of School of Economics, University of Queensland

Andrew Leigh, Professor of Economics, ANU

Adrian Pagan, Professor of Economics, QUT, former member RBA Board

Rohan Pitchford, Australian Professorial Fellow in Economics, University of Queensland

John Quiggin, Federation Fellow in Economics, University of Queensland

John Rolfe,  Professor of Economics, Central Queensland University

Prasada Rao, Australian Professorial Fellow in Economics, University of Queensland

Rabee Tourky, Professor of Economics, University of Queensland

Warwick McKibbin,  Professor of Economics, ANU, current member RBA Board

Categories: Economics - General Tags:
  1. Alice
    November 26th, 2009 at 15:49 | #1

    @Mark Hill
    Nonsense Mark “our government cannot afford to do anything line is wearing mighty thin.”

    Did we or did we not build the snowy mountains scheme and all sorts of projects in the past – did we or did we not build the water system, kerbing and guttering, and railways and roads…

  2. Alice
    November 26th, 2009 at 15:53 | #2

    @Mark Hill
    Mark Hill. I put a lot more faith in the twenty names on that list than on you or Andy above and so would most…. Im sorry to have to say this to both of you but there is a point where sense and not senseless actions are required. We have reached that point.

  3. November 26th, 2009 at 17:56 | #3

    Alice,

    The letter is not about the rights or wrongs of privatisation per se, but the circumstances and rationale it is done under.

    There are many people on that list of signatories that can be described broadly as pro or anti privatisation.

    You’ve missed the point, unless you’re telling me you are going to without fail accept whatever John writes here or in his work against a contrary view. If so, then there is little point in carrying the discussion further.

    This was my point before: Trujillo did not gut Telstra as you implied and since it was corporatised it has built two mobile phone networks and a a wifi network. The last mobile and the wifi were done during partial privatisation. Before you were also lamenting about how much in the past Governments did with respect to infrastructure.

    They don’t, even if they could. Worse still, they have run out of money. This is the precise reason why the NSW electricity sector was finally looked at by the ALP for privatisation.

    Again, the relevant point is that it is a poor way of doing things and the Government does not really understand why it should or should not do this. Unlike the signatories to the letter, the Governments of NSW and QLD have not been making economically rational choices. They have no fiscal discipline and have decided to privatise for spurious reasons in poorly conceived ways.

    Yes the Government can build dams etc. Unfortunately, while at the same time as electing not to, they also make it very difficult for anyone else to do so. The Government can build kerbing, but they can also run farms and any other business you like. Why would they want to do this though?

    Deciding what should and shouldn’t be in Government hands can be a utilitarian choice, based on the definition of what public goods are and then cost-benefits tests for trickier questions. This is being economically rational, as are the signatories of the letter, to whom you refer to.

  4. Alice
    November 26th, 2009 at 18:24 | #4

    @Mark Hill
    you say “unless you’re telling me you are going to without fail accept whatever John writes here or in his work against a contrary view,If so, then there is little point in carrying the discussion further.”

    We are in one thread and on this I am in complete agreement with what JQ says here on the QLD privatisations and in complete agreement with the letter and the other twenty signatories to the letter.

    What part of that is confusing to you Mark Hill? Im just sorry no one has raised the same sort of letter to the NSW State Government and someone else in this thread has the same concerns with the South Australian State Government. Enough.

    You are right and I am in total agreement with you.

    There is no point to any further discussion on the matter with you.

  5. Alice
    November 26th, 2009 at 19:47 | #5

    Good news on the update JQ. I dont know when you updated but its good news anyway.

  6. Alice
    November 26th, 2009 at 19:59 | #6

    @Graeme Bird
    You say Telecom Australia was phone smashing handle bad. I know they had delays but seriously only two years ago I had ann experience with Telstra that was akin to a form of mental torture when I needed my computer to work and their lines did not. I dont know how many times I was asked to switch on the computer, go through a reconnection, resent the modem (each time taking half an hour). Finally it was elevated to Telstra linesman. Announced repaired. Still not working. Start again “resent modem” etc. In all I had six different visits from 6 different people, with the second last announcing after merely unscrewing the cover plate of the main line “oh I know what the problem is but Im not allowed to touch that. I have to elevate it.”. It had mould in the connection and had rusted. A three minute job by the 6th chap. Would have been a three minute job by the first….No, Telstra is no better than Telecom. I dont see any difference and I was around when Telecom was and in fact I think Telecom were marginally better (but yes – still bad). Its still phone smashing bad.

  7. Graeme Bird
    November 26th, 2009 at 20:35 | #7

    You’ve got a good line of argument, but you are taking it too far. We don’t want to get in this socialism versus cronyism argument. Telstra is better than Telecom. But its still not good enough. And the point is its not good enough.

    Why lose the argument with this sort of stubbornness? If we never intended to sell Telstra, but rather worked on reform that would allow the private guys to build and invest, then Telstra would be there and powerfully effective, or it would be shriveling each year.

    Cronyism is just fundamentally offensive. Its repulsive and anger-provoking. But its going to win by at least a head, if not two body lengths against socialism, according to metrics that the economists will come up with. Its only a functioning free enterprise market that will be satisfying to everyone. I’m saying that keeping the assets will help us get to a free enterprise market better. Since if the investment isn’t there we know we need more reform. The public assets are there as a signal to tell us if our reforms have gone far enough.

    Supposing we had the commonwealth bank under charter. And we used it to release new cash. And it had some goal that the private banks would not have. Like trying to get us out of debt. Trying to wean public organisations off debt. Giving cheap loans if they swore off debt. Or some other worthy goal like that. This would be a way of keeping the private guys honest. And if it wasn’t effective the Commonwealth bank would just slowly shrink. This is the argument I’m going to make. You try and tell these people socialism is effective thats an argument that you will lose. Alice things have gone too far and this is an argument that we cannot lose. The consultants want to flog all our strategic assets to Peking. Don’t lose this argument through stubbornness.

  8. November 26th, 2009 at 21:11 | #8

    Alice,

    I don’t think you are in complete agreement with the letter. You are not viewing privatisations in a rational manner (in general, as the evidence shows from the Hilmer reforms [although a broader agenda of general microeconomic reform]). This is what the letter asks Bligh to do but also to have a fully informed and open mind on the matter.

    The letter is economic rationalism par excellence. It basically looks at the different returns on investment and says this is how we should rank our choices.

    As for Telstra, if it were privatised the way I said it should have been, we would have all have been much better off.

    You’re saying that Telstra and Telecomm are just as bad without considering the benefits of properly executed privatisation or how to do it better. We ignore these at our own detriment.

  9. SJ
    November 26th, 2009 at 22:31 | #9

    Mark Hill Says:

    Australia has an AC power grid – no Government has seriously tried to convert to DC

    Australia now certainly has an AC power grid, except for the bits that aren’t, like the DC interconections between NSW and Qld, Vic and SA, and Vic and Tas. I’m not sure the rest of it is true, but it relates to a debate that took place more than a century ago, and was decided on purely economic grounds, so I’m pretty sure that:

    a) it’s not relevant, and
    b) you don’t know what you’re talking about.

    Alice, in case you didn’t already know, the guy’s just a typical libertarian. Check the link in his signature. He might be a better class of troll than we’re used to around here, but still…

  10. Alice
    November 26th, 2009 at 22:33 | #10

    @Mark Hill
    You presume to read my mind Mark? I am in complete and total agreement with the letter. You appear to have some perception problems. I dont agree that a better privatisation makes excessive privatisation any better. The problem is the mix of public and private investment Mark. I do not want to end up in Somaustralia with a government that has lost contol and a private sector run by gangs and thugs. Thats where we will end up if people like you -in denial to any of the history of poor privatisations, assets thats shouldnt be privatised and excessive privatisation disasters…like so many other denials from the right the general answer is “oh well that privatisation wasnt done right” or “we should have privatised it some better way” Its never ‘maybe we shouldnt have privatised after all”.

    Ive said it before and Ill say it again. Menzies had more sense than the lot of the liberals rolled together these days. Running the party would be like herding cats, the way it is now.

    One day Mark Hill, when you are more mature, you will learn that the key is balance not extremity. That is some a way off yet.

  11. Alice
    November 26th, 2009 at 22:35 | #11

    @SJ
    SJ – he is not any better. I left the DFNTT sign in another thread as a warning.

  12. Alice
    November 26th, 2009 at 22:36 | #12

    oops slipped – they will never be able to work it out SJ!

  13. SJ
    November 26th, 2009 at 22:40 | #13

    That’s almost certainly correct, Alice. Cheers. :)

  14. November 26th, 2009 at 22:55 | #14

    SJ – tell me how State interconnections are relevant for making geothermal more viable.

  15. SJ
    November 26th, 2009 at 22:58 | #15

    Mark Hill Says:

    SJ – tell me how State interconnections are relevant for making geothermal more viable.

    Well, see, they aren’t, and I never claimed that they were, so we’re back to this “you don’t know what you’re talking about” thing.

  16. November 26th, 2009 at 23:10 | #16

    Can you explain to me then why in the context of state owned power generation and distribution networks, why investing in DC lines for geothermal power is a patently bad idea then?

    How do you deal with the transmission losses with AC given geothermal is often remote. Geothermal has to be considered for renewables given its capacity to power base load requirements.

    If I don’t know what I’m talking about and you do, this can be explained very quickly.

  17. SJ
    November 26th, 2009 at 23:32 | #17

    …this can be explained very quickly.

    Yes, it can.

    Losses from an AC line are not much different losses from a DC line. Cost of construction is about the same. So if the existing system is AC, and you want to build a new line, you build it AC.

    Losses from an underground cable are different. The losses from an AC underground cable are much higher than for a DC underground cable, and the difference gets bigger as the length of the cable increases. Cost of construction for the AC or DC cables are about the same, but, if you’re going to use DC, you have to build AC to DC converters at each end of the cable. The converter stations can cost are hugely expensive, much more than the cost of the cable itself. It’s hard to justify the use of DC. You’d only do it if it was either impossible to build an overhead line, eg the Vic-Tas undersea link, or if you were linking countries that used different AC frequencies, i.e. 50 Hz vs 60 Hz.

    Now go away.

  18. TerjeP (say tay-a)
    November 27th, 2009 at 04:30 | #18

    Mark – converting our grid to DC would be an absolute white elephant pie in the sky project. And it would not make any difference to geothermal prospects. I have no clue why you are beating this drum but you are wrong.

  19. Alice
    November 27th, 2009 at 05:06 | #19

    Thank goodness you are here SJ. My comment to Mark Hill (sounds a bit like Uncle Mil?) got moderated and usually when that happens it doesnt come out for days. Shame about that. Even Terje is backing us up on this one.

  20. November 27th, 2009 at 09:43 | #20

    SJ,

    I won’t go away, you and Terje have probably corrected me on something. I find this useful. I had been told something different by other environmental scientists (admittedly not engineers). I was previously informed the voltage loss was significant.

    Given the information in the following article and DC still seems useful to make alternative energy more viable.

    http://en.wikipedia.org/wiki/HVDC

    Perhaps there is a lot wrong with this article. If there is, strike out ‘DC etc…’ and add the Government investing earmarked carbon tax money in the context of Government owned electricity companies for more geothermal and wind (lower cost renewables).

    What I propose is still miles ahead of the ETS which is a poor policy in itself but is being implemented on top of other bad energy/environmental/economic policies.

  21. Alice
    November 27th, 2009 at 11:38 | #22

    pass

  22. TerjeP (say tay-a)
    November 27th, 2009 at 12:08 | #23

    Mark – several points.

    Firstly voltage loss isn’t the same as power loss. The power lost in a transmission line is the current squared times the line resistance. The voltage drop is the current times the line resistance. If you want to minimise voltage drop and/or power loss then you want to minimise current. You also want to minimise resistance in the wire itself but there isn’t a whole lot you can do about that beyond choosing a low resistance material with the right strength and cost (gold wires would have low resistance but would fail on both strength and cost considerations).

    The power delivered out the end of a transmission line is the output voltage (ie input voltage less voltage loss) times the output current. So to deliver a given quantity of power you can have high voltage and low current or vise versa. Given that we want to minimise power loss in the transmission line we tend to go with very high voltages (eg 330kV or higher) and proportionally lower currents. As such when I suck ten amps out of my power point at home the extra current flowing through the corresponding transmission line is going to be less than 10 milliamps.

    All of the above is true irrespective of whether we choose AC or DC. However AC has the massive advantage in this rhelm because of a device called a transformer. A transformer is an electromagnetic device that works with AC systems but not DC systems. It can boost voltage and drop current (or vise versa) with very low losses. It is a simple relatively inexpensive device. It can be used to compensate for voltage loss by boosting voltage (and reducing current).

    There are ways to do similar things within a DC system but transformers are so cheap and reliable that it is rarely worth the trouble. Even more so when it comes to the distribution side of things.

    The one downside of AC transmission is that the associated oscillating magnetic field that AC current creates tends to cause more electricity to flow on the outside surface of a wire rather than in the core. This is called the skin effect. It is readily dealt with by having multiple thinner wires that are spacially separated. And on large transmission lines a conductor is often made up of a cluster of wires separated by about 10-20 centimetres.

    There are times when DC makes sense. The link between Tasmania and Victoria is a HVDC connection. And if a geothermal plant was built on a remote volcanic island and wanted to transmit power to the mainland it might also use a HVDC system. However this would require government intervention to change out the existing grid. It would just require a DC to AC converter at the junction point. Just as we do at each end of the Bass straight link.

    There is one other reason besides the cost of power to reduce transmission line losses. That is heat. Hot wires melt. And melted wires break. And broken wires are not very good for transmitting power.

  23. TerjeP (say tay-a)
    November 27th, 2009 at 12:13 | #24

    p.s. If you really want to get into the detail you would need an appreciation of the difference between real power and reactive power. However take it one step at a time.

  24. November 27th, 2009 at 12:20 | #25

    Terje,

    What would be the best system for a getting power from Cooper Basin geothermal energy project to the national grid or the nearest large city?

    This seems worth doing:

    http://en.wikipedia.org/wiki/HVDC#Tripole:_current-modulating_control

    That wouldn’t require changing the grid would it?

    I still think ideas like that, funded from earmarked taxes from a simple carbon tax are many times more worthy than the subsidies to protected industries under the ETS or current economically and ecologically wasteful subsidies we already have.

    It’s not intervention I necessarily want. I want the least damaging intervention (if it is justified) with public monies well spent.

  25. TerjeP (say tay-a)
    November 27th, 2009 at 12:41 | #26

    Mark – build some more interconnectors between NSW and Victoria so that the Victorians can make more use of our fine black coal. ;-)

    Whether you build an AC system or a DC system to the Cooper Basin is quite separate to whether it is subsidised or not. The subsidy should not alter the design considerations one way or the other. It will only effect whether or not it gets built and when.

  26. November 27th, 2009 at 12:58 | #27

    I agree with that.

    The fact is I was saying that mitigation can be done better, and the revenue can be better spent than being put in consolidated revenue, in as far as it could reduce the rate of tax required if Government power corporations were to fund a switch to renewables though the tax.

    I was also saying that this would be money better spent than on poorly installed pink batts etc.

    Geothermal is one important part of renewable base load. HVDC seems the best way to get the most geothermal from remote areas (a good idea as you want to get as much base load as possible) and Tripole seems to integrate the old and the new with little investment or disruption.

    I was wrong about plain old DC – and in effect was talking about the benefits of HVDC.

  27. TerjeP (say tay-a)
    November 27th, 2009 at 14:09 | #28

    Mark – Pink Batts (even if poorly installed) is actually a quite good use of subsidies. On the McKinsey cost curve for carbon abatement it is a much better use of funds than renewable energy, including geothermal. Improved residential heating / cooling efficiency is in the no regret arena (ie there is a social pay off even if AGW doesn’t exist). Axing solar subsidies and switching to insulation subsidies instead is something this government has got right.

  28. November 27th, 2009 at 16:59 | #29

    I’d be interested to know how poorly installed batts do anything. The Govenrment also has no credible way of measuring the success of this. A State power corporation would. Power companies, public and private also charge market rates whereas the batts are a subsidy which isn’t mean tested.

    Geothermal is the lowest cost renewable and has base load capacity. I have figures to justify this (not mine, not publicly available). Does this alter the cost differentials then?

    How do batts deal with adaptation as opposed to switching our power sources?

    Would making the grid tripole have any benefits other than integration with any DC generator sources?

    PS Did you have a look at the Claverton study or the Holistic Management view of carbon sequestration?

  29. Alice
    November 27th, 2009 at 18:19 | #30

    @Mark Hill
    Terje and Mark – you are in danger of derailing thread.

  30. paul walter
    November 27th, 2009 at 18:29 | #31

    Perhaps the problem is with the batts- they fly away , or cr-p in the wrong place if they are “poorly installed”.
    If they are pink batts, the others reject them on gender discrimination grounds.
    Perhaps they should use fruit batts? baseball batts?
    Reiterate Alice above, this is becoming as boring as Battsh-t

  31. Alice
    November 27th, 2009 at 20:15 | #32

    @paul walter
    LOL Paul exactly – we were on the QLD privatisations but now we are debating the relative merits ?mating ?habitats? of bats and why exactly do they have to be pink anyway? ZZZZzzzz. I suspect the thread derail is deliberate. We often get bats in here doing that.

  32. November 27th, 2009 at 20:28 | #33

    Alice,

    The thread naturally digressed from when SJ told me that I didn’t know what I was talking about. He was half right (I was mentioning the benefits of HVDC whilst only referring to DC). The lack of investment in power generally and especially renewables which we are asked to adapt to is in part caused by a lack of public sector fiscal discipline. There are plenty of things Governments have decided to spend scarce tax revenue on which are far less utilitarian than such infrastructure.

    It was “derailed” when I noted the lack of infrastructure investment was a choice of successive Governments (who also have made private construction of infrastructure difficult), not because of the private sector as you inferred. Actually I don’t see how this derailed at all given the basis of the discussion was infrastructure and the benefits of an open discussion of rational policy.

    The type of discussion Terje and I are having is what Bligh should have facilitated in Queensland. We are talking in terms of economic rationalism, relative rates of return etc. This is what Bligh refused to do and made some fast and loose justification for privatisation.

    Perhaps Quiggin, Ergas etc should have been more broad in their criticism of Bligh, noting a lack of investment but Governments in general having record levels of revenue. Fiscal discipline is still a core issue here.

  33. SJ
    November 27th, 2009 at 20:53 | #34

    In a way, Alice, Mark Hill is right. After all, this is a thread about clueless, deluded con-artists. ;)

  34. November 27th, 2009 at 22:25 | #35

    SJ,

    Please tell me why if the Government is to encourage renewables, why investing in HVDC that has very low transmission losses is a bad idea since we would need to rely on remote geothermal for base load. Please also tell me if a tripole power grid would result in a negative rate on investment – the conversion rates can be impressive and integration is a lot cheaper than DC conversion [which you and Terje correctly pointed out doesn't really have a benefit]. Please also tell me why linking the WA AC grid to the East Coast AC grid by HVDC is “clueless”.

    I’m not an engineer so if I make a mistake, it is because I’m a non-specialist. The idea is to have more efficiency and enable renewables to be viable. This is more important than sticking to one concept. If you told me HVAC, FACTS or WAMS was better and would get those results, and you assured me you knew what you were talking about, I’d believe you then try to be more informed.

    Please explain why I’m also a con artist. I’m advocating the Government always have a rational and fully costed policy.

    My suggestion is that we better spend the revenue on infrastructure the Government wishes us to adapt, rather than say, the electricity subsidies for alumina smelters and so on.

  35. November 27th, 2009 at 22:44 | #36

    SJ,

    Perhaps you should read this:

    http://www.ece.cmu.edu/~electriconf/2004/Barthold_The%20Future%20of%20Transmission%20Technology.pdf

    HVDC tripole just seems the way to go.

  36. Graeme Bird
    November 29th, 2009 at 14:23 | #37

    I haven’t seen any indication at all that the pro-privatisation side of this argument has comprehended that the issue is not about selling, its about establishing a functioning industry. The ‘aha moment’ that would lead them to make this realisation, and change their thinking, is simply not forthcoming.

    Until this coterie are replaced by a new generation of technocrats, or alternatively until they see the wrongness of their thinking, there is simply no choice for the rest of us, to “just say no.” Just halt all asset sales until we have the people with the mindset to get these things right.

    We see they are unrepentant about the Telstra disaster. The disaster of having a market so fundamentally unsound, and incompatible with free enterprise, that Telstra has to be arm-twisted to lease out its transmission capacity. This is gross incompetence. And no lessons have been learned. No lessons have been learned by the Russian fiasco either. Wherein a few black market operators took over most of Russian industry by the very methods that the neoclassicals advocate and approve of.

    Most of all I want to convey that these people do not represent the pro-Capitalist point of view. They represent pigheadedness, cronyism and flat learning curves alone. They are not the leaders on my side of the moat. They cannot be reached through reason. They just have to be stopped point blank on this issue.

  37. Graeme Bird
    November 29th, 2009 at 20:43 | #38

    Consider just as an intellectual exercise, the foolishness of privatising New Zealand rail, when and how it was done.

    1. There are no clear rules for private-eminent-domain in NewZealand. How does a potential competitor realistically produce a new rail?

    2. There is no advanced way to know for sure that you can take over the government land, and if so, what price can you do it at.

    3. The above goes for the hypothetical prospect of setting up competition, not only as competing rail, but also as competing road and sea transport.

    4. New Zealand is a long skinny country. Not exactly suitable for multiple competing rail.

    5. It appears to me that a minimum requirement prior to privatising the rail would have been for the Wellington bigshots, to travel around the country and to get local governments to agree on a motherload of coastal areas, to being approved for the potential-but-not-the-necessity, for the investment of wharf facilities. So that any wharf developer would face a sellers market for the required land.

    As everyone knows, nothing beats sea transport for cost-effectiveness when it comes to slow heavy cargo. And without sea transport, the privatised rail, therefore lacks an inherently effective competitor.

    6. (a)Since setting up a competitor for the national rail carrier would take many years of investment before revenues, let along profits, would be reached….

    and (b). Since all that time the investors would have to be paying income taxes for their employees.

    then:

    7. It stands to reason that prior to flippantly selling off the rail we would need a 50 year tax exemption for the investments that made full spectrum competition with that rail doable.

    8. A patriotic and nationalistic consequence of 7, is that we must have the legal framework for a new type of company, wherein the shares can be only owned by citizens of that country, if the infrastructural goods are clearly “strategic”.

    That the end result of these reforms might be that the goods are competitive and not strategic, down the track, is neither here nor there.

    While an honest argument that the goods are strategic yet exists, there is a need for a category of shares, that are only valid, in the citizen of that countries, hands. The reclassification of those shares as non-strategic, can wait for another day, if a country wishes to stay free and sovereign.

    >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

    So you see, the privatisation of New Zealand rail, and pretty much every asset sale you can think of, was at best, way premature. Not in terms of the decade wherein the sale was made. But rather in terms of getting the reform together, to make it the case, that the sales would be made, in the context of a functioning industry.

    Now I personally, want it, that in the end, all things that can be private be private.

    Fans of the Professor might wish for a great deal of this stuff to stay public. Surely we can agree across ideological lines on this one matter. That the reform comes first. The asset sales come later. If at all.

    What happened to the socialist idea of the government fading away? Strategically I say lets keep the government assets, and reform things so that they will fade away in the relative sense, by us creating such a fair and dynamic environment, that the private stuff overwhelms the public stuff.

    In any case let us remember Nancy Reagan who was a good girl and one half of a formidable duo.

    just….. say …… no.

  38. December 3rd, 2009 at 15:47 | #39

    E-petition: Call for immediate resignation of the Queensland government and new elections

    Queensland citizens draws to the attention of the House the Queensland public, the rightful owners of $15 billion worth of assets which are to be sold, were denied any say over this because of the failure of the Queensland government to reveal those plans during the course of the elections. We consider the stated intention of the government to proceed with the sale in the face of opinion polls, which show at least 80% public opposition, to be amongst the most serious breaches of public trust imaginable.

    Your petitioners, therefore, request the House to call upon the Queensland government to resign immediately to give the Queensland public a chance to elect a new Government which can gain its trust. Your petitioners also warn any private investors considering buying the assets, not to do so and call upon a future State government which does enjoy the trust and confidence of the Queensland people not to honour any such contracts for the sale of assets.

  39. Alice
    December 3rd, 2009 at 16:35 | #40

    @SJ
    Id agree with that SJ (missed your comment…as usual it was short but very sweet).

  40. Alice
    December 4th, 2009 at 10:28 | #41

    It appears that Bligh has now become the QLD State’s most unpopular premier ever in a recent poll. We dont have to wonder why.The electorate is growing tired of the neo liberal clap trap arguments and the accompanying state asset stripping….its the issue of asset sales that has made her so unpopular. She emerged the most unpopular Qld premier in the past two decades. Labor’s primary support is 34% and Libs 43%.

    Just how we gow about cleaning out the rhetoric and policies of the now unpopular mad right at state and federal levels in this country is beyond me…

    I suggest the current electorate should get the award for the longest suffering group of people in Australia’s history – perhaps with the exception only of the convicts and aboriginals.

  41. December 5th, 2009 at 07:22 | #42

    Queensland today is absolute confirmation that our electoral system serves corporations and not ordinary citizens.

    The most recent elections were effectively rigged by the Governent, the corporate media and the ABC to ensure that candidates, with any will to serve ordinary people, stood no chance of gaining control of the state Parliament.

    One of the purposes of my petition is to eventually establish the right of ordinary citizens to remove Governments they bellieve are no longer governing in their interests. Whilst the Queensland Government is under no constitutional obligation to abide by the wishes expressed in that petition, I believe a large number of signatures, in the order of hundreds of thousands, would be a good start to achieving that and to fixing what is now rotten in the state of Queensland.

    So, please consider signing the petition, Alice and others if you are an Australian citizen and a resident of Queensland.

    James Sinnamon

    Anti-privatisation independent candidate
    Queensland state elections, March 2009

    Brisbane Independent for Truth, Democracy,
    the Environment and Economic Justice
    Australian Federal Elections, 2010
    http://candobetter.org/james
    Ph 0412 319669

Comment pages
1 2 7377
Comments are closed.