Families slugged by NewsCorp Innumeracy #NewsCorpFail

According to Steve Lewis in the Daily Telegraph

CONSUMERS will be slugged with price rises on everyday items like milk, cheese, chocolate and pizza’s as the carbon tax puts the squeeze on retailers and producers

(the apostrophe in pizza’s suggests News may have cut the subediting budget a bit too far). He illustrates with a picture of a mother of three who is currently paying $300 a fortnight for groceries.

Steve can’t say how much, and neither can his sources, though they are happy to give scary quotes. So, instead he quotes some big-sounding numbers derived from the Dept of Climate Change analysis. Woolworths, for example, will pay around $73 million a year in higher electricity costs. That certainly sounds like it would put a dent in the household budget. As the old saying has it, a million here, a million there, pretty soon you’re spending real money. That’s where Lewis leaves the story

But those of us capable of primary school arithmetic can take things a little bit further. There are 20 million or so people in Australia, so the cost amounts to aroun $3.50 a year, or 7 cents a week for us. For the archetypal (if unrepresentative family of four) that’s around 30 cents a week or 60 cents a fortnight (an increase of 0.4 per cent for the mother in the example). Looking at the illustrative photo, that’s rather less than the difference between the Kleenex tissues in the shopping trolley and the home brand alternative.

For a validity check on the impact, we could look at Woolies’ total sales of around $18 billion a year. A cost increase of $73 million is approximately 0.4 per cent. Of course, this doesn’t really get to the right answer either, because it doesn’t take account of changes in the wholesale cost of goods (so-called Scope 3 emissions).

But doing the analysis at an aggregate level fixes this pretty well. A tax at $26/tonne will raise around $10-$12 billion, depending on exemptions and particularly on the treatment of petrol. That’s about 2.5 per cent of total household expenditure on goods services, meaning that the gross impact of the carbon tax will be about a quarter that of the GST (note however, that the GST was offset, for goods, by the removal of Wholesale Sales Tax). The increase will be greater than this for energy services (electricity, gas and so on), and therefore must be less on non-energy goods. Overall, it’s safe to predict that the impact on grocery bills and similar items will be around 1 per cent.

Over the fold, I’ll do the cents per week exercise for all of Lewis’ examples when I get a moment

Monday Message Board – Queens Birthday Edition

Time for another Monday Message Board, but we’re enjoying a long weekend, at least in Brisbane where the miserable weather of last week, forecast to continue for several days more, has disappeared. I’d welcome thoughts about the monarchy, honours lists and so on, and would also be interested to hear from readers affected by the volcanic ash clouds.

I’m tightening up on the civility rules and will, from now on, delete anything I regard as personal criticism of another commenter, along with coarse language. As usual, save long rants, extensive debates with other commenters, and repetition of old themes for an appropriate sandpit.

Reasons to be cheerful, part 2

There are plenty of reasons to be gloomy about the prospects of stabilising the global climate, but there are also some promising developments, so I’ve started a series on this topic.

I’ve been meaning to write this post for a while, but Stephen Lacey at Grist (via David Spratt on Twitter) has done much of the job for me, and better than I could have. The crucial point is that the cost of solar photovoltaic electricity has fallen dramatically and is almost certain to fall further. In particular reaching the point where it is the cheapest large-scale alternative to carbon-fuelled electricity generation, and competitive (at reasonable carbon prices and in favorable locations) with new coal-fired power.

This makes for some fundamental changes in the debate over climate change and mitigation, even as it reaffirms the central point that advocates of mitigation have made all along, namely that, with an appropriate policy response, the costs of drastic reductions in carbon emissions will be modest in relation to national or global income.

Read More »

UnFunRun fundraiser

It’s been a while since we’ve had a fundraiser here, but a great opportunity has just come up. I’ll be attempting a half-marathon as part of the Brisbane Running Festival on 7 August, and there’s an associated fundraiser for the Queensland Cancer Council, which promotes research, awareness and support services. So, I’ve created a webpage for my effort here, where you can donate money (before June 30 if you want to claim it in this year’s tax return!).

A good fundraiser needs a good gimmick, so here goes. I completed my first[1] half-marathon run a week ago, in a time of 1:59:24, staying just ahead of the 2:00:00 pacerunner (someone who runs with a balloon or flag at a steady pace so others can keep pace) the whole time. I was pretty tired and sore by the time I finished – it’s not what you would call a fun run! This time, I want a commitment device to push me to run at 1:55 (or even better!). So, for each $1000 I can raise before race day, I’ll commit my best effort to stay a minute ahead of the 2:00:00 pacerunner. If I can raise $5000, I’ll run at the 1:55 pace as long as I can[2]. And, if there’s $10 000, I’ll try for 1:50, which will really push me to the limit.

I’ll start the ball rolling by promising to give $200 for each minute below 2:00 hours. So, you only need to give $800 to push my time down.

This is a great chance for everyone. If you enjoy the free commentary I’ve provided, please say thanks by giving whatever you can afford. If I’ve annoyed you, toss some money into the pot, and you can enjoy a Sunday morning lie-in thinking about me struggling to keep a punishing pace (at least for a middle-aged academic) over 21.1 km.

I’ll provide regular updates, and thanks to contributors, except for those who prefer to give anonymously.

fn1. I also did one in 2010, but I had to walk a fair bit, so I don’t think it counts.
fn2. No guarantees, as I’ll slow down if I’m feeling knee damage, but I’ll do my best to push on through exhaustion.

Own goals

One great thing about soccer, at least for me, is that it is possible, and (by contrast with other sports where this can theoretically occur) relatively common, to score for the other side[1], thereby giving the language the phrase “own goal”. While not an own goal, I certainly had a missed shot with my prediction back in 2007 that the Liberals would never win another federal election. Technically, I’m still in the clear – the prediction that they would merge with the Nats before regaining office was right for the Queensland parties and may turn out correct at the national level – but the underlying analysis posited that Labor would remain politically dominant at both the Federal and State (except NSW) level for years to come. That prediction was derailed by a spectacular series of own goals on the part of the Labor Party, including

* WA Premier Carpenter’s decision to allow ministers to resume contact with Brian Burke
* The NSW government’s suicidal pursuit of electricity privatisation, thereby turning a defeat that was already inevitable (given past own goals) into a rout
* The Bligh government’s similarly suicidal program of asset sales
* Federal Labor’s dumping of the ETS, followed by the dumping of Kevin Rudd

While there is no particular disaster to explain the narrow defeat of the Victorian Labor government, spillovers from the Federal level probably did enough damage to make the difference.

But after only a short period in office, it seems that both the NSW and Victorian Coalition governments are scoring own goals on a regular basis. In Victoria (as at the Federal level) there have been huge blowups over senior ministers missing Parliamentary votes. And NSW Premier Barry O’Farrell, having campaigned as cuddly and unthreatening, made a huge mistake when he tried to retrospectively reduce the feed-in tariff paid to people who had, in good faith, invested in the previous government’s solar PV scheme. He followed that up by ramming through Parliament anti-union legislation that had not been mentioned in the campaign. Given how far Labor’s stocks have sunk, mistakes like this probably won’t be crucial. But a government that manages to mess up what should be its honeymoon period is unlikely to last for long.

For political analysis, the “own goals” phenomenon presents a serious problem. If you want to estimate things like election outcomes you have to work on the basis of things that are more or less predictable, like economic conditions, ideological positions and so forth. Implicitly, this assumes that politicians do the best they can to win, given the objective circumstances. But if political outcomes are driven primarily by unforced errors like those I’ve mentioned, then predictability goes out the window.

fn1. In Australian football, it is, for course, very common to rush the ball through your own goal for a behind, scoring 1 point for the other side, but preventing a goal worth 6 points.