Post comments on any topic. Civil discussion and no coarse language please. Side discussions and idees fixes to the sandpits, please.
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John Quiggin 
The recent infrastructure report from the Australian National Infrastructure Advisory Agency, highlights the lack of skilled workers in Australia. One estimate equates the shortfall to over 200 000 workers. The biggest labour shortages is in the field of structural engineering and project management. Ambitious infrastructure projects can only be completed with the right labour inputs. On top of these labour shortages, there is materials shortages. Steel, rock, sand and other construction materials are not in large enough supply. All this begs the question, in the planning stages were these supply shortages addressed. And if it was known that there would be input shortages, then how was this to be managed? A lack of detailed planning seems to be stalling large infrastructure projects. This is far short of the world’s best practice. Critical path management is fundamental to the throughput of any infrastructure and construction project. But successful timing and coordination depends on the accurate supply of inputs. Unless this is addressed there will be no quick transformation of ageing infrastructure.
Gregory, What is a “labour shortage”? Does this mean that the demand for labour at the prevailing wage exceeds the supply offered at that wage? So I guess normal economics would suggest that an increase in wages would close this gap. It might be argued that the effects of this adjustment might be disruptive to the economy in the short-run since the supply of skilled labour might be fairly inelastic in the short-run. And that has been the basis for introducing skilled workers into Australia via the immigration program to fill the gap. Then wages don’t rise as much because the supply curve for these skills shifts right. In effect high immigration intakes seek to peg real pages.
The current immigration fill-in has been the rationale for targeting skilled immigrants since, at least, the Snowy Mountains Scheme in 1949. A different perspective would be in the longer-term to try to allow shifts within the Australian labour force toward more highly valued occupations. Signals would also seep through to the education system where students might seek more highly paid jobs.
One advantage of doing this would be a lower need for the types of infrastructure that is needed by a higher population. The north east link in Melbourne has been driven by higher traffic from the north and will cost $18. The Metropolitan rail loop around Melbourne is scheduled to cost $120b but no-one really believes this figure – given the amount of underground tunneling the figure will plausibly exceed $200b.
A disadvantage of this scheme would be that our theft of human capital from other countries, the “brain drain”, would be limited. We would need to pay ourselves for the investments in skills we need rather than nick them from developing countries. This theft is, of course, consistent with our stingy international aid contributions in recent years.
Another saving by limiting population growth to something approaching replacement fertility would be to limit the $3b in congestion costs that Melbourne and Sydney now experience annually.
My general point is that to focus on “labour shortages” alone without reference to basic economics involves a lot of unintended consequences. It has driven faulty immigration policies in Australia for decades.
replace “pages” with “wages”.
No recent Sandpit, so this hobby-horse post goes on the Message Board, perhaps as a swan song.
As you know, I’m a fan of the niche Canadian geothermal startup Eavor. They have a highly original and highly conservative approach to tapping geothermal energy far more widely than the few existing hydrothermal locations. They describe it concisely:
“A closed-loop system that circulates a benign working fluid through a network of underground drilled passages, creating a continuous heat exchanger that taps into the natural heat of the Earth.”
This means that they cut out the tricky part of mainstream EGS, the artificial creation of fissures in deep rocks enabling heated water to flow through them to a turbine. This scheme has been demonstrated in several places, but developers have struggled to model it properly and get it to a commercially worthwhile scale. Eavor’s lined tubes may cost more to drill, using standard fracking technology, but there is much less to go wrong and fewer obstacles to scaling up.
Their underworked PR person issued a press release in October https://www.eavor.com/press-releases/, to “announce the successful completion of $182 million in financing.” That is serious money for a closed startup. I guess they are nearing crunch time: if Eavor can’t build a full-scale pre-commercial demonstration plant with that money, they should pack it in. We and the VC investors will no doubt find out pretty soon. Success could have a large payoff. There are hot rocks everywhere if you go deep enough, and once built a geothermal system is near-perfect in reliability, safety, and despatchability, with a low impact on the surface environment, a handy size in the tens of megawatts, and optional use for process and district heating. The plants would find takers even at a higher upfront cost than wind and solar.
An interesting sidenote in the release is that the lead investor is the Austrian company OMV, originally state-owned and still partly so (31%). In June they put up €34m – it’s not clear to me if this was part of the same round or separate. OMV is a midsize oil-and-chemicals company with €62bn in annual sales. Exxon-Mobil’s are $346 bn. But OMV have got religion, and plan to follow Øersted (previously DONG, Danish Oil and Natural Gas) out of fossil fuels. OMV is a major importer of Russian gas, which Austria is struggling to cut and eliminate by 2027. Their investment in Eavor is not a purely financial one, it’s a commercial partnership; OMV wants to be at the pointy end of the geothermal business. From the June 14 press release:
“OMV intends to transition from an integrated oil, gas, and chemicals company to become a leading provider of innovative and sustainable fuels, chemicals, and materials, while taking a leading global role in the circular economy. By switching over to a low-carbon business, OMV is striving to achieve net zero in all three Scopes by 2050 at the latest.”
I find it striking that a sizeable oil company should have concluded that putting money into a small Canadian geothermal startup, with a novel technology so offbeat that nobody else in the sector is trying it, should be less risky than keeping it in the business they are in now.
Oil in Japan
Chart from the EIA:
Oil consumption in Japan peaked in 1996 at 5.7m barrels/day. In 2023 it is 3.4 m barrels/day, a 40% drop at a steady 2% a year. This is before any major shift to electric vehicles, as the Japanese government and car industry remain stubbornly faithful to the hydrogen dream. The market share of new EVs is a laughable 3%. Toyota, Hino and Isuzu will jointly launch an electric bus next year. Chinese companies have been making them in numbers since 2009.
Doubly despicable
In the US, Congressional Republicans are now holding military aid to both Ukraine and Israel hostage to a panoply of measures to control illegal immigration. Or rather, to appear to do so. Republicans had decades of unified control of the federal government in which to pass a comprehensive reform of immigration. They did not seriously try. We can conclude that the real GOP policy has two parts.
The first is to ensure a steady supply of undocumented adult migrants ready to work at low wages on American farms and other businesses, and too frightened of deportation to complain of abusive working conditions. Contrast Australia, where conservatives actually do want to keep out migrant workers. As Kevin Drum regularly points out, it would be very easy to deter undocumented migrants simply by enforcing existing laws against employing them. The US has a working administrative system that would enable this, E-Verify. All it would take is a few well-publicised dawn raids on agribusinesses, Amazon warehouses, and Walmart stores, followed by maximum fines, and the job openings would dry up. Impracticable? Why do you think we don’t hear in France of Carrefour or IKEA employing undocumented Malians, Kurds, or Albanians at subsistence wages? They wouldn’t dare try. In the USA, any suggestions to this effect – IIRC Ron de Santis tried in Florida – have been firmly squelched.
The second part is to set up highly visible performative repression at the border that will inflict as much suffering and humiliation on the migrants as possible, and satisfy the xenophobia and sadism of the neo-fascist base, while carefully remaining ineffective.
It’s to advance this odious policy that the GOP is prepared to abandon Ukraine to *genocide at the hands of Putin’s Russia. (Pause for throwing up my lunch).
* This is not hyperbole but an exact and correct usage that quite clearly applies to Putin’s stated war aims and the conduct of Russian officials in occupied areas of Ukraine. It is the original sense of Raphael Lemkin, the great Jewish-Polissh jurist who coined the term during WWII and succeeded in securing its recognition as a crime in international law. The UN Genocide Convention of 1948, of which he was the prime mover, defines genocide as any of a number of acts, including but not limited to mass murder, “committed with intent to destroy, in whole or in part, a national, ethnic, racial or religious group, as such”. See Wikipedia.
I am sorry to say, we are kind of boneheads. I love my country but we are not very smart, and we don’t even have the excuse of actual low IQ – nope. It is just that our political culture encourages idiots and extremists. And social media is not helping. It is a crying shame.