Defending Australian institutions

John Quiggin6 Comments

The issues dominating Australian public debate are many and various But most of them can be summed up as the defence of Australian institutions that have been under attack by radical extremists. I’m referring to such institutions as the ABC, CSIRO, the weekend, public education, the union movement, the fair go our natural environment and our indigenous heritage. Mention of any of these is enough to raise a derisive sneer from the radical rightwing apparatus that dominates much of Australian politics, most obviously the supporters of Tony Abbott who (ludicrously) call themselves “conservatives”.

Turnbull promised something better but was, if anything, worse than Abbott. So far, it seems as if Morrison is going to continue the trend. Having dumped nearly all his unpopular economic policies, he’s left with nothing but the culture war, which would be more accurately described as a war on culture.

We shouldn’t be wasting time on (Issue I oppose)

John Quiggin22 Comments

Something I read a lot in political discussion is the claim “We shouldn’t be wasting time on Issue X”. Almost invariably, the writer clearly has strong views on Issue X, supports the status quo, and is aware that some change has majority support. So, their best hope is to avoid any decision at all. Of course, while statements like this logically imply that the speaker shouldn’t waste their own time on the issue, this inference is rarely drawn. The same people who tell us not to waste our time on some proposed change will spend lots of their own time fighting against it.

Feel free to point to examples or, for that matter, counterexamples.

The Coal Cartel ? Why Adani’s prospects haven’t improved

John Quiggin15 Comments

In my recent piece in The Guardian, mostly about Adani, I observed

The paradoxes of Adani are mirrored in the global coal market. Despite a small increase in 2017, global coal production is below its 2013 peak. Yet prices have recovered strongly, yielding big profits to existing miners and offering a seemingly tempting prospect for new mines.

It turns out that this isn’t quite right. The benchmark Newcastle price, for low-ash coal with a heat content of 6000kcal/kg has risen strongly, to the great benefit of companies like Yancoal, Glencore and Whitehaven. It turns out, however, that this increase isn’t representative of the broader market. Prices for lower quality coal with lower heat content and higher ash content haven’t moved at all, with the result that the premium between higher and lower grades has grown dramatically.

What’s going on here? One possible explanation is that Yancoal and Glencore, who produce the majority of Australia’s high-grade coal, have engaged in successful cartel behavior. Another is that the premium reflects shifts in demand (with China and India increasingly rejecting high ash coal, while Japan continues to demand high grade coal) and supply (few new mines are opening, and this has a bigger effect on the smaller market for high grade coal).

Whatever the explanation, most analysts agree that it is more likely to be resolved by a decline in the price of high-grade coal rather than an increase in the price of low-grade coal.

Where does Adani fit into all this. Most of the discussion I’ve found focuses on the premium between 6000kcal/kg and 5500 kcal/kg. Coal extracted from the Carmichael mine would be much lower quality, below 5000 kcal/kg.

Adani on life support

John Quiggin9 Comments

I have a piece in The Guardian under the headline Adani’s rail line cut shows project is on life support but still a threat to climate, starting with the observation

The recent announcement by Adani that it will halve the costs of its rail line to the proposed Carmichael coalmine by building a shorter, narrow-gauge line raises an obvious question: if such a massive cost-saving is feasible, why didn’t Adani go that way in the first place?

I also address the broader question

If coal is doomed, why has the price recoverd

Failing upwards

John Quiggin51 Comments

I’ve been busy finishing the manuscript of my book, and dealing with policy issues as they came up, so I haven’t paid a lot of attention to the Liberal leadership saga. One thing that strikes me is that Josh Frydenberg has had exceptionally favorable coverage, apparently on the basis that he’s likable and popular. That’s fine, but if you’re going to appoint someone as Treasurer, shouldn’t a successful track record be a necessary (though not sufficient) condition? Morrison, for example, had a political success in stopping the boats (whatever the morality of the policy) and was generally seen as a successful Social Services minister (unlike his successor, who messed up the robodebt program). He didn’t impress as Treasurer, but at least his previous career justified giving him a go. And while he looks underqualified as PM, the alternatives were even worse[1].

Frydenberg has essentially had one ministerial job, covering environment and energy (though with various titles and temporary add-ons like Northern Australia). In this capacity, his big contribution was the National Energy Guarantee. It was a terrible policy, made necessary by the failure of Turnbull and Frydenberg to face down the denialists in the government. Designed to be all things to all people, it ended up being nothing to nobody. Frydenberg’s failure to secure agreement on the NEG was the proximate cause of Turnbull’s downfall as PM, and the policy was promptly abandoned the moment Morrison took over. In what possible world is this a basis for promotion?

 

fn1. Bishop was ruled out on tribal grounds. Her weakness as Treasury spokesman years ago was also held against her, even though she wasn’t obviously worse (in retrospect) than Morrison, and much better than Hockey. About Dutton, the less said the better. After that, it’s daylight.