Breaking ground in Adani’s Utopia

John Quiggin12 Comments

Having argued for some time that Adani’s Carmichael mine-rail-port project is unlikely to go ahead, I was initially surprised to read the announcement that Adani says it will break ground on Carmichael rail link ‘within days’. My mental image was of heavy earthmoving equipment excavating the route along which the line is to be laid. This seemed surprising to me, since there had been no evidence that the project was anywhere near that stage.

But a closer reading suggests that the “ground breaking” is of the kind seen in a typical episode of Utopia, in which lots of dignitaries are presented with shovels and turn over a piece of dirt, to “mark the official start” of the project. That is, presumably, a different “official start” from the one that was marked by another ceremony back in June. Obviously, this ups the pressure on governments to lend public money to the project since a failure to do so would mean abandoning a project that is “officially” under way.

Why zero (multifactor) productivity growth is OK for Oz (very wonkish)

John Quiggin23 Comments

I’m writing a book chapter about productivity, much of which will be a rehash of my 20-year debate with the Productivity Commission over measures of multi-factor productivity (MFP). In the process, I reread this op-ed by Ross Gittins, and the Treasury article on which it is based, by Simon Campbell and Harry Withers. As a result, I had what seemed to me like a Eureka moment. As with all such moments, of course, my insight might turn out to be either wrong or obvious.
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Socialism for the 21st century

John Quiggin24 Comments

I have a long article in the Guardian putting forward some thoughts about a socialist economic policy program for the 21st century. The headline “Socialism with Spine” is a shortening of my observation that:

As it is used today, the term socialism does not reflect a well-worked ideology. Rather it conveys an attitude that could be described as “unapologetic social democracy” or, in the US context, “liberalism with a spine”

The contraction might have led some readers to expect a position more radical than the one put forward in the article. I’m advocating both a restoration of those aspects of 20th century social democracy that are still relevant today and new ideas to turn the 21st information economy to the benefit of the many, not the few.

Who will pay for Adani’s infrastructure? We will

John Quiggin19 Comments

A couple of days ago, it was announced that the Fly In Fly Out workforce for Adani’s putative Carmichael mine would be split between Townsville and Rockhampton. Since I’ve long argued that the mine is highly unlikely to go ahead, I didn’t read the news stories closely. So, I missed the fact, buried in the middle of this ABC news report, that the deal requires Townsville and Rockhampton councils to build Adani an airstrip at a cost of $20 million. It turns out that not everyone in Townsville is happy about having their money spent on a project far away from the city.

This outcome is consistent with what I and others have been arguing for some time. Adani has to keep the project alive to avoid recognising the loss of the money its spent so far, and admitting that coal volumes at its Abbot Point port will be far lower than planned. On the other hand, there’s no point throwing good money after bad. So the strategy is to move slowly on the development, building a railway with money from the Commonwealth government and, now, an airstrip paid for by the people of Townsville. When, with much regret, the mine is deferred indefinitely, the Australian public will be the proud owners of a railway to nowhere, with the option of a flight back.

Three observations on guaranteed and universal basic income

John Quiggin27 Comments

I’ve been working for a while on the idea of Universal Basic Income (UBI), and the closely related alternative of a Guaranteed Basic Income (GBI), in which the payment is phased out as income increases. I’ve now developed a very simple model to illustrate some of the crucial points. Here are three observations. Only Observation 2 requires the model, and the assumption that the distribution of income is broadly similar to that prevailing in Australia today.

Observation 1: Any UBI scheme can be replicated by a GBI with the same effective marginal tax rates, and vice versa

Observation 2: A GBI equal to 40 per cent of average income, with a phaseout rate of 40 per cent, would require additional transfer payments equal to between 8 and 10 per cent of national income.

Observation 3: A UBI equal to 40 per cent of average income, with no phaseout, would require additional transfer payments equal around 30 per cent of national income, but would have the same effective marginal tax rates as a GBI.

A poll result I find hard to believe (two updates)

John Quiggin34 Comments

Nearly a week ago, I argued, in relation to the equal marriage survey that “most people will either respond straight away or not at all.” That was supported by an Essential poll, taken from Wednesday to Friday of the first week in which 9 per cent of those polled said they’d already responded. Since the first surveys were mailed out to rural areas on Monday, that looked like a rapid response. But the most recent Newspoll, conducted from last Friday to Monday reported only a 15 per cent response rate, even though nearly all those polled would have received the ballot. This didn’t reflect apathy or a boycott – the vast majority said they would definitely respond.

I don’t have any good reason to think Newspoll is drastically wrong on such a straightforward question, but I also can’t understand the result. Perhaps this is another example of the (apparently spurious) Pauline Kael fallacy, but everyone I know has already voted (mostly, though not exclusively, Yes). I’d appreciate any insights on this.

Update Essential has a poll out with 36 per cent saying they have already responded, 72 per cent of those saying Yes. No details yet on when the sample was taken, but it must overlap pretty closely with Newspoll. That’s a bigger difference between polls than I can recall seeing on any topic.

Further update Peter Brent in Inside Story quotes* leaked internal polling from the Yes side, reporting that 65 per cent of those polled had already returned their surveys. He describes this as “flabbergasting”, but it’s in line with my expectations. Still, the puzzle of how polls asking a simple factual question could yield such radically different answers remains unresolved. He makes the point that there’s always a reason for a leak, but this obviously isn’t what the Yes campaign would want to leak, since it implies that Yes has already won, or nearly so.

* Brent doesn’t give a link, but I dound the story here.