All posts by JohnHHill

DISCORD IN DEMOCRACY November 2018

DISCORD IN DEMOCRACY

WHERE WE HAVE COME FROM
The catalyst for this article is the slow corrosion in living standards and the rising discontent in Germany, France, Greece and Italy highlighted in ongoing press coverage. This information is related to the current malaise in the United States, Britain, Australia and for the French Department of New Caledonia.

Controls on democracy were instigated with the first pictograms invented in ancient Sumer (4500-1500 BC). The written word was to facilitate the enslavement of the population. The French structural anthropologist, Claude Levi Strauss, considers that, within Homo sapiens, immutable deep structures exist which define what we are today. It was only in the 8th Century BC, that Homer’s Illiad & Odyssey were written down in Phoenician script to appear on the public stage: this was a first flowering of literature for the people. A democratic voice was only for landowners and advisors.

The mid-1400s saw the invention of the Caxton and Gutenberg printing press. The Church and State now started to lose control of the population, however the ruling elite maintained brutal power. From the mid-eighteenth century with the coming of the Enlightenment, the industrial revolution and the evolution of political parties round a rebuilt British Houses of Parliament,  political debate erupted around a slowly rising living standard. The rising middle class was a new steadying hand on the democratic process. Soon after the commencement of the industrial Revolution, it became clear that the Political Elite and Capital needed each other to stay in power.

Labour is necessary to Capital but as the decades progress greater unrest is seeping into the system. The pay gap within the democratic system is becoming obscene.

A definition: Democracy is a system of Government by the population of a State through elected representatives. (Oxford Dictionary. Until the Industrial Revolution, democracy and politics was a social science where ideology could flourish. Post the Revolution, social science has been replaced by technical science which is beyond the capacity of many politicians. And now, ideological policy is a stumbling block to the democratic process.

Our modern democracy dealt with Tories and Whigs, then Conservatives, and then Conservatives and Labour separated by Minor Parties. This was a tetchy interface that is becoming more polarised now that a restless democratic electorate endures a slow decline in living standards while the transfer of wealth proceeds to the upper quartile.

DEMOCRACY IN THE UNITED STATES
According to Geoffrey Sachs, noted economist, who addressed the Canberra Press Club on the 14th November, a principal opinion was that the United States might become a failing democracy. Initial democracy in America had restrictive  similarities to that of early 8th BC Greece. The democratic system is  now producing a rising Capital and Ruling Elite and an increasing fractious Middle America. The rising White Supremacy Movement now responsible for 70% of mass shootings, the Me Too Movement and the ongoing African-American situation and America’s place in a changing  world, is producing pitched political battles.

The current prosperity is not significantly seeping down. It has more to do with the Federal Reserve, not Trump. Reasons are:

  • The Fed cut interest rates.
  • Rates were held down for several years.
  • Trillions of dollars of quantitative easing were pumped into the economy which over time reduced the purchasing power of the Dollar.

The democratic battle is over falling living standards coupled with grave social issues that should have been identified well before the present period, There were two reasons for Trump’s populist result: first, under Obama, there was growth in the top 1% of households and Middle America wanted change to include them; secondly, Trump’s promise “To make America Great again” resonated in the Rust Belts. It was the Electoral College who elected Trump. despite his knife edge minority. The danger for Trump will be the popping of the asset bubble which will expose the  sociological and economic  currents below surface. These splinter across the Democrat – Republican divide. (Larry Elliot, 29 April 2018, The Guardian)

DEMOCRACY IN GREAT BRITAIN
Democracy is under siege. The Brexit proposal presented to the electorate was ideological not scientific – uninformed argument provided the very worst for an uninformed electorate. The support that brought Trump to power was similar to that in Great Britain –Rust Belt cancer and a jingoistic cannon, “We want our Sovereignty back”. The Brexit line was about jobs in the North of England. “Give us back Our Sovereignty” is a deep-seated issue harking back to shreds of Empire.

The electorate was entitled to informed financial advice. All it received was misleading ideology; this was a dereliction of duty by elected representatives. With an inconclusive vote (52 Leave to 48 Remain) this was not a clear result, many had not voted. The catalyst to Great Britain’s democratic system in the 18th and 19th centuries, was rising commerce and the living standard of Labour and a rising Middle Class. By the end of the 20th century the democratic system was under strain.

Globalisation has put pressure on democratic systems since both Democracy and Capitalism can both operate best by upward improvement. With globalisation under discussion the concept has been raised that the Five Eyes might consider an Anglo-Saxon trading bloc.

DEMOCRACY IN AUSTRALIA
Australian Democracy is veering towards a republic. Excluding Africa, the precedents established in the Southern Hemisphere by
ex-colonial Hispanic powers is terrifying. For the Australian electorate, the political elite is not respected, ideology not scientific discussion rules debate, the opinion of experts is dismissed. The nation struggles on a bed of long overdue infrastructure. Like the other Anglo-Saxon trading partners, the democratic process has become more fractious as rising standards are not keeping up with expectations. Fast forward from Sumer to Canberra and an article in WEA  (24 November 2018), ‘Our Great Trust Crisis Hits Home’, illustrates the failing system of our Western-style democracy. It is a deep malaise.

DEMOCRACY IN NEW CALEDONIA
This process is skewed because 44% (indigenous Kanacks) require independence while 56% (mainly French settlers) want to remain under French protection and financial support. The New Zealand model for a democratic system is not an option where the population divide is Caucasian 74% and Maori 15%. For the foreseeable future democracy will wilt.

Historically, the midnight 21 Gun salute, raising the National Flag and the Anthem, are euphoric moments before the normal daily poverty. The political elite (yesterdays’ freedom fighters) and the new security forces, quickly restrain a ‘loyal opposition’. In many Pacific cultures, “Big Men” are the source of power. In New Caledonia they will plan societal change. In the current political climate, Australia, New Zealand and France will quietly work to retain the status quo.

DEMOCRACY ON A LEE RAIL
The democratic process evolved out of the Enlightenment and the social conditions flowing from the Industrial Revolution. This system worked for some 200 years in a cocoon of rising living standards. There  was little resistance to the acceptance of democratic principles in the Anglophile nations. Now, all has changed due in part to declining trust between Government, Industry and the electorate. The deep social divide, due to immigration and dilution of national character, is causing intractable problems beyond the ability of our  ‘social’ politicians. Electorates will be better served by technical politicians (managers) who will not use ideology.

The symphony of democracy may not be in tune with Homo sapiens’ early development. There are deep socialogical issues.

A TIMELY CONJUNCTION
A forum, “Towards a Sustainable Australia, (29 November, 2018} was organised by the Royal Society of NSW and the Four Academies. The problems and issues identified were prescient to looming democratic issues. The Forum’s content highlighted core requirements for the survival of a stable democratic system.

 

JOHN HUGH HILL
lurgashall@westnet.com.au
Current Affairs Flash Points: 
towardsthefinalhour.com.au

 

 

 

 

THE DARK NET IN AUSTRALIA October 2018

THE DARK NET IN AUSTRALIA
THE WEB – “NOT AN UNGOVERNED SPACE” – NONSENSE!

Dark Net
THE INVISIBLE DARK NET (Darkness 3 Qled.com.ua)

The Elephant in the Room
On Monday, 8 October, the Hon. Mitch Fifield, Minister for Communication, addressed the Sydney Institute on Government policy around safety and security of the Internet. The audience was assured the Internet was not an ungoverned space. Incredulous, my grandson, aged eighteen, hissed at me “What about the the Dark Web and the import of drugs, munitions and pornography which can be purchased anonymously using untraceable bit-coin?”

On Wednesday, 10 October, the Hon. Peter Dutton, Minister for Home Affairs, addressed the Canberra Press Club on national and cyber security. The success of Border Force operations and the role of cyber crime  was mentioned  but there was no reference to the disastrous activities on the Dark Net with respect to drugs and child exploitation (hard candy).

Both Ministers dwelt on progress by their Departments but both avoided mentioning the ‘elephant in the room’ – the Dark Net. This dark cyber space is more dangerous than the visible Internet and is capable of great damage to the Australian people but it is invisible and essentially uncontrollable.

The Dark Net
The Dark Net is a hidden unregulated encrypted network. The Global Internet comprises a vast cyber space where only 4% is available to the public; the remaining 96% consists of the Deep Net. The Dark Net is only a sub-set of the Deep Net.

The Dark Net is a space where total anonymity can be maintained using dozens of software layers, operating through hundreds of servers, transmitting encrypted messages managed by thousands of operators. The Dark Net is not visible to normal search engines but is entered using the TOR (The Onion Router) software developed by the US Navy to protect government information. Entry to the Dark Net is facilitated using a VPN (Virtual Private Network) which provides the user with a fake address and anonymity. A Dark Web address can be identified by the suffix ‘.onion’, not ‘.com’, ‘.co’ or ‘.net’.

The Dark Net is now the freeway for global organised crime. Recent investigations by Kings College, London, on nearly 3000 Dark Net sites found that about half were contacts for credit cards, drugs, guns, counterfeit money, malware and child exploitation.  With the introduction of bit-coin, all transactions can be effected with complete anonymity. Not everything found was illegal, there were contacts for specialised clubs and and social networks!
(State of Cyber Security, 19 June 2018)

A DOG
COMPLETE ANONYMITY  (Cryptorials)

The Dark Net cannot be closed down because TOR software is available on the open market and encryption is universally generated and transmitted by the internet providers. This total situation is facilitated by the complexity of layers of protective software and illegal sites are also, in part, supported by banking assistance from legal entities. (Quora, 9 February 2017)

Australian Story
A recent study has shown Australia hosts the second highest concentration of Dark Net drug dealers per capita after Netherlands. Despite Border Force interceptions, the majority of drug deals via the Dark Net are undetected and delivered by Australia Post. There is also a prolific traffic in child pornography. (The World today, June 2018, The Australian Institute of Criminality, Swinburne University)

Not an Ungoverned Space?
For public consumption Government Ministers utter soothing comment on 4% of the Internet. Serious crime and exploitation are emanating from a significant part of the invisible 96%. The Dark Net cannot be shut down. Australians have little protection except their common sense to protect themselves from criminals operating in the Dark Web. The TOR software is the legal gateway for the savvy and the gullible/ignorant to enter a dark space.

End Game
Among the many material benefits created by Homo sapiens, it has created a rogue elephant, the Dark Net. This currently, cannot be destroyed or subdued because encryption and VPNs are not illegal. Government Ministers claim to be curtailing evil activities on the Internet but realistically this is about 4% of the Internet or World Wide Web.

Ministers should warn that most of the Internet is, indeed, “Ungoverned Space” and we enter it at our peril.

 

 

ECONOMIC MISREPRESENTATION Australia. Sept. 2018

THE AUSTRALIAN ECONOMY – “NO WORRIES!!”

 CAPTION.  Good governance can lessen the burden. Fiscal Deficit. Trade Deficit, Debt.   

Impediments
IIMPEDiMENTS TO THE ECONOMY. (sundaytimes.uk)

Obscuring the Truth.

Australian Treasurers appear to have developed the charade of constantly obscuring  the economic problems from the nation. A recent statement by Treasurer Frydenberg reinforces this reporting situation. Evidence for this style of reporting on the national economy is illustrated by the following quotes:

  • A pleasing set of numbers. Hockey, September, 2014.
  • A terrific set of numbers. Hockey, June, 2015.
  • The best growth rates since 2012. Morrison, September, 2016.
  • Deficit reduction due to good economic management. Morrison, January, 2018.
  • Excellent GDP rate of 3.4%. Frydenberg, September, 2018.

The Devil in the Detail.

Each of these statements have glossed over a serious weakness in the economy or have omitted to include important facts which have a bearing on the numbers. The Devil lurks behind the rosy announcements:

  • In September 2014, Treasurer Hockey announced the National Accounts to be a ”pleasing set of numbers”.  At the same time, the Reserve Bank warned of a dangerous housing bubble. Mr Hockey enthused that the GDP had risen to 0.5% for the June quarter but omitted  to mention real GDP had fallen to 0.3% due to unfavourable Terms of Trade.
  • In June 2015, the annual growth rate had risen to 2.3%. Treasurer Hockey enthused   “this was a terrific set of numbers” and further stated the Australian economy was among the fastest growing in the world. The Treasurer omitted to mention that this period had seen the fifth quarterly drop in the Terms of Trade and that disposable income was now less than that after the GFC in 2008. Australian living standards were falling and national productivity had declined as growth was driven from low labour mining to intensive labour in tourism and hospitality.
  • In September 2016, Treasurer Morrison enthused over the National Accounts informing Australians there was no sign of a downturn in the economy. The Treasurer noted that exports had increased slightly and imports had decreased. However, the Treasurer omitted to mention that Australians now had less disposable income so, ipso facto, lower imports were to be expected.
  • In January 2018, Treasurer Morrison enthused over the success of Government economic policy in reducing the deficit. However, the Treasurer omitted to mention that there had been a spike in export commodity prices and that ATO income had increased due to the fact that company tax losses had now been fully absorbed following the GFC. The reduced deficit was due to good luck not good management.
  • In August 2018, Treasurer Frydenberg enthused on the annual growth rate of 3.4% for the six months ending June 2018 and that  this is on a par or better than Australia’s trading partners. Much more muted was a warning from the Reserve Bank that this  result is partly driven by shoppers drawing down on their savings. This profligacy cannot continue.

A Plea for Informative Economic Reporting.

Treasurer Frydenberg  generated enthusiastic reporting of GDP with accompanying  economic sweeteners. This  is useless information on which to judge the health of an economy. GDP can be generated in several ways:

  1. By immigration and small business development – unfortunately the money supply will churn, quantitative easing will be necessary and the currency will slowly devalue.
  2. By encouraging a domestic building boom –  imports will increase putting pressure on the deficit (Terms  of Trade), money supply will churn unless there is strong offshore buying.
  3. By irresponsibly permitting a savings funded retail spending spree. This is economic madness – the retail sector will benefit but the deficit will increase due to the import of foreign goods. Savings are finite!
  4. By generating infrastructure projects –  overseas funding will be required which will increase the National Debt  but, unless this infrastructure produces export income. the resultant economic activity will produce less useful domestic GDP.
  5. By encouraging strong export income. This is the Holy Grail. Unless the Government can encourage an increasing export, income wages will continue to flatline and increasing pressure will be placed on living standards.

Improving the Treasurer’s Statement.

The Government trumpets its record on job creation We know wages are depressed and under-employment is increasing, but what we do not know is the breakdown of employment into jobs in the domestic economy and jobs in the export industries. With this information, there will be a better informed sense as to how the economy is travelling. The term Jobs and Growth is oxymoronic- the mantra must become “Jobs and Exports”.

JOHN HUGH HILL                                                                                                                   Current Affairs Flash Points  towardsthefinalhour.com                                lurgashall@westnet.com.au

 

 

 

THE LOMBOK EARTHQUAKE August 2018

THE LOMBOK EARTHQUAKE
OR
BEWARE THE BEAST THAT LURKS BENEATH

BACKGROUND
Current ABC ‘breathless’ reporting on the Lombok earthquake negligently omits information on the situation lurking beneath the surface. This article is a plea for balanced reporting.


PLANET EARTH 

Rim of Fire
PACIFIC RIM OF FIRE & SUBDUCTION ZONES (en-wikipedia.org)

The equatorial Indonesian archipelago is part of the Pacific Rim of Fire with its associated subduction zones, earthquakes and volcanos. A subduction zone is formed where a continental plate collides with and is forced beneath another continent. The Australian continental plate is moving north a few centimetres a year beneath the Indonesian islands which form the southern edge of the Eurasian plate. As rocks are driven deeper they melt and then form lines of volcanos: earthquakes are generated as these molten rocks rise to the surface and create volcanos.

Subduction
SUBDUCTION ZONE & VOLCANOS (hhgs.edu.uk)

As the Australian plate moves deeper into the earth’s crust, melting rocks form magma and produce gas and steam which start rising to the surface. This process will generate earthquakes. This could be the situation on Lombok this August. Volcanos along the Indonesian archipelago can produce and destroy islands.

LOMBOK, SAMALAS-RINJANI VOLCANIC COMPLEX
Lombok is an island comprised mainly of volcanic deposits; the island has a geological history of strong earthquakes and catastrophic volcanic eruptions. The geological record proves there were major eruptions around 4000 and 500 BC. In 1257 AD there was a catastrophic eruption (Volcanic Index 7) which vented more than thirty cubic kilometres of rock into the air to be laid down as pyroclastics  and ash over four hundred square kilometres. Dust in the air caused the Little Ice Age in Europe and Asia which altered the climate causing mass starvation.

In 1257, as the magma rose to the surface, it would have caused strong earthquakes and the fractured rocks around the volcano would have facilitated percolation of water towards the volcano. The geological record indicates the Samalas-Rinjani eruption commenced with a massive (phreatic) steam-laden explosion. (Vidal. CM, 10 October 2016, The 1257 Samalas Eruption, Lombok.)

During a ‘breathless’ press interview recently, a witness noted that ‘water levels had dropped’. Certainly the current earthquake would have opened up old fractures and water will be available to generate superheated steam and set the scene for a phreatic explosion over the rising magma. It is reported there have been over 500 after- shocks. Are all these after-shocks, or are some shocks due to rising magma? Has anyone asked the question?

SUMBAWA, TAMBORA STRATOVOLCANO
Sumbawa island is close to Lombok island. It contains the fearsome stratovolcano, Tambora, which lies on the same subduction zone as Rinjani. A stratovolcano is a large volcano that has a long history of strong eruptions.

Geological records indicate Tambora has erupted several times in the last 11,000 years – the Holocene. Major eruptions occurred in 740 and 1816. The 1816 eruption was one of the most devastating in recorded history with an EI 7. The eruption blew out thirty cubic kilometres of ash and pyroclastics and produced a caldera seven kilometres across. More than 100,000 people died from the volcanic activity and starvation.

In recent years there has been earthquake activity in the vicinity of Tambora. The volcano is still active, small eruptions  occurring in 1967 and 2011: earthquakes and steam venting accompanied this activity. (Smithsonian Institute, 28 August 2014, Tambora Explosive History)

Other active volcanos, among many, are Agung on Bali and Krakatoa in the Sunda Strait. The map below shows the amazing number of volcanos along the subduction zone of the Indonesian archipelago.

Volcanos
INDONESIAN VOLCANOS ABOVE SUBDUCTION ZONE. RINJANI & TAMBORA NAMED.
(geology.sdsu.edu)

FOREWARNED
ABC reporting is inadequate. There is no commentary on wider issues associated with subduction volcanism and its disastrous effects. The listening public deserves better. In 1990, the Soviet Union imploded and it was put about that this event heralded ‘the end of history’ – the reverse is true, international affairs are more complex. So too, the eruptions in 1257 and 1816 did not herald the end of subduction volcanism.   20 August.  Two magnitude 6.9 earthquakes have again shaken Lombok on the 19th and 20th August. Since the end of July Lombok has been shaken by four strong earthquakes, 29/7, 5/8, 19/8, 20/8. The epicentre on the 5th August was shallow, taken in conjunction with a report on falling surface water levels this phenomena could indicate  lava is rising beneath Mt Rinjani and water percolating through fractured rocks towards the volcano could cause a dangerous phreatic explosion.
There will be more strong volcanic eruptions.

 

JOHN HUGH HILL
Current Affairs Flash Points.   towardsthefinalhour.com
lurgashall@westnet.com.au

 

BRUSSELS-TRUMP-HELSINKI July 2018

BRUSSELS-TRUMP-HELSINKI

OR

MAKE RUSSIA GREAT AGAIN VERSUS AMERICA FIRST

 

Caption:  QUIET ENGLISH WEEKEND,  JOUER DEJEUNER  OR LIGHT RELIEF BETWEEN ANGELA AND VLADIMIR  (dailymail.co.uk)

QUIET ENGLISH WEEKEND!!   JOUER DEJEUNER. (dailymail.co.uk)

BOISSONS–DRINKS
The same herd of elephants in NATO head quarters will move to the President’s palace in time for the Trump Putin meeting. It is almost certain two important issues will not be properly addressed.

The issues are the fallout from the unilateral decision by Present G W Bush to withdraw from the Anti Ballistic Missile Treaty in 2001 which spawned another arms race between Russia and America. The second issue is the annexation of Crimea and the destabilisation of Ukraine by Russia in 2014. Hot potatoes like North Korea, the Iran nuclear program, Russian interference in Syria, cyber security will be discussed at the expense of the really serious.

ERSTER GANG–FIRST COURSE

Caption:  ‘FOE” AND FAUX PAS, NATO, BRUSSELS
(Business Insider)

FOE
FOE” AND FAUX PAS, NATO, BRUSSELS. (BUSINESS INSIDER)                                                                                                                                                                                                                                                                    At the NATO meeting in Brussels Trump demanded that members increase military spending to 2% of GDP.  If there is a poor response, Trump threatened “America might go it alone”.  This might be a negotiating ploy but behind this statement America has real concerns:
  • The United States requires Europe to remain a strong strategic and financial buffer between the American homeland and the Russian Federation. Just as Russia requires Eastern Europe and Ukraine to be a buffer to NATO and China requires the Nine Dash Line as a first line of defence, so America requires the same. As a digression, China is increasing its influence in the Pacific Islands north-east of Australia which could affect the security of Australian maritime trade.
  • In 2001 America withdrew from the Anti-Ballistic Missile Treaty in order to improve its missile defence systems as a precaution to counter the rise of terrorism. This inevitably triggered a renewed arms race which made Russia nervous of American military power. This has resulted in Russia upgrading  its military capability that is now perceived as a threat to European security. Putin recently made an unusual reference to the development of anti-ballistic missile defence systems and other offensive military equipment.
    (Russian Military Buildup,  4 March 2018, National Interest)

The European Union is America’s most important trading partner, despite the current adverse terms of trade; by contrast Russia is twenty-third in the list.  Also, America requires a stable Europe and a more indefinable, but important, resilient Trans Atlantic Community. (Newsweek, 16 January 2018)

America is still a superior power compared to Russia but ‘boots’ on the ground might pose a threat:

  • The Russian ‘Zapad’ military exercise in September 2017 involved up to 100,000 troops, heavy armour and aircraft adjacent to the Polish and Lithuanian borders. (Washington Post, 23 September 2017)
  • By contrast, a major US led NATO exercise, Sabre Strike 18, only involved 18,000 soldiers from nineteen NATO countries which were spread across Poland, Lithuania, Latvia and Estonia. The exercise was ‘a demonstration of commitment and solidarity to the alliance”.
    (US-NATO Lead Exercise, 3 June 2018, Associated Press)

Prior to Sabre Strike 18, the Polish Government had requested an American armoured division (15,000 men and 44 tanks) to be based in the country to counter Russia’s increasingly aggressive posture along the border. The Polish document referred to Russian aggression in Georgia in 2008 and Ukraine in 2014.
(MENI-ONET, 20 March 2018)

Russia appears to have more ‘boots on the ground’ than NATO at any one time, To counter a hostile act, NATO maintains 30,000 equipped troops with only a 20,000 strong rapid response group that could be mobilised in thirty days. (Die Welt, 3 June, 2018))
Last year there were only 30,000 American troops in Europe. (Business Insiders, 30 August 2017) This information may explain why NATO members must contribute 2% of GDP to increase its deterrent capacity.

OSNOVNOYE BLUDE–DINNER
(Written before the Summit)
The flash points for discussion between Trump and Putin in Helsinki have been well aired. The elephants have now arrived at the Presidentinlinna from Brussels. While Trump made enemies in Britain, they will conclave to ensure that crucial matters will not be addressed. These matters are the destabilisation of Ukraine and the military build up by Russia along the Eastern European border lands.

Details are:

  • Irrespective of Trump’s view of deficient contributions by NATO members, the security of Europe is important to America as its primary trading partner; Russia ranks twenty-third. America must maintain the integrity of European borders.
  • America has a special relationship with Ukraine which makes it surprising that America has permitted Russia to cross a ‘red line’ and annex Crimea and destabilise Eastern Ukraine. Trump should make it clear to Putin that these incursions will not be tolerated. Unless a hard line is taken, Russia will commence  incursions into Eastern Europe – note Poland’s concern.
  • American policy is complicated by America’s special relationship  with Ukraine. Since independence in 1991, Ukraine has has been a good ally for the United States. The country gave up its nuclear weapons following the implosion of the Soviet Union and signed a non-proliferation treaty with America. In 1994, the Budapest Declaration signed by Russia, America and Britain guaranteed the sovereignty of Ukraine. Russia tore up this document with the annexation of Crimea and the destabilisation of eastern Ukraine. This has crossed a ‘red line’. In 2008, Ukraine supplied three battalions to the Iraqi Coalition and was fourth with ‘boots on the ground’ after America, Britain and  Poland. Soon after, President Bush attempted to bring Ukraine into the Atlantic Alliance but this was not supported by Nato members.

KAFE  I  VODKA–COFFEE AND LIQUEUR
(Written after the Press Conference)

Caption: “THE BALL IS IN YOUR COURT”, PUTIN TO TRUMP, HELSINKI. (ABC NEWS)

Ball
“THE BALL IS IN YOUR COURT” PUTIN TO TRUMP, HELSINKI (ABC NEWS)

The Press Conference produced a furious, disgusted reaction in the United States at the performance by President Trump: no substantive issues were discussed to a conclusion. The mood is best summed up by John McCain, Chairman of the Senate Armed Services Committee, quote “Today’s Press Conference in Helsinki was one of the most disgraceful performances by an American President in living memory.” (The Guardian, 17 July 2018)

The Press Conference ended with a brilliant tactical move by President Putin when he threw a soccer ball to Trump with the quip “The ball is now in your court!” President Trump, almost expressionless, quickly threw the ball to The First Lady. Trump has returned to the Washington “Swamp” much discredited and to face the fury of many people.

POKHMELYE–THE HANGOVER
There was no meeting of minds between the two leaders; the incompatibility of ‘Make Russia Great Again’ and ‘America First’ ensured there was no common ground. Major international issues were virtually ignored as both leaders were mindful of their domestic politics and their support base. For Trump, this was a difficult meeting as Russian interference lurked just under the surface. It was probably Trump’s intention to blame the Obama administration for the poor relations between the two countries, not the Trump  administration, but the message was lost in translation between the brain and the vocal chords. The move by Special Council Mueller to indict Russian agents threw Trump into confusion which resulted in Trump endorsing Putin’s view of the election interference situation. This was a PR disaster for Trump.

A diplomatic leak (Gazeta Express, Kosovo, 25 July) from the closed door meeting mentioned a discussion on the partition of Kosovo between Serbia and Albania. Should this proceed then serious boundary disputes and fighting could erupt in Bosnia and Macedonia leading to widespread unrest. ( Geopolitical Futures, 1 August 2018)

Concerning ‘dirt’ on Trump – if there had been, the Russians would not have permitted the press conference to proceed. Strange as it may seem, Russia wants to increase Trump’s standing in the West as he is such a divisive influence: this assists  Russian foreign policy objectives.

In this sorry saga, real damage has been done to one politician, Trump. The electorate and his base know him and the latest ratings show him at 47%.  Nothing much will change in the heartland but a deluge of comment can be expected from his critics. Post Helsinki nothing will change. The slow shift in power politics will continue, but if hostilities should erupt, then a little more rapidly.
(The Trump Putin Meeting, 18 July 2018, Geopolitical Futures)

Caption: JOHN McCAIN, CHAIRMAN, SENATE ARMED SERVICES COMMITTEE>

WORDS
THE WORDS OF AN AMERICAN PATRIOT (Pinterest)

 

JOHN HUGH HILL
Current Affairs Flash Points  –  towardsthefinalhour.com
lurgashall@westnet.com.au

 

 

 

THE DRAGON and the KANGAROO June2018

THE  DRAGON  AND  THE  KANGAROO
OR
WILL  LESSONS  EVER  BE  LEARNT?

Caption – Australia’s Bête Noire. Fishing in contested waters.

Problem
AUSTRALIA”S BÊTE NOIRE. FISHING IN CONTESTED WATERS>
(economist.com)

CURRENT  AFFAIRS FLASH POINTS
The average Australian citizen might see a common denominator to the list below sooner than some decision makers in Canberra. The list unrolled is:

  • The eruption of Mt Pinatubo, Philippines, in June 1991 leading to the departure of American forces from Subic Bay naval base and Clarke airforce base resulting in a military power vacuum.
  • A few months later the Chinese Government reinvigorated the Nine Dash Line in the South China Sea thus increasing its influence over east Asian nations.
  • Darwin port and the 99 year lease granted to the Chinese-controlled Landbridge Group for a paltry $650 million odd.
  • Whispered plans for a Chinese military base on Vanuatu.
  • Huawei Technologies Co Ltd and Australia’s politicians visits to China.
  •  The publication of Silent Invasion by Dr Clive Hamilton.
  • Australia’s recent arm wrestle with Huawei to construct a $200 million undersea communication cable to Papua New Guinea.
  • An announced Australian Government program  to install undersea cables to the Solomon Islands and Vanuatu
  • Foreign Interference legislation passed to protect National Security.
  • Chinese acquired shortwave radio access to Pacific island nations because Australia terminated its well-established shortwave service for a paltry annual net saving of $2.8 million. China, naturally, filled this broadcast power vacuum. (ABC News, 22 June 2018)

Comment will be restricted to the termination of Australia’s shortwave radio services to Pacific island nations and the predictable rise of Chinese influence by snapping up Australian shortwave radio frequencies. Larger issues flow from this.

This decision  will be shown to be a major diplomatic blunder by DFAT and the ABC. It reflects poorly on lessons to be learnt from history on the nature of ‘vacuums’ in geopolitics.

EXIT THE KANGAROO
In January 2017, the ABC formalised a decision to terminate shortwave radio services to the Northern Territory and Pacific nations to save an annual current cost of some $1.9 million. (aph.gov.au, Restoring Short Wave Radio) This decision was made before updated FM services were in place. The reason being the technology was old (but very effective) and would be updated  by FM and digital at a future date. So, immediately, Papua New Guinea’s population of eight million (less 10% with internet access) and several million in other Pacific nations, were in radio silence – not a good way to win friends and influence people.

In June 2017 after the termination, DFAT indicated Pacific nations clearly required this vital service, but the cost would (only) double to $4 million a year. However, net increase would only be $2.8 million a year. (The Strategist, 19 June 2018)
In a thinly-veiled attack, the Lowy Institute’s Melanesian Program Advisor indicated that $2.8 million was no more than a rounding error within the DFAT budget of $1.1 billion in 2016-17 for the Pacific nations. (SBS News, 22 December,2016)

In Pacific nations away from principal population centres, Australia’s shortwave radio service was the only contact with island capitals and the outside world. This service was essential in times of disaster, political instability and security. For eighty years, since the 1930s, Australia has been providing this service to millions of people. The service has won friends, stabilised hearts and minds, promoted trade and national interest. Now we pack up our swags, leave a radio black hole behind us and provide the perfect environment where Chinese influence can flourish.

At a Senate Estimate Hearing in March 2017, the ABC CEO intoned ” I am confident we have met our Charter obligations across all services we needed to provide”. This mean-spirited myopic comment beggars belief. There is a lack of understanding of Australia’s role in the Pacific region involving international relations, security and national interest. The fact that the CEO, Ms Michelle Guthrie, has no experience in journalism or public broadcasting could explain the lack of vision and foresight for the ABC in the Pacific. (theaustralian.com/abc/guthrie)

DFAT appears to have been barely involved and was apparently unconcerned over security, geopolitical issues or trade. In an interview with the Foreign Minister, the Vanuatu Trade Commissioner said it would be a disaster if the shortwave radio service was terminated. Ms Julie Bishop agreed to pass on this concern to the ABC – a totally inept response. History does not record any result. (SBS, 31 January 2017)

While tedious, it is instructive to appreciate the extent of this radio black-out by Australia. Nations affected are Papua New Guinea, Solomon Islands, Vanuatu, New Caledonia, Fiji, Tonga, Samoa, Nauru, Kiribati, Micronesia, Polynesia, Marshall Islands and Cook Islands.

Under questioning, the ABC stated “while there are no firm figures on audience numbers in those regions they are understood to be low”.  In fact, the number exceeds ten million. The view of the Australian Strategic Policy Institute is “this is a dumb decision and another bout of OZ amnesia. (SBS, 22 December, 2016)

Concluding this section, both ABC and DFAT have terminated a vital shortwave radio service apparently oblivious to social, trade and national security implications for a net annual saving of $2.8 million dollars. A vacuum has been created – drum roll for the Dragon.

ENTER THE DRAGON
With Australia’s unwise relinquishment of shortwave radio, frequencies for the Pacific region Radio China International acquired these assets and is now broadcasting to Pacific nations on Australia’s maritime ‘turf’. This was to be expected as illustrated by the Mt Pinatubo eruption and the fallout from the military vacuum.

The irony is that China has acquired valuable radio frequencies for minimal cost, complete with a tied established audience with radios already tuned to Australia’s discarded frequencies. The Voice of Radio China is now heard without adjusting the settings. It is not too late for Australia to re-enter this arena but it will be with a diminished voice. Meanwhile, New Zealand maintains its short wave influence in the region. (RNZ, 22 & 25 June 2018)

The implication of this Australian faux pas is serious and must be considered in parallel with other tensions across Australia’s Pacific ‘turf’. These are:

  • China is seeking to become the the controlling power in Australasia; it has large resources at its disposal.
  • Canberra is seeking to negotiate a security treaty with Vanuatu to address economic aid, maritime surveillance and defence cooperation. It is not impossible to consider Vanuatu could be used by a hostile power to threaten Australia.
  • It has been reported by Australian military sources that China and Vanuatu are discussing a military base on this island nation – so far denied.
  • Unrelated to the above! – China has financed a new cargo wharf on Esprito Santo and completed an upgrade to the international airport. China now owns more than half of Vanuatu’s $440 million foreign debt while, since 2007, trade between the two countries have increased six fold.
  • China is in talks with the Solomon Islands Government to construct an airport and aircraft maintenance facilities on Guadalcanal. (The Times, 1 May 2018)
  • To forestall Chinese intentions, Australia has committed to construct a 4,000 km submarine internet cable from the Solomon Islands to Australia.
  • The Prime Minister of Papua New Guinea  has just completed a visit to China where he has committed the country to the One Belt One Road policy. This is significant as it now places this Chinese trading structure within a canoe ride of the Chinese controlled port of Darwin. (Geopolitical Futures, 25 June 2018)
  • An extraordinary ‘big picture’ is emerging of Chinese influence, military aspirations and trading links involving Papua New Guinea, Solomon Islands and Vanuatu. These island chains control the north-eastern maritime approaches to Australia.

The concept of land or sea barriers between warring states is older than the Roman Empire but still relevant today. Russia’s influence over the Intermaruim plus Ukraine has been a central tenet of Russia as a buffer against Europe. China has sought some security behind its Nine Dash Line. Australia had its opportunity to develop a buffer along the island chains of the Western Pacific but China appears to now be turning this situation on its head to become a security issue for Australia. There is now a discernible trend in Chinese policy – if it is not halted it will continue.

Caption.  Fair Go! Not another problem!
Fishing in contested waters.

Fair Go
FAIR GO – NOT ANOTHER PROBLEM!!  FISHING IN CONTESTED WATERS.  (sbs.com.au)

CLOSE
History is important – two comments:

  • The Nine Dash Line was reinvigorated into the vacuum created by America. The termination of ABC shortwave radio into the Western Pacific, created a vacuum now filled by  Radio China International.
  • The port of Darwin was acquired by a Chinese company without visionary regard to long term trade, security and geopolitical implications by the Australian Government. This unwise arrangement resulted in a mystified  phone call —- Obama  to Turnbull  “What the devil is going on down there?” China now controls many of Australia’s former shortwave radio frequencies. The same question from America is again warranted.

Finally, the burning question is “Just how much America thinks China’s expansion into the South China Sea matters to its interests and how far America is willing to go to protect those interests”. (Geopolitical Futures, 28 June 2018)

The corollary that follows is: how far will America go to protect Australia’s interests in the Western Pacific?

POSTSCRIPT                                                                                                               Since June the Australian Government has reawakened to its obligations in the South-West Pacific by:

  • spearheading a security network to bolster the Pacific Island Forum.
  • providing 21 Guardian class vessels to twelve Pacific nations including East Timor.
  • the recognition of Malaysia, Indonesia and Philippines as buffer states to the Dragon.
  • upgrading the Lombrun Naval Base, Manus Island, PNG.
  • by blocking (postponing) the construction of a Chinese military base on Fiji.
  • by sighing a bilateral security treaty with Vanuatu. (GPF, Oct. ’18)

JOHN HUGH HILL– lurgashall@westnet.com.au
Current Affairs Flash Points – towardsthefinalhour.com

 

 

AUSTRALIAN BUDGET 2018-19 May 2018

THE AUSTRALIAN BUDGET  2018-19

A  DAMOCLEAN BUDGET
FOR
EDUCATION-SCIENCE-INNOVATION-INFRASTRUCTURE

 

Tax Cuts
TAX CUTS OR EDUCATION, R&D, & INNOVATION (news.8btc.com)

Sword of Damocles
Any situation threatening imminent harm or disaster.
Caption – Tax Cuts or Education, R&D & Innovation

 

BUYING VOTES AND DEMEANING DEMOCRACY

Election Budget
TREASURER DELIVERING THE ELECTION BUDGET  (indaily.com.au)

These comments are not a critique of the budget, the intention is to highlight aspects of the budget as it relates to secondary education, tertiary education, R&D, innovation and infrastructure – matters that are important for increasing Australia’s export income.

The centrepiece of the budget appears to be tax concessions to ‘hard working ‘ Australians. Tax inducements was one among several reasons that cost Najib Razak his position as Prime Minister of Malaysia. Rumblings of disapproval have been heard in Australia on this ‘tax reduction’ budget that does not bode well for Mr Turnbull. The Conversation (8 May) has commented ‘this is not a big budget for school funding and that the freeze on university funding continues into this year’s budget’.

In the WE Australian (12-13 May), Alan Kohler noted ‘the Federal Budget is a political event, a statement on election strategy not a report on financial administration’. The term ‘jobs and growth’ will continue to be an oxymoron until export income replaces low, paid jobs churning cash around a fragile internal economy. Well proven round the world and now corroborated in Australia, the trickle down effect from a natural resource rich export economy is a myth.

In delivering the Budget the Government emphasised  its good economic management, proof being the creation of a million jobs and a lower deficit. What the Treasurer did not mention was a surprising increase in export income from coal, iron ore and gas and also a boost to the ATO due to company tax losses from the GFC being fully absorbed. These windfalls were due to good luck not fiscal rectitude. The statement on employment glossed over under-employment and continuing low wages which cannot substantially improve until export income increases. Also last year’s youth jobless rate was 13% with under employment hovering round 18%. ( The Guardian  March 2017)


IMPEDIMENTS TO RISING EXPORT INCOME.

Secondary Education.  Education in Australia is in a deepening turmoil, and yet it is the very foundation for innovation and export income. There are several reasons for this critical situation:

  • Back in 1901, at Federation, the nation inherited the colonial structure that morphed into six states and two territories. Today the nation is burdened with separate education systems managed with variable rigour by several Departments of Education.
    ‘Turf’ protection will ensure there can be no unified national curriculum.
  • Australia has a growing inequality problem. According to the IMF Fiscal Monitor, Australia has the fastest rising inequality rate in the OECD over the past thirty years,  As a consequence, an increasing number of children are growing up in impoverished poorly educated households. The failure of the ‘trickle down’ effect will be a contributory factor to this situation.
  • The OECD League Tables on education standards (March 2015) show Australia at 14th behind Poland and Vietnam. Further more the PISA assessments show Australia consistently slipping between 2000 and 2012. Ranking declines are: Maths 6 down to  8, Science 8 to 16, and Reading down 4 to 13.
  • NAPLAN – Despite its short history there is pressure to abandon the tests, reasons given are that the tests are too stressful for students and there are odious comparisons between schools..
  • Federal and State governments are floundering seeking a solution to the entire education model. The Finnish education model is an outstanding success utilising well-trained highly-paid teachers who operate under a uniform national system. (Simola, H, 2007, The Finnish Miracle of PISA). Australia’s six state education system is an impediment to a national uniform education syllabus.
EDUCATION IN CRISIS – A SUMMATION OF BAD POLICIES (telegraph.co.uk)

Vocational Education & Training (VET). This education division is the big loser. A year ago the Federal Government promised $1.5 billion to the Skilling Australia Fund. No state has signed up to participate although Victoria has donated $200 million to the project. The Government has offered $50 million inducement to any state that signs up by early June. At Budget Night there were no takers.  Vocational Education and Training is in crisis; Australia cannot function without a trained artisan workforce. This situation will lead to an influx of skilled foreign tradesmen  under the Temporary Skill Shortage (TSS) program meaning lost jobs for Australians.

Tertiary Education. The Federal Government has extended last year’s funding freeze to universities in the 2018-19 budget. Funding, however, is available to regional, rural and remote students for Bachelor degrees at rural hubs, student access to youth allowance, Commonwealth supported places and education, training and employment assistance. The government has funded 4000 extra places costing $124 million for diplomas, associate degrees and postgraduate course work. A further 700 new student places costing $96 million ($120,000/student) will be made available for young people from regional, rural and remote areas.

Another twist of the knife into university funding is that from 2020 funding for new students will be based on the 2017 enrolment numbers, adjusted for population growth but tied to attrition, completion and employment numbers. This is grossly unfair since Federal/State education systems are turning out ill-prepared and poorly-educated students struggling to meet required STEM and PISA proficiency. There will be no Government subsidy for additional students and no funding for indexed inflation but the universities will receive indexed student contributions. So the bottom line is funding for students but no funding to improve university infrastructure. It is an election budget designed to foster student supporters.

University
LECTURES UNDER ADVERSITY – A FUNDING  FREEZE. (telegraph.co.uk)

Science, R&D and Innovation.  Australia rates poorly in research and innovation on automation and artificial intelligence. The OECD Innovation Index shows Australia’s place slipping during the past three years – records show 2015-17, 2016-19 and 2017-23 (UN World Intellectual Property Organisation). Further, these conclusions are reinforced by the World Economic Forum: Davos in 2017, was critical of Australia’s performance where a seminar concluded Australia trailed in skills uptake and risks becoming uncompetitive due to poor grasp of STEM. This information is reinforced by Professor Greg Austin, Centre for Cyber Research, ADF, who commented that ‘over the past twenty years the Government has been fostering a culture of incompetence in training in computing skills and cyber security’.

Has the Government been stung into a major initiative by its position on the Innovation Index – 23rd? A National Research Infrastructure Plan will fund projects of the National Collaborative Research Infrastructure Fund to the tune of $4.1 billion .
Objectives are:

  • Develop research institutions.
  • Develop data linkage systems.
  • Leverage of knowledge and learning  to drive innovation.
  • Develop alliances and models of collaboration.
  • Achieve interoperable bioscience.

It is very likely all this work and more could be carried out in existing universities, why the requirement to set up new organisations?

Grants for important scientific research will be maintained at existing funding levels. This is important for continuity. It is also important because R&D in the corporate sector is decreasing.

The proposed corporate tax cut from 30% to 25% will cost the Government net $5 billion a year. Before implementation there are issues which should be considered:

  • The effective tax rate after deductions is already about 17%.
  • Presidents Regan and Bush reduced corporate tax rates to stimulate the American economy, the result was disaster. Companies bought back shares, went looking for new investments, but did not employ more staff. President Clinton raised corporate taxes, created jobs and reduced the deficit.
  • The Turnbull Government appears oblivious of this case study.

Research & Development. The Government has placed the Sword of Damocles over Research & Development, Innovation and also, on the mantra of ‘Jobs and Growth’ in Australia. Professor Roy Green, Innovation Advisor, University of Technology, Sydney, considers the budget is not good for Australia’s Research and Development industry. (Science Show 19 May) Professor Green considers that, at a time when Australia is struggling to innovate away from a resource driven economy to a high tech export economy, the budget is a disappointment, the more so when the corporate sector will receive $5 billion a year income tax saving  while this sector expenditure on R&D is declining.

The Government has cut $2.4 billion from the R&D tax incentive so that now revenue measures have been bought forward and spending measures pushed back. The proposed commitment of $1.9 billion over 12 years ($158 million a year) is almost meaningless beyond the four year forward estimates. During the Abbott and Turnbull Governments the science and R&D budgets have been cut by around $2.0 billion. In terms of comparison, the proposed tax concession to the corporate sector is effectively a handout by the Government of $5 billion a year and this at a time when corporate R&D is declining.

Funding for R&D has also taken a hit. The tax relief threshold for R&D funding has been raised and funding has been reduced. Holland along with Australia are the only members of the OECD that rely on tax incentives  to fund R&D. Professor Green considers the future is bleak for science, R & D and innovation. The Academy of Science concurs with this assessment. Regressive elements of the budget are:

  • The R&D tax offset will now have the cash refund capped at $4 million per year with additional expense carried forward.
  • Companies with less than $20 million turnover were eligible for a 43% refund of a refundable tax offset, this is now lowered to 41%.
  • The threshold that can be claimed at the allotted R&D tax offset rate is being raised from $100 to $150 million for the financial year. (Research and Development Services, 9 May 2018)
Innovation
INNOVATION (goldennews.com.au)

 Infrastructure. King &Wood Mallesons (8 May) have provided an analysis of infrastructure forecasts that could be construed as an election budget. Major projects in the budget provide for $75 billion expenditure over a ten year period. Beyond the four year estimate the funding cannot be guaranteed. Some $12 billion is to be spent during forward estimates period in six states on road, rail and bridge upgrades. Additionally, $44 million is earmarked for innovation studies for Roads of Strategic Importance and Infrastructure and Regional Cities portfolio.

Three new funds have been created:

  • $250 million for a MajorProject Business Case Fund to assist with the development of business cases for future critical land transport in infrastructure projects. This appears to be placing the cart before the horse – mining, agricultural projects and industrial ventures all depend on resources and capriciously, where one finds them.
  • $1 billion to establish an Urban Congestion Fund to support projects to alleviate congestion, improve traffic safety and commuter/freight movement. London is the obvious starting point but the whole process will be bedevilled by politics, not science and logic.
  • $536 million will be spent over five years to regenerate the reef. This is probably a political decision where ‘something must be seen to be done’ before the election. Scientific study will  identify problems from rising sea surface temperatures and chemical run off from inland agriculture. Professor Grabic, Environmental School, Griffith University, states ‘the 2018 budget may not go far enough to save the Reef. The problem is not only declining water quality but expanding coastal development, bleaching, acidification, extreme weather events, marine heat waves and cyclones. Risks cannot really be addressed, they are inevitable as the climate changes. Progress on water quality is slow and targets may not be met’.

A Voice of Reason. Andrew Mackenzie, CEO, BHP, was critical of the size of the infrastructure budget. He suggested this is the responsibility of private enterprise not government. (FR 11 May) The commitment of $24 billion in projects with a ten year program exceeding $75 billion is not wise. Pledges for funding have been made through equity investments thus big ticket difficult items like the National Broadband Network can be kept off the balance sheet. The real problem is the Government strategy could result in financial loss if projects do not achieve commercial return. The firm message is government should use money for education and health, not funding infrastructure.

Australia should create incentives to use corporate balance sheets to invest in infrastructure; corporate knowhow and ability is normally better than governments. The interests  of the nation would be better served by investing in education, research and health. These sentiments are endorsed by Dr Bowditch, Executive Director, Better Infrastructure Institute, Sydney. He commented  that too many projects are orchestrated and funded by government which sits oddly with Super Funds which have the capacity to invest in infrastructure. This whole situation needs redress.

Private enterprise should be given the chance rather than relying on taxes taken from ‘hard working Australians’. Using private funds will free up government funds for budget repair and targeting community and social infrastructure – direct commercial returns will be low but the quality of life will improve.

Comments by Andrew Mackenzie raise fundamental issues  on government policy which cannot be addressed here. Commentators have noted that the 2018-19 budget is an election budget so the question must be asked:  is all infrastructure work in the six states absolutely essential or is this expenditure designed to curry votes?

Final Word. With respect to budget policy on education, science , infrastructure and innovation, the consensus is that the budget will do little to promote high-tech export-income Science and innovation; the main drivers to generate export markets are not well funded.

Secondary education is in disarray, university funding has been cut  by at least $2 billion, there appears to be no strong impetus to improve on  the IMF Innovation Index and R&D funding has been made more expensive. Finally, according to the BHP CEO, private enterprise should do more heavy lifting for infrastructure and the Government should concentrate on raising the nation’s living standards. There is much room for improvement.

By the end of the financial year the Sword of Damocles will still be hanging by a thread.

end of year
THE END OF THE FINANCIAL YEAR (gdpr2-1 jpg)

 

JOHN HUGH HILL
Current Affairs Flash Points – towardsthefinalhour.com
lurgashall@westnet.com.au

 

 

AUSTRALIA’s ENERGY CRISIS April 2018

AUSTRALIA’s ENERGY CRISIS April 2018

THE PROBLEM

COAL
COAL FIRED POWER STATIONS – USE BY DATES          (AEC– PWC)

The image is a snapshot of the use-by-date of Australia’s Power Stations – in other words, the fiftieth year and the final period of their economic life.  For example, Lidell NSW, will reach this critical situation in 2021-2022. The Power Station has been in the news as  the Government has requested that this ageing behemoth continue electricity generation to slow down Australia’s looming power crisis. The image clearly illustrates Australia’s declining dispatchable power in the coming decades. The need for dispatchable energy needs to be augmented by new hydro, coal or gas power stations.

From the early 1990s, a succession of Liberal and Labor governments have failed the Australian people by ignoring this unfolding energy crisis.  Within our political elite there is a culture of evading responsibility, best illustrated with politicians consistently blaming the other Party for the current situation. The Three Year cycle impedes forward thinking.

THE NATIONAL ENERGY GUARANTEE
To solve the urgent problem of the declining power supply in south-eastern Australia, (NT and WA excluded), the government has proposed a National Energy Guarantee that has yet to be unconditionally approved by the States and the Labor Party.  A sticking point is that the States are running their own emission reduction programs and have raised the concept of ‘additionality’ whereby they be credited with lowering emissions within the 26% envelope set by the Federal Government; this the Government refuses to do. Tasmania has opted out as the State Government wants no part of mainland high energy prices. Any Parliamentary legislation must be supported by both political Parties otherwise Australia’s long term energy policy remains in chaos.

In October 2017, the Government announced a new National Energy Policy. The Government has scrapped the Clean Energy Target proposed by the Chief Scientist, Dr Finkel, and has replaced it by the National Energy Guarantee for ideological reasons. The Clean Energy Target provided an incentive for new low emission forms of energy generation to enter the market. The National Energy Guarantee, unfortunately, entrenches the power of the big three retailers, AGL, Origin Energy and Energy Australia.

So, summarising the National Energy Guarantee:

  • The Government will scrap the Clean Energy Target based on science and will not extend the Renewable Energy Target beyond 2020. The Renewable Energy Target was intended to encourage electricity generation from renewable resources to meet a 20% share in the national power supply by 2020.
  • The Government will attempt to legislate a National Energy Guarantee which requires retailers to meet two targets:
  1.  The Reliability Guarantee.  This requires retailers to supply electricity from dispatchable sources which including batteries, hydro, gas and coal.
  2.  The Emissions Guarantee.  Retailers will be given targets to drive down the power sector’s green house gas emissions by 26% of 2005 levels by 2030. This is consistent with commitments made at the 2015 Paris Climate Treaty.

By 2030, the Government forecasts {hopes) that 28%–36%  of electricity generation will be from renewables of which 24% will be from wind/solar and by inference 8% from dispatchable pumped hydro, which explains why Snowy 2 has recently splashed onto media pages. Again, by inference, 68% of energy must still come  from coal/gas-fired power stations, hence the Government’s attempt to seduce AGL over Lidell. In a bizarre twist, a Hong Kong company, Chow Toi Fook Enterprises, has expressed an interest in Lidell, not for energy production but for its ‘poles and wires’, worth billions.

AND YET MORE PROBLEMS
Regarding solar power development, Australia lags well behind European nations who have a fraction of sunlight hours that Australia wastes. Why?

Solar Power
LOSING THE SOLAR RACE (REN 21))

The Snowy 2 pumped hydro scheme has become a common phrase in recent months; the Government is actively considering a major new power generator in the Snowy Mountains. It is hoped this facility will assist in providing the 8% of dispatchable power for the National Energy Guarantee plan within a decade. The objective is to supply power to 50,000 homes. A $29 million feasibility study has been completed which indicates a construction cost round $4 billion and transmission costs to New South Wales and Victoria of $2 billion. Engineering studies suggest that, as configured, it will increase electricity demand, increase carbon dioxide emissions and in fact, may require coal to generate the water supply. The project could not operate in a normal commercial market as it may not produce an acceptable rate of return and would require government subsidy. (Cost Blow out. New Economy, 21 Dec, 2017: The Guardian, 20 Dec 2017 )

The National Energy Guarantee will only apply to members of the National Energy Market. This excludes WA and NT since there are no transmission lines to the Eastern States. Also, Tasmania  has withdrawn as there is no wish to be lumbered with mainland high power prices. Thus, from 2020, these markets might not be subject to a Federal emissions reduction policy.

The Government has further indicated that when (if) COAG approves the National Energy Guarantee, (meeting on  20 April 2018) the average Australian household will save between $110-$115 per year between 2020 and 2030 – equivalent to   thirty three coffees or four smashed avocado breakfasts. (The Conversation, October 2017)
Post Script: the States will continue towards an Agreement.

Adding to this largess, the Shadow Minister for Energy, Mark Butler, at a media address on 8 February, 2018 stated the National Energy Market will increase electricity prices by $430 in NSW and $250 in  Victoria from 2019 due to Government inability to address the gas supply crisis. Large reserves are locked up in both States for political reasons.  The question may now be ventured – are the  States, ossified in1901, now approaching their use by date?

Gas
COAL SEAM GAS CRISIS IN NSW (Australian Mining – Economic Scenario

THE RELIABILITY GUARANTEE
The Australian Energy Market Operator (AEMO) has stated “Australia’s energy resources have reduced to the extent that there is heightened risk of significant unserviced energy requirement  over the next ten years compared with recent levels. The age of the coal-generation fleet is expected to result in the closure of plant over the next decade”. In plebeian speak, that is ‘Houston we have a real problem” which will lead to a surge in the birthrate. In plain English, in the next ten years there will be an electricity shortage and the lights will go out.

Despite the three-year advice required before closure recommended by the Chief Scientist, feasibility, planning approvals and construction will take a decade but large-scale renewable resources will take less time to bring on stream. The problem now for investors is that technology is improving and costs are reducing so rapidly that investors will be reluctant to make long-term strategic decisions on power generation. Under the Reliability Guarantee, generators/retailers may try to drive their equipment past use-by-date to meet near-term obligations rather than embarking on new generator capacity – this will favour existing generator-mix without improving it.

Also, overly risk-averse reliability guarantees may lead to excessive obligations placed on retailers and thus drive up costs for consumers. Similarly, uncertainty in demand caused by unforeseen events, (for example – a smelter closure), will encourage retailers to write  short-term contracts.

On an optimistic note, the imposition of a Reliability Guarantee may have the potential to open new markets powered by renewables that can dispatch on demand.

THE EMISSIONS GUARANTEE
Under the 2015 Paris Climate Agreement, Australia committed to reduce carbon dioxide emissions by 26% below 2005 levels by 2030. The scientifically generated Finkel Climate Report recommended a 42%  reduction. The Government has opted for an ideological target which is politically acceptable but not in the national interest.

Emission data for Australia, after Origin Energy are:

  • 2005 emission level – 610 Mt carbon-dioxide equivalent
  • 2017 emission level – 550 Mt
  • 26% of 2005 level of 610Mt –159 Mt
  • Australia’s reduction of 2017 level – 610-159 = 451Mt
  • Australia must reduce 2017 level by 550-451 = 99 Mt
  • 2017 level must therefore be reduced to 451 Mt by 2030
  • Australia must therefore reduce emissions by 99 Mt by 2030

The Emissions Guarantee generates two questions;

  1.  What is the percentage of the portfolio that must come from renewable resources?
  2.  Should the portfolio as a whole have a carbon intensity below an agreed threshold assigned to an energy production company?

Either way, the Emissions Guarantee must encourage investment in renewables. The Emissions Guarantee will be assisted by:

  • Reducing fossil fuel generation; however, existing generators will soon be closing down anyway, around the time of their 50 year use-by-date.
  • Increasing output from lower emission renewable resources and reducing emissions from fossil fuel generators – but, the double whammy is that renewables must replace ailing generators while, at the same time, providing additional sustainable energy above the existing fossil fuel generators.The magnitude of the current energy replacement problem in Australia is reflected in the energy production from various sources:
  1.  86%    fossil fuels –  coal and gas
  2.   7%      renewables –  wind and solar
  3.   7%       hydro

The irony of this situation is that renewable projects, either existing, under construction or planned, are expected to meet the Renewable Energy Target of 20% of the National Energy output by 2020, and contribute about 23% of generated output to the National Energy Market. This therefore requires 77% from the fossil fuel generators.
From the data above this will not happen.
(National Energy Guarantee, PriceWaterhouseCoopers, Oct,2017)

NOT THE LAST WORD
PriceWaterhouseCoopers have concluded the rationale for the National Energy Guarantee is sound. However, the guarantee thresholds need to be defined so that investors can assess commercial impacts of the legislation. With the  imposition of more regulations the main energy retailers can act as a barrier to new entrants into the market.

In a radio interview on 12 April 2018, the Shadow Minister for Energy indicated that there are design flaws in the proposed National Energy Guarantee which the Australian Competition and Consumer Commission wish to see amended. Currently, the three big retailers, AGL, Energy Australia and Origin Energy, will obtain too much power causing power prices to rise. The big three will effectively act as ‘gate keepers’ that will keep new investors out. This will disrupt contract markets which tend to stabilise power prices. There are also competition and transparency issues which will harm the economy if not fixed.

The position with Labor, should it win office, is that the reduction target for emissions will rise from 26% to 42% by 2030 in line with the Finkel Climate Review. This will, hopefully,  ensure global warming does not rise above 2ºC.

FINALE
On the national energy front, Australia is facing three power supply problems that have combined to produce a ‘perfect storm’.

  1.  As early as 2000, Australian politicians should have considered the use-by-dates of the nation’s coal-fired power stations and now it is too late. Australia’s dispatchable energy within a decade now runs the risk of decreasing by one third unless the power stations are flogged to death. Sustainable energy, on current progress,  is presently 7- 8% and the industry will be hard pressed to make up the short fall.
  2.  The domestic gas industry is in crisis. Victoria and New South Wales have abundant gas reserves but State Governments have refused to grant extraction permits. The Northern Territory has just lifted its embargo. The Australian Government has effectively excluded citizens from using Australian gas before export to east Asia.
NO GAS FOR THE BARBIE – ONLY FOR EXPORT (theaustralian.com)

3. The 2015 Paris Climate Conference has forced Australia into a commitment to reduce emissions to 26% below its 2005 levels. This is a problem due to Government inertia and little positive encouragement to industry.

AUSTRALIA”S FUTURE PROBLEMS

POWER – JOBS – HOUSING – EDUCATION

Power
“LET THERE BE LIGHT” (WTF+WIDE+2)   POWER  +  JOBS  + HOUSING  +  EDUCATION 

Voices within Government once proclaimed  ”COAL IS KING”.

HABEAS CORPUS
(A writ requiring a person under arrest to be brought
before a judge).


JOHN H HILL
   lurgashall@westnet.com.au
Current Affairs Flash Points   towardsthefinalhour.com.au

References                                                                                                                    Clean Energy Regulator, Australian Government                                Origin Energy, 22June 2015, Energy Distribution                              National Energy Guarantee, Oct. 2017, PriceWaterhouseCoopers      National Energy Guarantee, 17Oct, 2017, TheConversation Australian Energy, 20 Dec 2017, The Guardian                                    Snowy 2 Cost Blowout, 21 Dec, 2017, New Economy                Australian Energy, 21 Dec 2017, Aust. Renewable Energy Agency National Energy Markets, 5 Feb 2018, Shadow Energy Minister National Energy Guarantee, 12 April 2018, Shadow Energy Minister

 

 

AUSTRALIA & ASEAN March 2018

 

AUSTRALIA & ASEAN      March 2018

ASEAN
SYDNEY WEEKEND
(www.rfa & Philippines DFA)

BACKGROUND BRIEFING
Australia pulled off a diplomatic coup by hosting an ASEAN Special Summit in Sydney in mid-March, the more so since Australia only had ‘Dialogue’ status upgraded to ‘Strategic Partner’ in 2014. As background information,  the constraints and obligations of treaties and agreements swirling round individual ASEAN members  add to political complexities for an aspiring  cohesive southeast Asian community.

Precursor to the ASEAN agreement was the 1967 Treaty of Amnity and Cooperation initiated in Bali by Indonesia, Philippines, Singapore and Thailand. The objective was to promote perpetual and everlasting amnity among their peoples, an anti-colonial consensus facilitated a common bonding.

The ASEAN Agreement was signed in Bandung in 1987 by the founding fathers, Indonesia, Philippines, Singapore, Thailand and Malaysia and other regional nations, Vietnam, Myanmar, Cambodia, Loas and Brunei joined soon after. The objective was to promote Pan Asianism, intergovernmental cooperation, and to facilitate economic, military, educational and socio-cultural integration. Obviously Australia is anxious to forge closer ties with ASEAN for economic and strategic reasons, but there are fundamental reasons why a closer association might be difficult. ASEAN, like the EU, was conceived as a mechanism to maintain harmony and border security between fractious southeast Asian nations. A basic tenet was there was to be no interference in the internal affairs of any member nation.

In 1989, Prime Minister Hawke promoted the establishment of the Asia Pacific Economic Forum  (APEC). Later the same year national representatives met in Canberra to formalise the Association, they were Malayasia, Brunei, Japan, Korea, Canada, New Zealand and the United States, Ultimately, the group was joined by China, Vietnam, Russia, Chile, Mexico, Hong Kong and Peru. The objectives were to promote  trade and peaceful cooperation across the Pacific. It is significant that APEC brought to the table nations that ASEAN regarded as enemies or who sought economic domination.

APEC was an international  grouping where industrialised  (First World) nations would seek markets into less developed nations struggling to free themselves from agrarian constraints. The former raising taxes on commercial production, the latter raising rent seeking income.

In 2005, Australia reluctantly signed the Treaty of Amnity and Cooperation  (TAC) to ensure Prime Minister Howard  received an invitation to the year end East Asian Summit which was to be attended by eighteen regional nations. Australian attendance was critical since the southeast Asian region receives 60% of Australia’s exports. (AM RN 10 December 2005) Australia’s concern on signing the TAC was this action should not impact on the ANZUS Agreement or be binding on the Bandung Principle of Non- Alignment.

In 2006, the P4 Trade Agreement signed between Brunei, Singapore (two wealthiet ASEAN economies), New Zealand and Chile formalised a desire to promote trade.

Another layer of complexity impacting on ASEAN is the Trans Pacific Partnership ratified in March 2018 to promote trade and closer economic ties. Signatories are Brunei, Malaysia, Singapore, Vietnam, Canada, Australia, New Zealand, Chile, Mexico, Peru and Japan.

 

CORE ISSUES
The ASEAN community is in a state of developmental flux, from modern industrial  to relatively undeveloped agrarian economies. There is a desire to raise living standards under controlled democratic principles. The difference between most ASEAN members and Australia is stark. The data in Table1, illustrating GDP/pperson (not wages) and hourly labour rates, illustrates the disparity in living standards. The data on Brunei, Singapore and Australia clearly indicates problems of economies reliant on natural resources: Brunei is blessed with abundant energy resources; Singapore has built up a strong economy on trade, services and high tech exports; Australia’s economy still overly relies on natural resource exports which must be partly replaced by manufactured exports to maintain the very high living standards.

Table 1   Australia and Asean – Comparative Data   $US   IMF   2018

Data sets out population, national GDP, GDP/person (not wages) and minimum hourly wage, a measure of economic development.

COUNTRYPOPULATION MGDP BGDP/personHourly Rate
Indonesia26110924,1840.46
Philippines1033573,4661.12
Vietnam932352,5260.73
Thailand694676,7681.06
Myanmar53741,3450.39
Malaysia3134111,0000.93
Australia24120450,16613.59
Cambodia16241,500na
Loas7192,7140.83
Singapore631652,366na
Brunei0.41230,000na

 

The table below illustrates Australian Export and Import data with the global trading blocs. It should be noted the ASEAN bloc is relatively minor in value with Australia showing a negative Terms of Trade for 2016.

 Table 2   Australia and its Trading Blocs.

 

TRADING BLOCEXPORT $A BEXPORT %!MPORT $A BIMPORT %T of T
APEC2517623766+24
ASEAN38115516-5
EU3096720-37
G202347123368+1
OECD1303917150-37

(Composition of Trade, Australia. DFAT Table 9)

Unsurprisingly, Australia has an overall trading deficit which, of course, shows up in the national accounts. Australia’s long term objective is to assist in raising education and living  standards which will be reflected in higher labour rates. Australian exports must concentrate on education, services and development products.

Now to the smaller picture where the devil is in the detail. The table below provides export-import data on Australia’s top fifteen trading partners. These figures are surprising in that they indicate the southeast Asian nations have a trading surplus with Australia for 2016. This is a problem that should interest DFAT and AusTrade.

Table 3  Australia’s Trade with ASEAN,  among top 15 Partners

CountryExportExportImportImportT o T
Rank$A BRank$A B$A B
Hong Kong8
12.5---
Singapore910.3712.3-2.3
Indonesia117.4117.9-0.5
Malaysia127.41010.2-2.8
Vietnam135.1155.4-0.3
Thailand144.6416.5-11.9
4746

DEBRIEF
The Sydney Declaration following the Summit formalises the Leaders’ consensus way forward. There will be a joint effort to shape and secure a prosperous regional future through a range of measures. and there is to be significant collaboration in strenthening regional security. The public manifestation  of the Summit has been one of necessary protocol, smiles, pressing flesh, compliments and canapés. What should happen when leaders return to their respective fiefs, but probably will not, is firm instruction to a myriad bureaucrats, industry executives, technologists and academics to ‘make it happen’.

Australian politicians will have to look beyond the next three-year cycle to the IMF projections when, by 2030, ASEAN is slated to increase from the seventh to the fourth largest export market.

At the Summit, an ASEAN minister made a very polite but adamant statement that “Australia will never become a member of ASEAN. Australia is an extremely good friend of ASEAN nations and Australia is welcome as a dialogue partner”. (SMH, 24 March 2018) The principle problem is that Western European Caucasian-rooted culture is totally different to the southeast Asian Indo-Aryan and Dravidian-rooted culture. There is virtually no common ground except a desire for prosperity and security. There is no desire to see a powerful economic neighbour overwhelm the system and there is certainly no appetite to have Australia impose Western style democracy, rule of law or Christian inspired human rights legislation.

The last word comes from the Lowy Institute. (27 Marct, 2018) Former Prime Minister Keating addressed Australia’s Southeast Asian dilemma by stating “Australia needs to seek security in Asia, not from Asia”. Since Australia cannot integrate until its demographic substantially changes, the best policy is for Australia to remain a Dialogue and Strategic Partner and position itself to become a tower of technical assistance and an unbiased trading partner.

ASEAN
SULTAN OF BRUNEI DEPARTS
(Grahame Hutchinson, 16Right.com)