What happened to our electricity system in the heat? Coal and gas plants failed

Extract from The Guardian

Opinion

Climate change

Nicky Ison

We still have time to avert the worst impacts of climate change, but heatwaves are now an inevitable part of Australia’s future

@nickymison

Thu 31 Jan 2019 08.51 AEDT Last modified on Thu 31 Jan 2019 17.26 AEDT

‘We need to recognise climate change is causing more heatwaves which brings increased risk of localised blackouts and even load shedding.’ Photograph: Hamish Blair/Getty Images

Heatwaves and blackouts have been the talk of the town as temperatures climbed over 40C in all states except Tasmania, and once again the commentariat have gone into a renewable-generated bluster. Chris Uhlmann and Alan Moran blamed the high prices on wind power, Pauline Hanson called for people to use more power and Judith Sloan called demand management a bribe.
There were three notable things that happened with our energy system during what will become the new normal of extreme heat.

1. It was hot

At the end of last week it was hot. Like, record-breaking, fry an egg on the pavement hot. Many parts of South Australian and Victoria faced their hottest days on record.

As Australians tried their best to stay cool, almost everyone who had an air conditioner switched it on and we experienced a “peak demand” event. This is a period where our electricity system is stretched to its limit and wholesale electricity prices reach their peak.

As our planet warms we can expect more days like Thursday and Friday. While we still have time to avert the worst impacts of climate change, some warming is now locked in and that means the heatwaves we have experienced more than once already this summer are now an inevitable part of Australia’s future.
So what should we do about it?

Australia needs to get serious about reducing climate pollution, which continues to rise and do our contribution to stop runaway global warming.

We can improve our houses and building so they better manage the heat. Australian houses are sometimes called leaky tents; they let in the heat in summer and the cold in winter.
It doesn’t have to be this way. Insulation, double-glazing, draft proofing, better building standards, all these things will keep your house passively cool and reduce (though not eliminate) the amount of air conditioning you need. It’s not rocket science, but currently we aren’t doing any of this.
We can also upgrade our air conditioners to be more energy efficient. According to energy analyst Tristan Edis, new air conditioners use half the electricity of the majority of air conditioners that were installed in the early 2000s. On hot days, this would make a significant difference.

2. Coal and gas plants failed

Our coal and gas plants are ageing. As they age, they breakdown and need maintenance more often. Last week was a case in point. In Victoria, Yallourn power station took one of its units offline for maintenance and another had to be taken offline unexpectedly early Friday morning. Also in Victoria, Loy Yang A had a boiler tube leak just before the heatwave hit and was out for the duration. In New South Wales, Liddell and the Tallawarra gas plants were both offline for many days due to unplanned faults.
These six coal and gas units totalling 2,225MWs of capacity were not available for at least some of the period of Australia’s most intensive heatwave on record.
This is at best a sign that our coal plants are getting old and can’t be relied on at peak times and at worst it was price-gouging behaviour by some of Australia’s largest energy companies.
We need to get serious about demand response. Demand response is when households and industry are paid not to use electricity for some nonessential operations for a period of time. While this isn’t a great idea all year round, for a few hours on a few days a year it’s the cheapest and most effective way of maintaining an electricity system. This is standard practice in the US and Europe where they even have markets for demand response. This is urgently needed here, but was resisted by rule-maker, the Australian Electricity Market Commission (AEMC), until late last year.
We also need to continue to build new electricity supply in the form of solar, wind, battery storage, pumped hydro and similar.

3. There were blackouts

At the end of last week we experienced two types of blackouts. First there were localised blackouts affecting about 25,000 households in South Australia on Thursday night. These were due to fuses blowing in our distribution infrastructure. These fuses are designed to blow when infrastructure gets too hot so that it isn’t damaged. This was the electricity system working as it should. It isn’t surprising given the record temperatures.
The second type of blackout experienced was “load shedding”. This is where the market operator temporarily cuts off some energy users from the system to ensure “system integrity” and to ensure it doesn’t fail catastrophically. In Victoria on Friday afternoon, 160,000 customers were blacked-out over a two-to-three-hour period.
Load shedding is the action of last resort and Aemo did everything it could before taking this path. It fired up emergency reserves, asked big energy users to power down and appealed to us to lower our electricity use.
Australia’s electricity system is incredibly reliable, typically exceeding our reliability standard of 99.998%. That basically means that the electricity supply needed is available 99.998% of the time.
Almost all blackouts in Australia (96.6% according to the AEMC) are because of faults in the poles and wires. What happened on Friday was very rare – only 0.2% of blackouts occur because there isn’t enough operational generation in the system.
However, particularly for people suffering health conditions as well as older and younger people, power outages are dangerous and they aren’t good for business either.
So what should we do about it?
We need more on-demand capacity – there is need for storage (batteries and pumped hydro) and dispatchable solutions (concentrating solar thermal and demand response), that can turn on and ramp up quickly.
Renewables (hydro, solar and wind) account for about 20% of generation in the National Electricity Market, higher in South Australia. Over the two-day period in question, renewables averaged higher than 20% generation and on Friday afternoon, when power was needed most, a combination of hydro, wind and solar provided over one-third of Victoria and South Australia’s power.

However, while wind and solar will provide the bulk of our annual electricity need in the future, there is need for on-demand solutions. These solutions will fill the gaps in the two to six hours overnight where there is a lull in the wind, or when forecasts (demand or supply) are wrong.

The good news is that CSIRO and Aemo have found that just such solutions – wind and solar backed by batteries and pumped hydro are also the cheapest new-build options to deliver reliable, clean electricity supply.
We need to recognise climate change is causing more heatwaves which brings increased risk of localised blackouts and even load shedding. We need to start adapting to this new normal. One strategy to do this would be to create community cool zones where people can go to stay cool in extreme heat. These cool zones should have backup power that means they will stay cool even during blackouts.
Finally, we also need to have strategies for giving people, particularly vulnerable people, more notice of potential blackouts. If we get serious about demand management there will be better systems in place to provide this notice to people and even incentives and support for folks to go to the movies or a community cool zone.
While we can never have an electricity system that is 100% reliable, there are straightforward policy and engineering solutions that can increase our electricity system’s resilience to climate change in the future.

• Nicky Ison is the founding director of the Community Power Agency and research associate at the Institute for Sustainable Futures at the University of Technology Sydney.

Graziers rejoice as deluge soaks drought-ravaged western Queensland

Extract from ABC News

ABC Western Qld

By Kelly Butterworth and staff

Updated about 3 hours ago

Video: Deluge drenches drought-ravaged Fairview Station at Kynuna in north-west Queensland (Facebook: Caitlin Tait) (ABC News)

Related Story: Disaster declared in Townsville as monsoonal weather persists

Rain is finally falling in western Queensland with drought-stricken graziers grateful for the reprieve from the dry conditions as heavy but patchy rain falls across the west.

Fairview Station at Kynuna, north-west of Longreach received 205 millimetres with more rain expected in the coming days.

Photo: Rain is predicted to continue at Scartwater Station near Charters Towers in north Queensland. (Facebook: Terrie Pedracini)

Caitlin Tait, from Fairview Station said the wet weather was filling the dams on the property.
"We have had a total of 205mm, leaving mass amounts of water laying, filling dams, running creeks, increasing our much-needed water supply," Ms Tait said.
"We should see a dramatic comeback in the country after this rain, with the grass getting such a good soaking.

"Keep it coming — what an amazing start to what we hope to be a long and very wet wet season — it's a massive sign of relief for many."

Ms Tait said her young son was enjoying seeing his first wet season, which was a treat for all.
"We're hoping everyone gets some much-deserved rain after a few very long, very hard years," she said.

Photo: Stawellton Station, north-east of Richmond in north-west Queensland, received a drenching. (Facebook: Jacqueline A Jones)

Mckinlay Shire Mayor Belinda Murphy said she was happy to report she had pulled her raincoat out for the first time this year.
"It's so exciting seeing the rain we've got," Cr Murphy said.
"It's so pleasing to see we've had some widespread rain.
"Kynuna has had over 110mm … to the north of the shire, there's been falls of 150 to 160mm."

Video: Deluge at Walkabout Creek Hotel in McKinlay Shire in north-west Queensland (Supplied: Walkabout Creek Hotel). (ABC News)

She said for once it seemed like everyone was sitting under a cloud.
"I'm pretty confident that everyone is getting something out of this and hopefully it's going to last a few more days," she said.
"It's very exciting for our communities to see this low come in and basically a monsoonal event start to happen."

Photo: Children play in water after a deluge at Stawellton Station, north-east of Richmond in north-west Queensland. (Facebook: Jacqueline A Jones)

While the west was revelling in the falls, the brunt of the weather had been seen on the north Queensland coast near Townsville.
Oak Valley resident Ronnie Thomson said they had seen a phenomenal 769mm of rain fall since Sunday night to Thursday morning.
She said her daughter, Evelyn, had been having "an absolute ball stomping through all the puddles".

Photo: Ms Thomson's daughter, Evelyn, has been having "an absolute ball stomping through all the puddles". (Facebook: Ronnie Thomson)

"I'm from Richmond originally off a cattle property and we always needed rain like this," Ms Thomson said.

"I'm really hoping it heads out that way and stretches across the state to all the farmers who actually need it.

"It really is all going to waste here now, with the opening of the spillway from the Ross [River] Dam yesterday."
Rain is expected to continue to fall in the region across the weekend.

Photo: Water flows over the spillway of Ross River Dam between Kelso and Mount Stuart in Townsville. (Facebook: Travis Robertson from Oz Cyclone Chasers)

Homeless Australians given financial penalties under Coalition's welfare regime

Extract from The Guardian

Homelessness

Exclusive: 161 homeless or at risk welfare recipients were hit with a financial sanction between July and September

Luke Henriques-Gomes

Thu 31 Jan 2019 04.01 AEDT Last modified on Thu 31 Jan 2019 04.02 AEDT

Nearly 20,000 people considered homeless or at risk were given ‘demerit points’ under the Coalition’s welfare compliance regime. Photograph: David Moir/AAP

Nearly 20,000 people considered homeless or at risk of losing their accommodation were handed at least one “demerit point” – a warning that often comes with a temporary payment suspension – in the first three months of the government’s welfare compliance regime.
Government data also shows 94 people with a “homelessness” indicator in their case file were kicked off income support for four weeks due to a “work refusal” or “unemployment failure”. In total, 161 homeless or at risk welfare recipients were hit with a financial sanction between July and September last year.
Of the more than 50,000 people considered homeless or at risk across five welfare programs, 19,371 or 39% had received between one and five demerit points, according to a demographic breakdown.

The data, contained in documents tabled during Senate estimates last year and analysed by Guardian Australia, also shows more than 300 people considered homeless or at risk had already received enough demerit points to be handed a financial sanction. They would face a future financial penalty – such as having a fortnight’s payment docked or being kicked off welfare – for further infringements.
Centrelink includes a vulnerability indicator in a jobseeker’s file if it is believed their circumstances could impede their ability to meet their mutual obligations. Providers are supposed to consider these factors when creating job plans and when deciding whether to impose a penalty on a welfare recipient.

The government introduced the demerit points system as part of a broader welfare reform package that it said would make the system fairer while saving $204m over four years.
The points are issued to welfare recipients for missing or turning up late to an appointment or failing to meet other activity requirements unless they have a “reasonable excuse”. Those who receive demerit points also often have their payment cut off until they “re-engage” with their employment services provider.
Under the new regime, jobseekers lost the ability to appeal their providers’ decision with the Department of Human Services until they have racked up five demerit points.
Advocates for the unemployed argue this has placed too much power in the hands of private providers, citing figures that show Centrelink staff overturned their demerit points decisions in about 50% of cases.
That discrepancy is also contained in the data analysed by Guardian Australia, which shows 1,348 (or 51%) of Jobactive participants with a homelessness indicator were deemed incapable of meeting their job plan when their circumstances were reviewed by Centrelink.

Welfare groups were outraged by the figures. Cassandra Goldie, the chief executive of the Australian Council of Social Service (Acoss), said the Department of Jobs and Small Business had assured the peak body its “serious concerns” about the new regime “were unfounded”.
“It is grossly unacceptable for people to have their payments cut for up to four weeks at a time where this will lead to severe hardship and homelessness,” she told Guardian Australia.
Jenny Smith, the CEO of the Council To Homeless Persons, said the new figures supported the peak body’s “worst fears” about the new regime, while the Australian Unemployed Workers Union’s Jeremy Poxon called on the government to restore the right of welfare recipients to appeal decisions made by their provider.
The opposition, which has earmarked Jobactive for reform if it wins government, also said it was “gravely concerned”.
“The Morrison government must explain what it is doing to avoid leaving people destitute,” said Labor’s employment services spokeswoman, Terri Butler.

The Greens’ spokeswoman, Rachel Siewert, said the government was outsourcing to “private contractors who make millions of dollars to implement ineffective and punitive programs that ultimately punish people on income support”.
A spokesman for the Department of Small Business defended the new regime, saying it gave jobseekers “more opportunities to demonstrate their particular circumstances, situation and capability to meet their requirements”.
He said providers were “required to take into account both vocational and non-vocational barriers when setting a jobseeker’s mutual obligation requirements. This includes factors such as homelessness and access to technology”.
“Jobseekers may still be required to undertake mutual obligations, however these should be set in a manner that is commensurate with their ability to actively search for employment,” he said.
The minister for jobs, Kelly O’Dwyer, was contacted for comment.

Overall, there were 503,098 people across the five welfare programs – including Jobactive, Work For the Dole and Disability Employment Services – between July and September last year, according to the data. About 360,000 had not received a demerit point.

Chris Bowen says Labor sticking to tax policies despite political attacks

Extract from The Guardian

Labor party

Shadow treasurer says there will be no change on negative gearing or dividend imputation
• Chris Bowen: Liberals will run a scare campaign, but their age of tax entitlement must end

Katharine Murphy Political editor

@murpharoo

Thu 31 Jan 2019 04.00 AEDT Last modified on Thu 31 Jan 2019 06.20 AEDT

Chris Bowen says this is the negative gearing policy Labor will take to the election. Photograph: Joel Carrett/AAP

Chris Bowen has declared Labor has no intention of changing its position on negative gearing or dividend imputation despite an intensifying, negative campaign from the Morrison government and some news outlets, and some signs of a voter backlash.
The shadow treasurer also insists the negative gearing changes Labor has proposed since 2016 will take effect in the first term of a Shorten government, and not be deferred despite the recent softening in the housing market – a development that increases the political risks of the change.
In an interview with Guardian Australia, Bowen refused to say when he would specify the start date of the negative gearing changes, which abolish concessions for new investors buying existing properties, saying only the announcement would be made “soon”.

But he was clear the changes would “absolutely” take effect in the first term of a Shorten government in the event Labor wins the contest expected in May, and not be deferred into a second term. “First term, sure, absolutely. The only question is when in the first term.”
Bowen said there was a view in the property sector that rather than deferring the change because of the housing slowdown, the policy should be introduced sooner rather than later “because certainty is king”.

He says he’s listening to that feedback, but his principle consideration is optimising the legislative timing. “The main thing we think about [with sequencing] is when is the election, when would we bring down a budget, what is the legislative timetable.

“Obviously I talk to the sector a lot about what they think is happening, what the implications are. There are plenty of people in the sector who say if you are going to make this change, get on with it, because certainty is king. I weigh all that up but it’s mainly about legislative timetable.
“We developed these policies to last for 20 or 30 years. It can’t be changed every year in relation to movements in the market. Yes, the property market has softened somewhat in key markets, of course it has. But it’s still a lot higher than it was five years ago. Take a market, and they are all more expensive than they were five years ago with the possible exception of Perth.
“I’ll announce a start date soon, but that’s the only detail that’s a moving part. We’ll stick to the policy.”

MPs from both sides of politics report that a voter backlash against a separate, controversial tax change – Labor’s proposal to end cash rebates for excess imputation credits – is gathering pace in the community.
Labor has already amended that policy once, exempting pensioners and grandfathering self-managed super funds with at least one pensioner or benefit recipient after opposition MPs became nervous about the electoral impact.
But Bowen insists there will be no more adjustments to that policy between now and the election. “This is the policy we will take to the election, it’s the right policy.
“While there is not one skerrick of complacency in the Labor party about the election, nor are we concerned about the Liberal party scare campaign.
“They ran this in the Batman byelection. We won the Batman byelection with a swing to us. They ran it hard in the five byelections, particularly in Longman, and there was a 10% swing against them in Bribie Island, the retirement capital of Longman.
“People respect that we’ve had the guts to put this policy out, I’m not saying unanimously, there are people annoyed about losing it, but there are a whole bunch of other cohorts saying, I get it, this is unsustainable, I’ll claim it for as long as it is there, but it is unsustainable.”
The government has used the summer break to ramp up political attacks against Labor’s tax measures. In his first major economic speech of the year, Scott Morrison contended a change of government would imperil the recent pick up in the economy.
The treasurer, Josh Frydenberg, has been duelling with Bowen on social media throughout January about the impact of Labor’s measures, and this week declared the shadow treasurer was “arrogantly” dead batting the backlash among self-funded retirees to dividend imputation policy.
Bowen shrugs off the intensifying rhetoric. He says firstly Labor’s policies are an offering that need to be considered as a whole, and there is also an imperative to repair the budget to safeguard against a possible external economic shock.
“We need bigger budget surpluses as a bigger buffer. The fiscal cupboard is a lot barer than it has been in the past,” he says.
“When there is a downturn, it makes sense to have a bigger buffer. This government has very thin surpluses as far as the eye can see. It is actually the case that we need to get back to structural surplus more quickly to enable more flexibility going forward.
“You also need to take our policies as whole. The government wants to cherry pick them.
“Labor has bigger tax cuts for every Australian earning less than $125,000. That has an impact. People who are stretched will spend that. It’s an expansion. The education money is an expansion. The preschool money is an expansion.
“To the degree that our policies impact on higher net worth individuals, it will have less impact on their spending.
“The economic theory of balanced budget expansion comes into play here. It’s a well-established economic theory. The policies are designed and calibrated to fit together.”
Bowen also claims an upside in the intensifying government campaign against the tax measures. “Every time they do that, they do two things.

“They underline the lack of vision on their own side, and they increase the moral authority of our mandate, if we get it.”

Liberals will run a scare campaign, but their age of tax entitlement must end

Extract from The Guardian

Opinion

Tax

Chris Bowen

Labor has been upfront about its plans and identified neglected areas of the budget

@Bowenchris

Thu 31 Jan 2019 06.17 AEDT Last modified on Thu 31 Jan 2019 06.19 AEDT

Shadow treasurer Chris Bowen: ‘Many of the tax concessions that some people have been used to as an entitlement are now longer sustainable.’ Photograph: Lukas Coch/AAP

Seven years ago this April, my predecessor as shadow treasurer, Joe Hockey, got to his feet in London to declare the “age of entitlement” over. He didn’t declare any specific policies, just that budgets were under so much pressure that people who receive support from governments needed to get used to less support, more standing on their own feet.
As his successor as shadow treasurer, I actually agree with where he was coming from. The problem was twofold, however: the Liberals didn’t have the gumption to announce who would be hit by his policies in advance (in fact, they actively misled people by promising no cuts to health, education, the pension and the ABC and SBS).

The second problem was that when they did tackle the age of entitlement, in the 2014 budget, they targeted people and services that could least afford it: pensioners and basic and important public services including health and education.
Labor has taken a different approach. Not only have we been absolutely upfront and explicit about our plans, we’ve identified those areas of the budget that haven’t received enough attention in the debate and have been under-analysed by governments.
Primary school civics students are taught that the federal government funds health and education, defence and foreign affairs. But they won’t know that, for some of these areas, the government allocated more money to tax concessions – many of which were created years ago and have been left in “set and forget” mode.
Did you know, for example, that the federal government spends $8bn on childcare, but $11.7bn on negative gearing and capital gains tax concessions?
It spent $5.2bn on public schools in 2014-15, but $5.9bn the same year on being the only country in the world that sends tax refunds to shareholders who haven’t actually paid any tax?
Or were you aware that the federal government spends $1.8bn on Tafe and skills but forgoes $2bn a year because we let family trusts distribute income to family members tax-free or at lower tax rates?
Our pledge to tackle these tax expenditures means the Liberals can run a scare campaign against Labor. That’s a given that we were fully aware of when we announced the policies.
But if we are going to increase our investment in important public services in a fiscally prudent way, we have to recognise that many of the tax concessions that some people have been used to as an entitlement are no longer sustainable and need to be reformed.

And the only way they are ever going to be is by a government that has the courage to seek a mandate to do so.

Air traffic controllers defeated Trump. That's worker power

Extract from The Guardian

Opinion

US federal government shutdown 2019

Robert Reich

Public workers who lack any formal power to strike – but have the informal power not to work – are becoming a force in American politics and labor relations

Tue 29 Jan 2019 23.44 AEDT Last modified on Wed 30 Jan 2019 02.56 AEDT

‘Controllers simply stayed home. No federal law prohibits federal employees from getting sick or calling in sick.’ Photograph: Spencer Platt/Getty Images

Air traffic controllers hold the trump card (pardon the expression) in upcoming negotiations between Donald Trump and congressional Democrats over border security.

That’s because the president and the Republicans know that another shutdown would likely cause a repeat of what happened last Friday, when so many of the nation’s air traffic controllers called in sick that America’s air traffic came to a near standstill. Hours later, Trump agreed to reopen the government without funding for his wall.
Never underestimate the power of airport delays to arouse the nation. Nancy Pelosi deserves credit for sticking to her guns, but the controllers brought the country to its knees.
Trump is threatening another shutdown if he doesn’t get his way by 15 February, when government funding will run out again. “Does anybody really think I won’t build the WALL?” he tweeted Sunday, after his acting chief of staff said that he was prepared to shutter the government for a second time.
But his threat is for the cameras. If there’s no agreement this time around, the controllers won’t work another 35 days without pay. Now that they understand their power, they will shut down the shutdown right away. Trump knows this.

Ironically, it was Ronald Reagan’s audacious decision in 1981 to fire and replace more than 11,000 air traffic controllers who were then striking illegally that legitimized decades of union busting. It signaled to employers around the country that unions – both public and private-sector – were fair game.
It also unleashed political forces against unions, culminating last year with the supreme court’s 5-4 decision in Janus v AFSCME, holding that government workers can’t be forced to contribute to labor unions that represent them in collective bargaining.
But the decision last week by thousands of controllers not to come to work wasn’t a strike, and it wasn’t initiated by a union. Beforehand, Paul Rinaldi, the president of the controller’s union, the National Air Traffic Controllers Association, even went so far as to announce that the union did not “condone or endorse any federal employees participating in or endorsing a coordinated activity that negatively effects the capacity of the National Airspace System”.

"Not all public workers can expect similar results by walking off their jobs. The walkout has to cause a major disruption"

Controllers simply stayed home. No federal law prohibits federal employees from getting sick or calling in sick. And who’s to say it was coordinated? Today, the internet can spread information about a voluntary walkout as quickly and efficiently as any centralized coordinator.
The larger story is that public workers who lack any formal power to strike – but have the informal power not to work – are becoming a new force in American politics and labor relations.
Look what teachers accomplished last year by walking out of their classrooms in the unlikeliest of places – West Virginia, Arizona, Oklahoma, Kentucky, Colorado and North Carolina. Most of these are Republican “right-to-work” states that bar strikes by public employees. In recent years, all have slashed school funding and eroded teacher pay and benefits.
Like the air traffic controllers, the teachers chose not to work rather than give in to what they considered intolerable conditions. These unauthorized “wildcat” strikes won gains in teachers’ salaries and funding for schools. (Not incidentally, they also galvanized thousands of teachers to run for office in the 2018 midterm elections.)
These were especially powerful because they offered elected officials no union leader or chief organizer with whom to negotiate a deal, who would then sell it to rank-and-file workers. As with the air traffic controllers last week, officials had to back down because the people they were dealing with were all rank-and-file, and public pressure was mounting rapidly.

Not all public workers can expect similar results by walking off their jobs. The walkout has to cause a major and visible disruption. (A work stoppage by FDA inspectors would hardly be noticed, at least until the public begins to worrying about toxic drugs and tainted meat.)
And the public has to be supportive. By the fifth week of Trump’s shutdown, polls showed the public highly sympathetic to federal workers who hadn’t been paid. Likewise, most Americans have been on the side of teachers. National polls have shown the public largely in favor of higher teacher pay and supportive of teachers’ right to strike.
Finally, it’s not a weapon that can be used often because it relies for its potency on public frustration and inconvenience. If walkouts by public employees in France and other nations are any guide, public patience eventually wears thin.
But when elected officials in the United States abuse their power or take actions that unnecessarily harm the public, walkouts by public workers can function as an important constraint.

In the age of Trump, we need all the constraints we can get.

Scott Morrison’s hint at a recession under Labor is part of the usual shtick before an election

Extract from The Guardian

Grogonomics

Australian economy

Greg Jericho

We’re promised 1.25 million jobs in five years, but at the same time the picture of an utterly fragile economy is painted

@GrogsGamut

Wed 30 Jan 2019 11.15 AEDT Last modified on Wed 30 Jan 2019 11.16 AEDT

‘’The jobs figures of 2018 showed generally strong results but like financial advice, past results are not sign of future performance – especially if the world’s economy shudders’ Photograph: Darren England/AP

We always seem to get bizarre economic narratives as we come up to an election – especially one in which the government is facing defeat. We get a story of how things are going so well – rock solid achievement, with a future so bright 1.25 million jobs can be created in five years, but one also so utterly fragile that a change of government could mean we head into a recession. The jobs figures of 2018 showed generally strong results but like financial advice, past results are not sign of future performance – especially if the world’s economy shudders.

“PM warns Australian economy could tumble into recession under Labor” screamed the headline in the SMH as it reported on the speech the prime minister would give yesterday. The prime minister wasn’t actually so stupid as to suggest a Labor government would cause a recession, as did Christopher Pyne last November. He merely rolled out the usual shtick: “Labor and Mr Shorten are offering you a weaker economy to live in, held back by higher taxes and militant unions”.
The same thing said by every Liberal prime minister since Menzies.
We even saw the Conversation pose the question to economist about whether or not we would go in to a recession over the next two years, and at least considered foreign impacts rather than worrying about changes of government.
The first place to look for a recession is the US. Over the past 40 years Australia has never had an economic downturn, let alone a recession without the US leading the way:

It’s a reminder that the fact we did not follow the US down the GFC plughole remains the pre-eminent economic achievement of any government in the past 25 years.

And even though China remains a major direct influence on Australia, unless the US heads south, we are very unlikely to have a recession.
The problem of course is that the economy of the US is fairly likely to head into a recession. Certainly the market thinks so.
In the past whenever the yields (or interest rates) for US treasury five years bonds has gone lower than that of two year treasury bonds, the US has gone into a recession soon after. Right now the five year bond yield is very slight below that of the two years:

So not good, and it would be perfectly apt for the ALP to take power just as world recession is about to occur, as happened in 1983, and 2007.
But one problem with a slowdown is that it means the good times are ending – at least for a while – and our good times have not been overly great.
In pure employment terms 2018 was quite good. Employment grew strongly, not as well as 2017, but nonetheless at 2.3% it remained above the average growth of the past quarter of century.

The growth of full-time employment was also quite strong – across both men and women.

The jobs however were pretty unevenly spread. Around 80% of all new employment occurred in New South Wales and Victoria, with the rest of the country relatively underperforming:

Now of course employment by itself can be a bit misleading – population growth (natural and migration) can cause a big spurt in numbers of people employed.
But even when we look at the number of adults aged 25-64 (ie the prime-age workers) we see that there are more now than every before of that age group in employment:

Mostly this is due to the increase of women in work as the level of men in employment has remained pretty steady.

The past two years especially has seen a big boost of women as a percentage of the population in employment – both full and part-time, while the percentage of men working full-time actually declined this year:

But when we dig deeper the shine does come off a bit. When we look at average actual hours worked we see that there has also been a a flat-line in population terms.

The end of the mining boom all adult Australians (ie those aged 15 and up) were on average working nearly 90 and half hours a month. The GFC saw this fall due to not just drops in jobs but people moving into retirement (especially so given the first baby boomers turned 65 in 2011).

In 2017, strong job growth saw this fall rebound, but the past year has seen the level remain around 86.3 hours.

When we compare the level of employment to the population with the hours worked we see that there is around the same level of jobs now as prior to the GFC, but people are on average working around 2.5% fewer hours a month:

And that of course is why underemployment remains very much higher, and wages growth very much lower now than then. But here at least we have seen slight falls in underemployment across age groups, with the biggest fall occurring for 45-54 year old workers:

Still, it would be somewhat odd that should we go into a recession we would do so with underemployment at historically high levels.
But let’s leave aside the gloom. After all the prime minister has promised 1.25 million jobs in five years – outdoing the one million jobs in five years pledge of Tony Abbott in 2013.
Is it a tough target to achieve? Not particularly. It would actually just require a 9.8% increase in employment, which is what has been achieved over the past five years.
That doesn’t mean it is not a worthy goal, but really it is more about promising more of the same (and actually in percentage terms, slightly less growth).
To add 250,000 new jobs a year by 2023 needs an average annual growth of around 1.8%:

Such a consistent growth is unlikely to occur – more likely there will need to be a few very good years, such as occurred in 2015, 2017 and 2018 to cancel out the dud years.

But whether at the end of that the average hours being worked will have improved, or the level of underemployment will have fallen is another question. Whether the jobs are full-time, part-time, casual, high paying, in industries with good wage growth, in areas with good housing affordability, are not aspects included in the pledge.
Regardless, however, an extra 1.25 million people in work in five years would be good.
But as we have needed to do so for our entire history, we will be looking across the waves to see how the rest of the world is going, because the best aspect of achieving the 1.25 million jobs target is that it will likely mean neither the rest of the world nor Australia has experienced a recession in that time.


• Greg Jericho is a Guardian Australia columnist

Australia’s record on emissions and sustainability condemned by OECD review

Extract from The Guardian

Environment

Paris agreement target will not be met without changes to policy and threatened species at risk unless funding increased

Lisa Cox

Wed 30 Jan 2019 14.27 AEDT Last modified on Wed 30 Jan 2019 14.31 AEDT

The OECD’s damning report says the status of Australia’s biodiversity is poor and worsening and the country is increasingly exposed to floods, heatwaves and bushfires. Photograph: STRINGER/Reuters

Australia is not on track to meet its 2030 emissions targets under the Paris agreement and needs to bring its environment policies into line with the “scale of the challenge” the country is facing, one of the world’s pre-eminent economic institutions says.
In a major report on Australia’s environmental performance, the Organisation for Economic Cooperation and Development also finds the status of Australia’s biodiversity is “poor and worsening” and the government’s national threatened species strategy will fail unless it is expanded and funding increased.
The report is the third OECD review of Australia’s track record of protecting its environmental assets, with previous reports published in 2007 and 1998.
In a statement on Wednesday, the institution said “the country will fall short of its 2030 emissions target without a major effort to move to a low-carbon model”.
“Australia is home to a 10th of global species and is seen by many as synonymous with pristine coastal areas and an outback brimming with nature. However the country is increasingly exposed to rising sea levels, floods, heat waves, bushfires and drought,” said the OECD’s deputy environment director Anthony Cox.

“This makes it all the more important that Australia take a more proactive role in fighting climate change and addressing biodiversity loss.”
The latest review highlights numerous environmental challenges, including the emissions intensity of Australia’s economy, but singles out economic opportunities including “untapped renewable energy potential” and the ability for the country’s “rich biodiversity” to support the economy.
Among its findings, the OECD warns:

• Australia has no national long-term vision on sustainable development.

• Australia is one of the most carbon-intensive economies in the OECD, has no national long-term strategy for lowering emissions, and despite targets in place under the Paris agreement “emissions are projected to increase by 2030”.
• Australia’s energy taxes do not reflect the climate cost associated with fuel use. “Taxes on transport fuels are low by international comparison; tax refunds mean fuels are largely untaxed outside of transport, and coal is fully untaxed.”
• Australia’s wildlife is in a poor state and its condition is worsening, with “81 ecosystems, 511 terrestrial and aquatic animal species and 1,355 plant species” listed as threatened at the national level.
• Only one of the 10 targets of the National Biodiversity Conservation Strategy 2010-2030 has been met and the first draft of Australia’s Strategy for Nature 2018-2030 “appeared unlikely to catalyse progress”. The OECD calls for more Commonwealth leadership to guide biodiversity policy.
• The government’s threatened species strategy will only improve the status of the country’s wildlife if it is expanded and there is a substantial increase in the amount of resources directed to it.
• About 50,000 mines around the country need rehabilitation and not all states and territories have comprehensive registers of contaminated sites or remediation standards.

The report says many mines around Australia need rehabilitation. Photograph: Auscape/UIG/Getty Images/Universal Images Group

• State government agricultural, mining and forestry policies are sometimes at odds with environmental objectives and despite progress in incorporating biodiversity considerations into large projects, the cumulative environmental effects of new and existing developments are not fully considered.

• “Economic interests still tend to dominate decision making” with regard to the environment, and public participation in environmental decision making, particularly for Indigenous communities, should be increased.
• With the exception of the Reef 2050 plan, funding for conservation and research is falling.
• Public spending on biodiversity has remained between $400m and $500m since 2010 compared with an average of $13bn for road transport and infrastructure.
• In the past 10 years, more than three-quarters of transport investment has been directed to road construction and Australian cities have less travel by public transport than similar cities elsewhere.
The OECD said Australia needed to strengthen its climate change and biodiversity policies if it wanted to make progress towards sustainable development and better coordinate work between state and federal governments.
The report highlights the work being done by state governments to reach net zero emissions in the absence of federal policy.
“Australia has strong potential to green its economy but the low-carbon transition will require stronger price signals,” it says.
The environment minister Melissa Price said on Wednesday the OECD report was wide-ranging and “includes recognition of the excellent work Australia is doing in protecting and conserving our unique environment, as well as recommendations for improvement”.
“The report praises Australia’s outstanding achievements in protecting both land and sea through reserves. It notes that our National Reserve System covers about 20% of Australia’s land, which is above the OECD average of 15%,” she said.

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“The OECD acknowledges that environmental protection is a shared responsibility across all levels of government, with the states and territories having primary carriage of many of the issues covered in the report.”
The Australian Conservation Foundation said the report highlighted the benefits for Australia of transitioning to a more sustainable economy, cutting pollution and restoring nature.
The ACF’s chief executive Kelly O’Shanassy said the OECD had singled out a “litany of failures” over the past decade that were “the result of a persistent attitude among some irresponsible politicians and businesses that the environment had to suffer to turn a profit”.
“In this election year our major political parties have an opportunity to detail to the community how they would embrace a cleaner and greener plan for our country and our economy,” she said.

“The OECD is clear. Australia is failing to protect the environment and we are doing damage at record speed.”