Monday 31 August 2020

Menzies, a failure by today’s rules, ran a budget to build the nation.

 Extract from The Conversation (August 29, 2014)

Robert Menzies may be a Liberal hero for John Howard and his successors in the current government, but his budgets fit their definition of ‘disaster’. AAP/Alan Porritt

Robert Menzies left Australia in far worse financial shape than he found it, at least according to current treasurer Joe Hockey’s favourite debt and deficit benchmark. Having inherited budget surpluses from the Chifley Labor government, the Menzies Coalition government ran small budget surpluses from 1949-50 to 1957-58.

But then Menzies’ “irresponsible profligacy” began, running budget deficits for the last nine years of his reign.

Between 1958-59 and 1966-67, Menzies averaged budget deficits of 1.8% of GDP. His biggest deficit of 3.3% of GDP in his final year in office was larger than the last Swan deficit, which the Abbott government has called a “disaster” and a “budget crisis”.

While Hockey borrowed his “lifters and leaners” line from Menzies, he has not borrowed his fiscal strategy. Spending as a percentage of GDP rose steadily and substantially under Menzies, from 19.4% of GDP to 24.5%. The public sector that Hockey so derides grew by around 25% while Menzies, a Liberal hero to prime ministers John Howard and Tony Abbott – as well as Hockey – was calling the shots.

Read news from Australia’s most trusted political reporter, Michelle Grattan.

Tax grew steadily under Menzies as well. The tax-GDP ratio rose from 19.6% of GDP to 21.2% over his time at the helm. Because tax didn’t rise as fast as government spending, the Commonwealth deficit grew steadily.

As budget deficits are typically funded by government borrowing, they usually result in an increase in public debt. Menzies had been paying off wartime debt early in his term, but debt increased to be at 41% of GDP when Menzies retired.

A history of public debt in Australia, Commonwealth Treasury (2009). Katrina Di Marco, Mitchell Pirie & Wilson Au-Yeung

To put that into perspective, Commonwealth net debt stood at 12.5% of GDP at June, up from 10.1% in June 2013.

Commonwealth Treasury, Mid-Year Economic and Fiscal Outlook 2013-14

Menzies focused on the economy

So, what was Menzies up to? He clearly wasn’t obsessed with the budget deficits or worried about numbers of public servants that so concern Hockey. The economy grew quite steadily, often growing at more than 6% in real terms. Unemployment was mostly around 2% or less, and only 1.6% when he retired. Over his time in power, you couldn’t even argue that Menzies was trying to balance the budget over the business cycle.

Menzies was interested in nation-building. He not only wanted rapid population growth, but he wanted infrastructure growth and growth in the health and education services that make a society both cohesive and productive.

Like any successful corporate leader, he was willing to use long-run debt financing to fund long-run investments. Menzies knew that a lot of his budget spending was for capital projects that would deliver benefits for decades, so why should he have funded them entirely out of one year’s revenue?

Tony Abbott’s claim that ‘you can’t fix the economy unless you fix the budget’ would have bemused Menzies. AAP/Julian Smith

Hockey, on the other hand, wants to fund a big increase in infrastructure spending with no increase in tax and no increase in debt. He wants to fund more capital spending by cutting spending on essential services and income support for poor people.

The simplistic notion that a deficit is evidence that a government is “living beyond its means” is complete economic nonsense. Leaving aside that historic and international evidence provides no support for the claim that budget deficits cause long-run economic problems, the argument is contradicted by the corporate decision making that politicians pretend to emulate.

During the mining boom, BHP ran large and repeated “budget deficits”. The company’s annual reports provide clear evidence that BHP spent far more than it earned. But rather than criticise BHP for its “irresponsible” borrowing, shareholders reaped billions in dividends and watched their share price grow. How could this be?

Contrary to virtually every word spoken by our political leaders, there is absolutely no relationship between a budget surplus and a profit. They aren’t just different concepts, they are unrelated concepts. They have nothing in common except that people generally think both of them sound good.

Budgets require long-term vision

The reason that BHP ran very large deficits during the mining boom is that, like Menzies, the company was spending large amounts of money on long-lived assets that would deliver benefits for decades to come. First-year economics and accounting students could tell you that you don’t treat purchasing an asset as an “expense” in the year in which the cheques are written.

What corporations do, and what governments used to do, is to distinguish between capital spending (spending that delivers future benefits) and recurrent spending (spending that delivers transient benefits). Only the portion of capital spending that is “used up” in the current year is included as an expense, and this portion is called “depreciation”.

So when BHP spends A$3 billion building a mine that is expected to last 30 years, the company might record a “depreciation expense” of $100 million.

Joe Hockey is wrong to liken the budget to businesses or households ‘living beyond their means’. AAP/Paul Miller

The same is true for households. While political leaders like Hockey often tell us that governments are like households and shouldn’t “live beyond their means”, in reality most households aspire to rack up huge “budget deficits”. If you earned $60,000 a year and borrowed $500,000 to buy a house, then, assuming you didn’t spend a cent on anything else that year, you would have incurred a “budget deficit” of $440,000.

The reason that companies and households rack up huge debt is because they think the things they are investing in will deliver long-run benefits that far exceed the combination of the upfront costs and interest paid on the debt. Investment markets rarely complain about the “interest burden” carried by such companies. Rather, they often accuse them of having a “lazy balance sheet”, which means they haven’t borrowed enough to invest in growth.

This year, the Australian population will grow by around 400,000 people. Since Sydney hosted the Olympics in 2000, Australia’s population has grown by 22% from 19.3 million to 23.6 million. That is why Australia’s roads, trains and hospitals are crowded.

If the government wants to double Australia’s population by 2060, it can either invest in the new infrastructure the country needs before the population arrives, or it can lower Australians’ expectations about how much infrastructure we should expect. It seems clear we are being warmed up for the latter.

If Australians demand more infrastructure, Hockey tells us that the price of funding new roads and hospitals reduces spending on trains and nurses. This is not the logic of Menzies, nor is it the logic of BHP. It is, however, the logic of a treasurer and a government that wants to use vague notions of “economic responsibility” to drive big reductions in the social safety net.

Fresh controversy over Tony Abbott’s Brexit trade role.

Extract from The Guardian

The ObserverTony Abbott

Proposed UK envoy at odds with Boris Johnson’s assurances on environment and workers’ rights.

Former Australian prime minister Tony Abbott

Former Australian prime minister Tony Abbott will reportedly be appointed to the Board of Trade.

Last modified on Sun 30 Aug 2020 18.38 AEST

Tony Abbott, the former Australian prime minister, boasted that he signed deals with China because he was not “sidetracked by peripheral issues such as labour and environmental standards”, raising further questions over the UK government’s reported intention to use him as a trade envoy.

Abbott will reportedly be appointed to the Board of Trade, which advises Boris Johnson and trade secretary, Liz Truss, on future trade deals and will be a vital component of the UK’s future post-Brexit trade strategy.

Abbot’s past accounts of his role in Australia’s trade deals with China, Korea and Japan, signed during his two-year premiership, suggests he would have little sympathy with government’s stated intentions to maintain British standards on food, the environment and workers’ rights.

In a column for the Spectator Australia in March 2017, Abbott said he had made three contributions as prime minister to getting the deals done: setting a deadline, ensuring focus from the top, and endeavouring “to ensure that we weren’t side-tracked by peripheral issues such as labour and environmental standards”. He added: “Our insight was to grasp that free trade deals are too important to leave to the officials.”

During the Brexit campaign and since he became prime minister, Boris Johnson has insisted that workers’ rights and environmental standards would be maintained once Britain leaves the single market and customs union.

However, the government has repeatedly avoided attempts to guarantee those rights with legislation. It removed a section of the EU withdrawal bill that referred to workers’ rights, claiming they would be covered by a new employment bill. A bill was introduced last year but has yet to progress to a second reading.

It has also avoided attempts to include a “non-regression” clause to prevent the government from weakening environmental standards.

Rules on the use of antibiotics in British farm animals have already been weakened after hundreds of restricted medicines were left out of regulations due to come into force in January. The Department for Environment, Food and Rural Affairs says a new list would be published in 2021.

Next month, the House of Lords is expected to vote on amendments to the agriculture bill, which seek to enshrine in law the Conservatives’ manifesto commitment not to reduce environmental or food standards as part of its post-Brexit trade strategy.

Green groups are concerned that news of Abbott’s appointment is part of a pattern. Shaun Spiers, chair of the Greener UK coalition, said: “Tony Abbott would be a perfect choice to advise the government on how to undermine environment, animal welfare and food standards. But if the government really is serious about not compromising these standards in trade negotiations, appointing him is bizarre.”

David Lawrence from the Trade Justice Movement said: “Hiring Tony Abbott to one of the top jobs in UK trade policy is a baffling choice.

“The government claims it wants Britain to be a world leader on tackling the environmental crisis, but in order to achieve this our trade policy – and trade appointments – need to be radically overhauled.”

Australian and British politicians have reacted with incredulity to reports of the appointment, which has not been confirmed, although Truss said Abbott had done “excellent work” on trade in the past. Critics say Abbott had little to do with Australia’s trade deals.

He is sceptical about the climate crisis and in 2014 as prime minister he attempted to delist 74,000 hectares of World Heritage-protected forest in Tasmania. His party ousted him as leader after two years and he lost his Sydney parliamentary seat in 2019 to an independent candidate who campaigned on the environment.

Australian Industry Group urges Coalition to spend 'at least' $3.3bn on renewable energy over coming decade.

Extract from The Guardian

Environment

Peak employer body warns Australia faces ‘costly increase in climate-related impacts and risks’ even in best-case scenario.

Wind farm turbines in New South Wales

Wind farm turbines in New South Wales. The Australian Industry Group has called on the federal government to boost spending to help ‘build a new energy advantage for Australia in a net-zero emissions world’.

Last modified on Mon 31 Aug 2020 06.13 AEST

The Morrison government should spend $3.3bn over 10 years on renewable energy and $500m over two years on capital grants to improve energy efficiency and management, according to the Australian Industry Group.

The peak employer body made the calls in its pre-budget submission, released on Monday, which also proposes it bring forward income tax cuts, cut business tax, extend the coronavirus supplement on jobseeker and make a further round of $750 payments to households.

Ai Group warned that Australia was facing a “substantial and costly increase in climate-related impacts and risks” even under the “best possible scenario for global mitigation”.

The submission follows a statement from 10 business, industry, farming and environmental leaders warning Australia is “woefully unprepared” for the impact of climate change over the coming decades.

Ai Group suggested national cabinet take a role coordinating climate policies to ensure the most effective response and “build a new energy advantage for Australia in a net-zero emissions world”.

Australia should conduct a biannual assessment of national climate change vulnerability and make reducing the financial risks from climate change a “core priority” for financial regulators, it said.

AiGroup called for an improvement in energy efficiency through spending on public housing, private housing, commercial building and manufacturing upgrades.

It called for “at least” $3.3bn over 10 years for the Australian Renewable Energy Agency and for “additional funding” for the Clean Energy Finance Corporation.

“The Australian government should allocate $500m over two years for capital grants to rapidly scale up the penetration of existing technologies that are uncommon in the Australian market,” it said.

Those include electrification of processes, heat pumps, electric induction furnaces, and energy management systems such as technology that enables demand response.

The federal budget to be delivered by the treasurer, Josh Frydenberg, in October comes in the midst of the Covid-19 recession, the first in 30 years and the worst since the Great Depression.

The budget is expected to show a deterioration from the deficit of $184.5bn projected in July, due to the second wave of coronavirus cases in Victoria and extended stage-four lockdown in Melbourne.

The budget will also set out job creation initiatives on top of the $314bn of direct stimulus or increased lending from the federal government and Reserve Bank.

Frydenberg has confirmed the government is considering the timing of the second and third stage of income tax cuts, due to start in 2022 and 2024.

Ai Group submitted that lifting the upper threshold of the 19% tax rate from $37,000 to $45,000 and reducing the tax rate on incomes between $45,000 and $90,000 from 32.5% to 30% from 2021 would “increase take-home pay and household spending”.

AiGroup said the 25% company tax rate due to take effect for small businesses with less than $50m turnover should be extended to all companies earning less than $1bn.

The move would be a massive expansion of company tax cuts passed in the 45th parliament only after big businesses were excluded.

The budget presents an opportunity to ... rectify the underlying weaknesses in the economy

Ai Group called for a range of measures to boost employment including “broad wage support” for businesses to hire new apprentices, trainees, cadets and interns and more funding for vocational education and training.

Ai Group supported the “dual rate of jobkeeper” lowering payments for those working part-time hours. But it proposed that the coronavirus supplement, set to be cut from $550 a fortnight to $250 from September to December, should be extended in line with jobkeeper until the end of March.

The chief executive of AiGroup, Innes Willox, said: “For the near term, measures are clearly required to assist and secure the recovery of activity, investment and employment in the wake of the Covid-19 crisis.

“The budget also presents an opportunity to act on measures that will rectify the underlying weaknesses in the economy that were evident prior to the onset of the Covid-19 crisis.”

Leading into the budget, the Australian Council of Trade Unions has campaigned on a platform sharing some elements with employers including wage subsidies for apprentices, support for the tourism and hospitality sector and renewable energy to support manufacturing.

Unlike big business, the ACTU has also called for an extension of free childcare and increased federal government spending on public housing.

Construction and mining industry super fund puts carbon-intensive companies on notice.

Extract from The Guardian 

Business

Cbus superannuation expands pledge to hit zero emissions by 2050 across its entire portfolio.

Power lines run from Liddell Power Station near Muswellbrook in New South Wales

Cbus, the construction and mining industry superannuation fund has said ‘you can only say the data is holding you back for so long’ and set new emissions targets for its investment portfolio.

Last modified on Mon 31 Aug 2020 06.13 AEST

Construction and mining industry super fund Cbus says it will slash emissions from its investments by 45% within the next 10 years, putting carbon-intensive companies on notice that they will need to demonstrate how they will cut greenhouse gas emissions in order to stay within the fund’s $54bn portfolio.

Cbus has also expanded an existing pledge to hit the Paris agreement target of zero emissions by 2050 in its property and infrastructure investments to cover its entire portfolio.

Its chief investment officer, Kristian Fok, stopped short of ruling out any investment in new thermal coalmining but said any such business would face an extremely high hurdle to attract Cbus’s money.

“I’m not going to rule out anything, but the hurdles are going to be so high for these things, because the way we would see it is that it would have to be highly competitive against the alternatives,” he said.

“Basically we now have a [carbon] budget in our portfolio, so it would have to be more compelling than something else.”

He said Cbus had in the past been hesitant to make commitments outside property and infrastructure, where it has a voice at management level, because of a lack of data about emissions.

“Frankly, as we’ve built our internal capability, we’ve built our confidence in understanding around this in all sectors,” he said.

“And data is an issue, but we’ve sort of made the call that you can say that data is holding you back for only so long.

“The reality is that things are coalescing fast around us. We have the reality that all states and territories in Australia have made commitments, for instance.”

Institutional investors such as pension and superannuation funds have been ratcheting up the pressure on big emitters, such as mining companies, to slash their carbon output.

In April, Norway’s US$1.1tn Government Pension Fund Global, one of the world’s biggest investors, put BHP on notice that it needed to get out of thermal coal or the fund would dump its stock in the company.

At the same time, it announced it had sold its stake in Australian energy company AGL, which owns coal-fired power stations including the carbon-intensive Liddell plant in New South Wales.

In August, UK government pension fund Nest sold off its last shares in BHP because the company’s carbon emissions were too high an investment risk.

BHP has responded to shareholder pressure by abandoning its support for the use of carry-over credits to meet global greenhouse gas emissions targets and committing to selling or spinning-off its thermal coal assets, which include the Mount Arthur mine in NSW that powers AGL’s elderly Liddell power plant, within two years.

One option open to BHP is giving the coal assets to existing shareholders by spinning the mines out into a separate company.

Asked if Cbus would be willing to take shares in a BHP coal spin-off, Fok said the new framework wouldn’t stop the fund from doing so.

“But what it does make us look very carefully at is what price we’re paying for it,” he said.

“In relation to thermal coal, we would look at it in relation to the global economy. But it’s quite clear the lifecycle of thermal coal is shorter than the next fossil fuel, which is gas – but the lifecycle of gas is shorter than what it used to be as well.”

He said the value of thermal coal assets was declining.

“The whole industry itself is declining and will go away at some point in time, that is just the reality of this trajectory … so as an investor we need to understand that.”

Cbus’s new emissions target will cover scope 1 emissions – produced by businesses themselves – and scope 2 emissions – those generated from the power used by businesses – but not scope 3 emissions, which are made by customers.

Fok said it was currently too hard to measure scope 3 emissions “but ultimately we’re going to have to include scope 3”.

“We will be committing to including scope 3 and including scope 3 over time,” he said.

He said that even though many of Cbus’s members worked in high-emissions industries, they understood the need to decarbonise the economy.

“When you dig down deep they actually understand the impacts of the climate.

“One of the interesting things that one of our members said was of course we would be really cautious about building property right on the beachline, that would be ridiculous to do without thinking about the issues from rising sea levels.

“And then they expect us to manage the risks and the opportunities in the portfolio in the same way.”

Australian greenhouse gas emissions fall to lowest level since 1998 under Covid restrictions.

 Extract from The Guardian

Energy minister Angus Taylor says emissions have reduced as expected but restrictions are unsustainable.

Aerial view of grounded Qantas planes on the tarmac

Coronavirus restrictions have caused Australia’s greenhouse gas emissions to fall to their lowest level in more than two decades, including a 79% reduction in emissions caused by jet fuel.

Last modified on Mon 31 Aug 2020 06.13 AEST

Coronavirus restrictions have caused Australia’s greenhouse gas emissions to fall to their lowest level since 1998, the latest official data shows.

National emissions in the June quarter 2020 were estimated to be 8% – or about 10m tonnes of carbon dioxide – lower than a year earlier.

The energy and emissions reduction minister, Angus Taylor, said the reductions in preliminary data to June had been caused by “unsustainable restrictions on Australians’ livelihoods and freedom to travel”, including a 79% reduction in emissions caused by jet fuel.

Emissions from petrol were also down 26% in June, compared to the previous year.

“With the impacts of Covid-19 restrictions being felt across the economy, emissions have reduced as expected,” Taylor said.

The figures, released by the Department of Industry, Science, Energy and Resources, give preliminary results to the end of June and official data to March.

Emissions data to March 2020, which largely accounts for the period before the coronavirus pandemic and associated restrictions, showed a 1.4% reduction to national emissions – a total reduction of 7.7m tonnes.

Taylor said the amount was 14.3% below the 2005 levels used as a baseline to calculate Paris emissions reductions targets.

Taylor’s statement said emissions from electricity generation were in “long-term structural decline” and reduced by another 4.2% in the year to March 2020. Reflecting the lingering impact of the drought, agricultural emissions were also down 5.5% in the quarter.

However emissions from exports continued to increase (up 1.9%), mainly fuelled by an 11% increase to LNG exports.

A recent analysis found that Australia’s greenhouse gas accounting underestimates national emissions by about 10%, largely due to a failure to properly recognise the impact of methane released during gas production.

It found that if the methane emitted in Australia was measured according to the latest science it would increase annual emissions by more than 50m tonnes a year, the equivalent of Sweden’s total carbon pollution.

The Morrison government has been championing a gas-led recovery from the Covid-19 pandemic. But last week, leading scientists released a letter to the chief scientist, Alan Finkel, warning his advocacy for increased use of gas-fired electricity was at odds with the Paris agreement and not consistent with a plan to secure a safe climate.

Taylor said that when the national emissions were adjusted to remove emissions generated by exports, the reduction on 2005 levels was 32%. The statement said this “reflects the continuing decarbonisation of Australia’s domestic economy”.

The minister also repeated his claim – regularly accompanying the release of emissions data – that Australia’s LNG emissions have the potential to cut global emissions in importing countries by up to 169m tonnes a year.

As the Guardian has reported, this figure is based on a back-of-envelope calculation and not an analysis of whether gas is being used to replace coal.

Sunday 30 August 2020

The experience of Covid-19 shows how easily catastrophe can befall our species.

Extract from The Guardian

OpinionWeapons technology

A previous generation understood the destructive power of humanity. We would do well to heed their insights.

petri dish and a DNA printout

‘An engineered virus could be developed at a far lower threshold of cost or scientific capability than a nuclear bomb.’

Last modified on Sat 29 Aug 2020 21.01 AEST

Months after the end of the second world war, Albert Einstein gave an interview to urge Americans to imagine the third one. It was vital, he said, “to recognise that unless another war is prevented it is likely to bring destruction on a scale … even now hardly conceived, and that little civilisation would survive it.”

In late 1947, the United States was still alone in wielding the atomic bomb. It might still have renounced its future use, and attempted to end proliferation and outlaw atomic weapons there and then. But the arms race would proceed headlong: soon the US and Soviet Union were both conducting thermonuclear tests. In 1954, the Castle Bravo test, carried out in the Bikini Atoll, produced an explosion a thousand times as powerful as the one over Hiroshima.

The same year, the philosopher and pacifist Bertrand Russell began to draft an appeal to reason. His manifesto – which was also signed by 10 atomic scientists, nearly all Nobel Laureates, and Einstein – addressed itself to “members of the species Man, whose continued existence is in doubt”. They made a simple argument with a radical conclusion. Having learned to weaponise nuclear power, we could never unlearn it; disarmament might succeed, but we could not un-invent the bomb. Our command of science simply couldn’t coexist with a tendency to make war without – eventually, inevitably – wiping out our species. “Here, then, is the problem which we present to you … dreadful and inescapable: shall we put an end to the human race; or shall mankind renounce war?”

To people alive today, the episode may seem quaint – a curio of the early cold war. The image of humanity in a ruined state is in everyone’s head now, but as a vision of the climate crisis, not of war. For most people in many countries, war seems a reduced and peripheral concern. For generations, we’ve been spared an experience of general, worldwide calamity, one that warps the horizon of our normality. Then came coronavirus.

About 10 weeks into the global eruption of Covid-19, the notion began to spread that the virus might not be nature’s creation. Webs of paranoia are easily spun over our homebound, internet-fed imaginations. Naturally, Donald Trump was an early victim, but he wasn’t alone. TV networks in the second most populous country in the world went before him, as rightwing media in India fanned phobias of a “corona jihad” conducted by orthodox Muslims. In every society shocked and shuttered by the virus, some people have nursed theories that this much damage could only originate in human, presumably hostile, designs.

Responsible voices in the scientific community and media have talked these theories down. That’s for the best. What’s not for the best, however, is remaining oblivious to what they knew in 1955: that science is arming us in new ways, at the risk of human society itself. We can reject malicious conspiracies about Covid-19, and still see in this catastrophe a mere illustration of what an engineered pathogen could do to us.

The hazard we face from bioengineered agents is likely to be much greater than that of nuclear holocaust. In The Precipice: Existential Risk and the Future of Humanity, the Oxford University fellow Toby Ord meticulously accounts for various events, natural and anthropogenic, that pose “existential risk”. In his reckoning, the chance of nuclear war stands at 1/1,000 in the next 100 years, but the chance of “engineered pandemic” is 1/30 – the second-most likely of any catastrophe, beaten only by rogue AI. “We already have past examples of biological threats reaching extreme proportions,” Ord told me on the phone from Oxford, where he works at the university’s Future of Humanity Institute. “When we go beyond the natural risks and consider that people could engineer pathogens in order to have the exact properties to do us the most damage – that’s when it gets really scary.”

An engineered virus could be developed at a far lower threshold of cost or scientific capability than a nuclear bomb. Gene-editing techniques are advancing with blistering speed, and most data is simply shared as academic material, with little of the oversight given to applied nuclear physics. Bioengineering breakthroughs, made in the most advanced labs a few years ago, are now replicated by undergraduates. This is great for research, but in terms of risk – in Ord’s phrase – “democratisation is proliferation”.

“One has to make it clear you’re not suggesting the coronavirus is a bio-weapon,” Ord continues. “But it certainly shows the lower bound for what a major bio-weapon attack could do.”

A bleak lesson of the 20th century is that general war legitimises any means, even those formerly deemed atrocious. (Throughout the 1930s, European powers repeatedly resolved to never use bomber aircraft.) If the catastrophic potential of science keeps increasing, the conditions for that potential to be realised must always retreat. We really do have to renounce war.

Instead, since the Covid-19 crisis, many governments have doubled down on blame-games and brinkmanship. The world’s rival superpowers are trading denunciations, closing their consulates, and brushing up against each others’ fleets in the South China Sea. Hard-won arms-control treaties such as the New Start are being left to expire, instead of being expanded to include China. The two countries presumed most likely to resort to a nuclear exchange are India and Pakistan. A third of their weapons could kill roughly 100 million people directly and precipitate a global nuclear winter. On televised debates, we watch Indian and Pakistani spokespeople bellow threats to “wipe out” each other’s capitals.

In 2020, bio-weapons are not our biggest problem. Thanks to Covid-19, though, they are the stick that has rolled out between our feet from the barrel of dynamite we forgot we were sitting on. The moral argument against future war stands on the same ground as the argument for fighting climate change. In Edward Said’s resonant phrase, the task before us is not to separate one struggle from another, but to connect them. There are radical paths we are preparing to take to save ourselves from climate disaster. These paths should also lead us away from the next war, and that gamble with humanity’s future.

In previous decades, images from Hiroshima and Nagasaki made people around the world say never again to the bomb. For most people today, to whom the bomb is just an ironic symbol in the “mind-is-blown” emoji, our worst impressions of the Covid-19 pandemic could be a similar caution. Curfew, displacement and hunger around the world – wealth devastated, and the international grid of travel and trade shut down – deaths mounting senselessly without a shot being fired: Covid-19 is a terrible natural pandemic, but also a rehearsal of a kind of future war, one that mobilises not tanks or submarines but the frontiers of scientific research.

“The atomic scientists, I think, have become convinced that they cannot arouse the American people to the truths of the atomic era by logic alone,” Einstein said in The Atlantic magazine. “There must be added that deep power of emotion which is a basic ingredient of religion. It is to be hoped that not only the churches but the schools, the colleges, and the leading organs of opinion will acquit themselves well of their unique responsibility in this regard.” We are called on to attempt a cultural, moral evolution away from war. We may be too embarrassed to say it, and risk sounding naive. But the atomic scientists were not embarrassed, knowing the real risk before us.

•Raghu Karnad is a journalist and contributing editor at The Wire

Power to the people: why clean energy must give more Australians a slice of the pie.

Extract from The Guardian

Energy

Australians are far more welcoming of change than we expect, and are furious at having been shut out of being direct participants.

Wind turbine

Once operational, wind turbines and solar panels do not require the same level of active human involvement as traditional power stations like coal and gas
Sun 30 Aug 2020 06.00 AEST

In August 2015, I spent a cold night at the old TAB Royal Hotel in Manildra (population: 765), near Orange in central New South Wales. It wasn’t familiar territory. A sign behind the bar yelled: “MEN: no shirt, no shoes, no service. WOMEN: no shirt, free drinks.”

My colleague and I, as part of the communications team for the renewable energy company Infigen, were there for an open day talking to community members about the company’s proposed solar farm nearby. The day had been quiet. A few locals wandered in, curious about our work, but mostly wielding questions about how they might get solar on their own rooftops. Our Sydney office staff had booked a more upmarket hotel in a larger town nearby for us, but once we arrived my colleague insisted on cancelling to stay at the Royal, which was only a few hundred metres from the planned site.

“I just want to support the really local businesses, you know,” my colleague told me. It is an important habit. When a solar or windfarm is being built, the people who build it stay nearby, they eat and drink at local shops, and they procure materials and services from local businesses. This is a significant boost for regional towns that, in the past few decades, have suffered a variety of stressors, including drought, and, more recently, a drop in tourism due to bushfires and Covid-19.

The number of jobs in the wind industry has remained steady, even though the number of wind turbines in Australia has increased.

Supporting local business is necessary, but insufficient as a tool for ensuring full participation in the clean energy transition. Employment and economic benefits associated with development and construction are significant, but, once operational, wind turbines and solar panels do not require the same level of active human involvement as traditional power stations like coal and gas. Renewable energy is cheap partly because it requires little human intervention, and that low cost translates into lower electricity prices for everybody. It also means more money can be given back to the community in other ways.

Renewable energy jobs rely mostly on new growth, rather than existing projects. But the “jobs” narrative around renewable energy has, problematically, failed to provide clarity about this temporal skew. This is borne out in the Australian Bureau of Statistics’ figures on wind power employment, which show that the number of jobs in the wind industry has remained steady, even though the number of wind turbines in Australia has increased significantly (see graph below).

ABS stats
Photograph: NewSouth Books

The three categories of traditional sharing of benefits from wind power projects – landholder payment, community enhancement funds, and jobs and economic benefits during construction – bring important and positive changes to communities. But together they have been insufficient in addressing a powerful perception of injustice, disconnection and unfairness felt by those living near the big new manifestations of climate action.

Technologies, when built, are fiercely opposed, but are soon welcomed once their benefits are spread more equitably across neighbours. Andrew Dyer pointed out a precedent in the early days of mobile phone towers: “I think there’s lots of parallels. There’s a mobile phone tower 200 metres from our house. I don’t recall any protests or issues about that.”Renewable energy is, for both wind and solar, a marker of change.

Renewable energy is, for both wind and solar, a marker of change. Photograph: David Mariuz/AAP

He’s right. Public objections to mobile phone towers, like we saw in clips from the mid 90s, aren’t dominating the nightly news. Things have changed. “I think over time people are more accepting of something they know is a benefit. What’s changed attitudes to towers has been the smartphone – when you realise it’s not just a rich person in their Rolls-Royce with a car phone driving ‘cancer-causing’ mobile phone towers to be erected, it’s actually the thing that gives you Facebook access and lets you see what your nieces are up to, it makes you far more tolerant.”

Is there a way to make renewable energy as directly beneficial to those living nearby as mobile phones have been to those of us plugged into the world via social media? Dyer strikes at the heart of the problem. Renewable energy is, for both wind and solar, a marker of change. It is a physical and aesthetic alteration, as the landscape is transformed within months, in front of the eyes of those who have gazed at the same shapes for decades. It is an ideological change, as our species seeks to capture and utilise its lifeblood – energy – in a totally new way. It is a political change, whether we like it or not.

For so long, the narrative around opposition to renewables was that these people were resistant to change, but I challenge that. I argue that they are, in fact, far more welcoming of change than we expect, and are furious at having been shut out of being a direct participant in it. The benefits of renewable energy are already known by some, but they have not been properly made available to people who have been screaming out for a slice of the pie.

In 2012, researcher Nina Hall led a report on behalf of the CSIRO into social acceptance of windfarms in Australia. She pointed to “psychological identification” as a key goal for local responses to renewable energy, as opposed to more passive “approval”.

“Psychological identification” strikes me as something that could be more simply described as love – a passionately happy and optimistic response to being granted the right to actively participate in the process of resolving the biggest problem in the world. “This effectively dissolves the us/them boundary,” wrote Hall and her colleagues.

A paper by community energy researchers Jarra Hicks and Nicky Ison outlined significant opportunities for rural communities in Australia when participation in clean energy significantly increased. “While [community renewable energy] is a new sector in Australia, many opportunities exist for it to contribute to addressing climate change, community development and rural economic health,” they wrote.

The potential for greater participation is vast. Every new technological change required over the coming decade, including the growth of solar and transmission networks, new hydro and new batteries, could be subject to its own wind turbine syndrome–style campaign. Renewable energy needs to earn broader and stronger support from the communities that host it, through better participation and more equitable benefit sharing. Other countries have seized on the task of rapid construction of new forms of electricity generation, but largely avoided the serious and long-lasting delays that stem from community backlash. Australia has so much to learn from their experiences.

  • This is an edited extract from Windfall: Unlocking a Fossil-free Future, published on 1 September by NewSouth Books. $32.99

Unlike today's Liberals, Robert Menzies boasted of delivering large budget deficits.

 Extract from ABC News

By business reporter Gareth Hutchens

Capturing history
Former prime minister Robert Menzies boasted of the "expansionary effect" of a cash deficit.(Supplied: Australian War Memorial)

There's a lot we've forgotten about Robert Menzies.

Take his name, for example.

Younger Australians may not know it, but our country's longest-serving prime minister, one of the founders of the Liberal Party, was nicknamed "Ming".

He was our first prime minister to have two Australian-born parents, but his paternal grandfather was Scottish and he was proud of that heritage.

He preferred his surname to be pronounced the way the Scots pronounce it — Ming-iss — but his attempts to convince his countrymen to do so were in vain.

He received the nickname "Ming" instead.

Then there was his time as prime minister, when he boasted about delivering a bigger budget deficit than Labor would have, for the good of the country.

That's right.

The father of Australia's Liberal Party was proud of spending whatever was necessary to ensure full employment, even when the economy wasn't in recession.

Keynesian logic of Menzies

A speech Mr Menzies gave in August 1962 about his budget that year is worth reading.

He'd won the federal election eight months earlier, defeating the Labor opposition led by Arthur Calwell.

During the campaign, Mr Calwell promised to deliver a deficit large enough to eradicate unemployment, and he figured that meant a deficit of 100 million pounds.

Here's Mr Menzies explaining why he was spending more than Labor pledged.

"We shall pay out to the citizens 120 million [pounds] more than will be collected from them.

"So, far from being timorous — I think that was another of the words used by the deputy leader of the opposition — this is adventurous finance.

"Add to the deficit the tax refunds now being made, and it is clear that purchasing power in Australia this financial year will be uncommonly high.

"The real task of any government today, as well as of the business community and all sensible citizens, is to get that purchasing power exercised."

It was uncomplicated Keynesian logic.

As John Maynard Keynes wrote in 1933: "Look after the unemployment, and the budget will look after itself."

During the years 1946 to 1975, when Australia's federal governments (both Labor and Liberal) pursued a policy of genuine full employment, the unemployment rate was kept below 2 per cent on average.

Mr Menzies' second stint as prime minister lasted from 1949 to 1966.

For his last nine budgets he delivered deficits, and the size of his last deficit, at 3.3 per cent of gross domestic product (GDP), was 0.3 per cent larger than the deficit in Wayne Swan's last budget in 2013.

So why wasn't the public angry?

Because Australia's economy, like economies in other western nations, grew strongly in the post-war period.

In the 1940s, its average growth rate was 3.8 per cent.

In the 1950s, it was 4.2 per cent.

In the 1960s, it was 5.3 per cent.

And that constant growth meant the size of Australia's government debt relative to the size of the economy (the ratio of debt-to-GDP) shrank dramatically, too.

All while the government was handing down budget deficits.

Employment push more in line with today's Greens, Labor

Keynesian economists would say those governments were doing what governments should: using their spending power to cover any shortfalls in growth left by the private sector, to support as much employment as possible and boost growth.

At the end of the war in 1945, Australia's government debt-to-GDP ratio was 120 per cent. By the mid-1970s, it had fallen to roughly 10 per cent.

Look after unemployment, and the budget looks after itself.

In that same speech in 1962, Mr Menzies said his government had a number of objectives.

"The first item in our policy … is to build up Australia's population," he said.

"An increased population is vital to Australia. Whatever fluctuations may have occurred in our population, let me remind honourable members that in 1949 the population was a little more than 8 million, but today it is well over 10,500,000.

"Our second great objective is to maintain full employment of man-power and resources.

"The two things must go together if we are to develop Australia."

He listed some of the major infrastructure projects, like the Snowy Hydro scheme, that had taken place under his government (while he was delivering deficits) and said he didn't accept the "artificial division" between the public and private sectors.

"We look at the works programmes of the states and we think they are very good programmes. They are very good indeed," he said.

"Without them and without our works programme, private industry could not grow. It could not employ people. It could not see them housed and provided with transport, schools and all the amenities of a civilised society."

He said his next great objective was to oversee a "steady and strong growth" of manufacturing.

"Because manufacturing is one of the essential conditions of full employment in a growing population."

He also argued why full employment was vital.

"Full employment is not an artificial idea or something to be achieved by some sleight of hand, by some artifice on the part of a government," he said.

"In other words, you can look at full employment as if it were a theory, or you can look at it as the desired end of a great co-operative effort throughout the country — an effort in which action is productively directed and people are productively employed."

You wouldn't blink if you heard a modern Greens or Labor politician speak that way, but a Liberal leader?

From embrace of deficits to 'living within our means'

Younger Australians, those born from the 1980s onwards who came to political consciousness in the Howard years and after, may be surprised to hear that our federal politicians used to boast about the size of their budget deficits during periods of economic growth.

The constant political messaging in recent decades about "debt and deficits" and the need to "live within our means" (from both the Coalition and Labor Party) has primed voters to think about government spending in extremely narrow terms.

Modern Monetary Theory explained

The global economy today is obviously radically different from the post-war period, so it would be impossible to copy-and-paste Ming and his opponents' budget measures.

But it doesn't mean we should forget them, either.

At the beginning of his prime ministership in 2018, after years of internecine warfare, Scott Morrison took his colleagues to the birthplace of the modern Liberal Party, in Albury on the New South Wales-Victoria border, in a bid to remind them of their roots and convince them to work together again.

He spoke of Mr Menzies' legacy — but not of his deficit spending that contributed to the growth of Australia's middle class and rising national wealth.

Today, a generation of Australians may have learned to think budget deficits are synonymous with economic mismanagement, but deficit spending, historically, has been as Liberal as the colour blue.

Bottling nostalgia: The rise and fall of Australia's old-fashioned soft drink industry.

 Extract from ABC News

Independent soft drink companies were prevalent in Australia around the 1950s.

Before multinational soda giants Coca-Cola and Pepsi dominated the market, Australia had its own thriving soft drink industry.

In the mid-1950s, nearly 600 soft drink companies were in operation.

"Small towns like Dalby had two, Toowoomba had three or four, every little town had one," said Murray Rosenberg, co-owner of Crows Nest Soft Drinks in Queensland.

Figures are hard to confirm, but Mr Rosenberg believes as few as seven small Australian independent businesses remain.

"A lot of the popular brands got bought out by the majors," he said.

"They were offered large amounts of cash to surrender their brand; the majors bought the market share."A collection of brightly coloured soft drink bottles.

Vintage soft drinks bring back plenty of memories for many Australians.(ABC Landline: Pip Courtney)

Six years ago, the future for Crows Nest Soft Drinks in the small town of Crows Nest, 150 kilometres north-west of Brisbane, was bleak.

After bottling for 117 years, it was weeks away from closing when Mr Rosenberg, who was working in the mining industry, bought it with Alex Davidson, a retired baker.

They acquired worn-out equipment and an old recipe book with the secret formulas for nearly 30 different syrup flavours.

"I could follow recipes, being a baker, and Murray's a very clever engineer, so the combination's worked," Mr Davidson said.

A black sign on a shop front reading 'Crows Nest Soft Drinks, a taste of the past since 1903'.

The soft drink company is continuing its century-old legacy.(ABC Landline: Pip Courtney)

The pair said moving the factory to Crow's Nest's main street and opening a shop-front full of product and memorabilia turned the business around.

"We're now selling more than 200,000 bottles of soft drink a year," Mr Davidson said.

"One of the things we never saw in the numbers was the smiles on people's faces when they'd come in from all over Australia, and it started to twig the brand was something special," Mr Rosenberg said.

He calls that joyful nostalgia "the magic".A number of colourful soft drink labels stuck to a white wall.

Seventy years ago, Australia's soft drink industry was thriving.(ABC Landline: Pip Courtney)

A return to old-fashioned flavours

A hundred kilometres away in Pittsworth, Cooks Soft Drinks was saved by a local electrician.

It had been bottling since 1900 when Brendan Cavanagh bought it in 2015.

"I heard the doors were going to shut and thought, 'Something this good can't be lost,' because once they're gone, they're gone," Mr Cavanagh said.A man holds two 'handbooks', one red, one brown, full of recipes for soft drinks.

Mr Cavanagh still has old instruction books for making soft drinks and cordials.(ABC Landline: Pip Courtney)

"The flavours appealed to us, just the richness and the uniqueness of them.

With a smile, he admitted his wife called his purchase his "mid-life crisis".

Mr Cavanagh moved the factory to Pittsworth's main street and opened a shop.A man in a blue uniform stands in front of rows of soft drink, smiling and holding a bottle.

Mr Cavanagh saved the old-fashioned soft drink company.(ABC Landline: Pip Courtney)

The business is now profitable and growing.

A new bottling line was bought so he could do more contract bottling for local farmers.

Three producers have sent cordial made from waste produce, which he carbonates, bottles and labels.

"The first person we did this for told us he'd been trying to get it done but the larger companies had minimum orders of 10 pallets — I told him I'd do him 20 cartons," Mr Cavanagh said.

"Those contracts have grown and the popularity has taken off."Coloured class bottles with green and yellow labels in a row.

Pittsworth soft drink company Cooks partners with local farmers.(ABC Landline: Pip Courtney)

'Invented as a treat'

Old-fashioned sugary drinks are experiencing a revival, despite health advice to eat less sugar.

Nostalgia is a big driver for sales, as the old flavours trigger childhood memories.

Mr Davidson of Crows Nest Soft Drinks said customers wanted to support local business and enjoyed trying fizzy drink and syrup flavours like musk, lychee, grape, butterscotch and custard.

At the shop, customers are advised to treat soft drink like their grandparents did.A number of brightly-coloured soft drink bottle caps stuck to a wooden surface.

Many customers can recall the soft drinks and cordials of yesteryear.(ABC Landline: Pip Courtney)

"The carbonated drink was invented as a treat; it was never intended to be consumed as a hydration aid," Mr Rosenberg said.

"If you're thirsty, drink water."

Mr Davidson is adamant he will not change the old recipes.

"They've been around since 1903, but with the controversy over sugar, we're finding people are buying the syrups because you can make it any way you like it," he said.

"Me, I just put a few drops in the bottom of a glass and soda water."

The fizzy polariser

There's a similarity between the soft drink businesses that may explain why at least four of the country's remaining seven companies are in Queensland.

Queenslanders love double sarsaparilla.

You either love or hate the black brew and as "sars" isn't so beloved in all states, it can be hard to find.Rows of bottles without labels and filled with double sarsaparilla.

Not everyone is a fan of Queensland favourite double sarsaparilla.(ABC Landline: Pip Courtney)

"We can't sell sars to New South Wales, they say it tastes like cough mixture," Mr Rosenberg said.

But to Mr Davidson, it's black gold.

"It's our biggest seller," he said.

"We couldn't keep the doors open without it."

Watch this story on ABC TV's Landline at 12:30pm on Sunday, or on iview.