Cutting off someone else’s legs to make you look taller

Bjorn Lomborg’s excellent piece in yesterday’s Australian highlights the flawed economics of solar and wind power.

It also complements a recent Bloomberg article about how the increasing footprint of wind and solar in energy markets is eating into the economics of existing fossil fuel plants. It’s a great read – not so much for its apparent endorsement of crony capitalism as for its clear illustration of how government subsidized and mandated renewable energy policies are actively seeking to make commercial fossil fuel power stations uneconomic, so that renewables can compete.

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While this article doesn’t talk directly about Australia, the recently announced closure of Alinta Energy’s South Australian operations is an example of this in practice and its intended outcome here.

Fossil fuel power stations are the backbone of world electricity networks. As referenced in the article, coal, oil and gas are typically able to generate electricity 24 hours a day, 7 days a week, (and for 40-50 years according to the International Energy Agency (IEA) needing only occasional down time for maintenance. This usually equates to about 80-90% of their capacity.

Solar power stations however typically deliver 20% of their capacity (night, clouds and winter are a problem) and wind 33% (no wind or too much wind is a problem). According to the IEA, wind and solar power stations also typically have half the plant life of fossil fuel plants. What is also never included in the comparative economic cost of wind and solar is that a fossil plant usually has to be on standby somewhere to generate power in calm or non-sunny conditions.

If fossil fuel power stations were being displaced by better fuels, technology or processes, it would be creative destruction and a normal part of capitalism. However this is using the financial power of government to cripple commercial products and replace them with less productive alternatives, which we will all pay for in the long run.

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Top 3 articles from this week you must read

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Bret Stephens

1) In the Spring edition of the City Journal, Steven Malanga documents who is really behind the “grassroots” environmental movement in California

2) On Monday, the Scientific American published a fascinating account of a failed Greenpeace renewable energy experiment in India, and how coal really does trump solar

3) Also on Monday, in an excellent Wall Street Journal article, Bret Stephens called on Europe to remember its Judeo-Christian inheritance.

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Email: Support for freedom of speech continues to grow

While the prime minister has kicked it “into the long grass“, support within the Coalition for freedom of speech continues to grow.

There are now 13 senators who are public in their support of changes to section 18C of the Racial Discrimination Act 1975. (See the full list on FreedomWatch here).

Last week, Senator Zed Seselja was the latest to join the call for free speech, with this 11 minute speech in the Senate. It is a must watch.

This week, Prime Minister Turnbull rejected the opportunity to demonstrate his commitment to freedom of speech (which the IPA’s Simon Breheny suggested they take up last week) saying “the government has no plans to change the Racial Discrimination Act at all”.

Continue Reading →

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Powerful labour monopolies must be broken

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Today’s Australian Financial Review editorial on the Fair Work Commission and superannuation governance is a very powerful endorsement of the need to reform the insular and uncompetitive industrial relations club.

All organisations are vulnerable to corruption, no matter what the rules. But the Labor-union nexus is prone to it because of its governance, even though most people who enter its ranks do so with the best of intentions.

At the heart of this are the industrial relations laws that grant unions monopoly rights over the supply of labour, in particular industries or trades.

These monopoly rights, sometimes backed by the threat of violence, remove the accountability of competition to represent the interests of employees.

Instead, control of the labour monopolies is politicised and merged into the political wing of the labour movement, producing a system based on power and patronage.

This system must be changed.

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LISTEN: Chris Berg talks food trucks on 3AW

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Anybody who has been to a major American city in the last decade will have been impressed by the large number of food trucks dotting their sidewalks.

Earlier this morning I was interviewed by Neil Mitchell on 3AW to explain why we don’t see similar offerings in Melbourne. The answer, unsurprisingly, is the arcane regulatory hoops and rent-seeking prohibitions that keep food trucks mostly off our streets. Councils have limited the number of trucks allowed in their suburbs to protect existing restaurants from competition.

During the course of the interview, a number of food truck operators called in with their experiences about how hard it is to operate across Victoria, and how the permit system is holding back food diversity and choice.

You can listen to the interview here. And I wrote about food trucks in the Sunday Age back in 2013.

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The problems with a sugar tax

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Professor Chaloupka

Taxpayers in Western Australia have copped a double whammy from the visit to Perth of University of Illinois at Chicago professor Frank Chaloupka.

Firstly, their state’s Health Department has helped fund Chaloupka’s trip. Secondly, Chaloupka wants to increase their taxes, specifically to introduce a sugar tax.

As Healthway’s 2015 Visiting Fellow, Chaloupka is busily addressing conferences and talking directly to government and health officials. It should be noted that Chaloupka is not a professor in any health related field, but rather a professor of economics, hence his focus on taxation. He is pushing a sugar tax claiming that children and low-income groups needed to be discouraged from consuming a major driver of obesity.

However, there are significant problems with a sugar tax. If targeted at low-income groups, it is a highly regressive from of taxation which may produce perverse health outcomes. It will also be the thin end of the wedge for, if we get a sugar tax, there will surely then be calls for a salt tax, a general junk food tax and even a red meat tax.

The push for a sugar tax is certainly not unique to Australia. Celebrity chef Jamie Oliver recently addressed a Health Select Committee at Westminster. As well as arguing for a whole suite of advertising restrictions, he wanted a sugar tax imposed for at least three years.

Of course, the likes of Chaloupka and Oliver never argue for restrictions on what they eat themselves or what can be cooked in high class restaurants, only on what others can consume. And it is no coincidence that so-called ‘public health’ advocates link children and low income people in their demands, because they seem to want to infantilise all of society.

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Government hoists the white flag on academic freedom

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Yesterday, the federal government surrendered to the hysterical demands of the vocal minority to Bjørn Lomborg’s Australian Consensus Centre.

Sarah Martin reported in The Australian today: 

The Institute of Public Affairs, a free-market think tank, accused the government of “hoisting the white flag” on academic freedom.

… IPA executive director John Roskam said the move was “terribly disappointing”.

“I think it is a victory for censorship. I think it is a victory for closed minds,” [Roskam] said. “It is a terribly disappointing day for Australian universities and for academic freedom.”

Read the full article here.

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Latest claims highlight the vindictive nature of ICAC

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The latest claims about behaviour from the controversial ICAC can only be described as arrogant and vindictive:

The NSW corruption watchdog re-enacted a seizure of Margaret Cunneen’s mobile from her home in order to cover-up a flawed raid a week earlier when they took her phone without a search warrant.

In a further explosive revelation, Ms Cunneen, a deputy senior crown prosecutor, claims ICAC leaked to her boss a private text message she sent in which she was critical of him – even though it was sent two years earlier and was not relevant to ICAC’s investigation.

Conducting raids without a warrant? Leaking a text just to hurt one of their targets? ICAC act as if they are a law unto themselves. Chris Merritt has more:

If substantiated, it would mean officers of this government agency misled a court and swore a false affidavit to cover up a raid that was conducted without a proper legal basis.

To obtain a search warrant… ICAC officers must have provided an affidavit explaining why such a course was necessary.

If that affidavit says ICAC wanted to seize her telephone — which it already possessed — it will destroy careers.

This would be a good start, but there is a deeper problem – the agency itself. By skirting (and breaching) the limits of its powers, asking parliament to authorise its past unlawful investigations, rejecting accountability by refusing to answer questions from a parliamentary committee, and not observing the rules of evidence, ICAC has shown it is home to a poisoned culture. And the best antidote is abolition.

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Rail dispute settled – with your money

According to today’s Herald Sun, it appears that Melbourne’s train dispute has now been settled, with rail staff getting  a 14% pay rise over three years, with a 3% sign-on bonus.

While all sides typically claim a win in disputes like this, the final amount is suspiciously close to the 18% over three years demanded by the rail union which suggests that the Victorian government and rail operator Metro did indeed cave in to pressure to prevent strikes during the Spring Racing Carnival.

On top of the reported 28% pay rises over the previous six years, it is clear that these workers are indeed adept at taking people for a ride.

An average train driver is now set to earn $143,600 a year by 2018 and a driver with only two years’ experience $122,000. This is quite a good wage when you consider the average full time salary in Australia is now around $77,000 per year with a lot of people earning a lot less.

Wouldn’t it be great if MPs could be held financially accountable for the decisions they take on our behalf?

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Be ideological, Hockey advises Turnbull

Yesterday, on the 21st of October, Joe Hockey farewelled public life.

As a nation whose political system has long been defined by a rigid party structure—which encourages conformity and punishes dissent—Australia was offered a rare insight into the values and motivations of one of our most senior political figures.

Readers of FreedomWatch will find much to like, and much to dislike, in Hockey’s valedictory speech.

He argued in favour of lower and simpler taxes, for a more flexible employment system (an end to penalty rates), and for an end to the age of entitlement—the topic his brilliant 2012 speech to the IEA. Less pleasing was his praise of Labor’s NBN, his celebration of imposing GST on imported goods, and his hostility towards international tax competition (in the guise of tackling so-called “profit shifting by multinationals”).

But it was his defense of ideology that was most important. After restating his commitment to liberalism, Hockey declared that:

It’s true but it must be said, if you don’t have core beliefs then you have no core. When you’re asked to make very difficult decisions that have a huge impact on people’s lives, without a guiding philosophy, you’ll inevitably be indecisive, or worse, inconsistent.

If the Turnbull government takes anything from Hockey’s speech, it should be this.

As I argued in The Spectator last year, and as Chris Berg argued in The Drum last month, the Abbott government’s problem was not that it was too ideological, it’s problem was that it wasn’t ideological enough.

Without ideology—or, as Hockey put it: a set of core beliefs—politicians are left with mere populism. What results is an inconsistent, short-sighted, and ad-hoc approach to government. In an age of global competition, Australia must enact substantive reform or risk being left behind.

Malcolm Turnbull began his premiership by declaring that he would lead “a thoroughly liberal government, committed to freedom, the individual, and the market.” So far, these are just words. Time will tell if this guides his policies.


Watch Joe Hockey’s full valedictory speech, here.

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