The fossil fuel subsidy myth

Henry Ergas in yesterday’s Australian cited a letter from the former chief economist to the International Monetary Fund (IMF) that describes that organization’s claim of $5.3 trillion of world fossil fuel subsidies as “highly questionable” and “dubious”.

The IMF, like the Organisation for Economic Co-operation and Development has jumped on the subsidies bandwagon in recent years. This is especially disappointing in the case of the OECD, given that it exists solely to promote economic growth.

A true energy subsidy is a payment, or other measure, that reduces prices below the true market price. Energy subsidies, like all subsidies, distort the natural flow of investment, demand and supply in markets, and should not be supported, especially given that the long-suffering taxpayer is the one that ultimately foots the bill.

While there are governments around the world that do genuinely subsidise energy (e.g. Venezuela, or Iran), these subsidies are in fact dropping.

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In September the IPA published The Fossil Fuel Subsidy Myth which found that the phrase “fossil fuel subsidy” in the Australian context had been used by environmentalists as a political weapon to demonise the mining industry and artificially bolster the case for renewables.

A refund of overpaid tax is not a fossil fuel subsidy, and neither is a campaigner’s calculation of what a company or consumer “should” have paid. Tax systems exist to raise enough revenue to pay the government’s bills, and should not be used to pursue political vendettas.

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We need permissionless innovation to grow and prosper

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Upon becoming prime minister Malcolm Turnbull outlined a desire for Australia to become a more innovative country, unlocking the inherent potential for greater entrepreneurship and ingenuity.

To be certain, most people see an innovation policy as being synonymous with more government subsidisation and tax breaks of a limited range of activities seen to be innovative. But is greater public sector activity in economic activities needed to encourage innovation?

In a piece published in the Canberra Times on Saturday weekend, I say no, not at all. A slice:

If Prime Minister Turnbull and his eager cabinet colleagues wish for a more innovative Australia that is readily embraced by every resident, better for them not to game the market process by forcing us to accept bundles of new economic knowledge we would prefer not to produce and buy ourselves.

The best innovation policy, in other words, is one which frees up the economy in every way imaginable so that innovation is generated by entrepreneurs in the marketplace.

Continue reading here.

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Global disaster guru on tonight’s Q&A

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Prominent ecologist and biologist Paul R. Ehrlich will be on tonight’s Q&A.

Dr Ehrlich was one of the world’s first global alarmists, with his 1968 book The Population Bomb warning of the death of hundreds of millions of people in the 1970s and 1980s due to global starvation because “the world is running out of food”.

The book, which was commissioned by the Sierra Club, called for “population control” through “changes in our value system but by compulsion if voluntary methods fail.”

As tends to be the case, Dr Ehrlich also promoted global cooling in the 1970s.

It will be interesting to see if any of his failed predictions are mentioned!

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ICAC: “We’re above the police”

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Sophia Tilley, the girlfriend of prosecutor Margaret Cunneen’s son Stephen Wyllie.

This exchange between ICAC officials and Sophia Tilley – the girlfriend of Margaret Cuneen’s son – is further evidence of the nature of this out of control organisation:

“There were these guys in suits. They were really solemn and they knew our names. They said, ‘We’re going to need to take your phones’,” Ms Tilley told The Australian in her first interview.

“We said, ‘We need our phones for work, who are you, why would we give you our phones?’

“They said, ‘We’re ICAC.’

“I said, ‘You’re not the police, I don’t know what ICAC is or who you are, we’re not going to give you our phones, why would we?’

“They said, ‘We’re above the police.’ They said ‘if you don’t you’ll face five years in prison’. They said, ‘Trust me, this is in your best interest to do what we say, we’re the guys who got Eddie Obeid.’ That’s how they tried to identify themselves.

“I don’t watch the news so I didn’t know who Eddie Obeid was.”

Initially thinking the ­ordeal was a practical joke, Ms Tilley asked the officers if the visit was to do with a friend who lived nearby.

“But they said, ‘No, it’s you’,” she said.

“We said, ‘Why? What have we done?’ and they said, ‘You’ll find out soon enough.'”

It’s worth reading the full exchange at The Australian here ($).

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Devine: close down ICAC

Miranda Devine lashes the NSW Independent Commission Against Corruption in her column today for the Daily Telegraph:

I hope the Baird government is making plans for regime change at ICAC. Better yet, close down the discredited star chamber and save the taxpayer $28 million a year.

The benefit of any corruption deterrence has been outstripped by ICAC’s abuse of its extraordinary powers, particularly when it comes to the ­malicious pursuit of NSW prosecutor Margaret Cunneen, SC.

There is no escaping David Levine’s lacerating assessment of the organisation led by commissioner Megan Latham, whom he has described previously as a “sore loser”.

In his annual report, released on Friday, Levine says ICAC displays “almost breathtaking arrogance in relation to its own powers, in relation to the people with whom it is dealing, in relation to other institutions of governance of the state, not least the parliament to which the ICAC itself is accountable”.

The former Supreme Court judge, whose role as inspector is to oversee ICAC, describes his relationship with the organisation as characterised by “hauteur”. He also refers to the “dysfunctionality and contradictions that exist in the environment of corruption and investigation in this state”.

And that’s just the appetiser.

Read on here ($).

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Senator Abetz to cross the floor in support of section 18C amendments

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Parliamentary support for free speech continues to grow.

In a opinion article for the Federal Young Liberal Policy Journal, Liberal senator Eric Abetz has said that laws which prohibits insults and offensive speech is “anathema to the kind of free and open society that we should be promoting.”

As reported in The Australian today, Senator Abetz also encouraged his party to throw their support behind the Senator Bob Day’s amendment, which seeks to remove the words “offend” and “insult” from section 18C of the Racial Discrimination Act 1975. From The Australian:

“It will be a sad day if Liberals have to cross the floor to protect one of the great human freedoms — free speech.”

… Senator Abetz said while he was constrained as a minister in the Abbott government to support the party’s position, his “new-found freedom” as a backbencher allowed him to express support for Senator Day’s bill.

He also took aim at Malcolm Turnbull for maintaining Mr ­Abbott’s position on section 18C, despite previously expressing support for the change.

“With the new-found freedom I have been generously given, I don’t mind saying that I agreed with the then communications minister’s assessment that Sen­ator Day’s bill was broadly supported and it wouldn’t have any negative impact.

“It is disappointing that the now Prime Minister appears to have changed his view,” he says. “It is still my hope, though, that the partyroom ­decides to support this bill as a whole.”

Senator Abetz joins the growing list of current senators who are on the record in support of amendments to section 18C. The now 14 senators in support of change are as follows:


UPDATE: Link to the Federal Young Liberal Policy Journal, featuring Senator Abetz’ article, can be found here.

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Top 3 articles from this week you must read

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Dr Jennifer Oriel

1. In excellent essay in the Wall Street Journal on Saturday, Matt Ridley described how technological evolution has momentum of its own – momentum which the government cannot dictate

2. In the Washington Post on Wednesday, George Will described the financial interests of US states underpinning ‘Prohibition 2.0‘ on sports betting

3. And in The Australian today, the fantastic Dr Jennifer Oriel – citing IPA research – highlights the problem of university courses leading new teachers to be hostile to the West ($).

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What smoke-free zones look like

This is the bizarre footage of a Sydney maniac exploding at a lady for committing the unspeakable crime of smoking outside.

No, the madman wasn’t reprimanded. As he says, what the lady was doing, while harming nobody else, was against the law. On the flimsiest of justifications, an increasing amount of outdoor smoke-free zones – including in Martin Place – have come into being. Anti-smoking hysteria is now the law.

And this war against smokers continues. The Herald Sun reports today that the City of Melbourne is set to create the city’s largest smoke-free zone:

Princes Park in Carlton and the Tan Track, spanning 3.8km around King’s Domain and the Botanic Gardens, have been highlighted for bans that could start as soon as April, according to confidential papers seen by the Herald Sun.

Make no mistake – this is the next step on the path to a smoke-free city, as Councillor Richard Foster makes explicitly clear several times in the report.

Practical difficulties in enforcement aside, this campaign is obviously paternalism writ large. Claiming to save people from themselves, or punishing people for undermining the public goal of ‘denormalising’ smoking is a poor excuse for government action.

However, the risk of civil discord should also be acknowledged. The more that the demonisation of smokers is internalised in our laws, madmen will be ever more emboldened to harass others, as in the above video. How long before words become actions, and shouting becomes violence?

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Codeine changes will only make pain more painful

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Darcy Allen is a Research Fellow at the Institute of Public Affairs and Jason Potts is an Adjunct Fellow at the Institute of Public Affairs.


Imposing mandatory prescriptions for drugs containing codeine will line the pockets of medical professionals at the cost of taxpayers.

Recently the National Drug and Alcohol Research Centre at the University of NSW released research showing codeine-related deaths increased from 3.5 to 8.7 per million of the population from 2000 to 2009.

That sounds very bad, but almost all of these approximately 150 deaths per year involved ‘multiple drug toxicity’. That is, codeine was one of several drugs involved. So it’s not actually even obvious that codeine is the problem here.

Nevertheless, the Therapeutic Goods Administration (TGA) maintains codeine is an addictive ‘drug of abuse’ in desperate need of regulatory attention. Their recent interim decision means all over-the-counter medicines containing codeine be changed to prescription-only as early as mid-2016.

One of the quickest ways to effectively assess calls for new regulations is to follow the money. So, who wins and who loses from making codeine prescription-only?

Doctors win. Forcing more patients to queue at the door for basic prescriptions means more money in the pockets of GPs. A Macquarie University study finds up-scheduling analgesics will directly cost consumers an additional $70 million, and cost the PBS an additional $170 million. That money flows to doctors.

Consumers and pharmacies lose. If such a proposal goes ahead this means hundreds of popular painkillers — including Panadeine Forte, Nurofen Plus and Codral Cold and Flu — will become more expensive and inconvenient for everyday Australians. Pain will become a lot more painful.

Continue Reading →

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