The fossil fuel industry and who really runs Australia
The age of entitlement is over in Australia — except for
the dominant fossil fuel industry and those rich enough to be able to
buy political patronage. Deputy editor Sandi Keane reports.
Treasurer Joe Hockey urges all of us to “share the pain” for his confected “budget emergency”, but, sadly, 'sharing' isn’t in the fossil fuel industry’s playbook.
Big Carbon has always balked at sharing profits from Australia’s mineral wealth.
In stark contrast to Norway, where a mining tax of 78%
has resulted in a sovereign wealth fund twice the size of its GDP,
Australia’s effective tax rate for foreign multinational miners is a
mere 13%.
Instead, whilst crying poor, the mining industry managed to stump up $22 million for an anti-tax campaign and, in 2010, bring down a prime minister — Kevin Rudd.
This week, Australia's dominant fossil fuel industry threw down the
gauntlet to Hockey’s razor gang after it threatened to trim the
luxurious 38% diesel fuel tax rebate.
The speed and the manner in which Hockey and Abbott caved in left most in little doubt about who really governs this country.
From The Land (5/5/14):
'Correspondence leaked to the ABC between top mining executives
warned of a “profound” political impact from cuts to the diesel rebate,
greater than that faced by Labor with the mining tax. The letters showed
the government faced a potentially damaging fight with the nation's
biggest mining firms over the rebate.'
According to The Australia Institute, the fossil fuel industry receives more than $10 billion per year in government subsidies, with the mining industry hogging most of it. The diesel fuel rebate or Fuel Tax Credit Scheme,
is worth $4 billion per year. It might have been designed originally
for farmers, but the lion’s share goes to the mining industry.
In 2012, nine out of ten people polled
voted for the money to be redirected to health and education. But,
unless you are one of the powerful business elites, you – sadly – have
very little sway with this Government.
Because miners and moguls run Australia.
So we taxpayers will see just our pockets looted to reduce a budget
deficit of just 15% of GDP — one of the lowest of any G20 economy.
(Table via austrade.gov.au)
But for sheer chutzpah, you can’t go past the fancy footwork
of the fossil fuel industry in response to the public’s outrage about
the doubling of electricity costs — now one of the highest in the
world. The energy companies have neatly sidestepped responsibility for
overinvesting in poles and wires – a nice little rort as we shall later
see – by taking their cue from the Abbott playbook and blaming the
Renewable Energy Target (RET) and the carbon price.
But the Australian Energy Regulator (AER) disagrees
with the energy companies. It sheets the problem of increased
electricity costs straight back to the networks’ “gold plating” of poles
and wires, which makes up 50% of the average household bill. By
contrast, the RET adds a paltry 4 per cent and the carbon tax 17%.
The overinvestment in infrastructure has been a lucrative little earner for the energy industry.
And here’s how this golden goose delivers...
The networks are permitted to invest a dollar figure based on five
year forecasts. For the years 2014-15, approval was given to spend $45
billion (compare that to the Rudd government’s $39 billion National
Broadband Network described by present Communications Minister Malcolm
Turnbull as "reckless and irresponsible").
In return, the networks are entitled to recoup the cost from the
long-suffering householder. So, the more invested, the bigger the
profit.
Way to go… or so they thought.
Thankfully, as reported recently by Renew Economy’s Giles Parkinson,
the AER has started cracking down on rorting. It now requires Victorian
network operators to base their expenditure plans on actual usage
rather than forecasts. It’s a good start but the regulation system is a
complicated one and progress will be slow.
One outcome the energy industry hadn’t counted on was the growth of
solar rooftops. The infrastructure profit bonanza started falling in a
heap when the public wised up in tandem with the rising power prices. As
solar doesn’t need over-priced poles and wires, that’s half the
household bill saved for starters.
Renewable Energy Target Review (by a climate change denier)
In a special report on the ABC’s Background Briefing, ‘The Price of Power’, The Australia Institute’s Dr Richard Denniss explained solar’s “trick” to reporter Jess Hill:
“Solar rooftops are wreaking havoc on the traditional power
industry, because they produce the most amount of energy at the time of
day when the power industry makes the most money.”
That is, solar works best when the sun shines —when baseline power
producers charge their peak tariffs and also when we turn our air
conditioners on.
“What that means is that the big coal-fired power plants are
earning less for the energy they produce. That's because Australia has
more electricity than it can use.”
Another piece of good news is that a bigger interconnecter linking
the South Australian electricity market with Victoria will mean more
wind energy coming Victoria’s way. As reported by Giles Parkinson in the
same report, Victoria’s brown coal industry is resisting — fearing wind energy would drive their profits down further.
And wind tends to blow at night — when solar goes to bed, creating a perfect storm for the coal industry.
Wind is coal’s biggest competitor, while coal is the Liberal and National Party's biggest donor — mostly through the Free Enterprise Foundation, the Cormack Foundation and the Greenfields Foundation, all set up with the specific purpose of laundering (mostly mining) donations.
[See this author's investigation into Liberal Party fossil fuel donation dependency report with senior correspondent Barry Everingham.]
It is, therefore, no coincidence that the Abbott government plans to wind back the renewables industry.
We’ve also seen how the wind industry was demonised in Victoria by
the Baillieu – then the Napthine – Governments, resulting in
approximately $3 billion in investment going offshore.
[Refer also to my investigation: Victoria goes dirty brown.]
I DREAM OF GINA - CROWDFUNDING TRAILER
Now Joe Hockey has picked up the chant, calling wind farms “utterly offensive”.
We must assume by this that the insane experiment of CSG mining, with its legacy of worthless farmland and the toxic infrastructure, is more to his taste along with sulphur-belching coal-fired power stations.
The news on rising gas prices is a similar example of the fossil fuel
industry extracting favoured treatment over the Australian public by
Federal and Eastern State Coalition and LNP governments.
Householders in New South Wales can prepare for gas prices to take a
17 per cent hike thanks to LNG exports. Foreign-owned mining companies
have been hoovering up all the gas to make killing by selling LNG on the
higher priced overseas market.
Unfortunately, greed resulted in them overcommitting and there simply
isn’t enough gas to fulfill contracts. At one point, they even
contemplated drilling under residential homes just outside Sydney.
[For full details of why the CSG industry is no longer such a gas, read my report here, including the predicted shortage by the Australian Energy Regulator back in December 2012.]
This cynical disregard for Australia’s domestic market was followed by the NSW Independent Pricing and Regulatory Authority’s
decision to allow overseas prices to dictate what energy companies
could charge the domestic market – effectively negating any benefit we
could fairly expect from a resource owned and managed by the Crown
supposedly on our behalf.
The mining industry is not the big employer it claims to be.
It destroys more jobs than it creates and tells outright lies about employment figures, such as APPEA’s dishonest claim to have created 100,000 jobs in 2012; the Australian Bureau of Statistics put it at only 9,372.
According to a report by The Australia Institute,
mining employs only two per cent of the workforce. The boom in
Queensland is likely to destroy one non-mining job for every two mining
jobs it creates.
Last month, at global talks in Nairobi, energy experts at were calling on subsidies to oil, gas and coal prices to be cut:
‘According to the International Energy Agency, the elimination of
fossil fuel subsidies will be the single most effective measure for
climate change mitigation and would be one of the most effective
measures for keeping the temperature rise beneath two degrees, which has
been agreed upon in the international climate negotiations.’
The talks were organized by Germany's development agency GIZ, the UN's Environment Program and the International Monetary Fund. It was noted that most European countries have already cut their fossil fuel subsidies.
There’s little chance of the Abbott Government following suit while
its policy outcomes continue to favour Australia’s richest corporate
elites in return for hefty political donations.
At this point, donations – other than certain donations, such as from developers as in NSW – are not illegal.
Until such time as there is a national ICAC and an appetite to clean
up the corrupt practice of political donations being tied to favourable
decisions, we know who really governs Australia — the miners and the
moguls.
Read also managing editor David Donovan’s The Commission of Audit pantomime and the Coalition’s big lie. Follow Sandi Keane on Twitter @Jarrapin.
The Renewable Energy Target is under review - have your say
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