Ross Grange writes: For once I must wholeheartedly agree with Peter Dutton, our shadow prime minister, and his acolytes: wind farms must not go ahead (“ ‘Misinformation war’: Inside the Facebook groups fighting against offshore wind farms”). If they do, Australia runs the risk of using up wind that could be better used by the Coalition to spout more misinformation, mistruths and misrepresentative swill to feed the Murdoch press and its avid followers.
Good grief that this should happen and that the more intelligent population would be deprived of the opportunity to wonder what happened to sanity in this country.
Tim Stephens writes: Online activism effectiveness is inversely related to the engaged readers’ effective cranial capacity. Like so much in the real world, one must be able to objectively seek and analyse information from several “reliable” sources, to be able to make an informed decision. Sadly, this ability is rapidly diminishing, especially in the online world.
However, being of limited ability in the realm of physics, I have worked out that having all these giant fans resisting the movement of global air masses means that they are effectively slowing the rotation of the planet. This in turn is leading to longer duration daylight hours (especially during daylight savings) and thereby increasing global warming. They must be stopped!
David Simpson writes: Online activism thrives because the internet, through social media, turns a one-person soapbox into a proselytising thunderbox. Amazingly, it sometimes seems those who claim to care the most, know the least.
Regarding offshore wind, European renewable energy people find it hard to believe that Australia is even considering it. “You have all that land and still want to go offshore, which is twice as expensive to build and maintain,” was quoted to me.
We may be the lucky country in some ways, but we have a long way to go to become an efficient one. (The Productivity Commission is a refreshing voice of reason, if only politicians listened.)
David Rowell writes: The long, detailed item on groups opposed to the offshore wind farm proposals reminded me of the community backlash before the last federal election opposing the Petroleum Exploration Permit 11. It would be interesting to find how much of opposition to both is actually from local NIMBY groups. That politicians often get behind these groups is surely what politicians do?
Clean-up operation
Saul Eslake writes: Re “Labor wants to nobble the Productivity Commission on climate policy”: Danielle Wood’s appointment as chair of the PC was, in my opinion, an inspired choice, and I have no doubt she will do an outstanding job, as she has done as CEO of the Grattan Institute. In particular, I hope she can help undo what I regard as — along with the Abbott government’s abolition of the carbon tax — one of the worst public policy decisions of the 21st century: changes to the GST revenue-sharing arrangements imposed by the Morrison government in 2019.
Those changes involved trashing the “horizontal fiscal equalisation” principle which had underpinned the allocation of “general purpose” (that is, “untied”) moneys flowing from the federal government to the states and territories since 1936 — namely, that such moneys should be distributed among the states and territories to enable them to provide the same range and quality of public services to their citizens if they made a similar effort to raise revenues from their own sources.
This long-standing principle is — with Australia’s national income tax and social security systems — an important reason why the differences in material living standards between Australia’s richest and poorest states are considerably smaller than those between the richest and poorest states, provinces, länder or cantons in other federations.
As a result of the changes, the “fiscal capacity” of the fiscally weaker states and territories will no longer be raised (by the distribution of GST revenues) to that of the fiscally strongest state (which for most of the past 15 years has been Western Australia), but rather to the fiscally stronger of NSW and Victoria (which now, and for the foreseeable future, is NSW). As well, the distribution arrangements are subject to a “floor” which provides that no state can receive less than 70% (in 2022-23 and 2023-24) and from 2024-25, 75%, of what it would have received under a hypothetical equal per capita distribution of GST revenues.
What this means in practice is that if iron ore prices remain high such that the WA Treasury is wallowing in mining royalty revenues, WA gets to keep them; but if iron ore prices were one day to fall back to somewhere between US$50 and $70 a tonne (as the federal and WA treasuries keep forecasting), WA’s share of GST revenues will rise just as it would have done under the now-superseded revenue-sharing arrangements.
In other words, heads WA wins, tails, the eastern states and the federal government lose.
Why does the federal government lose? Because the carve-up of the revenue from the GST is, in principle, a “zero-sum game” — that is, an increase in any one state or territory’s share can only be at the expense of one or more of the other states’ and territories’ shares. To cajole the eastern states and territories into agreeing to something that was so obviously disadvantageous, the Morrison government provided what it called a “transitional guarantee” that it would “top up” the GST revenue pool by whatever amount necessary to ensure that no state or territory was worse off than it would have been under the now-superseded arrangements, until 2026-27.
At the time, federal Treasury projected that this “transitional guarantee” would cost the budget $6.6 billion over the eight years to 2027-28 — on the assumption that iron ore prices would come down to, and remain at, around US$55 a tonne. But largely because iron ore prices have since then for the most part remained well over US$100 a tonne (while the A$ has fallen, thus further boosting WA’s mineral royalty revenues), the cost of the “transitional guarantee” has now blown out to a projected $28.4 billion.
That’s $28.4 billion that the federal government is borrowing (in every year except 2022-23, when it ran a surplus) and handing over to the only government in Australia, indeed one of very few governments anywhere in the world, that has been running, is running, and expects to continue running budget surpluses. Moreover, it is the government of the richest state in the country, richer than the rest of the country by a much bigger margin than NSW or Victoria ever were when they were the richest states in the nation.
What’s all this got to do with Danielle Wood? Two things. First, the PC is required to undertake a review of the new GST revenue-sharing arrangements ahead of the expiry of the “transitional guarantee” at the end of 2026-27. Second, she is already on the record, in a report she co-wrote for the Grattan Institute in April entitled “Back in black? A menu of measures to repair the budget”, as identifying “winding back the WA GST deal” as an option that would “make a worthwhile dent in spending”, noting that “in effect, the federal government is spending almost $5 billion a year to support superior government services in the only state that is running a strong surplus”.
So Wood has an opportunity to help reverse one of the most ill-advised public policy decisions of this century. Here’s hoping she takes it.
Death warmed up
David Rowell writes: It’s great to see the focus on particulate pollution and its effect on community health here and globally (“Heat death isn’t the only cost of our addiction to fossil fuels”). It comes from industries, coal burning and diesel exhausts, and community awareness should be raised and more action taken to remove or reduce it. However, the report referred to seems targeted predominantly at climate warming-related health risks but there are so many more major health issues.
The silent treatment
T.R. Stephens writes: I’m a 78-year-old resident of the US state of Florida and I’m hoping it will be possible to live long enough to get up one morning, turn on my computer and see no mention of, picture of, or quote by the deplorable Donald Trump or any of his disgusting scion (“Donald Trump: a uniquely American buffoon“).
Remember one of the issues they used to defeat. Bill Shorten was the demonisation of electric cars.
Saul Eslake writes knowledgeably on the GST. I can’t do that. But I can say that when WA was to have returned to it only 30c in the dollar of the tax we pay economic theory went out the window, and the red mist rose. As does the talk of leaving the Commonwealth. The Eastern States are known here for scams, rorts, maladministration and political stunts. Also pork-barrelling, lunatic defence splurges and idiotic undermining of WA’s exports. Should you think that we are all rich over here I can tell you the cost of living is higher, wages are lower and we have more than our share of homeless. So as long as you do dumb things like the forthcoming stage 3 tax cuts you will get short shrift when you try to rip us off even more than you already are. So there (blown raspberry)!
Besides, it’s the only good thing Scomo ever did. Don’t spoil it now.
To Saul: if you want more money, try spending less. Start with luxuries.