After America’s “basket of deplorables” banded together to send Donald Trump to the White House and Hillary Clinton to the Dog House, everything politicians and pundits thought they knew about politics is patently wrong.
Ignoring the working class is one thing, but condescending, denigrating and ridiculing those who plump for people like Trump as ‘idiots’, or worse, is quite another; as teary Clintonestas have learnt with disastrous (for them) consequences.
The political/media class which spawned and sustained people like Hillary Clinton is now so out of touch with the electorate, that results like Brexit and the election of Donald Trump as President of the USA come as gut-wrenching ‘shocks’.
In the lead up to the Presidential election, STT had the fortune of speaking to a number of Americans, who made it plain that Donald Trump was a serious contender and that Hillary Clinton was more detestable than deplorable.
From their perspective, America had never really recovered from the 2007 sub-prime mortgage fiasco that destroyed millions of jobs and trillions in wealth, with whole states and industries still struggling almost a decade after Lehman Bros and a band of other Wall Street bankers went belly up (for an entertaining reminder of how the sub-prime mortgage disaster arose, check out the quasi-documentary, The Big Short).
The view among this group of Americans was that Donald Trump would win, as voters would place their bets on the pony with a chance of delivering something other than the status quo. Trump was seen as the wildcard and there were plenty of Americans who were sick to death of the political/media class pushing Clinton (and her politically correct agenda) on Americans, who have been ground down by long-stagnant wage growth, in moribund regional economies, and who were plainly fed up with Clinton’s promises of more of the same. On the strength that inside info, STT backed Donald Trump and is still gleefully collecting from those foolish enough to have backed Hillary as the next American President.
Sneeringly referred to as either the “rustbelt” or the “flyover states”, it was in places like Michigan, Iowa, Pennsylvania and Wisconsin that Trump’s message resounded loudest.
One of Trump’s campaign messages that clearly hit home in America’s industrial heartland, involved the promise of scrapping all those policies which are deliberately designed to make energy crushingly expensive; and which drive not only the producers of energy out of business, but which also inevitably drive to the wall all of those industries that depend upon having secure, reliable and affordable power – mineral processors, manufacturers and industry of all descriptions.
Australia has the same grab bag of ludicrous, economically destructive policies, such as its Large-Scale RET – a $3 billion a year tax on all Australian electricity consumers, designed to be directed as subsidies to wind power outfits until 2031; although with investment in new wind power capacity at a complete standstill, the 33,000 GWh target will never be met and, instead, around $1.5 billion of what will be collected from retail power consumers each year will be recovered as a Federal ‘penalty’ on power retailers and directed into general revenue as a $20 billion ‘stealth tax’ on electricity.
Not so much a ‘policy’ as an economic suicide pact, the LRET has already claimed thousands of jobs in places like Leigh Creek and Port Augusta in South Australia (regional centres hitherto hosting, respectively, a coal mine and coal-fired power plant) and Hazelwood in Victoria, with thousands more job losses to follow in both South Australia and Victoria in energy hungry businesses, such as mineral processing and manufacturing: the town of Portland will lose 800 jobs when its aluminium smelter inevitably closes due to the spike in power prices that will follow the closure of the Hazelwood power plant, along with hundreds more indirect service jobs, as well.
South Australia’s principal cash cow is BHP Billiton’s Olympic Dam gold, copper and uranium mine, which is under threat as a result of SA’s ludicrous obsession with wind power: on occasions when wind power output collapses, BHP Billiton has been forced to pay more than $2.5 million a day for electricity that would ordinarily cost $250,000.
Understandably, BHP Billiton has scrapped the plans it once had to expand its Olympic Dam operations; an investment which would have been worth more than $1 billion and which would have created thousands of jobs in a State with the worst unemployment in the nation.
Donald Trump’s emphatic win surely demonstrates that treating energy policy as an ideological playground, and the working class with barely concealed contempt, will ultimately end in political disaster for those politicians slavishly obsessed with listening and responding to whatever they hear rattling around inside the green-left echo chamber of Twitter, instead of getting off their arses and going out and actually listening to the people that vote: the latter strategy worked a treat for Donald Trump in America; and, so far, it’s worked a treat for Pauline Hanson and her One Nation party, and will continue to do so.
The lessons laid out in America by its “basket of deplorables” for people like PM, Malcolm Turnbull and Energy Minister Josh Frydenberg are plain enough. However, whether they have the wit and temerity to learn and profit from Hillary Clinton’s experience, is another matter.
Here’s a couple from Alan Moran which Australia’s political class can choose to ignore, but only at their peril.
Hazelwood closure: higher costs and lower reliability
The Spectator Australia
4 November 2016
A little over two decades ago, as the deputy secretary responsible for Victoria’s energy policy, I accompanied the then Coalition government minister to a Hazelwood visit. Although the plant personnel were solid Labor and opposed to the emerging policy of privatisation of the electricity supply industry, we were received with great cordiality. Apparently, the workers feared the ministerial visit to the plant – the first in the memory of the workers there – was to announce its closure and there was great relief once they learned no shutdown was planned.
In the mid-1990s there were reasonable grounds to expect the plant’s closure. Built in 1964 it had not been performing well – unreliability meant it was available to run only 70 percent of the time (paradoxically, a level that is twice as high as that of modern wind farms). Its design life gave it only a further ten years to operate.
As it happened, the plant was sold in 1996 for $2.4 billion a price three times higher than was originally contemplated. And the new owners, initially National Power from the UK, proceeded to shed excess labour, undertake low-cost capital improvements and manage the plant rather than allowing it to be worker-controlled. Although Hazelwood would always be the highest cost of the four major Latrobe valley brown coal stations, in spite of an accumulation of government regulatory cost impositions, it operated profitably for most of the next 20 years and accounts for about 15 percent of supply.
Electricity prices have been forced down over the period since 2000 when the renewable energy regulations were first introduced bringing increasing cross-subsidies to wind and solar. Subsidies through the Commonwealth’s RET scheme are currently about $90 per Megawatt hour, giving renewable suppliers a guaranteed support of twice the market price, in addition to receiving the market price itself. Other subsidies – both state and federal – add to the disadvantage under which fossil fuel suppliers operate and impose (mainly hidden) costs on electricity consumers and the taxpayer.
Reducing Victoria’s electricity supply by some 15 percent is bound to have an upward price effect. Estimates of wholesale price increases vary from 4 to 25 per cent. If the plant closure is also accompanied by the closure of the Portland aluminium smelter, which uses some 12 percent of the state’s electricity, the price increases will be at the lower end. But that, far from being a serendipitous outcome, would represent just another example of an ideologically driven de-industrialisation of the economy. This will make all but renewable energy snake-oil merchants poorer.
In a touch of irony, during my drive with the minister of energy to the Latrobe Valley all those years ago, he had to answer a call from the premier, Jeff Kennett. During that call Mr Kennett, at the behest of his departmental secretary, told the minister he should fire me. My crime was that I had given a television interview to a conventionally politically correct ABC journalist during which, much to the interviewer’s astonishment, I had dismissed the possibility of wind and solar energy being competitive with fossil fuels. Kennett, then at loggerheads with the nurses and teachers, was persuaded that he did not need another war front and that I’d just opened one with the environmentalists.
The energy minister, the eminently decent Jim Ploughman, refused to fire me. He explained to the premier that he’d instructed me to appear on the program and had endorsed the approach I took.
Hazelwood was always planned to be replaced as it aged and as power generation technology improved. Nobody twenty years ago, however, would have thought its replacement would be by plant – wind and solar – that is three times as costly as well as being unreliable. The issues at that time were whether competing privately owned plants could provide a product that is non-storable and necessitating plant interdependence at lower cost than a centrally controlled system.
That issue was resolved in the affirmative. Post privatisation, the electricity industry throughout Australia achieved world leadership with its low cost and reliability. But, that having been accomplished, we have seen political intervention creating a new conundrum by deliberately increasing the costs of supply in pursuit of the chimera of cheap electricity based on the vagaries of the sun and the wind.
And, in an attempt to take advantage of the enhanced fears that politicians now feel about the consequences of their constant undermining of cheap electricity, at least one remaining coal generator, AGL, is calling for a market rejig to guarantee higher prices for its baseload. Such a policy approach in Western Australia delivers an additional $100 million a year to the generators at the expense of customers.
The Spectator Australia
Malcom, ramming ideologically driven energy policy down the throats of the unemployed working class won’t wash any more. Ask Hillary.
Future prosperity and its enemies
7 November 2016
There are three pertinent pieces in today’s media covering the economy-crippling policies that our political elites are pursuing by attacking property rights and promoting their own favoured economic and political outcomes.
First we have Barnaby Joyce with a wonderful op ed which is worth quoting at length
I listened to Professor Hugh Possingham talking on the ABC radio last week about the benefit of more restrictive tree-clearing laws that it is claimed will save endangered species, and reduce global warming. A noble cause; but paid for by divesting private individuals of their property rights without payment and making some land useless and unsaleable by reason of new government caveat.
Heading further south, Victoria’s Hazelwood Power Station is closing and apparently a new water feature will be built to fill the hole where the coal came from. This feature will presumably assist in mollifying the increase in power prices from losing 22 per cent of Victoria’s power supply.
In South Australia the attraction of industry is impeded by a power grid over-reliant on a naive zealot-like approach to a heroic renewable power target.
In Queensland the government is trying to sidestep building dams in the regions because it will not be accepted by an inner-urban Green constituency.
Daniel Andrews (is) talking about how he “acknowledges the burden on families” by people losing their jobs at Hazelwood. He sounds pathetic as he talks about building new hospitals that require people to be gainfully employed to live there to use it, and he is apparently creating a new “hub”— for what Daniel? Unemployed angry people?
Service industries need industry to service.
Dams create new agricultural wealth with waiting markets in a hungry world. Cheap power creates manufacturing.
Social infrastructure, however, such as hospitals, is a legacy of a strong and vibrant economy in meaningful production, not the creator of it. Social policy is the colour of the icing, not the cake.
We better hope for a real epiphany in the way we do business — or get ready to be smacked between the eyes by an economic stick called reality.
All too true but Barnaby himself, rather than promoting such issues, has of late been sidetracked into railing against the so-called supermarket monopolies and assuaging his Alan Jones prejudice-fuelled attacks on coal seam gas.
Then we have a piece in the AFR, regarding the Hazelwood closure. This is largely based on an interview with Josh Frydenberg, who blamed the Labor government for putting pressure on Engie to shut the plant to encourage the exit of coal-fired power stations, adding, “The closure of Hazelwood has long been Labor’s policy”.
Frydenberg may be one of the nation’s better politicians but he neither mentioned nor was prompted by the journalist to explain that the policy is actually close to consensus. The closure of Hazelwood, like that of the two South Australian coal power stations, is due to the subsidies consumers are forced to give to wind generators, subsidies that are largely provided by federal government policy and deliver wind a price three times that of commercial generators. Subsidies to renewables started small under John Howard and have been expanded considerably; the current Coalition Government has maintained them and they are central to the climate policy that it took to the Paris greenhouse conference in December of last year.
Finally we have an article by Graham Lloyd in The Australian which is a preview of the policy conclusions that Senator Roberts is announcing following a very detailed briefing from CSIRO. One Nation’s view is that Australia’s climate change response is a waste of money. Senator Roberts says, “CSIRO’s approach has serious deficiencies. Policy failures at global, national, state and regional levels based on failed and ridiculous forecasts are costing lives, costing taxpayers billions of dollars, exporting jobs and destroying energy security and reliability,”
In a statement with which few of us would disagree, he added,
“The ultimate goal of Pauline Hanson’s One Nation party is to dismantle Australia’s obsession with green guilt and assist in restoring our country’s former agricultural, manufacturing and economic base.’’
Daniel Andrews & Lily D’Ambrosio: enemies of Victoria’s working class, pledged to kill thousands of jobs & affordable power and happily did so.