CHOICE membership

How market forces have failed the nation (its citizens and consumers)

services

#101

When politics meets “market forces”, failure is predictable.

Cost-benefit analysis is far from a “value free” economic tool.

The NBN cost-benefit analysis concluded using the econometric model of the Centre for International Economics (CIE) that in “98 per cent of the circumstances modelled”, MTM was more cost effective.

98%? I’m impressed. :expressionless:

The NBN cost-benefit analysis determined that the median Australian household would require a bandwidth of 15 megabits per second (Mbps) by the year 2023,

most consumers were actually paying for more than 24 Mbps already by early 2016.

https://www.michaelwest.com.au/nbn-myths-inside-the-independent-models-which-failed-a-nation/

Often, market mechanisms are merely tools of political failure.


NBN fibre to the premises - what are the real costs, benefits and value?
#102

When market failure threatens lives:

Bob Katter

Julia Creek Hospital – landline out for over a week!

I have utter contempt for the privatisation of Telstra and its ineffective systems which has seen the flood isolated hospital in Julia Creek without a landline phone since 6pm Tuesday 29 January.

This lack of communication is life threatening.

The Julia Creek hospital has been waiting over a week for this service to be restored. Telstra sent out additional mobile handsets – but these could not get to Julia Creek due to the flooding. For the past week the hospital’s only means of communication has been a single 3G handset.

After initially advising that Telstra would travel to Julia Creek after the floods subside (which could be another week) a phone call today from myself will see Telstra travelling to Julia Creek by chopper to resolve the issue.

Before the Government privatised Telstra we had 4 Telstra workers in Julia Creek, we had nearly 20 in Cloncurry and a dozen in Hughenden. Since privatisation, I doubt we would have half a dozen in the Mid-West and Gulf now.

At the time of privatisation the then Prime Minister assured us we would have Universal Service Obligations (USO) and they have tried to get rid of that too ( the Productivity Commission’s 2017 review of USOs).

We suspect many have died as a result of lack of service and privatisation.

20,000 workers made redundant, jobs abolished and workers are being brought in from overseas with call centres off shore. It has been an absolute disaster.

This is no way a criticism of the workers on the ground who are doing their absolute best, but a criticism of the corporate structure and systems in Telstra since privatisation.


#103

Market forces may only apply where the market is strongest?
Or where the market can pay a premium?

Katter country by virtue of political difference and sparse market knows too well about market forces not delivering benefit. The same may apply to many other parts of Australia. Generally those outside the SE triangle formed by joining Melbourne, Brisbane and Sydney.

What is it that should not be left to market forces?
Ask anyone who lives outside the magic triangle for those most significant. The consequence is the public purse is left to close the gap, often with limited funding.


#104

This could have gone into any number of threads, but seems most appropriate here:

No doubt the ACCC also recognised that private enterprise was never going to build a new fixed broadband network across Australia. The investment horizon is too long and the capital investment too high.

Certainly private enterprise would have built parts of such a network in areas of Australia where a good financial return could have been generated. But, as we told the meeting, it was unrealistic to expect private enterprise to provide every Australian premises with high-speed broadband access, and provide it at the same price regardless of where it is located.

We pointed out that of the three major fixed-line telecommunications deployments in Australia prior to the NBN, only two could be regarded as being successful – both built by governments. The first was the overland telegraph line built by the South Australian government in the 1870s. The second was the existing telephone copper network progressively built by the federal Postmaster-General’s Department, starting in the early part of the 20th century. Both turned out to be of great value to Australia.


Long, but worth reading.


#105

Monbiot offers an alternative to raw, unfettered market forces:

the founding principle of any just system is that those who are not yet alive will, when they are born, have the same rights as those who are alive today.

no renewable resource should be used beyond its rate of replenishment. No non-renewable resource should be used that cannot be fully recycled and reused. This leads inexorably to towards two major shifts: a circular economy from which materials are never lost; and the end of fossil fuel combustion.


#106

Monbiot does well to remind us of the principle of intergenerational equity, that the people of today should not be spending away resources so that succeeding generations are left impoverished.

However he gets two things wrong in my view.

  1. He seems to be saying that only capitalism can make this error. Why is it not possible for communism and dictatorship to do the same? Central control of land and its resources can be just as destructive to environments and consumptive of resources as capitalism.
  2. He neglects the essential driving force of capitalism, never-ending exponential growth of the economy, which as far as we can determine means equivalent growth in resource consumption. In this context fossil fuels and the ability to dump by-products into the atmosphere are both resources but there are many more of course.

I think there is a very good case for saying that the apparent success of capitalism since the industrial revolution (with its growth in material wealth and living standards) could only have happened if cheap energy was available. The problem is that today we have trouble separating results due to the the economic system from those due to the cheap energy. We want to stay rich without considering how we got rich and how long that can go on. It is little wonder there is great resistance to looking at other systems and to getting away from fossil fuel consumption.

With a finite earth we must do both.


#107

I quite like his thinking.


#108

Is there no recourse against cartels?

https://www.michaelwest.com.au/the-ultimate-gouge-why-australia-the-worlds-1-exporter-now-imports-gas/


#109

Of course there is, it is called political will, that is why we don’t have it.

West follows on the theme of my little essay into the current state of the market. You will see that the same prestidigitation is still being attempted by the gas lobby, that more production will fix the problem. No, more production will just allow them to export more gas and leave the problem as it is.

He also picks up on the ‘transition fuel’ concept. This is the idea that because gas produces less greenhouse gases per generated megajoule when burnt it is better than burning coal. This is false for several reasons:

  • It assumes there are none or very tiny fugitive emissions of methane during production and transport. Methane is a much more powerful GHG than CO2 and even quite small emissions make the total impact of burning gas as bad or worse than coal.
  • Even if there are no fugitive emissions burning gas still produces much more GHG than wind or solar.
  • Gas is now too expensive to burn for electricity locally. So the cartel’s own exports have destroyed the transition fuel concept: good work guys.
  • Using a substitute fuel hobbles progress towards getting away from burning fossil fuel altogether which is where we need to head.

#110

I’m hoping that Choice will investigate and lobby. People power is all we have.

I completely agree.
Coal seam gas should be avoided at all costs, and current gas extraction wound down. I can’t see that happening without a price (or similar) on carbon and other GHGs.


#111

#112

We achieved largest exporter this year of LNG, not sure that’s an achievement to be proud of (makes me quite sad in fact) and we sell it so cheap that our royalties are very meagre in comparison to the amount shifted. So doubly cursed by it’s export and removal from the ground.


#113

I watch the endless procession of ships coming into berth at Port Botany to take onboard; what you aptly wrote we sell it so cheap ; the natural resources of this once great country at such a bargain basement price, that I for one is deeply saddened by the abhorrent mess this countries so called elected representatives have taken us as a collective in such a short sighted manner.


#114

Norway had the right idea. Of course it took some forward thinking and an ability to see the benefits as a nation rather than buying off special-interest groups one by one.

Hold on - didn’t the Labor Party propose a tax on resource extraction last time it was in government? Damn socialists!


#115

I did not think this was worthy of its own topic, but the IMF data point is interesting even if it is published by Rolling Stone. This from the country that almost lives to criticise other countries for their own subsidies to various industries. Also remember the US military budget exceeds the aggregate of the next 10 or so, so the numbers are ‘yuge’.


#116

They aren’t subsidies in the true sense as a consumer not paying the full environmental social and economic cost of any product, including energy, foods, shelter, technology etc etc.

It doesn’t matter the product, usually only the economic cost is paid by consumers, that being how much it cost for the purchase of the product without considering the environmental or social impacts.

Singling out one sector is purely political as it applies to everything we buy.


#117

Yes, fuel prices affect e.v.e.r.y.t.h.i.n.g as a political choice by the politicians, and they are true subsidies paid for by taxes.

subsidy: a sum of money granted by the state or a public body to help an industry or business keep the price of a commodity or service low.

They (it) negates or mitigates market forces.


#118

I wasn’t talking about fuel prices affecting other products. There are a gamut of impacts which are never considered in the cost of a product.

An example may be vegetables…costs such as impacts of water lost from a hydrological system, pesticides impacts (killing more than the target animal), loss of biodiversity (ecosystem services) through farming practices or clearing of vegetation to produce a crop, loss of future opportunities with phosphorus fertiliser application, reduction is soil carbon and/or soil fertility, health impacts on animals from poor farm hygiene, overspray impacts on water courses and local communities and the list goes on. With vegetables, the price we pay is influenced by the cost of production and what the market wishes to pay for the product…other impacts of the vegetable production either direct or indirect, are not factored into the market price.

If they are classed as subsidies then everything we use and have has been subsidised by the government. This is where the argument falls down.


#119

Yes it props up Fossil fuel industries to a very much larger extent than any renewable energy subsidy…you could almost say to an unrealistic point of difference. I wonder if the same amount was spent on the propping up renewables what sort of industry would we have with those now.


#120

There is movement on the local gas supply front. Federal Government to consider domestic gas reserve to force down prices There is no guarantee that anything will happen as APPEA will fight to the death to stop it. Any bets on the outcome?

We are left to wonder why only WA went it alone, if other States had done so 5 years ago things would be much different. In NSW they said it was strictly a federal matter. In QLD they said little but muttered about roast goose and golden eggs.