Morrison rebrands national energy suicide

There have been many opportunities to save Australian manufacturing at little cost and great gain:

  • The property bubble could have been reined in 2003, 2008, 2013, 2019 and today to stop the financialization of the economy that was driving up the currency.
  • Mining might have been taxed properly and recycled as an SWF offshore in 2003, 2007, 2010 and today to contain spillovers into the local economy, ensure consumption was contained, a lower AUD and fiscal stabilisation in the down cycle.
  • Industry policy could been used to great effect throughout instead of being abused mercilessly by mining interests.
  • The gas industry could have been forced to provide cheap feedstock (such as in the US and WA) instead of being allowed to export it all and gouge the locals with the highest prices in the world.

All of these things would have protected and preserved the Australian industrial base that has been killed by a rising real exchange rate.

Today, COVID-19 has reminded us all that no serious country can’t make anything for itself.  As a result, there is a half-arsed but politicised recognition in government that we can’t let the industrial hollowing out run any further.

But this vague consciousness is beset by the corruption that has overtaken the Coalition and political economy more widely.

Witness the COVID-19 Commission and its shockingly inept “gas-led recovery” which is designed to promote cheap gas but will result in precisely the opposite because nowhere does it address the core issue of the gas cartel.

That was but a taste of the corruption that is coming:

  • Morrison will pay Australia’s two last oil refineries $2.3bn to stay open over this decade.
  • They can’t compete with large Indian and Chinese refiners.
  • This “prepares Australia for any future crisis” said Morrison.

How? In 2019, Australia consumed 1,046 kbbl/d while refining 455 kbbl/d. With the announced closures of Kwinana and Altona, leaving us with just two left, this will fall to 229 kbbl/d very soon.

As well, roughly 9% of refined product currently comes from China. Now it’s going to grow just as we declare war on it!

By all means, find a way to keep the remaining refiners open. But can it be a part of an actual plan to restore the industrial base such as:

  • Massive promotion of decarbonisation technologies and electrification of the transport network.
  • Scrapping property speculation subsidies.
  • Gas reservation.
  • Massive industry policy including procurement, tax and R&D supports.
  • Getting education off the China tit and back teaching constructively.

Meh. Give the refiners some cash and keep importing Chinese petrol!

David Llewellyn-Smith
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Comments

  1. happy valleyMEMBER

    “Meh. Give the refiners some cash and keep importing Chinese petrol!”

    And put a moratorium on anyone declaring war on us until we have received all of the shipments of oil that Angus has organised through the strategic holding the US has for us? LOL.

  2. The Traveling Wilbur

    Does this mean anyone who fills up an entire tank of fuel in one purchase gets a free box of chocolates?

    No? How about a can of Coke?
    Or an upgrade to extra leg-room on a domestic flight?*

    *QANTAS only. Obviously.

  3. Walter Berg IVMEMBER

    Well said,

    When all is said and done we have done nothing but stuff about with energy policy for a generation where just a modicum of thinking could have positioned Australia to have industries which employed people (off the back of cheap gas), and bodies of expertise which the rest of the world sought our guidance on (solar).  That’s on top of the complete dogs breakfast we made of leading the world with a carbon pricing scheme, then walking away from it with a turn to a Torynuff government.  That of course is all before we consider the complete head up its backside approach embodied by a man who carried a lump of coal into parliament, sat there smirking with it, and has since become PM – with the same smirk all the way through.

    Australia currently has about the worlds most expensive energy.   That is an outright disincentive to doing anything involving energy usage in Australia (not to mention it comes on top of the worlds most expensive people and land).

    Todays announcement by the government isnt a step towards Australia taking a step towards having considerbly cheaper energy.  It is an investment in a deteriorating status quo.  When it comes to transport fuels it is an investment into increasing geostrategic risk.  Would a nation which has embargoed our commodity exports and become rather sensitive to concerns expressed about it from Australia see it in their interest to make fuel cheaper for a nation of legendary loudmouths? Would reliance on India be that much better?

    If we are to continue shunting LNG offshore as a loss leader while gouging our own consumers for any they may care to use then why havent we subsidised solar batteries and electric car usage, and have mass solar panel plants?  If we are to subsidise (and hold ourselves to ransom for) 2 fuel refinery operators still in operation then why arent we requiring gas producers to reserve? Like how about some strategy? How about coherence?

    • Agree we have completely wasted an energy transition opp, but…

      Isn’t this “Morrison will pay Australia’s two last oil refineries $2.3bn to stay open over this decade” about national defense? We are spending $280B on defense toys and people to drive them, may as well be able to fuel the damn things along with the rest of the war machine? Hot war happens, military gets 1st dips on fuel available and then its rationed out to the greater masses based on need.

  4. DouglasMEMBER

    Whilst you and Garnaut and the ANU no hopers, no ideas, economic illiterates barracked on the decimation of value adding industry in Australia you want it back when no one in their right mind would go into major manufacturing in such a small market with huge govt imposts. It resonates that the “guru” Garnaut went in with Gupta the fraudster -shows how much he knows!!

    • Stop making the Australian excuse. Singapore is a small market. Taiwan is a small market. South Korea is a small market. Lower the currency. Import some inflation. Target excellence and not “equality”. The world still needs excellent products. We’d be making things again because we’d have to and because we could.

      • DouglasMEMBER

        robert2013
        Tell me have you ever run a manufacturing business in Australia? When we had a car manufacturing industry the tariffs into Thailand with some of the world scale car factories were about 60%. Also Australia is a dumping ground. In your reply who are the “we”. DLS is an academic with ivory tower views in concert with his idol Ross Garnaut.

        • I have not been involved with large scale manufacturing, only niche engineering. I know the talent is there. If it were properly rewarded more would emerge. As long as we continue to allow Sydney and Melbourne to syphon off the export dollars and spend it on cheap foreign labour and imports then nothing will change. I do not accept the small market excuse, never have, never will despite people uttering it since my childhood. We are substantially bigger than we were then, yet I keep hearing the same excuse. It’s not a small market, it’s a rigged market.

        • Although Australia has an FTA with Thailand they imposed a huge increase in registration fees for vehicles not made in Thailand. It gets past the FTA but killed quite a sizeable market for cars made in Australia,

  5. TheLambKingMEMBER

    Wrong subsidy. We should instead turn them into reverse batteries. Fuel refinery consumes more electricity than almost every businesses on the grid. (aluminum smelting is the 1st)

    Instead of just giving them cash, the Federal Government should pay for solar+wind to power the plant – but have the ability to ‘slow down’ or stop production during high demand or low renewal output.

  6. If only we have an opposition that could craft this into I don’t know an election platform

  7. Lord DudleyMEMBER

    ” Massive promotion of decarbonisation technologies and electrification of the transport network.
    Scrapping property speculation subsidies.
    Gas reservation.
    Massive industry policy including procurement, tax and R&D supports.
    Getting education off the China tit and back teaching constructively.”

    Each of those things require long-term investment and will substantially reduce short-term profits, especially in zero-sum sectors like real-estate. They would take power away from rent-seekers who hold government sanctioned monopolies over energy, mineral, and land resources.

    So none of them are going to happen.

    • Lord DudleyMEMBER

      … with the exception of “Getting education off the China tit and back teaching constructively.” That might happen, but solely because the Chinese stop their students from coming to Oz.