Albo’s cowards gut Aussie economy for China

For the past few years, the Albanese opposition ran a small target opposition to put the toxic Scott Morrison at the center of the election.

At least, that’s what some thought it was doing.

As it turns out, the Albanese Government actually appears to be a policy coward. We weren’t seeing a strategy, we were seeing the quivering poltroons behind it.

How can I make this judgment so quickly, you will rightly ask? Because in a few short days, as a series of crises rock the Australian political economy, Albo’s cowards have made it abundantly clear that they have no stomach for the major economic and strategic fights of our time.

At the center of this fear are prostrate Treasurer Jim Chalmers and his endorsement of the raging energy shock gutting east coast industry, business and households on behalf of China.

No, you say!

Yes. I’m afraid so.

The Australian east coast gas price is traditionally $3Gj. Today it is at $35Gj. This is the same price that Russia is charging Europe for its gas, as an economic weapon of war.

The thing is, Europe has no gas. But we do. Loads and loads of it. Far more than we could ever possibly need. It comes out of the ground at $1Gj all across QLD and SA.

But then what happens to it is beyond all reason. Three-quarters of it is shipped to China as LNG at $31Gj, $4Gj cheaper than it is sold locally.

This is the crazy world of the east coast gas export cartel that deliberately starves the local market of gas to force prices up at home, while also forcing down prices for China.

To add insult to injury, the gas cartel pays no tax for doing so.

The kicker is that because gas-fired power stations are the marginal cost producer for electricity, the gas shock is also a local electricity shock.

To put it bluntly, every Australian east of the WA border is currently being forced to pay a massive and spiking energy tax to subsidise the Chinese economy even as that country does everything it can to crush our own.

There is a very simple solution to this curious form of national suicide. It is called the Australian Domestic Gas Reservation Mechanism (ADGSM). Installed by Malcolm Turnbull when the local gas price was a measly $20Gj in 2017. It is a contract with the cartel that forces it to leave more gas here so that the local price crashes to acceptable prices around $7Gj.

Yet, with this Heads of Agreement already in place, with the trigger ready to pull, with the cost of living crisis in full swing and being severely exacerbated by the energy inflation shock, here is what Treasurer Jim Chalmers is going to do:

The new treasurer, Jim Chalmers, is banking on a surge in capital spending to boost productivity in the economy and ease a “cost-of-living crisis”.

After the Australian Energy Regulator on Thursday lifted standard power prices by as much as 20% for some customers, Chalmers said the increase revealed “a very serious situation” and was just one of several challenges left by the Morrison government.

“Electricity prices are the pointy end of the cost-of-living crisis,” Chalmers said, adding the increase would intensify the “extreme price pressures” in the economy that include sharply higher costs for construction and other sectors.

The treasurer elaborated on comments he made on Wednesday, when he described the Albanese Labor government as inheriting “dire” budget conditions.

“Budget vandalism”, including poor policies that were deeply entrenched, would take time to repair, Chalmers said.

But he had seen enough to rule out extending either the six-month fuel excise cut – that cost $3bn – or the low and middle income tax offset.

“We’re not contemplating changes of that nature,” he said.

Economic data from the Australian Bureau of Statistics (ABS) on Thursday added to evidence that price pressures were building but that the economy remains on a strong growth track.

ABS phone surveys conducted from 11 to 18 May found 38% of businesses planned to lift prices in the next three months, with almost all of them citing rising costs of goods and services, and just over 75% reporting rising energy costs.

…“The outlook for business investment remains strong but headwinds of capacity constraints and rising costs will hurt, but potentially also elongate the investment cycle,” the CBA said.

…Chalmers said the government would rely on $20bn in investment in its “Powering Australia” program to strengthen the grid, enable the faster take-up of renewable energy and bring down power prices.

He said he would be relying on an economic team “chock full of talent” that included the finance minister, Katy Gallagher, and Andrew Leigh and Matt Thistlethwaite. Chalmers also intends to consult his close friend and former adviser in the Rudd government, Andrew Charlton, who he said was a “first-rate thinker”.

Chalmers, who earned a doctorate with his thesis on “brawler statesman” Paul Keating, said he talks to the former Labor treasurer and prime minister a couple of times a week. “My friendship to Paul Keating matters a great deal to me,” he said.

To summarise, Labor is going to do nothing to ease the cost of living pressure being exerted, in some very large part, by the gas export cartel. It is instead going to rely on advice from card-carrying China groveller, Paul Keating.

This, even though activating the ADGSM is a political free-kick and will instantly reverse pressure on every cost in the east coast economy (noting that WA already has its version of the ADGSM so its gas price is currently under $6Gj).

I ask you, how can a new government be this stupid? I suspect it is a toxic brew of the following:

  • fear of gas cartel (BHP, Exxon, Shell, Santos, Origin) blowback, vis the RSPT coup;
  • fear of blowback from China given the export cartel may have to declare force majeur on a few shiploads of LNG while Penny Wong is busy trying to make friends with Beijing to restore an irrelevant lobster trade;
  • fear of Paul Keating;
  • fear of losing the half-million dollars that the cartel has given the ALP;
  • fear of policy leadership in general.

There is one other possible interpretation. The ALP is happy to see every Australian east of the WA border pilfered mercilessly by an energy cartel because it is effectively an enormous carbon tax. Notwithstanding that it is being paid to robber barons and not the government, it will accelerate renewables rollout, at grotesquely unnecessary and inequitable cost.

But Labor is too afraid to be honest about that, too.

Therefore, there is only one explanation. Albo’s cowards are afraid to do what is needed in the national interest.

That bodes very poorly indeed for its future.

Houses and Holes

Comments

  1. We will soon get used to Jim “Speed Dial” Chalmers. Big donors at the other end of his speed dial will be confident that he will always answer any question with “GDP growth”. Any old kind of GDP growth will do. Especially if it perpetuates resources giveaways, cheap student labour, mass immigration, and rising house prices forever.

    • Michael ChehoffMEMBER

      Absolutely, no discussion in MSM. Playing us for fools and obscuring the true reasons for price increases. Almost a decade ago, Michael West exposed the spin and lies about energy market price settings.

  2. Same as it ever was. A captured polity, all sound and fury, signifying nothing (good)

  3. pfh007.comMEMBER

    The ALP remember what happened to Rudd when he tried, albeit via a dubious Canberra tax grab, to extract more of our mineral wealth from the clutches of the international miners.

    We need a fundamental reconsideration of the dopey insights, myths and fables of free markets and neoliberalism but we are a looooooooooooong way from that in Australia. The ALP economic talking heads are eager to insist that they remain hard core neoliberal free trade fanatics.

    Look at our privatised and deregulated model for public money.

    Thoroughly broken and clapped out (regulated zero interest rates to keep it from imploding are the proof of its failure) but it remains an untouchable article of faith of just about the entire policy class who were indoctrinated between the 1970s and the present.

  4. “…Chalmers said the government would rely on $20bn in investment in its “Powering Australia” program to strengthen the grid, enable the faster take-up of renewable energy and bring down power prices.”

    You heard the screeching around the “gas led recovery”. So now because of virtue signaling about solving climate change Labor cant immediately stop talking about REs and start making gas nearly free. Fear is correct. Fear of their own screeching, detached from reality, virtue signaling supporters.
    Trapped!!
    This is exactly what I wanted to be honest. Failure on climate. Failure on China. Not because I want Labor to fail. I want all those screeching about REs and China diplomacy to find out that they are FOS!!!! It’s already begun. Popcorn anyone?

  5. BackwardArseCountryMEMBER

    HnH if you want to vent your spleen join the fold and make a change. lol, like labour would do anything, seriously how silly are you. Blind optimism doesn’t get you very far does it.

  6. Arthur Schopenhauer

    Have a look at the returns for Labor stalwart booth Thomastown. A 16% swing against Labor, last time I looked. Votes all over the place.

    The people vs professional politicians. (Aka carpet baggers)

  7. Albo’s cowards vs HoganDutton heroes. The battle of the giants.
    Hint: yesterday Scummo was glad Labor could form the majority. Which means, not to worry, she’s in good hands…

  8. Ronin8317MEMBER

    If Albo triggers the ADGSM, he’ll be the first PM to be rolled before the election result is in. Australian is so addicted to entitlement right now, that nobody is allowed to lose entitlement. He needs political cover, and a story to sell.

    Because the gas cartel pays no tax, Albo should trigger the ADSGM, then ‘compensate’ the gas cartel by a non-transferrable company tax credit that cannot be carried forward. Australian manufacturers can get their $3Gj, and the gas Cartel can get their $32Gj phantom tax credit. I look forward to seeing gas cartel to go on TV and say “It’s not fair, because we don’t pay any tax on those massive profits”. 😛

    • Prevent rolling by prepping a sophisticated and total media blitz.

      “this our gas. these guys take it for $X/GJ. They sell it overseas at $Y/GJ. We buy it back at $Z. Why are we doing this? We’re going to keep it here, pay them $Z and your power costs will decrease by x%. It will keep industry going (mournful case study of job losses). Did we mention they don’t pay gas? That’s right they get it for just about free and you pay for it. What’s fair about that”

      Someone smarter than me can simplify that.

        • Would also be good for an honest gov!
          LNP rorted the public service announcements for political gain, Labor could do the same on a few(!!!) issues where years of disinformation mean the public narrative is wrong, eg budget surpluses etc

  9. BradleyMEMBER

    I made a few comments in various MSM publications restating some the obvious points mentioned here, pointed at the ADGSM and ask why it hasn’t been implemented. Nothing published despite being tame yet factual. However many other comments get up even though some are quite extreme. The power of the cartel seems very large.

  10. Fishing72MEMBER

    It seems obvious to me that the entire Western world is engaged in semi-covert attempts to derail the living standards of the Western middle class so that the emerging world can access a better standard of living whilst simultaneously paying lip service to the great Climate Threat. It’s all about continuing profits for WEF stakeholders ( not the plebs) whilst attaining control over western populations( the plebs). That’s why we will continue to see a global elite flying private jets to meaningless conventions around the planet where they will declare that the people of the world need to accept less access to resources in order to save the planet. The Western sphere is tapped out of credit and the market has lost its potential for exponential growth on current path so the great reset is underway.

    The energy companies will position themselves to exploit the population for the “green” energy of the future on the way.

    • Ronin8317MEMBER

      The “emerging world” are not paying less for oil and gas : they are being screwed even worse. There will be food riots in many, many places in the second half of the year as the high cost of energy flows through.

  11. reusachtigeMEMBER

    LOLOLOLOL! Lame Labor. And the sort of people that a reservation would p1ss off are the sort of people that fought against them in the election. Labor are commies and a commie gas reservation is what they should do. But they are so lame. Bring back Scomo, he was ace as!!

  12. hareebaMEMBER

    Chalmers reminds me of Turnbull. Articulate and seemingly impressive but totally full of …

    • Jason Clare has a clear path ahead of him. let’s hope he’s a good guy, he’s got the talent.

  13. At times of rapid change the hardest task is to keep your focus on the future.
    With this in mind, by all means activate the ADGSM but don’t fall into the trap of believing that this action in any way modifies the future, it needs to be just a transient thing, a correcting control force to address an unexpected system overshoot.
    The future for most natural gas reliant industry is very bleak, they need to change, they need to break their reliance on Methane and develop the processes, equipment, procedures and skills needed to take their place in the emerging Hydrogen economy.
    If our gas rescue plan lasts for one year than that’s understandable, but if it lasts for 10 years then it is unforgivable.
    In the first case we’ve given these industries the time to transition, however in the second we’ve denied them the value of the global market input.

    Over the long term Australian’s industry protected by ADGSM can ignore market inputs, the global market is not so lucky so they’ll change. they’ll have the first mover advantage, they’ll own all the intellectual property associated with the emerging hydrogen economy, they’ll charge us an arm and a leg for information that we could have gained ourselves ….if we weren’t busy hiding from global market forces.

  14. I didn’t put Labor ahead of Libs for some ******** greybeard stuck in the past to be the puppet master!!!

  15. Leroy Huggins

    It’s racist for a majority White nation to look after its own interests, don’t you know.