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"...public opinion deserves to be respected as well as despised" G.W.F. Hegel, 'Philosophy of Right'

investing in infrastructure « Previous | |Next »
April 17, 2012

I rarely read The Australian these days now that it is behind a paywall. The exceptions are Meganomics and Mumble and the occasional opinion piece if it looks to have something interesting to say. Few do.

Since George Megalogenis recommended that I read David Uren's We've lost the will to build I went and had a look. It's behind a paywall but Uren argues that Australia has lost the ability to develop infrastructure in the teeth of community opposition.

RoweDSwan'sfolly.jpg David Rowe

He traces this back to 1983 when the newly elected Hawke government used the commonwealth's external affairs power to block the construction of a 180-megawatt hydro-electric project on the Franklin River in Tasmania.

He mentions the failure to build hydro-electric, irrigation or urban water dam projects; coal-fired power stations, and the second airport in Sydney as examples of this failure to build necessary infrastructure. This is important, says Uren because the declining productivity seen in Australia now partly reflects the ageing infrastructure reaching its use-by date.

I have three comments about this. First, Sydney's second airport is a good example of this failure to build crucial infrastructure. The finger can be pointed at both the ALP and the Coalition because they have placed their own interests above the public interest.

Secondly, the other examples chosen--dams and coal-fired stations--- are problematic from an environmental perspective, given the ecological destruction wrought in the Murray-Darling Basin and global warming being caused by the burning fossil fuels.

Thirdly, Australia is building infrastructure in the form of the national broadband network and renewable energy (wind and solar) But The Australian, and News Ltd in general, is deeply opposed and downright hostile to this form of infrastructure building and it conducts campaigns against them; even though Australia is a “late starter” in the transformation to a low-carbon economy, thanks to its reliance on low-cost fossil fuels.

Uren, therefore, basically mentions specific infrastructure that is favoured by particular industries---the irrigators, the fossil fuel industry and the big emitters who want the Australian energy market to remain highly concentrated, and structured around centralised power generation.

| Posted by Gary Sauer-Thompson at 3:43 PM | | Comments (7)


build more coal-fired stations?

How can Uren be taken seriously when gas-fired power is accepted as the best way to provide a transitional or complementary power generation technology. Isn't gas good for peak power generation, because you can shut it on and off, which you can’t do with coal?

Or does this flag what a future Abbott led Coalition government would do.

What bank in the world would fund a coal station in Australia now?

I understand that there are there are currently 11-12 proposals for new conventional coal-fired power stations in Australia. A map.

"First, Sydney's second airport is a good example of this failure to build crucial infrastructure."

There is a policy consensus that a second airport in the Sydney basin is required by 2030. The federal-NSW government joint study on aviation capacity in the Sydney region also stated that Badgerys Creek in Sydney’s west is the best site. Wilton, in the city’s south-west, is the next best option.

NSW Premier Barry O’Farrell’s current plan is for a high-speed train from Sydney to Canberra Airport. O’Farrell has ruled out a second airport in the Sydney basin.

The second airport issue is too good a chance for the NSW Liberals to kick the Gillard Government.

Badgerys Creek was first earmarked by the Hawke government in 1986 before being abandoned by the Howard government in 2003. The Hawke government even bought the land.

Kingsford-Smith site is small by international standards and cannot be expanded. This means there can be no major realignment and lengthening of the runways, or rationalisation of aprons and taxiways.

Hence the need for a second airport.

In The Australian Henry Ergas says that Australia is still a frontier economy, with abundant resources to be exploited.

Why? Because

High tariff protection taxed our resource industries to promote the growth of manufacturing employment, supporting high immigration and population growth at the expense of output per capita. Recent analysis shows the industrial relations laws may have been every bit as harmful, as they dragged down productivity in service industries and in the public enterprises, imposing high costs on goods that needed to be transported to export ports. Agrarian socialism stifled the development of agribusiness, with the statutory marketing boards ensuring Australia was the only large primary exporter without its own food multinationals.

In a frontier economy Imposts such as the mining tax and the carbon tax are a sure way of making the goal of strong investment, which can and should form the foundations for sustained economic growth, more difficult to achieve. The Fair Work Act adds to the problems.