Captain Bligh sets sail to “rob the treasury” in Canberra

Reader Bushie from Burnett sent in this little ditty and the associated press item from The Courier Mail:

With the Ship of State virtually rudderless, Captain Bligh is off to rob the treasury in Canberra. With the economic storm worsening and as the Ship flounders towards the reef (Election date), the captain and crew are panicking.

Anna Bligh makes dash to Canberra for infrastructure cash

Article from: Michael Madigan, John McCarthy and Melanie Chrisitansen
January 28, 2009 11:00pm
ANNA Bligh has made a mercy dash to Canberra in the hope of accelerating multibillion-dollar infrastructure projects to stave off a state recession.
The Premier’s trip came as inflation posted its biggest quarterly fall in more than a decade, slashing the annual rate from 5 per cent to 3.7 per cent in the face of a dramatic slowing in growth.

Ms Bligh is concerned resource-rich Queensland is dangerously exposed to the global financial crisis.

“Our own data shows that we are seeing a deterioration of the Queensland economy and it’s happened very rapidly,” she said.

Ms Bligh had a breakfast meeting with Prime Minister Kevin Rudd. The two agreed a national, co-ordinated bout of pump priming was needed.

Ms Bligh refused to reveal which projects would take priority but said the pair had agreed to “put the pedal to the metal” on major projects.

“Clearly these are unprecedented times and the PM and I are agreed to act swiftly, and carefully,” she said.

“By necessity our conversations are confidential while we get more detail on the proposals before us.”

The Consumer Price Index fell 0.3 percentage points in the December quarter, the largest quarterly fall since 1997, taking inflation to 3.7 per cent.

The figures show the decline was partially due to the drop in the price of petrol, down about 18 per cent over the quarter.

Treasurer Wayne Swan said the inflation figures were a timely reminder of the effects of the financial slowdown.

“I think it’s now clear that inflation in Australia is subsiding – as it is of course around the world – and it’s subsiding in response to the global financial crisis which is slowing growth dramatically in the global economy,” Mr Swan said.

The CPI figures also showed rising food bills had kept the financial pressure on Brisbane consumers.

The overall CPI for Brisbane fell by 0.2 percentage points in the last three months of 2008 – a smaller decline than most other capital cities.

Food prices in Brisbane jumped 2.7 per cent, more than twice the increase in Perth.

The data released by the Australian Bureau of Statistics yesterday showed Brisbane food bills were driven up partly by an 8.8 per cent spike in fruit and vegetable prices.

Last night the International Monetary Fund warned advanced economies were suffering their “deepest recession” since World War II.

The grim warning almost ensures the Reserve Bank will cut interest rates by up to 1 percentage point on Tuesday.

The IMF report – which will be released today in Washington – forecasts world economic growth to collapse from 3.4 per cent in 2008 to 0.5 per cent this year.

Advanced economies including the US, Europe, Japan and Australia will contract by an average 2 per cent for the year.

The economy of China is tipped to grow 6.7 per cent, down from 9 per cent last year.

This is particularly bad for Australia, with the IMF reporting that “anaemic global growth has reversed the commodity price boom”.

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Contracting economies means RECESSION. If the economies contract much more than the 2% forecast above, then it would be a DEPRESSION. Now is definitely not a good time to be chasing fools gold with an expensive emissions trading scheme and the associated tax burden.  It wasn’t a good idea before this – man made CO2 is NOT causing catastrophic global warming. An ETS will not reduce world CO2 emissions.

Coalition joins the climate change fight – but without an ETS?

The Leader of the Opposition, Malcolm Turnbull, is quoted by The Australian as giving a speech which attacks the Australian Government’s unbalanced focus on an emissions trading scheme as a means of addressing man’s influence on the climate. Instead Mr Turnbull states that a Coalition Government would focus on replacing old technology with new.

“An ETS is not an end to itself,” Mr Turnbull will argue. “It’s only part of the solution – one tool in the climate policy tool box and, in fact, no solution at all without new energy sources and new low-emissions technology.”

“Our Green Carbon Initiative will ensure Australia is able to achieve greater reductions in carbon dioxide than those proposed by Mr Rudd, at relatively low cost and with enormous additional benefits to our own country’s environment.”

Hooray! At least part of the message is getting through to the politicians. Also, thank you to readers who have sent copies of my posts to politicians. Suddenly there is a risk-management focus on the climate change debate….

But Mr Turnbull will assert that action on climate change is not a matter of belief or non-belief in the science but a wise exercise in risk-management.

Clever political move Mr Turnbull. Most Australians ARE concerned with the environment. With our abundance of open space, Australians are probably more environmentally aware than other people.

However, Australians are not convinced that another socialist experiment is in anyone’s best interests. The US sub-prime mortgage market was one such experiment, and that triggered the current global economic crisis.

I posted on a risk management view of an ETS in Australia headed for economic strife, but still wants a an Emissions Trading Scheme?

Personally, I support moves to actually protect our environment and have lower human impact on the world we live in – regardless of whether man-made CO2 is causing global warming. (And I still have stuff to readnsay on that topic too!)

Global financial crisis – what would you do if you were dictator for a day?

New reports today quote Australian Prime Minister Kevin Rudd as saying the current global financial crisis is due to a culture of greed, and inadequate market supervision. The following is an extract from an AAP report in The Courier Mail:

“A culture of excessive risk taking – a culture of greed – a culture of excess has brought massive economic disruption to global financial markets and the global economy.”

Those markets had been inadequately supervised and the world had to develop warning systems to prevent it all happening again, Mr Rudd said.

In amongst the doom and gloom he promises strength and compassion:

“We will govern with a combination of steely economic management and compassion for those who need support.”

That sounds to me like Social Security payments will increase (not per person though) and frills will be cut. It also sounds like he is talking about greater market regulation and monitoring (auditing). Hmmm – a bit of shutting the gate after the horse has bolted.

Due to the international nature of capital markets and financial trading, this is indeed a global financial crisis. The dominoes are still falling. Some countries will suffer more than others.

Sounds like a time to be creative and think outside the square.

If you were “world benevolent dictator for the day”, what would you decree to turn around this mess?

Photo from freefoto.com

Australia headed for economic strife, but still wants an emissions trading scheme?

The Australian economy has held up pretty well against the storm of the global financial crisis, but it appears the financial crisis is starting to bite here too. China’s economy is slowing, which will reduce our exports of resources. It is the resources boom which has insulated Australia from the bulk of the global economic storm so far.

I published this graph in a previous post, How an ETS would create economic chaos to indicate Australia’s recent dependence upon resource mining.

 

Any commercial enterprise with this type of graph of its product mix would have identified this as a commercial risk and acted to mitigate the risk of the main product line going sour for some reason. These actions might include investing in value adding from that product, increasing sales in other existing product lines, not locking in investment in this product line too far in the future, while ensuring that product can be supplied for as long as there is demand for it ……..

Another risk mitigation strategy would be to ensure that the business does not place critical reliance on the cash flow from this one major product. Australia has not made the most of any of these risk mitigating opportunities. Therefore as the demand for our resources slows, we are going to feel a bit of a pinch.

Fortunately this slow down shouldn’t last too long. The world’s financial industry is starting to settle in corrective and remedial action. This will take time to come around, but it will. The upturn will be gradual though, as finance and credit will become available again a bit at a time, not in one wave of a magic wand. In the meantime industry needs to slow activity until the financial markets get back onto firmer ground.

Imagine though if the downturn in industry was imposed for ten years? That is what Australia is facing with the cap, tax and (one day) trade Carbon Pollution Reduction Scheme. It is our boom and bread and butter industries – mining and agriculture – that will feel the main impacts. Industry will take time to implement the cleaner technologies, once they become technically realistic and cost effective.

Industry invests less in R&D and innovation in a downturn because most efforts and money are spent on ensuring survival. No sense investing heavily in next generation technology if the risk you won’t be around next year is getting uncomfortable.

Also, government invests less in innovation when tax revenue falls. Social security, health, education, policing and security are basic services expected of a government in a developed country. It is the other areas in which there is more flexibility in spending, and that is where the cuts will be made.

Hopefully the policy makers are reviewing their strategy regarding CPRS already.

 

What would you do if you were part of the government policy making team? What risk mitigation strategies and policy changes would you be taking now?