Bringing back Australian Manufacturing: Discard programmed obsolescence

[SirRumpole]

The state owned networks are a cost plus profit model two, if they make less than their costs the either go bankrupt or need tax payer subsidies,

Taxpayer subsidies are worth the cost if they attract more business into the State.

You don't like subsidies? Tell it to the EU, US, Japan, Korea and virtually any industrialised country. They all do it, so capitalist "purity" is a mirage.

 

[SirRumpole]

The states sold their power systems because they had run them into the ground, and they required large capital outlays to meet the forecast growth.

The States who sold their power assets did so because Peter Costello told them they wouldn't get any more grants unless they sold. It was called "asset recycling".

 

[sptrawler]

The States who sold their power assets did so because Peter Costello told them they wouldn't get any more grants unless they sold. It was called "asset recycling".

Thankfully W.A, Queensland and Tassie didn't.

Shame about NSW and Victoria, but par for course, they would sell the baby with the bathwater, going on past performance IMO.

It would have been all different, if chairman Dan had been in when they got the money from the sale, he would have spent it wisely.

You have to be honest, Victoria and NSW could buy back the power stations for a lot less than they sold them for, so they did pretty well.

In South Australia, the Govt was offered North power station back for nothing and refused it, then it was blown up from memory.

So blaming this pile of $hit mess on the Costello, is drawing a long bow, but blaming is goto answer these days, rather than fixing.

 

[JohnDe]

The States who sold their power assets did so because Peter Costello told them they wouldn't get any more grants unless they sold. It was called "asset recycling".

Not entirely correct.

The South Australian electricity trust was sold by the newly elected Liberal government to pay off the debts of the bankrupt State Bank, caused by mismanagement of the bank and the previous Labor government. The Liberal leader had promised not to sell if they won the election, but once in they did sell with the reason being that the debt was worse. Fair enough, the debt was ridiculous and caused pain for SA residents for decades, but a broken promise is never forgotten, and the SA Liberal party has paid dearly ever since.

State Bank of South Australia

The bank's financial implosion in 1991 was one of the biggest economic disasters in the state's history. As a government-owned bank, deposits were guaranteed (legally underwritten) by the Government of South Australia.[9]​

​

The bank's managing director, Tim Marcus Clark, was ultimately considered the most legally responsible for the bank's downfall,[10] Labor Premier John Bannon resigned in 1992, and a landslide electoral defeat of the state Labor government occurred at the subsequent 1993 election, won by the Liberal opposition led by Dean Brown.[10]​

​

The State Bank collapse continued to affect the state's finances and politics into the 21st century. The State Bank debt was given as the main reason for the privatisation of Electricity Trust of South Australia by the second-term Liberal minority government led by John Olsen.[10]​

​

The saleable portion of the State Bank was acquired by Advance Bank, which was bought by St George Bank. The Bank of South Australia (also known as BankSA) is now a division of and a trading name of St George Bank. St George Bank was taken over by Westpac on 1 December 2008.​

Electricity Trust of South Australia

After the State Bank collapse in the early 1990s, South Australia was left with a large debt after fulfilling its obligation to bail out the bank. In the lead up to the 1997 state election, the incumbent Olsen Liberal government pledged not to privatise ETSA. However, after being re-elected, the government proceeded with privatisation plans citing the dire financial situation, with new information such as a warning from the State Auditor General and the introduction of the Australian National Electricity Market.​

​

Following the 1997 state election, the Olsen Liberal government needed the support of an additional two non-Liberal upper house members to pass legislation, with the Australian Democrats retaining the balance of power on three seats. However, defectors from Labor in the upper house, Terry Cameron and Trevor Crothers, brought independent member Nick Xenophon in to play. In 1998, Xenophon voted with Cameron and the government to proceed with the second reading of the ETSA power sale bill.[14][15] The bill became law when Cameron and Crothers voted with the Liberal government. They subsequently resigned from the Australian Labor Party.​

 

[SirRumpole]

Thankfully W.A, Queensland and Tassie didn't.

Shame about NSW and Victoria, but par for course, they would sell the baby with the bathwater, going on past performance IMO.

It would have been all different, if chairman Dan had been in when they got the money from the sale, he would have spent it wisely.

You have to be honest, Victoria and NSW could buy back the power stations for a lot less than they sold them for, so they did pretty well.

In South Australia, the Govt was offered North power station back for nothing and refused it, then it was blown up from memory.

So blaming this pile of $hit mess on the Costello, is drawing a long bow, but blaming is goto answer these days, rather than fixing.

People who can fix should fix, blame is a way of learning lessons from the past.

 

[Value Collector]

Taxpayer subsidies are worth the cost if they attract more business into the State.

You don't like subsidies? Tell it to the EU, US, Japan, Korea and virtually any industrialised country. They all do it, so capitalist "purity" is a mirage.

I am fine with subsidies where they are needed, but I am just pointing out that comparing a model that is run to provide enough return to keep capital flowing, with a model that was based on government subsidies is not a great comparison.

 

[mullokintyre]

REDARC is Australian made and has a very good reputation among the DC electrics users, for solar controllers, chargers, switchgear etc.
Even so, I was flabbergasted to see the price of the 4 pole battery isolator switch listed below.
Luckily, it has been price reduced from $2131 down to $1917.
Mick

 

[Value Collector]

Thankfully W.A, Queensland and Tassie didn't.

Shame about NSW and Victoria, but par for course, they would sell the baby with the bathwater, going on past performance IMO.

It would have been all different, if chairman Dan had been in when they got the money from the sale, he would have spent it wisely.

You have to be honest, Victoria and NSW could buy back the power stations for a lot less than they sold them for, so they did pretty well.

In South Australia, the Govt was offered North power station back for nothing and refused it, then it was blown up from memory.

So blaming this pile of $hit mess on the Costello, is drawing a long bow, but blaming is goto answer these days, rather than fixing.

Queensland and WA might not have sold, but they have relied on heavy private investment to keep the lights on.

In Queenslands case we would be suffering regular black out if the private sector didn’t build a link to join Queensland and NSW, build out all the natural gas plants and associated pipelines, and build all the solar.

It’s the same in WA, most of the states energy is coming from the private sector that built and owns the gas pipelines, gas power plants, wind farms, and solar.

 

[sptrawler]

It’s the same in WA, most of the states energy is coming from the private sector that built and owns the gas pipelines, gas power plants, wind farms, and solar.

In W.A the only reason the NW gas hub was developed and a pipeline was built, was because the State Government agreed to buy a certain amount per day before the pipeline was built on a use or pay basis, when they didn't even have anything to use gas, so for quite some time from memory, Woodside was actually extracting gas and pumping it back down and the Government was paying for it. From my cloudy memory it was 173TJ / day but I could be wrong on that.

Then the Government had to convert a power station to run on gas, to use some of the contracted amount when it arrived and the Government had to reticulate Perth residential properties with the piping and infrastructure to use the contracted gas when it arrived.

Then when it became profitable they sold it off, so you seem to have the story ar$e about, but don't let history ruin a good story.

A lot of others on the forum try to rewrite history, as us older generation pass away they will get away with it, that's the scary bit.

The State owned company that was sold off, you may have heard of, Alinta.

For someone who prides themselves in researching things, that prognosis of yours was lacking in most aspects, I've covered the gas section do you want to get into the solar farms and wind farms?

The Transition from Coal to Natural Gas in Western Australia. How European Ideas of Progress, Colonial Experiences and Frontier Sentiments Transformed an Energy System on the Edge of Asia

The transition from coal to natural gas in Western Australia is relatively recent. Decisions made in the 1970s ultimately resulted in a 1.540-kilometre natural gas pipeline being built and commissioned in 1984. This pipeline, underpinned by a long-term natural gas supply contract with the...

books.openedition.org

From the article:

Despite these challenges, Court viewed this now large and potentially low-cost fuel source as a tool to facilitate greater industrialisation, mineral processing, and economic development. In 1975, a group was assembled which included the Stated Energy Commission of Western Australia (SECWA) and the North West Shelf Joint Venture Group (NWSVG). The NWSVG was a consortium of domestic and international private companies which had discovered and controlled leases over these major offshore gas fields. SECWA and NWSVG group concluded that the State Government would need to build and operate a 1.540-kilometre natural gas pipeline from Dampier to Bunbury (the north-west of Western Australia to the south-west). This would be accomplished by a twenty year “take or pay” contract between the private gas companies and SECWA. Of particular import for the private companies, infrastructure for both domestic gas and exported LNG, such as the offshore platform and sub-sea pipeline, would be accessible by both parties.

41The implications of the “take or pay” contract are important to understand, as it was signed by a state-owned utility (SECWA), in unison with private companies, to underwrite an investment in infrastructure which could also be used for an export industry (LNG). While the LNG contracts with Japan and final agreements between SECWA and the private companies were not concluded until the early 1980s, Sir Charles Court’s direct involvement in what was a complex series of agreements, undertakings and ultimately contracts, was a key determinant in securing the international investment for the domestic and then international stages of the LNG.24 The investment, which at the time was the largest in the nation’s history, was made possible by a complex series of decisions. This brief overview merely touches on the main contributing factors. The 1.540-kilometre natural gas pipeline was finished in 1984 and supplied large volumes of natural gas to Perth and nearby industries. In 1989, the first load of LNG departed for Japan.

Also:

Sale of Dampier-to-Bunbury natural gas pipeline officially completed | Western Australian Government

25/3/98 The biggest privatisation in Western Australian history, the $2,407 million sale of the Dampier-to-Bunbury Natural Gas Pipeline, has today been officially completed with the WA Government receiving the full amount from the sale from new owners Epic Energy Australia.

www.wa.gov.au

From the article:
25/3/98

The biggest privatisation in Western Australian history, the $2,407 million sale of the Dampier-to-Bunbury Natural Gas Pipeline, has today been officially completed with the WA Government receiving the full amount from the sale from new owners Epic Energy Australia.

The State Government today accepted full and final payment from Epic Energy Australia, just three weeks after the Government announced the details of the successful sale.

 

[sptrawler]

Following on from the above post, it was politicians with a vision that made Australia what it is today, not the private sector, they wouldn't have done anything unless there was money in it.

Here is a bit of history on W.A's wind farm development.

https://www.synergy.net.au/Blog/2018/07/History-of-wind-farms-in-WA

Synergy sells Albany wind farms for $34m

Synergy is selling its wholly owned 21MW Albany and 14MW Grasmere wind farms into a private investment vehicle....

energycentral.com

Synergy to underpin $750m wind farm

The state government has authorised electricity retailer Synergy to buy power from the planned $750 million Collgar wind farm in the Wheatbelt, underpinning the development of one of the largest wind farms in the country.

www.businessnews.com.au

AS for private/ public solar in W.A, this is still fresh in some people's mind.

How a big new solar farm became a stranded asset

A perfectly good solar farm will be dismantled in 2024 just seven years after its high-profile launch. Bureaucrats insist it was a good use of taxpayers’ money.

www.afr.com

Under a blazing sun in outback Western Australia, preparations are under way to remove more than 34,000 solar panels.

They were made to last a quarter of a century, but here at Doolgunna, they’re about to be ripped out of the ground after barely seven years of powering the nearby DeGrussa copper mine.

It’s a humble end for a 20-hectare solar and battery project that was launched in a blaze of publicity in 2015, when federal taxpayers agreed to provide almost half of the $43 million construction cost, plus lend a further $15 million at concessional rates.

Owned by French giant Neoen, the DeGrussa solar and battery hub was described by the Australian Renewable Energy Agency (ARENA) in 2015 as “the largest of its kind in the world”.

Planeloads of politicians, investors and media flew to Doolgunna over the subsequent few years to marvel at the novelty of a mining company embracing renewable energy as the solution to its off-grid power needs.
The solar farm provided Sandfire Resources with up to 20 per cent of the energy required to power the DeGrussa mine. It reduced diesel consumption, cut emissions and funnelled a steady stream of large-scale generation certificates to Origin Energy.

But in 2024, the party will end.

Sandfire has extracted the last of DeGrussa’s copper, and in this remote part of Australia, there are no other customers to buy such vast quantities of solar power.

The planes now bring technical workers charged with decommissioning the project, as Neoen plans to remove the panels and rehabilitate the site.

Soon, red dust will be all that remains of the $20.9 million of taxpayers’ funds invested into the project by ARENA. So, was it really worth it?

 

[fiftyeight]

So how much capital and labour do we want to divert away from mining Iron Ore and into steel making?

Iron Ore vs steel making, no idea on that specifically, but I am glad someone is going to try

Fortescue starts works on Green Metal Project

www.fortescue.com

With increasing automation an outsourcing of high skilled jobs, seems like it would be a good idea to be creating new jobs in new industries sooner rather than later. I have no issue with automation or outsourcing btw, we outsource a lot of our eccom store jobs.

Chevron powers up engineering and innovation ENGINE in India

www.chevron.com

Would an investment in to new industries HAVE to divert capital away from mining Iron Ore? Like you said, Iron Ore mining is highly profitable it does not need any assistance, mining companies might have more excess capital they would like to invest?

Would new industries HAVE to take away high-paying mining / FIFO jobs? Maybe, but it could also shift jobs from government roles, increasing labor costs and pushing the government to be more efficient (wishful thinking).

The gov could stayout of the 'picking winners game', and give tax breaks to our MASSIVE super funds to invest.

I am sure there are plenty of much smarter people, like yourself, who could come up with a few good ideas that are more creative than a zero sum game between Iron Ore and making steal.

Almost like you gave me a false choice there haha

 

[Smurf1976]

He owns the grid and generation assets in Iowa, and sells the power to customers in Iowa for half the price that the government owned utility across the river in Omaha sells that it generates for its customers.

I've had enough to do with utilities to say there are good and bad examples under both government and private ownership. What determines it is more about the regulatory environment and the people involved in top positions.

Go back a generation and several Australian states were easily beating the US on energy costs. Today the opposite is true and the driver of that change was far more about regulations and leadership than it's about ownership.

The big shift is the focus has shifted from cost minimisation to revenue maximisation. That's the crux of it, the entire mindset has shifted dramatically.

That's because of regulatory change, not ownership change indeed it's occurred even where ownership remains unchanged. They all have an order of magnitude greater overhead costs today in the modern regulatory environment, and far less pressure to contain costs than was historically the case.

Trouble is everything to do with energy, resource and industrial economics has become so heavily politicised as to make rational public discussion effectively impossible. That which is fundamentally a technical and accounting exercise has turned into something more akin to religion.

Hence I've decided to limit what I say going forward. It ends up interpreted as a political comment, rather than an economic one, and I don't think that's really doing the forum much good.

Noting for the record that pretty much everyone with knowledge has already completely walked away from publicly commenting on it anywhere. Everyone who could help solve it has given up trying, because you just can't win with politics and religion and unfortunately that's what it's come down to.

 

[Value Collector]

In W.A the only reason the NW gas hub was developed and a pipeline was built, was because the State Government agreed to buy a certain amount per day before the pipeline was built on a use or pay basis, when they didn't even have anything to use gas, so for quite some time from memory, Woodside was actually extracting gas and pumping it back down and the Government was paying for it. From my cloudy memory it was 173TJ / day but I could be wrong on that.

Then the Government had to convert a power station to run on gas, to use some of the contracted amount when it arrived and the Government had to reticulate Perth residential properties with the piping and infrastructure to use the contracted gas when it arrived.

Then when it became profitable they sold it off, so you seem to have the story ar$e about, but don't let history ruin a good story.

A lot of others on the forum try to rewrite history, as us older generation pass away they will get away with it, that's the scary bit.

The State owned company that was sold off, you may have heard of, Alinta.

For someone who prides themselves in researching things, that prognosis of yours was lacking in most aspects, I've covered the gas section do you want to get into the solar farms and wind farms?

The Transition from Coal to Natural Gas in Western Australia. How European Ideas of Progress, Colonial Experiences and Frontier Sentiments Transformed an Energy System on the Edge of Asia

The transition from coal to natural gas in Western Australia is relatively recent. Decisions made in the 1970s ultimately resulted in a 1.540-kilometre natural gas pipeline being built and commissioned in 1984. This pipeline, underpinned by a long-term natural gas supply contract with the...

books.openedition.org

From the article:

Despite these challenges, Court viewed this now large and potentially low-cost fuel source as a tool to facilitate greater industrialisation, mineral processing, and economic development. In 1975, a group was assembled which included the Stated Energy Commission of Western Australia (SECWA) and the North West Shelf Joint Venture Group (NWSVG). The NWSVG was a consortium of domestic and international private companies which had discovered and controlled leases over these major offshore gas fields. SECWA and NWSVG group concluded that the State Government would need to build and operate a 1.540-kilometre natural gas pipeline from Dampier to Bunbury (the north-west of Western Australia to the south-west). This would be accomplished by a twenty year “take or pay” contract between the private gas companies and SECWA. Of particular import for the private companies, infrastructure for both domestic gas and exported LNG, such as the offshore platform and sub-sea pipeline, would be accessible by both parties.

41The implications of the “take or pay” contract are important to understand, as it was signed by a state-owned utility (SECWA), in unison with private companies, to underwrite an investment in infrastructure which could also be used for an export industry (LNG). While the LNG contracts with Japan and final agreements between SECWA and the private companies were not concluded until the early 1980s, Sir Charles Court’s direct involvement in what was a complex series of agreements, undertakings and ultimately contracts, was a key determinant in securing the international investment for the domestic and then international stages of the LNG.24 The investment, which at the time was the largest in the nation’s history, was made possible by a complex series of decisions. This brief overview merely touches on the main contributing factors. The 1.540-kilometre natural gas pipeline was finished in 1984 and supplied large volumes of natural gas to Perth and nearby industries. In 1989, the first load of LNG departed for Japan.

Also:

Sale of Dampier-to-Bunbury natural gas pipeline officially completed | Western Australian Government

25/3/98 The biggest privatisation in Western Australian history, the $2,407 million sale of the Dampier-to-Bunbury Natural Gas Pipeline, has today been officially completed with the WA Government receiving the full amount from the sale from new owners Epic Energy Australia.

www.wa.gov.au

From the article:
25/3/98

The biggest privatisation in Western Australian history, the $2,407 million sale of the Dampier-to-Bunbury Natural Gas Pipeline, has today been officially completed with the WA Government receiving the full amount from the sale from new owners Epic Energy Australia.

The State Government today accepted full and final payment from Epic Energy Australia, just three weeks after the Government announced the details of the successful sale.

The pipeline was still privately funded, even if it was underwritten by a government contract.

But, am talking about all the privately owned gas power stations, wind turbines, solar installations, gas storage etc etc

My point is simple that the energy system in Australia relies on a lot of funding coming out of the private sector, pretty much all of the growth is private.

If you look at this asset map, from just one company in WA (APA). You can see that quite a bit of their assets have been built privately.

 

[Value Collector]

With increasing automation an outsourcing of high skilled jobs, seems like it would be a good idea to be creating new jobs in new industries sooner rather than later. I have no issue with automation or outsourcing btw, we outsource a lot of our eccom store jobs.

When it makes sense it will happen automatically.

 

[divs4ever]

Iron Ore vs steel making, no idea on that specifically, but I am glad someone is going to try

well Australia has heaps of iron , coal , a fair amount of nickel ,oil , gas and uranium .. and the sun shines a fair bit in the Northern States

in fact if we really tried , we could make most steels types without importing any materials

we could start with a big bonfire to burn all the red/Green tape to get the furnaces warmed up

 

[SirRumpole]

I've had enough to do with utilities to say there are good and bad examples under both government and private ownership. What determines it is more about the regulatory environment and the people involved in top positions.

Go back a generation and several Australian states were easily beating the US on energy costs. Today the opposite is true and the driver of that change was far more about regulations and leadership than it's about ownership.

The big shift is the focus has shifted from cost minimisation to revenue maximisation. That's the crux of it, the entire mindset has shifted dramatically.

That's because of regulatory change, not ownership change indeed it's occurred even where ownership remains unchanged. They all have an order of magnitude greater overhead costs today in the modern regulatory environment, and far less pressure to contain costs than was historically the case.

Trouble is everything to do with energy, resource and industrial economics has become so heavily politicised as to make rational public discussion effectively impossible. That which is fundamentally a technical and accounting exercise has turned into something more akin to religion.

Hence I've decided to limit what I say going forward. It ends up interpreted as a political comment, rather than an economic one, and I don't think that's really doing the forum much good.

Noting for the record that pretty much everyone with knowledge has already completely walked away from publicly commenting on it anywhere. Everyone who could help solve it has given up trying, because you just can't win with politics and religion and unfortunately that's what it's come down to.

Well I think everyone who consumes energy wants it at the cheapest price and everyone who produces, distributes or sells it wants to do so at the maximum price.

The bottom line is what is in the national interest? That's what we elect politicians for and we need some far sighted ones of old, not fanboys for what a few blue sky companies are trying to sell.

As you have said, all the politicians are out of their depth, and we need some experts with the chutzpah to speak truth to power and do it publicly.

Do you know anyone like that?

 

[SirRumpole]

That's because of regulatory change, not ownership change indeed it's occurred even where ownership remains unchanged. They all have an order of magnitude greater overhead costs today in the modern regulatory environment, and far less pressure to contain costs than was historically the case.

Is that about "gold plated" poles and wires?

 

[divs4ever]

Well I think everyone who consumes energy wants it at the cheapest price

cheap AND reliable , for me , i have had a gutful of blackouts , brown-outs and general downtime because someone in planning had the insight of a golf ball ,

the worst one was a brownout that fried a prize computer DESPITE a UPS ( that died too ) and a transient spike protector , and surge resistant power-board ( and the usual home electrical protection stuff )

now you might be smiling BUT that premises was less than two miles for THREE major hospitals .. and a nursing home .. imagine if that have fried a ventilator or dialysis equipment ( and that place was on the very edge of the CBD in Brisbane )

BTW the culprit was found a year later the sub-station around the corner , took three days with an excavator to dig it all up and replace the sub-station ( thank goodness it didn't catch fire before being replaced .)

now the problem is ... in this digital dependent world .. you often have neither cheap or reliable

but you can count government to run infrastructure into the ground , then flog it off , because it can't afford to replace it ( they wasted all the profits )

 

[SirRumpole]

but you can count government to run infrastructure into the ground , then flog it off , because it can't afford to replace it ( they wasted all the profits )

If governments are going to own power assets then they need to appoint experts to the board of the ownership authority and take their advice, not indulge in their own fantasies.

 

[qldfrog]

If governments are going to own power assets then they need to appoint experts to the board of the ownership authority and take their advice, not indulge in their own fantasies.

Just one example
Jim Soorley, ex ALP mayor of Brisbane , is now a registered lobbyist AND Chairman of Sunshine Coast water business Unitywater,and a board member of government-owned electricity generation company CS Energy.
So not only are incompetent politicians making critical decisions on, here, power and water..not benign..
But when expelled by voters, they come back at the very head of these companies..even if public/state owned..what do we expect?
You see Mr @SirRumpole , not as easy as state or government owned vs private.
The whole Australian system is corrupt, not a light word, lawfully corrupt meaning decisions are made for direct pay back to the decision makers.
It is hard to swallow for older Australians but this is the case, and our energy plans... Or absence of..are the results as well as other critical defences, infrastructure (a road for the PM) choices