The Gillard Government’s Clean Energy Future plan signifies that the game is up for the free rider’s polluting our planet.

The Carbon Tax of $23 per tonne of carbon for July 1 2012 – June 30 2013 sends a clear message that polluters must pay. In this age of compromise politics, the industry lobbyists who seem to have won are the steel manufacturers. The ALP’s union links have been rewarded. The coal and mining lobby have lost out. But have no fear, Gina Reinhart has no doubt flown Lord Monckton to Australia to represent their interests.

Land Locked
Of immediate interest will be to see how land prices in sun drenched locations near major power transmission lines behave. If it is anything like California’s Mojave desert land rush, land prices there will sky rocket. Land speculators will get in first, with solar operators forced to pay more for land to meet their ransom price.

Rainforest land values
How will land prices for carbon sinks in the Pacific Islands react to this announcement? One expects there to be a gold rush of land grabbing for rainforests. Reports of cashed up mining companies hedging their bets has been prevalent for a number of years.

We remind you that these precious carbon sink resources, the lungs of the world, will only get more valuable in the future. Selling carbon permits off per annum is a much more sustainable solution for tribal elders. Then when carbon prices increase to $100 – $200 per annum, they get a share of the rising prices too.

Selling rainforest lands outright should be avoided at all costs.

Pressures on Housing
The exemption of petrol form the carbon tax means that sprawling home owners won’t be penalised. Some in the housing industry are complaining:

“Competing against imports from non-CO2-e taxing countries, Australian building product manufacturers face a cost collage as the carbon tax is passed on down the line into the inputs for each production and fabrication phase,” HIA Chief Executive Graham Wolfe said.

Construction costs have largely flat-lined during this land and house price boom. However, there is next to no commentary from the HIA on the role of land speculation in holding prime locations bare and forcing the rest of us to travel further to our work, our home.

Land speculation is an issue that will increase in importance as the drive to a more sustainable future becomes intrinsic to humanity’s survival. Listen to this recent podcast where second only to energy production was the importance of living in central locations (as the surest way to reduce our carbon footprint by 70%).

Some are complaining that Negative Gearers would be hurt by the rising of the tax free threshold from $6000 – $18,200. This will deter property investment/ speculation as there will be less of a tax write off for those hard working property flippers. This is a good thing. First home owners and the market in general continue to prefer established housing in centralised communities, rather than McMansions in ‘Master Planned Communities’.

Some commentators are concerned at the $4 billion budget hole over the next four years from the Clean Energy Future package. Compare that to some $24 billion we will be giving to negative gearers to both bid up existing house prices and support the building of unwanted McMansions in unwanted areas.

The Big Sell

Now we are set for a campaign like fever of salesmanship from both PM Gillard and Opposition leader Abbot. When will anyone in politics use the golden words ‘tax switch’ as a means of describing this momentous shift?

To see Abbot in his fluro vest working amongst the people, one wonders when a government MP will hit him over the Mining Tax. Abbot wants small business in manufacturing and services to pay the same company tax rate whilst miners benefit from record price gains for their products. That does not sound like a strategy towards lowest operating costs. It sounds like the end of the eastern seaboard manufacturing industry. The Liberal Party have become little more than a protectorate for monopolists, rather than the shepherds of efficient pricing systems.

Land Value Capture
Our aim for a sustainable society will not be maximised until we adopt a Geonomics system, where the earth’s scarce values are recycled back to the community. Page 7 of today’s AFR reported the high cost structure of the proposed high speed railway as one of its biggest hurdles to competing with discount airfares. Melb – Sydney is the world’s fourth busiest air route. A high speed train emits 1/4 of the greenhouse gases per person than what air travel does.

Land values along this train route would sky-rocket, especially at linking train stations. The $32 – 59 billion infrastructure price tag could be met if landowners paid back just 6% of the windfall land price gain they receive from this new service (over 20 years). Then train ticket prices could reflect the Marginal Operating Costs, keeping their price structure low.

That would certainly continue the positives.

photo credit: versageek

The might of the Australian mining industry is throwing everything it can at mainstream Australia at present.

Can Joe 6 pack comprehend the difference between industry that is man-made ie car manufacturing, versus the mining industry, who are ripping up our valuable earth as if they scientifically produced the iron ore?

Apparently, the Rudd Government is largely doing what the mining industry asked for in their submission. Thanks to the ever accurate Peter Martin, we read that the difference between now and the collapsing 2008 economic environment (when the Henry submissions were sent) is that ‘decades of profits to come’ are now expected.

Mining magnates have flipped their view now that they realise how much they will be contributing back to the commonwealth.

Miners had supported the Resource Rent Tax because it included the ability to write off losses.

The ramifications of the earth’s privatisation are rearing their head where ever we look at the moment:

• Greece has run out of money due to a poor taxation system. The bursting of their property bubble has made their pensioners even angrier at having the retirement age raised from 53 to 67.
• Goldman Sachs is facing a raft of fraud cases and is now attempting an out of court settlement. The risky nature of the US property bubble saw the use of dodgy derivatives to offset this risk.
• Aus-Aid has announced a $53m ‘aid’ package to map and value the Pacific’s resources. We know this is code for ‘so we can sell it off to our mates in high places’. Tragically none of this money is being spent in Vanuatu to train local ni-vans on how to value the land (we are not sure about the rest of the Pacific). A hand-out ‘beg-for-aid’ mentality is ensured.
• Indonesia has opened up its property market to foreign investors.
• East Timor desperately needs land reform to move on from the post Indonesian rule and disputes over land title.
• China’s property bubble is on the precipice. Check how land speculators are dodging China’s credit restrictions.
  

Have a listen to our Renegade Economists podcast. The bottom line is that more people need to understand geonomics, an earth based economic system.

You can do this by joining Alanna Hartzok’s Earth Rights course. It takes about 4 hours to arm yourself with knowledge to read between the lines to decipher what the big boys are really up to. Click on the Earth Rights Pacific class to join so we can discuss local issues.

The earth has been sold off and the message in this course is that we can reclaim it, not by force but by redirecting the invisible hand to value and share the earth’s resources on all our behalf, not just for neo-colonising land speculators.

photo credit: M0les

Renegade Economists podcast

Joel Simo from the Melanesian Land Defence Group visited Australia recently via an Aid Watch.

Listen to his interview on the Renegades here…

In discussion with Green Left Weekly Joel says:

Customary land title represents the majority of land tenure in Fiji and Vanuatu and provides locals with food security.

This security provides certainty in times of economic downturn. MILDA argues that during the global financial crisis of 2009, very few people in these communities went without food or housing because of their access to traditional land.

Sukot told GLW: “During the economic crisis, it was very difficult for people in the cash economy. In the traditional economy, everything is very much dependent on land.

“People are able to provide basics for themselves even in economic crisis. The traditional economy is about sharing. This is different to the economy in the US, where the economy is based on selling.

Music

The Shepherd Island dancers were recorded at the 2008 Shepherd Alliance Party’s National Congress.

Read this innovative Helo Magazine interview. As a crisis journalism magazine, we were interviewed via a skype roundtable chat session:

Part of the intro states:

Can Pacific peoples bridge the world’s chasm between understanding cause and effect of climate change as well as coconut colonialism? Paradise, blue water, blue skies, abundant marine life, smiling faces, bible harmonies, simple lives, and resorts for cashed-up suburbanites. Or abject poverty, menacing kava stares, razor wire, machete-wielding youth, laplap dictatorships, tribal violence and raskol gangs running amok.

We jump into the interview:

Karl: My answer is to use the language of the corridors of power to fight back:  Use economic lingo to protect the earth, the community. Also, foreign aid has to be carefully looked at. Throughout Melanesia, aid has built ring roads around islands and new wharfs so the Multi-National Corporation’s (MNC’s) can rip out the resources quickly. Thirteen such projects by the Millennium Development Corp in Vanuatu. [For example] the ring road is almost finished on the main island of Efate.

Daniel J Gerstle, HELO Editor:  Forgive me, but given that foreign aid development may need to be done with more fairness, particularly in terms of MNC, does it really follow that you consider those ring roads and development unhelpful to the indigenous people in other ways, in terms of infrastructure, healthcare logistics, and markets?

Karl: More resource-based greed is showing through in the carbon cowboys scouring Papua New Guinea (PNG), and I bet other Pacifica islands. Check the comments re: Kirk Roberts.

The roads do improve life in the short run—less dust for local communities, quicker travel times – are dwarfed by the motivations these improved services provide to land sharks. Land becomes hugely valuable when you can fly into an airstrip in the north of Efate, one of the 13 infrastructure projects being built in Vanuatu, and zip off to the coastal mansion you have. All with little interaction with the locals, missing the urban drift in Vila. When this happens the local fisheries are fenced off by these essentially gated communities and the locals can no longer live off the land.

They have to head into town to work for the man. This form of dispossession has racked all developing countries where land scarcity delivers more workers to the smokestack MNC’s, and thus cheap labour. Check out the land speculators paradise: They have the cheek to call it barrier beach! To turn it into a marketing ploy when the locals can’t fish there no more!!! This site is in Santo, the 2nd biggest island in Vanuatu. 

Elite property investors are attracted to this slick site. Check it out and invest with a click of a button, with no thought of the impact on the local community. The Washington consensus has been aiming for this, for the flexibility of capital to swoop into a country and buy up a prime location, sell it a year later to make a killing. This is happening to all of the world’s most beautiful areas, particularly those like in the pacific where private land title is barely thirty years old.

Read more at HELO

Renegade Economists Podcast 130

As broadcast on the mighty 3CR – Wed March 03, 2010
Subscribe to the podcast

Show Notes – ‘All Puns Intended’
Internationally acclaimed multimedia artist Paul Millar (DJ Spooky) discusses his Nauru Elegies project. Hear with interest how Nauru, the modern day equivalent of Easter Island, has overexploited its resource base.

Neo-colonial resource stripping amidst poor economic policy have much to answer for.

The multimedia show touring the globe highlights: “Polyphonic issues including matters of ecology and raw material (phosphate), geo-political history, virtual-banking and economic corruption, global climate issues and information networks.

The interview, recorded on the Yarra River, features music from DJ Spooky’s new album, the Secret Song.

Download the interview (30mins)

photo credit: sigmaman

In Revenue Sharing – A Piece of the Pie John Cutfeet says:

I recently heard an Elder say that we, as the First Peoples, were given resources by the Creator from which we can make a living. He said, “God gave us resources to use from our lands. Our people did commercial fishing where we sold fish to make a living. We have the land and resources we can use instead of not doing anything with it.”

This message by the Elders has been consistent throughout the years and has been voiced repeatedly. When our forefathers engaged in the treaty-making process, they understood that they were agreeing to share the land and the benefits it provides with the newcomers.
Unfortunately, the text of the treaty does not reflect the discussions as remembered by the elders. They recall agreeing to share the lands and its resources for mutual benefit and not mass land surrender.

The shadows of the Copenhagen climate conference provide an opportune time to review our operating system and it’s pursuit of creating carbon permits for carbon speculators AKA carbon cowboys acting out as financial middlemen.

The short term mentality of quarterly dividend payments curtails the western CEO from thinking of future generations. Easy profits are delivered by the economic rents inherent in mining, land speculation or the ownership of any resource that is scarce. This gives modern economics a one-eyed view of the importance of scarce resources.

What justification do mainstream religious leaders give themselves late at night with the disjoint between the sentiment of their teachings and the outcomes of society as dictated by the economic system?

If nature’s wealth is shared amongst all, and not just the shareholders and privateers, then equality of opportunity is encouraged. Read this report on Valuing Common Assets and read more here for background.

Indigenous practice for thousands of years saw this work effectively and sustainably.

We believe that speculation on the licensed monopolies of scarce resources (also our DNA, copyright, fishing licenses) drives the rest of the economic juggernaut to cut corners. A coffee shop is forced to do this to keep up with the average 15.5% return over the last decade for land speculators here in Australia (where our land bubble still hasn’t popped).

Once speculators are signaled to stop their destructive practices of price inflation, then the cost of living returns to a more sustainable level. The implementation of a true cost economics system does this by penalising speculation and penalises pollution. Urban density, walkable communities and $1 train rides on an expanded network are all possible.

So too is more affordable housing, a decentralised push back out of our mega-cities and into the bush (where land values are lower and thus so are taxes) and even increased small business. The access to cheaper land with a simpler tax framework encourages the everyday person to follow their dreams into a start-up. The competition for labour heats up and because less is being paid for in rent, there is more to pay wages.

This all assists in undoing the forces that are driving the wealth gap. The chasm between private interests and the public good finds harmony when public works benefit all citizens equally, rather than delivering windfall gains for the lucky few who ‘own’ land.

A strong link with indigenous leaders will one day be made upon the common ground that the earth’s worth is for all and not just the privileged few. Can trust in market forces ever be rekindled? We like to think so.

photo credit: Just a Temporary Measure

Australia’s disastrous first home owners grant has spread in principle to both the US with an $8000 tax credit (rumoured to soon be ‘boosted’ to $15,000) and now to our Pacific cousins in Fiji with a handout.

Sure the American’s are giving a tax credit, ensuring that only those with enough savings can get into the property game, but have a read of this:

Experts Commend Fiji Government’s New Housing Plan

Suva, Fiji (AHN) – The Fiji Government’s initiative to put in place a housing assistance grant worth $10 million for the construction of new individual homes was applauded by economics and business experts.
–
According to the Prime Minister Commodore Voreqe Bainimarama, this housing assistance grant shall be available to those families or individuals who want to construct their first house and who meet the commercial bank loan serviceability requirements can substantially contribute towards the 20 percent deposit requirement but do not have enough funds to meet the total deposit requirements.

Each successful applicant will be given a maximum of $10,000 and that would mean that 1,000 families can benefit from this scheme, he said.

“Based on an average cost of $100,000 for a basic house, this grant scheme has the potential to generate $100 million into the economy,” Bainimarama said.

As we have repeated time and again, if everyone gets $10,000, then the price of land will go up at least $10,000. This is a subsidy for the sellers, not the buyers.

Let’s hope that not too many of Bainimarama’s family are in the real estate industry.

Read the frustrations of local blogger Fiji Freedom Fighter re under-utilised land and poor NGO policy. If only more NGO’s understood economics and the effect of any community improvements on the value of land. Ditto for our politicians and their well-heeled consultants.

Who are we really working for?

Renegade Economists Podcast 108

As broadcast on www.3CR.org.au 30/09/09.
Subscribe to the podcast.

Free Trash of Freeport: We finish off our climate friendly policy overview, then interview Nick Chesterfield (Manukoreri) and Nicholas Taylor (Outcrop) to discuss the immense wealth and destruction flowing from West Papua’s $40bn Freeport mine. Photo – Freeport’s tailings, thanks SkyTruth.

Key Articles:
Red River: The blacklisting of Rio Tinto:
Will Australia Allow Another Balibo at Freeport

Show Notes
Carbon Trading Controversies – speculative middlemen aka the bankers bonanza implicit in Australia’s Emissions Trading System

Contraction & Convergence – Aubrey Meyer. Also his book

Carbon Tax – James Hanson (NASA) supports

Tax Upstream

We propose to tax fuels as far upstream as practicable, i.e., at the point where possession of the carbon-bearing fuel passes from the “producer” (e.g., coal mine; oil wellhead or tanker; gas wellhead) to the immediate next entity in the supply chain (e.g., coal shipper or utility; oil refiner or importer; natural gas pipeline). Presumably, each such transfer will be codified in a contract, or at least a bill of lading, specifying the attributes of the fuel.

This will minimize the number of points in the economy at which the tax would be levied. It will also simplify tax treatment of potential downstream carbon control technologies such as CCS (coal capture and sequestration), as discussed below.

Carbon Variability Requires Taxing by Btu, not by Fuel Weight or Volume
The tax rates will be stated in dollars per million Btu of heat content for each fuel. A more familiar approach based on physical
quantities of fuel isn’t tenable, due to wide natural variations in carbon content within each fuel type. These variations are most stark for coal. A ton of lignite typically contains around 40% less carbon than a typical ton of bituminous coal, for example. To tax the two respective tons at the same dollar rate would be grossly unfair since combustion of the lignite ton releases 40% less carbon into the atmosphere than for the bituminous ton.

Freeport, West Papua
Caroline Lucas (MEP – Greens) West Papua speech – October 17th 2008
Just as they have never received a penny of the massive profits turned over by Freeport, whose Indonesian subsidiary last year paid the Indonesian government over 1.8 billion dollars in tax.

Genocide by Demographics
According to Dr Elmslie, highland Papuans who allegedly have gonorrhoea are being treated in UN-funded family planning clinics — but not for gonorrhoea. They are being injected instead with long-term contraceptive drugs. As Dr Elmslie notes, this goes some way to explaining why the 1.67 percent population growth rate for Melanesian Papuans in West Papua is so much lower in than over the 2.6 percent population growth rate for Melanesian Papuans over the border in Papua New Guinea (PNG). (Meanwhile, the growth rate for the non-Papuan population in West Papua is 10.5 percent.)

Music

Songs for West Papua – Kelly Newton-Wordsworth
War is not over – Kelly Newton-Wordsworth

…
Freeport McMoran Copper & Gold annual report
Royalties totaled $113 million ($0.10 per pound of copper) in 2008, compared with $133 million
($0.12 per pound of copper) in 2007. The reduction in royalties for 2008 primarily reflects lower copper prices and lower gold sales volumes.
Implying the fixed, nominal amount of royalty payments, rather than as a percentage. This hurts both West Papuans and Indonesians in that as the value of the resource increases, the company gets to pocket the increased value rather than the people (who created the gold?).
Freeport Mine
… an industry giant. Estimates suggest that the mine has both the third largest reserves of copper, and the second largest reserves of gold, in the world.
…
Freeport, which is responsible for about 2/3 of Indonesia’s annual production of gold, is regularly amongst the largest corporate taxpayers in the country.
…
Risky Business: The Grasberg Gold Mine
Indonesia, The TNI and the USA.
Paying for Protection (linking Freeport to state sponsored security)

Will Australia allow another Balibo at Freeport? – Nick Chesterfield
..with the shooting death of Melbourne man Drew Grant at the massive and controversial Freeport mine in Timika, West Papua, a powerful spotlight has been shone on an otherwise ignored struggle that has claimed an estimated 564,126 people as of late 2008, according to analysis of demographic discrepancies by Sydney University.
…
Freeport pays TNI over US$5 million per year to guard the mine
…
Australian Federal Police officers have been in Timika assisting the Indonesian investigation. From the outset the official investigation has been far from transparent, raising significant questions.  Evidence was tampered with, and bullets in Mr Grant’s body were removed before the pathologist was able to conduct the autopsy, whilst in the custody of Australian Embassy officials.   Were these officers involved in an attempt to hide the identity of the real culprits, and if not, what have they done to ensure transparency?
…
The Indonesian Defence minister conceded the Free Papua Movement is unlikely to be responsible, indicating both the military and the police are responsible, and even went as far as suggesting that Australia itself was behind the attacks.  “What I think is don’t let Freeport be closed, because it involves global competition over natural resources there are a number of countries that have an interest in destabilising Freeport,” Sudarsono said.  He said foreign NGOs and governments had a history of backing groups that “agitate” in Papua.  Asked which countries he was referring to, Sudarsono said: “Apparently many neighbouring countries to the south.”  

photo credit: backpackphotography

Today’s Age report on Carbon Cowboys Riding High

THE Australian at the heart of Papua New Guinea’s carbon trading rush is entrepreneur and racing identity Kirk Roberts, who is believed to have convinced many tribal groups to sign their rainforests up for future use as carbon credits.

Mr Roberts, who runs his carbon operations through a company called Nupan Pty Ltd, claims to have power of attorney over 90 forestry deals, giving him control over land potentially worth tens of millions of dollars as carbon sinks.

We warned on this when we first heard that Jeffrey Sachs was giving PNG carbon sink advice (back in May). Anyone who has heard Prof Michael Hudson or read Naomi Klein’s Shock Doctrine understands what we mean.

The danger in signing away your full rights as a carbon sink custodian is that over time, the value of saving the planet will become more and more important. As the lungs of the planet, these ancient forests will become increasingly valuable. Why sell the carbon rights off now in total rather than lease out their sequestering capabilities over their lifetime? With a yearly lease, where the land is valued per annum, the local PNG tribes would get a share of the ever increasing value of these living treasures.

We have warned about the speculative nature of these new eco markets on the Renegade Economists podcast for many moons. This story is the dangerous outcome to the bankers bonanza opening up in green markets. Speculative middlemen will simply sneak in and claim the lion’s share of the profiteering made possible by the creation of ‘fee simple’ property rights (rather than ‘fee annual’ – defining yearly payments).

This REDD scheme will do little to reduce overall carbon emissions. Neither will carbon trading.

Stories are being leaked on how companies are setting up bogus refrigeration companies in India that use the worst possible emitting gases, then ‘reforming’ them towards less harmful gases as the cheapest carbon ‘credit’. Why not avoid the pain of nightmares from our future grandchildren by going to a carbon tax? Sorry speculators, you will have to do something productive!

See our other commentaries on carbon trading here

The earth’s bounty should be shared amongst all to create the equality of opportunity that we are hood winked into believing democracy delivers!

photo credit: corvidmagic

The world of pass-the-buck hit home with Rudd’s cop out yesterday. It’s too hard for us, let’s ‘leave it to Obama to sort it out in Copenhagen’. Perhaps Obama has given the ALP a get out of jail card with the Democrat’s Waxman-Markey Bill beginning it’s long path through Congress. The US seems to be moving towards cap and dividend at worst, at best a carbon tax. That’s a long way from the unlimited importation of international Kyoto permits via the loophole ridden CPRS.

Smoke and Mirrors:

Meanwhile, the Government has thrown more compensation at big-polluting industry: more free carbon permits for the first five years, a low fixed permit price of $10 for the first year, and a 12-month delay to the entire scheme.

One of the side effects to the $10 carbon cap and the yearly delay is that is gives major emitters another year to buy carbon sinks (the carbon sequestration rights that forests enable). The $10 cap and the doubt the carbon reduction scheme raises will undermine the value of carbon sinks. Local dealings for carbon sequestration rights will put downward pressure on land prices in PNG’s forests (carbon sinks). With this doubt in mind, mining companies and the like will be hoping to fudge the true value of the massive carbon sinks in PNG, using this to wedge downwards the asking price of indigenous chiefs for their sacred forests.

This is a clear message to those tribal chiefs. DO NOT SELL YOUR LAND OUTRIGHT!

Only sell the carbon sink lease on a percentage basis. The mining company can claim the carbon credits if they pay you 25% of the value of those carbon permits, for example. The land does not need to be sold outright. Fishing, hunting and other customary rights can still be maintained.

Over time the value of these forests will dramatically increase as the speed of climate change increases. The PNG community must get a share in this resource scarcity and the resultant profits. Carbon sinks will be more valuable than oil wells in the near future. If the carbon sequestration rights are to the forest are leased, then every year that the carbon permits go up in value, the PNG crew get a share of this bounty. This can help fund the health and education that such countries need.

Back to the west, it seems that Handout Politics is the only way to get a policy passed. That is the advantage of the cap-and-dividend policy that Obama could be inching towards. The public gets a regular handout so that the future Bush Mark3 can’t easily remove climate friendly policy.

Unfortunately, it seems that not only do we have the world of lobbyocracy distorting the political process from the corporate end, but unless the public are given a handout in return, legislation gets bounced via opinion polls. Weak politics will lead to a weakened planet.