Category Archives: Politics

Don Elder was painted into a corner

Fossil Trilobite from Morocco.

Trilobite – another fossil.

Everyone from John Campbell to Gareth Hughes has been dumping on Don Elder over the last week. Not only did he oversee the now disastrous diversification of Solid Energy that has been deemed responsible for significant redundancies in the coal mining industry, but he also continues to draw his rather large salary while on gardening leave. John Key has been less than complimentary about the performance of the SOE which Bill English has assured will not be allowed to fail.

Regardless  of who was running the show, Solid Energy was certainly facing the prospect of a grim future. Here we had a multi-billion dollar enterprise based on operating coal mines (Waikato, West Coast and Southland) and billions of tons of undeveloped lignite in Southland. As the reality of climate change begins to hit home, it is starting to dawn on even the energy companies, that their share market valuations are based on coal, oil and gas reserves that can never be developed. Current modelling suggests that the listed global Reserves of fossil fuels exceed what can safely be mined by a factor of 5.

We have not yet got to the stage where questions are being asked as to which reserves should not be mined and therefore which companies are grossly overvalued, but we are starting to see some manoeuvring as gas muscles into the power market in the U.S.A. at the expense of coal. The abundance of gas is also a factor in driving down coal prices which is hurting the bottom line at Solid Energy.

This is not the time to have a portfolio chock full of lignite; the dirtiest fossil fuel and perhaps the one most likely to be scratched from the Environment’s dance card. This is where Don Elder comes in. It was almost as if Solid Energy’s diversification strategy was to build up an industry around lignite, as quickly as possible, so that it is too big and too advanced to suffer in any subsequent environmental rationalisation. Hence the dash to develop diesel, fertiliser and briquette industries even though they were heavily criticised by the Parliamentary Commissioner for the Environment in 2010.

It would appear that Don Elder was trying to save his (our) coal company by making Solid Energy too big to fail and thus insulate it from inevitable rationalisations in fossil fuel use. This dinosaur strategy of following short-term profits/lift in company value at the expense of long-term consequences is prevalent in today’s economic growth models. The cynicism of this strategy is exemplified by the lack mitigation measures associated with the lignite projects.

Fortunately this grand gamble was laid low by a strong dollar and low coal prices. Lignite is now off the agenda and the coal mines face downsizing or mothballing. The employment crisis facing the laid off coal miners was always inevitable and the Government’s role should be to facilitate their transition from the industry rather than prop it up through cost-cutting measures such as allowing mining in the Conservation Estate.

 

Government has us over a barrel

Last year I signed the petition calling for a referendum on the sale of the power companies. Although our minority National Government went to the polls in 2012 saying they wanted to sell, they only scraped past the post; ending up with 59 + 1 (ACT) + 1 (United Future) seats that were for the programme out of the 121 that were available.

Wind farms among the assets up for grabs.

Any wind in their sales?

Without getting into the debate over what sorts of margins should be required for governments to pass irreversible legislation, questions regarding the economic merits of selling asset generating an 18% return, when with an extremely strong dollar and low interest rates borrowing is such an attractive option. Especially as the Government intends to spend all of the money raised rather than retire debt.

I’m not an economist, but the fact that they (economists) are arguing among themselves as to the merits of the programme and prices are likely to be depressed by the economic climate all suggest that the sales might not be a smart option. Yet John Key remains locked in to the strategy with a resolve that reflects ideology rather than sense.

So what do I do now?

The sale legislation was passed in Parliament (61 to 60), the High Court challenge has been dismissed and the referendum although likely, will be too late.

Do I buy shares in Mighty River Power – the first cab off the rank in the sale process? Because if I don’t, my allocation could go offshore, or be consolidated within the portfolios of a minority of New Zealanders.

Do I boycott the sale in the rash hope that everyone else does too? Leaving the government with an under-subscribed float and egg on its face.

The answer is I don’t know. My inclination is that I should buy, but it feels wrong. The continued flow of wealth and wealth-generating assets to the few is not an equitable, nor fair solution for the bulk of New Zealand society.

 

 

New Zealand Government Eats its Greens

When John Key was elected Prime Minister of a minority National government in 2008, one of his first acts was to overturn legislation of the defeated Labour government mandating a phase-out of incandescent light bulbs.

National was not to be associated with ‘nanny state’ proscription which ran counter to a Libertarian agenda that included lots of fossil fuel extraction (lignite, coal, oil & gas) and catching up with Australia. We now export graduates there in such numbers that the proportion of the population to have graduated from university has declined by nearly 5% since 2000 cf. the OECD average rise of 4% – Economist).

But over the last few months the tables have turned and New Zealand is making huge green inroads – even while the government has walked out of Kyoto and watered down the already ineffective ETS.

Sculpture Barista Alchemy

Converting swords to ploughshares – the not so good prospects for a carbon intensive economy.

So what has brought about this turn around?

  1. Last December the Brazilian oil giant Petrobras  relinquished it’s expansive Exploration Licences off the east coast of North Island after completing a controversial seismic survey in 2011. While the National cabinet is full of blue sky miners, the reality is that New Zealand has proven a difficult nut to crack for explorers (even in Taranaki) and Petrobras obviously didn’t see anything in the seismic results that suggested easy money. Hopefully this result has cooled the ardour of some cabinet members for the title of Saudi Arabia of the South.
  2. National imposed a carbon tax – due to take effect in July 2013 with a 3 cents a litre petrol tax hike on this and each of the following two years. Of course they didn’t call it that because a tax on carbon would stifle economic activity. This is a strategy to lift government income; raising a projected $300 million to help out the bottom line in a stagnant economy with high unemployment, rising emigration and poor social outcomes. For an economy that is reliant on the slow-to-build stimulus provided by the Christchurch earthquake of 2011, there are few options available other than clawing back tax cuts offered up early in their tenure. Whatever the stated goals of the tax increase, it will effect the overall economy and in all likelihood lead to a reduction in the use of petroleum – one of the goals in the introduction of a carbon tax.
  3. Although the historical high value of the New Zealand dollar has cushioned us from the effects of rising oil prices, this has been cited in combination with low coal prices as the reason for the economic strife of State Owned  Enterprise Solid Energy. The company has ballooning debts of over $389 million and has already, as part of the cost cutting, shelved plans for large-scale lignite mining in Southland. Large tracts of land bought up to facilitate access to the bounty below, are now on the market and are likely to become dairy farms. While New Zealand prides itself on the very high proportion of sustainable energy (hydro and geothermal), Solid Energy’s plans to use low grade lignite in large-scale, energy intensive, fertilizer and bio-diesel applications were going to significantly undercut this standing. These proposals were strongly criticised for both their carbon intensity and the use of an outdated dirty technology.

There can be no question that these events were significant reversals in the government agenda and are likely to impinge on the well-being of all New Zealanders through higher costs and continued reductions in services. The irony is that these are the sort of consequences that it was argued, would prevent us from taking steps to reduce greenhouse gas emissions until everyone else in the world has adopted them. It looks like New Zealand is taking a lead (albeit accidental) – something the Government argued it would never do.

Let’s get real about cats and dogs

 

Regardless of where you sit in the cat spectrum, you will readily admit that cats catch and kill stuff. However, the extent to which they do this will vary from ‘they mostly catch rats and mice and are therefore environmentally benign/beneficial’, to ‘they are responsible for an avian genocide’. A recent US study mounted cameras on cats and recorded their activities. While only 30% of roaming cats kill prey (an average of two per week), those that do only bring home a quarter of what they catch. So for every mouse (or bird) that Tiddles shows you, there are likely to be three more corpses left out in the garden.

Kingfisher in the rain

Not on the menu.

Gareth Mogan provides some frightening statistics on cat predation of native fauna, so what should be our approach be to this reality? At the moment there are no restrictions on the number of cats that can be kept, there is no registration requirement and cats are free to wander as and where they please.

Contrast this with our closest neighbour; where our ‘cultures’ is so interchangeable that nearly 60,000 Kiwis a year go there with the  ease of moving to a neighbouring town – though you might be surprised if you want to take your moggy with you.  In Victoria legislation requires: registration, permanent  identification, restrictions on numbers kept, mandatory de-sexing and secure confinement to the owner’s premises.

From the City of Melbourne website:

“Did you know…

Your neighbours are entitled to enjoy their garden without your cat or dog roaming onto their property killing birds, digging or leaving excrement in their garden.  If your neighbour asks you to stop your cat or dog from coming onto their property, you must do so. If your animal strays onto their land without permission more than once, it can be seized and you may be fined or prosecuted.”

Melbourne also encourages you to keep your cat  inside at night for the sake of you, your cat and anything that they might catch.

Clearly we are a long way from this level of prescription, but the question is, if the Australians accept regulations to help control an equivalent impact on their native fauna, why can’t we?

While Gareth Morgan is being deliberately provocative, he is on the right track. As a start sign his on-line petition calling for registration and chipping of all cats.

 

Put a Stake through Rodney’s Hide

 

I see that unwanted politician Rodney Hide continues to push his wheelbarrow of BS and is still getting away with it.

Rodney Hide doesn't want to listen to expert advice.

Climate denier Rodney Hide trumps science with his opinions.

The Auckland Herald for some strange reason seems to think that he has something interesting to say beyond his home renovations or new trials as a late-in-life father.

This time he rails against the shallowness of politicians and the lack of analysis and reflection in news coverage where “Who can be bothered with a boring report? Just give us the headline.” rules.

He is building up to one of his favourite riffs about the scam perpetuated against honest business people by that evil cabal of climate scientists.

In this case, late last year the British Met Office announced that global temperatures over the next five years “are likely to be a little lower than predicted” in their December 2011 report. This news was trumpeted in the Daily Mail and Telegraph newspapers as evidence of the demise of global warming.

Mr Hide took this same tack, but had he looked beyond the headline and actually read at what the Met Office had to say, he might have been better informed. Paragraphs 2 and 3 of their release are produced verbatim.

However, both versions [2011 and 2012] are consistent in predicting that we will continue to see near-record levels of global temperatures in the next few years.” and

This means temperatures will remain well above the long-term average and we will continue to see temperatures like those which resulted in 2000-2009 being the warmest decade in the instrumental record dating back to 1850.

Perhaps Mr Hide could take heed of his Croatian taxi driver and give us the real news, not his opinion.