Let’s talk about the “Chinese ship” – it has recently undertaken a joint exploration with New Zealand and is the focus of a lot of media coverage at the moment.

“”It could be mapping the ocean floor, it could be mapping our submarine cables which are critical for our lines of communication as a country,” Andrew Hastie, the shadow defence minister said.

In the absence of evidence – why stop there? It could be laying mines at the bottom of the ocean, it could be laying sensors  to detect Australian submarines (with hitherto unthought-of ultra long range underwater communication capability), it could be giving resupply to Harold Holt’s underwater palace…!

Let’s take a look at what else was reported in that ABC article:

“While it’s not clear exactly what research the ship is conducting, analysts have told the ABC that its submersible vessels could be mapping the undersea environment south of Australia — including a major submarine cable connecting Sydney and Perth.”

Which analysts? And what advantage would it give China if it knows where the cable runs? If they want to cut it during a military confrontation, they would have to either sail some ships close to Australia’s south coast, where they would be extremely far away from any support and easily sunk, or spare a long range, nuclear-powered submarine from their fleet of 8 (currently only 6), and out of 3-5 of such submarines they could put to the sea at any one point.

Sometimes we just need some facts in the debate.

Peter Dutton is right – more gas for domestic use should bring down prices. He is also right – Australia does not have a gas shortage. And while we he seems a little bit reticent to say it again, he clearly said on Saturday when announcing the gas reservation policy that we don’t actually need more gas to have a gas reservation scheme. Here’s the quote – put it on a bumper sticker!

We can do it straight away because the gas is there, it’s being produced now. It doesn’t require any infrastructure. It is a matter of turning it back into the economy.”

So ok, we don’t have a gas shortage. But the problem is while Woodside and Santos and INPEX might be the ones extracting all the gas we poor folk living in homes in Australia don’t buy our gas from them, we buy it from retailers – mostly three of them – AGL, Origin and EnergyAustralia.  

And when you have an industry dominated by 2 or 3 retailers… well they get to make a lot of profit at our expense.

It is easyish to mode the wholesale price of gas – ie the price those big three pay to get gas from Santos, etc, but it is tougher to do it for the retail sector.

Modelling consumer prices means somehow modelling what these three retailers charge their consumers. And those big three can pretty much do what they want without much logic on the surface.

For example, AGL has been charging consumers three times the price for its large business customers and the others are not far behind. Are they going to change that? They could for example just raise the price they charge businesses and leave household gas at the same price. How will a govt under Peter Dutton get AGL, Origin and EnergyAustralia to actually pass on the lower wholesale costs to their customers? 

When you look at what AGL charges – the big chunk is not the cost of their gas (energy procurement costs) but retail profit! Anyone think they are about to give that up?

Journalists love to call for modelling. But always remember – modelling of anything generally delivers what the people who commissioned the modelling wanted it to say (think the modelling for the Liberal Party’s nuclear power fantasy).

So good luck for anyone who thinks they can model any reactions from AGL, Origin and EnergyAustralia, and also if or when it does come up, let’s hope journalists don’t swallow it in one gulp.

Today the RBA board announces its decision on interest rates.

What the board should do: Cut. The inflation rate is well within the RBA’s target band. Every indicator we have points to further falls in inflation in the coming months. The recent budget showed that Treasury believes that inflation will stay in the target band for the next few years.

Interest rates are currently restrictive, that is they’re designed to slow the economy down. The RBA needs to take its foot off the break.

Remember that shifting interest rates has large lags. That means that changes in interest rates takes a long time to work its way through the economy. The RBA needs to set interest rates for what they think the economy is going to be doing in the months and years ahead, not what the ABS says inflation was several months ago.

What the board will do: No change in rates. The RBA believes that there is a risk that the low unemployment rate might suddenly set off a rapid increase in wages which will then flow through to inflation. They keep believing this despite all the evidence that has shown the opposite.

We get the next quarterly measure of inflation from the ABS at the end of April. It will most likely show all the measures of inflation will fall again. After this data release the board will hopefully accept that inflation has been controlled, and they will cut at their next meeting in May.

Meanwhile Energy Minister Chris Bowen appeared on ABC’s 7.30 overnight, where he was grilled over energy prices and promises made at the last election:

Q: Now you and the Prime Minister relied on modeling by Reputex before the last election to promise a $275 drop in power prices by 2025 and a further cut by 2030 have you now dumped that modeling?

Bowen:

Well, we’re fighting the 2025 election, not the 2022 election, and not the 2028 election. We’re fighting this election with policies for this election. We did model the impact of our policies and released it very transparently, and that modeling showed that renewable energy is the cheapest form of energy, and if you get more in, you will see downward pressure on prices. But of course, since then, we’ve seen the impact of the previous government’s hidden price rises today. It is actually the third anniversary of Angus Taylor changing the law.

Host: We’ve heard this one before.

Bowen:

It’s true today is the third anniversary of Angus Taylor changing the law to hide a 20% electricity price rise before the last election. And of course, we’ve been dealing with very difficult international circumstances. We’ve been very clear about that all the way through this.

Q: So does that mean that? The answer is, you have now dropped that model.

Bowen:

It’s modeling done in 2021 we’re now in 2025.

Q It was something that you relied on to make multiple promises. We heard the Prime Minister today say it’s Reputex modelling. So it’s no longer modeling that you will be using?

Bowen:

No because it’s 2025, not 2021. That was modeling done in 2021 for a 2022 election. It was the modelled impact of our policies for the 2022 election. We’re now going to the 2025 election. You don’t go to every election with exactly the same policy.

Australia Institute analysis of the latest Australian Government commodity forecasts shows that, to 2030, multinational gas companies are expected to export $170 billion worth of liquified natural gas, made with gas that attracts zero royalties.

Previous Australia Institute research showed that 56% of Australia’s gas exports are based on royalty-free gas and Treasury has confirmed that no gas export project has ever paid Petroleum Resource Rent Tax.

Key points:

• Gas export volumes are expected to be maintained at 80 million tonnes per year to 2030.
• This gas is expected to sell for a total of $303 billion.
• 56% of this, or $170 billion is based on royalty-free gas and is unlikely to pay any petroleum tax.

“Big gas is taking the piss,” said Mark Ogge, Principal Advisor at The Australia Institute.

“Last week we saw Opposition Leader Peter Dutton acknowledge that excessive gas exports are harming Australians.

“Unrestricted gas exports have been a disaster, but even worse is that most of it is given away for free.

“It’s important to understand what these forecasts mean – the Australian Government is planning to give away vast volumes of public gas, for free, out to 2030.

“Not only is this fiscally irresponsible, but this is making climate change worse.

“Fossil fuels need to be phased out and kept in the ground, not given away for free.

“The next parliament has a real opportunity to end the gas industry’s free ride and deliver for the Australian public and the climate.”

Q: Can Australia dictate the levels of gas reservation from the current gas fields under the current extraction contracts with the companies extracting and exporting Australian gas? Gezza.

Thanks for your question Gezza. The good news (and easy answer) is – they don’t have to!

This report is from August 2024, but the principle is the same.

Australia has an abundance of uncontracted LNG capacity over the next 20 years – so much that just 5% of the uncontracted gas could be used to meet any potential ‘shortage’ that usually comes up everytime we talk about domestic capacity.

As Matt Saunders explained:

In a March 2023 Senate committee hearing on the Cost of Living, the Chief Executive Officer of the leading gas lobby group, the Australian Petroleum Production and Exploration Association (now renamed Australian Energy Producers), Samantha McCulloch, told senators that “that gas was produced in large part because of plans to access the export market. Essentially, it wouldn’t have been produced without that export market there. When those facilities were built, they had long-term supply agreements with our trading partners in Japan, Korea and elsewhere, so there is a very strong export market.”

And so the gas industry argues that Australia has a gas shortage, and that gas converted to LNG can’t be used to meet any “shortage” because of the long-term supply agreements in place. However, analysis of the government’s Future Gas Strategy and AEMO reports shows this line is just an excuse because the uncontracted capacity of LNG well exceeds that of any supposed shortage.

From these reports we know the amount of gas currently contracted for exports, this enables us to calculate the level of uncontracted gas relative to current export outputs. This analysis reveals that by the middle of the next decade, when the annual gas shortage in South East Australia is predicted to be equivalent to 3MT of LNG, Australia will have around 53MT of LNG export capacity that currently has no export contracts.

That means a mere 5% of that uncontracted gas could be used to meet any potential “shortage”. The reason gas companies have not agreed to do so is because they hope to make greater profits selling the gas overseas.

So we don’t even have to alter contracts to create a domestic gas reserve. We have enough just sitting there waiting for an export contract.

But either way, we don’t need new gas fields to meet our domestic needs.

Shockingly, we are not on the Coalition campaign’s media list (I know – let’s all gasp together). But lucky we have the good people at AAP who have written up some of today’s announcements:

A $13 billion airport line at the centre of a major infrastructure federal coalition election offering could sound the death knell for a suburban rail loop, if the opposition wins government.

Opposition Leader Peter Dutton has pledged to pump an additional $1.5 billion into Melbourne’s airport rail to shorten travel from the city to half an hour and reduce congestion on the arterial Tullamarine Freeway.

The additional $1.5 billion – which would take the Commonwealth share to $6.5 billion, or half of the estimated cost – would be matched by a future Victorian coalition government, Mr Dutton said. The next state election isn’t until November 2026.

The catch is the money will come from the axing of federal Labor’s $2.2 billion commitment to the suburban rail loop, if the coalition wins the May 3 national election.

That would all but put the final nail in the coffin of the contentious project, as the debt-laden state struggles to find funding.

The contentious suburban loop is a major 90km orbital rail project running from Melbourne’s southeast to the outer west via the Tullamarine airport, with the first stage set to open in 2035.

The airport link is a separate project that would be connected to the massive loop in decades to come.

Premier Jacinta Allen hasn’t been able to explain how the state would make up the funding shortfall if a federal Liberal government axed the funding but vowed to continue with the loop regardless of which party took power.

Victoria hoped the federal government would cover a third of the more than $30 billion price tag for the first phase but it has been reticent to do so beyond the $2.2 billion it has already committed.

The independent Infrastructure Australia has called for an “exit strategy” in case it cannot be delivered as costs blow out.

The RBA is meeting today, and it is the first meeting of the new regime, but most economists expect the central bank to hold the cash rate at 4.1%

After the last meeting in February and the decision to cut rates, attention immediately turned to this meeting given that it was going to be held during an election campaign. The bank doesn’t like to make changes in election campaigns, given it fears it would be seen as ‘political’ but actually, the data shows that historically, the bank usually cuts twice in a row. So not doing so now, given further falls in both trend and underlying inflation, is also ‘political’ – because it’s making considerations to not be political. Which is just as political.

But I’m just screaming into the abyss with that train of thought.

The research ship that might be a spy ship, that begins as ‘research vessel’ in media questions but quickly becomes ‘spy ship’ as the hysteria increases is still making its merry way around Australia.

Mark Butler was asked about that on Nine’s breakfast show today and whether it was the ADF who was monitoring it as the PM said, or Border Force or both and says:

Our agencies obviously work very closely together. Australians will want to be assured that when there’s a ship circumnavigating Australia, that our agencies are monitoring it. Obviously, we’d prefer that ships from other countries didn’t circumnavigate our country, just as China would prefer that we don’t travel through the South China Sea and the Taiwan Strait, but we do, because we’re a country that supports freedom of navigation.

The host jumps in to say that ‘that’s a bit different to circumnavigating OUR ENTIRE NATION and Butler says:

Countries do this right across the world in all of the oceans. And the critical thing Australian viewers will want to know is that our agencies are watching this boat very closely, and we are. We know exactly where it is, we know where it’s heading, we know the speed at which it’s travelling. Obviously, you don’t want ministers going into operational details on TV about exactly what we’re doing, but your viewers can be very confident that our excellent agencies, our security agencies, are monitoring this boat very closely.

BUT ARE THE UNDERWATER CABLES OK?!

Butler:

Obviously, ministers aren’t going to go into the details of exactly what our agencies are doing. They don’t report to the Health Minister, you won’t be surprised to hear either.  These are details that we don’t broadcast over the TV. Your viewers know we’ve got excellent security agencies, and they’re doing their job in monitoring a boat that is circumnavigating our country.

(That’s code for, I am not part of the inner workings, but protecting the underwater communication cables is one of the priorities and if the shit had hit the fan, I would have heard, so things are OK)

On the need for additional health care workers, Mark Butler says:

We added 17,000 new doctors to the system in the last two years. The biggest number in over a decade. But we need more. This year we’re training more junior doctors to become GPs than we have ever done in Australia. But we need more. So we’re making it easier to recruit doctors from GPs in particular, from jurisdictions we’re very confident in, UK, Ireland, New Zealand, where we know their training regimes are pretty much exactly the same as ours. We need more doctors. It’s not just affordability, as important as it is, we need a better supply of doctors and nurses and midwives and so many other allied health professionals.