High immigration masks Australian economic decline

Source: High immigration masks Australian economic decline

 

I read this today prior to you posting

 

And all the time the national debt pile grows and budget black hole is ignored. ROFL.

 

Lol this country is heading up a massive disaster the way it's going. Better off buying a gold mine which is like the price of a terrace in Mosman way things are going.

 

Malcolm T turned out to be a dud unfortunately

 

Exactly. Being PM is another notch in his belt.

 

Rather than focusing on 'budget repair' and driving the economy further into the ground with austerity measures now might be a good time for a major infrastructure program. State Governments are fiscally constrained, but the Federal Government has no such barrier.

It would be easy to roll out programs like underground power lines, high speed rail (built with Australian resources), and renewable energy projects. In South Australia they should turn the soon to be ex-Holden factory into a medicinal cannibas factory, but instead everybody sits on their hands and make up reasons as to why it's too hard. Of course it's much easier just letting the flood gates open and accepting economic growth via migration as the more people in the economy the more people spend. However, that doesn't do much to improve the economy for existing citizens.

 

Problem is some of that is just pork barrelling.

Where's the Cost-Benefit of paying $Billions on Undergrounding Powerlines. Would way rather see this go to something that increases productivity.

Why install more renewables in SA vs installing them in markets where the load is going to be used.

 

Too wealthy and too removed from normal people, so he wants for nothing.

 

The dream of PC investors internet-wide

 

Waiting for cross river rail in Brisbane but i think that's politics not money. Turnbull doesn't want to give the labor govt money in an election year so they get the announcement.

 

Same story in SA.

 

Like them all politicians.
What did you expect?

 

I don't doubt that there may be political motivations, but access to money is definitely a prime motivator in not giving funding.

National government debt is increasing at around $40bn a year. Total debt is surpassing $500bn and the government is about to remove their own self-imposed ceiling and loose their AAA credit rating. Meanwhile QLD state debt is around $36bn and rising, WA is $30bn and rising. SA has a minor surplus ($300m) but one extra major project unaccounted for could throw their position to deficit.

Proportionate to revenue, the government is spending huge on transport right now, which outside of health and education is about all that falls under their remit in our privatised economy. Powerlines, energy, manufacturing, medical supplies, and so much more are all managed by private industry in Australia. The government's role is in optimising policy to ensure private industry can act. It is not cost competitive or in the best interest of promoting industry for the government to spend money on any of these things.

My career has spanned between renewable energy engineering (designing/managing wind farms) and management consulting so this is a topic i love to jump on. This happens because it is a private investor's decision and the government does not put a dime towards it.

The reason they invest in SA is primarily two-fold. (1) SA has one of the world's best wind resources, so cost/MWh it makes the most sense. The recent Hornsdale wind farm achieved a cost/MWh of $73, far below the $89/MWh for ACT's latest effort. Funnily enough, Hornsdale's energy is purchased by ACT government on a long term supply contract. (2) the SA government made it easier to build there in order to spur investment and industry. They milked it to the point of saturation, exactly like they are now doing with the new-build FHOG in a saturated housing market. As a result, millions of $$ in operator wages and royalties now flow in to SA each year.

SA is part of the world's biggest energy grid (the NEM) that stretches from SA up to Queensland and over to Tassie. When they make too much power, it goes across to VIC and likewise VIC send power to SA. Most of the problems in SA are related to grid constraints which (surprise..) was privatised. In a monopolistic privatisation, better policy around its execution would have helped develop a more robust grid. If you blame the government for anything, make it policy decisions, not spending decisions.

Benefit is reduced cost of pole maintenance, line maintenance, asset inspections, and tree pruning, reduced failures from storm outages, and improved public safety. This increases productivity primarily by freeing up spending capacity.

 

Which works well for the owner/operator and the market when there is no constraints. But who ends up getting charged to upgrade or build new interconnectors?

But at what cost of capital? Is it worth paying 3 times the network charges for? or stumping up massive upfront charges. Far more worthwhile places to put that capital to work.

People can and do underground assets now, but there is a reason we don't see it on a large scale. When people are forced to pay for it, the value suddenly isn't there.

 

if new lines are needed when building a wind farm, it is factored in to the cost. Its like building a house - the person building pays for the connection to the grid. Part of Hornsdale's budgeted $73/MWh is a grid connection fee.

Regarding interconnectors, that is part of a growing grid and energy security. In 2007 a coal fired station tripped causing a market pricing spike where $568m of power was traded in 24 hours. This is about equal to 6-8 weeks' market activity, and remains the biggest trading interval in Australian history. Power companies factor such events in to your retail price, so you're already paying for grid redundancy.

Cost of capital: ~$3,000-4,000 per house to convert from overhead (with studies finding it increases a house's value by $10,000). At a guess this is probably not far from the hourly rate of mobilising an overhead line maintenance crew. Most state governments seem to put around $4m/year towards underground programs, so I can't say that you'll be getting much infrastructure by redirecting funds, and given that the cost to maintain underground is lower than overhead, I'm genuinely interested to know where a figure of 3x network costs comes from.

We do see it on large scale, as literally every new housing development is mandated to have them. We don't see it on transmission lines because sinking a 500kV line is very different to sinking a 240V line. For starters, 500kV lines typically are not in residential areas so do not pose such an impact, but they are in far less quantity by installed km and as they carry such massive amounts of power, the maintenance costs are amortised across magnitudes more kWh or carrying capacity.

Info here:
Underground Power Cables: Costs and Benefits – Parliament of Australia

 

Generally only pay for alterations/connections at the local point of supply.

Except when the benefit actually becomes to export more generation.

Then from an end user point of view it is important. As they are also paying higher network charges to access that intermittent generation. Need to compare that to the benefit of developing and embedding the generation in NSW, etc. where the load & interconnection already exists.

Need to get away from pushing up the cost of electricity by multiples of CPI every year. We have solar/battery technology getting cheaper & the grid getting more expensive, that can only end one way.

I thought we were talking about the wholesale undergrounding of brownfields area's as some sort of government infrastructure/stimulus program.

Greenfield cost's are already imposed on the homeowner.

No way would $3000-$4000 in brownfields area's cover network cost.
If there was any truth to a cost per house of $3000-$4000 & a capital appreciation of $10,000 we would be seeing a lot more action.

The 3x network costs comes from removing all overhead assets (LV, HV, Transmission, Pole Transformers, etc) & burying below or at ground level.

Definitely not an engineer or anyone else with any industry experience. Most of the submission focuses on the visual aspects.

Also keep in mind that submission is 20 years old and so are any prices he is quoting 2nd hand.

 

Even if its exported, they pay line rental. Line rental is typically paid by quantity that flows down it.

The benefit is that jobs are in SA, and community funding grants feed SA towns. If it were in NSW, the state wouldn't get that. That's why SA government pushed for so much of it.

My colleagues have performed very detailed studies that have been presented at national conferences on connecting generation in different states. Until it is commercially superior, you cannot expect any right minded company to invest otherwise. Thats like me telling you to buy a house in Kalgoorlie simply because Sydney is too busy.

Battery is still $400/MWh+. Add up how many MWh flow around the NEM and you'll quickly see why we don't have more of it. Saturation of solar poses higher level of peaking risk as the sun only shines so many hours a day.

We were talking brownfield, greenfield was quoted in the same article at half that. State governments contribute a small part as they see the benefits. Local governments, residents, and distribution companies cover the rest. Government contribution is in the single-millions/year. Considering jobs created and positive social aspects, they're getting a good deal.

Argue with ANU researchers:

"It's hard to tally up the annual savings in maintenance, tree lopping, transmission losses and possum lives. But one study from ANU found that underground power cables could increase a home's value by up to 3 per cent. On an average Sydney house, that's likely to be upwards of $20,000, suggesting the investment is a good one."
While you're down there: a chance to bury the power lines

Or the NSW government:
"the State Valuer General has suggested that putting cables underground may improve property values by up to 5% in some areas."
https://www.ipart.nsw.gov.au/files/...7b-9f2601809811/Pittwater_Council_-_S4894.pdf

And people do actually see value enough to contribute personally. From City of Vincent in WA:
"The majority of the property owners (82.9 per cent) supported the installation of underground power, and 77.6 per cent of the respondents indicated that they were prepared to contribute to the costs to have the power lines placed underground."
https://www.erawa.com.au/cproot/863...erground Power Program Cost Benefit Study.pdf

Or this incredibly detailed study also by the Economic Regulation Authority of WA which even goes as far as to put a dollar value on the benefits of underground cables (to 2011 the program returned a positive NPV of $480m)
https://www.erawa.com.au/cproot/969...erground Power Program Cost Benefit Study.pdf

Show me a source. As an engineer I simply cannot believe this. Installation cost may be higher (still, 3 times??) but savings on maintenance far outweight that. Until I see a legitimate source, this just sounds like total hyperbole designed to challenge a minor government spend.

See articles above. I'm sure some engineers were involved along the way.

 

Didnt I read that Australia's debt limit is about half what it could be without so much as a second look in?

That said, 40bn a month is ridiculous - and probably masked by falling bond yields in this low environment.

Its a bit of a bite out of theconvenience of it all when inflationary measures return, it'll be "currency wars", "trumps fault", and the pollies can just sweep it under the carpet by blaming the faceless international bond market, the aussie public will buy it up because Kochie doesnt understand it.

 

I could be wrong, but I think there is a strong business case for CRR. I.e. its worth the expenditure. I participated in a focus group (probably commissioned by the State Govt) on the matter and it looks like it will be very useful. Creating transport oriented hubs around the new stations, making commuting easier. Opening up the city better for tourists to whiz around. It seems like a real no brainer to me for investment.