Water:the new wealth

Wealth cannot be measured on just on the traditional measures, like property, bank accounts and cash any more.

Dire predictions, associated with drought and climate change are making it absolutely clear that water – and access to it – will become increasingly important sources of wealth in Australia in future.

The CSIRO, for example, is predicting that there could be up to 41 per cent less water, in Australia’s main river system, the Murray Darling, by 2030.

And water levels, in that system, on which so much of Australia’s agriculture depends, are already disastrously low.

If the worst case scenario, in the CSIRO report is realised, flows to the Lower Lakes, at the mouth of the Murray, would fall by almost 70 per cent, by 2030.

The Prime Minister, Kevin Rudd, warned of these risks yesterday when he visited the Hume Dam, near Albury, with his minister for Climate Change and Water, Penny Wong.

He said water on the catchment side of the dam was at its lowest level, since the dam was built in the 1920s.

“…inflows into the Murray today are at one sixth of their long term average,” Rudd said.

He noted, too, that the water level in the dam itself is just 19 per cent of  capacity.

“We have some real problems on our hands,” Rudd said.

He said the government is tackling these problems  in several ways.

One was buying back water rights.

Rudd said the government had already started to do that.

The government wanted to see farmers doing more with less water, he said.

Rudd reminded those present, also, that the government is planning to spend $3.7 billion to upgrade irrigation systems, so that less water is wasted.

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Why Ross Garnaut has great faith in you

Worried about the necessary adjustments to climate change?

You shouldn’t be. The Federal government’s adviser on these matters, Ross Garnaut, has great faith in you.

“Experience shows that once economic agents have accepted the inevitability of change, they will alter their behaviour to account for the new conditions more efficiently and effectively than previously predicted,” Professor Garnaut says, in his interim report on the challenges Australia faces with climate change.

Take a bow. That’s you he is talking about, when he uses those odd words, “economic agents.”

You already know, don’t you, that the recalcitrants are wrong?

And that the perceived necessity to adjust to climate change is based on good science?

And that’s not all of the encouragement Professor Garnaut has to offer.

“The experience suggests that economic models are likely to underestimate the benefits or overestimate the costs of economic reform,” he says.

Professor Garnaut, of course, is talking here about the economic reforms necessitated by climate change.

His message here is that you, personally, have a part to play in all this.

This is a democracy. So get out and encourage your local politician to support those necessary changes.

He, or she, may need quite a lot of encouragement in that direction, right now.
There will, of course, be the usual benefits for the early adopters.

“Consumers who are willing and able to replace higher emission products with lower emission products will adjust relatively painlessly,” Professor Garnaut says.

That will be true, also, for producers.

“Firms with less dependence on emissions intensive processes, or which have the ability to switch production processes quickly in order to minimise their exposure to carbon price, may find that their market share and profitability increase,” he adds.

As always, good research will usually be very worthwhile.

The next thing to watch for, is the outline of Australia’s likely emissions trading scheme.

That is due to be released this week.

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Climate change:will your beach be all washed up?

How will climate change affect your favourite beach and your lifestyle?

People living on the New South Wales Central coast will be able to discuss issues like that, with senior Federal politicians later this week.

That will happen when the House of Represenatives Committee on Climate Change, Water, Environment and the Arts visit Lake Macquarie on Thursday.

This hearing is destined to be among the first of many, on the microeconomic and local aspects of issues raised in the Federal government’s Garnaut report.

Similar meetings will be held, over the coming year, in most parts of Australia.

Professor Garnaut, himself, explained his report to a public meeting in Perth yesterday, the first of several such meetings to be held nationally.

The parliamentary committee’s chair, Jennie George, said important issues would be raised at the Lake Macquarie meeting.

“Climate change, particularly projected sea level rise, has serious implications for coastal areas,” Ms George said.

“Much of Australia’s population and infrastructure is in the coastal zone.,

“The growth in population along the coast is also increasing pressure on the environment in many areas,” she said.

The Garnaut report, on the implications of climate change, also encouraged local communities to think seriously about what they can do, to meet its challenges.

“Many people will have thoughtful contributions to make,” Ms George said.

“And this open public forum will allow them to have their say,” she added.

The central message of the Garnaut report is also compelling.

All Australians have a part to play in managing climate change.

So you will need to be prepared, when your call comes.

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Emmission trading:the politics

Australia needs a robust emmissions trading scheme, if it is to avoid the worst results of climate change.

So what are its chances of actually getting one?

It is, of course, too early to say, just yet.

But it would certainly take great political courage.

Especially as petrol prices would start rising in 2010.

That, of course, is the year in which Kevin Rudd and his government will have to face voters, in the next scheduled Federal elections.

One thing we can be sure about, before then, is that the prime minister won’t be entertaining himself, with videos of the old television program, Yes Minister.

He certainly won’t want to hear Sir Humphrey telling the world, once more, that “a courageous decision” in politics, is one that will cost you the next election.

Equally, though, it is nonsense to declare, as some analysts have, that the Federal government is now facing tougher decisions, than any other government before it.

What about those two World Wars, last Century?

Unarguably, though, the decisions the government now faces will be tough enough.

Even the government’s own climate change adviser, Professor Ross Garnaut, says strong public education programs will be needed.

Media proprietors, throughout Australia, will be delighted to hear that.

The “rivers of gold” – as Kerry Packer once called advertising revenue – will soon run again, even if the Murray Darling system stays dry.

There will be big obstacles, though.

The opposition is playing its cards close to its chest.

However most analysts would be surprised if Brendan Nelson does come out strongly in support of a robust emmissions trading scheme.

His pledge of a 5 cents a litre cut in petrol excise is not an encouraging sign, for those who want serious action.

The government has its own problems, too.

Its main man, Kevin Rudd, is no orator.

He has not yet presented the climate change message with the necessary clarity, brevity and force.

And he doesn’t have a lot of time.

The bureaucrat within him is  still in the ascendant.

That won’t be good enough, as the going gets tough.

And it certainly will.

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Would an extra $52 a week help?

Kevin Rudd and Wayne Swan have a message for you.

They would like to remind you that the average Australian family will be $52 a week better off from today.

That will flow from measures the government announced in its May budget.

Mr Rudd said the package will include help with the costs Australia’s parents face educating their children.

So the Treasurer is urging you to keep your receipts,  to validate these expenses.

Up to $750, that is, for primary school students and $1,500 for secondary students.

Produce those receipts at tax time, and you will get a 50 per cent deduction on those expenses.

Nice.

But that’s not all.

The child care rebate also rises from 30 to 50 per cent from today.

That will take it to a ceiling of $7,500.

All that,  and tax cuts as well.

Naturally, the government has its own reasons for reminding you of all this.

It took a belting in the Gippsland by-election last weekend, as angry voters let it know what they thought of rising petrol prices and interest rates.

And the opposition can’t wait for the next by-election, which is likely to be in the safe Liberal seat of Mayo, held by the former foreign minister, Alexander Downer.

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Only the brave need apply

Share trading will be just for the brave this week.

The lead from Wall Street could hardly be worse.

The Dow Jones industrial index continued to fall Friday, US time, after its plunge on Thursday.

It finished the week no less than 4.2 per cent down.

That happened as oil prices continued to test new highs.

The Australian market performed relatively well, on Friday, Australian time.

It fell, but not by as much as Wall Street had, the night before.

Oil futures have been trading at levels close to $US143 a barrel.

But while the US economy is dangerously close to recession, Australia is looking at a commodities boom.

However Australia still has its problems.

Business and consumer confidence are both down.

Inflation and interest rates are high.

And no-one expects either to ease, anytime soon.

Company profits have been slashed.

And investors know that the local company collapses, that have already occurred, won’t be the last.

Petrol prices, too, are creating havoc.

There is, as always, money to be made at this time.

But faint hearts will fail.

Climate change:the realities

Australia will start to get an idea of where it is going on climate change, later this week.

That will happen when Professor Ross Garnaut’s draft report on the nation’s options is published.

It will be published on Friday.

Professor Garnaut’s final report won’t be released until September.

Garnaut is making no secret of the fact that climate change science is still far from mature.

But he is  also saying that the costs of waiting until it is will, almost certainly, be higher than those of starting to act now.

He compares the state of public knowledge now with that which existed, when Columbus sailed west, several centuries ago, searching for China.

Garnaut admitted, too, that even the best climate change scientists we have now differ, even with each other, on important points.

He concedes, too, that Galileo’s case shows that one person can be right, when many others are wrong.

But he says uncertainty is no excuse for inaction.

And Garnaut warns that, in current circumstances, the “business as usual” option must be rated as “high risk.”

“This has no close precedent,” he said.

The professor’s draft report, though, is expected to provide the first real guide to the approach to climate change, that the Rudd government is likely to take.

This will be a rough – and expensive – ride.

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Brendan Nelson buys time

The Gippsland by-election result will buy a little more time for Brendan Nelson, but probably not much more than that.

The swing of more than 6 per cent against the government was a set-back for Kevin Rudd. The Prime Minister, himself, has virtually admitted that.

And with petrol prices still testing record heights, the government still has more hurdles ahead.

Brendan Nelson’s prediction last week, that Labor might win in Gippsland, was misplaced.

Nobody, though, is likely to blame him for that, or, indeed, even to remember that prediction.

That’s politics.

Labor, though, is citing the obvious in its defence.

The electorate is in National Party heartland. It stayed that way.

Both Rudd and his Treasurer, Wayne Swan, have been saying, too, that with inflation high, the government has been taking the necessary tough measures, to prevent it getting worse. Looking out, in fact, for “the long term.”

That might be right.

But it won’t be popular.

And, as the great economist, John Maynard Keynes once said:-”In the long run, we are all dead.”

Rising petrol prices bite even harder in rural areas, than they do in Australia’s capitals.

There is little, if any, public transport in the bush.

So Brendan Nelson’s repeated argument that the Rudd government needs to “do something” about petrol prices has extra resonance there.

But all he is offering to do, himself, is to cut the Federal government’s fuel excise by 5 cents a litre.

As fuel prices have already risen by more than 30 cents a litre this year, that’s not going to make a noticeable difference to family budgets, either in the cities or in the bush.

Rudd keeps telling Labor MPs that their lead, in the polls, is not as great as some might think.

The Gippsland by-election result will emphasise that message.

But the Coalition is still a long way from winning back government.

And Nelson’s hold on the Liberal leadership is still weak.

Voters are still looking for firm, clear leadership from the conservatives.

And Nelson isn’t supplying it.

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