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The Forum > Article Comments > Australia now and 2030 > Comments

Australia now and 2030 : Comments

By Chris Lewis, published 31/1/2013

Australia's relative material well-being today was aided by recent reforms in line with the demands of an increasingly international economy.

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The author forgets the economic success of any nation relies on ‘cheap’ energy.

The cornucopian’s believe the so-called revolution in the shale oil and gas markets will be the saviour to our ever declining conventional oil resources globally, the one that supports and underpins our on-going economic ability to continue business as usual.

If you take the US as an example of the false euphoria, look at the reality:

Since peak oil production in 1970, the number of operating oil wells in the U.S. has stayed roughly the same while the average productivity per well has declined by 42 percent.

Since 1990, the number of operating gas wells in the U.S. has increased by 90 percent while the average productivity per well has declined by 38 percent.

Shale plays suffer from the law of diminishing returns. Wells experience severe rates of depletion, belying industry claims that wells will be in operation for 30-40 years. For example, the average depletion rate of wells in the Bakken Formation (the largest shale oil play in the US) is 69% in the first year and 94% over the first five years.

The very high decline rates of shale gas wells require continuous inputs of capital—estimated at $42 billion per year to drill more than 7,000 wells—in order to maintain production. In comparison, the value of shale gas produced in 2012 was just $32 billion.

The recent announcement of one of Australia's biggest energy find reminds me of the spin verses reality that usually follows these so-called revolutionary discoveries in the energy field.

So despite all of the rhetoric in the article, one of the key drivers of a societies wellbeing has been ignored, interesting!
Posted by Geoff of Perth, Thursday, 31 January 2013 11:02:03 AM
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If we continue increasing our population and destroying our resources and environment the way we are now Australia won`t be worth living in in 2030.
Posted by ateday, Thursday, 31 January 2013 12:07:58 PM
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Peter Lewis is guilding the lilly here.We were only saved by selling off resources and a Liberal Govt that showed some restraint on spending.

We should never have sold off the Commonwealth Bank and 4 state banks.Our Govts must now borrow the new money to equal our productivity into existence as debt.The debt will never stop growing until we address this reality.New money to equal our productivity should not be expressed as debt.Only money that already exists should have debt attached.

It is like pouring water into bucket with a big debt hole at the bottom.The more water you borrow to fill the bucket,the more debt you incur.
Posted by Arjay, Thursday, 31 January 2013 1:27:05 PM
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Hmm

Not much in this article. There’s a lot of Australia “now”, and perhaps for the next few years, but almost nothing I can see that really explores what 2030 will be like, and how we get there.

This looks wrong to me: “Australians of non-English speaking backgrounds will be the majority by 2030.”

I suspect he meant “overseas born Australians ….”
Posted by Rhian, Thursday, 31 January 2013 3:23:53 PM
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Rhian, that is a straight forward comment by George. Those Australians of non-English speaking backgrounds include himself and all others coming from a ethnic background that is non-English speaking.
Posted by Chris Lewis, Thursday, 31 January 2013 3:57:18 PM
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Though certainly well-intentioned and worthwhile, this article strikes me as a bit of a 'dog's breakfast' - many questions, observations, assertions and accusations, but, no answers.

>>Australia's relative material well-being today was aided by recent reforms ... This included significant labour market deregulation and taxation reform.<<

What? Fair Work Australia (and resultant increased wage claims), immigration and 457 visas - and limits on private health insurance rebates? Or gov't handouts, Pink Batts, carbon tax and MRRT? (Not mining productivity, bank regulation and surplus left by Coalition perhaps?)

>>it (Aus) will need to remain internationally competitive in terms of labour costs and taxation levels.<< And: >>Australia now has fewer options in regard to balancing our productive capacity and consumption.<<
So, what should we be doing about this? How about industry, R&D, and productivity development? (On back of the mining boom.) Employment is key, not promotion of welfare and handouts - or pats on the back.

>>In an era where more nations have greater opportunity to encourage economic production and attract vital investment, Australia's distribution of public resources has increasingly focused on greater efficiency and accountability.<< Really? (Halls, Pink Batts? Or submarines?)

>>But how do we promote Australian industry to employ more Australians and immigrants given the ongoing demise of more sectors that are opened up to foreign competition?<< While: >>In truth, whether the Australian economy prospers or stagnates depends very much on the fortunes of the international economy, as it always has.<<

Ah, there's the rub. Free Trade and Level Playing Field, with Aus at bottom of a steep slope. A 'smart country', higher wages, immigration, and better trains, roads, school halls and higher education are still useless without jobs. Industry and services anyone?

The author's conclusion: >>Economic policy difficulties will lead Australian political leaders to exploit non-economic issues or offer false claims or ideas that supposedly can save the world.<<

Resignation to our current reality? Or, forecast of our inevitable destiny? Sad, and so very unenlightening.

Our future tied to the rise and rise of China and the 'growth paradigm', as, unchecked, the world heads inexorably to implosion.
Posted by Saltpetre, Thursday, 31 January 2013 5:46:10 PM
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Saltpetre,

fair comments. I cant really disagree with much of what you said.

Can i see a better future? Not really. Whatever policy choice Australia makes there will be consequences. Maybe i should have elaborated on that.

Also, while i do believe that Australia did not have much of a policy alternative in recent decades, I also believe that continued adherence will increase our problems. I support freer trade, but see recent trends as now having major problems.

As far as knowing the 'right'policy mix, i expect i am not alone in not having the answers.

Hence, my piece merely is as you suggest, hardly enlightening but I dont feel bad about that.

In my next piece on Abbott's prospects, I will attempt to offer some answers within my perspective which will focus more on policy possibiltes and limitations in today's world. Again, however, i wont be delivering an overly optimistic opinion.
Posted by Chris Lewis, Thursday, 31 January 2013 8:46:04 PM
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Sorry Chris but this is a really mangled article.

Like those who have socialized science, education, medicine and infrastructure, this article demonstrates what happens when you try to do the same with economics.

Domains like economics are discrete disciplines and products of their internal processes. These internal processes respond to the inputs to produce the desired outputs.

The inputs to economics are investment, skills, people, material resources and an enabling regulatory environment. The output is national wealth through wages, taxes and return on investment.

When you try to inject social policy into the middle of this mix you socialize an otherwise sound domain. The result is socialization of the internal domain processes and you screw it.

To have any meaningful discussion about economics you need to remove the ABC, academics, journalists and social commentariat. Otherwise, as we see from the responses to your article, they go off into the realm of pet policy and ideology.

Nothing wrong with that on OLO, that’s what it’s for however, to have the “socializing elements” as the basis for your article compromises it from the start.
Posted by spindoc, Friday, 1 February 2013 9:18:52 AM
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Spindoc,

Again fair enough comments.

However, as Graham Y has tagged the article, it was not an economics argument. Nor am i an economics specialist.

Albeit that my writing may have a long way to go in terms of quality or what i am trying to achieve, i am only interested in the policy mix of nations. This includes social and enviromental.

In all my academic and opinion pieces which focus on generalist topics concerning govt, my need to express awareness about eco and social issues is evident. This includes my brief stint at Quadrant 2006-8.

As a westerner, i am very much interested in eco, social and environmental issues, as is govts of such nations which must take account of diverse considerations.

I suspect i will continue to mix up social and economics, but i dont see any other way. I am not a specialist and never will be, so I suppose such an approach makes it harder for me.

I also do believe that certain academics and certain ABC shows, like internet media sources, also offer an important role in understanding how best to improve our eco and social balance.

Nevertheless, i always need to lift my game, so constructive criticism is always appreciated.
Posted by Chris Lewis, Friday, 1 February 2013 9:46:14 AM
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OK Chris, your response appreciated.

You say you “do believe that certain academics and certain ABC shows, like internet media sources, also offer an important role in understanding how best to improve our eco and social balance”.

Questions arising,

Why? Which certain academics and ABC shows? Whose understanding? What is meant by best understanding? Why should your nominated sources offer best understanding? Who is it precisely that is going to improve things? What is meant by eco-social balance? How do you get balance from the ABC on eco topics?

Finally, aren’t these sources by their very nature just their opinions? In which case why can’t you formulate you own opinion rather than trying to imply that your sources are other than argument by authority?

That was just one paragraph and I did suggest your article was mangled. I dread to think what sort of a job you are going to do on Tony Abbott but this is not a good precursor.
Posted by spindoc, Friday, 1 February 2013 11:00:04 AM
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spindoc, no need to read my piece on Abbott if it gets published. No doubt it will dissapoint you.

As for my reliance on opinions, all scholarly or media work is an opinion, perhaps more educated at best. I wrote my piece in response to an ABC media show which expressed and discussed opinions.

Do you actually know anyone that has a mastery of 'the' facts rather than offer their opinion. If you do, i would like to meet him or her.

Even academia, which studies society, produce very different summaries of events.
Posted by Chris Lewis, Friday, 1 February 2013 11:14:16 AM
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Chris, thank you for your very courteous response. I don't think I really deserved such generosity, and was actually expecting a fairly sound rebuttal - as is the usual on OLO - so thank you for your openness and consideration.

I also share a concern for eco, environmental and social issues, and the impact, and future potential impact, of economic drivers on overall quality of life aspirations and realistic expectations. In my view this is a fine balance, and one which is poorly regarded - or almost totally disregarded - in the economic tsunami which is currently enveloping this finite and fragile world.

In this, I beg to differ with Spindoc, as I believe these diverse interests are indivisibly and inseparably connected - and I accordingly view 'pure' economics as mere mathematical construct, and as 'flawed' by failing to take appropriate account of downstream consequences, such as 'garbage', pollution and general health impacts (and possibly 'climate change'), as well as direct impacts on 'quality of life' occasioned by destruction of forests and over-exploitation of arable land, extinction of species, dispossession of 'natives', cultural disintegration, and conflict amongst and against the powerless, the disadvantaged and the dispossessed. An inordinately complex economic 'equation', I agree, but anything less is simply failing to 'insure' your 'home'.

(We note the air pollution in China, and their current and planned construction of multiple nuclear plants to meet exponentially increasing energy demand. A rocket ship, heading where?)

Small Oz. We have many 'smart' people now, and it's time 'tap' that resource to identify a 'balanced' way forward - be it more conservative welfare (less parental leave, more individual responsibility), childcare, not 'early learning' funding and exorbitant expectations (parents off your butts), more realistic wage and conditions demands, enterprise-driven service and industry development (jobs), more affordable housing, 'skills-based' immigration, and less ambitious 'higher learning' funding.

Preserve, protect and defend our national aspirations, and avoid the expansionist whirlpool consuming the sanity of so many others. (Let's not get too big for our britches, or 'soil' our 'nest'.)
Posted by Saltpetre, Friday, 1 February 2013 5:43:24 PM
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Saltpetre,

Thanks for that.

Also, there is much food for thought in your comments.

We all need to lift our game, including academics, but i do believe Aust (and other western societies) are at crossroads. Yes, balancing eco, social and env issues is the ultimate test of a sophisticated society, but demands of int economy now putting this goal under threat.

I suggested a mix bag for Aust by 2030, but this does not mean that we cannot adopt a more appropriate policy mix to meet old and new demands.
Posted by Chris Lewis, Friday, 1 February 2013 6:00:28 PM
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Dear Saltpetre,

You are perfectly entitled to disagree with me but you are not entitled to be right. If you don’t understand economics that’s fine, but you cannot legitimately deny a university subject which teaches the precise opposite to your perspective.

What I said was that economics is and always will be a set of discrete processes. To insert socialization topics into these processes rather than have them drive the desired social outcomes is exactly what I stated as the “socialization” of a domain.

You say that you “believe these diverse interests are indivisibly and inseparably connected - and I accordingly view 'pure' economics as mere mathematical construct”

Sorry but this is utter rubbish, factually incorrect and a figment of your dreamtime.
Posted by spindoc, Saturday, 2 February 2013 11:28:00 AM
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The ABC discussion that Chris referred to and Chris's expansion are all
well away from the coming reality.
Too much discussion around politics, the media and places like this are
very much taken with the business as usual syndrome.
International business will not be the problem for Australian business,
as the vast majority of business will be local.
With much more expensive energy, there will be a major reshuffle of our workplaces.
An increasing number will be "returning" to the land as farmers.
There seems to be no way we can afford to build by 2050 the totally
non fossil fueled transport, food system and industry that will enable
us to continue as we are now.
Certainly by 2030 a transition will be under way that just cannot be
repelled or bypassed.
We might alleviate it to some extent by a very large campaign of
building nuclear power stations, but aside from the mindset that now
exists we just cannot afford it.

The whole discussion seems redundant to me.
Posted by Bazz, Monday, 4 February 2013 2:22:50 PM
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