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 Dud leaders make dud and expensive decisions!

08.11.19. Although many Australians have woken up to the lack of acumen held by our elected elites as they lurch from one great scheme to the next all the while knowing that it’s the latest brain-fart that supersedes the previous blunder, they still vote for them. This blundering is especially so in the energy scams like Tim Flannery’s thermal energy venture in which many lost all their money, and those wave generators—both are now rusted relics of failure, produced by incompetence. What does it matter to an indexed pension for life—why would they care? Maurice Newman has his finger on the pulse of such problems.
When will Australians understand that most often it’s not market failure or timidity in the private sector that drives governments to accept unknown returns from risky “nation-building” projects but a popular, patronising perception that voters are beguiled by ministerial grandstanding? That political advantage lies in the announcement of projects, not in their delivery? 

Source: Maurice Newman for News Corp

NBN, Snowy 2.0 — late and over budget, as always

Just as well. As Malcolm Turnbull once explained: “The history of mega projects is such that, no matter how sophisticated the technology or how great our advances in accounting practices, we have essentially not gotten any better at avoiding serious cost overruns.”
What the former prime minister really meant to say was: “We learn nothing from our mistakes. So let’s be philosophical. Once the project is under way, someone else can worry about the inevitable cost overruns.”
What better example than the National Broadband Network, which was touted to cost no more than $26bn? Taxpayers are looking at double that. But, then, this folly was conceived on the back of a coaster, with no cost-benefit study. Indeed, the responsible minister at the time, Stephen Conroy, said a cost-benefit analysis would be a “waste of time”.
Rather than killing this white elephant, the incoming communications minister — Turnbull — compounded the folly by connecting the fibre to copper wire.
Now, before the rollout is complete, technology is available that requires no trenches and is five times faster than NBN’s maximum. It leaves Australia with a costly state monopoly, providing an obsolete service ranked 62nd globally for internet speed.
When looking for white elephants, desalination plants come to mind. Panicked by global warming propagandists, Victoria’s facility, originally estimated at $5.1bn, may end up costing about $24bn. It’s much the same for the other states where taxpayers and consumers have paid billions of dollars for plants not to deliver unwanted water.
Finally, after a decade and with dam levels falling, the Sydney plant has started in earnest. Consumers, already paying $90 annually for no water, will have to find another $30 a year for the 15 per cent of their needs the plant will supply. Dams may not be as politically exciting as desalination plants but they are cheaper and more energy efficient.
Australia’s latest mega-project is Turnbull’s Snowy Hydro 2.0 pumped storage scheme. Announced in 2017, Turnbull claimed it would be an “electricity game changer”. He said “it will increase the generation of the Snowy Hydro scheme by 50 per cent, adding 2000 megawatts of renewable energy to the National Electricity Market”. The only reference to cost was a preliminary estimate of $2bn.
The project was scheduled for completion in 2021. True to his word about cost overruns, two years after the initial announcement contracts have been let for $5.1bn. Excluded are project management expenses, which can add another 20 per cent. Exceedingly long tunnelling and complex engineering make further blowouts almost certain. Completion is now expected in 2027.
New transmission lines critical to the project also are missing from the estimates, as is the significant premium inherent in the $6bn purchase price paid to NSW and Victoria for their Snowy interests. Perhaps that premium hides a silent agreement requiring the states to meet the project’s “grid augmentation” costs? But, whoever pays for the transmission lines, they are still a cost of the project. When all is finally accounted for, it would not surprise if the total cost exceeds $10bn, five times the original figure.
A comprehensive report prepared by the National Parks Association of NSW is highly critical of the Snowy plan. No wonder.
Notwithstanding the project is wholly within a national park, construction began before an environmental-impact statement had been exhibited. Indeed, Snowy 2.0 will encompass a third of Kosciuszko National Park and will wreak significant environmental damage. Yet the only compensation the park operators will receive is a derisory lease fee of $1.6m a year.
The concept of pumping water uphill using cheaper off-peak electricity, then generating hydro-electric power during peak hours when energy prices are more expensive, makes sense. The storage operator profits by maximising the difference between the two prices. However, it’s an expensive process, consuming more energy than it produces. Experts estimate Snowy 2.0 will consume/lose about 30 per cent of the electricity generated.
Its potential capacity is 11 per cent greater than the existing Tumut 3 pumped storage facility which, between 2009 and last year, operated on average only 12 days a year. If one or both facilities run close to capacity they risk cannibalising each other, not to mention other renewable projects.
Predictably, Turnbull’s announcement was long on vision and short on detail. He laid out his ideological ambition to achieve a 100 per cent renewable energy grid forgetting that, for the first decade at least, Snowy 2.0 will depend mostly on fossil fuel generators for off-peak pumping.
Stripped of the hype, Turnbull’s plan appears to be just another costly political thought bubble. What business case there is, despite “great advances in accounting practices”, is unconvincing. For instance, we don’t know whether long-term contracts exist to lock in revenue. Obviously, without such contracts, increased use of hydro capacity will almost certainly narrow the critical operational spread between wholesale peak and off-peak prices.
Moreover, the viability of both is contingent on dependable supplies of water.
Based on the history of Tumut 3 and in the absence of enforceable long-term power contracts, the likelihood of one or both hydro schemes breaking even seems highly improbable. Taxpayers or consumers will fund the difference.
So, once again, we inherit a “trust me” project knowing, however dubious the economic credentials, political vanity will ensure its survival.
And we wonder why living standards are falling and jobs are leaving for overseas?

{ 7 comments… add one }
  • DT 08/11/2019, 6:43 am

    Lack of water supplies.

    Nothing has been mentioned for months now that the Snowy Hydro water supply dam is low and after shutting down the Hazlewood Power Station (brown coal) in Victoria that supplied about 25 per cent of electricity to the state grid the Snowy Hydro generating capacity also reduced considerably.

  • Penguinite 08/11/2019, 7:32 am

    Yep! Fool me once,” shame on you. Fool me twice shame on me”. Why we keep falling for the same old BS from these over paid morons is a real conundrum! The country is, basically, divided into two camps so the “Morons” only need to win-over a minority to win. Usually this sleight of hand is performed with $$$. Of course when a Moron doubles down on stupidity, a la Labor/Shorten, the other side merely needs to highlight the flaws. We still get conned though, when a Moron successfully obscures their true path. Tony Abbott is the closest we’ve come to an honest bloke but he stuffed it up by inanely Knighting Phil the Greek!

    • DT 08/11/2019, 7:46 am

      Relentless negativity!

      As outlined @ stopturnbull.

      Another media beat up on a subject PM Abbott was not in a position to comment on at the time. Being that the government he led received a request from Buckingham Palace for Prince Philip to be nominated for a Knighthood which only the Queen can award.

      The nomination was based on his service to the Commonwealth of Nations since the 1950s and including the Duke of Edinburgh Awards, just one of many examples of his involvement.

  • lorraine 08/11/2019, 7:36 am

    old fashioned trust in politicians to do the best for the Country has been lost.We have had bastards for some time giving mates rates and more likely is they are into favours for self.

    • Botswana O'Hooligan 08/11/2019, 10:39 am

      Yr right of course but think what would ensue if we had President turnbull? I can never force my self to use upper case when spelling his name unless BASTARD is included.

  • ibbit 08/11/2019, 9:34 am

    Politicians grandstanding and not delivering is a spot on observation. They grandstand for votes and are not sensible enough to know that non-delivery of the grandiose plan means a hefty loss of votes.
    The politician (LNP) of course, who represents my electorate did not even understand what I meant when I tackled him about Tim Flannery and the thermal projects loss of money. Couldn’t care less – had the temerity to rebuke me for wasting his time.
    And what of the latest drought plan? Heard a farmer on radio say this morning that he had been trying for eight months to access a loan from a(previous) loan scheme without success – each form knocked back with the latest request being a copy of his wedding certificate. What a cheek, invasion of privacy and how dumb, anyway. The B bureaucrat has probably no knowledge of Births, Deaths and Marriage registers.
    MM Ed is right – we know how incompetent politicians and government are, but we still vote for them. Well, we shouldn’t. If the great majority of voters did not vote at an election, that might wake the mongrels up and start them questioning why that might be.

    • nev 09/11/2019, 1:02 pm

      If enough of us didn’t vote they would be worried Sh%*less, about what we were thinking about and what our next step would be!

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