A Tangled Web
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Am I just part of the older generation and getting out of touch or is the world becoming a crazy place? Everything is so complicated now. We seem to have lost the ability to find simple solutions. Our current power problems illustrate the issue very well. Only 30 years ago there was State Electricity Authority in Victoria and similar authorities in other States. The Authority built the power stations we needed, using our dirty Victoria brown coal of course. It built power lines, substations and delivered power to our houses so that we could switch on the toaster for breakfast. It then sent us a bill. Then came the great international privatisation movement championed by British PM Margaret Thatcher. We sold the power stations to private enterprise and hoped they would build new ones for us. We sold the power lines and substations and hoped private enterprise would develop them too. Wholesalers buy electricity from the power stations and pay the powerline owners to run it through their wires. The wholesalers sell their electricity to a retailer who sends us a bill for using the toaster for breakfast. Can this possibly be efficient? If there is some efficiency is the customer the beneficiary?
The recent chaos suggests all the benefits are going to the power companies and we now have to have a very clever regulator to make all the participants behave in a reasonable manner. I’m sure the regulator doesn’t come cheap. I’m not philosophically opposed to privatisation. I have seen and benefitted enormously from it at times but our electricity system looks like something dreamed up by a very large committee after sitting too long into the night.
Our gas supply for the Eastern states is almost as bad. The WA government had the foresight to get it right long ago with a very simple move. In the east businesses are going to the wall because they are being charged opportunistic prices for the gas which comes out of the Australian ground. It looks like the government will have to step in there too unless we are to lose our chip shops, souvlaki bars and much bigger industries too. A small brickworks company in Stawell Victoria closed this week because it can’t afford the 4-fold hike in gas for their kilns. The price of their Australian gas is being forced up by a war on the other side of the planet and lack of foresight.
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Our complex world has developed interdependent systems spanning every industrialised country including countries which are ideologically completely opposed to western democracy. Europe allowed itself to become deeply dependent on Russian gas. What was the logic of that? Cheap yes, but what sort of price is being paid now not just in Europe but by a brickworks in Victoria?
For decades now the Australian economy has been driven by resources and commodities predominantly dependent on exports to China. Another case where an ideologically opposed nation has control of our destiny as they ably demonstrated when they decided to block Australian coal, wine and barley. Why did we let it happen? Our resources exporting has been so successful that we now manufacture very little of the products we need. When Covid struck there was a world shortage of what we all came to know as PPE (personal protective equipment). We had to scour the world as our one small manufacturer could not cope with the huge increase in demand. It would be nice to think we learn from our mistakes, but the last tender put out by our government a few months ago went to an overseas company because the local producer was too expensive. I hope they are still in business if there is another pandemic.
The pandemic highlighted a massive problem for the worlds’ car industry. Almost all the computer chips used in cars are made in China and much of China’s industry was shut down because of Covid. No ideological game playing there, they just couldn’t keep producing. World-wide cars are still in short supply with even the great innovator Tesla unable to deliver.
Despite Australia’s decision on PPE I’m optimistic that the world will look at issues other than price when considering manufactured supplies, and, a greater diversity of sources will develop. Our complex world has delivered so much benefit. We have wonderful communications both personal and for business. Covid demonstrated just how effective meetings on line can be. Instead of many hours flying, staying in hotels, and being away from normal social life, you can now have a face- to- face meeting with people interstate, in Europe and the US in the morning and be home for a family dinner the same day. Pity we can’t fix the time zones.
Our complex world has delivered a superb airline system which means when we do want to meet friends and family in person there is a network of flights available to us. It may be suffering from trying to sort out its complex systems post Covid but I’m sure it will get there.
I hope in future we can find leaders, political and industrial, who can think of and implement simple solutions. Leaders, prepared to think more broadly about the issues beyond price. The long- term bottom line might well show the benefit. I’m sure they are out there.
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