Brought down on the side of ‘creative’ people – Caveat Emptor – the budget

The Government has not yet explained some Budget proposals in detail. Caveat Emptor: a principle in commerce: without a warranty the buyer takes the risk. The excitement is the budget will allow small business to get a tax advantage for spending, and being creative. The carrot is to encourage you to be a start-up. The beware warning is because; generally the announcements made, as part of the Budget will have to pass as legislation before they take effect. Therefore, Budget proposals should not be taken as fact yet, even if a starting date is proposed.

It is right to get excited, it is a policy turnaround with promise. A promise you will be rewarded for being creative. Now comes another issue: While it helps start-up, being creative just does not cut it at all when it comes to describing what you do (why you are a desirable product). You see a well thought out plan is more than a document; it is the display of your method to success.

As a small business owner you realize the measure of your worth is how you can innovate and compete. There is even a separate government program designed for that purpose. The necessary step is you must have a plan that is focused on an idea and method. If you think about this you realize a politician emphasizing ‘creative’ might be silly. Our PM has repeated wailed the word on the media as describing the primary need for being successful and rewarded by the budget.

What is wrong with the word ‘creative’ you ask? The word ‘creative’ may mean “deceptive in presenting financial information”. The dictionary tells us so, and it seems a poor choice of word to be used in the Budget meant to build confidence.

Maybe the Treasurer is doing a better job of showing an understanding of language – of the budgets intended purpose, and I quote: “If small business people are investing in innovation and job creation, we should be celebrating. That’s fantastic and that’s how you grow an economy.” Then we take notice the PM was reluctant to use the word ‘innovation’ in his address; he preferred to embellish ‘creative’.

Continuing with the Treasurer’s words: “We focused on continuing with our economic plan which is built on last year’s budget, is built on a number of decisions we have made since we came to government.

We are continuing with that economic plan”.

The above comments while confusing are at least reflective of a change to the mindset, or at least, a thought – Start-ups will save us?

Where did that idea come from? A recent start-up economy study undertaken by PwC and commissioned by Google Australia forecasts high-growth technology companies could contribute four per cent of gross domestic product (or $109 billion) and add 540,000 jobs by 2033 from a base of about 0.2 per cent of GDP today.

However, they also warn of market failure and the reason why it is likely.

Then comes the worrying bit of all this enthusiasm. According to a World Economic Forum report, “Australia’s start-up ecosystem is already lagging behind those of many other developed nations due to a lack of emphasis on entrepreneurship education, limited engagement with universities and poor cultural support for entrepreneurs.”

Back to more worry: Treasury makes no forecasts beyond 2016-17. After that, it only makes a technical assumption that all will be well over the following five years. In other words the assumption we will able to achieve nirvana. To this point we read one media report even said :It’s what Happy Joe’s Fairy Godmother might deliver for him, if he had one. It’s not what you would want to base our economic policy settings on.”

To recap earlier in the blog. The risk of being creative is the creator may be seen as deceptive in presenting financial information. The risk of presenting innovation is that might be seen as coincident and opposed to the purpose for the statement.  The case for the cost benefit for the policy would have to ask and answer: Is this idea creative or innovative. It cannot be both otherwise you might be opening for a consensus. Consensus has a habit of finding a rule against the ideals. If you have had policy training, you might be saying – bloody ‘creative’ budget got me going. If we play semantics with the wording, and the PM can spin this morning as encouraging ‘creative’ small – to mean what he did not intend? Did he intend to omit to say innovative small business to be encourage, the day after the budget?

We tested that thought, and to paraphrase some of the responses:

  • We need local employment opportunity to go along with the incentive, something we often see social planners forget about.
  • We to be producers too, not just service providers.
  • We see a different economic reason altogether, the incentive increases our reliance on imports. We have had our manufacturing sector stripped of its ability to compete.
  • Startups are not just IT companies. Real innovators make things, not just create.
  • They don’t get the supply demand balance!
  • Does anyone have a spare $200million laying around, we have a outstanding start-up ready to go. But we have no government support! That got our attention. It is real and the problem policy does not want to know.

Think again if you think they got. Than listen to this game of semantics, on ABC TV: Interviewer Leigh Sales (LS) and Interviewee Joe Hockey (JH) –

LS – The Government’s spending as a percentage of GDP is 25.9 per cent. That is the same as the previous Labor Government (was) spending at the height of the global financial crisis.

JH – Not true. They got to 26 per cent.

LS – You’re at 25.9 per cent?

Another commentator of the semantics, said:

Maybe Australians are thought they don’t know when their legs are being pulled!

Now the dust has started to settle on the hype of the budget. There is a realisation that the accelerated depreciation schedule that was announced for those nice to have tools of trade (sometimes called big boys toys) is not gifts. The scheme is designed to offset your tax liability when you earn enough money to pay for them. The issue them is one of equity. A positive of this is that the plumber or electrician is now fully aware that a market is supply and demand. Albeit the new measure makes them aware they do need to make enough money to pay for the toys. The story continues as we received a plumbing quote a week before the accelerated depreciation for small business was announced – it was $1,700. A few days after the announcement – it was changed to $2,400. Why, the reply to pay for items I need to buy? Why, do you need to buy them? Because I realised I had to earn more money to have a liability to pay tax and that tax is what I can claim from what I buy? And, we were to be a willing to pay for that purpose? Yes. We did not find that equitable – so we put off our purchase.

So the problem is ‘start-up’ are not stand-ups or creative types on how to make money. A genuine start-up is backed by a method that will create money and not just redirect money from old to new etc. We think – nay – still confused!

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Yield expectation – NSW Poles and Wires – for sale.

Ok, the NSW poles and wires lease sale is now into the detail phase. Well actually that detail is reported to be already decided. What are not known are what will be said to the public, and that should be not too far away from being known. In fact the Premier has not wasted any time in encouraging ‘mums and dads’ investors to take out shares. As with all investments the price must be attractive to encourage you to buy. But there is another side of the coin. The institutional buyer must know the price to the user is higher enough to guarantee a return before they buy into the infrastructure. How is that done?

In the case of the energy utilities: It is the federal body, the Australian Energy Regulator (AER). It happens that the AER, and very shortly after the NSW Election where the mandate has been won to sell off the 99 year lease of the ‘Poles and Wires’ to highest bidder, will be setting the price for the future with an interim decision by April 2015 or very near to that date. That decision would determine network prices for the next five years.

So if you think about that you can see that the NSW Premier is technically right – no price movements will be because of the ‘sale’. You might also see why the oversea of the ‘sale’, the former ACCC chair, can say prices will not be greater than the regulator (AER as it turns out) determines. You could find it argued you will pay more, but it is not the sale process that increased the prices. That may be a slight of hand from the politics, but it is still a fact.

Then to put a balance on what an investment might be expected to return, we have a story – Is the search for yield becoming unsustainable?

By business reporter Stephen Letts, 30 March 2015. “The rotation out of investing in high-yield dividend companies into ‘growth’-focused enterprises is gaining momentum. The past month has been particularly striking. One of the key engines of the yield story – the utilities sector – has gone into reverse, falling on average 1.5 per cent this month after a solid 12 months of outperformance.

At the same time, investors exiting the yield play are piling into information technology and industrial stocks hoping for more exciting returns.”

Co2land org now considers: Is the NSW Government too late in getting the float of the poles and wires to market. We use the story above again to quote: “Manufactured yield is not sustainable.” Also quoted is: “Goldman Sachs says the low risk approach is to avoid companies that have been “manufacturing yield” by relying on debt, assets sales and underinvestment in their businesses. Interestingly many of the companies with the largest “cash shortfalls” are the utilities that have been at the forefront for the search for yield. Leading the pack is the power utility and network operator, AusNet Services. Goldman Sachs has found AusNet Services experienced at a $2.2 billion cash shortfall over the past five years, which represents about 62 per cent of its average market capitalisation over the period.

Duet and APA – who are in the same line of business – have shortfalls of $1.1 billion and $650 million respectively.”

Therefore we see an ominous gathering of indicators that suggest the NSW float might not be the good it is promoted as being.

We think the ‘real’ issue will be the pressure to reduce the price by the user. The providers for a ‘demand response’ should also be persuasive to avoid prices rising by virtue they can determine the demand needs for energy. Why the later because, they have the power to defer capital investment needs assuming the network growth need dictate investment in the failings of the system.

The ‘elephant in the room’ is there too! It is of course the remodeling of the energy networks business model and the rise of cheaper embedded energy networks with renewable energy sources.

Tis interesting times!

Poles and Wires Apart – NSW style

Being it is an election issue – What do you think about privatisation of the electricity assets? A fair question we said, but the wrong one! We feel the ‘real’ question is will the price of supply go down either way? Then it becomes obvious if you use the word ‘redundancy’. In the Queensland election the word was replaced with an emotive ‘gold plated’. In the coming NSW Election there is no mention of either term. The political sides prefer to attack and defend on diverting money streams that would flow onto ‘infrastructure’ projects.

Our point here is that ‘poles and wires’ are infrastructure and there is a level of build required to a) Meet demand. B) Provide reliable pathways. The c) route is actually the political risk to an incumbent that makes the decision to support or reject a build decision and that might not have any basis of a) or b). So c) can be why redundancy is so important when they build.

It is time for a new incumbent politician to be elected. Both sides understand the previous administration built into the system excessive redundancy. This equates to – those assets offered for sale or lease will be attractive as very little needs to be done for another 5 years before meeting demand and system reliability becomes an issue (a and b).

If the current state government is re-elected they can honour their pledge that in 2019 no price rises will occur because of the assets passing into private hands. The potential buyer will find the ‘redundancy factor’ attractive in guaranteeing a profit.

If a new government is voted in they will ‘protect you’ from price rises and continue a revenue stream for the infrastructure needs of the state. They will simply have a different emphasis on what infrastructure to spend. For example less will be spent on Roads and Rail and more on other social needs. The new will be able to do this by avoiding spending as redundancy is built into the system.

How much redundancy is built into the NSW System? The question is not so easy to answer. Because Transgrid the transmission network had something like $15b to spend a couple of years back and the Distribution network companies spend considerable amounts on their needs. The ugly ducky in terms of the need to spend is still looking to be Essential Energy by virtue of the area and geographical spread of its territory. Essential is essentially regional NSW.

What neither party is telling you are what Essential Energy will do to address a new business model to meet the challenges in the next three years.

The question is really, will history repeat itself and will the need to further build after the redundancy period morphs into a massive rebuild program. Building program cost money and in any user pays system you will pay for the need to supply. You will pay either as a taxpayer or a direct cost. The politicization factor will decide what the koala will bear. Koala in this sense is the voter.

To back this up we read with interest the writings of Keith Orchison, 9 March 2015, ‘Who’s telling porkies about NSW’s poles and wires?’ You will find the story in the Business Spectator. He says, “Where the wheels fall off the propaganda cart, is when you look forward and also when you bear in mind what Mike Baird wants to flog. The Premier plans to sell half of Ausgrid and Endeavour Energy, the two largest earners, all of TransGrid, the high voltage business, and none of Essential Energy, which delivers power to 95 per cent of the state and has been declared untouchable by Baird’s National partners.

Broadly speaking, any loss of revenue will be about half the total networks income for the government. Then the question is how much income is that likely going to be?”

“You can then halve these numbers for ‘lost revenue’ because Baird proposes to hang on to half the distribution duo that delivers most of the moolah.

One way of looking at this is that there is about a $3bn to $4bn hole in the ‘anti’ brigade’s bucket on this issue over the remainder of this decade.

These campaigners have not been too fussed about accuracy in other respects, either.

For example, the $1m worth of advertising currently running on NSW television screens is supported by an assertion that power prices in Victoria have risen 60 to 70 per cent since electricity privatisation, but this ignores the fact that network charges in that state have fallen during this period.

Work done for the NSW Treasury by Ernst & Young shows that Victoria’s network charges fell 18 per cent in inflation-adjusted terms between 1996 and 2013. Over the same period, they rose 122 per cent in NSW.

Now the voters of New South Wales can’t be expected to go out and research all this stuff for themselves, so what is the role of the Electoral Commission in vetting the integrity of the campaign?”

We say no more – it has been said! Now you vote – clear as mud is it not!

clueless, naive and dangerous in its understanding of its responsibility – what is the legacy?

The NSW and Queensland Government have a plan. If they sell off the assets they will be no longer responsible if things go wrong. This does leave a fundamental problem in terms of legacy – A number of problems actually.

Starting with: Will corporate simply view governments as irrelevant in the near future. They already do think that, and as an example when the Queensland Transport Department set traps to catch UBER drivers employed by Google and Goldman Sacks. The corporate told the drivers to continue business as usual and ignore the Department. Google even then disabled the Government ‘s capability to track the drivers. How could they do that – they are quoted nationally as saying the conglomerate has deeper pockets than the government.

Both NSW and Queensland seem to have suitors for the Energy Networks Companies they have on offer. Even the relevant Ministers’ seem confused as to what and how much is for sale.   What the public know is that it is very likely two Asian based corporations will be in the front seat for the assets purchase. Both with deep pockets, and both with a high probability on controlling the total business in both states.

Can we have confidence wise decisions will be made? Maybe time will tell. But in NSW at least a very worrying case indicates the Government is more interesting in avoiding responsibility for its choices.

If you follow this story you may feel as apprehensive as we do: Wind farm at Gullen Range a ‘mess’ as matter heads back to court , January 26, 2015. http://www.canberratimes.com.au/act-news/wind-farm-at-gullen-range-a-mess-as-matter-heads-back-to-court-20150126-12ygnn.html

“”The scene is set for a right royal mess with no one happy. It follows the protestors, the complainants, the Developers, are all challenging the Minister over who is responsible for a litany of ‘mistakes’. s clueless, naive and dangerous in its understanding of national security. Suggesting the department is clueless, naive and dangerous in its understanding of its responsibility. To quote directly from the story: the Department – and therefore Ms Goward – had taken three different positions on the wind farm, which would be difficult to defend.

Firstly, the Department recommended conditional approval of the turbine changes to the PAC. In turn, this body refused the DA but along the way, the Department had recommended that just nine turbines be moved.

“So if it all goes to court, which position will she defend?” Mr Brooks asked.

“The whole thing is a colossal mess.”

Complicating matters is the Department’s oversight role earlier in the development. The company appointed an independent environmental monitor to oversee turbine placement and report to government planners. However, the Landscape Guardians alleged he had a conflict of interest as director of a consultancy firm that worked on the wind farm.

A Department spokesman told the Goulburn Post that this person was employed by a consultant and not by the government.

“[He] was not involved with the design, construction or operation of the project, having worked as a consultant preparing the environmental assessment for the application.

“Appointing [him] as the project’s environmental representative is in line with the project’s approval conditions and the Department’s procedures at the time.

“The Department has since improved requirements further to require wind farm consultants have an even greater level of independence.”

Adding to an “invidious” position, the Department allowed turbine construction to continue for a year after residents alerted it to their “incorrect” placement, Mr Brooks said.

“My [legal] advice is that the Minister will be obliged to defend the [Land and Environment Court] action seriously because her authority is at stake,” he told the Post.

“I hope the court throws it out, but that would throw up the situation where the PAC has rejected it, and we still have a wind farm of 69 turbines that are not in their approved locations. What happens next?”

A Department spokesman said the appeal was not about the merits of the modification, such as whether any turbines should be moved, but the process the PAC followed to make its decision.

“If the appeal is successful, then the modification application will need to be re-determined: at this stage the merits will be considered again,” he said.

“It would be highly unusual for a court to require new evidence from any party regarding an appeal of this nature,” he said.

Late last year, Mr Brooks lodged a complaint with the NSW Ombudsman about the Department’s handling of the project.

The Ombudsman was currently investigating, he said.

He’s not stopping there. Mr Brooks is also writing a submission for a Senate select committee’s inquiry into governance and the economic impact of wind turbines. He is not only highlighting the Gullen Range wind farm and the Department’s “incompetence” but the fact the developer collected renewable energy certificates, despite alleged “noncompliance” with state and federal regulations, as required.””

Co2Land org therefore must conclude a captains call will be required – then confuse you even more. But in all seriousness – you will note someone will have to pay. Guess who! Hint – you because no one else will be responsible.

Killing off domestic low cost energy mix – Queensland style

It was some surprise amongst friends that Angus Taylor (thought to be the rising star of the Liberal Party) said gas was the future of a low-cost energy mix. This seemed at odds with Tony Abbott’s (the Prime Minister’s) view that coal is the key. Some react to that story as an OMG moment. We take the story as one that is a design to disguise and deflect on what is actually happening and lead the consumer to a path to pay more. Some might even say it is a centrifuge of fluid appeal. The opening line story is from:

http://www.goulburnpost.com.au/story/2791033/angus-at-odds-with-abbott-over-coal/?cs=181

So there is no confusion as to what we believe: Lets us declare we are pro-market. What we question is whether pro-business rent-seekers are slewing benefits for the rent-seekers at the expense of the consumer. After reading the article immediately below, the story should unfold as to why the opening paragraph was so well linked:

Will Queensland defy the trend of declining demand? By Paul McArdle Wed, 24 December 2014 | Topic Summer 2014-15 in the NEM

“As early as 2011 and perhaps earlier, we’ve been posting commentary about how growth in electricity demand was slowing, and then began to decline.  Across the NEM this trend does not appear to be slowing (and there are a number of reasons for this).

However, within Queensland we wonder whether what we’ll see this summer and next will buck this trend?

Earlier this week we noted articles (Gladstone Observer, Courier Mail and SMH) about the arrival of the first LNG export tanker in Gladstone.  Billions of dollars of investment have been sunk into this new east-coast industry, a fair percentage of which being focused on the upstream tasks of releasing the coal-seam gas and delivering it to Gladstone.  With the three projects each opting for electric compression of gas delivery to Gladstone, we’re looking to see a sizeable increase in demand for electricity as a result.”

Good stuff, hey! Can you see that only a few benefit? We cannot save you, but we can make you aware!

Lets us look at some of those linked ‘demand risers’ in more detail:

The $170m Bauhinia rail electrification project has just been completed and is a spur line to link with the Blackwater System in Central Queensland. The Blackwater system too was upgraded to double its electrical capacity, so rather than using diesel trains carrying coal from the Rolleston mine all the way to the coast it will be all electric powered haulers, which will no doubt further increase electricity demand. Queensland now has electric locomotives rated to 4,000 kW each as opposed to the previous 3000kW. So this means each locomotives at 100% load factor it would be 4 GW of demand! For more information go to –

http://www.aurizon.com.au/projects/bauhinia-electrification-project

Therefore you can expect: Each new coal train is likely to have three locomotives and each locomotive is about 4 megawatts load rated and drawing current directly from the overhead wires. This is and 12MW additional load on the network for each new train. This load was not required before.

We then read the Queensland people and business in general will pay more for gas than other states in Australia. Despite that state having more than enough gas for domestic purposes. Our Queensland contact said it has something to do with the resources rent policy of the state government. We noted that the quoted price, last week, from traders is Brisbane trades for gas in the order of $4.21 per GJ. This was an increase, which was coincident on the arrival of the first LNG tanker in Gladstone to export gas. At that same time Sydney prices rose to $4.00 per GJ. However Victorian prices remained at around $3.50 per GJ.

Now, 13 January 2015, Paul McArdle reported Brisbane hub for gas trades had reached $8.69 per GJ, Sydney $4.52 and Victoria 3.75 per GJ. While we could argue Sydney and Victoria are merely movements in the market, it is obvious Brisbane is a seismic like demand wave pushing up prices.

We no longer need to speculate that higher Queensland gas prices will mean gas for electricity peaking generation plants will be a higher price. Being that the energy market is a spot market the higher bidder sets the price. In short, as electricity demand increases so does price. What this means for electricity generators is higher demand, higher Queensland gas prices, and the market rewarding them because the higher bidder sets the electricity price for them to benefit. How much higher Queensland gas prices will go will be interesting to follow. We no longer speculate as 13 January also see Queensland peak electricity prices running as much as 300 precent plus higher than the remainder of the eastern seaboard on that day.

A short while a go the Federal Government with the Queensland Government’s endorsing repealed the carbon tax (the inception program was called the Carbon Price) as it was claimed it was to blame for higher energy prices! But now those bodies welcome higher prices, and the investor rent seekers want to hear this glorious venture has raised higher revenues from higher prices. It may be immoral but it is not illegal they say.

We are told gas prices must increase to match world demand and the price continuum. But that is seeming a hollow argument as even Japan now appear to be reluctant to source or pay for our LNG. This is a shift from their previous willingness to pay high prices for gas. Why this shift? Because, new low-cost LNG producers elsewhere are joining the supply side, and Japanese LNG demand is moderating to lower levels of need. Other factors to indicate a lower LNG demand is lower oil prices, and alternate energy sources coming in lower priced too.

Why will the demand increase in Queensland, the key to this is three projects each opting for electric compression of gas delivery to Gladstone, and therefore an increase in demand for electricity as a result.

The confidence trick here is QCLNG and APLNG are electrified using electricity from the NEM, and the GLNG upstream project has gas turbine driven hub compressors and electric driven nodal compressors supplied by open cycle gas turbine generators. Therefore it is the gas prices that is be the price setters for the electricity price, not any increase electricity demand on the NEM. Good double talk is it not?

Then Hugh Saddler said, 7 January 2015, via WattClarity: “The excellent data available through NEM-Review tells me that a large new continuous load of around 400 MW came on line in Queensland on 27 October last. This suggests that the 2014-15 summer peak is likely to be considerably higher, for equivalent weather, than in recent years; this has already happened on 9 and 17 December. However, without knowing what the load is, it is difficult to be certain with such a prediction.”

The later we find most interesting and it is the unknown that is more to worry about. About what price you will end up paying.

Now back to Paul McArdle he continued to say:

“1)  We can see that, in summer 2014-15, we have already experienced a higher demand in Queensland than was the case in the whole of summer 2013-14 .

2)  Queensland demand (with respect to the competition) has already peaked to the level of 8,472.23MW

3)  That demand peak occurred as late as 17:15 on that day (hence as the effect of solar PV injections into the grid had receded).  This is something we would not have seen several years previously!

4)  We also see that price volatility is starting to look as something like what happened in summer 2012-13 as well.”

Co2land org concluded it will continue to be a good time for ole king coal generators in Queensland and those state consumers will pay the price. A price that will lead to other east coast states rising their prices too. However, it will not the market causing the rise it will be rent seekers and their influence on the policy makers.

The ray of sunshine is it may become too expensive for policy makers to bear!

Our goal – to inspire and learn, a new year resolution for 2015.

Resolutions are always good to start a new year with: Committing to Gamification sounds like a good one. The goal is to maximize enjoyment and engagement through capturing the interest of learners and inspiring them to continue learning. Then it occurs one element you need is narrative and at least one other is immediate feedback. Then it occurs what we are being conditioned, or thought we are being conditioned by our leaders, corporate and political. Other evidence of this is the narrative we increasingly hear is playing down the unpleasant rather than getting to the point – an example of spinmeisters at work deploying euphemism(s) expecting we let the words wash over us without scrutinising the underlying reality.

So now our good intention is turning out to be a communication strategy and not so much a goal to inspire – We are openly massaging our message to our stakeholders to transition our moving forward. But what if, if the intention was only pro-business and pro-market? By this we mean to benefit the rent-seekers only.

It then occurs that while we have good intention in our resolution, others might not share our values that climate change is real and urgent. That merely adapting for ‘climate variability’ is a loser view. It would seem, according to Dr Neil James: Workers, corporate and politicians alike are digging in for a long fight between the ideology of each for 2015. Reported is you just have ask around and you read and hear; “Minister’s who can’t or won’t compromise, Union’s lack the strength to force their issues, and a workforce wondering what is going on here? “

Co2land org does guess it is about the game after all, and we are still in hope for a happy new year. As was said in Monty Python’s Life of Brian – always look on the bright side of life.

Also introduced are the further extensions of language to confuse and obfuscate, and from Dr Neil James, executive director of the Plain English Foundation and the author of Writing at Work was said:

“In Australia, the nation’s finances dominated the political “narrative”. The Treasurer divided the nation between “lifters” and “leaners”. The finance minister huffed that our public broadcasters were merely being subjected to an “efficiency dividend”. The government later admitted that, yes, this meant their funding was being cut after all.

Then Amanda Vanstone weighed in as a member of the National Commission of Audit with what must be the mixed metaphor of the year: Let’s fix our roof while the sun is shining because we’re on a course to hit the rocks and we have to fix it.

In the era of the mobile device, we are subjected to more information in more places at more times than ever before. It has never been more important to deconstruct this kind of doublespeak and uncouple the corporate spin. 2014 provided plenty of examples of what to watch for in the year ahead.”

Then there are the ‘we are here to help you’ matters – Like the National Disability (NDIS) scheme where parents of young children are being helped. But there is a catch; your special school can now bill you for the government contribution equivalents and other fees that leave them out of pocket in a way not done before.

Then there are those innovation help schemes. One example from a LinkedIn group member involves the ‘improved’ Commercialization Australia Scheme, called ‘Accelerating Commercialisation Australia’.

Under the heading: Accelerating Commercialisation Australia – up close and personal, Mark Dunn wrote – “Having read all the paperwork, FAQs and consumer guides, I lodged an application with Accelerating Commercialisation, and found out what they are really targeting.

Basically, this is product development funds. You have to have your prototype product or service, and are seeking assistance to convert it into something that a customer wants, e.g. making samples to distribute, or working with customers to determine detailed specifications, or working to develop markets.

The rules say the grant scheme is potentially good for $1 million, for 1:1 matching funds, but to quote their advisor, ‘there is not actually very much money’ in the fund.”

Being we cannot help ourselves we set about looking at common reference tools and found:

Accelerating = Slow down (dictionary form antonym)

Commercialisation = making it easy for companies to engage and successfully exploit

Australia = a sing-along medley of mountains, deserts, reefs, forests, beaches and …

I guess with a sense of humour you could say come a waltzing Matildas with me!

But do we need it, to suffer anymore in 2015 with the ‘necessity’ of euphemism, obfuscation and metaphors aided by corporate and political spin?

Then we read something that is food for thought in showing we are all full of it, and that ideology has little to do with success. It starts with the headline: Government running costs to reach record high as disability expenses mount, by Markus Mannheim, 3 January 2015: The Goulburn Post – “Former public service commissioner Andrew Podger, now a public policy professor at the Australian National University, said the expenses were a better indicator of efficiency than the size of the workforce because they included costs racked up by private contractors as well as public servants.

There have been a lot of experiments in efficiency over the years – outsourcing was one, another is shared services to try to take advantage of economies of scale …” he said.

“We had a period of decentralising government bodies and now we appear to be moving back to centralising a lot of work back into departments.

But you can’t say one method is more efficient or cheaper than another: it should be decided on a case-by-case basis for each program.

Real running costs grew rapidly under the Howard government. Labor, meanwhile, managed to restrain its operating expenses despite its massive spending projects to counter the global financial crisis.

Last month, as part of the Coalition’s “smaller and more rational government” agenda, Senator Cormann detailed plans to abolish or amalgamate about 250 government bodies, though most were small committees.

He also released a paper outlining the Coalition’s philosophy on the role of the public sector.

As a principle, government bodies should not be given preference as service delivery agents, where others are more capable of providing the same service …the minister wrote.”

We must finish with tying all this back to our advocating for a sustainable world, and the headline:

Heat is on Abbott government over climate change as world turns, 3 January 2015. “This could be the year of extinction for the climate-change denier” writes Peter Hannam. He goes on to say about the stance of the NSW Coalition Government: “When the Baird government unveiled the first high-resolution mapping of how global warming is expected to shift the climate for NSW, Victoria and the ACT by 2070, officials were quizzed why they weren’t using “climate variability”, a term favoured by federal Coalition counterparts, to describe the outlook.

This is the NSW government, we believe in climate change!” came the immediate response at the last month’s media briefing”.

Co2land org now asks is Gamification to be accessed in a similar way to narcissism. Classified as good and bad! We say we are good!

A Quandary – Nit-pick or constructive critique of CFI ERF

The quandary for most of us when we express our thoughts is we can be regarded as excessive or obsessive for seeking out an agenda – the agenda to change that might be procedurally correct, but fails to address the main issue. For instance the Emissions Reduction Fund – Irrigated Cotton draft determination and associated documents (the consultation process closed 12 December 2014). The main issue, as with other Carbon Farming Initiative methods, is that it is harder for leading growers to be rewarded, as there is no recognition of past improvements.

In the main we found the draft cotton determination, draft cotton explanatory statement and the draft cotton equations, as is, to be sound. It has its process thought through well enough and while we could say some of the flow could be improved any further submission could appear to be nit-picking as opposed to constructive criticism.

Was there room for constructive critique? Yes, but these are areas we might like to adjust the eligibility criteria. Also a little tweaking of what appears too broad in the descriptions. They are areas that could be argued as wrong, but they really are areas for the regulations or legislation to be adjusted. When you access the process of a determination your role amounts to comment on the process that is laid out in the draft determination. It is not the appropriate place to express frustration with the rules. Expressing your frustration is really the domain of the politics.

Being we mentioned the ERF – Irrigated Cotton draft determination, we should let you know what is it about. The first thing is it is the opportunity for growers to obtain certificates called the Australian Carbon Credit Unit (ACCU) under the Act 2011 called the Carbon Farming Initiative (CFI). The reference to the Emissions Reduction Fund (ERF) is part of the CFI Amendment Bill 2014. The fund is designed to help reduce Australia’s emissions by providing and incentive for business, landowners, state and local governments, community organization and individuals to adopt new practices and technologies which reduce emissions. The ERF does include incentives for business activities and farming practices. To find more go to: http://www.cleanenergyregulator.gov.au .

A bit more about our thoughts on the determination and consultation on the Draft Energy Reduction Fund: Irrigated cotton.

  • The ‘system’ is for irrigated cotton growing mainly in Queensland, NSW and Western Australia.
  • The incentive is to encourage Nitrogen fertiliser use efficiency and efficiency is a measure of the ratio of lint yield to nitrogen applied via synthetic fertiliser (kg lint yield per kg N).
  • An increase in nitrogen fertiliser use efficiency is equivalent to a decrease in emissions intensity from synthetic fertiliser use in irrigated cotton (t CO2-e per kg lint yield).
  • Because nitrogen fertiliser use efficiency is calculated using both nitrogen fertiliser use and yield, credits for emissions reductions can be generated by reducing fertiliser use while maintaining or increasing yield, or by increasing yield without a corresponding increase in fertiliser use. This approach also ensures that credits for emissions reductions cannot be generated through a contraction of yield without a reduction in fertiliser use.
  • The draft Determination therefore enables irrigated cotton growers to adjust nitrogen fertiliser rate according to paddock yield potential in the project area, provided that nitrogen fertiliser use efficiency increases.
  • There is support for a broad range of activities to improve the efficiency (reduce the emissions intensity) of fertiliser use in irrigated cotton, including activities to improve lint yield without a corresponding increase in nitrogen fertiliser application rate, and activities to modify the rate, timing, method and efficiency of nitrogen fertiliser application.
  • Proponents have the flexibility to select management actions that suit their individual circumstances.
  • In this draft, cotton is the only crop in the production system eligible for generating credits for a reduction in emissions from synthetic fertiliser use.
  • Emissions from other crops grown in rotation with cotton, with the exception of green manure, are excluded from this draft Determination.

What is Synthetic fertiliser?

Inorganic are sometimes called synthetic fertilizers since various chemical treatments are required for their manufacture.

Synthetic fertilisers do not include solid or liquid organic products created using waste products of other industries that do not meet these labelling and minimum nitrogen content standards. For example, synthetic fertilisers do not include manures, such as poultry litter or beef feedlot manure, or mulches and composts, such as composted ginning trash.

What is a Green Manure?

A green manure is a legume that is planted in a paddock to improve the soil for a subsequent cotton crop. A green manure crop is not harvested and the above ground growth is returned to the soil. Examples of green manure are vetch, faba beans, chickpeas and annual clovers. Non-legume crops which require nitrogen fertiliser are not included in the definition of green manure

What is Organic fertiliser?

Organic fertilizers are usually (recycled) plant- or animal-derived matter. The main “organic fertilizers” are, in ranked order, peat, animal wastes, plant wastes from agriculture, and sewage sludge.

If you picked up on peat as a organic fertilizer and the reference that it has no nutritional value to the plants, but improves the soil by aeration and absorbing water. You might ask why is biochar not a fertilizer?

Bio char

It gets down to two issues:

  1. Bio char is described as a sequester of carbon and as such binds carbon to its properties.
  2. So broad is the definition that it is seen to be the product of ‘burning’.

The later point is where it gets interesting and frustrating. This is because the technology for fine chars is thermochemical decomposition of organic material at elevated temperatures in the absence of oxygen. In another speak, Bio char is created by pyrolysis of biomass.

We do not argue that is a fertilizer. What we argue is it is an agent to improve the efficiency of fertilizer use.

Another potential for confusion is linking soil carbon to bio char. Soil carbon is a condition and bio char is a conditioner. If you think one is the constant and the other the agent for change it makes sense does it not?

That leaves the issue of if it is helpful why is it excluded from the incentives?

Maybe the question is better put this way: Plants don’t need carbon, soils do. Biochar is but a hazardous waste from pyrolysis, looking for a below-the-radar application. Do we have that application? But that is for another discussion and a case study!

Fairly unfair – Energy Network price setting

Gold plated networks practice stopped, and cost reflective price setting will be the market policy. Yes, prices will rise. However prices will be controlled in a fair way it is said. It is an interesting game and thinking about it you realise it is ‘business as usual’ with an appropriate spin for self fulfilling prophesies. Actually it could be prophecies as it depends on if you are using the term as a verb or noun. For instance whether you are forewarning of significant price increases with callous regard to the customer, or anticipating being able to inspire the process of one or more messages that have to be communicated on behalf of the ‘good’.

Previously Co2land org wrote that the question that is most difficult is are you pro-business or pro-market. We have found a new term for the customer as a position description ‘pro-sumer’, and the position is the customer must be the one that willingly pays. We won’t bore you with theories of elastic and inelastic demand as this is a supply side argument. However, we might suggest you develop an instinct that identifies what can be summed as – ‘The rustling of the leaves tells a story, warns of a danger, and a lot of … is going on’. Beware you might not like what you see and the problems are in the detail. So what is the story behind it all?

The story is the players displaying how they justify the costs of reliability of supply. It is not about balancing the supply and demand for more efficient and reliable source of supply. A little more explanation please we hear you say. The business and the market of the energy supply is a supply side focus. That is why the energy companies are called, in the rules, the supplier, and where the customer might curtail or offer low volume generation into the supply is called the provider. Where the customer consumes they are called the user, or more recently termed the ‘pro-sumer’ where they make smart choices. All very simple is it not!

It remains at issue is your network charges will rise regardless.

The questions are how much and why is the political term ‘gold plated’ being used to substitute for what was called redundancy in the past – In this case we explain: “Redundancy is the duplication of critical components or functions of a system with the intention of increasing reliability of the system, usually in …” Source en.wikipedia.org/wiki/Redundancy_(engineering).

The remainder of the story uses other sources as follows: http://www.canberratimes.com.au/act-news/actewagl-says-power-supply-in-canberra-at-risk-20141127-11uyv7.html

, and

http://www.goulburnpost.com.au/story/2726997/australian-energy-regulator-clamps-down-on-network-charges/?cs=12

, and

http://reneweconomy.com.au/2014/regulator-slaps-down-networks-on-more-attempted-gold-plating-22048. Also AEMC paves way for changes in network pricing for solar, air-con.

The network view:

ActewAGL: Chief executive officer Michael Costello says the draft decision from the Australian Energy Regulator does not make sense, and could lead to catastrophic failure.

“We not objecting to a reduction in price, …What we are objecting to is the degree of the reduction, and the fact it threatens reliability, stability and, if it does go far enough, the safety of the network.”

Energy Networks Association head John Bradley said the “unsustainable” spending cuts could compromise reliability, safety and efficiency outcomes for customers. “If implemented, these funding cuts put at risk key consumer outcomes relating to safety, maintenance and outage response times,…Consumers end up paying more under this kind of ‘roller-coaster’ regulation where underspending is followed by higher cost catch-up spending and political intervention.”

The Regulatory View:

Australian Energy Regulator (AER) chair Paula Conboy says under new rules the regulator’s focus is squarely on outcomes for energy consumers, for a safe and reliable network. “So we have to ask ourselves, why should customers be required to pay more?….. Our draft decisions propose lower allowed revenues for transferring electricity and gas, which, if implemented, should result in lower energy bills for end users in the ACT and NSW,… These reductions would be followed by small increases in each of the three subsequent years [in line with the yearly Consumer Price Index]…. Network charges on bills have inflated with extravagant spending – or gold-plating on poles and wires – in recent years and now account for 50 per cent of an energy bill issued to NSW users.”

RenewEconomy asked Conboy if the network revenue application were simply a case of them prosecuting “business as usual” rather than the transformation – the “prosumer revolution” – identified by new AER chief executive Michelle Groves, the chief executive of the AER.

Groves said last month:  “The electricity industry certainly is changing. In fact it is not much of a stretch to say that the next couple of decades will witness something of a revolution in the way small customers interact with the electricity industry. In the future there will be more scope for even the smallest energy users to become active participants in the energy market.”

Conboy said we would have to ask the networks if they were focused on business as usual.

In a separate announcement, the Australian Energy Market Commission (AEMC) said new pricing rules will begin on December 1.

“By having prices that reflect the costs of different patterns of consumption, we are giving consumers clearer choices as we develop a more efficient, incentive-based network regulation framework,” AEMC Chairman John Pierce said .

The Users View: Large, SME, Domestic Advocates.

Gabrielle Kuiper, senior policy officer at the Public Interest Advocacy Centre, said the AER’s draft decisions were welcome news to the increasing number of NSW families struggling to stay on top of soaring energy costs. Dr Kuiper also said there was room for improvement in regards to the allowed rate of return – the forecast of the cost of funds a network business requires to attract investment in the network.

Oliver Derum, another senior policy officer at the advocacy centre, said energy prices could drop even further if the NSW government before the proposed lease of the networks writes down previous over-investment by the networks. “That could cut bills further by hundreds of dollars a year. We would urge the NSW government to consider this option as part of the sale process,” he said.

The Parkinson Report says (Giles Parkinson that is), “The draft rulings are part of a big game between the networks and the regulators over how much they can spend on upgrades, charge for maintenance, and for the cost of capital. The networks have a history of asking too much, and while the AER has sought to cut them down in the past, they have often been over-ruled, or forced to compromise on appeal.

(The AER decides how big the revenue pie will be for the networks. In an associated decision, the Australian Energy Market Operator has confirmed new rules that will require networks to introduce “cost reflective” tariffs, which will likely mean higher fixed and/or demand charges, which could affect households with solar arrays)… Hence the focus on this new round, particularly in light of the incursion of solar and battery storage into the grid, and the emergence of a new decentralised energy model. The AER, in its draft decisions, said that its estimate should result in a lowering of electricity costs, rather than a rise if the networks were allowed to have their way”.

Co2Land org review:

It all looks too much like they want your energy supply to be viewed as a commodity attached to a financial service. You see a commodity price can be manipulated as a means of control. If you lose control the networks cannot keep the growth numbers where they want them – ‘business as usual’.

Look further at the network lobby group, the Energy Networks Association, which has never conceded gold plating in the past, wants solar incentives reduced, higher fixed charges to consumers, and argued that it would be too expensive to quit the grid, said the AER ruling threatened the reliability of the network – an old favourite of those arguing against carbon prices, renewable energy, or any much change at all.

Reneweconomy says solar households face inevitable changes to the way their bills are packaged after the Australian Energy Market Commission delivered new rules which will require networks to impose “cost reflective” pricing on networks.

According to the AEMC, the changes will not only cater better to different patterns of consumption, they will benefit all consumers in the longer term as lower peak demand reduces the need for spending on infrastructure, and they will likely result in changes in tariffs to encourage households to avoid switching everything on at peak times, or at least pay for the privilege, and also for solar households. It could, for instance, encourage more homes to install west-facing panels rather than north-facing panels, but the final tariffs will be up to the networks to decide.

Reneweconomy goes on the say: In effect, while the Australian Energy Regulator decides how big a revenue pie the networks can eat – and based on today’s decision it is a lot smaller than last time – the AEMC is proving rules that decide how the networks can slice and dice that pie.

The new rules also affect households with air conditioning units, as the main targets of new tariffs aimed at recovering network revenue.

The arguments all centre on fears of the networks are losing market share, and are keen to get as much “network pricing” out of the pro-sumer as they can. The pricing set and recovered from different consumers, says the AEMC, with the key factor to determine how much consumers pay being their individual usage pattern or load profile.

The bit we love sic most “This rule change will not actually set new network prices – that is a role for the networks themselves and the AER. It does create a new requirement that reveals the cost of people’s energy choices,” AEMC’s Pierce said. Other AEMC quotes “Under these changes, we estimate around 70-80 per cent of consumers would have lower network charges in the medium term…Research undertaken since the draft rules were released for public consultation in August shows network prices are likely to be lower in the long run with cost-reflective prices,…

Research shows average residential charges could reduce by $28 to $145 per year. Households which use power at a steady rate through the day will receive the biggest benefits…Based on Victorian trials, we also found a small business could save up to $2,118 or 34% of its total annual electricity network charges by using less electricity at peak times for just 20 hours per year when networks are congested,…

Once the new rule commences on 1 December 2014 network businesses need to start consulting on their new tariffs and submit draft proposals to the AER in late 2015 for new prices that will start no later than 2017.”

Head spinning – it should be!

Our final word: We suggest it is because the term gold plated is different to redundancy in that the former highlights the risk of stranded assets.

ChAFTA – ‘real’ big deal – but!

On balance is a fair term when describing trade. However, when you say Free Trade there has been some disquiet across a number of industries. Clearly there are some clear winners and some areas of concern apparent from the China Australia Free Trade Agreement (ChAFTA) signed, 17 November 2014, between the two countries. As with all good stories comes a more interesting one. How to make it work will come in time. It is time that is most important. If you think culturally, something becomes obvious – Western world thinks 5 years is a good plan, Eastern World sees no sense in less than 10 years and prefers 100 years. So is it about plans or planning?

If you did not already know – NZ released a press announcement on 7 April 2008 that it signed a Free Trade Agreement with China. For reference go to chinafta.govt.nz – as far as we can tell the last press release was 12 April 2013 on progress on that sight – maybe someone else knows why?

One topic on the official NZ site is the comment: Are you ready for China, and that forms the discussion from this point.

Starting with two words that seem popular – collaboration and cooperative. We find a world of difference yet seemingly very similar words. It is how they operate that matters. One is a verb and the other an intransient verb – inner or outer if you prefer.

To collaborate suggests to work with others and is an intransitive at an intellectual level whereas the Australian version of ChAFTA is missing encouragement of cooperatives to take advantage. Why is this important? Because it is yet to be fully explained what is the level of risk. Risk of the franchise is the more important thing to work through when considering the deal.

The talk from the positives claim it will build on the indications from China that it values a further deepening of our trading relationship. For instance, the setting up of a ‘settlement hub’ in Sydney, based on Chinese Renminbi exchange. This hub is designed to make doing business with and in China easier. While restrictions to trade and tariffs ranging from dairy products, wine, processed foods and pharmaceuticals, to processed metals, plastics, medical devices, cosmetics are lifted. A very strong point is also being made that a new mechanism for resolving non-tariff barriers to trade which have caused so many issues with the implementation of previous FTAs is part of the positive. That said, not all are happy and it is not necessary the raw material suppliers it is also those that realize there is a lack of the detail and effectiveness of this mechanism and all is yet to be tested.

Another concern is anti-dumping may be not be possible as the ChAFTA only uses the wording ” full access for Australian producers to trade remedies available under the WTO, including anti-dumping and countervailing measures.” Which like Australian Intellectual Property is often seen as an unnecessary barrier by Chinese firms. That said it is claimed China is moving towards more rigorous protection of IP as a natural progression. Some experienced people in this area may be saying – waiting – waiting – time will tell!

The positive also argue that while the service industry will no doubt benefit the Chinese market is good news for manufacturers as they will often be able to incorporate Australian manufactured products in their offerings.

Architects, for example can partner with local Australian suppliers to offer broader solutions to Chinese needs. Healthcare providers can similarly partner to tackle the China market. Other restrictions being relaxed on services will clear the way for Australian equipment and technology suppliers. The later point is claimed as a win for innovative technology and product suppliers.

One area of both opportunity and concern is the easing of restrictions on the use of imported Chinese labour. That labour source can undermine workers’ conditions and the competitiveness of firms operating under Australian law, so who wins? Comparative advantage is what the economists would argue would determine the winner.

While the positive argue it is all good. They also acknowledge there is no doubt China benefits greatly from this agreement and with that will come greater competition and threat to Australian business. It then means the Australian government must be more active in follow up on industry concerns as the details of the agreement are revealed and issues emerge. The difficulty in this is it is actually counter to the current government’s intention ‘of open for business’. It is even more difficult if you consider the need to collaborate outside of the cooperative of Australian Values.

So from all this comes the ‘real’ issue of not knowing about the mechanism proposed for addressing non-tariff barriers. Kindly provided is the following summaries to assist highlight what might be of concern. Not in any particular order:

  • Customs-related issues: – import tariffs, onerous customs procedures, including customs valuations, other import taxes and charges, rules of origin/certificates of origin, market access quotas
  • Technical issues – standards and certification: conformance testing and certification requirements
  • Other internal regulations issues – internal taxes, restrictive import licensing agreements, visa requirements and work permits, ownership and investment restrictions, banking and foreign exchange issues, governance and competition-related issues, differing processes for obtaining government approvals, transparency and fairness in tendering procedures for government contract and in the – award of tenders, ineffective enforcement of intellectual property rights
  • Social or market-related issues: staff recruitment, local business culture.

It is suspected that these barriers in China are extensive and complex.

In addition, it needs to be appreciated that arguably Australia’s largest barrier to trade, particularly in the services sector, is the very low level of mandarin speaking skills and understanding of Chinese Confucius-based business culture by Australians. Add to that the comparatively low level of ‘in country’ trade development support offered by the Australian Government and the need for Australians to invest considerable time and resources necessary to build up relationships before any deals can be concluded are also important factors.

We also seem to forget the high level of competition which Australians will face not only from European countries that have been far more active in Chinese markets in recent years, but also the very strong presence of mandarin speaking Taiwanese business interests who will be actively chasing service market opportunities.

Despite the current level of political rhetoric being generated about opening up ‘services-based’ markets in China, the reality is likely to be quite different. Only time will tell!

So was it so clever to have financial services hold the key to trade that is controlled by exchange. What is different for building trade over services is the key advantages of building trade around ‘hard products’ (commodities and manufactures) is that they are ‘language and culture’ neutral; if the price is right and the technical and other barriers can be addressed, market opportunities can be realised. Simply put the agenda is obvious and transparent.

As we see it the hurdle that many Australian companies within an exchange will be the need to learn and understand the soft diplomacy required in bedding down arrangements as the cultural context of business is different to that of the West.

A mixed blessing is probably the best description. A number of major concerns with this agreement:

  1. Firstly there is no mention of China needing to float it’s currency to achieve a more honest and realistic exchange rate.
  2. The agreement favours large-scale innovative makers and mining.
  3. Maintaining small to medium business input will be difficult.
  4. China is not required to place a carbon footprint on it’s export products, an economic advantage. In addition Australia does not require imports to place a carbon footprint on products. Should such a footprint be costed in real terms local manufacturing competes.
  5. China’s agreement with the USA may result in pollution issues being costed.
  6. We have heard no analysis of any imbedded uncompetitive clauses that may have a detrimental effect on Australian export business and local business alike.

Meanwhile back in NZ. After signing the NZ/China FTA Plinius Audio based in Christchurch NZ spent almost 5 years getting the CCC approval process to work for its products to enter China having been tested and proved compliant here.

Back to the now in Australia we are having our own ‘realities’ where according to our agribusiness contacts China is always going to control raw materials into China, it is a balancing act between feeding the people with Grain, clothing the people and exporting, and manipulating the price of commodities into China. Why? Because if they lose too much control, they cannot keep the rate of growth in the range where they have it. It follows that if China’s economy slows down it has huge implications not just for China, but for its main trading partners, of which Australia is a major one for Raw Materials.

Whether it is perceived or ‘real’ most feel the so-called free-trade agreements and other international contracts zap control from sovereign nations and hand it to rootless instrumentalities, undermining the role of governments.

It all culminates with: Planning, the timeframes that each culture believes plans should be projected forward and whether your side is proactive or reactive and when to be so inclined.

Digitally enhanced – ‘friends of’

Are you a moderniser or values driven? It is suggested it is a logical postulation that evades resolution, and is a true conundrum for the politic.

To illustrate, Douglas Carswell is authentically a modernizer and has quipped, in his book The End of Politics published in 2012, where he argued that “The digital revolution will do to grand planners in the West what the collapse of Communism did to socialist planners in the old Soviet bloc”. “Reform” in the 19th century meant increasing the franchise until it eventually included the entire adult population. In the 21st, it means “iDemocracy”, the crowd-sourcing of politics. We were asked where did you read this stuff? The Telegraph.co.uk, 29 Aug 2014, was the reply.

Thinking about this in a local setting – it occurred; The Independent senators have a handle on these problems and in particular how to save our country from being a dependant service industry – the advent of the exit of manufacture. In other words they are thinking on how to rally ‘Friends of Manufacturing’. The simple question is why is Australian politics having so much difficulty understanding the dependency issue and what then occur is causal of other uncalculated change too! History is full of such things that happen, and in particular that they were results of as opposed to outcomes of the change.

Change is always a difficult path and it is not as easy as engaging in old style reform. In a visit to the UK the tour guides constantly delivered the message that to save England from descending into moral decline they built churches that also served as an economic reform.

The difference today is renewal requires a different form of discipline – discipline to resist pandering your own ego. Why because eidetic recollections are called for, and you don’t have time to perform lengthy research for your answers, or just call on a higher ‘authority’ – how do you do that? Google or DuckDuckGo it of course, for the instant answers for the crowd.

It follows that the danger is you will selectively pick what suits ‘you’ and ‘your’ ideals and therefore cannot be empathetic and understanding of what is ‘the going concerns of real life’ – think of it as viewing life as a theme park. This simply means the view is an invitation to join the like minded and is sufficient to set change in the right direction. What examples let us think that this is a problem? The political scene in the UK illustrates the point very well, as reported by the Telegraph – being it “showed a weakness for the political equivalent of botox”. As a sense of humour must prevail – does that explain the goofy grin that seems printed on our PM’s face!

So is being a ‘friend of manufacturing’ the illustration of a present-day confrontation of social systems and civilizations and implies a confrontation exists between various systems of values. This implies the belief that as the creations are part of given social forces, each type of civilization embodies the values of the respective social forces.

Therefore what is needed for such a move to be successful is we distinguish between the sociological-politological and the axiological approach to values. You could argue the former disregards the intrinsic substance of value. The axiological approach is based on historical experience, on the social situation, on the interests and ideology determining the way in which a social group, a human community, a society ascertains values, non-values and anti-values. You could also argue, there is a correlation between these two approaches. We could say if you define political values as political relationships, institutions, organizations, views and ideas resulting from the transforming, creative sociopolitical practice of the social forces that meet the requirements of social progress and of the development of human personality on a social scale.

What this does emphasize is the special role of political values. Of course you then might say if you believe this you accept there is no place for the intrinsic character of political values.

That is not the case here, we believe to identify the issue, you need a group that can intrinsically recognize and then know where their mediating role in the creation-and, respectively, assimilation-of these values is needed. Therefore the ‘friends of’ person of today ‘experiences’ the values centered on political values. For all the differences between civilizations and their values, the common fundamental interests of mankind—the necessity of setting up a new economic and political order, of creating a new climate of peace and cooperation among states and peoples—require the assertion and promotion of common, general, and acknowledged political values. So ‘friends’ become political no matter what.

So what is the conundrum? It is the political values that interfere with real life experiences and that interferes with modernising. The question then becomes how do you prevent the hollowing out of your attempts to modernise? Then you develop your ‘friends’ and then along come the ‘rent seekers’ wanting to influence their interests.

If you then argue it is a matter of ‘friends’ being pro-market and not pro-business you will come across the issue of old fashion values and entrenched responses of we need more regulation. Then we have another issue – the policing of the regulator? How do you do that? By reverting to your values system you then effectively hollow out modernising.

What is the answer? Maybe we just postulate – change will occur, but what we must do is accept that where non-conforming activities are evident it is that anticipated remediation contingencies also need to be in place. What is this meaning? It is the place where conforming bodies are confronted by non-conforming bodies with pro-business friends. It is happenings and is akin to corrupting practices. You might say they will plan to achieve a competition to fail event. To be concluded over time as to whether the issue evades resolution!