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  • Red-hot coal deals add more fuel to the economic fire

    Tim Colebatch, The Age

     

     

    AUSTRALIA’S economic prospects have taken another unexpected turn.

    Economists estimate that last week’s deals with steel makers Posco and Nippon Steel to treble the price of coking coal will lift national income in the year ahead by at least $30 billion, or 3%.

    While each day brings more evidence that economic activity is slowing rapidly, the 210% rise in prices negotiated by the BHP Billiton Mitsubishi Alliance in deals with the steel makers suggests a powerful force will be pushing it ahead.

    While senior Reserve Bank and Treasury officials forecast last month that Australia was heading for a boost of 10% to 15% in the terms of trade in 2008-09, the Posco deal suggests the rise could be more like 20% to 25%. Next year could see the terms of trade — the ratio of export prices to import prices — overtake the record levels of the Korean War boom in 1951.

    That boom and bust pitched Australia into recession. But the economy now has a much broader base.

    With the global financial crisis and higher interest rates pushing hard on the economic brakes, and soaring mineral prices pushing equally hard on the accelerator, the relative strength of the two forces will determine what happens to the economy over the coming year.

    ANZ senior economist Katie Dean said if the bullish assumptions behind the coking coal deals flowed into negotiations for steaming coal and iron ore contracts, Australia was set to experience another steep rise in its income in 2008-09.

    "It’s going to add about $30 billion to the size of the economy," she said. "It’s a huge development, and it shows what the Reserve Bank is up against in trying to slow the economy. They can’t control what is happening in these markets."

    ABN Amro chief economist Kieran Davies said the income boost could be more like 4% of gross domestic product — including a windfall of more than $10 billion in company tax revenue for the Federal Government.

    "This should provide an immense boost to the resource-rich states, but the broader boost should be less than usual if the Government saves the windfall," he said.

    "This suggests that the strengthening of the resources boom, while much greater than first thought, could have a less pronounced impact on the economy (outside the resource-rich states) than past commodity price rises."

  • Aussies desert the bush

    The atlas found Australia’s big towns and cities are getting bigger, while small rural communities are getting smaller.
    The rural population is declining by just under 1pc a year, with a 2pc annual decline in the number of children.
    Rural communities are ageing faster, and have a higher average age, than the rest of the country.
    "The social circumstances of many people, communities and towns have changed as the movement of young people and families to regional and major urban centres for better employment and education opportunities has accelerated," the atlas found.
    Major cities grew by 8pc in the five years to 2006, and coastal towns and cities boomed too.
    Queensland was the epicentre of coastal growth, particularly the Gold Coast, Maroochydore and Cairns. Interstate, Geelong in Victoria and Newcastle in NSW grew strongly.
    Almost two-thirds of Australians live in capital cities.

    Agriculture Minister Tony Burke said the report confirmed that people, especially young families, were leaving smaller rural communities.

    However, he focussed on the positives as he launched the report in Melbourne Thursday, pointing to high labour participation rates, vocational training take-up and home ownership in rural areas.
    "These figures reinforce what we already know about people living in the bush – they’re resilient, highly skilled and passionate about their communities," Mr Burke said.
    The report found a relatively high proportion of young people in rural areas are in school, and the number of people without qualifications had fallen sharply.
    People in rural areas are more likely to have a vocational degree or certificate than the national average.
    The atlas is also interesting news for single women in the bush – there are 25pc more young males than females in rural areas.
    Cities and regional centres had more women than men.
    The atlas, called "Country Matters, a Social Atlas of Rural and Regional Australia", is prepared every five years for the Department of Agriculture, Fisheries and Forestry. It is used by the government to develop policies and programs.

  • Minister fails on plastic bags

    The failure of environment ministers to take action on plastic bags and recycling underscores their hopeless capture by the big food and beverage corporations, Australian Greens leader Bob Brown said today.

    "This is a plastic-wrapped, recycled failure to take action. With the exception of South Australia, it is no different to repeated failures to take action by Howard-era ministers for the environment," Senator Brown said.

    "Australians throw away 4 billion plastic bags every year. The ministers have instead decided to continue to support voluntary action from retailers, which last year saw plastic bag use skyrocket by almost 40%."

    The Greens support an outright ban or a levy and have re-introduced a private members’ bill to the Senate which applies a 25c levy on plastic bags. Similar levies have reduced the use of plastic bags by up to 90% in countries like Ireland.

    "Shoppers who don’t want to pay a levy would have the option of bringing their own ‘green’, canvas or string bags to the shops," Senator Brown said.

    Senator Brown also said the Australian Greens were working with state Greens parliamentarians to introduce state and federal legislation to pave the way for a national container deposit scheme.

  • Greenpeace calls GM approval corrupt

    Environmental scientist Jo Immig and canola grower Juliet McFarlane, who both sat on the committee, said the go-ahead to plant GE canola should not have been given. They argue that the segregation of GE and non-GE canola cannot be guaranteed and non-GE farmers have no legal protection if their crops are contaminated by GE.

    Appallingly, Primary Industries Minister Ian McDonald’s decision to introduce GE canola into the state is effectively beyond reproach, since he introduced legislation to ensure that his decision to approve the crop could not be challenged in court. This is unprecedented for legislation of this nature and Greens MP Ian Cohen has accused the minister of “treating the parliament as his own fiefdom.”

    The NSW government established the committee to “assess whether industry is prepared and capable of segregating genetically modified (GM) and non-GM food crops”. However, the committee is cloaked in secrecy – with the identity of committee members not being publicly revealed. Committee members can face prison sentences of up to three months for divulging committee discussions. Having such a gag order on a public committee is also unprecedented.

    The government was required by law to record the pecuniary (vested) interests of the committee in a book that could be viewed by the public, however, this is stored in Tamworth.
    On two occasions Mr Cohen unsuccessfully asked minister McDonald to provide the names of the committee and declarations of pecuniary interest. It is clear why the minister did not want to reveal them – the book shows that the majority of committee members have vested interests in GE crops. This is tantamount to letting the fox look after the chickens.

    Immig said that the representatives on the committee were quite clearly very pro-GE people. "It’s hard to imagine that the committee would come up with any other outcome other than to eventually approve, or suggest to the minister that he approve the genetically modified canola,” she said.

  • Village goes local in supermarket protest

    Of the 164 families who live in Martin, 101 have signed up as members of Future Farms for an annual £2 fee, although the produce can be sold to anyone who wants to buy it.

    The "community allotment" sells 45 types of vegetables and 100 chickens a week, and is run by a committee which includes a radiologist, a computer programmer and a former probation officer.

     

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    The Good Life

    In The Good Life, Tom and Barbara (played by Richard Briers and Felicity Kendal) try to live a self-sufficient lifestyle by converting their garden into allotments

    Nick Snelgar, 58, who came up with idea in 2003, said the project was gradually "weaning" villagers off of supermarkets.

    He said: "I like to think of it as a large allotment in which there are lots of Barbaras and Toms working away.

    "There are also Margos as well, but everyone can get involved.

    "The nearest supermarket is six miles away. Of course people still have to go there for things like loo roll and deodorant and fruit you can’t grow in Britain.

    "So we aren’t boycotting supermarkets entirely but we are gradually weaning people off them and as a result are reducing our carbon footprint by not using carrier bags and packaging."

     

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    village of Martin

    Every Saturday the produce is sold at the village hall

    so much that last year it had a turnover of £27,000 – most of which was ploughed back into the scheme.

    He said: "We began with vegetables and we found that all the skills we needed were here in the village.

    "After the vegetables we introduced chickens and then pigs and we learned inch by inch.

    "We have other producers whose goods we sell and they include a sheep farmer and someone who has honey.

     

    The farm sells 20 pigs a year as well as chickens and lambs and is now starting to sell beef

    "It has been a fantastically interesting experience and we now have four plots of land covering eight acres.

    "There are 164 families in the village and they include about 300 adults and 100 children, so there are about 400 creatures to feed.’

    Every Saturday the community comes together with their produce which is sold at the village hall.

    Mr Snelgar added: "The most popular thing we sell is carrots.

     

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    The majority of families have signed up to the scheme, but anyone can buy the produce

    "People love the smell of fresh carrots, and we pull them out of the ground the day before we sell them.

    "We don’t yet do dairy, but we hope to include that in the future and we also intend to grow raspberries and strawberries.

    "We set the prices by working out how much the food costs to produce. We then add 20 per cent.

    "Our pork sausages, for example, are sometimes cheaper than sausages you buy in the supermarkets. We break even and all money gets ploughed back in.

     

     

    "When we started some people thought it would fail and we’d never last, but as the years have gone by more and more people have become involved.

    "It is also a talking point in the village and it’s great to see people walking to the village hall on a Saturday morning talking to each other. It has created a sense of belonging."

  • Business wakes up to peak water

    Peter Brabeck-Letmathe, chief executive of Nestle, the foods group, says businesses must wake up to the value of water. He warns of an impending crisis over supply, in the developed as well as the developing world, because of climate change and problems of over-use.

    He says businesses may struggle in the future to find the water they need and will be forced to pay much higher prices for it, if more is not done to conserve the resource and distribute it more rationally.

    These problems are not confined to poor countries, warns Mark Lane, partner at the law firm Pinsent Masons: "[While] it is true that in the developed world most people have access to toilets and a sewerage system … the problem that the developed world now faces is to adapt its waste-water systems to the changing circumstances brought about by climate change, and sudden much more extreme bouts of rainfall."

    Mr Lane points out that in much of the developed world, the wastewater infrastructure has been constructed on the assumption of a temperate climate.

    With global warming, which will bring more storms and floods and intense bouts of rainfall interspersed with periods of drought, that assumption no longer holds good.

    As a result, in many countries the wastewater infrastructure will need to be expanded and upgraded to cope with much greater volumes of storm water. "This will cost huge sums of money," says Mr Lane, "and one key issue, for example in England and Wales, is how such infrastructure improvements are to be paid for."

    Businesses can prepare by using water more efficiently. Some companies have started to take action, and a growing number of technologies are becoming available for businesses to make their use of water more efficient.

    Pepsi Bottling Group (NYSE:PBG) , the drinks company, has managed to conserve 1m gallons of water per year at each of its plants, using new processes for cleaning equipment. The company can save 13,000 gallons a day on certain high-speed lines by using air instead of water to clean packaging. The company also uses 10 per cent less water through its upgraded reverse osmosis purification systems.

    B&Q, the retail chain, has been actively monitoring water consumption since 2003. The company set a target to reduce mains use across UK outlets by 10 per cent by the end of 2008, but found that by the end of 2007 it was saving 20 per cent.

    This has been achieved using methods such as harvesting rainfall for toilet flushing and using "smart water metering", allowing store managers to see in real-time how much water they are using. Monitoring use in this way lets the company quickly identify and deal with leaks, and helps prevent excessive usage.

    Other techniques include recycling water. For instance, Dow Chemical (NYSE:DOW) at its Terneuzen site in the Netherlands has been re-using about 70 per cent of the 2.6m gallons of the municipal waste water produced daily in the area.

    Cutting water use can also help to cut energy use – Dow found its efforts at Terneuzen reduced its carbon dioxide emissions by 60,000 tonnes per year.

    But companies and consumers may be unaware of the amount of water they use, and the amount that goes into products.

    Embedded water, also known as virtual or hidden water, is the water used in the production of goods that is invisible to the end user.

    Examining the amount of embedded water in common products can give startling results. It takes 2,400 litres to produce a hamburger, and 11,000 litres to make a pair of jeans, including the water needed to grow the cotton.

    Tim Jones, principal at Innovaro, says companies could attach "water labels", just as some are using carbon labels showing how much greenhouse gas was emitted during production. This would enable purchasers to make decisions based on environmental principles.