Right Pulse

Argentina has for the first time directly threatened Australian interests:

Argentina’s ambassador to Australia says mining group BHP Billiton will face business sanctions if it pushes ahead with oil exploration in Falklands waters.

BHP has a licence to explore off the Falkland Islands and is scheduled to start doing so in the next four months.

But Ambassador Pedro Villagra says if the company proceeds, their business in Argentina will suffer.

“If they conduct activities they will not be allowed to carry out some activities in the Argentine territory in the mainland,” he said….

BHP does not currently have any operations in Argentina but has in the past held stakes in gold and copper mining projects.

BHP will probably just thumb its nose at Argentina and start drilling. It is fairly suspect that the USA is refusing to recognise Britain’s sovereign right over the Falklands. Are they hoping to gain a commercial advantage in the region? It looks like it. Clinton will probably do a deal when she meets the Argentine President.

Ever since GM pulled the plug on Pontiac and hence Holden’s export programme to the US, there has been ongoing off again on again speculation that Holden will export to the US under the Chevrolet badge:

General Motors North American boss Mark Reuss has named Chevrolet as the new potential US home for the Australian Holden Commodore, keeping alive the prospects of a billion-dollar export program for Holden.During an interview with Fairfax at the Detroit motor show, Reuss said General Motors wanted the Commodore in its North American model line up, effectively replacing the failed Pontiac export program. 

“There isn’t any impediments to it, other than we have to make sure the number of portfolios we put into Chevrolet …. is right for the dealer network.”

Well, we will see. I think Holden would be better off without GM, as a niche rear wheel drive car maker. Prospects for Ford Australia look a little more dim though. Apparently Ford chief Alan Mulally indicated that he wants Ford to have one large car platform for the whole world. Speculation is that this means the demise of the Falcon, to be replaced by a front wheeled drive Taurus like vehicle.

I can’t believe that would happen. Ford needs a large rear wheeled drive car – the Falcon is the only car they have that fits that bill. Customers won’t buy a Taurus like vehicle in the same numbers like the Falcon. If customers want a large front wheeled drive car they look to Toyota, etc….not some second rate Ford that is cobbled together in the same antiquated and incoherent fashion as the Ford ‘19th century live axle’ Mustang.

This is what happens when you get too close to the fire:

Two senior Qantas workers from Australia are being prevented from leaving Vietnam, as the Vietnamese Government, which is a shareholder in the budget airline Jetstar Pacific, investigates losses the company made on fuel….

Qantas owns the Jetstar group, and is a part-owner with the Vietnamese government of Jetstar Pacific.

The communist gov’t of Vietnam. And have not heard anything about that Australian Rio Tinto executive that was detained in China last year either. These recent events and others make a mockery of the Australian left’s many attempts to make Australia more Asian. Is this what they have in mind?

During the now defunct deal with Rio Tinto by Chinese government business enterprise Chinalco, I wrote on a number of occasions early last year against the deal, amongst many reasons:

My basic argument against Chinalco owning Australian mines is that the deal would be inconsistent with Australia’s approach to removing government control and ownership of business enterprises. Both sides of Australian politics generally accept that private enterprise, not government, should run businesses…To turn around and allow a foreign government to start buying up Australia’s key strategic assets would run counter to the long held principle of separating private enterprise from political interference.

Turnbull followed a similar line at the time. It is good to see that Tony Abbott is also maintaining the party line on the issue, as he recently spoke on the 730 Report:

What I’m not in favour is of nationalisation of Australian industries and if I don’t support Australian Government ownership of Australian industries under most circumstances, I would certainly be pretty wary about Chinese Government ownership of Australian businesses.

Compared to what Telstra can do now at minimal cost, the purpose of Rudd’s future big government run broadband network is what exactly?

…provide a two-finger salute to the government in the process.

The idea was to spend $300 million to upgrade the HFC cable network Telstra owns in the capital cities. The original NBN was supposed to deliver minimum speeds of 12 Mbps. Telstra would upgrade the speeds available through the HFC – which passes a million homes in Melbourne – to 100 Mbps. Should the upgrade go well, they were warning, they could spend a total of less than $1 billion to deliver 100 Mbps to all the capitals.

The HFC upgrade and Telstra’s show of continuing defiance and aggression might have been a provocation too far, forcing the government to consider the impact of such an upgrade on the richest consumer markets and its implications for the original NBN.

Ultimately it revealed the ‘new’ NBN, with its own 100 Mbps capacity (and higher upload speeds), as well as a package of threatening and punitive new regulatory measures to ensure Telstra was finally brought to heel.

The purpose of Rudd’s own future network is to destory private enterprise and wealth – not provide faster connection speeds to users. While Telstra has not released the prices of their new service, given Telstra’s relatively low capital investment compared to Rudd’s $43 billion investment, the final prices are likely to be in – total terms – much lower than anything the NBN could offer customers.

Rudd’s household fibre to node network plans have been panned by Rupert Murdoch, who claims that Rudd will have to eventually right down half the asset value of the venture. I made a similar claim sometime ago. The US edition of the WSJ has also renewed its attack 0n the plan:

The NBN, a tremendously awful idea, is a case in point. The government wants to spend $39 billion to deliver 100 megabits to every household in the next decade, without the slightest idea how it might be done commercially or whether customers, who already can get 21 megabits through wireless in most of the country, would be willing to support NBN’s huge costs.

The government wants to seize Telstra’s wholesale network partly to eliminate competition—i.e., even as Labor castigates Telstra as a “monopoly,” it wants to create a true statutory monopoly.

Of course, it takes an unwonted faith in government to believe it will deliver the promised digital nirvana on-time, on-budget or at all. In the meantime, Telstra would have no incentive to invest in its own network, so Australia could end up with the worst of possible outcomes: neither a shiny new functioning government network nor an existing Telstra network that keeps pace with technology and customer demand.

These criticisms aren’t new. Virtually every local industry commentator has panned the idea, with the  advancement of household mobile broadband technologies likely to make the NBN irrelevant, the poor track record found in Japan of a similar venture and with major business and government organisations already with access to fibre networks. Then of course there are the issues with overseas fibre cables that allow households to access the internet outside of Australia. Is Rudd going to try to nationalise this infrastructure as well?

So looks like Rudd is going to break-up a publicly listed company, hurting hundreds of thousands of investors to clear the way for a government monopoly. Back to square and back to the future.

The government today warned Telstra to voluntarily separate its wholesale and retail arms, or be prevented from acquiring an expanded wireless broadband spectrum.

If the telco did not agree to structural separation, the government would use proposed new laws to break up Telstra and force it to sell off its cable network and 50 per cent stake in Foxtel.

Communications Minister Stephen Conroy announced the dramatic reforms today as the government prepares to roll out its $43 billion broadband network.

Unbelievable. If the government can do this to a public company, where does that leave property rights?

Another Gillard ‘achievement’ thanks to her new industrial relations regime:

Horticulture Australia Council chairman Stuart Swaddling said the industry was “outraged” Ms Gillard had not taken action, as the proposed award to operate from January was the “single biggest calamity that the horticulture industry nationally has faced in its history”.

“The issue of the new Horticulture Industry Award is the biggest threat to the ongoing viability of the industry we’ve ever known,” he said.

“We demand that the federal government stops dragging the chain and takes some action on this issue.”

According to council estimates, fruit and vegetable businesses are facing increased labour costs of at least 25 per cent and, in many cases, 30 to 35 per cent. It estimates between one-quarter and one-third of the sector’s 30,000 growers could be made unviable after January.

And where is the media outrage like there was for WorkChoices? On a slight aside, I noticed yesterday that Barnaby Joyce was being attacked by the ALP via the ABC:

Queensland’s Natural Resources Minister Stephen Robertson told Parliament that Electoral Commission documents show Senator Joyce accepted $9,000 from the farm’s owners ahead of the 2004 election.

He says Senator Joyce has a conflict of interest when it comes to Cubbie Station and he should stay out of the debate.

Well with that being the case, surely then there is a conflict of interest in Gillard framing industrial relations legislation that awards more power to the ALP’s biggest donor, the union movement. Yet where is the critical ABC article on this? From Barrons:

The legislative jihad against minimum wage jobs continues because it is in the self interest of politicians to kill such jobs. That’s how you increase the need for public assistance and government-sponsored training programs for jobs that don’t exist. Politicians prefer handouts to wages because recipients of handouts are beholden to political providers. Public dependency grows when the market system is forced to shrink.

I don’t know how Rudd lives with himself. One moment he is claiming to be an economic conservative, the next he’s writing in the Monthly claiming that capitalism is dead so we might as well spend up big and attacking the Coalition along with way as being in bed with Big Oil over their policy to cut the fuel excise. Then he goes to Germany calling for the nations of the world to constrain government spending and debt, then he is back again writing in The Australian about the ills of extreme capitalism, and now he is touting a big business extreme capitalist deal done with evil American Big Oil and the Chinese – but what about our carbon footprint!?!

AN Asia-fuelled, decades-long windfall for Australia’s natural gas sector looks assured with up to $100 billion of fresh investment over 12 to 18 months expected across a range of projects after China promised last night to buy $50bn worth of natural gas from the proposed North West Shelf Gorgon development…Last month Exxon inked a $25bn deal with India, taking total commitments for the Gorgon project to about $200bn of an expected $300bn.

And Rudd’s plan has been to spend up big on ceiling insulation. Looks some what puerile by comparison. And I hear you saying, ‘What about wind, solar and human methane capture and storage electricity generation?’

The Gorgon venture promises to be Australia’s biggest resources project, pumping $40bn into the federal government’s tax coffers over the next 20 to 30 years.

Just as well the Chinese don’t have an ETS. And why again is Rudd forecasting the budget to be in deficit? Just as well he wasn’t involved in the negotiations:

Mr Ferguson says the Chinese ExxonMobil contract has been resolved commercially, at arm’s length to the Government.

It’s called ‘extreme capitalism’ delivering where Rudd’s ’social capitalsm’, “…in which government intervention and regulation feature heavily…” never will.

China’s regulatory response to the BHP/Rio iron ore deal in WA:

China’s top economic planner has unveiled draft rules that will apply to cases of “monopolistic pricing behavior,” inside the country as well as outside, according to reports…

“These regulations apply to monopolistic pricing behavior outside the People’s Republic of China that produce an exclusionary or restrictive impact on domestic market competition,” the Chinese-language draft says, according to a Reuters report.

Foreign multinationals operating in China would be covered by the proposals, the report said.

Interesting how they are not taking this potential dispute to the World Trade Organisation. Probably because the Chinese Communist Party wouldn’t be able to control the outcome of the dispute resolution proceedings of the WTO like they do at home. Due process is a damn thing when you are an authoritative oligarchy.