Tuesday, June 27, 2006

How Brisbane Stole Queenslands Dams

Many would be intrigued to learn that the Brisbane water supply was paid for by all Queenslanders but those outside greater Brisbane have had their share sold off in a classic "asset stripping" operation.

Wivenhoe Dam cost about $400 million in 1985 and each Queenslander owned a portion of it. But the state government then sold off all but 10% of it to Brisbane City Council and the adjoining LGAs in 2000. And they threw in Somerset and North Pine Dams at no cost.

The price that the city paid for this asset owned by all Queenslanders was the same $400 million it cost in 1985. This price was calculated solely on the basis of profits being earned on this investment, as determined by the Department of Natural Resources. There was, and still is, no charge for the considerable flood mitigation benefits enjoyed by much of Brisbane despite the fact that this was the main reason for building the dam in the first place.

But the moment Lord Jim Soorley gained control of the entity the wholesale price that was charged to the council customers (also the new owners) was increased from $120 per megalitre to $170/ML. And all of this price increase was added to the net profit figure and this meant that the value of the entity was closer to $1 billion rather than the historical $400 million.

If each flood prone house or cashed up CBD corporate paid a modest amount for the insurance value of the Dams under proper user pays principles then the value of the entity would be closer to $1.5 billion. Yet, the public officers who did the original valuations were closely involved in the running of the water system before the sale and, should have been aware that there had been no wholesale price increases for many years. And the potential for future price increases should have been a major factor in determining a fair price to pay Queenslanders outside Brisbane for their share of their dam.

So each non-Brisbane Queenslander got paid only $117 for their share in the dam that was really worth $440 while each of the 1.5 million residents of greater Brisbane now have an asset worth $1,000 that they only paid $266 for.

This transaction was referred to the ASIC but no action was taken and no grounds for that decision were provided. But one can't help wondering if the current lack of rain in the Dam catchment is the revenge of the gods for some very sleazy karma.

Tuesday, June 06, 2006

David Suzuki Champions Regrowth Forestry!

Environmental elder statesman Dr David Suzuki has identified the management of native forests for timber production as environmental "good news".
In interview on ABC's 7.30 Report, (5/3/02), Dr Suzuki challenged the basis of the Queensland Forest Agreement and the core beliefs of the Green movement by including specific examples of on-going private native forest management as "very, very serious attempts now that are working to get us off the current destructive path we're on".

Dr Suzuki has concluded that constant harping about bad news might be counterproductive. So he has written "Good News For a Change", because, "we're not going to get change if we don't acknowledge when the right moves are being made". A sceptical Kerry O'Brien asked, "What's the good news? Dr Suzuki's reply would be no surprise to family foresters. He said;

"We've got examples from a man who has owned a forest of 150 acres for 50 years. He's logged the equivalent of the entire forest over that time and he's still got more timber on his land than he had at the beginning".

"You could say that's just a small forest holding" (but) "Collins Pine is a family held company, 150 years old. They employ 7,500 people in Oregon. They do $250 million worth of business. Their forests are as rich today as they were 150 years ago. They don't make as much money, its true, as the companies that clear cut, but they have the goose that lays the golden egg. Their forest is a source of revenue and will last forever. You clear-cut a forest, you make money once and you have to wait 150 years".

These are North American examples but there is no ambiguity here, Dr Suzuki is referring to native forests that are managed for timber production. Yet, here in Queensland the green shoe brigade has repeatedly stated that the only sustainable use for a native forest is for conservation. The Beattie government accepted this statement and closed all of its own "golden egg laying geese", as Dr Suzuki describes them.

Ironically, Mr Beattie need only travel some 15 minutes from Parliament House to observe that Dr Suzuki's conclusions apply equally here. For all Dr Suzuki has done is to examine the forestry use in its entirety rather than focus only on adverse elements that normally occur on about five days in every 9,000 days of the growth/harvest cycle. He recognises that for 99.9% of a forestry operation, the only noise you will hear is birdsong. He is not trying to manufacture the need for regulatory jobs-for-the-boys, nor is he trying to demonise a minority group prior to an act of dispossession.

The same cannot be so certainly said of the Premier's cronies and their departmental minions. They have blatantly "got it wrong" on both public and private forest management but remain committed to putting existing family forestry operations out of business and replacing them with state owned plantations. And these directly prejudicial interests continue to be given an almost exclusive input into private forest policy.

Family forestry has always been a good news story, now its news.

First published in "The Regrowth Forester" 2002.

Monday, June 05, 2006

April 1st or Environment Day?

The green movement is in top gear as part of their annual "scare the kids day" but this year's effort would be more appropriate for the first of April. A good example of the material being produced is "Uneconomic Power" by Steve Shallhorn, CEO of Greenpeace Australia Pacific (Inc), on http://onlineopinion.com.au/view.asp?article=4512

The best insight into the feeble "greenpeace" collective wit is provided by the sentence;"In the event of a nuclear accident the costs are usually borne by others, often individuals who lose their livelihood and or their health".

Note how it starts in the conditional sense, the (remote) possibility of a nuclear accident, shifts to a generalised statement of presumed fact like, "costs are usually borne by others", and finishes with implied specific facts like "individuals lose their livelihoods and their health", all within a single sentence.

For the record, no accidents have taken place for more than 20 years, no costs have been borne by others and no-one has lost their livelihood or their health. But eco-bimbos have minds that routinely fuse hypothetical possibilities with actual recorded facts, treating them all as equally validated certainties. And the rest of the article is no exception.

The investment funds that might flow into "alternate energy", if the entire engineering/science community took a long Prozac holiday, morphs into an actual flow of investment that the nuclear industry will then capture. The fact is, the investment sector has a long and justified distrust of people who merge imagined potential with recorded results. And they avoid them, as they have done to date with "blow job energy".

There is, in contrast, an existing and potential supply of investment funds for nuclear energy. So the notion that this money would be switched from the alternate sector is pure fantasy.

Similar morphing of fact and projection was exhibited by Actor, Jack Thompson, who came out on world environment day to state that Nagasaki, Hiroshima and Chernobyl were nothing compared to global warming. Again, we have a projection of potential future mortality being compared with actual mortality as if both were detailed, proven and specific fact.

One aspect of the nuclear debate that will never get specific detail from the Greens is the issue of the actual discounted cost of long term storage. Even at 7% interest per annum, the net present value (NPV) of a dollar per year for 50 years is only $13.80 while the NPV over 60 years is still only $14.04. The extra decade of 1 dollar outlays can be paid for today with only 24 cents while the price for additional decades in perpetuity becomes infinitely smaller and smaller.
So any price charged for that service that is over and above that multiple is ALL PROFIT. And only greenfarce appears yet to learn that things rarely get done at all unless they can be done for a profit. Australia can manage this problem better than anyone else so our profit begins long before other nations costs are covered.

And lets not forget the "we don't want to live on a toxic dump" crowd who seriously suggest that there will be some sort of "nuke change", where people move from the cities to retire to a townhouse overlooking the nuke dump in the central desert.

Lets get this clear, SOLIDS DON'T LEAK! If the stuff is down a shaft in solid rock and the annual rainfall is only 100mm then the incidence of percolation of even 1mm below a depth of 1 metre is effectively zero. And if the shaft is sealed then it will need someone to go right out of their way, with some very conspicuous, noisy and expensive equipment, to get radiated. Ditto for theft.

It is an absolute disgrace the way the greens seek to imply that nuclear waste storage would be similar to your local urban rubbish tip located in the Great Artesian Basin. But that is par for the course for the bimboscenti.

First posted by Perseus, Friday, 2 June 2006 12:55:12 PM

Sunday, June 04, 2006

"Sustainable City" is an oxymoron

The term "Sustainable City" is an oxymoron. And will remain so for as long as metrocentrics continue to regard their city as separate to the environment. They try to balance economic, social and environmental outcomes by separating them rather than mixing them together. They gather exclusive economic and social outcomes to themselves while the ecological outcomes, and their costs, are apportioned almost exclusively to areas outside the cities. And they then criticise the overburdened farmers for excessive whinging.

The metrocentrics bear the environmental costs associated with their economic and social benefits and simplistically reason that rural folk should not complain about their lot because they enjoy compensating environmental benefits. That may be so, but health, education and most other attributes of what we regard as quality of life still cost as much, if not more, in the bush.

A truly sustainable Sydney CBD would have vegetated buffers by the Tank Stream. Building heights would be set by the height of the adjacent Blackbutts and there would still be a beach at circular quay. Instead, there is concrete everywhere. And to compensate for this failure, and to maintain a self delusion of environmental sensitivity, the workers in Phillip Street apply regulations that preclude even the most temporary of disturbances within 20 to 100 metres of any farmer's creek bank.

The urban public must understand that the essence of sustainability is balance between economic, social and environmental values and that, by definition, must incorporate limits on scale and intensity.It is the disproportion in the scale and intensity of urban living that contributes most to environmental degradation. Any excess of atmospheric CO2 is not caused by the exhaust emissions of a farmer, or farmers collectively, because their emissions are at a scale that actually fertilise their trees and pastures. There is no compensating absorbtion of urban emissions. Enter Global Warming.

Urban existence need not follow the London, LA to Mexico City model. The Swiss, with their autonomous States (Cantons) and small, high density but socially nourishing cities that remain in touch with their hinterland, are so much closer to a sustainable balance.

Any increase in population in our existing capitals comes at much greater cost than any benefit. We all know that the solution is effective decentralisation but that would require an admission by the cities to themselves as primary cause of their problem. The question is; Are our cities already too far gone to help themselves?

First posted by Perseus, Saturday, 3 June 2006 5:57:11 PM http://forum.onlineopinion.com.au/thread.asp?article=4516

Friday, June 02, 2006

Which tank and how much will it cost?

The optimum tank for your situation depends on your average use, your roof area, your rainfall, your catchment efficiency, your storage capacity, your overflows and your shortfalls. We compiled a series of spreadsheets to make sense of it all and discovered that investing in the right storage capacity is one of the lowest risk, highest return investments you can make.

The average household uses 700 litres a day or 255 kilolitres a year at a cost of 94 cents/kL or $240 a year. If that money was used to pay off a mortgage at 7% interest over the 25 year tank life then a bank would give you 11.65 times the annual payment. But in this case you are not investing for an additional benefit but simply replacing an existing outlay. Capturing your own expense is one of the lowest risk investments you can make. So it is more appropriate to use the official cash rate of 5% which also matches the average yield of a rental house. And this would set the capital value of your $240 water bill at 14.09 times, or $3,380. Spend more and your tank water will cost more than council water.

That is, until the next price increase. Projected to be 6% a year, they will double in 12 years from $0.94/kL to $1.90/kL and this differential will improve the rate of return on your investment accordingly. But even without these savings, the largest 27,000L polytank will give you $300 change from your $3380 break even point. But this is serious overkill for a house connected to mains water.

The average roof is 250m2 and each millimeter of rain makes a litre of water on each square metre of roof. And all of it can go into the tank. Your existing supplier, on the other hand, has trees and pasture in their catchment so only 5% of their rain will flow into their dam. And their storage has no roof so half of that will evaporate to give a net efficiency of 2.5% compared to your 100%.

Without recycling, the average Brisbane household needs only 1020mm of rain (89% of average) to supply all of their water needs. The spread of both rainfall and water use enables smaller tanks to be refilled many times whereas the public water system relies on one big storage that is only filled every five years. And this is a major contributor to public water inefficiency. The annual cost of your tank is covered by many times it’s own storage capacity.

All other factors being equal, the smaller the storage, the more times it will be filled and the lower the apparent cost of a captured tank full. But don’t go out and buy the littlest tank available. The smaller the tank, the sooner it will over flow. A 1000 litre tank costing $430, connected to 250m2 of roof will overflow after only 4mm of rain so most of those valuable summer storms would be wasted. The tank may fill up 264 times but the projected cost of only 12 cents/kL would be illusory because only a small portion of it would actually come out of the tap.

A 22,000 litre tank costing $2,700 would need 88mm to fill and it would lose much less to overflow. It would only fill 12 times a year to produce a projected cost of 72 cents/kL. But even this size will still lose 1.5 tanks to overflow in an average year and will need a 1.12 tank top up from the mains in a dry season. And obviously, the supply of your own water will drop in a bad year and the cost of the tank will be spread over fewer full tanks. In a year with only 81% of average rain (857mm) the average cost of water, including the additional purchases from the mains, will rise to 89 cents/kL.

In an above average year like the past 12 months with 1245mm of rain, the overflow will be greater but the amount drawn from the mains will be lower and the average cost will fall to only 82 cent/kL.

The optimum mix of limited mains extraction in dry times and limited overflow in wet seasons was a 13,500 litre tank costing $2,050. This would need additional outlay on foundations and plumbing but this would be covered by the $850 worth of council rebates. It would deliver an average water cost of 69 cents/kL in a normal year and 74cents/kL in a dry year. And only 13% of total household use would be drawn from the Dams, enabling them to perform their proper role as a supply of last resort to an urban community that has taken all reasonable steps to help itself before putting it's hand out for a public service.

Spreadsheets for modelling water needs and costs are available on request from;

Ian Mott. talbank@bigpond.com.au

Crisis? What Water Crisis?

When I tell you that in Brisbane there is no water crisis, and not even a drought, you could be forgiven for checking my medication. But those who didn't come down in the last shower may recognise the debate being shaped, not so much by a conspiracy but, rather, a loose coalition of the well meaning, with opportunists, excuse makers, and outright departmental shonks. And as is often the case, the most important attributes of the truth, the hard numbers, didn’t even make it onto the interchange bench.

We have the Premier saying, "we're doing our best but I can't make it rain". Others advise that, "even 50 water tanks are no use if it doesn't rain" and before long the tightarses have run amok with mean spirited sanctions on the frail aged. And silly, costly and ineffective measures like mandatory pool blankets indicate that it is “pick on a minority time”. Soon even the most sensible start to wonder if the global warming Bunyip has teamed up with the four horsemen of the apocalypse.

So let’s put this in perspective. My family of five’s annual household expenditure is about $40,000 of which $160 is the cost of water. It amounts to 0.4 of 1% or, dare I say it, two fifths of sweet FA. And that is the proportion of our thinking time that aught reasonably be allocated to the subject. Our problem is that the government owned supplier of this water is advising us that they are unable to deliver the desired product in the volumes required or at the times we require it. And as anyone from a business background will tell you, those that cannot deliver the goods often waste excessive amounts of your time with endless excuses as to why “their” crisis must also become “your” crisis.

Furthermore, this supplier has confirmed their intention to raise their prices for this product that they will deliver less of and with less reliability. So what would an even half competent manager do? He could check the alternative suppliers, or he could bring the function “in-house” and by-pass the incompetent, monopolistic middleman. He could invest in his own value chain, with a water tank or two.

The first thing to do is check the availability of the raw material. At the Bureau of Meteorology he would be surprised to learn that there is no shortage of this raw material. The rainfall data makes it clear that the past 12 months has been far from drought. From May 2005 to April 2006, Logan in the city south had 1,245 mm, 18% above the average 1,058mm. Strathpine in the north had 1,214mm.

So what have these people been going on about? They passed up an opportunity to diversify their catchments more than a decade ago and now want to pass on the higher costs to the customers. And their two largest storages have had a bad year. Wivenhoe had only 550mm in the past year against an average of 1,007mm. Interestingly, the alternative storage at Wolffdene, the right dam, in the right place, at the right time, but vetoed by Goss, had 1,127mm. Clearly, there is a crisis of management competence, not a water crisis.

Councils cannot stop you using other sources but you must remain connected and pay the fixed annual fee of $110. This allows you to use as much water as you can collect in your own tank and only take their water as a last resort. If you are not connected you would have to cover any shortfall by trucking in water at 10 times the cost as some acreage dwellers and farmers sometimes do already.

And never mind the “health concerns”. More than 15 % of Australian households already use tank water, including 37% in Adelaide, and there appears to be no variation between the two in the incidence of water borne ailments. It is a remarkably convenient urban myth that furthers the interests of the public sector water mafia. You are more likely to get sick from your refrigerator, but if managing a fridge is beyond you then, by all means, don’t get a water tank.

A water tank allows you the sweetest pleasure of having as little as possible to do with a whole cohort of bozos who want to share their problem with anyone gullible enough to put up with it.

You’ll save money and make a profitable investment in your own home.