Labor’s cost-recovery model won’t solve the looming electricity network crisis

Rewiring the Nation? [CC0]

Cost-recovery is one way of ensuring major infrastructure investments do not impact the national budget’s surplus or deficit. But history proves this approach to investing in important infrastructure produces outcomes that are too slow, too costly, and ultimately unwieldy. Here’s why.

Networked infrastructure is a peculiar beast that is difficult to change once the physical assets are deployed over the countryside. Roads, telecommunications, and electricity grids are all subjected to physical limitations that are not readily changed. Property rights, planning rules, and habits that evolve around the use of networked infrastructure all contribute to legacies that hinder the adoption of newer technologies.

Decisions made in earlier times result in limitations to what is possible or feasible when we try to build new roads, upgrade the existing copper network, or, indeed, upgrade the electricity grid.

Based on my research into transport and telecommunications infrastructure in various countries over the last 17 years, there are two clear obstacles to upgrading and improving existing networked technologies. 

First, the rights of way established by earlier iterations of the network are difficult to change. This means that farms, factories, houses, and other physical assets that restricted or evolved around pre-existing infrastructure create legacies relating to property rights or otherwise that increase the cost of deploying new infrastructure where compensation to meet the requirement for ‘just terms’ (in Australia) for the purposes of compulsorily acquiring property necessary for infrastructural deployment.

Second, the political situation created by attempting to compulsorily acquire property and then to determine the ‘just terms’ for doing so (and the amount of compensation) becomes embroiled in the bureaucracy of environmental impact assessments, ‘not in my back yard’ rhetoric (NIMBYism), and other matters that are at best explained as ‘political’ and at worst as attempts to thwart progress.

Federal governments have long grappled with methods to deploy infrastructure in ways where the cost is not reflected in the budget surplus or (as per recently) deficit, but rather as an investment. To do so, the cost-recovery method was deployed in Labor’s original plan for the NBN and is about to be adopted for the necessary upgrade to the electricity grid as part of Labor’s commitment to renewables and emissions targets.

The cost-recovery model effectively places the value of the future asset against the ongoing liability on the balance sheet (pending the recovery of the cost through future revenues from the asset). It doesn’t take a genius to work out why proper accrual accounting has been in place for the private sector since 1936 but was only implemented (under much protestation) by the Commonwealth in 1999.

Accounting ideas aside, the trouble is that the Albanese Government’s model for ‘fixing’ the problems in our electricity network is reminiscent of the Rudd Government’s attempt to fix the broadband network.

The cost-recovery model shifts the emphasis away from more-expensive regional areas and uses a system of cross-subsidisation where revenues from high-density areas are used to offset higher costs in the bush. In theory, the process is rational, but in practice, it puts the focus on low-priority areas to generate revenues that will later justify the cost of servicing regional and remote areas.

The emphasis on electric vehicles and the assumption that the electricity network will be able to cope with some 20 million motor vehicles being recharged means there is much to be done.

The Albanese Government is betting on renewables to deliver reduced carbon emissions alongside upgrades to the electricity network using the cost recovery model.

But the cost recovery model, if adopted to upgrade the electricity grid, will likely fail to deliver in the same way that the NBN cost recovery model failed (and continues to fail) to deliver in regional and remote areas.

Cost recovery has effectively become a term for covering up the costs of deploying networked technologies to the regional and remote areas of Australia while providing the latest technologies to the cities.

Labor’s cost-recovery model has become old and tired and helps to hide rather than address the problems of improving networked infrastructure in regional and remote regions. In the meantime, Australians are being asked to relive the inefficacy of the NBN that promised so much but continues to fail to deliver in terms of real outcomes for many Australians.

If we accept that investing in the national electricity network is necessary and costly, then we should also accept that some parts of Australia will cost more than others to service. But Labor’s model will prioritise the urban areas at the expense of remote and regional Australia.

Regrettably, if Labor’s emissions targets are relying on the cost-recovery model to deliver an upgraded electricity network, then we are once again in for a long, expensive journey. 

Contemporary Issues in Multimodal Transport(ation) Planning

Transport Modes, Hong Kong, 17 June 2007.

Recently, I delivered a guest lecture on contemporary issues in transport for the "Emerging Crises in Multi-modal Transport and Digital Transformation and Smart Supply Chain” for AcademyGlobal's CILT International Diploma students.

I adopted an approach to conceptualising multimodal transport and some of the issues that are invariably experienced by liberal democracies where political and property rights restrict optimal solutions, resulting in 'satisficing' different interest groups in building infrastructure.

A video recording of my guest lecture is available below:

The presentation slides are available below:

References

De Percy, M.A. (2018). Road pricing and road provision in Australia: Where are we and how did we get here? In Michael de Percy and John Wanna (Eds.) Road Pricing and Provision: Changed Traffic Conditions Ahead. Canberra: ANU Press.

De Percy, M.A. and Batainah, H.S. (2019). Government-Business Relations: Senior Version. In Chen, P. et al. Australian Politics and Policy. Sydney: Sydney University Press.

Shepherd, A.F. (2008). Stumbling towards nation-building: Impediments to progress. In John Butcher (Ed.) Australia Under Construction: Nation building past, present and future. Canberra: ANU E Press.

Farewell to my best good little man, Pablo

Pablo de Percy. Rest in peace, my little man.

Today, my best friend died in my arms. He was suffering from a distended liver. On 14th April 2022, I took him to the veterinarian at Gundaroo, and the X-rays showed that his lung capacity was severely diminished and that he did not have long to go. Remarkably, he survived the weekend and responded well to the diuretics and the cortisone. He was with us for another 58 days, and for that time I am eternally grateful.

I always had a soft spot for mini fox terriers. At about age seven, we lived in Kingswood, near Penrith in NSW. Growing up there was rough. I routinely had to fight with other kids in the street, and usually it was a pack of them against me. 

One day, while engaged in a bloody fist fight with some kid who was visiting the neighbourhood, and amid the chants from the parents telling the other kid to "knock my head in", the horrid woman who was the host of the visitors had two mini fox terriers. They were barking and I noticed them mid-bout and thought "wow those dogs are awesome!" - I loved the tri-colours and their shape, black, white, and tan.

Pablo in 2011, aka "Marble Joe"

In 2011, I was living in medium-density housing in Palmerston, Canberra, and after returning from Jordan after a six-month sabbatical, I was caught up in the enthusiasm to create a "home" with cats, chickens, and dogs.  I really wanted a male and a female mini fox terrier. One was available from Cooma, coming to Canberra where I could select one from the litter. The other was a rescue from Hay.

Frida, arriving in a B-Double truck. Tiny the Truckie delivered Frida (aka Tiny) to the Yass Service Centre at about 1am the morning after I picked up Pablo in Canberra.

The male, known by the children of the breeder as Marble Joe because of the shape of his head, I named Pablo after Picasso. The female was known as Tiny because she was, well, tiny. She was named Frida after Frida Khalo.

Pablo with Frida, 2011

When I arrived in Watson to choose from the litter, the breeder suggested I just hang out with the pups and the mother and see what happened. I squatted down among the litter. Pablo walked straight up to me and sat between my legs as I squatted, a position he would assume right up until his last day today.

It was pretty straightforward after that, and I brought Pablo home with me. I picked up Frida that night and for the next four and a bit years the two of them walked with me every day. At one stage, Pablo would walk 16km each day with me, until his feet hurt and then he walked with me every other day. But he was fit and strong and always by my side.

Pablo had some issues though, and he spent some time under observation at the vet in Fyshwick, which cost me a fortune to tell me nothing. 

I had some experiences with greedy vets who appeared to be interested in upselling based on my moral gullibility until I met Jan Spate at Hall. Jan was incredible and charged prices that everyone could afford. The way she was treated by her colleagues was abysmal.

Frankie in 2015

After moving to Gunning in late 2015, I first met Joseph from Gundaroo South Veterinary Clinic when I needed to have my Tenterfield Terrier-Jack Russell cross, Frankie, vaccinated. We didn't hit it off at first but Joseph came to be a friend and I miss him now he has retired and moved away. Thankfully Alex, our new vet, has been a godsend and the local vet continues to be affordable.

After years of friendship, companionship, and counselling, on 14th April 2022, Pablo was short of breath and not in good shape. X-rays revealed that his liver was distended and he had less than 20% of his lung capacity remaining. The prognosis was not good, and I was told that if he survived the weekend, he might stay with us for a little while longer.

Pablo with Desi during his final days.

During the next 58 days, Pablo responded well to the diuretics and cortisone until the evening of 9th June when he was short of breath and lethargic. He survived the night but he did not eat in the morning and even had trouble taking his medications with cheese, his favourite treat. By midday, he was unable to walk and I made the call to the vet. Pablo's life was set to end at 5.30pm.

I am no stranger to sobering moments with pets. My cat, Desi, has skin fragility syndrome and should have been put down when he was 12 months old. He is now four, and although he suffers superficial wounds and an inoperable case of cherry eye, he is still kicking on.

After much research, and working with Joseph the Good Vet, we worked out what the condition was and also that Desi was allergic to beef. Giving him beef collagen to help with his skin condition was counterproductive. After a few months he no longer needed the cortisone, so now he has his own room and pretty much does whatever he wants.

Pablo loved to go for walks. In his prime, he would do 16 km per day with me.

Frankie, the Tenterfield Terrier-Jack Russell cross, one day was shaking and lethargic. After tests, she was found to have high levels of ammonia poisoning. I thought she must have been eating the fertiliser, but after much research and discussion with Joseph, we discovered that she had Addison's disease. She now has a relatively normal life with daily medication and occasional doses of Prednisone when she is having a bad day.

We have four cats, two dogs (as of today), and eight chickens, so our pets are a major part of our life. Just before 2pm today, I was fretting about Pablo having to sit in the front of the car for the trip to Gundaroo. Rather than sit around for hours, I thought I would take the dogs to the nearby Riparian Walk and I would carry Pablo while the other two frolicked as they normally do. Pablo gave his tail a wag after I put him in the back of the car.

Pablo had trouble walking so after we finished the walk, I left him standing while I put Frida and Frankie in the car. I then carried Pablo to the car and put him in front of the passenger seat. I drove home and let Frida and Frankie in the back gate, and drove around to the front of the house to bring Pablo back inside.

Me and Pablo, 2022

As we drove off, Pablo turned to face the front of the car, then put his head down in a face-plant position. He looked so cute and at peace but I knew it was the end. When I arrived at the front of the house, I picked him up and he gasped once. I knocked on the door and my partner answered. Pablo gasped once more and died in my arms.

I buried him in the backyard in the place he liked to sit in the sun while I watched him from the kitchen window. 

We sent him off in the little woollen jumper he adored, covered in roses from the back garden. We shared a Guinness with him and covered him over. 

Frankie, Pablo, and Frida at the Gunning Golf Course in 2019

I can't believe he is gone. I am so sad.

If there are no dogs in Heaven, then when I die I want to go where they went. — Will Rogers.