Living standards fall as unreliables rise

Increasing unreliables reduces living standards. Everybody can see what's happening to power bills. There's worse to come. These add inexorably to more and more cost-of-living pressures, giving the lie to government claims they're providing cost-of-living relief.

Temporary power subsidies today are paid for by taxpayers now, or on the national credit card later. We all pay for them, one way or another. When they stop, power bills surge even more.

Energy is the major, pervasive, input driving living standards. It affects all elements in the supply chain. Higher living standards need more efficient use of (net) cheaper energy. Always have.

Because of soaring energy and other costs in Australia, some businesses are already cutting back local operations, or closing down. They cannot pass these higher costs on to their customers. Some are shifting production offshore to more competitive, lower cost, locations.

Australia was, and still is, a resources superpower. That reflects our natural comparative advantage. Yet we are pilloried for contributing 1% to global emissions production (and falling).

Worse, governments now assert Australia has a 'new' global 'comparative advantage' in at least two of the unreliables, because we are a sunny and windy spot, and the sun and wind are free.

This is nonsense. It 'gaslights' people who think. It's the province of economic illiterates.

Allowing for weather intermittency, the cost of unreliables' harvesting equipment (PVs, turbines, batteries, and specialised new transmission lines everywhere), and the short economic lives of the first three of these, Australia has neither a comparative, nor an absolute, advantage in them.

We cannot compete with other countries producing this stuff at scale. Sensibly, we import it. We export stuff where we have a cost edge. In net terms, our living standards gain from this trade.

What can we learn from the current unreliables bluster to promote higher living standards?

Recognise announcing something does not make it so. Previous and current prime ministers and premiers have learned – and taught us – this lesson. By ignoring it. They still do.

Stop the 'ad hominem' political 'blame game'. It doesn't fix problems. Political groupies aside, it probably turns most quiet voters off. Most avoid the polls. Until election time, of course.