Everything needs a bail out

Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidise it.
Ronald Reagan
I learned something today; there is a 1c per litre tax on the petrol in my car’s tank used to subsidise Australian oil refineries.

Wait. WHAT???

Worse, the unions and Opposition think this isn’t going far enough.

Primarily, the reason given is the usual “to protect jobs” bollocks.

The government argues keeping refineries open will suppress the price of fuel and modelling suggests wholesale prices would increase by almost 1¢ per litre if production ended, adding up to $4.9 billion over a decade.

Oh good; they’ve got a model.

Well, why didn’t you say so earlier?

We love models in 2020, they’re such a great way to build our confidence in an argument, and they’ve got such a good track record, they’ve never lets us down previously…..

Interestingly, the part not being said aloud in this article is the national security argument. It is referenced by the union though, here.

….our politicians now seem to understand the significance that refineries have to our national and economic security and how difficult the operating environment has been.

A similar low bow was drawn before the car manufacturers took the taxpayers’ money and scarpered.

It was never quite made clear how the ability to build a shitty Holden Commodore would dissuade or slow President Xi and the PLA Navy from steaming into Sydney Harbour and Port Philip Bay with all guns blazing. An allergy to garish paint jobs and shaded windows?

Bill’s Opinion

Putting aside the hilarious concept of Australia needing a refinery for reasons of national security, the protection of refinery jobs is a classic example of the Broken Window Fallacy, best described by Henry Hazlitt.

It’s probably only fair we subsidise fuel refining, after all, we chuck money at wind farms, solar energy and the coal mining industry. Why not oil refineries?

2020; the year we all stopped worrying and learned to love being Keynesians.

6 Replies to “Everything needs a bail out”

  1. Its almost like you are not a real industry if you aren’t worthy of government support.

    Separately, it appears as if William has some time on his hands, given recent posting volumes. Presumably even mercenaries get time off for the Festive season?

    Or you are taking a break before coming in off a long run into what surely will be a consultants’ paradise as Westpac tries to meet its own plan, forcibly agreed with APRA?

    1. “Or you are taking a break before coming in off a long run into what surely will be a consultants’ paradise as Westpac tries to meet its own plan, forcibly agreed with APRA?”

      I note with interest a lot of Wokepac female execs and managers are moving to pastures new, being replaced by “people with penises” (in the vernacular).

      Is this a recognition of the possibility some folk were promoted too quickly and too high simply because of their immutable characteristics rather than an ability to achieve results?

      1. I think there will be element of both. Females in banking are able to move on, so they do. Some will be over-promoted.

        For some of the men, less mobility is available. Additionally, if the men have survived for a number of years, then the payout is worth sticking around for. There will be an element of this at Westpac.

        I do wonder where a bank like Westpac goes. They have no growth options, are selling anything with any difference in risk profile to the core business, but can’t seem to get even the basics of writing a mortgage correctly for a chunk of the customer base. Which is supposedly the core business.

  2. Just so I have this straight…
    The government imposes a 1¢/litre tax on gasoline – the stuff that you are ultimately buying from a refinery, gasoline not being found in nature. There’s some tax-incidence issues there, so let’s just say some of that comes out of your pocket, with the rest being seen in lower refinery margins and reduced retail margins at the pump; we don’t really know the split there, and we don’t care. The government subtracts some deadweight costs of administrators and bureaucrats, and then send the rest of the dosh back to the refinery – the guy that you were buying from anyway. I suppose that lets them discriminate against imported gasoline (is there much refined product imported?) in favour of domestic supply, but wouldn’t it just be easier to let the refinery collect that extra 1¢ directly from you?
    Who thinks of these sorts of schemes?

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