Friday, August 29

Ntandire Church/Hall takes shape from within

The Ntandire commmunity has made great progress by installing seating and glass in all of the windows. They have also purchased more land and erected outside toilets. In their discussions they have proposed the name of the church to be ‘Our Lady Help of Christians’ which will coincide with the name of our parish.

Their hope is to invite the Bishop to bless the Church next year 2009.
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Friday, August 22

Unfinished Superannuation Business

One of the more colorful of Australia’s politicians was Paul Keating; Treasurer for Australia in the 1980’s who went on to become Prime Minister. Keating was quick witted, one not to mince words, irreverent but unusually dedicated. He publically admitted his lack of economics knowledge when first he became Treasurer and in those early days often looked rather bleary eyed and tired, from all night and early morning sessions poring over the latest treasury forecasts.

Personally I always thought he was a very clear thinker and one of the very few politicians whose communications were fluid and smooth; devoid of the usual irritating ums and arrs or awkward pregnant pauses. He was recently interviewed by Kerry O’Brian of the ABC and if you read the transcript I think you will be surprised by that same style. Click here to read the transcript.

Keating instituted many economic reforms; more so than anyone before or after him as he unshackled our labour and banking practices strangled in regulations and allowed the Australian dollar to float. But his most significant reform was to establish a universal superannuation scheme.

Keating’s grand vision was to encourage every citizen to save for retirement, and in the process create a huge pool of investment capital to enrich the nation. At that time superannuation existed for only about 50 % of the workforce and the remainder relied on somewhat meager government payments of the old age pension. Keating’s idea was the aged pension would become increasingly irrelevant as it was quickly superseded by universal superannuation. His vision was that every citizen would have a post retirement income equivalent to preretirement, paid for from a pension out of each persons superannuation account.

It began with the employer paying in a compulsory 4 %( initially Government funded) for all workers and eventually the minimum guaranteed percentage rose to 9%. Many people personally paid in another 5% or even matched the 9% contribution.

It was Keating’s intention to legislate for the 9 % to be increased to 15% but such intentions was denied after he lost the 1996 federal election and subsequently the elected Liberal Coalition showed no interest in increasing the percentage. Actuarially over a working lifetime, assuming just 15% and investing to give real rates of return you will finish up with sufficient funds to accomplish the goal of self funded retirees.

Superannuation remains unfinished business which hopefully will be rectified by the Rudd Government.

Sunday, August 10

Peak Oil

The rapid increase in the oil price to US $150 a barrel and its decline to around $115 has caused me to ponder the peak oil theory.

Peak oil describes the point in time when oil production declines. Peak oil theory assumes demand will outstrip supply as future deposits become increasingly costly to extract, ensuring price escalation and an end to oil dependant economies with catastrophic results. Nobody can tell reliably when that will happen but a groundswell of current opinion suggests it is either already upon us or it is immanent. It is an undeniable fact that reduced oil use, particularly in agriculture and most types of transport require huge societal shifts to sustainable limited alternatives. Alternative technology is far from encouraging. Man made fuels such as ethanol, derived from plants or diesel from coal only partially cover the gap and are much more expensive. There is no viable alternative other than to drastically curtail our use of oil, with less dependence on transport requiring communities to become more self sufficient.

But is the peak oil theory creditable? Are we at the end of what was a brief period of time known as the oil age?

In the past we have encountered similar sharp price increases in the 1970’s when OPEC curtailed production, in 1981 when Iraq was at war with Iran, and in 1991 during the gulf war. This time proponents of the peak oil theory say it’s a different scenario because our reserves have been in decline and new fields will be increasingly costly.

We cannot change geology.

Oil and gas will become increasingly expensive to extract from dwindling reserves. It seems creditable enough to believe we have reached this point in the cycle where oil prices can only escalate rapidly.

Although the statistics available are notoriously unreliable there is however a consistent trend in aggregated world reserves to show a small net increase, cementing a continuing trend of the oil industry each year to find more oil then it produces. In other words the net effect of new discoveries of economically feasible oil fields and assessment of the life of existing reserves of what’s left in the ground showed an incremental increase over previous years, in line with a positive continuing trend. The proponents of the peak oil theory argue some countries like Saudi Arabia deliberately lie about their level of reserves, overstating the figures to justify pumping more oil. But their motivation for doing this is at odds with their investment plans, as they implement large scale infrastructure spending. Why spend vast sums of money to increase your capacity if your reserves are running out!!

Herein then lies the confusion, assuming there is a fudging of figures than the theory remains creditable, if not we have limited time to adjust. And if the latter be correct than the price of oil will actually fall back to somewhere at around $100 per barrel, or even below within a year, assuming countries don’t simply turn off the pump and also barring another War or a cataclysmic event.

What of the future? No one knows!

Maybe there is a window of opportunity over the next 30 years to finally make some headway in reducing our reliance on oil, time for consumers to adjust. Already the recent spike has given a boost towards a more sustainable pollutant free lifestyle.