Comments by "Tony Wilson" (@tonywilson4713) on "ABC News In-depth"
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ENGINEER HERE: There isn't one of these projects that doesn't have some merit and some real payback to us the general population of Australia. The real problem is HOW these projects are planned from the start and that includes the contracts that are rarely negotiated in good faith by either or both the government or the contractors.
So for everyone interested here's 4 basic project items and for anyone who has ever done a project and wondered what went wrong simply ask which of these wasn't done well enough. Sorry if some of this is longish but I hope it will explain a number of things and how to NOT have projects go wrong.
1) SPECIFICATION:
This is the basic what, why and how.
What are we going to build - a bridge, a road, a building, a sports stadium or even a submarine.
Why are we building this bridge, road, building, sports stadium or submarine.
The what and why don't need much detail. Its can be as simple as, We need this bridge to go over that river because the old bridge needs replacing.
BUT the HOW must be detailed and most importantly it must explain what STANDARDS must be met. Most people and especially lawyers don't realise that most engineering standards are NOT required by law or regulation. There's actually very few standards that are required to be met by law and yes this stuns most people. So its incredibly important that every standard that a project needs is absolutely listed and described for its applicable use IN THE CONTRACT(s).
The single biggest issue with lawyers and engineering projects is NOT what they put in the contracts but what they leave out. See the comment at the bottom.
2) RESOUCES:
In all engineering projects there are 3 main resources - labour, machinery and money.
Labour from top to bottom needs to not only be available but also the required skills needed need to be available. This is an area where non-engineering human resource people are utterly hopeless. For all their claims (and I have experience with this issue) they CANNOT tell the difference between an mechanic and mechanical engineer, electrician and an electrical engineer or any other engineering skill set.
Machinery is another monster bug for engineers. Its no use planning to rent a 50ton crane when you need to lift a 100ton object AND YES THAT HAPPENS. You have to have people who know their subject plan what they need and when they need it. If you suddenly have to rent things like cranes, digging machines, scaffold,... etc. the people supplying those services can charge whatever they like because they know that holding up a billion dollar project is worse than paying ridiculous money to rent something.
Money is the worst thing engineers have to deal with because there's always some clown waving an economics degree like a caveman swinging a club screaming "What's the business case for that?" or "Who's going to pay for that?" In 99.9% of cases the reason why its costing more than planned is because the economics clown interfered back at the planning stage.
3) TECHNICAL VIABLITY: This is something that most engineers hate because it involves Donald Rumsfeld's 3 knowns. There's known knowns, known unknowns and unknown unknowns. Planning is about having as many known knowns as practical and the best way to have that is CLEAR SPECIFICATIONS. Think about the Apollo program. It had the very simple 2 PART specification. 1 - get a man to the moon and 2 - get him back SAFELY. That was why they could go there 9 times and land 6 times and not lose anyone in the process. The times they lost people were in training accidents where they were less clear about what they were doing and people were rushed and NOT checking properly.
4) COMPLETION DATE which is also called CLOSE OUT: This is possibly the worst thing done in all projects and again goes back to the specifications. If a job is NOT clearly specified then its gets very murky to what it means to be finished. Despite what people might think an unclear completion is music to a contractor because its easy to make a lot of money late in a project. Most of the major items are already in place so its mostly labour or variations and both are more money on top of profit. As we can all see from some of the enquiries into the Big 4 consultancies getting repeat work is what they want more than anything. In an engineering the equivalent to that are the contract variations at the end of a project. The way to avoid that is by (right up front) detailing in the specification: "This is what we want and this is what we mean by being finished."
Go check any project you know of and you'll quickly see the problems that happen when one of these things is not done.
And a perfect example of bad planning is Snowy 2.0. Yes as an engineer I can emphatically state that it is a project with merit and eventually we the Australian people will benefit from it. HOWEVER when you plan on building a power station you also need to connect it to the power grid. That was NOT done in the initial plans and that's where the biggest cost blowouts are. Plus the contractors KNOW they have us by the short and curlies because what's the point of building Snowy 2.0 if you don't connect it to the grid. It has to be connected so they have us. Its a perfect example of the problem of what's left out of the contract.
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ENGINEER HERE: This is reasonably easy to understand and my apologies if this gets longish.
Its ANOTHER outcome of what we now call neoliberal economics.
The short answer is we need more supply because anyone who ever did an economics course (and I did as an elective) gets told that IF demand is greater than supply then PRICES GO UP. In Australia we have built vast arrays of solar and wind BUT we have not built any new large bulk capacity BUT we have turned of several like Hazelwood in Victoria and Liddell in NSW. The last time Australia built a power station with more than 1,000MW of base load capacity was 1993 when our population was 17.6 million and we are now just over 26 million.
For sure Callide C (810 MW) in 2001, Millmerran (852 MW) in 2002 and Kogan Creek (750MW) in 2007 helped but there's another 5.2 million people in the country since Kogan Creek was commissioned.
For sure Snowy 2.0 at 2,000MW will help but that's not a base load generator its a storage system. Something else still has to generate that 2,000MW.
Bottom line we need to build new major base load power stations in South Australia, Victoria and New South Wales and plan on building future major base load power stations in Queensland and Western Australia. To give you an idea of the costs involved the Hinckley Point C nuclear power station with 2 x 1,630 MW units is now expected to cost £35 Billion (about AU$66.5 Billion). So the cost of 1 of those 1,630 MW units is about AU$33.3 Billion each.
Based on what power stations have either closed or are going to close through age we'd need 1 or 2 in South Australia, 3 or 4 in Victoria, 4 or 5 in NSW and 1 or 2 in Queensland. In total that's 9 units to produce 14,400 MW up to 13 units producing 20,800 MW. The combined total of Australia's coal fired plants is just over 24,700 MW.
That's just to replace lost capacity from power stations just getting too old to keep them running. It has nothing to do with climate change or anything else. That's between AU$300 and AU$433 Billion just to fix the stupidity of the last 25+ years it doesn't account for future population growth and we have some people wanting us to grow to as many as 55 or 65 million.
The long answer on how we got here is below.
I started informally studying economics because I got so frustrated from clowns waving economics degrees interfering in projects. What I found was that things like Reaganomics and Thatcherism didn't end they morphed in to this thing we now call neoliberalism or Chicago School economics if you're an academic. At its core is the line expressed by Ronald Reagan himself "government is not the solution to our problems; government is the problem."
In practice it has "the belief" (and its only a belief) "That anything a government does the private sector can do better." Part of that was Milton Freidman's "Greed is good" line because in his view greed drives efficiency because its financially rewarded. Milton also gave us that the free market can and will solve everything because it self corrects. Australians heard a version of this recently when Philip Lowe governor of the RBA said that the housing crisis was just the market correcting itself.
Philip Lowe's comment about the housing market SHOULD CONCERN US ALL about the energy market, because part of the neoliberal ideology is that regulators should do as little as possible and let the market self correct.
The 2008 GFC told us that's nonsense. It didn't self correct and there were $TRILLIONS in BAIL OUTS.
The current housing crisis tells us that's nonsense because its not self correcting.
The current inflation driven by supply chain issues and profiteering tells us that's nonsense because its not self correcting.
The current energy crisis tells us that's nonsense because its not self correcting.
This neoliberal nonsense of self correcting markets just DOES NOT WORK for certain things. Housing and energy being 2 of those things because they take time. It takes months to approve and build a house and longer if its something like a multistory apartment complex. Power stations take years to approve and if they are large scale can take years to build.
Education is similar it takes 13 years of primary and secondary education and another 4 doing a degree, cadetship or apprenticeship just to make a functioning adult. There is no business case for spending $2-300,000 dollars on a 5 year old hoping that in 17 years they'll do something.
The new nuclear plant the British are building, Hinckley Point C, took 7 years to design and approve. It will take 10 years (at least) to complete and power up with first power around 2028/29. It will take at least 15 years to break even on costs and that's only if its energy is sold at higher rates. There is no viable business case in the "Greed is good" neoliberal model that says you can spend £35 Billion and the break even point is 30+ years in the future.
During an engineering consult circa 2016 I discovered that Australia not only hadn't built any new large scale bulk delivery power stations since the late 1990s we haven't even got any proposals on the table to discuss. Snowy Hydro 2.0 might have a 2,000 MW power station but its NOT a generator its a pumped hydro energy STORAGE system. Those 2,000 MW have to be generated somewhere else.
This is the basis reality the neoliberals have wrong. There are some things that Governments have to do because they don't need a viable business case for shareholders. CEOs need profits while Governments needs a functioning economy. Governments measure themselves by GDP which is dependent on employment, wages and the effects of things like education and health care. Its complex while a CEO's task is simple we made $X and that gets $Y per share - done.
When Governments build power stations the outcome is measured in GDP growth. They don't have to care if it makes just 0.01% profit or even if it loses money. So long as the outcome is GDP growth which can happen when companies can start or expand on cheap energy then so what. More people get employed. More people can buy things that other people make - including houses.
So when we privatised our energy sector back in the 1990s we went from a system that was measured as part of GDP growth and designed to create jobs and growth to a system that had but one purpose. Milton Freidman said it in his famous 1970 New York Time essay "There is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits..."
If you ask why none of the so called experts in this video have NO ANSWERS its very simple THEY DON'T HAVE ANY. They all come from think tanks (like Tony Woods), lobbyists (like Ben Barnes) OR they are economists, lawyers, business leaders, academics,.... They are all people without any motivation to solve anything. This is something British Rebel Economist Gary Stevenson (here on YT) points out that is WRONG with current economics - too many of the people speaking have no motivation in solving anything.
And why don't they dare talk about solutions whether they be hydrogen, solar, wind, nuclear and there's a whole raft of nuclear technologies to discuss.
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@Eric-kn4yn You're 1/2 right.
Getting the business relationship with China for raw materials has been awesome and 1,000s of Australians have done well out of it, BUT sending slabs of our manufacturing to China has been a farking disaster and letting the Chinese steal intellectual property and trademarks has been a disaster. However clowns like Hawke, Keating, Howard, Costello, Rudd,... etc. kowtowing to them on these issues has been even worse because now we all have to deal with the ramifications.
Its all part of the basic rules of politics.
Rule 1: If "it" works then take credit for "it" even if you don't deserve any credit at all.
Rule 2: If "it" doesn't work then IBDeW:
a) Ignore and act like "it" doesn't exist (as Keating just did on certain questions); or
b) Blame someone else for why "it" didn't work (as Keating just did on certain questions); or
c) Deflect and change the subject (as Keating just did on certain questions); or
d) When all else fails and you can't take credit, deflect or blame the go full attack mode. Call anyone who asks a fraud, fake news, a scumbag or a clown. Just as Keating did when asked about if he'd be just as critical of the Chinese Communist Party and what they have done in Hong Kong and to the Uyghurs. Most importantly NEVER answer their question.
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On the demonization of other countries for the sake of globalization, I think you have that a little flipped around. I don't think they are demonising countries FOR globalization but to deconstruct globalization.
America (again thanks to Trump 🤷♀🤷♂) is trying to de-globalize and that's the one policy of Trumps that Biden is running with. In fact it possible to claim, if you consider the computer chips, that Biden is even more hawkish than Trump on that subject.
On China there 's a couple of interesting things that are starting to come out. Peter Zeihan talks about their demographics and its a disaster that's slowly eating the Chinese economic model. The 1 child policy was way more successful than anyone realised and it was kept in place for way to long. Those factories full of cheap labor have a problem. As the older workers retire there's not enough younger people to replace them. Its created a labor shortage and that's caused wages to rise making China less competitive.
If you then add in what Biden has done on the microchip front and Chinese industry has a problem.
Its really quite simple after exporting jobs fore several decades America wants those jobs back in America. Because of Trump's hawkishness that's being pursued aggressively. AND it includes dragging jobs out of Europe. Sure the yanks will still buy 1,000s of Audis, BMers, Mercs and Porsches. They'll just be made & assembled in Louisiana, Michigan, Ohio, Texas,... There'll still be some bits made in Europe but most of it will be in America.
Never forget in America nothing wins elections more effectively than jobs.
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@davidcarey9135 Sorry this reply is long but I’d like to know what you think.
I had a stunning bit of enlightenment recently. I was watching Steve Keen explain his modelling work to a couple of British students. At one point Steve jumped on his favourite topic of slamming classical & neo-classical economists like William Nordhaus and their inability to properly model things. In the middle of this rant, he suddenly said "They don't even have energy in their models."
As an engineer that stuns me because EVERYTHING in human society needs energy and the means to produce & use it. This is why economists have nothing but vacuum on the energy crisis. They don't have any suggestions let alone solutions. They don't even have hot air because hot air requires energy. Its like they just did what some others I have encountered. They drew a line in the dirt and said everything on that side of the line is an engineering problem and has nothing to do with us.
I have this idea I call "Engine Theory." I like to explain it in terms of ancient Egypt because that was the world’s first economy. Prof. Mark Blyth (Brown U.) has repeatedly pointed out a Bank of England report (Q1 2014) that has 2 papers that explain what money is and how it’s created BY WORK. The problem is as any engineer will tell you all work is a function of using energy. As in work is produced by converting energy via an "engine" hence the name Engine Theory. Simply put, anything that converts energy into work is an engine (mechanical, biological... whatever). Smith & Marx both termed everything in terms of labour. I think they got it wrong because there’s other ways to do work than just through labour. My idea is that all work stems from the conversion of energy into work no matter if it’s done by a person, animal or machine. Therefore, all economic value comes from energy being consumed or tapped by these “engines.” The fundamental rate of return is actually a function of energy efficiency. The better you consume and use energy the better the rate of return and more wealth is generated.
Going back in ancient Egypt they had slaves that sowed & reaped food, built houses, roads and monuments and they were fuelled by food. They had ox that pulled ploughs & heavy wagons and horses that pulled light wagons & chariots and they were fuelled by fodder. The ox & horses aren’t too dissimilar than the comparison of diesel to petrol vehicles. The Egyptians also had sail boats powered by the wind to go up & down the Nile. The difference was that the sails tapped a natural energy source (the wind) rather than consumed fuel like the slaves, ox & horses. Irrespective they had a variety of engines because different engines do certain types of work better and more efficiently and that’s a major part of Engine Theory.
In Engine Theory you have different engines for different tasks, and you evaluate them on their efficiency to do that task. In Egypt they could have pulled ploughs with slaves but that’s not as good as an ox. They could have pulled chariots with ox, but that’s not as good as ahorse because chariots need speed. This is why today all the wind, solar, nuclear and other people proclaiming “we have the solution that will save humanity” are all wrong. They have to start seeing themselves as PART of an overall combined solution instead of the single magical “does it all” solution.
Then there was the industrial revolution when we started making better engines that could convert fuel (quite literally) by the mountain and with it do mountains of work making mountains of wealth. Plus, some of these news engines didn’t do work and instead they produced energy that other engines could tap instead of converting fuel. We call these things power stations, and they could not only make more energy but do it better allowing energy to be more readily usable across a broader economic landscape. This is why I think economists have it so wrong. Karl Polanyi said you can’t commodify people because they are people. I think energy is the similar. You can’t commodify it because it works at such a fundamental economic level. Neoliberals are trapped in their own ideology and just see it as another thing they MUST marketize because marketization is the best way to distribute anything and everything. Its an ideology not backed up by real world experience.
I think a lot of people realise the neoliberals are wrong they just don’t know how to argue it and that’s what I am trying to do. I started informally studying economics out of the frustration of clowns waving economics degrees interfering in projects.
Part of the argument is: If work creates value (as economists say), then if they don't include the energy to do that work then they have been WRONG since the dawn of civilisation because the work that has been done has always required energy. It didn’t matter if the fuel was food, fodder or the energy was the wind. They had to convert fuel & energy into work. The massive change was the industrial revolution when we started producing BULK CHEAP energy. The bug in the neoliberal computer (as Mark Blyth puts it) is that they thought they could commodify it like they think they can do with everything and that’s just NOT TRUE as Polanyi pointed out.
And this is where the neoliberals have utterly stuffed up. They switched the BULK CHEAP energy systems from economic drivers into profit machines making energy more expensive and with it everything else. That's made everything else less economically efficient because all of the work became more expensive. Unless we can flip that back we’re stuffed. The energy transition won’t make any difference so long as it remains a for profit system because the economics won’t change. We not only have to change to cleaner energy to save the planet but (economically speaking) more efficient to save all our economies which are already on the precipice of a major catastrophe.
We dodged a big event in 2008 but the bail outs only made the clowns at the top think they can keep gambling with our future even more. I don’t know if you’re aware but the global FX-Swap market which is a glorified casino now has a betting pool of US$100 Trillion, which is around 5 times the size it was in 2008. Bizarrely NONE of it’s on any balance sheet because of the nature of FX-Swaps and how accountants account for them. Most of it isn’t even held by banks. It’s held by non-banking entities gambling on currency shifts. All it will take is the wrong clown to make the wrong mistake and 2008 will seem like a bad fart in an elevator because there won’t be a way off of this elevator as it plumets down the shaft.
Sorry, this was so long but I'd like to know what you think.
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@davidcarey9135 No, No you misunderstand.
The fuel type is irrelevant THE COST of the energy to BOTH society and industry is the important thing.
You are totally right about Britain being the first to use coal at scale gave them a growth spurt. The most important thing there is they changed to a better "engine." Remember the rail industry changed from coal to diesel and electricity after WW2 and there was NOTHING forcing it except they were better engines economically. This is something I am trying to get all the players to understand. They various technologies will be the main player wherever they are the better engine. I really do hate when the wind, solar, nuclear (all types), wave and FOSSIL FUEL people all claim that they are the ONLY WAY. That's just garbage.
That's the lesson of history, starting with the Egyptians and every economy since. EVERY type of fuel/engine system has its place and its not because people want this or that its because they are the better engine. I seriously can't see fossil fuels being 100% abolished because there will simply be places where its better than everything else, but you can't tell that to a lot of people. Likewise for the fossil fuel people to think that wind & solar aren't going to be major players in certain markets is equally delusional. In some places they will need nuclear because its the best engine in that place. Hydrogen will be a major player, but because of its basic nature its not going to be the savior that many claim and that's being said by someone who's a huge believer in hydrogen. But then I also know the limits of hydrogen.
And here's the grating thing - they all lie and all misdirect and it takes hours for engineers to explain it. When I mean they all lie. I mean ALL OF THEM. Wind, solar, nuclear, fossil fuel,..... ALL OF THEM. Even the hydrogen people lie and that's my thing.
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