HOW DO we work out a practical agenda for change?

One element is to make sure that the measures and assumptions that we are using are relevant to the situation that we’re trying to create.

Let’s explore the idea a little further.

On the TV news the other night it was reported, in reference to the many collisions on the Midlands Highway, that traffic on the highway was set to double by 2017. From this it is clear that the impacts of constant fuel price increases are just not being understood or incorporated into our forecasts.

Our social structures and our economic and other assumptions are predicated on affordable and available fossil fuels. Nearly every activity that we are doing requires substantial amounts of energy – transport, land clearing, growing food, building – all these and more have become designed around abundant and inexpensive fossil fuels.

The idea has been that using fuels increases our ‘efficiency’, meaning that a rate of conversion is increased. For example, a man with a shovel can dig a house foundation in a month whereas a small digger can accomplish the task in two days, hence the man with the digger is more ‘efficient’, he’s converted land to foundation in less time.

The term ‘efficient’ applied originally to machines and their relatively closed systems e.g. the engine is more efficient (more power per unit of fuel) at 3,000 rpm. With machines, efficiency relates to how much output you get for a given unit of input.

Applying that same ‘reasoning’ to wider systems, we then (mistakenly) conclude that the faster/bigger we can produce outputs, the better.

Unfortunately this false belief about ‘efficiency’ quickly leads us into serious difficulties, e.g. machines replace people thereby reducing employment and reducing the number of potential customers for products and services, and push manual labourers into poverty. The efficiency idea contains no information about the value of the output, nor any detriments caused by its production (e.g. efficient clearing of forests depletes environments and disrupts water catchments but delivers greater profits).

Machines have been constructed in greater sizes and varieties and now dominate many tasks like mining, forest clearance and long distance travel. The availability of machines has made many new industries possible and has changed the way that we live while simultaneously impoverishing remote communities and throwing unskilled labour out of work.

In a sense, machines became like capital. Ownership of machines gave substantial advantages to dominate the means of producing outputs (wheat, graded roads, loaded ships, food, aerial photos) so those who can operate, and have access to, machines gained a massive competitive advantage – as long as fuel was cheap and available.

Enter high fuel prices

Currently high fuel prices appear to be created by some combination of scarcity, currency changes and market bubbles.

Since the supply of oil is probably finite (a), observers are suggesting that we’re close to using more than half of possible supplies, meaning that oil will become more difficult to pump out of wells and more expensive. We’ve also pushed the price up by engaging in wars in oil producing areas that are disrupting supplies. The crazed US desire to nuke Iran will likely drive oil prices well over $200 per barrel, and potentially create a world in which access to oil is severely limited as military forces around the world stock up for a militaristic future.

Oil has been mainly priced in US dollars. Unfortunately the value of the US dollar (b) is being attacked by US administration policies that increase the money supply while driving the US deeply into debt through expensive wars and outsourced manufacturing.

Market bubbles are created by futures and other markets changing perceptions of oil value and affecting prices in that way. Currently there’re reports (c) that US bankers, who have posted losses of billion due to dodgy financial instruments, are now making up for those losses by pumping US taxpayers’ money into commodities speculation and hence driving up the price of oil, wheat, rice etc. In other words they are creating global inflation so that they can make mega profits to offset their own mistakes.

Whichever of these is the case, it looks as though oil is very likely to keep going up in price.

A case study

Someone phoned me last week to give me the fuel costs of operating a B double log truck.

Truck mileage is approximately 1 km per litre.

Average annual distance driven is 100,000 km.

Thus if diesel is $1.60 per litre, then the annual diesel bill will be $160,000.

That’s a lot of money for a mom & pop trucking operation to shell out.

If/when diesel goes up to $2.00, that fuel bill will be $200,000, an increase of $40,000 per year! That’s on top of all of the other increases that truckers have to face.

Thinking about this a little longer, if there’re 500 truckers in Tasmania that’s 500 x $160,000 in fuel per year or $80,000,000 per year in fuel costs. That’s a hell of a lot of money just to turn trees into woodchips. On the carbon front, that fuel will produce around 155,000 tonnes of CO2 to further damage our climate.

On the shipping side, figures from Pete Godfrey suggest that for a ship to get to Europe from Australia consumes over 700 tonnes of ships bunker fuel which would emit about 2,200 tonnes of carbon dioxide. (Fuel is 86% carbon by mass, CO2 adds the weight of 2 oxygen atoms to the carbon atom)

The simple idea of efficiency collapses in these situations and can lead us to highly dysfunctional outcomes.

Back in the world

Someone went to Chickenfeed and has been buying 48 page ruled exercise books for 1c each. How will our pulp be able to compete in a market like that?

We’re back to the critical question – should we be selling our trees as low value, high volume commodities or as high value low volume timbers?

The market sets the price of commodities so cost efficiency is a key to making money in the woodchip industry. Because selling into commodities markets focuses an industry on cost cutting, it has the effect of lowering investments and slashing employment by using ever larger machines.

It is Gunns choice of this market that has trapped them, and their various apologists, into a cost cutting market in which they suffer serious disadvantages like labour and fuel costs.

It’s pretty obvious that making furniture from a tree is a lot more labour intensive and takes a lot more time, effort and money than converting the tree into wood chips. It also creates a lot more employment and produces a product that is highly differentiated, thereby enabling the creator/seller to have a far greater influence on price than they have with commodities.

Net contribution (d)

Instead of using measures like efficiency for our social and industrial systems, we can look at the overall contribution of any given effort to our socio-economic systems. To do this, we need to assess the positive and negative consequences of our actions and the combined impacts that they have on the social system. When we do this, we often reach very different conclusions about where we should, and should not, invest our time and attention.

The narrow, benefits only studies carried out on the pulp mill proposal, were restricted to the ‘efficiency’ with which the proponent could make money from Tasmania’s timbers. It should be clear by now that those studies were entirely inadequate, it was the negative net contribution of the mill to Tasmania’s peoples that gave the lie to forestry’s claims of 95% support for the project, later proven totally wrong in poll after poll.

Many people have pointed out the low to negative social returns of wood chipping our forests, and now that oil is shooting up in price and our airlines are slowing down and cancelling flights, we need to really start to work out which industries to support and which to leave to free market correction.

An agenda for change and development

Building an acceptable agenda for change requires that we have useful ideas about what we want and need, so that we have a means of assessing what to do. It also requires that we have useful ways of measuring our success so we need to be clear on the metrics (means of measurement).

Tasmania has many clearly desirable characteristics that differentiate Tasmania from most other places. These include low population densities, natural beauty and some remaining accessible areas of forests.

We might expect many people to visit, and possibly move to, our island to experience these characteristics.

In addition Tasmania’s reputation for being green and natural enhances our ability to create and market foods and other products at premium prices (e.g. King Island’s dairy products).

We also need to explore the basics in light of the changes to fuel and other factors like water. Should we invest in better public transport? (Tourists and residents may not want to drive everywhere) Should we protect our food growing capacities? (DB gets points for this) Should we develop the clean green brand to help our food producers? Should we allow plantations to take our water for nothing?

It’s almost impossible to support a massive commodities business like wood chipping while trying to build a clean green brand and encourage tourism. It’s the 21st century trying to accommodate 19th century ideas.

According to the industry, forestry in Tasmania is sustainable which must mean that they don’t really need subsidies. We can therefore use the money and resources that have been extended to forestry for other purposes.

By the simple act of assuring that the forestry industry has the same responsibilities to the rest of Tasmania that everyone else has, we can free up hundreds of millions of dollars, and close the divide that has been created by setting forestry apart from the communities that it should serve.

One positive signal to the community would be for Premier Bartlett to cancel the PMAA section 11 that blatantly favours the pulp mill operators while removing any rights of redress held by taxpayers.

If Premier Bartlett wants community support, he needs to listen to community concerns and focus his government on meeting broader taxpayer needs than appear on the forestry industry’s agenda.

Watch this space

Mike Bolan
http://www.abetteraustralia.com

Mike
is a complex systems consultant, change facilitator, and executive and management coach.

(a) http://www.theoildrum.com/node/3726?gclid=CKbBlPyx0pMCFRZZiAodxhAmhw
(b) http://www.house.gov/paul/congrec/congrec2006/cr021506.htm
(c) http://www.informationclearinghouse.info/article20011.htm
(d) see Putting Systems to Work http://www.hitchins.net/SysBooks.html#PSTW
(e)http://tasmaniantimes.com/index.php?/weblog/article/law-and-justice-part-company-tasmanian-pulp-mill-assessment-act-2007/
(f) http://www.forestrytas.com.au/sfm

 

 

Mike Bolan

If Premier Bartlett wants community support, he needs to listen to community concerns and focus his government on meeting broader taxpayer needs than appear on the forestry industry’s agenda.