Sunday, January 13, 2013

On Jonathan Moylan and the Whitehaven coal hoax

The latest in a long line of Aussie hoaxes was perpetrated to great effect this week though its creator might yet pay a penalty of ten years and half a million bucks. Anti-coal activist Jonathan Moylan is in the wars for putting out a press release in the name of ANZ Bank on Tuesday. The release said the bank was divesting its $1.2b loan to Whitehaven Coal for its Maules Creek Coal Project. It was an important announcement. In Whitehaven’s own words, Maules Creek is “one of only a few remaining tier 1 undeveloped coal assets in Australia. It is also one of the largest coal deposits in Australia with 362 Mt of recoverable reserves.”

Photo credit: ABC TV News
Before it could be exposed as a hoax, it triggered a stock market collapse for the coal company. While almost all of the losses were subsequently recovered before the day was out, Moylan’s actions raises serious political as well as ethical and legal issues. Using dubious means, he focussed attention on the important question about whether we should be investing in major coal projects in a time when fossil fuel emission is the biggest issue we face as a species.

Maules Creek is in the heart of the rich Gunnedah Basin in NSW. That state and Queensland produce 97 percent of Australia’s black coal. It is an industry in decline with Australia producing 405 million tonnes of raw black coal in 2010-11 down from 471 Mt. in 2009-10. Yet Australia remains the world’s fourth largest coal producer and the world’s leading exporter with markets in Japan, South Korea, China, India and Europe. Coal fired generators are leading contributors (20 percent) to a greenhouse effect as heavy-grade emitters of carbon dioxide and methane into the atmosphere.

The Centre for Climate and Energy Solutions acknowledges fixing the coal issue will be difficult. Coal is cheap, is important for meeting energy needs in the developing countries, and has good lobby groups in countries like the US, which is the “Saudi Arabia of coal.”  Coal-fired generators could still play a role if carbon capture and storage (CCS) technology ever takes off, possibly 10-15 years away.  There would also be a need for a carbon market, priced at around $30 a ton of CO2 and a way of retrofitting CCS into existing technology.  An ANZ that truly considered its customers interests, would ensure such boxes were being ticked. But it has no plans to do so and there is no scrutiny of whether such interests are considered.

Instead, the argument focussed on Moylan with those dividing into two sides on whether his hoax ends justified the means. Those that supported him like Bob Brown identified Moylan’s action as a necessary civil disobedience that brought out in the open ANZ’s investment in coal.  That brought out the coalition’s Eric Abetz saying the ends did not justify the means. He turned it into an attack on Lee Rhiannon and the Greens’ “extreme political tendencies.”

Whoever is right, there is one thing for certain - Moylan planned his attack well. He put together a fake ANZ press template, a website and dummy email inbox online. The press release was a remarkable use of managerial language to frame an argument that would be quite unusual and brave in an Australian business context. Moylan used the voice of ANZ Corporate Communications to announce the bank would not support the project. Toby Kent, “Group head of corporate sustainability” was quoted to say the company wouldn’t invest in coal projects that cause “significant dislocation of farmers, unacceptable damage to the environment, or social conflict." The decision was made after “a careful analysis of reputational risks and analysis of the returns on this mine in the current climate of high volatility in the coal export market.”  The released concluded with the statement ANZ was undertaking “a review of coal and gas investments on productive agricultural lands and areas of high biodiversity.”

Moylan’s fake ANZ release was quickly picked up by AAP Newswire who failed to conduct any of the basic identity checks that would have exposed the hoax. At the bottom of the emails are phone numbers for Toby Kent and Joanne McCulloch “Media Relations Advisor” which if anyone had bothering phoning would have quickly exposed this email as a hoax.  Either that or a quick check of ANZ’s database of media releases would have been enough to dispel, or at least doubt, the information.

Instead AAP swallowed the news whole and provided it directly to the markets. When traders in the Australian Stock Exchange saw the newswires shortly after midday Tuesday, they went ballistic. Whitehaven bore the brunt as 85% owners of Maules Creek Coal. Maules Creek is 18km north-east of Boggabri on the Kamilaroi Highway between Narrabri and Gunndah. It is also just 16km from the railway line servicing the coal terminals at the Port of Newcastle, 360km to the south-east. Maules Creek’s current resources are expected to support a large open cut mining operation for 30 years at an average saleable coal production rate of 10.8 million tonnes per annum (Mtpa). Subject to approvals, the first coal production will commence in mid 2013, with saleable production exceeding 10Mtpa from 2016 onwards.

But it was a dead duck without ANZ’s investment, and within minutes Whitehaven shares plunged almost 10 percent from $3.52 to $3.21. Whitehaven Coal lost more than $276 million in market value. It capped off a bad year for the company since it merged with Nathan Tinkler’s Aston last April giving him 19.4 percent ownership. The share price has lost over half its value since then with CEO Tony Haggarty and the board blaming it on uncertainty due to Tinkler’s financial woes  - they want him to divest to institutions. Tinkler was quick to return fire on Haggarty and the board saying he wanted to increase his holding not decrease it.

That plan may be in tatters after Tuesday. The price did not recover until the real ANZ responded with a media release (pdf) entitled “Fraudulent media release regarding Whitehaven Coal”. This release (which looked remarkably like the fraudulent one) said ANZ remained “fully supportive of Whitehaven Coal.”
At the end of trading, Whitehaven was just 2c down on the day reflecting the fact there were other issues with the project. The damage done to Tinkler, was variously estimated to be anywhere between $50m and $180m (assuming it wasn’t him who picked up the shares when they were on the rebound).

Whatever the damage to Tinkler or Whitehaven, Moylan will suffer significant collateral damage. There is a strong prima facie case his actions were illegal according to Section 1041E of the Corporations Act 2001 (Cth).  That act states it is an offence if a person makes a knowingly false statement that is likely to make people dispose of shares. The maximum jail term for individuals is 10 years, with fines of up to $495,000. Organisations face fines of up to $4.6 million.

The Australian Securities Investment Commission said it would be investigating whether there had been a breach of Corporations Act rules on false or misleading statements. According to dean of law at the University of Western Sydney Michael Adams the legislation that deals with corporate fraud imposes a high penalty on false or misleading statements about traded securities on the ASX. Adams believes a successful prosecution will hang on the difference between a public nuisance and civil disobedience. “A protest normally provides publicity for a cause and brings the matter to the general public’s attention, but causes little harm to the community,” Adams said. “A fraud – and in particular one that impacts on the share market – has huge consequences”.

Research fellow on ethics Edward Spence picked up on Abetz’s argument about the ends and the means. Spence said Moylan’s ethical failings were harmful to the “integrity of the digital informational environment”. This is the environment whose trustworthiness, Spence said “we all rely on to conduct our legitimate informational transactions.” We are not only biological beings, he said but also and increasingly informational beings. “When the informational environment is harmed we are also harmed.”

Spence may be exaggerating the harm here as it ignores the fact that checks and balances such as AAP did not do its job properly. Nor did any of the rest of the media use the hoax to expose ANZ's dealings with the coal industry. Why didn't anyone ask the bank if they would do "a review of coal and gas investments on productive agricultural lands and areas of high biodiversity".Why is it acceptable for the bank to continue to invest in projects that cause "significant dislocation of farmers, unacceptable damage to the environment, or social conflict?"

We're waiting.

Thursday, January 03, 2013

A new start it ain't: Jenny Macklin and unemployment

The new Australian political (and election) year did not get off to an auspicious start with the Macklin affair though some good might yet come of it. The affair has seen a government minister tied up in knots about a nonsensical hypothesis, the media whipped up in frenzies of righteous wrath, and the leader of another party now wanting to live out the nonsense.

The problem occur on New Year’s Day. Families Minister Jenny Macklin held a door-stop media conference at a Melbourne hospital to promote the government’s Dad and Partner Pay scheme introduced on January 1. The scheme brings in government-funded paternity leave for two weeks so it should have been a good news story for Macklin to deliver.

However the journalists there were not interested in the good news, they were more interested in a bad news change that came in on January 1. This change was a follow on from a change John Howard made in 2006 which was to end the supporting parent allowance when the child turned eight. Howard exempted those already receiving the parenting payment before July 2006 who were able to keep it until their youngest turned 16. This meant there would be exemptions until 2014. However the Gillard Government has now ended that immediately, saving $728 million over four years.

This change shifts 80,000 single parents from the parenting payment to the Newstart allowance when their youngest child turns eight.  Some parents will be up to $110 a week worse off with the new arrangements and it was this issue that journalists turned to when one asked Macklin if she could live on the dole on $246 a week. Macklin could have done many things at this point, including refusing to answer on the grounds it was a very stupid question. Fellow Minister Tanya Plibersek would later answer the question “properly” by saying "I don't think anyone thinks it's easy."

But no such luck for Macklin, who gave the worst possible answer. “Yes I could”.  Macklin then made matters worse by omitting her answer from the transcript issued by her office. Macklin tried to push on by telling journalists they had simply applied existing rules to people who had on the payment since 2006. “What’s important for people who are unemployed is that we do everything possible to do everything we can to help people get into work and that’s what we’ll be doing with these single parents as well,” she said.

But it was too late. The damage was done by the killer quote. TV cameras captured that answer which immediately provided the headline for broadcast and print media and the subsequent non-appearance in the transcript merely fuelled speculation of a cover-up. Susie O’Brien in the Herald Sun went so far as to call it “obscene”.  Australian Council of Social Service chief executive Cassandra Goldie also took Macklin to task, but ridiculed calls for the minister to try surviving on the Newstart allowance. “You can't replicate that experience if you are a senior member of government,” she said.

Goldie’s comment came as Greens’ leader Adam Bandt  repeated tragedy as farce by announcing he would live on the $246 allowance for one week, challenging Macklin to do the same. "Once you take into account your rent your bills, your food, there's not much change left over from $35 a day,” he told reporters in Melbourne, but didn’t elaborate how much of his modern lifestyle and well-tailored suits would be pushed to one side to make ends meet in that week.

Bandt’s stunt had little to do with the Newstart Allowance and everything to do with his struggle to retain Melbourne at the next election. But the whole affair does highlight issues with the low benefit rate when there are systemic problems of under-employment Australia has not solved. While the current rate of unemployment is low at 5.2 per cent by historic and international standards there is a high degree of volatility within this rate. In March 2012 the unemployment rate in Tasmania was 7.0 per cent, nearly twice the 3.7 per cent rate in the Northern Territory. Similarly, in March 2012 the unemployment rate for those aged 15-19 is 18 per cent, more than three times the national average.

There are “dole cheats” but for the vast majority, the dole queue remains a humiliating experience  for most people. Economist John Quiggan said that instead of completing the Howard agenda, the Gillard government ought to be looking at increasing the real value of benefits, “allowing the unemployed to share in some of the growth in incomes for the community as a whole”.  Even thinking about the absurdity of living on $246 a week, reminds us that many people have to do exactly that and some parents of those aged eight and over will now pay the price for the Government’s budget balance obsession.

Meanwhile Prime Minister Julia Gillard preferred to focus on solving the inequities of employment in the “patchwork economy” rather than increasing dole payments. “Some today see a problem, they offer blame”, Gillard told the Sydney Institute last year. “I see a person, a person who can work. I offer only opportunity, I ask only responsibility in return.”  If Gillard gets the public space to tackle that agenda, she might yet be grateful for Macklin’s mistake.

Tuesday, January 01, 2013

Should people be free to bushwalk unprepared?

A Victorian bushwalker in NSW has been fined on charges of “lack of planning or preparation”. The 29-year-old man, name unknown, went off on a long walk last Saturday  in the Blue Mountains, west of Sydney. He was leaving from Newnes and heading east across the rugged Wollemi National Park to Colo Heights. He carried a kilo of potatoes and an unknown quantity of naan bread which he estimated would last him three days.

He told friends who dropped him off he would meet them at the other end on Wednesday at 3pm. When he didn’t rendezvous at the appointed time, his friends alerted authorities who mounted a search and rescue operation. With the help of two helicopters, they found him just four hours later on the track. The first helicopter spotted him and the second winched him out of the Wolgan Valley. According to Police, the man had suffered a minor ankle injury and declined treatment. Police took him to Katoomba station for questioning before giving him a $500 infringement notice.

None of the media covering the story stated why this was an offence (they were all too obsessed with the spuds and naan) but they did quote NSW Police Force Rescue commander Brenton Charlton who said the route through remote terrain was extremely difficult to complete safely and had taken much longer than estimated. "Getting the basics right with trekking is so easy - all people have to do is notify the police or other responsible person of their trip intention and carry a personal locator beacon," Charlton said. "Making use of available technology, together with some commonsense trip preparation, could mean the difference between life or death."

Whatever about that quantity of food being sufficient for three days,  it is clear the man was underprepared. Though some people on that bushwalk forum said the walk was possible in three days, even a modicum of research would have uncovered it was likely to take much longer. According to this site devoted to walks at Newnes, the track to Upper Colo is listed as a very hard grade walk that takes seven days. The walk “ is for experienced and well prepared walkers only! Country traversed is rugged and there are no tracks beyond Annie Rowan Creek.” Its advice is “Check with your local bushwalking club before attempting this one.”

Clearly the Victorian did not take this into account. But should that be an offence? And should all bushwalkers be forced to take a “personal locator beam”?  PLBs are distress radio beacons which transmit location information about individuals directly to Search and Rescue forces letting them know that the owner is in grave and imminent danger. They retail on Gumtree for around $225 second hand though Blue Mountains police apparently do give them out for free. When Briton Jamie Neale was found alive after being missing in 2009 for 12 nights, Blue Mountains police superintendent Tony McWhirter told media they have free PLB for bushwalkers so they can locate them. However since then, the law has changed.

The NSW police media release (which was the basis for all media stories - no journalist did original research) did state why the fine was activated. It was issued under the National Parks and Wildlife Regulations of 2009 for engaging "in activity that risks the safety of self/others". The relevant clause is 22(1)(d) which reads “Sporting, recreational and other activities
(1) A person must not in a park:
(d) engage in any activity or recreational pursuit that involves risking the safety of the person or the safety of other persons or damaging the environment.
Maximum penalty: 30 penalty units.”

As a contributor to a NSW buskwalk forum said, the fine was troubling. “Guy sounds like an idiot", said colinm, “but I don't see that it necessarily warrants a fine. Since he's a Victorian, I bet he doesn't contest the charge, so is a bit of a soft target.” So should bushwalkers be forced to be prepared or should anyone have the right to go out and do what they want? Was it necessary for an expensive search and rescue operation to be mounted when the man was just four hours late? And what equipment should be compulsory on any trip? These angles were not covered by media. In their efforts to make the trekker look like a fool, the naan bread proved more alluring than the nanny state.