Encouraging workforce participation

Leigh Sales' interview with Labor Leader Bill Shorten on ABC730 on 5 May 2016 drew questions from an article in The Australian on 13 February:

"The one-third of working households receiving more in government benefits than they pay in tax — many of them families — will be targeted by the federal government...

There are 3.6 million households that are net beneficiaries of the tax and transfer system out of 8.8 million and among them 1.9 million are working age households."

The answer to those questions Leigh Sales asked was contained in the same article:

"As far as the objective of the system is lifetime income smoothing, the percentage of net taxpayers is to some extent a ­prisoner of demography.

If society wanted families to have children, this was part of the deal." 

That some number of households may be "net beneficiaries of the tax and transfer system" during part of their working lives is a sore point in the Abbott and Turnbull Coalition Government.

An article "Half of families pay no net tax if welfare benefits deducted, new figures reveal" published in May 2014 shortly before the Joe Hockey delivered his first budget alleged:

The exclusive modelling for News Corp Australia by the National Centre for Social and Economic Modelling at the University of Canberra reveals 48 per cent of Australia’s 12.2 million “income units” pay no net tax.

What the real figure is remains unclear. Many of the 3.6 million households targeted by Scott Morrison's 2016 budget that are "net beneficiaries of the tax and transfer system" may in fact be retirees living on the age pension.

A set of charts published with the more recent article on 13 February 2016 shows these households targeted in the 2016 budget are mostly "single parent" working households and "older" households that aren't of working age.

Child care and other family allowances enable workforce participation for people who otherwise would not find it economic to work. This creates jobs in the child care industry, boosts economic output in the businesses in which they are employed, and increases revenue and profits for businesses where these families do their shopping.

Cutting transfer payments to these families disadvantages everyone: lowering workforce participation will reduce jobs and growth.

As children grow up, attend school and then leave home these families may well become net contributors of tax, that is used to help younger families just as they were once helped, and to help provide the age pension to others, until they themselves eventually retire and once again become net receivers of tax transfers.

It is simplistic and naive to ask whether such an arrangement is "fair" or "acceptable". An objective understanding is that it makes bloody good sense.

The Coalition Government made the same simplistic error with its thought bubble of imposing high tax rates on backpackers who generate income for Australian farmers.  The likely effect will not be an increase in Government revenue at all. The backpackers will simply choose different holiday destinations, crops will go unharvested, farm income will fall and Government revenue will be slashed.

Such naive measures that haven't been thought through will reduce workforce participation.

They are destructive of jobs and growth.

Why the totally dumb #backpackertax idea in the first place? nothing but destruction and thought bubbles #auspol pic.twitter.com/DSC3vrZfoY

— HRH Terry Australis (@AustralisTerry) May 17, 2016

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Media release: #backpackertax delay announcement falls short @FinlayBrent https://t.co/JOYnheWSBx #accelerateag #ausvotes

— National Farmers Fed (@NationalFarmers) May 17, 2016

Bill Shorten explains the opposition's response to the federal budget

Labor Leader Bill Shorten faced Leigh Sales on the ABC’s 7.30 Report last night on his budget reply speech.

Mr Shorten’s claims that a mother on $65,000 with high school aged children will be worse off under the budget plan faced scrutiny.

Leigh Sales claimed that about half of Australian taxpayers, or 3.6 million households, get more in benefits than they pay in tax and asked if Mr Shorten thought that's acceptable.

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Sales: Let’s go straight to the Budget, you seem upset that the Budget isn’t giving every last Australian a direct handout. Is that your idea of responsible economic stewardship?

Shorten: Well, it’s a question of priorities, Leigh. What we believe is that the Government shouldn’t be giving millionaires a $17,000 tax cut whilst a working mum with two kids at high school on $65,000 is actually facing losing over $4,700...

...

Sales: Sure, but let’s stick for the moment with the low income earners that we’ve been talking about. Many people under $80,000 a year get more in Government handouts than they pay in tax.

Shorten: Oh, I think if you look at who does best out of the system it’s the very high net worth individuals.

Sales: But that’s true isn’t it what I just said.

Shorten: Well, actually, I don’t agree that Australians who get child care funding from the federal government are getting as much as the people who get the tax subsidies from negative gearing.

Sales: But the people who are getting tax subsidies are actually paying the taxes that pay for the other people who aren’t paying any tax to have child care.

Shorten: I think, if this country - if the argument that the Liberals are advancing is that because you’re rich and you pay the taxes you’re meant to pay, somehow you’re at a disadvantage to people who are poor...

Sales: With - just to return to my point about households. According to the ANU Center for Social Research, 3.6 million households get more in handouts than they pay in tax. That’s about a third of families. Do you think that’s acceptable?

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3.6m households pay no net tax after churn

The Australian | February 13, 2016 12:00AM
The one-third of working households receiving more in government benefits than they pay in tax — many of them families — will be targeted by the federal government [emphasis added] in a bid to make the system fairer, cut spending and rein in waste.

Scott Morrison, Social Services Minister Christian Porter and their departments are working on ways to untangle the tax-and-transfer system with a focus on the 3.6 million households who are net beneficiaries of government payments.

...

 “We actually have an earnings problem in this country,” Mr Morrison told The Weekend Aus­tralian. “People are not earning enough. The country needs to earn more. And the tax burden on the earners in this economy is something that is a very high economic goal that we have to ­address. Fairness is a two-way street. You’ve got to look at the fairness to those who receive the benefits, but it’s got to be fair on those who are paying for it.”

...

Modelling by the Australian National University Centre for Social Research and Methods using 2013-14 ABS Survey of Income and Housing data paints a picture of these households, setting them squarely in the territory of “Howard’s battlers” who swept the conservative prime minister to victory in 1996.

There are 3.6 million households that are net beneficiaries of the tax and transfer system out of 8.8 million and among the 1.9 million working age households, 608,509 of these are couples with dependent children.

...

ANU Centre for Social Research and Methods research fellow Matthew Taylor said: “People get a bit excited about the lifters and leaners rhetoric but I would suggest, in as far as the objective of the system is lifetime income smoothing, the percentage of net taxpayers is to some extent a ­prisoner of demography.”

If society wanted families to have children, this was part of the deal, he said.

Practical solar thermal energy power stations

Designers of solar thermal power stations may not realise that a few minor changes are all it takes to:

• Reduce the cost of solar thermal power and
• Provide reliable 24 hour, 7 days a week operations.

A substantial capital cost is the heliostat field that focuses solar energy on the tower where elecricity is generated. Two design options are available to lower this significant cost component.

• Improve the efficiency of power generation in the solar tower, and
• Simplify the two-axis tracking technology that repositions each heliostat as the sun moves across the sky.

Another substantial cost is the choice of components to provide power generation during cloudy periods and at night. The simplest design option is also by far the lowest cost solution:

• Use an alternate energy source to maintain energy production at all times.

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Improving efficiency

The size and cost of the heliostat field is directly related to the efficiency of power generation.

•  A 10 megawatt power station that achieves only 25 percent thermal efficiency requires a heliostat field able to focus 40 megawatts of solar thermal energy on its receiving tower.
• The same power station with generating technology that achieves 50 percent thermal efficiency requires a heliostat field able to focus just 20 megawatts of solar thermal energy on its receiving tower.

The cost of the heliostat field is cut in half by this increase in efficiency.

Simplify the two-axis tracking technology

The cost of actuators to reposition heliostats is another significant component in the power station cost. Usually two actuators are needed for each heliostat.

Every heliostat in each row of heliostats needs to rotate by the same angle and at the same rate each day as the sun tracks from east to west. Just one actuator connected via a fixed beam is all that is required to provide the east-west movement of each row of heliostats. Another actuator on each heliostat is still required to provide tracking for the vertical movement each day.

Improve the efficiency of power generation

Concentrated solar thermal power stations typically use steam turbines for power generation. These are able to achieve thermal efficiencies around 25 - 35 percent at best.

A far more efficient technology is combined-cycle generation using a solar-air turbine in the first cycle with a steam turbine in the second cycle.

• A conventional internally heated combined-cycle gas turbine power station achieves around 60 percent thermal efficiency. Using an externally heated solar-air turbine turbine reduces the efficiency to around 50 percent. 

Use an alternate energy source until energy storage is much cheaper

Concentrated solar thermal energy varies steadily through the course of each day and can fluctuate in very short intervals if clouds cast moving shadows over the heliostats.

• A simple and effective solution is to incorporate a temperature sensor on the output from the solar-air turbine to control a gas burner  fitted to the turbine.

Government 'own-goal' on uni fees

Labor has accused the federal government of an own-goal after the Parliamentary Budget Office predicted student loan debt will blow out to $11 billion. (Read more: "Government 'own-goal' on uni fees: Labor")

A Parliamentary Budget Office analysis predicts the cost of student debt will climb to $11 billion within a decade, as total exposure reaches $185 billion.

Simon Birmingham struggles to blame others for this own-goal.

The Coalition Government was warned two years ago, in May 2014, that its University funding policy would blow a hole in the budget. Joe Hockey and Christopher Pyne didn't do arithmetic in 2014:

#qanda Christopher Pyne recommends University Students go into debt but claims it is an emergency if the Government has a debt. LOL. #auspol

— Askgerbil Now (@Askgerbil) May 5, 2014

.@mdlp00 If University fees double and the Govt lends the money to students then GOVT DEBT for funding fees will double! #Budget2014 #auspol

— Askgerbil Now (@Askgerbil) May 16, 2014

.@RuthTownsendlaw Joe Hockey's plan to double University fees will create a budget black hole. A DEBT and DEFICIT mess for Labor to clean up

— Askgerbil Now (@Askgerbil) May 16, 2014

The Coalition creates a new "Debt and Deficit" mess. Deregulated University fees mean BIGGER loans to students. A BIGGER deficit. #auspol

— Askgerbil Now (@Askgerbil) May 17, 2014

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But the Coalition Government still doesn't do arithmetic...

MR: Birmingham confirms $100,000 degrees still Liberal government policy. #auspol #highered https://t.co/96HzbXp2aT

— Kim Carr (@SenKimCarr) April 4, 2016

Large companies, economic growth and tax reform

You might have missed it but 579 large companies paid no tax in 2013-14 but the Turnbull Government's priority is jacking up the GST #auspol

— Wayne Swan (@SwannyQLD) January 6, 2016

ABC Radio AM
Small businesses frustrated large companies 'fiddling the system', pay no tax

Naomi Woodley reported this story on Saturday, December 19, 2015 08:10:00

NICK GRIMM: A leading small business group has taken aim at the big end of town, saying too many large companies aren't paying their fair share of tax.

The Tax Office this week released a report showing almost 600 public companies didn't pay any tax in 2013-14, including 60 per cent of those in the energy and resources sector.

The Council of Small Business says Australia has a good tax system and it accepts there are legitimate reasons why companies may not pay tax.

But the Council's chief executive, Peter Strong, has told our reporter, Naomi Woodley, that too many companies are "fiddling" the system, damaging confidence and the budget.


(Audio player added with code generated at "How to add a music player in Blogspot". Thanks Amanda.)

A novel approach to tax reform - Social Capital Royalty

The report from the Tax office summarised below shows most large corporations make little taxable income and many pay little or no tax.

They can be classified as being poor, fair and good contributors to taxable income and tax payable.

Those that are poor performers may be fiddling their books or simply are not very profitable. In either case imposing a "Social Capital Royalty" on these leaners can boost investment and economic growth.

This royalty can be avoided simply by lifting profitability and taxable income into the "fair" category. Corporations liable to pay the "Social Capital Royalty" will be motivated to change accounting practices or to invest to improve performance. Failing to do either will encourage their elimination by more innovative business competitors.

This is a relatively efficient mechanism. It provides business with motivation to improve performance rather than relying on compliance and enforcement activity by the Tax Office to weed out accounting fiddles.

The "Social Capital Royalty" should be seen as the minimum or "flag fall" liability by a corporation for the opportunity to operate a business in Australia. The amount of "Social Capital Royalty" liability by each corporation should ensure some minimum proportion, say 2% of total income, is collected by the Tax Office, firstly as tax payable with a variable royalty amount to make up any shortfall.

All of the additional revenue raised from the "Social Capital Royalty" can be distributed as a "Good Economic Performance Bonus" to corporations with taxable income of at least 5% of total income and tax payable of at least 2% of their total income.

Businesses in the "fair" category that do not have to pay any "Social Capital Royalty" can become eligible to receive a "Good Economic Performance Bonus" by investing to  lift their competitiveness and profitability.

This approach to tax reform gives an incentive to businesses that perform poorly to invest to raise productivity and profitability. It also encourages and rewards those businesses that pay their fair share of taxes.

Summary of the Tax Office report

The "Corporate tax transparency report"released in December 2015 covers 1,539 public companies that had a total income of $100 million or more in the 2013-14 financial year.

1,249 of the companies had a total income between $100 million and $1 billion each and the remaining 290 companies had a total income exceeding $1 billion each.

In each of these 2 groups a significant number of companies had taxable incomes between nil and 5 percent of their total income.

Of the companies with taxable incomes of more than 5 percent of their total income a significant number had a tax payable between nil and 2 percent of their total income.

The table below shows that 740 (48.1%) of the companies receive 14.0% of total income and paid just 1.6% of the tax payable by the 1,539 companies.

Only 82 (5.3%) of the companies receive 27.5% of total income and paid 68.9% of the tax payable.

Income tax information for 2013-14

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Companies with Total Income from $100 million to $1 billion
	Taxable Income from nil to 5% of Total Income
		Nbr	Total Income	Taxable Income	Tax Payable	% of Sum of Nbr of Companies	% of Sum of Total Income	% of Sum of Tax Payable
		740	227,411,885,976	2,635,600,521	627,167,780	48.1%	14.0%	1.6%
	Taxable Income 5% or more of Total Income and Tax Payable from nil to 2% of Total Income
		Nbr	Total Income	Taxable Income	Tax Payable	% of Sum of Nbr of Companies	% of Sum of Total Income	% of Sum of Tax Payable
		154	50,309,170,667	4,861,416,908	599,193,549	10.0%	3.1%	1.5%
	Taxable Income 5% or more of Total Income and Tax Payable 2% or more of Total Income
		Nbr	Total Income	Taxable Income	Tax Payable	% of Sum of Nbr of Companies	% of Sum of Total Income	% of Sum of Tax Payable
		355	105,485,898,123	19,323,412,036	5,167,853,388	23.1%	6.5%	13.0%
	Sum of Companies with Total Income from $100 million to $1 billion
		Nbr	Total Income	Taxable Income	Tax Payable	% of Sum of Nbr of Companies	% of Sum of Total Income	% of Sum of Tax Payable
		1249	383,206,954,766	26,820,429,465	6,394,214,717	81.2%	23.5%	16.0%
Companies with Total Income of $1 billion or more
	Taxable Income from nil to 5% of Total Income
		Nbr	Total Income	Taxable Income	Tax Payable	% of Sum of Nbr of Companies	% of Sum of Total Income	% of Sum of Tax Payable
		159	479,744,441,621	7,271,212,018	1,388,426,103	10.3%	29.4%	3.5%
	Taxable Income 5% or more of Total Income and Tax Payable from nil to 2% of Total Income
		Nbr	Total Income	Taxable Income	Tax Payable	% of Sum of Nbr of Companies	% of Sum of Total Income	% of Sum of Tax Payable
		49	317,549,625,271	34,371,492,696	4,621,252,061	3.2%	19.5%	11.6%
	Taxable Income 5% or more of Total Income and Tax Payable 2% or more of Total Income
		Nbr	Total Income	Taxable Income	Tax Payable	% of Sum of Nbr of Companies	% of Sum of Total Income	% of Sum of Tax Payable
		82	448,522,165,053	101,443,717,535	27,458,923,189	5.3%	27.5%	68.9%
	Sum of Companies with Total Income of $1 billion or more
		Nbr	Total Income	Taxable Income	Tax Payable	% of Sum of Nbr of Companies	% of Sum of Total Income	% of Sum of Tax Payable
		290	1,245,816,231,945	143,086,422,249	33,468,601,353	18.8%	76.5%	84.0%
Sum of All Companies above
		Nbr	Total Income	Taxable Income	Tax Payable	% of Sum of Nbr of Companies	% of Sum of Total Income	% of Sum of Tax Payable
		1539	1,629,023,186,711	169,906,851,714	39,862,816,070	100.0%	100.0%	100.0%

Optimising the price-performance ratio of solar thermal power stations

Optimising the price-performance ratio of concentrated solar thermal power stations is an interesting mathematics puzzle.

Fossil fuel power stations have traditionally been designed without the benefit of advanced compressor technology that achieves close to isothermal compression. Without this technology all designs necessarily aim to maximise the temperature at which fossil fuels are burned.

Optimising the price-performance of concentrated solar thermal power stations has two significant differences:

1. New compressor technology allows optimisation without the need for extremely high temperatures and substantial waste heat being discharged as a result.
2. Solar thermal energy able to be used in a solar thermal tower reduces as the temperature increases. At the maximum attainable temperature known as the "stall temperature" energy arriving in the collector is being re-radiated into space at the same rate as it arrives. No energy is available to be converted to electricity.

As a result of the last point above, an increase in efficiency that relies on a higher temperature will eventually result in less electricity being produced because less solar energy is being converted - even though the efficiency of conversion is greater. For instance 50 percent of 100 kilojoules is more than 75 percent of 60 kilojoules in the situation where 40 kilojoules are lost due to a higher temperature in the solar receiver.


This video describes the difference between steam turbine power plants and gas turbine power plants. Concentrated solar thermal power plants use the same technology without using fossil fuels as the source of thermal energy.

Steam power plants and compressed air turbines can only convert about 35% of the energy collected into electricity:

• On the back end of the steam turbine the steam must be condensed back into water.  During this condensation process, heat is “rejected” up cooling towers and into the atmosphere, resulting in a loss of 30% to 40% of the original heat energy supplied to the system. More energy is then used in pumping the condensed water back into the boiler at very high pressure.
  
  
• Compressed air turbines discard a large amount of energy collected in the exhaust flow out of turbine. More energy is used by the axial flow compressor that compresses air on input to the turbine. 

"Solutions" focus on methods to make use of the heat energy wasted by these engines. One often-used approach is to build an entire steam power station behind a compressed air turbine generator! This "solution" is known as a combined-cycle gas turbine or "CCGT" power plant.

For reasons that are not clear solutions that simply avoid the waste of thermal energy in the first place are overlooked.

Adding a high-efficiency compressor to the front of a conventional axial-flow air compressor and turbine generator allows the exhaust to cool to ambient temperature with no heat energy wasted.

Hicor’s technology achieves a more efficient compression process by minimizing the temperature rise

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Compression Basics

The Hicor technology achieves a more efficient compression process by minimizing the temperature rise associated with compression, improving efficiencies over conventional compressors by 30% or more.

At its most basic, compression is a mechanism by which work is put into a fluid and results in an increase in pressure. Heat is also generated as a by-product of compression, which serves to make the process less efficient by turning some of the input work into heat instead of pressure. As the gas being compressed heats up further and further, the compression process gets less and less efficient.

Hicor’s technology achieves a more efficient compression process by minimizing the temperature rise associated with compression, improving efficiencies over conventional compressors by 30% or more.

Hicor’s proprietary compression technology provides a myriad of additional benefits as well, including fewer moving parts, less vibration and noise, and a variable pressure ratio. Finally, Hicor’s near-isothermal compression technology allows for compression ratios of 30 to 1 or higher, reducing system level complexity and resulting in lower capital and operating costs.

Positive Displacement Compression

The compression process can be displayed graphically, as in the pressure-volume (PV) plot shown below. The curves in a PV plot show how the pressure increases as volume decreases. For different compression processes, the curves will vary. The work of compression can be visualized as the area under the curve corresponding to a given compression curve.

All compression processes fall between two extremes: adiabatic, where no heat is exchanged with the outside environment and the energy put into the system remains internal; and isothermal, where energy is removed from the system in the form of heat and the temperature of the gas remains constant.

In practice, all compression processes fall somewhere between adiabatic and isothermal and are known as polytropic processes. To achieve a more highly efficient compression process, it is ideal to reduce the polytropic constant to as close to the isothermal process as possible, where the polytropic constant is 1.

The Hicor proprietary compressor design is capable of achieving polytropic constants as low as 1.06, improving efficiencies over conventional, near-adiabatic compressors by as much as forty percent.

Would you be surprised if one day energy was free?

Part 1 - Canberra August, 2004

"I've always been really interested in recreating space phenomenon in the laboratory. It's very difficult to measure in space to measure the aurora although it is a true wonder in seeing these lights in the sky. But to simulate this in the laboratory, to do experiments on it and then try and understand what is happening I think for me is one of the greatest joys that we've been given", said Dr Rod Boswell.

First you make the plasma by zapping a gas with radio waves - "microwaving" it. The atoms change into electrically charged particles called ions. Cut the end of the tube and the ions all shoot out, creating thrust - plasma thrust.

"This is Wombat. It's called wombat because it's got four legs and sort of looks like a wombat. You can see here we create a plasma, this is the glowing gas you can see in the end there. So the plasma's created here then moves into space. And if you look in there, ah, it always amazes me. There's this blue column of plasma which is shooting out from the plasma source," Rod explained.

Rod made quite an impression around the world with his Wombat plasma generator. NASA took some of his ideas to design tiny satellite guidance thrusters.

Anxious to find new ways to make plasma thrusters work better, Rod assembled a team of young physicists, and encouraged an atmosphere of ideas and creative thought.

"I came here to ANU because I thought that this is one of the top laboratories in the world. The environment is just perfect and it's really good for creativity," explained Dr Christine Charles.

Professor Christine Charles
Head of the Space Plasma, Power and Propulsion Laboratory
Australian National University

Christine, freshly arrived from France, soon became inspired by Rod's enthusiasm for plasmas, and for the forces in the universe that generate them.

Rod had recently commissioned a new, improved version of wombat, and Christine was eager to try it out, to see if she could, amongst other things, recreate an aurora in the lab. One day, impatient for results, Christine decided to play with the settings. She was amazed with what happened next.

"I'll show you. Normally this is standard plasma, but on the day, instead of doing what everyone does which is turn the knob on, turn the power on, and see what happens, I did the opposite. I turned the power down and I reduced the flow down. So then you need to increase the magnetic field to be able to contain it. So you do that, you make the measurements with the ions... Look at this, there it is. The hot ions, the plasma is suddenly accelerating, all by itself. It appeared to be in free fall, travelling much faster then I'd ever seen before. And I kept getting this result, and I thought, oh, this is like, oh! What's happening!" Christine recalled.

"The plasma behaves like water tumbling over a cliff, getting faster as it drops. And, just like an aurora, it seems that the plasma actually makes the 'cliff' - all by itself. It's almost magic."

"What Christine found is that under certain conditions instead of just flowing out smoothly it creates this jump, and the ions fall down this, and it's like having two electrodes that accelerate the ions like in an accelerator, but there are no electrodes! The plasma itself forms an acceleration mechanism. It's actually a wonder," said Rod.

Battery storage of renewable energy

You can increase the financial return from an investment in a lithium ion battery pack by your choice of where to use the energy it stores.

For instance if the retail price of electricity is 20 cents per kilowatt-hour then using stored solar energy to replace the purchase of electricity you use in your home will save you 20 cents for each kilowatt-hour your battery pack delivers.

Tesla’s new “Powerwall” home battery will cost $3,500 for 10kWh units

If you chose to pay for the lithium ion battery pack to be built into an electric vehicle then the financial return may be far greater:

• Suppose a small electric vehicle can be fully charged in 7 hours at the rate of 2.4 kilowatts per hour and travel about 150 kilometres on that charge.
• The total amount of energy stored is 7 hours times 2.4 kilowatts which is 16.8 kilowatt-hours for 150 kilometres, or 11.2 kilowatt-hours for each 100 kilometres.
• Suppose a similar small petrol car would use 10 litres of petrol per 100 kilometres costing about $1 per litre. At this price of petrol the fuel cost is 10 litres times $1 per 100 kilometres which is $10.
• Choosing to put your lithium ion battery pack investment in a small car could save you $10 for each 11.2 kilowatt-hours of energy stored in it. 

This is a saving of $0.89 per kilowatt-hour which is more than 4 times the saving of $0.20 per kilowatt-hour if you use the lithium ion battery pack to replace electricity you use in your home.