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US

Andrei Skoch: Judge authorizes warrant for US to seize Russian oligarch’s $90 million plane

Andrei Skoch: Judge authorizes warrant for US to seize Russian oligarch's $90 million plane



CNN
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US authorities have obtained a warrant to seize a Russian oligarch’s private plane, valued at over $90 million, for violating US sanctions for Russia’s invasion of Ukraine.

The Airbus A319-100 aircraft, authorities say, is owned by Andrei Skoch, a member of Russia’s State Duma and a billionaire who made his fortune through a stake in a conglomerate in the metals and mining industry. Skoch has been on the US sanctions list since 2018 for Russia’s invasion of Crimea, the eastern region of Ukraine. The plane is believed to be in Kazakhstan, authorities said.

Skoch is the latest Russian oligarch to have one of his luxury assets in the sights of US authorities, who launched a campaign to seize valuable property of those close to the Kremlin in hope of pressing an end to the war.

In June, US authorities announced a judge approved a warrant for the seizure of two of Roman Abramovich’s private plans, valued at more than $400 million. In May, the US took possession of a $300 million super yacht called the Amadea, which is owned by Suleiman Kerimov. And in April, authorities seized at a port in Spain the $90 million yacht Tango belonging to Viktor Vekselberg, a billionaire with close ties to Russian President Vladimir Putin.

On Monday, a federal judge authorized a seizure warrant from a special agent with the US Department of Commerce, Bureau of Industry and Security, which traced the plane to Skoch through a series of shell companies allegedly intended to shield his ownership.

Authorities allege Skoch violated US sanctions by using US dollars to pay the plane’s registration fees to Aruban authorities and pay insurance premiums on the Airbus that passed through US financial institutions. The $113,180 in registration payments and $284,459 in insurance premiums passed through the US banking system without a license to allow payment on sanctioned entities.

The seizure warrant notes that, in addition to the plane, Skoch owns a yacht named the Madame Gu, a helicopter, and a villa at the Four Seasons Hotel in the Seychelles. Those assets are not authorized for seizure. Authorities need to demonstrate that sanctions were violated, such as by money transferring through the US banking system, to seize property.

Prosecutors have creatively used insurance premiums and registration payments to identify assets for seizure since most yachts and plans can’t operate unless they are insured. Since the US, UK and the European Union announced broad sanctions against Russian elites, several insurance companies stopped doing business with sanctioned individuals.

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Business

ABS: Monthly household spending indicator reveals 10 per cent more spending

ABS: Monthly household spending indicator reveals 10 per cent more spending

Household spending in June was up more than 10 per cent compared with the same time last year, as Australia struggles through skyrocketing cost of living.

The latest monthly spending figures, released on Tuesday by the Australian Bureau of Statistics, show household spending increased 10.2 per cent through the year, with a 15.9 per cent increase on services and a 5.0 per cent increase on goods.

Both discretionary and non-discretionary spending increased – not surprising given the rate of inflation is 6.1 per cent.

Discretionary spending rose by 10.8 per cent, driven by spending in recreation and cultural activities, while non-discretionary spending on essentials rose 9.8 per cent, due to the rising cost of transport.

The most significant area of ​​spending was on transport, up 22.7 per cent, driven by higher oil prices due to the ongoing war in Ukraine and the demand for air travel.

Spending at hospitality businesses like hotels, cafes and restaurants was up 17.1 per cent in what is viewed as a positive return to pre-pandemic levels.

There was also strong growth in spending on clothing and footwear – up 16.3 per cent; as well as a 15.5 per cent increase in recreation and culture.

Jacqui Vitas, from the Australia Bureau of Statistics, said June marked the 16th consecutive month of through-the-year increases in total household spending.

“This was off the back of consistent decreases in total household spending from March 2020 to February 2021, as responses to Covid-19 were experienced across the country,” she said.

“Spending categories most impacted from Covid-19 responses – transport, hotels, cafes and restaurants, and clothing and footwear – have now returned to pre-pandemic levels.”

Queensland and Victoria recorded the highest state-based increases in spending through the year, spending 12.4 per cent and 11.8 per cent respectively more.

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Categories
Sports

Contracts, driver market, Daniel Ricciardo future, Pierre Gasly contract clause, McLaren, Alpine replacement

Contracts, driver market, Daniel Ricciardo future, Pierre Gasly contract clause, McLaren, Alpine replacement

The F1’s silly season has well and truly arrived, with the retirement of Sebastian Vettel last week sparking mid-season musical chairs as Fernando Alonso signed with Aston Martin.

Now widespread reports suggest McLaren will snap up rising Australian star Oscar Piastri, leaving fellow countryman Daniel Ricciardo without a seat for next year.

It leaves Alpine on the lookout for a driver to replace Alonso and Ricciardo shaped as the most logical option, having previously worked together when the team was called Renault.

Lamonato: Likely to see Piastri in F1 | 06:01

But there could be a twist which opens up another alternative for Alphine, should they opt to go in a different direction.

A report back in June from RacingNews365claimed that AlphaTauri’s Pierre Gasly has a clause in his contract that would allow him to join a rival team in 2023 — with one condition.

That is that the team is placed higher than AlphaTauri on the standings and Alpine, currently sitting in fourth in the constructors’ championship, would fit that bill.

Now that report has been shared around again given it takes on even more relevance with Alonso’s shock exit.

Gasly’s path back to Red Bull is seemingly blocked after Sergio Perez re-signed until at least the end of 2024 and the Frenchman had been linked to McLaren earlier in the year.

But with Piastri seemingly on his way to McLaren, there would be an opportunity at Alpine should that be of interest to both parties.

MORE F1 NEWS

2023 GRID: How surprise twist could keep Ricciardo’s career alive after Piastri shock

‘DONE DIRTY’: F1 world stunned as ‘brutal’ Ricciardo sacking looms

AlphaTauri's French driver Pierre Gasly could hold the key. (Photo by Jure Makovec / AFP)
AlphaTauri’s French driver Pierre Gasly could hold the key. (Photo by Jure Makovec / AFP)Source: AFP

Speaking back in June, Gasly said he was in “ongoing conversations” with Red Bull’s motorsport advisor Helmut Marko about his future.

“Well, at the moment, it is not a question of looking outside [Red Bull] or looking anywhere,” Gasly told media, per RacingNews365.com.

“I think my contract situation is pretty clear with Red Bull.

“It’s just ongoing conversation with Helmut and the management to know what’s best for all of us. But, as I said, it’s been very logical that they signed Sergio.

“He’s been competitive since the start of the year, so yeah, no surprise on that side. Obviously, it impacts what’s going to happen for my career in the coming years and, based on that, we just need to have normal conversation on what’s best going forward.”

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Business

Elon Musk says he would fight Kim Jong-un, Vladimir Putin

Elon Musk says he would fight Kim Jong-un, Vladimir Putin

Elon Musk has thrown the gauntlet down at North Korean leader Kim Jong-un after challenging Russian President Vladimir Putin to physical blows earlier this year.

speaking to the full-send podcast, Musk said in the hypothetical scenario posed to him that he “wouldn’t say no” if the North Korean leader wanted to fight him.

In March, Musk went viral for a tweet in which he challenged the Russian President to fight.

“I hereby challenge Vladimir Putin to single combat,” he wrote.

“Stakes are Ukraine.”

When asked who Musk’s biggest “enemy” was at the moment, the billionaire mentioned his challenge to the Kremlin.

“I am not sure if they are going to send him, but I did challenge him on Twitter,” he said.

So how exactly would Elon Musk battle against the Russian leader known for his military martial arts background?

Easy. Musk says it’s a little known technique called “the walrus”.

“Listen, (the fight will) be a pay-per-view,” the Tesla and SpaceX CEO envisioned.

“It’ll be an interesting question because (Putin’s) good at martial arts and he’s pretty buff. You’ve seen those pictures of him on a horse.

“He has won like Judo championships… so he is pretty good, but I think I am 30 per cent bigger than him.”

Musk said his “weight advantage” would help him overthrow Putin with his ultimate MMA move.

“I’m going to use a move called ‘the walrus’, where I just lie on you. You can’t get away.”

While Musk is known for making controversial commentary that even he worries “could really backfire” on him, the billionaire has focused part of his Starlink efforts to aid Ukrainians.

As Ukraine enters its fifth month during the Russian invasion, Musk has deployed thousands of Starlink satellites to aid the Ukrainian defensive effort.

Musk activated the broadband service in Ukraine, after a Kyiv official urged the tech titan to provide his embattled country with stations.

“Starlink service is now active in Ukraine,” Musk tweeted, adding “more terminals [are] enroute.”

The Satellites have been a vital resource allowing Ukrainians to maintain access to the internet with encrypted data as Russia seeks to target Ukrainian power grids in attempts to disrupt information sharing.

Read related topics:Elon Musk

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Business

Inflation: Why you could soon be back earning what you did back in 2008

Inflation: Why you could soon be back earning what you did back in 2008

It’s the grim graph that suggests Australian workers face a horror “back the future” scenario on wages.

Real wages – workers’ income that has been adjusted to reflect the rising cost of living – are going backwards.

Perhaps, that’s no surprise to anyone who has tried to buy fresh fruit and vegetables at the supermarket lately amid rising prices and massive interest rate hikes.

But Dr Greg Jericho, the Center for Future Work’s Policy Director has some bad news.

It’s even worse than it sounds.

As households struggle with the rising cost of essentials, real disposable household income is set to fall for months to come sending workers back to what they were earning in real terms over a decade ago.

“The latest Reserve Bank Statement on Monetary Policy estimates that real wages will continue to fall until the end of next year, at which point they will be back to 2008 levels,” he said.

Dr Jericho describes the graph as “horrific”.

“In real terms, prices and wages since 2008 will have gone up by exactly the same amount. So there’s no improvement,” Dr Jericho said.

“Your wages might have gone up 20 per cent. But prices have gone up by 30 per cent.

“It’s horrible. Normally it goes up. Before the pandemic, it was rising, perhaps a bit slower than it was during the mining boom, for example, but it still keeps going up. It’s pretty drastic.”

For three years, the RBA predicts wages are going backwards.

The RBA now estimates that real wages will fall fourteen consecutive quarters from the Sept 2020 quarter through to the Dec 2023 quarter.

The situation won’t improve until 2024 according to the Reserve Bank’s latest monetary policy update released on Friday.

“It’s most pronounced for low income people because what we’re seeing with inflation at the moment is that the prices of what we call non-discretionary items or essential items are rising faster than sort of discretionary luxury items,” Dr Jericho said.

“So the prices of things that you can avoid paying like food, like energy, bills, rent are rising faster than the things you can decide not to buy, like a holiday.

The big drivers of inflation are the war in Ukraine and the supply chain disruptions caused by Covid.

“Higher prices, especially for food and fuel, are likely to impact low-income households in particular (which tend to spend a larger share of their income on these necessary items),” the RBA said.

“While household balance sheets are generally strong and many households should be able to absorb these price increases, others have limited savings buffers and may have to reduce spending elsewhere.

“For some of these more vulnerable households, the impact of price rises will be mitigated to some extent by the indexation of social assistance payments twice per year, though price rises will reduce recipients’ real incomes in the near term.”

But the RBA’s grim predictions also raises fresh questions about Labor’s pledge to address cost of living.

Labor’s election campaign was based around the slogan that “everything is going up except your wages.”

This data suggests that’s not going to improve for months to come.

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Categories
Entertainment

‘Legal theft’: Balenciaga slammed for selling $2557 trash bags

'Legal theft': Balenciaga slammed for selling $2557 trash bags

Luxury fashion house Balenciaga has been blasted for its latest bag – a calfskin leather “Trash Pouch” that looks identical to a bin liner and retails for $A2577.

Dozens of people have taken to social media to accuse creative director Demna Gvasalia of “legal theft”, describing “high fashion [as] a joke at this point” after the aptly-named accessory was made available on the label’s website.

The shiny drawstring bag, made out of calfskin leather, is emblazoned with a subtle logo (to differentiate from … the ones us commoners buy off the shelves of Coles) and comes in black, white, blue, red and yellow.

Asked about the bags backstage in March, where they debuted, Demna joked to WWD that he “couldn’t miss an opportunity to make the most expensive trash bag in the world, because who doesn’t love a fashion scandal?”

Given the furore on Twitter, he certainly got his wish.

“A trash bag purse – @BALENCIAGA deliberately sells ultra expensive signals of low status,” one user wrote.

“The rich buy them to differentiate themselves from the middle class, who are afraid to wear them for fear of being mistaken for low class.”

“I’m convinced Balenciaga is a social experiment because there is no way they are charging 1.8K (US) for a trash bag???” said another.

“Idk how to feel about @BALENCIAGA and their new ‘Trash Pouch’,” tweeted a third.

“I’ve been wearing this exact look for YEARS taking out the trash Sunday nights. Winter ’22 my right eye!”

“What is Balenciaga gonna do next? Bottle up some air and sell it for $999. They’re doing too much with those trash bags,” said another.

“Whoever buys this needs to be thrown out of it.”

At Balenciaga’s March show, models trudged through a fake winter storm lugging the bags, with Demna writing in his show notes that the despair over Russia’s invasion of Ukraine informed the mood of it.

He wrote that he “became a forever refugee” when his family fled the war in his native Georgia, noting the war in Ukraine had “triggered the pain” from his past and highlighted the “absurdity” of fashion week.

“I realized that canceling this show would mean giving in, surrendering to the evil that has already hurt me so much for almost 30 years,” he said.

“I decided that I can no longer sacrifice parts of me to that senseless, heartless war of ego.”

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Categories
Business

Why Canva boss, Cliff Obrecht isn’t bothered by $20 billion loss

Why Canva boss, Cliff Obrecht isn't bothered by $20 billion loss

Despite a $20 billion fall in its evaluation, a tumultuous economic landscape and a sudden string of tech companies announcing staff cuts and sharp declines, Australia’s start up golden child is not worried.

speaking to the Sydney Morning Herald, Canva’s co-founder Cliff Obrecht believed the bearish market would provide the company with lots of opportunities.

“These times of market uncertainty provide a lot of opportunity and other than the external valuation noise, it’s a huge opportunity for us to grow our business,” he said.

This comes as Australia’s largest venture capital firm Blackbird announced they had reduced the holding value of Canva by 36 per cent. Listed as Canva’s largest investor, with around a 14 per cent stake in Canva, this indicated a drop of about US$14 billion or A$20 billion, in the tech company’s estimated value.

“This holding value of Canva is the result of an independent valuation process that was completed by a big four accounting firm and adopted by Blackbird’s valuation committee, in consultation with our auditors,” the company shared in a statement to news.com.au.

Before this, Canva managed to more than double its worth in 2021. After acquiring a valuation of $19 billion in April 2021, the company skyrocketed to $54.5 billion just five months later.

In internal emails reported by Nine newspapers, chief executive Melanie Perkins said the company was set to mark its sixth year of being profitable. She also assured staff and said the company was still hiring, unlike some other technology companies.

“We had planned to dip out of profitability this year to invest in further accelerating growth,” she wrote.

“However, we changed course as soon as we noticed the macroeconomic environment changing and are now back to being profitable again this year, for the sixth year in a row.”

Founded in 2013, by Perth couple Ms Perkins and Mr Obrecht, and Tasmanian developer Cameron Adams, Canva is a free-to-use design tool that allows users to create social media posts, graphics, videos and presentations.

Since then, it’s become Australia’s most successful start-up – a title it continues to hold. For scale, Australia’s second largest start-up, online payments company Airwallex was valued at $5.5 billion in November 2021.

It’s believed Ms Perkins and Mr Obrecht hold a 30 per cent stake in the company, which given the most recent evaluation is close to $6 billion.

According to its website, Canva has more than 2000 employees and operates in 100 languages ​​and across 190 countries.

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Business

Australian house prices: 300 suburbs that have significantly dropped in value

Australian house prices: 300 suburbs that have significantly dropped in value

As skyrocketing interest rates smash the Australian housing market, a dozen suburbs have already seen property prices fall by more than $500,000 since March.

PropTrack’s automated valuation model (AVM) data show more than 300 suburbs across the country where dwelling values ​​have experienced six-figure falls over the quarter.

In percentage terms, the worst-performing suburb in the country was South Hedland in WA’s Pilbara region, where units dropped by 24.81 per cent to a median value of $213,791 in June 2022 – a loss of more than $70,000.

That was closely followed by Booval in Queensland, where unit prices were down 24.64 per cent, or more than $121,000, to $370,231.

But it was wealthy suburbs in the capital cities that experienced the largest falls in dollar terms, with parts of Sydney’s northern beaches and eastern suburbs, Melbourne’s Mornington Peninsula, as well as inner-city Perth and Canberra all experiencing falls in excess of half a million dollars.

Former Prime Minister Malcolm Turnbull’s eastern suburbs home of Point Piper recorded the biggest fall in dollar terms, with units there losing nearly $715,000 in value – a 14.82 per cent fall from $4.82 million to $4.11 million.

Manly came in second place with losses of nearly $680,000 in house prices, representing a 13.8 per cent fall from $4.92 million to $4.25 million.

Ingleside on Sydney’s northern beaches saw house prices fall nearly $610,000 to $2.77 million, while Flinders in Melbourne suffered a $600,000 fall to $2.51 million.

Other suburbs where house prices fell by more than $500,000 include Clontarf, Dover Heights, North Bondi, Bronte, Rose Bay and Bondi Beach in Sydney, Peppermint Grove in Perth and Griffith in Canberra.

Close behind in the $400,000 range were the likes of Double Bay and Tamarama in Sydney, Red Hill – both in Victoria and Canberra – and Mulgoa at the foot of the Blue Mountains.

“Price falls are largely being led by the ‘high end’ of the market and higher value suburbs,” said PropTrack senior economist Eleanor Creagh.

“Manly and Tamarama in Sydney have all posted declines in quarterly values.

“Previously popular suburbs in the Central Coast and Melbourne’s Mornington Peninsula have also seen values ​​decline.

“It’s often the case that the upper end of the market experiences larger price declines, and at the moment it’s the suburbs that are home to more expensive properties that are seeing bigger price falls than more affordable properties.”

It’s not all bad news for homeowners, however.

House prices in some suburbs are still rising, led by Balmain East in Sydney’s inner west, which saw house prices rise more than $329,000 over the quarter to $3.48 million.

New Farm in Brisbane was second with house price growth of more than $295,000 to $2.65 million, followed by Coledale in NSW’s Illawarra region, which was up nearly $289,000 to $2.47 million.

Other suburbs where dwelling values ​​rose more than $200,000 were Newcastle East, The Rocks and Waterloo in Sydney, and Brisbane’s Bowen Hills, Tenerife, Highgate Hill and West End.

“While the current cycle of exceptional price growth is winding down Australia-wide, there are some parts of the country bucking the falling price trend,” said Ms Creagh.

“Parts of Brisbane, Adelaide and regional Australia are proving more resilient.

“With the pandemic driving a boom in remote working, housing markets in parts of regional Australia have emerged, with sea and tree changers looking for lifestyle locations, larger homes, and beachside living.”

The ongoing low supply of properties available for sale, combined with relative affordability advantages driving heightened demand, are causing prices to continue to rise in some regional areas or only just beginning to fail as the impact of higher interest rates weighs on the market.

“As the home price cycle has matured and interest rates are now rising, some suburbs in previous regional hot spots on the Sunshine Coast, and in the Southern Highlands and Geelong regions are starting to see larger price falls, with affordability advantages having been eroded since the pandemic onset,” Ms Creagh said.

“Suburbs like Lorne, Sunshine Beach, Minyama and Noosa Heads have all seen quarterly declines in unit or house values.”

She added it was a similar picture in the capital cities, with markets that led the upswing like the “lifestyle and coastal locations of the northern beaches and eastern suburbs now seeing larger price falls”.

It comes after the Reserve Bank hiked interest rates for the fourth month in a row on Tuesday.

The 50 basis-point increase at the central bank’s August meeting brings the official cash rate to 1.85 per cent, up from the record low 0.1 per cent it was up until May.

Governor Philip Lowe said the RBA had made the decision to raise the rates in a bid to drive down the current 6.1 per cent inflation figure.

In a statement, he said the path to returning to inflation under 3 per cent while keeping the economy on an even keel was something that would take time.

“The path to achieve this is a narrow one and clouded in uncertainty, not least because of global developments,” Dr Lowe said.

“The outlook for global economic growth has been downgraded due to pressures on real incomes from higher inflation, the tightening of monetary policy in most countries, Russia’s invasion of Ukraine, and the Covid containment measures in China. Today’s increase … is a further step in the normalization of monetary conditions in Australia.”

Already, the rise in interest rates has pushed house prices down in most major cities as borrowers stare down the barrel of higher monthly payments.

PropTrack’s Home Price Index shows a national decline of 1.66 per cent in prices since March, but some regions have seen much sharper falls.

“As repayments become more expensive with rising interest rates, housing affordability will decline, prices pushing further down,” Ms Creagh said earlier this week.

Last week, the Australia Institute’s chief economist, Richard Dennis, told NCA NewsWire the RBA was one of the biggest threats to the economy at the moment.

“If we keep increasing interest rates because inflation is higher than we’d like, we might cause a recession,” he said.

“Increasing interest rates won’t help us prepare for a slowing global economy … but they might actually further dampen the Australian economy.”

[email protected]

– with NCA NewsWire

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Categories
Business

Why Canva boss, Cliff Obrecht isn’t bothered by $20 billion loss

Why Canva boss, Cliff Obrecht isn't bothered by $20 billion loss

Despite a $20 billion fall in its evaluation, a tumultuous economic landscape and a sudden string of tech companies announcing staff cuts and sharp declines, Australia’s start up golden child is not worried.

speaking to the Sydney Morning Herald, Canva’s co-founder Cliff Obrecht believed the bearish market would provide the company with lots of opportunities.

“These times of market uncertainty provide a lot of opportunity and other than the external valuation noise, it’s a huge opportunity for us to grow our business,” he said.

This comes as Australia’s largest venture capital firm Blackbird announced they had reduced the holding value of Canva by 36 per cent. Listed as Canva’s largest investor, with around a 14 per cent stake in Canva, this indicated a drop of about US$14 billion or A$20 billion, in the tech company’s estimated value.

“This holding value of Canva is the result of an independent valuation process that was completed by a big four accounting firm and adopted by Blackbird’s valuation committee, in consultation with our auditors,” the company shared in a statement to news.com.au.

Before this, Canva managed to more than double its worth in 2021. After acquiring a valuation of $19 billion in April 2021, the company skyrocketed to $54.5 billion just five months later.

In internal emails reported by Nine newspapers, chief executive Melanie Perkins said the company was set to mark its sixth year of being profitable. She also assured staff and said the company was still hiring, unlike some other technology companies.

“We had planned to dip out of profitability this year to invest in further accelerating growth,” she wrote.

“However, we changed course as soon as we noticed the macroeconomic environment changing and are now back to being profitable again this year, for the sixth year in a row.”

Founded in 2013, by Perth couple Ms Perkins and Mr Obrecht, and Tasmanian developer Cameron Adams, Canva is a free-to-use design tool that allows users to create social media posts, graphics, videos and presentations.

Since then, it’s become Australia’s most successful start-up – a title it continues to hold. For scale, Australia’s second largest start-up, online payments company Airwallex was valued at $5.5 billion in November 2021.

It’s believed Ms Perkins and Mr Obrecht hold a 30 per cent stake in the company, which given the most recent evaluation is close to $6 billion.

According to its website, Canva has more than 2000 employees and operates in 100 languages ​​and across 190 countries.

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Categories
Business

Simple way to fix Australia’s east coast energy crisis

Simple way to fix Australia's east coast energy crisis

Slowly but surely, the story of the greatest rip-off in Aussie history is coming out. It’s not a great train robbery. Not a Sydney wealth management fraud. It is an investment boom that miraculously turned east Australian resources bounty into a pair of concrete boots for the broader economy.

This is the sorry tale of how foreign cartels stole Australian gas reserves and fed them to China while the local economy was starved of it.

It began during the GFC-period when advances in unconventional gas extraction (fracking, shale, coal seam etc) made huge reserves in Queensland viable for extraction. Three conglomerates of largely multinational firms built infrastructure systems across the east of the state to extract, pipe and freeze that gas for export.

They spent some $80 billion doing so, in a mad race that duplicated everything, over-invested in production and crashed the global gas price, forcing them to write off tens of billions on their investment.

Meanwhile, in poor little Australia, which actually owned the gas, the moment the export trains opened the price began to rise because there was not enough left over for locals.

The price rose from $4Gj relentlessly until we were paying $20Gj in 2017 – more for our own gas than our Asian customers.

Worse, because gas sets the marginal cost of electricity on the east coast, whenever its cost rises, power prices go mad as well, hugely multiplying the negative impacts on the economy.

The Turnbull government recognized the folly of this in 2017 and installed the Australian Domestic Gas Security Mechanism (ADGSM). That crashed the gas price back under $10Gj, though it remained much higher than it had been traditionally.

But that was not the end of it. Whenever there has been cold weather, or coal or other outages in the power market, or international shortages, the gas cartel has popped up again to squeeze local prices higher.

This serial debacle most recently came to a head with the war in Ukraine and Russian sanctions which have left the world short of gas and Australian prices have gone to as high as $65Gj, the market has been suspended and electricity prices have been driven up by 600 per cent to boot.

This is a $50 billion gouge by the energy cartels that are effectively war-profiteering at every Australian’s expense. Soon, these price rises will deliver an extra 6 per cent CPI inflation, ensuring the RBA has to drive interest rates higher than many households can bear.

And for what? The gas cartel will not invest anymore. There’ll be no jobs created. Governments will receive no tax dividend owing to broken laws and the massive writedowns on the projects.

Indeed, this episode will be recounted by economic historians as the worst case of the “resources curse” ever. (It’s sometimes called Dutch Disease after the Netherlands’ broader economy suffered in the ’70s with the development of North Sea oil resources that lifted its currency and falling competitiveness hollowed out the industry.)

If Dutch Disease is a national cold, then Australian Disease is like an inoperable brain tumour. It has allowed miners to steal the resource, pay no tax, force scarcity pricing on the extractive nation, and raise the currency. All of which have already decimated industry, hobbled national income, and will soon begin to deflate household wealth as well.

how to fix it

The new Labor Government has been forced to confront this reality to some extent. Untenable energy prices have triggered a review of the Turnbull domestic reservation mechanism. This is all to the good, but what should it look like?

First, the reformed ADGSM must include a price trigger. As it stands, it is a volume measure that is too unwieldy to be effective. The ADGSM should automatically divert gas from export the moment the price goes over $7Gj. This is plenty high enough for the gas cartel to make money out of it. The reserves are quite cheap and since they’ve written off so much investment, the gas has become even cheaper on a cash basis.

The new ADGSM should apply to all three conglomerates. Although it is the Santos-led GLNG that has come to be most short of gas and openly lied about it, all three joint ventures knew what they were doing when they overinvested to leave Australia short of gas. Besides, as Bass Strait gas bleeds out, the shortage will only get worse and the future will require as much as 15 per cent of the gas currently exported to remain at home. That’s a burden best shared by all three projects.

A second option is to use export levies. If we set a baseline for profits at pre-Ukraine war prices around $7Gj, then levy the gas cartel for every export dollar above that price, then the local price of gas would collapse and Australians collect the war windfall instead of firms that have no right to it.

Third, we could install a super-profits tax on the cartel and recycle that revenue as energy subsidies for everybody else. That is a pretty clunky solution but it delivers the same end.

With any and all of these solutions, the cartel will scream “sovereign risk”. But so what? It was its mistakes that created this untenable situation. Australians should not have to pay for them.

Moreover, export gas contracts are renegotiated all the time. Just a few weeks ago, one member of the gas cartel, Shell, declared force majeur (that is undelivered but contracted gas) over something as trivial as a maritime labor dispute.

The larger truth is that the cartel is a risk to the sovereign and everyone within it.

Read related topics:Cost Of Living

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