Following the NSW Government’s released of an independent review of its resource recovery framework and implications for the circular economy, three key takeaways struck me:
The review identified friction between the environment and safety objectives of the existing NSW waste and resource recovery framework and the need for flexibility to support innovation and a smooth transition to a circular economy.
A key criticism of the EPA was their handling of the revocation of the mixed waste organic material (MWOO) exemption in 2018. This led to recommendations for the resource recovery regime to be put on a similar footing to environmental and planning approval regimes.
The debate over the definition of waste continues, as the broad interpretation in the case of EPA v Grafil has potentially slowed the advancement of the circular economy.
The Review made a recommendation that the EPA should investigate a pathway to enable an “end-of-waste” outcome for suitable common, low-risk recovered materials to better enable reuse and promote circularity.
There were many other matters raised in the review, highlighting the challenges of both resource recovery and closing the loop between waste and input to future production processes.
The balance between environmental protection, regulation to achieve that and innovation to drive the emergence of the circular economy is still being worked out.
How do you think this is being played out in other jurisdictions? What tradeoffs have to be made between effective environmental regulation and commercial innovation to achieve the circular economy?
Staying on top of municipal waste costs is a significant challenge for many local councils. There are several ways local governments can manage these costs.
Implementing recycling programs: By promoting and facilitating recycling, local governments can reduce the amount of waste going to landfills, which can help lower disposal costs.
Negotiating contracts with waste management companies: Local governments can negotiate contracts with waste management companies to secure lower prices for waste disposal.
Implementing pay-as-you-throw programs: These programs charge residents based on the amount of waste they generate, encouraging them to reduce their waste and lower their costs.
Promoting waste reduction: Local governments can promote waste reduction initiatives, such as composting, to reduce the overall amount of waste generated in the community.
Partnering with private sector companies: Local governments can partner with private sector companies to create new waste management technologies or recycle more materials.
Implementing waste-to-energy programs: Some local governments have implemented waste-to-energy programs, which use waste as a fuel source to generate electricity, reducing the need for traditional fossil fuels and lowering energy costs.
To what extent is your local government doing some, all or even more than this?
Lytton Advisory is pleased to advise that in December 2022 Craig Lawrence was appointed as a consultant to the Pacific Regional Infrastructure Facility (https://www.theprif.org/what-we-do).
He will be assisting PRIF by helping Pacific Island states develop national infrastructure investment plans to drive economic and social development.
Craig is Managing Director of Lytton Advisory. For the past nine years he has led teams of economists examining infrastructure and public policy issues.
Like many folk over the summer holiday, I played around with ChatGPT, a natural language AI.
Being an economist, I asked for the meaning of Opportunity Cost, a foundation concept in economics. The response was deadly boring.
So I asked it to flick a switch and give it as a sonnet:
Opportunity cost, a term so fine, Refers to the cost of choice not made, The next best option left behind, When one decision is the one laid.
It’s something we encounter every day, From big choices to the small and meek, But often we don’t stop and weigh The cost of what we choose to seek.
So think before you act, consider well, The path you take and what it means to stray, For opportunity cost will dwell In every choice you make, come what may.
So choose with care and wisely weigh, The cost of all the options in play.
ChatGPT
This might be all a bit too much for those in the C Suites, so here is your executive haiku:
Pacific Island nations have complex requirements for infrastructure. It is tempting but foolish to see similarities and simply apply a one-size-fits-all.
However, the best combination of infrastructure assets for Pacific Island nations will depend on the specific needs and resources of each individual nation. In general, however, there are a few key types of infrastructure that are important for the development and well-being of Pacific Island nations.
Transportation infrastructure: This includes roads, ports, airports, and other transportation networks that are necessary for the movement of people, goods, and services within the country and to other countries.
Energy infrastructure: This includes power plants, transmission and distribution networks, and other facilities that are necessary for the generation and distribution of electricity.
Telecommunications infrastructure: This includes networks of communication towers, cables, and other equipment that are necessary for providing telephone and internet services to the population.
Water and sanitation infrastructure: This includes systems for the treatment, distribution, and collection of water, as well as sewage treatment facilities and other infrastructure related to sanitation.
Health care infrastructure: This includes hospitals, clinics, and other facilities that are necessary for providing health care services to the population.
Educational infrastructure: This includes schools, universities, and other institutions that are necessary for providing education to the population.
It is important for Pacific Island nations to have a balanced and well-developed infrastructure system in order to support economic growth, improve living standards, and enhance the overall well-being of the population. It means having an approach that enables strategic consideration and appraisal of a diverse combination of assets across a diverse set of countries.
Recently, the Federal Government decided that it does not want to interfere in the market for the private provision of rapid antigen tests in the middle of a pandemic.
Preserving the right of private businesses to profit during the pandemic at the potential expense of the vulnerable is simply not a great policy.
What are the economics behind this, and what might they be missing?
Rather than assume it is simply a cop-out, it seems it is a naive application of Economics 101. However, the policy is not well thought through.
The implicit assumption is that there are no significant positive externalities in subsidising the cost of rapid antigen tests. That is the information benefits of knowing whether you have Covid and taking personal responsibility by appropriately isolating to avoid infecting other people are neither insignificant nor irrelevant.
The US National Bureau of Economic Research recently concluded that much of the decline in economic activity in the US associated with Covid-19 came from self-protective behaviour. As Australia re-opens its economy, this is likely to become a potential handbrake when uncertainty about managing the virus is widespread in the community. RATs provide a frontline but partial solution to this self-protective behaviour.
Research by the Royal Australian College of General Practitioners suggests there is a case for substituting PCR tests with RATs, and saving public funds. The benefit comes from earlier knowledge of infection and people isolating earlier, lessening the spread of the virus.
The government’s approach presupposes that rapid antigen tests are a consumer item rather than a public health consumable. A bit like asking people to bring their own oxygen bottles to hospital. Now that is something we have seen elsewhere.
The Australian Chamber of Commerce and Industry recognises the information value of RAT, advocating free rapid testing will improve business and consumer confidence, assisting in reopening the economy after a series of lockdowns and international lock outs. This will help minimise the extremely disruptive impact of snap closures and held businesses reduce risks to employees, customers and the community.
The government has argued that it does not want to provide ‘free’ rapid antigen tests. However, that is misleading. Publicly provided tests are paid out of taxation revenues. Either way, we are paying for these tests.
I find it difficult to believe that the Commonwealth cannot secure bulk supplies of these tests and distribute them at less cost than I could purchase one at full retail prices.
Also, it is surprising to me that given the extensive use of rapid antigen tests elsewhere, the Federal Government has not provided more effective leadership on this.
The Australian Competition and Consumer Commission is awake to the risk of price gouging and has indicated it will ‘name and shame’ those that do.
With Covid case numbers soaring again, the test and trace systems are simply not up to the task given volumes. Rapid antigen tests provide a viable alternative to enable people to be informed about their own health status and act accordingly. That has to benefit their families, friends and co-workers and, ultimately, the wider society and economy.
I was thinking that we were all in this together. The Federal Government still needs to catch up. We can’t afford another strollout in a fast-moving medical environment. Time and again, we have seen political processes simply cannot match the pace of this pandemic.
Let’s not think Covid has passed just yet. People are still dying.
Wishing clients, colleagues and friends a happy and prosperous 2022. Thank you to everyone who has worked with Lytton Advisory over the past year and has supported our efforts. We look forward to engaging with you all in the New Year.
Recently I was reading a LinkedIn post about infrastructure that was drenched in buzzwords. It struck me that the big professional service fees are in new infrastructure and construction (building more).
That is what many large advisory firms are seeing and want. Fee incentives are all around the size of the overall spend. However, I think a lot of the ‘thought leadership’ pieces from some of these firms skip over the maintenance and rehabilitation story (keeping what we’ve got going).
Those maintenance / rehab projects are more numerous and smaller in scale. Also, they reach deep into local government systems, bypassing large state and federal bureaucracies.
But there are no real fees for the large advisory firms in that.
Neither federal nor state governments have been successful in keeping the lid on the costs of large projects – they seem to blow out. And there do not appear to be any real consequences for poor advice.
It is an old line that infrastructure spending kick starts the economy. Also the tired ’shovel ready’ cliche gets trotted out again and again. More of the same thinking, really. Get ready for that to be turbocharged in the upcoming federal election.
We really need to get more service from the infrastructure asset dollar, rather than just building big, dumb assets.
It is instructive that recently a major firm fired a partner for telling its government client they were wasting taxpayer money. That would never have seen the light of day without a transparent, independent inquiry process.
Some large firms are shamelessly conflicted with embedded contractors masquerading at senior levels as independent professionals when they are, in effect, overpaid departmental staff.
Are they being paid to steer projects or steer work to their firms?
Professionalism must be accompanied by independence and transparency, but the penchant for opinion shopping remains strong.
Lytton Advisory 