The recent awarding of the $50 billion submarine contract to French firm DCNS was greeted enthusiastically by members of the French-Australian Chamber of Commerce and Industry (FACCI), which is doing terrific things around town and running some excellent events. For example, the week before last, at a FACCI breakfast event at Deloitte’s offices, Australia Pacific LNG CEO Page Maxson, the quintessential oil and gas man from Oklahoma, spoke about issues affecting the LNG industry. Despite recent market conditions, Mr Maxson was very upbeat about the outlook for gas over the next five to ten years. Given expected global demand growth, analysis he has seen suggests there will be a shortage of capacity within six years, and he also noted that six years is about the full lead time needed to increase capacity.
Mr Maxson was realistic enough to recognise that, over the long-term, there will be (or has to be) a transition away from fossil fuels to other energy sources. He considered that the only realistic way to do this, and come anywhere near achieving the aspirations set at the Paris Climate Change Conference, would be to massively increase our reliance on nuclear energy. I fear Mr Maxson is right about this. A greater reliance on nuclear energy may bring large risks, but it may well be preferable to relying on very costly renewable energy.
In question time, Mr Maxson was asked whether Australia is a high-cost country and whether this is adversely impacting the industry. Mr Maxson noted that the problem is not high wages, but rather relatively low productivity for those wages. He compared us with Japan, which has high wages but also high productivity in its industrial sectors, which he considered is related to better organisational skills in Japan than he sees in Australia. Of course, it is well known that Japanese success in manufacturing is partly related to lean manufacturing/just-in-time methods that eliminate waste and excess capacity. Mr Maxson’s opinion seems reasonable, particularly given many Australians still possess the “she’ll be right, mate” view and may not pay enough attention to the details. This is certainly something for our educational professionals to ponder, as we may need to teach better organisational and planning skills in our schools.
Page Maxson, CEO of APLNG, addressing a FACCI seminar at Deloitte’s offices, Riverside Centre, Brisbane, on Thursday 28 April. I am in the front row.
Queensland Economy Watch 
Largely due to the success of Soviet Cold War propaganda, in which American but not Soviet nuclear weapons were portrayed as a global threat, nuclear energy is not politically possible in Australia. Fukushima made it even less acceptable. Very different situation from France, where an independent nuclear deterrent was widely seen as a deterrent against invasion and occupation, as happened in 1940. Nuclear energy is not politically contentious in France. So in relation to Australia, nuclear energy is a good case of something that may be economically desirable but is not politically feasible. And with the increasing influence of the Greens, nothing is likely to change.
Good points, Robyn. I think it’s very unlikely Australia will embrace nuclear energy in the next decade or so, but eventually we may have to. Thanks for the comment.
Robyn, I agree. However, *if* the Greens were really serious about the use of fossil fuels leading to disastrous climate change, I believe they should actively consider nuclear energy and advocate the adoption of it. Full reliance on renewable energy is not economically or practically viable, and nuclear energy, as a low CO2 emission power source, could offer an acceptable middle ground. This gives some political wriggle room, and further one can identify the geographic differences between Japan and Australia that make Australia a more acceptable place for nuclear adoption (seismic activity and areas of low population density being main points).
Ultimately, I believe the Australian public needs to experience the “bill shock” that comes with a elevated Renewable Energy Target before they genuinely consider the nuclear option.
I doubt that nuclear energy will ever be feasible. Look for example at the way the ABC portrays the issue of proposed “nuclear waste dumps” in desert locations. It’s ok apparently to keep low and medium level waste at Lucas Heights and myriad hospitals etc. As for the Greens, they seem to have no understanding of economics. Most work in sheltered workshops of various kinds. So best forget nuclear and focus on various kinds of renewables, for which Left/ Green support is assured. On 12 May 2016 8:26 am, “Queensland Economy Watch” wrote: > > Harry commented: “Robyn, I agree. However, *if* the Greens were really serious about the use of fossil fuels leading to disastrous climate change, I believe they should actively consider nuclear energy and advocate the adoption of it. Full reliance on renewable energy is” >
The future of our energy mix is possibly more open to debate now than it has been, given last year’s COP21 in Paris, abundant “carbon-light” gas in the states that produce it, and a Labor government in South Australia initiated a review that recommended taking greater ownership of the nuclear fuel cycle beyond raw production. That same government is due to make a decision on nuclear waste storage by the end of 2016, though the Federal Labor leader, Mr. Shorten, is thought to be no fan of nuclear. The French-Australian Chamber in Queensland will be hosting another breakfast on August 4th, debating how quickly Australia’s economy can decarbonise (and possibly divest from those fuels) – should be an interesting addendum to this conversation.
As Page and Gene point out, the productivity challenge is, however, real. High wages are sustainable (Germany, France and Japan are longstanding examples) if the workers are efficient. That needs to includes proper design of their work processes and training of staff and, in particular, of supervisors and their managers – and yes, perhaps a little less of the “she’ll be right, mate”.
Thanks for the comment, Brian. That sounds like a great breakfast event you’ll be holding in August.
The future of our energy mix is possibly more open to debate now than it has been, given last year’s COP21 in Paris, abundant “carbon-light” gas in the states that produce it, and a Labor government in South Australia initiated a review that recommended taking greater ownership of the nuclear fuel cycle beyond raw production. That same government is due to make a decision on nuclear waste storage by the end of 2016, though the Federal Labor leader, Mr. Shorten, is thought to be no fan of nuclear. The French-Australian Chamber in Queensland will be hosting another breakfast on August 4th, debating how quickly Australia’s economy can decarbonise (and possibly divest from those fuels) – should be an interesting addendum to this conversation.
As Page and Gene point out, the productivity challenge is, however, real. High wages are sustainable (Germany, France and Japan are longstanding examples) if the workers are efficient. That needs to include proper design of their work processes and training of staff and, in particular, of supervisors and their managers – and yes, perhaps a little less of the “she’ll be right, mate”.