Laffer curves and corporate monsters

July 21, 1993
Issue 

By Richard Staples

Disputes surround proposed ocean outfalls at Coffs Harbour and Lennox Head. The authorities claim "there is no alternative". Opposition to new dam proposals is deep seated within many communities. Pacific Power has announced it intends preparing a new environmental impact statement (EIS) for the power line proposed between Lismore and Mullumbimby, examining (as did its predecessor Elcom) three route options, but not the feasibility of meeting energy requirements from different sources altogether. In a 43-page discussion paper just released, photovoltaics are dismissed in a mere 43 words! And plans for toll roads and super highways are perennially on the agenda of politicians, bureaucrats and big contractors, despite increasingly well-organised and vocal opposition.

At the same time government departments and instrumentalities are struggling to come to terms with massive cost blow-outs for infrastructure — water and sewerage schemes in particular. The NSW government Prices Tribunal, in its recently released Interim Report on Water Pricing, reveals that the rate of return on water and sewerage schemes in this state is generally 1-3%. Would you invest money at such a rate?

We have arrived at this absurd and economically damaging position thanks to supply authorities charging what the market will bear while relying on subsidies from the public purse and claiming they are providing an essential service. Alternatives are eliminated or discouraged by a variety of means.

Furthermore, the state government is presently attempting to do away with the obligation of preparing EIS's for sewage treatment plants.

Why the eternal fuss? Is there a common thread here?

Edward de Bono, in his recent book I am Right — You are Wrong, describes the Laffer curve, named after a statistician who noted that increasing the rate of taxation doesn't necessarily result in

increased taxation revenue. Put simply, a common error of logic is to assume that because something is good, more of it is better. The classic Laffer curve is shaped like a mountain — suggesting that for many things (like salt in the diet) there is an ideal level beyond which problems start occurring.

For example, the new sewerage schemes of the late 19th century were a great improvement over the dangerous open drains that they replaced in inner-city areas. The 20th century, however, brought the motor car and its by-product, suburbia. Extension of sewers to the suburbs and beyond has continued on the assumption that "more of the same must be good". But is it?

There are, of course, powerful bureaucracies built up around the construction and operation of infrastructure, which put a lot of energy into ensuring the survival and continued growth of their empires.

Perceived threats to their domination are dealt with energetically. Last year a water consultant to Byron Council tried to manufacture a case against domestic rainwater tanks on economic and health grounds. This study used air pollution figures from the USA to speculate on roof contamination, assumed roof area (and hence rainwater catchment) area was the same as internal room area, and assumed those with rainwater tanks would still pay the tariff for reticulated water on top of rainwater tank costs. (If you tilt a playing field far enough, you can prove anything.) In actual fact, supplying water from rainwater tanks is not only feasible in this region, but substantially cheaper than reticulated supply.

A similar series of questionable studies has been used by the NSW Health Department to justify banning septic tanks on health grounds. It is intriguing to hear local and state politicians across the political spectrum speaking out against this policy on the grounds that it will hold up development.

A ratepayer was even sued recently by Ballina Council for daring to criticise its sewerage plans. The use of a S.L.A.P.P. (Strategic Lawsuit Against Public Participation) in such a way is a disturbing attack on

those who question the agenda of an elected body.

Marc Reisner in his masterpiece on the politics of water in the US west, Cadillac Desert, suggests that most statutory authorities reach their use-by date after several decades. Beyond a certain point, what was once a useful entity generally becomes a monster dedicated to its own survival.

His book documents the history of the Bureau of Reclamation, the authority vested with the job of building dams for water supply in the US. By about 1950, all the really good dam sites were used up; yet the bureau continued building many dams of questionable value — sometimes dams which no-one (except the dam-builders) wanted or could afford.

Reisner documents many of the techniques used by such authorities to get a proposal onto the rails and keep it there. Rous County Council, our regional water supply authority, is showing flair in keeping its dream of a dam at Federal alive — for example by replacing the consultant who recommended against the construction of the dam.

There are alternatives to the old centralised models. Composting toilets use no water at all and produce a valuable fertiliser as a by-product. Models are available from as little as $1500.

In this region Lloyd Smith, a retired civil engineer, is promoting what he calls the Greenbelt system of sewage disposal — an improved version of the traditional septic tank. The oft-encountered problem of clogging of infiltration trenches is overcome in this system by keeping the trench shallow (and hence aerobic) and by strategic plantings of suitable trees and shrubs around the infiltration trench. Smith maintains that 10 square metres of infiltration area is all that is required for such a system, making installation possible in all but the most heavily urbanised areas.

One of the greatest arguments for maintaining strong local government is the fostering of local diversity and innovation where external interests seek to impose their quite often monolithic recipes for our future. The greatest protection against this sort of thing

will always be an aware local community that refuses to be told what is good for it.
[For more information on decentralised water and sewerage send a self-addressed envelope to Richard Staples at Byron Environment Centre, Cavanbah Place, Jonson St, Byron Bay NSW 2481. The Greenbelt Handbook may be purchased for $7.50 at the same address (post free).]

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