Sunday 16 October 2011

Who is Henry Ergas and why did he hop aboard Teh Rabbit's Fright Bus?


Prompted by a tongue-in-cheek Jeremy Sear tweet asking the questions “Where the hell is Henry Ergas pulling this "$1 trillion" figure for the carbon price from? And who is Henry Ergas anyway?” I went looking for answers.

This is Henry:

Pic from The Australian

This is what what Wollongong University has to say about Henry:

Professor Ergas is a well-known regulatory economist who held a range of leading positions at the OECD before returning to Australia in the mid-1990s. He chaired the Australian Intellectual Property and Competition Review Committee for the Australian Government in 1999-2000 and was a member of the Prime Minister’s Export Infrastructure Task Force in 2005 and the Defence Industry Policy Review in 2006. He has published extensively on infrastructure regulation and cost-benefit analysis."

This is what Liberal Party hacks have been saying about Henry:

“evidence before the inquiry by Professor Henry Ergas, the carbon tax will cost the Australian economy more than $1 trillion between now and 2050.”

This is what The Prof tells the Murdoch meeja:

“the carbon tax will cost a year's national income: that is, $1 trillion.”

This is what the Liberal Party’s best mate told the Senate Carbon Tax Inquiry on 10th August 2011:

“Yes. What is available that Treasury have indeed released, and I congratulate them on doing so, is a spreadsheet that is similar to a spreadsheet that they had released for the CPRS model and that spreadsheet allows you to look at the change in the value of GDP under the base case, as it were, and with the so-called core policy, which is the primary abatement scenario that they model, and also under the so-called high-price scenario, which is where you go for more ambitious abatement. So what you can do, Senator, is you can use that spreadsheet—and you do need to make a number of assumptions—to calculate the value today of the change in GDP under those alternative carbon tax scenarios. To put it in perhaps simplistic terms—but this may help explain what is going on—say that in 2020 GDP would otherwise have been $2 trillion and instead, under the modelling of the core policy, it is $1.8 trillion, and in 2030 it would have been $3 trillion and instead is $2.6 trillion, you can take that difference and express it as if it were a value today. You can bring it back to the present. To do that you have to find some way of adding up amounts at different points in time. You have to take some account of the time value of money. In the calculation that I set out, I used a discount rate—that is, the assumed time value of money, as it were, that is used in the Garnaut report. When you do that, you get a GDP loss that is in the order of somewhere between $890 billion and $1.345 trillion for the core policy scenario. I rounded it to about $1 trillion.”

This is the conclusion he drew for the Business Council of Australia:

The Gillard government's emissions trading scheme poses a $9 billion risk to the already stretched federal budget in its first five years if carbon price estimates prove optimistic

And this is how good an economist ol’ Henry is:

Extracted from ASIC's database at AEST 20:14:00 on 15/10/2011

 

Name

NETWORK ECONOMICS CONSULTING GROUP PTY LTD

 

ACN

006 819 969

 

ABN

72 006 819 969

 

Type

Australian Proprietary Company, Limited By Shares

 

Registration Date

27/07/1987

 

Next Review Date

27/07/2010

 

Status

Deregistered Date Deregistered 21/10/2009

 

Locality of Registered Office

not available

 

Jurisdiction

Australian Securities & Investments Commission

 


Former Name(s)

 

ERGAS & ASSOCIATES PTY. LTD.

 

WATRON PTY. LTD.

 

Extracted from ASIC's database at AEST 20:41:54 on 15/10/2011

 

 

Name

CONCEPT ECONOMICS PTY LTD

ACN

129 990 530

Type

Australian Proprietary Company, Limited By Shares

Registration Date

03/03/2008

Next Review Date

03/03/2012

Status

Deregistered Date Deregistered 08/05/2011

Locality of Registered Office

not available

Jurisdiction

Australian Securities & Investments Commission

From Bloomberg Business Week:

Network Economics Consulting Group Pty. Ltd. provides economic and strategic advisory services.

Mr. Henry Ergas Managing Director  

From Manta:

Concept Economics Pty Ltd

Henry Issac Simon Ergas Director

Inevitable conclusion – why on earth would I trust the carbon tax sums done by a Menzies House amigo who apparently couldn’t balance the books of two businesses?

1 comment:

Anonymous said...

Doesn't he also work for the IPA? That should explain everything. The point is that this 1 trillion is from now to 2030, almost 20 years. Given a long enough horizon, anything will cost 1 trillion dollars.