13/06/2006 - 22:00

Where pipelines and pipe dreams meet

13/06/2006 - 22:00

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What is it about politicians and pipelines? First we had Colin Barnett promoting a water pipeline, or canal, from the Kimberley. Now we have Alan Carpenter raising from the dead the image of the late RFX Connor and his trans-Australian natural gas pipeline.

All that’s needed to complete this picture of grand construction schemes with ribbons of steel criss-crossing the country are the ghosts of Lang Hancock and former Queensland premier Sir Joh Bjelke Petersen to call a press conference to announce the return of the plan to build an iron ore and coal railway from Western Australia to Queensland, complete with steel mills on both sides of the country.

Told in a light-hearted way and it’s possible to laugh at these grand plans to take ‘stuff’ from one corner of Australia and deliver it to another. After all, it sounds so dreadfully easy. Just dig a long ditch, lay a bit of steel pipe or rail, and off you go.

That, at least, is how Briefcase interprets the three visions, including the latest from Mr Carpenter – because all three share something in common or, to be more accurate, share something in what they lack – customers – and don’t for a minute think people making up this species are the good guys.

Rex Connor’s vision, which first surfaced sometime around 1974, is popularly believed to have failed because it was too expensive. In truth, it failed because it would have competed for customers in eastern Australia with gas from Bass Strait and the central Australian gasfields of Burmah Oil and Santos.

Mr Barnett’s water pipeline/canal had a similar problem. There seems to be little doubt that it could deliver water, but equally little doubt that it would be very expensive water.

Mr Carpenter’s revival of the Connor plan is doomed to suffer the same fate. This time it’s gas from Papua New Guinea rather than Bass Strait.

The golden thread which links all of these ‘vision things’ is that all of the proponents look at their baby through rose coloured glasses.

They seem to imagine that, just because it can be built, the customers will come, a variation on the movie Field of Dreams, in which a baseball field is built in a corn field and the fans rock up to see their team, despite the long drive.

Just as the movie was a fiction, so are the water and gas pipelines, and even the trans-Australian railway of Lang and Sir Joh. In every case, the proponents have relied largely on engineers and bankers to ask (a) can it be built, and (b) what will it cost.

The bean counters, and the boys in big boots, will always tell you what you want to hear because they are in the business of building things, and lending money.

At no stage, or so it seems to Briefcase, have the politicians done what all sensible business people do and asked the potential customers: (a) how much water/gas/rail space do you want; (b) how much will you pay; and (c) how much will you really pay.

That final point, how much will they really (truly) pay, is the killer application, as everyone in business (as opposed to someone in politics) knows.

Once upon a time, Briefcase had the pleasure of helping to launch a newspaper (or two). The chaps funding the project said it would cost a lot, but they offset the high price by saying a survey of potential advertisers showed that the costs would be covered.

Oh dear, what a surprise to discover that after the cash had been spent, and the newspapers launched, the customers (and their promises) disappeared.

Where did they go? To the opposition, of course, which had done the obvious thing and cut its prices to retain customers, the most fickle of beasts, who promise one thing, and then do what best suits their budget.

Before Mr Carpenter (or former opposition leader Mr Barnett) next think about running their pipeline concepts up the flagpole of public opinion they had best ask themselves a few questions, such as: (a) have either of them ever actually run a business? (b) do they understand that potential customers will always tell you what you want to hear? and (c) those same customers will then do precisely what is in their best interests and buy whatever competing product is readily available, and cheapest – whether it’s water, gas, iron ore or coal.

•••

Another chap who seems to have overlooked the power of the customer to do what he chooses with his money is the nuclear power convert and former environmental activist, Patrick Moore.

A marvellous public speaker, Dr Moore last week thrilled a Perth crowd made up largely of fellow believers in the power (and money making potential) of uranium and nuclear generated electricity by telling them precisely what they wanted to hear – that uranium is good for the world, or at least it’s less bad then other stuff, such as coal and oil.

Briefcase had the pleasure of watching the good doctor in action and also came away thinking this uranium/nuclear caper has a real future in Australia, and that perhaps the prime minister, John Howard, is onto a winner in launching a full-blooded inquiry into Australia’s role in the nuclear business.

But, after a bit of deeper thinking it became obvious that the only real future for uranium is as an export commodity because when it comes to locally generated electricity there is simply no way it can compete with locally mined coal and gas.

As with the doomed pipeline plans, it seems that once again the politicians and scientists are forgetting to ask the customers what they want, and how much are they prepared to pay – even if the question is prefaced with the feel good foreword ‘if you buy nuclear power you will play a part in saving the world from greenhouse gas’.

As Briefcase has seen countless times, you can package your goods in the most alluring coloured paper, but at the end of the day the customer will buy what’s cheapest, and in Australia that means electricity generated from coal or gas.

 

 “No-one ever really minds seeing a friend fall off a roof.” Confucius

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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