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Lang Hancock, “Stopping energy chaos,” Mining Review (February, 1980), pp. 7-8. (With thanks to the legendary John Zube and his LMP.) Update: this was written by Viv Forbes, of Carbon Sense fame, who gave Hancock permission to use it without attribution.

We have in the Australian resource industry two distinct sectors — the private sector, which is controlled by government departments, and the public sector, which is controlled by no one.

The key to resource management in the 1980’s will be the extent to which we can reverse this destructive state of affairs. In this article I shall try to outline those government policies which will prove of greatest long term benefit to sensible resource management in the 1980’s.

Unfortunately, everyone seems to have his own special theory on the best minerals and energy policy for Australia. In reviewing these I have some sympathy for the cynic who remarked, “Every government plan for industry consists of a number of policies held together by a few patriotic clichés to form an unworkable blueprint that offends no one.”

This is not to say that the people who drew up these plans are fools or cynics. It merely illustrates the difficulties we all have in discovering the fundamental principles which should be used to test the appropriateness of a particular set of government policies. In fact it is considerably easier to say what government should NOT do than it is to say what they should do. There is a sound reason for this. The essential role of government is to keep the peace — internationally, nationally and commercially. Thus most of its commands are negative and restraining. For example: “Thou shalt not steal”, “Thou shalt not make false or misleading statements”, “Thou shalt not break contracts”, “Thou shalt not assault peaceful neighbours”.

These negative actions are the things government does best, and few people will disagree with their usefulness. The problem comes when government exceeds its role of peace-keeper and attempts active “restructuring” in industry.

Before considering what government should do, it may be instructive to consider how a government would deliberately go about causing an energy crisis. This should provide some guide as to what policies are not useful. By way of illustration I have put together what I call the FIVE POINT PLAN FOR ENERGY CHAOS.

STEP 1 — DISCOURAGE EXPLORATION

The following policies can be relied on to decimate exploration industry —

Make frequent changes to the tax laws, especially retrospective changes. Harass foreign investors and inhibit the promotion of new exploration companies. Force the renegotiation of mining agreements after exploration has been successful. Impose super-profits tax on successful explorers. Delay offshore exploration for several years while royal commissions consider the safety of offshore drilling. Avoid open tendering for allocating new exploration areas. Make secret arbitrary decisions wherever possible. Maintain confusion as to mineral rights in Aboriginal areas.

STEP 2 — STERILISE EXISTING ENERGY RESERVES

This is best done by application of a stifling network of taxes, rules and regulations covering every aspect of production and trade in energy products. These can usually be justified if they can be related even vaguely to “safety”, “health”, “national security” or “concern for the environment”. The following policies should prove effective —

Insist on numerous environmental enquiries which fail to reach a conclusion. Prohibit the use of high sulphur fuels without considering the costs and benefits. Force the introduction of unproven air pollution devices which increase fuel usage. Limit open cut mining for cosmetic reasons, even though it is the safest and most efficient form of extraction. Impose costly controls on underground mining that force the closure of many high-cost mines. Increase mining royalties and impose export levies. Impose windfall taxes on oil producers to discourage secondary recovery and reduce the life of marginal fields.

These moves will guarantee the sterilisation of reserves that can no longer be economically extracted.

STEP 3 — ENCOURAGE WASTEFUL USE OF ENERGY RESOURCES

This can best be done by fixing the domestic price of oil, gas or coal below the world price. This will accelerate the use of domestic fuels and discourage exploration and development. It will also reduce the amount that can be profitably extracted from existing deposits. Tax concessions, power rationalisation schemes, export controls and petrol price equalisation schemes can also be used to encourage waste of fuel.

This will guarantee a rapid depletion of existing reserves.

STEP 4 — CRIPPLE PRODUCTION OF ENERGY

The following policies should ensure a shortfall in the production of energy fuels and in the generation of electricity.

Delay the construction of new refineries and processing plants with environmental enquiries, royal commissions and federal-state red tape. Prohibit the import of foreign fuels. Criticise and threaten large highly efficient producers. Prohibit the mining and processing of uranium. Delay the construction of nuclear power plants for years by making license requirements uncertain or by outright prohibition. Allow unreasonable union demands to delay and defer the construction of conventional power stations.

These policies should ensure power brown-outs and petrol queues.

STEP 5 — IMPOSE A NATIONAL ENERGY PLAN

The final step on the road to energy chaos requires the appointment of several committees of bureaucrats and academics to investigate the cause of the energy crisis. After three years of hearings and 100,000 pages of transcript these committees will conclude that the energy crisis was caused by grasping energy companies and selfish consumers. They will recommend a national energy planning authority. Electricity will be rationed, new taxes will be levied on producers and consumers, highway speed limits will be imposed and petrol coupons will be issued. All exploration shall be done by the State Minerals and Energy Corporation which will license all current producers of energy. The new dark age will descend and black market sales of candles will boom.

It has been said that the most valuable plan in any Government organisation is the one which it knows to be consistently wrong. The above Five Point Plan is thus an invaluable guide to government mineral and energy policies — it is consistently wrong in every area. I leave it to you to observe how closely successive governments have followed this plan. I dare not contemplate how far we are along the road to energy chaos.

WHAT POLICIES WILL WORK?

There are only four laws worth knowing in the world resource industry. They should be engraved on the ivory walls of every tower in Canberra and the state capitals. They are —

  1. The Law of Limited Resources, which says, “There is no free lunch.”
  2. The Law of Supply and Demand, which says, “People take notice of price when spending their own money.”
  3. The Law of Perverse Consequences, which says, “Whenever government intervenes in an industry, the long term results will be opposite to those intended.”
  4. Bastiat’s Law, which says, “If goods don’t cross boundaries, armies will.”

If we apply these laws to the question of what government should do in the mining industry, the answer is, “Not very much at all.”

But there is one essential duty they must perform. This concerns mineral titles and security of tenure.

Guaranteed property rights are the prime requirements for the long term planning required in the resource industry. Arbitrary laws force men to take short term views. When laws are just and stable, men plant oak trees (and plan great mining projects). When laws are discriminatory and unstable men plant cabbages (and run down their capital in order to maximise short-term profit).

It is an essential role of government to define, record and protect mining property rights. Unless these definitions are clear and unambiguous there will be disputes. The long disputes over aboriginal land, the Fraser Island fiasco and the numerous problems over exploration on private land or in parks and forests shows that the definition of mining titles leaves much to be desired.

In order to minimise costly and destructive disputes, every exploration or mining title should spell out clearly the rights and conditions of exploration and mining. These should not be subject to retrospective legislation, nor should they be varied during the term of the title except by mutual consent. Areas where mining is prohibited should be clearly identified and reviewed regularly. In the case of existing title disputes, these should be settled by arbitration as quickly as possible so that all parties can stop fighting and start operating by mutual consent within a stable defined framework.

There are a few other things governments could do:

They could introduce a 10 year moratorium on new laws and regulations.

The could find useful jobs for those armies of intelligent, highly educated experts who are now using taxpayers funds to produce solutions for which there are yet no problems.

They could introduce birth control of paperwork.

They could decide that the cure for centralisation is decentralisation.

They could act to curb the taxation industry — the largest extractive industry in Australia.

They could decide to live within their income.

They could even decide that export controls, capital controls and investment controls are of no assistance in the hard export markets of the 80’s.

But all this, I fear, is wishful thinking. We cannot expect a band of monks to dissolve their own monasteries.

We are now in the transfer economy, where the road to riches is not through efficiency, profits, savings and investment but through political action. The transfer economy is characterised by conflict where the beneficiaries urge faster transfer of wealth while the victims oppose every new appropriation. Resource managers of the 1980’s must learn to cope with this new uncertainty. Not only must they overcome all the usual obstacles of nature, markets and finance, they must also learn to survive in the political society.

The real heroes of the 1980’s will not be the lonely prospectors, the brilliant engineers or the skilled miners. They will not be those who spend their resources seeking loopholes and shelters from the agents of the transfer society.

They will be in the midst of the ideological battle, refusing to join the looters in all political parties and speaking out against their spurious arguments.

And they must start now.

They say that the road to hell is paved with good intentions. If you check the five point plan for energy chaos you will see we are already well down that road. You can’t keep going to hell forever without getting there.

This is the real challenge of resource management in the 80’s.

(in order of appearance on Economics.org.au)
  1. Ron Manners’ Heroic Misadventures
  2. Hancock's Australia
  3. Hancock on Government Help
  4. Wake Up Australia: Excerpts Part 1
  5. Wake Up Australia: Excerpts Part 2
  6. Lang Hancock's Five Point Plan to Cripple Australia
  7. Governments Consume Wealth — They Don't Create It
  8. Up the Workers! Bob Howard's 1979 Workers Party Reflection in Playboy
  9. Jump on the Joh bandwagon
  10. John Singleton and Bob Howard 1975 Monday Conference TV Interview on the Workers Party
  11. Governments — like a red rag to a Rogue Bull
  12. Lang Hancock's Pilbara-Queensland Railway Proposal
  13. Singo, Howard and Hancock Want to Secede
  14. Lang Hancock's Foreword to Rip Van Australia
  15. New party will not tolerate bludgers: Radical party against welfare state
  16. Small and Big Business Should Oppose Government, says Lang Hancock
  17. A Condensed Case for Secession
  18. Hancock gets tough over uranium mining
  19. Hancock's threat to secede and faith in Whitlam
  20. PM's sky-high promise to Lang
  21. Lang Hancock: "a catherine-wheel of novel suggestions"
  22. Govt "villain" in eyes of new party
  23. The spread of Canberra-ism
  24. Govt should sell the ABC, says Lang Hancock
  25. 1971 Monday Conference transcript featuring Lang Hancock
  26. Aborigines, Bjelke and the freedom of the press
  27. The code of Lang Hancock
  28. Why not starve the taxation monster?
  29. Lang Hancock 1978 George Negus Interview
  30. Party Promises to Abolish Tax
  31. Right-wing plot
  32. "The best way to help the poor is not to become one of them." - Lang Hancock
  33. WA's NCP commits suicide
  34. "You can't live off a sacred site"
  35. Hancock: King of the Pilbara
  36. Bludgers need not apply
  37. New party formed "to slash controls"
  38. Workers Party Reunion Intro
  39. Workers Party is born as foe of government
  40. Government seen by new party as evil
  41. Ron Manners on Lang Hancock
  42. Does Canberra leave us any alternative to secession?
  43. Bury Hancock Week
  44. Ron Manners on the Workers Party
  45. Lang Hancock on Australia Today
  46. Hancock and Wright
  47. Lang Hancock on Environmentalists
  48. Friends of free enterprise treated to financial tete-a-tete: Lang does the talking but Gina pulls the strings
  49. Lang Hancock, Stump Jumper
  50. Lang Hancock: giant of the western iron age
  51. The Treasury needs a hatchet man
  52. We Mine to Live
  53. Get the "econuts" off our backs
  54. 1971 Lang Hancock-Jonathan Aitken interview for Land of Fortune (short)
  55. Gina Rinehart, Secessionist
  56. 1982 NYT Lang Hancock profile
  57. Enter Rio Tinto
  58. Hamersley and Tom Price
  59. News in the West
  60. Positive review of Hancock speech
  61. Lang Hancock International Press Institute General Assembly speech, Canberra, 1978
  62. Australia's slide to socialism
  63. The Great Claim Robbery
  64. Why WA must go it alone
  65. Lang Hancock in 1976 on Public Picnics and Human Blights
  66. MILLIONAIRE PUTS MONEY BEHIND SECESSIONISTS
  67. Resource Management in Australia: Is it possible?
  68. The gospel of WA secession according to Lang Hancock
  69. Crystal Balls Need Polishing
  70. Minerals - politicians' playthings?
  71. John Singleton-Ita Buttrose interview (1977)
  72. Boston Tea Party 1986 style, hosted by Lang Hancock and Bob Ansett
  73. Singo says Lang Hancock violated Australia's 11th commandment: Thou Shalt Not Succeed
  74. Singleton: the White Knight of Ockerdom
  75. Tactics change by Hancock
  76. Lang Hancock complains to Margaret Thatcher about Malcolm Fraser
  77. 'Phony crisis' seen as 'child of politics'
  78. Lang Hancock on nuclear energy
  79. Lang Hancock beats the left at their own game on civil liberties
  80. Lang Hancock's Favourite Books
  81. 1977 Lang Hancock Canberoo poem
  82. Hancock's playing very hard to get
  83. Hancock proposes a free-trade zone
  84. An Open Letter to Sir Charles Court
  85. John Singleton 1976 ocker Monday Conference Max Harris debate
  86. Lang Hancock in 1984 solves Australian politics
  87. Lang Hancock on the Workers Party, secession and States Rights
  88. Lang Hancock asks what happened to Australia's rugged individualism?
  89. Precis of Ludwig Plan for North-West
  90. Announcement that Lang Hancock will be guest of honour at the Workers Party launch
  91. Lang Hancock's March 1983 attempt to enlist "former presidents of nations and heads of giant companies" to save Australia
  92. Lang Hancock asks us to think how easily environmentalists are manipulated for political purposes
  93. Invest in free enterprise
  94. Democracy is dead in Australia and Lang Hancock's education
  95. Lang Hancock Incites Civil Disobedience
  96. Hancock sounds call to battle Canberra
  97. Mining policy a threat
  98. Over Whitlam's head
  99. Lang Hancock suggests that newspapers don't give space to politicians unconditionally
  100. Lang Hancock on saving Australia from socialism
  101. Secede or sink
  102. Australia can learn from Thatcher
  103. John Singleton. Horseracing. Why?
  104. How Lang Hancock would fix the economy
  105. Lang Hancock: victim of retrospective legislation
  106. Lang Hancock supports Joh for PM
  107. Hancock seeks miners' tax haven in the north
  108. The Ord River Dam
  109. Why Lang Hancock invested in Australia's film industry
  110. Lang Hancock's 1983 letters to The Australian: Lang's precedent for Steve Jobs, renaming the Lucky Country to the Constipated Country, and more
  111. Australia's biggest newspaper insider on manipulating the media
  112. 1980 Lang Hancock-Australian Penthouse Interview
  113. Canberra: bastion of bureaucracy
  114. Pilbara can be the Ruhr for South-East Asia
  115. 1982 Lang Hancock-John Harper Nelson Interview
  116. Australian elections are one of the greatest con games in history
  117. Our leaders are powerless
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(in order of appearance on Economics.org.au)
  1. Lang Hancock's Five Point Plan to Cripple Australia
  2. Put Windmills in National Parks
  3. Magnifying National Disasters
  4. Please Don't Feed the Animals
  5. Buy Birdsville Made?
  6. The Economics of Flood Risk
  7. Touring Bureaucrats
  8. Our slip-shod laws to blame
  9. Why Wind Won't Work
  10. A Profusion of "Prices"
  11. R.I.P. Ron Kitching - pioneer, explorer, author, family man, entrepreneur, scholar
  12. The Carbon Pollution Lie
  13. Closing Down Australia
  14. The Anti-Industry
  15. The Pyramid Builders
  16. Carbon Tax Bribery
  17. Crown Monopolies
  18. Carbon Tax Job Losses
  19. What Next, a Tax on Water?
  20. Carbon Health Warnings Coming Soon
  21. Growth Mythology
  22. The Tax Collection Industry
  23. Propaganda Puts Paid to Proof
  24. The Milk of the Welfare Teat is Watered Down
  25. "Crops for Cars" as Bad as Everlasting Drought
  26. Poll speech sets record
  27. The Emissions Trading Casino
  28. The Contract Society
  29. A Model Ministry
  30. The Five Point Plan to kill the economy with High Cost Electricity
  31. Put a Sunset Clause in the Carbon Tax
  32. Stuck on Red
  33. Time to Butcher "Aussie Beef"
  34. Carbon Tax Lies and Bribes
  35. The Middle of the Road
  36. United against taxes
  37. Call for Govt administrator
  38. Property & Prosperity
  39. "The Science is Settled" BUT Durban Climate Summit Not Cancelled
  40. No End to Fuelish Policies?
  41. The Right to Discriminate
  42. Sell the CES
  43. Free Water Costs Too Dam Much
  44. Creating Unemployment
  45. Viv Forbes Wins 1986 Adam Smith Award
  46. 1985 news item on Tax Payers United, Centre 2000 and the Australian Adam Smith Club
  47. Having the numbers is not the same as having the truth
  48. Who's Who in the Workers Party
  49. David Russell Leads 1975 Workers Party Queensland Senate Team
  50. Caught in a welfare whirlpool
  51. Global Warming Season
  52. Mining in Queensland, Past, Present and Future
  53. WEATHER IS USUALLY UNUSUAL
  54. Political branch formed
  55. Ron Manners on the Workers Party
  56. Viv Forbes on Libertarian Strategy and the Constant Resources Myth
  57. The New Brisbane Line?
  58. Carbon Lies
  59. We Mine to Live
  60. Save the taxpayer
  61. Solving Three Canberra Problems
  62. Vested Interests in the Climate Debate
  63. Carbon Tax Retrospective?
  64. Carbon Price Propaganda Taxes the Truth
  65. Don't Burn Food for Motor Spirit - Feed People not Cars
  66. Two Big Climate Taxes
  67. Greens Rediscover Hydrogen Car
  68. Atlas of Australia
  69. Shutting Out The Sun
  70. Safety Mania
  71. Coal - Sinking in the Swamps
  72. Hobbling the Competition
  73. Cubic Currency Coming
  74. "Dear Government"
  75. Viv Forbes mocks Flannery in 1988
  76. What we have is not a drug problem but a drug law problem
  77. Smoking, Health and Freedom
  78. Privatise Now! while they are still worth something
  79. The Electoral Act should allow voters to choose "none of the above"
  80. The New Federalism
  81. Sunset for Solar Subsidies
  82. The mouse will roar
  83. The Road to Homelessness
  84. Planning & Prosperity
  85. Viv Forbes and Jim Fryar vs Malcolm Fraser in 1979
  86. Quip, Quote, Rant and Rave: four of Viv Forbes' letters to the editor in The Australian in 1979
  87. Australia's First Official Political Party Poet Laureate: The Progress Party's Ken Hood in 1979
  88. Our homeless regulation refugees
  89. Progress Party and Workers Party lead The Australian
  90. Viv Forbes in 1978 on loss-making government, the Berlin Wall and misdirected blasts of hot-air
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