Sunday, November 21, 2010
Friday, November 19, 2010
A New Bubble
by Shae Smith (Money Morning)
Forget about the supposed gold bubble. Ignore the growing property bubble, and don’t worry yourself about the potential commodity bubble if Dr. B.S. Bernanke – yes, those are his initials – gets his way.
There’s a bigger bubble brewing. This one is in bulbs. But not light bulbs. And not tulip bulbs either…
Because this one’s not in the Netherlands, it’s in China. In fact, talk of this bubble began long ago.
"Garlic prices have increased fifteen fold in China in under a year because Chinese investors are said to be attempting to create an artificial shortage and drive up prices."
That was written over twelve months ago. But it’s truer now that it was back then.
How did the Chinese end up buying garlic as a speculative investment?
By the way, I’m serious. This isn’t some kind of elaborate analogy… China has created an asset bubble in garlic!
Well, first you have to go back a bit as the 2008 planting season was about to begin.
Farmers, sick of the increasingly low prices for garlic – about 1 Yuan (AUD$0.15) a kilo – decided to ditch the garlic crops for something that had a more attractive price, like corn or rice, which is also ‘price controlled’ by the government.
To the farmer, this made a commodity like corn, much more attractive, knowing that he would always get the same price for his crop, and not risk out on losing money on garlic plantations that attracted very little return. At one point, the price of garlic fell as low as 0.08 Yuan (AUD$0.012) per kilo.
Then along came Swine flu in 2009, and that changed everything.
You see, traditional Chinese medicine believes that garlic has medicinal use, and when Swine flu was invading our vocabulary this started to boost the demand for garlic. But because of the small crops that were planted in 2008, there wasn’t a lot of stuff to go around.
Which is partly to blame for the shortage today.
At first, officials had blamed the shortage on bad weather and farmers hoarding what little supply they had, but as the swine flu scare worsened, the price started to sky rocket.
By the end of 2009 the price for a kilo of garlic was 60% higher than the year before.
In fact, during this period, you’d find many articles like this one, stating how ‘Garlic beats gold as an investment’.
Because many food commodities are price controlled in China, garlic, which isn’t, started to attract speculators into the market.
But all this did was drive the price higher.
Right now, China is the world’s largest exporter of garlic. They export more than 1.5 million tonnes each year.
However, it greatly depends on who you listen to as to whether the price of garlic is sustainable at these new highs of about 14 Yuan (AUD$2.13) per kilo.
Firstly, you have mostly market speculators taking advantage of farmers without access to a wide range of information. Most farmers are still only receiving 1 – 1.5 Yuan per kilo for garlic, as speculators hoard the supply and release only small quantities to the market at a time, keeping the price elevated and demand high.
That being said, the farmers are still averaging three times more income from garlic this year than last year.
But the problem is, even though there’s a shortage of available garlic, many farmers are reluctant to plant bigger crops. The reason? They simply can’t afford the higher price of the seeds, and they don’t want to be left with goods they can’t sell.
Then you have Yi Xianrong, a researcher for the Chinese Academy of Social Sciences who has said that the garlic market ‘...is cyclical. Price are short term, and they will fall again before long.’ He estimates that this is just part of a three year cycle and prices will return to 1.5 – 2 Yuan per kilo soon.
However, one of the biggest problems facing the garlic market isn’t the speculators, but the Chinese government.
Many commodities, including agricultural ones are price controlled by the government.
Talk has already begun about the government stepping in and developing a ceiling limit that garlic can attract per kilo.
There’s two reasons here, being the world’s largest exporter of garlic, they don’t want the price to become too high and lose their best customers to Argentina or Spain as they also export large volumes of the stinky stuff.
But more importantly, China’s ever rising consumer price index (CPI) has caused the central bank to want to curb inflation. And any time an abnormal economic number comes out from China global markets get a bit rattled...
When the food component of China’s latest CPI was over 10% higher for the most recent quarter, you can bet that the Chinese government is going to step in and take control of the garlic market before any more of its economic numbers are skewed.
Forget about the supposed gold bubble. Ignore the growing property bubble, and don’t worry yourself about the potential commodity bubble if Dr. B.S. Bernanke – yes, those are his initials – gets his way.
There’s a bigger bubble brewing. This one is in bulbs. But not light bulbs. And not tulip bulbs either…
Because this one’s not in the Netherlands, it’s in China. In fact, talk of this bubble began long ago.
"Garlic prices have increased fifteen fold in China in under a year because Chinese investors are said to be attempting to create an artificial shortage and drive up prices."
That was written over twelve months ago. But it’s truer now that it was back then.
How did the Chinese end up buying garlic as a speculative investment?
By the way, I’m serious. This isn’t some kind of elaborate analogy… China has created an asset bubble in garlic!
Well, first you have to go back a bit as the 2008 planting season was about to begin.
Farmers, sick of the increasingly low prices for garlic – about 1 Yuan (AUD$0.15) a kilo – decided to ditch the garlic crops for something that had a more attractive price, like corn or rice, which is also ‘price controlled’ by the government.
To the farmer, this made a commodity like corn, much more attractive, knowing that he would always get the same price for his crop, and not risk out on losing money on garlic plantations that attracted very little return. At one point, the price of garlic fell as low as 0.08 Yuan (AUD$0.012) per kilo.
Then along came Swine flu in 2009, and that changed everything.
You see, traditional Chinese medicine believes that garlic has medicinal use, and when Swine flu was invading our vocabulary this started to boost the demand for garlic. But because of the small crops that were planted in 2008, there wasn’t a lot of stuff to go around.
Which is partly to blame for the shortage today.
At first, officials had blamed the shortage on bad weather and farmers hoarding what little supply they had, but as the swine flu scare worsened, the price started to sky rocket.
By the end of 2009 the price for a kilo of garlic was 60% higher than the year before.
In fact, during this period, you’d find many articles like this one, stating how ‘Garlic beats gold as an investment’.
Because many food commodities are price controlled in China, garlic, which isn’t, started to attract speculators into the market.
But all this did was drive the price higher.
Right now, China is the world’s largest exporter of garlic. They export more than 1.5 million tonnes each year.
However, it greatly depends on who you listen to as to whether the price of garlic is sustainable at these new highs of about 14 Yuan (AUD$2.13) per kilo.
Firstly, you have mostly market speculators taking advantage of farmers without access to a wide range of information. Most farmers are still only receiving 1 – 1.5 Yuan per kilo for garlic, as speculators hoard the supply and release only small quantities to the market at a time, keeping the price elevated and demand high.
That being said, the farmers are still averaging three times more income from garlic this year than last year.
But the problem is, even though there’s a shortage of available garlic, many farmers are reluctant to plant bigger crops. The reason? They simply can’t afford the higher price of the seeds, and they don’t want to be left with goods they can’t sell.
Then you have Yi Xianrong, a researcher for the Chinese Academy of Social Sciences who has said that the garlic market ‘...is cyclical. Price are short term, and they will fall again before long.’ He estimates that this is just part of a three year cycle and prices will return to 1.5 – 2 Yuan per kilo soon.
However, one of the biggest problems facing the garlic market isn’t the speculators, but the Chinese government.
Many commodities, including agricultural ones are price controlled by the government.
Talk has already begun about the government stepping in and developing a ceiling limit that garlic can attract per kilo.
There’s two reasons here, being the world’s largest exporter of garlic, they don’t want the price to become too high and lose their best customers to Argentina or Spain as they also export large volumes of the stinky stuff.
But more importantly, China’s ever rising consumer price index (CPI) has caused the central bank to want to curb inflation. And any time an abnormal economic number comes out from China global markets get a bit rattled...
When the food component of China’s latest CPI was over 10% higher for the most recent quarter, you can bet that the Chinese government is going to step in and take control of the garlic market before any more of its economic numbers are skewed.
Aussie Banks "Unique System to Keep Dwelling Prices High"
by Kris Sayce (Money Morning)
Well reader, I have to say it, today your editor read the most ridiculous article we've ever read on Australia's now-popped house price bubble.And believe me, that takes some doing. There's been a heck of a lot of rubbish written over the years, but the article we read today trumps the lot.What makes it worse is that it wasn't written by some half-baked real estate agent or a rabid property spruiker. No, it was written by someone who many believe is one of the most respected financial journalists in Australia - Robert Gottliebsen.
As his biography on the Business Spectator website points out:"When it comes to Australian business media, one name is synonymous with trust, integrity and depth of knowledge that surpasses all others, that name is Robert Gottliebsen. Robert Gottliebsen is an Associate editor for Business Spectator and was the original AFR Chanticleer and founder of Business Review Weekly (BRW) Magazine."He's a commentator that many in the mainstream respect. Although based on the article he wrote yesterday, he looks to be past his sell-by date.
In his article Mr. Gottliebsen expressed sympathy for a view put forward by Bendigo and Adelaide Bank chairman Rob Johanson. Mr. Johanson was commenting on proposals by the socialist Green Party to prevent Australia's banks from raising rates any higher than rate moves by the Reserve Bank of Australia (RBA). Mr. Johanson said:"None of us... who can remember trying to buy a house in the 1970s would want to have to go through or go back to that situation for funding."With my wife I bought my first house in 1967 and I remember vividly what it was like in the 1970s. Getting a housing loan from the bank was extremely difficult and as a result house prices were very low because you had to assemble deposits many times current requirements."Mr. Gottliebsen then offers his opinion on what makes the current Australian housing market so special:"It might not be intentional, but in Australia banks have developed a unique system to keep dwelling prices high. They are liberal in granting housing loans, so there is a strong consumer demand for houses.
"We're dumbfounded, but we'll continue:"By restricting the supply and boosting the demand, banks keep dwelling prices high. If the Greens' proposal were enacted and we had further increases in the cost of funds overseas - which many are predicting - then the current high house price arrangement would be blown apart..."I am delighted that neither the government nor opposition are going down that path."
At least we should be grateful for one thing from Mr. Gottliebsen's truly mind-blowingly dumb article, and that's the admission from a mainstream insider that the current housing and banking relationship would be "blown apart" if it wasn't for house price manipulation by the banks and government.But of course, it's too late to worry about that.
As I wrote earlier this week, the house price bubble has already popped and it'll be blown apart regardless of whether the Greens' policy gets up or not.But quite frankly we find it extraordinary that not only would a banking executive claim it was terrible that people had to "assemble deposits" to buy a house, but it's equally bizarre that a so-called respected journalist would cheer the fact that Aussie banks have "a unique system to keep dwelling prices high."
Clearly they prefer how the market is rigged right now. Where those - we'll assume - such as Mr. Johanson and Mr. Gottliebson who bought their homes in the 1960s and 1970s and who have benefited from two decades of loose bank lending and cheap credit feel weak at the knees at the thought of house prices returning back to their pre-boom levels.
Much better for house prices to remain high, for banks to be "liberal in granting housing loans", and for current homebuyers to be paying 60% or 70% of their income in interest to the banks... banks such as Bendigo and Adelaide Bank.I mean think about it. Think about the difference. In the 1960s or 1970s buyers would have saved a deposit. They would have had money sitting in a bank account accumulating interest. Importantly, they would have been debt free. And, they would have had savings set aside for a rainy day or to put down as a deposit for a house.
Today, buyers are bribed and suckered in to the market by banks such as Bendigo and Adelaide Bank thanks to artificially low interest rates and taxpayer funded giveaways such as the first home buyers bribe.And rather than having a healthy bank balance of savings for a rainy day or for a deposit, well, they've already got a house so they don't need a deposit, and with 60% or 70% of their income going on mortgage repayments they don't have a bean left to put towards savings anyway.They're living the life of a pauper, but at least they're doing it in style... if that's possible!But don't worry guys, because apparently in Australia "banks have developed a unique system to keep dwelling prices high."Don't you believe it.
The market has cracked and the baby-boomers who thought they could profit at the expense of youngsters going deeply into debt will soon find the smile wiped off their faces.Perhaps Gottliebsen's name used to be synonymous with trust, integrity and depth of knowledge, but not after that article. We thinks it's time for Gottliebsen to hang his head in shame and hang up his boots to let someone with a bit of common sense take over.
Friday, October 22, 2010
Why Can't I Question the "Social Contract"?
Let’s not mince our words; the “Social Contract” as laid out in the Malaysian Federal Constitution is official racism of the most absurd and blatant of its kind. The “Social Contract” as it was first established under Article 153 of the Federal Constitution grant the Malays special rights and privileges irrespective of even if they are millionaires, just as long as your skin is of a certain colour.
The “Social Contract” originated during independence when the “pendatang” or foreigners (mainly Chinese and Indians) were given the special privilege of citizenship in exchange for the Malays being given “special privileges” as the indigenous people of Malaya. The special privileges include “Malay” entitlement in the areas of business and economy, quotas for certain trade licences, education and public scholarships, quotas into public universities, civil service and politics. Then in 1969, when the ruling UMNO party lost it’s parliamentary majority after the elections and hundreds of Malays ran amok and went on a killing spree at the expense of the Chinese, the New Economic Policy (NEP) was establish to further extend the “Social Contract” which was meant to be only temporary and was recommended to be reviewed after the first fifteen years as advised by the “Reid Commission” which prepared the framework for the Constitution. It was due for review in 1972 but after the May 1969 riots and with a state of emergency declared, it passed without incident.
That’s a bit of history and now the hard questions. I know that the “Social Contract” is not meant to be questioned or challenged but what the hell.
1. Would it not be better for the government to improve funding and cut out corruption in the education sector and improve the overall quality of the education in Malaysia than to reserve certain quotas for Malays irrespective if they’ve earned their place in the institutions of higher learning or not? Would placing quotas based on your skin colour only alienate the other races who will have to work harder, earn more money and fund their own education overseas and after they’re done to never return to Malaysia, choosing to stay on in the country that gave them their higher education as staying on and working there would earn them ten times more than if they returned to their corrupt and racist mother land? The local graduates on the other hand, when they “graduate” are left wanting and can hardly cope with the rigours that face them in the real world. Employers on the other hand are weary of local graduates especially those that made it based on their skin colour.
2. Would it not be better to develop social welfare policies that helped the genuine poor irrespective of their skin colour, that is, help the poor rather than help based on your skin colour? If you are Malay, and are very well off why should you be helped over a poor person just because of your skin colour? No proponent of the “social contract” has given a satisfactory answer to this question to date. Undoubtedly the NEP was designed to help the cronies in the ruling UMNO party rather than to genuinely help any poor person Malay or otherwise.
3. Would it not be better to lift the uncompetitive protection given to the national carmaker “Proton” after so many years, so they can compete on their own two feet? Get the best brains, best training and best quality process in place to make it a national car that the whole country can be proud of instead of the butt of all the jokes even if this means hiring more of people of other races? Why not give the majority of Malaysian citizens the choice to choose other cars of higher quality without imposing such heavy duties to protect Proton? Why would you protect one company at the expense of the other millions of Malaysians? Why do Malaysians have to suffer driving a substandard car at over inflated prices to protect Proton and its cronies?
4. How do you justify an across the board discount for property purchase for Malays when some of these people could be very wealthy? Where is the equity and fairness when a Malay millionaire could purchase a property cheaper than a poor non-Malay because of this institutionalised racism that exist?
5. Would it not be more appropriate if the government could improve skills training to those that needed it most instead of imposing law that requires local companies to meet the hiring quota for Malay people? Many of these companies hire the Malays just to “comply” but the driving force of the companies is the other races. Would that then improve the skills of these “dead wood” that would otherwise just remain dead wood?
6. If there is some law in the constitution agreed or otherwise fifty years ago and if we knew it to be bull shit, could we not question it and amend it if it would be better for the country to do so? All the indicators and also common sense tells us that the social contract is one of the most regressive, absurd and utterly racist policies that exist for Malaysia and it’s hurting the reputation, business environment, competitiveness, quality of life, education and almost every aspect of life as we know it in Malaysia and the only people who don’t want to amend it are the UMNO politicians and their cronies that are benefitting inequitably from the policy. They rape, pilfer and rob the nation with the help of the “social contract” and are enriched so unimaginably and will go to any lengths to ensure it remains that way, even threatening riots and death to anyone who questions the social contract.
The social contract is not working to its initial goal and everyone knows it, even UMNO but its initial goal is no longer a goal worth fighting for and there is a new goal to enrich UMNO and its cronies beyond anyone’s wildest imagination and in order for this new goal to be achieved with vigour, this “social contract” need to remain in place. Anyone questioning the social contract needs to be put in their place either by using a host of draconian laws like the ISA, Sedition Act, Communication and Multimedia Act, Printing Act etc. to be muzzled forever. Malaysia Boleh!
Saturday, October 16, 2010
My Trip
Well I just got back from one hectic 8 flights, 10 cities total of 25 hours in direct flying time and equal in taxi trips to the airport and airport waiting time in 7 days and I'm buggered. I did Perth -- KL -- Jakarta -- Singapore -- Hong Kong -- Shenzhen -- Dongguan -- Shenzhen -- Shanghai -- Dongguan -- Guangzhou -- KL -- Seremban -- Perth in just 7 days and to say that I'm tired is the understatement of the year. In fact while typing this up I can still hear the roar of the aeroplene engines ringing in my ears. My body is still but the mind is travelling at 800 km/h at 36,000 feet. Seem like out of a total of 7 days, 2 full days were spent on travelling, although it seems more than that.
To add to the gruelling schedule one missed flight and one leg straight from the club to the airport with a total of 3 hours sleep over a two day period makes for one gruelling trip. I averaged around 3 hours of sleep per day and 4 hours if lucky, comprised mainly of late nights romps with friends followed by early morning flights to the next destination.
So what did I get up to?
Well the main purpose of the visit was to go to the World Expo and to experience the commerce in the southern Pearl River Delta economic region of Shenzhen and Guangzhou. The Jakarta trip was a last minute call we made due to some insistence of our friends in Indonesia who wanted to show us what their country had to offer. This meant that on the first day I had flown from Perth to KL (bypassing Jakarta), waited a few hours for the next flight back down from KL to Jakarta (another 2 hours) and another 1 hour wait for my ride to pick me up from the Jakarta International Airport due to the notorious jakarta traffic and another 1.5 hours back to our hotel in Mangga Dua. I had enough time for a quick shower only to be brought to a club to meet some other contacts who were supposed to be important locals who we were told were worth our time meeting up with. As the case is with Jakarta business men and being a Friday, we only managed to pry ourselves away from the group at about 5am, went back to the hotel and slept probably about 6am only to wake up at 9am unable to sleep any further, strange noises still ringing in my head.
The next day was some massages, a fantastic traditional Sundanese meal and a quick stop at the mall to get some sundries before heading off to meet some other friends at another club. This time round we had to wrap up the nights activities around 4 am to head straight to the airport to catch the 7am flight to Singapore onward to Hong Kong and straight into southern China via Hong Kong, not the best route but needed to be done as one our mates hadn't arranged for a China visa, leaving the Hong Kong -- Shenzhen border the only viable alternative to apply for a full China visa within the hour. It turned out this friend could not make the trip to China anyway, but our tickets were already purchased leaving the rest of us with valid visas to make the ridiculously gruelling trip anyway, when a direct flight from Jakarta to Guangzhou would have sufficed and saved us the pain. When you've only had 3 hours sleep in the last 48 hours, the last thing you need is to travel thousands of miles though cities which you don't need to go to, and a long wait at the airports for connecting flights which you should never be taking in the first place to get to your destination only about 6 hours away. The leg which started at 7am ended at 11pm at our hotel in Dongguan!!
Has China Progressed?
Economically, China has progressed as everyone knows but socially and behaviourally, not much. I was in China 5 and 7 years ago and China has progressed in how they behave due to the constant effort by the government to teach the people proper etiquette and behaviour but it's still quite common to see people spitting on the pavement, jumping the queues and atrocious driving habits. Signs in the World Expo reading "One Step Forward" in front of the urinals which I assume was meant to say "Please take a step forward" when doing your wee wee make me conclude that either they pee all over the place or they have short dicks. Other signs read "Don't Climb" on the railing guiding the long queues leading me to think it was intended for those who climbed the railings just to get ahead of the queue.
Driving in China
In Australia, you honk only if someones has committed a serious offence that would endanger the safety. In Malaysia, you honk if you think that someone is going to commit an offence that could be considered dangerous but in China you honk as you like all the time anytime. They honk when they're in danger, they honk when not in danger and they honk when in between danger and out of danger. They drive like drunks when haven't actually drunk anything and common sense is not so common when it comes to their driving. Cars swerve to the left then right for no apparent reason whatsoever. You'll see cars swerving to the left when just a second later they are heading to the next right turn. The safety aspect also leaves a lot to be desired, for example people riding bicycles on the road at night with no lights heading in the opposite road direction with their usual swerving all over the place.
Bad English in China
I can't say too much about this one as I can't speak Mandarin but you would think with the World Expo, China's opportunity to showcase their progress to the world, they could afford to pay someone $50/hr to do a proper check that the English was proper. Signs all over the World Expo with broken english, some of them causing me uncontrollable laughter until now. I can't remember all of them as they were too many but some of them include: "No Noising" and "Please be Mindful of Civilisation". One in the airport read "Please proceed to the departeur gate" leading one to believe it was meant only for the french traveller. They provided great entertainment for me when I needed it most.
People in China cannot walk straight
I kid you not, if you look at the majority of people in China and you see how they walk, they never walk in a straight line. Just like their driving and business ethics, the Chinese people walking is never straight. This made it quite challenging for me especially in the Expo where there were hundreds of thousands of Chinese walking crooked.
Finally...
My critical nature of China and its people reflect a mindset of Western Society thinking that I think fall in the 'less travelled' category and have only really seen their own backyards although I think it is more in my nature rather than being less travelled to be critical. This blog was started due to my inate urge to criticize and to vent my no holds barred thoughts without any filters. Westerners staying in China however, are less critical due to their understanding that different cultures, different upbringing and social environment more often than not lead to different social and behavioural habits and that's part of life not only in China but all over the world and as such tend to tolerate the bad behaviour espoused by the Chinese people in their everyday encounter with them more so than their Western counterparts who see the appallingness for the very first time.
All in all this trip was overdone and too gruelling for an ageing man like me but undoubtedly one of the most interesting and eventful trips I have ever taken. It has given me very fond memories to remember especially meeting many people in China and understanding them a little better and their quest to better their lives and that of their families. I would make a similar trip like this if I ever get another opportunity to do so, my strongest endorsement yet that this trip planned for us was a resounding success.
Wednesday, October 6, 2010
Tiger Airways Voted Worst Domestic Airline in Australia
Got these from a consumer complaints website on Tiger Airways. Good read and beware as I agree that Tiger Airways should be boycotted.
Graeme of Adelaide, Australia September 11, 2010
15OCT09 we booked and payed AUD 741.65 for flights TR2423 Penang to Singapore and TR2716 Singapore to Perth for two Adults and two Children travelling on 16MAY10. 16MAY10 we arrived at Penang Airport to find that Tiger Airways no longer operated out of Penang on this day and that they had rebooked us on 19MAY10 flight without any prior notice. As there were no Tiger Airways staff available we had to rely on the airport information staff to help us.
They spoke to Tiger Airways on our behalf and were told that there were still seats available from Singapore to Perth for that day and all we would have to pay would be a rebooking fee if we could get there. We had no choice but to buy tickets on a Silk Air flight from Penang to Singapore for AUD 671.56.
When we spoke to the Tiger Airways customer sevice desk in Singapore we were told that we had to re purchase new tickets (AUD 1308.48) and that we would get a refund for the original purchase. We have spoken to Tiger Aiways on three occasions since our return and on each occasion they said they would only refund the amount of AUD741.65 for the tickets from Penang to Perth and that we would receive payment in three to six weeks. It has now been four months and as yet have not been refunded one dollar.
Elise of Port Sorell, Australia September 4, 2010
I booked flights with Tiger Airways at least 6 months in advance to get specials for my family. Tiger has now cancelled both out going and in bound flights to where I live. They told me I would get a full refund but it is pittance in comparison to going with another carrier at short notice, they give no other help financially or changing of flights as I have a connecting flight with tiger that I now cannot get but they wont change this or refund money for this.Been 3 months still no refund and 3 letters later no response from them except on my behalf only bieng able to contact call centre where they are useless.As a company I wouldnt put a name to this as I would be ashamed.
Phil of Somerville, Australia July 21, 2010
Tiger Airways is the worst airline I've ever had the misfortune of flying with! My critique is based on my experiences in over 30 years of domestic & international air travel. No matter how cheap it appears beware the hidden costs! Check-in fee! Oversized luggage fee! Overweight luggage fee! Re-booking fee! Beware of cancelled services! Services are delayed & cancelled regularly, the best you'll get is a meal voucher & a long wait at the terminal to board another flight. 2-1/2 Days at the Gold Coast Airport in one instance.
Beware of lousy customer service! Particularly the off-shore customer service centre at the end of their one & only advertised contact number! Long queues, hang-ups & mis-information are a regular occurence. Long wait at check-in counters and small & overcrowded terminals.
Let me reflect on my family's recent experience. Last minute travel to Brisbane for the Vic School Holidays, Tiger was the only airline that had affordable (not cheap,cheap) seats available at that time. Called Tiger customer service to confirm the departure terminal, answer "International at Melbourne Airport". Arrived airport 90 mins prior to departure time & parked car in Long Term car park. Headed to the International terminal - WRONG! After wandering around international departures for 15 mins trying to find the Tiger counter we were directed to the correct terminal at T4 (old Virgin). I'm told the Tiger customer service person had meant Melbourne International Airport!
After walking the family to T4 (10 mins or so) we arrived at the Tiger check-in counter 50 mins prior to departure to find that they were no longer checking in baggage. The "young" fellow behind the counter was not open to any reasoning or discussion re our plight, the only option given to us was to pay an additional 210 to be moved to the 5.30 am flight next morning. So there we were, 8.30pm & home was over an hours drive away. Taking into account the cost of fuel, toll charges & the 4am start next morning, we decided not to return home and so began our search for some affordable accommodation nearby. Having paid the 24 to get the car out of Long Term parking, we checked into a nearby motel 2 hours later, best rate 170, all for 5 hours sleep.
Arrived back at the Tiger terminal 4.30am next morning 90 mins prior to departure (Tiger reccommends 2 hrs). We'd already paid the extra 20 per passenger to get a 15 kg baggage allowance (55 pp if paid at the airport). One bag weighed in at 15.3kg, they then proceeded to try and extort another 55 from us for the extra 300 grams. No way was I going to pay them another cent, so I unpacked the case on the scales & removed my diary & jacket which I was then allowed to carry on as cabin baggage at no further cost (WHAT A JOKE! 300 grams is 300 grams, whether it's in the hold or in the cabin. WHY THE FUSS?)
The guy beside us was about to kill the check-in chick. He had a carry-on bag that he'd taken on board many different airlines while travelling the world. Tiger was telling him that it was oversize by 3cm and were demanding he pay 55, we was not happy. Every other queue was held up with people unpacking suitcases at counters trying to reduce the weight of their luggage. How efficient is that? Especially given that most of the stuff removed is carried on board as hand luggage anyway. 5 of the 55 baggage fee is supposedly an administration charge...SURE!
Once we'd left the check-in counter we were in yet another queue, this time weighing hand luggage to make sure it was under 7kg. Once again, people were forced to wait while passengers unpacked their bags in the queue. Moving on, there was yet another delay while we stood in the queue at the security point. A very narrow & innefficient choke point. The T4 terminal is very cramped with little seating available when 2 or more flights are scheduled to depart. Food & beverages are typically overpriced and there are queues at counters. Access to the aircraft is via the tarmac which was quite uncomfortable given the cold winter winds at Melb Airport.
Once on board, it becomes apparent that the aircraft are not cleaned regularly, there is no in-flight entertainment and the aircraft are not fitted with in-seat radios or video screens. All food & drink must be purchased and they DO NOT accept cash or eftpos on board, credit cards only. I had cash but I'd left my cards in my luggage, I couldn't even buy the family a drink of water... WHAT A JOKE!)
I ended up heading back to Melbourne earlier than expected, I booked with Qantas and left my family to return with Tiger as originally planned. My family reported that the service from Tiger in Brisbane was just as bad as Melb. Our itinerary had a seat booked for me including a 15kg baggage allowance that I'd paid for. Tiger would not allow my family to use the seat nor would they allow my family to use my 15kg baggage allowance despite us all being ticketed on the same itinerary. Once again, my wife had to unpack a jacket to bring a bag below 15kg. It turns out that they subsequently resold my seat & yet offered no refund.
Given the whole "Tiger" experience I will never ever fly with them again. At the end of it all I could have flown my whole family on a Qantas every day fare, at a time convenient to us, for less cost than we ended up incurring with Tiger. The airline is a joke and deserves every bit of the negative press & consumer backlash that it incurs. The company has taken domestic air travel in Australia to an all time low.
S.Chandrasekar of Chennai 600042 , Tamilnadu ,Indi, India February 19, 2010
Self had booked both ways 3 Air Ticket each on Tiger Airways under concessional fare on Chennai/Singapore leg along with separate Fee for seat allotment & baggage was paid by self using my ABN Amro Master card through their Website. ABN Card usage charge was 3.5% on the total amount. Transaction confirmed, Tickets confirmed but Seat unassigned in spite of the requisite amount paid by self at the time of booking. Tritinerary@tigerairways.com sent me the booking confirmation on 30 Jan 2010 but there again the seat was unassigned as against the actual seat numbers blocked and paid for. I took up this immediately with their Indian Call Center number wherein they maintained that they need to check and revert with no proper response as they claimed to have no access to do the needful in India, instead wanted self to call up Singapore.
I had no choice but to call Singapore too but the call never were answered, I was left with additional spending on phone calls and unnecessary mental tension & mail communications. This continued since day one, ie., 29 Jan 2010 till today when my travel date per confirmed ticked falls on 25 Feb 2010. Tiger Airways continued with their deliberate negligence and failed to rectify their mistake resulting to utter service failure.
Hence I was pushed beyond my extreme levels of tolerance and had real pain and mental unrest and agony due to which i came to a decision to not travel in Tiger Airways and ask for Full refund of paid amount plus the 3.5% commission on Credit Card for canceling. I sent mails in return on the email id that i received requesting them for full refund and cancellation thereof which again had no response at all till date.
On the 18 Feb 2010, I Called the call center and the Singapore office by the same continued with claims that additional fee over and above what i paid earlier for seat allotment will be applicable for seat allotment & refund /cancellation not possible. I faxed the emails and request for refund in total to Tiger Airways Singapore on 0065 68222310 by 1355Hrs today.
Its all most 20 Days and no revert on the query, on 18 Feb 2010 i checked for refund, then they come back with excuses but i had made up my mind not to travel in Tiger Airways / Refund of paid amount and 3.5% Credit Card charges due to such pathetic & uncertainties service of Tiger Airways leading to mental unrest & agony. Now they are holding on to their stance that they will not refund as per Ticket terms though they were at fault. What should i do?
Pls Note - Tiger Airways have their service out of Chennai but DO NOT have their liaising office in Chennai to assist the passengers on pre and post bookings/queries at Chennai. We also face the difficulty on communication as they are not willing to provide Tiger Airways email id to address the issues accordingly .
Yesterday evening(Post IST 1800Hrs18Feb 2010) they come up with seat allocation which i denied to accept and insisted on refund. As i mentioned, Am firm on Refund and am in no mindset to proceed to travel on this Airline due to such service failures which resulted me in mental stress, unrest with additional expences on phone calls, wastage of my productive time with agony pushing me to suspend my travel plans to Singapore on Tiger Airways once and for all.
Today, the 19 Feb 2010 around 1000Hrs IST , Mr.Kelvin T. - Manager Reservations, Claiming to be from Tiger Airways Singapore called on my hand phone and updated that they will not refund and cancellations not acceptable though they were at mistake. I denied to accept his claim and wanted them to Refund in full along with the commission of 3.5% on Credit Card Transaction.
He even dared to threaten self on forfeiture of total sum paid if i proceed on legal front. He also asked self as to what proof do i have for all such communication over telephones and wanted the records. Hence, I requested him to advise me their email address for me to address my further queries which he denied to provide and wanted self to use the Sin Fax no for any such communication. Moreover, he was not ready to transfer the call to the PRO or the legal department.
Lyndsay of Malvern, Australia December 22, 2009
Flight No TT669, Sydney to Melbourne on 29 November (Sunday) 2009 was cancelled. The aircraft apparently went out of service the night before, but we (three of us)only found out when we arrived at check-in at 10.00am the next day. No notice from Tiger that the flight had been cancelled. Fortunately we were second in the queue - if you happened to be number 123 you'd be really peeved! Anyway, we're told the flight has been cancelled. The next Tiger flight available to us is Wednesday - three days later! No assistance with alternate travel arrangements or accomodation. Given a slip of paper with the Tiger call-centre number on it. This number rings engaged for hours. No apology. "Should get a refund in about a month" - not holding my breath. Insurance only covers up to the value of the flights cancelled - so we get a refund to the value of a cheap flight booked three months previously, to buy a premium cost flight from a competitor airline at no notice. Who gets screwed here?
In summary, cancelled flight; no notice to customers; unclear refund process and timing; insurance not worth the paper it's written on; Tiger couldn't care less - on checking, this philosophy is written in to the fine print of their terms; impossible to find a Tiger official more senior than a check-in operator or a call-centre operative. Seven flights in the past six months - will not darken their doors again:-)
Shannon of Caulfield North, AL December 18, 2009
On the 6th of October 2009 I was due to board a flight from the Gold Coast to Melbourne on Tiger Airways. When I arrived at the airport EARLY to check in I was told that my flight was oversold and that someone else had taken my seat. I was told to fill in a form and that the cost of my flight would be refunded to me within 4 weeks. I had to then go to another airline and book another flight to get home, at an additional expense of course. To date (18th of December 2009) I have still not received the 214 owed to me.
In this time I have since written 3 letters, sent 3 faxes and have made numerous phone calls - of which I would be on hold for no less than 40 mins. I received a email from Tiger on the 19th of November saying that the money had been transferred into my account. Well, as above IT HAS NOT! I called my credit card provider, because apparently it is now their problem that the money hasn't been credited. They tell me I have to wait 30 days from the time they sent the email. I've waited the 30 days... the day is today. Now they have to dispute it with Tiger and it could potentially take up to another 90 days to sort out!
Maree of Narre Warren, Australia June 15, 2009
I've had a flight time changed, and they have asked if I need to speak to anyone, to call their Australian number, however after the automated service giving the information speel, the phone just goes dead, and after exactly 2.50 min the phone then engages. I've over the last 2 days made in excess of 20 calls to this number and still have'nt got through to anyone. I've also sent Fax to their Australian fax number, asking for them to contact me on my mobile earlier today (Monday June 15) and have not had any response to that either.
Read more: http://www.consumeraffairs.com/travel/tiger_direct.html#ixzz11ZJ0iDBE
Graeme of Adelaide, Australia September 11, 2010
15OCT09 we booked and payed AUD 741.65 for flights TR2423 Penang to Singapore and TR2716 Singapore to Perth for two Adults and two Children travelling on 16MAY10. 16MAY10 we arrived at Penang Airport to find that Tiger Airways no longer operated out of Penang on this day and that they had rebooked us on 19MAY10 flight without any prior notice. As there were no Tiger Airways staff available we had to rely on the airport information staff to help us.
They spoke to Tiger Airways on our behalf and were told that there were still seats available from Singapore to Perth for that day and all we would have to pay would be a rebooking fee if we could get there. We had no choice but to buy tickets on a Silk Air flight from Penang to Singapore for AUD 671.56.
When we spoke to the Tiger Airways customer sevice desk in Singapore we were told that we had to re purchase new tickets (AUD 1308.48) and that we would get a refund for the original purchase. We have spoken to Tiger Aiways on three occasions since our return and on each occasion they said they would only refund the amount of AUD741.65 for the tickets from Penang to Perth and that we would receive payment in three to six weeks. It has now been four months and as yet have not been refunded one dollar.
Elise of Port Sorell, Australia September 4, 2010
I booked flights with Tiger Airways at least 6 months in advance to get specials for my family. Tiger has now cancelled both out going and in bound flights to where I live. They told me I would get a full refund but it is pittance in comparison to going with another carrier at short notice, they give no other help financially or changing of flights as I have a connecting flight with tiger that I now cannot get but they wont change this or refund money for this.Been 3 months still no refund and 3 letters later no response from them except on my behalf only bieng able to contact call centre where they are useless.As a company I wouldnt put a name to this as I would be ashamed.
Phil of Somerville, Australia July 21, 2010
Tiger Airways is the worst airline I've ever had the misfortune of flying with! My critique is based on my experiences in over 30 years of domestic & international air travel. No matter how cheap it appears beware the hidden costs! Check-in fee! Oversized luggage fee! Overweight luggage fee! Re-booking fee! Beware of cancelled services! Services are delayed & cancelled regularly, the best you'll get is a meal voucher & a long wait at the terminal to board another flight. 2-1/2 Days at the Gold Coast Airport in one instance.
Beware of lousy customer service! Particularly the off-shore customer service centre at the end of their one & only advertised contact number! Long queues, hang-ups & mis-information are a regular occurence. Long wait at check-in counters and small & overcrowded terminals.
Let me reflect on my family's recent experience. Last minute travel to Brisbane for the Vic School Holidays, Tiger was the only airline that had affordable (not cheap,cheap) seats available at that time. Called Tiger customer service to confirm the departure terminal, answer "International at Melbourne Airport". Arrived airport 90 mins prior to departure time & parked car in Long Term car park. Headed to the International terminal - WRONG! After wandering around international departures for 15 mins trying to find the Tiger counter we were directed to the correct terminal at T4 (old Virgin). I'm told the Tiger customer service person had meant Melbourne International Airport!
After walking the family to T4 (10 mins or so) we arrived at the Tiger check-in counter 50 mins prior to departure to find that they were no longer checking in baggage. The "young" fellow behind the counter was not open to any reasoning or discussion re our plight, the only option given to us was to pay an additional 210 to be moved to the 5.30 am flight next morning. So there we were, 8.30pm & home was over an hours drive away. Taking into account the cost of fuel, toll charges & the 4am start next morning, we decided not to return home and so began our search for some affordable accommodation nearby. Having paid the 24 to get the car out of Long Term parking, we checked into a nearby motel 2 hours later, best rate 170, all for 5 hours sleep.
Arrived back at the Tiger terminal 4.30am next morning 90 mins prior to departure (Tiger reccommends 2 hrs). We'd already paid the extra 20 per passenger to get a 15 kg baggage allowance (55 pp if paid at the airport). One bag weighed in at 15.3kg, they then proceeded to try and extort another 55 from us for the extra 300 grams. No way was I going to pay them another cent, so I unpacked the case on the scales & removed my diary & jacket which I was then allowed to carry on as cabin baggage at no further cost (WHAT A JOKE! 300 grams is 300 grams, whether it's in the hold or in the cabin. WHY THE FUSS?)
The guy beside us was about to kill the check-in chick. He had a carry-on bag that he'd taken on board many different airlines while travelling the world. Tiger was telling him that it was oversize by 3cm and were demanding he pay 55, we was not happy. Every other queue was held up with people unpacking suitcases at counters trying to reduce the weight of their luggage. How efficient is that? Especially given that most of the stuff removed is carried on board as hand luggage anyway. 5 of the 55 baggage fee is supposedly an administration charge...SURE!
Once we'd left the check-in counter we were in yet another queue, this time weighing hand luggage to make sure it was under 7kg. Once again, people were forced to wait while passengers unpacked their bags in the queue. Moving on, there was yet another delay while we stood in the queue at the security point. A very narrow & innefficient choke point. The T4 terminal is very cramped with little seating available when 2 or more flights are scheduled to depart. Food & beverages are typically overpriced and there are queues at counters. Access to the aircraft is via the tarmac which was quite uncomfortable given the cold winter winds at Melb Airport.
Once on board, it becomes apparent that the aircraft are not cleaned regularly, there is no in-flight entertainment and the aircraft are not fitted with in-seat radios or video screens. All food & drink must be purchased and they DO NOT accept cash or eftpos on board, credit cards only. I had cash but I'd left my cards in my luggage, I couldn't even buy the family a drink of water... WHAT A JOKE!)
I ended up heading back to Melbourne earlier than expected, I booked with Qantas and left my family to return with Tiger as originally planned. My family reported that the service from Tiger in Brisbane was just as bad as Melb. Our itinerary had a seat booked for me including a 15kg baggage allowance that I'd paid for. Tiger would not allow my family to use the seat nor would they allow my family to use my 15kg baggage allowance despite us all being ticketed on the same itinerary. Once again, my wife had to unpack a jacket to bring a bag below 15kg. It turns out that they subsequently resold my seat & yet offered no refund.
Given the whole "Tiger" experience I will never ever fly with them again. At the end of it all I could have flown my whole family on a Qantas every day fare, at a time convenient to us, for less cost than we ended up incurring with Tiger. The airline is a joke and deserves every bit of the negative press & consumer backlash that it incurs. The company has taken domestic air travel in Australia to an all time low.
S.Chandrasekar of Chennai 600042 , Tamilnadu ,Indi, India February 19, 2010
Self had booked both ways 3 Air Ticket each on Tiger Airways under concessional fare on Chennai/Singapore leg along with separate Fee for seat allotment & baggage was paid by self using my ABN Amro Master card through their Website. ABN Card usage charge was 3.5% on the total amount. Transaction confirmed, Tickets confirmed but Seat unassigned in spite of the requisite amount paid by self at the time of booking. Tritinerary@tigerairways.com sent me the booking confirmation on 30 Jan 2010 but there again the seat was unassigned as against the actual seat numbers blocked and paid for. I took up this immediately with their Indian Call Center number wherein they maintained that they need to check and revert with no proper response as they claimed to have no access to do the needful in India, instead wanted self to call up Singapore.
I had no choice but to call Singapore too but the call never were answered, I was left with additional spending on phone calls and unnecessary mental tension & mail communications. This continued since day one, ie., 29 Jan 2010 till today when my travel date per confirmed ticked falls on 25 Feb 2010. Tiger Airways continued with their deliberate negligence and failed to rectify their mistake resulting to utter service failure.
Hence I was pushed beyond my extreme levels of tolerance and had real pain and mental unrest and agony due to which i came to a decision to not travel in Tiger Airways and ask for Full refund of paid amount plus the 3.5% commission on Credit Card for canceling. I sent mails in return on the email id that i received requesting them for full refund and cancellation thereof which again had no response at all till date.
On the 18 Feb 2010, I Called the call center and the Singapore office by the same continued with claims that additional fee over and above what i paid earlier for seat allotment will be applicable for seat allotment & refund /cancellation not possible. I faxed the emails and request for refund in total to Tiger Airways Singapore on 0065 68222310 by 1355Hrs today.
Its all most 20 Days and no revert on the query, on 18 Feb 2010 i checked for refund, then they come back with excuses but i had made up my mind not to travel in Tiger Airways / Refund of paid amount and 3.5% Credit Card charges due to such pathetic & uncertainties service of Tiger Airways leading to mental unrest & agony. Now they are holding on to their stance that they will not refund as per Ticket terms though they were at fault. What should i do?
Pls Note - Tiger Airways have their service out of Chennai but DO NOT have their liaising office in Chennai to assist the passengers on pre and post bookings/queries at Chennai. We also face the difficulty on communication as they are not willing to provide Tiger Airways email id to address the issues accordingly .
Yesterday evening(Post IST 1800Hrs18Feb 2010) they come up with seat allocation which i denied to accept and insisted on refund. As i mentioned, Am firm on Refund and am in no mindset to proceed to travel on this Airline due to such service failures which resulted me in mental stress, unrest with additional expences on phone calls, wastage of my productive time with agony pushing me to suspend my travel plans to Singapore on Tiger Airways once and for all.
Today, the 19 Feb 2010 around 1000Hrs IST , Mr.Kelvin T. - Manager Reservations, Claiming to be from Tiger Airways Singapore called on my hand phone and updated that they will not refund and cancellations not acceptable though they were at mistake. I denied to accept his claim and wanted them to Refund in full along with the commission of 3.5% on Credit Card Transaction.
He even dared to threaten self on forfeiture of total sum paid if i proceed on legal front. He also asked self as to what proof do i have for all such communication over telephones and wanted the records. Hence, I requested him to advise me their email address for me to address my further queries which he denied to provide and wanted self to use the Sin Fax no for any such communication. Moreover, he was not ready to transfer the call to the PRO or the legal department.
Lyndsay of Malvern, Australia December 22, 2009
Flight No TT669, Sydney to Melbourne on 29 November (Sunday) 2009 was cancelled. The aircraft apparently went out of service the night before, but we (three of us)only found out when we arrived at check-in at 10.00am the next day. No notice from Tiger that the flight had been cancelled. Fortunately we were second in the queue - if you happened to be number 123 you'd be really peeved! Anyway, we're told the flight has been cancelled. The next Tiger flight available to us is Wednesday - three days later! No assistance with alternate travel arrangements or accomodation. Given a slip of paper with the Tiger call-centre number on it. This number rings engaged for hours. No apology. "Should get a refund in about a month" - not holding my breath. Insurance only covers up to the value of the flights cancelled - so we get a refund to the value of a cheap flight booked three months previously, to buy a premium cost flight from a competitor airline at no notice. Who gets screwed here?
In summary, cancelled flight; no notice to customers; unclear refund process and timing; insurance not worth the paper it's written on; Tiger couldn't care less - on checking, this philosophy is written in to the fine print of their terms; impossible to find a Tiger official more senior than a check-in operator or a call-centre operative. Seven flights in the past six months - will not darken their doors again:-)
Shannon of Caulfield North, AL December 18, 2009
On the 6th of October 2009 I was due to board a flight from the Gold Coast to Melbourne on Tiger Airways. When I arrived at the airport EARLY to check in I was told that my flight was oversold and that someone else had taken my seat. I was told to fill in a form and that the cost of my flight would be refunded to me within 4 weeks. I had to then go to another airline and book another flight to get home, at an additional expense of course. To date (18th of December 2009) I have still not received the 214 owed to me.
In this time I have since written 3 letters, sent 3 faxes and have made numerous phone calls - of which I would be on hold for no less than 40 mins. I received a email from Tiger on the 19th of November saying that the money had been transferred into my account. Well, as above IT HAS NOT! I called my credit card provider, because apparently it is now their problem that the money hasn't been credited. They tell me I have to wait 30 days from the time they sent the email. I've waited the 30 days... the day is today. Now they have to dispute it with Tiger and it could potentially take up to another 90 days to sort out!
Maree of Narre Warren, Australia June 15, 2009
I've had a flight time changed, and they have asked if I need to speak to anyone, to call their Australian number, however after the automated service giving the information speel, the phone just goes dead, and after exactly 2.50 min the phone then engages. I've over the last 2 days made in excess of 20 calls to this number and still have'nt got through to anyone. I've also sent Fax to their Australian fax number, asking for them to contact me on my mobile earlier today (Monday June 15) and have not had any response to that either.
Read more: http://www.consumeraffairs.com/travel/tiger_direct.html#ixzz11ZJ0iDBE
Thursday, September 9, 2010
Are Solar Panels to the Home Economically Viable?
For those of you thinking about getting solar energy for your homes, perhaps this posting may be of some help. I got my 1.5kWh solar panel (total of six panels) installed on my roof a couple of weeks ago. To date it has produced more than 50kWh, not that it means anything much but it just means I have actually saved or contributed (depending on how you look at it) 50 kWh back to the electricity grid, in effect doing my bit for the environment.
Now the Australian government gives huge subsidies and buy back schemes to encourage people to take up solar power if you can afford the remainder that needs to come out of your pocket, that is. As I understand it (it’s still a bit of a blur), my panel costs about $8k and I paid $2k and the government paid $6k (not bad eh!). Yes, that’s not a misprint; I paid slightly above $2k for a $8k, 1.5kWh solar panel system installed on my roof. That’s on the smallish side but the government rebates only apply to a maximum size of 1.5kWh.
So the upfront costs seem attractive as you pay $2k but receive something worth $8k, if you can afford the $2k that is. Now what about the payback period/ return and all that jazz? Well we’ll get to that but let us first look at it from this perspective. If you were to put your $2k (if you had it) into the Commonwealth Bank, that $2k will be worth $2.1k after a year (at 5% interest the bank pays you). Now, I’m almost positive I will be able to save more than $100 a year by installing an $8,000 solar powered electricity system. If you can’t do that, then solar is a dud. So looking that way it’s already a good investment (if you had the money to invest in the first place).
Now, the state government was promising the most generous of buy back schemes in the nation but like all government promises this came up short. Initially, the government was going to buy back the gross and not net electricity generated by your solar system. Now what difference does this make you ask? Well there is a difference because the buy back rate is different than the usage (or import) rate. Essentially, the government buys back the electricity from you at 47c (40c government and 7c Synergy) but when you consume electricity you pay a lower rate, about 18c.
So under a gross system if you produced 6kwh per day you would export ALL of this back to the grid and a credit of $2.82 will be due to you. On the same breath, if you used 12kwh per day, your consumption costs will be $2.16 per day effectively putting 66c in your pocket.
Under a net system, the calculation is based on the ‘net’ import/ export of energy in the home at the time of generation. So assume once again if you produced (export) 6kWh of energy and consumed (import) 12kWh per day and out of the 6kWh produced 4kWh is produced net and the other 2kWh was produced for consumption the calculation will be somewhat less exciting than the net calculations. That is net exported is 4kWh ($1.88) and consumption is no more 12kWh but just 10kWh now as 2kWh was bought back from your own self at 47c!! You would have then consumed $1.80 per day and would only be on top 8c compared to 66c if it was net.
There has been complains also that while the state government was touting this to be the most generous scheme available in Australia, it was more smoke and mirrors where the tax payers were basically funding the electricity company (Synergy). Remember, the export to the grid is being funded by two schemes, the feed in tariff from Synergy (at 7c) and the “Buy Back Scheme” from the state government (40c). Before 1st August the “Buy Back Scheme” never existed and solar panel owners only received a credit from Synergy of around 18c for every kilowatt hour of energy exported to the grid. When the “Buy Back Scheme” was announced, most solar owners expected the same feed-in tariff rate from Synergy plus a higher than 40c buy back rate from the government, something above 60c for every kilowatt hour exported but the new feed in tariff reduced to 7c (from 18c) after 1st August and the government foots out 40c. So while the solar owners export rate has increased from 18c to 47c, the taxpayer is footing most of the bill while Synergy’s buy back rate dropped from 18c to 7c effectively meaning the taxpayer has funded Synergy indirectly.
Nevertheless, the scheme is generous enough although as I understand it the buy back only lasts for ten years to help recoup the initial costs for the panels. The costs for the unsubsidized panels above 1.5kWh will be much much more than the $2k I forked out. The only thing to remember with a net feed in tariff is that to get the most credits you will want to minimize your usage while your solar is producing energy at its strongest during the middle of the day so the “net” effect is more significant and if possible use the energy when the sun goes down where you will be buying energy at the selling rate of 18c, otherwise by using energy you would otherwise sell back to the grid effectively mean you are foregoing the 47c opportunity cost or buying back the energy at 47c which you would otherwise buy at 18c when there is no energy produced whichever way you look at it. This suits mostly working families who are not home during the day and use most of their energy at night.
So those of you considering purchasing solar panels, my take is apart from the fact that solar energy is good for the environment and that a solar installation invariably adds some value to your home, the subsidies and various schemes available are a huge incentive assisting this “investment” and well worthwhile and may put a few quid back into your pockets if you're an electricity nazi like me.
Now the Australian government gives huge subsidies and buy back schemes to encourage people to take up solar power if you can afford the remainder that needs to come out of your pocket, that is. As I understand it (it’s still a bit of a blur), my panel costs about $8k and I paid $2k and the government paid $6k (not bad eh!). Yes, that’s not a misprint; I paid slightly above $2k for a $8k, 1.5kWh solar panel system installed on my roof. That’s on the smallish side but the government rebates only apply to a maximum size of 1.5kWh.
So the upfront costs seem attractive as you pay $2k but receive something worth $8k, if you can afford the $2k that is. Now what about the payback period/ return and all that jazz? Well we’ll get to that but let us first look at it from this perspective. If you were to put your $2k (if you had it) into the Commonwealth Bank, that $2k will be worth $2.1k after a year (at 5% interest the bank pays you). Now, I’m almost positive I will be able to save more than $100 a year by installing an $8,000 solar powered electricity system. If you can’t do that, then solar is a dud. So looking that way it’s already a good investment (if you had the money to invest in the first place).
Now, the state government was promising the most generous of buy back schemes in the nation but like all government promises this came up short. Initially, the government was going to buy back the gross and not net electricity generated by your solar system. Now what difference does this make you ask? Well there is a difference because the buy back rate is different than the usage (or import) rate. Essentially, the government buys back the electricity from you at 47c (40c government and 7c Synergy) but when you consume electricity you pay a lower rate, about 18c.
So under a gross system if you produced 6kwh per day you would export ALL of this back to the grid and a credit of $2.82 will be due to you. On the same breath, if you used 12kwh per day, your consumption costs will be $2.16 per day effectively putting 66c in your pocket.
Under a net system, the calculation is based on the ‘net’ import/ export of energy in the home at the time of generation. So assume once again if you produced (export) 6kWh of energy and consumed (import) 12kWh per day and out of the 6kWh produced 4kWh is produced net and the other 2kWh was produced for consumption the calculation will be somewhat less exciting than the net calculations. That is net exported is 4kWh ($1.88) and consumption is no more 12kWh but just 10kWh now as 2kWh was bought back from your own self at 47c!! You would have then consumed $1.80 per day and would only be on top 8c compared to 66c if it was net.
There has been complains also that while the state government was touting this to be the most generous scheme available in Australia, it was more smoke and mirrors where the tax payers were basically funding the electricity company (Synergy). Remember, the export to the grid is being funded by two schemes, the feed in tariff from Synergy (at 7c) and the “Buy Back Scheme” from the state government (40c). Before 1st August the “Buy Back Scheme” never existed and solar panel owners only received a credit from Synergy of around 18c for every kilowatt hour of energy exported to the grid. When the “Buy Back Scheme” was announced, most solar owners expected the same feed-in tariff rate from Synergy plus a higher than 40c buy back rate from the government, something above 60c for every kilowatt hour exported but the new feed in tariff reduced to 7c (from 18c) after 1st August and the government foots out 40c. So while the solar owners export rate has increased from 18c to 47c, the taxpayer is footing most of the bill while Synergy’s buy back rate dropped from 18c to 7c effectively meaning the taxpayer has funded Synergy indirectly.
Nevertheless, the scheme is generous enough although as I understand it the buy back only lasts for ten years to help recoup the initial costs for the panels. The costs for the unsubsidized panels above 1.5kWh will be much much more than the $2k I forked out. The only thing to remember with a net feed in tariff is that to get the most credits you will want to minimize your usage while your solar is producing energy at its strongest during the middle of the day so the “net” effect is more significant and if possible use the energy when the sun goes down where you will be buying energy at the selling rate of 18c, otherwise by using energy you would otherwise sell back to the grid effectively mean you are foregoing the 47c opportunity cost or buying back the energy at 47c which you would otherwise buy at 18c when there is no energy produced whichever way you look at it. This suits mostly working families who are not home during the day and use most of their energy at night.
So those of you considering purchasing solar panels, my take is apart from the fact that solar energy is good for the environment and that a solar installation invariably adds some value to your home, the subsidies and various schemes available are a huge incentive assisting this “investment” and well worthwhile and may put a few quid back into your pockets if you're an electricity nazi like me.
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