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Clear-headed citizens' jury refused to be dazzled

Analysis

The citizens' jury's rejection of a high-level nuclear waste dump for South Australia was based on courage and common sense, writes economics commentator Richard Blandy - one of the expert witnesses called to address the jury.

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Last Saturday week, I participated as an invited expert witness (along with four other expert witnesses) to discuss the economics of the proposed high level nuclear waste dump with members of the second citizens’ jury on nuclear waste.

Because of the large number of jurors – 350 – there were three separate sessions in one of the presentation rooms in the Convention Centre. The last of these sessions can still be viewed here.

My fellow expert economic witnesses, chosen by a formal voting process by all the members of the citizens’ jury, were Dr Mark Diesendorf , a former Principal Research Scientist in the CSIRO and former Professor of Environmental Science at the University of Technology, Sydney), Dr Richard Dennis, Chief Economist at The Australia Institute, Barbara Pocock, Emeritus Professor of Economics at UniSA and a member of the SA Economic Development Board, and me.

All of these expert witnesses opposed the royal commission’s proposal to establish a high level nuclear waste dump in South Australia.

DemocracyCo, the body running the citizens’ jury process, added to this group Dr Tim Johnson, Project Manager/Consultant at Jacobs Engineering, which undertook the analysis of the nuclear dump for the royal commission. Dr Johnson was the project manager for Jacobs’ work on the cost analysis and business case for the dump.

Naturally enough, Dr Johnson supported the royal commission’s proposal to establish the dump.

Dr Diesendorf, participating in proceedings through a Skype link to Sydney, said the dump proposal painted a scenario of huge financial risk which had not been adequately addressed. South Australia could only proceed if it operated under two delusions – a delusion of grandeur and a delusion of being able to manage large risks that had not been adequately addressed.

I noted that there is no global market for high level nuclear waste at present so the price we could expect to get was a guess. The forecast profitability of the dump rested on highly optimistic assumptions, and the dump could easily lose money (on the Royal Commission’s own analysis in Figure J6) instead of being a bonanza. As Treasurer Tom Koutsantonis said in his recent State Budget: “There is no silver bullet … [including] the nuclear royal commission.”

Richard Dennis pointed out that South Australia had already spent $10 million on the nuclear dump proposal, but still did not have a cost/benefit analysis. The price we would get for storing nuclear fuel was exaggerated and the volumes we would store were exaggerated. Would no other country enter the market if there was a bonanza happening in South Australia? One of the key assumptions of economics is that huge profits will attract competitors. If the project were likely to make so much money, why wouldn’t BHP be wanting to invest in it, or at least spend the next $10 million to explore the project further?

A large majority could see that the bonanza that the dump was supposed to bring to the state was based on very flimsy evidence.

Barbara Pocock noted that all the economists agreed the dump was not a goer. In an earlier session, Dr Johnson had also agreed that the proposal needed a lot more work. It was a complicated project that had never been done before. At a projected cost of $145 billion, it was equivalent in financial size to 70 new Royal Adelaide Hospitals. A cost overrun would be very easy. The SA proposal was 20 times bigger than what the Finns are building. The profits come from holding the waste in inexpensive temporary storage for a very long time – but nothing will go wrong! We should not be dazzled and desperate. We should remember the State Bank – which cost us $3 billion and 20 years of economic confidence.

Tim Johnson summarised and defended the analysis that Jacobs had undertaken for the royal commission, which is contained in accessible reports, including the royal commission report itself. I will not go through this material again, here.

Most questions from the members of the citizens’ jury were directed to Dr Johnson, with other members of the panel commenting from time-to-time.

Late in the afternoon last Sunday, the 350 people of the citizens’ jury reported on their findings, the most important of which is reproduced below (supported by two thirds of the jurors):

No, not an option for the state under any circumstances for reasons of consent, economics, trust and safety.
· Under no circumstances should South Australia pursue opportunity to store and dispose of nuclear waste from other countries for reasons of consent, economics, trust and safety.

Rationale
The Jury has identified that the four key determining principles for deliberation are: consent, economics, trust, and safety.

Multiple threads of concern are present that undermine the confidence of jurors in the Royal Commission report’s validity. These concerns collectively combine to affect a powerful NO response to the concept of pursuing the storage and disposal of high level nuclear waste in SA.

Indigenous, community and social consent is absolutely required; currently not provided and a resounding ‘No’, see UN Declaration of the Rights of Indigenous Peoples, 14 September 2007, Articles 18-24 and 25-32.

Many have no confidence in the economics of the project which is a major concern to the Jury. [Richard Dennis, Richard Blandy, Barbara Pocock, Mark Diesendorf] The assumptions made to potential income are based on assumptions with little support. The disposal fee relied upon for the entire project is based on securing the majority of the global market from countries who do not have disposal plan, with limited or no competition. Competition is already developing globally, e.g. General Electric Hitachi. With no market testing and understanding the appetite with potential customers for the use of, and at what fee, for an Australian repository, is a reason not to undertake further expenditure and investigation. Political agenda in continuing the investigation for the disposal of nuclear waste, with evidence of lack of consent and poor economics, demonstrates this as an agenda of the government.

No evidence of regulatory bodies (EPA for example) to act independently and to be funded properly to adequately regulate an industry. For example, Radium Hill closure due to the waste tailings dam dispersing tailings into the surrounding landscape (Royal Commission Report p14-15). A further example is the nuclear waste dumping at Arkaroola in 2008 by Marathon Resources.

The premise for the Royal Commission was to extend the Nuclear Fuel Cycle in South Australia, which predisposes the Jury (i.e. the public) to follow the recommendations leading to a yes to continue which the Jury disagree with.

Accidents are inevitable in any industry, the cost of accidents may outweigh the economic benefit, and undermine any consent previously given. Jurors have also raised concern of long term quality assurance for safety measures both in Australia and client countries. This includes the safety associated with shipping in international waters and the security of the waste. Tim Johnson provided comment that no inclusion of costs associated with accidents had been considered. Some Jurors are less concerned with Safety as a predominant issue for consideration.
The long-term viability of the project is in doubt as it does not consider new technology providing potential alternatives for the use of the waste. This undermines the economics to the project resulting in disposal of waste redundant. The production of high level waste would reduce with recycling improvements, alternative generation, storage and improved use through more efficient generators.

Many jurors believe we don’t have the right to make a decision that will have such long term and irreversible consequences for future generations.

Many Jurors say “No” to the State being a “dump” due to consent, economics, trust, and safety and we should cease spending any further public funds.

It is astonishing that Premier Jay Weatherill’s immediate reaction to the citizens’ jury’s rejection of the dump is to say that it was just another piece to be added to the mix of evidence on which  Cabinet would base its final decision. Would this have been his reaction if two-thirds of the jury had supported the proposed dump? I think not.

In particular, the outright rejection of the proposed dump by South Australia’s Aboriginal people and their elders must be given enormous weight. The dump does not make economic sense and it is highly offensive and distressing to our Aboriginal citizens.

The high-level nuclear dump proposal must be abandoned.

I would like to congratulate the members of the Citizens’ Jury on their overwhelming decision against the proposed nuclear dump. They have shown courage and common sense. A large majority could see that the bonanza that the dump was supposed to bring to the state was based on very flimsy evidence. They saw that the real path to a better future for our state is based on our skills, innovative capabilities and capacity for hard work, not a bizarre gamble based on guesses.

I am proud of my fellow South Australians on the jury – including those who were in the minority. I would like to thank them for their efforts on behalf of their fellow South Australians.

Richard Blandy is an Adjunct Professor of Economics in the Business School at the University of South Australia, and contributes a weekly column to InDaily.

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