Presented at the Students for Liberty-Philippines conference

1. How Governmentsexpand via distorted
energy,infrastructureand fiscal policies
Bienvenido Oplas Jr.
Pres., Minimal Government Thinkers
Columnist, BusinessWorld, “My Cup of Liberty”
Students for Liberty Philippines Conference
Hive Hotel, Quezon City
July 22, 2017
minimalgovernment@gmail.com
http://funwithgovernment.blogspot.com/

2. Outline
I. Theoretical promise of more government, more welfare
II. Expanding government via climate and energy alarmism to
“save the planet”
III. Expanding government via build-build-build, borrow-borrow-
borrow
IV. Expanding government via tax-tax-tax
V. Concluding notes

3. I. Theoretical promise of more government, more welfare

4. But the opposite happens. More government, more diswelfare, less
freedom.
Succeeding discussions will show how and why…

5. II. Expanding govt via climate and energy alarmism to “save the
planet”
* But that the planet does not need any “saviour”.
* Climate change (CC) is cyclical (warming-cooling…), not “unprecedented”.
* CC is natural (nature-made), not man-made.
Temperature
reconstruction*
for N.
Hemisphere,
1-2000 AD
Modern warm
period not
exceptional or
scary.
Source: Dr. Roy Spencer, Senate EPW Hearing: “Climate Change: It’s Happened Before”, July 19th
2013.

6. http://www.greenworldtrust.org.uk/Sci
ence/Images/Main/Warm_periods.jpg
http://www.geocraft.com/WVFoss
ils/PageMill_Images/image277.gif
700 million years
data
4,000 years data

7. Climate models are not
facts, they are just
guesses.
Models' projections of
"more warming" is
wrong compared with
actual warming since
1975.
https://wattsupwiththat.com/2016/07
/26/climate-facts-versus-climate-
theories/
Extreme weather
getting “more
frequent”?
No. See Global
Tropical Cyclone
Accumulated Cyclone
Energy (ACE), 1971 to
2015.
http://policlimate.com/tropi
cal/global_running_ace.png

8. Source: Eschenbach, Willis. “Sea
Level Rise Accelerating? Not.”
July 20, 2017
https://wattsupwiththat.com/2017/0
7/20/sea-level-rise-accelerating-not/
“But sea levels are rising, small islands and low-lying areas will soon disappear…”
*Tidal dataset: Permanent
Service for Mean Sea Level,
1950-2015
* Rise in some, decline in others.
No “accelerated” rise.
 Caticlan, Aklan (Boracay). Scary rise? No.

9. 30 Nov 1912
– DEADLY
TYPHOON.
HOLOCAUST
IN
PHILIPPINES
WASHING…
http://trove.nla.gov.au/
1912 reports on Tacloban storm ‘killing’ 15,000
resurface | Headlines, News, The Philippine
Star | philstar.com
“Today’s extreme
weather is
unprecedented,
result of ‘man-
made’ CC of more
fossil fuels
burned.”
WRONG.

10. So all those “more renewables to save the planet” have no
scientific basis, only political basis. And we have lots of politics here
• From Vince Perez’ presentation at the ADB in 2009 or 2010
• PH’s RE law has more favoritism than RE laws of other Asian countries

11. Why Feed-in-tariff (FiT) provision in RE Act of
2008 (RA 9513) is anomalous, cronyism-
inspired:
(1) Guaranteed high price locked in for 20 years
despite technology improving fast,
(2) FiT rates rising yearly due to inflation and
forex adjustments,
(3) FiT rates of P8+ to P10+ per kWh for wind-
solar way high compared to current WESM
prices P3+/kWh,
(4) Capacity installations for wind-solar higher
than what was originally allotted,
(5) Even Mindanao consumers, not part of
WESM, not connected to the Luzon-Visayas
grids, been paying since 2015.
Total forecast cost revenue of FiT-
eligible plants (in P Billion)
(a) Wind: P6.3 B in 2012-2015, 8.0 in
2016, 9.2 in 2017, 9.2 in 2018.
(b) Solar: P1.5 B in 2012-2015, 5.9 in
2016, 7.0 in 2017, 7.0 in 2018.
(c) Biomass: 1.9 (2012-2015), 4.0
(2016), 6.7 (2017), 6.8 (2018)
Hydro is small, only P1.5B in 2017, 3.2
in 2018.
(Source: ERC, Case No. 2016-192 RC,
Docketed April 27, 2017, Table 4)

12. Project,
Province
RE Developer, Owner Inst. cap,
MW
TOTAL 721.56
WIND FIT rates, P/kWh
(a) 8.53 2015, 8.90 ‘16, 9.19 ‘17
(b) 7.40 2015, 7.40 ‘16, 7.72 ‘17
426.9
Burgos (Ph.
1 & 2),
Ilocos N.
EDC Burgos Wind Power
Corporation (Lopez)
150 (a)
Caparispisan
, Ilocos N.
Northern Luzon UPC Asia Corp.
(Ayala)
81 (a)
San Lorenzo,
Guimaras
Trans-Asia Renewable Energy
Corp. (Phinma)
54
(b)
Pillilla,
Rizal
Alterenergy Wind One
Corporation (Perez)
54 (b)
Bangui
(Phase 3),
Ilocos N.
Northwind Power Devt Corp.
(Ayala)
18.9 (a)
Nabas,
Aklan
Petro Wind Energy, Inc. 36 (b)
Bangui Wind
(Phase 1 &
2)
Northwind Power Devt Corp.
(Ayala): 5.76 2015, 6.01 2016,
and 6.20 2017.
33
SOLAR FIT rates, P/kWh
(a) 9.68 2015, 9.91 ‘16,
10.26 ‘17
(b) 8.65 2016, 8.89 2017
526.4
Ormoc,
Leyte
Philippine Solar Farm Leyte,
Inc.
30.4
San Carlos
Ph. 1-C and
1-D
San Carlos Solar Energy
Corp.
23.0
Tarlac Solar PetroSolar Corp. 50.1
Calatagan,
Batangas
Solar Philippines Calatagan
Corp.
63.3
Cadiz Solar,
Neg. Occ.
Helios Solar Energy Corp. 132.5
Cavite Eco
Zone
Majestics Energy Corp. 41.3
Clark Solar,
Pampanga
Enfinity PH Renewable
Resources
23.3
Corimao,
Ilocos N.
Mirae Asia Energy Corp. 20.0
Among the beneficiaries of expensive electricity via FIT for 20 years:

13. Source: Antonio Moraza, Aboitiz Power. Presentation during the Bworld Economic Forum,
May 19, 2017, Shangrila BGC
WESM, Load Weighted Average Price (LWAP), 2011-2016, P/kWh
• From average P5.37 in 2012 down to P2.81 in 2016.
• Due to expanding supply capacity, mainly from fossil fuel plants.
• There are price spikes, true, and there are also price dips.
RE law and FIT introduced new price hikes when PH was already enjoying
cheaper electricity

14. Markets Jan.
2012
Jan.
2016
%
change
Japan (Kansai) 24.48 23.32 -5%
Hong Kong 12.88 15.10 +17%
PHIL. (Meralco) 20.26 14.65 -28%
New Zealand 16.18 13.08 -19%
Sri Lanka 19.49 11.13 -43%
Singapore 20.06 10.89 -46%
Thailand 10.45 9.93 -5%
S. Korea 8.91 9.47 +6%
Malaysia 11.11 8.83 -20%
Taiwan 8.71 8.73 0%
Indonesia 8.51 7.03 -17%
Source: Intl. Energy Consultants (IEC), Regional/Global
Comparison of Retail Electricity Tariffs, Executive
Summary, May, 2016.
* Subsidized markets: Indon, Mal, Thai, S.
Korea, Sri Lanka, Taiwan.
* Unsubsidized and deregulated: Japan, PH,
Sing, NZ. HK is unsubsidized but unsure if
deregulated.
* All deregulated markets experienced price
decline.
Electricity Prices/Tariffs ave. excl. VAT, US cents/kWh
2012 2013 2014 2015 2016
Jan 5.46 5.79 6.12 4.72 3.92
Feb 5.58 5.24 5.54 5.24 4.17
Mar 5.33 5.19 5.21 5.21 4.00
Apr 5.66 5.39 5.90 5.41 4.10
May 5.60 5.47 5.97 4.81 3.88
Jun 6.14 5.66 5.31 4.46 3.72
Jul 6.45 5.33 5.41 4.74 4.06
Aug 6.74 5.05 5.64 4.55 3.86
Sep 5.40 5.17 5.19 4.13 3.94
Oct 5.50 4.68 5.35 4.00 3.89
Nov 5.63 5.67 5.11 4.08 3.84
Dec 5.48 5.94 4.94 4.13 3.94
Ave. 5.75 5.33 5.41 4.62 3.94
PH power generation charge,
Meralco area, P/kWh

15. Where there are wind farms, NO houses,
factories, schools, resorts, shops, hotels,…
(aside from
flattening mt.
ridges, cutting
thousands of
trees. Nabas
wind farm, 
Aklan)

16. Most environmentalists say, “Plant trees to save the planet.”
Solar env. and developers say, “Remove, kill trees to save the planet.”

17. https://www.agora-energiewende.de/de/themen/-agothem-/Produkt/produkt/76/Agorameter/
Germany electricity production, January 21 – July 21, 2017 (6 mos.)
* Very erratic output from solar (yellow) and wind (light green)
* It’s the conventional sources, coal, nuke, oil, that save Germany from daily “Earth Hours”
* Biomass and hydro are stable but low output

18. Observations from table below:
(1) Countries that have high and fast coal consumption are also those that experienced
faster economic expansion (at least 3x expansion of GDP size). Especially China, India,
South Korea, Indonesia, Vietnam, Malaysia, and Philippines.
(2) Countries with declining coal use are also those with slow economic expansion
(below 3x expansion of GDP size). Most notable are US, Russia, Germany, UK.
(3) PH’s coal use actually small compared to its neighbors; its 2016 use is just nearly 1/2
of Malaysia and Vietnam’s, just 1/3 of Taiwan’s and almost 1/5 of Indonesia’s. South
Korea, Japan, India, and China’s consumption are many times bigger than the PH.

20. More foreign loans to the ADB, JICA, WB to “save the planet”
* P95 B in 2013, P165 B in 2014, P173 B in 2015 -
- loans, not grants. To be paid by Fil. taxpayers,
not by Al Gore or Leonardo di Caprio.
* Less rain or no rain or more rains; less flood or
no flood or more floods, we send more money to
the UN, ADB, WB, CCC, etc.
* Some of these loans were used for the
frequent trips and junkets abroad by PH climate
negotiators and ‘planet saviours’.

21. III. Expanding govt via build-build-build, borrow-borrow-borrow
Dutertenomics’ plans:
(1) Huge, sustained government overspending and borrowings. Budget deficit/GDP
ratio from -0.9% in 2015 to -2.7% in 2016 then -3.0% from 2017-2022.
(2) Shift infra spending from Public Private Partnership (PPP) to more ODA
DoTr says these projects will be ODA (government loans) funded, not PPP.
1. PNR North Railway (Manila-Clark), construction Q4 2017 -- Q4 2021, P255 B.
2. PNR South Railway (Manila-Bicol), construction Q3 2018 -- 2021, P270 B (originally
a PPP).
3. Mega-Manila subway (Phase 1, QC-Taguig), construction Q4 2019 -- 2024, P225 B.
4. Edsa-Central Corridor Bus Rapid Transit BRT (Edsa, Ayala, Ortigas, BGC, NAIA),
construction Q1 2019 -- Q1 2021, P38 B.

22. • Ave. deficit (revenues lower than expenditures) in previous admin, 2010-2015,
only P185 B/year or -1.8% of GDP, benign and considered as “underspending”.
• Bigger annual deficit means more pub. borrowings, higher public debt stock, will
lead to higher taxes now and the future to service those huge loans.
• Massive shift from PPP to ODA of major infra projects will result in more loans
which mean more public debt, more taxes, and fees in the future.

23. Distribution of risks and values/benefits under a typical PPP-funded project

24. SCTEx vs TPLEx. Cost overruns for SCTEX are from P18.7B to P32.8B.
Cost per kilometer is P349M vs. TPLEx P274M.
Mactan Cebu airport terminal -- awarding was delayed for 18 months but
will still be completed on time -- is almost 5x times the size of the New
Iloilo airport and yet construction time is almost half that of the latter.

25. Total taxes (TT) = corporate
income tax + labor taxes +
other taxes
Total tax rate (TTR) =
TT/private enterprises’ net
and taxable income, in
percent
Good news: PH has a declining
TTR, 51% in the 2009 PWC
report to nearly 43% in the
2017 report. Only Malaysia has
a deteriorating or rising TTR.
Bad news: PH has the highest
TTR in the ASEAN, higher than
socialist Vietnam, also higher
than developed Hong Kong,
South Korea, and Taiwan.
http://www.bworldonline.com/content.php?section=O
pinion&title=individual-liberty-vs-state-coercion-and-
taxation&id=148351
IV. Expanding government via tax-tax-tax

26. Dutertenomics’ TRAIN is still based on envy. P5M/year annual income is not “super rich”
to be slapped
with 35% income
tax.
In fairness, its
plan to cut tax
rate for lower
income is good
news.

27. • 10 countries with zero income tax policy: Bahamas, Bahrain, Bermuda, Brunei,
Cayman Islands, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Emirates.
• Their governments rely more on selling petroleum, natural gas, lands, and/or
consumption-based taxes and financial transaction taxes.
• With low, flat income tax rates: Mongolia 10%, Macau 12%, Hong Kong 15%.
• Politics of envy is wrong. “Demonize and overtax the rich, subsidize the poor
forever” creates moral hazards problem. Aspire to remain poor because (a) your
minimum wage income plus bonuses will be tax-free, (b) you get lots of freebies
and subsidies, no timetable.

28. * The planet does not need any saviour
because CC is natural (nature-made,
not “man-made”) and cyclical
(warming-cooling).
* Consumer interest is cheaper and
more stable electricity. FIT and
subsidies to renewables, 160+ permits
and fees to various govt bureaucracies,
all contribute to expensive electricity.
* To have cheaper and stable electricity,
we need less government.
Governments and UN should step back
from politicizing climate and energy
research and policies.
Conclusions 1

29. * ODA funding normally has strings
attached. Project funded by China ODA
would restrict only Chinese contractors,
suppliers, managers,and workers.
* So perhaps 90% of China loan would
never leave China and only about 10%
would come here (food, housing,
electricity, etc. by Chinese contractors
and workers).
* To have more huge infrastructure in the
country, we should have more PPP,
attract more local and foreign players.
Less foreign aid, less ODA, less foreign
debts, less taxes to pay those debts.
Conclusions 2

30. Conclusions 3
* More taxes for more welfarism and
state dependence of the people is wrong.
* Campaign for “good governance” is a
trap. 99% this will result in bigger
government. There should be explicit
plan to reduce the government – the size
of the bureaucracy, the number of
regulations and prohibitions, the number
of permits and registrations, the number
and rates of taxes and fees.
* More government, more restrictions.
Less government, more freedom.