Fran Kelly: Banking reform is another issue before the Parliament at the moment. The Coalition has stolen a march on the Government, introducing a Bill to end price signalling by the banks. Now, that's a power that the ACCC has been calling for and it's something the Government shares, isn't? Why won't you vote for this?

Wayne Swan: Well, Fran, that is absolutely laughable. Joe come lately has not stolen a march on anybody. This Government has put in place, over a period of time, very substantial reform of the banking system, including a range of reforms to increase competition in the banking system, dealing with unfair mortgage exit fees, for example, providing a source of funding for the smaller lenders so they can compete against the bigger banks. And, of course, we are in the process of putting in place a further raft of reforms, which are all very important. Now, Mr Hockey read in the newspaper that we were discussing price signalling with the ACCC and he had a thought bubble and decided that he would produce a Bill. Despite the fact that the Liberals, at the last election, didn't take any policy to that election on banking. When Mr Hockey gave his budget reply in May this year, he called for reform of trade practices and didn't mention price signalling. The Bill that he's put into the Parliament yesterday is not well thought out. It doesn't actually achieve....

Fran Kelly: What's wrong with it?

Wayne Swan: Well, the fact is that it's got a test in there, call an effects test, which would create great uncertainty in the economy. We've been working methodically for some time with our regulators to put in place a range of initiatives which will further enhance competition in the banking system, including price signalling.

...

Fran Kelly: Wayne Swan, your Head of Treasurer, Ken Henry, was in Parliament yesterday giving evidence to the Senate Enquiry into the mining tax. And he said the mining boom could be the biggest external shock to the economy ever experienced in Australia. Do you agree with that?

Wayne Swan: Well, Fran, I began talking about this, and you would well recall it, when we released the Henry Review in Canberra one week before the Budget earlier this year. And our response to that was also front and centre of the Budget. We are absolutely determined not to make the same mistakes that the previous Government made at the height of mining boom mark one. And that's why we've got such a broad agenda. That's why we've got a mineral resource rent tax. That's why we've got such a big agenda when it comes to education and skills. That's why we're determined to put in place a company tax cut. That's why we're determined to assist small business. This is part of our response to mining boom mark two, which does present great challenges and great opportunities for Australia.

http://www.abc.net.au/rn/breakfast/stories/2010/3073650.htm

letters from the Sydney Morning Herald

I think the beancounter detectors are right (Letters, November 23). Predicting the cash flows directly and indirectly linked to colossal projects such as the national broadband network or very fast train is inevitably an exercise in sophistry or self-delusion. Any economist who claims that “the modelling” can make the right decision obviously is dreaming of a kind of self-importance that all professions crave.

Ironically, economics has a wonderful body of theory on the motives that drive professions and explain their ways. It's mostly about professional self-interest. In that game, economics has the advantage of no right answers or physical laws to show up its mistakes. The economics Nobel Prize winner George Stigler defined economists as hired guns waiting to produce the analysis to justify whatever is the decision (“forensic rhetoric”). In accounting, the same argument is titled the “market for excuses”.

None of this means that all grand schemes forged on gut instinct and good intentions will be worth their cost or justify what is lost. Look at Lake Pedder.

David Johnstone Professor of Finance, University of Sydney

Surely the only way to resolve the argument about a cost-benefit analysis of the national broadband network is to perform a cost-benefit analysis of the cost-benefit analysis.

Andrew Myers Red Hill (Qld)

Fair go, Stewart Fist (Letters, November23). You can't compare the national broadband network to Lachlan Macquarie's road building. He did that with convict slave labour, not with borrowed money. On that basis, one could consider the effective forced slavery and sequestration of the long-suffering Telstra shareholders. At least the convicts didn't have to pay Macquarie to build his roads.

William Lloyd Denistone

The copper network is falling apart and has to be replaced. Why is this never mentioned in any costings for the national broadband network? The Herald has run several stories documenting how bad the copper network is. I remember one about Telstra techs' essential tools including plastic bags, cling warp and duct tape ("Telstra users left holding exposed lines", December 9, 2008). The evidence from my experience and from those who post on technical web forums suggests Telstra has abandoned maintenance in many small towns and rural areas and makes only short-term repairs to keep the network going.

The alternative to the broadband network is old, broken, poorly maintained technology that will probably fall apart within 10 years and will need huge expenditure just to keep going. So should we try to keep bodgying up the copper or replace it all in one go with fibre? Seems like a no-brainer.

Michael Alting Gerringong

I cannot agree more with Beth Webster (Letters, November 22) on the limits of cost-benefit analysis as a technique for assessing the value of a strategic infrastructure project such as the national broadband network. Estimating the costs may not be terribly difficult, but trying to estimate the present value of the potential benefits over the next 20-30 years or more is extremely fraught.

Many of the second-order (and beyond) tangible and intangible benefits are hard to identify, let alone quantify at this stage. Also, there is a significant opportunity cost associated with not proceeding. This can result in Australia being frozen out of future opportunities and falling further behind many OECD countries.

The key issue is the role of the state in building critical national infrastructure. Once this principle is accepted, we can endeavour to contain the costs and manage the risks of the network.

Joseph Davis Professor of Information Systems and Services, University of Sydney

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Gus: no, Mr Lloyd (letter 3), you could be wrong. Some convicts may have paid for Lachlan Macquarie's roads... with their life... The Telstra share release by John Howard was a super-mega botch-up. Blame him. Don't blame the present government that is trying to implement the proper solutions for the future, not fiddling with the dicky patch-ups of the past, or just interested in filling its coffers like kings used to do in the middle ages...

Any engineer would know that the copper network will not cope with the information overload and speed that we — as part of a stylistically "entertainable" society — demand more and more. Only a government with a "benevolent" monopoly can create an entirely new worthwhile delivery network. The break up of Telstra should have been done yonks ago... The copper network should have remained in the hands of the government, network eventually falling into disuse, but John Howard did a con job — to fill the government coffers — and blurred the whole thing in a way in which the government still owns some of Telstra and no-one knows which bit... And everyone, including the Telstra shareholders, have to suffer a bit more to gain a lot. Once the air is cleared up by the break up, Telstra shareholders who paid far too much for what they got (and, by the way, bought "what they already owned") will benefit far more than they realise...

And Barnaby Joyce still act like a circus clown. He was responsible for Howard getting the Telstra mess across the line. Then, there was the bloody phones....

As Ms Gillard set about defending the NBN, the Member for Gilmore, Joanna Gash, asked what would be done about the destruction of the nature strip of one of her constituents in Kiama by workmen laying cable.

The question prompted Ms Gillard to accuse the Opposition of being against progress.

"Is its advocacy in this place that we somehow put a dome over the nation now, that we freeze it in time, that we pickle it?" she said.

"If they want to go out and rename their political party [the] luddite party, then they should do it by the time this Parliament next convenes and then at least they'll be honest with the Australian people."

http://www.abc.net.au/news/stories/2010/11/25/3076538.htm

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Gus: the  Luddite party (conservatives calling themselves the Liberals) live in the horse and bugger days... er... sorry horse and buggy days...

The magic of Christmas lies in the expectation. You hang out the stocking, leave a piece of cake and a stubbie for Santa and head off to bed.

When you wake up, there it is laid out for you, something shiny and new that you really, really wanted.

In this spirit it should come as no surprise that the Federal Parliament’s final act of the year was the passage of legislation enabling the rollout of the National Broadband Network, the embodiment of Labor’s hope that something better lies around the corner.

And there are grounds for optimism. In an era of cynicism with nearly every aspect of politics – and despite a concerted Opposition attack - this week’s Essential Report shows strong and increasing support for the network.

http://www.abc.net.au/unleashed/41578.html

see toon at top

from the editorial at the SMH

The federal opposition has seized with glee on a new assessment of the government's national broadband network. The Economist Intelligence Unit has issued a comparative evaluation of the broadband plans of those countries which have announced them, based on their speed, cost, timetable and regulatory framework. It also ranks them based on a score of its own devising.

South Korea, which probably leads the world at present in installing and using broadband internet connections, is at the top, scoring 4.4 out of a possible 5. Australia, in ninth position, scores 3.4. But the headline figures will pain the government most: Australia's network will cost 24 times South Korea's. The claim that it will deliver one-tenth the speed (100 megabits per second as opposed to South Korea's 1000 Mbps) appears to be a mistake: NBN Co announced last August that its network would be capable of the higher speed.

And yet, is a bare comparison based on the organisation's chosen criteria informative - let alone fair? South Korea, population 48 million, has a land area of about 100,000 square kilometres, and a population density of 491 people per square kilometre. Australia's 22 million people live in a continent of 7.6 million square kilometres at a density of 2.8 per square kilometre. It stands to reason it will cost far more to equip this large, sparsely populated nation with broadband connections of a suitable speed than South Korea. Or Japan, Singapore, Sweden, Finland, Estonia, France, Spain and Denmark - the other countries ahead of Australia on the table.

The Communications Minister, Stephen Conroy, came out all guns blazing yesterday to counter the potential damage from a usually authoritative source. The criticism was based on an ideological opposition to government investment, he said. It ignores the government's intention to privatise the broadband network once it is established. They are fair points. Free-market theorists will purse their lips, but Australians accept that at times their government must provide remote areas - within reason - with equal access to services and infrastructure to mitigate the effects of distance and isolation. Moreover broadband is in a special category of infrastructure. By bringing many other services - medical, scientific, educational, cultural - within reach of isolated communities it can multiply many times the benefit of one connection.

I have covered the South Korean telecommunications market for the past decade in a professional capacity and am compelled to clarify a couple of key points about the report from the Economist Intelligence Unit (''NBN report: one-tenth the speed at 24 times the price'', February 10).

First, as noted by Stephen Conroy's office, comparing South Korea, one of the most highly urbanised markets in the world, with Australia, one of the least, is an exercise in futility. You may as well make cost comparisons with tiny city-states such as Singapore and Hong Kong.

Second, only a tiny minority of Korean subscribers can access 1 gigabit per second services. Most receive between 50 and 100 megabits per second and are likely to remain with those speeds for the foreseeable future, which is on a par with what is on offer on the national broadband network.

Third, South Korea's telecom companies are far from happy with its broadband market. The three major telcos have all rolled out near-nationwide broadband networks and are also competing against cable TV operators, which offer their own broadband services. Operators are forced to spend huge sums on marketing to keep and poach subscribers, given that there is no new growth to be had in the market.

South Koreans are now asking whether a market of just 16 million homes really needs four broadband networks, or whether a more integrated approach would have made more sense.

Tony Brown

Senior analyst, Informa Telecoms and Media, Ormiston (Qld)

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From Gus...

I have friends who have "gone bush" past Dubbo and Broken Hill recently. Even in these glorious country cities, they found the present state of the internet either non-existent or deplorably slow. "The Kalahari desert internet connection was much faster" was the general observation. Another mate living on the Central Coast also indicated that outside the metropolis of Sydney, before Newcastle and beyond, the wireless internet broadband is very very slow and sometimes zilch...

Bring on the democratic NBN...

see toon at top...

National interest or nationalism?

A shrill cacophony of protest cries filled the air as a collection of bruised egos gathered to mourn their losses following the Treasurer's decision to bury the ill-conceived marriage of convenience between the Australian and Singapore stock exchanges.

According to Wayne Swan, it was a ''no-brainer''. Indeed it was. For had the deal been allowed to proceed, it would have not just undermined Australia's position as a regional financial centre, it would have seriously damaged our credibility on the global financial stage.

Still, that didn't stop the mournful cries from those desperately pushing the deal.

Australia has reverted to protectionism, they roared. This will increase ''sovereign risk''. Such a rejection has confirmed the rest of the world's worst fears about the difficulty of doing business here. Australia's national interest had been damaged, they claimed, neatly turning the concept on its head.

All of it was delivered with the passion of those who had just watched a fully laden Armaguard van disappear into the distance.

http://www.smh.com.au/business/rejecting-the-asx-merger-deal-was-indeed-a-nobrainer-20110408-1d7mk.html

Gus: yes it was a no-brainer... The move would have made cash bleed out of Australia — under the pretence it would be flooding in — and provide many companies with an easy clause out of paying Aussie taxes in the long run, by ways of restructuring their finances to suit... Thank you Mr Swan...

Euromoney said it has contacted Mr Keating for comment on Mr Swan's award, but had been greeted with a volley of expletives.

The magazine said the former treasurer "curtly offered what appeared to be travel advice, suggesting we visit some place called 'buggery'."

But he then cooled down, praising Mr Swan for "his ability to comprehend danger and act decisively to minimise it" in the wake of the 2008 Lehman Brothers collapse.

"Keating singled out Swan's decisions to guarantee bank deposits and splash on stimulus as crucial in helping Australia to avoid recession during the Global Financial Crisis," the magazine said.

http://www.abc.net.au/news/2011-09-21/wayne-swan-the-boss-is-back/2909376

please visit toon at top...