Bits and pieces

Just some bits and pieces that I have picked up over the past couple of weeks.

On Nanny Conroy's broadband plan:

Lindsay Tanner has confirmed what was suspected. In arriving at its estimate that the cost of the revised national fibre-to-the-premises broadband network would cost $43 billion, the Rudd government essentially dreamed up a big number and then added to it.

Committing to spending up to $43 billion of taxpayer funds, perhaps more, perhaps less, without rigorous and detailed analysis and modelling of the economics of the network and its inter-action with existing broadband networks is extraordinary.

When one considers the time and effort Infrastructure Australia put into compiling its list of priority national infrastructure projects, the way the NBN decision was developed – essentially as a response to the failure of the original lengthy tender process that involved only $4.7 billion of taxpayer funds – is even more remarkable.

The evaluation that should have preceded the commitment will now occur, with the government commissioning an "implementation study", which one assumes will consider the complex economic issues involved and come to a conclusion whether the NBN is a viable commercial proposition.


And this:

OECD statistics used to support the government's $43 billion national broadband network also raise serious doubts about the prospects of a fibre-to-the-home project being sustainable without heavy ongoing subsidies...

... The minister has ignored statistics that raise doubts about whether the construction of a fibre network will be economically viable.

Data from other OECD countries with more advanced broadband networks than Australia show that consumers faced with a choice between fibre and high speed broadband over copper (ADSL2+) will not necessarily rush to connect to fibre.

On the Australian Building and Construction Commission:

There was never any real question about whether the ABCC would survive the first term of the Rudd government. Indeed, many industry observers are surprised that it will last to early 2010 given the trenchant union opposition to the organisation and the debt that the political wing owes its industrial brethren for making Work Choices electoral death for the Howard government.

But the pragmatic Gillard would privately know that the ABCC has brought industrial peace to the industry, as the updated 2009 Report on Productivity in the Building and Construction Industry released by the Master Builders Association last week makes abundantly evident.

It says in the executive summary: “All of this evidence supports the conclusion that there has been a significant gain in construction industry productivity. What remains is to identify whether or not the contribution from each source to the productivity gain can be separately isolated.

“The data sources … indicate that the significant productivity gains in construction industry productivity started to appear around 2002-03. This supports the interpretation that it was the activities of the Taskforce, established in October 2002 and, more importantly, the ABCC (given its enforcement powers) when it was established in October 2005 that made a major difference.”

Despite the unions’ claims to the contrary, the industrial peace has come without any undue impact of the industry’s safety record. From 2000-01 to 2005-06, workplace claims per 1000 employees fell from 31 to 25 and preliminary figures for 2006-07 put the figure at 22.

It's working, productivity is up, safety is still good, everyone is happy except the rent seeking bullies in the unions - so let's upset everyone just to please them! Great one St Kev. In another article:

Harder heads in the federal ministry and caucus, however, while privately conceding that the ABCC in its current form cannot survive, are deeply worried about what might happen in Victoria and WA once it has been abolished, and are anxious to ensure its successor can exert its authority over this industry.

They are acutely aware of the capacity of these two branches to cause industrial mayhem as witnessed in Victoria during the lengthy West Gate Bridge dispute.

You betcha! But it's not like they're going to do anything about it, are they, apart from wring their hands.

The stupidity of trying to define an alcopop in legislation, so as to tax it differently to other alcoholic products, hits home at makers of Belgian beers. Memo to Brother Wayne and the excise crew at Treasury - why not tax alcoholic beverages by alcohol content? That would solve all your problems.

Mitch Hooke of the Minerals Council of Australia brings in the heavy artillery, Brian Fisher, to do the analysis of the C"P"RS that Treasury should have done. No surprises in the conclusions:

The CPRS scheme will shed 23,510 jobs in the minerals sector by 2020 and more than 66,000 by 2030. These are direct jobs. All minerals sectors will be affected, whether in coal mining, gold and base metals, alumina refining, mining services, copper, zinc, lead and aluminium smelting and so on. No state, or the Northern Territory, will be spared, no mining region will be untouched. The impact on regional Australia will be severe, including thousands of jobs in the Illawarra and the Hunter in NSW, the Bowen Basin in Queensland, remote regions in Western Australia, including the Pilbara and Kalgoorlie, South Australia, Victoria's Latrobe Valley, Tasmania and the Northern Territory.

You can add to these numbers the jobs of the council workers, the school teachers, the nurses, gardeners, and employees in the hundreds of small businesses in the towns and communities that service these mining regions.

That's just the start, Mitch! Killing the mines will drag the rest of the economy down with it. And what will happen in the suburban shopping malls when the punters can't by plasma screen tellies, because we can't economically mine the minerals to pay for them? Revolution in the streets! Great idea Kev!

Then there's the budget, starting with the attack on employee share ownership schemes:

There are about two million Australian employees who have been gradually building up stakes in the companies where they work via what are called "qualifying" share schemes. They're pretty basic, and they work by getting the employee to buy shares out of pre-tax income, but then hitting them for income tax at the far end when they sell the shares, if they make a profit.

What's gobsmacked a lot of observers is how the Government has instantaneously alienated a big slab of middle Australia, the ordinary scheme participants, while laying itself open to the serious risk that revenue from those schemes was going to go down and not up.

The strangest element of all is that Swan himself has long been a champion of employee share schemes on the basis that they align the interests of the workers with the shareholders.

A lot of thought went into that one, yes? Again, as with private health insurance, the pensions, the C"P"RS, the support for the car industry, etc., St Kevin's ideological fetishes trump common sense and good policy.

Then there's St Kevin's promise to wear the hairshirt - next year, of course, not this year:

Opposition Treasury spokesman Joe Hockey highlighted his scepticism last night by ridiculing Mr Rudd's promise of a limit on growth in outlays, noting it would slap a virtual straitjacket on the Government for six years.

Insisting that no government would go to an election without spending initiatives, Mr Hockey said he did not believe Mr Rudd would stick to the commitment.

"There's no wriggle room for new spending in their assumptions," he told The Australian last night. "They've already broken this promise because they have promised 3 per cent real growth in defence spending a year."

Believe that promise, and you'll believe anything. Especially when it comes from a man who, despite claiming to be a fiscal conservative, and before his conversion to spend-a-thons, increased government spending by 13.5% - yes, that much! - in 2008-09.

Peter Costello warms to this theme:

"What I find extraordinary is (that) if there was all this unsustainable spending, why didn't he (Mr Swan) cut it in the last budget? Apparently last year he didn't think this was unsustainable and made no effort in relation to it at all," Mr Costello said.

"He has invented this in response to the fact that he has careered the budget into deficit."

Since handing down last year's budget, Mr Swan had committed to spend another $100 billion on economic stimulus packages and a national broadband network.

"This bloke has added $100billion to spending and then said it was unsustainable to start with."

Alan Wood, in the Oz, detects the same pattern emerging as RuddWatch has noticed, first here:

The Government is making much of the fact that, on the budget forecasts, almost all new spending will be offset in the final year of the forward estimates, 2012-13, putting it on track for a surplus in 2015-16, but it is hard to believe. The Government certainly sent the wrong signal with its decision to increase pensions in an allegedly tough budget intended to demonstrate its long-term fiscal prudence. Whatever the arguments about the adequacy of pensions, this wasn't the time to put them up.

I don't know what Treasury said to the Prime Minister and Treasurer about pensions in their pre-budget discussions, but I would be willing to bet it didn't support this increase. In fact, I wouldn't be surprised if it warned them that a rise threatened the credibility of their fiscal strategy. Remember, the Government flew a kite about backing off its pension promise in the run-up to the budget.

It rapidly retreated in the face of a hostile response from pensioners. This was politics, not good policy, with Labor safe in the knowledge that on this issue the Opposition was equally irresponsible, so it was free to follow its welfarist instincts...

...[I]n the next couple of years the Rudd Government will need to take much tougher measures to rein in the bloated entitlement spending that is the dark side of the Howard government's legacy than it has shown in this budget, and a much more disciplined and consistent policy approach than we have seen from this Prime Minister.

And then here:

The big threat here has nothing to do with economic growth forecasts. It has everything to do with Rudd's chaotic and unpredictable leadership style and his obsession with political spin. This is a Government that couldn't make the hard spending decisions in its first budget, has managed only a half-hearted effort in its second and is unlikely to do much in its third, an election budget.

It hardly inspires confidence it will turn into a strict fiscal disciplinarian if it wins a second term.

Paul Kelly links this clear and present problem to St Kevin's refusing to say the 'B' word:

This Government's communications problem can be summarised in one question: does anybody believe that a Prime Minister and Treasurer too frightened to announce the deficit and debt numbers on television have the fortitude to wage a six-year-long campaign that keeps growth in government spending to below 2 per cent in real terms to achieve a budget surplus by 2015-16?

The answer is obvious. This is Kevin Rudd and Wayne Swan's real problem. Keen to promote themselves as decisive leaders during an economic crisis, this week they looked scared, silly and subservient to political spin. Until sanity prevailed at week's end, Australia had a Prime Minister and Treasurer who refused to answer questions about their core budget numbers with the directness of a primary school student. Their instinct was to avoid putting the words "dollars" and "billions" around the $57.6 billion deficit or projected $188 billion net debt.

This is the point where political spin lost touch with reality. It offers the insight that there are Rudd government tacticians who actually believe this is smart politics. It means, you see, Rudd and Swan weren't delivering a damaging media grab to be recycled. But it also sent another message: that the Rudd Government cannot look Australians in the eye and speak the truth.

What is extraordinary is that this tactic continued into a second week after criticism of Swan for omitting the deficit figure from his budget speech. The evasions this week left the impression of a Government desperate to hide something. The effect was only to reinforce attention on the size of the deficit and debt. The tactic reeks of the corrupted culture of NSW Labor, where spin is used endlessly to try to conceal the economic mire into which Australia's largest state has sunk. This mentality seems embedded in the Rudd Government's culture and it is a potentially terminal disease.

Rudd and Swan are better than this and they need to rise above it: this should become a test of their political character. They don't seem to comprehend the doubts fermenting about their Government in boardrooms across the nation (despite deep gratitude for the fiscal stimulus) and that this behaviour only further undermined their credentials.

And, lastly, we'll finish with a dose of reality, as the scales fall from middle Australia's eyes, and they see St Kevin's hypocrisy for what it is:

Even Kevin Rudd felt compelled to wade in on the matter by calling on all sporting clubs to give women more respect and giving his tacit agreement to the Nine Network's sacking of Matthew Johns.

At the same time there are many in the sporting world who believe that Johns was unfairly treated and who believe the Prime Minister should have stuck to commenting on his budget rather than the morality of larrikin footballers.

This newspaper's House Rules blog echoed the thoughts of many on Rudd's eagerness to put his own moral views on the situation. One blog commentator, "Skipper", wrote: "So the man who reduced a female RAAF member to tears and failed to apologise and made a drunken visit to a strip club is telling others to show respect to women. Curious!"

More to the point was "Oracle", who said: "No law was broken. This is purely a moral issue and if Johns can be sacked based on moral values can we sack Rudd for visiting strip clubs?"

Hear hear!

Have a great weekend.