In my mind there’s never been any doubt that the MTM NBN has been anything more than a complete debacle. At a technological level it is an inferior idea, one that fails to provide the base infrastructure needed to support Australia’s future requirements. As time went by the claims of “Fast, Affordable, Sooner” fell one by one, leaving us with a tangled mess that in all likelihood was going to cost us just as much as the FTTP solution would. Now there’s some hard evidence, taken directly from nbn’s own reports and other authoritative sources, which confirms this is the case and it’s caused quite a stir from the current communications minister.
The evidence, released by the Labor party last week in a report to the media, includes the following table and points to numerous sources for their data:
The numbers are essentially a summary of much of the information that has already been reported on previously however it’s pertinent to see it all collated together in a single table. The first row showing that the initial cost estimates were far out of line with reality has been reported on extensively, even before the solution was fully costed out in the atrocious CBA. There was no way that the initial claims of the FTTN install costs would hold, especially with the amount of cabinets required to ensure that the speeds met their required minimums. Similarly assuming that Telstra’s copper network was only in need of partial remediation was pure fantasy as the aging network has been in sore need of an overhaul for decades. The rest of the figures simply boil down to the absolutely bullshit forecasting that the Liberal’s did in order to make their plan look better on paper.
This release has prompted a rather heated response from the current communications minister Mitch Fifield, one which strangely ignores all the points that the Labor release raised. Since the figures have been mostly taken directly from nbn’s reports it would be hard for him to refute them however he made no attempt to reframe the conversation to other more flattering metrics. Instead it focuses on a whole slew of other incidents surrounding the NBN, none of which are relevant to the above facts. With that in mind you can only conclude that he knows those facts are true and there’s no point in fighting them.
It’s completely clear that the Liberal’s have failed on their promises with the NBN and this song and dance they continually engage in to make it seem otherwise simply doesn’t work. The current state of the NBN is entirely on their hands now and any attempt to blame the previous government is a farce, carefully crafted to distract us away from the real issues at hand here. They could have simply replaced the nbn’s board and continued on as normal, claiming all the credit for the project. Instead they tried to make it their own and failed, dooming Australia to be an Internet backwater for decades to come.
Take your licks Fifield and admit that your government fucked up. Then I’ll grant you some leniency.
The current MTM NBN is by all accounts a total mess. Every single promise that the Liberal party has made with respect to it has been broken. First the guaranteed speed being delivered to the majority of Australians was scrapped. Then the timeline blew out as the FTTN trials took far longer to accomplish than they stated they would. Finally the cost of the network, widely described as being a third of the FTTP solution, has since ballooned to well above any cost estimate that preceded it. The slim sliver of hope that all us technologically inclined Australians hang on to is that this current government goes single term and that Labor would reintroduce the FTTP NBN in all its glory. Whilst it seems that Labor is committed to their original idea the future of Australia’s Internet will bear the scars of the Liberals term in office.
Jason Clare, who’s picked up the Shadow Communications Minister position in the last Labor cabinet reshuffle before the next election, has stated that they’d ramp up the number of homes connected to fiber if they were successful at the next election. Whilst there’s no solid policy documents available yet to determine what that means Clare has clearly signalled that FTTN rollouts are on the way out. This is good news however it does mean that Australia’s Internet infrastructure won’t be the fiber heaven that it was once envisioned to be. Instead we will be left with a network that’s mostly fiber with pockets of Internet backwaters with little hope of change in the near future.
Essentially it would seem that Labor would keep current contract commitments which would mean a handful of FTTN sites would still be deployed and anyone on a HFC network would remain on them for the foreseeable future. Whilst these are currently serviceable their upgrade paths are far less clear than their fully fiber based brethren. This means that the money spent on upgrading the HFC networks, as well as any money spent on remediating copper to make FTTN work, is wasted capital that could have been invested in the superior fiber only solution. Labor isn’t to blame for this, I understand that breaking contractual commitments is something they’d like to avoid, but it shows just how much damage the Liberals MTM NBN plan has done to Australia’s technological future.
Unfortunately there’s really no fix for this, especially if you want something politically palatable.
If we’re serious about transitioning Australia away from the resources backed economy that’s powered us over the last decade investments like the FTTP NBN are what we are going to need. There’s clear relationships between Internet speeds and economic growth something which would quickly make the asking price look extremely reasonable. Doing it half-arsed with a cobbled together mix of technologies will only result in a poor experience, dampening any benefits that such a network could provide. The real solution, the one that will last us as long as our current copper network has, is to make it all fiber. Only then will we be able to accelerate our growth at the same rapid pace as the rest of the world is and only then will we see the full benefits of what a FTTP NBN can provide.
Starting a company in Australia, especially one that’s in the high tech industry, is much harder than it is in many other places in the world. This used to be due to a lack of supporting infrastructure, what with Australia’s remoteness precluding the required investment, however in more recent times that barrier has begun to melt away. The problem many startups face in Australia is that acquiring funding is extremely problematic as Australia’s risk averse investing style has meant that our large capital reserves aren’t used to invest in such ventures. Previous governments haven’t done much to change this, preferring to support already established businesses, however in his recent budget response Bill Shorten showed vision that few of his contemporaries have in the form of the Labor’s future technology policy.
At the core of this policy is the Smart Investment Fund, a $500 million allocation that will be used in partnership with venture capital firms and banks to facilitate more investment in early stage startups. I have spoken previously about how something of this nature would be required in order to kick start a Silicon Valley equivalent here in Australia and the policy that Bill Shorten has proposed lines up with that idea perfectly. Whilst startup investment can never be made risk free making them more attractive, through direct government investment and the partial loan guarantee with banks, will ensure that more of Australia’s capital makes its way into new businesses rather than the traditional investment vehicles.
Of course providing funding for such ideas is only one piece of the puzzle as we’ll need to encourage students to pursue careers in those industries. To this end Labor as put forward a policy to provide numerous scholarships to students who complete degrees in the fields of science, technology, engineering and mathematics (STEM) and then go on to become teachers in their fields. In addition to this Labor is proposing to forgive the HECS/HELP debts of almost 100,000 students studying in this field, something which could provide an incredible leg up for fresh graduates starting their career. Considering that 75% of the fastest growing new jobs are within these fields encouraging students to take up careers is an incredibly smart move and one that the current government should look at adopting.
You might be surprised to hear this but I’m on the fence about coding being added to the national curriculum, mostly because I’m not sure how it’d end up being implemented at the school level. Starting out in coding isn’t the most exciting of adventures and the rote learning approach which many schools use would, I feel, end up with them becoming bored and frustrated rather than energized and intrigued. Of course I’m not a teacher and I’m sure there are many who are more experienced in this field who could design programs that tackled this issue properly. In the end this is something that I’d have to see in action before I could form a solid opinion on it as whilst I’m all for kids being aware of how technology works I also know how quickly they can become bored with such things.
This is what the Australian public needs to see from a party in opposition: clear concise policies that show a valid course of action rather than mud slinging and point wining which have plagued Australian politics for the last 3 terms of government. Whilst these policies might not ever see the light of day it’s good to see that the Labor party is thinking along this direction and hopefully such policies will fuel their campaign come next election. I can only hope that the Liberals take note as whilst any incumbent would loathe to agree with their opposition it’s hard to deny just how solid some of these ideas are.
It’s no secret that I’m loudly, violently opposed to the Liberal’s Multi-Technology Mix NBN solution and I’ve made it my business to ensure that the wider Australian public is aware of frightfully bad it will be. The reasons as to why the Liberal’s solution is so bad are many however they can almost all be traced back to them wanting to cast anything that Labor created in a poor light and that their ideas are far better. Those of us in the know have remained unconvinced however, tearing into every talking point and line of rhetoric to expose the Liberal’s NBN for the farce it is. Now, as the Liberals attempt to rollout their inferior solution, they are no longer able to hide behind bullshit reports as the real world numbers paint an awfully bad picture for their supposedly better NBN.
The slogan of the MTM NBN being “Fast Affordable. Sooner.” has become an easy target as the months have rolled on since the Liberal Party announced their strategy. Whilst the first point can always be debated (since 25Mbps should be “more than enough” according to Abbott) the second two can be directly tied to real world metrics that we’re now privy to. You see with the release of the MTM NBN strategy all works that were planned, but not yet executed, were put on hold whilst a couple FTTN trial sites were scheduled to be established. The thinking was that FTTN could be deployed much faster than a FTTP solution and, so the slogan went, much cheaper too. Well here we are a year and a half later and it’s not looking good for the Liberals and unfortunately, by extension, us Australians.
It hasn’t been much of secret that the FTTN trials that NBNCo have been conducting haven’t exactly been stellar with them experiencing significant delays in getting them set up. Considering that the Liberals gave themselves a 2016 deadline for giving everyone 25Mbps+ speeds these delays didn’t bode well for getting the solution out before the deadline. Those delays appear to have continued with the trial now having just 53 customers connected to the original Umima trial and not a single one connected to the Epping trial. This is after they gave a timeline of “within a month” in October last year. Suffice to say the idea that FTTN could be made available to the wide public by the end of 2016 is starting to look really shakey and so is the 2019 timeframe for their completion of the NBN.
Worst still the idea that the MTM NBN would be significantly cheaper than the full FTTP NBN is yet again failing to stand up to scrutiny. Additional cost analysis conducted by NBNCo, which includes opex costs that were previously excluded under previous costing models, has seen the cost per premises estimate for brownfields (deployed to existing houses) rise to $4316. That’s a substantial increase however it’s a more accurate representation of how much it actually costs to get a single house deployed. Taking that into account the total cost for deploying the FTTP NBN comes out to about $47 billion, very close to the original budget that Labor had allocated for it. Whilst it was obvious that the Liberal’s cost-benefit analysis was a crock of shit from the beginning this just adds further proves the point and casts more doubt over the MTM NBN being significantly cheaper.
I’m honestly not surprised by this anymore as its clear that the Liberals really had no intent of adhering to their rhetoric and were simply trashing the FTTP NBN because it was Labor’s idea. It’s an incredibly short sighted way of looking at it, honestly, as they would have won far more favour with a lot of people if they had just continued with the FTTP NBN as it was. Instead they’re going to waste years and multiple billions of dollars on a system that won’t deliver on its promises and we’ll be left to deal with the mess. All we can really hope for at this point is that we make political history and cement the Liberal’s reign under the OneTermTony banner.
Last week I regaled you with a story of the inconsistent nature of Australia’s broadband and how the current NBN was going to solve that through replacing the aging copper network with optical fibre. However whilst the fundamental works to deliver it are underway it is still in its nascent stages and could be easily usurped by a government that didn’t agree with its end goals. With the election looking more and more like it’ll swing towards the coalition’s favour there has been a real risk that the NBN we end up with won’t be the one that we were promised at the start, although the lack of a concrete plan has left me biting my tongue whilst I await the proposal.
Today Malcolm Turnbull announced his NBN plan, and it’s not good at all.
Instead of rolling out fibre to 93% of Australians and covering the rest off with satellite and wireless connections the Liberal’s NBN will instead only roll fibre to 22%, the remaining 71% will be covered by FTTN. According to Turnbull’s estimations this will enable all Australians to have broadband speeds of up to 25MBps by 2016 with a planned upgrade of up to 100MBps by 2019. The total cost for this plan would be around $29 billion which is about $15 billion less than the current planned total expenditure required for Labor’s FTTP NBN. If you’re of the mind that the NBN was going to be a waste of money that’d take too long to implement then these numbers would look great to you but unfortunately they’re anything but.
For starters the promise of speeds of up to 25MBps isn’t much of an upgrade over what’s available with the current ADSL2+ infrastructure. Indeed most of the places that they’re looking to cover with this can already get such services so rigging fibre up to their nodes will likely not net much benefit to them. Predominantly this is because the last mile will still be on the copper network which is the major limiting factor in delivering higher speeds to residential areas. They might be able to roll out FTTN within that time frame but it’s highly unlikely that you’ll see any dramatic speed increases, especially if you’re on an old line.
Under the Liberal’s plan you could, however, pay for the last mile run to your house which, going by estimates from other countries that have done similar, could range anywhere from $2500 to $5000. Now I know a lot of people who would pay for that, indeed I would probably be among them, but I’d much rather it be rolled out to everyone indiscriminately otherwise we end up in a worse situation we have now. The idea behind the NBN was ubiquitous access to high speed Internet no matter where you are in Australia so forcing users to pay for the privilege kind of defeats its whole purpose.
Probably the biggest issue for me though is how the coalition plans to get to 100MBps without running FTTP. The technologies that Turnbull has talked about in the past just won’t be able to deliver the speeds he’s talking about. Realistically the only way to reliably attain those speeds across Australia would be with an FTTP network however upgrading a FTTN solution will cost somewhere on the order of $21 billion. All added up that makes the Liberal’s NBN almost $5 billion more than the current Labor one so it’s little wonder that they’ve been trying to talk up the cost in the past week or so.
You can have a look at their policy documents here but be warned it’s thin on facts and plays fast and loose with data. I’d do a step by step takedown of all the crazy in there but there are people who are much more qualified than me to do that and I’ll be sure to tweet links when they do.
Suffice to say the Liberal’s policy announcement has done nothing but confirm our worst fears about the Liberal party’s utter lack of understanding about why the FTTP NBN was a good thing for Australia. Their plan might be cheaper but it will fail to deliver the speeds they say it will and will thus provide a lot less value for the same dollars spent on a FTTP solution. I can only hope come election time we end up with a hung parliament again because the independents will guarantee that nobody fucks with the FTTP NBN.
Ah it’s budget time in Australia and like all the budgets before it everyone was hanging their hopes that X program would get some funding or Y scheme would see the changes that were so “desperately needed”. I always wonder why certain interest groups get so upset when their particular interest isn’t catered to, I mean if the government has made any announcements or commitments to them then you can hardly be disappointed that they didn’t come through. For the most part though there’s usually one or two stand out issues that everyone was waiting to see what the government would say on them and this year the question was whether or not Wayne Swan could deliver a surplus he promised all those years ago.
From what I’ve read there’s nothing particularly shocking or controversial about the budget, it’s all fairly routine stuff. There are some interesting points though like the government’s plan to cut 1.2% of the public service force with a third of that coming from the Australian Tax Office. It’s a small decrease but most years see the public service swell rather than diminish. With that small of a cut I believe that for the most part it will simply be attrition that will see those numbers decline rather than people getting fired, although for the organisations facing a bigger cut like the ATO I’m wondering just where the cuts will be made (especially considering they’re getting an additional $378 million in funding).
There’s also some major cash injection the low to middle class battlers of Australia. For starters there’s a tripling of the tax free threshold from $6,000 to $18,000 a good boost for those low income earners. People on welfare payments will also receive a bi-annual boost that’s due to begin in March next year further helping the unemployed and no/low income earners. Families have also seen a boost in the form of the SchoolKid bonus and an increase to the Family Tax Benefit A. These moves have been labelled as a vote buying maneuver and I tend to agree with that point of view as I’ve been told in the past that many Australian middle class households effectively pay little to no tax, but I’ve struggled to find any evidence supporting this viewpoint.
The big question that everyone was asking before the budget was released was whether or not the Labor government could make good on its promise of returning the budget to surplus in this fiscal year. With the current budget projections we’re looking at a surplus of $2.5 billion by the middle of next year. It’s a rather slim surplus, something on the order of fractions of a percent of total GDP but it’s there none the less. It’s a rather big deal as Swan will be the first Labor treasurer to deliver a surplus since Paul Keating back in the 1989/1990 budget. Personally I don’t really get what the hoopla is all about as whilst its nice to a have a surplus it’s not exactly a bad thing when a government runs a debt.
I’m your kind of standard Keynesian kind of guy when it comes to economic policies. Running a deficit isn’t a bad thing so long as the government is doing so for a reason and has the capability to pay off portions of it once the need for the deficit has alleviated. The current eurozone crisis is an example of how deficit spending can go woefully wrong but Australia isn’t as poorly managed fiscally and the debt we’ve been running wasn’t really that large and we were more than capable of paying it back. Hell take a look at Japan who’s debt is over 220% of its GDP but do you hear any about them having debt issues like Spain, Greece and Italy? Not in the slightest and that’s the reason why a deficit isn’t necessarily a bad thing.
I do agree with the idea though that we should run a deficit during the tough times (like the Global Financial Crisis for instance) and should look to remediating it when times are good but I personally don’t think that we should have a surplus for surplus’ sake. Whilst there’s no pressing need right now for the government to spending gobs of cash and thus a surplus is warranted I get the feeling that they’re just doing it so they can say “Hey look we’re in surplus” rather than taking a long term view of where Australia’s financials are heading.
As for me personally? Eh, nothing amazing in the budget for a young-ish married man who’s got a good paying job. All the talk of them scrapping things like negative gearing and what not did have me worried for a little while but realistically I can’t see any government going after that particular tax break unless something is really dire. Returning to surplus will appease some of the more fiscally conservative voters and the splashes for families will help Labor build their approval rating, something that they’re desperately in need of right now. Everything else isn’t really that exciting, but that could just be me becoming cynical in my late 20s 😉
I think I speak for a lot of Australians when I say I was tired of this election 2 weeks ago. I didn’t have the same buzz I had 3 years ago when I made my way to the ballot box, eagerly waiting to cast my vote that would bring the change that Australia desperately needed. That night was filled with elation as my prime minister of choice was elected and Australia’s future started looking a lot brighter. The next couple years were a tumultuous time but we came through the other side with nary a scratch on ourselves. However Rudd’s non-negotiable stance on several key issues rubbed people the wrong way and the Liberal attack dogs were let loose, utterly destroying the once high approvals that Labor once had. In the end we ended up in a position where neither party really won the election and we’re now stuck with a minority government and 3 years of pork for a few regional seats. There’s really little good to come out of this election.
Still there had to be a winner and it was the Labor government. You’d think that by my glowing recollection of the first years of the Labor government that I’d be happy about this but in truth I’m indifferent. I voted for the Greens this year because they aligned with my ideals the best out of the lot, but they were still far off the mark for a lot of their other policies. Don’t think for a second that I was just voting for them because I was disillusioned with Labor; I voted below the line on this one ensuring all my preferences went exactly where I wanted them, not where the Greens thought they should. Still it mattered little for the electorate I’m in, but that’s just how it goes in representative democracies.
Probably the only good thing to come out of all of this is the fact that the National Broadband Network will not be scrapped in its infantile stages and will live on for the next 3 years. I commend the Labor government for initiating this project as the time frames are far past that of their current term (and then some) showing that they at least have some long term vision for the future, even if it’s only in this one area. The good news is that should they not win the next election the NBN will be far enough underway that cancelling it would be political suicide and it will keep on rolling until its fully realised. There’s still a chance that it might get scaled back or mucked with in another way by a future government but 3 years is long enough to secure the vast majority of its infrastructure to ensure that a good majority of the original NBN idea gets implemented within its original time frame.
However the NBN hasn’t come out of this election turd smelling of roses either. As funneling pork to the regional independents was key to securing this election for the Labor government the NBN, which would eventually bring significant investment to the regions anyway, has been rescheduled to first target regional Australia. Now it’s really here nor there on whether this is a good or bad thing in itself, I mean I’m all for them working out the bugs on the regional folk before rolling it out here, but the highest value places for the NBN are the CBDs of major cities. Rolling out to the regions first means that Australian businesses will be waiting longer to make use of these upgrades, potentially stymying them for a couple years. It’s not that big of a deal, but it does open up the potential for criticism when the NBN is only delivering on its promises to a small subset of Australia.
There’s also been an increased amount of scrutiny and criticism levelled at the NBN due to its increased visibility in this election. During its construction the NBN is going to require up to 25,000 workers to get it all rolled out by its current deadline of 2018. According to industry union estimates there are only 7,000 workers in Australia right now that are capable of performing the required work and their estimates show that there will be a shortage of 10,000 workers over the course of the NBN’s implementation. Such a skills shortage does mean that there will be an upward pressure on wages in this particular industry and that has the potential to increase the projected costs for the NBN. Most of this has already been taken into consideration however and I believe the potential impact to the project should be minimal if action is taken to address it immediately. It’s unfortunate that Australia has a tendency to be so xenophobic when it comes to migrant workers as there’s more than enough skilled labor overseas that could be imported for the required duration.
Can’t imagine how the unions would feel about that one either… 😉
Strangely enough one of the most common criticisms I’ve heard has come from my IT cohorts who say that the NBN goes too far with its planned implementation. Their reasoning is mostly based on the fact that the Internet they have now is quite adequate and there’s little reason to overhaul the network. However this does not take into consideration that the current copper infrastructure can not scale in the same way a fiber network can and whilst their broadband is fast enough now it won’t be in 5 to 10 years time. Additionally such a network would make Australia quite attractive to overseas technology companies looking to trial new services, especially those coming out of the United States. This has the potential to build Australia’s service industry up for the time when our natural resources run dry and our current source of economic success is cut off.
The counterpoint many of them use is that wireless technologies are rapidly and will render a cabled network useless. Indeed the LTE specification is designed to give peak performances that are very comparable to that of the NBN and there have been demonstrations of the technology to that effect. However the amount of work to implement such a wireless system on the same scale as the NBN requires investment on almost the same level. The wireless towers would all require a fiber connection back to the dark fiber back hauls in essence requiring a scaled back NBN that did fiber to the node. Additionally none of the towers in Australia are equipped to broadcast on the frequencies required to achieve speeds comparable to that of the NBN, somewhere on the order of 2.6GHz (most carriers are on the 850/900/1900/2100MHz bands). There would also be a need to increase the number of towers to ensure adequate coverage, further increasing the cost required. In the end the argument that a wireless NBN is the cheaper and better alternative is nothing more than a distraction, it’s just not as viable as a national fiber network.
It’s no secret that I’ve got a lot invested in the NBN idea, what with my dreams of starting up my own private data center in my basement so I can host all my web applications cheaply. But the NBN is so much more than that and whilst I might be unhappy with the way the election turned out this year I’m glad that the NBN didn’t get the chop. The next 3 years of pork barrel politics will be long forgotten when the NBN finally reaches its goal of bringing extremely fast Internet to the vast majority of Australia’s population and I can’t wait to see it happen.
I resisted getting into politics in any way for most of my adult life. For the most part I thought it was just a popularity contest that I had no intention of getting involved with, nor trying to form an opinion on more it than once every 3 years. Fortunately I can count amongst my friends a highly skilled academicwho’s area of study is politics and his constant pontificating about the subject eventually pushed me into figuring the whole thing out, lest I be unable to communicate with him (and subsequently be utterly bored). Today I pride myself on taking an engineer’s approach to the world of politics, figuring out the variables and breaking it down into manageable chunks upon which I can base my ultimate decision. It’s no secret I tend towards the liberal ideals with perhaps a touch of the libertarian in me, much like most of my generation.
This year though presented quite a conudrum as neither of the two major parties nor any of the others could logically get my full support. Labor continues to push policies that I can not agree with (Internet filtering and other nanny-state type policies) and the Liberals candidate for Prime Minister is nothing more than a rabid attack dog who couldn’t write a decent policy to save his life. The popular choice amongst my peers would then be the Greens party who, whilst giving their preferences to Labor, don’t support Internet filtering and have favourable policies in many other areas. Unfortunately for someone like me who sees the benefit in developing nuclear power in a similar fashion to countries like France the Greens can’t be an alternative as they outright oppose any kind of nuclear development. Other favourites include the newly formed Australian Sex Party who take similar positions to the Greens on many matters but unfortunately lack clear direction on many other key matters. The same can be said for many of the other minor parties as well, as whilst they have solid positions on their key issues I can’t really vote for them unless their stance on many critical issues is formalized.
After some research (which was sped up nicely by this spreadsheet) I came to the ultimate conclusion that no party fully supports my political vision. I can understand that this is usually the case with any political party as you can’t satisfy everyone but in the past I was able to easily reconcile my differences with the major parties as the issues were usually small. This last term has seen my support for the party I once supported wane without a strong competitor that rose up instead. In the end it looks to be the Greens who will get my vote as whilst I disagree with some of their policies I can reconcile that with the fact that many of my ideas won’t take off in Australia for decades to come, so I might as well go for the people who support the largest majority of my ideas.
Election time always sees discussions over the dinner table with my family about who we’re going to vote for and my weekly dinner with the parents was no different. My father was always a staunch Labor supporter whilst my mother flits between different parties depending on the political climate of the time. This year was quite a different discussion than the ones I was used to as whilst my father said he would be supporting Labor (but wasn’t quite happy about it) my mother wanted to send a message to the Labor government that she wouldn’t tolerate their actions, and so would be voting Liberal. Since they are in one of the most critical seats of Australia, Eden-Monaro, I took it upon myself to see why she felt that way and the results surprised me.
Many of the issues were those you’d find in the popular media. She wasn’t happy with Julia Gillard’s rise to power, felt that the border protection policies were lax and overall didn’t trust the government to bring Australia back into the black over the coming years. I agreed with her on several key points, I wasn’t terribly happy with the way Gillard came into power either, but the fiscal management one caught me off guard. Since my mother had lived through the Labor government previous to this one I thought she would’ve understood why Labor had to spend money during their times in government, but honestly who really does remember what happened 20 years ago?
I can tell you I certainly don’t remember much. The last time Labor was in power I was still in primary school, blissfully unaware of all the goings on. Still my perverse interest in all things financially disastrous had taught me quite a lot about the economic climate of the time, and the similarities to the current government were startling. I asked her “Do you remember what was happening in the early 90s that just happened recently?”. She couldn’t answer and I don’t think many Australians would be able to either.
The answer is: global economic crisis.
Most Australians will remember Paul Keating’s famous line of the “recession we had to have” which was in fact caused by a wider economic crisis that can be traced back to Black Monday in 1987. Whilst everything appeared to recover during the early nighties it was unfortunately shorted lived and many countries, including Australia, plunged into recession because of it. Since the great depression all governments have recognised the ideals of Keynesian economic theory which dictates that during times of recession the government should step in and spending in order to stimulate the economy. Traditionally this is done with deficit spending, I.E. borrowing money, which many people see as being detrimental. However as history has shown not going into debt to avoid a recession will make said recession last that much longer. Indeed we saw the swift action by our government that saw Australia to be the only developed country to avoid a recession, a phenomenal feat especially when the rest of the world couldn’t manage it.
The past 2 Labor governments have presided over an Australia that was ravaged by global economic tides and the notion that all a Labor government does is spend the surplus that the Liberals build up is complete bullshit. Everyone seems to forget that the last Liberal government saw such economic growth and surpluses because it was never hit by a global financial truck that required them to spend their way out of it. Indeed even the Liberal party forgot that Labor delivered a budget surplus in its first year only to have it dashed by the global financial crisis the year after. To say that a Labor government is fiscally irresponsible because they always run a deficit shows a complete disregard for the facts and is nothing more than political spin. My mother also brought out the old chestnut of interest rates being higher under a Labor government, conveniently forgetting the last 3 years.
The fact is that if you’re worried about a Labor government staying in power because you don’t trust them to run the economy think again. They proven that they are completely capable of handling an economy through the toughest times where the Liberals have only shown how they fair when the seas are calm. Additionally if you’re worried about your interest rates I’d point you to the last 6 years of the Liberal government which saw a steady rise of interest rates that only came down under Labor. Really though the interest rates have absolutely nothing whatsoever to do with the government of the day, so please ignore any pontificating you hear when its related to any political party.
Hopefully you’ve learned something from this post and I urge you to spread this knowledge amongst everyone you know. The misinformation around this subject is abnormally high and the media outlets have no interest in setting the records straight. Whilst such information won’t swing the election one way or another it may do the public some good to question what they’re being told and hopefully seek out the truth for themselves.
Ah budget time, it’s always an interesting time of year as you get to see what the government has planned for the coming year and the rhetoric spin machines go into overdrive as both sides of parliament start duking it out over every talking point they can find. For me it usually entails a couple hours of good analysis of the changes so I can see if there’s any new measures that I’m able to exploit or if my particular industry might see some changes to encourage or discourage growth. Still it’s no secret that the whole thing is a rather dry affair (I skipped out on a friend’s invitation to have budget drinks at a local pub, even alcohol can’t make the delivery interesting) and I’ll forgive you if you tune out now, but if you read on I promise to make it worth your while 🙂
Rather than link you to a veritable tsunami of articles that analyze the various ins and outs of the budget I’ll just give you a link directly to a quick overview to the whole thing direct from the horse’s mouth. On the surface there’s really nothing amazing about it, no crazy reforms or highly controversial schemes that haven’t already been duked out in front of the public over the past few weeks. Most criticisms I’ve heard of the budget thus far focus on the government’s ability to follow through on the plans, citing past broken promises (ignoring the fact that it wasn’t Labor which caused them to fall through) and making accusations that it all hinges on things that haven’t yet passed parliament. Most of these accusations can be traced right back to Liberal party rhetoric and frankly, whilst they may have raised a couple points that need discussion, I’m starting to get tired of all their talk (more on that later).
One of the biggest things to come out of this budget is the so called Resource Super Profits Tax. In essence it’s the Australian governments attempt to get a bigger slice of the current resource boom that Australia is experience on the back of the heavy demand stemming mostly from China. Initially I was appalled at the idea as it felt a lot like a grab at a profitable industry just to boost the coffers to put the budget back in surplus sooner (which honestly doesn’t matter as much as the Liberals will have you believe). I mean what would happen if we had an IT boom in Australia? Would we then be subject to a super profit tax because we suddenly became desirable for hosting services (which is quite possible if the NBN goes ahead)? Diving deeper however it appears that this idea actually came direct from the mining giants themselves, hoping to seek a simpler system rather than the complicated arrangement they currently have. My sentiments echo that of Martin’s post I just linked; the belly aching we’re seeing from mining companies lobbyists is a disagreement over price more than it is them actually being hurt by this new tax.
An interesting development is the government’s idea of implementing a pre-fill or standard deduction option to the current tax return system. Basically this allows about 25% of all Australians to be able to claim a standard flat fee from the government (to the tune of $500, increasing to $1000 in 2013) without having to go through the hassle of filling out a full tax return. It’s a good idea, one of the few that the government is implementing from the Henry Review, and is very similar to many systems that are implemented in other countries. The main saving comes from the estimated 8.5 hours that every tax paying Australian spends doing their taxes every year, totalling a whopping 100 million hours spent collectively (not including the back end processing that the ATO has to do as well). For someone like me who has a rather complicated tax arrangement it’s really of no benefit but for those 6 million+ Australians it will help I’m really glad to see a measure like this go through, although I’m sure accountants Australia wide are none too happy with it.
Two major areas of funding are infrastructure and renewable energy. Whilst the infrastructure spending is mostly just a continuation of the spending that has been going on for a couple years the resources allocated to renewable energy and a skilled workforce are welcome changes. For renewables (full disclosure: my dad is the teacher of renewable energy at the Belconnen TAFE and I share his passion for it) there’s really nothing to lose in researching such technology. Whilst most are still in their infancy we’re on the cusp of having some real significant breakthroughs and Australia is well positioned to take advantage of them. Really with our vast amounts of unarable land and swaths of coastline we’re an idea place for wind and solar (both photovoltaic and thermal) and with such strong opposition to other clean forms of energy (read:nuclear, despite us having about 40% of the world’s uranium in our soil) renewables are the way to go, and I’m going to keenly watch all developments in this space.
There are some benefits that also speak to me personally, like the reduction in company tax rate and instant asset write off for small businesses. As someone who’s just about to lash out into the cruel world of being a technology start up any benefit I can get my hands on will be gladly taken and made use of. All the bits of technology I require to get my projects underway neatly fit under that $5000 limit for instant deduction, hopefully softening the blow somewhat to my own personal finances whilst I attempt to get my business off the ground. Whilst these changes are the ones that hinge on the super tax going through I’d still bet on it being passed, albeit in a different form to what it is now.
Now that I’ve gotten that all out of the way I’d like to take some time to launch a load flame laden bloggery right at the Liberal party. For the past 5 months the Labor government has been under constant attack from the Liberal party who have been taking every shot they possibly can whilst failing to deliver anything substantial of their own. To be honest I had expected as much as after the leadership spill saw Howard’s attack dog Tony Abbott take the opposition leader’s crown. Whilst I can appreciate that criticism of any policy is required to make sure it is robust I’ve heard little to no arguments that can be rightly substantiated with hard facts. That usually wouldn’t be a problem but it seems that the constant barrage of vitriol from the Liberal party is starting to have a dramatic effect on the Labor government’s approval rating with the populace at large, and that’s worrying for a couple reasons.
It’s no secret that I’m liberal (little l there folks) with a slight bent for libertarian went it suits me, so you should probably take this all with a little bit of conservative salt. The current rhetoric from the Liberal party is hinging on old ideals that Labor can’t be trusted with money (they always spend it~¹) and that the Liberals are the best to handle the economy (they always run a surplus and interest rates are always lower~). However if you do even a small amount of research you’ll see that traditionally the Labor government has been in power when the world economy at large is suffering. Keynesian economics advocates government deficit spending in time of a recession and it has been proven time and time again that this either softens the blow or stop a recession from happening entirely. Liberal rhetoric would have you believe that if the government did nothing we would’ve been fine regardless which shows a reckless disregard for the facts and decades of research into the matter. The interest rate line is dragged out time and time again, but isn’t it strange that the last year has seen interest rates lower than that of the previous governments entire time in office? That would be the line I’d tow if I wasn’t so blind to the fact that interest rates are subject to external pressures that are not under any Australian government’s control. The sooner this myth and the fear that comes with it dies the better.
Then there’s the idea that the Liberal government would do better than Labor at the helm of this country. Right now nothing could be further from the truth as whilst the party has managed to stabilize itself for the past 5 months it has spent most of that time being cynical whilst doing little other work. You’ve got an ultra-conservative at the helm, one climate change denier (he is a NOT SKEPTIC) in the front bench (with one recently leaving) and none that seem to harbor any respect for fact and rational thought, although I fully admit this could be far more due to party politics and such issues being dealt with behind closed doors. Currently it seems that the public perception is that they’re not sure about the Rudd government but they have yet to seriously consider the alternative: an Abbott government. Pressing a few not-so-politically inclined friends on the matter shows that they’d rather not have the latter, but hadn’t considered opposing Rudd meant getting Abbott as PM.
The budgets are always a big talking point for both parties and even more so in an election year. The Rudd government has delivered a sensible budget that aims to continue the economic growth that it managed to sustain throughout a global recession and keep Australia being the economic power that it has become. The rhetoric from the Liberal government should be analyzed and then discarded for the rubbish that it is and hopefully the Australian public sees that the current government is doing the right thing by us all and the alternative is a much darker Australia for us all.
¹FYI a tilde at the end of a sentence on the Internet typically indicates a sarcastic, flirty or playful remark.