My brother came up with a good statement the other day, "Labor are doing very well by every measure, except public opinion". Its true the circus that Holden202T mentioned hasnt looked good, but that aside, despite the GFC, the spending has kept a lot of money moving in our economy and as a country were not in heaps of debt even though public opinion believes otherwise.
Abbott has said he wants to be "the infrastructure" prime minister, but then hes killing the NBN which was the best long term investment for the country ive seen. Its not often any government will commit to an investment that will take longer than 1 term to complete, but if It was going to be finished by 2020 it'll be longer now since it'll be some more years before the majority of people realise its value, and before there is another proposal to finish it off. For my day job in IT, I could have used that upstream bandwidth and low latency immediately but theres no contracts in my area, so apparently as of yesterday I now live in a digital backwater.
In fact, since i care so much about the NBN, im going to post this quote verbatim. The biggest problem is that it takes this much text to properly explain it therefor its not compatible with the media and you cant get the message across. Thanks Mark N, for writing it so clearly in the first place.
One of the ALP's abject failures has been their inability to accurately describe how they're
planning to pay for it all.
If you buy $10k worth of shares, you don't portray that to your accountant as $10k worth
of expenditure. It's an investment: you've taken a bundle of value stored as cash and
turned it into a bundle of value stored as shares. Later you'll sell, hopefully for more than
the $10k cash you put in to it. If the proceeds of the sale are big enough, you'll bank more
than you'd have received if you'd put your $10k into something else, and you'll call it a
successful investment.
That's how the ALP plans to pay for the NBN.
NBNCo reckons it'll cost about $45b to build it, stretched out over 10 years, which you
could simplify to $4.5b per year, give or take (it won't actually be smooth like that,
it'll be a curve with a slow ramp-up, a peak, then a slow ramp-down, but that's
not important for this conversation)
They'll also be receiving income by selling wholesale broadband services to ISPs. The
income will ramp-up as the network builds out and more people connect to it. So it'll
initially be pretty negligible, and will eventually grow to fund the business.
Between now and then, there's a gap where NBNCo's income doesn't cover their
opex and capex requirements. The Government is tipping in capital to fill the gap,
several billion per year initially, ramping down as NBNCo's ability to pay their own
bills ramps up. The Government expects that they'll supply about $34b worth of capital
by the time the network is built; NBNCo will raise additional capital from sources other
than the government by selling into the bond market.
That'll get NBNCo to the point where it's earning enough to cover its opex + a profit margin
7% above the bond rate.
The Government then intends to recoup the money it's paid-in by selling it five years
after it's finished, with the intention of fetching a price that makes a small profit. They've
done a lot of analysis on the likely value of a profit-making telco with a national monopoly,
and reckon they'll make a small profit on the deal.
So, the upshot is that the nett cost to the taxpayer for that plan is $0, in the same way that
your house costs $0 if you sell it for its original cost + inflation and accrued interest.
The government is essentially funding a tech startup, acting like a venture capitalist
expecting to make some coin out of it.
That's something to think about next time you hear party-political propaganda about profligate
spending. The NBN is essentially free to the taxpayer, which is why DBCDE has been
funding it off-budget. When the Opposition says it'll cost $50b and pretends that that's
what the taxpayer will actually spend on it, they're only expecting to get away with it
because they believe you're too dumb and ignorant to know you're being lied to.
(the hapless incompetence of the ALP front bench, who have been running this policy
since 2008 without being able to explain the previous 7 paragraphs to the public, is
awesome to behold. What are they good for, and why, exactly, are they even there?)
The real financial controversy concerns the way NBNCo needs to set their prices to
achieve bond rate + 7% commercial returns. Although we won't be paying for it with
our taxes, we will be paying for it with our Internet service fees, so it's in all of our
best interests for the network to be built as cheaply and efficiently as possible.
It does strike me that having massive political arguments every 12 months about whether
NBNCo should drop everything and do something different is diametrically opposed to
that aim. Unless we're prepared to pay an inefficiency penalty, it's probably better to just
get on with it and build it even if the current plan is imperfect. Roads, sewers and electrical
networks don't have to cost-in constant bitchfighting about what they're doing and how
they're doing it, I can't see any reason why NBNCo should either.
What are the alternative models?
Well, the Libs will give grant money to construction companies to build bits of their
NBN in each service area. They'll never get that money back; The network will be owned
by the telcos who build it, not by NBNCo, so the Government won't be able to recoup
their money by selling it afterwards. As such, the Liberals' NBN policy is more expensive
to the taxpayer than Labor's, even though it's slower, crappier, and has a shorter
operational life.
(again -- The ALP are stupendously dense to have not made that simple point back
in April when the Libs' policy was announced. If you're looking for someone who is skilled
at occupying three dimensional space, a Labor MP will excel at the job. But if you want
someone who can actually explain and advocate policy, they're the most utterly useless
bunch of empty-suit seatwarmers you're ever likely to meet)
And the Greens? Their policy is to build the ALP NBN, but not sell it afterwards. Our
government spends billions of dollars per year on infrastructure like roads, ports and
navy submarines and we taxpayers don't expect to see any direct return on that investment.
Why should 21st century infrastructure like broadband networks be any different?
The attraction of that approach is that it drops the requirement for bond rate + 7% (which
only exists so that commercial buyers will find it attractive when the government wants
to sell -- if they don't intend to sell, then the ROI requirement is diluted). Without a
bond rate + 7% requirement, NBNCo's $20 per Mbps CVC charge doesn't need to exist,
which will make NBN usage charges cheaper for all of us, in exchange for a marginal
increase in commonwealth infrastructure expenditure.
I could go on about a lot of other policies, but this post is huge already. I cant go so much in to the libs policy as most of that sounds likely to be unpopular and secret for now, so lets give them 6 months then see what they start doing, and then see if the masses forget by the time the next election rolls around. Anyone expecting the economy to be as strong as it was in the howard years might be in for a surprise.
Theres some good reading here about debt and spending too, well worth clicking this link:
http://www.abc.net.au/unleashed/4674322.html
if the fibre wasn't going ahead id rethink the wireless so i can ditch the phone line as im already on voip.