Why Aussie geeks should not support Kevin Rudd’s broadband plan

23 03 2007

Geeks, techies, educators and innovators across Australia were excited to hear about Kevin Rudd’s plan for a high speed broadband optical fibre rollout to 98% of Australia. There is no doubt that Australia is a “broadband backwater”. The horror quotes from the Luddites of Australian politics, such as Ron Boswell’s “We’ve got adequate broadband for the people out there”, Helen Coonan’s “Internet users in most Australian capital cities should be happy with the speed of their broadband connection” and (my favourite, the biggest luddite in history), Richard Alston’s “Well for example, people will tell you that pornography is one of the major reasons why there’s been a high take-up rate in South Korea. I haven’t confirmed that at first instance but I’ve been there, I’ve looked at what’s happening.”, say it all. Our politicians don’t have a technical clue.
However, while I fully support the idea of optical fibre to 98% of Australia, it has to be funded and planned in a responsible manner. You may have read this little gem: “The Future Fund is full of money from telecommunications from the sale of Telstra, so in a way it’s not inappropriate that money is spent on telecommunications” from Democrats leader Lynn Allison. The origin of the money in the Future Fund is not the issue Lynn Allison, it’s what it’s been earmarked for. Labor cannot guarantee to cover public service superannuation liabilities, not if it’s going to be spending that money. There are no guarantees in investment. This is Superannuation money that people have been paying their whole lives. If it was my money, I would not want anyone spending it and promising they’ll pay it back by 2020. I doubt Kevin Rudd will be leaving his Superannuation in there until 2020, so he personally won’t be paying any price. This plan is a carrot dangled for the younger generation, who aren’t owed any money by the Future Fund. The Future Fund is not spending money, it’s a debt owed by the government that they have an obligation to pay. The Australian Government made a mistake a long time ago, by not putting aside money for their future superannuation obligations for retiring workers, just like General Motors. What do you think will happen if a large number of public servants don’t get the Superannuation they need for retirement? They’re going to be an additional drain on taxpayers in the welfare system. This money is not just for politicians, it’s for teachers, police, doctors, nurses and other staff working in the public sector, paid by the government. For Generations X & Y, this may mean your parents moving in with you when they’re no longer able to work, as they can’t afford housing without their Superannuation and welfare money will be limited with a reduced workforce. Don’t be fooled by this shiny offer, read the fine print. I want that dream broadband network too, I just don’t think this is the way to fund it.
We don’t just need faster broadband, we need a complete project plan for ongoing infrastructure building, maintenance and future upgrades. This is not the last time a communications network will require upgrades, how do they intend to pay for the next one?
Optical fibre is a great plan for Australia (we need Fibre To The Home (FTTH) not Fibre To The Node (FTTN), but stealing from the future to pay for the mistakes of the past doesn’t work. It’s how we built this broadband backwater in the first place, by cutting corners and hoping someone in the future will fix it. All Australian politicians need to use greater foresight in policy, 5 years, 10 years, 20 years, 50 years, 100 years, not just planning ahead until the next election. Each side doesn’t want to do too good a job, for fear a future opposition might take the credit. Get your bloody act together Labour and Liberals. Try working together to actually solve a problem for the good of the country, instead of wasting time name calling, chest beating and buggering around instead of actually getting things done.

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11 responses

26 03 2007
Simon

Hmmm … I meet my responsibilites and pay govt mandated super. What has the government been doing for its workers? Oh – lets wait and sell Telstra and then we’ll put money aside. What future vision. And now the opportunity is to create some vitally important public infrastructure, and nope, again, no vision.

I’ll back the infrastructure project thanks. Not only is true broadband economically vital for our future, govt owned broadband infrastructure will be a revenue earner as well – bandwidth will be sold to carriers and there will be a return on that investment. Sounds like a plan to me.

26 03 2007
scientaestubique

The track record of the goverment making money from infrastructure is not good. Inefficiency, waste and lack of future planning.

Simon – would you be willing for your own Superannuation money to be invested in this project, with the risk that if it fails, you will not be receiving your Superannuation?

I back investment for broadband infrastructure, but the Future Fund is to protect taxpayers from the burden of future debts for the owed Superannuation of all government employees and with the baby boomers retiring, there may not be enough money to pay that debt.

26 03 2007
Simon

The super that govt workers have been paying all their lives – both Libs & Labour guarantee that payout. You write as if Labour will get themselves in a pickle and say ‘oops – sorry, can’t pay your super’. Wot Rubbish! Worst case scenario, alternate super strategy needed, taxes go up (ie the rest of us pay it), Labour gets booted (big assumption they get in anyway), Libs back in. No one is going to loose their super. I’m not saying a messed up strategy is good, but likewise, an outdated telecommunications infrastructure is ultimately going to mess with our economy (as badly and if not worse), and guess what, our taxes go up as well.

Howard just doesn’t want to build the infrastructure. Its got nothing to do with the FF. He wants private industry to build it. And by today’s headlines with the FF, its well ahead of its target for 140 billion by 2020. 2.7 billion from it for major infrastructure is hardly irresponsible.

But, Labour have hit on something everyone wants, everyone recognises Australia needs, everyone recognises Australia is way behind on. Its a chink in the Libs armour and all they can do is whine, carry on, and try and blow it all out of proportion.

26 03 2007
scientaestubique

This is not about Liberal or Labour. There are no guarantees in investment, these guarantees are worthless, there’s no penalty to either Kevin Rudd or John Howard if it goes wrong, they’ll be long gone. Taxes going up may not be able to cover it, as the retiring baby boomers will leave a large burden on the small pool of remaining workers. There is a very real risk that people will lose their Superannuation, that’s the entire point of the Future Fund: The Future Fund has been established as a financial asset fund with the defined purpose of accumulating sufficient financial assets to offset the Australian Government’s unfunded superannuation liability. This is an unfunded liability, without funding, it will not be met. This is the sad situation that General Motors also finds itself in, having not actually put away all the money they owe their workers over the years. This is the result of a lack of long term future planning, and slack accounting standards, which allowed retirement debts to be accumulated by companies and not reported. Any investment made for the Future Fund should be based on investment goals alone, not anyone’s political agenda.
You don’t have to sell me on broadband, I understand it’s value. I just think this funding should be found somewhere else, so generations X, Y & Z don’t have to pay for the mistakes of the baby boomers.

26 03 2007
Simon

ok – I take your point, but by current reports the Future Fund is booming. Its ahead of its projected targets, Nick Minchen said today Govt may not have to funnel its future budget surplus’ in, for the Future Fund to hit its target. And whilst there are no guarantees on investment (and I’m sure the Future Fund is invested in something, rather than sitting in a bank), I’d rather put my money into a national broadband infrastructure scheme than any civil engineering project.

26 03 2007
scientaestubique

It may be ahead of it’s future targets, but there’s no guarantee it will continue to go so well, especially with the number of government changes which are likely to happen before 2020. The choices for Future Fund investment should not be led by anyone’s political agenda, no one else’s Superannuation is. Government employees should not be treated any differently from any other Australian citizen.

22 05 2007
Duxor

That post sounds like a lot of rhetoric to me. It is rather misleading.

“JOURNALIST: Just to be absolutely clear, is there going to be any draw down on the assets within the Future Fund or is it simply a transfer of assets into another (inaudible)?

TANNER: It’s effectively transferring an asset into another asset. So, in other words, it’s still an investment, you are still generating a revenue stream in the case of people paying for access to the network. Access to the network won’t be free. It’s not free in the current network. That would generate a revenue stream that generates returns to the investors. The question of the detail of that, of course, is a matter for negotiation with prospective private partners, be they Telstra or any of the others.”
http://www.alp.org.au/media/0307/pcloo210.php

And since when can “Labor [not] guarantee to cover public service superannuation liabilities”?? What is your argument to support that? If you read the link you will see this

“Public service superannuation liabilities will be fully met under the Future Fund, that is absolutely clear cut in our position,’ Mr Rudd said in Sydney today.”

I think it is a good idea to research your blog posts before publishing them.

A national broadband plan, approached strategically, will be an excellent boost for Australian economy.

22 05 2007
Duxor

KEVIN RUDD: “Well, on the question of the Future Fund itself, let’s go to some numbers and put Mr Costello’s political performance into some economic context, some financial context, here. We’ve put forward a proposal, which says we’ll invest up to $4.7 billion and that’s necessary to make sure that this high speed broadband network happens within five years. That’s critical. How would we fund it? $2 billion of the $4.7 [billion] comes from the Government’s existing communication fund. As for the remaining $2.7 [billion], we say that we would access that from the remaining unsold shares from the 70 per cent remaining government holding in Telstra. That’s the way in which we’d fund it. So let’s put it into context. The Future Fund right now stands at $50 billion. It will grow into a fund of $150, $160 billion by, say, 2020. The policy objective is this, to fund by that date the total requirements for unfunded public servant superannuation requirements. We accept and fully support that objective. What we’re talking about is something in addition to that and making productive use of it in productive investment which itself will generate a revenue stream.”

22 05 2007
scientaestubique

Duxor – Investment in broadband infrastructure does not have a great track record of being profitable to shareholders.

They can say these liabilities will be met, but with what money? The point of the Future Fund is that there was not going to be enough money to cover their liabilities, money owed in Superannuation to government employees. No person alive can guarantee any investment, unless they have the funds to cover the debt. It is meaningless to say you can cover a debt when you do not have the money to do so.

I have no argument against a broadband rollout in Australia, I just do not believe that one group of Australians should be forced to invest their Superannuation in it, whether they like it or not. It’s a political exercise, not in the interests of those whose Superannuation it is. I believe Australia’s police, teachers and other public servants deserve to be treated better. If Labor and Liberal are serious about broadband, they need to invest their own money in it, not other people’s.

21 10 2007
Sam Clifford

Costello and Howard have hoarded excess tax revenue and are now handing it back in terms of $34 billion of tax cuts. Labor have released their tax package of $31 billion in cuts with the remaining $3 billion to go in to education rebates.

It would be nice if someone promised to use that tax revenue for what it was collected for in the first place, provision of infrastructure and services. Howard and Costello have been stingy with the public purse in order to bribe the electorate in to voting for the Coalition by appealing to the hip pocket. Coonan believes that building the next generation of telecommunications infrastructure should be left to private industry (yes, because Telstra’s doing a bang-up job on line maintenance). It’s almost as if the government believes it’s neo-liberal policy to the logical extreme.

Rudd, afraid of being wedged by the government on everything, adopts almost the same fiscal strategy and, as a result, Australia has no way to choose a government that will actually spend the public’s money on public services.

Government owned broadband infrastructure should be built using money from the huge surpluses that Costello’s miserly ways have generated. We can leave the Futures Fund alone and get broadband internet to 98% of Australia.

18 12 2007
CryptWizard

Yay, you linked to my blog!

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