I’ve been arguing for a year or so now that I’d be voting for the Libs were it not for three policies. Abolition of the mining tax is crazy given it is a profits based tax and will eliminate itself if margins fall below a reasonable level. For the same reason it doesn’t deter investment. In the short and medium term it isn’t making any money but in the long term it will and the demographic challenge facing the nation means that the lost tax will have to come from somewhere else.
The second policy is the scrapping of the carbon price. This should be Liberal heartland policy, using markets to effect change, so it makes no sense to me that it be scrapped given the likelihood that mitigation policy will be required of the nation.
The third policy is the changing of horses midway through the NBN rollout. I can understand why traditional conservatives balk at this policy. It is a big bill and will no doubt get bigger. I’d be very happy to see a conservative government put a new broom through the thing and demand greater transparency on costs. The Australian today has news of good policy from the Libs on this front:
THE federal Coalition has threatened a crackdown against union-friendly workplace deals on government-funded, nation-building infrastructure projects, vowing to enforce a strengthened national construction code to police conditions that apply to workers.
Opposition workplace relations spokesman Eric Abetz said yesterday the militant construction union had a history of holding key infrastructure projects to ransom, and nominated the $8 billion east-west road tunnel project in Melbourne as one undertaking a newly elected Abbott government would “take steps” to ensure was delivered on time and on budget.
The Australian has confirmed that the Coalition, which has a workplace policy to undermine the institutional power of unions, intends to take the same approach with all government-funded infrastructure projects.
“The community can be assured the Coalition will have a strong and effective building code that cracks down on illegality and thuggery in the building and construction sector, within the first three months of a Coalition government, which will apply to all government infrastructure projects,” Senator Abetz said.
Excellent. I’m all for it. The Libs must as well prevent the kind of contractor gouging we’ve seen in the last few weeks with Leighton subsidiaries crying poor mouth and being gifted fat new contracts. I wonder too how it will address its reinstatement of Telstra’s vertical monopoly.
But, the NBN is still in principle well-directed public investment. The network is simply too big and faces too much tyranny of distance to ever be built by the private sector. As well, the fibre-optic roll out is very well-timed for our post mining boom adjustment, helping to sustain investment expenditure as we head off the mining investment cliff. Even better, it is off balance sheet and does not impact the budget bottom line materially. In fact, in theory it should boost the budget by growing productivity in all sectors but especially the large services component which struggles to gain efficiency by its nature.
That’s the point that’s at large in the media today with a new study by Deloitte Access Economics. From the AFR:
The average household would be $3800 a year better off by the end of this decade due to lifestyle changes enabled by the National Broadband Network, including more people working and shopping from home, a new study has found.
…The study finds the $3800, which is in today’s dollars, would come about largely because people would stay at home more rather than go out to work, shop or even see a doctor.
The saving comprises $2000 per household in cheaper prices and higher wages due to a productivity boost to the economy worth $16 billion by 2020.
Another $634 would be saved per household through the increased use of teleconferencing and telework, meaning reduced travel for workers.
…It finds significant benefits for those outside the cities. “Those in regional areas . . . will be less likely to have to move for education and employment,” it says.
“Broadband, particularly in regional areas, will open up opportunities to allow regional residents to better participate in the digital economy.”
The report concludes that the estimates of what could be achieved are conservative.
“The range of broadband impact is extensive and finds substantial benefits to many different households,” it says.
“Further developments in technology and applications are certain, and are likely to mean that realised benefits in 2020 will be greater still.”
Deloitte acknowledges that this is not a cost benefit analysis. But if we’re talking about a $25-$30 billion uplift in household standard’s of living per annum, even at a significantly higher cost of building that would be worthwhile and it would be difficult to match in any other spend of the same amount of money. There is no comparable assessment of the Coalition’s more limted plan.
Such figures are always pie-in-the-sky so I’d throw a grain of salt over them. But it does illustrate the point of this post. Labor has doomed this policy by failing to cost it for the public. It should have been done with the full scope of the economic benefits. That it wasn’t can only be for three reasons. Either the numbers are questionable, the numbers are so big that they’re easily undermined politically, or Labor does not want to be held to account to any benchmarks. There is no kind interpretation for their silence.
But on the other side, why is the project being cut to ribbons before the numbers are even exposed? That can only be political bastardry as well. And given the pre-commitment to gutting the policy, how can we expect an honest appraisal now of the possible benefits of the project? These questions are pressing enough before we add the very blurry role of Rupert Murdoch, his media support for the Libs, and alleged hostility to the NBN.
Those committed to the tribal following of either political party should ask themselves hard questions about why Rudd and Abbott combined have corrupted this policy before we can even test it’s very promising upside.