EDITORIAL THURSDAY 16.04.09.
Standby for an early election. The federal government has decided to make a second attempt at introducing its controversial alcopops tax after it was shot down by Senator Stephen Fielding siding with the opposition to vote against it. At the time, the Coalition opposed the tax on the basis that it was a revenue measure masquerading as a health policy, and would not achieve the stated aim of reducing binge drinking, particularly among young people. Senator Fielding, on the other hand, was in favour of the tax, but insisted that it should be a part of a larger suite of measures including a ban on alcohol advertising on television during sports events.
What makes the decision to try again surprising is that nothing has changed. The opposition still opposes it, and Senator Fielding says he will vote against it again if he doesn’t get what he wants. At this point it appears that the government hasn’t changed its position either so there is no reason to expect a different outcome the second time around. Unless the government intends to negotiate further, and possibly give in to some of Senator Fielding’s demands, it is hard to know just what the government expects to achieve.
Certainly, presenting the legislation again provides an opportunity for all parties to reconsider their positions, but at this point that seems most unlikely. It also provides the government with more ammunition to depict the opposition as being obstructionist, pointing to the long list of government initiatives thwarted by a hostile Senate. In fact, the government is already plying this line for all it is worth. But more significantly, if the legislation is rejected a second time it provides a potential trigger for a double dissolution election.
Wayne Swan has said that if the opposition blocks the legislation again it amounts to Malcolm Turnbull “loading the gun” for an early election, but that the government has no intention of firing it. No doubt that is true for now, but the mere fact that the trigger becomes available elevates the political stakes. While it is most unlikely that the government will use a contentious alcohol tax as grounds to call an election, the ability to do so at short notice places renewed pressure onto the opposition, particularly when it is considering all future government proposals. If the opposition votes to block any new measures the government may seek to introduce later this year, it is possible that the government might choose to pull the election trigger.
Timing is also an important factor, with some evidence to suggest that the economy is likely to get considerably worse before it gets better. In that light it is possible that calling an early election in the second half of this year before the unemployment figures become too much worse might be seen as preferable to waiting for the scheduled 2010 election. If the economy hasn’t turned the corner by then, it will be much easier for the opposition, and the voters, to pin the blame on the government. But going to the poles this year, on the basis that the opposition is blocking attempts to deal with the economic mess, would make a lot of sense.
While the debate about binge drinking is an important one, it should be obvious that adjusting the price point by increasing the tax is not in itself a measure that will solve the problem. Price pressure can be one component of a larger campaign to deal with alcohol issues, but by itself won’t stop binge drinking. The simple fact is that individuals who are determined to go on a binge will do so anyway, regardless of the price. While there is some truth to the argument that one step forward in the fight against alcohol related harm is better than no steps, there is also a lot of truth in the suggestion that the government needs the revenue to help the budget bottom line. Of course there’s no reason why you can’t have both the revenue and a campaign against binge drinking, but the evidence suggests that the government is also keeping its options open for an early election.
Even though the government insists that it has no intention of pursuing that option, the right combination of circumstances could well see them reconsider that position. As unemployment becomes worse, don’t be surprised if the government seeks to renew its mandate in the second half of this year.
Thursday, April 16, 2009
Wednesday, April 15, 2009
It’s The Message That Matters, Not The Medium
EDITORIAL WEDNESDAY 15.04.09.
News Corporation has today announced a new unit within its organization which will facilitate the sharing of content and resources between the company’s many arms. Much more than a stable of major newspapers such as The Wall Street Journal, The Times of London, and of course the Australian, News Corporation includes television production and broadcasting, movie production and distribution, book publishing, and an expanding presence on the internet including Myspace. It should be a no brainer to see the opportunity to maximize the return on all of that content across the empire.
At the same time, Kevin Rudd’s announcement of a new superfast National Broadband Network has prompted many to observe that online streaming of both audio and video will begin to challenge the existence of traditional television and radio broadcasting. It should be obvious that as the technology of the internet improves, and the ability of portable devices to access it expands it is only a matter of time before traditional broadcasting services could be made obsolete and irrelevant. The day is rapidly approaching when reliable always on wireless broadband will be commonly available in the dashboard of every car, and when that happens radio as we know it could well disappear.
Of course, that doesn’t have to be the case. Just because the platform is changing doesn’t necessarily mean that the radio experience has to be lost. The crucial thing is to see it as a process, not as a piece of equipment. Radio itself has embraced the challenges of a changing landscape over the years and has survived the onslaught of television, the introduction of FM broadcasting, and now the rapid expansion of the internet. Right now, radio is gearing up for digital broadcasting, even though there is still some debate about whether or not the internet will one day make it obsolete. Ironically, that brings us to the point. Either way, the program is going to be digital. The important thing is that technology always changes, and it doesn’t matter how people listen to what we call radio; what matters is the content.
This means two things. First, there will always be a niche for local broadcasting to provide the kind of local content that simply isn’t of interest to a national or international audience. There will always be a need for local news, local sport, local weather, and local community information to be disseminated and local radio remains a great way to achieve that, notwithstanding the current tendencies of big companies to rely on networking and syndicated programs. The day will come when even such local programming is online rather than on the air, but remember it’s not the platform that matters, only the content.
The second thing is the opportunity for non local programming, or what might be described as global programming. As the internet grows and matures into a fully fledged digital media platform, the opportunity will open up for individuals to access virtually any programming from anywhere at anytime. In such an environment, the quality of the content becomes increasingly important. In addition to that, the convergence of media, much discussed for many years, really will become inevitable.
Already there are radio station websites which look like newspaper sites; there are newspaper sites that play streaming video reports; there are television network websites which operate as portals into millions of online classified advertisements. Fairfax, the oldest and most traditional newspaper empire in Australia operates a digital newspaper in Brisbane which exists only on the internet and is never printed on actual paper. In all of the big media companies content which is created for the traditional media will find its way onto the internet, but it is also happening the other way around where content which was generated for the internet is now finding its way onto the traditional media.
For any media organization, whether it is a giant like News Corporation, or a small network of radio stations, the key to ongoing success in a constantly changing environment has to be the creation and management of content. It will be the quality of the content which attracts and keeps an audience, and therefore advertisers, not the platform on which it is delivered. The funny thing is that, when you think about it, that has always been the case. It’s just that sometimes the people running the show forget this because they get carried away with flashy new technology. They are distracted by the medium and they miss the message.
In the end, if the content is not relevant to the audience, whether it is old media or new, people will switch it off.
News Corporation has today announced a new unit within its organization which will facilitate the sharing of content and resources between the company’s many arms. Much more than a stable of major newspapers such as The Wall Street Journal, The Times of London, and of course the Australian, News Corporation includes television production and broadcasting, movie production and distribution, book publishing, and an expanding presence on the internet including Myspace. It should be a no brainer to see the opportunity to maximize the return on all of that content across the empire.
At the same time, Kevin Rudd’s announcement of a new superfast National Broadband Network has prompted many to observe that online streaming of both audio and video will begin to challenge the existence of traditional television and radio broadcasting. It should be obvious that as the technology of the internet improves, and the ability of portable devices to access it expands it is only a matter of time before traditional broadcasting services could be made obsolete and irrelevant. The day is rapidly approaching when reliable always on wireless broadband will be commonly available in the dashboard of every car, and when that happens radio as we know it could well disappear.
Of course, that doesn’t have to be the case. Just because the platform is changing doesn’t necessarily mean that the radio experience has to be lost. The crucial thing is to see it as a process, not as a piece of equipment. Radio itself has embraced the challenges of a changing landscape over the years and has survived the onslaught of television, the introduction of FM broadcasting, and now the rapid expansion of the internet. Right now, radio is gearing up for digital broadcasting, even though there is still some debate about whether or not the internet will one day make it obsolete. Ironically, that brings us to the point. Either way, the program is going to be digital. The important thing is that technology always changes, and it doesn’t matter how people listen to what we call radio; what matters is the content.
This means two things. First, there will always be a niche for local broadcasting to provide the kind of local content that simply isn’t of interest to a national or international audience. There will always be a need for local news, local sport, local weather, and local community information to be disseminated and local radio remains a great way to achieve that, notwithstanding the current tendencies of big companies to rely on networking and syndicated programs. The day will come when even such local programming is online rather than on the air, but remember it’s not the platform that matters, only the content.
The second thing is the opportunity for non local programming, or what might be described as global programming. As the internet grows and matures into a fully fledged digital media platform, the opportunity will open up for individuals to access virtually any programming from anywhere at anytime. In such an environment, the quality of the content becomes increasingly important. In addition to that, the convergence of media, much discussed for many years, really will become inevitable.
Already there are radio station websites which look like newspaper sites; there are newspaper sites that play streaming video reports; there are television network websites which operate as portals into millions of online classified advertisements. Fairfax, the oldest and most traditional newspaper empire in Australia operates a digital newspaper in Brisbane which exists only on the internet and is never printed on actual paper. In all of the big media companies content which is created for the traditional media will find its way onto the internet, but it is also happening the other way around where content which was generated for the internet is now finding its way onto the traditional media.
For any media organization, whether it is a giant like News Corporation, or a small network of radio stations, the key to ongoing success in a constantly changing environment has to be the creation and management of content. It will be the quality of the content which attracts and keeps an audience, and therefore advertisers, not the platform on which it is delivered. The funny thing is that, when you think about it, that has always been the case. It’s just that sometimes the people running the show forget this because they get carried away with flashy new technology. They are distracted by the medium and they miss the message.
In the end, if the content is not relevant to the audience, whether it is old media or new, people will switch it off.
Tuesday, April 14, 2009
Stealing From The Poor And Giving To The Rich
EDITORIAL TUESDAY 14.04.09.
If you are looking for a good little business to keep you afloat during this Global Economic Downturn you might just be in luck. A great little cash flow business has just come onto the market, and it could be just the ticket to see you through the tough times. Yes, if you have the upfront cash you could be the lucky bidder to take over running New South Wales Lotteries for the next thirty years, and enjoy a return of around $50 million a year, with unlimited opportunity for future growth. Even better, you can pick all this up for just half a billion dollars, a massive saving on the $800 million that was discussed a few short years ago.
Right now, it would seem that the New South Wales government is desperate to sell just about everything because it is so short of cash. Items up fro grabs include the electricity retailers, a couple of prisons, school playgrounds and various buses and ferries. While there can be sensible and compelling reasons for governments to sell various assets and enterprises, the bottom line here is that the government has mismanaged its way into a position where it is flogging off the farm to pay the bills. Instead of reinvesting the proceeds into capital works, a big chunk of it is set to be used to pay the wages of police and nurses. The problem of course is that they will still need to be paid next year and there won’t be anything left to sell.
New South Wales Lotteries in particular is not an appropriate target for privatization for a long list of reasons. Firstly, it’s just a bad deal. Aside from the fact that selling now while the financial markets are weak guarantees that the price achieved will be considerably less than it otherwise would have been, there is the simple fact that the dividend it provides to the government is a better return on investment than almost anything else that the government could do with the money. It is the proverbial license to print money, so who in their right mind would give that away at a bargain basement price?
Secondly, the purchase of a lottery ticket can be viewed by the individual as a sort of voluntary tax. Yes, you might win something back again, but even if you don’t you know that the money is going towards paying for hospitals and schools, highways and railways. Once the lotteries office is sold to a private operator, such as perhaps Jamie Packer, every lotto ticket you buy is making him richer at your expense. Yes, the government will still collect the gaming taxes, but why sell the goose that lays the golden eggs, even if you put a tax on the eggs? Why not keep the goose and invest the golden eggs into the services that the community should be entitled to expect?
Thirdly, any private operator will expect, and be entitled to expect, the opportunity to expand and grow the business in order to maximize the return on investment. There’s nothing wrong with that except for one little thing. This is not a business in the normal sense of producing a product or service which fills an economic need. It is a gambling operation, and the only way to expand or grow the business is to entice more people to gamble, whether they can afford to or not. It is not socially responsible for a government to be handing over even more gambling operations to the private sector. The reality is that many gambling operations are already in private hands, but the sale of New South Wales Lotteries will only add to the proliferation of gambling which carries proven and significant social costs.
While it is within the government’s prerogative to allow private operators to run gambling outlets, such activities are heavily regulated. Such regulation inevitably means that the fortunate few in a position to command a license become the beneficiaries of gambling, at the expense of the rest of the community. While I am not suggesting that gambling should be unregulated, such an arrangement only serves the interests of the elite, rather than the interests of the people of New South Wales.
Selling the lottery office is quite simply stealing from the poor and giving to the rich.
If you are looking for a good little business to keep you afloat during this Global Economic Downturn you might just be in luck. A great little cash flow business has just come onto the market, and it could be just the ticket to see you through the tough times. Yes, if you have the upfront cash you could be the lucky bidder to take over running New South Wales Lotteries for the next thirty years, and enjoy a return of around $50 million a year, with unlimited opportunity for future growth. Even better, you can pick all this up for just half a billion dollars, a massive saving on the $800 million that was discussed a few short years ago.
Right now, it would seem that the New South Wales government is desperate to sell just about everything because it is so short of cash. Items up fro grabs include the electricity retailers, a couple of prisons, school playgrounds and various buses and ferries. While there can be sensible and compelling reasons for governments to sell various assets and enterprises, the bottom line here is that the government has mismanaged its way into a position where it is flogging off the farm to pay the bills. Instead of reinvesting the proceeds into capital works, a big chunk of it is set to be used to pay the wages of police and nurses. The problem of course is that they will still need to be paid next year and there won’t be anything left to sell.
New South Wales Lotteries in particular is not an appropriate target for privatization for a long list of reasons. Firstly, it’s just a bad deal. Aside from the fact that selling now while the financial markets are weak guarantees that the price achieved will be considerably less than it otherwise would have been, there is the simple fact that the dividend it provides to the government is a better return on investment than almost anything else that the government could do with the money. It is the proverbial license to print money, so who in their right mind would give that away at a bargain basement price?
Secondly, the purchase of a lottery ticket can be viewed by the individual as a sort of voluntary tax. Yes, you might win something back again, but even if you don’t you know that the money is going towards paying for hospitals and schools, highways and railways. Once the lotteries office is sold to a private operator, such as perhaps Jamie Packer, every lotto ticket you buy is making him richer at your expense. Yes, the government will still collect the gaming taxes, but why sell the goose that lays the golden eggs, even if you put a tax on the eggs? Why not keep the goose and invest the golden eggs into the services that the community should be entitled to expect?
Thirdly, any private operator will expect, and be entitled to expect, the opportunity to expand and grow the business in order to maximize the return on investment. There’s nothing wrong with that except for one little thing. This is not a business in the normal sense of producing a product or service which fills an economic need. It is a gambling operation, and the only way to expand or grow the business is to entice more people to gamble, whether they can afford to or not. It is not socially responsible for a government to be handing over even more gambling operations to the private sector. The reality is that many gambling operations are already in private hands, but the sale of New South Wales Lotteries will only add to the proliferation of gambling which carries proven and significant social costs.
While it is within the government’s prerogative to allow private operators to run gambling outlets, such activities are heavily regulated. Such regulation inevitably means that the fortunate few in a position to command a license become the beneficiaries of gambling, at the expense of the rest of the community. While I am not suggesting that gambling should be unregulated, such an arrangement only serves the interests of the elite, rather than the interests of the people of New South Wales.
Selling the lottery office is quite simply stealing from the poor and giving to the rich.
Thursday, April 9, 2009
The Christian Thing To Do
EDITORIAL THURSDAY 09.04.09.
The decision by an unnamed bureaucrat to remove the cross and the bible and all religious paraphernalia from the chapel at the Royal North Shore hospital has been described as political correctness gone mad. In fact, it’s worse than that. It is offensive and insulting and bigoted and only adds to the vilification of religious minorities who inevitably suffer the backlash from such ill considered decisions. Nobody gains anything from the intellectually bankrupt and morally perverse depiction of any religious faith as offensive.
Such a decision is insulting to everyone. It is insulting to Christians who are told that they cannot be permitted to display the symbols of their faith for fear of offending somebody else, while efforts to accommodate other faiths mean that all of us witness daily the symbols of minority faiths in public places. Somehow the majority faith has been turned into something that has to be hidden away, while at the same time members of that faith are instructed to be tolerant of all others. It is hypocrisy, and it is insulting.
It is also insulting to the Muslims, the Jews, the Buddhists, the Hindus, the Hare Krishnas, The Shaolins, and even the atheists who are not in the least bit offended that Christians might wish to display Christian symbols. Worse than being insulting, the claim that Christian symbols must be hidden away because it offends non-Christians only serves to incite resentment against people who were not offended in the first place. The innocent get the blame for idiotic decisions made by people who possibly don’t even have a firm grasp on religious concepts anyway. Certainly it’s clear they don’t have a grasp on basic common sense.
The truly ridiculous thing is that many people of other faiths cannot understand why supposed Christians are not more active in displaying the signs of their faith. They cannot understand why Christians act is if they are embarrassed about who they are or what they believe in. Many of them even realize, quite rightly, that if the right to be openly Christian is gradually undermined then it is only a matter of time before the right to be openly displaying any other faith will also come under attack.
The Chapel in question at the Royal North Shore Hospital is used as a multi-denominational place of reflection and worship. There is nothing wrong with that. There is nothing wrong with displaying the symbols of a number of different faiths, but to display none seems to rob it of any kind of significance or sense of purpose. It is a fact of life that our community is shared by people from a variety of faiths, and a public amenity such as a Chapel at a hospital will be too.
That means all who share that space must accept and tolerate each others’ differences, which ultimately mean very little in the light that most of them are there for very similar reasons in the first place. Muslim or Christian, Hindu or Jew, they are all there because somebody they care for is sick or dying and they are seeking a place of spiritual comfort. That is something we all share, and that is why a place such as this should not be made sterile and meaningless. It should instead be filled with care and compassion and love for each other. Oddly enough, that would be the Christian thing to do.
The decision by an unnamed bureaucrat to remove the cross and the bible and all religious paraphernalia from the chapel at the Royal North Shore hospital has been described as political correctness gone mad. In fact, it’s worse than that. It is offensive and insulting and bigoted and only adds to the vilification of religious minorities who inevitably suffer the backlash from such ill considered decisions. Nobody gains anything from the intellectually bankrupt and morally perverse depiction of any religious faith as offensive.
Such a decision is insulting to everyone. It is insulting to Christians who are told that they cannot be permitted to display the symbols of their faith for fear of offending somebody else, while efforts to accommodate other faiths mean that all of us witness daily the symbols of minority faiths in public places. Somehow the majority faith has been turned into something that has to be hidden away, while at the same time members of that faith are instructed to be tolerant of all others. It is hypocrisy, and it is insulting.
It is also insulting to the Muslims, the Jews, the Buddhists, the Hindus, the Hare Krishnas, The Shaolins, and even the atheists who are not in the least bit offended that Christians might wish to display Christian symbols. Worse than being insulting, the claim that Christian symbols must be hidden away because it offends non-Christians only serves to incite resentment against people who were not offended in the first place. The innocent get the blame for idiotic decisions made by people who possibly don’t even have a firm grasp on religious concepts anyway. Certainly it’s clear they don’t have a grasp on basic common sense.
The truly ridiculous thing is that many people of other faiths cannot understand why supposed Christians are not more active in displaying the signs of their faith. They cannot understand why Christians act is if they are embarrassed about who they are or what they believe in. Many of them even realize, quite rightly, that if the right to be openly Christian is gradually undermined then it is only a matter of time before the right to be openly displaying any other faith will also come under attack.
The Chapel in question at the Royal North Shore Hospital is used as a multi-denominational place of reflection and worship. There is nothing wrong with that. There is nothing wrong with displaying the symbols of a number of different faiths, but to display none seems to rob it of any kind of significance or sense of purpose. It is a fact of life that our community is shared by people from a variety of faiths, and a public amenity such as a Chapel at a hospital will be too.
That means all who share that space must accept and tolerate each others’ differences, which ultimately mean very little in the light that most of them are there for very similar reasons in the first place. Muslim or Christian, Hindu or Jew, they are all there because somebody they care for is sick or dying and they are seeking a place of spiritual comfort. That is something we all share, and that is why a place such as this should not be made sterile and meaningless. It should instead be filled with care and compassion and love for each other. Oddly enough, that would be the Christian thing to do.
Wednesday, April 8, 2009
Banks Are Squeezing Every Last Drop Out Of Interest Rates
EDITORIAL WEDNESDAY 08.04.09.
Yesterday’s decision by the Reserve Bank of Australia to cut official interest rates by 0.25% was immediately welcomed by the big banks with a massive round of doing pretty much nothing. Some passed on a small portion of the reduction, while others passed on none at all, keeping the entire rate cut for themselves. The banks argue that despite the official rate coming down, the actual cost of funds to them is still high because of international conditions. While that is true, our banks continue to be among the most stable and profitable in the world and are in a position to pass on at least a fair share of the saving. But that’s only part of the story.
While much of the focus is on mortgage rates, and of course they are an important indicator for the economy, the impact on business lending is being overlooked. Banks have been reluctant to pass on interest rate cuts to business borrowers, and indeed have actually re-rated business loans for increased risk due to the economic contraction. The conundrum there of course is that by charging businesses more for finance they actually contribute to increasing the risk that those businesses may become no longer viable.
Looking at the big picture, failure to facilitate business lending actually contributes to making the economic climate worse, and if credit dries up enough it could get to the point where banks themselves begin to suffer. While that might sound like poetic justice, it would further contribute to the damage to the economy. The truth is that our banks remain sound, and that is at least in part thanks to the government guarantee of bank deposits. For that reason, as well as for the benefit of the broader economy, banks have a responsibility to maintain the supply of credit to working businesses in general, and to do so at rates of interest which will help those businesses to remain afloat.
There is also another lending sector which is being completely ignored when it comes to interest rate relief. Credit cards. Some credit card customers are paying more than 20% per annum for their credit card balances at a time when the official cash rate is now 3%. If that’s not highway robbery, I don’t know what is. Admittedly there are lenders including the big banks who do offer cheaper credit card rates at around 11% or 12%, but you have to wonder why they are allowed to get away with charging some of the higher rates that are still being imposed.
Credit card interest rates are also important to the economy because higher rates undermine consumer spending power at a time when policy makers want to encourage consumers to start spending and thus kick start the economy. Banks claim that credit cards are unsecured debt and therefore represent a higher risk, and that’s true, but much of the risk management hangs on how the banks decide to whom to issue cards in the first place and what conditions, limits and restrictions to impose. The reality is that the banks are still using credit cards as a magic money machine, and if the credit risk really was that high we would have already seen many more people actually defaulting on their cards.
While we can be thankful that our banks are sound and profitable, meaning that they are in a position to help keep the economy moving, it would be nice if those banks were themselves more thankful to the people who helped to make them so profitable in the first place: their customers.
Yesterday’s decision by the Reserve Bank of Australia to cut official interest rates by 0.25% was immediately welcomed by the big banks with a massive round of doing pretty much nothing. Some passed on a small portion of the reduction, while others passed on none at all, keeping the entire rate cut for themselves. The banks argue that despite the official rate coming down, the actual cost of funds to them is still high because of international conditions. While that is true, our banks continue to be among the most stable and profitable in the world and are in a position to pass on at least a fair share of the saving. But that’s only part of the story.
While much of the focus is on mortgage rates, and of course they are an important indicator for the economy, the impact on business lending is being overlooked. Banks have been reluctant to pass on interest rate cuts to business borrowers, and indeed have actually re-rated business loans for increased risk due to the economic contraction. The conundrum there of course is that by charging businesses more for finance they actually contribute to increasing the risk that those businesses may become no longer viable.
Looking at the big picture, failure to facilitate business lending actually contributes to making the economic climate worse, and if credit dries up enough it could get to the point where banks themselves begin to suffer. While that might sound like poetic justice, it would further contribute to the damage to the economy. The truth is that our banks remain sound, and that is at least in part thanks to the government guarantee of bank deposits. For that reason, as well as for the benefit of the broader economy, banks have a responsibility to maintain the supply of credit to working businesses in general, and to do so at rates of interest which will help those businesses to remain afloat.
There is also another lending sector which is being completely ignored when it comes to interest rate relief. Credit cards. Some credit card customers are paying more than 20% per annum for their credit card balances at a time when the official cash rate is now 3%. If that’s not highway robbery, I don’t know what is. Admittedly there are lenders including the big banks who do offer cheaper credit card rates at around 11% or 12%, but you have to wonder why they are allowed to get away with charging some of the higher rates that are still being imposed.
Credit card interest rates are also important to the economy because higher rates undermine consumer spending power at a time when policy makers want to encourage consumers to start spending and thus kick start the economy. Banks claim that credit cards are unsecured debt and therefore represent a higher risk, and that’s true, but much of the risk management hangs on how the banks decide to whom to issue cards in the first place and what conditions, limits and restrictions to impose. The reality is that the banks are still using credit cards as a magic money machine, and if the credit risk really was that high we would have already seen many more people actually defaulting on their cards.
While we can be thankful that our banks are sound and profitable, meaning that they are in a position to help keep the economy moving, it would be nice if those banks were themselves more thankful to the people who helped to make them so profitable in the first place: their customers.
Tuesday, April 7, 2009
Welcome To The 21st Century
EDITORIAL TUESDAY 070409
Welcome to the 21st Century. Not just the gritty reality of a world struggling with the unforeseen Global Financial Crisis, with a New Age multi ethnic United States President, and the threat of nuclear armed rogue states such as Iran and North Korea, but the 21st Century we were all promised by years of watching Star Trek and reading Arthur C. Clarke books. The brave new world of instant communications thanks to a technological revolution providing new opportunities for new and unprecedented wealth. That’s the 21st Century we’ve all been waiting for, and it has just been delivered.
The Federal Government tender process for the construction of a Broadband network was already in danger of going off the rails after Telstra essentially shot itself in the foot when the personal battle between Sol Trujillo and the Government resulted in that company being dumped form the process. Now, the whole thing is academic because the Government has decided to throw the whole process out and build the network itself. More importantly, the new network will be superior to the specifications previously laid down in the tender process, literally paving the way for a whole new telecommunications landscape.
Despite the observation by one of the tenderers that this decision is unfair because they had proposed a bid based on the specifications previously given rather than those that the government has now decided upon, the outcome delivers a positive result for almost everyone, including Telstra. That’s because the door is now open for Telstra to participate in the process rather than remain completely frozen out. At the same time, the new plan achieves a radical restructuring of the whole sector, over the next decade, which might have been impossible to achieve any other way.
One of the outcomes is that when the new network is established, Telstra will no longer have a near monopoly on network infrastructure. In effect it achieves the separation of the retail and wholesale arms of Telstra without ripping the company apart. While there are no guarantees for Telstra, the fact is that this arrangement presents opportunities, a fact which appears to be reflected by the immediate jump in the Telstra share price after the announcement. Telstra shares climbed about 3% after the news, on a day when the rest of the market has been falling.
More importantly, the commitment to construct a fibre optic network which reaches all the way to the customer, instead of just to the exchange, or the street corner, means that 21st Century communications will finally be delivered to 90% of Australians. While the home consumer will enjoy immense benefits from the vast improvement, business stands to reap great gains from access to the kind of communications capabilities that were pure science fiction just a few decades ago.
The plan has been described as the most significant nation building infrastructure program since the Sydney Harbour Bridge and the Snowy Hydro Electric Scheme combined, and even that might be an understatement. $43 Billion will be invested over eight years, creating 37 000 jobs. The initial $4.7 billion dollars will come from the Building Australia Fund, money which is already in the bank, so it does not come out of the budget bottom line. Other funds will be raised by the issue of bonds which will ultimately be financed from the returns generated by the infrastructure itself, while up to 49% of the capital will come from the private sector. When the network is completed, the 51% held by the government will then also be privatized. This is not simply expenditure, this is wealth creation.
Welcome to the 21st Century. Not just the gritty reality of a world struggling with the unforeseen Global Financial Crisis, with a New Age multi ethnic United States President, and the threat of nuclear armed rogue states such as Iran and North Korea, but the 21st Century we were all promised by years of watching Star Trek and reading Arthur C. Clarke books. The brave new world of instant communications thanks to a technological revolution providing new opportunities for new and unprecedented wealth. That’s the 21st Century we’ve all been waiting for, and it has just been delivered.
The Federal Government tender process for the construction of a Broadband network was already in danger of going off the rails after Telstra essentially shot itself in the foot when the personal battle between Sol Trujillo and the Government resulted in that company being dumped form the process. Now, the whole thing is academic because the Government has decided to throw the whole process out and build the network itself. More importantly, the new network will be superior to the specifications previously laid down in the tender process, literally paving the way for a whole new telecommunications landscape.
Despite the observation by one of the tenderers that this decision is unfair because they had proposed a bid based on the specifications previously given rather than those that the government has now decided upon, the outcome delivers a positive result for almost everyone, including Telstra. That’s because the door is now open for Telstra to participate in the process rather than remain completely frozen out. At the same time, the new plan achieves a radical restructuring of the whole sector, over the next decade, which might have been impossible to achieve any other way.
One of the outcomes is that when the new network is established, Telstra will no longer have a near monopoly on network infrastructure. In effect it achieves the separation of the retail and wholesale arms of Telstra without ripping the company apart. While there are no guarantees for Telstra, the fact is that this arrangement presents opportunities, a fact which appears to be reflected by the immediate jump in the Telstra share price after the announcement. Telstra shares climbed about 3% after the news, on a day when the rest of the market has been falling.
More importantly, the commitment to construct a fibre optic network which reaches all the way to the customer, instead of just to the exchange, or the street corner, means that 21st Century communications will finally be delivered to 90% of Australians. While the home consumer will enjoy immense benefits from the vast improvement, business stands to reap great gains from access to the kind of communications capabilities that were pure science fiction just a few decades ago.
The plan has been described as the most significant nation building infrastructure program since the Sydney Harbour Bridge and the Snowy Hydro Electric Scheme combined, and even that might be an understatement. $43 Billion will be invested over eight years, creating 37 000 jobs. The initial $4.7 billion dollars will come from the Building Australia Fund, money which is already in the bank, so it does not come out of the budget bottom line. Other funds will be raised by the issue of bonds which will ultimately be financed from the returns generated by the infrastructure itself, while up to 49% of the capital will come from the private sector. When the network is completed, the 51% held by the government will then also be privatized. This is not simply expenditure, this is wealth creation.
Monday, April 6, 2009
A Penny Saved Is A Penny Earned
EDITORIAL MONDAY 06.04.09.
Following last week’s high court decision to allow the Federal Government to give taxpayers their own money back, cheques for up to $900 are now being delivered to their intended recipients. Much to the relief of those battlers who had already decided just what they would be doing with the money, the challenge by University Of New England Law expert Bryan Pape failed to convince the High Court to stop the payments. Now, the plans that people may have made can go ahead, whether it may have been for updating household appliances, taking a holiday, or even buying a big screen TV.
Of course, there will be some people who decide not to spend the money. Some will decide that the sensible thing to do is to reduce their debt, or to simply tuck the money away in their savings. Judging from the experience of the first round of stimulus spending last December, perhaps as many as half of the recipients might be tempted to save it rather than spend it. Given that the whole reason for handing out the money in the first place is to dump cash into the economy, some will undoubtedly see this as counterproductive. The question is, if the money isn’t spent, how does it help the economy or sustain jobs?
That is precisely the criticism which has been leveled by the opposition, who have labeled the cash hand out as wasteful and reckless, suggesting that it won’t do anything to save jobs. The Shadow Treasurer Joe Hockey has even gone so far as to indicate that should there be further such measures in the forthcoming Federal Budget the opposition may vote against them. While consistent with the opposition’s recent stance against what it depicts as profligacy, this is a politically driven position which ignores some fundamental realities.
First and foremost, if the Australian taxpayers who are receiving a refund of their own money in this current round of stimulus spending should choose to save the money rather than spend it, then good for them. Each Australian should be able to best decide for themselves what is the best use of their money. Some will indeed spend it, and that will help retailers and other businesses to benefit from the cash. But those who choose to save it are also doing the right thing. Each individual should make that decision based on his or her own circumstances, and for many people, putting the money aside or paying off some debt will make more sense than spending it.
The good news is that this is still good for the economy, no matter what Joe Hockey or anybody else says. Economic strength depends on many things, and one of them is good national savings, something that Australians haven’t been especially good at. But when it comes to the bug picture, any contribution to boosting savings and reducing debt is good for the nation’s overall balance sheet. It provides stability and security and brings closer the future time when people will feel more confident about spending.
We generally believe we are a wealthy nation, and it’s true. Thanks mainly to a plethora of minerals and other natural resources, we have enjoyed the benefits of wealth without having to recognize that the real seed of all wealth and prosperity is in retained earnings which are in turn reinvested in productive activity. Saving some or all of the bonus money increases wealth in the economy, as well as adds to the lending reserves of the banks where it is invested. Saving the money may mean there is less immediate benefit to the retail economy, but it is still good for the economy.
Ironically, even if every recipient went out and spent the bonus money, much of it will still wind up in savings somewhere. If I buy a digital TV, I might spend the whole $900. But the shop which sold me the TV will bank a profit from that sale, thus adding to the savings of the business. The salesman who sold me the item will spend some of his commission on his groceries, but if he is a prudent manager of his own financial affairs he will bank a portion of it into his savings. The shareholders in the company which owns the TV shop will bank their dividends. The grocer who sold the food to the TV salesman will bank his profits… and so on. At every point, as the money changes hands over and over again through the system, the prudent people will take a portion of it and put it aside into their savings. It is the sensible thing to do, and it is the seed of all wealth.
So whether you decide to spend or save your bonus money, rest assured, you are still doing your bit for the economy. The important thing is that you also do the right thing for your own finances.
Following last week’s high court decision to allow the Federal Government to give taxpayers their own money back, cheques for up to $900 are now being delivered to their intended recipients. Much to the relief of those battlers who had already decided just what they would be doing with the money, the challenge by University Of New England Law expert Bryan Pape failed to convince the High Court to stop the payments. Now, the plans that people may have made can go ahead, whether it may have been for updating household appliances, taking a holiday, or even buying a big screen TV.
Of course, there will be some people who decide not to spend the money. Some will decide that the sensible thing to do is to reduce their debt, or to simply tuck the money away in their savings. Judging from the experience of the first round of stimulus spending last December, perhaps as many as half of the recipients might be tempted to save it rather than spend it. Given that the whole reason for handing out the money in the first place is to dump cash into the economy, some will undoubtedly see this as counterproductive. The question is, if the money isn’t spent, how does it help the economy or sustain jobs?
That is precisely the criticism which has been leveled by the opposition, who have labeled the cash hand out as wasteful and reckless, suggesting that it won’t do anything to save jobs. The Shadow Treasurer Joe Hockey has even gone so far as to indicate that should there be further such measures in the forthcoming Federal Budget the opposition may vote against them. While consistent with the opposition’s recent stance against what it depicts as profligacy, this is a politically driven position which ignores some fundamental realities.
First and foremost, if the Australian taxpayers who are receiving a refund of their own money in this current round of stimulus spending should choose to save the money rather than spend it, then good for them. Each Australian should be able to best decide for themselves what is the best use of their money. Some will indeed spend it, and that will help retailers and other businesses to benefit from the cash. But those who choose to save it are also doing the right thing. Each individual should make that decision based on his or her own circumstances, and for many people, putting the money aside or paying off some debt will make more sense than spending it.
The good news is that this is still good for the economy, no matter what Joe Hockey or anybody else says. Economic strength depends on many things, and one of them is good national savings, something that Australians haven’t been especially good at. But when it comes to the bug picture, any contribution to boosting savings and reducing debt is good for the nation’s overall balance sheet. It provides stability and security and brings closer the future time when people will feel more confident about spending.
We generally believe we are a wealthy nation, and it’s true. Thanks mainly to a plethora of minerals and other natural resources, we have enjoyed the benefits of wealth without having to recognize that the real seed of all wealth and prosperity is in retained earnings which are in turn reinvested in productive activity. Saving some or all of the bonus money increases wealth in the economy, as well as adds to the lending reserves of the banks where it is invested. Saving the money may mean there is less immediate benefit to the retail economy, but it is still good for the economy.
Ironically, even if every recipient went out and spent the bonus money, much of it will still wind up in savings somewhere. If I buy a digital TV, I might spend the whole $900. But the shop which sold me the TV will bank a profit from that sale, thus adding to the savings of the business. The salesman who sold me the item will spend some of his commission on his groceries, but if he is a prudent manager of his own financial affairs he will bank a portion of it into his savings. The shareholders in the company which owns the TV shop will bank their dividends. The grocer who sold the food to the TV salesman will bank his profits… and so on. At every point, as the money changes hands over and over again through the system, the prudent people will take a portion of it and put it aside into their savings. It is the sensible thing to do, and it is the seed of all wealth.
So whether you decide to spend or save your bonus money, rest assured, you are still doing your bit for the economy. The important thing is that you also do the right thing for your own finances.
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