Bits of Destruction

While DBCDE has ended its DE blog, and started its more formal consultation, there are signs that they still underestimate the magnitude of the question "what is the digital economy?"

Their discussion paper starts with an objective that;

The Australian Government is seeking to increase the effective use of networked information and communication technologies (ICTs), especially the internet, by consumers and all businesses to drive higher productivity growth and community participation in the digital economy.

In my own discussions I've tried to suggest that the issues of the DE are far greater than this. It is not just about driving greater use of online transactions but recognising the wider impacts that these have on economic and social structures. The British MP Tom Watson included a link to this venture capitalist blog post under the heading Bits of Destruction. The post started;

The news is full of stories this year end about the impending bankruptcies of retailers, newspapers, auto manufacturers, banks, and a host of other businesses that have been the mainstay of corporate america for the past 100 years or more.

Clearly the economic downturn is the direct cause of most of these failures but I believe it is the straw that broke the camel's back in most cases. The internet, now closing in on 15 years old in its mainstream incarnation as the world wide web, is in many cases the underlying cause of these business failures.

He goes on to list the obvious areas impacted, retail banking, retail shopping, news and entertainment media. But even he misses the big one - that the whole fanciful structures of securitised debt, and then securitised risk (credit default swaps) instruments are as much products of the internet as they are of the "quants" that were hired to Wall Street. You can't create, market and manage these products without electronic settlement systems. But it is the facility of these systems that means the instruments could become so abstract and so divorced from the underlying asset (in the bulk of the cases houses).

Hopefully I will be able to include more of this in a more formal submission.

My Escape

The instructions with an Esteelle suacepan say if overheating occurs leave the pan where it is to cool. I know because I just had to buy a new one and read them.

The longer versuion of the story is that yesterday I put a little water on to boil to steam some asparagus. I then came in to do some e-mails etc. I forgot about the saucepan till I smelt a strange metallic smell.

Sure enough the saucepan had boiled dry. I turned off the heat and thought I'd just leave it where it was. Then (stupidly) I thought I'd check how hot it might be (whether I could cool it down by putting cold water in it.

So I tilted the pan towards me to have a ook. Suddenly molten metal is pouring TOWARDS me. Thankfully (and remarkably) it splashed on the side of the stove and scattered across the kitchen everywhere but on my (or my legs or my feet - I had shorts on and no shoes).

The explanation was it was the solder that attaches the copper base to the stainless steel saucepan - so it had been pouring from the bottom of the saucepan. The stove cleaned up Ok but the floor has burn marks all over it as have some of the cupboard plinths. It is the second kitchen I've damaged like that (the first was burning oil).

Punchline

I was just watching the telecast of the cricket from Melbourne and they showed three dudes in the crowd dressed as Batman, Spiderman and Superman. This suggests there should be a joke available along the lines of...

Superman, Spiderman and Batman went to the cricket. Each of them planned to catch a ball in the outer. After half a day nothing had been hit in their direction. Eventually a ball is hit vaguely in their direction ... Superman jumps the fence, runs catches the ball and runs back to his seat. As he runs faster than a speeding bullet no one saw anything other than the ball taking a really strange flight over the boundary.

The next ball is hit away from them. Spiderman sends out his web, sticks to the ball and pulls it towards him. Once again the crowd just see a ball take an unusual path.

Next ball Spiderman and Superman look expectantly at Batman.

Any ideas on what he does?

To my readers

To my small but loyal band of readers, I'd like to wish you all a Merry Christmas. Let us hope that the Christmas message of love and peace is not drowned out by sermons on satan.

There ought to be a law

Is a familiar refrain, one I respond to regularly by pointing out that laws alone aren't enough.

There are, of course, other laws like the laws of physics or economics. Then there are the funny laws.

Anyhow I tumbled onto this list under the heading of this post when helping with a crossword.

As an aside, the crossword had already used Murphy's Law and Gresham's Law in clues, and then asked simply "Cole's Law?" (7,3,6,5). The answer I got as a variation of the one in the linked list is simply "cabbage and carrot salad."

Socialism and all that

The Fabian Society held a forum in Sydney earlier this year titled "What happened to the Left?" For some reason nothing about it appears on the Fabian website but here is one informative blog about it.

Rodney Cavalier's speech has been subsequently published in his Southern Highland Branch Newsletter, a fact that was referred to in one of Alan Ramsey's last columns for the SMH. This article concluded with a neat summation of the Cavalier thesis, "What Happened To The Left? It Died", an essay on the end of pretence by the Left that any shred of socialist ideology remains in its character.

Basically Cavalier's point is that there are no socialists anymore because no one believes in the "socialisation of industry, production, distribution and exchange" anymore. It is an interesting point, but to explore it let's look at the full phrasing from the ALP Objectives.

The Australian Labor Party is a democratic socialist party and has the objective of the democratic socialisation of industry, production, distribution and exchange, to the extent necessary to eliminate exploitation and other anti-social features in these fields.

The question really is what does "socialisation" mean. The Free Dictionary provides three definitions.
1. socialisation - the action of establishing on a socialist basis; "the socialization of medical services"
2. socialisation - the act of meeting for social purposes; "there was too much socialization with the enlisted men"
3. socialisation - the adoption of the behavior patterns of the surrounding culture; "the socialization of children to the norms of their culture"

Clearly Cavalier is interpretting the word under its first definition - while being silent on whether the socialist objective necessitates ownership by Government or by co-operatives or collectives.

What is possible though is that the phrase could be interpretted as being about the third definition, that "socialisation" simply requires driving industry etc to "adopt the behaviour patterns of society" and hence include all the attributes of moral persons. This outcome can be achieved with different policy levers, not the least of which is to ensure that companis understand they exist to serve the needs of all stakeholders, not just investors.

That conversation is for another day. But if the meaning implied by the ALP objective was the "socioal ownership of ..." rather than the "scialisation of ..." one wonders why they didn't just say it.

Strange Bed Fellows

It is fascinating to see how people line up in the whole NBN story.

Australia's last remaining old style socialist, Kenneth Davidson, wrote in The Age

If Telstra's fixed network monopoly had been maintained so that its economic rents had been retained instead of distributed to its competitors via arbitrage, the introduction of fibre to the node would probably now have been connected to up to 80 per cent of network customers.

Of course, Davidson's position is that the monopoly should have remained in public ownership. The main Telstra union, the CEPU, has been simultaneously engaged in an industrial dispute and in the defence of their employer's market power.

Perfectly logical really, as historically monopoly rents aren't returned to shareholders but dispersed across a whole coalition of supporters of the monopoly. However, when management repeatedly claim that the only reason the company exists is to create shareholder value, you might think the union would adopt a different strategy.

Back to Davidson. He is on the point that the cross subsidisation of access lines from call charges was how the network was built and that the recognition that the marginal cost of a call was close to zero resulted in "arbitrage dressed up as competition". Apart from the error i thinking that arbitrage is by definition "wrong" (it is after all what every retailer does), this creates the error of assuming that the network effect from new connections is infinite, and also ignores the signficant endowment effect.

While there are not many people connected to a network, creaing low price access and higher priced call charges is a good way to grow subscribers - as the benefit to other subscribers from the new connection is priced into the calls they will make. However, the more people that are already connected the less the marginal benefit to existing users.

In addition, an endowment effect operates. The price a consumer will pay to continue to rent a phone line is higher than the price they will pay to acquire one in the first place. Once the phone becomes something everyone has experienced there is no longer an economic case for the subsidy.

In any case the historical analysis is technically wrong. When the Federal PMG was created it charged users a flat rate for connection and did not charge for any calls made within the exchange area. The flat rate varied depending on the size of the exchange.

Davidson's conclusion is apparently simple;

Does Conroy seriously want to put the Commonwealth in danger of a multibillion-dollar compensation claim from Telstra shareholders when the alternative is to abort the tender or let it run its course and admit that there is no practical, economic alternative to letting Telstra continue upgrading the network? All the Government has to do then is change the regulatory structure to put adequate return on capital for new investment ahead of the present ersatz competition requirements and let Telstra get on with the job without cost to the taxpayer.

This is a strange calls for a private monopoly. Presumably despite the professed concern about the possible need for compensation, Davidson would follow-up with re-nationalisation.

Meanwhile Telstra has said pursuing legal action against the Rudd Government for kicking it out of the NBN tender is not a priority, though the telco has not ruled it out.

Nothing quite like a good threat, beats action any day.

It is a rank not a score.

Under the headline It's a record: 23 HSC students hit 100 the SMH on the weekend confused the UAI with a score.

The UAI is a rank - the candidates are all ordered (actually they apply a notional rank to the population old enough to sit the HSC who don't) and given their rank in the UAI. There is basically the same number on each index point. If the total population increases (as it has) the total awarded a UAI of 100 will increase.

These students did not get "perfect" scores, they got the "best" scores - which is an equally great achievement. And they are a group of students who surely know the difference between a rank and a score.

A mixed bag

A really mixed bag of political news from which I wish to extract a theme.

First was the PM being asked to comment on the video released of a drunk Andrew O'Keefe. The PM responded "No one is perfect and most people stuff up". Which is a really good answer.

What made it particularly interesting was that he was asked the question while launcing policy on the homeless, and thus was standing by Tanya Plibersek. Her husband is the head of the NSW Education Department over whom so much noise was made when it was discovered that he is a former heroin addict.

Oh, if only more people could be so realistic. It is not as if O'Keefe engaged in any physical violence while drunk.

Meanwhile Malcolm Farr thinks Malcolm Turnbull will be in a good position over climate change. Farr's analysis seems to be that the Government will need to negotiate with the Liberals as they won't come up with an outcome that the Greens will support. Firstly, this is fanciful because in the end Bob Brown knows the ETS will be stronger if the Government reaches a deal with the Greens tha the Coalition - and Brown can make thunderous speeches in support of any legislation that condemn it. Secondly, it is hard to imagine any leader of the Opposition actually revelling in the idea that they have been reduced to the position of "balance of power" party.

Talking of revelling, we discover that the PM and the leader of the opposition will Christmas in Sydney, while both their deputies will holiday in Adelaide (where they both come from). What else do we learn from this amazing revelation of Christmas plans? Well, that pollies like to spend their Christmas much the same as the rest of it. Next year expect the headline Research shows politicians are people too.

Meanwhile the member of the coalition most pumped by the moderates as their hope for the future, Christopher Pyne, has chocolate on his mind. I must admit I've never seen the potential in Pyne that some have, but this is a thoughtful piece. He is higlighting th plight of child slaves in Africa, many of whom harvest cocoa for chocolate. He deals with the vexed problem that just deciding not to eat chocolare does more harm than good because you dry up national economies. His suggestion is a selective boycott by the Australian Government in its chocolate purchases.

"What chocolate purchases?" you might ask. Well, he means the chocolate in vending machines across the buildings occupied by public servants. There is only one flaw with this - the Government doesn't buy that chocolate/ Vending machines are usually run by small businesses that "place" them, and in many organisations the machine belongs to the staff club.

Does anyone have a better idea we can offer to Mr Pyne?

Senator Conroy

Part of the fall out from the Telstra exclusion from the NBN process has been the whole question of what happens next, and to whom.

Following Senator Conroy's media release where he said "Telstra's Board will have to explain to its shareholders why it has decided to sideline itself" there has been a lot of attention to the question of where the accountability lies. Usually the kinds of share price declines don't go unpunished by shareholders.

In today's SMH Matt O'Sullivan has asked a few fund managers there views. It looks like they agree with the Minister, one (drawing on card and snooker metaphors)saying "They overplayed their hand...they miscued badly ... and they are going to suffer the consequences."

However there have also been those trying to suggest that Senator Conroy will also be under pressure, but these stories as far as I can see are all sourced from inside Telstra (though some have come from the CEPU who bizarrely thinks Telstra is their friend). This would be the view I guess if you were like Telstra and believed the only people who could build the network are Telstra, so having Telstra not in the field must mean Conroy screwed up.

This is really interesting. Telstra has convinced many with their "only Telstra has the funds, the vendors and the skills" story. The reality of course is that there are multiple vendors out there and Telstra outsources most of its engineering build work these daya. The funds one is the fun one. Firstly, it is an admission by Telstra that they are the only ones mking a profit - which sounds like an admission of market power. But the rumoured disagreement between the CEO and Board over whether to lodge a bid was apparently due to the CEO being concerned about the wisdom of committing cash i the current climate - though we do suspect he spends more time in the US than here and does confuse the two economies (and political environments).

What's the rest of the substance? Well Conroy has been coming under sustained attack over recent days over the internet filtering plans. The SMH had another item this morning, this time about the reactions online to filtering.

I have my own view that the filtering storm is a bit like the tabacco industry fury over advertising and its encroachment on freedom. I think the industry itself has a lot to answer for in its persistent determination to claim no responsibility.

In other areas of the portfolio there seems to be real progress on Digital Switchover, which could never be said under Alston, Williams or Coonan. There also seems to be both a process and a prospect for decent funding of the public broadcasters.

Those who want to believe that Conroy is under pressure want to ask themselves two questions. The first is whether there is anyone in the Ministry who would want the job or that the PM would want in the job. The second is that there seems to be no other compelling reason for change. As Bernard Keane noted in Crikey One year into the Howard Government and there were already a half-dozen ministerial corpses. That Rudd’s ministry has entirely avoided scandal of any kind in its first year is testimony not to luck, and not merely to Rudd’s control freak nature, but to his knowledge of the pitfalls of new governments.

Meanwhile it is interesting that only a week ago the SMH published a feature on Conroy as the Minister for the Future. Even the current runctions in the Victoria right are unlikely to cause any sleepless nights when Conroy holidays on the NSW South Coast.

For the graphic alone

For the graphic alone today's CBD in the SMH is worth a look.

Telstra hits back

The big news of this week has been Telstra's exclusion from the NBN process. For students of "public affairs" (or corporate spin) this has led today to two stories that make interesting reading.

First some context. Telstra decided not to submit a full bid for the NBN but instead made a "proposal". Their reason for not bidding were based on the Government's refusal to rule out structural separation and supposedly the risk that the information in the bid could have facilitated the Government in instituting that separation.

Interestingly the proposal made great play about the national security qualifications of their equipment supplier, saying;

As part of the merger between Alcatel and Lucent Technologies, Alcatel-Lucent entered into a National Security Agreement with the United States Government to protect the security of many of its products and services. This unique arrangement provides Alcatel-Lucent's customers with confidence in its equipment for securing information and protecting networks and users, including law enforcement and national security purposes.

When Telstra was excluded from the NBN the CEO conducted a conference call with analysts. Twice in that conference call he referred to Telstra's ability to deliver broadband using wireless. The Minister in his press conference later in the day was asked about this claim and indicated he didn't take it seriously as the Telstra 3G network can't sustain the speeds or volume.

So there you have it, Telstra's attempt to differentiate itself on security concerns and Telstra's need to build credibility in its wireless capability.

And so we come to today's media. The front page of The Australian screams Chinese spy fears on broadband frontrunner that claims that the Government has security concerns about Huawei, a possible vendor to Optus. Meanwhile an industry news-sheet called Communications Day (subscription required) led with the headline Telstra launches international search for LTE engineers.

So there you see the wonders of the PR machine. Tweak up the security risk, build the credibility in the threat.

Only the strategy still suffers from some weaknesses. Firstly they need more than engineers to build LTE - they need some spectrum to deploy it in. And as for security someone needs to tell these guys that Australia isn't the USA. In fact the last foreign country to use its miltary to sink something in our vicinity was the - you remember - the FRENCH who sank the Rainbow Warrior in New Zealand. Alcatel, of course, is a French company.

Avenue Q - and the filter

OK OK folks. I know this will be old news for some of you. But every day I hear one of these new comments about filtering I keep thinking of the song from Avenue Q. The show is opening in Melbourne in June so presumably Senator Conroy will see it then - if he hasn't already on an overseas trip.

Here we go.

Avenue Q - The Internet is for Porn
Uploaded by slzaza

Telco news

Embroiled as I still am in some telco matters I thought I might just share some information.

Firstly a great little article about the LTE vs WiMAX discussions. Worth a read for anyone who believes the LTE hype.

Next up an article about Mobile Number Portability implementation in India. What I find interesting is that we implemented MNP in Australia in 2000 with what I believe to be still a world's best implementation. While we complain about our telco regulators maybe we should also recognise how well we have done on some fronts.

The next is a new internet map that shows the data flows over the internet around the globe. The equivalent map on submarine cables is often made into a corporate give away - maybe a great idea for this too.

And finally an article that makes it clear that operational separation doesn't make all those pesky regulatory issues go away. But that's a discussion for another day.

Network effects and Government information

I mentioned the new Digital Economy blog. I also referred to the blog tracking it by Verity Pravda.

This lady has been very busy posting to the DE site as well. In a post today she notes the need for the Trade Practices Act to reflect the consequence of "network economies" (by which I guess she means "network effects").

In a speech I gave in February I referred to a consultancy that the then DCITA commissioned on the policy issues of next generation networks. I know one of the authors and he told me that he was stunned at how little departmental officers seemed to understand about the sigificance of network effects.

Thinking of that report in this context intrigued me because that report has not been released - which is interesting in the light of the inclusion of a topic of public access to Government information in the DE blog.

10 Worst Predictions of 2008

Thanks to Tom Watson MP for the link to this list.

Never have truer words been spoken ...

Stephen Conroy appeared on The 7:30 Report last night. In it he included this memorable exchange;

HEATHER EWART: Are you prepared for legal challenges from Telstra?

STEPHEN CONROY: [Laughs] Look we've been prepared for legal challenges since the beginning of this process from all sides. There have been threats of legal challenges, complaints about the process from all of the major players involved in this sector. This is par for the course in this sector.

I said yesterday that this exclusion of Telstra just demonstrates that the processes that this sector is normally engaged in are completely out of control. We have a situation where the sector can't cooperate, it can't have a discussion, it can't reach a common position.

Seldom have truer words been spoken (ignoring the philosophical question of whether there can be degrees of truth). There are some who would claim that "the processes [the] sector is normally engaged in" are "completely out of control" because of the continued distorted market structure. There are others who would argue that it has been the consequence of Government policy, in particular the distorted role the Commonwealth had for so long as a regulator and vendor. There are still others who would like to blame just the personalities involved, from the CEOs to the "spin-meisters" (like me I guess).

If you want more evidence just look at the column in today's SMH by Paul Fletcher, who was formerly the regulatory head at Optus. It isn't so much the content of the article, which is a fairly measured assessment of the ways Telstra has gone about Government engagement, but the proposed title of his forthcoming book "Wired Brown Land? Telstra's Battle For Broadband".

Having heard Fletcher on the topic I anticipate this book will be full of ascriptions of motives to Telstra of various actions over time rather than the a historical anlysis. It will be interesting to see how he deals with the way Telstra approached ULL pricng, because Fletcher fully appreciated the outcome. I have been somewhat more distraught about the outcome, I think a higher ULL price is apprpriate. But I think it was Telstra who missed the opportunities the regime presented to lock in a higher price.

The kind of unedifying slanging match can also been seen in my review (in the TJA (subscription required) of the Henry Ergas book Wrong Number.

Some like CommsAlliance CEO Anne Hurley believe the industry can rise above this , as she wrote in an Obamaesque way in Communications Day;

Can our industry heal its wounds and accept that we have a broad social responsibility to move forward and harness our best technology for Australia’s broadband future by cooperation and collaboration? Yes we can!!

The Minister clearly believes we are the nation's dysfunctional child. I tend to agree.

The Digital Economy

When I was unsuccessful in getting selected to the 2020 summit at the start of the year I posted about the experience of nominating for a committee that wound up never existing.

Ever since then I've threatened to write a paper titled (as a play on the Bill Clinton slogan) It's D. Economy, Stupid. I'll get to it eventually.

When I do I'll have the ability to include the "wisdom"(?) coming forward from the Department of Broadband, Communications and the Digital Economy "blog" that is being used to consult on the DE.

I won't repeat here the number of criicisms that have been made of it. Nor do I want to belabour the point that they should have guessed they'd be swamped with posts on filtering (I'm reliably informed that there is a page coming on the topic - though personally I think that should have been a different blog).

It is interesting that some luminaries have graced the blog comments, the CEO of Telecom New Zealand Paul Reynolds dropped in as did Carolyn Dalton the regulatory and policy dude for Google. (I'd link to their posts if I could find them - it is not easy to find comments on the blog). More recently I see that Laurel Papworth, who is a wow at all the on-line communities stuff, has engaged.

The blog is getting some coverage from other blogs. Andrew Bartlett has made some comments. He has also identified that there is a blog that has been blog tracking the discussion.

I encourage my small but loyal readership t have a look. So far the topics covered have been DE definition, use of government information and most recently the appropriate regulatory framework.

Unfortunately as a piece of consultation it looks very much like an ordinary consultation/discussion paper has just been cut into bite sized chunks for distribution. If the folks who've tried to scream the Government down on filtering could just get out of the way a bit some discussion might flow.

We live in hope.

Colless on NSW

It has been great recently to read the writings of Malcolm Colless in NSW politics.

He had a point well made in criticising the current leadership of Barry O'Farrell.

Peter Debnam lost the last election because his only campaign theme was to cut public servants. I am increasingly frustrated by seeing the Opposition spokespeople on transport and health simply pop up on TV and say "shame" but I have yet to hear anything convincing about why the coalition would be different, let alone better. After all this is still the Liberal party which believes in small government which means less services.

More recently Malcolm Colless has attacked the "jobs for the boys" culture in NSW Labor. The article only dwells on the intention to recreate Agents-General positions, but the rot is great. Its apothesis is the appointment of John Robertson as an MLC, a ludicrous decision, but it runs deep in the public service. The most recent is the appointment of thenew Director-General of the Premiers Department.

The other nice thing about reading Malcolm is that somewhat unique feature of the media where journalists like Malcolm (formerly Canberra press gallery) move to management (Northern Daily Leader, HWT, Strategy and Government Relations) and then resurface as columnists. If only more occupations wer so flexible.

Train station conversation

If you live in the State of NSW you have been subject to some screaming headlines about the current Government over recent days and its mini-budget.

But it is interesting to note the most common stoic public response to this - as reflected in conversations on the train this morning. Large sections of the public think the solution is to get rid of State Government as an institution, not just change the set of currently elected politicians.

Today Tony Abbott has made his suggestion, change section 51 of the constitution. While his focus has been more on places where Federal?state co-operation is required - his suggestion does create a pathway that could lead to the eventual abolition of the States, as a central Government with the ability to make laws about anything eventually would.

The idea has merit, but we shouldn't fool ourselves into believing it solves much. As the early experience of Federation showed, and the 1910 Royal Commission into the Postal Service demonstrated, migration to a centralised model is hard.

And the issue of the need for "co-operation" doesn't go away, it just changes. Even if there is only one level of Government the co-ordination of the training of sufficient doctors and nurses with the availability of hospital beds, and the managing of the balance between hospital beds, rehabilitation beds and aged care facilities is a dfficult undertaking. But at least the proposal would reduce the ability to undertake the "blame game."

However more of the issues require us to think harder about the procedures and methods of co-ordination, and the ways incentives are constructed that can result in sub-optimal outcomes. If you remunerate a salesman just on how many units he sells and manufacturing on how low the per unit cost can be you can wing up selling al red widgets and making all blue. The same co-ordination issues occur everywhere, but our systems rarely deal with the need for the co-ordination to occur.

Internet Filtering

Antony Loewenstein writing in The Age on 10 November accused the Rudd Government of hypocrisy over its internet filtering plans. The accusation was based on the PM's earlier criticism of Chinese political filtering of the internet to journalists.

Unfortunately the Rudd Government's policy is being widely misrepresented. Ultimately the Government is trying to find a way to apply the same kind of classification system that applies to printed material, films and DVDs. It is partially hamstrung by the fact that the Howard Government lumped refused classification and varies restricted classification materials together in the definition of prohibited content in the Broadcasting Services Act. This means the scare mongers can rightly indicate that any plan would cover all this material, though the desire is really to stop access to the refused classification material.

Loewenstein refers to the clip on ZDnet below, which is worth a look. I must admit that I don't quite understand how the CEOs presented here have decided that their decision about what content might or might not be appropriate is more important than that of an elected Government.



The important thing to understand is that the "filtering" trial is not dynamic filtering that would examine the content of a site, it is about restricting access to known sites. The Government is also not naive to suggest that the filter stops everything, just as the ban on importing RC DVDs doesn't mean that one might not be posted to Australia in the guise of a classified film or even a data file. But the fact that can occur is no reason not to have the import ban.

This is a very sad case of the way a debate can be hijacked by sophistry. It is a little like the monarchists who successfully argued that the people should not be asked whether they wanted a republic and then having forced the republicans to choose one, the monarchists attacked the model (the politicians' republic) not the concept.

It would be nice to see the critics first agree that the Government is right in deciding that Australians should not be able to navigate through their browser to RC material. After we have that agrement we might get on to figure out how it could happen.

Optus Speak

Anyone familiar with Don Watson's excellent little book Death Sentence will know that he has particular ire for the language employed in marketing speak, and he uses a number of examples from Optus.

One particularl gripe is the use of the word "upgrade". It is disappointing to see that the folk at Optus haven't read the book. I unasmadely quote from today's Communications Day.

Optus cuts off MMS notification service
Optus is set to cut off a service which notifies customers with older handsets that they have been sent an MMS. Set to be culled within days, the change means that users who send MMS messages to users with non-MMS phones will still be charged for sending – even though the designated recipient will never receive anything or be alerted of the message.
According to an Optus spokesperson, “upgrades” to its messaging system have resulted in the MMS alert system being culled. “Optus recently upgraded its MMS/SMS system to improve the customer experience. Enhancements include image quality and adjustment. As part of that upgrade, Optus customers with a non MMS capable handset or whose handset is not configured to receive MMS will no longer receive an SMS advising them when they have been sent an MMS and will no longer be able to view or retrieve the MMS via the Optus Zoo website,” the spokesperson said.
Optus will advise customers of change this week. “The sender of the message will still be charged,” the company said. “This is consistent with the Optus Standard Form of Agreement as Optus does not guarantee successful delivery of MMS or SMS.”

Memo to Optus marketing; for a change to be an upgrade no user should experience a lesser outcome than they did before!

Prayers and Politics

The question of the appropriateness of The Lord's Prayer for the opening of Parliament has been raised again. New Federal MP Rob Oakeshott wants recognition of aborigines while the Australian Federation of Islamic Councils has suggested something more inclusive. The Islamic spokesman in fact said "I have no problem with a Christian prayer -- any prayer is better than no prayer at all".

This reminds me of a debate that was conducted at Ryde City Council some years ago. At that Council one of the local Ministers of Religion is invited to open each meeting with a prayer, and the issue was raised over whether the remit should be wider than just Christians and include Muslim prayers. This was before 2001 but I recall that my thoughts then were that any faith should be welcome so long as the relevant preacher could demonstrate that he/she had preached in favour of religous tolerance in their own place of worship recently. Many of the Christian Ministers may have struggled on this one.

In the Federal parliament the issue is over the choice of prayer rather than the choice of preacher. I am here mindful of the approach of the international Credit Union movement that has historically opened all meetings with the Prayer of Saint Francis of Assisi (or the Peace Prayer of St Francis) which reads;

Lord, make me an instrument of your peace.
Where there is hatred, let me sow love;
where there is injury,pardon;
where there is doubt, faith;
where there is despair, hope;
where there is darkness, light;
and where there is sadness, joy.

O Divine Master, grant that I may not so much seek
to be consoled as to console;
to be understood as to understand;
to be loved as to love.
For it is in giving that we receive;
it is in pardoning that we are pardoned;
and it is in dying that we are born to eternal life. Amen

I for one would be very happy if our parliamentarians were to start their daily deliberations with this invocation - and then act accordingly.

PS Evidently the prayer is not the work of St Francis, but dates from World War I.

The last Hurrah!

The Ryde by-election on Saturday is probably the last hurrah for the party that Gordon Barton started.

I know popular mythology is that Don Chipp started the Australian Democrats, but the reality was that Don Chipp was the long sought after "high profile" candidate that galvanised the Australia Party and SA's Liberal Reform Movement into a viable force.

On Saturday the Democrats candidate Peter Goldfinch scored 1.7% of the vote. This should be contrasted with the 11.6% to the Greens. While as usual the Democrats struggled to mount a campaign, this is an election in the kind of environment that might suit "third party insurance" campaigns - Labor is imploding but there is nothing about Barry O'Farrell's team that inspires confidence.

Meanwhile up on the North Coast an independent held Port Macquarie, showing there is still capacity for the electorate to look beyond the major parties.

As is on the public record I joined the Democrats late in the piece and contested the 2007 State election in Epping. I also encouraged Peter Goldfinch to run in Ryde - if ever the Democrats could have found a bounce this was it. My interest in the Democrats position began back in the early 70s when I broke away from my parents support of the conservatives and found a first home in the liberal and libertarian Australia Party. Much of the Democrats platform and almost all their rules had its genesis in the Australia Party of that era.

My own political journey took me into the ALP twice, leaving the first time because of a lack of time to contribute and the second time because (biazrrely) I had read Graeme Freudenberg's history of the ALP. The lesson I learnt in the Freudenberg book was that the ALP had never changed fundamentally from the inside, only from outside. The piece the Liberals keep hating about Labor, its strong union links, are becoming the ALPs biggest weakness, as the party selects its "stars" from a small gene pool of full-time politicians with limited additional experience to draw upon (the excellent Fabians lecture by Rodney Cavalier on Could Chifley win Labor preselection today made this point well.) The institutionalised factions are as much a problem - because the factions are no longer means of contending philosophical positions but separate patronage pools.

The other bizarre part of the NSW by-elections is the extent to which they play out as contests between management teams not political philosophies. Who can run the hospitals better, rather than why public health care is an equity issue. The Liberals campaign theme was "Start the Change" - but to what?

This results in the experience of general elections being the selection of a electoral college to choose the Premier and little else. Out of this the occassional independent thrusts through - picking up the despair of the citizenry about the hollowness of organised politics.

So where to for the great democratic experiment of the Australia Party/Australian Democrats? The short answer would appear to be that they should adopt a position as a political society rather than a political party. A place to promote discussion and at times support candidates, but not to try to wear the mantle of party. By being a non-party the society can better criticise parties. By being a non-party they can advocate real reforms like an elected executive President that therefore creates a meaningful legislature.

Peter Goldfinch has served the Democrats well, hopefully his greatest service will be in delivering the message - 'The party is over".

Delusions of the unsuccessful job seeker

Wow. Janet Albrechtsen does take the cake. Today she writes a perfectly reasonable piece about banks and politicians, and points out the irony of the ALP supporting the private banks while the Turnbull/Bishop show was trying to promote a run (or so it seamed).

But she "had to go and spoil it it all by saying something stupid like" the story she gives about her interview with the SMH. She says that the interview went icy after she commented that the then commentary on banks was one-sided. In this shejoins that horde of unsuccessful job applicants (of which I have recently been one) in deciding their lack of success is all about the hirer not about them.

We don't know if the job was as a lawyer or as a journalist. But my feeling is that either way Fairfax dodged that bullet well.

This is a first!

I want today to agree with the comments of both Gerard Henderson and Janet Albrechtsen - and that is a first! They are both right in pointing out that there has been a Government policy dimension to the crisis in the US, that being the policy promoting home ownership through non-recourse loans increasingly made to people unable to pay, but fuelled by ever increasing asset prices.

They could have added, however, that the latter part of this was promote by the central banker from hell - Alan Greenspan - who kept US interest rates low through two booms. This not only created the asset price inflation that made house lending look like a risk free bet (so what if the owner can't pay the loan - the house is always worth more) but has left the US without anywhere to go on interest rates to stimulate the economy.

I am, however, not as sanguine as they are about the suggestion that because we can find this fault we can therefore deflect all criticism from the process of deregulation and the overall embrace of market capitalism, what Joseph Stiglitz has called "that grab-bag of ideas based on the fundamentalist notion that markets are self-correcting, allocate resources efficiently and serve the public interest well."

In part this is because of the three crises identified by Scott Birchill under the heading Capitalism in Crisis. These are a crisis in confidence, systemic crisis and a legitimation crisis. As an example we should consider the mark to market rules that result in asset bubbles being systemically moved through the whole financial system. Similarly we should question the role of institutions like the credit ratings agencies that rated the securities that created the crisis.

AFP - Global Police?

I feel incredibly sorry for the Lapthorne family over the "disappearance" of Britt in Croatia. But Mr Lapthorne is quoted in The Age as saying he had been reassured by his briefing with the detective, but he remained disappointed with the Australian Federal Police. "All I've heard from their officer is PR," he said."


I fail to understand what role the AFP is supposed to play in this case, I don't think they have jurisdiction in Croatia.

The same comment can apply to the criticism that journalists were able to interview "persons of interest" in Portugal that Croatian police hadn't. Does anyone know the difference between a news interview and a police interview? The latter to be of any use in a subsequent prosecution will need to be conducted within the framework of the law.

The current expectation of global citizens about the reach of their home nation's lgal system smacks of the "extraterritorial" rights that the British and other Europeans claimed for their nationals in China in the nineteenth century. That didn't end well!

Vale Phil Burgess

My former colleague Dr Phil Burgess (in the sense that everyone in telco public policy is a colleague)has been busy talking and writing as he prepares to leave our fair shores. This has included an article in the SMH and a speech at the Lowy Institute.

I thought it was appropriate for someone to write a valedictory. It was too long just to include here, so you'll have to follow the link.

I conclude with "Phil I think will understand if I say (in the Australian vernacular and the Fullbright sense) “Mate, you are a great Australian patriot, but you’ve been wrong about a few things.” To understand that you'll need to read the item and listen to the Lowy speech.

Poor Kevin

Glen Milne reports criticism of Kevin Rudd that he is too much of a micro-manager, while Phillip Coorey reports complaints that the Ruddbot shouldn't be travelling to New York "when the work is mounting up at home".

The latter includes the delightful criticism that Kevin in 10 months will have met UN Secretary-General Ban Ki-moon three times and SA Senator Nick Xenophon not at all. Bizarre really - Ban Ki-moon represents all 205 or so countries in the UN, Xenophon represents about 14% (a quota) of the citizens of South Australia who are also represented by a host of Labor Senators, Penny ong among them. Plus Nick has actually been a Senator for under three months. And really the PMs message to the opposition and cross benches at tis stage should be "bring it on" - it is the PM who would be suited by a double dissolution.

As for the Milne piece, I'm trying to figure out how he has a report about a meeting carried out under what he (incorrectly) calls "Chatham House rules". There is only one rule. That, for the record, is;

"When a meeting, or part thereof, is held under the Chatham House Rule, participants are free to use the information received, but neither the identity nor the affiliation of the speaker(s), nor that of any other participant, may be revealed".

Get it right.

Strange Silence

The Senate Select Committee on the NBN has published the submissions received by the closing date (which had been extended).

The list is noteworthy for the absence of Telstra amongst the submitters. Is this because they feel they don't need to as they are in "the box seat", because they decided that to submit to an opposition committee might raise the Minister's disapproval or because they still can't really figure out their own strategy on the NBN bid.

Telstra will spin it as a version of one or two, but I wouldn't be really surprised if it is number three.

Telstra's difficulty remains that they have a position of not wanting any money from the Government but probably can't make the commitment on the 98% build on their own.

A very tricky dilemma.

What is a big share of the "innovation system"

The Government has received its report on innovation from Terry Cutler and his committee. I haven't waded through it yet - but note that no hard copies of the report are available only the online version, and the Criky story with the Cutler comment on copyright.

This blog post is about the interview Dr Cutler gave on Lateline Business. In the interview he said "First of all, focus on your strengths. I mean, Australia is a small economy in global terms; we're roughly two per cent of the world's innovation system."

I'm assuming Dr Cutler thinkks that one's share of the global economy is the same as one's share of the "global innovation system". For this he uses the 2% number most commonly used. However if you use World Bank numbers the figure and go to two decimal points the number is 1.51% (on a table revised on 10 September 2008).

While that sounds small, when you realise there are some 200 countries it makes us three times the size of an "average" economy. By rank we are the fifteenth largest economy on the planet - ahead of Sweden on 19(Ericsson, Volvo, Saab), Denmark at 27 (Lego), and Finland on 32 (Nokia).

The reality is that Australia faces another disadvantage compared to these economies in being more remote from sizeable markets. However our biggest disadvantage remains our ability to be fat dumb and happy on the back of resource endowments.

What we don't need is people writing innovation reports perpetuating the myyth that this is a small economy.

Grocery Review

The ACCC review of grocery prices came in for mixed reviews. In fact Frank Zumbo gave it a bollocking in a piece he wrote and as quotes in another.

I have only just got around to getting a copy of the report and the skim reading disappoints me. There are so many ways. But most importantly it is the complete failure to deal with industry structure in a meaningful way. Two small examples:

The report disparages the idea of greater transparency in pricing in the supply chain as it creates the opportunity for implicit collusion or explicit cartelisation. This ignores the power of information assymetry to entrench market power and ignores the fact that the best remedy against collusion is industry structure without a small number of large players.

The second is the extent to which the report treats speciality stores as competitors to supermarkets, as if the authors have never read about so called "imperfect competition" or monopolistic competition built around no-price differentiation.

But by far the worst is that the ACCC has now concluded a grocery and a petrol enquiry and hasn't discussed the "shop a docket" fuel voucher system. So let me explain how that works to increase prices.

Assume I need to buy $100 worth of groceries and $100 worth of petrol a week. ($100 worth means that much assuming the goods are priced at cost - i.e. competitively). When I go to buy my groceries I know they will give me a voucher for a 4% petrol discount. So I'm prepared to pay $103 for my groceries because I'll still be a dollar in front.

Having bought my groceries I'm prepared to pay $103 for the petrol because I'm a dollar in front on my purchase over buying petrol at cost elsewhere. Therefore the "discount" entices me to pay $206 less my $4 discount thus spending $2 more than if I'd purchased at cost.

Each decision of the consumer is rational. Unfortunately most cases of product bundling result in this kind of outcome. Bundling does not benefit the consumer, it benefits the firm with sufficient market power in one or ideally both firms to induce customers to pay too much.

By the way - ending shopper dockets is entirely within the power of the ACCC.

National Consumer Law and Mobile Phones

This is a tale from the Australian Financial Review so I can't do it with links. So I need to simply quote.

AFR 16 August David Crowe
Customers will gain new rights to quit unfair contracts with businesses ranging from fitness centres to phone companies under an agreement between Canberra and the states for a single consumer protection law to apply nationwide....

Minter Ellison partner Richard Murphy said the concept of what was unfair remained "woolly" but it was a major step forward to have a single national law. He cautioned, however, that companies not operating in Victoria would have to review their contracts to ensure they complied with the new regime.

In Victoria, for example, AAPT was found to have used unfair contracts because its terms allowed it to vary phone charges without notice, apply reconnection fees for any reason, charge customers for suspended services and end a service unilaterally....

AFR Letters 20 August David Havyatt
In the item on proposed changes to consumer protection laws you note that AAPT was prosecuted in Victoria for unfair contracts (“National laws to protect customers” AFR 16 Aug). While this is factually correct the manner of its reporting is misleading.

While AAPT’s contracts were found to have unfair terms, in the judgment it was noted that the terms had never been used and no compensation or restitution was due to any customer. Nor was AAPT required to make any changes to its contracts as they had been fully revised by the time the judgment was made.

In fact Consumer Affairs Victoria was fully aware that AAPT was in the process of changing its contracts when they commenced the litigation in December 2004, and was fully apprised of progress the week following the action being brought. AAPT, along with all other telcos at the time, had been dealing with the need to comply with the Victorian legislation and to meet requirements being introduced through an industry code.

Uniform consumer protection laws will be welcome by all in industry. However, this should not come at the expense of incorporating poorly designed legislative provisions such as the Victorian unfair contract provisions.

AFR Letters 21 August David Cousins
David Havyatt's [letter of 20 August] complains about "misleading reporting" of the AAPT case and then puts his own nique spin on that case.

He suggests the judge found "no compensation or restitution was due to any customer" when Consumer Affairs Victoria did not seek such relief. I was director of CAV and initiated the action against AAPT.

The public interest declaratory and injunctive relief sought by CAV was not granted only because AAPT had included, in the changes to its consumer contracts (that were prompted by the CAV action and still did not come into effect until four months after the proceedings were started), a provision that applied the new terms and conditions retrospectively.

The critical fact is the judge found that many of the terms of AAPT's contracts, as identified by CAV, were unfair terms and, therefore, void. Rather than being poorly designed as suggested, the law was shown to be effective.

After refusing to deal with the regulator, AAPT recognised finally the writing was on the wall about its unfair contract terms and chose to fix the problem with retrospective effect. As far as the industry code is concerned, it was made to conform with Victorian law only after CAV had intervened in the code development process.

The Victorian unfair contract terms law has been designed to ensure a minimum appropriate stanard of commercial conduct for the protection of Victorian consumers and businesses.

Effective unfair contract terms provisions are essential for Australia's national consumer law.

AFR Letters 25 August David Havyatt
While your original article on the prosecution of AAPT for unfair contracts was misleading, David Cousins’ [letter of21 August] contains simple untruths.

The most specific of these is his claim that the changes in AAPT’s contracts “were prompted by the CAV action” and that AAPT “recognised the writing was on the wall…and chose to fix the problem.” The facts of the matter were that AAPT was already in the process of making these changes, a fact that CAV was aware of before initiating the action and was reminded of on the day they informed us (and the media) of the action.

He engages in his own sophistry by suggesting that the basis for there being no compensation or restitution was due to CAV not seeking such relief. My recollection is that CAV did not seek the relief because there were no customers for whom they could seek relief as none of the clauses had been used.

Victorians might like to contemplate whether they got value for money from a prosecution that ultimately had no impact on telecommunications contracts. They might also like to contemplate whether the attitude of the Victorian Government in pursuing the pointless prosecution had any impact on AAPT’s decision to relocate its call centre from Bendigo to Sydney.

Summary and other points
For reasons of space the second AFR letter was shorter than I first submitted. That included the following points.

Cousins provides as a reason why AAPT was singled out for the prosecution rather than one of the other providers of mobile services who had similar contracts at the time, his assertion that AAPT refused to deal with the regulator. The facts were that the telecommunications industry at that time had already instituted a guideline on contracts, and all operators including AAPT were in the process of revising contracts and had adopted a practice of not using any contract terms outside the guideline. The industry regulator, the Australian Communications Authority, required the industry to strengthen the guideline to a code, so AAPT paused the implementation of new contracts pending the finalisation of the code.

It was in the middle of this process that CAV approached AAPT about its contracts, and AAPT advised the process we were going through and that it was wasteful to duplicate the process. To ensure the message wasn’t misunderstood I visited the Chief of Staff of CAV’s Minister John Lenders to explain the AAPT position a week after replying to CAV (I was unable to see Lenders himself because of probity issues in relation to TPAMS).

When CAV launched its action in December it was Minister Lenders who issued a press release to trumpet the prosecution of the “giant phone company AAPT”. At the time AAPT had 2% market share, and CAV did not prosecute the other mobile providers with the same contract terms.

Throughout the process of CAV trying to make a case of the telecommunications industry they refused to meet with the industry through its industry ssociation or collectively. After commencing its litigation CAV refused to meet with AAPT with a view to terminating the proceedings.

Finally it is worth noting that the recommendation of the Productivity Commission on unfair contract terms was for a version that would only see prsecutions brought in cases where customers had suffered detrimental outcomes from the unfair terms. The CAV action against AAPT would not have been brought in these circumstances.

Henderson and the "Culture Wars"

Gerard Henderson has written an epitaph for John Howard, "Despite the views of some left-wing commentators, Howard did not get to the front line in the culture wars, let alone win a medal."

His basis for making an assertion of defeat for Howard is the suggestion that Howard failed in his "expressed aim" to reform the ABC. The question for me is why Henderson fails to really question whether it really was a Howard aim, and if it was whether it can ever succeed. Howard appointed his own Chair (twice)and a number of Board members. There were two selections of CEO (Shiers and Scott), and still "no change".

Could it perhaps be that the issue lies with the charter and not with the staff? The charter has as its objective the provision of programs that "contribute to a sense of national identity and inform and entertain, and reflecting the cultural diversity of, the Australian community". But the ABC is also required to "take account of the broadcasting services provided by the commercial and public sectors".

That is, the ABC is not required to achieve the diversity of broadcasting within itself, but to provide diversity in the whole sector - that is including what is broadcast commercially. In that context it is not unsurprising that the ABC contribution is slightly left leaning given that the remainder is slightly right leaning.

Maybe Henderson would like to suggest a different charter?

Postscript. Former ABC director Ron Brunton has written a piece for Henderson's Sydney Institute Quarterly that has been reported on in the SMH. It is an interesting spray that in the coverage alleges that board members couldn't acvhieve much against the ingrained culture of the staff and their lying or "spinning" information for the Board.

It is an incredible claim. At its core it is Brunton admitting that Howard appointed Board members not up to the task, that is they couldn't do what Boards do - set direction, measure performance.

A more charitable interpretation though is the one above. To change the ABC you don't need to change the Board you need to change the charter. But to what?

What is a "European-style metro" system

Commentary on rail options in Sydney continue to mention a preference for a "European-style metro system".

I want to know what kind of rail system this is meant to be describing. Typically rail is described as "light" (like trams - think the light rail to Glebe)or "heavy" (which incorporates all the rest of the passenger and freight rail networks). Fundamental differences relate to the number of carriages, the kind of inclines they can handle and the frequency of service.

As far as I can tell the proponents of "metro" are really talking about the same thing as Asians would call a "rapid transit" system. Its features are, typically;
1. Carriages designed mostly for standing not sitting.
2. Carriages with lots of doorways for speedy exit and entry - some systems use one side of the train for boarding and the other for alighting.
3. Very frequent trains.

Sounds awfully like the early rail carriages I was still riding as a school boy with four doors per carriage. Then some idiot decided to deal with the congestion problem at city stations by building double deck trains - which are idiotic beasts that are impossibly slow to load, have very little functioning standing room (compared to any single deck carriage I have ever ridden on except for amn intercity style train).

So Sydney can be converted to a "metro" on this definition if we simply change the trains - and do something about creating another line through the city and/or improving the platform functionality at Wynyard and Town Hall (e.g. can we use both sides of the train at Wynyard? Could the Eastern suburbs line be dropped lower at Town Hall and have three sets of dual lines not two sets of three? Or perhaps could the city circle be rerouted under Town Hall and not stop there at all?)

The original North-West rail plan met many of the requirements, including a new Harbour Crossing. Let the engineers get on with it.

Leadership

Having come from the Corporate world I'm used to their being lots of talk about leadership and its distinction from management. However, I'm currently doing a stint in the public service and I'm getting to look at the question all over again.

My public service obsrvations can wait for another day. Today I wanted to simply point to a really great article by Cynthia Banham. As readers might recall Cynthis is a journalist who only just survived an Indonesian plane crash. I actually knew Cynthis some years ago as a journalist, very good at her craft but not yet standing out as a potential leader in the field.

Her tale is about more than leadership, but I do like her three main ideas about leadership.
1. One does not need an official title to be a leader.
2. An ethical leader must draw on a set of values and, to comprehend those values, must think and talk about them. A good leader treats others as the leader herself or himself would want to be treated; suggesting equality, egalitarianism, compassion, empathy (the Golden Rule is found in most religions).
3. The importance to good leadership of moral courage. It may manifest itself in willingness to speak the truth, even when others - more powerful people, perhaps - do not want to hear it. It is about making difficult and unpopular decisions because you know they are appropriate.

The article is well worth reading.

Climate Change Sceptics

Don Aitken has got coverage in today's The Australian for a speech he gave on climate change.

Aitken has done a remarkably good job of dealing with the justifiable doubts about anthropogenic global warming. In particular I support his eminently justified critique of the attempt to be doctrinaire about the so-called consensus. I could also quibble about his description of Paul Feyerabend as a political theorist rather than a philosopher of science, and to simultaneously assuming there is an established “scientific method” while also quoting approvingly from Feyerabend’s Against Method, which was an argument that there is no privileged scientific method.

In the end all we can have are theories, and we can have theories that are largely useful or theories that have been useful but are now less so, and eventually some of those theories may become “discredited”. With climate change we have a theory of the Greenhouse Effect; a theory I first heard at an ANZAAS conference in 1975 as an argument for nuclear power and hence treated by me with excessive scepticism.

It is a plausible theory, it is a difficult theory to fully demonstrate and model; primarily because weather patterns are what we now call chaotic systems. To the extent that there is evidence to support the theory it is “patchy” – the ice core correlations don’t prove cause and effect, short run warming measures are hard to interpret.

But Aitken also wants to discount a “precautionary principle”, based on a simple criticism of Pacal’s reason for believing in God – namely that in doing his expected value analysis the father of probability theory left out some other possible future states. However, in this case while there are multiple alternate theories there is still a simple binary choice between the “Greenhouse Theory is correct” or “it is not correct”.

The matter is very like the Pascal’s though in pay-off – acting to reduce emissions has a relatively low cost compared to the catastrophic outcome if the theory is correct. And just like Pascal, we can’t wait to make the decision. If we wait to see incontrovertible evidence of warming then we are too late to stop the process escalating. The one thing we do know is that the CO2 concentrations in the atmosphere are already at monstrously high levels.

I have elsewhere likened the issue to a General who refuses to believe the intelligence reports of a paratroop invasion until he sees the first invader on the ground. By then the other thousands are in the air on the way down and there is nothing he can do about it.

Finally, climate change reaction may in the end be just what we need. The theory known as “peak oil” is that the global economy will receive a massive shock when energy demands keep increasing at the same time as oil supply starts to decrease. The steps taken to reduce reliance on fossil fuels will also ease the risks of that shock.

What I find a pity is that the climate change discussion has become clouded in the same kind of pointless dialectic as the so-called culture wars - where persons on either side seem to think direct attacks on the other as being wrong in method are productive or useful. Aitken is right to raise his concerns about the climate bandwagon - but his proposed solution of a giant process to decide the "right" scientific answer is also wrong. We have to accept that at this point multiple theories have degrees of evidentiary support - the question is how to act in the face of that, not on how to decide "the truth".

Double Vision

The good news is the gas bubble (with its edge of blood) has gone now. The bad news is that I seem to now have "fourth nerve palsy" which means my left eye doesn't point the same way as my right.

This means I see two images, and as my left eye vision improves the second image is getting stronger. The doc thinks it might have been pre-existimng but that my brain always compensated for it - but now we just have to wait to see if that is the case.

If not it is either glasses with a prism effect or surgery to remove a bit of muscle. What fun?

No Hope for Liberals

There is now conclusive evidence that there is no hope for the Liberal Party. They have announced that Henry Ergas will be undertaking a review of their tax policy.

Ergas in the article is given a title that I don't think he is entitled to, but the absebce of that qualification alone is insufficient to invalidate his role. It is more that his only area of expertise is really regulatory economics, not macro policy issues and certainly not tax. He has no access to a General Equilibrium model to assess the affects of any proposed tax changes across the economy. And most tellingly, his last foray into this territory was embarrassing.

In 2007 Ergas prepared a report for the Menzies Research Centre (no active website!) on the issue of State and Commonwealth expenditures. This was designed to underpin the Costello claim that it was the States putting pressure on interest rates with an old-fashioned crowding out argument. This ignored the fact that the capacity constraints in the economy were in part due to lack of infrastructure spending by the States.

But worse, he tried to argue that the GST windfall to the States had been frittered away on "unearned" wage increases, that is wage increases not tied to productivity improvements.

His analysis was flawed because the evidence was the States had to respond to the general movement in wages in the labour market, and in a tight labour market with skills shortages it was the private sector that was leading in wage settlements. This was not an era of Whitlamesque government led wage increases.

His second problem was that he had blessed little meaningful data on productivity in the major employing areas in the States - health, education and policing. Further he had no idea of how productivity gains (usually achieved through the introduction of new technology) could be achieved in those sectors.

It should be an interesting tax policy when it is released.

Sydney and Plans

I had my first success in getting a letter published in the SMH for quite a while toda; Don't mess with the heart and soul of this great city. (You have to dig a bit.)

It was editted from the original which I share with you below.

It is remarkable the faith people have in the mythical Ability of planners to write wrongs. Supposedly in the city of Sydney those wrongs include the “chaos” created by the unplanned environment of the 50s and 60s.

It is fascinating that the same Premier who planned to give us an Opera House planned to give us the Cahill expressway. Fascinating that the citizenry continues to complain about The Toaster without reflecting how much more open the Opera House is now than it was with the original collection of East Circular Quay buildings.

And the politicians and media get seduced by the nice clean lines of the impressions of the new designs, without looking at the pieces of the impression that are areas that don’t change. The bulk of the improvement is like fashion magazine “before and after” shots, though in this case the after shot is the one improved by not colouring it all in.

Cities grow like organisms, their functions change and morph. Sydney is no longer a bustling wharf town to the disappointment of sum. But messy railways, aerial freeways and busy ferry wharves are visual expressions of the vibrancy of the city. It is not some airbrushed picture postcard of sentimentality. Please Clover and everyone else, let Sydney quietly evolve and banish your sterile visions.

The editted version really missed the bit about how misleading all the artists drawings of the "future" city look. I'll save that for another day.

Gans and Housing

Unfortunately I can't link to Australian Financial Review stories but I thought I'd share this with my few loyal readers. The following was a letter submitted to the AFR Thursday that might I suppose still get a run.

The proposal by Joshua Gans and Christopher Joyce for the creation of an ‘AussieMac’ (“Home loans need an AussieMac” AFR 27 March) is based on the false assumption that mortgage lending is “as safe as houses”. The creation of a AAA rated credit pool to create competition in home lending makes sense if the asset, residential mortgages, really are that secure an investment.

The unfortunate reality is that house prices can be subject to price bubbles like any other asset. Once the bubble goes too far prices will fall, and frequently (or very frequently as now occurring in the US) the owner has negative equity, and the securitised mortgages contain more risk than ever envisioned. The problem with an AussieMac is that it compounds the problem by introducing moral hazard; no one really cares about the quality of the underlying loans if they are using Government guaranteed credit.

The way to stop bubbles is to increase the funding cost to acquire the asset, but in general raising interest rates is a very blunt instrument as it suppresses productive as well as speculative investment. If all housing finance was derived from deposit taking institutions one way to control housing price bubbles would be to reduce the 100% risk weighting given to residential mortgages in calculations of capital adequacy. This is not only effective, but logical, as it reflects the fact that prices now might not match prices in the future.

Securitised mortgages while increasing competition took away the effectiveness of the strategy. A Government backed securitised mortgage market may be worthwhile if it could also include a similar mechanism for dealing with housing price inflation.

Of course I'm jealous that Joshua got an invite to Australia 2020 - but I'm glad he is there, as is John Quiggin. A couple of economists who usually (not always) make sense. Meanwhile poor Malcolm Turnbull and the Liberals are relying on Henry Ergas for their economic advice. I guess he and Malcolm both know how to turn a quid from building and then selling advisory businesses - the search party is still out trying to locate Ergas' other expertise.

A Funny Thing Happened on the Way to the Forum

A classic 60s slapstick-style comedy - but my blog is about Australia 2020.

You see I was vain enough to nominate for one of the committees, disappointed that I didn't receive a letter of invitation and then stunned when the final list was released today.

You see I nominated for what was announced on 3 February as "Economic infrastructure, the digital economy and the future of our cities". With the announcement of the steering committee on 26 February it was announced that Warwick Smith would chair the committee - on "Economic infrastructure, the digital economy and the future of our cities". And that was certainly the name of the committee in the on-line form I completed.

I was a bit concerned when the first twenty members were announced on 23 March, because none were listed for the committee on the digital economy, though at the bottom of the release it still said "Economic infrastructure, the digital economy and the future of our cities" was one of the ten critical areas for discussion at the summit.

But with the final release of the full 1000 participants today the first item "Future directions for the Australian economy – including education, skills, training, science and innovation as part of the nation’s productivity agenda" in all the earlier lists was morphed into two separate committees of 100 - one on the "Future directions for the Australian economy" and a separate one on "The Productivity Agenda (education, skills, training, science and innovation)". On the official lists Warwick Smith is now shown to be chairing this.

What we don't know is whether the original committee was dropped because of lack of interest from potential participants, or it was thought to be too diverse a group of topics (though I can easily link the three), or whether it was because the weight on nominations for the big headline "future directions of the economy" resulted in a need to find a way to accomodate them all.

But in the process the whole "critical area" has simply disappeared. So there is no explicit reference to economic infrastructure - it hasn't been added to one of the other economic lists. There is a whole committee to talk about the minority of Australians who don't live in cities - and no committee for those who do. And meanwhile - the digital economy doesn't exist - and it hasn't even been explicitly added to the 'productivity agenda".

I haven't had the time to go through the list in detail - but I do note the media coverage that James Packer has been added. That might be good because Packer and Lachlan Murdoch together perhaps equals one synapse. But heavens he's on the committee to talk about future directions for the Australian economy. We know his answer - gambling - or, as they call it down on the farm, "Prosperity through Probability" - a great slogan for the side of the barn.

To paraphrase the Bill Clinton 1992 election slogan "It's D-Economy, stupid." So much for Kevin Rudd "getting it" as his Minister for the Digital Economy keeps telling us.

(Note: It is also interesting to note how the order of the committees has changed - with health being top of the list now whereas the economy was originally. Was this designed to make it harder to note the change, or just playing to the warm inner glow of talking about health.)

A Bubble of Blood

Hope that got your attention.

This is an eye update. I had a one week check-up yesterday, and had a nervous morning because I started to get enough vision back in the eye that I noticed that I again had a dark view at the bottom of my eye - but this time like a straight line, unlike the arc of the detatched retina. I also noticed the line moved up and down as I tilted my head but still no idea.

The doctor explained that there has been a little post operative bleeding and this has gathered at the bottom of the eye. The line stays as a horizon even if I tilt my head to the side. Discovered today that I can see it sloshing around when I walk!

So that is all good. The detatchment was, as they say in the trade, macula off, but so far it is going well. Still another week before the gas bubble dissipates and we really see how it is going.

One-eyed Tahs Supporter

Please read on - this isn't about football.

On Monday 10 March the vision in my left eye was incredibly blurry. This was very strange because the Friday before I'd picked up new reading glasses and had a visual field test, and the Friday before that I had the eye test to get a new prescription and was advised I had no pressure problems (glaucoma), no catarats and they even took nice pictures of my retinas. I do have large optic nerve attacments but I have had for a while, and they aren't getting worse (that's why you have the field test), I also had slightly large veins in the eye. The optometrist asked if I had hypertension and I replied that my blood pressure was good.

On the Monday I made an appointment with my GP but didn't think it was an emergency, so the earliest I could get in was Monday 17 March. When I saw the GP that afternoon I also mentioned my blocked nose and the GP decided we should check to see if there was a sinus infection that could be causing the vision problem, this required a sinus CT scan The GP thought I'd be struggling to get booked in but that I had to insist, and made another appointment for me at 6:15 Thursday, which was of course the day before Good Friday. At this stage all I had was very blurry vision, so that seemed OK. By the time I left the surgery it was too late to call the Radiology place, but when I rang first thing Tuesday they said I could get in straight away.

I went about life as normal on Tuesday but on Wednesday morning I woke to have a green shadow circle segment in the lower right corner of my left eye. As this didn't clear I rang the GPs office - but he doesn't work Wednesday. By Wednesday night it was black and almost filling the whole of the eye.

So Thursday morning I rang to ask for an earlier appointment and got one for 11:15 am. As soon as I sat down and talked about the symptoms he realised something more was wrong (he simply thought a bleed) and booked me in to see an opthalmologist straight away. So down I went to the specialist and saw him at about 12:30 - on first examination he looked at my eye and said "yes you have a problem" then put more drops in my eye to dilate my pupil and sent me out for half an hour. Not a great wait I must say.

Then when I go back in after looking again he tells me I have a torn and detatched retina which is not good. He only sees two a year. I will need to see a retina guy, but they have one right there (and I discover later he only works there Thursday). They squeezed me in to his already busy schedule - plus gave me some more drops to further dilate the pupil.

While waiting they take pictures of my retinas - and wow - it really is ugly. About half the retina is detatched and it is masking the rest of the retina so it looks blurry. When I get to see the retina guy he tells me officially the bad news - and for some reason (possibly contributed to by not having eaten since breakfast, a high level of stress and having looked at the world through one eye) I start feeling incredibly dizzzy - so I lie on the floor and get the rest of the news lieing on my back. He tells me that I actually do have cataracts forming, which is sort of good because the surgery to fix the retina results in cataracts so it is less of a concern if I was geting them anyway. The surgery could be done at the Eye Hospital but Thursday night might be a problem because it is also the hand hospital and there is a five hour operation about to start to reattach a guys fingers. They can't tell what has happened to the macula and if it hadn't yet detatched then getting the retina back on would be better for recovery. I convinced the guy we should try for Thursday night.

It is now about 3:30pm and he tells me I should aim to be at the Hospital by 5 and present to Eye Emergency. He encourages me to take the train but I want my iPod so need to go home first and we figure driving will be just as fast. We very nearly made it except for a guy who just double parked in Hospital Rd and who took exception to us tooting - what part of he was blocking access to emergency didn't he understand.

Because we'd missed 5pm eye emergency was shut, so we went to ordinary emergency. Ordinary emergency didn't understand that while the hospital was expecting me I wasn't really booked in - they sent me up to the first floor who wanted to send us back down. I didn't move till she called her supervisor who was brilliant, took me back downstairs and explained to the triage sister what to do. It was still a long process to get admitted.

At 10pm the retinal guy and I remet in theatre, he'd been home had dinner and a bit of a sleep. Surgery was under a local anaesthetic but quite frankly I don't remember a thing (the good eye was covered and the optic nerve of the dud eye blocked by the anaesthetic).

Back to the ward at about midnight. Text to Marg to tell her I was OK - then try to sleep on my stomach with my face down. Out of hospital at about 10:00am the next day. Now my eye is full of gas, I can't catch a plane for a couple of weeks, have no vision out of the eye and have to wait to see if I'm one of the 90% for whom the retina reattaches.

All this trouble to become a one-eyed Waratah's fan and they still lost miserably to the Crusaders.

Telstra's Big Loss

The High Court today gave its decision in Telstra's case challenging the validity of the telecommunications access regime.

It wasn't just a loss for Telstra though, it was really a big loss. The court ultimately had to decide whether the cutting over of local loops to competitors for the purpose of providing ULLS and LSS services was an acquisition of property, and if so whether the so-called "historic shipwrecks" provisions of the Act were sufficient to preserve the validity of the access regime.

Telstra lost on the very first limb, the acquisition of property. But they lost not on the technicality that was argued in the case of whether Telstra did or did not still have the ability to use the copper. They lost on the grounds that their property right to the copper had always been encumbered by the legislative framework, that when they acquired the PSTN it as acquired under a legislative regime that included the requirement to provide access. The Court didn't further dwell on the fact that any other asset invested in since the vesting was equally covered by the provisions of the act.

In an earlier post I said "Those who are resorting to property rights arguments might find out they have less than they ever imagined." This is certainly what has now happened to Telstra. There are some futher interesting questions about what the management and Board have been representing to shareholders in terms of the assets they own, and their probably could be some "good faith" defence. I know the Commonwealth was always very careful as vendor to state that in the sale process it was not changing any element of policy.

As a side benefit, the Court also ruled that had their been an acquisition, the historic shipwrecks provisions would have been sufficient to save the regime, though Telstra could still mount a challenge that the compensation wasn't just in the Federal Court. But that route is now eliminated.

This is a deceptively big decision, one that I think many corporations will have wished Telstra hadn't ever brought. It will certainly lify a veil of uncertainty over the scope of the legislative arrangements for telecommunications and could even further embolden Government.

David is Sorry

I had the good fortune to be in Canberra on Wednesday 13 February 2008 and stand in Federation Mall to watch the apology to the stolen generations on the big screens. I turned my back on Dr Nelso when he tried to justify the intervention - a policy no doubt well intentioned by the militarist Mal Brough but only supported by John Howard (as with so much) in the hope it could "wedge" the ALP.

I was dismayed to find some of my acquaintances and one of the local papers still objecting - both I think because of the usage "stolen generation" and their observation there was no "generation" stolen. This objection is based on the use of the word “generation”.

Let's start with the definition of the word "generation" that means all those people in a family or group (or nation) born at about the same time. Clearly the facts state that most of the indigenous children born at any time in the first seven decades of the twentieth century got to live their lives with their parents. But we do know that between one in ten and one in three was taken from its family. That is a lot.

We talk freely of the generation that went to war - in reference to both the first and second world wars - yet the proportion was certainly below one in three and for most areas and age groups less than one in ten. Clearly ordinary usage permits the use of the word "generation" to refer to circumstances that affect a significant proportion of that population but not all of it. To use the word "generation' in the context of stolen generations is acceptable within ordinary usage.

A second meaning of "generation" is the period of time between one generation and the next - so we hear phrases like "a once in a generation opportunity". This period is usually considered to be 25-30 years, though it can be as short as 15 years in some usage (e.g. generation X and Y refer to two fifteen year periods).

The period of seventy years over which the policies applied constitute two or more generations in this meaning of the word and the "stolen generations" can be interpreted as referring to this time (and it is because of the length of time of the policy that the original "stolen generation" became "stolen generations" as used in the apology).

If you want me to go through all the other limbs of objection I will but let me summarise; They weren't stolen - well yes a lot could be argued to have been taken under the same conditions as DOCS would take kids today, but we do know there were some who were taken merely because they were half-caste, we know a different standard on separation was applied to blacks than whites and we know that after separation they were treated far differently than ay white children taken on the basis of inadequate home life - most especially the habitual separation of siblings from each other.

It was well intentioned - yes, but it was based on race and race alone in many cases and that is inexcusable in hindsight. Was Hitler "well intentioned" in seeking racial purity in Germany and does that justify his actions.

So "stolen generations" is arguably acceptable language to refer to the systematic removal of children from their homes on racial grounds, though it is not the language I would choose.

We aren't responsible for actions made by previous generations - we're not taking responsibility just expressing regret and apologising. When I say "I'm sorry" to someone whose close relative has died I am not saying I was responsible for their death. You could equally argue we shouldn't be proud of anything in history.

Finally, if just saying sorry is going to make the aggrieved people, many of whom are still alive, feel better then it is a good thing to do. .