Friday, October 30, 2009

Infrastructure and planning

I must be having one of my right-wing days!

John Roskam of the IPA had a column in the AFR today (thankfully reproduced on the IPA website) that was warning us against the idea that the Federal Government was hoping to reach out from Canberra to help us plan our cities.

Now apart from the fact that I would disagree with him on the qualities of Canberra I must agree with him on the idea that city planning from Canberra would be a mistake. I am not an absolute fan of Adam Smith and Fred Hatek but they are right about the "genius" of markets in being able to transmit large amounts of information about preferences. Letting people make their own decisions can be the best policy.

But we also know there are plenty of weaknesses to that. That includes externality (we all suffer if one person puts up an ugly building), free riders problems (the public goods that are non-rival and non-excludable like roads), and the reverse problem of booms (too many people at the same time identify a need resulting in an overinvestment).

Roskam was responding to the Prime Minister's address to the Business Council of Australia annual dinner, in which he said;

The previous government vacated the field on future planning for our major cities.

More broadly, the previous government vacated the field on infrastructure per se - as this was passed off as the responsibility of the states, despite their financial and in many cases planning constraints. There was a failure of planning, a failure of coordination, a failure of investment and a failure in service delivery.

The BCA is well aware of the shortcomings in our nation's infrastructure planning and development, and this was a focus of the 2005 Infrastructure Action Plan for Future Prosperity. The Government that I lead was elected to tackle the challenge of providing national leadership for long-term infrastructure planning and investment.

and later;

Clearly, the Commonwealth should not take over state responsibilities for land planning or have a direct role in the day-to-day decisions of state and local governments.

As Minister Albanese has said, no Commonwealth Minister wants to decide development applications or where to lay sewerage pipes. But we must recognise the economic reality of the 21st century.

The national government has a clear responsibility to provide national leadership in the development of strategic planning frameworks for our largest cities. That is why, working with State and Territory governments, we established the Council of Australian Governments Cities Taskforce.

We created the Major Cities Unit within Infrastructure Australia to identify opportunities where national leadership can enhance the prosperity of our cities and the well-being of their citizens. We have also created the Australian Council of Local Government so that we can hear from, and talk to, all levels of government involved in economic development.

and then announcing;

In partnership with the States and Territories we will now propose the development of national criteria for the future strategic planning of our major cities. The first in our country's history.

And, the Commonwealth will now consider linking all future infrastructure funding to compliance with these criteria.

If the Commonwealth is to foot any significant part of the urban infrastructure bill - the Commonwealth will legitimately expect to have confidence in the integrity of the strategic planning system in our major cities.

The goal is that our cities have strong, transparent and long-term plans for growth and high-quality urban development; that our cities are productive, liveable and sustainable.

The criteria are listed in the speech. So realy all the PM was saying was that he has deviated from the policy of the previous Government by investing directly in urban infrastructure. Secondly he announced that further funding would be contingent on being satisfied that there was a robust planning process in the relevant area before committing funds.

In that regard the PM was hardly anouncing micro-planning from the Stalinist centre. In fact, uit sounded awfully like the role the BCA called for the previous Government to take on infrastructure. We don't need Government necessarily to make all the investments, we do need Government to facilitate the information exchange that doesn't always happen because markets aren't perfect.

Perhaps then we could respond to the latest paper from the Centre for Independent Studies that tells us we can solve our rail problems by introducing business class train travel.

There are always firsts

There is a current debate raging in Australia over what information in Government tendering processes should be regarded as commercial-in-confidence. The proximate trigger has been debate about the National Broadband Network and what should or should not be released from the Expert Panel report.

Today Henry Ergas has written a column on the general topic, though using the case of toll roads to make the point. I can't think of anything he has written with which I have agreed more. The secrecy accompanying PPP projects results in a lack of public accountability on the projects.

Part of his criticism is also of PPP's in general and the illusion that they reduce Government risk, whereas they tend to maintain risk, don't stop "crowding out" and really often amount to auctions for monopoly rents. I wouldn't perhaps subscribe to the theory that the private sector alone can be relied upon to deal with the issues of infrastructure building (I will return to that in a later post).

Mr Ergas will no doubt be delighting in the inquiry in the Federal Parliament that will be conducted by the Senate Finance and Public Administration Committee (inquiry won't be formally established till 15 November). The inquiry will be addressing "A process for determining public interest immunity claims made by the government in response to orders of the Senate or of Senate committees for the production of information and documents."

The inquiry could range further, given that in speaking on the topic Greens leader Senator Brown said "Freedom of information ought to have been legislated long ago for the private sector as well as for the public sector because the private sector ... is very, very dependent upon the largesse of taxpayers."

This is where Senator Minchin's demands over Telstra have led. Both Senator Minchin and Mr rgas need to realise that this practice of claiming commercial confidentiality has been driven more by the private sector in its dealings with Government than by the political process. They may be winning no friends in boardrooms around town.

Meanwhil any of my dear readers who have an interest in the matter of claimed confidentiality might like to take note of the inquiry.

Thursday, October 29, 2009

The great carrier pigeon test

Last night's HungryBeast had a segment in which a carrier pigeon was pitted against an ADSL connection and a car to transfer a data file. Thanks to itNews for alerting me to the segment.

The show recreated a test performed first in South Africa. It was in response to a comment in Parliament by Kevin Rudd that; "If the Liberals had their way Australians would be left using carrier pigeons for the future rather than accessing an internationally competitive broadband network." The challenge was to see which was faster - the carrier pigeon or the internet at transferring a file of a 700 MB movie 132km from Tarana to Prospect.

The results were the pigeon in 0ne hour and five minutes, the car clocked a respectable 2 hours and ten minutes and the internet advised the upload would take between "four and nine hours" but the net cut out twice "the second time for good".

The conclusion they reached was "So Prime Minister, maybe you should think twice before dishing carrier pigeons because if you live in regional Australia and need to send large files ANYTHING is better than the Internet."

Good example of how relatively slow broadband speeds are in regional Australia - but that actually was the PMs point. He wasn't dishing carrier pigeons - he was dishing the Liberals for selling out Australians on the prospect of better broadband.


So that's the policy analysis. But what about the test. Did this real life demonstration tell us anything?

Well let's first understand the internet connection. Ee don't get told much about the internet connection being used - except the claim that at the Tarana end the internet conection is the same as used by "90% of the population" but at the Prospect end there is footage of a laptop having a dongle installed...that is we don't know enough about both ends of the internet link.

In the course of the test we are told "the internet crashed twice". Presumably that was the connection, and not the whole internet. But we don't know the cause. It could have been any of the links involved (and this communication would have been going to the local Telstra exchange, then to an exchange in Sysdney, perhaps through two more in Sydney, before heading back out to Prospect exchange (if an ADSL link was used) then another line. Of course, being the net it is entirely possible packets were being routed through Mongolia. In fact the most likely cause of the "crash" was settings in either computer that couldn't handle a single large file transfer at slow speed (i.e. a time out action at the browser or other application not the internet connections).

But we are told the internet connection advised it would take 4 to 9 hours for a 700 MB transfer. Let's just do the sums...

MB700 MB is 5600000 kbits
4 Hours is 14400 Seconds a transfer rate of 388 kbit/s
9 Hours is 32400 Seconds a transfer rate of 172 kbit/s

But this calculation doesn't allow for the IP overhead added to convert the 700 MB to packets etc.

Meanwhile a car travelling 123 kms without knowing the route. Let's assume the 123 is the hypotenuse of a right angled isoceles triangle and that the road route is along the other two sides. That gives the total distance as 123 times the square route of 2, about 174 kms. I usually allow an average of 80 kms/hour for a mixed country city drive like that. Estimated time 2.175 hours, so the two hours and ten minutes is reasonable.

The evere reliable Wikipaedia suggests the average flying speed of a homing pigeon "over moderate distances is around 48 km/h, but speeds of up to 95 km/h have been observed." Either it was a very fast pigeon, or (more likely) it had a very good following wind to cover 123km in 1 hour 5 minutes (that would be 113 km/h).

The physical test has therefore not demonstrated much more than could have been worked out with a pencil and paper (or a spreadsheet...). The test is setting up a stupi example by focussing on the transfer of a 700MB file, and has chosen a sufficiently short distance to suit the purposes. Over a longer distance the internet transfer doesn't take any more time, while the other two do. The pigeon can't go as far as the car and the car is limited to the land of the continent.

Its is a pity that people ned to resort to such stupid exercises to demonstrate what we by now know...the old standard 256 Kbps (or a 512 Kbps as offered under the Australian Broadband Guarantee) doesn't cut it. And our reference point needs to be what we need to start building now to have in five to ten years.

Sunday, October 18, 2009

The David/Julia Project?

Not quite. But I just saw this morning the very excellent movie Julie & Jilia, based on the book of the same name and the story of how Julie Powell wrote a blog about cooking all the recipes in Mastering the Art of French Cooking.

The book by Simone Beck, Louistte Bertholle, and most famously Julia Child which starts with the words "This is a book for the servantless cook". Eventually first published in 1961, andd first published in Great Britain, my copy is 1972 reprint of the Penguin edition that first appeared in 1966. Though I actually bought my copy sometime around about 1979/81 when my brother had introduced me to the book (second hand from Lawson's).

The original blog still exists and you can read it from its first post. Probably something I should do one day.

The scense in the movie where Julia Child is given a copy of Larousse in French is fascinating, because these days you can get a version in English. But if you really want to cook French you need your Beck, Bertholle and Child to get you started - Larousse just expands the repetoire.

Maybe my task should be the David/David project and cook everything from Elizabeth David's Italian Food. Her French Provincial Cooking is perhaps more famous, but I'm just fond of the Italian.

For anyone who is interested the movie is excellent. Also Julie Powell has started a new blog.

Bon appetit.

Friday, October 16, 2009

In praise of John Watkins

I have two reasons to want to write a short note in praise of John Watkins, being Alzhiemer's and trains.

It was my pleasure to attend a lunch last week hosted by Alzheimer's Australia NSW at which Grame Samuel spoke about his own familiy's experience. John Watkins left politics to become CEO of this body and has done a wonderful job of raising its profile. I loved most John's quote that forgetting where your keys are is not a sign of dementia, forgetting what they are for may be.

While John is doing well, I'm concerned that he has a long way to go to displace breast cancer in popularity as a cause - yet I suspect that more people of my generation will suffer in life from the effects of dimentia, as sufferers, carers or friends, than anything else. Here I am also making the distinction between the effects on quality of life rather than just the end of life.

John Watkins left politics rather suddenly to take up this job, probably leaving just as the ALP needed him most. The party's stupid approach to factions denied John the Premiership when Bob Carr stood down, only for the party to have to resort to a more untried and certainly less talented man in Nathan Rees fom the left.

John wanted out because, in part, he was sick of the excessive ctriticism of Transport by Treasury. This was the time when the North West rail was canned to become a metro, which itself has been shrunk. The flavour of that battle has been listed in a Crikey post today that read;

News today that Sydney's controversial CBD Metro railway to Rozelle (i.e. nowhere) will cost at least $2 billion more than planned (i.e. up to $7 billion) reinforces doubts about what this rail link is for, and why the NSW government is so keen to pursue it despite refusal by Infrastructure Australia and the federal government to fund it.

According to a public transport lobby group, EcoTransit, it's the brainchild a group of bureaucrats within the state government who want to thwart and thereby "discipline" Sydney's CityRail by setting up an alternative private, non-union network.

In effect a Thatcherite political experiment. Details here.

If only we had more citizens like John.

Monday, October 12, 2009

Telstra, Budde and what the hell next

There are times when it is my job to read documents that I find really hard because you want to stop every second sentence and shout at the author.

The Telstra submission to the Senate on the legislation announced by Stephen Conroy as historic telco reforms is one of those. The reason for wanting to shout are the contradictions inherent in the paper. The first is that Telstra has long argued that the excessive regulation of them is a disincentive to invest, but try to argue they've out-invested the rest of industry. The second is to claim that there is some cost and innovation benefit in being vertically integrated but that Telstra's wholesale customers can get an equivalence for competition by some simple changed rules on transparency.

The first of these is actually fallacious because Telstra contrasts its revenue share to its investment share, whereas the correct comparison is its EBITDA share to its investment share. On that basis it is "under investing." But under investing is actually a demonstration of its market power - only someone with market power ever has an option to not invest.

The second is just so much hypocrisy. Apart from its own internal flaw, what part of "it's a bit late now" doesn't Telstra understand? It has had plenty of opportunity since 1997 to behave the way they now promise to.

Meanwhile we see an industry commentator falling over himself to trumpet the wonders of the new Telstra, and even prior to their submission echoing the suggestion we should just try to work all this out. I'm actually with Paul on this to some extent. I don't think the long term interest of the industry are served by leaving Government and regulators at the core of it - I diverge from the views of many of my industry colleagues in this.

But the view being promoted by Paul and being demanded by Telstra is a little bit like coming back after the invasion of Chekoslavakia promising peace in our time. The time for appeasement is over.

Can I link Tony Abbott and Iran in one post?

Tony Abbott has provided another thoughtful piece on his constitutional proposal for resolving some Federal/State impasses without going the whole way to abolish the States.

His proposal has been mentioned here before, but even he would (I think) acknowledge that the States could ultimately be made redundant as a consequence of the move.

The benefit of steady constitutional change is that it avoids "unintended consequences". We see in Iran That the Revolutionary Guards have now become an alternative power authority and as a group are extending their control into economic areas. The economic area in particular is ownership of a telecommunications monopoly - both a good earner and a useful piece of infrastructure to control.

While abolishing the States might not be in the same class as building an elite squad for the defence of the revolution, the risk can be the same. Unintended consequences abound.

Nobel prizes

Well before the controversy over Barack Obama's Nobel Peace Prize broke out I received an e-mail about that other, not really real Nobel prize - the one for Economics.

The article identifies that it wasn't one of Nobel's prizes, but describes it as an attempt to cloak the dismal science in the kind of respectability achieved by Physics, Chemistry and Medicine. The article pointed out that the work of some famous laureates in economics looks dodgy now - and in general that the prize has represented orthoodoxy.

Economists should not castigate themselves for this. After all Nobel did create the prizes to "recognise contributions that enhanced the quality of human life, through scientific advance, literary creativity or efforts at bringing about peace." However, in part the purpose prize was to salve Nobel's own conscience for having invented dynamite and hence created the most effective weapon terrorists had. And even the Physics prize has transgressed the goal - many of the earliest recipients for quantum theory went on to give the world nuclear weapons – hardly adding to Nobel’s great aim.

Similarly physics can be accused of its own current crisis of ever more esoteric models with no real world application – though at least string theory benefits from having no testable predicted observations whereas much economics has testable predicted observations but simply assumes away all failures as being due to a usually unnamed external factor. Admittedly Physics last award in particle physics was for the last theories to build the Standard theory of particle physics.

The Obama prize is also nothing extraordinary. The Nobel Peace Prize has been awarded to former guerrilla fighters (Jose Ramos Horta in 1996) active terrorists (Yasser Araft 1994) repressive rulers who were overthrown for running feudal socities (the 14th Dalai Lama in 1989) a woman whose objective in India and Bengal was to campaign against woman controlling their own bodies (Mother Teresa in 1979) another former terrorist (Menachem Begin in 1978), a man whose crusade for “national self-determination has created more fanciful grounds for war than any other (Woodrow Wilson 1919).

So why not reward a guy for getting elected and not ending any wars and not winding back the largest armaments budget of any country. You almost feel he got the award for not being George W. Bush. And they didn't have to award it - the Nobel Peace Prize has frequently been not awarded.