Monday, September 20, 2010

And now to broadband - briefly

Ah, so while I was away the Government became the Government again, largely because the coalition which trumpets itself as the party of the bush because it contains some Nationals couldn't get a broadband policy together.

As I wrote before the election, the coalition were captives of their past in framing their communications policy. It is therefore reassuring to see Chris Pyne referring to the idea that the coalition will refresh their policy approach. Similar comments were made by the actual shadow Malcolm Turnbull as "In a wide-ranging interview with The Age, Mr Turnbull signalled the Coalition would develop a new broadband policy for the next election rather than stick with the approach taken to this year's poll."

hat has not stopped Turnbull already blathering on about the need for a "cost benefit analysis". A very good piece on why a CBA may not be what the commentariat think it is was re-run today. It might obviate my need to do a similar piece.

Possum Comitatus at his Pollytics blog picks up the main points that a CBA is different from a financial analysis or business case, that the timescales used are longer and that the CBA would be meaningless because of the degree of uncertainty. Put it simply we pay politicians to make decisions - if everything could be decided by simple analysis you'd leave it the bureaucrats alone.

There are some bits he leaves out. The first is that if you are using CBA for comparing projects because of a limited capital pool, then you a) need to do the CBA on all projects not just one, and (b) rather than just an NPV on the benefits over costs you should use a benefit-cost ratio. I have never seen either actually done for any public policy of any magnitude. They are usually restricted to relatively small scale projects.

The second is that a CBA is based on a thing called the "compensation principle" - a benefit to me offsets a cost to you if my benefit is bigger than your cost bcause I could notionally "compensate" you for your loss. This is made worse because a dollar gain to a millionaire is regarded as the same "value" as a dollar loss to a pensioner - even though we know the two "value" that dollar differently. In brief CBA is inherently anti-egalitarian - hence the reason why Australia's private CEOs club (mis-labelled the Business Council of Australia) so favours them.

Let me save or later the conversation on whether advancing the regional deployment changes the priority on wireless.

No comments: