Monday, January 20, 2014

Optimism bias

The Productivity Commission public inquiry into Public Infrastructure has received its first initial submissions. Number 87 comes from Henry Ergas in his private capacity.

Having done similar things I applaud his eagerness to participate in the process, even though I disagree with almost everything he says. It is, however, pleasing to see him acknowledge that telecommunications networks are a natural monopoly.

The key issue that I wanted to highlight is Ergas comments about discount rates.  He states about large infrastructure projects that;

The discount rates used do not properly incorporate a mark-up for optimism bias and other distortions in public sector decision-making. The extent of that mark-up should reflect the option value of deferring investment, which in turn depends on the extent to which updated cost and demand information could lead to a reconsideration of the timing and extent of investment.

This is a very, very big call.

I first want to talk about "optimism bias." The phenomenon of "optimistic bias" is well researched. One item quoted the following cases;

  • "People expect to complete personal projects in less time than it actually takes to complete them" (Buehler, Griffin & Ross (1994)) (basis of Hofstadter's Law)

  • "Students expect to receive higher scores on exams, at least when those exams are still some time away, then they actually receive." (Shepperd, Ouellette and Fernandez (1996))

  • "Second-year MBA students were found to overestimate the number of job offers they would receive, the magnitude of their starting salary, and how early they would receive their first offer." (Hoch (1985))

  • Professional financial analysts "were reasonably able to anticipate periods of growth and decline in corporate earnings, but consistently overestimated earnings realised." (Calderon (1993))

  • Vacationers "anticipate greater enjoyment during upcoming trips than they actually expressed during their trips." (Mitchell, Thompson, Peterson and Cronk (1997))

  • Newlyweds "almost uniformly expect that their marriages will endure a lifetime" despite the large proportion of marriages that end in divorce. (Baker and Emery (1993))

  • Students "consistently reported that they would behave in more socially desirable ways - for example, that they would be more resistant to unwanted social influence, or more likely to donate time to a worthy charity - than did people who have not first been asked to make predictions about their behaviour". (Sherman (1980))

  • "Most people expect they have a better-then-average chance of living long, healthy lives; being successfully employed and happily married; and avoiding a variety of unwanted experiences such as being robbed and assaulted, injured in an automobile accident, or experiencing health problems." (Weinstein (1980))

  • "Between 85% and 90% of respondents claim that  their future will be better - more pleasant and less painful - than the future of an average peer" (Armor, 2000, unpublished raw data)

  • Most smokers believe they are less at risk of developing smoking-related diseases than others who smoke. (Weinstein, 1998, unpublished manuscript)

  • Further analysis reveals that the bias is also described as the "planning fallacy" which Wikipedia credits to the great founders of behavioural and experimental economics - Tversky and Kahneman.

    In perhaps a blow to the critics of NBN Co's corporate planning, the bias is subjective, since "The bias only affects predictions about one's own tasks; when uninvolved observers predict task completion times, they show a pessimistic bias, overestimating the time taken."

    In the context of infrastructure bias Ergas quotes the oft cited case of Sydney's Cross City Tunnel for which the investors got seriously burned due to overstating demand.

    In the futurist business there is a principle referred to as Amara's Law which states "We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run."  I am not aware of any empirical test for this, but it is consistent with my observations of previous historical predictions. While we all often laugh about the great underestimation quotes like Tom Watson and the world market for computers, look at the average success rate of product forecasts and they over-estimate early sales and under-estimate the long run.

    This is certainly the case with most of the road projects. 

    In other words the optimism bias in long run projects is a tendency to flatten out the growth curve rather than predict  more normal exponential-like (meaning any of a family of S shaped curves) adoption. 

    Ergas solution to the perceived problem of optimism bias is to increase the discount rate. He is reintroducing here a concept called "real option theory" that he tried for years to have incorporated in regulatory proceedings by the ACCC to increase the WACC (discount rate) that should be applied to accessing Telstra infrastructure. This is a weighting supposed to reflect the benefit of waiting to make a decision in the future when there was greater certainty of demand.

    One of the difficulties with this approach though is that absent the actual infrastructure there is no way to determine the real demand - the preference for driving on that road or for using that broadband service can only be revealed by having the road or service available.  This is not "build it and they will come" so much as "build it and you will know its use".

    But this then brings us to the fact that take-up curves are S-shaped, use promotes further use. If this is the case, and importantly if the optimism bias in the early period of the project is counterbalanced by a pessimism bias in the long run, then the approach of adopting a single higher discount rate is wrong, because it penalises more the forecasts that are further out and more likely to be right.

    The correct response to optimism bias isn't a higher discount rate, it is to deal with the sensitivity analysis of the forecasts in both the short and long term. From a finance perspective it certainly means investors should note be financing with a lot of debt financing upfront that immediately requires servicing out of forecast cashflows (which was the real problem for CCT). Ideally you need equity investors who are prepared to be patient in generating a return.

    Ultimately that is what makes the case for Government ownership. Only Government can afford to absorb the risk in the short term.

    Ergas second point in the paragraph quoted is about "public sector decision making".  This follows from an earlier assertion about the kinds of projects that attract investment; saying;

    The incentives in political decision-making lead to an undue emphasis on ‘ribbon cutting’ opportunities, generally associated with very major (‘mega’) projects, at the expense of periodic maintenance and of small-scale ‘de-bottlenecking’ options that could postpone or even avoid the need for costly asset expansions.

    This shows a lack of understanding of politics.  The NBN was a great project because it delivered lots of ribbon-cutting (or button pressing) opportunities.  Lots of small projects would actually be more appetising.

    But the real problem with this is the arrogance of the techno-crats...that political decision making is somehow less reliable than other forms of analysis. But in the final analysis political decision making is driven by what voters actually want. The technocrats need to not deride the people but get into the explaining business if they genuinely believe the wrong decisions are being made.

    It will be interesting to se how much of Mr Ergas own views features in the report of the CBA review of broadband policy.

    Monday, January 13, 2014

    Response to Rear Window

    The AFR 's Rear Window paid me the dubious honour of making a whole item about me today.  Only problem is that I didn't really deserve it.

    The first error is to claim I achieved a degree of infamy as a Conroy adviser. I think it is more correct that I had my infamy first. I think the only press references to me at the time was the stories that I'd been hired and the ones about me being retained by Minister Albanese.  A quick Google reveals plenty of earlier references...even a whole Op Ed in the AFR.

    The next part about my tweet regarding the ASX delisting of 21st Century Fox is an accurate description of the post.  But the contact with Clare's office was a call to me.  Wow how surprised would the journalist have been if I had said it WAS the party line.  Also let's be clear, I don't like the way Mr Murdoch runs his business these days.  I haven't always had that view since when News was my customer when I was at Telstra I did a fair bit of work to help the Foxtel JV happen. 

    But it is also true that I posted here only a few days ago that I thought the claims if Mr Murdoch's political influence are overstated.  On 21st Century Fox I think I am not alone in still wondering whether NSW taxpayers really got a good deal from the redevelopment of the old showground site as Fox Studios...but now Entertainment Quarter. 

    Then the biggy where Godwin's law might be in play.  Context is everything. Firstly I never used the word Nazi, for a reason.  The comment followed Christopher Pyne's assertion that the Liberal party is the only true national party because it doesn't represent any sectional interests. This was said by Pyne in the context of his two dodgy mates being appointed to review the national curriculum.  Now Pyne really questions the three cross disciplinary focus areas of Asian century, indigenous past and the third I can't remember. He loves to question the relevance of these to maths and science, as a distraction from his view that shouldn't feature in history or civics.

    When you analyse the Liberal position on teaching history it is very strongly "nationalist"...European tradition is better than everything, our judeo-Christian heritage is more important than our place in Asia.  Sounded very much to me like the kind of nationalism that the German national socialists espoused publicly, not the far more brutal version they believed privately. So quite reasonably is response to Pyne's claim the Liberals were a national party, I suggested they might be better able to claim to be "national socialists". Perfectly reasonable claim.  

    The journalist thought the tweet had been about the Nationals because basically he was lazy and was taking a feed from someone and really had done no research.  And he ran my correction as if it was an extra story, rather than as pointing out his original version was wrong.

    So hopefully next time I make it to rear window it will be by someone who knows I have been infamous in tech circles for a while now, and it will be about something substantial and not just a selective reading if a couple if tweets. 


    1. The columnist for the AFR was Will Glasgow.  My grandfather Carl Frederick Spencer Glasgow was a UAP member if the NSW Legislative Assembly for one term.  Makes it possible young Will is a distant cousin.  Just proves you can't chose your relatives.

    2. The tweets had been referred to Will by someone, and he just laughed when I suggested he should just ignore future tip offs from Liberal staffers.  Could have been an AFR journalist following me I guess. But most of them would know better on the history.  Anyhow if someone is noticing then something is going right.

    Wednesday, January 08, 2014

    Business, Economics and Strategy

    Former Internode execs Simon Hackett and John Lindsay are no longer parts of iiNet. 

    Mr Hackett we know resigned from the Board of iiNet to take up a position on the Board of NBN Co. ZDNet reported this week that Lindsay had "quietly departed" from iiNet, though Delimiter today reports that Lindsay was made redundant.

    I wish them both well. They, like Michael Malone at iiNet, feature in my allegory about understanding "purpose" in business. Both firms were founded by people who liked the internet at university and wanted to make it available to themselves and friends after university.  (In Malone's case making it available to friends was about subsidising his own access). Focussing on that purpose enabled them to establish a valuable business.

    But this does not make either of them infallible. 

    One of the quotes attributed to John Lindsay in the ZDNet article was "If you build something like a new network that has abundant capacity and then you arbitrarily limit that for commercial ends, you've basically created artificial scarcity."

    While this may refer to the CVC issue, I believe it also relates to a concern that differential pricing for AVCs is wrong. My reason for that belief goes back to discussions at the time the "G9" was putting together an alternative FTTN proposal. A sticking point was determining pricing structures - and the representative from Internode (not John by recollection) argued that we should charge the same price per port because that is what the cost base was. The same reasonin would be that AVC charges on the NBN should be the same as the cost is the same.

    It is relatively easy to demonstrate why that doesn't, or mightn't, work. It is because different consumers have different preferences expressed as willingness to pay. Let's assume we have two customers. Customer A is prepared to pay $3 for a 100 Mbps service but only $1.50 for a 10 Mbps service. Customer B is prepared to pay only $1.50 for 100 Mbps and only $1 for 10 Mbps.  As the supplier we have one expense which will provide two 100 Mbps services, but we can limit them to 10 Mbps (with the unused 90 not available for sale).

    If our costs are above $4.00 but we sell only one product which is the 100 Mbps one, at an averaged price we can't make a case that recovers our cost.  The average price will be $2.00 and customer B won't pay it. With differential prices Customer A will pay $3 and B $1. 

    When it comes to the NBN this is significant, because the bottom price tier is essentially set at the price of a voice access line - because some of these customers will only be using it for that.

    So having a price point that limits capacity can create supply, nor reduce it.

    Simon Hackett in his defence of HFC on his blog said "Despite claims to the contrary, this use of shared segments in the last part of the [HFC] network is also the case in the existing NBN fibre (FTTP) design....The trick (in both technologies) is to keep the contention ratio acceptable in each of these shared segments. There is a commitment in the NBN HFC context to do that, just as in the FTTP rollout, so that the result is great for all users."

    I don't think this is technically correct. While the 1 Gig plus of fibre from the FAN is repeatedly split in the FTTP scenario, it is split in a controlled way. There is no actual "capacity sharing". More specifically the RSP can be sure about how much capacity a fibre customer will have available in the AVC, they can't be sure in the case of HFC.

    Hackett and Lindsay are both projecting their experience from how they ran an ADSL2+ network.  The economics and strategy question for a national broadband network are different. 

    Tuesday, January 07, 2014

    Telstra and all that cash

    The AFR today speculates on the possibility of a Telstra $6 billion share buy back. This follows the sale of CSL and planned sale of autohome.

    However, Telstra has repeatedly indicated it is seeking opportunities to expand. It, like most incumbent telcos, has struggled with how to be a successful entrant when its core skill has been managing networks.

    When Telstra sold TelstraClear in 2012 there was speculation that Telstra was shaping for a go at Telecom New Zealand.  That was dismised with the revelation that the deal included non-compete clauses.

    This was confirmed when the deal cleared its last hurdles in October 2012. There are few details of the non-compete clause available. The last item referred to said;

    The takeover includes a non-compete cause, of unknown duration, that prevents Telstra entering the NZ market.
    Regardless, most analysts dismiss the notion that cash-rich Telstra is clearing the decks for a run at Telecom. Telecom is struggling to turnaround declining profits at a time when Telstra is eyeing high-growth opportunities at home, and in Asia.

    The interesting fact is that Telstra has been divesting its investments in Asia.  The AFR article concludes "Telstra has long pledged to increase the amount of revenue it generates from Asia, and Thodey is chasing corporate customers in the region with cloud computing and telecommunications services."

    The reality is that the most important market to secure first is New Zealand, because most corporations now run their A/NZ operations together.  The second is that no matter the current financial state of Telecom, the synergies between the two businesses are immense.  The ability to operate the New Zealand mobile business as a component of the Australian one is alone worth a lot.

    At the time of the original speculation the biggest barrier wasn't the non-compete clause, it was that Telecom still owned its asset - AAPT. That is now resolved as well.  The only other impediment is New Zealand regulation about domestic ownership, a hurdle that would not be hard for the Kiwi Government to deal with if the suitor was Telstra.

    An acquisition of Telecom is one of the few cases where Telstra could genuinely say it was investing the money better than Telstra shareholders could on their own.

    Sunday, January 05, 2014

    Just how influential is the Murdoch Press?

    A fixation during the 43rd Parliament, the lead up to the 2013 election and the campaign itself was the perceived influence of the Murdoch press in Australia. This generally means the collection of News titles – The Daily Telegraph, The Courier Mail, The Herald and Weekly Times, The Advertiser and The Hobart Mercury – as well as The Australian.

    As the campaign started Sydney University academic David Knight wrote a piece titled “Murdoch and his influence on Australian political life” for The Conversation. He opened with a quote attributed to Murdoch that what gives him the most pleasure in running his empire is “trying to influence people.”

    McKnight claimed Murdoch has had influence on elections previously, but his primary source was the Murdoch press’s own claim about the 1992 UK election that “It Was The Sun Wot Won It." He then simply assumed the influence and sought reasons for Murdoch wanting the end of the Labor Government.

    He dismissed the claim made by PM Rudd that Murdoch’s focus was on the threat to News from the NBN, and that really his interest was entirely ideological.

    This focus in the campaign followed a few years where the role of the Murdoch press had been part of public debate.

    The key trigger point was a press conference by Christine Milne on 21 July 2011.

    As reported by the Herald Sun Milne called for a federal inquiry into the media saying "The important thing here is that out of the scandal in the UK there is an opportunity now for Australia to look at a number of issues. One is concentration of the media ownership for the print media in Australia. Another is the privacy issues. Others relate to licensing and fit-and-proper person tests. All of those things should come out in an inquiry."

    The next day Prime Minister Gillard got herself into bother over comments that given the serious nature of the international allegations in the UK, the Australian arm of News Corp arm to answer 'hard questions'. In the same article Tony Abbott was reported to have given qualified endorsement to the idea of improving Australia's privacy rights and his communications spokesman Malcolm Turnbull says the privacy reform discussion is 'a debate worth having'.

    News Corp didn’t immediately dismiss the idea of improved privacy laws, with a spokesman in the same article saying “Without statutory protection of freedom of speech in Australia, there is a danger that a law to protect privacy will curtail the media's ability to hold governments, corporations and individuals to account. Any increased protection of privacy must be balanced against the need to ensure information that is clearly in the public interest is available to the public.”

    The SMH on the same day reported “The government has given mixed messages about its enthusiasm for a review and about exactly what it would be inquiring into. Some ministers have attacked News Ltd publications for running what they say is biased coverage, and senior sources said yesterday some investigation of media regulation and 'ethics' remained a real possibility.”

    On QandA three days later Milne said

    Look, the Murdoch press has been running a very strong campaign against action on climate change. The bias is extreme in The Australian in particular.

    You’ll see column inch after column inch after column inch of every climate sceptic in the country run with exactly the same authority as the intergovernmental panel on climate change as if they are the same. You’ll find, day after day, a real attempt at regime change.

    Now, a newspaper is supposed to be running with fairness and with balance and that paper is not doing it and one of the useful things about the hacking scandal in the UK is that it will lead to an inquiry into the media in Australia and that is well and truly overdue and we are, at last, going to see some real discussion about issues around rights to privacy, around issues like the level of ownership and dominance of the Murdoch press in several capital cities around Australia.

    We’ll also have a look at a range of other issues, including who are fit and proper people into whether we need that test of people to be running media outlets. So I think this is a really useful opportunity, especially at the media is changing so rapidly. Everything is going online. Newspapers online, you wonder if you can call them newspapers anymore in that sense, so it’s time we had a good inquiry.

    next day The Australian reported

    Julia Gillard has said she is open to an inquiry, declaring News Ltd, publisher of The Australian, had “hard questions” to answer following the UK phone hacking scandal.

    In a separate move, the government will act on a three-year-old report by the Australian Law Reform Commission calling for a legally-enforced right to privacy.

    The Prime Minister's office said Ms Gillard was yet to talk to Greens Leader Bob Brown about the inquiry.

    The Minister for Broadband, Communications and the Digital Economy announced the Independent Media Inquiry on 14 September 2011. Its report was incorporated into the overall Convergence Review, which was released by the Government with little fanfare and no comments about the Government’s intentions.

    The void was filled by a virulent attack, led by News CEO Kim Williams, on any proposal to regulate print media. After months of rumours but no action the Government suddenly introduced a package of reforms in March. The two most controversial related to a diversity test and a strengthening of the mechanism for enforcing standards for privacy protection and accuracy.

    The response from News was immediate and strong. But the Bills implementing these reforms failed not because of the News campaign but because the proposals could not overcome reservations held by Parliamentarians that were different to the complaints of News.

    That News publications continued to be biased in their reporting on a number of issues was very apparent. The screeching headline in April proclaiming the cost of the NBN would be $94 billion based purely on a Coalition thought bubble was simply one of many cases.

    The position of News translated into a fixation by the Rudd campaign on the issue, though there seems to have been some initial surprise at the extent of the bias. It may be that there was a presumption in the Ridd camp that the News Corp campagn was anti-Gillard rather than anti-Labor.

    Bruce Hawker in his book The Rudd Rebellion states that going into the first week of the campaign there were major challenges to sort out. He notes “What we didn’t know, however, was that News Corp was planning its own campaign – one that would make its previous forays into partisan reporting look like the picture of even-handedness.”

    He records a conversation at Kirribilli House on 1 August to respond to the arrival of Col Allen in Australia and the all-out News Corp campaign. Hawker notes “I had a long talk to [UMR research CEO John] Utting about the research required to see if News Corp actually does change people’s minds and if there are ways of successfully countering an attack or even pre-empting one by reference to Murdoch’s financial or political ambitions.” He also talked about research to monitor the extent of actual bias.

    On 3 August he records that Utting argued against the proposed 7 September election date “to take more time to prosecute our economic credentials.” Hawker argued that “going late just gives News Corp an extra two weeks to attack us – as we know they will.”

    Later as the campaign has kicked off Hawker recites all the stuff about editors and journalists saying they had never seen anything like the concerted News Corp campaign. He claimed the impact was felt in 5 ways;

    1. They sought to undermine Rudd’s “legitimacy and credibility;

    2. They fed shock-jocks and thus were repeated throughout the day;

    3. They diverted attention from the issues Labor wanted to discuss – for example the stories about Rudd’s use of notes in the first debate diluted all the messages in the content of the debate;

    4. They allowed News Corp reporters to suggest Rudd was off message and chaotic – news conferences became dominated by talking about the News Corp reports;

    5. They allowed Abbott to stay positive all the time.;

    When one analyses these impacts one realises they really were cases of “don’t think of a square.” The key person being distracted by this was Rudd – he and Hawker were obsessed.

    In his epilogue Hawker claims “The other remarkable aspect of this election was the highly partisan role played by the News Corp press…News Corp is easily the most powerful political force in Australia – bigger than the major parties or the combined weight of the unions. The fact that the swings were lowest in the States where News Corp’s anti-Rudd invective was at its most virulent is a welcome reflection on the maturity of the Australian people. We shouldn’t use this as an argument to downplay the News Corp influence in this election”,

    But really – we should do exactly that. Murdoch’s influence comes from the perception by politicians that he has a great deal more influence than he really does. NSW Labor learnt the similar lesson some time ago about Alan Jones.

    A little research reveals that the power of the print media to influence is over-stated. University of Sydney academic Rod Tiffen wrote the chapter on Australia in The Handbook of Election News Coverage Around the World. He notes that “As in other democracies the most publicly debated media impacts concern allegations of partisan bias.”

    Tiffen goes on to note the limited competition in Australia’s print media, but also notes that for most of Australia’s history all of the print media’s support has gone to the Liberals.

    Tiffen notes that the most valuable set of polling data on Australian elections comes from the Australian Electoral Survey and that none of the surveys has found a strong correlation between party vote and any patterns of media consumption.

    Prior to the 2013 election, the most debated cases in Australia were the 1972 and 1975 elections. As Tiffen says in both cases “the electoral tide was running so strongly that press partisanship would likely not have had any impact on the result.

    Tiffen also notes “In recent years, there have been some claims by Labor that the Murdoch press is still biased against it, although the nature of media politics now is that a company like Murdoch’s also has an interest in being perceived as supportive of whoever wins the election.”

    As the Guardian reported UK politician Rory Stewart said this week;

    "But in our situation we're all powerless. I mean, we pretend we're run by people. We're not run by anybody. The secret of modern Britain is there is no power anywhere." Some commentators, he says, think we're run by an oligarchy. "But we're not. I mean, nobody can see power in Britain. The politicians think journalists have power. The journalists know they don't have any. Then they think the bankers have power. The bankers know they don't have any. None of them have any power."


    1. Tiffen also has useful observations on agenda setting and the building of political momentum. He also argues that journalists frame election campaigns as horse races to distance themselves from the politicians and parties. To comment on actual policy may force them to express a view about it, whereas talking about how a policy has been crafted to appeal to the electorate removes the need to actually comment on the policy itself.

    Hence the objective of “unbiased” reporting possibly has the consequence of hollowing out politically coverage in the media.

    2. The tendency for the splash in the morning tabloids to create the news story of the day that runs on talkback radio and then becomes the headline of the nightly news is real. However, tightly scripted events providing good visual images combined with strong messages can disrupt the momentum

    In the case of the Labor 2013 campaign it was Rudd and his personal advisers who were doing more than anyone to distract the campaign and destroy plans for getting the story to be Labor’s message of the day. The case of campaigning on the NBN is one – of which hopefully I will share more in a later post.

    Saturday, January 04, 2014

    Supplying Consular Assistance and Mandatory Insurance

    It is hard not to agree with Julie Bishop that there is merit in reviewing how Australia provides Consular assistance to travellers in trouble overseas. 

    Reports suggest that it is not thought that Australia should do less, but that there are circumstances in which citizens might be required to repay the cost of that assistance.  These include where citizens don't take insurance or they wilfully engage in breaking the law of countries they visit.

    The issue has been raised again because of the case of Greenpeace activist Colin Russell.  In an article the Guardian seems to have prodded him to give the traditional reply that the Australian government "could have gone into bat a little bit more for me".

    There is a problem with consular assistance in that somehow people think that it is the Australian government's responsibility to conduct a whole defence on their behalf, or worse, that somehow Australian consular assistance is a means to have the Australian citizen's conduct considered under the provisions of Australian law.  This is like presuming that the Treaty of Nanjing providing the British with "extra-territorial rights" in China existed for Australians for the whole world (when the right was actually relinquished in 1943).

    The related issue is the crazy definition that Greenpeace and others apply to "peaceful protest." Even in Australia deciding to climb onto a structure is not a "peaceful protest."  But the offences took place in Russia and it is the Russian definition, not the Australian definition, that counts.

    By all means be a martyr to your cause by wilfully breaking the law in another country to highlight its politics or your issue - but you didn't do it for Australia and deserve no more than standard assistance. 

    This is exactly the same argument that applies to Julian Assange.

    The second is the expectation of provision of assistance for "insurable events".  The most common is repatriation of a citizen who falls ill overseas, but can include the cost of proper legal representation.

    The Minister has suggested that one case where citizens could be required to repay would be when they hadn't taken out insurance. 

    More useful would be to actually require citizens travelling overseas to take out a minimum level of travel insurance.  This is no more extreme than the requirement on owners of motor vehicles to have third party personal insurance.  It would not be hard for an Australian leaving the country to present a certificate of insurance at passport control when leaving the country. 

    But the most important issue is getting people to understand that when travelling overseas it is the foreign law, not the Australian law, that applies.

    Thursday, January 02, 2014

    Think tanks on the left - a preliminary survey

    Two related but slightly different twitter engagements have me writing this blog post.

    The first followed

    This question from @Gwyntaglaw was not something I could answer in 140 characters!  (The first part of my two part reply had read "ALP does not have the policy strength to tackle the question of thorough reform of the welfare system - but it could."
    @VanBadham's argument is that the changes that "pushed Australian single parents from a family pension onto the dole once their child turned eight" were a betrayal of Labor values.  The argument did not reject the validity of attempting to deliver reform, just that the reform chosen under the label "Building Australia's Future Workforce" did not reflect the kind of policy development that previous Labor Government's showed.  In fact, the policy seemed to be more about addressing the failure to deliver a surplus and indeed a bit of pandering to those who peddle the story of young women only having children to get benefits.
    It was summarised as:
    The party of Whitlam, Hawke and Keating has the policy knowledge, history and experience to do what is required to reform welfare as a system that equalises social opportunity for all Australians. That it squandered its chance for meaningful reform through the BFAW and then abandoned single parents to the politically fabricated budget panic belies a party which has allowed itself to become spooked by the propaganda of its opponents.
    I was questioning whether the party today indeed actually had the "policy knowledge, history and experience" described. 
    It followed on from an earlier engagement with @Gwyntaglaw also on the topic of left think tanks.
    It seems to me that it really isn't possible to mount a review of welfare policy until there is a wider socio-economic program to underpin it.  Hence I am serious about the question of the need for a "seminal text" (noting that Marx is definitely not it) that is a subject for another longer piece of writing.  As an example at the end of my post on confirmation bias I used the term "social justice" as an example at the end on terms that are used by one side of political debate that result in a completely different interpretation from the other.
    For now this is just a quick trawl through the left think tanks and a thought about their capacity to assist Labor.
    The first observation to make is that while the history of Think Tanks is long, especially in the USA, they are perhaps more renowned for the role they played in the rise of the neoliberal right in that country.  Indeed it was based on a call by William Simon that "The only thing that can save the Republican Party … is a counter-intelligentsia. … [Conservative scholars] must be given grants, grants, and more grants in exchange for books, books, and more books."  In short, the Think Tank was seen as a response to the perceived excessive influence of the Left in other institutions - especially Universities.
    So it comes as a bit of a shock to refer to the left wing think tanks, though there are such things even in the US. 
    Wikipedia provides a list of think tanks by country.   At the time of writing it listed the following [with my assignation of the leaning of the body in square brackets];
  • Air Power Australia [unaligned]
  • Australia Institute (TAI) [left]
  • Australian Institute of International Affairs (AIIA) [unaligned]
  • Australian Strategic Policy Institute (ASPI) [unaligned]
  • Brisbane Institute [unaligned]
  • Committee for Economic Development of Australia [right]
  • Centre for Independent Studies [right]
  • Centre for Policy Development [left]
  • Development Policy Centre [unaligned]
  • East Asian Bureau of Economic Research (EABER) [unaligned]
  • Evatt Foundation [left]
  • Grattan Institute [unaligned]
  • H.R. Nicholls Society [right]
  • Institute of Public Affairs (Australia) (IPA) [right]
  • Lowy Institute for International Policy [unaligned]
  • Mannkal Economic Education Foundation [right]
  • Per Capita [left]
  • Sydney Institute [right]
  • Strategic and Defence Studies Centre (SDSC) [unaligned]
  • United States Studies Centre [unaligned]
  • Western Australia Policy Forum [right]
    The count is 4 left and 7 right - but the list is not complete (it doesn't include the McKell Institute, Whitlam Institute or Catalyst for example). 
    The left think tanks as I can identify them and what they say about themselves is;
    "The Australia Institute is the country’s most influential progressive think tank. Based in Canberra, it conducts research on a broad range of economic, social and environmental issues in order to inform public debate and bring greater accountability to the democratic process. ...The Institute is determined to push public debate beyond the simplistic question of whether markets or governments have all the answers to more important questions: When does government need to intervene in the market? When should it stand back? And when regulation is needed, what form should it take?"
    "Though we call ourselves a think tank, the Australian Fabians are more than this. We are based on a social and intellectual movement: the UK Fabian Society has been a central part of democratic socialist, social-democratic and Labor tradition thoughout the 20th century in Britain, and the Australian Fabians in Australia since 1947. Our output is thoroughly contemporary and relevant: by dint simply of who we are, it is organically connected to the history of the left.
    Our goal is not merely (as by and large it is for other think tanks) to produce interesting ideas for the elite policy community. It is the promotion of socialist and progressive thought throughout society. We aim to change the intellectual climate of the Australia (and indeed of the wider world). We want to make broadly left of centre ways of thinking commonplace."
    "Catalyst is a collaborative policy network. We work closely with trade unions, non-government organizations, academics and practitioners to promote progressive policy solutions to some of today’s most pressing social and economic issues.
    Our simple vision is for good lives, good work and good communities."
    "The Centre for Policy Development is a public interest think tank dedicated to seeking out creative, viable ideas and innovative research to inject into Australia’s policy debates.
    We give a diverse community of thinkers space to imagine solutions to Australia’s most urgent challenges, and we do what it takes to make their ideas matter."

    "The Chifley Research Centre is the Labor Party’s official think tank, committed to the advancement of public policy debate and progressive thinking in Australia. To this end, the Centre promotes policy discussion in universities and throughout political and industrial forums; commissions academic research into pressing and long term public policy issues affecting Australia; provides strategic policy advice to the Federal Parliamentary Labor Party; and works in conjunction with other research and intellectual bodies to promote better understanding of the Australian political and policy environment."
    "The Evatt Foundation is committed to advancing the highest ideals of the labour movement, such as equality, participation, social justice and human rights, by promoting:
    research and discussion of public issues;
    awareness of social, political and economic aspects of Australian life;
    academic and applied research for trade unions, the labour movement and other community organisations;
    education and vocational training;
    young artists in Australia."
    McKell Institute
    "The McKell Institute is a public policy institute dedicated to developing practical policy ideas and contributing to public debate. The McKell Institute will explore and discuss a wide range of policy issues and reforms including:
    Improving the State’s infrastructure, particularly transport, to encourage economic growth and development and meet the needs of a growing population.
    Economic policies that support growth, foster job creation and the expansion of small business.Supporting increased economic engagement with key international trading partners to deliver investment and create jobs.
    Making housing more affordable for all Australians, particularly for low income families.
    Creating and maintaining work environments which are safe and free from discrimination, while providing fair remuneration and conditions for workers, particularly those in low paid jobs.
    Preserving our natural environment and taking action to protect future generations from the effects of climate change by moving to a low carbon economy.
    Providing quality and affordable health and dental care for all Australians, while increasing investment into mental health research and support for sufferers.
    Ensuring that governments invest in our public and private education system at all levels, to provide all Australians with a first class education and the opportunity to retrain when necessary."
    "Per Capita is an independent progressive think tank dedicated to building a new vision for Australia.
    ...The study confirmed the gap in the Australian marketplace for ideas. Well-funded conservative think tanks were presenting detailed arguments in the public arena, but progressives had failed to seriously contest these conservative positions. ...
    We decided to establish Per Capita to present the economic and moral cases for progressive policy reform in Australia."
    "The Whitlam Institute records the historical legacy of Gough Whitlam’s years in public life and fosters the contemporary relevance of the Whitlam Program to public discourse and policy.
    The Whitlam Institute is guided by the ‘three great aims’ that drove the Whitlam Program of 1972. They are:
    to promote equality; 
    to involve the people of Australia in the decision-making processes of our land; and 
    to liberate the talents and uplift the horizons of the Australian people.
    “We want to give a new life and a new meaning in this new nation to the touchstone of modern democracy — to liberty, equality, fraternity.” Gough Whitlam, ALP Policy Speech 13 November 1972"
    The immediate observation one makes is that this constitutes quite a high number of separate think tanks - especially since none of them individually achieves the cut-through of the IPA, the Sydney Institute or even the Centre for Independent Studies. 
    The next observation is that there really is a lack of clarity about the objectives.  Catalyst stands out because it is actually quite narrowly focussed on the Corporate Social Responsibility agenda. 
    The rest have either fairly vague notions of encouraging involvement in policy processes or otherwise to promote "progressive" thinking.  I haven't done the research but I don't think right wing think tanks talk about promoting "conservative" ideas - they do talk about promoting the concepts of freedom and of markets.
    To a large extent this vagueness then permeates a lot of the work - with lots and lots of stuff on environmental and rights issues, and less on economic issues.  And where economic issues are addressed they commence from the framing of the right - that economic issues are about markets - rather than the framing of the left - that economic issues are about institutions and in particular power structures. 
    Turning to the actual question posed by @Gwyntaglaw of which left leaning policy shops are up to the task of really grappling with the structure of the welfare system - to create a post welfare state welfare system?  The answer is that the troika of Chifley with Per Capita and CPD could do it.  Ideally Chifley would frame the overall project and the other two would do elements of it.
    Chifley was getting close to addressing the issue at the Progressive Australia conference late last year - a theme of which was to pay particular attention to what could best be described as "early intervention" to escape disadvantage.  The difficulty is that the thinkers still seem to frame "disadvantage" as some kind of statistical luck-of-the-draw event.  In reality it is an outcome of the operation of power structures. 
    A very simple example of this is how the metaphor of a "labour market" has seen corporations largely vacate the field of skill development. Where once a young Australian could hope to be employed by one of our large firms or state owned enterprises and be trained to do a sequence of jobs now the employer is only interested in getting skills from the market - if their skill needs change they sack the workers they have then hire a new lot.  This has become particularly destructive behaviour in the field of ICT skills. In short the adoption of the concept of "labour market" has pushed the responsibility, cost and risk of skill development entirely onto the worker, while the corporation disproportionately benefits from the "surplus value" thus created. 
    An analysis of the welfare system needs to recognise these institutional distortions.
    1. Institutional Economics.
    There are many economic theories that constitute the field of heterodox economics. Institutional economics is one of these - that simply has at its core the proposition that "institutions" cannot be removed from proper analysis in political economy.  In some respects Marx was an institutional critic of the classical economists Smith and Ricardo. Veblen was an institutional critic of the neo-classical economists. More recently there are different strands - one based on the concept of transaction costs that seeks to explain the existence of firms, the others like Galbraith focus on how institutions result in deviations from market theory. 
    2. How the single parents pension won a conservative voter.
    My mother was a conservative voter her whole life (her father had been very briefly a UAP member of the NSW Legislative Assembly).  The only time I think she might have voted Labor was for Gough - and in particular for the single mother's pension. As a doctor she had seen too many women staying in abusive relationships because they would have had no means to support themselves if they left.  The pension and no fault divorce were incredibly significant reforms.

    Confirmation bias - the NBN and facts

    After my last post for 2013, in which I was taking as a given the need to build a fixed high speed broadband network, I've started 2014 engaged in a "twitter-sation" with a gentleman whose twitter description is "business broker".  I had completely forgotten that there is still a bunch of people out there who seriously believe that any investment in fixed broadband is a waste because it will be bypassed by wireless.

    "The NBN is obsolete because of wireless" claim

    The conversation started innocently enough with a question to me asking if I'd ever heard of apps and including this chart.

    As I'd written about the idea of using technology to generate letters to MPs I was wondering if this was some cryptic hint that I should be looking for an app not a website.
    The reply was that "Nobody is using cables. The world is going wireless at a rapid rate."
    I replied citing the ABS stats on downloads per service (more on this later) This evoked the response "ABS stats? How about some global data that is up to date? You do know what Android is? " This was accompanied by the graph below.
    Now I was finding all this interesting - in part because I was carrying on the twiiter-sation using my iPad and the home WiFi.  I asked my respondent what he was actually using and don't think I got a reply. 
    Now the ABS Stats I forwarded were only to December 2012 because that was the set I found using my iPad and a quick Google search.  I realised that I'd actually put all the June 2013 data up in this blog post on 8 October. 
    My interrogator seemed to place some great store in the use of international sources rather than domestic ones. I'm not sure I actually ever got the relevance of either of the two charts - especially since as they are both cumulative data sets the growth rates are relatively modest. Apps is a difficult one because there is no "limit" to it - but the Android devices showed a distinct slowing. 
    But the question remains over what networks are the connections made.  The Cisco VNI global data and forecasts are as follows;
    Global Fixed/Wired was 59% of total IP traffic in 2012, and will be 45% of total IP traffic in 2017.
    Global Fixed/Wi-Fi was 49% of total Internet traffic in 2012, and will be 56% of total Internet traffic in 2017.
    Global Mobile was 2% of total IP traffic in 2012, and will be 9% of total IP traffic in 2017.
    When it is recognised that the period 2012 to 2017 sees the full explosion of mobile devices it is clear the per service download trends will continue for a while.
    Attempts by me to use the comments of Telstra and Optus in support of the idea that fixed networks will still do the heavy lifting, and that the former CEO of Vodafone AU Bill Morrow was clearly backing the fixed line networks were met with derision.  The point that mobile networks rely on fixed was met with "here we go again… repeating same drivel. yes mobile tower uses fibre as backhaul. Why raise something so irrelevant?" I really didn't have the energy at that point to explain the mismatch between Cooper's Law and Moore's Law, that higher speeds like 4G don't magically make more spectrum appear so long term strategies are about smaller cells and traffic offload.
    At the same time came the real stunner "As for Telstra - their 4G profits say it all!"  As I'm pretty sure Telstra doesn't even declare profitability separately between fixed and mobile, I am thoroughly confused about a report on the profits of 4G.  This, of course, did follow from the comment " look at financial & take up rate, then compare it to Telstra 4G."
    So it is time to do some research.  What exactly is Telstra saying about 4G?
    A quick review of the October 2013 Investor Day presentations reveals no separation out of 4G growth or profitability.  Pages 12 and 13 reveal that mobiles revenue in total is growing at 6%, but that margin remains at 38% - up a bit but not significantly different from 5 year trend of 36%.  Full year results announcement to June 2013 did include the comment "We now have sold 2.8 million 4G devices, including 1.9 million handsets and 200,000 tablets, 400,000 dongles and 300,000 mobile WiFi devices."  It noted that 27% of handheld devices were now 4G.  It did not record what percentage of time 4G devices used the 4G network or were actually roaming on 3G (at the time 4G only covered 66% of population.) It also noted that total CapEx of $3.8 billion "has enabled us to meet ongoing customer demand, support the accelerated rollout of mobile 4G LTE and meet ongoing delivery of NBN commitments."
    So I don't really understand the assertion of high take-up rates and profitability.  NBN take-up is - despite incorrect reports to the contrary - actually very strong. (NBN Co's presentation to the JCNBN on 19 April 2013 demonstrates this.
    My interrogator also questioned whether NBN Co should be happy with 2% completion after 5 years. Actual commencement of construction on the FTTP network only really commenced once the Definitive Agreements with Telstra went unconditional in March 2012.  The figures also pay no attention to the extent of build of the transit network (of which Telstra builds part), nor of fixed wireless and satellite. It is also amazing that the "2%" number endures despite there being an additional 100,000 premises passed from July to December.  And even the "Revised Outlook" from the Strategic Review only pushed the completion date to 2024 (Note also that if the FTTP build were to not cover the HFC areas the revised outlook would presumably see it complete by 2021).
    Anyway the whole discussion of mobile as an alternative died when I got no response to my question on what device/network combination my interrogator was using. By the way for the record are screen shots for my iPad using WiFi and my 100 Mbps Telstra cable extreme and then using the Telstra 3G from home (to a Telstra testing point)

    Simple observations: (a) given a choice for doing absolutely anything I will prefer the faster download speed - the difference is immense even on something as simple as refreshing the twitter app and (b) the upload is rubbish on both and its importance is often underestimated for ordinary browsing.
    Corporate Plans and other reports
    So the twitter-sation suddenly leapt into a third new territory with the comment "Why was hiding a report that values at NP Value of NEGATIVE $35b?" 
    This sudden diversion conflated two issues.  The first was the assertion that the Government refused to release the Corporate Plan 2013-16 prior to the election.  This claim was made as recently as 18 November by Mr Turnbull in the Parliament, and on the same day Mr Albanese demonstrated why it was a false claim. (The draft was ultimately published on the AFR website after it had been leaked). As was revealed by NBN Co's CFP Mr Payne at a Senate Committee the Government had asked NBN Co to revise the draft that was submitted to reflect the effect of the suspenson of Telstra remediation work while new asbestos handling procedures were implemented.
    The second was a report in the Australian on 16 November that was headed "Labor told of $31 billion NBN risk."  The existence of this report was not new - after all it was reported on by the AFR on 13 April 2013
    The reports of the Lazard review contain all the essential information but the Australian version specifically has been crafted to mislead.
    The review was commissioned by the Government to provide advice on the Telstra/NBN Co agreement (as reported by the AFR and in the actual story in the Australian), not on the overall project (as claimed in the Australian editorial of 18 November).  The key recommendation of the report was that the Government should seek lengthier non-compete clauses from Telstra. 
    The Lazard report raised concerns about the effect of wireless substitution which was covered in the original Telstra agreement by a prohibition on Telstra promoting wireless as a substitute (as reported by the Australian). This was deleted at request of the ACCC (as reported by the Australian) but at the time all parties agreed it was actually unnecessary because to promote mobile as a "substitute" would be misleading and deceptive conduct.
    The single biggest clanger in the original Australian report was to claim "Net present value calculations are done specifically to take the risks involved into account." They are not.  They are done to make it possible to compare two sets of future cash flows - in this case the "Telstra deal" and the "no Telstra deal" scenario.
    The nub of the issue is included in one line in the Australian report "The advisers said the project had significantly underestimated the cost of its capital, and provided alternative figures, but in the end reasoned that this was a theoretical endeavour."
    That's really it - to do the deal/no deal comparison Lazard simply used a much higher discount rate for doing the NPV calculation - in part because they wanted to use a lower discount rate to reflect the idea that the Telstra deal de-risked the project.  The $31 negative NPV was simply the outcome of doing that - and it certainly wasn't anything remotely approaching a '$31 billion risk."
    Mr Turnbull himself fuelled the confusion over the Lazard report.  In the Parliament on 20 November Mr Turnbull noted that in December 2010 Minister Conroy had said the expected rate of return was 7 per cent.  He continued "The only problem was that this was one month—only one month—after the government received advice from Lazard, the investment bank, that the NBN project had a negative value of $31 billion. No wonder Australians lost faith in Labor. No wonder they are sick of their spin."
    The implication is that somehow one could not say there was a rate of return of 7% if the Lazard report had found a negative NPV. This is not the case.
    Discounted cash flow analysis is not something most people deal with - but business executives, economists, some accountants, and bankers would deal with it regularly.  The internal rate of return (IRR) of a project is the discount rate at which the NPV is exactly zero.  In a set of cashflows for an investment with upfront investment followed by eventual returns using any discount rate higher than the IRR will automatically generate a negative NPV. 
    As the Australian article had noted this is exactly what Lazard had done.  No mystery. No new information. No new risk not quantified.
    My interlocutor at various points in the twitter-sation had disparaged Australia's tech media as biased in favour of the NBN and had critiqued any pro-NBN comment as "busy publishing copy from Conroy's office." The latter was particularly hilarious because one high profile online journalist had observed to me that his apparent pro-Turnbull line had come about because Turnbull's office was far more useful in providing information for stories than Conroy's.
    In particular he was praiseworthy of the Australian for reporting on the Lazard report when no one else had.  Technically he was wrong because the AFR had already done so in April. But the substance was that only the Australian had been provided with a leak in November.  And the article reads like they had the actual report, not just someone's comments on it.  But unlike the AFR with the draft Corporate Plan the Australian did not publish the report in full
    It is mighty odd that the Australian has supported a call to overturn a long standing convention about cabinet submissions when it could apparently publish the information itself.  It is also quite odd because someone has clearly been hawking the story around since April about this report.
    The protagonist as I now think of him was today asking "What? You still don't know about the report was sitting on since 2010? " This is my long form reply to that.
    He quickly pointed to three new items in the Australian as "You guys are beginning to look like a doomsday cult! More articles on obsolete #nbn".  Note the source is again the Australian.
    I resorted to this long form response because the twitter-sation was going nowhere. This really wasn't just because it is hard to discuss the kinds of issues here 140 characters at a time. Similar frustrating conversations can be observed in the comments sections on on-line publications - Delimiter has many examples.  And is just a mine of such conversations.
    It reflects far more the principle of "confirmation bias."  The rather good article on Wikipedia defines this as;
    Confirmation bias (also called confirmatory bias or myside bias) is the tendency of people to favor information that confirms their beliefs or hypotheses. People display this bias when they gather or remember information selectively, or when they interpret it in a biased way. The effect is stronger for emotionally charged issues and for deeply entrenched beliefs. People also tend to interpret ambiguous evidence as supporting their existing position.
     The original description was applied to a tendency of people to use tests of a hypothesis that confirm their hypothesis rather than ones that don't.  This is generalised to a biased search for information and a biased evaluation of information.
    In the context of discussion of broadband policy the position of The Australian has been very clear. One interpretation of this though is that the paper adopts the position that it expects will sell more newspapers. Newspapers by definition are more attractive to people who are not "digital natives" and hence a broadband policy story that is likely to trigger a purchase is one that confirms the anti-technology bias. 
    The reverse is largely true of mostly on-line sources.  That is it is a logical commercial response by each media to undertake its intermediation task in such a way to confirm the beliefs and hypotheses of the people they want to attract.
    Indeed, there is a reasonable theory that the Murdoch media's political coverage in general over the last forty years has been more a matter of following public opinion than forging it. The correlation between the Murdoch policy stance and public opinion does not provide evidence of which way the causal flow operates. 
    Confirmation bias is a real phenomenon; none of us is immune to it. However, having policy discussions in fragmented form such as Twitter or the grabs of the nightly news doesn't really make it possible to address policy issues in such a way that confirmation bias can be addressed.
    In policy areas outside broadband the same facts apply.  People on the left will incant "social justice" and the like minded will find al the evidence why policy to help the less well off is justified.  But people of the right simply hear "culture of entitlement" or worse (see Marlene Goldsmith's Social Justice: Fraud or Fair Go).
    The biggest problem with confirmation bias is that we don't know we are doing it.  The best way to avoid it is to take the very conscious effort to understand what the evidence being presented o the other side really says and write a response directly to it rather than to just quote an alternative statistic. 
    I'm not sure I totally pulled that off in the above - but at least I think my response on the wireless question shows that I do not have a myopic view about the future of wireless devices.  Indeed there are deeper industry questions about whether only the three mobile operators themselves will be able to properly integrate the use of home based networks with mobile networks and thus create a strategic risk for the future of MVNOs like iiNet and TPG.
    But the broadband policy debate is far more complex than protagonists on either side will admit.  In many ways it really is a little like climate change. Just as one cannot conclusively prove that the planet is warming due to the effects of human activity, because of the uncertainty of future applications one cannot absolutely assert what the full future benefits of ubiquitous fibre broadband will be. But just like with climate change one can make a risk-weighted decision on what the right choice should be.  In the case of climate it is to move to reduce carbon emissions.
    The NBN Co strategic review actually found the cost savings of building to an all-fibre network in the future were relatively small compared to the overall cost of the project.  And this is with cash-flows assuming away most of the earlier high end use of an all fibre network.
    The last time a major fixed network investment was made in Australia it was Telstra's decision to build HFC after Optus had.  It is well known that at the time Telstra expected the investment in HFC to be value-destroying - it had a negative NPV of about $4 billion.  But not acting had a bigger impact - negative $7 billion.  (see page 89 of Managing in Australia).  However, these financial forecasts DID NOT include revenue (or costs) for also using the HFC for Internet connectivity.  In April 2012 Telstra CEO David Thodey called Foxtel Telstra's best investment - which has to include the HFC investment.
    And that ultimately is one of the core questions - what are the unknown upsides of building FTTP now. The one thing we do know is that if we don't build FTTP the upside will be zero. So what is the "prudent" decision?  Is it to forgo the upside - or make an investment and realise the upside.  Telstra's twenty year old HFC decision gives a clear guide. 
    1. The Australian editorial referred to above opened with the following.
    In April 2009, The Australian urged the Rudd government to produce the business case for what taxpayers could expect from their investment in fast broadband.
    Despite repeated urging, Labor refused to subject the nation's largest infrastructure project to a Productivity Commission cost-benefit analysis. As did the Gillard government. The obvious reason they didn't want the numbers crunched for public scrutiny was the extravagance of their "Rolls-Royce" fibre-to-the-premises model.
    This editorial reflects an ongoing confusion in Australia's media between a "business case" and a "cost-benefit analysis."  The business case was indeed published - it was the Corporate Plan 2011-14 published in December 2010.  That was subject to independent review by Greenhill Calliburn who found it to be of the standard you would expect from a major listed company. 
    2. The ethics of leaks.
    When a journalist is basing a report on a leaked document they have more leeway than with reporting on a public document to be selective in their reporting, or indeed to make factual errors that may stand uncorrected.
    Neither the Journalists Code of Ethics or the Australian's Professional Conduct Policy makes any direct reference to the issue of leaked documents.  But they are featuring more highly in everyday reporting as digital technologies make it ever easier to copy and distribute whole documents. And they work far more effectively than "we have been told" stories.
    Surely it is time that the policy be that the source document be published - not necessarily on the day of the story but at least with sufficient currency that the accuracy of reporting can be scrutinised.
    3. The case of Israel
    A former colleague just informed me of a December decision by the conservative Government in Israel to back "Digital Israel" which seeks to make all interaction between Government and citizens paperless.  That part is very much the same as "Digital First" which was announced by the Labr Government in June 2013.
    Interestingly the article notes that "to ensure that everything works the way it is supposed to" the Government is also "subsidizing a fiber-optic network that will let Israelis surf the Internet at speeds of 1 gbps (1 gigabit, or 1000 megabits, per second) and more...By 2020, some 70% of the country should be covered with a total of 25,000 kilometers of fiber optics in place when the project is fully completed."
    4. Apologies for the fact I accidently published this before it was finished.