Tuesday, November 23, 2010

What is Labor up to with the NBN?

Labor's policy initiative for implementing a high speed National Broadband Network arguably was a decisive factor in them forming minority government after the hung 2010 Australian federal election.

Rob Oakshott and Tony Windsor both stated that the delivery of fast internet access to rural regions in Australia was a key consideration in their decision to support the minority Gillard government.

So far so good.  Many of Australia's regional areas - even close to major cities - have very slow Internet access.  This hampers local businesses and makes it difficult for them to compete with city-based businesses, particularly when websites need updating and eCommerce transactions are conducted.

Spending money - say $20b - on providing fast broadband Internet access to rural areas would go a long way to providing services and opportunities to rural areas.  This could have the following benefits

  • Companies could conduct business relying on Internet services at any location, not just major cities
  • Regional employment opportunities could increase, attracting people to live in regional areas rather than continue to go to cities such as Melbourne, Sydney and Brisbane that are becoming crowded and congested
  • Innovative health services using video conference and remote surgery could be provided in regional areas, and mean that people living there don't always have to travel to Melbourne for complex or specialist medical treatment
  • Young people in rural areas would have the same sort of access to online media and social network that their city counterparts have.
I think all this is good.

However, the notion of providing fibre to every household in major cities is questionable.  The vast majority of  people who currently have ADSL2+ are happy with their speed of access and download volumes.  Our household manages well with 15GB per month and two fairly heavy Internet users find the speed more than acceptable.

Friends with teenage children downloading lots of media operate on plans up to 150GB per month and find this meets their needs.

The notion that extremely high speed (and expensive) optical fibre is required to every home is simply not true.  The notion that "it will be needed in the future" is highly questionable too.  Given the rate of innovation and change in computing and the Internet, when the future arrives it will be different, and more often than not cheaper.  

Politicians like Stephen Conroy know virtually nothing about technology and networks, yet they are presiding over major decisions like the scope and technology solution(s) for the National Broadband Network.

Most of these decisions are happening behind a veil of secrecy, with "commercial in confidence" being trotted out as the excuse for this.   This is just not good enough.   There has been no community consultation regarding the NBN requirements that I am aware of.

There has been no open industry consultation about it either.

Now Stephen Conroy and Julia Gillard are sitting on the "business case".  Why?  It is because it doesn't stack up?   Do the significant costs of providing optical fibre to every home not have any tangible benefits?

Right there are more questions than answers.  

I support proceeding with a rural high-speed Internet solution (say $20b) but think we should delay any expenditure on implementing optical fibre to the homes in our cities.

Optical fibre is already in use within the "Internet backbone" and further investment in this would be appropriate and cost effective.

Sunday, November 21, 2010

Liberal, Nationals and Labor converge to shut out Greens

When political parties lodge their "group voting tickets" with the Electoral Commission, their distribution of preferences reveals deals that have been done between them.  These "group voting tickets" number all candidates in order and determine the order of voter's preferences for those who vote "above  the line" by putting a "1" in a single party's box.

Looking at the "group voting tickets" lodged for the 2010 Victorian State election, the following preference deals are evident:

Labor and the Country Alliance
Labor has a directed preferences to the Country Alliance in Northern Victoria and Eastern Victoria regions - which could result in a right wing candidates getting elected who would oppose new National Parks, support native forest logging and support duck shooting and hunting.

Labor and the Sex Party
Labor has directed preferences to the Sex Party in Northern Metropolitian ahead of the Greens.  This is likely to have no effect as the Greens are most likely to win a seat on first preferences.  In exchange, the Sex Party is directing lower house preferences in some seats such as Melbourne to Labor ahead of the Greens.

Liberals and the Sex Party
A deal has been done between the Sex Party and the Liberals, making them strange bedfellows. The Liberals have given the Sex Party second preferences in Northern Metropolitan. The Sex Party give immediate preferences to the Greens in South Metropolitan, but as the Greens are likely to have a full quota, the next preference to be effective is to the Liberals ahead of Labor, defeating Labor's Jennifer Huppert and electing Liberal Georgie Crozier (source: Antony Green).

The Sex Party may have even put the Greens last everywhere. The are looking like "the porn and pimps party" run by the big money of the adult industry and are supporting Labor.

Labor and the Greens
Labor has directed second preferences to the Greens in five of the eight upper house seats.  In exchange, the Greens have directed preferences to Labor in 11 of Labor's 13 most marginal seats (Mount Waverley 0.3%, Gembrook 0.7%, Forest Hill 0.8%, Mitcham 2.0%, South Barwon 2.3%, Frankston 3.2%, Mordialloc 3.5%, Prahran 3.6%, Burwood 3.7%, Ripon 4.3%, Bendigo East 5.4%, Bentleigh 6.3%, Ballarat West 6.5%)

Labor has also directed preferences to the Greens in 79 of 88 lower house seats, but this is of no real benefit to the Greens as the only seats where they are likely to get elected are direct contests between Labor and the Greens, which means Labor preferences will not be distributed.

The Greens appear to have withdrawn preferences in two of the 13 (possibly Gembrook and one other) in retaliation for Labor directing preferences to the Country Alliance in the upper house.  The Greens have stated that they did not direct preferences to Labor in lower house seats in regions where Labor preferenced the County Alliance.

Liberals and the Greens - no deal
The Liberals announced their decision to put the Greens last in all lower house seats across the state. This breaks with their practice in past elections of putting the Greens ahead of Labor on their how to vote cards.

There appears to be four possible reasons for this.  The first reason is that the Greens were apparently not offering the Liberals anything they wanted - such as more open tickets (no preference direction) in key Labor marginal seats.

The second reason appears to be ideology. John Howard stated that the Coalition had nothing to gain by helping the Greens take seats from Labor. This was due to perceptions that the Greens would always support Labor and their agenda was more extreme. "I think my side of politics has got to be very careful about giving preferences to the Greens. In my view the Greens are worse than Labor". "The Greens are fundamentally anti free enterprise. They have terrible  foreign policy attitudes and they have a lot of social policy attitudes that a lot of Labor people would find abhorrent."  Senator Helen Kroger expressed similar views.

It is interesting to note however that both Howard and Kroger participated in previous decisions to preference the Greens ahead of Labor.

However, there was a split within the Liberal party on this.  Ex-Treasurer Peter Costello stated that it made good political sense for the Coalition to direction preferences to the Greens in the four inner city seats of Melbourne, Richmond, Northcote and Brunswick as Labor losing these seats would make it easier for the Coalition to win government, and because Labor would be directed campaign resources on two fronts - the inner city contest with the Greens and the other Labor marginals mostly in the outer Eastern Suburbs.

Ex Liberal Premier Jeff Kennett weighed in with an attack on Helen Kroger, stating the Liberals should direct preferences to Labor in the inner city seats, but then later backed Ted Baillieu's decision not to.

Premier John Brumby also made an extraordinary direct appeal when he begged for Liberal voters preferences for Labor ahead of the Greens, stating that Liberal voters should realise a Labor government would be better placed to tackle the big policy challenges than a minority government with the Greens holding the balance of power. ''For the Liberal Party to de facto elect Greens members of parliament is quite anathema to the Liberal Party,'' Brumby said.

The third reason is that it seems there were perceptions within the Liberals that the Greens would not form a minority government with them in the event of a hung parliament, which would have been likely if the Greens won four inner city seats.   The Liberals were possibly thinking "if we have got nothing, we have got nothing to lose", or they may prefer staying in opposition to the prospect of entering a minority government with the Greens.

The fourth reason, probably the most likely, is that Labor got onto its big business mates and used them to persuade the Liberals to put Labor ahead of the Greens.

So the Liberals announced their decision to direct preferences to Labor in the four inner city seats, and attempted to claim the high moral ground by claiming "voters now have a clear choice" and that "a Labor majority government is better than a Greens-Labor minority government.  Brian Walters, the Greens candidate for Melbourne stated that in doing so, "The Liberals and Labor seem to have formed a grand conservative coalition to shut out the Greens".

Mandatory preferences are not good for democracy
The electoral requirement for parties and candidates to specify "preference flows" for Upper House voting in Victoria (and the Australian Senate) opens up the playing field for parties and candidates to do all manor of "preference deals", which sometimes results in candidates being elected from a tiny percentage of the vote as Stephen Fielding (Family First) and Peter Kavanagh (DLP) were from Labor preference deals.

This is anti-democratic as voters are not involved in or even aware of such deals, yet their votes go where the party apparatchiks have decided.

A solution is to give voters the right to decide NOT to distribute the any or all of their preferences.  For above the line voting this would mean that a "1 Liberal" vote would go only to the Liberal candidates and not "flow on" to others.  For voters who do wish to allocate their preferences they could go 1, 2, 3, 4 etc above the line, or number any desired squares below the line in sequence - stopping when they want to.

In the lower house, how-to-vote cards favour political parties who have the resources to (people and/or money) to have them printed and handed out.  This provides a heavy bias against any independent candidates who don't have the resources to do this.

A solution would be ban handing out of how to vote cards, and provide fixed printed versions in every polling booth.   This would have the added benefit of eliminating the massive waste of paper from the hundreds of thousands how-to-vote cards printed and mostly discarded.

In conclusion
The Liberal-National coaltion's decision to direct preferences to Labor has certainly have impacted the Greens chances in all four inner city seats, but a lot still depends on the voters, many of whom may not follow their party's how to vote cards and choose where their preference goes.

If Liberal voters in these seats follow the Liberal how to vote card, then a vote for the Liberals will be a vote for Labor. 

If you live in the seat of Melbourne, Richmond, Brunswick or Northcote (or any other seat for that matter) you would do well to allocate your own preferences and not follow any how to vote card.

It is also possible that  Labor preferences may elect the Country Alliance to the Upper House, and that they may hold the balance of power in the upper house.  Yet another right wing group could hold the government to ransom.

Note that some of the articles below would have been written by party apparatchiks and fed to the media, and may bear no semblance to the truth!

Friday, November 19, 2010

Has Melbourne's property bubble burst?

After a long sustained period of dramatically rising house prices in Melbourne, and across Victoria, the market seems to have flattened out at last.  Many house prices in metropolitan Melbourne have doubled over the last 10 years.

I think the major factors contributing to this are:
  1. Tax free status of the place of residence. Home owners pay no capital gains tax when they sell their house.  This is one of the last easy ways to avoid tax.
  2. Negative gearing for investors. Investor can write off interest on loans for investment properties as a tax deduction.  This is also easy tax avoidance.
  3. First Home Buyers Scheme grants puts money in the pockets of first home buyers which allows them to pay more for a house
  4. Ongoing volatility in the share market creates doubts about shares being a good investment
The first three factors are all dependent on and associated closely with continually rising house prices. Nobody wants to take out a big loan, buy a house, then see its value decline.  As soon as there is a perception that house prices are flat (or even worse falling), we risk entering a negative feedback loop of the kind seen recently in the United Kingdom and the United States.

We could end up with a rush to sell houses to avoid losing capital value, which in turn floods the market and would drive the price down.  In addition, if unemployment rises and/or interest rates keep increasing, some people can no longer make their home loan repayments so they would be forced to sell their house.

Money borrowed to buy houses at inflated prices only benefits the banks and other lenders who reap a windfall in interest payments over a long time period. This money would be better spent on improving the energy efficiency of our housing stop so the we use less energy and save money on bills.

Factors one, two and three are "sacred cows" where no politician will go.  Unfortunately, I fear these factors  have combined to create a huge bubble in house prices which is based on peoples perceptions about wealth without having any real basis.

The other big problem is affordability and provision of housing for people and families on low incomes.  Many are simply priced out of the market.  They cannot afford to buy a house, or pay inflated rents that landlords charge to offset their large loans.  This is not good for the long term cohesion of our society.

By coincidence, the Australian has also published a prominent article on this topic.

Update 24/1/11
Apparently Melbourne's house price bubble is no longer growing.  I wonder if it will burst?

In the last two decades, we have gone from affordable housing for most to the world's most expensive housing for the wealthy elite, under the gaze of our politicians.

See also