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The Forum > Article Comments > Politicians fiddle over ports, roads, rail, power and gas > Comments

Politicians fiddle over ports, roads, rail, power and gas : Comments

By Rod Sims, published 3/10/2005

Rod Sims argues governments should not wait for a crisis before they upgrade Australian infrastructure.

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This is standard insider thinking that refuses to accept that the very people who are tasked with fixing the problem are, in fact, a major part of the problem.

With urban water, for example, these would be government "best practitioners" have not even bothered to distinguish between what volume of water is a basic need and what additional volume is a discretionary whim.

They have assumed that providing excess water for urban landscaping purposes is a 'just cause' for which someone else's river can be acquired for the 'public good' without ever asking if the users of that indulgent water have satisfied the crucial test of eligibility for public welfare. That is, have the people who demand to be supplied with indulgence water made "all reasonable and practicable steps to help themselves" before puting out their hand for an allocation from the public purse.

The short answer is no. Enough rain falls on each suburban roof in our cities to satisfy all the needs of the residents. And any shortfall in supply can be provided by a 6mm plastic pipe that is light enough, even when full of water, to be strung up a power pole with less visible impact than an Optus cable.
Posted by Perseus, Monday, 3 October 2005 3:01:09 PM
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Agree with this article. Doesnt say anything that isnt already obvious. It all sounds like common sense to me. The only problem is the politics of doing something about it. I.e., dealing with the interest groups that stand to lose something.

Dont quite get what you're getting at Perseus? I think Sims is fully aware that "those tasked with solving the problems", that is, the government regulators are part of the problem. He doesnt hide this fact, if any thing he points it out: "Governments should not wait to be confronted by a crisis...And they should not be too distracted by the fallout from the determinations of regulators that affect the profits of specific companies."

The issue you raise is a key one for government regulators. What is the right price? Obviosuly if the price of water was higher, people would install water tanks and 6mm plastic pipes. Unfortunately, even with rebates, the price is still too low.

But anyway, is your complaint about government being part of the problem implying that we would be better off without government regulations? Relatively unfettered monopoly advocated by the likes of Milton Friedman? Who knows, maybe market competition and the ability to own anything and everything would be a better guardian of the public good?
Posted by weapon, Monday, 3 October 2005 6:38:10 PM
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Well we could just do nothing at all about infrastructure and wait and see if the invusible hand comes down and fixes it. Then we could do the same for health and education. And why dont donated organs go to the highest bidder? The system we've got now reeeks of socialist utopianism.

If all this doesnt work then at least future generations will know not to follow our example.
Posted by Jellyback, Monday, 3 October 2005 10:58:46 PM
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Part 1
Are Costello and Howard fiddling too much with our public money?

“A country or person is enriched not by the act of not spending all their income on consumption. They are enriched by the positive act of using these savings to augment the capital equipment of a business or a nation.” - John Maynard Keynes - 1931

According to Kenneth Davidson, editor of the dialectical academic magazine “Dissent”, here we see the intellectual confusion in Mr Costello’s grand economic strategy which was sketched out in the 2004 electoral campaign (whom do you trust to keep interest rates low?) and detailed in the 2005 budget where the forward estimates spelt out billions to be funnelled away from nation building into Costello’s Future Fund. The real mistake according to Davidson, is that much of the Future Fund will be used to pump money into the share-market, possibly inflating share prices and reducing yields.

According to economists, gambling on the share market, is not real investment. Australia is now in the dangerous position where short-term interest rates are higher than the long-term bond rate, which thinkers see as a harbinger of a future recession. More concerning is that the government could be keeping short-term interest rates high in order to induce foreigners to continue financing Australia’s record $430 billion foreign debt.

Meanwhile, as short-term rates rise in line with increasing foreign investor nervousness about the increasing value of the Aussie dollar, long term rates have declined owing to a lack of real investment opportunities. At the same time Federal governments are failing to look after infrastructural and human needs as well as apprentice training, etc, in order to receive blessings from the ratings agencies for balanced budgets.
Posted by bushbred, Sunday, 9 October 2005 1:07:16 AM
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Part 2
Are Costello and Howard fiddling too much with our public money?

As Keynes points out, real interest rates can fall for two opposite reasons, firstly, a well budgeted supply of investment capital, and secondly a deficient supply of budgeted capital for investment. While rates falls because of the first reason provide a public benefit, for the second reason the lower rates are simply a measure of bad planning and increasing impoverishment. According to Davidson, our present Australian Treasure has not learnt Keynes’ lesson.

The result has been that Costello even with public money at hand, feels he is better off to stash it away into his Future Fund, and even speculate with it, while using borrowed money to finance Australia’s infrastructure and social needs. According to Davidson, the higher charges and cost of capital for privatised infrastructure are reflected in the economic rents being extracted by rentiers who can persuade/bully; blackmail governments into running things the way they want, while at the same time, Costello is piling taxation profits, etc, into a Future Fund expected to grow from $15 billion this year into $150 billion by 20-20.

Davidson believes that as long as most people misunderstand the role of share markets, the full extent of Costello’s moral and economic turpitude in diverting large sections of public money into private financial markets over the years, will not be understood - even though speculating with public money by a Federal Treasurer on this scale should be a major political scandal which would bring down any government. The ultimate cost could indeed dwarf the $2 .1 billion gambling losses racked under Costello’s watch during the $13 billion US dollar currency swap program - losses which were kept off budget so the government could deny them. Furthermore, even though these losses have now been confirmed by a 2005 Auditor-General’s report and signed by Treasury, the issue has been, apart from three exceptions, studiously ignored by the main media.

Goerge C, WA, Bushbred
Posted by bushbred, Sunday, 9 October 2005 1:27:23 AM
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