Aiden, most of your questions are answered here:

http://www.malcolmturnbull.com.au/archive/coalition-broadband-policy-frequently-asked-questions#energy

As to Govt just creating money and letting the Dollar crash, what a great way to create massive inflation and a lack of trust in our $. Banana republic here we come....

Yabby,

I had to laugh - the first time I tried to open that link of yours it got a 524 error. It appears Malcolm Turnbull has failed to understand the importance of internet reliability!

But when I did finally manage to load it, I found that I had misremembered one crucial detail: the governments calculations were based on a discount rate of 8% not 7%. So there's an even bigger artificial short term bias than I remembered.

I'm not suggesting creating enough money to cause massive inflation. But inflation is low at the moment, as too little money is being created by the private sector. Public sector spending is no more inflationary than private sector spending.

The myth that the government borrowing from its own central bank would crash the currency is based on demonstrably false assumptions. In reality currencies only collapse when they're held above market value, where the government tries to print money to finance a war, and where the government tries to print money to pay off foreign currency debt. When Keating floated the dollar, the Australian government stopped borrowing in foreign currencies, though public sector businesses were still allowed to until about a decade later.

The long term value of a currency depends on balance of trade. We should remember that instead of needlessly panicking about our dollar's short term value.

*It appears Malcolm Turnbull has failed to understand the importance of internet reliability!*

Aidan, far more likely, you are confused as ever :) I remind you that the whole Telstra system failed the other day, due to human error, some guy pushed the wrong button. Cables will be cut as well, by people drilling holes through them accidentally, I can guarantee you. All this despite the very best of technology that is already being rolled out.

*on a discount rate of 8% not 7%*

You seem to have missed his point about return on investment. Spending 30 billion on technology that only a tiny percentage of the 11 million households even want and are prepared to pay for, is an extremely poor Govt investment and quite foolish, when the same money could be invested in other projects with a much higher return.

*I'm not suggesting creating enough money to cause massive inflation.*

Ahh, but this is just your little hobby horse that you are intent on seeing spent. 30 billion$. Along comes every other lobby group wanting Govt money spent and Govts intent on winning elections keen to spend it, as it is not their money that they are promising and hey presto, you land up with massive Govt spending and roaring inflation.If the NBB were my business, I would not be spending it, as it is a poor business decision. So it would also be a poor decision for the country, which is the point. Labor just love to promise everyone, other peoples money! How it is ever repaid, they conveniently forget. So are you going to force people to pay more to recoup your 30 billion, for a service that they don't actually want? That would be Govt monopoly gone crazy.

Yabby,

Appreciation of irony is not confusion.

You seem to have missed MY point about return on investment. interest rates have fallen to 2%, so anything with a return of over 2% is profitable. Therefore the government should not base its decisions on what's worthwhile on a discount rate of 8%. Doing so introduces a huge short term bias to decision making, and will inevitably cost the taxpayers more in the long run. And if the government really is failing to invest in other projects with a much higher rate of return, that's a failure of government policy. If such projects exist, they should be implemented as well, but right now very few things are so profitable, which is why interest rates are so low.

"Ahh, but this is just your little hobby horse that you are intent on seeing spent. 30 billion$. Along comes every other lobby group wanting Govt money spent and Govts intent on winning elections keen to spend it, as it is not their money that they are promising and hey presto, you land up with massive Govt spending and roaring inflation."
Right now the government is spending too little; not only is inflation not a problem, but lots of people are unemployed because neither governments nor businesses are willing to spend the money to employ them. So there is still plenty of scope for government to fund other things as well.

If there is so much government spending that inflation becomes a problem, they can deal with it by putting up interest rates or putting up tax rates (the latter is preferable to the former IMO). But governments should try to coordinate the projects so that they don't enter the heavy spending phase at the same time in the same region, unless that region has a high unemployment rate to start with. That way inflation will not become a problem.

(To be continued)

Yabby (continued),

To clarify my position: I regard inflation as the biggest constraint on government spending. But as my understanding of the causes of inflation has improved, so has my opinion on what course of action is best for the economy.

"If the NBB were my business, I would not be spending it, as it is a poor business decision. So it would also be a poor decision for the country, which is the point."
Interestingly enough, when the government were deciding which NBN option to go for, Simon Hackett, who was then head of Internode, said that FTTP was the best option but the second best option was for the government to do nothing.

"Labor just love to promise everyone, other peoples money! How it is ever repaid, they conveniently forget. So are you going to force people to pay more to recoup your 30 billion, for a service that they don't actually want? That would be Govt monopoly gone crazy."
These long term investments eventually pay for themselves; it's the false economies like FTTN that eventually work out more expensive. The NBN is about meeting future needs, not just present needs or wants.

There is nothing wrong with Labor (or any other party) promising to spend government money on worthwhile things. When the economy's running below capacity (as it is at the moment) most of the money will be recouped through the tax system anyway. Meanwhile what the money is spent on improves productivity, so it will eventually pay for itself.

*and will inevitably cost the taxpayers more in the long run.*

No it won't, Aidan. Technology is actually driving costs down, as we have seen in this case. It is highly likely to become even cheaper, as new technology is invented. By then we might see if consumers actually want and are prepared to pay for something which you now want to force them to pay. You are not the first who thinks that he can predict the future and who invariably lands up being wrong.

Interest rates is something else which you claim to be able to predict. They may well rise, which leaves those who have borrowed too much, in all sorts of trouble. Already there is talk in the AFR of Australia losing its 3A rating, in which case all money borrowed overseas by Australian banks and others, would rise in cost. The very reason why Australia came through the GFC in good shape, was because Costello had paid down our debts, unlike other Govts (Greece and others) who did exactly what you are proposing for us to do.

*These long term investments eventually pay for themselves;*

Oh yeah. Like the billions upon billions invested in the MV industry, or the zillions of other Govt failed investments. Millions paid to Kodak for a film plant. Was that a wise investment? The list is endless.

*There is nothing wrong with Labor (or any other party) promising to spend government money on worthwhile things.*

Ah, there is the rub. Govt as been pretty hopeless at predicting the future and making smart decisions about what is worthwhile. So billions are peed up against walls. Perhaps we should start by making things a little more business friendly. It is pretty hopeless having a Fair Work Commission, where I gather people are paid 350K a year, which is not a bad lurk, which then has awards of 160 pages long, if you want to hire somebody to pump petrol. It was featured today on Switzer and shows why so many people say stuff investing in Australia.