The Thing About Kevin & The Shitsville Express

The last few months have been a hellish roller coaster ride, writes Assistant Managing Editor Timothy W. Humphries

Funnily enough, I remember during the 1980s a particularly colourful roller coaster ride at Dreamworld. Its gone now. However It used to slide in and out of view as our family barreled down the Pacific Highway to visit relatives on the Gold Coast.

I would argue we have entered a Dreamworld type era of twists and turns in Australian politics. Both sides of politics are setting themselves up as the answer in a political climate best described as 'disillusioned'. 

While I cannot vote Labor, I struggle to find justification to vote Liberal. Even against my own loyalty and trust, Tony Abbott agrees with Climate Alarmism and wants a direct action plan that will plunder the taxpayer "a bit less" then the other mob. This "a bit less then the other mob" paradigm has dominated every policy response.

Meanwhile Kevin Rudd in his newly incarnated form wants to punch forward with a dubious NBN, Health Reforms and a band-aid Asylum Seeker policy that doesn't account for long term requirements.  

In a politically unstable environment, there is no clarion call to achievable freedom and small government. It remains incredible to me that a man derided and replaced by a marxist radical can be reinstalled and yet still find favour with the Australian electorate.

If the narrative is correct and Kevin Rudd's leaking against Julia Gillard is the primary reason for his return to the leadership, there is something seriously wrong with how political narrative is communicated in this country.

The obsession seems to extend to the occasional nattering of the media class about whether or not Malcolm Turnbull would be an appropriate replacement for the Leader of the Opposition, in the obvious unfortunate circumstance that he loses the next election.This media dynamic is crazy!

Malcolm Turnbull, if the media's dreams are realised essentially sits in the same position that Kevin Rudd sits regarding climate change and many other issues. The sort of differentiation that is equal to naught.

One only has to mention the words "market mechanism" and somehow sliding from a disagreeable Carbon Tax to a disagreeable Emissions Trading Scam Scheme is bipartisan.

So here we are again. Lurching from one perceptual crisis to another, all the while assaulted by the visage of litugical charlatanism.

In such a parlous state the mind wanders to the future and who might be around the corner on Australia's political landscape.  

Whilst there are a mixture of views on Joe Hilderbrand and his brand of "journalism", his recent ABC program the "Shitsville Express" is a remarkably informative take on the supposed leaders of tommorow.

I do have allot of respect for what Mr Hilderbrand is trying to achieve with this program. Clearly the premise points to the future of the country through Gen Y and Millenial eyes. I liked this element.

However what our "future leaders" fail to realise is the nuance and guile required to achieve real reform. The sort of March of the Patriots reform that has been lacking in the polity since the end of the Hawke-Keating, Howard-Costello era. 

We have entered a Dreamworld scenario, where revolving door leadership and zany 24 hour news cycle explosions have replaced the considered creation and management of political narrative, that is comprehensible to those of us outside the beltway.

I remember being asked to jump on the old Dreamworld roller coaster by someone who had pumped themselves up on hot dogs, lemonade and fairy floss. After successfully declining, I watched their demeanour change after the ride ended.

Unfortunately Australian Politics and the Shitsville Express appear to be mirroring each other in that they reflect a process whereby politics itself is turning into a metaphorical disembarkation and search for a brown paper bag.

Timothy W Humphries is Assistant Managing Editor of Menzies House

Digital Set-Top Boxes – Cheaper at Harvey Norman

Quote

Every set-top box delivered under Labor's digital TV rollout could be costing the taxpayer an average of $698 –  almost double the government's original estimate, more than 30 times the cost of a box bought at a department store and far more expensive than a new 106cm flatscreen TV.

In May last year, Senator Conroy put the average cost for each installation at $350, but recent figures provided to The Australian by the digital switchover taskforce show that the initial budget of $69.5m has delivered 77,400 installations, which works out at an average of $897 each.

With just days to go until the analog switch-off, and faced with the prospect of being left without a working TV, Ms. Pasco phoned the son of a well-known retired local TV installer.

He fitted a set-top box she bought from Harvey Norman for $48.

All up, the cost of the set-top box and the installation set her back less than $100.


Set-top boxes is item 8 from the top 50 ALP achievements since 2007.

From the same people who are spending $36 billion (plus) on the National Broadband Network.

 

 

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How much will the NBN actually cost the Aussie taxpayer?

Sean-Garman Sean Garman analyses the financial claims underpinning the National Broadband Network:

 The National Broadband Network (NBN) has the potential to be an extraordinarily expensive white elephant that potentially exposes the Australian taxpayer to financial risks well beyond the political and business cycles. The NBN capital structure as it is currently set up increases the risk that this monopoly will be a financial, legal and operational drain on the Federal Government. There are a number of claims about the financial cost of the NBN which have not been rigorously examined by media commentators either because they do not understand or because they are too focused on the political or technological aspects of this project.

NBN will ‘only’ cost the taxpayer $27.5bn not $43bn

This claim is often repeated by the Government and pro-NBN supporters. At this moment, the Australian Government is directly contributing $27.5bn in equity into the NBN capital structure with the NBN Co. borrowing $13.4bn from 2015 onwards. The problem with this analysis is that it does not examine the potential downside risks to putting in ‘only’ $27.5bn in equity for an essentially unproven concept.

Waterfall impact – dividends, cost of equity and returns

In capital structures there is a term called a “waterfall” which is about tranche seniority when being paid an income (interest/dividend) or when the asset is sold. The most senior “tranches” are paid first with whatever remains being paid down the line, hence the analogy to a waterfall.

Debt ranks senior to the equity in capital structures. Under the proposed scheme, if the NBN does not return a sufficient net cash flow then the equity tranche will not return a dividend to the Australian Government. Therefore it will act similarly to dead capital – a sunk cost without any stream of constant income.

The Government assumes that the equity will be borrowed at a market rate of 5.39% (a 10-year Government bond yield) but the return will be 7.04%, thereby earning the government a 165 basis point spread or differential equivalent to $435.75m per annum on the total $27.5bn equity. The NBN will only begin to pay the government dividends from 2020 onwards. By that stage Australian taxpayers would have contributed the equity cheque but without receiving any compensating income from NBN Co.

Unfortunately this assumes that the NBN is profitable enough to provide that constant stream of income to the government. If the NBN is not profitable or there is not enough net cashflow at the end of the period to pay out a dividend cheque, the taxpayer still has to pay 5.39% to the bondholders but will not earn income to compensate for that. The net result is the taxpayer paying more in interest every year than they receive in income from the NBN.

Default provisions and a government guarantee

As I mentioned earlier, debtholders rank senior to the equity holders which raises some interesting questions around what happens in the event of a default. Every financial deal has a ‘term sheet’ which sets out the key terms and conditions. This is very important because technical details matter during times of distress.

NBN Co. is a company, we are told, who sign commercial agreements and the government will not guarantee NBN debt. Assuming this is true, when they borrow the $13.4bn in debt there will be a number of provisions in those documents which will be negotiated with the lenders. This raises additional questions:

  • What triggers a default? i.e. what financial covenants will NBN have and how easy would it be for them to breach it?
  • What legal rights do debtholders have when investing in the NBN Co.?
    • Can debtholders force a change in management in the event of underperformance?
    • Will debtholders take control of the fibre optic assets if covenants are breached?
    • If this happens, can the debtholders use their newly legislated monopolistic powers to push up prices for the retailers in the market?

I can go in this vein for a while. If the Government is serious about not guaranteeing the NBN then this will be reciprocated with debt holders demanding more security around their large investment in an untried company. If it is decided to change the debt structure to remove debt holder security, then investors will need to be compensated with a higher interest rate charged which reduces the internal rate of return (7.04%) that the government is forecast to earn.

A potential albatross around the neck of taxpayers

Supporters of an NBN do have a point that it can generate unexpected benefits over decades which simply cannot be quantified. If this was the only case for the NBN then the government should not pretend that they can quantify a defined benefit in perpetuity and should pay for it out of general tax revenue.

Unknowable benefits are not a good enough excuse to pay $27.5bn upfront, borrow an additional $13.4bn and then leave taxpayers who are pressured to take on a NBN at the mercy of an underperforming monopoly with private debtholders who may have legal rights to take over the company and potentially use their monopolistic powers by hiking-up prices.

In an era with greater-than-ever demands for public investment, we need complete transparency with the largest-ever government programme and we are being failed at every turn by an incompetent Minister who has nailed the trousers of the Australian taxpayer to the NBN mast. Let’s hope the ship doesn’t sink!

Sean Garman works in Structured Corporate Finance in London, he was the former Macquarie University Liberal Club President and is now Co-Chair of the Conservative Party’s City Future committee for Conservative supporters under 35 who work in finance in London.

 

Wireless challenge to ‘future-proof’ NBN | The Australian

A TECHNOLOGY guru who has been described as the Thomas Edison of Silicon Valley claims to have developed a new wireless technology that could one day rival the download speeds on the National Broadband Network.

The new technology, called DIDO, allows internet users to access download speeds up to 1000 times faster than possible on conventional wireless networks, without any fall in speed as more users get on to the network.

Opposition communications spokesman Malcolm Turnbull said the wireless breakthrough underlined the importance of being "technology agnostic" when it came to choosing broadband solutions to meet the nation's needs.

The federal government has pledged to spend $36 billion to roll out a fibre-to-the-premises network to 93 per cent of the nation over the next 10 years. The remaining 7 per cent will be served with a mix of wireless and satellite broadband technologies.

Tim Flannery and Michael Kirby to sell NBN

ALS rant JULIA Gillard's top salesman for climate change action and a former judge are on a shortlist of candidates to promote the $36bn NBN.

The Australian understands the Department of Broadband, Communications and the Digital Economy is looking to recruit about a dozen "NBN champions" who would be conscripted to publicly spruik the benefits of the Gillard government's $36bn wholesale fibre network, if a yet-to-be-revealed communications strategy gets the green light.

Forget that Ms. Prime Minister. Those two couldn’t sell Beer and a Meat Pie at a football game.

When it comes to “selling” there are only two people who can do the job!

Demtel’s Tim Shaw and “Vince” from Shamwow!


 



 

But there is still more.

Have Tim and Vince help you sell your border protection policy.

But I know you want more.

Tim and Vince can then sell your economic credentials on Budget night.

It gets better.

Tim and Vince can sell the virtue of your minority Government.

But I know you want more.

Tim and Vince will sell the success of the Pink Batts and BER roll out.

This is truly an amazing offer!

But I don’t think Tim and Vince can sell your stinker of a Carbon Tax.

If Bullshit was music, our Government would be a brass band.

Andy Semple

Speak without fear and question with boldness.

Superfast broadband scheme proposed for 5 million rural (UK) homes

Fujitsu claims its £2bn (that’s $3.1bn AU) investment could see superfast broadband reach 95% of UK population.

Britain’s sluggish rural broadband network could be revolutionised for 5 million people within five years, a consortium of companies led by Fujitsu has claimed.

The firm promised that it could eventually offer households a 10 gigabit connection, and said “from day one” ultrafast one gigabit connections would be available. Those speeds are more than 10 times faster than proposals from BT, and would be among the fastest in the world.

And the Gillard Government is going to spend north of $44 Billion (plus?) on the NBN! Outrageous.

I’d suggest Senator Conroy gives Fujitsu a telephone call – urgently.

More via the Telegraph

Andy Semple

Aged 19 and hating the NBN

Being in Generation Y and not wanting with the NBN has so far made me an outsider amongst people of my age. The advent of super-fast broadband has become for my contemporaries the greatest gift any government could give them.

As a student of politics and a keen reader of economics, the NBN really didn’t resonate as highly with me as it did for my friends. Whenever I make my opinion known among them, I was told that I was being elitist.

Why is NBN so tantalising a policy for young people? The answer is Mum and Dad will pay for it, and I will be able to play, download movies and see friends’ facebook photos faster than ever before. Of course this is exciting and even I can see the appeal, but it’s no wonder the NBN was adored by my Generation. And the adore it despite the fact that it will be Government owned, expensive and deliver nothing substantial to Australian battlers.

The fact that the NBN was to be a nationalised corporation should have had alarm bells ringing. The private sector would have provided the equivalent service, albeit later rather than sooner. This does not fly with Gen Y. We are the Now Generation. The desire for downloads completing now is the same desire for super fast broadband now.

When the NBN finally comes online, Australians will have one choice when it comes to broadband. What complicates the matter further is that as Labor becomes increasingly steered by the Greens, the chances of the NBN ever being privatised become smaller and smaller. If anything, this should be the greatest fear of the Australian people, especially those who praise the Internet as the greatest platform for free speech. There can be no greater a dissonance than the Government owning the Internet.

The Internet is the technological equivalent of a perfect free market: there is no regulation. The details of Stephen Conroy’s Internet filter are frighteningly sketchy at best – a worrisome prospect. Julian Assange would have found it very difficult to leak any cables if the Internet was controlled by the very Government he sought to incriminate. Young people cannot see the connection between “Government owned” and “inefficiency”; we’re too young to remember Telstra being the only telecommunications company in Australia.

We want our iPhones to be faster. We want the Government to make this happen. Generation Y cannot comprehend how much extra tax they’ll have to pay because of the NBN. And I say that because an age group that largely doesn’t pay much tax currently, finds the idea of more tax hard to fathom. Tony Abbott’s slogans wash off us, seen as the banal and cranky mutterings of a conservative who mispronounces modem.

The fact remains that private enterprise will always be superior to publicly owned utilities at delivering services. This member of Generation Y will not entertain any statements to the contrary. Friends of mine who retort “But corporations only care about profits” have completely missed the point. The profit-motive is the precise reason why the NBN should be privatised sooner rather than later. It will ensure quality of service and most importantly, constant improvement of facilities to compete with other companies.

There is no guarantee that the publicly owned NBN will endeavour to improve its services. Competition will not be an issue because there simply won’t be any. If or when the NBN is privatised, there will still be a single company owning all of the optic fibre in Australia.

The apparrent benefits of the NBN for regional Australia, lower income erners and education becomes the argument Gen Y uses to try and sound mature, as if they really care about people who can't afford broadband. Contrary to popular belief, the NBN will do absolutely nothing to improve the quality of life of the average Australian.

It is not plausible to suggest that rural families who cannot afford to send their children to superior boarding schools, will be able to afford a private tutor communicating with their child via live video feed (all day, mind you), using an expensive form of high speed broadband. This is the deluded fantasy of this shoddy Labor Government that will never be realised. If hospitals require a faster transferral of large information, which obviously is in the best interest of the patient, then the Government should absolutely upgrade those facilities. Yes, that would cost a considerable amount of money, but not anywhere near $43 billion.

Labor’s assessment of people’s “need” for super fast broadband is misguided and hugely irresponsible. Gen Y have swallowed the propaganda as expected and voted for the broadband. Spending $43 billion, in a now unarguably two-speed economy, when our country has been hit with two devastating natural disasters, is a wasteful depravity committed against the Australian public.

Thomas De Angelis is a 19 year old Law Student from the University of Notre Dame

 

Follow Obama’s lead on wireless

Jeffrey A. Eisenach, an adjunct professor at George Mason University, writes in today's Australian:

IN his January 25 State of the Union address, US President Barack Obama called for making fast internet access available to 98 per cent of American households. At first blush, it might sound to Australians like the President is imitating Labor's National Broadband Network, which promises a fibre connection to 93 per cent of Australian premises. In reality, though, there are profound differences between the Obama administration's broadband plan and the controversial NBN.

The most obvious difference is that the NBN is focused almost exclusively on fibre, while Obama spoke of deploying "high-speed wireless". Specifically, the President was referring to 4G wireless services using either Wi-Max or LTE technologies, which are already delivering speeds of up to 100Mbps downstream – the same as initially promised by the NBN – and have delivered up to one gigabit speeds in trials, the same speed the NBN aspires to achieve in the future.

Not to mention the U.S. rollout is being privatly funded, while Labor continues to waste billions of taxpayer dollars on an outdated technology. Read the rest.

(Posted by TVA)