Telstra

The announcement that the government has barred Telstra from building the national broadband network is the best news in Australia telecommunications I have read for a long time. Australia lags far behind many Asian and European countries in the provision of high-speed, high-quality and affordably priced broadband internet.

When Telstra was privatised, a very valuable public asset--the copper wire phone network--was handed over to it. Telstra has since done all it can--including intense lobbying for changes to laws and regulations--to exploit its monopoly position. This has been to the detriment of its customers, contractors, other telecommunications companies, the government and the Australian public.

Innovation in telecommunications has also been stymied due to the lack of proper competition.

I eagerly await the announcement that a different consortium has been awarded the national broadband contract. This contract would be a perfect opportunity for the government to fix up telecommunications regulations. Then we may even have a chance of catching up with those other countries.

Circular Quay

I don't understand what Philip Cox means when he says the proposed Rubik's Cube lookalike building for the Museum of Contemporary Art doesn't "actually respond to [Sydney's] Circular Quay."

Such a building, comprising of ugly squares and badly placed blocks, would fit perfectly with Circular Quay railway station and the Toaster, two other ugly monstrosities that hog prime architectural space on the waterfront.

The Opera House and the old sandstone buildings of The Rocks are not the rule for this part of Sydney but, sadly, the dying exception to it. One more hideous contraption surely won't be noticed.

Bill of Rights

The four people appointed to the Australian Government's Bill of Rights advisory panel have been criticised as being "not representative" of the Australian population, and their selection is dismissed as mere "political correctness."

In what sense are they unrepresentative? Of the four, there are two women, a member of a religious minority, someone of migrant background and an indigenous Australian. That's a pretty good sample of discriminated-against groups that a bill of rights would protect. Are they unrepresentative because there are no blind lesbian single mothers included? Or because they are not all ageing white males?

Industry assistance

If the large majority of car dealers are economically viable, as Kevin Rudd claims, why does he need to introduce a government-backed scheme to extend credit to car dealers? Surely if the dealerships have no trouble paying off the loans they would be lent the money by banks anyway, without a government scheme.

Using government funds to back up a scheme to keep uneconomic businesses afloat is a waste of taxpayer funds and constrains Australia's economic potential in the long-run as productive resources are tied up in unprofitable activities.

The economy

In hindsight we all have perfect vision. However, if we are to properly judge past decisions, we must consider the context at the time that they were made.

The Reserve Bank interest rate rises at the start of the year may well be beginning to show up in the national accounts data. It is indeed something that is working to harm the already fragile economy. However, given the information the RBA had in February and March, it is difficult to criticise the decisions they made then.

Until September, the overriding concern of the RBA was inflation. Inflation distorts relative prices, reduces the real value of money, redistributes wealth from debtors to creditors, and disrupts the tax system. The RBA sets interest rates in a forward-looking manner, seeking to bring inflation into the 2 to 3 per cent band over the medium run. Given the outlook earlier in the year--strong growth, very low unemployment, a terms of trade boom and inflation around 4 per cent--they were right to rate rates. If anything, they didn't raise them high enough to combat the inflation scourge quickly.

Since September rates have fallen by three whole percentage points. The RBA was quick to react to the financial crisis and global downturn, and did so in a pre-emptive manner, cutting rates well before the downturn shows up in national accounts and unemployment figures. In hindsight this monetary policy may look schizophrenic, but it merely reflects the way that interest rates are set by balancing all information (and risks) that is at hand each month and looking towards the future.

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We shouldn't be too concerned about the September quarter national accounts. Yes, national growth is at a standstill (0.1 per cent for the quarter), but we have to look at the bigger picture.

First, we are one of the few big industrialised economies that is not already in recession.

Second, the high interest rates that we had until a few months ago were acting to constrain economic activity during the September quarter, which combined with the financial crisis and global slowdown to produce such a low growth figure.

However, as the RBA's 300 basis point rate reduction since September and the government's fiscal stimulus kicks in over the coming year, we are likely to see some better figures on the national accounts. Whether we go into recession depends a lot on what happens to our trading partners, but our policymakers are working hard to pre-emptively stave off recession.

Infrastructure investment

Kevin Rudd's plan to borrow billions of dollars to pay for infrastructure projects is an idea worth looking into. Depending how the money is raised and used, it may well lead to big long-run benefits.

However, simply passing on the funds to state governments would be a disaster. The NSW Government's record on infrastructure spending shows few--if any--successes. Money tends to be wasted or spent inefficiently.

A far better idea would be for the Federal Government to fund projects directly, bypassing incompetent state governments (ie, NSW) that refuse to borrow for the bizarre reason that it would slightly tarnish a credit rating that, since they're not borrowing, they don't need to use anyway.