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Political debates, spins and government policies

Comments on Lenore Taylor “Former treasurer nails debate”, 17/06/2009, http://www.theaustralian.news.com.au/story/0,25197,25648362-5017906,00.html

While it is understandable that there will always be political spins and every political side will try to twist and make arguments in their favour, politicians, especially the government should be sober behind the scene and formulate strategies and make public policies according to the reality and sound reasons, rather than apparent political spins.

In that light, the Rudd government should probably need to acknowledge that it inherited an economy in excellent shape and a fiscal position that few other countries could match at that time. That, in conjunction with Australia’s sound banking system and banking regulations/supervisions, was the solid basis for Australia to weather the current global economic crisis.

What the Rudd government should and must do is to stimulate the economy in the most effective and efficient ways and at the same time to keep government deficits and debts as low as possible. While those are past already, the government should realise that both the cash handouts and the schools stimulus have generated some undesirable effects. They were not done in the most effective and efficient ways. There have been wastes in them, or soem unnecessary government spendings at least. The government could have achieved the same stimulus and education investment effects while using less government / taxpayers’ money.

There are lessons from those, but it is not too late for the government to become more effective and more economically responsible. We have a long way ahead before the global economic crisis is over. Besides every government policy or spending can be a test of economic management.

For example, while the government’s new national broadband network proposal is well intended and has the potential to boost productivity and the efficiency of the economy as well as the welfare of the nation, how the project will be designed and handled by the government and the industry will have a long lasting effect on national welfare.

I think the government should approach the NBN with an open mind and conduct extensive consultations. It should use several independent business and economic cost benefit analyses (not every one of them needs to be very complex) to ensure that the most effective and efficient and economic option or options are adopted and implemented. It is a huge exercise and must be done very carefully. There is a lot of money involved and either the wastes or savings would be huge.

The government should not be captured by particular special interest groups, including Telstra and others in the industry as well. It also needs to resist the urge to revenge Telstra for its confrontation with the government. Particularly, it should ignore the ACCC’s view on competition regarding Telstra's monopoly. The ACCC’s behaviour is of revenging nature and also reflects its failure in successfully managing a monopoly in its regulatory approach. It has outdated views and strategies in regulating industries and firms. The ACCC needs reforms and catching-up with the trends in globalisation and economic integration.

The government, Telstra and other players should work together, recognising each other’s interest. So the government needs to stand above the position as a simple player or competitor. It needs to remove emotions from managing the process. It needs to analyse what is the best way to move forward for the nation as a whole. Further, everyone should avoid falling into the trap of the argument that if the technologies are the best, they must be good economically. You have to take account of cost and benefit and also consider demand and supply.

Treasury and the Communications department need to be effective in their advices and policy formulations. They need to learn from the lessons in the stimulus packages, in the NBN bidder process and its failure and in the new NBN proposals. Bureaucrats must resist the urge to revenge and need to work in the nation’s interest and not driven by personal emotions.

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