Lucky Australia Hasn’t Avoided Mistakes

Australia has been relatively lucky. The ‘tyranny of distance’ has isolated us from the disastrous wars of Old Europe. Our huge land can support many times our population, and throughout history its resources have supplied our economy with boom after boom.

As a consequence, Australia entered the 20th century with the highest living standards in the world.

But by the 1970s, we couldn’t even crack the top dozen.

Australians are an entrepreneurial, creative and diverse people. The blame for this fall can be placed solely at the feet of government decision makers, propelled by ideology, the lust for power, or unfortunate ignorance of the consequences of their actions.

Some of these mistakes are obvious. In 1935, the Queensland Government introduced cane toads into Australia to combat pests in sugar cane crops without full understanding of the consequences. Cane toads are now considered one of Australia’s worst environmental disasters, breeding freely and poisoning native animals.

Many of the most harmful policies were the earliest ones, and have been the hardest to repeal.

The Immigration Restriction Act was the first bill passed in the new Federal Parliament and inaugurated the national White Australia Policy. This terrible policy gave bigotry the legislative blessing it was to enjoy for more than half a century.

Another early policy established the doctrine of wage fixing in Australia, rigidly setting workers’ salaries to enable a man with an average sized family to live in ‘frugal comfort’. Sounds like a good thing, unless you are one of the workers who, through no fault of your own, are suddenly priced out of the market and condemned to unemployment.

Centralised wage fixing has been devastating for low-skilled and migrant workers, and it is only recently that it has been substantially pruned back. Even now, many politicians still don’t understand that government can’t set wages, only the market can.

The Australian media also provides an example of disastrous government policy. If it wasn’t for political control over the airwaves, which the government also gained quickly after federation, perhaps media policy could’ve avoided a century-long comedy of errors.

Over the last century, with their power over the broadcast media governments, have held back the introduction of AM radio, television, FM radio, subscription TV and now digital television. Never mind the consumers, media policy since the signing of the 1905 Wireless Telegraphy Act has been designed to protect the established media from so called ‘harmful competition’.

If a service like YouTube required government-managed airwaves to operate, rather than the free-for-all internet, there is no chance it would have been given a license to operate in Australia.

Patrick White’s Nobel Prize in 1972 was a notable success for Australian literature, and the government speedily inaugurated the Australian Council for the Arts. But by isolating artists from their commercial audience, they may have condemned much of Australian art to mediocrity.

How would Charles Dickens’s have novels read if he had not been exposed to the demands of a fickle public?

The steady production of publicly funded Australian films, so many unwatched, is not a failure of Australian taste, but of government policy.

When we failed to win a single gold at the Montreal Olympics, the government’s response was, unfortunately, predictable. The Australian Institute of Sport, modelled on similar institutions behind the Iron Curtain, spends an enormous sum of taxpayer’s money on elite athletes, despite the huge commercial power of sport in this country.

After both success – Patrick White’s Nobel – and failure – the Montreal Olympics – the government has responded by creating vast new bureaucracies. This steadily increasing burden upon the economic and cultural life of Australia is not consequence free.

How has all this occurred?

Perhaps the worst mistake was Canberra itself. The invention of Canberra moved the bureaucracies and regulators away from the economic and cultural powerhouses of the nation, and dropped them into a new, meticulously planned ‘garden city’ in the middle of nowhere.

As the historian Keith Hancock wrote, ‘Canberra is a document of Australian immaturity’.

Isolated from the people they were supposed to be governing, it is little wonder that these vast Canberra bureaucracies increased their own size and influence. Many of the mistakes made in Australian history are a consequence of this. A lesson may be learnt for new and developing countries – never move your government away from your citizens.

Thankfully, steady reform since the 1970s has partly reversed some of the worst mistakes. But if we’d had a strong, liberal, free-trade party in Australia that embraced individualism and economic and social freedom throughout the course the twentieth century, perhaps we could have avoided some of these disastrous policies.

For a long time it has been common to talk about market failures. Let’s start talking about the failures of government.

No Net Gain In Beattie Plan

In the fall-out of Telstra abandoning its plans for a national fibre-optic network, Premier Peter Beattie has announced his own plans for super-fast broadband piped directly into Brisbane homes.

But there is much less to this proposal than he makes out.

Beattie’s plan to allow potential investors use of public assets to string fibre-optic cable offers those investors nothing they don’t already have. Infrastructure builders can already use these assets. Beattie expects private companies to foot the bill, but why haven’t they done so already without the Premier’s invitation?

Australia does not rate high on international broadband rankings. This is really the fault of the Federal Government and Beattie’s frustration with the situation is understandable.

Telstra’s fibre-optic plans were cancelled because of federal regulations. Our overzealous competition regulator, the ACCC, insisted that if Telstra built the $4 billion network, then it would be compelled to offer access to that network to its competitors.

The regulator would choose the price and conditions. Telstra’s competitors would bear none of the risk — and in the highly competitive and dynamic telecommunications industry, that risk is extremely high. If the network was successful, Telstra would see its rivals competing with it, using its own freshly built network. If it were unsuccessful, perhaps because newer technologies passed it by, Telstra would have wasted its money.

It is much easier to piggyback off another company’s network at prices set by a regulator than to have to invest in infrastructure yourself. This regulatory problem has not yet been solved.

Beattie’s announcement does nothing to change the underlying disincentives to broadband infrastructure investment. He offers, as a trade for the $550 million investment that he expects the private sector to fork out, access to public assets such as powerlines and sewer pipes. But such supply channels are already available. They do not need the Premier’s agreement for their use.

Nor do commercial businesses need a politician to point out such investment opportunities if indeed they are profitable. If a company declines to build a service, it is a fair bet that either it is uneconomical to do so or an external power, like a competition regulator, has made it uneconomical.

If the business case for investing in the kind of network Beattie would prefer is so obvious, then in all likelihood the network would have already been built.

The Queensland Government is not the only government prioritising access to broadband as an urgent policy matter. Since the Telstra decision, state and federal governments have been working feverishly to develop grand broadband “plans”. Federal Communications Minister Helen Coonan expects to come out with a national broadband strategy next month. The West Australian Government promises to come up with a similar plan to Queensland’s shortly.

High-speed broadband brings about enormous economic and social benefits, but the Queensland Government should be wary of trying to chaperone telecommunications investment into the state. Governments are remarkably ineffective at predicting future technologies and consumer demand. When they try, politics always intervenes.

Earlier this year, the San Francisco council teamed with Google and internet service provider Earthlink to provide blanket wireless broadband coverage across the city, supported by advertising. Inevitably, the negotiations over this have been bogged down in politics and no wireless network has emerged. The two companies have found that running between town hall meetings trying to keep up with political, rather than commercial, demands is more work than was expected.

The San Francisco network, if it ever gets off the ground, will be a snails-pace 300kbps — a speed that the Australian Labor Party decries as “fraudband”.

An earlier citywide wireless broadband network in Orlando, Florida, was shut down in January 2005 when the city realised that only 27 people a day were using the service at a cost to taxpayers of $US1800 a month.

If Beattie’s project goes sour, taxpayers will have to foot the bill or be saddled with a sub-par network. It is not hard to imagine the Government chipping in a few million here or there to seduce investors, as various governments have done in pilot programs around the country. But doing so would invite failure, as countless taxpayer-funded and government-initiated broadband projects around the world have shown. Most end up underutilised or rely on tax money to survive.

The solution to broadband backwardness is not press releases announcing grand “plans”, but comprehensive regulatory reform. If the State Government wants Brisbane to have access to new high-speed networks, they would be better to work with the Federal Government to lower the obstacles to investment nationally.

Only removing the disincentives to investment stemming from the ACCC will allow Australian consumers to get the broadband they deserve.

Media-Rule Horse Has Bolted

Communications Minister Helen Coonan’s attempts at policy reform have so far been conspicuous failures. Telstra’s fibre to the node network was scuttled by her requirement that Telstra build it and then give control over it to the regulator. And now what was already a timid “media reform” package has been watered down almost to the level of pointlessness.

The coalition’s proposed changes to media laws were obsolete on the day they were released. They were an attempt to deal policy into the frenzied technological change taking place in the unregulated parts of the media and telecommunications sector.

In March, the day the government released its media discussion paper, Apple released for download and purchase on its iTunes service High School Musical. The movie has been a huge success with the “tween” market (children between the ages of eight and 12). It cannot be seen at the cinemas, it’s available only on DVD and via the internet. Movie distributors had learnt the lesson from music distributors’ failure half a decade ago – consumers are migrating their entertainment onto the internet, and are happy to pay for the privilege.

This week we saw the final watering down of the media package and the sale of YouTube to Google – $US1.65 billion ($2.2 billion) for 67 employees and a website.

None of Apple, YouTube, Google or Microsoft made submissions or appeared at the Senate inquiry into the government’s media legislation. Telstra gave evidence only about the mobile television licence. These companies didn’t need to get involved in debates about old media. No reform package can stop the migration of consumers from traditional media into more exciting and more flexible formats.

Now, with the release of Telstra’s Next G network, the transition from old to new media is firmly under way. Certainly, the wireless network is slower than the scuttled fibre to the node network, but it doesn’t take much to happily stream a YouTube video onto a mobile phone. Next G speeds are already faster than those that many consumers have piped into their home, and are set to increase in speed tenfold.

When Prime Minister John Howard says media reform is only a second-order priority, he is more prescient than he realises. The creative storms of change will blow no matter what is in the Broadcasting Services Act.

The Holy Grail of modern communications has long been obvious: high-speed internet. If this is available on mobile devices, consumers can watch video from any service, read their email from any provider and browse any website with the same freedom they have in front of their computers at home. But Australia has a regulatory environment dramatically at odds with technological and cultural developments here and overseas.

What was the debate about? The “diversity” cry rings hollow – on the internet, an infinite array of content and opinion is available to anybody who cares to look. Online media services, still in their infancy, can deliver more diverse content than can be consumed in a lifetime.

But political debate about media ownership always ends up with politicians pontificating about the relative merits of media content. Genuine deregulation means that this decision would be made entirely by consumers. In a deregulated market, what people want on television or radio, people get.

By forcing local radio stations to broadcast a minimum of local content, the politicians say they know better than consumers what should be broadcast. It is an attempt to force consumers to pay for politicians’ public visibility – elsewhere this would be called corruption. By restricting the ability for stations to respond to consumer demand, the reform package condemns many independent broadcasters to failure.

Local media produces niche products that can be supplied by other vehicles. Whether product is supplied on the same radio transmitter as 50 years ago, or a podcast inaugurated 50 days ago, should be of no concern to legislators.

Outside the realm of government regulation, we have innovative, dynamic companies responsive to market demand. Within its reach, we have an industry being variously protected and attacked by flawed public policy and political manoeuvring. Unsurprisingly, audiences for unregulated new media are growing faster.

Traditional media still have a role. But when the government imposes new regulations and fails to strip away the old ones, that role is looking more and more perilous.

Being creative has never been “un-Australian”

Holden’s blimp over the MCG during the AFL Grand Final might have upset Toyota, the AFL’s official sponsor, but it was hardly “un-Australian” marketing.

Holden saw a captive audience of thousands at the MCG, and took the opportunity to market to them. Since when has it been “un-Australian” to be creative? Holden was simply using public airspace to advertise its product and it broke no laws in doing so.

Cricket Australia are thinking about asking the government for legislation to stop the same thing happening during the Ashes. But is it the role of government to protect advertisers from other advertisers?

Even less is it the role of government to hand over an asset — in this case the rights to airspace — to an advertiser for free.

The solution lies in property rights. If advertisers wanted to stop competitors from flying giant blimps over their events they should pay to buy the airspace.

As it stands, the air has been designated by the government as a public asset, rather than property, and Holden has every right to fly through it. In a truly free-market economy, organisations and individuals would be able to purchase or lease the rights to airspace and utilise it in whatever way they chose.

There already exists a wide range of legislation designed to protect against many forms of ambush marking. The Trade Practices Act protects against ambushing companies engaging in deceptive or misleading conduct, or falsely representing sponsorship deals. Holden did none of these things.

“Ambush marketing” is the market in action. And it’s kind of funny.

In search of Smith’s legacy

Review of Adam Smith and the pursuit of perfect liberty, by James Buchan (Profile Books, 2006, 288 pages)

If an economic philosopher is to be judged by his sound bites, then Adam Smith’s best lines come not from his great masterpieces, but from a paper delivered in 1755, as reported by a friend:

Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism, but peace, easy taxes and a tolerable administration of justice.

All governments which thwart this natural course, which force things into another channel, or which endeavour to arrest the progress of society at a particular point, are unnatural, and to support themselves are obliged to be oppressive and tyrannical.

Twenty years later, his masterwork An Inquiry into the Nature and Causes of the Wealth of Nations would contain nothing so radical. James Buchan’s short intellectual biography of Adam Smith pivots around the publication of his Wealth of Nations and the earlier The Theory of Moral Sentiments. Spartanly but engagingly written, Buchan depicts an Adam Smith cursed by ill-health for his whole life. The racy novelist Marie-Jeanne Riccoboni, who befriended him while he stayed in France, described him as ‘ugly as a devil’ – she hated his voice and found him terribly absent-minded, but loved his sentimental philosophy.

Buchan describes in his introduction how both sides of politics have tried to claim themselves as the heirs of Adam Smith – long adored by the free-market right, reform-minded Social Democrats now try to co-opt his legacy. Buchan chastises both Alan Greenspan and Gordon Brown for inappropriately calling upon Smith’s ghost, but it would be interesting to see where the biographer ultimately stands on this.

Certainly Smith was not a dogmatic libertarian by modern standards. He saw a role for the State in education, if under a peculiar justification. The division of labour, he worried, would make the poor into specialised idiots, men who were ‘mutilated and deformed’. Public education would help alleviate their intellectual isolation, and lower the chances that their minds could be corrupted by the baser elements of political thought. He had a remarkably unenlightened view of women, but subsequent feminist authors made much of his theories by applying them more equitably.

Buchan rightly makes note of the misuse of what has wrongly become Smith’s signature term ‘the invisible hand’. Indeed, the ‘invisible hand’ was rarely used in Smith’s writings, only once in each of the Wealth of Nations and The Theory. An out-of-context quotation from the Wealth of Nations has imparted upon it the meaning it has for modern commentators: an economic actor is ‘led by an invisible hand to promote an end which was no part of his intention.’ Smith, in this case, is talking about merchants who choose to store their wealth at home rather than overseas for security purposes, and therefore raise the aggregate wealth of their home nation.

However misquoted or misunderstood, the ‘invisible hand’ has since become the universal metaphor for the workings of a free market. Buchan notes that while Adam Smith was not a particularly religious man, his metaphor helped illuminate his message to his students, most of whom were training for religious careers. The Theory is peppered with such references: Smith refers to the Great Superintendent, the Great Conductor, Benevolent Nature and the Superintendent of the Universe.

But, co-opted by economics teachers as a metaphor for Hayekian spontaneous order, its use just about gives the game away. If all that is required to shift resources efficiently throughout an economy is an omniscient designing mind, could not a sufficiently enlightened public servant, equipped with the best technology and intellectual expertise, do well enough to make it worth trying? But it is the process of voluntary exchange that creates the order of a market, and without perfect omniscience, no planner could replicate its results.

While the metaphor holds, it also leads to unfortunate hubris on the part of planners who presume to replicate the invisible hand with their visible fist.

A short postscript he wrote for his friend David Hume’s autobiography, who had attacked the religious sensitivities of establishment England at the time, caused Smith much greater problems than the Wealth of Nations, which had attacked the entire British commercial system. Buchan’s brief overview of Smith’s life gives us an engaging account of this man whose greatest work is now gathering the controversy it deserves.

Opening statement to Commonwealth Standing Committee on Environment, Communications, Information Technology and the Arts inquiry into the Broadcasting Services Amendment (Media Ownership) Bill 2006

As well as being a research fellow with the Institute of Public Affairs, I am the editor of our magazine, the IPA Review. The Institute of Public Affairs is a public policy think tank based in Melbourne. It was founded in 1943. We believe in small government, private enterprise, the rule of law, representative democracy. It is our position that any media reform should be clearly and unambiguously directed towards liberalisation and deregulation. We say this because, in cases where there are many potential or actual suppliers of goods and services—which is clearly the case in media—markets are far more efficient providers than government bureaucracies.

Technological and commercial innovation have provided Australians with a multitude of choice in the information and entertainment content we consume, the way we receive it and display it and our capacity to store it for future consumption. Therefore, any regulatory rationale based on assumed scarcity of media content or delivery mechanisms is no longer valid.

The IPA welcomes changes to media ownership regulations. The removal of foreign ownership restrictions is long overdue. Similarly, the removal of cross-media ownership restrictions is welcome. After all, millions of Australians each day already access foreign owned media through the internet. This access does not seem to have harmed us and certainly has not reduced the output of Australian produced and managed media. However, we believe that the proposed reforms do not sufficiently tackle the problem. Given the wide variety of choice available to Australians, we feel there is no longer any convincing case to maintain media-specific competition and ownership regulations. Instead, the government could better rely on the general economy-wide merger and ownership regulations to ensure competition. The ownership of media assets is no more sensitive than the ownership of, say, railroad assets.

While we welcome the release of two new television stations, we regret the imposition of regulatory requirements on both A and B. There appears to be no justification for these restrictions. They merely represent the elite imposing its preferences on consumers, and government technocrats seeking to impose their preferences on the way technology develops. Unfortunately, these provisions illustrate clearly that the lesson has not been learned for centre of government failure in introducing new media technology. We strongly oppose the imposition of any regulation which attempts to enforce local content requirements, plans or anything else on regional or rural media services.

In conclusion, the government has been presented with an opportunity to genuinely reform this regressive regulatory framework that the Australian media has been burdened with for over a century. This reform package makes a few minor adjustments, however its practical effect is not as large as the public debate has made out. Furthermore, in many areas it represents a significant re-regulation of the sector. This does not mean that the reforms are without value. The removal of the cross-media ownership restriction, as absurd an ownership restriction as can be imagined, is welcome, as is foreign investment deregulation. Adjustments to the digital transition are long overdue. The package needs significant revision. However, the need for reform is clear and should not be abandoned. It is less bad than the status quo.

Only The Market Can Properly Reshape The Media

Robert Menzies despised television and stated privately that he hoped it would not be introduced during his government. Does Communications Minister Helen Coonan have a similar attitude towards the next radical media change?

Given the opportunity to robustly liberalise the regulatory environment that the Australian media has been subject to for over a century, the government has declined to act.

There are big entrenched media companies which have made large investment decisions based on the current framework, and the political reality is that genuine deregulation would have to be a slow and careful process. But instead of attempting to unwind our Byzantine media regulations, at whatever pace, the government’s media reforms do nothing more than add more rope.

For instance, the proposed auction of two additional swathes of spectrum should have been greeted with enthusiasm. Entrepreneurial companies which had won these new licences could have used them to deliver whatever services they perceived to be in demand.

Instead, the government has chosen to dictate to potential users the terms and conditions of their licences, terms and conditions which will not apply to existing users of broadcast spectrum. This “command and control” approach to economic management has been discredited in both theory and practise. It’s ill-suited to managing a limited and static array of services, and it’s doubly unsuited to manage the fast paced and high-risk communications and media industry.

It does, however, allow the government to claim credit, as the Communications Minister did this week, for any potential new services delivered within their strict framework. What Coonan fails to mention is the services that the government will not allow us to receive. To this end the government has invented two terms, “narrowcasting” and “datacasting”, defined not by what they can do, but what they cannot.

One of the channels to be auctioned is allowed to broadcast free-to-air, but not replicate traditional TV services. Why not?

The government is not a suitable body to predict the possibilities of and the demand for newer forms of media. Only a market unhindered by restriction is capable of doing so with any success.

Similar objections can be raised to the government’s proposal to replace one elaborate formula for media ownership restriction within a market with another elaborate formula. While touted as a grand liberalisation of ownership regulations, they are in fact, little more than minor adjustments. For advocates of genuine deregulation throughout the economy, this should be a disappointment.

Many critics of the reform proposals hinge their arguments upon the potential lessening of diversity that could be the result of consolidation within the industry.

It is absurd to argue that media diversity will decline without stringent checks on the ownership of broadcast media outlets. In no era in history has this been less true. While the internet has been justifiably praised in bringing alternative viewpoints and independent media outlets to the home, rapid technological improvements in seemingly mature industries like printing have increased in the last few decades the volume of magazines, newspapers and printed material manyfold.

Anybody who doubts that minority or niche voices will not get heard after genuine media reforms should consult the vast ethnic press, made possible by dramatically lower print production costs.

In fact, mergers between media organisations could have tangible benefits. A fully vertically integrated corporation, able to command world-wide news gathering and content production, may be able to produce a far better and diverse range of services.

The massive competitive pressure exerted upon existing media companies from the proliferating new media compels dramatic change, even in such seemingly dominant organisations as News Ltd. Rupert Murdoch’s recent acquisition of the social networking website MySpace is a case in point.

These gains are not guaranteed, however. The US market, after a rush of media consolidation in the 1990s as companies rushed to prepare for the digital era, has been beset by a series of failures and divestitures. AOL Time Warner has been shedding assets now that the financial gains expected from its highly publicised merger have not appeared. Viacom, Disney, Clear Channel, Knight-Ridder and many others have downsized or spun off companies in the last few years.

But these companies need the freedom to experiment, and fail, with new business models.

New media organisations are popular and influential, and will become more so. Governments of all stripes across the world are struggling to predict its significance. That is understandable – nobody has any inkling of how these changes will pan out.

But instead of indulging itself in public consultations and submission processes, commissioning reports and carefully releasing sections of the spectrum with highly prescriptive regulations, the government would be far better to leave the future of the Australian media up to the market.

There is no convincing reason why entrepreneurs, allowed to experiment with new technologies and business models, cannot amply deliver the services that Australian consumers demand now and into the future.

Submission to the Inquiry into the Broadcasting Services Amendment (Media Ownership) Bill 2006 and related bills

Introduction: Reform to the regulatory framework of the Australian media should be unambiguously directed towards liberalisation of the sector. It is important to place the relatively recent, and highly publicised changes in production, distribution and consumption of media made possible by communications technology in a context of long term and continuous radical media change. Technological and commercial innovation have provided Australians with a multitude of choice over the content we consume, the way we receive and display it, and our capacity to store it for future consumption. Not only this, but the cost of production has rapidly dropped for seemingly mature industries like print, which has allowed niche and specialist publications to flourish. Never before have Australians had access to so much information packaged in so many formats.

Available in PDF here.

Regulator Should Butt Out On Fibre-Optic Broadband

It is unfortunate for consumers and businesses that Telstra’s potential $3 billion-plus investment in a large-scale fibre-optic network and the coming T3 sale have coincided.

The debate over the two have rarely been separated, but at stake are two very separate issues, with very separate stakeholders. Treasury officials are concerned with maximising the price of Telstra’s sale, but consumers and businesses should be concerned about the circumstances in which we allow infrastructure investment in this country.

As Australian Competition and Consumer Commission chairman Graeme Samuel has correctly noted, Telstra’s fibre-optic plan is “not the only game in town”. A consortium of Telstra’s competitors, including Optus, Macquarie Telecom, Primus and Internode, have proposed an open-access network. Tellingly, all their proposals would require heavy investment from Telstra.

Telstra’s competitors are merely following Telstra chief executive Sol Trujillo’s lead and conducting regulatory negotiations through press statements.

Unfortunately for the regulator, the obstinate Telstra refuses to sign up to its competitors’ plans. Telstra has the money to do so, but, under the current regulatory framework, no desire. And why should it? The ACCC has argued that any investment by the carrier would be subject to a “fair” return. But it is not the ACCC embarking on this risky business venture – Telstra is a company that at least in theory should be aiming to maximise its financial returns. If a company, or individual for that matter, makes an investment in the market, they should be subject to their own judgement of what constitutes a fair return, not what a national regulator considers one to be.

But such thinking is largely alien to the ACCC, which has long believed itself to be the patriarch of large infrastructure investment in Australia.

The classic justification for the imposition by a regulator of shared access does not apply to Telstra’s fibre-to-the-node (FTTN) proposal.

The carrier built its copper-wire network under a government-imposed monopoly. It used taxpayers’ funds to do so. Under these circumstances, it was perhaps reasonable to have a regulator open the network up to ensure at least the vestiges of competition. But there are very real problems with such a regulatory regime.

Access-based competition encourages service providers, initially leeching off the monopoly provider’s network, to step up the “ladder of investment” – slowly investing more and more in the existing infrastructure. This has its advantages in a marketplace with little innovation.

But having now invested a great deal in the existing network, these carriers are faced with the prospect of being abandoned by Telstra as it jumps into a largely separate new network.

The ACCC’s framework has encouraged the growth of small, fly-by-night internet service providers, whose business model is nothing more than a reliance on the ACCC-determined access prices. Country-wide, there are more than 250 of these ISPs, encouraged not by the whim of the free market, but by the decrees of the regulator. Given their perilous profitability, they are ill-equipped to withstand the rapid technological change of the sector.

Access sharing does nothing to encourage true, facilities-based competition. And there are few other industries where facilities-based competition, and the innovation which propels it, are of such paramount importance. Given the ever-increasing range of technology by which high-speed broadband can be delivered to the home – and to the mobile phone – we cannot afford to discourage entrepreneurs from experimenting with new business models and products.

And, not least, access sharing constitutes a massive taking of property rights. This may not have been of much concern to regulators a decade ago, when they were faced with the taxpayer-supported Telecom, but with a nominally private company whose investments are subject to free will, this should be of great concern.

The communications market has been liberalised for the past decade and subject to a radical shift in emphasis. It is important to remember that consumer demand has moved from the basic telephone service to mobile telephones, to video-playing iPods. There are now large numbers of telecommunications providers, many of which are justly proud of their investments in infrastructure across the country.

But Telstra’s competitors and the ACCC want to migrate the access-sharing framework, developed a decade ago for a monopoly network provider, onto a fibre-optic network developed by an entrepreneurial company with private capital. The FTTN network is highly speculative. Given the current state of technological innovation, it is a risky investment. Telstra must bear this risk alone.

The FTTN network will not be the last investment Australian firms make in telecommunications infrastructure. Rapid technological change makes it a certainty that every few years significant upgrades will be made to our national communications networks. But if regulators are given a right of reply to every investment and pricing adjustment, Australian broadband will lag well behind what a wealthy, prosperous nation should have.

You Are What You Chose To Eat

It is a tribute to Australia’s prosperity that people in poverty are more likely to be overweight than underweight. But rather than a celebration of the achievements of economic growth, this has instead led to cries of an “obesity epidemic”.

For instance, Ross Gittins argued (Opinion, 28/6) that this is a case of market failure that we need the government to remedy.

It is clear that the average weight of Australians is increasing. But obesity is a complicated area, and health advocates would do better to analyse the long-term causes and effects before rushing into calls for government regulation.

Using the standard measure of obesity, the body mass index (which, in simple terms, compares weight with height), obesity is on the rise. At present, 21 per cent of Australians are classed as “obese”.

However, the medical literature is highly sceptical of the validity of this measure that takes no account of body composition, such as muscle or bone. It may be that many people now classified as obese are, in fact, “big-boned”.

Our consumption habits also tell a complex story. OECD data shows that daily energy consumption per Australian has actually decreased since the early 1960s by about 125 kilojoules. Similarly, our sugar consumption has also gone down. Many nations, including the United States, have seen increases along these lines, but these figures indicate that Australian consumption is getting more, rather than less, healthy.

Even more surprising: a study from the Centres for Disease Control in the United States found that “overweight” people had a lower risk of death than those of normal weight. Not only that, but this lower risk partly cancelled out the increased deaths from obesity.

But we are getting heavier. Part of this is to do with the composition of our diet.

As the millions of supporters of the Atkins diet will argue, what we eat now is radically different from what our ancestors ate 50 or 100 years ago. But it is also true that what those ancestors ate is radically different from what their ancestors ate. Food consumption has been one of the biggest changes brought about by our centuries-long process of globalisation.

More recently, technological change and supply-line innovation in food manufacturing has drastically reduced the cost in time and money of food preparation. It is arguably a wise economic decision to eat out rather than in, especially when factoring in the time of shopping and cooking a meal.

As the quality and variety of manufactured food has gone up, its price has gone down.

But most of the recent growth in weight is not directly attributable to our food.

A study by the economists Darius Lakdawala and Tomas Philipson found that only 40 per cent of weight gain since the 1970s is due to changes in diet. Rather, the large part of our weight increase can be attributable to changes in lifestyle and work practices.

Contrary to what Gittins has argued, this is not an opportunity for government to intervene.

First, government regulation doesn’t seem to work. Sweden has every program on the book to combat childhood obesity. Advertising aimed at children under 12 is banned. Sports programs are heavily subsidised. Healthy cooking is part of the curriculum. But the number of overweight Swedish children has tripled in the past 15 years.

The market is remarkably good at educating people on the negative consequences of their decisions. Balancing against the advertising for high-sugar snacks, television programmers have provided shows like What’s Good for You and The Biggest Loser.

All of these programs have been produced not by government, but by corporations eager to maximise their ratings, and therefore their profits.

In fact, data from the United States indicates that the number of food and restaurant commercials viewed by children has actually declined over the last decade.

Consumers are becoming more aware of the consequences of fatty and unhealthy food. This change in demand goes far past the salads at McDonald’s. Juice bars, wheatgrass shots, bioengineered food and even sushi were unheard of to Australians 50 years ago.

The notion of a government regulating to protect people against obesity used to be unthinkable, used as a parody of anti-tobacco legislation. Unfortunately, it shows us how far the political debate has moved from personal responsibility to government responsibility.

But is there a clearer area in which individual responsibility must take the fore than when choosing what we eat? Government regulation is not the solution to the obesity crisis.