Crikey – Chris Berg

Jim Chalmers’ spray at the RBA is embarrassing

There’s nothing in the Reserve Bank Act, or in the concept of central bank independence more generally, that says the treasurer can’t be as critical of the RBA as he likes. There’s a lot of silly hand-wringing about “inappropriateness” every time this happens. Our economists should not be so delicate. A government at war with its own money printer is a sign of the bank’s independence, rather than a lack of it.

But Jim Chalmers’ salvo against the RBA this close to an election is embarrassing and desperate. Foreshadowing the anaemic GDP growth figures released yesterday, the treasurer declared that the fault is all with the RBA: it is “smashing the economy” by keeping interest rates high to slow inflation.

It’s not unusual for governments to be frustrated when monetary policy contradicts their political strategy. It is unusual for a treasurer to so aggressively try to offload blame for sluggish growth onto a central bank whose governor he appointed and whose mandate and approach he endorsed less than a year ago.

The problem for the Albanese government is simple. There is a fundamental tension between the government’s election strategy (to relieve the pressure of inflation on household budgets through fiscal transfers and try to prop up the economy with government spending) and the RBA’s requirement to get inflation down — inflation that is exacerbated by the government’s fiscal transfers and expenditure. So we have had higher interest rates for longer while the Albanese government has tried to shield voters from the impact of those higher rates while keeping spending high.

Chalmers knows full well that monetary and fiscal policy can work against each other. Back during the global financial crisis, an internal government meeting between treasurer Wayne Swan, prime minister Kevin Rudd, treasury secretary Ken Henry, and “senior staff” specifically discussed how, if government spending increased, the RBA would likely keep interest rates higher than it would otherwise (I wrote about the implications of this meeting for ABC’s The Drum here). Chalmers was Swan’s principal adviser when that meeting occurred.

If only the government and the RBA could row in the same direction. But the blame for policy divergence has to rest entirely with the government. RBA policy choices are strictly bounded by its legislative objectives and its extremely limited set of tools. Chalmers has a lot more discretion.

We might have some sympathy for Chalmers’ predicament. It must be galling to see other central banks starting to reduce rates. Voters always blame the elected government for a poor economy. They are right to. Ultimately it is Parliament that has the most tools to boost productivity and through that economic growth.

But there’s no time before the election to turn private sector growth around and there’s seemingly no appetite within the government to resolve the fiscal-monetary contradiction. Chalmers’ comments on Sunday were immediately following Anthony Albanese’s Saturday announcement of further “cost of living” relief in the form of increased rent assistance payments.

After the economic data this week, there’s a good chance that the RBA will change tack soon. But you can see what Chalmers is trying to do: shift blame onto the bank for the economy’s poor performance generally.

I started by observing that there’s nothing wrong, in principle, with the treasurer complaining about RBA policy. Yet this is a sensitive moment for the central bank. At the same time as Chalmers is accusing the bank of economic recklessness, he is also trying to finalise the overhaul of its governance, splitting the board into a monetary and governance committee. The treasurer wants this reform to be bipartisan. After this week’s events, the Coalition should insist that any reform and associated personnel choices wait until election season is over, whoever wins.

Telegram founder’s arrest is radical — if it’s a crime to build privacy tools, there will be no privacy

Published in Crikey

The arrest of the Telegram CEO Pavel Durov in France this week is extremely significant. It confirms that we are deep into the second crypto war, where governments are systematically seeking to prosecute developers of digital encryption tools because encryption frustrates state surveillance and control. While the first crypto war in the 1990s was led by the United States, this one is led jointly by the European Union — now its own regulatory superpower.

What these governments are insisting on, one criminal case at a time, is no less than unfettered surveillance over our entire digital lives.

Durov, a former Russian, now French citizen, was arrested in Paris on Saturday, and has now been indicted. You can read the French accusations here. They include complicity in drug possession and sale, fraud, child pornography and money laundering. These are extremely serious crimes — but note that the charge is complicity, not participation. The meaning of that word “complicity” seems to be revealed by the last three charges: Telegram has been providing users a “cryptology tool” unauthorised by French regulators.

In other words, the French claim is that Durov developed a tool — a chat program that allowed users to turn on some privacy features — used by millions of people, and some small fraction of those millions used the tool for evil purposes. Durov is therefore complicit in that evil, not just morally but legally. This is an incredibly radical position. It is a charge we could lay at almost every piece of digital infrastructure that has been developed over the past half century, from Cloudflare to Microsoft Word to TCP/IP.

There have been suggestions (for example by the “disinformation analysts” cited by The New York Times this week) that Telegram’s lack of “content moderation” is the issue. There are enormous practical difficulties with having humans or even AI effectively moderate millions of private and small group chats. But the implication here seems to be that we ought to accept — even expect — that our devices and software are built for surveillance and control from the ground up: both the “responsible technology” crowd and law enforcement believe there ought to be a cop in every conversation.

It is true that Telegram has not always been a good actor in the privacy space, denigrating genuinely secure-by-design platforms like Signal while granting its own users only limited privacy protection. Telegram chats are not fully or always encrypted, which leaves users exposed to both state surveillance and non-state criminals. Wired magazine has documented how the Russian government has been able to track users down for their apparently private Telegram conversations. For that matter, it would not be surprising to learn that there are complex geopolitical games going on here between France and Russia.

But it would be easier to dismiss the claims made against Durov as particular to Telegram, or dependent on some specific action of Durov as an individual, if he was alone in being targeted as an accomplice for criminal acts simply because he developed privacy features for the digital economy.

The Netherlands have imprisoned the developer Alexey Pertsev for being responsible for the malicious use of a cryptocurrency privacy tool he developed, Tornado Cash. Again, Pertsev was not laundering money; he built a tool to protect every user’s privacy. The United States has arrested the developers of a Bitcoin privacy product, Samourai Wallet, also for facilitating money laundering.

The arrest of Durov suggests that the law enforcement dragnet is being widened from private financial transactions to private speech. If it is a crime to build privacy tools, there will be no privacy.

Taxpayers should not bail out journalism. They do so already!

Published in Crikey. Part of a debate about whether taxpayers should fund journalism.

The case for subsidising journalism is weak. The case for subsidising journalism more than we already do is incredibly weak.

The government already directly pays for journalism through the ABC ($1.1 billion in the 2022-23 budget) and SBS ($316 million). With my colleague Sinclair Davidson I am famously sceptical that public broadcasting is a good idea. (Maybe infamously.) But put the argument for privatising the ABC and SBS aside. Policy choices do not exist in a vacuum. Any case for journalism subsidies should first explain why our already significant expenditure has failed, and whether there are any ways to reform our public broadcasters to more directly align with our policy goals. There is a lot the ABC and SBS do that isn’t journalism — would some of it be better redirected?

It is true that democracy relies on a thriving public sphere, of which news and journalism are critical parts. But on this count, Australian democracy doesn’t seem to be doing too badly. In the digital age, our problem as citizens and voters is not an information deficit but an information surplus — there is an enormous amount of online and offline content about the actions of the Australian government and civil society that we can consume. Digging through that content is the real challenge. Usually, we say that governments should subsidise things if the market underprovides for them. What is underprovided here? How should we measure it?

The real struggle is within media firms. Having lost their monopoly over advertising to a richer, more diverse, and more complex digital ecosystem, they find themselves competing to produce an extremely low-margin product while trying to support their legacy, high labour and production costs. I understand that the media industry has gone through 20 years of industrial pessimism. But at the same time, there are now senior journalists who have experienced nothing but disruption and have thrived within it. Too often policymakers confuse protecting established companies with supporting what they produce.

Practical considerations also undermine the case for journalism subsidies.

Almost any policy framework to subsidise journalism favours the large players that already dominate the Australian institutional media. Crikey has been arguing for a long time that News Corp pays less tax than it ought to. Guess who the biggest private beneficiaries of subsidised journalism are?

Maybe we can imagine a way to only favour the journalism we want, or to only favour smaller firms. But a policy framework that tried to discriminate against (say) the conservative talking shop ADH TV to only fund a left-leaning equivalent would merely invite the same government interference that the ABC labours under. A government unhappy with coverage could threaten to take away a media outlet’s privileges.

Government-subsidised journalism — whether through public broadcasting, tax breaks or direct subsidies — is fundamentally misconceived. It makes civil society the handmaiden of the state, rather than the other way around.

But in an important sense, the sort of policy rationalism I’m presenting here is beside the point. The question before policymakers is not whether subsidising journalism is a good use of taxpayer funds. The question is what to do with the Morrison government’s News Media Bargaining Code now that Meta is refusing to play ball.

The code is a legendarily outrageous example of rent-seeking in the history of Australian public policy. It is simply one sector using the government to directly extort money from another sector of the economy. And on the flimsiest pretence too: we have been asked to believe that allowing users to share news links with friends is somehow a violation of intellectual property.

The only “bargaining” that is going on here is between the media giants and the government. Meta and Google are the objects of the bargaining, not the participants.

The irony is that, if anything, the digital firms that are being targeted have been responsible for what has historically been the sharpest growth in the public sphere since the Gutenberg press. If democracy is first and foremost about citizen engagement, then they have been great for democracy.

Scratch the whole thing and start over. Media companies never had a natural right to advertising dollars and they have absolutely no right to funds forcibly extracted from companies in another sector. If we think the market is underproviding journalism then let’s see if our public broadcasters can spend their budgets better. At the very least, it is time to draw a line under this shameful, rent-seeking episode.

Taylor confirms curriculum motivated by ideological antagonism

Finding the philosophical assumptions that underpin a curriculum is careful work. It involves looking less at what’s included than what’s absent.

So it was refreshing to see an article in Crikey on Monday by Tony Taylor, which confirmed everything we discovered in The National Curriculum: A Critique. Taylor simply and forthrightly spells out the curriculum’s ideology in a stark few hundred words.

Of course, that’s not his intention. Taylor drafted a previous iteration of the history curriculum, and claims to be a consultant on this one. He intends to defend the curriculum, but he accidentally condemns it.

Take Taylor’s apparent rebuttal of David Daintree’s claim in our book that the curriculum largely ignores and consistently denigrates the role of Christianity in Western civilisation:

Christianity is covered in Year 8 under “the spread of Christianity”, medieval Europe under the Crusades (not so good, that bit), the medieval dominance of the Catholic Church and the Spanish conquest of the Americas (another not-so-good bit).

Could there be any more concise summary of the curriculum’s hostility? Certainly, as Daintree points out, Christianity, and religion in general, is responsible for much historical wrongs. But religion is responsible for much good too.

But weighing up the pros and cons of religion is, contra Taylor, not the point. It’s an undeniable historical truth that Christianity is one of the keys to understanding the development of Western civilisation. Europe’s advances in law, philosophy, and even science have been conceived of in largely Christian terms, by largely Christian people. To imagine that Christianity’s importance can be neatly summarised by a) the Crusades and b) the conquest of the Americas is not only unhistorical, it’s dishonestly antagonistic.

Taylor would be welcome to hold that view in a polemic. But such polemics should not be imposed on a curriculum that will be imposed on every Australian school student.

A much less typical view of Taylor’s is in response to the shadow education minister Christopher Pyne’s view that the curriculum unjustly underplays the English Civil War:

As for the Bill of Rights and the English Civil War, the former is covered in Year 10 under the optional “egalitarianism” and the latter is arguably just a series of confused and confusing localised squabbles that may have a special significance for UK history, but not for anybody else (unless they like dressing up in period costume).

“Just a series of confused and confusing localised squabbles” is a strange way to describe the revolt of parliament over the monarchy, the trial and execution of the King of England (an extraordinary break with the past) the declaration of a republic, and its disintegration into dictatorship.

The English civil war echoed through the intervening centuries. It was just as important as the French Revolution. If not more: the principles that were developed after the civil war have become the principles on which liberal democracy has been implemented around the world.

There is a direct line from the Rump Parliament to the Declaration of Independence, to the Declaration of the Rights of Man and the Citizen, and, even, to self-government in Australia.

This is a strange thing to have to remind one of the designers of the national curriculum.

If the intention of the national history curriculum is — or should be — for Australian students to understand how their world became, then Taylor’s bizarrely dismissive attitude about one of the foundation events of that world is astonishing.

And if we needed confirmation that the national curriculum is motivated by an ideological antagonism to the history of Western civilisation, Taylor’s short column is it.

Here’s What Isn’t Happening

There’s a lot going on in the Liberal Party at the moment, and, indeed, on the Australian right. But here’s what isn’t happening. There isn’t a burgeoning ideological split between conservatives and liberals. Climate change is not a stalking horse for social conservatism. And this isn’t the old guard rebelling against the new guard. In both camps there are conservatives and liberals, seasoned parliamentarians, time-servers and first-termers.

Neither is this any sort of “Howard’s revenge”. It’s a long bow to blame a schism within a party on the one leader who kept it together for a decade.

For the Liberal Party, the emissions trading scheme is a special case.

After the 2007 election, there was much discussion about the future of liberalism and the Liberal Party. And the debate largely framed in British terms. Should the post-Howard party saunter down David Cameron’s path of moderate economics and moderate greenism, or talk about high tax rates and inflation? (For the questions that debate raised, read James Campbell in the IPA Review in March 2008.)

Anyway, it turns out that there are a few problems implementing an Antipodean interpretation of Cameronism. There appears to have been an assumption that choosing to follow the UK model was a simple as flicking a switch – just a quick rejig of the Liberal Party’s press release template and bang, the Liberals are now greener than the ALP. Hence Turnbull’s recent use of “progressive” – a word that resonates among Cameron’s strategists, but is alien to the Liberal parliamentary party and its supporters.

Campbell’s piece shows that Cameron’s strategy was more than just adding a tree to the Conservatives logo. For one thing, he took his party with him, over a period of many years. And whatever success Cameron is enjoying cannot be isolated from a few pertinent facts: the Tories have been out of power for a decade, Labour has driven the UK basically into the ground, and the ideological ghost of John Howard is not as strong as the ghost of Margaret Thatcher.

But most importantly: It’s easy for a nominally small government party to be clean and green if all you’re talking is about bicycles. By contrast, the ETS is no small thing. The ETS Green Paper bragged that the government’s scheme would “change the things we produce, the way we produce them, and the things we buy”. The scheme is arguably the largest economic change in Australian history — an emissions trading scheme is like plopping a entire second economy on top of the first one.

Malcolm Turnbull’s camp wants to follow the Cameron model. Nick Minchin’s camp is more diverse. Not all of the Minchin sceptics are sceptics of the science. Weirdly, Kevin Rudd got this one right. Sceptics include those who believe the science but think the scheme is irrevocably flawed (does anyone disagree with that?). And then there are those in the Minchin camp who even believe the world should take action on climate change, but feel that Rudd’s diplomatic strategy of legislating before Copenhagen is a little bit silly. You might not agree with it, but this is an entirely defensible position. The entire economy isn’t just a bargaining chip to be handed to our diplomats to go off and play with.

Most in the Minchin camp have little interest in climate science, but believe a Liberal Party cannot claim to be liberal if it supports one of the biggest government interventions ever considered by the parliament. And with its extraordinary concessions, the ETS doesn’t even have the redeeming quality of being able to achieve its purported goal: substantially reducing emissions. It doesn’t even work as an insurance policy. It has negligible coverage and a massive premium. The ETS is, simply, a massive tax/corporate-welfare churn. Its economic cost will inevitably be substantial – doubly so in the absence of a global deal – and the Minchinites are betting that cost will be a significant political issue in future elections.

So before a global deal, for many in the parliamentary Liberal Party, opposing the ETS seems like a no-brainer.

Big Government: A Love Story

Michael Moore’s Capitalism: A Love Story “takes aim” at the capitalist system, as a few dozen supportive reviewers have mindlessly written. But that’s a tough metaphor to uphold. It’s easy to aim when you don’t care what you hit.

Moore is interested in Big-C Capitalism. So after a few stories of families having their homes foreclosed, Moore reveals his thesis.

“Capitalism is a sin”, he gets a series of priests to say darkly into the camera; it’s “obscene” and it’s “radically evil”. Capitalism is a secular “crime” and spiritually “immoral”.

Another priest reflects that he is “really in awe of (pro-capitalism) propaganda”, which is funny to hear from a minister of religion. And a bit rich: one sequence in Moore’s film describes the somewhat icky practice of firms taking out life insurance for their employees, which he tastefully illustrates with lingering shots of a grieving family, as if insurance policies cause cancer.

Moore has always been an awkwardly self-conscious working-class man. In this instalment, he is also God-fearing. And his NASCAR-chic populism is now littered with calls to “people power”, which, coming from a multimillionaire, are as authentic as the Spice Girls’ “girl power”. It’s all so laden that there’s a good chance he wants to run for office.

In a bizarrely misdirected appeal to authority, Moore quizzes the off-Broadway actor Wallace Shawn, who has “studied history and a bit of economics” about what he reckons is the problem with capitalism. (The audience Moore hopes will see his film know Shawn from The Princess Bride. But those who will actually see it know Shawn from My Dinner With Andre.) Shawn’s answer isn’t the point: what possible value could his view add?

But Moore’s argument is even more misdirected. He’s justifiably outraged at the bailouts and the way they were pushed through Congress. Who isn’t? He’s angry about the favour-trading relationship between Wall Street and Washington. Again, who isn’t?

But that’s not capitalism. It’s corporatism - a political system with a veneer of free enterprise but where a network of lobbyists, bureaucrats and politicians use the political system to achieve private goals. Moore would like to add a fourth movement to this symphony - the unions. But unless you think of unions as omniscient and beneficent guardians of the public good, doing so wouldn’t change the corporatist dynamic.

So when he describes a real outrage - like a corruption case in Pennsylvania where a corrupt judge funnelled innocent kids into a privately run juvenile detention centre - he doesn’t quite understand who the bad guy actually is: the politicians and administrators who let it happen. (After this case, two judges face charges of racketeering, fraud, money laundering, extortion, bribery, and federal tax violations. Corruption is, after all, against the law.)

And who to blame for the bailouts? The firms that ask for them, or the politicians that grant them?

For Moore, Barack Obama’s election is a spiritual catharsis, an explosion of people power, and a sudden break with the capitalist nightmare. But the outrages he spent 90 minutes detailing have, if anything, gotten worse under the Obama administration. The employment pipeline between Goldman Sachs and Treasury has is even busier. And Obama has graduated from bailing out banks to bailing out car companies. For Moore, when Bush did this sort of thing, it was capitalism. When Obama does, it’s democracy.

In Capitalism: A Love Story, Moore can’t quite get himself to the problem. If he did, he’d have to admit that the big activist government of his dreams is actually the cause of his nightmares.

Where Is The Evidence That Junk Food Ads Make Kids Fat?

Australia’s public health establishment doesn’t lack ideas. Another official report into preventative health brings another few dozen recommended regulations, subsidies, cries for greater ‘public awareness’ and demands for further (commissioned) research.

This latest edition is the result of the Senate Inquiry into Obesity in Australia put out yesterday in order to avoid being completely overshadowed by the release of a National Preventative Health Strategy that should come out sometime this month.

The committee’s proposals are predictable. Limiting – with a view to banning – advertising of junk food to children. Subsidising gym memberships. Even more food labelling. Regulating stupid diet programs. Encouraging urban planners to deliberately design cities that are inconvenient to drive in. We’ve been hearing these ideas for years.

Unfortunately, while public health advocates may talk big on ‘evidence-based’ policy, their recommendations almost always fall well below that standard.

Take the popular claim that junk food advertising is causing fat kids. The evidence just isn’t there. The federal government’s peak communications research body, the Australian Communications and Media Authority, has concluded that it is near impossible to parse out the relationship between advertising and childhood obesity. At best, advertising could account for 2 per cent of food choice.

And the fuzziness of the relationship is clearly reflected in the academic literature: “Despite media claims to the contrary, there is no good evidence that advertising has a substantial influence on children’s food consumption and, consequently, no reason to believe that a complete ban on advertising would have any useful impact on childhood obesity rates.”

Yet despite this almost complete lack of evidence – which was acknowledged in the committee’s public hearings – the committee’s report just recommends more stringent regulations on advertising, and, of course, more research. And the Senate was actually quite conservative compared to the waves of doctors and public health activists who participated in the inquiry, agitating for every sort of ban and regulation on marketing to children they could think of.

So why such a casual approach to the use of evidence in developing effective public policy, from an industry that prides itself on the close scrutiny of evidence as it affects medical outcomes? Regulation might not be a science, but does nevertheless require careful attention to cost-benefit analysis, and some analysis of efficacy and efficiency. And then governments need to consider the philosophical implications of many regulations – how it relates to responsibility and choice, and who will bear the brunt of the costs.

But as we wait for the Preventative Health Taskforce to lodge its report, we’re still seeing no signs that these issues are really being considered.

Never Mind The Deficit, Look At The Spending

It must take a lot of confidence to blame the size of our new deficit on revenue loss due to the financial crisis just seconds after you have finished a mind-numbingly long list of new spending measures.

In fact, there’s a weird – almost creepy – sense of confidence surrounding Wayne Swan’s second budget.

Treasury’s reputation should be very battered. Just last year, the inflation genie was out of the bottle and we were looking at a beautiful vista of economic happiness stretching as far as our eyes could see. But Treasury seems to be getting more sure in its ability to predict the future, not less.

Wayne Swan’s conceit that this recession will be quickly followed by a burst of astonishing, face-saving growth relies on a predicted GDP growth of more than 4% in the next couple of years. That’s a pretty big call in the middle of a recession that took the Treasury itself by surprise. And it’s an even bigger call considering during the twentieth century, the average GDP growth was only 3.4%. So if Treasury’s forecasts are accurate, then the fire in which this budget was forged was not very hot.

The misplaced confidence of this budget is even clearer when we look at Wayne Swan’s counterfactuals. Without the property bailout, the Wellington Street bus station, the highways up (and down) the coast, the detailed design work for the Sydney West Metro, and the $900 recession hush-money, the Treasury believes that Australia would apparently be 2 ¾ per cent poorer next year. And there’d be 210,000 fewer people in work. Not 220,000, not 200,000 but 210,000.

Of course, these numbers are almost always invented out of thin air. Treasury secretary Ken Henry admitted as much in February.

So without these impressively self-assured Treasury figures we are left with just a historically large deficit and a government piling its promises up behind the next election. We have spending levels not seen since the Second World War, and not a whole lot to show for it.

Wayne Swan’s budget is a chickie run between Treasury and the global economy. Sure, both could get out of it safely, but you wouldn’t want to bet on it.

The Winds Of Change Will Not Wait For Rudd’s Broadband

The failure of the National Broadband Network tender to find a sensible and willing private sector company is not surprising. But the failure cannot be blamed on the global financial crisis – the economy may look pretty dismal, but the government’s broadband policy was never very good anyway.

Partly this is because technological change has boxed the government into a corner. Earlier this year, while the NBN expert panel was dithering about looking for a firm to make good on the Labor Party’s election promise of a 12Mbps network, Telstra announced that it was planning to upgrade its already-existent cable network to 100Mbps, without a scrap of government support or subsidy. Even the firm’s mobile Next G service – which right now covers far more of Australian population than any future fixed-line network could hope to – is being upgraded to 42Mbps. And it’s not just Telstra – Optus has been periodically upgrading its cable network to match the speeds of its competitor.

Simply put, it would have been humiliating for Communications Minister Stephen Conroy to trumpet a 12Mbps network while there are superior products in the broadband marketplace.

And these are just the private sector’s plans for the next twelve months. The government intends to roll its network out over eight years – who knows what we will expect from our internet connections in 2018? There’s a very good chance that the new network will be long obsolete by the time it is finished.

While the Prime Minister announced that the network will cost “up to” $43 billion over those eight years, it has only committed to an initial $4.7 billion investment into the project. This cost is, at least on the face of it, a drop in the bucket. Since coming to office, the Rudd Government has increased the size of government by a massive 21%. And the Commonwealth Government’s contingent liabilities have increased ten-fold in the last year. Nevertheless, the new NBN plan opens the door even wider to future financial obligations, especially if the fundraising and rollout doesn’t proceed as smoothly as the government is hoping.

So far no government has been willing to treat the cause of our broadband problem – the long outdated access regulations which compel Telstra to share its network at a regulated cost.Today’s announcement just maintains the fiction that the government can buy its way out of a long-term regulatory mess.

Broadband: Another Telco Monopoly Would Be A Disaster

If the Expert Taskforce into broadband infrastructure was supposed to delay scrutiny of the government’s broadband policy until after the election, then it isn’t working.

The Taskforce was formed to evaluate proposals for broadband infrastructure roll-out, and assess the regulatory or legislative changes that that may require.

Debate over telecommunications regulation hardly needs its fire stoked. But, oddly, the loudest agitator over the last week has been the communications minister herself.

Helen Coonan has spent the last few days apologising for speculating that the taskforce could recommend the structural separation of Telstra.

And yesterday in the Australian Financial Review she raised the possibility that the government could help pay for a proposal that delivered fibre-optic broadband all the way to the home. This too was quickly retracted. The Minister, a spokesman claimed, was speaking “hypothetically”.

Conspicuously, one option which has been not withdrawn is the potential that the winning broadband proposal will be granted a monopoly over broadband infrastructure. Coonan periodically refers to this possibility in her public addresses and it goes unchallenged. But granting an infrastructure monopoly would stifle competition in the telecommunications industry far more than it is already.

While the Taskforce prepares to receive the first broadband proposals, almost any regulatory change is on the table. But the one thing that the taskforce cannot yield on is the most important and controversial – the requirement that any new network be open to access by competitors at a “non-discriminatory” rate. The taskforce’s job is to devise some regulatory conditions under which a firm would both build the fibre network and share it with competitors.

But it is this sort of mandatory access regulation that has drawn the telecommunications sector into its current regulatory quagmire. Access regulation encourages firms to piggyback on existing infrastructure, rather than competitively build infrastructure themselves.

And fibre-to-the-node will hardly be the last broadband infrastructure Australia ever needs. When the next upgrade inevitably appears on the horizon, mandatory access regulation will still be hampering investment.

Coonan let this cat out of the bag when she raised the possibility of government subsidies for a future, higher-speed network – a tacit admission that she does not believe that the telecommunications industry can manage and fund its own investment while the existing regulatory framework remains.

The Taskforce’s requirement that the new network be open for access by competitors merely demonstrates that the government has learnt little from the failures of telecommunications regulation. To appropriate the Minister’s artless phrase – whatever the Taskforce concludes in February next year, telecommunications regulation will still not be “future-proofed”.