Broadband baloney: Kevin Rudd's unhealthy addiction to ICE

The Pledge of Allegiance recited by many American school students daily celebrates the Republic, in part, as a melting pot of people who, while divided by ethnic diversity are united in their God fearing ways:

I Pledge Allegiance To The Flag,
Of the United States of America,
And To the Republic For Which It Stands,
One Nation, Under God, Indivisible,
With Liberty And Justice For All.

While Americans are united as one nation under God, Opposition Leader Kevin Rudd would seem to be keen on bonding us, as one nation under the fibre optic cable.

Financing the higher bandwidth Mr Rudd offers will require diving into both the government’s Communications Fund, as well as the Future Fund, to the tune of $4.7 billion. His determination to raid the Future Fund in order to supply high speed Internet Connectivity Everywhere (ICE) is quite simply, fiscally reprehensible.

The extra bandwidth Mr Rudd offers will allow the media and entertainment industries and the telcos (among others) to benefit greatly, by not only selling more of their wares online, but by having the extra bandwidth paid for substantially by the mug public servants, using their super entitlements.

It’s a bit like your daily home delivered newspaper publisher demanding you fund a bigger mailbox so that more publications can be delivered to your door every morning. You end up paying for a bigger letterbox that you never really needed, and you end up subscribing to publications you can’t really afford. It’s a win-lose situation. The media companies win and you lose.

This chutzpah echoes a recent demand by Fairfax Media and News Ltd that the Federal Government purchases bigger aircraft so that its employees (the media’s, not the Government’s) will be able to travel together with senior politicians, when the politicians gallivant abroad. And the media big wigs demanded this with straight faces.

Let’s see Mr Rudd’s plan with a very simple example.

Imagine living in a country town that has no one concentrated retail precinct. Instead, the stores are located over a very wide area. Some in the far north of the town, some in the south. And a liberal scattering of outlets in the east and in the west.

As public transport is woeful, in order to shop, the townfolk must drive their cars great distances to any store. So people are forced on to poor roads, which resemble car parks with countless pot holes, all the while grinding their teeth.

Now imagine that petrol prices have skyrocketed. So much so, that casual trips to the stores for meaningless coffee dates will become but distant memories. And essential trips to the stores become less and less frequent.

Out of the blue, one politician suggests that in order to combat rising oil prices, that all stores be aggregated in one mega shopping centre, a Super Mall. So far so good.

This politician proposes a very flash mall with car spaces for everyone and only the finest building materials to be used. He also proposes that the Super Mall offers the latest in customer conveniences, forgetting for a moment that he is talking of a small town in a mediocre state in a middle ranking country and not of a major city in a G8 nation.

Given the large investment proposed, the politician suggests that the Super Mall’s owners should not only determine the leasing rates for each would be tenant, but should also be allowed to set the prices for utilities and roads used by the tenants and be allowed to control the planning powers for that part of the town. While he’s feeling generous to the would-be owners of the Super Mall, he expresses the view that the Super Mall should be allowed to dictate all business regulations under which retailers must operate. In short, it is said that the owners should have both ownership of the asset (the Super Mall) as well as regulatory control.

After assiduously courting the various lobbies - the retailers, the construction industry and the media, this politician drops a bombshell: in order to get the Super Mall up and running in a timely fashion and to his specifications, he will largely build it with taxpayers’ funds.

He considers a 50-50 equity joint venture with some retailers, with terms to be agreed on in the fullness of time.

The politician doesn't even consider that if the Super Mall - that is, the idea of centrally locating all retailers - was such a good idea, it would have been picked up by the private sector. Evidently his passion for this retail concept, while great, is dwarfed by his lust for populist policies regardless of its financial merits.

That’s right. Whether a taxpayer wants to use the Super Mall or not, the taxpayer will pay. The funds will be taken out of an emergency do-not-touch “rainy day” fund, with scant regard to the norms of financial prudence. The politician’s sole focus is to curry favour of lobby groups any way he can, and build awareness for his “brand”. Himself.

The politician is in a fix and he doesn't know it. He wants the government to hold an asset (the Super Mall, that is a retail operation) while simultaneously he wants the goverment to regulate that asset.

Clearly the politician has slept through the last decade and is blissfully ignorant of the manifestly unsatisfactory situation where the government owns an asset and is simultaneously the regulator of that asset.

For an idea of the pitfalls of this situation, look no further than the Federal Government's attempts to regulate the telco industry in a neutral manner while owning a large part of the biggest player in that industry. Or how about state governments nationwide who juggle owning utilities while trying to regulate them in a neutral manner.

Given the line up of vested interests - businesses, builders, road pavers and the media - who in one way or another will all benefit from this new retail monstrosity - it is noteworthy that a crucial question is never ever asked: yes, while a Super Mall may be a good idea, why should the public fund what essentially is a product that will benefit corporations?

The town in its quest for the Super Mall is pursuing a sound idea by unsound means.

Mr Rudd mirrors this stupidity when he exhorts us to move from what he mistakenly views as the Prime Minister's World Wide Wait to the ALP's World Wide Web. While noble in intent, it is irresponsible in its planned execution.

By offering such ill considered sweeteners to the big end of town, in a naked effort to curry the business vote, the Opposition Leader shows his true colours by doing whatever it takes to get into power.

Rather than show financial literacy and run away from socialist shenanigans, Mr Rudd gleefully runs towards populism and 10-second sound bites that don't stand up to rigorous analysis.

Unsurprising really. Addicts, even to ICE, manufacture their own realities