Some of you will recall just prior to the election of the Rudd government, the speech given by Ken Henry to gee up the Treasury troops (how could he ever have imagined that its contents would be leaked – to the Fin, no less). He railed against poor public policy-making, the intrusion of rent-seeking interest groups and the exclusion of Treasury from important policy areas such as water. In particular, he criticised the Howard government’s plans for the Murray-Darling Basin, citing in particular the lack of any cost-benefit analysis.
As it turned out from subsequent comments by Ken, it is clear that the Treasury doesn’t have the faintest clue about appropriate water policy, let alone the basic facts on the ‘history and geography’ of the Basin. So there has been little lost there, although Julia Gillard’s promise made during the election campaign to buy back all water entitlements from irrigators in line with the MDBA’s plan for sustainable diversion limits smacks of breathtaking fiscal profligacy – and, of course, not costed. (Hard to cost something when the quantum is unknown, but the sums will be in the billions.) It gives new meaning to the risk assignment principles – the government bears all the risk – which is without doubt completely inconsistent with the intention of the legislation. I wonder whether Treasury helped her out on that decision.
But given Ken’s firm commitment to the requirement of rigorous cost-benefit analyses to justify large sums of public expenditure, what then is the Treasury’s view on the NBN? And was this view made known to the independent members? After all, Ken has some background in this area: he was on the panel that rejected all the bids for the much lower sum of money ($4.7 billion) that was to be used to fill in the broadband holes (market failures) for which the private sector would not cater. But without any attempt to deal with the Telstra complication, this process was always doomed to fail.
Panicked by the thought of not having a broadband policy, a 90-minute plane trip with the Minister and the PM on board, and Bob’s your uncle: a $43 billion bet on one technology with an enforced monopoly arrangement was hatched and became ALP policy. Taken off-budget because it is an ‘investment’ and therefore not showing up in the Budget deficit/surplus, the costs to the taxpayer are nevertheless real. (Even under the best scenario, investment is strong word given the pathetic returns revealed in the massaged McKinsey/KPMG study – a return well below the risk adjusted cost of capital.)
Don’t we deserve to know what Treasury thinks of this policy and how it compares with cheaper alternatives? Since the Treasury presumably prays at the shrine of J.S. Mill and the notion of opportunity cost, it is the least that long-suffering taxpayers deserve.
He won’t do it or criticize the Liars party because he’s an appendage of them.
He ought to be a little careful though because the party is known to ditch its losers pretty quickly if they look like losers and Kennie has caused them a lot of damage with the rent tax.
MY guess is that Kennie will ignore the requests.
JC
8 Sep 10 at 11:07 pm
He is an arrogant, insufferable man…and most relieved after yesterday.
Andy
8 Sep 10 at 11:20 pm
Come on.
Let the sunshine in.
.
8 Sep 10 at 11:58 pm
Sunshine can’t escape from a black hole.
Keith
9 Sep 10 at 4:17 am
Excuse me, but I’d like to channel Homer for a second:
“Judith you idoit – you clearly don’t understadn trearury process.”
/homer
How the treasury can sit back and wash its hands of this is beyond me. Up until Greiner took over in NSW, authorities like State Rail were off the books and held their debt separately.
An audit quickly determined that because the railways were constantly losing money hand over fist, and because they were funding their losses by borrowing more and more every year, they were in a debt spiral that was on track to bankrupt the state. Those losses (and the debt) were conveniently hidden for years by Labor until they had gotten totally out of control.
Forget the Greek railways as an example – we’ve got State Rail as a homegrown warning of what will go wrong.
boy on a bike
9 Sep 10 at 6:25 am
Excellent question Judith. Yes, let the sunshine in!
Dandy Warhol
9 Sep 10 at 6:53 am
There is an old rule – don’t ask a question unless you already know the answer and don’t ask if you don’t want to hear the answer.
I doubt that Treasury will be asked.
Ken n
9 Sep 10 at 8:32 am
“Sunshine can’t escape from a black hole.”
Nice… Consider it borrowed.
Fleeced
9 Sep 10 at 8:47 am
Not a tech head…
Tony Windsor, the man who ‘backed in’ the NBN, now admits:
“I can’t even operate a computer. I haven’t got one on my desk.”
C.L.
9 Sep 10 at 9:02 am
boy on a bike is not fair to the Greek Railways. Although NSW railways did stirling work demonstrating the virtues of Public Enterprise, I question whether they ever came up with the beautiful number of interest bill equal to 3x Gross Income.
The NBN might make it. Cost $B43 + normal cost over-run =$B86 + losses incurred by starting from Birdsville as now proposed, =$B100.
Interest rate after Govt induced inflation 20%.
If we can keep Gross income below $B6 we are getting somewhere.
Rodney
9 Sep 10 at 11:42 am