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Sunday, 04 October 2009 15:38

NBN an election keystone; filtering the millstone

The Global Financial Crisis, such as it was, will recede from voters' memories even faster than it took share markets by storm a year ago. And as much as the Rudd Government has enjoyed the ‘best crisis it could hope for,’ spruiking its heroics won’t get it too far with an electorate already starting to ask what have you done for me lately.

Which brings us to productivity: Progress toward the National Broadband Network, together with the structural separation of Telstra, is shaping as the central reform/investment pillars of a campaign to paint Rudd Labor as bold, reformist and forward thinking.

This is the message we will hear over and over between now and the next election. But there are yet a couple of areas where Government may not get its own way, not least its strange quest to introduce mandatory ISP level internet filtering.

It also pre-supposes a happy conclusion to its negotiations with Telstra inside the Government's own tight deadline. As unfair as it might be to describe Telstra as a wounded animal, we'll wait and see whether it can keep its happy face on between now and the end of the year.

Finance Minister Lindsay Tanner was at Deakin University last week picking up where Kevin Rudd left off a few weeks ago: Hawke and Keating led reformist governments under which productivity surged. Howard’s was a do-nothing government where productivity slowed to a crawl and a mining boom was squandered.

Tanner says that with the GFC effectively dealt with, the Rudd Government is now returning to its primary task – through investment and reform – of improving productivity across the economy. Labor good, coalition bad.

"After averaging 3.3 per cent through the mid-1990s, Australia’s productivity growth slowed to an average 2.2 per cent from 1998-99 to 2003-04. Since that time, partly because of the short-term effects of the mining boom, it has fallen to an average barely above 1 per cent," Tanner said during the 2009 Richard Searby Oration.

If anyone thought these numbers an accident, Tanner points to the productivity reforms of the 80s and 90s as "big, bold, sweeping decisions" like floating the dollar, cutting tariffs and settling on an enterprise bargaining system for IR.

The productivity improvements of Howard’s GST were "modest," he says, and undermined by compliance costs anyway. Howard’s Telstra privatisation created a giant monopoly more interested in "regulatory gaming" than innovation. WorkChoices did little, with "no discernable" benefits to productivity.

And then there is the NBN.

"There is one initiative, though, that is at the very heart of the Rudd Government’s productivity agenda. That initiative is the National Broadband Network," Tanner said.

"We have a chance to generate a huge surge in productivity across the Australian economy. Our capacity to export services will be turbocharged. The efficiency of our traditional agricultural and resources sectors will soar. Countless small businesses will deliver better services more quickly and cheaply," he says.

Port bottlenecks, railway improvements and even highway programs each form a part of the infrastructure investments that form a part of the Rudd productivity agenda. But these physical projects have taken time to move: The centrepiece is telecommunications regulatory reform and the NBN.

Which brings us to the Government's internet filtering plans. Communications Minister Stephen Conroy is expected to take receipt of a report later this month on the internet filtering trials that have been conducted with ISPs this year. The report will inform policy direction.

Finding that internet filtering is feasible is one thing. But if the report also finds a negative impact in network performance, it will take the gloss off Government's NBN message. If that impact has a negative productivity impact, filtering will get a re-think.

Internet censorship is clearly not popular among many internet users (many of whom see the Internet as the last refuge from the Nanny State.) But there are plenty of mums of dads who just see it as common sense.

It’s a strange issue. The internet community hates the policy. But its alternative is to back a Coalition that doesn’t put a high priority on broadband improvement.

Regardless, the NBN will be a central feature of the next election campaign. Which is why Government wants as many people employed by NBN Co as possible – and as many trenches dug –before the election is called.

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