Visionary or White Elephant?

The Federal Labour government are proposing that we spend $43 billion on the National Broadband Network (NBN). It is a being promoted as a Nation Building project that will increase the productivity of Australia and lead us into the 21st Century. Is this fact or fiction?
I pride myself on the fact that I am a bit of a technical Luddite (by the way, the Luddites were a social movement of British textile artisans in the nineteenth century who protested – often by destroying mechanized looms – against the changes produced by the Industrial Revolution, which they felt was leaving them without work and changing their way of life) so I am not really impressed when people start discussing current speeds, data downloads (and uploads for that matter) and fibre optic cable. However, I acknowledge that to retain our status in the real world some areas of our economy require much faster broadband speeds.
But for me to really determine whether the NBN is a good idea or not I would like to see a fully researched Business Plan.
Unfortunately, a Business Plan has not been established for the NBN (well it sort of has but the government won’t let us see it). I assume this is due to a couple of reasons, one being the uncertainty of who will avail themselves of this new technology and also ultimately what it will cost. There is little doubt that when a government (of any political persuasion) is involved in large projects there appears to be cost blow outs due to overarching bureaucracy and the temptation for people involved to simply increase their prices.
New technology is currently being developed at a very rapid pace. A pace that has probably never been seen before. We cannot forget, however, the lessons of the past. New technology always results in over investments (think railway lines is the late 19th century) and wasteful spending. I also acknowledge that people will raise the Snowy Mountains Hydro project of an example of a large infrastructure Nation Building project but the facts show that the cost of the Snowy Hydro Scheme adjusted for inflation was only $6 billion (in 2004).
So I would suggest that we slow down on the project and have an honest and open discussion about the costs, the benefits and threats before we embark on what could be an expensive mistake. Some people have likened the NBN to a 4 lane highway. What we have to remember is that not every house in Australia needs a 4 lane Highway to their front door.
Julian McLaren is a Representative of the Shadforth Financial Group (AFS Licence No. 318613) Julian may be contacted on 69317488. This is general advice and readers should seek their own professional advice in regards to their individual circumstances

The Madness of Crowds

Charles McKay’s eloquently stated in his book “Extraordinary Popular Delusions and the madness of crowds” (published in 1841), that “Men, it has been well said, think in herds: it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one”.
You will see, from time to time, this phenomena occur whether it be the Global Financial Crisis, the Swine Flu scare, Tulip mania, the Internet Boom and the list goes on. It is important for the individual to try and recognize these events and consider running against the herd and learning from past mistakes.
In the Late 19th century the world had witnessed a huge increase in the population in urban centres. In the USA the population of cities had increased by 30 million over the preceding 100 years of which half of that growth had occurred in just 20 years.
According to the new book “Super Freakonomics” by Steven Levitt & Stephen Dubner, this rapid population explosion in cities caused a huge “Emission’s” problem from the major mode of transport – Horses! Their Emission’s of course was manure. New York City alone was occupied by 200,000 horses at the turn of the 20th Century. It is said that these horses produced 5 million pounds of dung a day.
This was indeed a problem. Streets were lined with dung and huge mountains of horse manure were built up around the city on vacant blocks. The smell and the hygiene issues had authorities and residents in a state of panic.
Indeed in 1898 New York hosted the first international urban planning conference to try and address the issue facing cities around the world. The conference only completed 3 of the planned 10 days as no solution could be found.
But then, all of a sudden, the problem vanished. Not by imposition of a big new tax, or legislation banning horses, or an uprising of disgruntled citizens. It was solved by the invention of the automobile.
Levitt & Dubner put it down to this….”Humankind has a great capacity for finding technological solutions to seemingly intractable problems……”. And I have no doubt that this will apply to the current catastrophic scenarios that are allegedly facing us today!
Julian McLaren is a Representative of the Shadforth Financial Group (AFS Licence No. 318613) Julian may be contacted on 69317488. This is general advice and readers should seek their own professional advice in regards to their individual circumstances