The Federal Government is about to attempt to revive the originally dubbed the personally controlled electronic health record (PCEHR) now rebadged myHealth Record.
The bottom line is that clinicians are reluctant to use the system - they don't see enough benefit compared to the cost. They also have very real concerns about putting too much of their own diagnostic and consultation detail on line as they see that as their "intellectual property" - and a reason why the patient will come back to them.
And that is quite valid, the health system would be better off if everyone had a good relationship with a GP. The problem is that is easier to do as you get older. The solution to it may lie in differential Medicare rebate rates - if the patient declares a practice as their primary GP then they get a higher rebate for that GP visit.
But the Government does control the purse strings for a lot of health care, and once the system becomes opt-out there is Government data that can and should be entered. The obvious ones are:
1. The fact of any visit to a doctor and the attendant item number included in the Medicare claim.
2. The details of any script filled. This can be captured by pharmacies and almost certainly is already captured.
3. The details of any pathology tests ordered.
4. Focus on the providers of practice management software to build the appropriate APIs for interfacing between the myHealth Record and the practitioner system.
5. The date and purpose of any hospitalisation in a public hospital.
5. The fact of any imaging from the medicare claim. Build APIs for the myHealth Record to access images held in practice records (subject to data limits).
The issue isn't about training, it is about forcing some of the data onto the system. This won't capture historic data (though the Medicare records might) - and I can't see GPs ever loading historic data. But as time goes on it becomes increasingly rich.
The really good value will come from capturing the referral letters and replies relating to specialist consultations. The easiest way to capture those is by myHealth Record being a convenient and secure means of communicating between practitioners.
The data set obtained is not only useful for the purposes of accurate history taking, but also as data sets in big data studies on health issues. Two contributors reporting on a workshop convened by Australia's Chief Scientist Ian Chubb identified this "big data" analysis as a critical pathway to making the health system more efficient and equitable.
Sally Redman wrote "Australia’s excellent and world-leading big health data sets – including large, long-term research cohorts and routinely collected information such as hospital and Medicare data records – will be central to this effort."
James McCluskey wrote "There is an agreed need for electronic medical records across the nation to simplify patient interactions with the health system and drive new research. Indeed, 'Big Data' in health needs to be better harnessed to inform public health policy and practice"
Jane Gunn wrote "Clinical data should be used to inform efforts to improve the system. Currently we have no standardised system for recording diagnoses and management across separate health care settings. This makes it extremely difficult to keep track of what is happening to people as they interact with the health care system."
The benefits of these health records are so great we need to stop pussy-footing around on "permission" and wherever possible make data capture the default.
Tuesday, July 7, 2015
Monday, July 6, 2015
Where is the NBN Co Corporate Plan?
In my AFR column that appeared in print today I noted that it is 34 months since a full NBN Co Corporate Plan was released.
I just thought I might touch on a bit of history here on why it has been so long.
Prior to the 2013 election NBN Co had submitted a 2013-16 plan, but the Government asked that the plan be reviewed in the light of some current issues. One in particular was the construction delay caused by the halt to Telstra remediation while working with asbestos training and work practices were revised and implemented.
In the 'NBN Debate' conducted on Lateline on 12 August 2013 between Malcolm Turnbull and Anthony Albanese the now Minister asserted the then Deputy Prime Minister was sitting on the plan and wouldn't release it to the public.
Later in the same program a very agitated Mr Turnbull was far more direct saying that the company had been told to keep the "draft" stamp on it because there was a "time bomb ticking away."
Unfortunately Labor wasn't re-elected and so no 2013-16 Corporate Plan was ever published.
However, both the plan that had been originally submitted as referred to by Mr Turnbull and the plan submitted to the Minister subsequently have since been leaked. Most importantly Mr Turnbull chose not only not to release either version of this plan, but instructed his strategic review to work off the 2012-15 Corporate Plan. (An archive on the history of the NBN including Corporate Plans is being developed here.)
Mr Turnbull was particularly aggrieved by the idea that Corporate Plans might be received in "draft" and took to Twitter two days later to record his "outrage".
Mr Turnbull released neither version of the 2013-16 Corporate Plan. The 2014-17 Corporate Plan was released in November 2014. In doing so NBN Co heavily qualified the plan saying:
NBN Co's officers do not give any guarantee ... that the results, performance or achievements expressed or implied by the FY2015 estimates will actually occur. NBN Co is not yet in a position to generate projections with a reasonable level of confidence for FY2016 and FY2017,
The shareholder Ministers also noted the limitations of the 2014-17 Plan, saying:
Given the transitional nature of the 2014-17 Corporate Plan and various ongoing activities (such as negotiation of amendments to the NBN Co/Telstra Definitive Agreements) which will be material inputs to future planning, the forecasts, analysis and risk assessments in the 2015-18 Corporate Plan will be crucial.
As the company advises, it is not in a position to generate forecasts with a reasonable level of confidence beyond the current 12 month business cycle and as such anything beyond that are heavily premised on long-range assumptions.
The Corporate Plan is important. The now Minister thought so when he demanded the original Corporate Plan be published in full. He thought so in the NBN Debate on Lateline.
He also thought so four months after that debate when on 7:30 on 12 December 2013 he said:
We have got to stop the spin. We've got to start telling the truth and have some numbers and forecasts.
The 2015-18 Corporate Plan is the first time NBN Co will make firm commitments about anything to do with the Multi-Technology Mix. Almost everything delivered in FY2015 has been the continuation of the original NBN model.
The plan is already with the Minister. The Minister previously vigorously objected to the idea that a plan other than the final plan might be received by Government. The Minister previously failed to release either version of the 2013-16 Corporate Plan despite insisting on its publication during the election campaign (see Note).
The SSCNBN in its Second Interim Report called for the release of the full plan when finalised. The Government Response is that Government supports the recommendation and notes the Statement of Expectations from the Australian Government to NBN Co requires the preparation
of annual corporate plans for the purpose of “consideration by Government and subsequent public
release”.
More recently the Senate passed a resolution (known as a return to order) on 17 June requiring the tabling of:
A complete and unredacted copy of the NBN Corporate Plan 2015 18, prepared by NBN under the Public Governance, Performance and Accountability Act 2013 and applicable rules and guidelines, and containing each and every financial and deployment forecast identified by NBN and the Department of Communications during the 2015 Budget Estimates hearings as being contained in the NBN 2015-18 Corporate Plan.
The response from the Minister for Finance was:
One observer noted "Fine sentiments, but there's just one small problem: the 2015-2018 Corporate Plan doesn't exist." The writer referred us to the Hansard from Budget Estimates.
There Deputy Secretary in the Department of Communications, Mr Robinson, noted "The corporate plan is still being settled. All the processes get a draft at the end of May and the government considers it and talks to the company. There may be changes in timing of debt associated with that, but it has not been settled."
The language, however, becomes fun in itself as this exchange showed:
Senator CONROY: When do you expect to receive the final draft? Today is 28 May so it does not leave a lot of days.
Mr Robinson: GBE guidelines call for a draft corporate plan by the end of May, and we expect one.
Senator CONROY: A final one?
Mr Robinson: A final draft, yes.
Senator CONROY: Not another iteration? It will be their final one.
Mr Robinson: It is a draft in discussion with the government, but yes.
On the basis of the Minister's earlier comments about drafts it wasn't perhaps that unreasonable to ask for the Corporate Plan. The motion also asked for an un-redacted version of the Strategic Review, but that was also denied.
The questions that Senator Conroy was asking about the Corporate Plan indicate that this plan will be like the 2010 Corporate Plan in that it will still be premised on detail of Government policy.
NBN watchers will wait in anticipation of the Corporate Plan. As a marker the only real Corporate Plan released so far was on 8 August 2012. It was 12 August 2013 when Minister Turnbull aggressively demanded the next one. That should be when we get to see it.
Note: In his outburst on the Corporate Plan in the Lateline Debate Malcolm Turnbull said "You've got a time bomb ticking away. You've got a confession from the company that they're failing and you don't want to let the public know." Mr Albanese had previously repeated that the project was on time and on budget, and under questioning that it would be delivered by FY2021 for $37.4 Billion in Capex. The Corporate Plan that Mr Albanese was supposedly "sitting on" did exactly what Mr Albanese claimed. It did show a $1.6B increase in peak funding due to delays at the start of the roll-out.
That the Government was justified in not relying on that plan is revealed in the next version of the plan that was only considered by the NBN Co Board after the election. It may never have been formally submitted to the Minister but comments about targets indicates the Minister was aware of at least some of its contents. That next version moved the completion date 6 months because of the suspension due to asbestos, it maintained Capex but reduced peak funding by $0.8 billion.
Of course, Mr Turnbull maintains that these weren't achievable.
But in the Lateline interview he also said of his $94 billion estimate:
Now, those four assumptions about revenues, cost of construction, wireless-only households and time are very reasonable ones. We put them out more than four months ago and nobody has been able to say that our assumptions are unreasonable, or, that given those assumptions, you would not end up with a $94 billion figure. And you'd think if they were wrong, in more than four months, the Government or NBN Co or somebody would've said, "No, Malcolm, you've got that number wrong." No-one has said that.
He is right, in large part because Labor didn't use the company management to do political work. But the company did eventually tell him he got it wrong - in the Strategic Review. And as the First Interim Report of the Senate select Committee on the NBN said the most accurate forecast was the cost of the Radically Redesigned model without assuming lower revenues and without assuming limited numbers of simultaneous work fronts. In brief, the Strategic Review largely confirmed the NBN Co Corporate Plans.
I just thought I might touch on a bit of history here on why it has been so long.
Prior to the 2013 election NBN Co had submitted a 2013-16 plan, but the Government asked that the plan be reviewed in the light of some current issues. One in particular was the construction delay caused by the halt to Telstra remediation while working with asbestos training and work practices were revised and implemented.
In the 'NBN Debate' conducted on Lateline on 12 August 2013 between Malcolm Turnbull and Anthony Albanese the now Minister asserted the then Deputy Prime Minister was sitting on the plan and wouldn't release it to the public.
However, both the plan that had been originally submitted as referred to by Mr Turnbull and the plan submitted to the Minister subsequently have since been leaked. Most importantly Mr Turnbull chose not only not to release either version of this plan, but instructed his strategic review to work off the 2012-15 Corporate Plan. (An archive on the history of the NBN including Corporate Plans is being developed here.)
Mr Turnbull was particularly aggrieved by the idea that Corporate Plans might be received in "draft" and took to Twitter two days later to record his "outrage".
Mr Turnbull released neither version of the 2013-16 Corporate Plan. The 2014-17 Corporate Plan was released in November 2014. In doing so NBN Co heavily qualified the plan saying:
NBN Co's officers do not give any guarantee ... that the results, performance or achievements expressed or implied by the FY2015 estimates will actually occur. NBN Co is not yet in a position to generate projections with a reasonable level of confidence for FY2016 and FY2017,
The shareholder Ministers also noted the limitations of the 2014-17 Plan, saying:
Given the transitional nature of the 2014-17 Corporate Plan and various ongoing activities (such as negotiation of amendments to the NBN Co/Telstra Definitive Agreements) which will be material inputs to future planning, the forecasts, analysis and risk assessments in the 2015-18 Corporate Plan will be crucial.
As the company advises, it is not in a position to generate forecasts with a reasonable level of confidence beyond the current 12 month business cycle and as such anything beyond that are heavily premised on long-range assumptions.
The Corporate Plan is important. The now Minister thought so when he demanded the original Corporate Plan be published in full. He thought so in the NBN Debate on Lateline.
He also thought so four months after that debate when on 7:30 on 12 December 2013 he said:
We have got to stop the spin. We've got to start telling the truth and have some numbers and forecasts.
The 2015-18 Corporate Plan is the first time NBN Co will make firm commitments about anything to do with the Multi-Technology Mix. Almost everything delivered in FY2015 has been the continuation of the original NBN model.
The plan is already with the Minister. The Minister previously vigorously objected to the idea that a plan other than the final plan might be received by Government. The Minister previously failed to release either version of the 2013-16 Corporate Plan despite insisting on its publication during the election campaign (see Note).
The SSCNBN in its Second Interim Report called for the release of the full plan when finalised. The Government Response is that Government supports the recommendation and notes the Statement of Expectations from the Australian Government to NBN Co requires the preparation
of annual corporate plans for the purpose of “consideration by Government and subsequent public
release”.
More recently the Senate passed a resolution (known as a return to order) on 17 June requiring the tabling of:
A complete and unredacted copy of the NBN Corporate Plan 2015 18, prepared by NBN under the Public Governance, Performance and Accountability Act 2013 and applicable rules and guidelines, and containing each and every financial and deployment forecast identified by NBN and the Department of Communications during the 2015 Budget Estimates hearings as being contained in the NBN 2015-18 Corporate Plan.
The response from the Minister for Finance was:
There Deputy Secretary in the Department of Communications, Mr Robinson, noted "The corporate plan is still being settled. All the processes get a draft at the end of May and the government considers it and talks to the company. There may be changes in timing of debt associated with that, but it has not been settled."
The language, however, becomes fun in itself as this exchange showed:
Senator CONROY: When do you expect to receive the final draft? Today is 28 May so it does not leave a lot of days.
Mr Robinson: GBE guidelines call for a draft corporate plan by the end of May, and we expect one.
Senator CONROY: A final one?
Mr Robinson: A final draft, yes.
Senator CONROY: Not another iteration? It will be their final one.
Mr Robinson: It is a draft in discussion with the government, but yes.
On the basis of the Minister's earlier comments about drafts it wasn't perhaps that unreasonable to ask for the Corporate Plan. The motion also asked for an un-redacted version of the Strategic Review, but that was also denied.
The questions that Senator Conroy was asking about the Corporate Plan indicate that this plan will be like the 2010 Corporate Plan in that it will still be premised on detail of Government policy.
NBN watchers will wait in anticipation of the Corporate Plan. As a marker the only real Corporate Plan released so far was on 8 August 2012. It was 12 August 2013 when Minister Turnbull aggressively demanded the next one. That should be when we get to see it.
Note: In his outburst on the Corporate Plan in the Lateline Debate Malcolm Turnbull said "You've got a time bomb ticking away. You've got a confession from the company that they're failing and you don't want to let the public know." Mr Albanese had previously repeated that the project was on time and on budget, and under questioning that it would be delivered by FY2021 for $37.4 Billion in Capex. The Corporate Plan that Mr Albanese was supposedly "sitting on" did exactly what Mr Albanese claimed. It did show a $1.6B increase in peak funding due to delays at the start of the roll-out.
That the Government was justified in not relying on that plan is revealed in the next version of the plan that was only considered by the NBN Co Board after the election. It may never have been formally submitted to the Minister but comments about targets indicates the Minister was aware of at least some of its contents. That next version moved the completion date 6 months because of the suspension due to asbestos, it maintained Capex but reduced peak funding by $0.8 billion.
Of course, Mr Turnbull maintains that these weren't achievable.
But in the Lateline interview he also said of his $94 billion estimate:
Now, those four assumptions about revenues, cost of construction, wireless-only households and time are very reasonable ones. We put them out more than four months ago and nobody has been able to say that our assumptions are unreasonable, or, that given those assumptions, you would not end up with a $94 billion figure. And you'd think if they were wrong, in more than four months, the Government or NBN Co or somebody would've said, "No, Malcolm, you've got that number wrong." No-one has said that.
He is right, in large part because Labor didn't use the company management to do political work. But the company did eventually tell him he got it wrong - in the Strategic Review. And as the First Interim Report of the Senate select Committee on the NBN said the most accurate forecast was the cost of the Radically Redesigned model without assuming lower revenues and without assuming limited numbers of simultaneous work fronts. In brief, the Strategic Review largely confirmed the NBN Co Corporate Plans.
Monday, June 29, 2015
The more significant gaps in Australia's innovation system
This week I had a column published in the AFR in which I noted that what is missing in Australia's start-up funding marketplace is risk takers, the lack of risk takers then results in some of the best opportunities looking elsewhere, and thus the return for start-up investing is low.
The AFR also reported on a debate on innovation at The Australian Financial Review/Crawford Australian Leadership Forum in Canberra. In a different take on the financing issue former institutional investor Doug McTaggart told the forum that there was plenty of money available for innovative business ideas, "But we have a huge gap in term of capable experienced personnel who can take an idea from the cradle to the early stages of commercialisation. The US has them in spades."
These "capable experienced personnel" seem to be the magic missing ingredient. Perhaps McTaggart and I are both right - but the important missing part of the skill set of the personnel we bring to the task of taking ideas to commercialisation is the willingness to fail.
The importance of embracing failure had featured in another AFR column reporting on research by Experian. Experian Australia & New Zealand managing director John Merakovsky said, "The key thing, which was pleasantly surprising in the research, is the emergence of, particularly in the progressives, of some acceptance and tolerance of failure. The idea of one big strategy without getting market feedback and getting it right is extremely risky, but being able to go down this path, try things, fail, try things, win, is really important."
The importance of being prepared to fail isn't new in management literature. It was one of the concepts promoted by Peters and Waterman in In Search of Excellence, and captured in the phrase "Ready, Fire, Aim!"
(source see slide 11 here)
At the same Leadership Forum, former IBM Australia CEO Andrew Stevens said "I don't think we have a disruptor mindset" and that as a nation we need to understand this as an issue about jobs "This issue of future jobs for our young people…is one of the central issues for our generation...automation and autonomous systems will have an impact." CISCO's Irving Tan (predictably) said the next wave of digitisation would involve the industrialisation of the internet caused by connecting robots and sensors.
And maybe between these two we might also find our path to experimentation and failure. Disruption isn't a goal directed activity solved by deductive reasoning, it is a creative task that uses skills in "lateral thinking." You learn by doing. As Gretzky says you miss 100% of the shots at goal you never take. But also, to get better at shooting goals you take lots of shots at goal (and OTHER training).
Elsewhere former chief futurist at CISCO Dave Evans wrote "Here's what policymakers need to understand: Each individual device hooked up to the Internet is a kind of experiment, and any given product might succeed or fail. But in aggregate, this is an advance so large it's hard to grasp as a single thing."
Finally though we have to confront the question of whether there is a problem, more specifically does digital disruption really create growth and jobs. That was the question the AFR's Jennifer Hewitt posed after this year's Leadership Forum. Hewitt at least believed that we should give it a go, concluding "And although it's true no one can predict the relative significance of the internet compared with say, electricity, it seems reasonable to take out a form of national insurance policy."
But interestingly that question featured at last year's forum and I answered it almost a year ago in the pages of the AFR. In brief, the digital revolution is only one of the factors influencing our growth rate; its impact is masked by factors pulling growth down, especially growing inequality.
One of the themes of my writing here and elsewhere is "what can Government do to drive Australia in benefiting as a digital economy." But often the question is also "what can industry do."
A separate item in the AFR this week got me very angry. Under the heading "Research students must be trained for jobs in industry" the executive director of the Australian Technology Network makes a case for the Industry Doctoral Training Centre in Mathematics and Statistics model. It teams each PhD student with an industry partner to work on an industry problem applying mathematics and statistics. We are told that students also receive course work in technical and business skills such as leadership, communication, project management and commercialisation. The national student group also gets brought together regularly for conferences and networking events.
This is all very interesting, but the piece is otherwise confused. On one hand industry employs only a third of Australia's researchers, but we are told the PhD program doesn't train researchers for jobs in industry where "many of them will be employed." I get particularly annoyed when the article cites the Global Innovation Index and Australia's "innovation efficiency rank" of 81st as some kind of validation that the "problem" is all about not having researchers "industry ready." My anger is two-fold.
Firstly because the GII is a piece of unscientific gobbledygook (this is true of almost all published Indices - see this discussion that refers to the ITU ICT Development Index). It's starting premise is that the number of patents is the important output. It correlates the index to GDP/capita but never attempts a correlation to growth. The former correlation is to be expected - rich countries spend more on inputs like education, the causal flow is from wealth to investment in innovation. The valuable question is to devise an innovation index that has predictive power on growth!
Secondly because it makes the huge assumption that industry doesn't employ researchers because they are not "industry ready". The reality is that industry simply has no interest in research in Australia, but thinks it does. The latter point comes from the difference between Australian businesses self-assessment of university research collaboration as measured by the WEF Global Competitiveness Index and the data provided by the OECD (see note below).
Industry is forever banging on about students from first degrees not being "job ready", this pitch about research degrees is just another variant. What we need is a national conversation about the difference between education and training. The former prepares the individual by providing base level knowledge and skills ready to be trained. Medical practitioners provide the best model - the degree provides the foundation, two years in hospitals followed by specialist (including GP) "training" creates the skilled practitioner. But that is only the start of a career that demands life-long learning.
So - the gaps in our system - a lack of risk takers and managers who know how to fail fast, a jaundiced view of ICT, and industry that has a mistaken belief about its own participation in research and training.
Note:
Australia is rated last in the OECD for firms collaborating on innovation with higher education or public research institutions both SME and large firms. The World Economic Forum Global Competitiveness Index (I have used the 2014-15 report) includes as one of its indicators of "innovation" (12.04) "University-industry collaboration on R&D" which is derived from a survey question "In your country, to what extent do business and universities collaborate on research and development (R&D)? [1 = do not collaborate at all; 7 = collaborate extensively] |
2012–13 weighted average". To derive a single rank for the OECD the expenditure in the OECD data is weighted 70% to large firms and 30% to small as this weighting generated the highest correlation between the two ranks. Australia is ranked 33 out of 33 on the OECD data but its managers rank itself 15th in the OECD. (Note the OECD data is collaboration expenditure as a percentage of product i.e. revenue)
The AFR also reported on a debate on innovation at The Australian Financial Review/Crawford Australian Leadership Forum in Canberra. In a different take on the financing issue former institutional investor Doug McTaggart told the forum that there was plenty of money available for innovative business ideas, "But we have a huge gap in term of capable experienced personnel who can take an idea from the cradle to the early stages of commercialisation. The US has them in spades."
These "capable experienced personnel" seem to be the magic missing ingredient. Perhaps McTaggart and I are both right - but the important missing part of the skill set of the personnel we bring to the task of taking ideas to commercialisation is the willingness to fail.
The importance of embracing failure had featured in another AFR column reporting on research by Experian. Experian Australia & New Zealand managing director John Merakovsky said, "The key thing, which was pleasantly surprising in the research, is the emergence of, particularly in the progressives, of some acceptance and tolerance of failure. The idea of one big strategy without getting market feedback and getting it right is extremely risky, but being able to go down this path, try things, fail, try things, win, is really important."
The importance of being prepared to fail isn't new in management literature. It was one of the concepts promoted by Peters and Waterman in In Search of Excellence, and captured in the phrase "Ready, Fire, Aim!"
(source see slide 11 here)
At the same Leadership Forum, former IBM Australia CEO Andrew Stevens said "I don't think we have a disruptor mindset" and that as a nation we need to understand this as an issue about jobs "This issue of future jobs for our young people…is one of the central issues for our generation...automation and autonomous systems will have an impact." CISCO's Irving Tan (predictably) said the next wave of digitisation would involve the industrialisation of the internet caused by connecting robots and sensors.
And maybe between these two we might also find our path to experimentation and failure. Disruption isn't a goal directed activity solved by deductive reasoning, it is a creative task that uses skills in "lateral thinking." You learn by doing. As Gretzky says you miss 100% of the shots at goal you never take. But also, to get better at shooting goals you take lots of shots at goal (and OTHER training).
Elsewhere former chief futurist at CISCO Dave Evans wrote "Here's what policymakers need to understand: Each individual device hooked up to the Internet is a kind of experiment, and any given product might succeed or fail. But in aggregate, this is an advance so large it's hard to grasp as a single thing."
Finally though we have to confront the question of whether there is a problem, more specifically does digital disruption really create growth and jobs. That was the question the AFR's Jennifer Hewitt posed after this year's Leadership Forum. Hewitt at least believed that we should give it a go, concluding "And although it's true no one can predict the relative significance of the internet compared with say, electricity, it seems reasonable to take out a form of national insurance policy."
But interestingly that question featured at last year's forum and I answered it almost a year ago in the pages of the AFR. In brief, the digital revolution is only one of the factors influencing our growth rate; its impact is masked by factors pulling growth down, especially growing inequality.
One of the themes of my writing here and elsewhere is "what can Government do to drive Australia in benefiting as a digital economy." But often the question is also "what can industry do."
A separate item in the AFR this week got me very angry. Under the heading "Research students must be trained for jobs in industry" the executive director of the Australian Technology Network makes a case for the Industry Doctoral Training Centre in Mathematics and Statistics model. It teams each PhD student with an industry partner to work on an industry problem applying mathematics and statistics. We are told that students also receive course work in technical and business skills such as leadership, communication, project management and commercialisation. The national student group also gets brought together regularly for conferences and networking events.
This is all very interesting, but the piece is otherwise confused. On one hand industry employs only a third of Australia's researchers, but we are told the PhD program doesn't train researchers for jobs in industry where "many of them will be employed." I get particularly annoyed when the article cites the Global Innovation Index and Australia's "innovation efficiency rank" of 81st as some kind of validation that the "problem" is all about not having researchers "industry ready." My anger is two-fold.
Firstly because the GII is a piece of unscientific gobbledygook (this is true of almost all published Indices - see this discussion that refers to the ITU ICT Development Index). It's starting premise is that the number of patents is the important output. It correlates the index to GDP/capita but never attempts a correlation to growth. The former correlation is to be expected - rich countries spend more on inputs like education, the causal flow is from wealth to investment in innovation. The valuable question is to devise an innovation index that has predictive power on growth!
Secondly because it makes the huge assumption that industry doesn't employ researchers because they are not "industry ready". The reality is that industry simply has no interest in research in Australia, but thinks it does. The latter point comes from the difference between Australian businesses self-assessment of university research collaboration as measured by the WEF Global Competitiveness Index and the data provided by the OECD (see note below).
Industry is forever banging on about students from first degrees not being "job ready", this pitch about research degrees is just another variant. What we need is a national conversation about the difference between education and training. The former prepares the individual by providing base level knowledge and skills ready to be trained. Medical practitioners provide the best model - the degree provides the foundation, two years in hospitals followed by specialist (including GP) "training" creates the skilled practitioner. But that is only the start of a career that demands life-long learning.
So - the gaps in our system - a lack of risk takers and managers who know how to fail fast, a jaundiced view of ICT, and industry that has a mistaken belief about its own participation in research and training.
Note:
Australia is rated last in the OECD for firms collaborating on innovation with higher education or public research institutions both SME and large firms. The World Economic Forum Global Competitiveness Index (I have used the 2014-15 report) includes as one of its indicators of "innovation" (12.04) "University-industry collaboration on R&D" which is derived from a survey question "In your country, to what extent do business and universities collaborate on research and development (R&D)? [1 = do not collaborate at all; 7 = collaborate extensively] |
2012–13 weighted average". To derive a single rank for the OECD the expenditure in the OECD data is weighted 70% to large firms and 30% to small as this weighting generated the highest correlation between the two ranks. Australia is ranked 33 out of 33 on the OECD data but its managers rank itself 15th in the OECD. (Note the OECD data is collaboration expenditure as a percentage of product i.e. revenue)
Monday, June 22, 2015
Will aerial cable rules plague the NBN?
The proposal announced last week to amend the Low Impact Facilities Determination (the LIFD) to increase the size of cable used for aerial telecommunications deployment raises the question of whether the NBN will face a new round of controversy.
People of a certain age will recall the public consternation that followed the deployment of the Optus and Telstra HFC networks. This consternation received a bit of a public revival when NBN Co first advised that it might include an aerial component in its rollout. (An example including a summary of the history is provided in this Senate committee submission by Ross Kelso and Peter Downey). See also this story about Haberfield.
Dr Kelso says of himself that he "successfully lobbied on behalf of local government for major changes to the Telecommunications Act and associated Codes for reduction of carrier powers and immunities." Dr Kelso also refers to a report for the Department "Putting cables underground : report of the review of options for placing facilities underground, as required under clause 49 of schedule 3 of the Telecommunications Act 1997 / Putting Cables Underground Working Group" which unfortunately doesn't seem to have been captured in the appropriate archiving of the Department website.
Those earlier concerns about NBN aerial deployment were assuaged by the agreements with Telstra and Optus. The Telstra agreement provided access to Telstra infrastructure and reduced the potential use of aerial deployment. More importantly the agreement with Optus saw one of the two HFC networks being completely retired - which would have included its removal. So Labor's NBN was going to reduce the amount of aerial infrastructure over all.
The decision to retain BOTH HFC networks under the MTM deployment already means that there was to be no improvement. The proposal introduced last week means it will get worse.
The consultation paper outlines exactly how it is that the MTM has introduced this problem:
In limited circumstances, such as when NBN Co adds an extra cable to an existing 42mm bundle, the diameter of the HFC cable bundle will be 48mm. Typically, HFC cable bundles will be much smaller than this. In addition, NBN Co has advised that in very limited circumstances, individual copper cables of up to 40mm in diameter will need to be used to augment the copper network for FTTN. Further guidance on the limited use of such cabling will be provided in the Explanatory Statement to the amending Determination and other documents as required.
The question is how much attention will be paid to the issue BEFORE the LIFD is amended, or how much it will simply be after the infrastructure is augmented.
Certainly one politician has previously sought to make the greater use of aerial infrastructure for communications an issue - that is the Parliamentary Secretary to the Minister for Communications, Paul Fletcher. The video below is from his original by-election campaign in Bradfield.
But Mr Fletcher came to this late.
When the Optus cable was being deployed the Member for Warringah was highly vocal on the topic.
Here are some excerpts.
Grievance Debate (“Information Superhighway” ) 18 September 1995
I have to say that I am not against pay TV. I just think that pay TV, if delivered by cable, should be delivered by cable underground. It should be delivered by cables which enhance our life and do not detract from our life. We have more than enough clutter overhead. We have more than enough space junk in our cities already; we do not need any more to deliver us pay TV via cable.
….
This is an absolute outrage. It shows that this system of rules that the government has in place is completely meaningless. It shows that Austel is a watchdog which does not even bark let alone bite. It shows the need for the government to get serious about telecommunications regulations straight away.
Statements by Members, 6 March 1995
I support the introduction of pay TV but not at the expense of the local environment. Telecommunication companies now propose to deliver pay TV by cables draped from existing power poles: that is, cables of the diameter of a one-dollar coin draped from pole to pole with a signal amplifier the size of a briefcase suspended from the wire every 200 metres. Maybe some communities will be prepared to accept overhead cabling even more cluttered and ugly than it is at present, but I suspect that the vast majority would object to having the information superhighway dangling overhead right outside their front doors.
Adjournment 27 November 1995
I am not here to apportion blame; I am here to appeal for reason. Telstra say they cannot give Optus access to their wires at anything other than what Optus think is an extortionate cost. Optus say that they cannot afford to go underground. Sydney Electricity say they cannot put all their wires underground because the profits have to be high and the prices have to be low. If that is economic rationalism, it does not make much sense to me.
I call for a local summit of Sydney Electricity, Optus and Telstra, in my electorate, to try to ensure that 21st century technology is not delivered by 19th century means.
The Member for Warringah kept at it when the Coalition formed Government in 1996.
Second Reading Appropriation Bill no.1 10 October 1996
Earlier this week in my electorate corporate rights and environmental concerns came into head-on collision. Optus commenced its cable rollout in the municipality of Manly and many of my constituents feel that they are now threatened with a form of technological home invasion. The reason for this is the former government's telecommunications regime, which put telecommunications carriers in effect above the law. You and I cannot put a flagpole in our backyard without getting council permission first, yet these carriers can do virtually what they like. They can put a 30-metre-high phone tower virtually wherever they want.
…
I commend the new Minister for Communications and the Arts, Senator Alston, for his draft telecommunications national code, which gives councils significantly more say over infrastructure. . ...It is very important that we have a national plan to ensure that, sooner or later, all the overhead infrastructure goes underground. ...
It is my understanding that the minister is looking into the possibility of a national burial fund for overhead infrastructure and that he is considering bringing the various parties to this issue together to see whether a sensible compromise can be hammered out. I strongly support those efforts and they cannot happen a moment too soon for the people in my electorate.
I wonder what position Mr Fletcher and Mr Abbott will take on the proposed amendment to the LIFD!
People of a certain age will recall the public consternation that followed the deployment of the Optus and Telstra HFC networks. This consternation received a bit of a public revival when NBN Co first advised that it might include an aerial component in its rollout. (An example including a summary of the history is provided in this Senate committee submission by Ross Kelso and Peter Downey). See also this story about Haberfield.
Dr Kelso says of himself that he "successfully lobbied on behalf of local government for major changes to the Telecommunications Act and associated Codes for reduction of carrier powers and immunities." Dr Kelso also refers to a report for the Department "Putting cables underground : report of the review of options for placing facilities underground, as required under clause 49 of schedule 3 of the Telecommunications Act 1997 / Putting Cables Underground Working Group" which unfortunately doesn't seem to have been captured in the appropriate archiving of the Department website.
Those earlier concerns about NBN aerial deployment were assuaged by the agreements with Telstra and Optus. The Telstra agreement provided access to Telstra infrastructure and reduced the potential use of aerial deployment. More importantly the agreement with Optus saw one of the two HFC networks being completely retired - which would have included its removal. So Labor's NBN was going to reduce the amount of aerial infrastructure over all.
The decision to retain BOTH HFC networks under the MTM deployment already means that there was to be no improvement. The proposal introduced last week means it will get worse.
The consultation paper outlines exactly how it is that the MTM has introduced this problem:
In limited circumstances, such as when NBN Co adds an extra cable to an existing 42mm bundle, the diameter of the HFC cable bundle will be 48mm. Typically, HFC cable bundles will be much smaller than this. In addition, NBN Co has advised that in very limited circumstances, individual copper cables of up to 40mm in diameter will need to be used to augment the copper network for FTTN. Further guidance on the limited use of such cabling will be provided in the Explanatory Statement to the amending Determination and other documents as required.
The question is how much attention will be paid to the issue BEFORE the LIFD is amended, or how much it will simply be after the infrastructure is augmented.
Certainly one politician has previously sought to make the greater use of aerial infrastructure for communications an issue - that is the Parliamentary Secretary to the Minister for Communications, Paul Fletcher. The video below is from his original by-election campaign in Bradfield.
But Mr Fletcher came to this late.
When the Optus cable was being deployed the Member for Warringah was highly vocal on the topic.
Here are some excerpts.
Grievance Debate (“Information Superhighway” ) 18 September 1995
I have to say that I am not against pay TV. I just think that pay TV, if delivered by cable, should be delivered by cable underground. It should be delivered by cables which enhance our life and do not detract from our life. We have more than enough clutter overhead. We have more than enough space junk in our cities already; we do not need any more to deliver us pay TV via cable.
….
This is an absolute outrage. It shows that this system of rules that the government has in place is completely meaningless. It shows that Austel is a watchdog which does not even bark let alone bite. It shows the need for the government to get serious about telecommunications regulations straight away.
Statements by Members, 6 March 1995
I support the introduction of pay TV but not at the expense of the local environment. Telecommunication companies now propose to deliver pay TV by cables draped from existing power poles: that is, cables of the diameter of a one-dollar coin draped from pole to pole with a signal amplifier the size of a briefcase suspended from the wire every 200 metres. Maybe some communities will be prepared to accept overhead cabling even more cluttered and ugly than it is at present, but I suspect that the vast majority would object to having the information superhighway dangling overhead right outside their front doors.
Adjournment 27 November 1995
I am not here to apportion blame; I am here to appeal for reason. Telstra say they cannot give Optus access to their wires at anything other than what Optus think is an extortionate cost. Optus say that they cannot afford to go underground. Sydney Electricity say they cannot put all their wires underground because the profits have to be high and the prices have to be low. If that is economic rationalism, it does not make much sense to me.
I call for a local summit of Sydney Electricity, Optus and Telstra, in my electorate, to try to ensure that 21st century technology is not delivered by 19th century means.
The Member for Warringah kept at it when the Coalition formed Government in 1996.
Second Reading Appropriation Bill no.1 10 October 1996
Earlier this week in my electorate corporate rights and environmental concerns came into head-on collision. Optus commenced its cable rollout in the municipality of Manly and many of my constituents feel that they are now threatened with a form of technological home invasion. The reason for this is the former government's telecommunications regime, which put telecommunications carriers in effect above the law. You and I cannot put a flagpole in our backyard without getting council permission first, yet these carriers can do virtually what they like. They can put a 30-metre-high phone tower virtually wherever they want.
…
I commend the new Minister for Communications and the Arts, Senator Alston, for his draft telecommunications national code, which gives councils significantly more say over infrastructure. . ...It is very important that we have a national plan to ensure that, sooner or later, all the overhead infrastructure goes underground. ...
It is my understanding that the minister is looking into the possibility of a national burial fund for overhead infrastructure and that he is considering bringing the various parties to this issue together to see whether a sensible compromise can be hammered out. I strongly support those efforts and they cannot happen a moment too soon for the people in my electorate.
I wonder what position Mr Fletcher and Mr Abbott will take on the proposed amendment to the LIFD!
Wednesday, June 10, 2015
RBA Governor Glenn Stevens bells the cat on infrastructure policy
Many thanks to Bernard Keane and Glen Dyer of Crikey who neatly summarised the political message in Glenn Stevens speech yesterday.
Having outlined the bank's disappointment about private sector investment not filling the gap left by the collapse of the mining boom, Stevens effectively said the solution was in more effective infrastructure spending.
In particular he said "it would be confidence-enhancing if there was an agreed story about a long-term pipeline of infrastructure projects, surrounded by appropriate governance on project selection, risk-sharing between public and private sectors at varying stages of production and ownership, and appropriate pricing for use of the finished product."
In some ways he was reflecting the earlier criticism of the Productivity Commission that there is too much emphasis on big tendered projects rather than ongoing infrastructure programs.
But a "meta-analysis" of the problem comes down to the move over the last twenty years from having Government Departments that had their own construction capability and instead outsourcing the work to the private sector.
The public sector model was criticised for being inflexible (unable to ramp up and down to deal with priorities) and for high labour costs (through sweet heart deals by managers who don't confront market pressure). Both have proven to be spurious.
The "optionality" that was supposedly created by contracting out ignored the fact that there aren't really other activities that can be turned down and up counter-cyclically to a major contract. So the so-called competitive tendering market just includes the cost of this optionality (the cost to ramp up and then close down) for each project. Maintaining a standing workforce and planning projects around the availability of resources turns out to be a cheaper way to do things.
External contracting has been successful in driving down wages, but that hasn't flowed through to cost. Much of our construction industry is now foreign owned and I'm prepared to take a bet that large scale corporate tax avoidance is rife, and probably occurs at multiple levels in the tiered contracting model. So the country is bleeding money with every contract.
I know Stevens talked about "risk sharing between the public and private sectors" - but this is such a hard concept. The only risk the private sector is potentially best at is managing execution risk on the contract - but the game constructors play is to see how much they can interpret out of scope of the original work and then bill as a variation. The alternative of build-operate-transfer (such as the LCT and CCT) fail because the private sector is least well placed to absorb demand forecast risk.
The nature of the problem is now very clear. The destruction of the public sector construction capability is causing lasting damage to the economy.
Unfortunately it isn't doing lasting damage to the law firms, accountants and banks that generate enormous transaction fees from the private sector model. Together they not only constitute the most effective lobbyists in the country, they are also increasingly the source of Government's contracted advice.
It would be hoped that the left wing Think Tanks like the Chifley Research Centre or McKell Institute might find the time to pursue this. Unfortunately, McKell's recent report on Transport Infrastructure didn't dare touch it. Similarly NBN Co never considered the prospect of a direct employment model for building their network.
It is most frustrating that endless repetition of a mantra about the efficiency of the private sector is supported despite all the evidence to the contrary.
Having outlined the bank's disappointment about private sector investment not filling the gap left by the collapse of the mining boom, Stevens effectively said the solution was in more effective infrastructure spending.
In particular he said "it would be confidence-enhancing if there was an agreed story about a long-term pipeline of infrastructure projects, surrounded by appropriate governance on project selection, risk-sharing between public and private sectors at varying stages of production and ownership, and appropriate pricing for use of the finished product."
In some ways he was reflecting the earlier criticism of the Productivity Commission that there is too much emphasis on big tendered projects rather than ongoing infrastructure programs.
But a "meta-analysis" of the problem comes down to the move over the last twenty years from having Government Departments that had their own construction capability and instead outsourcing the work to the private sector.
The public sector model was criticised for being inflexible (unable to ramp up and down to deal with priorities) and for high labour costs (through sweet heart deals by managers who don't confront market pressure). Both have proven to be spurious.
The "optionality" that was supposedly created by contracting out ignored the fact that there aren't really other activities that can be turned down and up counter-cyclically to a major contract. So the so-called competitive tendering market just includes the cost of this optionality (the cost to ramp up and then close down) for each project. Maintaining a standing workforce and planning projects around the availability of resources turns out to be a cheaper way to do things.
External contracting has been successful in driving down wages, but that hasn't flowed through to cost. Much of our construction industry is now foreign owned and I'm prepared to take a bet that large scale corporate tax avoidance is rife, and probably occurs at multiple levels in the tiered contracting model. So the country is bleeding money with every contract.
I know Stevens talked about "risk sharing between the public and private sectors" - but this is such a hard concept. The only risk the private sector is potentially best at is managing execution risk on the contract - but the game constructors play is to see how much they can interpret out of scope of the original work and then bill as a variation. The alternative of build-operate-transfer (such as the LCT and CCT) fail because the private sector is least well placed to absorb demand forecast risk.
The nature of the problem is now very clear. The destruction of the public sector construction capability is causing lasting damage to the economy.
Unfortunately it isn't doing lasting damage to the law firms, accountants and banks that generate enormous transaction fees from the private sector model. Together they not only constitute the most effective lobbyists in the country, they are also increasingly the source of Government's contracted advice.
It would be hoped that the left wing Think Tanks like the Chifley Research Centre or McKell Institute might find the time to pursue this. Unfortunately, McKell's recent report on Transport Infrastructure didn't dare touch it. Similarly NBN Co never considered the prospect of a direct employment model for building their network.
It is most frustrating that endless repetition of a mantra about the efficiency of the private sector is supported despite all the evidence to the contrary.
Thursday, May 28, 2015
The Rich are Getting Richer - but more equal with each other
The BRW Rich list is out for another year. Apart from the headline that Gina Rinehart is supposed to have gone from wealth of $20 to $14 billion what can we learn?
Well apart from that move at the top we can also reveal that the bottom entry has gone from $250 million to $286 million. However, the BRW is quite confusing in its list construction. Some wealth amounts are listed for families but occupy one place, whereas others might be listed in two names but the list for some reason gives them two places. As a consequence there are actually only 185 "wealth pools" listed, not 200. The average pool has gone from $1000 million to $1053 million. That's a growth of a bit over 5% and hence better than inflation.
Unsurprisingly if the bottom has increased and the top massively decreased the wealth distribution is ever so slightly more even as shown in the chart of proportion of population measured against cumulative proportion of wealth.
Well apart from that move at the top we can also reveal that the bottom entry has gone from $250 million to $286 million. However, the BRW is quite confusing in its list construction. Some wealth amounts are listed for families but occupy one place, whereas others might be listed in two names but the list for some reason gives them two places. As a consequence there are actually only 185 "wealth pools" listed, not 200. The average pool has gone from $1000 million to $1053 million. That's a growth of a bit over 5% and hence better than inflation.
Unsurprisingly if the bottom has increased and the top massively decreased the wealth distribution is ever so slightly more even as shown in the chart of proportion of population measured against cumulative proportion of wealth.
However the change is very slight. Statistical analysis of the list over the last ten or more years could be a fun exercise. I'll just add it to the long list of fun exercises I have to do.....
Thursday, May 21, 2015
When research isn't
I have a weekly Google Alert on the term "Digital Economy"to keep track of what is happening in the policy space.
This week I got VERY EXCITED (yes I want that emphasis) when I saw two stories (Computer Business Review and Information Age) that said over half of all UK businesses don't understand the digital economy.
You can understand my excitement, because getting business to understand the implications of the economic transformation we are in is a critical part of reaping the benefit.
One of the two handily linked to the media release issued by the company that commissioned the research. The release started:
A study released today has found over half (57%) of business leaders do not understand the Digital Economy, highlighting that organisations are not yet fully prepared to deliver the digital experiences and access buyers desire and require.
Reading the release I realised that both stories were simple cases of "churnalism" - faithful reproduction of the release as if it is an actual story. More importantly the release contained no link to the "study."
So I went to the website of the company that conducted the research, OnePoll, hoping to find it there. I was immediately concerned once I read the description of the company that came up on the Google search for OnePoll.
And down at the bottom of the homepage I found this delightful piece of text.
pr surveys for brand exposure
Generate content and news angles with a OnePoll PR survey, and secure exposure for your brand.
Our PR survey team can help draft questions, find news angles, design infographics, write & distribute your story.
The "study" was the creation of an agency that specialises in the creation of surveys that have only the purpose of securing brand exposure. I have emailed the contact on the press release and asked if there is a study that has actually been released, or whether the word "release" was a circular reference to the media release itself. (I recently had this conversation with an Australian PR firm over a similar claim of the release of a study).
These kinds of surveys are not new. As Kristen Drysdale explained in a recent episode (Serises 3, Episode 1) of ABC TV's The Checkout they are the source of most of the "clinical studies" claims made by the beauty industry.
My view is that in a data saturated world the last thing we need is bogus data that we need to wade through.
Joe Hockey got into a blather having used the term "disintermediation" to describe the disruption in the economy, but it has been around a long time and refers to the removal of the "middle men" in transactions. Shopping and the media are great examples.
If journalism is to have a future in mediating the information flow, it needs to understand that its job is to validate the claims made in a media release. It isn't hard to do. Simply Googling the name of the firm that conducted the research revealed that there should be concerns.
If a company claims research has been "released" but the details of the research haven't been released, then simply don't report the survey. Or even better write the real story that starts "today firm X tried to con the public and gain brand exposure by claiming to have released a study that wasn't released."
If the worst that happens to the commissioning firm is that they spend money and get no coverage, then one employee might not get their bonus. If the firm gets negative coverage as a consequence then management might care what marketing gets up to.
This week I got VERY EXCITED (yes I want that emphasis) when I saw two stories (Computer Business Review and Information Age) that said over half of all UK businesses don't understand the digital economy.
You can understand my excitement, because getting business to understand the implications of the economic transformation we are in is a critical part of reaping the benefit.
One of the two handily linked to the media release issued by the company that commissioned the research. The release started:
A study released today has found over half (57%) of business leaders do not understand the Digital Economy, highlighting that organisations are not yet fully prepared to deliver the digital experiences and access buyers desire and require.
Reading the release I realised that both stories were simple cases of "churnalism" - faithful reproduction of the release as if it is an actual story. More importantly the release contained no link to the "study."
So I went to the website of the company that conducted the research, OnePoll, hoping to find it there. I was immediately concerned once I read the description of the company that came up on the Google search for OnePoll.
And down at the bottom of the homepage I found this delightful piece of text.
pr surveys for brand exposure
Generate content and news angles with a OnePoll PR survey, and secure exposure for your brand.
Our PR survey team can help draft questions, find news angles, design infographics, write & distribute your story.
The "study" was the creation of an agency that specialises in the creation of surveys that have only the purpose of securing brand exposure. I have emailed the contact on the press release and asked if there is a study that has actually been released, or whether the word "release" was a circular reference to the media release itself. (I recently had this conversation with an Australian PR firm over a similar claim of the release of a study).
These kinds of surveys are not new. As Kristen Drysdale explained in a recent episode (Serises 3, Episode 1) of ABC TV's The Checkout they are the source of most of the "clinical studies" claims made by the beauty industry.
My view is that in a data saturated world the last thing we need is bogus data that we need to wade through.
Joe Hockey got into a blather having used the term "disintermediation" to describe the disruption in the economy, but it has been around a long time and refers to the removal of the "middle men" in transactions. Shopping and the media are great examples.
If journalism is to have a future in mediating the information flow, it needs to understand that its job is to validate the claims made in a media release. It isn't hard to do. Simply Googling the name of the firm that conducted the research revealed that there should be concerns.
If a company claims research has been "released" but the details of the research haven't been released, then simply don't report the survey. Or even better write the real story that starts "today firm X tried to con the public and gain brand exposure by claiming to have released a study that wasn't released."
If the worst that happens to the commissioning firm is that they spend money and get no coverage, then one employee might not get their bonus. If the firm gets negative coverage as a consequence then management might care what marketing gets up to.
Thursday, March 5, 2015
Telco competition hasn't reduced prices
Ever since the open market structure for telecommunications was adopted in 1997 in Australia, the ACCC has been required to publish an annual report reflecting on the state of competition.
As part of that report the ACCC has developed a price index to show the movement in prices. Every year it shows a real price decline.
In the media release to accompany this year's report the ACCC Chair Rod Sims states:
Competition is driving substantive reductions in the price of telecommunications services, significant infrastructure investment to improve the quality and coverage of services, and technological innovation. Consumers are seeing lower prices and improved services as a result of the vigorous competition that began in the 1990s.
Unfortunately for the ACCC their price index isn't the only one available.
As part of the data collection for the Consumer Price Index the ABS also publishes data on the groups of goods used to derive the index. Communications data is available from 1972 and so the real price movement (Group Index/CPI) can be derived. The chart below shows the real price movements over that period as reported at the September 2014 quarter.
Communications is the red dotted line - and the decline has been relatively consistent since the 1975 spike. That spike (I think) was due to a massive increase in stamp prices when Post and Telecom were split from the PMG.
Since 1980 the ABS has kept a separate sub-series on telecommunications and postal prices. This shows that post prices have been stable in real terms while telecommunications prices just continue to drop.
There are two small blips in the 1988-91 period and around 1997 but neither of these periods of reform result in a fundamentally new trajectory.
I have previously undertaken a rudimentary econometric analysis of the data to 2009 and was able to demonstrate that scale and experience effects explained the price movements better than did the reduction in industry concentration as a consequence of competition reform.
It is a great pity that the competition regulator continues to claim benefits for a set of reforms that cannot actually be credited to them. In particular, infrastructure competition cannot be claimed to be the source of price declines in Australian telecommunications.
As part of that report the ACCC has developed a price index to show the movement in prices. Every year it shows a real price decline.
In the media release to accompany this year's report the ACCC Chair Rod Sims states:
Competition is driving substantive reductions in the price of telecommunications services, significant infrastructure investment to improve the quality and coverage of services, and technological innovation. Consumers are seeing lower prices and improved services as a result of the vigorous competition that began in the 1990s.
Unfortunately for the ACCC their price index isn't the only one available.
As part of the data collection for the Consumer Price Index the ABS also publishes data on the groups of goods used to derive the index. Communications data is available from 1972 and so the real price movement (Group Index/CPI) can be derived. The chart below shows the real price movements over that period as reported at the September 2014 quarter.
Communications is the red dotted line - and the decline has been relatively consistent since the 1975 spike. That spike (I think) was due to a massive increase in stamp prices when Post and Telecom were split from the PMG.
Since 1980 the ABS has kept a separate sub-series on telecommunications and postal prices. This shows that post prices have been stable in real terms while telecommunications prices just continue to drop.
There are two small blips in the 1988-91 period and around 1997 but neither of these periods of reform result in a fundamentally new trajectory.
I have previously undertaken a rudimentary econometric analysis of the data to 2009 and was able to demonstrate that scale and experience effects explained the price movements better than did the reduction in industry concentration as a consequence of competition reform.
It is a great pity that the competition regulator continues to claim benefits for a set of reforms that cannot actually be credited to them. In particular, infrastructure competition cannot be claimed to be the source of price declines in Australian telecommunications.
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