National Broadband Network Justification "weak"

An international study finds that the benefits claimed for the NBN have been "grossly overstated". Evidence to support claims made for fibre-to-the-home networks was "surprisingly weak". The study says, "All else equal, faster is better. But faster technologies don't always triumph, witness passenger hovercraft, maglev trains, and supersonic airliners."
South Korea is cited as the world leader in providing fibre to homes, and national productivity dropped from 7.6% to 3.8% since their program was begun. The study finds this drop in productivity might have been partly because of "the massive increase in online gaming, facilitated by the high speed broadband."
When launching the NBN, Kevin Rudd predicted 78% of productivity gains. The basis for this appears to be a paper from Australia's Communications Department referring to gains of 59% to 78%, available from all forms of new technology, from biotechnology to containers, not just fibre broadband. Rather selective use of statistics, Kevin!

Kirkham Bridge - Transurban Position

Apparently the RTA and Transurban have advised that they don't have authority to demolish the Kirkham road bridge, their present approval covers single lane working over the bridge during the span extensions. It seems they are considering options, including demolition as a way to speed up the work, but would need extensive community consultation and a major planning approval process, before they could take up that option.

M2 Upgrade Conditions of Approval

This document, signed on 21 October 2010 by NSW Department of Planning, is available on the net at http://www.hillsm2upgrade.com.au/files/101021_M2%20Upgrade_Conditions%20of%20Approval.pdf.

It talks at length about the project's effect on waterways and wildlife, but makes no mention at all of disruption to the lifestyles of the people who use the Kirkham Road bridge over the M2 between Kirkham Road and Beecroft Road. Obviously if the bridge is completely closed even for a few days that would seriously inconvenience school kids who walk to and from school, and commuters who walk from home to the railway and bus stations in Beecroft.

One would like to think that the lack of information indicates that there is no intent to interrupt access to that road bridge. So why the rumours?

Section 5, "Community Information, Consultation and Involvement", requires the project to establish and maintain a website for provision of electronic information associated with the project. This will include a copy of each current strategy, plan, program or other document required under this approval.

A telephone number is to be provided on which complaints and enquiries about construction and operation activities may be registered, along with a postal address and an email address. These shall be published in a newspaper circulating in the local area prior to the commencement of construction and prior to the commencement of project operations. The details shall also be on the website mentioned in Section 5. So far as I can tell none of this has yet happened, so work cannot yet commence.

Section 5.4, Community Consultation, requires the project to prepare and implement a Community Communication Strategy for the project. The specification for this document is extensive, and so far as this blog can determine no such document has yet been published. So again presumably work cannot yet commence.

Section 6.3 requires a major Project Management Plan for the widening of the Norfolk tunnels. If there was a plan to demolish the Kirkham Road Bridge, which would be even more disruptive than widening the tunnels, then that must surely have been mentioned in great detail in this document. One therefore is forced to assume that no such plan exists.

As soon as any more information is uncovered, this blog will post it.

Australian Home Price reports

An article by Nick Gardner in the Sunday Telegraph says that property investors are being advised to hold off from putting money into Australian homes, given low yields and limited prospects for capital gain. He quotes Shane Oliver of AMP Capital as saying commercial property is a better bet than residential.

If home owners and investors lose faith in the housing market, then there could be a surge in properties being offered for sale. Indeed arguably this is already under way. Ray White Beecroft, tracking statistics in the Beecroft and Cheltenham areas, notes there are more properties listed for sale in the area than at any time in the last two years. The last dramatic rise in listings was in October 2008, at the peak of the Global Financial Crisis, when many people had to offload investments to pay margin calls and other debts.

But rents are going up dramatically, and as Ray White Development Marketing Group explained in the recent RWB Investment Seminar, an investment property becomes more attractive to the individual investor in these conditions, getting tax relief on interest and negative gearing on the income. Finance the property on an Interest Only mortgage, and use income to pay off your household debts.

The article finishes on an optimistic note. "The situation is less of a problem for buyers looking for a home, with experts saying that as long as buyers choose a property that they will be happy to live in for a few years, they will have time to ride out any fluctuations in house prices, and should not be put off buying."

Kirkham Bridge Roadworks Plans

The Northern District Times had an article on 31 October saying the Murray Farm/Kirkham Road bridge over the M2 in Beecroft "may be reduced to one lane of traffic for 20 months while it is lengthened" as part of the M2 widening.
Transurban and the RTA confirmed to the newspaper that this is one of the options being considered for when the project begins in January 2011, but the decision has not been finalised and a variety of measures are being considered. The residents of Beecroft and Cheltenham are entitled to know what the other options are. The latest report, from the BCCT, implied that they have heard the bridge might be demolished and not replaced for "at least six months".
Does it make any sense at all to be starting a Half a Billion Dollar project when such factors have not yet been decided? Before the NSW government signed the contract authorising this work to begin, the local residents should have been given full and open facts about their intentions, and where those intentions are not yet firm, the government, and the RTA, should have listed all possible options. And that list must be exclusive, so the contractor can't come up later with a new cheaper but more destructive, option. Nor should the contractor be able to charge the taxpayer for selecting a more expensive but less disruptive option.
An RTA spokesman apparently said "The impact of the proposed bridge closure on local traffic is still being assessed." This blogger can find no word on this in the earlier RTA and M2 Project documentation.
The spokesman went on, "Consultation with residents has not yet started and will be carried out before any decision is made."
The statements available so far are ambiguous, and could be read as meaning work on the bridge won't start for six months, and might be limited to minor lane closures. But the actual wording was that "it will be at least six months before a replacement bridge is constructed."

Kirkham Bridge

The M2 Upgrade Environmental Assessment document issued by the NSW Roads and Traffic Authority says under the heading "Adjacent road network - Activities undertaken within the adjacent road network are listed in Table 53", and that table shows
"Kirkham Street/Kirkham Street Lengthening of bridge spans over M2 Motorway." Clearly that does not cover demolishing the bridge, so presumably that reading of the RTA statements must be incorrect. But what are the RTA's plans as they affect residents of Beecroft and Cheltenham?

M2 Project intentions for Kirkham Road Bridge

Dear Fellow Resident,
This is an extract from an information sheet from the BCCT:

Beecroft-Cheltenham Civic Trust President Michael Stove’s media release below, raises real concerns about the integrity of our suburbs. The loss of the bridge across the M2 Tollway, linking Murray Farm Road and Beecroft Road, as below, is unacceptable. The Trust has contacted Greg Smith SC MP, NSW Member for Epping, to lead our representations to the appropriate NSW Minister, to reduce the huge impediment that the M2 augmentation will place upon our suburbs.

The attached photo has been sent to local media. I will keep you posted!

Regards,

Colin Johnston
Secretary, Beecroft-Cheltenham Civic Trust

This is the media release by Mr Stove:

Bridge demolition will divide Beecroft

Michael Stove the President of the Beecroft-Cheltenham Civic Trust said residents were very concerned by Transurban’s intended demolition of the Murray Farm Road Bridge, ahead of the widening of its M2 Tollway.

“Transurban has not provided residents with detailed information” Mr Stove said at a weekend gathering of concerned residents and local Councillors at the bridge.

Transurban’s media message is the M2 project ‘aims to provide efficient and integrated transport for the community of Sydney’s North-West’,” Mr Stove quoted. “Murray Farm Road bridge is a key link in Beecroft – its demolition is not transport integration”, Mr Stove said.

He added: “Beecroft will be a suburb divided. How do our students get to local schools, our elderly get to doctors and chemists? There will be no local link from Beecroft Road to the Murray Farm Road area of Beecroft.”

“Our community has to put up with M2 construction, with loss of greenspace and local amenity. It is unacceptable that Beecroft residents will also be cut off from shops, services, friends and neighbours by Transurban’s ill-considered bridge demolition.” Mr Stove also noted: “Transurban advises The start of major work is expected to commence in late 2010 and is expected to take approximately two years to complete. It will be at least 6 months before a replacement bridge is constructed.”

Mr Stove commented that there is an engineering solution which should be pursued by Transurban, instead of subjecting our residents to months of inconvenience.

Contact:
Michael Stove:
President, Beecroft-Cheltenham Civic Trust
0401 991 927

Sales Soft

Interest rate rises sent a tremor through the property market yesterday with softer auction clearance rates reported. Clearance rates were 54.6%, down on the 57.5% last weekend.

Buyers Fooled by Low Quotes

Posing as a potential buyer, a Sunday Telegraph reporter phoned 85 real estate agents and asked for a price guide on a property. Almost one in three of those agents turned out to have significantly underquoted.
The NSW Minister for Fair Trading responded "A blitz on under-quoting and dummy bidding earlier this year uncovered no evidence of under-estimating prices." One wonders how the OFT failed to find any evidence at all, when the Telegraph found one in three agents doing it.
She also said "The onus should be on the buyer to do their price research instead of relying on real estate agents." Thanks Virginia. All the buyer wants is that the agent be required to tell something approaching the truth, isn't that the definition of Fair Trading?
The problem is the conflict under which the agent operates. If he underquotes to the owner, he won't get the listing. So the agent puts an optimistic price on the agency agreement, just to get that precious listing, and then starts "conditioning" the vendor to accept less.
Meanwhile the agent quotes below the likely price to prospective buyers, to persuade them to invest in a building survey before going to the auction. Having made that investment, buyers are more likely to bid up rather than throw away that initial expense.
There is an easy answer for this. Vendors have to display the contract at the sale property during Opens. Why not also require them to display the Sales Agreement?

Commonwealth Bank Ups the Ante

In a move almost forcing a government response, the Commonwealth Bank followed the RBA's announcement of a .25% rate rise with an immediate .45% rise! The banks say they have to do this because of the cost for them to borrow money, but then they declare huge profits so it's hard to accept their argument.

There is much debate between the politicians on how to prevent this, but no action. Wayne Swan said last month that he was "looking at tougher powers to increase banking competition".

Banks are not like retail shops. Bank customers can't just walk into the shop next door when the shop they normally use raises its prices. Bank customers own mortgage for many years and moving to another bank involves large fees that are difficult to quantify in advance. There is no point moving your account unless you can be sure the other bank is going to keep their rates lower for long enough to cover those moving fees.

Surely the simplest solution is just to forbid banks from charging more than the actual cost of doing the paperwork when mortgage holders move their accounts elsewhere. Then a bank would have to try to retain its customers, instead of just milking them.

Interest Rates Up

Rather against expectations, Reserve Bank increased interest rates today. It will be interesting to see how this affects house prices.

"Solar Flare-up will burn Every Pocket"

According to the Sun-Herald, NSW households will pay an extra $600 on their electricity bill over six years to cover the $2 billion cost of the Kineally government's failure to cancel the solar power scheme when concerns were first raised.

Apparently so far the government has refused to admit when it first became aware of the problem, although Country Energy was telling officials in May that the target had already been breached. The government "dithered until August" before holding its review, which only reported last week. There seems to have been no reason why the 60c tariff could not have been cut back then, or at least a sunset clause could have been put on the duration for which the 60c tariff would be paid. Instead because the government did nothing for five months, NSW taxpayers are now saddled with this enormous and quite unnecessary problem in addition to all the unavoidable factors that are forcing up energy costs.

And lots of honest and respectable businesses are likely to be forced into bankruptcy by their inability to sell the stocks of solar panels they built up, in good faith, to meet the government's promulgated solar panel program.

I am all for green policies, but this one seems to have done as much harm as the Federal government's aborted home insulation program. The cost of paying the excessive tariff is likely to delay investment in the cheaper and cleaner generating plants that NSW desperately needs.

Banning "Offers Over" Property Advertising

The Minister for Consumer Affairs in Victoria intends to ban the use of ‘price plus' in real estate advertisements, to protect consumers against agents underquoting property prices.

Rather than banning the practice, they should just make such adverts legally enforceable. If an agent advertises "Offers over $700,000", then the owner should not be able to refuse an offer of $701,000. Perhaps the law could allow the vendor a week or so delay while the agent tries to attract higher offers, but if none is received then the property should have to go to that first bidder.

Agents like to use the "offers over" method of price advertising because if you put a fixed price people usually bid under it. You might list the property for $750,000, and potential buyers think they know where they stand, but then may choose not to bid because they can't go as high as the listed price. However the vendor might be happy to accept anything over $700,000. How can the agent explain this to potential buyers if "offers over" are not permitted?

To advertise "Offers over $700,000" when the owner has stated that nothing under say $730,000 will be accepted is clearly deceptive and needs to be stopped. But I see nothing wrong with advertising that property as "Offers over $730,000" with hopes that a bidding auction can be started ending at or above the $750,000 the owner really wanted.

Keneally acts to bring down electricity costs

Kristina Keneally says she will cut electricity bills by delaying infrastructure. Smacks of the NSW government's policy for roads and rail! Now we are to be exposed to power cuts as well as jammed roads and packed trains.

Apparently Energy Australia has given in to government pressure and agreed to defer spending. Why not? They will be able to charge more next year for doing the same work more urgently.

It seems the government's long term plan is to do nothing and prepare to blame the Liberal government next year for both increased electricity bills and power cuts. And of course in the same paper the government brags of having made a surplus because of increased house sales and tax revenue (sales tax and the new ad valorem tax). Is it fair to say you have made a profit by not spending on essentials?

NSW Solar Panel Scheme slashed

In a blog on 7 October I forecast that the NSW government would have to cut the 60c tariff they had set on solar panel systems on people's houses. And indeed today they have done so, effective midnight yesterday!

To put it nicely, this will throw the solar industry into turmoil.

Just as with the sudden cancellation of the Federal government's much reviled home insulation program, this sudden brake on solar panels is going to hurt a lot of people who have invested in the equipment and supplies involved in the scheme. With the home insulation, many entrepreneurs had stockpiled warehouses full of batts, and were left with unsellable stock. Now, solar panel stockists are going to be left with warehouses full of unsellable panels. And part of that problem is that the cost of panels is going down all the time, so those stocks will become increasingly unsellable.

Given the hazards associated with the insulation scheme one can sympathise with the decision to make an immediate cut. But this decision about solar panels could surely have been done a bit more sympethetically, perhaps phasing down the 60c tariff progressively? But most importantly the NSW government should never have allowed the 60c tariff to apply in perpetuity! In yesterday's announcement they confirm the high tariff will continue to be paid, apparently indefinitely!

It just seems strange that a scheme reported in the papers as being so obviously flawed was allowed to continue for nearly a month without any transition phase, and is now suddenly dropped.

Population Big Enough

A poll published by the Australian National University finds that the majority of Australians believe the country has enough people already. "Australians would prefer natural growth to increased immigration."
The report found that "Concerns were mainly about infrastructure and the economy, rather than cultural diversity." The report listed house prices, road congestion, and overcrowding in cities as the driver for those concerns.

NBN Takeup 11% in Tasmania

An article in The Australian reports that telcos will be provided with $3Billion ($300 per customer) to lure households into connecting up into the National Broadband Network. Results in the first trial, in Tasmania, suggest it might take even more than this!
The NBN project originally planned to run the new fibre cable to the street outside each house, with a total budget of $43 Billion. Now, recognising that many (most?) homes wouldn't pay to connect across their front lawn to the road, the NBN is proposing to wire up to the house. It is not clear whether their budget includes the cost of remediating pavements, drives and gardens in each of the 10,000,000 houses involved.
But that still leaves a large cost in wiring and equipment inside the house, to access the new network. The latest proposal is that telcos will contribute $300 towards that, but of course that extra money had to be paid for by the Federal Government.
In Tasmania apparently about 50% of households consented to having the connection provided, but only 11% have subscribed to the new high speed (and high price) services that will be available.
Mr Turnbull recently called the NBN "reckless and imprudent".

Councils lapping up your rates

The Daily Telegraph today has an excellent report on where your rates go - and most of the money doesn't go to benefit the ratepayer. The average household pays $998 every year. Of this the report claims $820 goes on bureaucrats and workers. Of course the councils also tax the public with special rate rises, parking fees, fines, and user charges, so there should be lots of money available for the ratepayers. But no, the latest Department of Local Government data shows, per person, $30 goes to health and environment, $83 on recreation, $65 on community services.

The key point in the report is that councils could merge to reduce costs and share services. But which public servant wants to volunteer to become unemployed? Oh no, wait, they wouldn't be sacked, but they would be put on the temporarily unassigned roster and have nothing to do all day, instead of feeling important managing their swollen departments.

Genia McCaffrey recently told the NSW Councils they need to modernise. "You can do it yourself or have it thrust on you," she said, hopefully prophetically.

Gillard Plan to Cut Electricity Bills

The latest scheme by the Federal Government is to make the electricity retailers replace old electrical appliances in all our homes. The proposal is that the retailers be banned from passing the costs on to consumers in higher electricity bills, though I cannot imagine the retails agreeing to that - or at least if they agree it will be because they have worked out how to pass on the costs, which would of course be enormous. And of course the consequence of the activity would be to reduce demand for electricity, which will guarantee the retailers oppose the plan. Rather smacks of Rudd's proposal to tax the miners, relying on the miners generosity and public spiritedness. It will be interesting to see how the proposal survives what can be expected to be a major advertising campaign by the electricity retailers.

Apparently the proposal was received in July, but not released until after the election. The report in the Daily Telegraph explains this delay as:
"Sources said the Federal Government had refused to release the report during the election campaign for fear of igniting debate with the Coalition over family electricity bills."

M2 Upgrade Concerns raised in NSW Parliament

Greg Smith, Liberal member of NSW parliament for Epping, raised the community's concerns about the M2 Upgrade in Parliament last Friday. Summarising his excellent speach, why put the community through so much disruption and inconvenience, and indirectly tax road users to the tune of $550M, for an upgrade that will be rendered obsolete by the North West Rail Link?