photo credit: striatic

Our submission to the Digital Dividend green paper for the sale of …

photo credit: OiMax

Not only has the public re-organised spectrum space for the broadcaster’s new channels, but we’ve also gifted a rebate on their licensing fees! Some sort of Digital Dividend, Mr Conroy! A dividend for whom? Where will the missing $200 – $500m p.a come from?

The broadcasters should be paying more for the added access to the commons, not less. A yearly licensing fee commensurate with the value of the spectrum should be implemented.

With the upcoming 4G license to be auctioned, the spectrum issue is heating up. Crikey’s investigative team reveals there’s a lot more to the story:

Free TV Handout’s – We Don’t Know the Half of It
by Crikey’s Glenn Dyer and Bernard Keane

The competition regulator should step in and force Free TV Australia, the television broadcasting cartel lobbyist, to change its name. There’s now no such thing.

A Crikey analysis has shown that the promised licence fee rebates of 33% this year and 50% next year to the television networks will be much greater than previously thought. Rather than $250 million, the likely cost to taxpayers will be closer to half a billion dollars from the Rudd Government.

Which means the free-to-air networks will cost us more than $20 a head for every Australian over the next 17 months.

Based on likely growth in advertising revenue as the economy accelerates, big sporting events such as the Commonwealth Games and the advertising frenzy of a federal election, the rebate could conservatively yield about $240 million in 2010 and $300 million or more in 2011.

Looked at another way, the roughly $500 million involved is 25% of the combined budgets of the ABC over the current and 2011 financial years. Imagine the complaints from the television networks (and not to mention News Ltd, Fairfax and Foxtel) if the ABC got a budget increase of that scale.

photo credit: JPD Photos

AN EXPERIMENT IN INDIA

The much travelled and well known author, Karl Eskelund, whose many books on foreign countries and their people have countless readers, describes the effort which a band of young American and English Quakers made in the way of assisting some of the Indian population, millions of whom live at starvation level.

The young idealists took up their task in 1946 at the village district of Pifa, which lies in the Ganges delta, 45 miles east of Calcutta and four miles by bus from Basirhat railway station. They were fully aware that their work would test their patience, for in India you can get no results “at five minutes past twelve.” But after having outlined their plans to the peasants, the fishermen and the landowners, which met with general approval, they organised a co-operative enterprise in cultivating the land and in marketing the produce. They set up day schools for the children, evening schools for adults, clinics, etc.

After overcoming the initial difficulties, they saw signs of progress; inspiration grew. Health conditions improved. All took greater interest in their work and their earnings increased. New ideas took shape – there was advance along the whole line – an advance, slow but sure.

Five years after the experiment began Karl Eskelund visited Pifa and with one of the Quakers as his guide, he went through the village to see how it was faring. The Quaker had lost more than two stones in weight and was as thin and spare as the natives. But what was worse, he had lost heart because the experiment had proved a total failure. The day school still existed, but only one-fourth of the children attended it. The evening school was closed.

The clinic was hardly used. Agriculture, fishing and trade were back again to old methods. The author asked for an explanation of this fiasco. The young Quaker offered quite a number of reasons, none of which he could accept.

Finally he got to the root of the matter. This is what he says:- “In the first year after beginning the experiment, both peasants and fishermen earned more than ever before. What was the result?”

“The large landowners at once raised their rents and the smaller landowners followed suit. The peasants had to pay more for permission to cultivate the land. The fishermen had to find more money to buy permission to cast their nets on the flooded fields. In that way practically the whole of the increased earnings passed into landowners’ pockets.”

Alanna Hartzok

The global financial crisis has demonstrated a deep systemic failure of the prevailing economic paradigm. So far, efforts to remedy the situation have failed to address the root causes of the meltdown and are digging the American people deeper …

photo credit: hans s

Michael Hudson

As published in today’s Business Age Opinion section

HIGHER land and house prices typically lead to an increased supply of housing. Yet at the peak of Australia’s perennial housing affordability crisis, the Housing Industry Association declared that there would be a 13 per cent fall in housing starts this calendar year, compounding last year’s 18 per cent fall.

In light of massive rezonings in Victoria and improved planning bureaucracy in many states, this can only be seen as a warning that property insiders expect there to be a price crash.

The public face of the housing industry is quite different. So, what do property investors expect that the rest of the population does not?

Government spokesmen reflect assurances by bankers and their major category of customers – the real estate industry – that Australia’s economy is defying gravity. In reality, that is as impossible in economic life as it is in physical nature.

Property prices are defined by how much a bank will lend. Donald Trump claims that a man is worth what he can borrow. This usually depends on what a borrower can afford to pay, after meeting basic break-even needs (the cost of living, plus taxes). In the corporate sector, it means after-tax cash flow. So property prices are set by the banks, subject to the tax system.

The motto of real estate investors is that rent is for paying interest – and whatever the tax collector relinquishes is available to be capitalised into a bank loan as a flow of interest payments. The guiding idea is that affordability determines property prices. One example of how the tax system affects property prices is in its failure to distinguish land from capital improvements. Speculative withholding of prime locations from the market in an undeveloped or unsold state creates artificial scarcity. This raises prices.