The numbers keep adding up for Labor€™s new Richo
The Age
Wednesday February 17, 2010
Stephen Conroy knows how to deliver rewards to his loyal mates. YOU€™VE got to look at it from Senator Stephen Conroy€™s perspective. The fact that Mike Kaiser had been involved in branch stacking is not a matter of shame. He was working on behalf of the Right faction. He was an ally. He was successful. He should not have attracted embarrassing publicity. And for that he has to accept a penalty.The penalty is that he cannot run the Queensland ALP machine. This means he can take a $450,000 job in the new NBN Co to be established with taxpayers€™ money €” and $450,000 is nothing when you are getting the taxpayers to stump up $43 billion.Conroy is not what you would call a policy wonk. He has risen in politics by running numbers: first in the unions, then in the factions of the Victorian ALP, then in the federal caucus. To keep all those people voting the right way, you need to be able to promise returns. This is where Mike Kaiser becomes a role model.Mike€™s doing OK. Stephen recommended him for a job. And he can recommend others who show loyal service over a long period.NBN will be a fantastic opportunity. Most companies start small. This company will start with $43 billion. Since it has no pre-existing business, it will recruit from the ground up, or, as happened in the Kaiser case, from the minister down.Here€™s another reason to get Kaiser involved: NBN needs a few numbers men. Before the election it was going to cost $4.7 billion to roll out broadband on the national network, but now it is costed at $43 billion. The ALP€™s pre-election costing was out by a factor of 10 (it is only a zero on the end). Barnaby Joyce is not the only one mixing up his arithmetic.As a country accountant, Joyce would know one thing. Before you put $43 billion into a company, you normally have a business plan that shows some hope of a return. Yet last week the Treasury admitted that it had not done a cost benefit analysis on NBN. Nor has anyone else in government. Remember how the government pledged that all its infrastructure spending would be rigorously tested against objective criteria? Apparently that doesn€™t apply to projects worth more than $40 billion. And the ominous lack of a business case demonstrates the utter irrelevance of Treasury to such an important decision.And here is the genius of Conroy: the budget is in deep deficit, the government desperately needs money, and this week he announced a tax cut worth at least $250 million. This is a tax cut that will only be shared between three companies! Never before has a Sunday press release delivered so much to so few.Normally, tax cuts are announced in the budget. During the budget process, the government works out how much revenue it needs and if it can cut tax. Then it assesses competing claims between, say, retirees or carers or . . . television stations. The budget process allows you to weigh competing priorities. But the television stations got in first. They won€™t have to go through the budget process. Nor will Conroy have to argue why media owners are more deserving of tax cuts than poor or struggling families.If you want to know how valuable these tax cuts are, you can see it in the way the share price for Channel 10 jumped 10 per cent on the announcement and delivered $150 million to shareholders. It€™s harder to assess the gain to shareholders in Channels 7 and 9 since they are mostly in the hands of private equity firms located in foreign jurisdictions. But they have reason to be thankful.Here also is another odd feature of the announcement. Up until now the government has said that it cannot announce any tax relief because it is waiting for Ken Henry€™s comprehensive review of the tax system. Now it no longer matters what the Henry review recommends on television taxes. That industry€™s wish list has been granted.Other industries unlikely to get a tax cut out of the Henry review should try to get in now. The sooner the better. Remember, someone is going to pay more since the television shareholders will pay less.All of this goes to show that Conroy has done rather well for the people he represents. I am sure he will regard it as a compliment when I say that he is emerging as a real operator, a worthy successor to that other great Labor communications minister, Graham Richardson.
© 2010 The Age
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