Synergies and savings

Synergies and savings

Summary: commentary Politicians say they want to reduce waste and save money. Here is our modest suggestion for the tech and communications sector.

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TOPICS: Telcos
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commentary Politicians say they want to reduce waste and save money. Here is our modest suggestion for the tech and communications sector.

In Opposition Leader Mark Latham's response to last month's budget, he said the Opposition had identified billions of dollars in wasted government spending that his party would eliminate if elected.

One obvious example Latham mentioned is the AU$650 million the Howard Government has allocated to consultants' and financial advisors' fees for the sale of Telstra. Perhaps this is a naïve understanding, but how can someone -- even as wasteful and overpriced as a financial consultant -- blow AU$650 million on selling shares in a vast, highly profitable telco with a monopoly on much of the country's telecommunications infrastructure? It should sell itself.

By committing to keep Telstra in majority government ownership, Opposition bean counters can simply draw a big red X through AU$650 million of spending and redistribute that money elsewhere.

In an announcement that seemed to get into the spirit of reducing wasteful spending, the Government said last month it would be merging the Australian Communications Authority (ACA) and the Australian Broadcasting Authority (ABA) into a new agency called the Australian Communications and Media Authority. "Maintaining two separate regulators, both dealing with similar issues but focusing on different sectors of the communications industry, is neither practical nor effective," says Minister for Communications, IT, and the Arts Daryl Williams.

the Government or Opposition could save AU$72.8 million by merging both good-for-nothing regulators into a skip and carting them off to the nearest rubbish dump.
He has a point. The lines are blurring, and the allocation of duties between the two makes no sense. Why for instance is the ABA in charge of regulating adult Internet content, but the ACA in charge of enforcing spam laws? The difference between the two regulators' jobs is small, and shrinking.

However, Williams has admitted "there will be no immediate savings from the new arrangement". When two companies merge, they use words like "synergy" to hide the fact that entire departments are decimated when duplicate resources get the chop. They fire staff, they pay less rent, they only have to print one lot of letterhead and "with compliments" slips. But when two government departments merge -- having obvious duplications and synergies -- why is there no saving to be had?

"This merger is a token effort to make it look like they are doing something about it," says Shadow Minister for Sport and Recreation, the Arts, and IT Kate Lundy. "The bottom line is that there is so little in this budget for communications and IT." She has a point, too. The entire combined budgets of the ABA and ACA come to AU$72.8 million for next year -- around a ninth of what the Government is willing to spend flogging Telstra.

But are Lundy and Williams both missing the point? The ABA gets millions of dollars a year to do nothing about Internet porn. It does nothing about "cash for comment" deals between Telstra and high-profile broadcasters, where the Government pays journalists in order to influence political outcomes. The ACA gets millions not to reduce the amount of spam -- it makes the occasional threatening noise about suing some local spamtrepreneur who might contribute 0.1 percent of our total spam volume. It doesn't get us lower prices on even the most basic communications services.

Rather than saving on rent and stationery costs, the Government or Opposition could save AU$72.8 million by merging both good-for-nothing regulators into a skip and carting them off to the nearest rubbish dump (recycling the paper, plastic, and glass first, of course).

The alternative? Spend some decent money on regulators who have the power, the will, and the political backing to improve the lives of the people who pay the bills, rather than the companies who pick up the tab for lunch.

This article was first published in Technology & Business magazine.
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Topic: Telcos

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3 comments
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  • Josh has it right in his last 2 paras. Scrap them both. They DO absolutely NOTHING for the taxpayer..the paying users. They allow T(H)elstra to rip us all off every minute of the day and do absolutely nothing about it. Give us one single authority with the power to make decisive directives and have them obeyed! What we have at present are two very expensive qangos who cowtow to the government and serve NO useful service.
    anonymous
  • Keith has put the point very well, how do we allow & pay for two "separate" government bodies to have almost identical policies, yet are not able to perform their tasks properly. Capital idea, combine these two bodies & dump them completely.
    How is it that the average person can think along these lines, yet our political leaders (and their "advisers") are unable to do so? and we don't even get 20% of the pollies perks!!
    adsanker
  • I coudn't agree more with the 2 comments above.
    Whats the point of having a regulator who WON'T do anything and who would be ignored if they ever did.
    Telstra and the govt need a swift kick up the proverbial and massive EVERY time a major stuff up occurs like Telstra's retail broadband pricing dropping below their wholesale pricing model.
    The only way such bloated companies learn anything is to hurt them in their wallets. Slapping them on the wrist and telling them 'Now don't do it again' whilst allowing them to raise line rentals yet again achieves nothing.
    zybch