China’s second quarter GDP numbers, released yesterday were widely reported in the Australian press as further evidence that the global economy has turned the corner, and it’s all up from here. Hopefully that is correct, but as always, reading China’s GDP numbers is as much art as science.

 

The headline number is GDP growth over the year to the end of the June quarter of 7.9%, up from 6.1% growth in the first quarter. China’s GDP growth slowed dramatically in the last couple of months of 2008 and into the first quarter of this year, but is now showing signs of picking up very quickly in the second quarter. The major reason for the pick up is the effectiveness of China’s stimulus package. Most major Chinese cities have detailed plans for their cities out to 2030 or beyond – these plans include great detail on public transport and road requirements. With these plans in place it is possible for provincial and local governments to speed up spending programs if funds are provided to do so.

 

The willingness of China’s central government to expand monetary policy has enabled banks to lend to state owned enterprises, and so China’s stimulus package has very quickly led to huge spending on public infrastructure. Fixed investment grew by over 40% in real terms over the past year, mostly representing this huge increase in infrastructure spend. Interestingly, this increase in spending has not been strongest in the usual growth engines in China such as Shanghai, Beijing, and the export oriented areas around Guangdong province. Instead, second tier cities and provinces away from the coast are expected to grow quicker than average throughout 2009 – particularly in Sichuan province where earthquake reconstruction continues, but also in places like Inner Mongolia.

 

China currently has around 130 million workers in the urban centres who have migrated from the countryside. It is commonly claimed that China needs 8% GDP growth to create enough new jobs to support these migrant workers, as well as to create jobs for additional migrant workers as they move to cities. If growth falls too far below 8% then rising urban joblessness will create social unrest and put pressure on the central government to support the economy.

 

This pressure is one of the reasons why the central government has been willing to support the stimulus program in China. Moving forward however, China needs to move towards an economy that is driven more by private investment and by consumption, rather than by investment that is state driven. Encouragingly, retail sales grew by nearly 17% in the past year, but this stronger growth in consumption needs to continue. For China’s economy to have sustainable growth in the medium to long term, China’s reliance on investment by state owned enterprises needs to be reduced. But in the short term the Chinese government will continue to support growth through loose monetary policy and heavy funding to state owned enterprises for infrastructure and related projects. With this being the case I think that we can expect to see China’s economy grow at around 8% in 2009 and in 2010.

 

The implications for Australia of this growth are very positive. Not only is China growing reasonably strongly, but the emphasis on infrastructure makes this growth very resource intensive, which of course is a good thing for Australia’s resource exporters and for our economy.

NEWspaper Business Model

Joshua Gans, The Voice, 13 July 2009.

It is commonplace to hear about the impeding death of the newspaper. And that notion is given its true irony when we realise that we live in the age of news.

News is more widely available and widely consumed than ever before. Reading (words that is) is clawing back its past lost share to viewing. So how can it be, that what used to be the principle vehicle for the delivery of the news, is somehow uneconomic?

The crucial word, of course, is “delivery.” The newspaper was a way of getting news to people in a timely fashion. It aggregated it, and came up with a process of putting it together and distributing it that was cheap and could all be done before 6am in the morning. Magic. To be sure, there were other means of getting the news—including radio and television—but these never delivered so much. A television news broadcast required the viewer to sit through what the station thought they wanted to hear. But a newspaper allowed you to pick and choose. Even if you were only interested in a few things a day, the newspaper could deliver it all and satisfy a broad set of possible ‘few interests.’

The Internet has changed all that and it has done it on so many fronts, it has been hard to sort out.

First of all, it has completely displaced newspapers as a source of classified ads. This was the function of bringing sellers with ‘limited interest’ products together with potential buyers. But the organisation of a newspaper just can’t compete with the ability to tailor product searches online. Somehow for housing, cars and jobs, classifieds hang on but there is a clear feeling that their days are numbered. And the issue here is not that they had anything to do with producing or reading the news. Instead, by using newspapers to distribute classifieds, the cost of the magical pre-6am delivery network could be shared. Soon the news will be on its own.

And that is really bad news because, second, the Internet has completely displaced newspapers in terms of timely delivery of a large amount of content. The newspaper delivers news that is largely old and, as I will argue shortly, this has undermined its social purpose. Moreover, nowadays, instead of flicking through the newspaper I can browse and search through web pages. But even so, few websites have managed to replicate the satisfying morning experience of turning the pages and finding points of interest.

So what has been the reaction to all of this? In many markets, newspaper publishers have taken their classifieds online. However, this has only exposed more quickly the fact that they cannot subsidise the delivery of the news. In relation to the newspapers itself, there has been much discussion about how to make up the revenue. It is asserted that consumers still like the news and so will pay for it. However, this logic completely ignores what people like about the news.

The conventional view about the news is that it is ‘information’ or ‘content.’ People value knowing what is going on and, in some cases, specifically so (for example, financial information or the weather). But this fails to recognise that as content, the news is fairly inconsequential. You might read about the latest social or political scandal or that there problems with the war in Afghanistan or a controversy over a missing child in Portugal but none of it will do what information should do, change what you are doing in your day-to-day lives. Instead, it provides a point of social contact. It is something to discuss with your co-workers over morning tea and muse about. But no one is changing what they do as a result. Put simply, for the vast majority of news, the value comes from being able to talk about and share it (”did you hear about”?) rather than add to your pool of knowledge per se.

And this is precisely why the loss of timeliness is so critical. That social conversation has already occurred by the time you read the news in the morning papers. Chances are your friends and co-workers know well before you do what will be of interest. And it has already been brought to your attention. So what you are getting in the paper is not the news at all. Indeed, now you have to work reading it to find something new.

In this environment, raising the price of the news (something you think of doing when you think news is information) destroys whatever social value it might have. If I have to pay for the news, that is a problem because I cannot be sure others have read it enough to participate in conversations. Moreover, the means by which newspapers ensure that payment sticks (logins, paywalls and blanking out cutting and pasting) mean that I can’t share it to even begin those conversations. It just doesn’t reach the blogs, email or Facebook. If the news is social, payment, even micropayment, kills its value. It should not surprise us that this does not and has not worked except where that social value isn’t there (e.g., in the finance pages).

Will journalism and other aspects of the creation of the news survive all of this? I think it will but the age is so disruptive it will take time to work out precisely how. The fundamentals are sound (there is demand and supply) but those in charge of the key businesses have yet to sort it all out. And the Internet has brought with it competition for the creation of news, opinions and expression. Indeed, rather than trying to lock-in their content, newspapers have to ask themselves “why aren’t teenagers stealing our content?” They aren’t and until they are, you aren’t producing what interests them.

But there is another fundamental demand that is disappearing but that could be the hope for the newspaper business: the morning browse through the newspaper. You just can’t do that on the Internet because no one has designed web pages for that purpose. When I visit a news site, I see much of the same content as the last time I was there. What I want is for it to recognise what I saw the last time and to update itself in an intelligent fashion. I want it to configure itself and then provide a mass of content and a way of browsing through it. And I want to see what people are saying about it. And not just a 1,000 random people but my people (the same people who are on my Facebook page). This activity is still there for the taking. The Internet has removed the morning paper as a means of doing it. We are some thought and maybe a technical device away from getting it back. Who knows when that comes back I might even see the ads.

Joshua Gans is Professor of Management (Information Economics) at Melbourne Business School. He writes for the economics.com.au blog.

Consider the following list of financial terms and the images they conjure: `assurance’, `bond’, `credit’, `consolidation’, `equity’, `interest’, ‘mutual’, ‘obligation’, `redemption’, `reconciliation’, ‘security’, `trust’, ‘venture’.  I wonder how many of these terms have their origins in the Protestant business philisophy of the nineteenth century – that wealthiness is next to godliness.  

Even the trashy housing loans that got us into this mess are called “sub-prime”, which to me sounds like a cut of beef only slightly more chewy than eye fillet. “Lambs to the slaughter” might have been a more honest marketing strategy.

And my favourite bit of financial jargon is ‘efficient market hypothesis’ as Doublespeak for complete bloody randomness.

Mad furore surrounding the so-called “people’s bank”

Joshua Gans, The Punch, 13th July 2009.

A few days ago, I was part of a group of 6 economists who wrote an open letter arguing for a new Inquiry into the financial system—a so-called “Son of Wallis, Daughter of Campbell.”

Put simply, so much had changed in our understanding of finance, banking and economics and so much ‘on the fly’ policy had been undertaken, that surely stepping back and reviewing our policies above the political fray would be a good idea.

We had hoped that this might get a little media and perhaps push the government into putting an inquiry onto the agenda. Our letter was a long and not particularly reader-friendly affair. But towards the end we asked the following:

Are ideas a repugnant good?

by Joshua Gans

This may seem like a ridiculous notion to associate ideas with bad taste but in economics terms that may not be far from the truth. Harvard economist Al Roth has noticed that there are many economic transactions which are simply banned either by law or social custom. A favourite example is kidney sales. Most of us have two kidneys but can make do with just one. There are a few others for whom both kidneys fail. We have the technology to trade here and give a healthy kidney to another person without killing either one. The problem is that despite the apparent over-supply of kidneys, there are long waiting lists. Why? Because while kidneys can be donated, they can’t be sold. The result is a glaring set of inefficiencies. To Al Roth, while economists might lament the whole deal, this illustrates something quite common: sometimes, repugnance is a constraint on the operation of markets.

Scott Stern (of Northwestern University) and I have been researching for many years on the trade in ideas. Our principal focus has been on the agreements that start-up firms make with established ones to license their innovations. But more recently we have become interested in why ideas trading is not widespread. While there are many possible reasons, one hypothesis that we have put forward is that ideas may have more in common with kidneys than other economic goods. Put simply, there may be a reluctance to attach a price to them.

This is, of course, a highly uncontroversial notion within academic institutions. Everything about the norms of science drives us to generate ideas and to disseminate research as widely as possible. We academics are extremely resistant to any commercial like interference in that process even when recognising that the research itself is not free and that sometimes the only people wanting to put up capital are those that don’t share our norms for openness.

But this notion, that attaching a price to ideas is repugnant, crops up in all manner of places. Just ask any teenager who considers it OK to download music (the digitised form of a creative idea) for free. Or ask the majority of Internet users who believe that all web pages should be freely available — including newspapers and videos. There is resistance to paying for ideas.

Of course, we always resist paying for things but what is interesting about ideas is that resistance comes from sellers as well. We academics fall into that class but so do bloggers, twitterers, open source software developers and the thousands who contribute to Wikipedia. These people don’t want payment and as a quid pro quo apparently want to ensure that no one is forced to pay for their ideas. Indeed, it is not a stretch to see that most forms of ideas exchanged have this quality and that a payment is relatively rare.

This research is in its infancy but it already points to explanations for some strange things we see in creative industries. The moves of newspapers towards micropayments fail to recognise that much news is social and payment will be a barrier to sharing. And musicians are working out other ways of making money (e.g., concerts) while being able to provide free music to their fans.

The silver-lining, however, is that by being able to exchange without payment, ideas trading is wonderfully efficient and free of transaction costs by economic standards. And for such an important economic good that is something we can be thankful for. If only kidney donation could work so smoothly.

Joshua Gans’s paper “Is there a market for ideas?” is available at http://works.bepress.com/joshuagans/23/

“Gans: Why the People’s Bank makes good sense”

Crikey, 8 July 2009.

If there is one thing Australian governments have been good at over the past three decades, it is periodically reviewing the banking system and its regulation. Starting with Campbell in 1981 and then Wallis in 1996, governments have found that the best way to consider banking policy is to move it above the political fray, take its time, look at all parts and independently charge a panel with reviewing the state of affairs and providing clear and evidence-based recommendations.

In an open letter today, six economists (including myself) making the case for another similar inquiry to take place over the next year or so. In the letter we note that the Australian financial system has weathered the global storm relatively well but at the same time a significant and often radical set of policies have been put in place. ACTU president, Sharon Burrow, called many of these policies necessary “band aids.” At the same time, however, it is believed that those policies while shoring up our major banks have disrupted the smooth workings of the financial system. Right now, that isn’t a problem but into the future as we come out of this crisis the costs of those might be felt.

This is not simply a timely review but a necessary one. Economists have come to realise the gaps in their knowledge of how regulation performs and what the best institutions are for on-going government intervention in the financial sector. The Prime Minister is well aware of these as he articulated in his much talked about essay for The Monthly. For these reasons, it is important to step-back and assess the new knowledge gained here and around the world and consider a greenfields approach to our set of financial regulations.

It is interesting that the proposal, floated although not necessarily endorsed in the letter, that a government-owned institution might have a competitive and stabilising role was picked up so strongly in the media. That policy likely has costs and benefits and only further investigation will determine its appropriateness. The media attention surrounding it only adds grist to the mill that considered policy evaluation is necessary in this sector. Indeed, it is in the major banks’ interest to get behind a new independent inquiry lest policies directed towards them continue to be enacted on the fly or in the midst of some new political storm in relation to bank profits.

Our goal here is to decouple of review cycle from the electoral cycle for banking. That is surely something many interested groups can support.

Joshua Gans is an economics professor at Melbourne Business School. The open letter can be viewed here: http://economics.com.au/?p=3816

The crisis and the textbooks

Joshua Gans, Online Opinion, 8th July 2009.

Maybe not in the next edition but in future editions we will have learned enough about what worked given that massive bet to write a better textbook.

[\DDET]

A: Not sure how on earth that one might be workable. If there is a problem with foreign debt, then we need to reduce our current account deficit by raising national savings. We’ve gone through this one before so not sure what an inquiry can add. Our forex exposure is very low, so we don’t face Asian crisis type risks. In short, oversight of our foreign debt directly is neither practical nor desirable.

What position should Australia take in relation to restructuring of the global financial architecture? A: Who cares. We will have no influence. We have been debating the global financial architecture since the Asian crisis. We have made little progress. Europe and the US will never agree. We sit in the middle. We should take steps to make our financial system more robust, but don’t rely on the global financial architecture, Europe, or the US to do this.

Overall, in my view we can never completely protect a financial system against every possible contingency. But one major weakness in our system is that we still don’t enforce enough transparency and sophistication among players. When I sign up for a mortgage I have to sign off to say that I understand the product, and go through the mortgage papers with a lawyer. But I can gear up and buy instalment warrants that the average punter has no understanding of at the drop of a hat. Why are financial market firms allowed to advertise complicated financial products in the AFR and try to attract mug punters? Buyer beware is fine, but I think that punters should be better advised about certain classes of products, including mortgage backed securities. If I get time I’ll have a go at answering a couple of other questions so that we can save some taxpayer money on another inquiry.

Australia Needs a Comprehensive Financial System Inquiry

Joshua Gans, Nicholas Gruen, Christopher Joye,
Stephen King, John Quiggin and Sam Wylie

Ever since the severe market failures in Australia’s securitisation industry were identified in 2008, we have been concerned that these problems were partly attributable to more fundamental flaws in Australia’s ageing regulatory architecture and the inadequately defined role of government in dealing with such crises.

The shortcomings within our governance system have been exacerbated by the relentless changes that have occurred in financial markets since the essential elements of our regulatory infrastructure were put in place decades ago. One example of this is the 1996 Wallis Inquiry’s rejection of the use of deposit guarantees, which have been critical tools for maintaining stability during the current crisis. Following the lessons that have been learned during the global financial crisis, and the 12 years that have elapsed since the last such exercise, we believe that a broad-based inquiry into the integrity of Australia’s financial system is now warranted.

While the $40-50 billion per annum residential mortgage-backed securities (RMBS) market supplied the funding for up to a quarter of all Australian home loans it did so with little-to-no government oversight or support. The growing depth and liquidity of this market enabled the emergence of significant alternatives to the major banks in the form of empowered regional banks and building societies, and smaller non-bank lenders. When this market disappeared due to an entirely external shock—the US sub-prime crisis—many of these institutions were brought to the brink of collapse and forced to withdraw from lending altogether or merge with competitors. At least one smaller Australian bank would likely have failed had it not done so.

The biggest beneficiaries of this chaos have been the four major banks that receive the most favourable regulatory treatment under the existing system, which was not conceived with many of their smaller rivals, and the new markets that they rely on, in mind. Yet the forced ‘reintermediation’ of the major banks into the residential lending arena has had other unintended effects, with the pressure placed on their balance-sheets in turn compelling them to ration credit to the higher risk small business, corporate, and commercial property sectors.

We are still in the midst of understanding the consequences of the global financial crisis and the actions of governments (including Australia’s) in response to it. Importantly, it remains uncertain to what degree Australia’s comparatively successful performance in navigating through this catastrophe has been due to our own regulatory foresight or just good luck. We would do well not to discount the possibility that a ‘good roll of the dice’ left us without more significant system failures such as those seen in the UK. In future crises, we may not be so lucky.

This cataclysm was imposed upon us by the increasingly interconnected and globalised nature of capital markets. These interdependencies also extend to government policy. The catalytic event that was US sub-prime borrowers defaulting on home loans that barely exist in Australia pushed the world into a deep recession and has subjected Australia to a marked slowdown accompanied by significant job losses. As a nation with a large foreign debt that has continually increased its liabilities via enormous current account deficits, Australia’s vulnerability to foreign shocks is in many respects greater than most of our peers.

It is, therefore, critical that policymakers take this opportunity to thoroughly review the existing system and evaluate whether changes need to be made to it. Although the dependence of financial institutions on national governments has been reinforced by the crisis, global capital market integration is not going away. We have little comprehension of the consequences of the raft of new policies that are being implemented by other nation states. What effect will the whole or partial nationalisation of banking systems around the world have on Australian institutions and, more specifically, our ability to source foreign credit? Will the UK Government’s recent decision to guarantee securitised home loans along the lines of the Canadian model place Australian lenders at a competitive disadvantage in a global capital raising context? What are the long-term ramifications for Australia of the new regulatory regime being instituted by the Obama Administration?

These linkages cannot be ignored and should be examined under the auspices of a first-principles system review process similar to that undertaken by Campbell in 1981 and Wallis in 1996 with the benefit of new insights.

If there is any doubt as to why Australia needs to urgently revisit the foundations of its financial architecture, and evaluate what renovations might be required in light of the current crisis, consider that the following questions remain unanswered:

· Will the Australian government seek to establish a regulated clearinghouse for the hundreds of billions of dollars worth of over-the-counter derivatives contracts that are otherwise beyond the remit of policymakers;

· Should banks be subject to a ‘systemic capital charge’ to account for the risks associated with the correlation between bank balance sheets given that current capital charges reflect the idiosyncratic risks to the institution itself, and may not be collectively large enough to compensate for system-wide catastrophes;

· Will the deposit and/or wholesale funding guarantees be phased out and, if so, what new policy guidelines will explain how they might be redeployed when capital markets seize up again in a manner that minimises disruptions to other sectors (such as the knock-on effects seen in non-guaranteed areas like the commercial paper debt markets, the mortgage trust industry, and the CMBS and RMBS markets). If they are not phased out, how will the terms and price of these subsidies be determined and what regulatory constraints will be applied to prevent the emergence of moral hazard risks. More broadly, what parts of the credit markets will or will not be guaranteed in the future;

· Should APRA impose ‘automatic stablisers’ that require banks to accumulate capital in good times to serve as insurance against the bad;

· Has this crisis reminded us that Australia’s major banks fulfill a unique community role akin to public-private utilities that warrant special controls to guard against system stability risks? Here it is odd that we’ve been repeatedly told that our banks were lucky not to have had substantial overseas exposures and yet they now appear to be rushing offshore to obtain exactly these;

· What new regulations will govern executive compensation at banks and securities firms to mitigate the ‘call-option’ like payoffs that have tainted these arrangements in the past and how might these be tied to prudential supervision (eg, higher risk-weightings for firms that have short-termist structures and/or claw-backs on remuneration for executive negligence and adventurism);

· Can real competition emerge while consumers face significant costs in switching between financial institutions? Does a government-regulated securitisation market provide an opportunity to consolidate mortgage account standards and more effectively enable switching;

· Where government guarantees are deemed necessary is it preferable for them to be offered against complex institutions like banks, or against tangible portfolios of assets the characteristics of which can be relatively easily assessed by independent experts;

· Should citizens who feel unsure and unqualified to shop wisely in our financial markets be able to access basic savings, payments, and wealth management products that have been vouchsafed by governments as being safe and professionally managed (eg, why can’t Australians invest with the Future Fund)? In this regard, is there a role for a publicly-owned entity, akin to KiwiBank in New Zealand, to offer essential services in Australia’s finance sector that leverage off unique government infrastructure (eg, Australia Post, the tax system, and the government bond market);

· How will policymakers remedy the regulatory asymmetry between institutions like the larger banks that rely on short-term retail deposits as their primary source of funding (in combination with wholesale debt) and many of their competitors that depend on the longer-term and (ironically) ‘matched’ funding furnished by the RMBS market? Whereas banks benefit from a range of government subsidies (implicit and explicit deposit guarantees, term funding guarantees, RBA liquidity support, etc), which glue together the enormous asset-liability mismatch created by funding 30 year loans with at-call deposits, Australia’s regulatory architecture does nothing to maintain the liquidity and integrity of its securitisation market. This contrasts with the Canadian system, which has remained open and functional throughout the crisis (and displayed lower default rates than Australia);

· Should the RBA ‘lean against’ incipient asset-price booms fuelled by increases in system-wide leverage;

· Should Australia’s global foreign debt position be the subject of any general policy oversight and, if so, what measures should be pursued to ensure that these exposures are prudent;

· What position should Australia take in relation to the restructuring of the global financial architecture? This will begin in earnest once it is clear that the worst of the crisis has passed. We need to be prepared for the negotiations that lead to new organisations, treaties and the global regulation of finance. For example, European states appear to favour a global super-regulatory body. The US has not embraced this approach. Where should Australia stand? And what will Australia’s views be on other key issues, such as the uniform global reform and regulation of rating agencies and hedge funds; and finally

· What does Australia want to achieve from trade negotiations relating to the opening of foreign financial systems to overseas firms? Australia should be able to expand its supply of global financial services because of its location, political stability, resilient financial infrastructure, skilled workforce and competitive institutions. What steps will be taken to optimise Australia’s ability to both import and export financial services?

These are but a small subset of the many profound policy questions facing Australia and its financial system. Our relatively strong economic position offers an opportunity to review, investigate, consolidate and reform (if necessary). We need to take active steps to avoid the temptation of complacency and accept the lure of challenge. Only a full-scale independent commission on the financial system—roots and branch—can put us on a path to continued stability and insulation against the unpredictable. Following in the footsteps of Campbell in 1981 and Wallis in 1996, such a review’s time has now come.

As Tom rightly points out, the UK (and just about everywhere else) is also stimulating its economy. Interest rates on government bonds are going up everywhere. In theory, what matters for the exchange rate is whose interest rates are rising the most. This is not likely to be Australia – starting from a low level of debt should mean that the government does not need to offer as high interest rates as the UK or elsewhere, so our interest rates ought to rise less than elsewhere, and if this is the case the exchange rate should depreciate, not appreciate.  In practice, however, the linkage between public borrowing, interest rates, and the exchange rate is pretty much non-existent. Look at Japan through the 90s and 00s as a good example of increasing debt, low interest rates and a flat real exchange rate – sometimes it increases and sometimes it decreases, but uncorrelated with debt paths or with interest rates.

Taskforce needs to loosen grip on hidden public data

The Government’s tight control of public information is outdated.

UNLOCKING the information collection by governments — and deciding what information could be of social value — is the aim behind the new ‘Government 2.0′ taskforce headed by economist Nicholas Gruen.

The taskforce’s mission results from a key recommendation in the Cutler Review on Innovation — a taskforce that Dr Gruen served on.

In BusinessDay last August , I highlighted an example with regard to the free availability of public toilet location information — also mentioned in the Cutler review because that information had actually been collected as part of the National Continence Management Strategy and gave Australia perhaps the most comprehensive toilet location map in the world.

However, that information was provided only in ways the Federal Government chose to and it could not easily be viewed on a mobile device.

That has improved, but not to the extent of allowing developers to match the information with devices in a truly usable manner.

Google Maps might have been invented in Australia and they can pull all manner of data — except our toilet locations.

But this is just the tip of the iceberg. Schedules for public transport, TV and radio programming, emergency room information and traffic sits locked within the Government. So the mission of the taskforce to find ways of bringing it out is clearly a critical one.

They will face challenges. Politicians and bureaucrats do not give up control of information lightly. The taskforce will hear excuses.

First, it will be claimed that free use of the data means the Government cannot certify its integrity. That may be the case, but is it really necessary for it to give such certification?

Surely our consumer laws are strong enough to accept clear labelling from those repackaging the information that things may not be up to date. Search for exchange rates on free sites and the disclaimer is there.

Even so, the taskforce should not settle for that. It should be the duty of the Government to not just post some spreadsheets on a website but to work out protocols that, if changes occur, allow those drawing from the information to update it accordingly.

Twitter and Facebook provide developers with this ability in real time. Surely, the Government should be expected to do the same thing?

Second, there are issues of privacy.

Dr Gruen highlighted NSW information on popular baby names from the Registry of Births, Deaths and Marriages as an area where governments are getting it right. But that same information excludes really unpopular names because they might identify (presumably the birth year) of certain people.

That might be possible if your name is derived from Klingon but surely that isn’t a strong reason to limit searches. For instance, you could identify unpopular names by decade rather than year.

These demonstrate the challenges that might come from complacency. But Dr Gruen’s baby names’ example highlights another. He was enamoured with a particular representation of the data as a graph showing 1200 baby names over time. You can hover over bits of it and find out just how many NSW babies had a name in a given year. Perhaps it was neat technologically but it was, in many respects, of no real value. At best, it told you trends of gender-based names around certain areas of the alphabet.

The point is that it shows us that we can do better and indeed, it is precisely why the Government needs to free the information so that others can provide it in a useful form and improve on it.

The problem is that when it comes to NSW baby names, despite the flashy graph, that data is locked within Government. You cannot request a database with the underlying information. And so no one other than Government can present it to us in a form that is actually of use.

I won’t speculate on what that use might be. I just hope this is not what the taskforce has in mind because it highlights precisely the problem rather than the goal.

To be fully successful, this taskforce will have to change the default position of government from tight control to open access. That said, I would be happy if beside every representation of information, there was a ‘click here to download a spreadsheet’ button. If they can’t get that, this taskforce cannot claim to have succeeded in any measure.

Joshua Gans is an economics professor at Melbourne Business School. He contributes to the economics.com.au blog.

First, before describing that, let me note that both here and on Whirlpool, the overwhelming advice to my plight was to abandon Telstra and go to somewhere else like iiNet. The problem is that I am on the edge of an exchange zone and so ADSL2+ is unlikely to work too well from my home. You can see here the speed I get on Bigpond Cable:

I was laughed at by experts who claimed that the ‘theoretical maximum’ was 30Mbps. I don’t think so. So you can see my reluctance to give up the best broadband connection in the country. I resisted that option and went for ‘voice’ rather than ‘exit.’

Recall that my issue was (a) that the usage was correlated with my usage and (b) it was all in downloads. That suggested that no neighbour was using my connection as that use is usually casual and illegal (with lots of uploads through torrents). My security was set at WPA2 and the password changed every few months. The high usage had been going on for at least a year. My guess it was twice my usage (that is, an extra 30GB per month).

To get to the bottom of this, I need an independent measure. The tool I used to measure usage was the PRTG Traffic Grapher which could monitor all of the ports on my Time Capsule. (It’s free if you aren’t using it much). It took a little time but when I had it running on one computer, I stopped everything else. That computer wasn’t using the net but something else was at steady download stream of 50MB per hour. Work that out and you get 30GB or more per month. The tool also allowed me to work out it was coming through the wireless. Kill the wireless and the traffic went away. The problem was at the time, no machines were logged on to the wireless.

So I changed the password and that killed that stream and this time it hasn’t come back. So if it was one of my devices, that wasn’t the cause. Telstra, whose attention was grabbed by Firth and my posting, sent out a technician yesterday. After marveling at the speed of my connection, he could not pinpoint a cause. It could have been someone sophisticated logging on but this might be taking CIA level hacking and for what purpose it is hard to imagine.

The upshot of this is that I was wrong about over-counting of overall usage. Near as I can tell the Bigpond usage meter is accurate.

Where it is not accurate — and this can be a worry for billing — is that it does not necessarily log traffic according to the date it was incurred. That means that on the last day of the billing month, as happened to me this month, you can think you are safe with 1GB left and not receive extra charges but, in fact, not be and receive those charges. Why it can’t be real time given that Telstra internally can tell these things is beyond me. Put simply, if you are a high user, having the PRTG going is a good idea.

For me, so long as that extra traffic does not return, I will be well under my cap with relaxed usage. So I’m pleased about that. I am troubled that we can’t rule out a security issue so I am now monitoring for that and the logs I keep might help identify what happens if it returns.

The point is that had I just down tools and switched providers, I would have had a slower connection and continued to have had high usage. Sometimes, it isn’t Telstra’s fault.