SME’s Paying For More Corruption!
Coonans ICT Report Sources Exposed
AGIMO and NOIE Have Squandered Billions

This weeks report published By Senator Coonan, Howard’s Communications Minister,
(see http://4idtvforum.blogspot.com ) supportingthe sell-out of local ICT, had a familiar fishy smell about it and checking through our records and research we realised a bunch of corrupt inept bureaucrats have more than likely been the source as they have squandered billions and with a few name changes over the past 10 years, very few people (except the insiders) are aware of their existence let alone their corrupt history.
We published this about 18 months ago and hope it will be of some interest, particularly to SME’s as they are consistently being used by a wide range of bureaucracies to milk budgets and essentially maintain their corrupt squandering empires.
Once again our ongoing research has identified their ignorance about these new technologies, their economics and flawed bureaucracies, so there is no surprise they would produce a report to protect themselves and their trough – feeding careers.
We would always like to hear from any SME’s interested in long-term solutions. But we must emphasise what we publish here is the tip of the iceberg and if SME’s want to continue to ignore this wasted wealth and lost opportunity we can only do so much without some support. (We apologise for the quality but we have limited resources while these parasites squander billions and opportunities to benefit SME’s continue to be ignored.) If the AWB corruption is not enough for SME’s to realize the extent of what corrupt bureaucracy is costing them then we are at a loss.

E-BUSINESS PROGRAMS-Government wastes A$140 million plus while enterprise stifled ?... 2004/2005
When any in-group remotely connected to government wants to get funds it seems all they need to do is promote some sort of solution for SME's, which in turn can be promoted by the government of the day.
This has been popular for about two decades now but a closer look shows it is probably being abused with a dubious return on investment. Of course the politicians and bureaucrats are not going to fall over themselves looking for reasons to expose the flaws and the media monopoly true to form will only raise the issue if compelled to but without joining the dots. The politicians because it's good PR to promote their concern about SME's; The bureaucrats because it's a good job where not even the pols know much about it; And the media monopoly because it contributes to profits by way of government advertising spending and quick (free) press releases good for filling otherwise blank space. And of course, because of the bigger issue, which is that they want to remain a media monopoly.
What NOIE was up until recently, and its subsequent reinvention, is a good example of the model.The National Office for the Information Economy was created in 1997 to provide, “thought leadership to SME's and to help make Australian SME's more competitive and profitable by working to optimise their ability to participate in, and benefit from, the information economy.”
This is a worthy aim but it is clear it was never the first priority. Getting a budget and spending it was, and still is!
Before being axed in 2004 (with a convenient name change from NOIE to AGIMO so they could keep the show going) NOIE employed 170 bureaucrats directly. Logically if it was achieving the stated aim then it would be expected to still be around not need a name change and a new mission. It is more or less but broken up, renamed and recycled and merged into other bureaucracies now called AGIMO although in the past 18 months it could be renamed again. (Destroy the history and no one will follow it. Like the AWB model we are getting a view of now in March 2006.) All of the bureaucrats survived and importantly so did the budget as other creative schemes were devised to make sure it is spent, and they spend it. If any of the bureaucrats left their government positions they would have moved on into one of the many consulatncies they threw millions at to pave their dual career paths etc. The public sector union made some noise about closing it down but their only priority was preventing any loss of jobs not SME's. Of course there is always the distinct possibility that if this kind of money was invested in new industry creation it could not only create a greater number of jobs for the long-term, but also export earnings. One eBay equivalent or even a modest sucessful variation, would be more valuable in every respect. However given history it seems such a success might up the benchmark for government, which would result in unwelcome exposure of the traditional poor track record and return on investment. Again, whether it achieves the stated aims for SME's and the nation into the long-term is not the priority. Although we would like to hear from any SME's who feel they have benefited, and how. We would like to be proven wrong. This seems to be yet another case of the left hand conveniently not knowing what the right hand is doing. Some familiar patterns appear! Not leaving a trail always seems to be a priority. Why was it necessary to erase the name and break up – but not break up- the organisation? And so on.
Another spin-off occurred in 1997 called AUSe.NET (Australian Electronic Business Network) as, and according to the PR, “an industry led initiative, established in partnership with governments across Australia to foster awareness of e-commerce among Australian SME's.” It was funded and promoted as providing workshops to SME's about e-commerce, but at $150 plus per SME. However there do not seem to be any financial reports about this entity and how much revenue it generated and where this revenue in turn was spent. More bureaucracy would be the obvious guess! ASIC might be able to provide financial reports?
Again if any SME's have any relevant information about AUSe.NET please send it along. Information about any other government “initiatives” including at the state government level would also be useful.
It would be a shame to have accumulated all of this expensive new –technology experience and not to use it, but to bury it, and perhaps instead to repeat history. And also when there are in fact valuable and unique short to long – term online opportunities available for SME's. But are unable to find sufficient funding! This is a common pattern over more than the past 2 decades and goes some way to explain why Australia has such a well known track record of missing the boat. It seems bureaucracy that has a track record of failing, including identifying an ROI, is worth continually funding as the highest priority. It also does mean though, that government budgets will be spent regardless of the results.
Every large bureaucracy, government or private - and often these days they are for many purposes, as one – knows that the way it conducts its affairs is the best way and more often than not, if they want first bite at the budget, the only way. This culture, however, cannot hope to optimise benefits from the information economy for SME's. Government bureaucrats might be just as perceptive as private entrepreneurs, but there is no mechanism for terminating unsuccessful experiments; instead they tend to be expanded in order to bury small failures in a large venture which itself will one day fail. (NOIE as a modest example has been funded around A$50 million a year, which in context is small.)
Businesses that are operated in accordance with the law of bureaucratic inertia fail. Eventually if this inertia becomes dominant over a long enough period, perhaps an economy will develop a growing world record foreign debt and a currency exchange rate that tests US$0.48 cents more than once and on a regular basis. Valuable for foreign exchange speculators!Another government scheme (of many) that has been funded over the same time –frame is, Building on IT Strengths, or BITS. As an incubator program it is fundamentally flawed. Not for the network of public and private bureaucrats though! Of the original budget of A$78 million 60 % has been spent for management fees and advise. Optimising benefits to SME's indeed! The BITS model the government has funded was known to be sub-optimal from the start. Just 31 per cent of funding went to start-up companies.
Again a familiar pattern but also, however, there are many familiar names and faces among the public and private bureaucrats tasked with managing the funds.Successive governments have a history of this kind of inefficient “industry initiative”. Like some vast computer, penetrated by error and duplicating it forever!
Identifying an ROI is proving to be a convenient moving target depending on how much governments spend on getting consultants to find one. That Australia 's ICT deficit has climbed to around $60 billion from about $2 billion 20 years ago seems not to be given much weight. This might also indicate how sure they are that they will be able to continue to “duplicate it forever”.The Annual report for NOIE shows some interesting priorities in light of the claim to be their for advancing the information economy status of SME's.Overall expenses for Years 2002 and 2003 were $30 million and $50 million. The surplus in 2002 of $5.3 million of course had to be disposed of somehow and in 2003 it was with a deficit of $4.6 million. Grants to optimise benefits to SME's were $1.27 million in 2002 and $3.0 million in 2003! Ranging from 3 to 6 percent of their overall budget! NOIE required 170 employees to administer and manage this optimisation for SME's! And consumed close to the same amount for each year! That is, $15 million or around 50 percent in 2002 and 30 % in 2003 of their budget.Suppliers (consultants?) consumed the largest percentage in 2003. And so on.
Clearly SME's haven't been the priority although again they continue to be used as the vehicle to get a bureaucracy funded and setup. Perhaps this is also another inspired job creation scheme! It is doubtful it could be said to be industry and wealth creation. After NOIE was axed in 2004 some new schemes were devised and administered and managed out of other offices under other names. One of these is now referred to as a Demand Aggregation scheme, which is allocating over $8 million to regional bureaucracies for the purpose of supposedly facilitating the cost-effective adoption of broadband networks.(While government controlled Telstra, with enormously expensive installed unlit fibre, impedes universal broadband adoption to ensure it can maintain its profits and the Telstra share-price! And thus a higher price for a T3 sale, after which will occur unprecedented uncertainty! Add this to the cost of giving broadcasters free digital spectrum, plus the cost of T2, among various other costs, and it should raise questions about the overall long - term cost to the economy of the governments consistent support of the media status quo. A form of open ended subsidy by SME's perhaps? ) However once again it is sub-optimal, as SME's have, overall, some unique demand aggregation opportunities that would produce a ROI in excess of anything this scheme claims to deliver. But yet again such opportunities are not originated by the bureaucracies tasked to spend these budgets. Therefore how could they be worth funding! The first round of funding for this scheme has been disposed of and another round is being prepared for funding.
It is interesting to make some comparisons with one or more Internet companies started in the US and Australia over similar timeframes. The company eBay for example was started in 1996/97 and with initial funding of around $20 million achieved revenues of $2.0 billion and a market capitalization of $ 65 billion in 2004. About the same time Looksmart Ltd. started life in Melbourne with government backing, climbed to around a market value of A$2 billion, with a current market value of $250 million. The government shareholding was sold at the peak, producing a "return" (or rather a transfer!) to government of about $200 million. A variation of T2, which is wealth transfer not wealth creation. Many other such examples exist.
In the last analysis, and if history is any guide, it is clear that if SME's want to optimise their short to long-term information economy benefits they should not be relying on government.
NICE TRY COONAN AND CO BUT SOME OF THE HISTORY SURVIVES.