‘Free Speech’ – It’s Not As Easy As ABC

My take on Yassmin Abdel-Magied’s Anzac Day social media post and why ‘freedom’ does not necessarily entitle you to ‘free speech’:

Most Australians are aware that in the past century over 100,000 of our countrymen gave their lives in our defence and to preserve the freedoms we value and enjoy today. Australians also understand the veneration we hold for those who served, the fallen, their sacrifice and that the Anzac tradition is sacrosanct. (See also: ‘Aussie Battlers, Flu Pandemic, Headache, Heatwaves & Hardship’).

(I say most Australians, as  I assumed it would be safe to include someone like Yassmin, who arrived in Australia at the age of 2, who is now 26 years old, well-educated with a Bachelor of Mechanical Engineering with honours from the University of Queensland.)

What I would like to know is why some Australians choose to confuse the ‘freedoms’ won by the Anzacs with an entitlement for ‘free speech’? How could that be when ‘free speech’ is the right to express any opinions without censorship or restraint? All expressions and opinions actually come with enormous responsibilities and consequences, particularly if you fail to comply with the law or if you violate society’s standards in relation to causing ‘offense’. (In fact, the noun ‘free speech’ has so many limitations that the title is virtually a misnomer.)

Of particular offense to me is when I read claims that ‘our diggers died’ so that we can exercise ‘freedom of speech’ to publish offensive material disrespecting the same Anzacs who made the ultimate sacrifice defending our freedom. See ‘Yassmin Abdel-Magied says she was treated unfairly over her Anzac post’.

This type of odious subversion needs to be called out for what it is; Australia and New Zealand must continue to respectfully uphold and defend the tradition and memory of the Anzacs. Freedom is a Human Right that was fought for and won by the blood of our forefathers. It is the responsibility of this generation to defend it and in doing so, continue to commemorate those who made the ultimate sacrifice, with the reverence they so rightly deserve. ‘Freedom of speech’ on the other hand is something completely different and should not be confused with or used in the same context as ‘Freedom’, which in itself, is not completely free.

So, what makes a media presenter think they are entitled to post unfiltered offensive material and then claim unfair treatment as ‘the victim’ when publicly vilified? What makes them think that posting a ‘very quick’ apology (but not a retraction) negates the offense? ‘Freedom of expression’ or ‘free speech’ has always been subject to various forms of censorship, irrespective of the publishing platform, whether it’s a song banned from radio or a film rating or a time delay on live radio or television. The concept of filtering the media’s offensive behaviour with classifications or censorship is not new; the Australian Government Classification Board has been around for approx. half a century.

Then, of course, there is Section 18C of the Racial Discrimination Act (See also ‘Human Rights, 8 Commissioners & 18C’s’). What do you need to ‘live under’ if you are not familiar with the well-publicised examples of censorship to free speech, where it has cause to offend under the Racial Discrimination Act? How could you work in the media and not have a sound knowledge of what constitutes ‘offence’ in a media publication, including social media releases? (Incidentally, a ‘very quick’ apology does not ‘cut the mustard’ when you offend under 18C either.)

The motivation behind the ‘Anzac Day post’ was possibly more about promoting one’s public profile. We live in the age of ‘celebrity’ where any media or publicity is considered ‘good publicity’ irrespective of the degree of offensiveness. Perhaps it was an orchestrated stunt, an attempt to create enough controversy to discourage the ABC from proceeding with its planned axing of the part-time presenter’s TV program (see ‘ABC axes Abdel-Magied program one month after controversy’).

I expect there may now be some consternation within the ABC as to whether the ‘axing decision’ could be spuriously linked to the consequences arising from the Anzac Day controversy, particularly given the potential weight or perceived influence attached to the ‘discrimination’ comments made by the president of the Australian Human Rights Commission, while appearing before Senate estimates (see ‘Gillian Triggs warns of increasing sexist attacks against woman in public life’).

A check of Hansard (see ‘Commonwealth of Australia – Senate – Legal and Constitutional Affairs Legislation Committee’) reveals that Professor Triggs stated ‘My concern has been the rising level of discrimination against Muslims in Australia and, sadly, in particular, Muslim women wearing the hijab’. One wonders whether the ABC’s decision to axe Yasmin could be interpreted, construed, seen as, or possibly ‘feels like’ discrimination in some circles. Professor Triggs later went on to reiterate her earlier view that the Anzac Day post was a ‘mistake’ saying ‘Well, again, I think it was a mistake, as I have said. It was followed rapidly by an apology’.

To be clear, I do not condone discrimination and the abuse (as opposed to the fair criticisms) directed at Yassmin in the wake of her social media post. My demurring relates to the virtual trivialisation of the Anzac Day social media post by academics like Triggs, who dismissed it as a mere ‘mistake’ or at worst agreeing ‘that it was a most inappropriate thing to have said’, while the broader community clearly felt deep offense.

Of particular indignity is that it was an honoured Australian who dishonoured and disparaged the memory of fallen Soldiers, on of all days, Anzac Day and I can only extend a sincere apology to our New Zealand partners for the insensitive offense. To add insult, Yassmin has served as a member of the Federal ANZAC Centenary Commemoration Youth Working Group so I cannot be convinced that she did not know exactly what she was doing and I find it insulting and disingenuous to suggest that her ‘post’ should be dismissed as an inappropriate ‘mistake’. Who is really out of touch here?

So, given due consideration to the above, the question remains, how can you call the actions of a media-savvy individual, seeking wider self-promotion by publishing offensive material on a social media platform, a ‘mistake’ when the individual is employed in the media and is steeped in their conventions? What propaganda is this? This was no mistake! 

It is time for people to take responsibility and be accountable for their actions, actions that have consequences. People need to take ownership of their behaviour, ownership of what they say and what they do, particularly when they have the power of the media behind them. Dare I say it, but we need to exercise a little more courtesy, have some empathy and learn to be nicer to one another.

However, if you are going to radically court controversy, then stop playing ‘the victim’ when you get the notoriety you widely seek. Stop hiding behind discrimination as a means of preservation when your provocation goes wrong. Don’t point your finger claiming intolerance at those who ‘call you to account’ or suggest that they are bigots, sexist and racist just because they objected to your insensitive, insulting, disrespectful, intolerant, narrow-minded & purposefully offensive publication.

Don’t stomp on the grave of ANZAC to promote your personal agenda!

Lest We Forget.

26 May 2017

If we are not careful, our colleges will produce a group of close-minded, unscientific, illogical propagandists, consumed with immoral acts.  – Martin Luther King.

 

 

Government Cons Constituents into Feeling Good About Higher Taxes

In last month’s Federal Budget, the Government announced the introduction of an additional tax on the Financial Services Sector, or at least on five of the larger banks operating in the sector. This comes at a time when the Government is on one hand, advocating policies to reduce company tax, while increasing taxes on the other. (So unlike Governments to have contradictory agendas!)

The Liberal Government is ‘banking’ on this new tax levy being more popular than Labor’s failed Mining Tax, which the coalition Government subsequently repealed. This new populist policy is the Government’s attempt to leverage off the creed that all Australians hate banks, apparently because they are well managed global businesses whose apposite profits are too big.

Therefore, the thinking is that the public will be happy if the so-called ‘greedy’ banks are taxed more than other companies and as a consequence, the Government gains a popularity lift from you, the electorate. This is a desperate ‘socialist solution’ by a Government who is supposed to be encouraging private enterprise to grow the economy; no wonder we are confused about what this Government is supposed to stand for!

The Government is taking advantage of the public’s naive ‘bank bashing’ mindset by virtually condoning hatred against a small number of profitable institutions just so they can pass their bias, uncompetitive and oppressive policies unimpeded. The Government is counting on the gullibility of the public who have been conditioned by successive financially incompetent Governments, and the media, to believe we have been ripped off when in fact the Bank’s ‘Return on Equity’ is somewhat moderate compared to many other publicly listed companies (see below).

I keep hearing the media and politicians say that the Banks should pay this new levy and not complain because they (the banks) are so hated and more unpopular than politicians, (if that’s possible). But who are they? Well, ‘they’ is essentially you, whether as an individual shareholder or more likely in your superannuation fund, or if you have a bank mortgage or a bank account, not to mention if you any exposure to any of these banks’ subsidiaries.

Anyone with any relationship, direct or otherwise, with the Banks will pay for this new levy/tax. If there is an additional cost to business, someone pays and in the final analysis, the people who own and deal with the banks will pay the additional tax the Government has conned you into feeling good about.

Let’s face it, I don’t think that getting a dividend yield of 6% as a shareholder of a Bank is an ‘obscene’ return, in fact, far from it given the ‘capital risk’ you carry. So this ‘clever’ new policy is only a slick revenue grab, that somehow ‘the constituency’ has been duped into thinking they’ll love!

If Government-cultivated hatred and loathing is driving a prejudicial policy agenda in Australia, where we single out and indiscriminately penalise certain groups or sectors in our community; then we are on a slippery totalitarian slope with despotic overtones. 

Another consideration in this subterfuge is the randomness of the policy, there is no reasonable basis for the new tax. Apparently, the Australian Government supports a Fair Taxation System unless the ignorant decide the industry is so unpopular that it justifies a discriminatory socialist policy. If you implement a tax just because you make a large profit, then why not apply the new tax to companies that make larger ‘returns’ than the Banks do and if not, why not? Would that not be a reasonable and equitable basis to apply a tax, with a just ‘outcome’ for all Australians under the ‘Fair Taxation System’?

I have scanned the various market segments and randomly identified 14 companies with a higher ‘Return on Equity’ (RoE) than the five banks targeted. Should companies like those listed below also be identified as ‘bad profitable corporate citizens’ to be singled out and penalised for being commercially viable?

What is going on in Australia when you virtually need to apologise for being successful and profitable? Talk about the tall poppy syndrome; it’s economic emasculation of epic proportions! If making a profit is so obscene and offensive that we need to disincentivise success, then it is a crippling legacy to pass on to the youth of Australia: a future of limited opportunity courtesy of a pathetic, lazy, short-sighted, spiritless and tired leadership.

Return on Equity:

  • Amcor 86.9%                          
  • CSL 41.5%
  • JB Hi Fi 37.8%
  • Woolworths 32.1%
  • Rea Group 28%
  • Sirtex Medical 27.7%
  • Telstra 26.8%
  • McMillan Shakespeare 23%
  • ResMed 21.2%
  • Breville Group 20.4%
  • Flight Centre 20%
  • Ainsworth 18.2%
  • BHP 16%
  • Corporate Travel 16%
  • CBA 15.7%
  • MQG 14.2%
  • WPC 13.2%
  • NAB 12.2%
  • ANZ 10.1% 

‘He knows nothing; and he thinks he knows everything. That points clearly to a political career’ – George Bernard Shaw

3rd June 2017

Global Financial Crisis – When Will We Do This Again?

As we approach the ten-year anniversary of the Global Financial Crisis (GFC), I thought I’d get in early with a few ruminations, before the experts who didn’t predict the crash write their moot editorials.

I keep reading about the GFC and the predictable question: will it happen again? Well, history has the answers. It was only 20 years prior to the GFC that the US faced the ‘Savings and Loans Crisis’ where the failure of bureaucratic ‘regulatory and enforcement agencies’ ended up costing $160 billion, predominantly funded by taxpayers. Even the learnings from the 2001 Enron scandal were quickly forgotten; where corporate fraud of approx. $45 billion contributed to the company registering for bankruptcy.

When you look back at our historical track record, you realise how heedless we hominids are, as we continue to allow the same fraudulent behaviour to reoccur. Perhaps the answer or reason WHY can best be explained with a closer examination of the judicial system and incarceration rates. There is no doubt that white collar crime pays. The financial sector’s punishment for transgressions seems to be highly remunerated senior executive positions in government, where they get to set the future policy agenda and protect their ill-gotten wealth by recommending taxpayer-funded bailouts.

So, let’s look at what happened ten years ago and compare it to where we are at now, ask if anything has materially changed and wonder who will pay for the next round of bailouts.

The catalyst for the GFC started with the misguided concept that pretty much everyone should be able to afford a home, much like the present ‘Housing Affordability’ debate in Australia, about how to interfere in free markets to artificially influence affordability. The consequences were higher prices, with exuberant growth generated in the housing sector creating a false and inefficient market which inevitably collapsed with a subsequent correction (as free markets do).

The so-called crisis in the subprime mortgage market in the US was fuelled by readily available and cheap credit, honeymoon deals and high-risk loans where financiers massively misrepresented applicants’ capacity to repay loans. Again, a regime existed where there was a complete lack of regulatory compliance and enforcement, allowing Financial Institutions and Banks (FI&B) to lend unabated, fuelled by commissioned staff who were immorally motivated by their employers; employers who set the wrong Key Performance Indicators (KPIs), the wrong remuneration models and therefore unsurprisingly, we saw the wrong behaviour.

Meanwhile, the FI&B were generating obscene profits as they actively promoted high-risk lending, but without having to carry the associated risk. They simply shifted the risk to the mortgage insurance companies, who covered the banks against loss in the event of default. The rot set in when the insurers collapsed, with a central insurance player in the US eventually requiring a taxpayer-funded bailout, reportedly around $180 billion.

FI&B had to find creative ways to get these junk loans off their books before they defaulted. Their solution was to bundle and package up these rubbish mortgages and sell them off as defensive or low-risk income investments i.e. monthly income mortgage funds (backed by property, what could go wrong?)! The target market was conservative investors and retirement/pension funds, looking for a regular monthly income stream.

The question is: how do you convince conservative investors to buy junk mortgages i.e. how do you ‘window dress’ high-risk mortgages as low-risk income investments? This deception could only be perpetrated with the assistance of a complicit rating agencies industry, who sell the desired credit ratings for the right price and that’s exactly what the rating agencies did. They rated ‘junk’ as ‘investment grade’ effectively giving licenses to FI&B to credibly disguise and sell rubbish investments in the open market.

They knowingly ripped off consumers, because they knew these instruments would fail when the underlying loans inevitably defaulted. This was an orchestrated fraud and collusion on a scale never seen before! If the rating agencies’ actions were not fraudulent, then they were certainly complicit, yet somehow they managed to deflect responsibility and have never been held to account. Keep in mind that these agencies are responsible for rating the sovereign risk of our country! Why has their behaviour gone unchecked and how do they get away with it? Why is there still no meaningful regulation around rating agencies?

These rating agencies continue to control and influence the investment and advisory industries and, as a direct consequence, investor behaviour. How can they possibly be trusted when investment fund managers are still buying favourable ratings for a negotiated price? As a consequence, investors are still losing money on underperforming investments, while the money managers and credit rating agencies never lose. The credit rating system is corrupt and totally ineffective as a management or due diligence tool for consumers to gauge the worthiness or suitability of any given investment.

The next level of greed and deception perpetrated by the FI&B was to orchestrate additional profits from the junk mortgages they sold to retail & wholesale investors. How? Manufactured products! A number of these FI&B were so confident that the bundled junk investments they sold would be worthless, that they took out insurance to that effect (derivative positions) and then collected when they imploded.

So when the loans failed, they collected twofold, once when they sold the junk product and later from trading their derivative position. Talk about benefiting from the misery of others when you can make twice the money from engineering ‘failure’ than you can from honest trading and all at the expense of the consumers who believe that their governments have the right governance, compliance and enforcement controls in place to protect them. We poor misguided citizens!

This is what happens when our trusted FI&B are left unchecked as government regulators fail to enforce the law. What is the value of paying thousands of ineffective bureaucrats for not holding the FI&B executives to account, perhaps because most of these executives are now bureaucrats themselves? What a great system: governments act as enablers for institutional theft and then use our taxes to fund the corporate bailouts.  How do we keep losing the same dollar twice? We need to improve regulation but more importantly, we need government to start enforcing the current laws.

How is it that a corporation can go bust after losing our money and then expect taxpayers to bail them out because they were ‘too big to fail’? If a corporation is ‘too big to fail’ then governments should legislate to unwind conglomerates and reverse the ‘bigger is better’ trend, because it is not!

I believe change is urgently needed if we are to minimise the risk of future financial losses at the hands of institutions. Start, as I have emphasised above, by dealing with credit rating agencies. It’s a flawed model and there needs to be a mechanism in place to hold them accountable for their performance i.e. some transparency around the accuracy and value of research, rather than just being allowed to sell a rating without recourse.

Favourable credit ratings give FI&B, fund managers and stockbrokers a licence to print money, even when the underlying investment fund, equity or product, fails to meet the performance expectations as set out in the rating agencies initial report. All these ill-gotten profits are funded from money lost by investors who were given misleading or inaccurate information right from the start.

Secondly, there needs to be a closer look at how FI&B use mortgage insurance companies. Basically every loan approved conditional to mortgage insurance means that the FI&B recognise that the risk is too high to carry on their balance sheet. So the FI&B subrogate control and responsibility of the ‘loan default’ process to the insurance company. That leaves the borrower without any capacity to negotiate with their financiers, who are now beholden to the insurance companies.

Unlike banks, insurance companies do not have legislated capital reserves, so what are the potential risks in the event of rising defaults? What is the cost of making housing more affordable in the short term when there is no long-term contingency plan when interest rates and unemployment rise? History tells us that if the housing sector is artificially stimulated, then you can expect with a high-degree of certainty that a correction is a foregone conclusion. It’s just a question of whether you’ll be one of the many little people who end up bailing out the big end of town so they can maintain their hedonistic and privileged lifestyles.

I keep hearing that banks are bastards; well wait until you have to deal with insurance companies!

23 April 2017

“I sincerely believe… that banking establishments are more dangerous than standing armies”. Thomas Jefferson

Housing Affordability- Is it Harder Than Ever to Buy a Home?

There seems to be an emerging trend in Australia where there is an increasing expectation for government intervention in our free market economy, where supply and demand rationally determines the variable factor ‘price’. On a macro basis, the present economic environment seems like a perfect recipe for growth: historically low inflation & interest rates, credit/finance readily available, generous government subsidies, favourable exchange rates, relatively low unemployment. But it’s still not working as the economy is stalling, barely managing a growth rate of 1%, which is insufficient to support full employment for this year’s school leavers. It is clear that the low-interest rates are no longer an effective Reserve Bank lever to stimulate growth in the economy, so what are politicians to do?

With the Government having significantly closed the tax incentive for individuals to SAVE, (see ‘Age of Entitlement – Unsustainably Extended’), much of the economic investment has shifted to ‘Negatively Gearing’ property (a tax incentive for domestic investors who BORROW) and the Reserve Bank of Australia (RBA) is now deeply concerned that the housing debt is too high ($2 Trillion or 1.2x GDP) and a risk to the economy, particularly given the critical sensitivity analysis and impact on the economy when interest rates inevitably rise from their current low level of 1.5%. The RBA understands that the economy is fragile and there is nothing more it can do other than rely on a paralysed Government to act, by either further stimulating the economy or removing the red-tape barriers so businesses have the incentive to expand and grow.

Like the economy, wages growth has stagnated (public sector 0.6% Dec Quarter & 0.4% in the private sector) living standards are falling and the trouble for government is that they have few options to stimulate the economy, as they have literally blown their currency with debt now close to half a trillion dollars and the budget bleeding a cash deficit of approx. $200,000,000.00 per day. Governments are relying on businesses expanding, ‘dreaming’ that in the tradition of the classic Australian movie ‘The Castle’, we could survive by continuing to ‘dig holes’. But the heavy regulatory and Government control and intervention in commerce mean that the environment is not conducive for business to invest for growth.

Now politicians want to intervene by changing ‘Negative Gearing’ in the hope of improving housing affordability by removing buyers from the market. However that will only make room for more foreign investors, so as an alternative why not remove some of the bureaucratic restraints and bring more supply to market to help reduce the cost of housing.

In fact, on a micro basis how hard is it to actually buy a house today? ‘It’s ‘never been harder’ is the mantra, but is that true? This left me questioning this assumption: I concluded that it’s not harder now, it’s always been hard. It comes down to ‘what you are prepared to do’ and ‘what you are prepared to do without’ that makes the difference. There is no quick shortcut solution to circumnavigating what’s hard; otherwise it would be easy. We need to stop using ‘too hard’ as the excuse rather than the reason for not trying. So what are the facts?

Australia is now building the world’s largest homes in suburbia with an average floor size approx. 243 sq. m, the highest floor space per capita in the world. This is an increase of 50% from approx. 162 sq. m 30 years ago. Over that time the size of the household has progressively decreased, from an average of 3 members down to the present 2.5; that is a increase in living area per person of 80%.

The current low-interest rate environment has had the effect of increasing demand and therefore influencing house prices, but overall the lowest interest rates in over 50 years is extremely beneficial for those who want to get into the market. Compare the current home loan rates of 4% against 17% in the late 1980’s!

In the 1980’s a ‘home deposit’ was a non-negotiable 20% of the purchase price. The only way most people I knew could save for a home deposit, was by holding down a second job at night. It was just what you had to do to ‘get ahead’; we never thought it was hard, it was simply necessary if you wanted to save for a deposit to buy a house.

The biggest headwind to ‘saving’ was that you paid 60% tax on the income you earned on your second job. Back then the highest Marginal Tax Rate was 60 cents in the dollar for income over $35,000. Today the highest Marginal Tax Rate is 45 cents in the dollar for income over $180,000.

Another restriction back in the late 1980’s was that if you had finance approved by the bank, they could only fund a proportion of your requirement on cheaper Home Loan rates and the balance was on a separate consumer loan, with a much higher interest rate. This was probably the last time Australian’s experienced a credit squeeze, when the bank wanted to lend you money, but didn’t have enough funds to advance at home loan rates. Remember this was a time when commercial business lending rates were 22%-25% and when Government regulated existing home loans with a ceiling rate of 13.5%; at the expense of new home borrowers who were forced to pay market rates of 17% at the banks and 18% at Credit Unions.

On top of all that, most banks would not lend 100% against a female’s income, in case she found herself ‘in the family way’. Subsequent changes to discrimination laws meant that home loan repayments could not exceed 25% of an individual’s gross income and 20% of joint gross income (income from second jobs did not count). Loan terms were limited to 20 years with ‘principal and interest’ repayments (no ‘interest only’ loans or 30-year+ terms back then).

Thirty years ago there were no functioning Government subsidies, housing assistance or Stamp Duty relief. There was a first Home Buyers scheme but the bar was set pretty low, meaning that if you qualified for a payment under the scheme, then it meant that your financial position was such that you wouldn’t be eligible for a bank loan. I’m not sure that any Government funds were ever paid under that scheme, certainly none of any substance. It was the old chestnut: Government being seen to be doing something, without actually doing much.

Should we lower our expectations and look more closely at what we can ‘do without’ now in order to save for what we want in the future? Are we living within our means and have we anything to show for our apparent high levels of personal debt? Do you control your finances or are your finances controlling you? Having a long-term plan is important if you intend to commit to a 30-year loan term. These issues can also be impairments to entering the housing market.

I’m not saying that it’s easier now. Most of the key determining criteria generally remain unchanged i.e. there has always been a correlation between incomes and house prices. I don’t know if the problem is because ‘marketers’ have succeeded in making us all victims of ‘the Jones’ syndrome’, conditioning us to believe that we need bigger houses for fewer people per household.

Perhaps making the family home ‘exempt from capital gains tax’ is the problem, as the tax concession is encouraging excessive investment in single non-productive assets. I’m not omniscient, but what is certainly true is that credit is now far more readily available, which increases demand and puts upward pressure on real estate prices, simply because there are more buyers competing. Supply, on the other hand, is closely controlled e.g. land release, but I can’t help thinking that the most significant contributing factor or barriers to home ownership today is the doubling of the area under roof line over the last three decades and the impact that has had on prices.

I acknowledge that there are great difficulties getting into the market in certain areas where there are concentrated pockets of demand which attract all the media noise, but I’m not certain it’s a national crisis. While we might all ultimately like to live in an ‘advantaged area’ with a good postcode, the reality is that the location ‘entry point’ is dictated by what your budget can sustainably afford. Perhaps the solution can be more difficult than the actual problem if we let it. Remember, if you are striving to achieve an ambitious goal, the ‘hard bit is having the self-discipline and commitment to achieve it!

It always seems impossible until it’s done – Nelson Mandela

25 February 2017

Aussie Battlers, Flu Pandemic, Headache, Heatwaves & Hardship

In the early part of last century, with a population of 5 million people, Australia entered the so-called Great War, World War 1 (1914 -1918) where some 60,000 Australians sacrificed their lives for their/our country.  It was incorrectly termed the ‘war to end all wars’ and just like the Second World War some twenty years later, the profound hardship was also shared at home.

At the end of World War 1, upon returning from service, Australians faced another great challenge: the relentless suffering of the 1918–1920 Pandemic, the so-called “Spanish Flu” where more than 12,000 Australians lost their lives. The privation of The Great Depression (1929-1932) soon followed, with Australia experiencing one of the most severe rates of unemployment in the industrial world at 32%.

It is almost unimaginable now, the hardship Australians must have felt: the depth of their pain and despair, the sorrow and loss faced by our forbearers, a generation whose stoicism remains unparalleled. So much so that it is embarrassing that our society now considers it necessary to redefine words like ‘hard’ or ‘Aussie Battler’ in order to attract the sympathy and attention they apparently so desperately seek and desire.

Yet another example of real hardship occurred in the summer of 1939 when Australia experienced a heatwave with temperature recorded as high as 49.7 degrees Celsius (121.5 degrees Fahrenheit). It was relentless, lasting some 14 days. That January was a disaster: hundreds of people lost their lives, the numbers of deaths from the heat were so high in some communities that they simply ran out of coffins. This was at a time when the population was a mere 7 million and the country was preparing to face the next great challenge, when later that year Prime Minister Menzies announced our entry into the Second World War (1939-1945) a period of hardship and sacrifice that has been well documented.

We have learnt and benefited from our history, from the sacrifices of those who have gone before us, those who built and have left us a very generous legacy, yet we are reluctant to acknowledge how much better our lives are today. We now seem to feel a need to pitch the line that everything is actually harder or we are ‘worse off’. As usual, once said more than three times on social media it somehow becomes a truism or matter of fact!  Perhaps we are just redefining our negative words proportional to the rate that our lives improve, so we can maintain the need to continually complain and deny ourselves the optimism and happiness our forefathers believed we deserved.

Just as an example: the other week the weather report described one isolated day with a maximum temperature of 38 degrees on the east coast of Australia in the middle of our southern hemisphere summer as a ‘heatwave’. Those who remember January 1939 must quietly shake their heads and mockingly wonder how soft we have become as obviously ONE DAY IS NOT A HEATWAVE. Certainly, my deceased relatives would think it a load of bull for the media’s deities, who seem to confuse climate and weather, to make such a stupid statement.

Again another slightly different but related example: last month the federal drug regulator announced that painkillers containing codeine will no longer is available over the counter from 2018. What has changed? Is there a relationship between the demands for heavier drugs and the way we are redefining certain empathy seeking words? Let’s face it; no one gets headaches anymore, it’s not ‘hard’ enough. It seems that most of us are now only ever afflicted with migraines and this is apparently reflected in the demand for harder painkilling drugs. As a consequence, these drugs are being withdrawn due to misuse.

(Not that I’m stoic, yesterday morning I awoke with a scratchy throat, by lunchtime there was concern that I had an infectious disease, some type of viral influencer and by evening drinks the fellas diagnosed me with bacterial pneumonia. Clearly, the belief that man-flu is more painful than childbirth is an exaggeration, as today, irrespective of the various diagnoses and the relief provided by a small camphor bag, I just have a cold!)

We need to toughen up a bit and stop understating the basics just to make everything sound harder than it is. Stop embarrassing the legacy that we’ve inherited. Stop denigrating the memory of our forefathers: those who endured real struggle and hardship, hunger and homelessness, like the survivors of the Great Depression, the real little Aussie Battlers. How dare we compare our situation today with those who survived such forlorn years? Just look at the photographic evidence of the time: the skinny malnourished skeletons whose sunken eyes reflect the permanent pain etched deeply on faces aged well beyond their years.

Today when we refer to ‘Aussie Battlers’ the picture is generally one of welfare dependence, addiction, sloth and obesity, not people picking themselves up and having a go. Just stop using the term, as it insults the memory of those who’s lives defined the label.

There is no success without hardship – Sophocles

24 February 2017

Government Giving In to Banks

In the past, I have written about how the financially disadvantaged in our communities are the demographic that would probably benefit most if they were able to access financial advice services. However, the costs of such services are so expensive that it’s effectively priced out of the reach of those who need it most: the young, vulnerable and working poor. (See: Government Absent on Credit Act-Disadvantaging Vulnerable, Youth & Working Poor).

The high-cost factor is due to the massive amounts of legislation, compliance, regulation, governance, licencing etc. plus the expense of supporting ineffective multi-layered reactive government enforcement agencies/bureaucracy. The whole structure is broken because the system favours the wealthy and ‘enforcement’ is incapable of preventing those who are not members of the industry (i.e. the unlicensed criminals) from ripping off consumers, which is the main source of losses.

All this new legislation does not make criminal activity more illegal when it was illegal in the first place, so the effect of more legislation is that it increases the costs for honest business operators. It’s just that every time the government enforcement agencies fail to do their job, they hide their incompetence, aligning themselves with Government and point the finger at the industry. So instead of the financial services industry, the legislators, the enforcement agencies and even the product providers all working together for the benefit of consumers, it’s the opposite: all the parties are ‘hostile’ and the industry is isolated. As a result, the product providers and rating agencies are taking control of the industry unabated, yet no one is receiving the right advice. What a mess!

Mind you, the Financial Services industry has not helped itself. Those representing the industry have the difficulty of managing a weak and indecisive body that has limited influence, direction and control. They busy themselves trying to convince the public that they are a Profession, not an Industry, desperately trying to pitch the ‘value of advice’, yet deriving little revenue from it. In reality, they are lorded over by their commission-driven masters, the product providers, who actually pull all the strings. Finance advisers are just facilitators for the Product & Platform providers, Insurance companies and Fund Managers, predominantly controlled by the four major Australian banks.

As with all business models, the emphasis is always on what drives revenue and the problem for the advice industry is that they just can’t sell ‘advice’ as a value proposition. The pity of it is that, in truth, the right strategic financial advice is the most important and essential cornerstone to successful planning and should always be the first step. A consequence of appropriate advice may, at a later point, involve some type of investment product but unfortunately the force$ that control and drive the industry influence the wrong behaviour (and therefore outcomes) as the weak advice industry allows the ‘trail commission tail’ to wag the dog; yet one cannot do without the other.

The Government needs to look at measures to abridge the present prohibitive governance and compliance red tape, as these costs make the provision of services prohibitive for consumers and unviable for the advice industry. Something must be done to preserve the advice industry, if not, control defaults to the Banks and insurance companies, and that would be like giving the foxes the keys to the hen house. Another consequence of the ludicrous levels of Government compliance, regulation and bureaucracy is that the product providers are finding new ways to move their wares without providing appropriate advice i.e. avoiding the industries’ compliance regime altogether.

A perfect example of this is the personal insurances industry. You don’t have to watch too much free to air television to notice that in recent years we have been overrun with commercials for all types of personal insurances. The reason for this is simply that the insurance industry had to find a new platform to move product when the ‘advice industry’ stalled due to bureaucratic and regulatory overload and Government indecisiveness.

The problem with mass product marketing is that consumers end up with the level of cover that they want, not what the need! The outcome is that most consumers are now significantly under-insured, or have no insurance at all. Many are paying for cover they don’t need or have the wrong policies.

These policyholders are then conditioned to believe they need to increase their cover (and premiums) annually by some obscure or irrelevant indicator such as CPI, when in reality they should be reducing the amount of cover in line with their needs, which generally declines annually as we gradually approach retirement (the obvious exception being Income Protection Cover).

Something needs to change in order to make financial advice more accessible for those who clearly need it most. Otherwise unscrupulous product providers and their enablers in the media will continue to take advantage of the financially vulnerable.

Unfortunately, Governments use the passage of legislation as a benchmark of their success; they actually need to reduce the red tape around compliance if they really want to assist those consumers needing help. That’s counter-intuitive and therefore a major hurdle as it’s a concept that is extremely difficult for Government to grasp. They all need to stop making the finance advice industry the enemy and engage with them to find a workable solution for those who currently cannot afford these types of services.

I’m not against regulatory controls, but it only works if enforced, otherwise it just increases the cost of services and makes it impossible for the industry to reasonably compete against unlicensed, dishonest and fraudulent shysters who continue to rip consumers off carte blanche. The Government, compliance agencies and the industry all need to start working together for the benefit of the consumers. What a novel idea!

The conventional view serves to protect us from the painful job of thinking. – John Kenneth Galbraith.

23 February 2017

Governments Eliminating Greenhouse Emissions by Shutting Off the Power

One of the biggest disadvantages of minority governments is that in the middle of all the madness nothing actually gets done. We are now realising the consequences of decisions made at the ballot box, yet another gigantic, predictable and foreseen cost for the ‘constituents of Australia’, as we enter a prolonged period of irregular and unpredictable power supply blackouts. The inconvenience, cost and consequences for the public and the economy are the obvious inevitabilities, following decades of indecisive politicians with injudicious policies.

Every political party argues about which idealist has the biggest renewable energy target (RET) as if the award goes to the party with the most short-sighted and unachievable target without consideration for the long-term consequences. They talk about intangibles i.e. ‘targets’ but no one is held to account for the lack of a viable plan to implement and achieve a workable outcome. Let’s not even consider the costs, because you can’t cost a plan that doesn’t exist.

I’m not against renewable energy or reducing greenhouse emissions, but I’m not in favour of reverting back to third world standards because a bunch of indecisive elected suits are incapable of doing their jobs. From what I can see coal generates approx. 73% of our power, natural gas 13%, so common sense would dictate that we secure an alternative supply of ‘constant’ or base load power source before we started shutting down power stations. What ideology is so blind that they can’t see that?

The alternative to base load power supply is, of course, renewable energy technology; hydro 7%, and intermittent power from wind and solar 7%. Broadly intermittent power can only be relied upon about 30% of the time, essentially dependent upon the right weather conditions.

The point is that when there is no intermittent power, we essentially have a 100% reliance on coal and gas. Even if wind farms could produce 100% of our power 30% of the time, it’s apparent that we still need coal and gas to produce 100% of supply when weather conditions prevent intermittent power generation. So why can’t the impaired see what is plainly obvious? It seems that vested interests line political pockets!

Why are we closing power stations before replacing them with alternative facilities to guarantee supply as the main priority? Would it be stating the obvious to say we should first guarantee supply before investing in unreliable renewable alternatives to the point of dependency?

Australia has some of the world’s largest deposits of uranium and coal yet somehow ‘blackouts’ are preferable to considering nuclear or clean coal technology. Why not get a return on the hundreds of millions of dollars invested by government into carbon capture and storage technology? Meanwhile, we fail to acknowledge that intermittent energy with current technology cannot be relied upon no matter how many wind farms we litter the landscape with, unless storage technology can be commercially adapted.

The truth is that there needs to be room for both renewable and traditional sources of power production, but first you must guarantee a reliable supply. So what is the right balance in a world of commercial imperatives and what chance do we have that those with extreme views will ever take their blinkers off for long enough to consider reality, rather than hold us all to ransom by literally keeping us in the dark? How much inflicted grief must we endure before there is a sensible debate?

Australians need to understand their voting responsibilities when they exercise the privileges provided by our democracy, after all, if you are looking for someone to take responsibility for this debacle then we need to focus inwardly and not blame some of the blind, intemperate and fanatical activists we put in office. The reality check is coming. We are facing a massive increase in the cost of power and we will all pay for their idiotic ideology. Unfortunately, the biggest losers will always be the working poor, disadvantaged and the youth, the demographics with no voice, the politically disenfranchised.

Forethought we may have, undoubtedly, but not foresight. – Napoleon Bonaparte.

21 February 2017