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

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

Government Absent on Credit Act-Disadvantaging Vulnerable, Youth & Working Poor

An interesting learning this week: apparently the tabloid media declared that January is the best time for individuals to review how well they manage their finances. It would seem from the story that the levels of personal debt are at record highs and credit cards are funding extreme levels of long-term unsustainable debt at usurious rates. Unsurprisingly, this is apparently due to the fact that many of us are living beyond our means and funding the shortfall on ‘credit’.

The story then promptly proceeded with what appeared to be a paid infomercial or ‘product flog’ offering a different credit card that does essentially the same thing!  So the solution is the same wrong behaviour with a different product provider! Is that how you take responsibility and control of your finances?

The tabloid media, like the Government, keeps missing the opportunity to educate the large numbers of consumers who clearly need help, although after about 10 years of Federal Budget deficits the Government is hardly in a position to lecture. The bottom line is: if you are using your credit cards for anything other than as a ‘method of payment’ you are simply not applying ‘efficient and effective’ management of your finances to achieve an outcome that is going to be beneficial for you.

Debt management is the essential first step if you are ever going to be in a position to accumulate sufficient assets to live a reasonable existence and a comfortable life in retirement. But who thinks that far ahead? Certainly not Government!

Almost everyone needs assistance to learn how to manage their finances; after all, it’s the mechanism we all use to fund ‘living’. It can be complex and getting the right advice should start early in your working life. The misconception is that you seek financial advice when you have plenty of money, but you actually need it when you have very little and looking to accumulate wealth.

It seems incongruous that Government reactively fund ‘Credit Counselling Services’ for those who have already got themselves into financial trouble, but do nothing proactively to assist with preventative ‘risk’ education for consumers. Nor are they willing to adopt workable policies or remove the failed and ineffective Government Legislation and the associated unenforceable compliance regime. If they did, the prohibitive costs of financial advice could be slashed and services made more accessible to the masses. The barrier for the average consumer is ‘cost’. At the moment only the wealthy can afford financial advice services. Why exclude the demographic that needs help the most?

Why do we accept that a certain socio-economic demographic are the disposable victims of the questionable practices and behaviour of the financial institutions issuing these credit cards to individuals who have no capacity to repay? How do these financial institutions continually avoid regulatory scrutiny from the Government’s own enforcement authorities? There needs to be an enforcement conversation about Financial Institutions complying with the Credit Act or, more precisely, the lack of scrutinising around the practices, behaviour, ethics and morality of the financial institutions issuing these cards.

There was a time when Financial Institutions issued credit cards, but only after completing a credit assessment of the applicant’s capacity to make repayments, as well as looking at their character and capital position or net worth, essentially to ensure the applicants could afford the repayments and to reduce the risk of individuals getting themselves into financial trouble.

Now with increasingly smart technology and the removal of manual credit assessments to reduce costs, the product model has changed. It is no longer about preventing or reducing defaults but rather a high turnover computerised system, which is programmed for an acceptable level of failure or default rate. The higher the interest rate margin the higher the statistical default rate can be. So it’s no longer about looking after customers to prevent defaults, it’s a statistical formula for acceptable losses where the casualties are the customers set up for failure by design, usually the young, vulnerable, disadvantaged and working poor.

Technology has completely changed the dynamic of the card facility and it is questionable whether credit cards can still be defined as a ‘financial product’ in accordance with the intended provisions of the Credit Act. It’s now a ‘service’ generated by a statistically programmed computer; designed by actuaries based on probability and operated by a ‘processing centre’, not finance-trained people. The governing legislation has not kept pace with the technological evolution in the finance sector, where defaults are no longer a potential consequence but a planned inevitability. The cost of the ‘systems failings’ is clear to see: whether due to theft, misappropriation, dishonesty or default, the systems disposable casualties just add further pressure on society and welfare dependency.

The financial services industry seems to have completely dehumanised the relationship with their client. They don’t care or feel accountable to their customers, especially the ‘acceptable losers’ built into these programs. If clients are defaulting because they were not correctly assessed in the first place, then you must ask the question: how are these Financial Institutions meeting their ‘Duty of Care’ to their customers and how do they remain compliant with the Government’s Credit Act? More to the point, where are the regulatory enforcement agencies?

The fact is that financial institutions make large profits from credit cards when the interest margins and fees are so high, particularly at the moment where credit spreads (interest ‘charged’ versus the actual ‘cost of funds’) have never been wider due to the present historical low-interest rate market. I’m not against financial institutions being successful by making profits but businesses still have a Duty of Care to their customers. We need to ask whether the absence of ‘Care’ is the reason why the profits are so high and if that’s the case, I can’t help thinking that the Government has left vulnerable consumers exposed to predators whose behaviour appears unscrupulous, immoral with unethical standards. It’s a numbers racket that would make organised crime syndicates envious.

The gap between what’s said and what’s done has never been wider, with the absence of ‘complete truth’ reflected in the length of the product disclosure documents i.e. they are what they hide. I accept that we all need to take responsibility for our actions, but financial institutions are acting as enablers, knowingly selling what they consider is an acceptable level of grief without accountability or reasonable preventative care. Shaping an orchestrated loss scenario for certain consumers feels like predatory behaviour to me. Why is the corruption of morals the only bankruptcy acceptable to the financial services industry? (See also ‘Why are Government Regulators – not working’).

The time is always right to do what is right. –Martin Luther King Jr.

25 January 2017

Broken – What Detention Now Means for School Children

In July 2016 the Government announced the Royal Commission into the Protection and Detention of Children in the Northern Territory. The Royal Commission has been established to enable the swift inquiry into the treatment of children in detention facilities and child protection in the Northern Territory.

I gather the inquiry will be looking at how competently the bureaucrats have performed in executing their ‘duty of care’ to the children in Government custody.

I think it’s reasonable to assume that a number of these children are indigenous (97%) as now we are hearing that the Government is looking at a new inquiry into Aboriginal Incarceration Rates and/or a new Royal Commission into Juvenile Justice in the Northern Territory.

How about a little less conversation, a little more action, please!

If only Governments had adopted the recommendations of the Royal Commission into Aboriginal Deaths in Custody (1987-1991) there would be no need to repeatedly have the same expensive talkfests, just because as a nation we are incapable of executing ‘action’ when it comes to the Indigenous community.

We just keep doing what we did yesterday and wonder why nothing changes; no wonder there is so much despair in Indigenous Australia.

To be seen to be doing something, Government’s only solution is to ‘spend more’, $5.9 billion per annum and essentially on more bureaucrats. The problem with more money is that it just makes an incompetent system incompetent on a larger scale, while nothing actually changes on the ground.

God help you if you are unfortunate enough to find yourself in custody, under the jurisdiction of these incompetent bureaucrats, because there is no chance of ‘breaking the cycle’ unless of course Governments adopt the same level of commitment to Indigenous affairs as they do to stopping boats.

2nd November 2016

Age of Entitlement – Unsustainably Extended

It’s clear from actuarial forecasts that the Government is on an unsustainable course with ‘welfare’.

Circa 1910, the Federal Government introduced a welfare payment scheme to essentially help feed Australians who were; 1/ living below the ‘poverty line’, 2/ living well beyond their life expectancy and 3/ were too old to work.  This scheme still exists today and is known as the Aged Pension.

The Australian Aged Pension in 1910 was subject to a residence qualification of 25 years and was available to men from age 65 and women at age 60. Life expectancy in Australia for the period 1901–1910 was 55.2 years for males and 58.8 for females.

Today, 106 years later, life expectancy has improved by about 30 years, to approximately 85 years (or 75 if you are an Indigenous Australian) yet surprisingly the Aged Pension still remains available at age 65. So based on these statistics, it is understandable why the Government is starting to progressively move the Aged Pension qualifying age up to 67 years as well as undertake a number of other welfare reforms.

We are starting to see more onerous qualifying rules in many areas following the Review of Australia’s Welfare System (McClure Review); the purpose of which was to “identify how to make Australia’s welfare system fairer, more effective, coherent and sustainable and encourage people to work”. We are being told to be more responsible for our own financial well-being and to aim for a higher standard of living, well above the poverty line where the Aged Pension sits.

Crucial to framing an incentive to achieve financial independence in retirement was the Keating Labor Government’s 1992 introduction of a compulsory superannuation guarantee system as part of a major reform package addressing Australia’s retirement income policies.

The new reality is that we need to be accountable for funding our lifestyle when we cease working (or retire), unless of course you are content with living on the poverty threshold by relying on Government welfare to survive i.e. approx. $35,000 per annum per couple (Aged Pension).

Australia’s median gross household income in 2013-14 was $80,704, some 130% above the Aged Pension entitlement. So what does ‘financial independence in retirement’ actually mean in dollar terms and how much ‘capital’ do we need? Clearly we all have different circumstances but the point is that in reality, we need extremely large amounts of ‘capital’ for a below average retirement ‘income’.

For example, the levels of capital ‘self-funded’ retirees need to enjoy a joint sustainable indexed pension of $50,000 p.a. is a tidy ‘nest egg’ of approx. $1,000,000.00 (30 year annuity assumes 4.75% return, 2.00% inflation).

Given the magnitude of these numbers, you would think that the Government would introduce policies that complement their welfare objectives, but not so. If you read the 2016 Federal Budget glossary it states “In the 2016-17 Budget, the Government announced a package of reforms designed to improve the sustainability, flexibility and integrity of the superannuation system. It set out a clear objective for superannuation: ‘to provide income in retirement to substitute or supplement the Age Pension’ which guided the superannuation changes”.

So what was the Government’s significant reform to superannuation? They reduced the amount you can invest in superannuation by approx. 42% per annum yes, totally illogical and contrary to the policy objective.

This naive, theoretical, bureaucratic nonsense that apparently asserts ‘less is more’ reflects very poorly on the judgement of our Governors, particularly if we are to believe the notion that ‘simplicity and clarity lead to good design’. So what is going on?

NB: None of the above applies if you are a retired Politician, Government Bureaucrat or Public Servant, with taxpayer-guaranteed defined retirement benefits.

1st November 2016

Unroyal Abuse Commissioned – Good for $ome, Your Honour

There are some things that are so wrong that it’s just easier to ignore; dare we risk feeling that deep nausea stemming from our moral conscience. A bit dramatic, but our Government and the bureaucrats that they appoint represent us and we cannot abrogate our responsibility with silence.

Example:

The Government recently appointed the Royal Commission into Institutional Responses to Child Sexual Abuse. While the ‘terms of reference’ start out by saying that ‘all children deserve a safe and happy childhood’, it’s basically a historical investigation into sexual abuse in Australian Institutions over the last 50 years where the perpetrators are now either dead or in jail.

So why has the Government spent $502,800,000.00 on a Royal Commission that does not even address the horrendous crimes being inflicted on children right now? Why are we excluding the most vulnerable people in society just because they weren’t abused in an institution?

Some would say that the most vulnerable are those Aboriginal children in remote communities, conveniently outside the terms of reference of the Royal Commission.

The Australian Institute of Family Studies publication (October 2016) estimates that less than 30% of all sexual assaults on children are reported and that the reporting rate is even lower for Aboriginal and Torres Strait Islander children. In some states, it was concluded that the sexual abuse of Indigenous children was widespread and grossly under–reported, with an estimated 88% of all sexual assaults in Aboriginal and Torres Strait Islander communities going unreported.

So, not being able to accurately define the extent of the problem is apparently a good enough reason to exclude the most vulnerable from the Royal Commission’s terms of reference even though they advocate that ‘all children deserve a safe and happy childhood’.

So do taxpayers think they are getting value for money ($502,800,000.00)? Like most things involving Government, all the budget goes towards administration costs (the bureaucrats) and very little gets to the pointy end of the problem.

Perhaps another Royal Commission in 50 years’ time will adequately explain to victims why we did nothing while they were being raped, only this time we can’t pretend that we didn’t know about it.

31st October 2016