Tuesday, July 31, 2007

Why Brits still emigrate to Australia

Australian financial journalist Noel Whittaker says salaries may be much higher in the UK but the cost of living is way above that in Australia. Although it is wildly at variance with the exchange rate, his suggestion that purchasing power parity is reached by equating one Australian dollar to one British pound is in line with what I have observed too

I have just returned from a fact-finding trip to Britain. Let me assure you, from a financial point of view at least, that this is the lucky country. Now I know that Aussies look longingly at the salaries paid in Britain and imagine themselves living handsomely on 50,000 pounds a year, which is equivalent to $116,000 here, but you have to understand that prices there have the same nominal value as in Australia. A main course in a restaurant may be 30 pounds in Britain and $30 in Australia, so the cost of living is more than double ours. Believe me, it's a shock to the system to put 40 litres of petrol in your rental car and discover that the cost is 40 quid or $A88.

But that's not the end of it. There is a VAT (value added tax) of 17.5 per cent on most things you buy, and many restaurants add a 15 per cent compulsory service charge as well. It makes our GST of 10 per cent look cheap.

I discussed wealth-creation strategies with a director of a British firm that specialises in financial planning for high-net-worth people. He was green with envy at our superannuation system, and told me that most of his work revolved around estate planning because Britain had high death duties [Australia has none]. This is a rapidly growing market because property prices have been rising dramatically and more and more families are facing death duties as the family home is not exempt.

We discussed borrowing for investment, which is one of the best strategies to create wealth in Australia because the interest is tax deductible, and income from both property and shares carries great tax concessions. I was amazed to discover that investment borrowing is rarely used in Britain because there are no concessions whatsoever. If you borrow to invest, you pay tax at your top marginal rate on the income from that investment, yet you get no deduction for the interest. Therefore, you may be losing up to 40 per cent of the income in tax while being forced to pay the interest from after-tax dollars.

Housing affordability is a hot topic in Britain, just like in Australia, and some building societies have even gone to the extent of lending far more man the value of the house. One newspaper gave the example of a couple with no deposit who were buying their first home for 152.000 pounds, the average home price. and who were able to qualify for a loan of 190,000 pounds to enable them to consolidate their other debts and get a foothold in the housing market. This means that they will have a negative equity in their home for many years and will be reliant on capital gain to get back to square one. This is a high-risk situation and, to make matters worse, the Bank of England lifted interest rates to 5.75 per cent earlier this month, putting further pressure on home-owners' budgets and increasing the prospect of a fall in home prices.

We had a break in Spain on the way home and the conditions are no different there. In Spain, VAT is 16 per cent and our tour guide in Valencia was bemoaning the fact that home prices had risen so much that she had been forced to take out a 40-year mortgage just to buy a unit [condo].

The above article appeared in the Brisbane "Sunday Mail" on July 29, 2007

More overseas doctor concerns

The inquest into the death of a 16-year-old girl who died in a Sydney hospital after being hit by a golf ball may have to be reopened following allegations about the competence and assessment of two overseas-trained doctors involved in her care. The allegations -- aired on ABC TV's Stateline program in NSW last night -- claimed neither of the overseas doctors treating Vanessa Anderson had been "subject to any appointments or selection process".

Anderson died in 2005 while being treated for a fractured skull caused by the golf ball. The inquest at Westmead Coroners Court, which held its final hearing two weeks ago, heard there were "a number of deficiencies" in her care, including one doctor's failure to give anti-convulsive drugs as ordered by a consultant. Another doctor, anaesthetics registrar Sanaa Ismail, increased the dosage of painkilling drugs to a level the consultant in charge told the inquest was "too high".

It has now emerged that the inquest may be reopened after a senior hospital anaesthetist, Stephen Barratt, wrote to Deputy State Coroner Carl Milovanich about the allegations. In a statement to Stateline, NSW Health director-general Debora Picone said the "accuracy and relevance of a number of the assertions" made by Dr Barratt were "disputed". "The tragic death of Vanessa deserves proper investigation by the state Coroner and I do not think it appropriate to pre-empt the coronial process," Professor Picone said.

In his letter, Dr Barratt said Dr Ismail -- whom he was supervising -- had previously been judged by him to be "not safe" to treat patients after two previous incidents just months earlier. Dr Barratt also revealed he was "unhappy" with how the inquest had unfolded and added "you need the truth". Azizi Bakar, the doctor who had failed to provide the anti-convulsive drugs ordered by a consultant, was the other doctor whom Dr Barratt suggested had not been properly screened prior to employment.

Dr Ismail faced questions during the inquest over her decision to double the dose of a painkilling opiate drug, oxycodone, to treat Anderson's headache, despite the fact that she only spoke to the patient for a pre-operative check. Dr Ismail said she did not realise Anderson was already receiving Panadeine Forte, a painkiller with a high level of codeine, another opiate drug.

Dr Barratt's letter alleged that Dr Ismail's salary was being paid by the Saudi Government, an arrangement that he said was "not unusual in the public hospital system -- that is, there are many others like her". "In fact, a few months before the Vanessa Anderson incident a bureaucrat from the Department of Health came pleading with us to take more of these 'trainees'," Dr Barratt wrote.

Professor Picone said "learning exchange" arrangements was a "feature of any modern health system". Out of a total 11,000 doctors in NSW public hospitals, about 100 at any one time would be paid for by an overseas government or other agency, she said.

Alison Reid, medical director of the NSW Medical Board, refused to discuss the case specifically but said that generally applications to register doctors first had to come from a prospective employer, supported by letters from the relevant medical college. Qualifications were independently verified and certificates of good standing sought from previous regulatory bodies.


The market is the solution to water shortages

Water restrictions can be lifted within five years in all capital cities - and it does not require drought-breaking rain to do it. Charging more for water for non-essential purposes, using private investment to expand supplies through desalination and recycling projects, and allowing trading between country and city can deliver all the water needed. That is the conclusion of a report on the nation's infrastructure needs, released to The Australian. Prepared by Infrastructure Partnerships Australia, which represents government as well as industry bodies, the report includes a list of more than 100 priority projects ranging from road and rail links to water and energy schemes and schools, hospitals and affordable housing plans. The goal is to refurbish Australia's capital stock within the next 10 years and set up the nation for continued strong economic growth over the next 20 years.

The report recommends the appointment of a federal minister for infrastructure, as well as an office of national infrastructure co-ordination. IPA head and former Kennett government minister Mark Birrell said that, surprisingly, no broadly agreed list of infrastructure requirements existed. "This decade we have the opportunity to deliver on age-old plans like a four-lane highway linking Melbourne, Sydney and Brisbane, an efficient freight rail link up the east coast of Australia, the completion of the ring roads around our largest capital cities, renewing the stock of government schools across the country and replacing super-specialist public hospitals in every capital city," he said. Mr Birrell said a combination of healthy state and federal budgets, the scope to increase government debt levels and superannuation funds that were looking for investments opened the way for large-scale infrastructure funding.

The report suggests a two-tier system for residential water. Current prices would be charged for consumption for essential needs -- say 150 kilolitres a year. Discretionary use above this level for purposes such as lawns and pools would attract the full market price, which could be as much as double the present Sydney rate of $1.42/KL. Average water use around Australia is now 376KL a household, although many families who do not water lawns or have a pool use much less.

The report suggests expanding the market in water to allow trading between rural and urban uses, thus allowing water to flow to its highest value uses. Tradeable entitlements also could be assigned to large commercial users and competing retail water businesses.

The energy sector will require $30 billion-$35 billion in investment by 2020. A true national energy market should be established, starting with a comprehensive restructuring in NSW where the industry remains in government hands. A meaningful debate of the nuclear option is premature without fundamental reforms to create a national market. Government decisions are needed to allow a fibre-to-the-node broadband rollout within two to three years, the report says.


Pupils moving out of government schools

Which pushes some government schools to lift their game

STUDENTS have fled NSW public schools at a rate of 125 a week - equal to two busloads - in the past decade as low-fee private schools boom. The latest Australian Bureau of Statistics figures reveal how parents have snubbed local public schools, often in favour of new faith-based schools backed by Howard Government subsidies.

A Daily Telegraph analysis of the census data shows that in areas like Penrith there has been a mass walkout on public education, cutting their market share by almost a half of all enrolments. Almost 68 per cent of Penrith students attended public high schools in 1996, but this slumped to 54.79 per cent by the 2006 census. In the same period, Catholic school enrolments grew from 23.7 to 33.21 per cent and the "Other Non-Government" category grew from 8.4 to 12 per cent. Across NSW, government secondary schools had 67.1 per cent of all enrolments in 1996 - but this has shrunk to just 60.83 per cent. In raw numbers, about 46,000 students have vanished from public primary schools and 19,000 from public high schools over the decade. There have been similar changes in areas such as Camden, Hawkesbury, Wollondilly, Liverpool, Bankstown, Holroyd, Sutherland and Warringah where public school market share has dropped 10 per cent or more.

The popularity of low-fee private school enrolments indicates why Opposition Leader Kevin Rudd has abandoned previous ALP policy to reallocate private school funding. Even in suburbs such as Canada Bay, Waverley, Marrickville, Manly, Lane Cove and Randwick parents have been moving away from public schools.

But it's not all bad news for public education. In Sydney's inner-west, Strathfield Public School enrolments have bucked the trend, surging from 39.35 to 49 per cent. Public school enrolments in nearby Ashfield and Burwood have also increased. In Baulkham Hills, the Blue Mountains, Pittwater and Ryde previous losses have been stemmed.

An Education Department spokeswoman said the public schools sector realised they now operate in an environment where "greater emphasis is being placed on choice". She said the most recent trends were positive for government schools. Kindergarten, Year 3, Year 8 and Year 11 market share had all slightly increased this year, reversing the declining trend over many years. Schools singled out as success stories include Ku-ring-gai High, Cherrybrook Technology High, Wattle Grove Public School, Arthur Phillip High, Rouse Hill Public and Parklea Public.

But Christian Schools Australia, which represents dozens of newer private schools, says its enrolment growth across NSW has increased by 25 per cent in five years. "There's no doubt people are making a choice," chief executive Stephen O'Doherty said. "Many families have gained prosperity under Howard and are using the extra income to move to affordable non-government schools. He said much of the enrolment growth in swinging seats would help determine the federal election later this year.


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