Friday, August 12, 2011

We'll survive the sea of debt

Jeff Kennett

THE world financial markets are in roller-coaster mode. But as a nation we are well placed to ride out the crisis - if we adhere to the basics.

What an extraordinary start to August. The upheaval in the world financial markets registered a 5 on the Richter scale, but the rioting in the UK registered a 6.

Yet we Australians are relatively unaffected. Yes, our buying patterns are changing. Yes, many employees are facing the loss of jobs. Yes, super funds have had their wealth reduced.

Yes, those senior citizens whose only means of support - the pensions they have generated through years of hard work - are now seeing their comfort and dignity for later years put at risk.

But we are still here. No one has died, there are no riots, no loss of property and no wars.

That Australia performed so well through the global financial crisis and its aftermath can be attributed to one factor only - that as a country we went into the GFC with no national debt. None at all.

John Howard and Peter Costello took over an economy that Labor had left on the ropes and 11 years later we had a Budget surplus of $22 billion before the change of federal government that ushered in Kevin Rudd.

That absence of debt allowed the Rudd government to borrow money to provide financial incentives to individuals and families, as well as some of the documented quick spends such as the pink batts programs and the Building the Education Revolution schools program.

Sadly a lot of that money went directly overseas, and much was wasted through terrible administration.

However, the collective spend, combined with the emerging expansion in the mining sector, helped Australia emerge from the GFC in a remarkably strong position.

Today Australia's debt stands at $150 billion and growing quickly. Theoretically, using the Howard-Costello performance as a yardstick, and assuming our debt does not increase above $150 billion, it could take roughly 22 years to emerge debt-free.

Some argue our debt, as a percentage of GDP, is low compared with other countries, and it is. At approximately 12 per cent it is one of the lowest debts in the world. But it still has to be repaid by us through taxes and charges levied by the Government.

We must bear in mind that even if the debt were to stay static at $150 billion it would grow each year by the interest we pay on that borrowed money - or by $7.5 billion a year even if we paid 5 per cent (double the current rate of around 2.5 per cent) on our money borrowed.

We are entering a second phase of re-adjustment, and some things will never be as they were before the GFC.

Our desire to spend is being tempered by our growing concern about increases in utility charges, education, health and aged care. We have to think seriously about debt and expenditure.

All of us have to live within our means. Our governments must do so too. We must not as citizens make irresponsible demands on governments. Already Australians have started down this path. We have reduced our expenditure. The retailers do not like this and that is understandable.

Governments like Greece, Ireland and even the United States are in trouble for one simple reason. They have been living beyond their means, spending more than they raise in revenue from individuals and businesses.

Until the change of federal government from Howard to Rudd, Australia was living well within its means. Now we are starting to live beyond our means, although we are still light years away from the situation that confronts Greece, Ireland and America.

So as individuals and families we should try and reduce our debt levels wherever possible. Start with reducing your credit card debts. Commit yourself to not spending more than you earn, and if you need to borrow, do so only for an asset that will appreciate, like a home.

As a community we are in for a period of uncertainty for some time, maybe years. How we come out of this period will depend as much on how we conduct our lives, as it will on what we demand of governments and councils.

Australia right now is better placed than the majority of other countries in the Western world, but we must not become complacent. We must now get our own expenditure and debts under control, as must the governments we elect to lead us.


Surgery patients on hold as NSW hospitals close waiting lists

PATIENTS are being turned away from public hospital surgery clinics which claim to meet politically sensitive waiting list targets.

Sydney hospitals, which according to published waiting lists have no elective surgery patients who have been waiting more than 12 months, have been telling patients waiting lists are closed and to go somewhere else.

One patient was told by two different hospitals she could not access waiting lists for sinus surgery - a practice believed to be widespread.

The Australian Medical Association NSW believes the government needs to document the size of the problem by recording "surgical access time", which would measure the time from a patient's GP referral to their surgery.

"We don't want to see people being restricted from waiting lists so the figures look better," said an AMA councillor, Brian Owler.

At the last Council of Australian Governments meeting the expert panel on review of elective surgery, of which Associate Professor Owler is a member, recommended surgical access time be adopted, and the Standing Council on Health agreed to consider it.

He said inconsistencies had previously been found in published waiting times. In March, the Herald revealed half of all patients at some Sydney hospitals were recorded as having their elective surgery on the day they joined the list - dramatically reducing average waiting times.

But Associate Professor Owler said doctors should not add patients to waiting lists if they would be there for longer than 12 months, as it would be unfair and could cause problems if their condition changed.

CJ Donovan, 50, was told by two major Sydney hospitals that their waiting lists for ear, nose and throat clinics were closed.

"I think we have in Australia an expectation that we are getting First World medical services, and it felt like something that I imagine happens in [another] country," she said. "I'm reasonably articulate and able to assert myself … If I can't get on a list what happens to people who are young, unassertive, not confident with English?"

She said her sinuses felt blocked most of the time, and her snoring disrupted her sleep.

After a referral to Prince of Wales Hospital in Randwick, she said she was told the hospital could not accommodate her. A referral to Royal North Shore Hospital produced the same result.

A spokeswoman for Prince of Wales said although Ms Donovan had a reference number after visiting the hospital, it had no record of her referral to the clinic. She said the hospital's ear, nose and throat clinic did not close its waiting lists.

Royal North Shore hospital confirmed its appointment book was closed to non-urgent cases.

The Minister for Health, Jillian Skinner, said she had ordered an audit into surgery waiting lists, which would give the first accurate picture in 16 years.


More cash splurged on Gillard Government's asylum seeker bailout

A NEW deal with PNG to take asylum seekers could take several weeks to start as 102 more boat people landed.

The development today comes as the third asylum seeker boat to arrive since the "Malaysian solution" was signed plunged the Government into troubled waters.

It will be several weeks before an immigration detention centre on Manus Island is ready to take asylum seekers arriving in Australian waters.

Immigration Minister Chris Bowen today admitted that Manus Island would not be an "answer in itself'' to the people-smuggling issue, and revealed it would take several weeks for the island's detention centre to come up to appropriate standards.

"There is upgrading work to do and measures to take,'' Mr Bowen said. But he denied the arrival of three boats showed the Malaysia deal was not deterring people smugglers. "People smugglers will try it on ... using all sorts of lies about the current situation with the Malaysia court case.''

"You may be sent to Malaysia or Papua New Guinea, but you're not going to be processed in Australia,'' he told ABC Radio on Friday.

His comments came as another 102 asylum seekers landed at Christmas Island last night, including more children. This takes the number of people facing deportation to 207, more than a quarter of the 800 Malaysia will take.

The arrivals coincided with the confirmation of the fresh immigration deal - with Papua New Guinea - at further cost to taxpayers.

The boat surge increases pressure on the Government, which is facing a High Court challenge to its people swap deal that will be heard on August 22.

Prime Minister Julia Gillard said the Government was very confident it could send asylum seekers to other countries.

Mr Bowen earlier warned that delays would provide people smugglers an angle to "spin" to desperate people willing to get on boats.

Opposition immigration spokesman Scott Morrison said about 770 asylum seekers had braved seas to reach Australia since the Government announced its new policy in May.

He said the deal's "use-by date" was fast approaching, regardless of the High Court challenge. "It's a one-off deal with one country with a clear use-by date and a huge cost of almost $300 million, which simply hasn't been thought through," he said.

With the deal hanging in the balance, another option for processing asylum seekers has emerged, with the Papua New Guinean Government agreeing to re-open the Manus Island detention centre.

Ms Gillard confirmed the agreement in a statement. "Arrangements are being made for a high-level delegation of Australian officials to travel to Papua New Guinea in the very near future to finalise a memorandum of understanding regarding the centre," Ms Gillard said.

"We are committed to working in partnership with PNG to examine how such a centre might operate, including how it might best complement broader regional activities."

PNG Prime Minister Peter O'Neill said Australia would meet the running costs of the centre, although details were yet to be confirmed. If the centre were renovated and run by Australian staff, it would cost millions.

As the Malaysian deal legal battle looms, the Government continues to say asylum seekers arriving at Christmas Island will be sent to Malaysia.

Home Affairs Minister Brendan O'Connor said people on the latest boat "will be taken to Christmas Island for pre-transfer assessments, pending removal to Malaysia".

As the asylum seekers entered legal limbo, Burmese refugees from Malaysia have arrived in Melbourne to start a new life.

The first eight to be re-settled in Melbourne are not part of the 4000 refugees Australia has agreed to take under the Malaysian deal.


Warming uncertain says CSIRO scientist

The CSIRO is a major scientific research organization funded by the Australian government

Researchers from the CSIRO and the University of Melbourne analysed the predictions of 23 currently available global climate models using data from the Coupled Model Intercomparison Project, a project that gathers data from around the world to make predictions on changes in world climate.

A statistical tool called a 'probability distribution model' was applied to the projected changes predicted by the models to find what changes would occur at certain levels. These probability distribution functions were scaled to match scenarios of global warming for 2030 and 2070.

Climate predictions then and now

Previous projections by the CSIRO and the Bureau of Meteorology in 2007 predicted a temperature increase of at least 1 degree Celsius by 2030. “If emissions are low, we anticipate warming of between 1.5 degree and 2.5 degrees by 2070, with a best estimate of 1.8 degrees,” Whetton said in 2007. “Under a high emission scenario, the best estimate is 3.4 degrees Celsius with a range between 2.2 to 5.0.”

The 2007 report also predicted the effect of increasing levels of greenhouse gases on rainfall, showing decreases in overall and seasonal rainfall across Australia in the decades to come.

The new study gives a more solid prediction to the effects of a global climatic shift. If global temperatures increased by 4 degrees Celsius or more, it would result in temperature increases of between 3 degrees and 5 degrees for coastal areas and 4 degrees to 6 degrees for inland Australia, the report shows.

In addition, global climate shifts would affect precipitation patterns, with snow cover falling to zero in most regions across the Australian Alps. More notably, the annual rainfall over southern Australia, particularly in winter and spring, would decrease by up to 50%.

"Unlike anything experienced before"

The combined decrease in rainfall with rising evaporation levels of between 5% and 20%, would lead to droughts occurring up five times more often in the southern regions of Australia, the study said.

"Rapid global warming of 4 degrees Celsius would be unlike anything experienced before by modern human societies - presenting us with huge challenges in our ability to adapt," Whetton said.

Steven Sherwood, an atmospheric physicist and co-director of the Climate Change Research Centre at the University of New South Wales in Sydney, said that while the report, "follows a fairly standard methodology" in summarising the predictions of climate models, the estimates "must be taken with a grain of salt" because of the variability between the 23 models. "They don't all predict the same outcome, so a large range can sometimes appear - but this probably represents the best we can do at the moment," he said.

Sherwood continued, "Of course there is no guarantee that the actual outcome will even be within this range, all the models could be off. But if the models are wrong, it is just as likely to be in the direction of underestimating change rather than overestimating it. "Either way, it's better to be safe than sorry and we need to reduce greenhouse emissions now while we still can before it's too late."


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