Tuesday, July 28, 2015
The high cost of Australia’s housing "obsession"
It's an "obsession" that people want a house to live in?
The stockbroker below is an economic moron. Negative gearing is normal accounting. It means that the cost of earning income is deducted before you are taxed on that income. Any other system would be hugely destructive, It would mean taxing people on money that they do not have. There is no "subsidy" involved, just normal cost accounting.
And we read below: "“If someone borrows money to buy residential property, it doesn’t create any jobs,” he said." How does he think residential property gets built? By fairies? The housing industry is in fact a major employer.
The guy is a vivid testimony to the sad state of modern education. He might make a good hewer of wood and drawer of water but he is a disgrace to his present occupation. A very low-wattage brain indeed
AUSTRALIA spends 20 times more money on subsidising negatively geared property than funding start-up businesses and this could cost us jobs and our economic future, one senior financial analyst says.
Ivor Ries, a Morgan’s stockbroking firm analyst, said one of the greatest weaknesses in the Australian economy was the lack of investment in infrastructure and early stage businesses.
“We are miles behind places like the US in financing young, growth businesses. We’re pathetic really compared with the US,” he told the ABC this week.
He said about $250 million was available in venture capital for young entrepreneurs each year. This was about 20 times less than what taxpayers spent subsidising investment properties, which do not create jobs.
“We currently give $4 billion a year to investors via the tax system to subsidise people buying negatively geared rental accommodation,” he told news.com.au.
Mr Ries said Australia was basically a country that subsidised nonproductive capital. “If someone borrows money to buy residential property, it doesn’t create any jobs,” he said.
“We’re giving already well-off people subsidies to buy more property, whereas the country in total spends $250 million a year on venture capital. There’s something wrong with that balance.”
It also meant that Australia was basically “exporting jobs”.
“It just means there will be less jobs here in the longer term. We’re just exporting jobs at the moment,” he said.
The money spent on venture capital was even less than the $1 billion Australians spent buying luxury sports utility vehicles (SUVs) every year. A high proportion of these vehicles will be used as private cars but written off as a business asset, which the taxpayer pays for.
“The reality of life in Australia today is we subsidise people buying high-end SUVs but we don’t give as much to venture capital,” Mr Ries said.
Mr Ries said the tax system should be tilted back towards things that actually created wealth and jobs. He saw at least two businesses a week that had developed some fantastic technology but could not get funding.
“I’ll give them a list of 25 venture capital funds in Australia and I will say to them, ‘Don’t expect to get any money out of them because they are fully committed’ and I think any small business that’s got great new technology, or a great new business idea in Australia at the moment is probably getting that advice from multiple sources around the country,” he told the ABC.
“We just don’t have the capacity to fund these businesses at the moment.”
If Australians did start investing in venture capital at the same rate the US did, spending would jump from $250 million to $4.9 billion a year.
The risk of not doing this could condemn the country to low employment growth and a sticky unemployment rate, which is hovering about 6 per cent.
He said more tax concessions should be made available. “I think the government needs to make it much more attractive to invest in these things which, by their nature, are much more risky,” he told news.com.au. “Nine out of 10 of them will fail but the one that succeeds will often be hugely successful.”
Those who live in glass houses...
Bronny's helicopter had a lot of precedents -- as "New Matilda" points out below. Why the hate for the Labor Party? The Matildas hate everybody. It's what they do. They are so far Left that they hate the ALP nearly as much as the Liberals
Angry with Bronwyn Bishop over her diddling of her travel expenses? Fair enough. But save some of that outrage for the other side.
If you’re waiting for the Abbott Government to ‘do the right thing’ and remove parliamentary speaker Bronwyn Bishop for trying to fleece Australian taxpayers $5,000 for a chartered helicopter flight to a party fundraiser, don’t hold your breath.
In 2013, the Gillard government’s Attorney General Mark Dreyfus drew up legislation which ensured that government departments which provide services directly to the parliament are no longer subject to the Freedom of Information Act. That obviously includes the Department of the House of Representatives, which processes the travel claims of politicians.
In other words, if politicians diddle their ‘entitlements’, you - the taxpayer – are not entitled to access the documents that prove it.
The legislation was a response to a scoop from Fairfax Media in June 2013. After the Sunshine Coast Daily was refused an FOI application*, The Herald decided to test the FOI legislation, and found a loophole. It got its hands on the spending of former speaker Peter Slipper’s office.
Traditionally, parliamentary services had always been exempt from FOI, but a change in laws in 1999 left a hole. The Herald tried to tear it open, but had their FOI application rejected. They appealed to the Information Commissioner, Professor John McMillan, who presides over all things FOI.
McMillan ruled in Fairfax’s favour, and hence we found out this juicy nugget: “Mr Slipper's new coat and tails cost taxpayers $1,248, while his total travel bill in his first six months as speaker was more than $18,000. He had also spent more than $8500 on catering.”
In hindsight, Slipper was quite the miser compared to his eventual successor – Bishop’s tally for 2014 was $389,139.25 in travel expenses alone, and just over $800,000 to run her office.
In any case, Labor - and the Coalition, despite their hatred of Slipper - were having none of it. Dreyfus hastily prepared a piece of legislation – one page in length - which closed the loophole.
You might remember Dreyfus from such parliamentary scandals as ‘I billed the Australian taxpayers $466 for two nights accommodation in Perisher for a family ski holiday’.
His bill was rushed through parliament with the support of the Coalition, despite the fact a review on the issue, commissioned by the previous Attorney General, Nicola Roxon, had yet to deliver its final report.
Notably, that report - and the parliamentary departments themselves - recommended against a blanket FOI exemption. They got one anyway.
At the time, Labor’s Anthony Albanese was quoted in the Herald article defending the indecent haste with which the legislation was pushed through. He described it as "an interim measure" before the review's completion. No prizes for guessing whether the exemptions remain in place today.
And of course, you may remember Albanese from such expenses scandals as ‘I charged taxpayers to get to a couple of NRL games’. ‘And then I charged taxpayers to go to the AFL grand final. And the Australian tennis Open.’
That was roughly around the time when it emerged that Tony Abbott had charged taxpayers tens of thousands of dollars to attend a host of sporting events, along with more than $9,000 for travel he claimed while on a private book tour. Plus all the travel claims he made when he was ‘volunteering’ in remote Aboriginal communities.
It was also around the time when it emerged Abbott and others had charged taxpayers to attend private weddings, including those of ousted Liberal MP Sophie Mirabella and, believe it or not, Peter Slipper.
Also quoted in the Fairfax story was Bronwyn Bishop who defended the closing of the loophole by complaining that a parliamentary librarian had been placed in a "very difficult position" after the Information Commissioner’s ruling that the service was subject to FOI.
Now here’s the rub.
Unlike Slipper, who was prosecuted – unsuccessfully in the end – for trying to steal less than $1,000 in cab fares to tour wineries just outside of Canberra, Bishop does not have to stare down the Australian Federal Police.
Instead, her matter is being investigated by the Department of Finance, led by bureaucrat Jane Halton, who you might remember from such scandals as John Howard’s ‘Children Overboard’ affair’.
As for the Information Commissioner, who ruled that Fairfax’s FOI application on Slipper’s expenses was valid, you won’t remember him in a few years.
Professor McMillan’s position was abolished by the Abbott Government last year, in their very first budget.
Banning political donations will run foul of free speech protections in the constitution
Unfortunately the simple solution to the potentially corrupting influence of political donations - banning them altogether - is not as simple as it seems.
The inquiry into political donations laws in NSW headed by Kerry Schott found that only Tunisia has adopted a total ban and that virtually all Western democracies allowed fundraising from the private sector.
For a start, a total ban would likely drive donations underground and shunt political campaigning into third party identities, giving rise to the new problem of establishing whether the groups were independent or linked to political parties.
Second, most Western democracies regard financial support for political ideals as part of the democratic right.
A total ban would almost certainly fall foul of the implied right of freedom of political communication in the Australian constitution.
Even partial bans have run foul. Bob Hawke's attempt in 1992 to ban television advertising in an effort to curtail the burgeoning costs of campaigning, was knocked on the head by the High Court. So was former NSW premier Barry O'Farrell's attempt to ban donations from unions and corporate donors.
The latest freedom of speech challenge is coming from former Newcastle mayor and property developer Jeff McCloy, who is challenging NSW's ban on developer donations. The ICAC heard allegations that McCloy had paid $30,000 in secret donations to local Liberal MPs in breach of NSW laws which ban certain classes of people, including property developers from making political donations. The ICAC report and the High Court decision are still pending.
The thinking behind NSW's approach of banning certain classes of donors is that the profits of developers, the alcohol industry and the gaming industry are directly affected by state decisions and so the risk of corruption is much higher.
ALP conference 2015: Bill Shorten’s wins comes at a cost
Bill Shorten has strengthened his leadership by winning vital policy fights at Labor’s national conference, using the support of key unions to fight off vigorous challenges that would have damaged his authority.
The Opposition Leader got his way in debates to endorse boat turnbacks, allow a free vote on same-sex marriage and take a cautious approach to party reform in outcomes where the Labor Left splintered on crucial decisions.
But Labor’s internal tensions were laid bare in disputes over support for Mr Shorten on key questions, fuelling talk that Tanya Plibersek and Anthony Albanese were positioning themselves as potential leaders.
The jostling for personal position cast a cloud over Labor’s attempts to use the conference to assure voters that it could be trusted to form government at the next election and could manage border protection once in power.
The Opposition Leader’s victories also came with promises that will require generous budget spending, including programs to help workers who could lose their jobs under his risky new target for renewable energy.
A deal on tougher border protection policies, including turning back boats where safe to do so, came with a pledge to spend $450 million over the next four years on the UN High Commissioner for Refugees.
Mr Shorten relied heavily on key unions on the Left of the ALP to prevail in the conference debates, including the Construction Forestry Mining and Energy Union. The CFMEU added its voice to support for Mr Shorten in Left faction meetings on boat turnbacks, reinforcing his authority.
While that debate was not linked directly to others, the union movement is expecting Mr Shorten and shadow ministers to campaign hard against a free-trade deal with China in order to extract changes that toughen the safeguards against easier visas for skilled migrant workers. Unions fighting the China trade deal include the CFMEU, the Australian Manufacturing Workers Union, the Maritime Union of Australia and the Electrical Trades Union.
The Opposition Leader declared last night that the conference proved to voters that Labor was serious about taking social and economic reform to the next election.
“In every chapter of our platform we have offered views and propositions for change for a brighter future,” Mr Shorten told the closing session. “We will leave here with the fundamental challenge of the next election established. We believe that hope can triumph over fear, that optimism defeats pessimism.”
Mr Shorten named health, education, jobs and renewable energy as key areas where Labor had updated its policy platform with new propositions that would secure support among voters.
While small changes were made yesterday to democratise the party, union leaders helped to dilute the reforms to retain their power in the party’s peak councils, an outcome seen as a win for Mr Shorten and a defeat for the Left.
Mr Shorten also got his way on a softer line on the recognition of Palestine, despite attempts by the Left to dictate policies that would hamstring the leader. But his decision to embrace an emissions trading scheme triggered a dispute yesterday over whether the impost could be labelled a “tax” — a question that helped bring down the last Labor government.
The personal tensions now shape Labor’s preparations for the next election amid calculations over whether the Left has the numbers to seize the leadership one day.
A vote on same-sex marriage late yesterday turned into a test of authority for both Mr Shorten and Ms Plibersek. All sides conceded that the Left had a majority to enforce the deputy leader’s call for a binding vote for all MPs to support same-sex marriage despite their personal views.
But with some members of the Left at odds with the deputy leader’s position, including Mr Albanese and Victorian powerbroker Kim Carr, the faction agreed to a retreat that helped Mr Shorten.
The result was an amendment that approved conscience votes on gay marriage for the next two terms of parliament, by which time most expect the matter to be settled in federal parliament.
All parties sought to portray the compromise as a win for their side, highlighting the underlying contest for leadership status.
The conference infighting included attacks on Ms Plibersek for playing a “double game” in the debate over boat turnbacks in a way that could diminish her influence within the Left. While she did not oppose the turnback policy in shadow cabinet and argued for it in meetings of the Left, she gave her vote to a proxy who cast it against Mr Shorten’s position.
The Opposition Leader’s allies also took aim at Mr Albanese for openly voting against the tougher line on boat turnbacks, even though he did not challenge the policy when shadow cabinet agreed on the tougher line.
The Australian was told that only one frontbencher, Penny Wong, expressed reservations about supporting boat turnbacks when the stance was decided in shadow cabinet. Senator Wong’s vote at the party conference was also given to a proxy who cast it against Mr Shorten’s position.
Caucus members described the positioning within the Left as a quest to succeed Mr Shorten, with several arguing that Ms Plibersek had lost ground as a result of her handling of the passionate differences over asylum-seekers.
Mr Albanese gained acclaim within the Left for taking his stand against turnbacks, raising suggestions that he could one day capitalise on the growing power of the Left to take the leadership.
How Starbucks thrive on an Australian invention
STARBUCKS said its quarterly profit jumped 22 per cent as pricier drinks like flat whites and food helped lift sales at its U.S. cafes.
The Seattle-based coffee chain said sales rose 8 per cent in its flagship Americas unit. In the U.S., which makes up the majority of the unit, the company has been pushing up sales with price hikes and offerings like S’more frappuccinos and flat white espresso drinks that cost a little more.
Flat whites are an Australian invention that were introduced to American Starbucks menus at the beginning of the year
Starbucks chief financial officer Scott Maw said in a phone interview that people are even “trading up” to newer, pricier breakfast sandwiches, such as one served on a croissant bun. Maw noted that more people are getting food with their orders as well.
Customer visits are increasing too, boosted by the company’s mobile app. The app, which incorporates its loyalty program, encourages people to return by rewarding them with “stars,” which can be used toward free drinks and food.