Building for the community is a win for the Gold Coast Games


Karine Dupré, Griffith University

Major events such as the Olympic and Commonwealth Games have emerged in recent years as significant elements of public policy. In addition to the opportunities new venues provide, these events are viewed as a way to stimulate tourism and investment, increase civic engagement and promote urban revitalisation more generally.

For the next two weeks, the Gold Coast is hosting the Commonwealth Games, a record fifth time for Australia. But it’s the first time an Australian non-capital city will host the event.

Another great distinction from past hosts is that the Gold Coast is mostly relying on its existing assets, and the community aspect has generally prevailed: most of the refurbishments and extensions took place one to three years before the start of the Games, meaning the community has already been able to use these facilities.

Not building just for the Games

Only two of the 13 Gold Coast venues are bright new buildings, the Carrara Sports and Leisure Centre and the Coomera Indoor Sports Centre. All the others are either already built or are great natural assets such as the Coolangatta and Currumbin beachfronts.

Even the new venues were completed some time ago. At the Coomera Sports Centre, early site works began in February 2015. Construction was completed in early August 2016, 20 months ahead of the Games.

Similarly, the Carrara Sports Centre was completed in early 2017. The nearly 20,000m2 venue was available to Gold Coast residents to enjoy more than a year before the Games.

Refurbishment is costly, but looking at the bigger picture it might still be less expensive. A new building usually involves other costs such as building new road access, water and electrical connections, and so on.

The same strategy was implemented for all the refurbishment projects without exception. For example, the aquatic centre is a recycling and expansion of the original 1960s Southport pool. Finished in 2014, it hosted the Pan Pacific Swimming Championships the same year. Although at that time debate about the lack of a roof was raging, being able to test the facility in advance is a luxury that few host cities have had.

Few Games hosts have had the luxury of trialling venues like the aquatic centre, where refurbishment was finished in 2014.
Karine Dupre, Author provided

What about the architectural legacy?

In designing venues, architecture plays a a critical role in delivering a premium experience for athletes and spectators, and thus ensuring the success of the Games.

It’s doubtful any of these buildings will enter into the history of architecture as references or models for future Games. They are not comparable to what has been done, for example, in Beijing in terms of structural innovation (such as the swimming pool or the stadium) or iconic status.

I am convinced, however, that all these buildings display a very good critical approach by their architects.

For example, for the Coomera centre, the choices made by Gold Coast-based BDA architects were fundamental to achieve the flexibility to accommodate up to 7,500 spectators when starting from 350 permanent seats. The truss structure, in allowing a very long span (82m by 168m for the roof), frees the indoor space from columns and increases flexibility of uses. In the same way, the 23m roof clearance frees the volume.

In terms of aesthetic, the choice not to enclose fully the centre at the entrance gives both a lighter perception of the building – despite the use of 600 tonnes of structural steel and 6,000 cubic metres of concrete – and a different look from the traditional box often found for gymnasiums.

Commonwealth Games gymnastics competition is under way at the Coomera Indoor Sports Centre.
Karine Dupre, Author provided

The key new facility at Carrara presents some similar characteristics. Because of its central location on the Gold Coast, the idea was that the new centre would contribute to the creation of a sport precinct and to economic development and sport advocacy programs. Knowing that Glasgow had a 17% increase in people doing sport after the Games, it was a reasonable vision to bet on long-term use by locals and not only on the visitors for the brief period of the Games.

Designed by BVN architects, the Carrara centre consists of a street space between two major halls. As the nominated venue for the badminton, wrestling and table tennis programs, it is quite an unexpected arrangement; it does not feel like the traditional sport hall, but more like a place to meet others. The colours and material palette have been used to symbolise the young and vibrant image of the Gold Coast. Again, all these architectural choices come together to provide a memorable experience for visitors and athletes alike.

Within the given budget, the balance between an appealing aesthetic and a long-term legacy has been achieved. Maybe none of these buildings will become international landmarks, but present uses have shown their functionality and benefits for the Gold Coast.

Even if we don’t all agree with the current politics, there is one thing we cannot deny about the Games preparation: architecture has been a tool for enhancing public facilities thanks to a very long-term vision. The social, cultural and economic legacy is already there, since facilities are being used.

The ConversationFinally, since the Games preparations began, major debates on the Gold Coast concerned new casinos, the Spit redevelopment and the light rail extension. None of these debates caused any real problems for the Games. It is quite an achievement, or the result of a very good communication strategy, but that might be another discussion…

Karine Dupré, Associate Professor in Architecture, Griffith University

This article was originally published on The Conversation. Read the original article.

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Vital Signs: Australia’s stubborn growth problems are moving at a geologic pace



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Unfortunately for the RBA, the health of the economy is not measured on the Geologic Time Scale.
Alfonso Silóniz/Flickr, CC BY-NC-ND

Richard Holden, UNSW

Vital Signs is a regular economic wrap from UNSW economics professor and Harvard PhD Richard Holden (@profholden). Vital Signs aims to contextualise weekly economic events and cut through the noise of the data affecting global economies.

This week: Interest rates remain on hold as the RBA talks up employment growth, green shoots remain in manufacturing, and China strikes back in the Trump-led trade war.


On Tuesday, the RBA left official interest rates unchanged at 1.50% for the 18th consecutive meeting, tying their all-time record. They will break that record next month when they do the same thing.

And the official statement by governor Philip Lowe sounded like it came from a guy who had gone from crossing his fingers to crossing his toes as well. For example:

“The Australian economy grew by 2.4 per cent over 2017. The Bank’s central forecast remains for faster growth in 2018.”

Um, why? The same macro model that got 2017 wrong is now going to get 2018 right?

Or this one:

“The unemployment rate has declined over the past year, but has been steady at around 5½ per cent over the past six months. The various forward-looking indicators continue to point to solid growth in employment in the period ahead, with a further gradual reduction in the unemployment rate expected.”

But a few months ago, those same forward-looking indicators were saying the plateau in the unemployment rate wouldn’t happen.

And finally (but only because I have space constraints):

“Notwithstanding the improving labour market, wages growth remains low. This is likely to continue for a while yet, although the stronger economy should see some lift in wages growth over time.”

If “over time” is read analogous to “life in the Mesazoic Era evolved over time” then I suppose that may be right.

Unfortunately for the RBA, the health of the economy is not measured on the Geologic Time Scale. Stubbornly low inflation, persistently hopeless wage growth, and with the Australian population growing at 1.6% p.a., that 2.4% GDP growth number looks pretty weak. The real question is whether the RBA is not cutting rates because it thinks monetary policy is ineffective at this level, or because it’s scared of fuelling (further fuelling?) a (the?) housing price bubble.




Read more:
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ABS data released Wednesday showed a drop in building approvals in February. Total dwelling approvals were down 6.2%, driven by a 16.4% drop in apartments, compared to a 1.9% rise in houses. For the 12 months to February 2018, that puts the total down 3.1%, again driven by a large (14.8%) drop in apartments and a rise (6.1%) in houses.

This is all evidence that demand – often from offshore – has dried up in one important sector of the market: apartments. It is still too early to know what the fallout will be, but this is exactly the kind of pattern one sees in property markets when the music has stopped.

The Australian Industry Group’s Performance of Manufacturing Index, released this week, hit a record high of 63.1 index points for March. Perhaps more importantly, the survey indicated that capacity utilisation was at a record high of 81.2%. This matters because it suggests stronger employment and wage growth in the sector.

On the other hand, manufacturing is about 6.5% of GDP, so even strong growth in the sector has a relatively modest overall effect. But, as they say in baseball, you can’t boo a home run.

US jobs figures continued to impress, with payroll processor ADP releasing figures Thursday Australian time that the economy added 241,000 jobs in March. The official figures from the BEA come out Friday US time, with market expectations at an addition of 185,000. So if the official figures line up with ADP, this will be further evidence of strong employment growth.

Trump trade war update

This week, China struck back, again. The Trump administration recently instituted roughly US$50 billion worth of tariffs on steel, cars, automotive and aircraft parts, consumer products like televisions, and other goods. Almost immediately, China responded with tariffs of a similar value on 106 types of American goods.




Read more:
America’s allies will bear the brunt of Trump’s trade protectionism


Those 106 types of goods include soybeans and others produced in the Trump heartland. This was a cleverly designed, targeted measure, designed to hurt Trump politically.

His response:

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That reveals his mercantilist view of trade: that it’s a zero-sum game rather than something that increases the size of the economic pie and makes both countries better off. But hey, maybe he has a big reading backlog and isn’t up to 1817, when David Ricardo pointed this out with his theory of “comparative advantage”.

The ConversationLet’s hope it does, and President Trump gets the message that he needs to knock this off. All he is doing is making America poorer. And the game theory of it is worse. Tariffs beget tariffs.

Richard Holden, Professor of Economics and PLuS Alliance Fellow, UNSW

This article was originally published on The Conversation. Read the original article.

Australia is one of the world’s best places to retire, or is it?



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Happiness in retirement isn’t the same for everyone.
Tom Carmony/Flickr, CC BY-NC-ND

Rafal Chomik, UNSW and David Rodgers, UNSW

Australia is ranked in the top third of countries in almost all indices measuring the best countries to retire, according to our analysis of nine separate ageing and retirement indices.

The problem is, experts contriving such indices can’t agree about which ingredients should be included and which are most important.

The flaw of averages

While composite ageing indices provide us with what appear as simple comparisons, the underlying methodologies are complex, prone to judgement, and can be tweaked to obtain certain results.

Using indicators that aggregate outcomes for the older population within a country also ignores differences between people within this population. Sub-indices by gender and more granular age-groups do exist, but one improvement could include an inequality adjustment based on outcomes by socioeconomic status or income.

What about just asking people about their life? Studies that compare differences in people’s own evaluations of life across countries show these are substantially explained by social and economic differences across countries. And when comparing individuals in high-income countries such as Australia and Britain, good physical and mental health appear most correlated with life satisfaction, while in middle-income countries like Indonesia, income is more important.

But that doesn’t differentiate by age. When the OECD asked older people across rich countries what mattered to them, they said that “health” and “environment” were most important while “civic engagement”, “community” and “income” domains were less so. By contrast, younger groups attributed less weight to “environment” and more to “income”.

Such indices usually involve scoring a country in several categories and combining these into a composite score and ranking. Done well, these can reveal how life in one location is better than another and in which categories it is lagging.

So what do existing indices suggest is important for older people’s well-being? And which countries come out on top?

Ingredients for a good old age

The ingredients used in an overall index differ, ranging from the employment rates of older people in each country, to their political participation, income, levels of exercise, and life expectancy.

These indicators and weights are often chosen subjectively by experts constructing each index. Some comparisons focus on current standards of living and comprise social, environmental, health, and economic indicators. These are probably more immediately relevant to people.

By contrast, indices that aim to measure the likely future for older people mostly comprise financial indicators and those that relate to retirement income system design, demography, and economic conditions. These are probably of greater concern for those thinking ahead about the impacts of population ageing.

Where to retire?

Despite the flaws with such comparisons, few people can help themselves. So how does your country rank?

European countries – particularly Nordic ones – are consistently highly ranked across ageing indices (see figure below). Such results reflect their high health outcomes, high incomes, generous social welfare, and comparatively well-designed retirement income systems. These are also countries that top the subjective happiness rankings.

https://cdn.theconversation.com/infographics/251/a4b6d81ee4291bb9594ed94e7418ca580cb214a7/site/index.html

Lower and middle-income countries receive lower rankings from the current well-being indices in which they feature. India and China, where there is low public provision for retirement, occupy high rankings among indices that emphasise fiscal sustainability over the quality of life of older people.

Australia is ranked in the top third of countries in almost all indices. It ranks particularly highly in the Melbourne Mercer Global Pension Index, largely due to the design of its retirement income system.

The ConversationFor what it’s worth, one could take an index of these indices to summarise. Such an index, call it the CEPAR meta-index of ageing, indeed shows Nordic countries taking the top three places, followed by Australia and the US, with the UK coming somewhere in the middle of 25 countries – apparently well ahead of places like France and Italy. Something to ponder when contemplating the good life in old age.

Rafal Chomik, Senior Research Fellow, ARC Centre of Excellence in Population Ageing Research (CEPAR), UNSW and David Rodgers, PhD Student in Economics, UNSW

This article was originally published on The Conversation. Read the original article.

Daylight saving can boost the economy but Australia needs to make it uniform


Andrew C. Worthington, Griffith University

When we compare daylight saving across countries, states and territories its economic impact is mostly positive. But this breaks down in the “transition” in and out of it, such as the days before and after, and when people cross borders between states that have daylight saving and those that don’t.

The easiest way to resolve this would be for daylight saving to be applied uniformly across Australia as it is in nearly every other country that has it.

The problem in Australia is unique. While a similar size, the European Union has just three time zones year round, with the shift to and from daylight saving time synchronised throughout since 1996. Likewise the mainland United States has four time zones, with uniform daylight saving everywhere but Arizona.

When daylight saving ends in Australia, the country will revert from five different time zones to three. The time difference between the east and west coast will also change from three to two hours.




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Start resetting your kids’ body clocks before daylight saving ends – here’s how


Daylight saving time positively affects the economy in a number of ways. It reduces street crime in darkly lit streets, for instance, which means less costly and better targeted policing.

Decreased home energy consumption leads to lower household bills. More people being out and about in the evenings boosts local economies through increased spending in shops and restaurants.

This at least partially explains why there is an ongoing debate about adopting daylight saving in states that do not have it, such as in Queensland and to a lesser extent in Western Australia.

Problems in transition

However, the transitions to and from daylight saving time (setting clocks forward or back, or moving between states with and without daylight saving) has economic costs. Many of these are associated with increased health care, but also include lost earnings and higher insurance costs.

One problem is that there is a “daylight saving effect” linked to changes in circadian rhythms and a (negative) effect on sleep patterns. As with jet lag, the movement to daylight saving time compresses the day, while the movement away stretches it.

Research has linked changes to and from daylight saving time with sudden changes in biological rhythms. Swedish data show a significant increase in heart attacks for the first few days after the introduction of daylight saving time and again, but for a shorter period, following its end.

A United States study found that pedestrians were nearly seven times more likely to be injured following transitions to and from daylight saving. A Canadian study suggested a significant increase (up to 8%) in accident risk on the Mondays following the spring and autumn daylight saving time changes.




Read more:
Is daylight saving time worth the trouble? Research says no


In the United States (but not Australia) the daylight saving transition period has also been linked to stockmarket participants suffering greater anxiety, preferring safer investments and shunning risk. This pushes down stock prices and lowers returns, meaning everyone with superannuation loses out.

There is also evidence that the “artificial” daylight saving transition when crossing the Queensland–New South Wales border imposes significant costs on businesses. The study found that Gold Coast businesses lose sales and have higher administration costs because of it.

Businesses throughout Queensland believe that its failure to adopt daylight saving time has a negative influence on the functioning and performance of the state economy.

Simplifying time zones

Ultimately, Australia needs to simplify what is one of the world’s most fragmented national set of time zones.

The administration costs of scheduling business across time zones, and through the transition, are a burden on business. This has an economic cost in terms of lost profits (and therefore taxation), as well as employment.

While technology has no doubt made this co-ordination easier, research in the United States still suggests that economies are more productive when there is greater time co-ordination. This is a strong argument for countries having as few time zones as possible.

In the United States, some are advocating fewer time zones, or even year-round daylight saving time, to avoid the costly transition twice a year.

Here in Australia, introducing daylight saving in Queensland would avoid significant business co-ordination problems with the other eastern states, especially for the highly populated southeast. There would be similar benefits for Western Australian and the Northern Territory.

The ConversationWhile getting rid of daylight saving altogether would also remove these transition costs, its economic benefits suggest it would be much better for daylight saving to be adopted throughout Australia.

Andrew C. Worthington, Professor of Finance, Department of Accounting, Finance and Economics, Griffith University

This article was originally published on The Conversation. Read the original article.

Government defers company tax cut vote for want of numbers


Michelle Grattan, University of Canberra

The government has been forced to put off a vote on its tax cut for big business after failing to secure support from the final two crossbenchers it needs to pass the legislation.

The deferral until the budget session in May is a bitter disappointment for the government, which had been hopeful of landing the legislation this week.

It needs nine of the 11 non-Green crossbenchers to pass legislation. It had seven on side but still needed Victorian senator Derryn Hinch and South Australian independent senator Tim Storer.

Hinch has most recently been talking to the government about trade-offs in the areas of help for pensioners, affordable housing, assistance for the older unemployed, and more action to combat paedophilia.

One source said Storer’s inexperience – he only arrived in the Senate last week – was a complication in finalising negotiations.

Storer said lower company tax should be part of broader tax reform. “This bill is a narrowly cast proposition of change to the overall tax and transfer system”, he said.

“I have held numerous meetings and received input from stakeholders including members of the public, South Australian businesses and business-groups, leading economists, national welfare groups, national business councils and their members” and “I am processing my consideration of this bill.”

The legislation is for the second tranche of the tax cuts, which is directed for big business. It would cost the budget A$35.6 billion, apply to companies with turnovers of more than $50 million annually, and bring the rate for them down from 30% to 25% by 2026-27.

Finance Minister Mathias Cormann told the Senate late on Tuesday that the legislation would not be debated further this week.

“It is a matter of public record that, as a result of the work that has gone so far, we have been able to secure the publicly stated support of 37 senators in this chamber for our business tax cuts legislation,” he said.

“Everybody knows we need 39. So, given that proposition and given that’s the situation we are in, the government has made a decision we will need to do some more work.”

He said the government thought it could get the numbers and so was “committed to keep working, to keep engaging”.

Cormann said the government intended to bring the legislation back to the Senate in the next sitting week – which is budget week.

Speaking to a function organised by the Business Council of Australia (BCA) at Parliament House, Malcolm Turnbull said the government was still two votes short and encouraged the businesspeople to keep talking to the crossbench.

He said the government wasn’t fighting for higher dividends or higher remuneration for executives but to give companies every incentive to invest and grow, creating more jobs and higher-paid jobs.

Earlier on Tuesday, Opposition Leader Bill Shorten pledged a Labor government would repeal the legislation if it passed. He said the opposition would decide its position on the tax cuts already passed for businesses with annual turnovers up to $50 million “in the context of the information we receive in the budget”.

The case for the tax cuts received a setback on Tuesday with the reporting of a secret BCA survey finding that fewer than one in five of leading chief executives had said they would use the proposed cut to directly increase wages or employ more staff. The Australian Financial Review reported that “more than 80% said they would either use the proceeds to boost returns to shareholders or invest in the company”.

The BCA played down the survey, saying it had never been finished.

Last week, the BCA released a letter signed by ten business leaders, saying: “If the Senate passes this important legislation we, as some of the nation’s largest employers, commit to invest more in Australia which will lead to employing more Australians and therefore stronger wage growth as the tax cut takes effect”.

The Australia Institute, lobbying against the legislation, wrote to senators with a brief about reaction to the Trump cuts.

The Conversation“Critically, the evidence shows it is not workers and employees who are benefiting most from the tax cuts. In fact, the tax cuts will exacerbate inequality with benefits flowing overwhelmingly to wealthier Americans via, for example, share buy-backs,” the institute’s executive director, Ben Oquist, wrote.

Michelle Grattan, Professorial Fellow, University of Canberra

This article was originally published on The Conversation. Read the original article.

Pensioners would retain cash refunds on franked dividends under Labor backdown


Michelle Grattan, University of Canberra

Labor has capitulated to pressure to exempt pensioners from its plan to end cash refunds for dividend imputation credits – a concession that would shave only A$700 million off its large projected savings over the forward estimates.

The “pensioner guarantee” would mean more than 300,000 full and part-pensioners, and people on government allowances, would be excluded, as would 13,000 self-managed superannuation funds with at least one pensioner or allowance recipient before Wednesday this week.

The decision follows a government scare campaign and some sharp public reaction through the media. Monday’s Newspoll found 50% were opposed when people were asked about Labor’s policy “to abolish franking credit cash refunds for retirees”. Only 33% were in favour. But Labor’s 53-47% two-party’s lead was not hit.

On figures costed by the Parliamentary Budget Office (PBO), the revised crackdown on cash refunds – currently paid when the person does not have taxable income against which to offset the dividend imputation – would save $10.7 billion over the forward estimates and $55.7 billion over a decade. This is $700 million less over the forward estimates than before the exemption, and $3.3 billion less over a decade.

Even with the revisions, the policy leaves Labor with a massive amount of money to offer income tax cuts and use for other purposes.

The opposition initially said it would not change its plan but would ensure pensioners were protected in other ways. It decided on the rework to deal with the reaction and when it became clear the exemption would be relatively cheap.

In a statement, Bill Shorten, Shadow Treasurer Chris Bowen and Shadow Social Services Minister Jenny Macklin said Labor knew pensioners were struggling with their cost of living. “That’s why Labor is making sure pensioners will still be able to access cash refunds from excess dividends imputation credits,” they said. “Labor has always protected pensioners – and we always will.”

If Labor wins the election the policy would start on July 1, 2019.

According to PBO forecasts, in 2019-20 there would then be 45,000 full pensioners with franked shares, 232,000 on part-pensions, 29,000 people on allowances with shares, and 13,000 relevant self-managed funds. These are higher numbers than Labor used initially, which were based on Australian Tax Office data for 2014-15.

Labor stressed that “the vast majority of working Australians do not receive cash refunds for excess imputation credits. Analysis from the PBO shows that 92% of taxpayers in Australia did not receive any cash refunds for excess imputation credits in their 2014-15 tax return.

“Recipients of cash refunds are typically wealthier retirees who aren’t paying income tax. These are people who typically own their own home and also have other tax-free superannuation assets, and don’t pay tax on their superannuation income,” the ALP statement said.

It said 80% of the present benefit accrued to the wealthiest 20% of retirees, and the top 1% of self-managed superannuation funds received an average cash refund of $83,000.

The ALP accused the government of running a “dishonest scare campaign … using ‘taxable income’ data to indicate that Labor’s policy was targeting people on very low incomes”. But a lot of income that retirees had was out of super funds and so tax-free – meaning some people had low taxable income but high disposable income.

Labor gave the example of a self-funded retiree couple with a $3.2 million super balance, a home, and $200,000 in Australian shares outside their superannuation. After receiving annually $130,000 in superannuation income, and $15,000 in dividends, they would have a taxable income of only $15,000 – but pay no income tax.

The ConversationTreasurer Scott Morrison told parliament that the opposition’s policy “announced just two weeks ago … has turned to custard in a matter of days”.

Michelle Grattan, Professorial Fellow, University of Canberra

This article was originally published on The Conversation. Read the original article.

Why China is a leader in intellectual property (and what the US has to do with it)


Alice de Jonge, Monash University

United States President Donald Trump is not the first to complain about intellectual property (IP) theft by Chinese companies but ironically it was US companies’ use of China’s resources that led to the development of its powerhouse of patents.

In the late 1980s and throughout the 1990s, western firms like Apple and Intel made large profits by investing in China to take advantage of the cheap labour, often at terrific human cost. As China’s economy grew, and the population became wealthier, western firms were then able to profit by selling their products back to the wealthier children of the same labour force which made them.

The Chinese government saw this happening, and wanted western firms benefiting from the Chinese market to give something back. It established a system of approving foreign investments on the condition the businesses involved agreed to partner with local firms and transfer knowledge and skills to the local Chinese market.




Read more:
Australia should steer clear of the sanction fight between the US and China


In December 2001 when China joined the WTO it entered into the Agreement on Trade-Related Intellectual Property Rights to bring its IP laws up to a minimum international level. At the same time, the government was keen to transition from being a manufacturing-based economy to an innovation-based economy. This large step forward (as opposed to great leap) would be fuelled by expanding China’s domestically owned intellectual property.

One of China’s more controversial growth tactics has been to focus on fostering IP innovation within China. For example, the government preferences procurement of high-technology products whose IP is owned or registered in China.

This has been called a strategic attempt to commercialise non-Chinese ideas in China, and as a trade barrier potentially contravening China’s WTO commitments, including those under the Trade-Related Intellectual Property Rights agreement.

In 2010 the Obama administration filed a complaint with the WTO over China’s use of its innovation policies in the wind power industry. There’s been other complaints lodged relating to Chinese IP laws, one notably in 2007 argued that China has failed to enforce IP law on pirated products, even when they had been identified by victims and/or the Chinese authorities.

Since the late 1990s, China has been steadily improving the quality of its IP protection and the standard of its IP law enforcement. Many of its preferential policies favouring Chinese IP development have been wound back so as not to discriminate against foreign IP; or at least not so obviously. Other amendments have strengthened IP protection and enforcement, as well as increasing penalties for IP infringements.

In March 2017, for example, the General Provisions of the Civil Law were amended to make clear that trade secrets can be protected under civil IP laws. Amendments to the 1993 Anti-Unfair Competition Law in early 2017 also improved protection for trade secrets.




Read more:
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China’s most recent, 13th five-year plan, approved by the National People’s Congress in early 2016, envisions China as a world leader in science, hi-tech and intelligent machines:

We will…expedite implementation of national science and technology programs… make breakthroughs in core technologies in fields including next generation information and communications, new energy, new materials, aeronautics, biomedicine and smart manufacturing…

Perhaps the best example of China’s goal of becoming a global leader in artificial intelligence (AI) is in the area of facial recognition technology. These systems, which automatically identify an individual from a database of digital images, are now a part of everyday life in China in areas such as public security, financial services, transport and retail services.

This technology is also just one aspect of a broader system being rolled out by the Chinese authorities. It aims to monitor and influence the whole of Chinese society (individuals and organisations) through social credit ratings.

The global facial recognition industry is forecast to be worth US$6.5 billion by 2021, and its continued growth in China is being spurred by innovative start-ups like Yitu Technology and DeepGlint.

China knows that an essential part of achieving its aim of “science and intelligent technology leadership” is putting in place high quality legal protection for intellectual property. However, as recent reports from the United States have found, there remain many deficiencies in China’s protection of trademarks, copyrights, and patents.

IP enforcement in the case of piracy and other breaches is often inadequate. Either there is no prosecution of breaches, no positive finding that a breach has occurred or the penalty applied is too light to have any deterrence value.

The ConversationHowever, for firms that do take the trouble to properly register their IP in China, protection does exist and enforcement is improving and will continue to improve.

Alice de Jonge, Senior Lecturer, International Law; Asian Business Law, Monash University

This article was originally published on The Conversation. Read the original article.

Australia should steer clear of the sanction fight between the US and China


Bruce Baer Arnold, University of Canberra

Even though Australia follows the United States in much of its policy, Australian exporters and consumers will be hoping we don’t get caught in the crossfire as the US and China impose sanctions on each other.

US President Donald Trump has the power to impose trade sanctions on China for its disregard of US intellectual property (IP) rights: patents, trademarks and copyright.

These sanctions could make Chinese exports more expensive or prevent access to the US market. China has already indicated it will play tit for tat, imposing its own sanctions.




Read more:
Trump’s $60 billion in China tariffs will create more problems than they solve


Trade disputes are often as much about rhetoric as about reality. China will remind the world that the US began as a pirate nation, harvesting European technological innovation and cultural production (such as work by Byron, Shelley, Dickens and Trollope) on the basis that it was a developing nation and because it could.

Away from the headlines China will likely take the US to the World Trade Organisation (WTO), a global mechanism for resolution of trade disputes. The US has announced it will take China to the WTO over patent violations.

The US will presumably ramp up claims with the WTO against other trading partners (such as India, Indonesia, Thailand and members of the European Union) that appear on its watch list for allegedly pirating US knowhow.

What this means for Australia

Academics such as Matthew Rimmer have astutely highlighted disadvantages for Australian consumers as citizens of an IP colony. This is where we import more than we export in content and pay a premium for work from overseas.

For example, we pay more than our US counterparts for software and hardware that most people take for granted. Our IP regime – in principle and practice – construes many violations of IP rights as piracy.

Our regime is aligned with that of the US. That reflects our traditional defence policy and the significance of US investment. What is good for US companies Microsoft, Pfizer and Disney is deemed to be good for Australia.

But joining in this cascade of retaliation will jeopardise economic growth, foster political unrest in developing economies and penalise consumers. The salient feature of economic growth over the past four decades has been globalisation – trade and investment across borders – rather that fundamental productivity gains through information technology.

Integration with the global economy (alongside the hollowing-out of local manufacturing and the TAFE system) mean that we cannot turn back the clock to the days of Alfred Deakin. Deakin’s grand compromise – the Australian Settlement – promised to protect small farmers, local manufacturers and workers behind walls that restricted migration and imports.

The headline-grabbling sanctions from Trump might also not necessarily be supported. Some business leaders recognise the importance of trade across the global economy and are perplexed by the current policy that seems to be driven by Trump’s late-night tweeting rather than anything coherent.

Where does that leave China?

China’s response has so far been cool. Moderation in the public arena highlights the idiosyncratic nature of Trump’s statements. It also reflects a deeper reality.

China wants to sell high-technology products to Australia, the US and other nations. One is example is 5G telecommunication networks from Huawei.

It wants the advantages that come from exploitation of the global IP regime, with its innovators and entrepreneurs building portfolios of patents and buying leading Western brands. It is likely to emulate what we saw with Japan: from “pirate” to IP citizen, complying with laws, within a few decades.




Read more:
Made in China: three ways Chinese business has evolved from imitation to innovation


Beijing is slowly strengthening the enforcement of IP rules in key regions such as China’s Pearl River Delta. In part that’s an effort to reduce the backlash in its export markets and it’s also a recognition that growth may be a matter of fostering innovation rather than copying or cheap labour.

The ConversationAustralia sources many manufactured items from China, with that production often dependent on US, Japanese and EU IP. Our own economy depends on exports of commodities; universities are dependent on overseas (particularly Chinese) students. So we don’t want to see an increase in international tensions and don’t want a slowing of the global economy because of a cascade of tit-for-tat sanctions.

Bruce Baer Arnold, Assistant Professor, School of Law, University of Canberra

This article was originally published on The Conversation. Read the original article.

New Zealand, US and UK outrank Australia in scores on budget transparency


Miranda Stewart, Crawford School of Public Policy, Australian National University and Teck Chi Wong, Australian National University

Australia ranks 12th in the Open Budget Index, and scores 74, much higher than the global average of 42 and the OECD average of 68. But Australia’s budget could still be more transparent if it included more on the budget’s impact on welfare and tax and by gender.

The Open Budget Index is published every two years and ranks countries using a transparency score, which is based on a survey for each country about publishing of budget documents, budget oversight and public participation.

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This year, there were 115 countries in the index and Australia was included for the first time. Australia ranks behind our neighbours New Zealand and also behind the United States, United Kingdom and France. The top three countries in the index are New Zealand (with a score of 89), South Africa (89) and Sweden (87).

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Each country’s survey for the index is prepared independently by an in-country civil society organisation or academic researcher. Applying standardised questions and based on evidence, researchers at the Tax and Transfer Policy Institute conducted the Australian survey. The assessments are also reviewed anonymously..




Read more:
The ‘citizen budgets’ of Africa make governments more transparent


How transparent is the Australian budget?

The survey assessed Australian federal budget process for the 2015-2016 year and the first half of the 2016-2017 year. Australia’s government performs well in publishing most budget documents at different points in the budget process.

The budget documents include: Budget Paper No. 1 (with a score of 87), the Mid-Year Economic and Fiscal Outlook (MYEFO) report (with a score 93) and the The Auditor-General annual report (81). The government reformed these documents in the 1990s with the introduction of the Charter of Budget Honesty.

Where the Australian budget falls down is in engaging the public in the budget process. The index evaluates public participation with 18 indicators. Australia’s weakest score is in budget participation (41 out of 100). This indicates limited opportunities for the public to engage in the budget process.

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For example the Australia government doesn’t publish a pre-budget statement and publishes less information in the budget that has been approved by the parliament and the government summary of the budget (a simpler and less technical version of the government’s budget proposal and other budget documents). Australia also lags behind New Zealand in transparency of most reports.

Yet, given participation opportunities are much scarcer in most other countries in the world, Australia is in fact one of the top performers on this measure. Almost all countries have only scant opportunities for public participation (score 40 and below), except New Zealand, the United Kingdom, Australia and the Philippines.

Where Australia scores really well is in its budget oversight by the Australian National Audit Office (a score of 100). But Australia presents a mixed picture on the checks and balances in overseeing the budget. The parliament provides adequate oversight at the executive and audit stage (that gets a score of 67); but limited oversight at the formulation and approval stage for the budget (with a score of 48). Overall, Australia gets a score of 70 out of 100, lagging considerably behind Norway (91) and Germany (89).

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The main barrier to improving this is the lack of pre-budget debate by the parliament. Budget Paper No. 1 is given to members of parliament less than two months before the start of the budget year, and in-year budget implementation is not examined by a parliamentary committee.

Room for improvement

It’s crucial that budget processes are fair, open, democratic and accountable. Australia performs well generally on budget transparency – as we should expect as citizens in a robust parliamentary democracy. But there is some room for improvement.




Read more:
With its 2017 budget the government is still discouraging women


For example, Australia’s budget contains much less information than in the past about distributional effects of budget policy on taxes and welfare. The government is no longer providing “cameo” tables, which show the projected impact in the real disposal incomes of different hypothetical families, as it did in the previous budgets prior to 2014-15.

The Australian budget also does not contain any analysis of the budget by gender. This is in contrast to the 1980s, during that time Australia was the pioneer in introducing gender budget analysis.

The ConversationThese gaps show us why it’s important for us to keep an eye on transparency. We should not be complacent. We need more public reporting, analysis and opportunities for public participation in the budget process.

Miranda Stewart, Professor and Director, Tax and Transfer Policy Institute, Crawford School of Public Policy, Australian National University and Teck Chi Wong, Research Assistant at the Tax and Transfer Policy Institute, Australian National University

This article was originally published on The Conversation. Read the original article.

Explainer: why Wesfarmers is ditching Coles



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Whoever buys Coles will have a huge store network.
Shutterstock

Gary Mortimer, Queensland University of Technology

Coles will soon be an independent company again, with more than 800 supermarkets, nearly 900 liquor stores, 700 service stations, and 88 hotels.

Spinning off Coles is a great example of how good Wesfarmers is at entering and exiting markets. Buying the ailing Coles in 2007 was a smart move.

But the supermarket sector has changed dramatically in the past decade in relation to intense competition, with the growth of discounters like Aldi and the emergence of price-conscious shoppers who simply shop across multiple brands of supermarket each week.

Customers have benefited from price deflation, but it is a different story for suppliers.

The nature of these relationships has regularly been criticised and investigated.

A new owner will bring these matters back to the forefront. Ultimately, private equity firms and global businesses only purchase companies and enter markets where considerable return on investments can be made.




Read more:
Why Australian supermarkets continue to look to the UK for leadership


Cash cows and dogs

Most first-year business students deal with these conundrums and often rely on simple models like the classic Boston Consulting Group’s Matrix.

Boston Consulting Group’s growth share matrix.
CC BY

Businesses move around in these quadrants, depending upon external, macro-level impacts. A stronger Kmart will push Target from a “Star” into the “Dog” category very quickly.

Wesfarmers has successfully moved Coles from “Dog” status 10 years ago to “Cash Cow”, but profits have slid in recent years.

Coles also accounts for a staggering 61% of the capital deployed in Wesfarmers’ entire portfolio (which includes other retail brands, industrial, mining and energy businesses), but contributes just 34% of earnings before interest and tax.

The supermarket sector has seen a huge increase in competition in recent years, with the growth of discounters like Aldi. There is also a possibility of more international competition from the German discounters Kaufland and Lidl.

This month, Fred Harrison, chief executive of Ritchies, Australia’s largest chain of independent supermarkets, called for an end to the “price wars”. Metcash, a wholesaler for independent supermarkets, recently delivered a loss in its food and grocery business.

Coles itself has signalled a move away from its strategy of slashing prices.




Read more:
Down, down but not different: Australia’s supermarkets in a race to the bottom


Other than putting cash back on Wesfarmers’ balance sheet, spinning off Coles creates two long-term revenue streams for Wesfarmers.

To begin with, Wesfarmers will aim to a hold 20% stake in Coles. So some profits will continue to flow back to Wesfarmers.

More importantly, Wesfarmers intends to retain “substantial” ownership in Flybuys, Coles’ loyalty program.

The value of loyalty programs is best highlighted by Woolworths’ purchase of Quantium in 2013 for almost A$20 million.

These programs hold a vast amount of data, giving Wesfarmers huge customer analytics capabilities with which to tailor promotions, product ranges and store layouts across all of its other retail businesses.

The new owners of Coles will also be eager to access this data.

Who will buy Coles?

While Wesfarmers will remain a minor shareholder, there will be plenty of interest in the majority share among private equity investors and international players (such as Walmart and Carrefour).

Walmart entered Canada through an acquisition, Mexico through a 50-50 joint venture with Cifra (Mexico’s largest retailer), and Brazil through a joint 60-40 (in favour of Walmart) with Lojas Americana.

Likewise, French retail giant Carrefour has adopted a range of approaches to international expansion, including joint ventures and acquisitions.




Read more:
Can Coles (Fly) buy shopper loyalty?


Ultimately, private equity investors and global businesses will only buy companies and enter markets where they can make a considerable return on investment.

Considering the declining margins in supermarkets, driven by low-cost operators like Aldi, it is likely that this will be done by squeezing suppliers.

On the other hand, a new Coles will no longer be constrained by Wesfarmers’ conglomerate ownership model. One of the challenges faced by large conglomerates is “strategic inertia”.

The ConversationA separate business will lead to faster innovation, greater investment and potentially another battle for market share between Australia’s two big supermarkets.

Gary Mortimer, Associate Professor in Marketing and International Business, Queensland University of Technology

This article was originally published on The Conversation. Read the original article.