Older people now less likely to fall into poverty



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The incidence of poverty among people over 65 is decreasing in part because of increased labour force participation.
Col Ford and Natasha de Vere/Flickr, CC BY-SA

Guyonne Kalb, University of Melbourne

The risk of people past retirement age falling into poverty is now decreasing. There has been a substantial improvement compared to 15 years ago, when the incidence of poverty among the elderly was 32.4%.

People past retirement age are much more at risk of poverty compared to people of other ages. In 2014, 23% of people over 65 were identified as experiencing poverty, while among the general population this was 10.1%.

If we look at poverty in older age using three alternative, well-established, definitions: the Henderson Poverty Line, the OECD 50% poverty line and the OECD 60% poverty line, they all lead to very similar conclusions.


Read more: How we could make the retirement system more sustainable


The OECD 50% poverty line is defined as 50% of median household equivalent disposable income. Equivalised household income allows for differences in household composition, like the number of adults and children who live in the household. It therefore makes income comparable between households of different sizes. Someone is counted as poor if their equivalised disposable household income falls below this poverty line.

Applying this to data from the Household, Income and Labour Dynamics Australia (HILDA) survey shows clear differences between ages. There’s a much larger incidence of poverty among people over 65, as well as a larger decrease in the poverty rate among those over 65.

Between 2000 and 2014, the prevalence of income poverty among older people declined by more than 9 percentage points, well above the decline of other age groups.

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There are a number of reasons for this decrease in the poverty rate. One is the increase in labour force participation from 6.9% to 12.5% for this older group, whereas for other age groups labour force participation has remained quite stable.

Another reason is the larger increase in pension rates (which is the typical social security payment for people over 65) compared to allowance rates (which is the typical social security payment for working-age people). From an already high base, the payment rates for the oldest age group clearly increased by the most.

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These two reasons combined account for over 75% of the decrease in poverty incidence. Increased private pensions account for a further large part of the decrease (nearly 41%), while changes in investment income would have increased the poverty rate.

Why pensions are so important

This shows just how important public and private pensions are for the standard of living of older people. Given that more and more people will be covered by superannuation, we expect that poverty rates will further decline in the future. However, maintaining the value of public pensions is equally important as a substantial proportion of people over 65 will remain dependent on these payments.


Read more: How can we prevent financial abuse of the elderly?


Those dependent on the age pension include people with a disability during their working life, and many women, as they remain the ones who are more frequently out of the labour force and working part time to raise children. As a result, these groups have less opportunity to build up sufficient superannuation. However, the age pension may perhaps be better targeted.

Although the largest increases in income support are for those classified as poor (with the largest average increase observed for those over 65), the non-poor population over 65 also receives a substantial increase in income support.

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The increase in payments for people who aren’t poor and over 65 is nearly as large as the increase for those classified as poor who are aged 15 to 64. Payments for working-age people have only been increased with inflation, while pensions increased at the same rate as average earnings which has generally been higher than inflation.

The ConversationTo better alleviate poverty for our whole population, government payments for working-age people need to keep up with average earnings like the pensions do. If the government is not prepared to direct more resources to income support payments, they need to treat different age groups more equally. This means better targeting payments among our older population and using any savings to increase payments for the working-age population at a similar rate as pensions.

Guyonne Kalb, Professorial Research Fellow and Director of the Labour Economics and Social Policy Program, University of Melbourne

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

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As costs mount, the government should abandon the Cashless Debit Card


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The Cashless Debit Card trial disproportionately targets Indigenous people, despite what the government says.
AAP/Richard Milnes

Elise Klein, University of Melbourne

A Senate inquiry has recommended that trials of the Cashless Debit Card be continued and expanded to new sites in other states next year. This is despite Labor and Greens senators providing separate dissenting reports that rejected the recommendation that legislation for the bill should pass.

The majority report’s proposal dramatically contrasts with most of the submissions accepted by the inquiry raising significant concerns and arguing against the trials. These submissions outline a variety of serious issues that have been largely overlooked.

What is the card?

The trials for the Cashless Debit Card began in early 2016 in Ceduna, South Australia, and the East Kimberley in Western Australia.

The card quarantines 80% of social security payments received by all working-age people (between the ages of 15 and 64) in the trial sites. It attempts to restrict cash and purchases of alcohol, illegal drugs and gambling products.

The card compulsorily includes people receiving disability, parenting, carers, unemployed and youth allowance payments. People on the aged pension, on a veteran’s payment or earning a wage are not compulsorily included in the trial, but can volunteer to take part.

The issues left unanswered

The trial disproportionately targets Indigenous people, despite the government claiming the card is for both Indigenous and non-Indigenous welfare recipients. This is disingenuous, given the card was first proposed as a key recommendation in mining magnate Andrew Forrest’s Review of Indigenous Training and Employment.

This recommendation followed various other forms of income management, including a program that was part of the Northern Territory Intervention in 2007.

The Intervention required the suspension of the Racial Discrimination Act to explicitly target all Indigenous people on welfare. Concerns about human rights breaches continue, and most were overlooked by the Human Rights Joint Committee’s commentary on the Cashless Debit Card bill.

The trial of the card has increased hardship in people’s lives. This is not only because of the experiment’s disorganised and ill-conceived implementation, but also due to the trial’s design.

People are being compulsory included because there is an assumption that they engage in problematic behaviours, such as the over-consumption of alcohol, gambling, or the use of illegal drugs. But this is not the reality for most people.

Being put on the card has made people’s lives harder because limiting cash restricts people’s ability to undertake day-to-day activities to help their family’s wellbeing. This includes getting second-hand goods, paying for transport, and buying gifts.

This hardship is reflected in the final evaluation of the trial, in which 32% said their lives were worse since being on the card (only 23% said their lives were better).

Further, 48% of participants reported that the card does not help them look after their children better. This is concerning, as recently completed research into income management programs indicates a correlation with negative impacts on children – including a reduction in birth weight and school attendance.

Getting the assumptions wrong has pushed already vulnerable people into even more vulnerable situations. Medical specialists have raised concerns with the card being used to treat addiction.

Both crime and domestic assaults increased under the card in the East Kimberley. Superintendent Adams of the Kimberley Police District told the Senate inquiry that in the 12 months to June 30, 2016, there were 319 domestic assaults in Kununurra, but in the 12 months to June 30, 2017 (and the time of the trial), this figure had increased to 508.

Flawed evidence

The government used both the interim and final evaluations as key evidence to justify extending the trials.

Both evaluations have been severely criticised as being methodologically and analytically flawed: from the way interviews were conducted, to having no baseline to test government claims of success, through to an over-emphasis on anecdotal improvements and discarding important issues such as the increase in crime and domestic violence.

The decision to implement the card was not a community decision that represents the regions’ diverse interests or population. And some have had more say than others.

For example, the Miriuwung Gajerrong Corporation noted that, although the:

… Department of Social Services states that the Cashless Debit Card program was co-designed with local leaders in Kununurra … in reality, only four local leaders were consulted in relation to the introduction of the [card] in Kununurra.

Consultations themselves have not been about co-design, but have been tokenistic to convince people to support the card.

In a perverse twist, the only way people can get themselves off the trial is to get a job. Yet in both Ceduna and the East Kimberley, the biggest cause of unemployment is the lack of formal, dignified and secure jobs. Linking to unemployment, some people included in the trial are also subjected to the punitive Community Development Program. This compounds poverty, as the program’s nature induces high breaching rates.

Even if a few support the card, many more have suffered material and emotional hardship. The community has been fractured through such heavy-handed intervention. And the A$25 million spent on it has demonstrated no credible evidence of sufficient benefit to justify an ongoing rollout.

That the card continues to be pursued by government exposes its dogged obsession with implementing neocolonial and punitive policy for some imagined political gain at the expense of vulnerable people.


The ConversationThe author would like to thank professor Jon Altman and Sarouche Razi for comments on earlier drafts.

Elise Klein, Lecturer in Development Studies, University of Melbourne

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

Instead of rebuilding stadiums, the NSW government should focus on local sport and events


Chris Gibson, University of Wollongong

The New South Wales government’s argument for spending A$2 billion rebuilding stadiums is that Sydney is losing flagship events to other state capitals, leading to fewer tourists and less media exposure. But large investments in transportation and venues are a significant drain on the public purse, often for economic returns that rarely break even.

Our research suggests that the NSW government should invest in smaller community events and sporting organisations that make use of existing facilities. We tracked 480 community events across Australia and found that they generated A$550 million in revenue.

These events also contribute more than A$10 billion a year to their local communities, support 100,000 jobs, and help build local business networks and skills.

Parkes Elvis Festival.
John Connell and Chris Gibson (2017) Outback Elvis: The story of a festival, its fans & a town called Parkes. Sydney: NewSouth Publishing

The benefits of grassroots events

In contrast to major, one-off events that require large infrastructure and marketing budgets, there are thousands of small community events across Australia every month. Each might only attract a few hundred people, but the revenue adds up.

Places that have consciously fostered grassroots community events, such as Ballarat and Hobart, enjoy healthy visitor numbers year-round, without overwhelming the local infrastructure.

Smaller community events make good use of existing facilities such as RSL clubs, showgrounds and parks. They tend to hire labour, PA systems, portaloos and catering from the local community, keeping dollars in circulation locally.

In contrast to mega-events that subcontract management to large firms, community events integrate more participation from their local communities. This not only improves local business networks, but also enhances local skills and leadership.

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The economics of large events doesn’t stack up

The evidence also overwhelmingly shows that public investment in major events isn’t worth it. Promised benefits are often exaggerated, and in the words of a recent review of the international research:

…any increased economic activity resulting from the event is routinely dwarfed by additional public budgetary commitments.


Read more: Suspended reality: the ins and outs of Rio’s Olympic bubble


Sydneysiders may have enjoyed the experience of hosting the 2000 Olympic Games, but increases in tourism and business investment failed to materialise. Rio de Janeiro is struggling with recession in the wake of its 2016 Summer Olympics. The money spent on the Olympics would probably have been better spent upgrading hospitals and other infrastructure.

This is partly why cities are backing away from hosting major sporting events. When the International Olympic Committee opened the bidding for the 2024 Summer Olympic Games, all but two cities – Paris and Los Angeles – withdrew their bids.

The fact that no other city was prepared to bid shows that the justifications for lucrative mega-events are wearing thin, both financially and politically.

Misleading numbers

The NSW government recently defended its plan to rebuild stadiums by arguing that the revenue generated by major sporting events will easily pay for itself within a few short years. Economists beg to differ.

Such estimates are typically based on conducting visitor surveys at events and asking punters to estimate their total spending. This is not good research methodology.

For one, people are consistently inaccurate at estimating their spending on the spot, only discovering the actual amount when they open their credit card statements.

It can also be hard for visitors to differentiate between money spent while at a specific event, and their spending elsewhere on their holiday.

Visitors complete surveys at the Daylesford ChillOut Festival.
Chris Gibson

We also need to subtract all of the money that would have been spent whether or not a major event takes place. This includes spending by people who live in the area, those who rescheduled travel plans to coincide with the event, and those who would have done some other activity (also known as “time-switching”) instead of going to the event.


Read more: Sydney’s stadiums debate shows sport might not be the political winner it once was


In other words, take all the Sydneysiders, casual visitors and time-switchers out of calculations of, say, weekly NRL game revenue at the Olympic or Sydney football stadia. The actual amount of “new” revenue for Sydney is much less impressive.

This is why a sober analysis of the true costs and benefits, and actual revenue numbers, are needed before governments rush to invest in major sports and event infrastructure.

The ConversationIf NSW truly wants to foster the events economy, the evidence suggests that money would be better spent on local community events and sporting organisations.

Chris Gibson, Director, UOW Global Challenges Program & Professor of Human Geography, University of Wollongong

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

Dastyari quits the Senate after pressure over his China links


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Sam Dastyari leaves parliament but insists he is a patriotic Australian.
AAP/Ben Rushton

Michelle Grattan, University of Canberra

Labor senator Sam Dastyari has succumbed to intense pressure to quit the Senate in the face of continued revelations that he had promoted Chinese interests.

Dastyari told a brief news conference, at which he took no questions, he had decided “the best service I can render to the federal parliamentary Labor Party is to not return to the Senate in 2018”.

He said his ongoing presence would detract from “the pursuit of Labor’s mission” and he wanted to spare the party “any further distraction”.

Earlier this week, it was revealed that in 2015 Dastyari tried to dissuade Labor’s then shadow foreign minister Tanya Plibersek from meeting a pro-democracy advocate during her trip to Hong Kong.

This followed an earlier revelation that Dastyari had tipped off his Chinese businessman benefactor, Huang Xiangmo – who is of interest to Australian security authorities – that his phone was likely tapped.

Opposition Leader Bill Shorten said that following their discussions, Dastyari had informed him he was resigning from the Senate. “I told him I thought this was the right decision.”

It is understood that Shorten had been in intensive talks with factional allies to resolve the Dastyari crisis. Labor had no power to force Dastyari out of parliament – and sources said he was reluctant to go.

In his statement, Dastyari strongly defended himself, saying he left parliament “knowing that I’ve always honoured my parliamentary oath”.

He said he had always acted with integrity “and I remain a loyal, patriotic Australian”.

Dastyari has been under sustained pressure to quit the Senate, with this week’s leak of his representations to Plibersek seen as part of the effort from within the ALP to get him out. On Monday two frontbenchers, Linda Burney and Catherine King, made it clear he should consider his position.

Sources said some people in Labor’s right had been concerned about the precedent set by Dastyari having to resign – given that he had not done anything illegal.

The government had maintained a constant attack on Shorten for not forcing Dastyari to leave, casting the issue as a test of Shorten’s leadership.

Dastyari’s resignation comes in the dying days of the Bennelong byelection, which a Newspoll in Tuesday’s Australian shows as being extremely close. The Newspoll has the Labor and Liberal parties on a 50-50 two-party-preferred vote, and each on a 39% primary vote.

The byelection follows the resignation of the Liberals’ John Alexander in the citizenship crisis; he is being challenged by former New South Wales premier Kristina Keneally.

Keneally’s name has recently been mentioned as a possible replacement senator for Dastyari if she failed in her bid to win Bennelong.

Bennelong has a significant Chinese community, and the row about Dastyari and also more generally the concern about foreign interference in Australian politics, could have some influence in the byelection, although how those factors will play out there is unclear.

Dastyari entered the Senate in 2013. A former secretary of the NSW Labor Party, he has been a significant figure and numbers man in the NSW right faction. In parliament, he has been active on issues of banking and misconduct in that industry.

He said he would continue to be an active grassroots member of the Labor Party.

Shorten said that Dastyari could be proud of what he had achieved as a senator. “He has sought justice for the victims of banking misconduct, exposed the tax minimisations processes of international giants, pushed for a better deal for younger Australians and promoted an inclusive multicultural nation.”

Joseph Cheng Yu-Shek, the pro-democracy activist that Dastyari unsuccessfully tried to persuade Plibersek not to meet, told the ABC that Chinese authorities “operated a very powerful, very resourceful machinery trying to influence the policies of various foreign countries”.

“This machinery tries to cultivate ties with influential politicians, tries to persuade them to be friends of China, and as friends of China, they should avoid meeting enemies of China,” he said.

The Conversation“If these situations become effective, the politicians concerned will be rewarded and then they will be pressured to do something even more compromising later,” he said.

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Michelle Grattan, Professorial Fellow, University of Canberra

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

How conservatives use identity politics to shut down debate


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One of the worst examples of identity politics came from Malcolm Turnbull on Monday’s Q&A program.
ABC News

Dennis Altman, La Trobe University

Conservatives are currently obsessed with identity politics.

Almost every issue of The Australian comes with a fusillade against the ways identity politics threaten civic discourse. And a Financial Review editorial in September warned:

… thoughts, expression and questioning are now more likely to be silenced in the excess of identity politics, where race, gender, sexuality and group-think declarations have replaced class as the key political dividers.

Yet one of the worst examples of identity politics came from Prime Minister Malcolm Turnbull in his Q&A appearance on December 11. In opposing the idea of an elected Indigenous Advisory Council, he claimed that politicians such as Ken Wyatt and Linda Burney represent Indigenous Australians. In fact, they represent the electors of Hasluck and Barton – few of whom are Indigenous.

It is great that there are Indigenous politicians in parliament (Turnbull somehow forgot the two Labor senators, Pat Dodson and Malarndirri McCarthy). But they are not there to “represent” Indigenous Australians any more than Mathias Cormann is there to represent Belgian-Australians.

Political party identities

The primary identity of politicians in our system is their political party. Sometimes other identities will seem more important, as in the case of the four openly gay Liberal MPs who pushed their party toward a free vote on marriage equality, or Michael Danby’s support for Israel – which goes far beyond the views of his party.

What these cases suggest is the complex and overlapping nature of identities, and the trap of defining anyone by only one identity. Nor does belonging to a particular group, whether through race, ethnicity or gender, mean one automatically speaks “for” that group. Margaret Thatcher or Bronwyn Bishop never sought to speak “for women”.

Identity politics, as we understand them, are often assumed to have emerged from the women’s, black and gay movements in the early 1970s. There is an earlier history, linked to the development of nationalist movements in 19th-century Europe, and the growth of anti-colonial movements across European empires.

Identity politics are born when people feel excluded because of something important to their sense of self – whether it be race, gender, sexuality or language. But they are also thrust upon people, as in the tragic case of those Jews who believed themselves to be 100% German until the Nazis came to power.

A sense of a shared history is crucial to empowering people who have been oppressed, and sometimes made invisible. When I was a schoolboy in Hobart we were taught that there were no Tasmanian Aborigines, who had effectively been wiped out by settlement. Today more than 4% of the state’s population identify as Indigenous.

Not necessarily born this way

Conservatives are particularly disturbed by the idea that gender identities might be fluid, which seemed their central concern in the marriage equality debate.

Ironically many of those who defend ideas of gender fluidity also believe their sexual identity is, in Lady Gaga’s words, “born this way”. In both cases the rhetoric ignores the evidence of both history and anthropology.

Identity politics are neither inherently left nor right. Some Marxists denounced the new social movements as threatening class unity, in terms rather like those who now see identity politics as fracturing a common polity.

One of the common criticisms of Hillary Clinton’s US presidential campaign was that she spoke too often to specific groups, rather than in the language of inclusion. This is an odd argument given Donald Trump’s blatant attacks on Hispanics and Muslims, which were clearly an appeal to white Americans who felt their identities were under threat.

Most critics of identity politics speak as if they were above identity, when in practice their identities are those of the dominant group. Pauline Hanson excludes Aborigines, Asians and Muslims from her view of Australian identity, cloaked in the language of patriotism.

Like Hanson, those who attack identity politics are often most zealous in defending their own versions of identity. Current proposed changes to citizenship requirements are supported by an emphasis on “Australian values”, as if these are both self-evident and distinguishable from more universal values of political and civil rights.

On the same Q0&A program Turnbull defined Australian values as based upon “multiculturalism”, which acknowledges that contemporary society is a mosaic of different and overlapping identities and communities. It is possible to argue that respect for cultural diversity is a national value, while ignoring the question whether Australian law treats all cultural values equally.

In practice, cultural diversity is clearly subordinate to a legal and political system heavily based on British precedents. A genuine multicultural identity might start by extending the term “ethnic” to include people of British ancestry, as much an “ethnicity” as any other.

Identity as a means of exclusion

Identity politics threaten democratic debate when they become a means of shutting down any comment that does not grow entirely out of experience.

Writers have been criticised for creating characters who do not share their author’s race or gender; speakers shunned for expressing views that are deemed “insensitive”.

Writer Germaine Greer may have views on transgender issues that should be opposed. But they should be met with rebuttal, not a refusal to listen. Critics of identity politics are right that zealousness in protecting identities can itself become repressive.

Identity politics become dangerous when they become an argument for exclusion.

The ConversationUnfortunately, the most dangerous examples of exclusion come from those who clam to speak for “the people”, a term which itself depends upon a certain version of identity. The populists who attack identity politics do so while creating their own, limited image of national identity.

Dennis Altman, Professorial Fellow in Human Security, La Trobe University

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

Politicians, stop pitching to the ‘average’ Australian; being middle class depends on where you live


Liz Allen, Australian National University

Politicians are fond of pitching to the “average Australian” but judging by the income of Australians, whether you are middle class depends on where you live. And where we live tells a rich story of who we are as a nation – socially, culturally and economically.

Income is at the heart of access to services and opportunities, which are differing and unequal based on where you live.


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Our ability to afford housing that meets our needs largely determines where we live. In turn, where we live influences access to other important features of our lives which shape lifelong and intergenerational opportunities. For example, student performance is associated with everything from where a student lives to their parent’s occupation.

Household incomes in capital cities are typically among the highest, with incomes declining the further you live from major cities. So it’s understandable why Australians living outside or on the fringes of cities might feel somewhat left behind.

The Australian Bureau of Statistics presents “average” income as a range based on where you live. This range is marked by a lower number (30% of incomes) at the beginning and the higher number (80% of incomes) at the top.

This “average” income varies substantially between different rural areas from A$78,548 – A$163,265 in Forrest (ACT) to A$10,507 – A$26,431 in Thamarrurr (NT). This is actually an equivalised household income which factors in the economic resources like the number of people and their characteristics, between households.


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The difference between the top and bottom of this range of “average” household income also shows greater inequality within areas.

Even within the greater Sydney metropolitan area, there’s significant differences in household income between areas. The average household equivalised income in Lavender Bay is around A$40,000 – A$95,000 higher than it is in Marayong.

The difference in income is marked, and there are other differences too. People in Marayong are on average younger than Lavender Bay. Family size is smaller in Lavender Bay. Over half of the Lavender Bay residents hold university degrees, compared to a more skill-based workforce in Marayong.

Why there is no one “average” Australian

Cities offer access to myriad employment options. Industries associated with relatively high incomes are typically concentrated in cities to take advantage of global connections.

Sydney, Melbourne and Canberra are notable standouts based on household income. So if you live close to these major cities you’d be getting the most opportunities in terms of employment and income, given the you’re the right candidate.

But not everyone wants to live in the centre of cities. Housing, lifestyle and neighbourhood preferences also play a role in where we live, but are still influenced by income and proximity to such things as employment and family and friends.

Also, infrastructure which supports social and economic wellbeing is essential in communities, regardless of where we live.

What politicians should be talking about instead

Improving the different and unequal access across areas requires better internet connectivity and advances in the way we work. Policies around housing and family-friendly workplaces go some way to supporting Australians in work.

Any measures to redress inequalities require understanding the needs and wants of communities. Proposed planning to reconfigure the greater city of Sydney around population and socioeconomic infrastructure offers an example of a data-driven approach to planning. Whether the proposed reconfiguration of Sydney leads to improvements or greater segmentation will be revealed in practice.

Politicians rarely reflect the characteristics of the people they represent, particularly when we consider the remuneration, entitlements and perks of political office. The longer politicians are in office, and somewhat removed from the people they represent, the further they potentially become from gauging their electorate.

Yet politicians profess to know what the average Australians they represent needs and wants. They apply this to a range of things from service delivery to representation on political matters. And this is within reason.

But without current experience we struggle to see things from perspectives other than our own. Take for example the way some have come to label themselves outsiders from the social and political elite to advance their credibility with average Australians.

The ConversationBringing politicians in touch with the diversity of needs and wants of Australians starts with a self-check and recognition of individual bias (conscious or unconscious). This is the first step toward really understanding and connecting with Australians – be it in the “average” or otherwise.

Liz Allen, Demographer, ANU Centre for Social Research and Methods, Australian National University

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

Charity regulators should not assume that donors always know best



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Whether charitable giving functions like a market is part of a broader and complex debate within the sector.
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Krystian Seibert, Swinburne University of Technology

Last week, the government appointed Gary Johns to head the Australian Charities and Not-for-profits Commission (ACNC), the independent national charities regulator.

In an opinion piece published in The Australian, Johns outlined some of his priorities in his new role. He wrote:

At its core, the [charities] sector is a market in charitable intentions.

Based on this, he said the ACNC should “assist donors to fulfil their charitable intentions”, by “helping the donor market drive the charity dollar to its most efficient and best uses” by providing information to donors they can use to judge the “state of the market”.

Johns’ approach seems to reflect a view that altruistic behaviour like charitable giving is based on similar motivations and drivers as economic decisions such as purchasing a good or service.

Consequently, if donors are given the useful and accessible information about charities, they will make decisions that reward charities that perform better than others. In theory, this will lead to a more “efficient” charities “market”.

Whether charitable giving functions like a market is part of a broader and complex debate within the sector. It includes discussion about the role of impact investing, and using business-based approaches to tackle social challenges. Some ideas and approaches show great promise; others seem to not quite fit.


Further reading: What is the impact of ‘impact investing’?


Many of the challenges charities seek to tackle arise due to market failure in the first place, or the uneven distribution of the benefits of markets working like they are supposed to. Therefore, to aspire to build the charities sector in the market’s image may be a flawed starting point. And in relation to market-based approaches to charitable giving, the US experience is very relevant.

Lessons from the US

In 2014, the Hewlett Foundation, a large US philanthropic organisation, decided to end its US$12 million Nonprofit Marketplace Initiative that started in 2006. Its ambitious goal was that, by 2015, 10% of individual donations in the US would be influenced by meaningful, high-quality information about charities’ performance.

As part of its strategy, it provided funding to “charity evaluators”, including Charity Navigator, GiveWell and Guidestar. They seek to assess charities’ financial and other information to give donors information they can use to guide their decisions.

The Hewlett Foundation’s own evaluation found that while the initiative succeeded at producing more information about charities, it did little to change donors’ decisions. Research undertaken in 2010, four years into the initiative, found that only 3% of individual donors compare information about relative performance when deciding which charity to support.

It also found that a majority of donors make giving decisions based on factors like loyalty, personal connections, and faith-based commitments.

Studies looking at the effectiveness of charity evaluators also back up these findings. They show just how problematic it is to expect donor behaviour to adhere to “market-based” frameworks.

A study that examined how donors respond to ratings of charities such as those provided by Charity Navigator found that, in general, they have a minor and often insignificant impact on donor behaviour. Another study found that changes in charity ratings tend not to affect donor support.

The Giving Australia 2016 report echoes these findings. It found that “making a difference, personal values and relationships motivate givers”. Charity performance was far down the list of motivations for giving.

What now for charities in Australia?

Charitable giving takes many forms and is driven by numerous and complex motivations – from reflexive and generous responses at one end of the spectrum to planned and structured giving in pursuit of specific objectives at the other. The latter approach is what we generally think of when referring to “philanthropy”.

One of philanthropy’s strengths is that it takes risks to help drive social progress. The outcomes of this risk-taking can often then be used to inform government policy.


Further reading: Twiggy Forrest donation: more philanthropy means more risk-taking – and that’s good


The Hewlett Foundation’s experience in this regard should provide a valuable insight into the extent to which market-based approaches should be applied to charitable giving in Australia.

It does not mean that we should disregard the value of providing information about charities to donors: quite the opposite. Financial and performance information is important for due diligence purposes regarding the operations of a charity. But we should not overstate the influence of such information on donor decision-making, nor assume that such information will necessarily drive improvements in charity “efficiency”.

There are two developments the ACNC could drive that would provide great benefit to the Australian charities sector:

  • Johns says he wants “to have the ACNC develop and apply a taxonomy of charitable causes to the ACNC”. It would certainly be worthwhile to adopt a consistent terminology for charitable causes in Australia. The global gold standard for this is the Foundation Center’s Philanthropy Classification System. CLASSIE is an Australian taxonomy that builds on the Foundation Center’s.

  • Although charities must submit reports to the ACNC consistent with the Australian accounting standards, there is great variation in how these standards are applied – for example, in relation to fundraising expenditure. This means meaningful comparisons of charities’ financial information is difficult. It would be beneficial to consider introducing charity-specific accounting standards in Australia, as the UK has done.

Whatever the next steps may be, the social challenges charities tackle are complex, and strategies to address them will take time to have an impact. Often conventional metrics of performance just don’t cut it when it comes to such long-term challenges.

And, in most cases, donors will have far less knowledge about social change than those working for the organisations they fund or the communities in which those organisations operate.

The ConversationDonors provide the funding that brings to life the expertise and experience of those who receive it for the public benefit. Donors play a critical role supporting Australian charities, but we should not attribute them with more knowledge than they actually have.

Krystian Seibert, Adjunct Industry Fellow, Centre for Social Impact, Swinburne University of Technology

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

Two Labor frontbenchers urge Sam Dastyari to consider his position



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Sam Dastyari is facing increased pressure to consider his position as a Labor senator.
AAP/Mick Tsikas

Michelle Grattan, University of Canberra

Labor senator Sam Dastyari is under renewed pressure to quit after allegations that he repeatedly pressed the ALP’s then foreign affairs spokeswoman Tanya Plibersek not to meet an advocate for Chinese democracy in 2015.

ALP frontbencher Linda Burney told Sky News early on Monday: “It is now up to Mr Dastyari to consider his position … Sam Dastyari I’m sure is thinking very deeply about his role within the party”.

Shortly after, another Labor frontbencher, Catherine King, also said: “Sam needs to reflect upon his position”.

The new allegation comes after earlier revelations about Dastyari tipping off a Chinese benefactor who was of interest to Australian security services that his phone was likely tapped.

The latest report in the Fairfax Media said that in January 2015, Plibersek went to Hong Kong. There, her meetings included one with Joseph Cheng Yu-shek, a prominent academic with Australian citizenship.

Dastyari “repeatedly attempted to warn Ms Plibersek that her meetings in Hong Kong would upset figures in the Chinese community in Australia”, the report said. He left messages on her phone and contacted her office multiple times, it said.

But he was unable to reach her directly, because she had left her mobile phone at home for security reasons – although his messages were passed on to her, according to the report.

A spokesman for Dastyari said the claims were “complete rubbish”.

The latest claims against Dastyari, which appear to have come from within Labor, are thought to be part of an effort to get him to resign from the Senate.

Dastyari’s links with China have become a severe embarrassment to Opposition Leader Bill Shorten. The government is relentlessly pursuing Shorten over them.

After it was revealed that Dastyari alerted Chinese businessman Huang Xiangmo about his phone being probably tapped, and audio emerged of Dastyari reflecting China’s line on the South China Sea, Shorten stripped him of his position as deputy opposition whip in the Senate.

Late last week, Shorten said Dastyari’s career was “going nowhere, fast”. Dastyari was doing no media on Monday morning, but his office said he wasn’t quitting.

Labor cannot force him to resign from the parliament – it could only throw him out of the party. But any move against him by Shorten is complicated by Dastyari being a leading member of the New South Wales right, whose support Shorten needs.

Plibersek’s office has consistently declined to be drawn about Dastyari’s representations. Rumours about these have been circulating in Canberra for some time.

A spokesman said Plibersek’s “itinerary in Hong Kong, including a meeting with a prominent pro-democracy activist, went ahead precisely as scheduled – I think that speaks for itself”.

The Fairfax story put forward “one suggested explanation” for the Dastyari representations – that he contacted her office following an inquiry from a Sydney Chinese-language media outlet, which was preparing a critical story on her meetings.

Immigration Minister Peter Dutton accused Dastyari of being “a double agent”, saying “he can’t be in the Australian Senate and it is important that Linda Burney has called for him to go and now Bill Shorten should do the same”.

The latest controversy around Dastyari comes days after Prime Minister Malcolm Turnbull introduced into parliament legislation to combat foreign interference in Australian politics. The government and the security agencies have become increasingly alarmed at the growing scale of this intervention.

The ConversationBut the new legislation, which includes a register for those lobbying for foreign governments and businesses, has sparked an angry backlash from China. It has also been criticised by former trade minister Andrew Robb, who now works for the Chinese company Landbridge Group.

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Michelle Grattan, Professorial Fellow, University of Canberra

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

It would cost you 20 cents more per T-shirt to pay an Indian worker a living wage



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A farmer harvests cotton in Maharashtra, India.
Shutterstock

Murray Ross Hall, The University of Queensland and Thomas Wiedmann, UNSW

If we really care about protecting the people who make the things we wear and use, we need to raise wages for workers in supply chains to above the poverty line. Our research shows that this only requires a 20 cent increase in the Australian retail price for a T-shirt made in India.

This small increase can lift wages by up to 225% in India, closing the living wage gap for the most vulnerable workers in the supply chain, such as cotton farmers. The living wage gap is the difference between a living wage and current wages.


Read more: Explainer: what exactly is a living wage?


The living wage is the income required for a decent standard of living for a worker and their family. It lifts the worker above the poverty line and is defined by the costs to meet basic needs such as food and shelter. It also limits the number of working hours per week required to meet these needs.

A living wage has long been advocated as a way to support vulnerable and exploited workers. About 42% of all workers globally are in insecure jobs and have no social protections, 29% remain in moderate to extreme poverty and about 25 million people are in slavery.

Many of the goods we now buy are part of global supply chains. Since the 1980s the production of labour-intensive products such as textiles and footwear has shifted to countries with low-cost labour.

Cost-cutting often impacts those with the weakest bargaining position, such as cotton farmers – cotton prices have been on a downward trend over the past decade. Without realising it, our demand for low prices can cause vulnerable workers in other countries to work for less than a living wage.


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Our research calculated the living wage gaps in India, broken down by region, gender, skill and type of employment. For instance, female workers on cotton farms in Gujarat earn 207% below the living wage. Casual female workers in Haryana have a living wage gap of about 34%.

It would take on average a 15 cent price increase on T-shirts in Australia to close the living wage gap for cotton workers in India. Adding another five cents would close the living wage gap for Indian textile workers, and also account for the increase in agent fees, which are a percentage of the production costs.

The living wage gap may be larger or smaller on particular farms or factories, but a 20 cent increase on average would be sufficient to lift all Indian workers in the garment supply chain out of poverty.


Read more: Why the fashion industry keeps failing to fix labour exploitation


The small cost to address poverty and climate change for producing a T-shirt in India. Murray Hall.

How we can raise the living wage

The cost to close the living wage gap in developing countries is small because wages for workers in these countries make up only a fraction of the retail price charged in countries like Australia.

Our work shows it costs about A$5.30 to produce a T-shirt in a country like India and ship it to Australia. The remaining costs embedded in a A$25 T-shirt come from warehousing, distribution and retail costs within Australia itself.

As a result, a 20 cent increase represents a less than 1% increase in the Australian retail price. It would cost only another 40 cents to cover the cost of greenhouse gas abatement. This means an ethically made T-shirt would only cost 2.5% more than current prices.


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A roadblock to implementing living wages is simply knowing the source of materials. Only about 7% of fashion companies in Australia know where all of their cotton comes from. Unless an Australian retailer specifies the source of cotton, the decision is made by the overseas textile contractor, often based on price.

Another challenge is that we need an accepted method for calculating and auditing the payment of living wages in the supply chain. The retailer needs to know how much the cotton farmer should be paid and have a system to check it has been done.

Over the past four years consumer pressure has pushed fashion companies to understand their supply chains and to consider paying living wages, but there is still a long way to go.


Read more: What businesses can do to stamp out slavery in their supply chains


In 2012 a group of the world’s largest ethical trade organisations formed the Global Living Wage Coalition.

This organisation has developed a manual for measuring the living wage and requiring? living wages to be paid to their producers. The producers are audited along the supply chain and in return can advertise their compliance with ethical standards. Shoppers will soon be able to look for a label – similar to the Fairtrade symbol – to know that living wages have been paid throughout the supply chain.

The ConversationThe famous economist John Maynard Keynes argued that consumers are not entitled to a discount at the expense of the basic needs of workers. In fact, we only need to pay a small amount more to provide a living wage and make a big difference to the world’s poorest workers.

Murray Ross Hall, PhD Candidate, School of Earth and Environmental Science, The University of Queensland and Thomas Wiedmann, Associate Professor, UNSW

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