Broad mandate for financial services royal commission takes the heat off banks


Kevin Davis, Australian Centre for Financial Studies

It does seem anomalous that the major banks have now become supporters of the royal commission into financial services, given they have been the principal targets. But the alternatives are probably less palatable, particularly if the banks think that all past major issues of misconduct and immoral behaviour have already been brought to light. And the broadening of the terms of reference beyond banking may dilute the focus on the banks themselves.

The banks argue that ongoing speculation and uncertainty are creating unnecessary costs and distractions for them, and that is most likely the case. Even if the major banks were to spend A$100 million in dealing with the royal commission that is less than 0.3% of the annual profits of the majors – so it has little impact on shareholder returns.

And with annual interest expenses in the order of A$65 billion, a cost of A$100 million or so could be quickly offset by improvements in bank borrowing costs from resolution of uncertainty. Whether the government spending a similar sum of taxpayer money on a royal commission is worthwhile is another matter.

Terms of reference too broad

The draft terms of reference of the royal commission ask it to focus primarily on three issues involving financial service entities. One is the essentially legal issue of identifying past cases of misconduct in violation of regulations and laws, as well as what might be termed “misbehaviour” (legal but immoral or unethical or unfair activities).

One apparent omission in the draft terms of reference relates to credit – and lending has been a major problem area in the past. While bank lending is covered, the definition of financial services entities to be considered does not appear to include those (such as mortgage brokers and some lenders) who only require an Australian Credit Licence and not an Australian Financial Services Licence (AFSL). Likewise, some financial services entities are exempt from the AFSL requirement and that may prove problematic if the draft terms of reference are not amended.

The boards and senior management of the banks (and other entities) no doubt hope there are no hidden skeletons in the closets which may be uncovered to shock them, and that revisiting the known past problems will be a case of yesterday’s news.

Although the term “misbehaviour” strays into grey areas of defining consistency with “community standards and expectations”, identifying past misconduct is a task suitable for a royal commission. But it shouldn’t be needed. ASIC and other regulators have adequate powers (if not adequate resources) to identify and prosecute misconduct. The adequacy of those powers is also a topic for the commission.

The second major task of the royal commission is to identify whether misconduct and misbehaviour can be attributed to poor culture and governance practices. This is particularly problematic.

What evidence is to be used to show, beyond reasonable doubt, that there is a causal relationship from the amorphous, non-quantifiable, concepts of culture and governance to specific instances of, or general proclivity towards, misconduct? There’s also undoubtedly many positive behaviours and outcomes occurring within these institutions they could point to, which may imply that, on balance, the arrangements are not bad.

So, the third question the commission then faces, is what changes might be made to reduce these problems. Here, the danger is that it involves a step into the unknown – what would be the likely outcomes under any proposed changes.

In its task of making recommendations, the commission faces a number of other difficulties. There is a raft of regulatory changes in progress following on from the 2014 Financial Services Inquiry and other government policy initiatives.

Also relevant is the financial technology or “fintech” revolution creating new business models, products and services, and methods of customer interaction with financial services entities. These create potential for new types of misconduct and misbehaviour. How relevant lessons the royal commission draws from history will be for this new world is unclear.

The ConversationThe banks will no doubt be pleased that the scope of the royal commission encompasses most of the financial services sector rather than focusing primarily upon them. In particular, the reference to superannuation fund trustees and use of member funds would seem to bring the controversial issue of fund governance right to the fore and will partly distract attention from the banks.

Kevin Davis, Research Director of Australian Centre for FInancial Studies and Professor of Finance at Melbourne and Monash Universities, Australian Centre for Financial Studies

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

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Just one small step for Australia’s space industry when a giant leap is needed


Andrew Dempster, UNSW

An expert review of the Australian space industry’s capabilities to participate in a global market was announced last week by the Minister for Industry, Innovation and Science, Arthur Sinodinos. He said the aim is to “develop a long-term plan to grow this important and exciting sector” and report in March 2018.

Interestingly, the words “space agency” do not appear in the announcement, but this was addressed later when the minister spoke to the media.

The space community had been expecting an announcement of this sort for some time. Many expected one to be made for maximum impact at or near the International Astronautical Congress (IAC) to be held in Adelaide in September, when Australia’s space community will be on show to the world.

Another failure to launch

Many also expected that the announcement would be of the establishment of an agency, rather than yet another committee and review of the industry. There seems to be at least one of these every year, with the past year alone seeing the Space Activities Act review, the Space Industry Association of Australia (SIAA) white paper and the annual State of Space report.

That frustration was voiced by the Shadow Minister for Innovation, Industry, Science and Research, Labor Senator Kim Carr, when he said Australia “desperately” needed to move towards having its own space agency.

This is a little rich, as Labor had the opportunity to go to the last election with a comprehensive space policy that included an agency, but failed to do so (like every major party). The 2016 NSW Labor Party Conference event asking if Australia should have a space program (at which I presented) did not lead to substantive action.

In commissioning a review that will not report until next March, the federal government has effectively ensured that there will be no Australian space policy of any merit to discuss at September’s IAC conference.

Australia will not have a space agency, or even a plan for one, when the eyes of the space world are on us. When all that international attention has disappeared next year, the idea could be shelved yet again.

That all sounds rather negative, and may imply an expectation that nothing substantial will happen as a result of this new review.

I have been in the space sector in some capacity since the 1980s and, despite there being many strong reasons (at least 10) to support an agency, I’ve seen this type of thing happen over and over again without result.

Reasons to act now

But this time around there are real grounds to expect that things should be different. So what are they?

First, there is what you might call the “Rocket Lab” effect. When a company started preparing to launch rockets from New Zealand, the logical reaction from the government there was to create an agency, effectively trying to build an industry around this project. In other words, the innovators forced a response from government.

Arguably, this effect is stronger in Australia. Several startup companies are effectively putting the same type of pressure on the Australian government. Two that recently achieved early funding are Fleet in South Australia (doing the “internet of things” from space) and Gilmour Space Technologies in Queensland (launching small satellites). There are at least a dozen others.

Second, an Australian space agency makes more sense now than ever before, with the emergence of what has been called “Space 2.0”. The old paradigm of big, expensive satellites and big, clunky agencies has been disrupted by easier access to space and the increasingly commercial use of space. Australia can leapfrog the old way of doing things, because most local start-ups are working on Space 2.0 applications.

The small satellite market causing this disruption is growing at more than 20% per year and will be worth about US$7 billion by 2020. Nanosatellites or “cubesats” are fundamental to this growth.

Recently, three cubesats deployed from the International Space Station were the first Australian-built satellites in 15 years. The story of my team establishing contact with two of them after they were initially silent was a great feat of engineering.

So Australia is already participating in Space 2.0 – we have active nano-satellites launched and innovative companies funded.

Third, the committee appointed by Sinodinos has a healthy number of members not aligned with traditional agency thinking. These include David Williams from CSIRO. He set up the UK agency, which is a good model for Australia to follow given it is focused on industry growth.

Also on the committee are local entrepreneurs Jason Held (Saber Astronautics) and Flavia Tata Nardini (Fleet), who run small companies with new approaches to space.

The absence of large multinationals has been lamented by some commentators, but not by me. The Communications Alliance is a voice for Australian’s communications industry, including those involved in the satellite industry, and its chief executive John Stanton was quoted in a Communications Day newsletter saying the review was “remarkably light on industry participants”.

In any case, large companies are represented by Michael Davis of the Space Industry Association of Australia (SIAA), which lists almost 400 Australian organisations as members.

Fourth, most of the case for an agency has already been made by the SIAA in its recent white paper. This does much of the new review committee’s work for it, and allows it to use the time between now and March to try to define the role and structure that any agency will take.

Fifth, the current government has already shown a willingness to facilitate growth in the sector by reforming the Space Activities Act. Although the Act is primarily regulatory, and its reform is an exercise in removal of red tape, the move will genuinely make it easier to run space businesses in Australia.

Finally, this industry attracts innovators like almost no other – Elon Musk’s efforts to get to Mars are only one high-profile example.

There is a groundswell of activity right here, right now, with a critical mass of brilliant young minds developing a 21st-century space industry, but needing supportive infrastructure to make it happen.

In other words, the environment and timing are right for the establishment of an Australian space agency. This review is just one small step towards that goal. At least it’s in the right direction, but is it necessary at all?

The ConversationWith Labor’s only complaint being that an agency is not being launched soon enough, bipartisanship on the issue seems assured. So why not take the giant leap?

Andrew Dempster, Director, Australian Centre for Space Engineering Research; Professor, School of Electrical Engineering and Telecommunications, UNSW

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

Australian Politics: 11 February 2014 – No More Car Industry


Australian Politics: 18 December 2013 – Unemployment is Liberating


Article: Music – Do We Buy It Any More?


I don’t often buy music any more. On the odd occasion I may, if I believe the price is reasonable, grab a CD or these days something of the iTunes site. Generally though I stopped buy music a long time ago. Why? Well, in my opinion it was far too overpriced. A CD with just 8 songs on it or perhaps even less than 8, for the price they were charging – no way!

Now I have a subscription to Spotify and I can stream (and save playlists to my lap top) music for a very reasonable price. Not everything is on Spotify, but I will still buy something from iTunes should I wish to – such as a couple of The Voice Australia songs.

For me, buying music or not buying music was never about could I get a pirated version. I stopped buying music because it was too costly to do so. I think the music industry got too greedy.

I think a similar thing with books. Traditional printed books cost too much to buy generally speaking and besides that I’m now a digital geek so ebooks are my thing.

For more on the music debate visit:
http://www.neatorama.com/2012/06/20/the-eternal-debate-of-nobody-buys-music-anymore/

IRAQ: GUNMEN KILL CHRISTIANS IN KIRKUK


Clergy believe attacks were religiously motivated.

ISTANBUL, April 28 (Compass Direct News) – Gunmen in Iraq shot five Chaldean Catholic Christians in their Kirkuk homes on Sunday (April 26) in two separate attacks, killing three and injuring two.

Cousins Suzan Latif David and Muna Banna David were killed at 10 p.m. in a suburb of the northern Iraqi city. Within a few minutes, Yousif Shaba and his sons Thamir and Basil were also shot in the same area, leaving the 17-year-old Basil dead. Yousif Shaba and Thamir were in critical condition.

Police have not stated if the two attacks were related, but they confirmed the arrest of nine men linked with the assault, a source told Compass. One of them is from the former insurgent stronghold of Ramadi and has suspected links to Al Qaeda.

Chaldean Catholic Archbishop of Kirkuk Louis Sako said the attacks aimed to split the community. Yesterday he presided over the murder victims’ funeral, which the city police chief and provincial governor also attended.

“The main object of these crimes is to create chaos and promote strife and division among the people of Kirkuk,” Sako said, according to Reuters. “I call on Christians not to be jarred by these crimes and stay in Kirkuk. We are sons of this city.”

Kirkuk Province Gov. Abdul Rahman Mustafa echoed the archbishop’s comments, calling on Kirkuk’s citizens to stand united against the terrorists.

Violence has struck the nation’s Christian community particularly hard since the Iraq war began in 2003. Left mostly defenseless in sectarian violence, Christians have been targeted for kidnapping under the assumption that they can garner a large ransom.

Chaldean Christians have been hardest hit in the northern city of Mosul, where thousands of families have fled since an uptick in violence started last October. Some locals believe Kurdish groups are trying to intimidate them into leaving so they can incorporate the city into the semi-autonomous Kurdish region.

But Kirkuk has largely avoided the sectarian bloodshed of the region. For this reason clergy believe the five Christians were targeted purely for their religion.

“They were peaceful Christian families, not involved in any political affiliation or such activities,” said Father Emanuel Youkhana of Christian Aid Program Nohadra Iraq, a local humanitarian organization. “What were they involved in that they be targeted in such a brutal way?

He added that most locals believe the two attacks were coordinated in order to terrorize Christians, as they occurred only a few minutes apart from each other.

“It was not just an accident that the two attacks happened in the same city on the same day at the same time,” he said.

The oil-rich city of Kirkuk has been caught in a tug-of-war between its Arab and Kurdish residents. Arabs were resettled there during Saddam Hussein’s regime, and Kurds have been moving back to reclaim the homes from which they were forcibly expelled.

But other groups have criticized Kurds for their massive immigration, charging that it is a means to annex the city – and its oil wealth – into the Kurdish region. Kirkuk has a small population of native Christians, with many moving here in recent decades to work in the oil industry. The Christian population is approximately 7,000.

Local police and officials have blamed Al Qaeda for the murders. Fr. Youkhana said there has been no evidence of Al Qaeda involvement, but that “for sure” it was a fundamentalist Islamic terrorist attack. He said security forces are often quick to blame foreign-based Al Qaeda rather than call attention to a violent, homegrown organization.

An Eastern rite denomination in communion with Rome, the Chaldean Catholic Church is Iraq’s largest Christian community.  

Report from Compass Direct News

RISING TIDE PROTEST IN NEWCASTLE: COAL INDUSTRY THE TARGET


Climate change activists under the ‘Rising Tide’ banner conducted what was called on the day the ‘People’s Protest’ in Newcastle yesterday. The protest was an attempt to shut down the Port of Newcastle in Australia, which is the largest exporter of coal in the world.

Despite the protesters claim that they had successfully blockaded the harbour, the authorities had previously arranged for there to be no shipping movements on the day in the interests of safety. The protesters used kayaks and various home-made ‘boats’ to form the blockade near Horseshoe Beach. About 500 people took part in the protest.

A police presence was very active during the protest to ensure safety and to prevent any form of crime.

Rising Tide is preaching a message of anti-coal and pro-renewable energy for our future.

NSW Greens MP Lee Rhiannon took part in the protest.

The protesters block the harbour entrance

The protesters block the harbour entrance

 

The police maintained an active presence

The police maintained an active presence

The police maintained an active presence

The police maintained an active presence

AUSTRALIA: THE NORTH MARINE REGION


Peter Garrett, Australia’s Minister for the Environment, Heritage and the Arts, today released a report on the biodiversity, ecosystems and social and economic uses of the oceans of northern Australia. The report entitled ‘The North Marine Bioregional Profile,’ brings together and explores the available knowledge of the Arafura and eastern Timor Seas, from the Northern Territory/Western Australia border to Torres Strait, including the Gulf of Carpentaria.

The report is expected to assist the government to better understand and protect our marine environment, conserve biodiversity and determine the priorities in our marine conservation efforts. It will also assist industry to better plan and manage their activities in the region.

A Marine Bioregional Plan for the region covered in the report is expected to be handed down in 2010. In total there will be five plans covering Australia’s marine regions.

View The North Marine Bioregional Profile at:
http://www.environment.gov.au/coasts/mbp/north/index.html

ECONOMIC RECOVERY AROUND THE CORNER


Given the state of the world’s financial situation at the moment you would probably think that there was little hope of a turnaround anytime soon – yet I’m prepared to go out on a limb and say that an economic recovery for Australia is just around the corner.

I’m no economist and I don’t pretend to know a great deal about financial matters on a global scale, yet I do believe that a turnaround is coming reasonably quickly for Australia. I really see no reason for that not happening soon. Sure, things still look pretty grim around the world, but things here really aren’t as bad as elsewhere and the panic in Australia is somewhat ill-founded I believe.

Perhaps a good tip at the moment would be to invest in real estate and the like at the moment – rather than in shares and banks. Banks rip you off anyway! I just won a dispute with a bank over fees and charges after threatening to go to the industry ombudsman (or whoever it might be).

Just some amateur thoughts perhaps …

Global Warming


I couldn’t believe what I was hearing on the news the other day – there was a member of the Australian government all but saying that there really isn’t an issue with global warming. Is he for real? We had our hottest day ever here a week or so ago, probably because of global warming and he still can’t see what is happening.

Surely it is time to now start doing something to try and repair the damage we have done to the environment! Sure, it may take some time to reverse – but if we don’t start now the problem is only going to get worse and eventually we will have no choice but to try and do something. I say now before things get much worse!

The industrial nations like Australia should be leading the way – after all we did cause the problem!

What do we do – we refuse to assist those low lying nations in the Pacific who are in danger from rising sea levels. Pathetic really! We should definitely be helping these people before they loose their countries to global warming.