Partial exclusion for Lee Rhiannon after marathon special Greens meeting


File 20170628 19372 1dhvj9b
The federal parliamentary Greens are taking on the power of the party’s hard left NSW branch.
Mick Tsikas/AAP

Michelle Grattan, University of Canberra

The Greens have imposed a partial exclusion from their partyroom on radical New South Wales senator Lee Rhiannon, after her behaviour over the schools legislation.

Her colleagues were angry that she authorised a leaflet urging people to lobby senators to vote against the bill, on which the Greens were negotiating with the government. The nine other Green MPs wrote to the party’s national council about her conduct.

While the letter cited the leaflet, the concern about Rhiannon went further. Party sources said they had not been informed that she had been bound by the party’s NSW branch to oppose the legislation. Eventually all Green senators voted against the bill, after the government did a deal with ten other crossbenchers.

The issues with Rhiannon involved trust in her and the ability of the hardline NSW branch to bind MPs – a power it is accorded under the party’s federal constitution.

At a marathon meeting of more than four hours in Melbourne on Wednesday, it was decided that the structural problem needed to be resolved.

The partyroom asked the national council to work with Greens NSW “to end the practice of NSW MPs being bound to vote against the decision of the Australian Greens partyroom”.

This was supported by all MPs except Rhiannon.

The partyroom also passed a motion “that NSW senators be excluded from partyroom discussions and decisions on contentious government legislation, including within their portfolio responsibilities, until these issues are resolved”. At present Rhiannon is the only NSW senator.

Rhiannon and Adam Bandt, the Greens’ only lower house member, voted against the motion.

In a statement after the meeting, acting whip Nick McKim said: “To function as a national partyroom, and to be a genuine alternative to politics as usual, we need to have faith and trust in our processes.”

The ConversationThere is some uncertainty about how a battle with the NSW branch – controlled by the “watermelon” faction, a description reflecting its hard left position – will play out. Some in the party fear the situation could be inflamed, while others will welcome the branch being finally taken on.

Michelle Grattan, Professorial Fellow, University of Canberra

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

Why retirement village contracts need to be regulated like insurance


Timothy Kyng, Macquarie University

While you may think signing a retirement village contract is similar to buying a house or apartment, it isn’t. Retirement village contracts resemble insurance contracts more than purchase agreements, only they aren’t regulated like insurance products.

The lack of regulation increases the risk for retirees. They face considerable delays in receiving their payments when they leave, costs due to the delay, and the potential loss of all payment from companies that don’t need to meet the financial standards of an insurance company.

Most retirement village contracts provide the consumer with a combination of the right to reside in the retirement village (until death, incapacity for independent living, or voluntarily relocation) and an “exit payment” upon leaving. As both the amount and timing of this payment depends on the resident’s death or ill health, the payment is a de facto insurance payout.

This makes the retirement village contract a combination of the right to reside and a de facto insurance policy. But the insurance policy comes from companies that wouldn’t normally be allowed to sell insurance.

Retirement villages are mostly small private companies or not-for-profit organisations. This means they aren’t required to publish their annual financial statements, hold reserves, or have reinsurance arrangements like an insurance company. The consumer can’t be confident that the retirement village is financially healthy and able to pay out the exit fee, due to the absence of information about their accounts and financial condition.

Fees and more fees

There is a great variation in the structure of the fees that retirement villages charge – entry fees, ongoing fees and a so-called “deferred management fee”, which is an amount taken out of the money refunded to departing residents.

These fees can be substantial – the entry fee alone is often comparable with the cost of buying an apartment. Although the amount varies by location, one operator told a Victorian parliamentary inquiry the entry fee was equivalent to 80% of the cost of a house nearby.

A retirement village contract might have an entry fee of A$1 million, a deferred management fee of 6% of the entry fee per year of residence, and a maintenance fee of A$500 per month.

For a contract with a A$1 million entry fee, after five or more years of residence, the deferred management fee is A$300,000, so the exit payment is A$700,000. But the deferred management fee can vary greatly. It may be 10% per year for three years, or 3% for 10 years etc.

The exit payment can also include some share of the resale value of the apartment. But the retirement village needs to be able to pay out this exit payment.

The need for proper regulation

The assets held by retirement villages are almost all invested in real estate. This is risky, as they aren’t diversified and their assets can’t be easily turned into cash.

When a retirement village has to pay a departing resident their exit payment it may take a long time to sell their apartment, which could involve a loss on resale. This can also lead to delays in receiving exit payments.

After signing their retirement village contract, residents are also in a weaker bargaining position than a traditional tenant in a normal pay-as-you-go rental arrangement. This is because residents have already paid their rent in advance for the rest of their life, and it usually costs a lot of money to get out of these contracts.

In some retirement village contracts the resident may be forced to spend a lot of money on renovations – such as for a new bathroom and kitchen – so that the apartment can be sold and they can get the exit payment.

This issue is compounded by the complexity of the contracts, which can be hard for both consumers and financial advisers to understand.

This creates substantial risk for consumers, and the lack of a requirement to publish financial statements and related information makes it very difficult to assess the financial soundness of a retirement village operator.

If retirement village contracts are in fact insurance agreements, then they should be regulated differently – by the Australian Prudential Regulatory Authority and not by state governments, as is now the case.

The ConversationIf retirement villages were properly regulated then consumers would be better protected from failure of operators and better protected from delays and capital losses when they get their exit payment.

Timothy Kyng, Senior Lecturer, Department of Applied Finance and Actuarial Studies, Macquarie University

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

Pyne’s self-indulgence damages Turnbull because it reinforces what Liberal right-wing malcontents believe



File 20170626 12696 pb80b0
A leaked recording of Christopher Pyne boasting of the success of the Liberal moderates threatens to further divide the party.
Mick Tsikas/AAP

Michelle Grattan, University of Canberra

Sometimes it’s hard to believe Christopher Pyne is actually a politician, let alone a cabinet minister. Often he seems a Peter Pan figure who treats federal politics like it was a university campus.

To anybody who knows him, it’s unsurprising that at the moderates’ “Black Hand” knees-up during the Liberal party federal council he boasted that the faction was “in the winner’s circle”.

“Two years ago … Malcolm Turnbull was the communications minister and now he’s the prime minister,” he said. “Our fortunes are pretty good at the moment”, with moderates holding very senior ministerial positions in a Turnbull government.

“Now there was a time when people said it wouldn’t happen, but George [Brandis] and I kept the faith. We voted for Malcolm Turnbull in every ballot he’s ever been in.”

There was more. “We have to deliver a couple of things and one of those we’ve got to deliver before too long is marriage equality … we’re going to get it. I think it might even be sooner than everyone thinks. And your friends in Canberra are working on that outcome.”

Pyne, among factional mates and buoyant, forgot the basic lesson of contemporary politics: assume everything will get out. Especially if you say it to hundreds of people late at night in a bar.

Particularly unfortunate for Pyne, his comments not only leaked, but in the form of a tape, not conducive to even implausible deniability.

Pyne’s hubris has created trouble for Malcolm Turnbull at two levels. First there is the same-sex marriage issue itself, which is highly emotive within the Liberal Party. Turnbull immediately declared “our policy [for a plebiscite] is clear, we have no plans to change it full stop”; Pyne tweeted likewise. The conservatives won’t believe them.

Recently there were suggestions that Liberals wanting a parliamentary vote this term would likely raise the matter in the spring session, although there have been fears about the political implications. Talk about a postal vote, which would be absurd, floats around. Many in the party worry about what policy can be taken to the election, believing it can’t be just another plebiscite promise.

Any move to switch policy on this issue has the capacity to blow up Turnbull’s leadership.

More broadly, Pyne’s self-indulgence is damaging to Turnbull because it reinforces everything the party’s malcontents on the right believe.

The right sees Turnbull taking not merely centrist, but leftist, positions on a range of issues. The most recent is schools funding; now he is considering what the right strongly opposes – a clean energy target. And here’s Pyne fuelling its arguments by celebrating the power of moderate members of cabinet.

All of this is somewhat ironic. A little while ago, the prevailing criticism of Turnbull was that he’d capitulated to the conservatives.

The fact is that Turnbull tacked toward the right to get the party leadership – and to consolidate it, now he’s tacking in the other direction to try to revive his diminished electoral fortunes.

Predictably, the Pyne action produced a reaction from Tony Abbott, who (conveniently) had his spot on 2GB with Ray Hadley on Monday. Abbott warned against dumping the plebiscite policy, and took from Pyne’s comments that he had been disloyal while he was a member of Abbott’s cabinet.

When Hadley accused Pyne of failing to have the courage, after the leak, to come out and say he believed there should be a parliamentary vote on same-sex marriage, Abbott put the boot in: “This is one of the reasons why the public turn off politicians – because we don’t tell them what we think. And it looks like one of our number has been caught out. You’ve got to be fair dinkum with the Australian people and it looks like that’s not been true of Christopher.”

Once again, the Liberal divisions are on display and amplified.

The danger for Turnbull is that every discontent bleeds into the right’s wider criticism of him.

Take the Catholic backlash against the just-passed schools package. This might be manageable if it was just a lobby – albeit a very powerful one – outside parliament. But the Catholics’ complaints are being taken up by conservative Liberals and columnists, adding to other gripes against Turnbull.

What Turnbull has done on schools is seen by them as further evidence that he is betraying the party’s principles – that he’s not a true Liberal.

The dots of the various grievances against Turnbull become joined, and that increases the difficulty he will have in landing future policy.

Dissatisfaction with his schools policy and now suspicion that he or his allies might try to pull a swifty on same-sex marriage will make the right even harder to handle on energy policy, which is the next big challenge the government faces. The Finkel report’s clean energy target faced an uphill battle in the partyroom from the start; the forces aligned against it are getting stronger.

It might seem an extremely long bow to see any connection between issues as diverse as same-sex marriage, Gonski, and Finkel. But if a significant section of a party lacks goodwill toward the leader, and has little respect for his authority, and its views are amplified by strong voices in the commentariat, normal political hurdles can become near insurmountable.

The ConversationYet if in a few months he was forced to capitulate in the battle to get a credible energy policy, that would be a disaster for Turnbull and his government.

https://www.podbean.com/media/player/kmkbw-6c3c94?from=site&skin=1&share=1&fonts=Helvetica&auto=0&download=0

Michelle Grattan, Professorial Fellow, University of Canberra

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

Rumours of the death of multinational tax avoidance are greatly exaggerated


Michael West, University of Sydney

The Australian government took out newspaper ads earlier this month boasting of unequivocal victory in the fight against multinational tax avoidance.

It is no small irony that taxpayers have forked out for this bald-faced lie. “Multinational corporations earning Australian dollars now pay their fair share of Australian tax,” decreed the ad.

The Australian government advertisement falls a long way short of telling the whole truth about multinationals’ tax.
Commonwealth of Australia

Hardly. While it is true that the Australian Tax Office (ATO) and the federal government have reaped more income tax from multinationals this year than they had earlier anticipated, this is a fight that has only just begun.

Were it not for increasing community awareness of multinational tax avoidance – the world’s biggest rort – and rising concern over tax fairness, things would be worse. So the positive perspective is that, yes, inroads are being made via the diverted profits tax, the ATO’s tax avoidance task force and the multinational anti-avoidance law, which was enacted late in 2015.

Tax Office people privately confide, too, that another A$2 billion may drop this year. That’s A$2 billion on top of earlier expectations – A$1 billion from tightened enforcement and another A$1 billion from “behavioural” factors: better behaviour by some multinationals, in other words.

As the swathe of December year reports have flowed through this month and last, it is evident that some companies such as Google and Facebook have been paying more tax, albeit slightly more and still well short of reasonable amounts.

Same old tricks

Others, such as oil giants Exxon, Shell and Chevron, digital players Booking.com, Airbnb, Expedia and eBay, and assorted others such as American Express are up to their same old tricks. We are presently analysing Big Pharma, a sector that is swimming in taxpayer subsidies thanks to the Pharmaceutical Benefits Scheme (PBS) and then has another bite of the cherry via transfer-pricing shenanigans as well.

To a couple of serial offenders, Goldman Sachs and News Corporation. The 2016 financial statements for “Goldies”, as the Giant Vampire Squid is affectionately known in financial markets, are utterly inadequate.

For a start, they are not even consolidated, so don’t provide a true picture of the profitability of Wall Street’s famous, or infamous as many would put it, investment bank. Its head entity in Australia, Goldman Sachs Holdings ANZ Pty Ltd, discloses revenues of just US$24 million, the same as the prior year and well shy of the US$45 million booked in finance costs. Then the profit and loss statement shows an income tax “benefit”, yes benefit, of US$2.4 million, compared with last year’s benefit of US$18.5 million. There was a bottom-line loss in both years.

On this, it would appear that Goldman has paid zero tax in the past three years in Australia. Travelling along to the cash-flow statement, though, they disclose US$286 million was paid in tax last year (down from tax received of US$8.5 million). But when you get to the notes to the accounts it shows an income-tax benefit of US$2.4 million.

All of this is meaningless, of course. As the accounts are not consolidated, they don’t disclose what has been going on in the whole group. Further, tax may have been paid in Hong Kong, the domicile of the immediate parent, or elsewhere.

The usual feature of high finance charges and large related party loans are there, not to mention “service fee expenses” with related parties. Merchant banks such as Goldman Sachs, being banks, get away with a lot on the tax front.

Our very own Macquarie Bank had a keen reputation for tax structuring until it got pinged by authorities three years ago. In 2008, it even recorded a tax rate of 1.7% after a jumbo “tax arb” transaction, a currency swap so successful that it delivered a profit of A$850 million in Asia and a matching loss in Australia.

So a billion-dollar profit bore almost no tax.

At least Macquarie pays homage to financial accounting standards and doesn’t file a pitiable and arguably non-compliant set of accounts like Goldman. ASIC could issue an edict tomorrow, if it had the courage and a burst of energy, decreeing that any multinational company operating in Australia had to file proper “General Purpose” accounts.

Feeling the heat

This brings us to the entity formerly identified as the nation’s number one “tax risk”, Rupert Murdoch’s News Corporation. That mantle has probably gone to Chevron now. After being rapped over the knuckles by the Senate Inquiry into Corporate Tax Avoidance two years ago, News has begun to pay more tax: A$110 million last year.

https://datawrapper.dwcdn.net/kFdQN/2/

The main ruse was to create A$7 billion in “goodwill” in 2004 via a string of related party transactions and then to rip out A$4.5 billion in profits to the US.

News is still deploying this “repatriation of capital” subterfuge to this day. This practice may be legal but it is unethical. The creation of “internally generated goodwill” could be described as suspect in the least. A “magic pudding” was the way former University of NSW accounting academic Jeffrey Knapp labelled it.

Over the ten years to 2015, Rupert Murdoch’s companies paid income tax equivalent to a rate of 4.8% on A$6.8 billion in operating cash flows, or just 10% of operating profits.

The basic numbers for the past two years are: A$110.5 million tax on revenues of A$3.1 billion and profit of A$156 million. In
2015, it was A$109 million tax paid on revenues of A$2.95 billion and profit of A$287 million.

They are still aggressively debt loading, however, or giving themselves loans from overseas so they can rip out interest before paying tax. The critical numbers are A$2.6 billion in related party borrowings on which they paid A$130 million to themselves in related party interest charges offshore. Overall, debt jumped from A$2.4 billion to $4.3 billion.

A A$411 million loan to Foxtel, which News owns with Telstra, remains. The interest rate on this loan is 10.5%, more than double what the average wage earner pays on a mortgage. This is another ruse to avoid tax.

All in all, it’s a better effort from News, but the evidence on multinational tax avoiders is in. There is improvement, but still a very long way to go.


The ConversationThis column, co-published by The Conversation with michaelwest.com.au, is part of the Democracy Futures series, a joint global initiative between The Conversation and the Sydney Democracy Network. The project aims to stimulate fresh thinking about the many challenges facing democracies in the 21st century.

Michael West, Adjunct Associate Professor, School of Social and Political Sciences, University of Sydney

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

Get headaches? Here’s five things to eat or avoid



File 20170626 4492 mqyzj3
Drinking more water can help with headaches.
from http://www.shutterstock.com.au

Clare Collins, University of Newcastle

Last week I had a headache. Two hours in a traffic jam, hot day, no water, plans thrown into chaos. That day I was one of the five million Australians affected by headache or migraine. Over a year one person in two will experience a headache.

Mine was a “tension-type” headache, the most common category. Migraines are less common but about one person in eight will experience one in any given year.

Headaches are really common, so here are five things the research evidence indicates are worth trying to help manage or avoid them.

1. Water

A study was conducted in people who got at least two moderately intense or more than five mild headaches a month. The participants received a stress management and sleep quality intervention with or without increasing their water intake by an extra 1.5 litres a day.

The water intervention group got a significant improvement in migraine-specific quality of life scores over the three months, with 47% reporting their headaches were much improved, compared to 25% of the control group.

However, it did not reduce the number or duration of headaches. Drinking more water is worth a try. Take a water bottle everywhere you go and refill it regularly to remind you to drink more water.

2. Caffeine

Caffeine can have opposing effects. It can help relieve some headaches due to analgesic effects but also contribute to them, due to caffeine withdrawal. A review of caffeine withdrawal studies confirmed that getting a headache was the number one symptom of withdrawal, followed by fatigue, reduced energy and alertness, drowsiness, depressed mood, difficulty concentrating, fuzzy head and others.

When people were experimentally put though controlled caffeine withdrawal, 50% got a headache, with withdrawal symptoms occurring within 12-24 hours, peaking between 20-51 hours and lasting from two to nine days. Caffeine withdrawal can happen from a usual daily dose as low as 100 mg/day. One cup of brewed coffee contains 100-150mg caffeine, instant coffee has 50-100 mg depending on how strong you make it and a cup of tea can vary from 10-90mg. It appears that maintaining usual caffeine consumption may subconsciously relate to avoidance of withdrawal symptoms.

Caffeine can lessen or worsen headaches.
Jonathan Thursfiled/Flickr, CC BY

Caffeine can dampen down pain. in a systematic review that included five headache studies with 1,503 participants with migraine or tension-type headache, 33% of participants achieved pain relief of at least 50% of the maximum possible after receiving 100 mg or more caffeine plus analgesic pain medication (ibuprofen or paracetamol) compared to 25% for the analgesic group alone.

A study in over 50,000 Norwegians, who have high caffeine intakes (more than 400 milligrams a day), examined the relationship with headaches. Those with the highest caffeine intakes (more than 540mg/day) were 10% more likely to get headaches, including migraine.

But when headache frequency was examined, high caffeine consumers were more likely to experience non-migraine headaches infrequently (less than seven per month) compared to those considered low caffeine consumers (less than 240mg a day). This was attributed to potential “reverse causation” where high caffeine consumers use caffeine to damp down headache pain. They found those with the lowest caffeine intakes (125mg a day) were more likely to report more than 14 headaches per month, which may have been due to greater sensitivity and avoidance of caffeine.

Hypnic headaches are a rare type that occurs in association with sleep. They typically last 15-180 minutes and are more common in the elderly. Hypnic headaches are treated by giving caffeine in roughly the amount found in a cup of strong coffee.

3. Fasting

Some people get a headache after fasting for about 16 hours, which equates to not eating between 6pm and 10am the next day. A study in Denmark found one person in 25 has been affected by a fasting headache. These headaches are most likely to occur when fasting for a blood test or medical procedure or if you are following a “fasting” weight loss diet or a very low energy meal replacement diet.

Fasting headaches are likely to be confounded by caffeine withdrawal. Check the test procedure instructions to see what fluids, such as tea, coffee and water are allowed and drink within those recommendations.

In a study 34 people with new-onset migraine who kept a headache diary for about a month, those who ate a night-time snack were 40% less likely to experience a headache compared to those who didn’t snack. For susceptible individuals this may prevent fasting headaches. Try a slice or wholegrain toast with a topping like cheese and tomato or avocado and tuna, with a cuppa.

4. Alcohol

Headache is the classic feature of alcohol induced hangovers. The amount of alcohol needed to trigger a hangover varies widely between individuals, from one drink to many. A number of factors mash up to produce a throbbing post alcohol headache. Increased urination and vomiting both increase risk of dehydration which leads to changes in blood and oxygen flowing to the brain.

Congeners, a group of chemicals produced in small amounts during fermentation, give alcoholic drinks their taste, smell and colour. Metabolites of alcohol breakdown in the liver can cross the blood-brain barrier contributing to hangover.

Alcohol can trigger tension-type headaches, cluster headaches and migraine. People with migraines have been shown to have lower alcohol intakes compared to others.
The wise advice is to drink responsibly, boost your water intake and don’t drink on an empty stomach. If you are sensitive to alcohol, avoidance is your best option.

5. Boost your intake of folate-rich foods

More folate in your diet helps migraines.
ahmadpi/flickr, CC BY

Some migraineurs are diet-sensitive. Triggers include cheese, chocolate, alcohol or other specific foods. A recent study found women with low dietary folate intakes had more frequent migraines. However a daily folic acid (1mg) supplement made no difference.

The ConversationBoost your intake of foods rich in folate such as green leafy vegetables, legumes, seeds, chicken, eggs and citrus fruits. Use our Healthy Eating Quiz to check your nutrition, diet quality and variety. Keep a headache diary to identify triggers and then discuss it with your GP.

Clare Collins, Professor in Nutrition and Dietetics, University of Newcastle

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

Australians want insurance against the burden of old age



File 20170622 3042 eqzgn0
Aged care costs are rising.
Shutterstock

Susan Thorp, University of Sydney

With the cost of caring for the elderly increasing, and the population ageing, Australia needs new sources of funding for aged care. In many parts of the world some of the cost is borne by private insurance, and new research shows there is demand for this in Australia as well.

There are several models of insurance to help fund aged care. One model is similar to what is found in the United States, where a customer pays an insurance premium each year and the insurance provider then covers (at least part) of the actual cost of getting professional care. But this restricts the customer to getting formal professional care if they become disabled or incapacitated.

Another model, somewhat similar to the system in France, has customers paying a premium each year and then receiving cash payments if they require aged care. Under this arrangement the insurer pays an agreed amount of money each year if the customer is disabled or incapacitated. There is no restriction on how that money might be used. This model is more flexible, and allows the customer choice over who provides care (it might be a family member) and where they reside.

Aged care is costly and growing

People now aged 65 have close to a three in five chance of needing some type of formal care over the remainder of their lives and around a two in five chance of spending at least some time in residential care.

The cost for this care can run from around A$1,000 each year for basic home support, to around A$65,000 each year for residential aged care. The cost is typically shared between the care receiver and the federal government.

Home care supports people to live independently in their own home. This can range from help with housework or managing medicine, to nursing services and palliative care. Residential care is for people who depend on ongoing nursing and includes accommodation in an aged care institution.

People on the full Age Pension pay 17.5% of their pension as a basic fee for in-home care, or 85% of their pension for residential care. Better-off pensioners also pay an additional fee that rises with their income up to certain limits.

But despite the cost sharing, the federal government’s share is high and rising. Federal government expenditure on aged care is now around 1% of GDP and is expected to rise to around 1.8% by 2050.

Around 80% of people who receive some aged care also get informal help, often from family or friends. While this care is unpaid and hard to value, it is likely to be worth around 4% of GDP and can lead to a loss of earnings and emotional strain for the care giver.

There is demand for insurance

Insurance could be a solution to the scale, scope and cost of aged care. But in Australia, there is little on offer. Our research shows that a majority of middle aged Australians would purchase aged care insurance in the form of an income stream that pays extra if they suffer ill health.

We asked people to choose between several options for funding their aged care. A life annuity (a regular, life-long income of around A$25,000 p.a. including the Age Pension), aged care insurance (paying about A$26,000 in ill health or disability), and an account-based pension (such as superannuation).

Men chose to use 25% of their retirement savings of A$175,000 on the life annuity, about 15% on aged care insurance and placed the remainder in the account based pension. Women made similar allocations. Overall, people chose insurance payments that were similar to the actual costs of aged care.

Insurance that provides an income rather than reimbursements suits people who prefer informal, in-home care. This is most likely to be women who think they need high level, informal care. Men who thought they would need informal care did not choose the insurance.

Women’s willingness to fund informal care with income could be related to an anticipation that they will outlive their partners, a desire not to “be a burden” to their family, an intention to make gifts to children who care for them, or a wish for flexibility and control.

The ConversationLarge scale, long term aged care expenses are a relatively recent problem – the outcome of population ageing and rising health costs. Our study shows that many people want help to manage these risks. However the current design and marketing of aged care insurance products present an array of difficult financial and communication problems for the financial services sector.

Susan Thorp, Professor of Finance, University of Sydney

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

Bust the regional city myths and look beyond the ‘big 5’ for a $378b return



File 20170623 27880 7ozx6i
Geelong’s relatively high creative industries score, coupled with a robust rate of business entries, provides a solid foundation for steady growth.
paulrommer from www.shutterstock.com

Leonie Pearson, University of Canberra

Investing in regional cities’ economic performance makes good sense. Contrary to popular opinion, new research out today shows regional cities generate national economic growth and jobs at the same rate as big metropolitan cities. They are worthy of economic investment in their own right – not just on social and equity grounds.

However, for regional cities to capture their potential A$378 billion output to 2031, immediate action is needed. Success will see regional cities in 2031 produce twice as much as all the new economy industries produce in today’s metropolitan cities.

Drawing on lessons from the UK, the collaborative work by the Regional Australia Institute and the UK Centre for Cities spotlights criteria and data all Australian cities can use to help get themselves investment-ready.

Build on individual strengths

The Regional Australia Institute’s latest work confirms that city population size does not determine economic performance. There is no significant statistical difference between the economic performance of Australia’s big five metro cities (Sydney, Melbourne, Brisbane, Perth and Adelaide) and its 31 regional cities in historical output, productivity and participation rates.

https://datawrapper.dwcdn.net/LSkSm/1/

So, regional cities are as well positioned to create investment returns as their big five metro cousins. The same rules apply – investment that builds on existing city strengths and capabilities will produce returns.

No two cities have the same strengths and capabilities. However, regional cities do fall into four economic performance groups – gaining, expanding, slipping, and slow and steady. This helps define the investment focus they might require.

For example, the report finds Fraser Coast (Hervey Bay), Sunshine Coast-Noosa and Gold Coast are gaining cities. Their progress is fuelled by high population growth rates (around 2.7% annually from 2001 to 2013). But stimulating local businesses will deliver big job growth opportunities.

Rapid population growth is driving the Gold Coast economy, making it a ‘gaining’ city.
Pawel Papis from www.shutterstock.com

Similarly, the expanding cities of Cairns, Central Coast and Toowoomba are forecast to have annual output growth of 3.2% to 3.9% until 2031, building on strong foundations of business entries. But they need to create more high-income jobs.

Geelong and Ballarat have low annual population growth rates of around 1.2% to 1.5%. They are classified as slow and steady cities. But their relatively high creative industries scores, coupled with robust rates of business entries, means they have great foundations for growth. They need to stimulate local businesses to deliver city growth.

Get ready to deal

Regional cities remain great places to live. They often score more highly than larger cities on measures of wellbeing and social connection.

But if there’s no shared vision, or local leaders can’t get along well enough to back a shared set of priorities, or debate is dominated by opinion in spite of evidence, local politics may win the day. Negotiations to secure substantial city investment will then likely fail.

The federal government’s Smart Cities Plan has identified City Deals as the vehicle for investment in regional cities.

This collaborative, cross-portfolio, cross-jurisdictional investment mechanism needs all players working together (federal, state and local government), along with community, university and private sector partners. This leaves no place for dominant single interests at the table.

Clearly, the most organised regional cities ready to deal are those capable of getting collaborative regional leadership and strategic planning.

For example, the G21 region in Victoria (including Greater Geelong, Queenscliffe, Surf Coast, Colac Otway and Golden Plains) has well-established credentials in this area. This has enabled the region to move quickly on City Deal negotiations.

Moving past talk to be investment-ready

There’s $378 billion on the table, but Australia’s capacity to harness it will depend on achieving two key goals.

  • First, shifting the entrenched view that the smart money invests only in our big metro cities. This is wrong. Regional cities are just as well positioned to create investment returns as the big five metro centres.

  • Second, regions need to get “investment-ready” for success. This means they need to be able to collaborate well enough to develop an informed set of shared priorities for investment, supported by evidence and linked to a clear growth strategy that builds on existing economic strengths and capabilities. They need to demonstrate their capacity to deliver.

While there has been much conjecture on the relevance and appropriateness of City Deals in Australia, it is mainly focused on big cities. But both big and small cities drive our national growth.


The ConversationYou can explore the data and compare the 31 regional cities using the RAI’s interactive data visualisation tool.

Leonie Pearson, Adjunct Associate, University of Canberra

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

Australians are increasingly non-partisan: Morrison



File 20170625 13435 110ebhx
Scott Morrison talked about the challenges of a nation indifferent to the business of politics.
Dan Himbrechts/AAP

Michelle Grattan, University of Canberra

Treasurer Scott Morrison has highlighted the difficulty of reaching today’s public, declaring Australians have “turned down the volume on Canberra’s noise”, ignoring both politicians and the media.

“After ten years of political brawling, Australians are fed up with the ‘politics-as-usual’ approach,” he said.

“This means that outside the bubble of Canberra, it is increasingly not about the conflict of partisanship. These are old political fights and battle lines that hold little if no interest to everyday Australians.

“Australians are increasingly non-partisan. They have their own tribes, which usually have nothing to do with politics. And their views do not always fit neatly into our partisan boxes, and nor do they care,” Morrison told the Liberal Party federal council at the weekend.

His comments reflect the concern in the government at the difficulty it is finding in cutting through to the electorate, and its deepening fear that voters have stopped listening, which is working against its attempt to sell messages including from the recent budget. If the electorate has already tuned out, the Coalition’s task of trying to turn around the negative polls become even harder.

Despite his point about people being fed up with partisanship, Morrison launched an attack on Bill Shorten, saying under him Labor represented “the same old self-interested politics – vested interests, special deals, protecting the big unions and their big deals that work against workers, machine politics, Shanghai Sam, John Setka and the CFMEU”.

Morrison said politics around the world had been “turned on its head. In election after election we have seen conventional politics and conventional politicians left standing at the polls.”

“Entrenched cynicism. Widespread disconnection. Broad-based economic frustration. Feelings of disempowerment. Distrust of mainstream institutions and conventional approaches, and not just by governments and oppositions. Media, banks, big business, utilities companies, just to name a few, are also in the firing line.”

He said the government and the Liberal Party must “face and embrace” the new reality. “It means we must be careful not to slavishly follow past political orthodoxies, simply because they worked before. The political and economic times have changed.”

The fall in earnings after the global financial crisis had made people feel more vulnerable, and also more acutely aware of essential services including Medicare, the pharmaceutical benefits scheme, schools funding and income support.

“For many Australians, the lack of progress in their own personal economic situation has led people to conclude that our economic system is not longer working for them. In frustration, many are turning away from fundamental economic policies as they search for alternatives to ‘business as usual’.” This had led some to turn to protectionism, he said.

“It is our job to give these Australians hope. To assure them that they have not been forgotten”, just as Robert Menzies had done 75 years ago when he spoke of the “forgotten people”.

“The twist for today’s forgotten people, though, is that they have chosen to forget us, the political class, making them much harder to reach,” Morrison said.

“Australians have collectively reached for the remote and turned down the volume on Canberra’s noise, which includes more than just politicians. The media are similarly ignored.

“They are giving up on politics holding any value for them because in their eyes, too often it is simply not relevant for them.”

Morrison said people were demanding to be better heard, better understood; they wanted politicians to focus on what mattered to them and deliver results.

“The challenge for us as Liberals is to come to terms with the fact that it is no longer about convincing Australians to be on our side, but to convince them that we are on theirs.

“To crack through this thick ice, we must communicate candidly and with authenticity,” he said.

“The challenge for us is not to differentiate ourselves from Labor, but to differentiate ourselves from being the party of ‘politics as usual’, which Labor represents.

The Conversation“We need to show how we are pragmatically acting to change government, turn over the tables, reset the rules. We need to demonstrate how we are breaking the mould and siding with Australians on the issues that are seen to be working against them,” he said.

https://www.podbean.com/media/player/kmkbw-6c3c94?from=site&skin=1&share=1&fonts=Helvetica&auto=0&download=0

Michelle Grattan, Professorial Fellow, University of Canberra

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

Former leader Bob Brown attacks Greens senator Rhiannon’s behaviour on schools



File 20170625 13446 cwhtat
All nine of Lee Rhiannon’s federal colleagues co-signed a letter of complaint that was sent to the Greens’ national council.
Mick Tsikas/AAP

Michelle Grattan, University of Canberra

Former Greens leader Bob Brown accused Lee Rhiannon of “perfidious behaviour”, as the defiant Greens senator fought back against united condemnation from her parliamentary colleagues.

The other nine parliamentary Greens, including eight senators and lower house member Adam Bandt, have written to the party’s national council complaining about Rhiannon who, when the Greens were negotiating with the government on the schools bill, authorised a leaflet urging people to lobby senators to block the legislation.

Brown, a long-time critic of Rhiannon, repeated his previous description of her as “the Greens’ version of Tony Abbott”, and his call for the NSW Greens to replace her at the election with someone more popular and constructive.

He said that while he did not disagree with the Greens ultimately voting against the legislation – because Education Minister Simon Birmingham had done a special deal with the Catholics – the Greens in their negotiations had obtained $A5 billion in extra money.

Education was not Rhiannon’s portfolio – and for her to advocate against the Greens leader Richard Di Natale and its education spokesperson, Sarah Hanson-Young, was “untenable”, Brown said.

The Greens letter said: “We were astounded that senator Rhiannon was engaged with [the leaflet] production and distribution without informing party room at a time when we were under enormous pressure from all sides as we considered our position on the bill”.

It said the leaflet had the potential to damage the negotiations that Di Natale and Hanson-Young were having with the government about billions in extra funding for underfunded public schools.

The Greens’ parliamentary partyroom will consider Rhiannon’s action.

Despite prolonged negotiations with the Greens, the government finally concluded a deal with ten of the other crossbench senators to pass the bill. But the Greens had done much of the heavy lifting to obtain a series of amendments. This included the additional money, which takes the planned total extra federal government spending on Australian schools to $23.5 billion over a decade.

In a statement on Sunday Rhiannon said she rejected allegations she had derailed negotiations and breached “faith of the party and partyroom”.

“I am proud the Greens partyroom decided to vote against the Turnbull government’s school funding legislation. It’s clear that public schools would have been better off under the existing Commonweath-state agreements than they will be under the Turnbull package.”

She said that at all times her actions on education had been faithful to the party’s policy and process, and her work had not impacted on the negotiations.

She defended the leaflets she authorised, saying they were “a good initiative of Greens local groups.

“They highlighted the negative impact the Turnbull funding plan would have on their local public schools.

“Producing such materials are a regular feature of Greens campaigns. These leaflets urged people to lobby all senators to oppose the bill.

The Conversation“I was proud to stand with branches of the Australian Education Union, particularly as the Turnbull school funding plan favoured private schools,” she said.

https://www.podbean.com/media/player/ivb89-6c3c98?from=site&skin=1&share=1&fonts=Helvetica&auto=0&download=0

Michelle Grattan, Professorial Fellow, University of Canberra

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