A ‘tickle-my-tummy’ nation

When I read this description of my adopted nation, decades ago, I was tickled (so to speak). When I was employed in the Balance of Payments Branch of the Bureau of Statistics, I realised how dependent Australia is on foreign capital inflows; and that there is a price to be paid when the economy is kept afloat by foreigners seeking a substantial profit or some economic advantage.

I arrived in 1948 when the British Subject status of Australians was replaced by Australian citizenship. British by origin and heritage, Australians seemed unconcerned by remaining beholden to Britain; except in relation to defence. When attacked by Japan, Australia had placed itself under the protection of the USA. We have been subservient to the US ever since, rushing into wars behind our hoped-for protector.

Since Australia is not in Asia, and is also not of Asia, with its Western roots, it cannot avoid being part of the West – in every way. We are an integral part of the West.   American corporations also developed Australia in economic (and cultural) terms, allowing us to jump smoothly after World War Two from a consumer nation (riding on the sheep’s back) to an industrial nation – a path not normally available to a developing nation. In the Treasury I learnt that the Government did rely on market forces to take the economy forward.

Our Governments, not known (ever) to possess any long-term plans for development (not even a population policy), are ever so grateful to anyone who wishes to invest in the country. Until the 1970s, when tariff-protected uneconomic, and technically inefficient, industries were opened up to foreign competition, with support from arbitral authorities, the people ate well. Welfare now subsidises or supports those affected by either import competition or the exigencies of an open market. (In 1963, I was the first ‘free- trader’ in the then Tariff Board.)

Like other nations, Australia seeks international trade agreements. Concessions of an economic nature are made, the signatories seeking mutual benefit. There will be some losers in each participating nation.

An amazing feature of the Trans Pacific Partnership to be signed is the surrender of Australia’s sovereignty. Corporations in signatory nations will be able to sue the Australian government in a foreign court “when they believe a change in Australian laws are affecting their profits.” Refer Anna Patty’s article ‘TPP deal may expose legal risks’ in the 5 March 2018 issue of ‘The Sydney Morning Herald.’

Patty quotes academic Stuart Rosewarne as describing this provision as “quite scary because it effectively allows a foreign-owned company to have any Australian law, including enhanced labour laws that are considered to impose additional or onerous obligations on a company’s employment practices, to be set aside.”

Tickle my tummy or not? How cheap is sovereignty?

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The El Dorado of welfare

When the Soviet regime allowed some of its Jewish citizens to join close relatives in Israel, 85% of those allowed to leave were (according to Israel’s Prime Minister in the early 1980s) deflected to the El Dorado of the USA (and to less-attractive nations such as Australia). This is the power of economic opportunity.

In recent decades, beardless Middle Eastern men and niqab-free women paid large sums of money to ‘snake-heads’ to deliver them to the (no reciprocity of payment required) welfare regime of the El Dorado of Australia.

The extent of support for welfare (and attempts to widen its scope in Australia) is most impressive. While ‘other people’s money’ is a natural drawcard, what motivates those who recommend (even demand) widening and deepening welfare eligibility for others? Paying students to study maths at school is the latest thought-bubble of a poobah in education policy.

And, until recently, there was a strident demand from a sector of the community that Australia should take in more economic migrants claiming asylum – without regard to the UN Convention defining a refugee. Is it not curious that their wish to offer charity is circumscribed by the availability of taxpayer money?

A concealed form of welfare takes the form of tax subsidies to the well-off. The most interesting one is described as ‘wealth creation’ by Conservative politicians. The most flagrant form is through ‘negative gearing’ of investments in property. Costs – actual or staged – are deductible against income from any source; a most generous unintended gift by other taxpayers, who have to make up the deficit in government revenue, and who are unable to reduce their tax burden honestly.

Interestingly, an article by Jessica Irvine in the Sydney Morning Herald of 9 Feb. 2018, about a report by the Grattan Institute on Australia’s compulsory contribution by workers, suggests increasing rent assistance to vulnerable retirees.

What was the objective in establishing the ‘superannuation guarantee charge’? Was it not intended to progressively replace the age pension, which is now popularly regarded as a right, and which is a very heavy budgetary burden?

When other people’s money runs out

Mrs. Margaret Thatcher, former British Prime Minister, said that socialism works well until other people’s money runs out (or words to that effect). In spite of my extended life in Australia (almost 7 decades as an adult), I do not believe that I have experienced (lived under) a socialist government. My exposure to the Australian polity ranges from White Australia (with its overt racism) to the current rule under Vaticanite social doctrines.

Although the Australian Labor Party (ALP) purportedly represented the working class, it has allowed generous tax concessions to the wealthy, and to powerful interests (especially the foreign-controlled mining industry). As a swinging voter, and thereby a political orphan, I am perpetually aware that our major political parties are akin to Tweedledum and Tweedledee in that wonderful story ‘Alice in the looking glass’. Changing places in Parliament makes little difference.

The cost of welfare payments is said to be rising. Eligibility seems to be widening. There are visibly wealthy senior citizens receiving some age pension (the cut-off point for couples is close to a million dollars). The disability pension (which pays about 25% more) appears to be easily exploited; I personally know 4 recipients who are not in any way disabled.

By retiring from the work force from about age 55 to 60, and living on one’s superannuation until retirement age, one could then live on the age pension until death. (Super is intended to be a replacement for the age pension.) The use-by date for men is now (Oct 2017) about 80; and for women about 84.

In the late 1980s, when asked about the policy implications of the proliferation of welfare eligibility – and how he proposed to deal with it – the responsible public official replied “I am too busy”!

With the political parties playing politics, were the responsible public officials to sit on their hands in the circumstances of the increasing casualisation of the workforce and falling union membership (about 12%), are those taxpayers who are unable to reduce their tax to be increasingly burdened? How long before the ‘camel’s back’ collapses?

Yet, there are increasing demands for widening welfare payments. In spite of a substantial intake of identified refugees, we are also asked to take more. It has also been suggested that welfare should enable a sustainable lifestyle. Worse still, that ridiculous concept of a ‘poverty line’ has re-surfaced. Under this definition, anyone whose income is below the median income (at the halfway mark) is in poverty; and therefore needs financial supplementation. How irresponsibly generous are those proponents of expropriation of other people’s hard-earned money!

The cost of welfare in October 2017 is reportedly $300,000 per minute or $430 million per day. The total lifetime bill for those receiving welfare benefits is estimated at $2.1 trillion. Furthermore, dole recipients are reported to be not attending interviews. Does anyone in office care?

Welfare is now based, not on need, but on a right; what about reciprocity? I read recently that a nation in Europe insists on reciprocity in relation to payments to refugees. Was I correct in believing during my youth that socialism is no different from communism – and to be fought in terms of a human right – the right not to subsidise those not in need?

Tolerance of failure

‘Tolerance of failure’ behind declining results

Following my previous posts on matters educational, especially in a competitive global milieu, here are extracts from an article which brings out the issues. The contents of this article are consistent with previous news reports on Australia’s ranking on a global scale.

These who make counter-arguments claiming that Australian students are better ‘rounded’ than their counterparts overseas or their Asian-Australian cohorts, because the typical Aussie is more involved in sport, appear incredible. Equally questionable are claims in the local media that regular tests and exams are stressful. Could normal life be expected to be stress-free?

The article is by Pallavi Singhal in the Sydney Morning Herald of 29 Sept. 2017.

“The co-ordinator of the Programme for International Student Assessment (PISA) has linked Australia’s steady decline in all three test areas of maths, reading and science to the country’s “tolerance of failure” in schools.

Andreas Schleicher, head of the OECD’s education directorate, said “It is perhaps too easy to do well in Australia” and that the country tends to accept that “some students will come out less well.”

“We asked students what makes you successful in maths, and many students in Australia said that it’s about talent, but if you asked students in China or Singapore the same question, you had the vast majority saying, ‘I can be succeed if I try very hard and my teachers support me’,” Mr. Schleicher said.

“In other countries, there is a belief that the education system is just not sorting them but that it can make a difference. There would be a much greater tendency for teachers to redouble their efforts for students who are struggling.”

The latest PISA results from last year showed that Australian 15-year olds are declining in both absolute terms and relative to their international peers. … …

“Australia used to be very good at the high end of the skill level but there’s been a gradual slide over the last 15 years,” said Mr. Schleicher. He said that the countries performing best “pay more attention to how they develop and retain the best teachers”. … …

“Australia needs to make teaching intellectually more attractive and provide better support and opportunities for the profession. … … “

Comment (based on nearly 70 years’ residence in Australia as an adult): The ‘near enough is good enough’ attitude held by many in the formerly closed and protective Australia is no more. Multiculturalism and globalisation require better planning and performance for survival.

 

Do universities meet the needs of society?

Here is the view of an eminent historian. “… the historian of the 20C notes the love of the conglomerate. Originally used for business, the word denotes here the wish to mix pleasures, activities, and other goods so as to find them in one place.” … …

“The conglomerate that best fulfilled the idea of the time was the course offering of the large colleges and universities. It had ceased to be a curriculum, of which the dictionary definition is: ‘a fixed series of courses required for graduation.’

Qualified judges called the (current) catalogue listings a smorgasbord and not a balanced meal. And large parts of it were hardly nourishing. The number of subjects had kept increasing, in the belief that any human occupation, interest, hobby, or predicament could furnish the substance of an academic course.

It must therefore be available to young and old in higher learning. From photography to playing the trombone and from marriage to hotel management, a multitude of respectable vocations had a program that led to a degree. On many a campus one might meet a student who disliked reading and had ‘gone visual,’ or be introduced to an assistant professor of family living.”

‘Fifty-some majors, thirty-some concentrations, and hundreds of electives.’ – The Dean of an Ivy League College to arriving students.

‘A university that offers a doctorate in sensibility, including courses in “niceness and meanness” and “mutual pleasurable stimulations of the human nervous system” was (well described) in 1992 as “an academy of carnal knowledge.” – New York Times (1996)
(These are extracts from ‘From Dawn to Decadence – 1500 to the present’ by historian Jacques Barzun. He has published more than a dozen books, and been described ‘As one of the great one-man shows of Western letters.’

One might ask, in the context of the Australian Government’s subsidy to our universities (based on enrolments rather than graduation, or on the utility of the content of courses,) about the taxpayer cost of university courses which do not provide usable skills. Of course, those who seek other kinds of courses can pay for these courses themselves.)

 

The dearth and probable death of democracy

Democracy, as we in the West know it, is correctly referred to as Western democracy. Effectively, in this form of citizen-participation in the process of governance, electors vote for a political party. Political parties became involved in governance only about 400 years or so ago. Technically, electors vote for the candidate offered by their party of choice. Electors have no say in the selection of candidates. Even local party members have almost no say in the selection of their candidate. The political party controls all.

With compulsory voting, as in Australia, there can be many ‘donkey’ votes, some with added rude words. Interestingly, as eligible voters become disenchanted with the process, many reportedly do not even register as voters. Where non-voting by registered electors will result in a fine, non-registration seems to be substantially ignored. Not long ago, when the responsible poobah was asked about non-registration, a media report quoted him as saying that the public would not accept punishment for non-registration.

The whole process has lost its credibility. The political parties prefer playing politics rather than debate policies in parliament; that is beyond question. The Opposition of the day, and minor parties, can delay or deny necessary policies. Minority parties can be single-issue parties, cherry-picking potential winners in policy. Some politicians act as individuals, pushing their personal barrows.

Australia does not have long-term policies: no economic policy; no population policy; no infrastructure policy; no housing policy; no policy regarding the objectives and outputs of tertiary education; no coherent and integrated social-welfare policies; no climate policy; and no energy policy.

‘Market forces’ influence outcomes in the economy, just as the USA influences defence policy. Without an ongoing inflow of foreign capital (with increasing foreign ownership of sound enterprises) Australia will sink. Worse still, we rely on cheap foreign labour (on short-term entry visas) in industries of no apparent interest to able-bodied, childless, unemployed persons.

Yet, we offer free hospital treatment for all residents, irrespective of capacity to pay. Then there are tax concessions galore, which benefit mainly the wealthy. These concessions require those who have no means of minimising their burden to also subsidise those who ‘create wealth’ (for themselves) by paying less tax. Overall, acquiring OP (Other Peoples’) money is a highly-preferred approach to achieving a lifestyle of choice.

To be fair, Western democracy permits a wider range of people to be subsided than those nations ruled by autocratic, kleptomaniac, rulers supported by a limited circle of supporter-beneficiaries.

Is there a fairer, or more efficient, or less-corrupt system of participation in the governance of a nation?

Cope and adapt – or whinge?

After nearly 7 decades of a highly interactive and contributory life in Australia as an adult, I believe that I am qualified to conclude thus:

• This is not the country I entered. Then, residents were self-sufficient and relatively poor, displaying respect where appropriate, and with pride in who they were. They adapted very successfully, progressively, to the tremendous changes to their society. ‘God’s Will’ did have a role.
• Today, new rights have been coined by the greedy and the opportunistic; government is required to accept responsibilities which were traditionally those of individuals, families, and private enterprise. The ‘nanny state’ has arrived.
• ‘Other peoples’ money’ is thereby demanded to compensate for the evil behaviour of priests; offset the low taxes paid by tax-minimising corporations, especially the multinationals; compensate for the calculated profligacy of individuals; and subsidise the so-called ‘wealth creation’ by the rich (including politicians) benefiting from questionable tax concessions. Taxpayers who have no way of protecting their earnings are increasingly fleeced.
• Our politicians are not trusted. Governments are seen as pre-occupied with politics, rather than with policies. And the nation is more backward than it should be, while political careers move forward.
• Early post-war immigrants integrated into the nation successfully, ignoring the prejudice (not always racism) displayed through spoken words and painful acts of discrimination. More recent immigrants, entering a nation considerably tolerant of difference, profess to have been hurt and humiliated by pejorative spoken words!
• These new arrivals could have no idea of the insults and denial of equal opportunity suffered by those of us who acclimatised superior white Aussies to the presence of people not like them.
• Welfare is not directed just to offset hardship. It is now a right. Spokesmen for the industry seek a ‘sustainable lifestyle’ for recipients, which includes going to the cinema, etc. etc. Why not? Someone else is paying.
• Some new arrivals are quick to adapt to the current national ethos: whinge, and whinge yet again.
• Castles built on clouds will collapse. Wait to hear the cacophony of complaints as the need for greater self-sufficiency zooms sky high (as the river begins to dry out).

From the sheep’s back to whose back?

“Our growth comes from extremely high immigration rates – some of the highest in the developed world per capita.”  “All the major parties, including the Greens, spruik perpetual growth. It is easy to see why Pauline Hanson’s policy to reduce immigration from 200,000 per year to a more sustainable 70,000 is gaining more support.” (Comment: Hanson is a rare independent fearless politician who speaks for those ignored by the major political parties.)

“Houses are already two times less affordable than the 1960s.”  (Comment: Homes in Sydney, and possibly in other major cities, are already beyond the capacity of young first-home buyers.)  “With modern robotics and automation, there are going to be less jobs than ever.”  “Our Sydney roads are already gridlocked and it gets worse every day.”  “… eight out of ten Australians I talk to don’t want a big Australia of never ending growth.”

The above extracts are from an advert. addressed to the chief planner of the City of Sydney in the 15 Dec. 2016 issue of the Sydney Morning Herald by Dick Smith (one of Australia’s outstanding businessmen).

I add the following thoughts: 

• Relying upon an increasing population, through an expanding intake of immigrants and UNHCR-accepted refugees, to add to the nation’s income reflects a shopkeeper mentality: the more customers the better.
• But, what is the source of the spending money of the new arrivals? Welfare? If funded by the taxpayer, for how long?
• The tax subsidy provided by the ‘negative gearing’ of house purchases results in (a) other taxpayers meeting the shortfall in revenue caused by the subsidy; (b) additional competition faced by first-home buyers.
• The so-called ‘mums and dads’ in federal parliament, particularly in the Coalition parties, are some of the beneficiaries of negative gearing. This benefits those with spare capital. What does it do for the nation?
• Australia has no long-term plans for the economy. Once upon a time, it relied on the sheep for export income. Now it is education and tourism – both likely to be impermanent.
• It has no population planning, no development plans, and apparently no capacity for investment in necessary infrastructure (to cope with the additional demands created by a fast-growing population).
• In federal parliament, each side of politics apparently stymies the other side’s proposals. Petty politics seem to rule. Where goes the economy?

Mr. Smith has Buckley’s hope of a more realistic immigration policy – unless State Premiers back him. Individuals and community groups can, and will, be ignored, until voters jack up at supporting political laissez-faire.

Corporate taxation in Oz: Is morality relevant?

“New research has revealed 76 of Australia’s biggest multinationals pay an average effective tax rate of just 16.2% – half the corporate tax rate.

It has also discovered the commonwealth government lost $5.4bn in potential tax revenue in 2013 and 2014 from those same companies, as they shifted billions of dollars in profits offshore.

Corporate tax experts from the University of Technology, Sydney, have worked with the activist group GetUp! to examine the financial records of the top 100 multinational corporations with operations in Australia.

They say large pharmaceutical corporations are paying the lowest effective tax rate at just 5.7%, compared with 7.5% for hi-tech corporations and 20% for energy corporations.

Australia’s official corporate tax rate is 30%.

A new report, Closing the Caribbean Connection: Solving Aggressive Tax Avoidance by Top Foreign Multinationals Operating in Australia, shows their findings.

It says the largest corporations with operations in Australia favour two tax minimisation techniques over any others.

The first technique, called “debt loading,” is favoured by energy companies. It finds foreign multinationals lending capital to their Australian operations at unusually high interest rates, with any profit made in Australia used to repay the foreign subsidiary. For the purposes of company tax records in Australia, the profits are then recorded as a loss in the form of an interest payment on the loan.

The second technique is called “profit alienation” and is preferred by pharmaceutical and hi-tech firms. It finds corporations holding intellectual property rights in low or zero tax jurisdictions. Any profits made in Australia are then used to pay the parent company for the use of its intellectual property.” … …

“The report’s authors say the Turnbull government needs to follow Hong Kong’s example in tackling debt loading abuse, by eliminating interest deductions and other financial payments on loans from foreign subsidiaries located in low or no tax jurisdictions.

It also says the government should introduce a diverted profits tax, set at 30% to reflect the current statutory tax rate for companies, as in the United Kingdom.

“Everyday Australians are paying tax at a higher rate than billionaire corporations like Chevron, Apple and Google,” Getup! campaigner Daney Faddoul said. “These foreign multinationals are inflating their losses and shifting their profits to rob Australia of crucial investment in our local hospitals and schools.”

(The above paragraphs are extracts from  Guardian Australia’s tax report of 20 April 2016.)

Representative government, anyone? One lot believes that, in the exciting times we live in, reducing company tax will result in instantaneous wealth creation (for whose benefit?). The other lot tells us what it might do one day. Will they work together for the benefit of the populace? What we have are legal loopholes benefiting from moral loopholes.     

 

 

 

Post-colonialism: Expatriate advisers

When the Board of the Central Bank in a small recently-decolonised Asian nation sought input from an appropriate international agency about an appropriate policy for the future, it was to convince an inexperienced government. The government was more likely to accept a suggested plan from an expatriate authorised adviser than one developed from within the Bank.

I was told the following story by a friend from that nation. The international expert sat down with each of the ‘Young Turks’ (overseas-trained, fast-rising, young economists). Obtaining their ideas about an appropriate development plan, he packaged into his report to the Board a consolidated version. Everyone was happy. The expert went home with a fat cheque.

Believing that what a European can do could surely also be done by an Asian, one of the Young Turks took off to advise one of the African nations for 3 years. It was lucrative.

He was not the first from that nation to become an expatriate consultant – on expatriate European levels of remuneration – to advise an African nation. As another friend of mine from that nation wrote to me, from his post as an expatriate consultant, the Africans were paying ‘white man’ fees to black consultants.

By the 1960s, there were quite a few economists from that nation in one or more international agencies. Perhaps appointments to such agencies did not involve the intangible, sub-surface, and allegedly flexible processes which were said to apply in nations in the developing world. Personal contacts and relative influence seem to have been disproportionately prevalent in these nations.

However, could even the most sensible, pragmatic, development plans devised by expatriate consultants overcome the stranglehold by the neo-colonial nations over the economies of developing nations? Then, there is the competition provided in the international market-place by developed nations such as Australia establishing themselves as growers of rice, tea, coffee, and tropical fruits, and thus damaging the much-needed export markets of the under-developed nations all over the world. As well, there is the confluence of the greed of some national leaders and the rapacity of the neo-colonial nations.

Add to that the foreign loans which have to be repaid; and the private charity monies which are reportedly deflected into non-development accounts in the receiving nation. In the 1960s, it was reported that, within 9 months, monies lent or given to certain Latin American nations would be back in U.S. bank accounts.

Expatriate advisers can only point the way forward.