E-CONVEYANCING CONCERNS ABOUT PEXA MONOPOLY MONEY

e-conveyancing concerns about PEXA monopoly money

Paul Bollen

SME LAW|12 JULY 2019By: Paul Bollen — 1 minute read

New South Wales has now become the third Australian state to transition to paperless property transactions, with the mandating of electronic conveyancing coming into effect on 1 July 2019, writes Paul Bollen.

However, the change makes the current monopoly market structure troubling for practitioners, financial institutions and property transactors.

The arrival of PEXA as the original provider of e-conveyancing services was heralded as a godsend to the profession wishing to see the end of cumbersome settlement procedures. PEXA was the company to deliver that solution.

Over time, and with the growth and full privatisation of PEXA, that position changed with PEXA’s intentions to expand further downstream into document supply in a bid to monopolise the market.

The concerns in the profession about PEXA’s monopoly position were justified when it became clear that PEXA was to set up conveyancing services direct to the public to wipe out competition in the profession — something the current PEXA users seem to have forgotten.

The national regulator, Australian Registrars’ National Electronic Conveyancing Council (ARNECC), and its chair, Ms Jean Villani, have made it clear that PEXA can set up a conveyancing arm, albeit under a separate entity, to compete with their very own clients whilst controlling the entire end-to-end conveyancing process.

Not only can they control this entire process, but the monopoly position of PEXA gives them no reason to innovate their platform or work on security, something practitioners were calling out for long before the original PEXA hack occurred.

With WA and Victoria preceding NSW’s move into a mandated environment with PEXA as their only e-conveyancing platform, Mr Victor Dominello, the Minister for Services in NSW, rightly determined that it was in the interests of practitioners and their clients that competition be present in this space to prevent a monopoly.

It is hardly a matter of Mr Dominello “going it alone”, but rather a frustration that Ms Villani has not addressed the rules for competition sooner. Why has the ARNECC chair deferred any investigation into competition and, more specifically, interoperability for the last year while supporting PEXA’s ability to move downstream and offer conveyancing services?

This is less about re-regulation of conveyancing by the state but providing a choice to lawyers and conveyancers as to which settlement platform they choose.

Competition is going to bring better outcomes for practitioners and their clients rather than relying on Ms Villani to attempt to regulate a very powerful monopoly in PEXA. Competition is going to drive innovation in the e-conveyancing market, drive better security and drive better prices for consumers.

I can assure you that any practitioners, be they solicitors or conveyancers, would welcome an environment where a choice is available as to which e-conveyancing platform they can use.

As a practitioner, I absolutely support Mr Dominello’s decision to bring the industry together to investigate how competition and interoperability in the e-conveyancing market will work.

Paul Bollen (pictured) is the owner of East Coast Law and East Coast Conveyancing.

SOURCE: https://www.lawyersweekly.com.au/sme-law/26030-e-conveyancing-concerns-about-pexa-monopoly-money

COALITION’s VISA PRIVATISATION WILL TORPEDO AUSTRALIA’s BORDERS

Mate Versus Mate: Inside ScoMo’s billion-dollar visa privatisation

The Unconventional Economist has spelt it out for what it is … no ifs … not buts …

Recommend everyone also view the comments starting with what looks like constructive criticism here …

-Adrian has donated money to ‘the party’ … therein lies the problem.

Would our founding fathers of the Constitution been ok with pollies being beholden to a foreign power? Through donations?

‘The fake left’ refuses to get the AEC to adequately fund the political parties thus the corruption continues!

-The extreme carpetbagging, rent seeking mentality of the LNP Right will always be among us … it is the insipid and gormless left … it is only by shutting down mass immigration and restructuring an economy befitting of what the Australian People want (Shorten tried to do that!)

SURELY NOW with what has surfaced from the LNP … and the angry reaction to it … it is time the ALP took charge!!!

Coalition’s visa privatisation will torpedo Australia’s borders

By Unconventional Economist in Australian Economy

September 13, 2019 | 24 comments

Following his stellar expose last month, investigative journalist, Michael West, has done another excellent job exposing the cabal of vested interests behind the Morrison Government’s plans to privatise Australia’s visa system:

Scomo’s mate’s mate and the billion-dollar privatisation of Australia’s visa system

Flemington market’s fruit and vegetable mogul Santo Peter Tripodina and his 38-year old son, property developer Adrian Tripodina, have emerged as mystery power-brokers behind one of the two bids for the Federal Government’s $1 billion visa privatisation.

Together with longtime Packer lieutenant Ashok Jacob’s Ellerston group of companies, the Tripodinas will be providing the financial grunt behind the Australian Visa Processing Pty Ltd consortium.

The front man for the AVP bidders is Scott Briggs, a friend and political advisor to Prime Minister Scott Morrison.

An investigation by michaelwest.com.au has revealed the Tripodinas are the major shareholders in Pacific Blue Capital. Scott Briggs is chief executive and Adrian Tripodina is executive director…

Final bids for the visa processing contract were submitted to the Department of Home Affairs on June 28 and the government has said it will advise on the outcome in October.

The Tripodina family has been reported as being members of the Liberal party in Scott Morrison’s electorate and Adrian has donated money to the Party in the past. It also has investment links to the ultra-wealthy Vidor family, property and hotel moguls from Sydney’s eastern suburbs…

CAAN: TOGA GROUP

LVO: Morrison, as well as Immigration Minister David Coleman, who previously worked with Briggs at Nine Entertainment, have recused themselves from the process due to their association with Briggs but until now the deep involvement of the Tripodinas in the tender, and their possible connection with the PM, has not been documented…

While the Government considers the rival bidders, it is interesting to note an increasing push by some parliamentarians to demand transparency from those who bid for government contracts.

The first assistant secretary of the immigration department, Andrew Kefford, recently labelled the privatisation of Australia’s visa system as the 

*“most significant reform to the Australian immigration system in more than 30 years”, and claimed that it would make the “visa business” profitable by including “premium services for high-value applicants”, different access for those able to pay more, as well as “commercial value-added services”.

However, the experience of the United Kingdom, which privatised its visa system in 2014, has been far from complimentary. There, the Dubai-based firm that won the government contract has been accused of exploitation and turning the visa system into ‘pay-to-win’, as documented last month by The Independent:

VFS, which has its headquarters in the UAE but is owned through holding companies in Jersey, the Cayman Islands and Luxembourg, faces claims of “gross maladministration” and “aggressive” selling of optional services since taking the UK government contract in 2014…

People applying through VFS – the majority of whom are from lower-income countries, with a quarter from south Asia – have said they missed flights and were wrongly denied visas due to delays and administrative errors, including apparent failure to scan vital documents.

Others said they had faced a barrage of “optional” services on the VFS website, ranging from document checking for around £5, to a “super priority” visa service costing as much as £1,000, which some said failed to deliver on the fast-tracked service promised. Lawyers said these additional services could exploit vulnerable migrants who may feel pressured to spend more to secure visas.

Meanwhile, VFS has increased its average revenue per applicant by 38 per cent between 2016 and 2018 by selling more premium services, according to an analysis of group accounts filed in Luxembourg.

Prior to the contract, the majority of UK visa applicants could submit their applications in British embassies or consulates, where their documents would be processed and decisions would be made, and where there was no system of offering priority or “added value” services.

But when the service was outsourced in 2014, decision-making was concentrated in larger hubs run by VFS, which the Home Office said at the time would “improve the efficiency and consistency” of decision-making.

Fees have increased since then, with the cost of applying for a standard visit visa – the most popular type – rising by 14 per cent, from £83 in 2014 to £95 in 2019. Applications for settlement have increased from £885 to £1,523, a rise of 72 per cent…

The figures come following widespread concern over the privatisation of the Home Office’s in-country visa system, which was outsourced to French firm Sopra Steria in November and has since, according to lawyers, offered a “substandard” service for “inflated” prices.

No matter which way you cut it, it is a staggering decision to outsource Australia’s visa processing. Quite apart from the inevitable cost increases as a monopoly supplier loads up their profits, it is about sovereignty. *

Governments must provide these essential services, they must be sacrosanct and marked ‘never to be outsourced’.*

The inevitable outcome from visa privatisation will be corruption and ‘pay-to-win’, with those willing and able to pay extra fees granted priority treatment, as witnessed in the United Kingdom.*

How can the Australian Government control immigration numbers when it adds a profit motive and turns the visa system into a quantity-based business? It cannot.*

We have already seen what happens with the international student market, whereby Australia’s universities have destroyed entry and teaching standards in order to pull in as many full fee paying students as possible.

Clearly, privatising Australia’s visa system carries enormous risks. It will torpedo Australia’s borders, drive private monopoly profits, and place Australian taxpayers on the hook when the inevitable disaster that follows needs to be fixed down the road.

There is no way any independent and comprehensive cost-benefit analysis would have resolved to outsource Australia’s visa processing. It is another prime example of Australia’s ‘Game of Mates’.

SOURCE: https://www.macrobusiness.com.au/2019/09/coalitions-visa-privatisation-will-torpedo-australias-borders/

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WHAT COULD GO WRONG AS AUSTRALIA PRIVATISES VISA PROCESSING

YES … what could possibly go wrong? As told by someone who knows what he is talking about!

Search CAAN website for Related Articles from the Unconventional Economist and Michael West

What could go wrong as Australia privatises visa processing

By Abul Rizvi Wednesday October 10, 2018

Abul Rizvi

On the basis of the limited information provided to the public to date, the business and risk case for privatising visa processing appears highly questionable, writes former Immigration deputy secretary Abul Rizvi.

Privatisation of core government functions such as visa processing is high risk, especially when undertaken under the cloak of commercial-in-confidence secrecy. Major ICT transformation projects conducted “in partnership” with a big IT company are also high risk. Doing the two together multiplies the risk big time, but that’s exactly what the Department of Home Affairs is doing.

The government first announced its intentions in the 2016-17 Budget through a measure titled ‘Reforming the Visa and Migration Framework’, promising to deliver significant savings for a relatively modest upfront investment.

We found out considerably more about the plan with the department’s request for information document released in January revealing that privatisation of visa processing will take place in eight separate bundles. Last month, The Australian reported bundle one, covering a ‘global delivery platform’ and certain low-risk visas, may be contracted relatively soon. Subsequent bundles involve more subjective and complex visa categories and functions, with the entire system worth in the order of a billion dollars over 10 years, according to evidence given by Home Affairs at Senate Estimates.

Overstated growth in application numbers

Home Affairs’ key justification for this unprecedented shake-up, in the Department’s own words, is that it is “faced with never before seen volumes of visa applications … forecast to increase by around 50 per cent by 2026-27.”

As the senior official responsible for design and delivery of both permanent migration and temporary entry visas from the late 1990s until 2007, I can tell you this argument is highly misleading and seriously flawed. During my time in the then Department of Immigration, we experienced a genuinely unprecedented increase in the visa caseload:

  • Net overseas migration increased from 72,402 in 1997 to 301,200 in 2008, a 316 per cent increase). By contrast, the government itself is forecasting net overseas migration will actually decline from 240,300 in 2017 to 221,400 in 2021.
  • The Migration Program grew from 67,900 people in 1998-99 to 171,318 in 2008-09 (an increase of 152 per cent). This government has cut the Migration Program from 190,000 in 2015-16 to 162,417 in 2017-18. All the indicators point to a further reduction in 2018-19. These cuts will lead to a reduction in citizenship applications.
  • Overseas student visa grants increased from 110,894 in 1998-99 to 320,368 in 2008-09 (an increase of 189 per cent). While student visas reached 378,292 in 2017-18, policy actions government has taken to cut off opportunities for successful students to secure permanent residence will significantly slow growth in student visas over the next few years.
  • Skilled temporary entry (former sub-class 457) grew from 29,320 in 1998-99 to 110,280 in 2007-08 (an increase of 276 per cent). Skilled temporary entry visa grants fell to 64,470 in 2017-18 and are likely to fall further. These falls will have flow on implications for applications for employer sponsored permanent entry.

The only areas where growth is likely to continue is in categories like visitor visas that are already largely automated and have been since the 1990s.

Ballooning backlogs and processing times

“No private company will take on these backlogs without eye-watering levels of compensation.”

One area of growth that does outstrip my time in the agency is ballooning application backlogs and blowouts in processing times. But these are due to a mixture of poor visa design changes; uncertainty around how the migration program is to be managed; reduced resources relative to other Home Affairs functions; and visa processing staff being intimidated by constant fear-mongering from the department’s leadership and demoralised by the complaints and inquiries as the large backlogs draw resources away from actual application processing.

No private company will take on these backlogs without eye-watering levels of compensation. Moreover, they will demand further recompense to get processing times back to their previous levels while maintaining high levels of visa integrity.

Revenue from visa application charges

An improved online visa processing platform is of course worth pursuing, as well as examining the option of using artificial intelligence as the department suggests. But why can’t government pay for this? The Productivity Commission found in 2016 that “revenue collected from visa charges is three times the administrative cost”. With massive increases in visa charges in recent budgets, that revenue to cost gap would now be even wider!

Treasury would never agree to relinquish such a lucrative revenue stream, so companies that win a contract to deliver visa services would need to either increase charges even further, use their monopoly position to find new revenue streams, reduce costs or rely on a growing caseload.

The final option would be taking a very big risk, unless Home Affairs guaranteed a minimum rate of caseload growth. That would hardly be conducive to good border protection and immigration policy!

Visa charges impacting key Australian industries

Home Affairs has indicated that while successful companies will be allowed to charge for premium services, the overall charges must not be greater than those of key competitor nations. That would be a hard ask given the Productivity Commission has noted that “charges for Australian visas appear to be higher than in Australia’s major competitor countries”.

Additional charges for high volume visas are also likely to be strongly opposed by key Australian industries such as tourism, education and agriculture. Home Affairs should not be allowed to wash its hand of charge increases just because they’re imposed by a private company. At this stage, it’s not clear if these industries are conscious of the potential impact on their international competitiveness.

Charging for ‘premium services’ and visa integrity

The long-term implications of allowing two separate processing streams for each visa type are truly frightening. Any monopoly provider would want to maximise charges for the fast lane and try to drive as many applicants as possible into that lane. There would inevitably be an incentive for the company to be more ‘facilitative’ on subjective criteria for applicants who paid for priority service.

For applicants and Australian sponsors who couldn’t afford the higher charges for the fast lane, we would likely see continuing acceleration of people by-passing standard off-shore visa processes and instead entering Australia on visitor visas and then applying onshore for the actual visa they need. This would perpetuate visa integrity problems including the blowout in people in Australia on bridging visas that Home Affairs has exacerbated through extraordinarily poor administration.

Home Affairs has suggested companies may also use their position to generate new revenue streams such as through online advertising or provision of ‘wrap-around services’ such as airfares, accommodation, etc. Giving a monopoly visa service provider such power raises even more issues around both visa integrity as well as potential abuse of market power.

Cutting costs

“Will the Australian public be comfortable with these extraordinary risks being taken on our behalf with such a core government function?”

A final option is for the winning company to cut costs. At present, complex visa services are delivered by relatively low paid staff in Home Affairs, particularly in centralised processing centres in cities such as Adelaide. Because these staff deal with much more highly paid lawyers and migration agents, they must have deep knowledge of the Migration Act, extensive legal skills and good knowledge of the common ways non-genuine applicants try to beat the system.

Any successful company would undoubtedly try to recruit existing Home Affairs staff but pay them less to maximise profit, as we’ve seen all too often with other outsourcing projects. Recruiting and training new staff would risk serious errors such as applicants who are not eligible being approved and applicants who are eligible being refused.

Alternatively, the successful company could seek to transfer the visa processing work to a low-wage economy overseas. This would cut costs significantly more, but the risks would rise accordingly.

On the black market, an Australian visa would be worth many times the annual salary of low-wage economy staff. Would Home Affairs cover the additional cost to monitor and investigate such corruption? And is the Australian public happy to take on such a risk given its attitude to issues such as border control and visa integrity?

We also don’t know the extent to which companies would be subject to scrutiny by government agencies such as the Ombudsman and the Auditor-General. Would Freedom of Information still be applicable? How would issues of national security be addressed? How would the successful company deal with privacy issues given the vast wealth of personal data it would have access to? Could it even be allowed to sell some of that data as an additional revenue stream?

Another issue would be the charges the successful company seeks whenever government wants to change visa design or visa policy – something that happens very regularly. Would that also impact on the policy advice Home Affairs gives to government, discouraging good advice that came at a high cost?

Finally, there’s the question of what happens to thousands of Australian staff who currently process visas as Home Affairs employees. Home Affairs would need to meet the costs of redundancy payments for staff who are no longer needed.

Will the business case be made public?

On the basis of the limited information provided to the public to date, the business and risk case for privatising visa processing appears highly questionable.

Is the government prepared to be open with the Australian public and Parliament about this high-risk initiative?

Will the Australian public be comfortable with these extraordinary risks being taken on our behalf with such a core government function?

And how long before taxpayers have to bail out the department because one or more of these risks materialises?

It really is a gamble that’s just not worth taking.

Abul Rizvi left the Australian Public Service in 2015 as a deputy secretary and is currently undertaking a PhD on Australia’s immigration policies. He was a senior official in the Department of Immigration from the early 1990s to 2007. He was awarded the Public Service Medal and the Centenary Medal for services to development and implementation of immigration policy, including in particular the reshaping of Australia’s intake to focus on skilled migration.About the author

By Abul Rizvi

Abul Rizvi left the Australian Public Service in 2015 as a deputy secretary in the Department of Communications. He was previously deputy secretary in the Department of Immigration until 2007. He was awarded the Public Service Medal and the Centenary Medal for services to development and implementation of immigration policy, including in particular the reshaping of Australia’s intake to focus on skilled migration. Abul is undertaking a PhD on Australia’s immigration policies.

SOURCE: https://www.themandarin.com.au/99686-privatising-visa-processing-the-alarm-bells-are-ringing/

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PM’s mate’s mate and the $Billion PRIVATISATION of Oz’s backdoor passport system

The Tripodinas, the Sydney fruit and veg moguls and Liberal Party donors behind the bid to privatise Australia’s visa system … and their connections!

Including … longtime Packer lieutenant Ashok Jacob’s Ellerston group of companies, Ellerston, controlled by the Packer family’s Consolidated Press holdings, Scott Briggs friend and advisor to Scomo, Vidor family, TOGA Group, property and hotel moguls, former Sutherland Mayor Kevin Schreiber, Australian Innovation Technologies, sole director Jeremy Mortlock, tax advisory firm Mazars and the rest!

Scomo’s mate’s mate and the billion-dollar privatisation of Australia’s visa system

by Michael Sainsbury — 2 September 2019 — FeaturedGovernment

Scomo’s mate’s mate and the billion-dollar privatisation of Australia’s visa system

Peter and Adrian Tripodina at the Tristate warehouse

*Meet the Tripodinas, the Sydney fruit and veg moguls and Liberal Party donors behind the bid to privatise Australia’s visa system. 

Michael Sainsbury reports.

Flemington market’s fruit and vegetable mogul Santo Peter Tripodina and his 38-year old son, property developer Adrian Tripodina, have emerged as mystery power-brokers behind one of the two bids for the Federal Government’s $1 billion visa privatisation.

*Together with longtime Packer lieutenant Ashok Jacob’s Ellerston group of companies, the Tripodinas will be providing the financial grunt behind the Australian Visa Processing Pty Ltd consortium.

*The front man for the AVP bidders is Scott Briggs, a friend and political advisor to Prime Minister Scott Morrison.

An investigation by michaelwest.com.au has revealed the Tripodinas are the major shareholders in Pacific Blue Capital. Scott Briggs is chief executive and Adrian Tripodina is executive director.

Pacific Blue is one of the biggest shareholders in AVP with 14.7 per cent.

*But under Pacific Blue’s structure Tripodina Nominees Pty Ltd holds 100 per cent of the 133,334 preference share which give their holders preferential financial treatment over ordinary shareholders.

Tripodina Nominees Pty Ltd is controlled by Santo Peter Tripodina who holds all that company’s shares. Adrian is an alternate director.

Pacific Blue’s ordinary shares are held by Tripodina Nominees and AJT Investments, a company that appears to be one of Adrian Tripodina’s private vehicles, and Apparat-Chick Pty Ltd, a company whose shares are held by Scott Brigg’s wife Meredith, a former Young Liberal.

The company lists the role of Adrian Tripodina as including “procuring finance through his close network of banking associates as well as delivering strategic industry partners on key projects”.

AVP is duelling with rival consortium of Australia Post, consultancy firm Accenture and IBM. Final bids for the visa processing contract were submitted to the Department of Home Affairs on June 28 and the government has said it will advise on the outcome in October.

*The Tripodina family has been reported as being members of the Liberal party in Scott Morrison’s electorate and Adrian has donated money to the Party in the past. It also has investment links to the ultra-wealthy Vidor family, property and hotel moguls from Sydney’s eastern suburbs.

The Vidor’s Toga Group of companies owns more than 50 hotels in Australian in the Asia-Pacific region.

Adrian Tripodina has moved in the same circles as Scott Morrison. His business partner in investment firm Pacific Blue Capital is the Prime Minister’s friend Scott Briggs; Tripodina and Morrison have referred, at various times in the past, to former Liberal Sutherland Shire Councillor and Mayor Kevin Schreiber as a friend.

Peter and Adrian Tripodina

*Adrian Tripodina declared that he “has a friendship with Councillor Kevin Schreiber and that he made a donation to Kevin Schreiber/Liberal Party of $5,000 two years ago” as part of a 2011 investigation into a $10 million property development in Miranda, a suburb in the Sutherland Shire. In his maiden speech to Federal parliament on August 14, 2008 Morrison said: “I particularly thank my good friend Kevin Schreiber.”

*Morrison, as well as Immigration Minister David Coleman, who previously worked with Briggs at Nine Entertainment, have recused themselves from the process due to their association with Briggs but until now the deep involvement of the Tripodinas in the tender, and their possible connection with the PM, has not been documented.

Pacific Blue Capital is said on its website to be a “a Tripodina family” investment. Pacific Blue Capital holds a 14.7 per cent stake in AVP, a shareholding that has been diluted from the originally reported as 19.9 per cent.

It is possible the Tripodina family could control even more shares in AVP. The single biggest shareholder in the consortium is held by a partner at second tier accounting and tax advisory firm Mazars, suggesting that he may hold the shares on behalf of another party.

Adrian Tripodina’s private company AJT Holdings Pty Ltd, which holds a 19.9 per cent stake in Pacific Blue Technologies, lists its registered address as the Mazars office in Sydney as does Tripodina Nominees, the company controlled by Tripodina Senior. So too does family company Tristate Holdings. Mortlock did not return calls.

“With in excess of 20 years’ experience my specialties include corporate structuring and taxation, superannuation, acquisition and sale of businesses and outsourced accounting,” Mortlock is quoted as saying on the Mazars website. It’s worth noting that Mazars has expanding in Australia in recent years via the acquisition of a range of local accounting firms.

Since gaining a Bachelor of Commerce from the Gold Coast’s private Bond University, where he studied after graduating from Sydney’s blue chip St Joseph’s College, Hunter’s Hill, Adrian Tripodina has been focused on diversifying his family’s fortune, earned over two generations trading fruit and vegetables from Sydney’s Flemington Markets.

As well as being Pacific Blue’s executive director, Adrian Tripodina also heads Tristate Holdings’ Pty Ltd, a company ultimately controlled by his father who is also listed as chairman.

The Tristate website explains that it started out as a “small wholesaler of fresh produce in 1986” but has grown into “a leading diversified private investment firm deploying capital across a number of sectors”. 

Tristate says it serves “all of Australia’s leading chain stores including Woolworths, Coles, Aldi as well as the largest independent retailers”. In real estate it invests in all asset classes “residential, industrial, commercial and medical having recently developed a specialist facility, anchored by Ramsay Health in South Sydney”.

Scott Briggs

*It also has a pipeline of some 400 residential dwellings across Sydney and joint venture arrangements with the Vidor’s Toga Group.

Along with the Tripodinas, the other group behind the AVP bid with financial heft is financial services group Ellerston Capital.

*Ellerston, controlled by the Packer family’s Consolidated Press holdings, has a 10.6 per cent share in AVP.

*The directors of Ellerston Capital are its chairman Ashok Jacob, chief executive Brian O’Sullivan, Guy Jalland, chief executive of James Packer’s private investment vehicle Consolidated Press Holdings, and a Crown Resorts board member, Michael Johnston, chief financial officer of CPH and a Crown Resorts director, and Chris Kourtis who heads the Ellerston group’s investment team.

Jalland gives his address as Carribean tax haven: Savannah Villas, Unit C, Country Club Road, Hodges Bay, St George, Antigua And Barbuda

Another Ellerston vehicle, Ellerston Special Purpose Platform Pty Ltd, holds 7.1 per cent of AVP; Brian O’Sullivan is the sole director and shareholder of that company, possibly controlling that stake on behalf of other interests.

The AVP vehicle appears to be set up for a listing on the Australian Securities Exchange. A stake of 19.9 per cent is held by Angus James, veteran former ABN Amro investment banker and his wife Sarah James. His partner in Aquasia and former ABN Amro colleague Colon McKeith on the share register with 1.12% via his private company Idollink Pty Ltd.

Shares in that company are held equally by McKeith and his wife Deborah Leibbrandt. Both James and McKeith sued ABN Amro’s purchaser Royal Bank of Scotland unsucessfully for back pay of million of dollars; James received only $400,000 and McKeith nothing.

*While the Government considers the rival bidders, it is interesting to note an increasing push by some parliamentarians to demand transparency from those who bid for government contracts.

*Cross-bench senator Rex Patrick is proposing draft legislation compelling private tenderers to disclose their tax haven connections and independent MP Zali Steggall recently called for an end to the government selling assets to firms with tax haven connections such as financial engineering group Brookfield, which recently acquired Healthscope and which is close to acquiring aged care provider Aveo.

Both bidding vehicles for Australia’s visa system, chiefly via Consolidated Press and Accenture, have significant tax haven connections.

Scomo’s mate’s mate and the billion-dollar privatisation of Australia’s visa system

SOURCE: https://www.michaelwest.com.au/scomos-mates-mate-and-the-billion-dollar-privatisation-of-australias-visa-system/?fbclid=IwAR0l56ZaxxmKmGVpmexrHn_Odu6oh-0FXyZfxPgj2V-l5yFUDWOeKtDsHd4

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DOM’s new reform agenda

Dominello’s new reform agenda

Policy

Dominello’s new reform agenda

Victor Dominello: New processes for big tech and digital project approvals

Australia’s first minister for customer service – the NSW government’s Victor Dominello – has pulled back the curtain on the internal reforms driving the state’s digital obsession, revealing new structures for approving tech projects, infrastructure to enable real-time feedback, and a renewed focus on building internal capability.

The reforms include new structures – yet to be tested – for diversifying the state’s technology supplier base and to make it easier for small and medium sized companies to sell to government.

NSW embarked on a grand experiment six years ago when it launched its new digital strategy. With its re-election in March, Premier Gladys Berejiklian has doubled-down on its digital drive with an internal reform agenda that has put service delivery – and the technology behind it – at the centre of public administration.

In a headland speech to the Committee for Economic Development of Australia (CEDA), Customer Service Minister Victor Dominello said the state was focused on digitisation because issues of service delivery were central to trust relationship between government and citizens.

“When government services fall behind citizen expectations from the other services in their everyday lives, their trust in government falls and disillusionment in politics rises,” Mr Dominello said.

“Politicians are generally high on the rhetoric, big on the money but poor on the delivery,” he said.

The machinery of government changes that followed the election have been dramatic, with a new Department of Customer Service sitting as one of three whole-of-government agencies alongside Premier and Cabinet and Treasury.

Mr Dominello outlined a streamlining of the Committee processes that ultimates run government, and which will have a profound impact on the way that government tech projects will be funded.

The restructure in NSW has radically consolidated the number of ministerial committees that run the state to just threethe Cabinet, the Treasury committee (or the expenditure review committee) and a newly-formed, customer-focused committee called the Delivery and Performance Committee (DaPCo.)

DaPCo is chaired jointly by Mr Dominello and the Premier, and includes as a members the Treasurer, the Deputy Premier and the deputy leader of the Nationals.

The committee is a radical departure from the way in which large IT projects have been traditional funded in government.

Mr Dominello says it is an opportunity for the most senior ranks of political leadership to ask “the hard questions” on delivery, before heading off to the ERC to get budget approval.

“If you want money, then show me that you’ve mapped out the data architecture, show me that you understand your customers’ needs, and show me that you’re following the Digital Design Standard. I want to see working prototypes of services, not big business cases<” Mr Dominello said.

“In the past, most IT projects got started by taking a big business case to the Expenditure Review Committee of Cabinet, asking for hundreds of millions of dollars upfront and reams and reams of paperwork to back it up,” he said.

“Now for IT projects – and for that matter any other project that has a delivery aspect, which cover most proposals before government – they first have to come to DaPCo.”

The new committee has three primary questions: What is the data architecture, what is the digital design, and what is the customer lens. If these are adequately covered off and approved, only then can the project leaders go off the Treasury committee and ask for money based on a ROI or cost benefit ratio.

“This reform – is cultural and it is whole of government – it is the hard stuff, the messy and complex innards of government that nobody likes to talk about,” Mr. It’s not shiny but it’s one of the biggest enablers for digital transformation and service delivery – which is why we’re committed to getting it right.”

He said NSW had also embarked on a new capability-building effort, both in investing in people inside government, as well as making it easier to small businesses to work with government.

“We are not just talking about capability inside the public service. We are diversifying our technology supplier base, making it easier for small and medium businesses across NSW to bring their skills to government.

Through the buy.nsw platform, we’re simplifying the processes that have long–inhibited small businesses from selling to government – and creating an open procurement marketplace that demonstrates that government is open for business. “

The proof of the pudding will be in the eating, of course. But it is fair to say for all of the work that the state has done in driving digital-based service delivery improvements, engaging with the local industry has not been a priority.

Mr Dominello has also outlined the state’s plans for improved Privacy, Security, Transparency and Ethics.

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MATE VERSUS MATE: INSIDE SCOMO’s BILLION DOLLAR VISA PRIVATISATION!

WHAT a surprise media coverage of this proposal has been quite muted …

Are we being robbed blind? Cough … cough …

… there’s a Sharkies connection … Scott Briggs is a Sharks Director … a Murdoch and Packer nexus … with the rise of the Mega Consultants

Looking at the rival bid, there are a number of Liberal Party connections

Mate Versus Mate: Inside ScoMo’s billion-dollar visa privatisation …

*Home Affairs Secretary, Mike Pezzullo, whose department is becoming a major player in the government outsourcing frenzy … and now widely seen as the most powerful public servant in Canberra, has given his personal backing to the project

Former Immigration deputy secretary Abul Rizvi gave his opinion on what could go wrong as Australia privatises visa processing

-privatisation of visa processing is high-risk

.esp. when undertaken under the cloak of commercial-in-confidence secrecy

-major transformation projects conducted “in partnership” with a big IT company are also high risk

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Mate Versus Mate: Inside ScoMo’s billion-dollar visa privatisation

by Michael Sainsbury and Michael West — August 14 2019 — FeaturedGovernment

Mate Versus Mate: Inside ScoMo’s billion-dollar visa privatisation

Key figures in AVP visas bid: Scott Briggs, Ashok Jacob, Peter Tonagh, Stephen Conroy, Kim Williams, Ervin Vidor

Is Scott Briggs – Scott Morrison mate, Liberal staffer, News Corp lobbyist and Packer empire crisis consultant – now the front-runner to win the Government’s billion-dollar privatisation of Australia’s visa system?

Or is it his rival suitors from Accenture and Australia Post, a consortium packed with Liberal Party identities? 

Michael Sainsbury and Michael West investigate the political and business connections behind this bumper taxpayer-funded prize.

Despite the myriad failures of privatisation, not least the disastrous sale of the nation’s energy networks, which has delivered dazzling profits to foreign multinationals at the expense of every citizen in this country, the Government has pledged to auction yet another essential service, visa processing.

*Media coverage of this proposal has been quite muted, especially in light of the poor track record of the Coalition Government in delivering big-ticket information technology projects and rising concerns about the ability of the bureaucracy to provide secure cyber platforms.

*Key examples are the failure of the 2016 Census platform delivered by IBM and the more than one million Australians opting out of the digital health records plan, MyHealth. Ironically, MyHealth was provided by Accenture, one of the two bidders for the visa deal.

Two Senate inquiries were announced on August 1. The first concerns service delivery in the visa and citizenship system Centrelink’s Robodebt, and the second on the government consulting bonanza and the Big Four audit firms. These followed a chorus of agreement between Labor, the Greens and the cross-bench and may mean a temporary interruption to plans to privatise visa processing.

Yet, the privatisation of visas has the weight of money behind it, and a veritable gravy train of consultants and business interests to give it momentum. The value of the contract is commonly tipped as $1 billion with some estimates as high $3 billion.

*The plan to outsource visa processing has been on foot since 2017. Part of a “once-in-a-generation IT platform overhaul”, it is  designed to process about 90 per cent of all visa applications. The growth outlook is appetising for investors. Visa applications are expected to grow from 8.7 million in 2016-17 to 13 million by 2026-27.

Mind you, there is no model for it. In the UK, where the visa system has been privatised, there are rising calls from MPs and lawyers concerned about the rampant profiteering of visa operators and their exploitation of vulnerable people.

*International precedent, in other words, is not favourable for outsourcing visas.

The Sharkies Connection

This story examines the private interests who stand to benefit from the proposal.

*Let’s begin with those closest to the top of Australian politics. A company chaired by Scott Briggs, who is a friend of the Prime Minister, director of the Cronulla Sharks rugby league club and Liberal Party heavyweight, is one of the prime movers behind one of two consortia. Briggs is well connected, though not well known.

Scott Morrison being presented with the no1 supporter jersey by former club chairman Damian Keogh, former CEO Lyle Gorman and club captain Paul Gallen. Picture: John Veage.(Image courtesy https://www.theleader.com.au/)

Another Briggs company was engaged by embattled Crown Resorts for crisis management advice after 19 of its employees of the Packer family business were detained in China in 2016.

Briggs’ bidding vehicle for visas is Australia Visa Processing Australia Pty Ltd (the “AVP” bid). The rival bidder is a consortium of global IT consulting giant Accenture and Australia Post.

Murdoch and Packer nexus

Scott Briggs

*While the bid by Accenture and Australia Post offers two reassuringly familiar names, Scott Briggs’ AVP is a new player in the booming government outsourcing game. Both bidders host a web of connections to the Liberal Party, Prime Minister Scott Morrison, his predecessor Malcolm Turnbull and the Packer and Murdoch business empires.

The drive to privatise visas has been hampered in recent weeks following admissions by the Government that it had deals with the scandal-plagued Crown Resorts and other corporations to fast track visas; in Crown’s case it was for Chinese high rolling gamblers.

After the Crown crisis broke, in 2016, when 19 of its employees were detained in China, it brought in Pace First, a pan-national crisis management that is chaired by Briggs, to protect Crown’s brand.

“We help clients understand and manage their unique risk profile, regulatory requirements and geographic exposures to anticipate possible disruptions and impacts, plan response and recovery strategies and understand the full context of consequences at every level of an organisation — from site to the boardroom,” Pace’s website states.

*AVP was registered with the Australian Securities and Investments Commission (ASIC) in September 2016. Searches show it has brought together some well known as well as mysterious Sydney business interests. Sydney lawyer Scott Briggs is  formerly Honorary Treasurer of the NSW branch of the Liberal Party. Briggs ran Malcolm Turnbull’s successful bid to beat sitting member Peter King for pre-selection for the seat of Wentworth in 2004.

Anthony Tripodina

He has also worked for Turnbull in finance and for both James Packer and Rupert Murdoch. His company Pacific Blue Capital holds 19.9 per cent of AVP. Pacific Blue also lists as a director and shareholder the young Sydney real estate agent Anthony Tripodina.

*Besides Briggs and Tripodina, other AVP directors and shareholders include former Foxtel chiefs Peter Tonagh, and Kim Williams and Kim Williams’ wife Catherine Dovey, long-time Packer family advisor Ashok Jacob, Sky News host and former Labor party Senator Stephen Conroy and secretive Sydney property group Toga Investments.*

Among other key shareholders there’s the scandal-prone National Australia Bank’s NAB Ventures, as well as Qantas Ventures. AVP’s registered offices are at a small suite in Sydney’s Australia Square Tower.

Rise of the mega-consultants

The company’s share register also includes PwC Nominees and while this nominee company appears to have been deployed to hold shares for other investors, reports in The Australian Financial Review suggest PwC is an investor in its own right, as well as a key advisor. PwC partner, Sammy Kumar, is a director of AVP.

The interesting thing here is that rival bidder Accenture is not merely an adviser but also a major investor.

Both PwC and Accenture are among the biggest beneficiaries of Australian government contracts, earning billions of dollars in recent years.

This brings us to an interesting development; the status of these mega-consultancies as, not just advisers, but bidders for public assets in their own right.

This, at a time when the Senate has just announced an inquiry into poor audit standards and conflicts of interest by the Big Four: PwC, KPMG, EY and Deloitte.

Michael West@MichaelWestBiz

Here is the Committee line up for Senate Inquiry into Big4 audit (and their tax and consulting conflicts). We will be calling for a break up. Submissions can be confidential https://www.aph.gov.au/Parliamentary_Business/Committees/Joint/Corporations_and_Financial_Services/Committee_Membership …#auspol #ausbiz1361:44 PM – Aug 12, 2019Twitter Ads info and privacy115 people are talking about this

One news report mentioned that three of PwC’s partners, including chief executive, Luke Sayers, and fellow partners Tony Peake and Kuman, held personal interests in AVP but had been forced to divest them.

Rise of the lobbyist

Scott Briggs is also a friend of the Government’s low profile Immigration Minister David Coleman. Briggs and Coleman are former colleagues who worked together at Nine Entertainment. It should be noted however that the visa project was already underway, and Scott Briggs had formed his consortium, when Coleman was surprisingly handed the junior Home Affairs ministry by Malcolm Turnbull in the 2017 cabinet reshuffle, in a bid to provide some check on the power of his rival, Home Affairs Minister Peter Dutton.

Coleman quickly recused himself from any involvement in the visa processing contract in 2018 which is now being looked after in Peter Dutton’s office. Scott Morrison, after some time, followed suit.

(pic of David Colman from Dept. immigration website)

In 2014, Fox Sports chief (now Foxtel CEO), Patrick Delaney, brought Scott Briggs in from Nine to work on government relations. Nine chief David Gyngell was said to be unhappy at his poaching at the time. Briggs had previously also worked for James Packer’s Publishing and Broadcasting Limited.

It is understood that Scott Briggs’ main job was as a lobbyist, focused largely on the anti-siphoning laws which keep major sports events on free to air television, laws which Foxtel has perennially tried to have lifted or at least watered down.

Colleagues described Briggs as someone who did not socialise much with workmates and who was secretive, and while he had a significant say in major divisions such as budgets and group strategy, the nature of his role in the Murdoch empire is not well documented. Others said that he remained close to people at Nine.

The last quango in Canberra

Looking at the rival bid, there are a number of Liberal Party connections, and a greater diversity of interstate operators, from WA to Queensland, as well as NSW and Victoria. Accenture is bringing its IT consulting expertise to the party, and Australia Post its broad network for distribution.

Four of the directors on the board of Australia Post are Liberal Party figures past and present. Tony Nutt was former Prime Minister John Howard’s personal private secretary for a decade, state director of the NSW, Victorian, South Australian and West Australian branches of the party and its federal director through the 2016 election.

(pict of tony Nutt, look up Tony Nutt advisory)

Bruce McIver is a former national vice-president of the Liberal Party.

Deirdre Willmott is a former chief of staff for Liberal premiers in Western Australia. Michael Ronaldson was a Liberal Party senator for Victoria.

The Australia Post board’s Liberal Party connections cover most of the country, largely due to the fact that, like the National Broadband network, its board was reconstituted – and stacked with mates – by Malcolm Turnbull from 2013 when he took over as Communications Minister. Turnbull’s work was continued by his successor Mitch Fifield, himself appointed by Turnbull after he rolled Tony Abbott in 2015. Australia Post directors currently take home $93,000 a year.

The Liberal Heavyweight

The heavyweight on the list is Tony Nutt, who was appointed by Fifield in May 2018 and is a former adviser to John Howard. Nutt has run the party at both federal and NSW levels, as well as being a loyal foot soldier to Tony Abbott who rose to be Cabinet Secretary. He even did a stint with short-lived Victoria Premier Ted Baillieu and was also in charge of Scott Morrison’s transition into government after this year’s election.

Melbourne lawyer, former Senator Michael Ronaldson, was appointed by Fifield in March 2016 and had his term extended for another three years this year. He is no slouch in the political experience department either, having been a Federal Liberal lower house MP from 1990-2001 and then Senator for the state between 2004-2013 and once served as junior transport minister.

(photo of Ronaldson, Australia post director’s page)

Trucking industry veteran, Bruce McIver, was appointed by Mitch Fifield in December 2015 but was certainly identified by Turnbull who had only recently become PM. He has been a very loyal servant to the party as the inaugural President of the Liberal National Party of Queensland from from 2008 until his retirement only three months before his elevation to the Australia Post board.

During this time, McIvor was also a Vice President of the federal Liberal Party and was unsuccessful in an internal tussle for the federal presidency in 2017, bowing out to its current occupant Nick Greiner. Interestingly, he is also a director of Clive Palmer’s Asia Pacific Shipping Enterprises.

(pic of Bruce McIvor)

Track record lite

Deirdre Willmott is former chief of staff of Western Australian premiers Richard Court and Colin Barnett from 2008-2010. She was also a Liberal candidate for the division of Cottesloe for the 2008 WA state election but withdrew after the sitting member Barnett back-flipped on his resignation. A grateful party handed her the job of replacing retiring Senator Chris Ellison but, again, she withdrew and Chris Back took the spot. Willmott is also president of the chairman of the WA Chamber of Commerce and Industry.

The chairman of Australia Post John Stanhope, was appointed by Stephen Conroy in 2012. Conroy, incidentally, is a director of Australian Visa Services, the rival bidder. Stanhope is the only surviving Labor appointment at Australia Post. He was reappointed by Fifield in November 2016.

(photo Stanhope look up Australia post)

His former Telstra colleague, marketing veteran Holly Kramer, is his deputy and was appointed by Fifield in October 2015 but was also a Turnbull pick. Australia Post chief executive and director, Christine Holgate, was also a senior Telstra executive before making her mark as CEO of the now-troubled vitamins and milk powder maker Blackmores Limited.

The other Australia Post directors are former journalist and Perth-based media executive Mario d’Orazio who is reportedly close to Finance Minister Mathias Cormann. He was appointed only six weeks out from the May 2019 election, a move widely seen as poor governance as Labor may have won the poll.

Finally, there is former Deloitte audit partner (until 2011), Jan West, who was appointed in May 2016 by Fifield.

It is worth noting that none of Australia Post’s directors, apart from McIver and perhaps Kramer, appears to have any executive experience in the group’s core logistics business. West and Stanhope have finance experience, West has commercial legal experience and Kramer a career in marketing.

Aussie Post’s cyber audit shocker

*The Australian National Audit Office has raised alarm bells about Australia’ Posts inadequate cybersecurity and risk management framework according to a damning report by released July 4.

“Australia Post’s cyber security framework and controls have been the focus of internal reviews, which highlighted that Australia Post had not fully implemented the security standards in its cyber security risk management framework,” the ANAO report found. Australia Post’s “existing controls do not sufficiently mitigate the risks it has identified”.

*As noted, Australia Post’s partner for the bid Accenture is no stranger to big government outsourcing projects and is expected to be one of the core half dozen companies that will come under the focus of the Senate inquiry into government outsourcing which has become rampant under the Coalition, joining its major rival IBM as well as the Big Four audit firms, PwC, EY, KPMG and Deloitte, in the hot seat. Indeed, the two IT services giants are seen as potential audit rivals to existing players in the future.

But quite what the Australia Post/Accenture alliance looks like, nobody knows because neither company is willing to comment.

*Despite this being a public tender process designed to spend taxpayer funds on privatising part of the public service, and despite Australia Post being a taxpayer funded organisation, a public relations operative for the state-owned corporation, John Pyrrios declined to explain its relations with Accenture.

Accenture’s Australian business is booming according to accounts lodged with the Australian Securities and Investments Commission, Accenture Holdings Pty Ltd.

*Its revenues soared past $2 billion in the 2017-2108 financial year, up from $1.8 billion in 2016-20127 to $2.1 billion but it has conveniently struggled to make a profit as hundreds of millions of dollars are raked offshore in related party transactions.

The group’s bottom line profit in the period went from down from $57 million to $53 million in the previous year and, like most global technology companies in Australia it paid only minimal tax of $22 million (about 1 per cent of its revenues) up from $13 million.

(pic Rob Easton – Ascenture website)

How does Accenture “offshore” its profits? Some $576 million was spent on consulting services from Accenture’s overseas entities last year and royalties payments jumped by $68 million in the one year to $156 million. Despite the apparently aggressive tax avoidance, the consulting firm has booked fees of $534 million from government contracts over the past three years.

Its parent is Accenture Australia Holdings BV a company incorporated in The Netherlands and its ultimate owner is Accenture Plc, a company incorporated in Ireland and listed on the New York Stock Exchange.

**There is some momentum growing in parliament, noticeably from independent MP Zali Steggall, Centre Alliance Senator Rex Patrick, Labor’s Julian Hill and the Greens to force companies who profit from government contracts to reveal their tax haven connections. Some have called for no government contracts to be awarded to entities who have tax haven connections.

Both bidding parties – thanks to the involvement of PwC and Accenture – have myriad tax haven connections.

(pic Rex Patrick or Zali)

The outsourcing frenzy

*Home Affairs Secretary, Mike Pezzullo, whose department is becoming a major player in the government outsourcing frenzy, and now widely seen as the most powerful public servant in Canberra, has given his personal backing to the project.

*“Whether the capital to fund a new immigration and citizenship system is privately financed or otherwise, is not a matter for me or the Department. The Government of the day will decide that issue, as it will the final form and design of the future system.

*Pezzullo noted it was his personal preference “to automate our manual processes wherever we can, reduce the administrative cost entailed in processing each visa, and – most importantly – concentrate the same number of staff (or preferably an increased number of staff) on higher value-added roles”.

*“Our people, who are our key asset, should be focused on decision-making, risk assessment and complex case engagement where human engagement with applicants is crucially important. Working together, across the Department and the [Australian Border Force] ABF, we will put a range of options to the government of the day, regarding the funding of a major capital upgrade of our systems, where we have the same number of officers, or preferably more, engaged on those higher value tasks, while, at the same time, automating wherever possible more manual administrative tasks, such as data entry.”

(worst picture of Mike Pezzulo I can find)

**Writing for The Mandarin, former Immigration deputy secretary Abul Rizvi gave his opinion on what could go wrong as Australia privatises visa processing.*

“Privatisation of core government functions such as visa processing is high-risk, especially when undertaken under the cloak of commercial-in-confidence secrecy. Major ICT transformation projects conducted “in partnership” with a big IT company are also high risk.

“Doing the two together multiplies the risk big time, but that’s exactly what the Department of Home Affairs is doing,” he wrote.

(Tweet from the Mandarin quoting Abul Rizvi)

Still, the outsourcing is well underway, with Boston Consulting Group – a firm where, ironically, Opposition Home Affairs spokesperson Kristina Keneally’s husband is a partneris acting as an adviser to the Home Affairs Department.

Another Big Four accounting firm, KPMG, is acting as commercial adviser to the Department to ensure the process is conducted at arm’s length. KPMG is also Accenture’s auditor with its accounts signed off by partner Tracey Driver.

All in all, this privatisation program is an all-in consultants-fest of epic proportions.

*There appears to be no international precedent overseas for a successful outcome, visibility and accountability of the key players are low, and all the risks – and they are enormousrest with the taxpayers who have no say in the process.

**Paradoxically, some of the main players – those who will reap the rewards – are either big facilitators or practitioners of global tax avoidance; PwC the former and Accenture and News Corp/Foxtel the latter.

Michaelwest.com.au is not suggesting there has been any political interference in the visa processing tender. Scott Briggs did not respond to emails seeking comment, Accenture and Australia Post declined to provide any information whatsoever.

———————–PREVIOUSHas ACCC let Facebook and Google off the hook?

ABOUT THE AUTHOR

Michael Sainsbury

Michael Sainsbury

Michael Sainsbury is a former China correspondent (now based in South-East Asia), with more than 20 years’ experience writing about business, business politics and human rights across Australia and the Asia Pacific.

Michael West

Michael West

Having worked for eight years investigating financial markets and big business for Rupert Murdoch’s The Australian and another eight years for The Age and Sydney Morning Herald at Fairfax Media, West has established michaelwest.com.au to focus on journalism of high public interest. West was appointed Adjunct Associate Professor at the University of Sydney’s School of Social and Political Sciences last year. The role is to work with the School’s Sydney Democracy Network, investigating money in politics, corporate influence and the intersection between government and big business.

Mate Versus Mate: Inside ScoMo’s billion-dollar visa privatisation

SOURCE: https://www.michaelwest.com.au/mate-versus-mate-inside-scomos-billion-dollar-visa-privatisation/

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NBN fix to blow $20b hole in Budget

A side-on shot of Scott Morrison speaking.

PHOTO: Scott Morrison will now have to carry the can for the NBN. (AAP: Joel Carrett)

NBN fix to blow $20b hole in Budget

By Unconventional Economist in Australian budget

August 5, 2019 | 3 comments

After ACCC head, Rod Sims, last week called for the value of the $50 billion National Broadband Network (NBN) to be written-down in order to lower prices, ABC business editor, Ian Verrender, has warned that the Morrison Government is facing a $20 billion budget hit to fix the NBN:

As a cautionary tale of the potentially caustic brew that can result from the intersection of government and investment, politicians and infrastructure, the National Broadband Network has it all.

What should have been a landmark project that projected Australian telecommunications into the modern era has turned into a decade-long debacle, marked by political infighting and cheap point-scoring.

After a series of roll-out miscalculations, what will be delivered on completion next year will be an expensive, sub-standard product incorporating a mix of retrograde technologies with higher running costs that, ultimately, will require a great deal more investment.

It also should sound a warning to those increasingly urgent calls for government to quickly ramp up infrastructure projects; to soak up workers as the residential construction boom rapidly comes to an end.

Without independent oversight and bipartisan political support, even the best-intentioned projects can end up a compromised, overpriced mess.

Is there a fix for the NBN?

There is. But it involves a write-down of the project of up to $20 billion. Politically, that’s an unpalatable solution and one that would blow a massive hole in the Morrison Government’s surplus ambitions…

[The NBN] is more expensive than the old ADSL service it replaced, and, at least in the experience of your columnist, it’s often no faster…

Perhaps the first mistake was the Howard government’s decision to privatise Telstra but leave it in control of the fixed line telephone network, which competitors had to rent at wholesale prices…

In 2011… David Thodey, struck an incredible deal; $9 billion that would be paid in instalments as Telstra’s fixed line customers migrated across to the NBN.

Three years later, under the Abbott government, it was renegotiated to $11 billion to include older technologies such as hybrid fibre coaxial cable…

That massive transfer from taxpayers to Telstra shareholders — agreed to by management and voted upon by shareholders — for a century-old network in terminal decline has turbocharged the company’s earnings and lucrative dividend stream ever since. It’s also a factor behind the exorbitant price tag for the rollout and why NBN Co’s business model is broken…. because the NBN is committed to delivering a commercial return to the Federal Government on the massive outlay, it is charging way too much to retailers who then are passing on the costs to consumers…

Given it is an investment, the NBN has to earn a commercial return and since the costs have blown out, it has to charge retailers like a wounded bull. They, in turn, pass on those costs to you and me.

There is almost no debate now about how to fix the problem. Everyone from ratings agency S&P to the telcos themselves are demanding the Government write down the value of the NBN by around $20 billion.

If it did this, the NBN wouldn’t need to charge as much and everyone would be better off.

There’s just one problem. Given it represents a loss, that $20 billion write-off would be very much on-budget, which essentially means taxpayers rather than NBN users would foot the bill.

It also would hit the budget bottom line, which explains why the Morrison Government, already facing a slowing economy, will be reluctant to do anything that endangers its promised surplus…

That’s a great summary of the NBN debacle.

As I keep saying, the federal government might as well write-down the NBN and take the Budget hit now – which seems inevitable anyway – and allow the NBN to lower its access charges. It should also open the NBN to competition in capital city areas where it is not a natural monopoly.

Low cost and reliable internet is now an essential service, just like electricity, water and gas. So it makes little sense for Australians to be charged excessive user fees, in turn dragging on Australia’s productivity.

It seems the biggest barrier to a write-down is political in that it would punch a huge hole in the Budget and destroy Scott Morrison’s surplus narrative.

Accordingly, Scott Morrison will try to kick the problem down the road for the next government to fix.

SOURCE: https://www.macrobusiness.com.au/2019/08/nbn-fix-blow-20b-hole-budget/

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NBN FIX INVOLVES A $20Bn WRITE-DOWN OF THE PROJECT THAT WOULD HURT MORRISON GOVT SURPLUS GOAL

ANALYSIS of how the NBN plan was to roll out fibre to almost every premise in the country … but what has been built is a slower, far more complex network

… perhaps the first mistake was HOWARD government’s decision to privatise TELSTRA

…under the ABBOTT government the deal with Telstra was renegotiated to $11Bn to include older technologies incl. hybrid fibre coaxial cable … it will need to be upgraded to a finished standard …

AND the SCOMO Govt ought carry the can and write down the value of the NBN by some $20Bn!

ANALYSIS

NBN fix involves a $20 billion write-down of the project that would hurt Morrison Government surplus goal

By business editor Ian Verrender

5 AUGUS 2019

NBN Connection Box

PHOTO: The NBN is currently a high-cost monument to the pitfalls of Government-run infrastructure projects. (ABC Radio Adelaide: Malcolm Sutton)

RELATED STORY: Internet ‘prices will have to go up’ if NBN doesn’t cut access costs, says Telstra boss

RELATED STORY: NBN write-down ‘inevitable’, warns ratings agency S&P

John Howard spawned the idea, Kevin Rudd forced it into existence, Tony Abbott wanted to throttle it, Malcolm Turnbull saved it from almost certain death and now Scott Morrison will have to carry the can for it.

As a cautionary tale of the potentially caustic brew that can result from the intersection of government and investment, politicians and infrastructure, the National Broadband Network has it all.

What should have been a landmark project that projected Australian telecommunications into the modern era has turned into a decade-long debacle, marked by political infighting and cheap point-scoring.

After a series of roll-out miscalculations, what will be delivered on completion next year will be an expensive, sub-standard product incorporating a mix of retrograde technologies with higher running costs that, ultimately, will require a great deal more investment.

A side-on shot of Scott Morrison speaking.

PHOTO: Scott Morrison will now have to carry the can for the NBN. (AAP: Joel Carrett)

It also should sound a warning to those increasingly urgent calls for government to quickly ramp up infrastructure projects; to soak up workers as the residential construction boom rapidly comes to an end.

Without independent oversight and bipartisan political support, even the best-intentioned projects can end up a compromised, overpriced mess.

Is there a fix for the NBN?

*There is. But it involves a write-down of the project of up to $20 billion. Politically, that’s an unpalatable solution and one that would blow a massive hole in the Morrison Government’s surplus ambitions.

It would add to national debt and be counted in the budget’s headline position.

While it wouldn’t affect the underlying cash balance — the commonly reported budget measure — a loss of that magnitude couldn’t be ignored. Hence the Government’s determination to resist any such move.

Telstra’s role in the mess

Telstra boss Andy Penn has stepped up the pressure on the NBN in the past fortnight, accusing the carrier of offering one of the most expensive fixed-line broadband services in the world, a claim rejected by his NBN counterpart Stephen Rue.

You don’t need an accounting degree to figure who’s correct. Anyone who has signed up to the NBN — even those with fibre-to-the-kerb (or curb as the NBN ironically calls it) — can quickly identify its two distinctive features.

It’s more expensive than the old ADSL service it replaced, and, at least in the experience of your columnist, it’s often no faster.

But it’s disingenuous for Mr Penn to sheet the blame home to the NBN, especially given Telstra’s role in this sad and sorry tale.

Why 5G won’t kill the NBN
Telstra and other telcos are planning a massive rollout of their latest 5G mobile networks, but analysts say they won’t make broadband obsolete.

Under American expat Sol Trujillo, Telstra spent years actively undermining both the Howard and Rudd governments’ plans for a fibre optic cable rollout.

*Perhaps the first mistake was the Howard government’s decision to privatise Telstra but leave it in control of the fixed line telephone network, which competitors had to rent at wholesale prices.

That wasn’t an issue until Mr Trujillo’s arrival. Telstra seized upon its monopoly position, to the point where more than half of all Federal Court cases were disputes between Telstra, its commercial rivals and the competition regulator.

The company even launched legal action against former communications minister Helen Coonan and thwarted every effort from the Howard and then Rudd government — which went to the 2007 election with a national broadband policy — to build a new network.

*In frustration, Mr Rudd and his then-communications minister Stephen Conroy delivered an ultimatum; co-operate or have the fixed line network confiscated.

From that moment on, the NBN became a political football as the Opposition trained its sights on the project.

Telstra chief executive Andy Penn wears a black suit and speaks at a lectern.

PHOTO: Andy Penn has stepped up the pressure on the NBN in the past two weeks. (AAP: Bianca de Marchi)

Telstra backed down and a humiliated Mr Trujillo headed home. Ultimately, however, the government still had to deal with Telstra given it owned the ducts, pipes and connections essential for the new cable.

*In 2011, Mr Trujillo’s replacement, David Thodey, struck an incredible deal; $9 billion that would be paid in instalments as Telstra’s fixed line customers migrated across to the NBN.

*Three years later, under the Abbott government, it was renegotiated to $11 billion to include older technologies such as hybrid fibre coaxial cable.

VIDEO: Can the NBN handle our ever-increasing digital appetite? (7.30)

*That massive transfer from taxpayers to Telstra shareholders — agreed to by management and voted upon by shareholders — for a century-old network in terminal decline has turbocharged the company’s earnings and lucrative dividend stream ever since. It’s also a factor behind the exorbitant price tag for the rollout and why NBN Co’s business model is broken.

Now, as customers are being switched across to the NBN, the cash deluge is drying up. That hasn’t stopped Telstra management complaining. And little wonder. At the half year result, it slashed the interim dividend as earnings plunged 27 per cent.

*According to Mr Penn, because the NBN is committed to delivering a commercial return to the Federal Government on the massive outlay, it is charging way too much to retailers who then are passing on the costs to consumers.

In that regard, he’s absolutely right.

Who pays for the mistakes?

To get the deal across the line without blowing the budget, the Rudd government came up with a novel idea. It decided to treat the project as a commercial investment rather than a budgetary outlay.

In accountant speak, the NBN is “off balance sheet”. To do this, the Government has tipped in $29.5 billion in equity and handed out a further $19.5 billion as a loan. The incredible shrinking Telstra
Telstra will have shed about half its workforce in just over a decade, but can it shrink its way to greatness?

*The idea was that the money would all be repaid with interest, and perhaps even a profit, as once the thing was up and running, it would be sold to the highest bidder.

*And therein lies the problem. Given it is an investment, the NBN has to earn a commercial return and since the costs have blown out, it has to charge retailers like a wounded bull. They, in turn, pass on those costs to you and me.

*There is almost no debate now about how to fix the problemEveryone from ratings agency S&P to the telcos themselves are demanding the Government write down the value of the NBN by around $20 billion.

*If it did this, the NBN wouldn’t need to charge as much and everyone would be better off.

*There’s just one problem. Given it represents a loss, that $20 billion write-off would be very much on-budget, which essentially means taxpayers rather than NBN users would foot the bill.

*It also would hit the budget bottom line, which explains why the Morrison Government, already facing a slowing economy, will be reluctant to do anything that endangers its promised surplus.

That’s not all

*Mr Rudd estimated the NBN would cost $41 billion. Mr Turnbull, having convinced Mr Abbott it could be built cheaper and quicker, then estimated the Rudd plan would come in at $72 billion.

**The solution? Cut the spend and use a mixture of technologies, some of which had been in place for years.

It’s now projected the total cost will be $51 billion.

*The comparisons, however, are useless because they are for different products. The original plan was to roll out fibre to almost every premises in the country. What’s been built is a slower, far more complex network.

VIDEO: NBN wiring rigged through trees in Sydney (ABC News)

As a result, it is more expensive to run and requires more maintenance, which delivers a lower return. Some premises have fibre running down the street. Some have the new cable ending at the node, the little units on some street corners. Still others use the ageing hybrid coaxial cable.

So, at some stage, it will need to be upgraded, to be built to a finished standard at a substantially higher cost.

In the meantime, it remains a high-cost monument to the pitfalls of government-run infrastructure projects.

NBN Connection Box

SOURCE: https://www.abc.net.au/news/2019-08-05/nbn-legacy-how-not-to-run-infrastructure-project-telstra/11382398

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INDUSTRY PARASITES DEMAND MORE PRIVATISATIONS

Workers of an electricity company repair power poles and cables.

Photo:  ABC

 DESPITE decades of privatisation and marketisation of public services and assets, there is no evidence of user charges falling, or government spending abating.

Quite the opposite, in fact. Yet this is what you’d expect were the privatisers to deliver the promised efficiency gains promised by the neoliberals.

The situation has gone so awry that Australian Competition and Consumer Commission (ACCC) head, Rod Sims, has issued a spate of warnings about, and voiced opposition to, the proliferation of privatisations being undertaken across the country!

 

 

Industry parasites demand more privatisations

 

 

 

With the net debt of Australia’s state governments set to rise sharply in coming years to finance infrastructure projects for Australia’s population ponzi, analysis shows they have almost $220 billion worth of assets that could be privatised.

Accordingly, IFM Investors CEO, Brett Himbury, is calling for further asset sales to the nation’s superannuation funds. From The AFR:

State governments are sitting on almost $220 billion in public assets which could be sold to help deliver much-needed infrastructure without leaving debt bombs to be paid off by future generations…

Figures compiled by The Australian Financial Review show Queensland has the most publicly-owned saleable assets on their books, with $67.4 billion, followed by NSW ($59.4 billion), Western Australia ($34 billion), Victoria ($24 billion), ACT ($15 billion) and South Australia ($10 billion)…

Infrastructure experts have called for another round of asset recycling to be initiated by the Morrison government…

Infrastructure Partnerships Australia chief executive Adrian Dwyer said… “The people of NSW are reaping the fruits of asset recycling. In Queensland, the tree is full of fruit that isn’t being picked”…

IFM Investors chief executive Brett Himbury… [said] “We would love to see asset recycling 2.0. The economic impact of asset recycling historically has been quite profound. It’s been great for investors and it’s been great for states that have adopted it”…

Further asset sales and privatisations would be a retrograde step.

*Despite decades of privatisation and marketisation of public services and assets, there is no evidence of user charges falling, or government spending abating. Quite the opposite, in fact.

Yet this is what you’d expect were the privatisers to deliver the promised efficiency gains promised by the neoliberals.

*The situation has gone so awry that Australian Competition and Consumer Commission (ACCC) head, Rod Sims, has issued a spate of warnings about, and voiced opposition to, the proliferation of privatisations being undertaken across the country:

…”we’re doing it wrong” in our national approach to privatisation and the public’s increasing scepticism of what should be a lever of enhanced economic efficiency is well justified.

“In my view, it is seeing prices rise. In my view therefore the public – who associate privatisation with higher prices – they’re more right than wrong.

And so we shouldn’t single the public out in saying ‘What do they know, they just don’t understand the argument?’

“They understand it very well. They see that we have been privatising in ways that push up prices and we shouldn’t be doing it because we’re actually harming the whole concept of privatisation itself”…

“Privatisation is not popular if you take a vote, because people believe it leads to high prices. They’re right. Often privatisation does lead to higher prices because we privatise for the wrong reasons and in the wrong way… we [should] privatise for the economic efficiency reasons, not to raise money”…

“The examples abound of privatising in the wrong way… Sydney Airport, [where][ the government doubled – I’ll say it again, doubled – the landing charges prior to selling it. They put no constraints on parking fees or anything else and they also gave the [new] owner the first right of refusal over the second Sydney airport so that there would be no competition and you boost price. [It was] a terrible example of how not to privatise”.

“The Port of Melbourne tried to increase the rents on the land by 750 per cent as they were privatising the port… You have to ask, what were they thinking?”

 

A view of the chief secretary’s building in Sydney

 The chief secretary’s office in Sydney is the last significant sandstone building still being used as a government office. The Guardian

 

There is also the risk that “asset recycling”  will encourage state governments to sell-off essential infrastructure without giving due regard to longer-term consequences, leaving taxpayers worse-off.

As noted by the Productivity Commission: asset recycling “could act to encourage privatisation in circumstances that are not fully justified and encourage the selection of new projects that do not have demonstrable net benefits.

The first rule of any privatisation should be that it boosts competition within the relevant market, and at a minimum does not lessen competition.

Unfortunately, recent privatisations have broken this golden rule, placing achieving a heavy sale price above the interests of users, in turn stifling competition and productivity.

Our politicians pursue this approach because it allows them to deliver both lower taxes and reduced public debt simply by transferring the ownership of monopolies from public to private ownership.

But there’s a catch: the new private owners will almost always use their market power to force-up user costs and boost their profits.

We have seen this time and time again with ports, airport parking, toll roads, and utilities (e.g. electricity, water and gas).

In most cases, the cost-of-living burden for users is worse than raising their taxes. It is also less transparent, since monopoly profits are easier to hide from public view.

Basically, asset recycling is a recipe for more empty calories growth that benefits rentier profits at public cost.

The problem with neoliberalism is that it eventually has nothing left to sell-off, and ultimately leaves citizens as little more than renters of their own country.

unconventionaleconomist@hotmail.com

Privatising WestConnex is biggest waste of public funds in Australian history

POOR ITA BUTTROSE: THE FUTURE OF OUR ABC IS AT STAKE IN THIS ELECTION!

 

Reports from Neuro Surgeons that social media is causing depression … or is it the economic rationalists running the joint in Australia?

KEY POINTS …

-if the Scomo guvmnt is re-elected on 18 May the ABC Board will have to ‘downsize’ with an $83.7M funding cut

.cuts to jobs and programmes

 

-the efficiency review … the Tonagh-Bean Report will not be publicly released before the election on 18 May … hm ???

-a renewed push to privatise the ABC; called for by the Inst. of Public Affairs

.carried by the federal council of the Liberal Party meeting; June 2018

Leaves a nasty taste in one’s mouth, doesn’t it?

Poor Ita Buttrose: The future of her ABC is now at stake in this election

Quentin Dempster says Ita Buttrose has taken the chairmanship of the ABC at a crucial time in its history.

 

 

Poor Ita.

National treasure Ita Buttrose has taken the chairmanship of the ABC at a crucial time in its history.

*If the Scott Morrison coalition government is re-elected on May 18 one of the Buttrose board’s first tasks will be to order the further downsizing of the broadcaster to accommodate an $83.7 million funding cut over three years from July 1.

This funding haircut was described as an “indexation pause” in Communications Minister Senator Mitch Fifield’s 2018 departmental budget papers.

Newly appointed ABC managing director David Anderson has contingency plans to put before the board, requiring cuts to ABC programs and output, and employee retrenchments expected to be in the hundreds.  

new ABC boss can't explain Michelle Guthrie's sacking
Ms Buttrose appointed David Anderson to the ABC managing director position. Photo: AAP

 

 

 

 

 

 

Mr Anderson told Patricia Karvelas’ RN Drive on Monday evening that “if the Coalition is returned then we have an $84 million budget reduction over the next three years and, having been through a number of budget reductions to this point, I don’t see how we can avoid staff cuts and, I think, disruption to our content.

“I think that it’s inevitable,” Mr Anderson said.

“They are all options that are not in keeping with what we are trying to achieve and that is to be independent, innovative and invaluable over the coming year.”

*Although the Morrison government renewed tied funding ($40 million) for an Enhanced News Gathering program in the recent 2019 budget, Ms Buttrose, her board and Mr Anderson also must prepare for the release on yet another “efficiency” review of the ABC.

This was commissioned by Minister Fifield in 2018 and the completed report has been sitting on the minister’s desk since October.

Although the terms of reference exclude any consideration of a merger of ABC with the multicultural public broadcaster SBS or subscription charges for users of ABC and SBS content, the bean counters are believed to have identified $120 million in recurrent operational “savings”.

 

*The efficiency review was conducted by Peter Tonagh, former chief executive of News Corp and Foxtel and Richard Bean, media lawyer and former acting chairman of the Australian Communications and Media Authority (ACMA).

Sources have told The New Daily that if “operationalised” this would entail a substantial reduction in current output by both broadcasters.

*It appears that the Tonagh-Bean report will not be publicly released before electors determine the future government of Australia at the ballot box on Saturday week.

*At a Sydney Writers’ Festival panel discussion on Whose ABC? last Saturday, former ABC managing director Mark Scott referred to the need for all to see the Tonagh-Bean report.

Mr Scott supported recent calls for ABC funding to be de-politicised by being spread over 10 years.

ABC funding needed to be removed from the “grinding incrementalism” of the current political cycle, Mr Scott said.

In his RN Drive interview, Mr Anderson said he had already written to the government advocating five-year funding.

A Senate inquiry into last year’s sacking of Michelle Guthrie as ABC managing director and the consequent resignation of ABC chairman Justin Milne following allegations of political interference, recommended more certainty of ABC funding over a minimum five years.

michelle guthrie
Michelle Guthrie was sacked from her position as ABC managing director. Photo: AAP

 

Although Labor shadow communications minister Michelle Rowland has also indicated support for secure longer-term ABC funding, so far in this election campaign her leader Bill Shorten has only committed to revoke the Morrison government’s “indexation pause” funding cuts.

*Also facing Ita Buttrose is a renewed push to privatise the ABC.

*Last month on Sky News, Institute of Public Affairs director John Roskam called for the ABC to be privatised.

This followed the publication last year of an IPA-commissioned book on ABC privatisation, arguing that a taxpayer-funded broadcaster was now redundant because of almost limitless content now being provided though the digital and internet revolution, on-demand video and audio streaming through smart television and digital radio.

*Former ABC chairman Maurice Newman has written in his column in The Australian that a taxpayer-funded public broadcaster is now “obsolete”.

 

*A resolution calling for the privatisation of the ABC “with the exception of regional services” was overwhelmingly carried by the federal council of the Liberal Party meeting in Sydney in June last year.

Although the Prime Minister and Communications Minister Fifield have said the parliamentary Liberal Party is not bound by this resolution, neither they nor any prominent organisational Liberal Party voice has moved to rescind it. 

ita buttrose abc chair
Ita Buttrose was named as the new ABC chair in February. Photo: AAP

 

Apart from expediting the “unanimous” appointment of Mr Anderson last Friday evening after a week of interviews with shortlisted nominees, Ms Buttrose has yet to comment publicly on her assessment of the adequacy of ABC funding.

If there is a change of government on May 18, Ms Buttrose will have more time to stabilise the organisation for which she has taken statutory responsibility after the Guthrie-Milne bloodbath, one of the biggest political and governance boilovers in the ABC’s history.

If the Morrison government is returned, she will have to stand and fight for the ABC against all the political and rivalrous media forces now lining up to destroy or radically reduce its current place as a part of Australia’s mainstream media.

Quentin Dempster, a contributing editor, is a public broadcasting advocate. He has been working with GetUp! in its current campaign to save the ABC