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

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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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OUTGOING PARKO WARNS ON AUSTRALIA’S PRODUCTIVITY CRISIS

Martin Parkinson, the retiring secretary of the Department of the Prime Minister and Cabinet, in Canberra yesterday. Picture: Sean Davey

What will the outgoing secretary be doing afterwards … will there be a lobbying position there … like there has been for so many former pollies?

Thanks a bunch …

Key Points …

  1. mass immigration has led to overdevelopment, congestion, prohibitive investment in infrastructure due to tunnelling and land buy-backs
  2. energy policy esp. LNG exports with power prices through the roof; has made our industry uncompetitive
  3. Australia’s tax system encourages speculation and investment in non-productive housing; with bias for bank lending towards housing over business
  4. Australia’s economy is ruled by oligopolies and rent-seekers

Outgoing Parko warns on Australia’s productivity crisis

By Unconventional Economist in Australian Economy

July 25, 2019 | 5 comments

The Department of Prime Minister & Cabinet’s outgoing secretary Martin Parkinson says Australia’s productivity growth has fallen below global standards. He warns that growth in Australia’s living standards will decline over the next decade unless action is taken to boost productivity. Parkinson adds that political instability and policy uncertainty may have contributed to the fall in productivity over the last decade. From The Australian:

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“We have fallen behind in global productivity,” Dr Parkinson told The Australian. “For whatever reason, our productivity performance is not keeping up.

“Over the next decade, our living standard growth is going to fall; it has fallen, and will continue to fall partly as a consequence of the inevitable ageing of the population and the fact we are not getting the same boost to participation.

“But it’s also productivity performance”…

“I think (instability) has been quite debilitating for the development of good policy,” he said… “And you just can’t have that sort of instability and think the political class is going to be able to concentrate on the big issues ahead…

“When you get through such long periods of economic growth, communities can lose sight of what is required to generate growth and higher living standards.

Australia’s productivity slump is illustrated below, via the Productivity Commission:

*The reasons behind Australia’s slow productivity growth are obvious.

*First, Australia’s mass immigration model is crush-loading our major cities, stifling productivity through rising congestion costs, as well as encouraging growth in low productivity people-servicing industries and debt creation, rather than higher productivity tradables.

*The infrastructure investment required to keep pace with population growth is also much higher cost than in the past, due to diseconomies of scale (e.g. tunnelling and land buy-backs), alongside government corruption in infrastructure selection.

Allowing employers to pluck cheap migrants in lieu of granting wage rises to local workers also discourages companies from innovating and adopting labour saving technologies, while also preventing creative destruction by enabling low productivity companies to remain in business.

*Second, Australia’s ghastly energy policy (especially around LNG exports) has sent Australian power prices through the roof, raising input costs, making Australian industry uncompetitive, and forcing higher productivity firms in tradable industries to close.

*Third, Australia’s tax system encourages speculation and investment into non-productive housing, and has also helped bias bank lending towards housing over businesses.

*Fourth, Australia’s economy is ruled by oligopolies and rent-seekers, whom bend the political decision-making process at their whim.

Indeed, Parko is part of this problem – two days ago he defended Christopher Pyne and Julie Bishop for taking consulting positions just after leaving their ministries.

And on it goes leading to fat cats taking the cream as labour works its arse off for no gains:

Given Parko – as head of the Treasury and PM&C – was partly behind Australia’s low productivity model, voicing his concerns as he heads into retirement is akin to shutting the gate long after the horse has bolted.

Secretary of the Department of Prime Minister and Cabinet Martin Parkinson will leave in August.

 Secretary of the Department of Prime Minister and Cabinet Martin Parkinson will leave in August. AAP

SOURCE: https://www.macrobusiness.com.au/2019/07/outgoing-parko-warns-productivity-crisis/

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A STRONG ECONOMY …. IT’s GREAT NEWS FOR INVESTORS …. ISN’T THAT AWFUL?

 

A stock market board shows prices going up

PHOTO: The lower interest rates go, the better the stock market performs. (AAP)

 

 

ANALYSIS

The economy is awful and that’s great news for investors

24 JUNE 2019

 

 

Bad news suddenly has become good again. No matter where you look, there are signs of a global slowdown while wars are brewing at a trade, currency and even military level.

Here at home, the economy is sputtering. Growth is slowing, inflation is on the mat, unemployment is ticking higher.

The situation has deteriorated to such an extent that it’s even jolted the Reserve Bank into action after three years of nothing.

It cut rates three weeks ago and now the betting is on that we could see another cut as early as next week.

Many economists are tipping three cuts this year. And yet, at every turn, investors appear to be overjoyed, clamouring over one another to pile into the stock market.

After taking a thumping late last year, when the global outlook appeared relatively benign, optimistic even, the local market this year has been on a tear, notching up one of the strongest performances in the world with an 18 per cent gain.

And things will only get better as the news gets worse.

Growth slowdown fires up stocks

Last week, our stock market galloped to an 11-year high and finally is within striking distance of cracking the record, from October 2007 just before the global economy tanked.

Compare that with Wall Street. Before the crash a decade ago, the Dow Jones Industrial Average peaked at around 14,000 points. On Friday, it closed at 26,719 points, more than double its pre-crash peak.

 

 

For most of the past decade, Australia has outpaced America’s economy. The resources boom saw us power through the worst of the global financial crisis as almost every major developed economy plunged into recession.

Why then, the relatively poor stock market performance? Shouldn’t the market reflect what’s happening in the economy?

In days past, stock investors positioned themselves for where they saw the economy six, or even 12 months, ahead.

Not any longer.

These days, traders and investors pretty much care about just one thing; interest rates. The lower they go, the better the market performs. And generally speaking, rates only fall in times of trouble, when the economy needs a boost.

One reason for this apparent mismatch is that there is so much investment cash out there looking for a home, when interest rates fall, it quickly migrates to stocks.

There’s another factor at work too. The global economy now is so overloaded with debt that, were interest rates ever to rise, there would be a massive spate of defaults that once again could threaten the banking system.

 

 

That’s why Wall Street tanked late last year as the US Federal Reserve persisted with its plan to “normalise” interest rates, to push them higher. December was its worst month since the Great Depression in the 1930s.

Global debt now stands at more than $US250 trillion ($360 trillion), more than three times its level 20 years ago, much of it backed by property.

Having painted themselves into a corner by issuing so much debt and printing so much cash, central banks, including our own Reserve Bank, are now so frightened about the potentially catastrophic impact of a downturn in either stock or property markets, that they are prepared to do almost anything to avoid it.

Market values must be maintained.

It’s a great strategy for anyone who owns a home or has a share portfolio. For those who don’t, it’s a recipe for disaster — or at the very least a widening of inequality and the wealth gap.

Why the RBA will cut again… and again

Reserve Bank governor Philip Lowe won’t have a bar of it. There’s nothing wrong with the economy, really. The RBA isn’t cutting rates because things are deteriorating. Not at all.

It’s cutting rates because the Non-Accelerating Inflation Rate of Unemployment has slipped. Ah, of course.

 

 

Where we once imagined the NAIRU at 5 per cent unemployment — the point considered “full employment” because anything under that saw labour shortages, wage breakouts and rampant inflation — it’s now closer to 4.5 per cent, maybe even lower.

That’s an oblique way of saying we’re in uncharted waters and the only way to navigate through is to throw caution to the wind.

The real reason for the RBA rate cuts is the dramatic fall in housing prices and the prospect that unemployment may spike, particularly if the escalating trade dispute between the US and China further crimps Chinese economic growth.

Should more people end up out of work, as the graph below from investment bank UBS indicates, there would be a rise in mortgage delinquencies and an acceleration of the housing price slump.

 

 

If there are two more cuts in coming months, that will take the official cash rate to 0.75 per cent. And at that point, we officially will have joined the race to the bottom.

Of course, quite a few countries already have reached the bottom and gone even further.

America spent years at zero per cent. Germany and other parts of Europe have seen interest rates at well below zero. Japan, however, is the world leader in negative rates, as this chart below shows.

 

 

All up, there’s around $US10 trillion worth of debt priced at an interest rate below zero.

 

Why would anyone lend money, deposit cash or buy a bond that guaranteed you’d lose money? Primarily because they think rates could go even lower. And many banks are forced to hold government-issued bonds, even ones that lose money, for liquidity reasons.

Once considered radical policy, it’s now becoming the norm and involves various strategies such as quantitative easing (printing money), ZIRP (zero interest rate policy) and NIRP (negative interest rate policy).

Our monetary mandarins, having explicitly raised the possibility of exploring such actions late last year, this week ruled them out, instead wisely urging governments to start spending big on infrastructure.

Rate cut goes nowhere — what now?

The disappointment must be palpable. When the RBA cut rates three weeks ago, its primary goal was to sink the Aussie dollar, to make our exports more competitive and to give a leg up to local industry.

It worked… for a while. But by the end of last week, the local currency had climbed back above US69c.

That’s the problem with rate cuts and currency manipulation — it only works when you go it alone or you’re in the minority. When everyone is doing it, it has no effect at all.

Shortly after our rate cut, US President Donald Trump’s demands for one at home grew louder as he openly discussed sacking Fed chair Jerome Powell if he doesn’t get his way.

European Central Bank chief Mario Draghi also has abandoned any plans to push rates higher, eliciting an attack from Mr Trump who, bizarrely for a leader engaged in the same strategy, accused him of trying to manipulate the Euro.

Mr Trump is threatening retaliation, possibly through trade sanctions. None of this bodes well for the global economy.

Perhaps it’s time to get into the stock market. It’s a great strategy, until it isn’t.

 

SOURCE:  https://www.abc.net.au/news/2019-06-24/ian-verrender-analysis-awful-economy-great-news-for-investors/11239398

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EXPOSED: A SECOND-RATE COUNTRY UNWILLING TO DEFEND PRESS FREEDOM

‘Parliament should make free speech a reality, not a “mere implication”, by enacting a proper shield law to protect journalistic sources and ending the secret rubber-stamping of national security warrants.  

Better still, of course, would be a CHARTER OF RIGHTS of the kind that protects journalism in the US, Britain and Europe.

Murdoch newspapers, which have long opposed it, should think again.’

OPINION

Exposed: a second-rate country unwilling to defend press freedom

Geoffrey Robertson
Geoffrey Robertson

Human rights barrister and author

 

 

What an irony. As the free world celebrates D-day and the heroes who kept it free from the Gestapo’s “knock on the door”, the international news on the BBC leads with the spectacle of the police raid on the ABC offices.

This could not happen in other advanced democracies, which all have constitutional protections for journalists and their sources of information, although of course it does go on in Istanbul and Rangoon – and now in Sydney.

How did we become so out of sync on press freedom, invasions of which are the sign of a second-rate country?

Protestors at the ABC in Sydney during the Australian Federal Police raid on Wednesday.
Protestors at the ABC in Sydney during the Australian Federal Police raid on Wednesday. CREDIT:DOMINIC LORRIMER

The government can only say that police are independent. So they may be, but independence is no protection against police incompetence, illegality or plain stupidity (see, for example, the Victorian Police and “lawyer X”).

The safeguard against overzealous policemen is meant to be the courts – that is,  the judges – but this warrant was granted by “a Queanbeyan court registrar”.

The warrant that allowed police to ransack News Limited journalist Annika Smethurst’s home on Tuesday was said to have been signed in secret by an “ACT magistrate”.

This could never happen in Britain where any police application for “journalistic material” must be approved by the Director of Public Prosecutions and then put before a judge, with the media represented, and on no account can it seek to identify journalistic sources.

How come we allow inconsequential officials to authorise police to intimidate news-gatherers?

Scott Morrison says “no-one is above the law” so why should journalists have any special right? For one simple reason, Mr Morrison – democracy depends on it.

It depends on an informed public, which means that journalists must be free to cultivate and to protect sources of important information about government agencies and businesses, otherwise news will diminish to what is fed to them by public relations departments, press releases and ministerial statements.

The public has a right to know about such matters as the alleged murder of women and children by Australian soldiers and plans for secret surveillance of Australian citizens: to ensure that information of this importance sees the light of day, some special protection must be provided to news organisations.

This is now accepted in the US – the first amendment, backed by “shield laws” that protect  journalists from police inquiries into their sources. It is accepted by the UK and by the 48 other countries that adopt the free speech guarantee in the European Human Rights Convention as a result of Goodwin v UK back in 1996.

My client, a young journalist, had been ordered to disclose his source but the European Court ruled that protection of journalistic sources was essential to democracy, otherwise “the vital public watchdog role of the press” would be mooted and it’s duty to provide accurate and reliable information would be adversely effected.

Australia, unlike all other advanced nations, has no constitutional charter of rights protecting press freedom.

However, the High Court, some years ago, discovered an “implication” in favour of free speech from the fact that the constitution establishes a democracy for which free speech is essential.

This implication has evidently not been noticed by those who pursued the warrant.

*This week’s raids have diminished Australia’s international standing, so Parliament must at least make amendments requiring police to obtain the DPP’s approval before any future attack on the media and requiring them to make an application to a real judge which the media can contest before any action is taken.

The behaviour of the AFP should be put under intense scrutiny by Parliament. Did it take legal advice before it applied for a warrant and from whom? Did it consider that the ABC had an obvious public interest defence?

Does the AFP not consider the alleged murder of civilians by the Australian army is a matter of public interest?

The ABC program went out in 2017. Why the long delay if national security were really at stake? What if anything did police tell the court registrar? The source of the leaks, former military lawyer David William McBride,  identified himself in March when he said he would defend charges on the grounds he had a duty to report the information. The leaker identified, were not the raids on the ABC entirely unnecessary?

And why did the AFP consider it necessary to ransack Smethurst’s home? If these and many other questions are not answered satisfactorily, then heads should roll.

This spectacle of AFP’s heavies looking over an editor’s shoulder should serve as a reminder that police raids on media officers, other than in times of emergency, are anti-pathetic to our law and our traditions.

Captain Arthur Phillip brought with him the laws of England, including the famous precedent of John Wilkes awarded heavy damages for a general warrant allowing raids on his home and printing presses for criticising King George III.

Our first notable court decisions, following this precedent, were those of Chief Justice Frances Forbes, striking down Governor Darling’s ill-tempered attempts to close down early versions of The Sydney Morning Herald.

All judges, law enforcers and even Queanbeyan court registrars should be aware of this proud history and Parliament should make free speech a reality, not a “mere implication”, by enacting a proper shield law to protect journalistic sources and ending the secret rubber-stamping of national security warrants.

Better still, of course, would be a Charter of Rights of the kind that protects journalism in the US, Britain and Europe.

Murdoch newspapers, which have long opposed it, should think again.

Geoffrey Robertson, QC, is a London-based Australian human rights barrister. He is the author of Rather His Own Man: In Court with Tyrants, Tarts and Troublemakers. 

 

Geoffrey Robertson

 

Geoffrey Robertson is a London-based Australian human rights barrister and author of Rather His Own Man: In Court with Tyrants, Tarts and Troublemarkers.

DATA DUMPED: IT’s ALL BAD NEWS FOR THE ECONOMY …

NOW FOR THE TRUTH!

THE current LNP administration is not only the ‘worst economic manager’ in Australia’s post war history, if not all its history, but one of the two or three worst in the developed world. 

-all critical indicators of economic health deteriorated since 2013 Election

.and accelerated since the 2016 election

-few, if any, of the outcomes have been reported accurately by mainstream economic reporters

-through most of the Labor years, Australia’s growth in GDP ranked in the top seven (7) in the OECD

.in 2009 it was the highest; in Labor’s last year, 2013, it ranked 6th

 

 

 

Data Dumped: it’s all bad news for the Australian economy

Data Dumped: it’s all bad news for the Australian economy
Things you’ll hear as the economy tumbles (Image courtesy https://www.activistpost.com)

 

If Prime Minister Scott Morrison went to the election in May to beat potentially bad economic news, it was an extremely well-judged decisionAlan Austin reports.

THE LATEST data dumps confirm the current administration is not only the worst economic manager in Australia’s post war history, if not all its history, but one of the two or three worst in the developed world.

If Prime Minister Scott Morrison went to the election in May to beat potentially bad economic news, it was an extremely well-judged decision.

*Virtually all critical indicators of economic health have deteriorated substantially since the 2013 election. That decline appears to have accelerated since the 2016 election.

*Few, if any, of these outcomes have been reported accurately by mainstream economics reporters.

Economic growth ranking plummets

*Yesterday’s release of the quarterly national accounts confirms Australia is sliding further down the global economic growth rankings. Through most of the Labor years, Australia’s growth in gross domestic product (GDP) ranked in the top seven in the 36-member Organisation for Economic Cooperation and Development (OECD).

*In 2009, it was actually the highest. In Labor’s last year, 2013, the first quarter number was 2.15 per cent, ranking sixth.

In stark contrast to that, Australia’s annual GDP growth over the year to March 2019 is down to 1.8 per cent, the lowest level since 2009, at the depths of the worst recession in eighty years. Australia now ranks 17th in the OECD.

Interest rates indictment

Monday’s cut to interest rates by the Reserve Bank underscores the deterioration of the economy since 2013. Throughout the global financial crisis from 2008 to 2013, Australia and Mexico were the two developed countries to keep interest rates in the sweet spot between 2.8 and 4.8 per cent.

Most of Europe plus the USA and Canada endured interest rates below 1.5 per cent. Obviously this is disastrous for those relying on income from interest. Rates rose above ten per cent elsewhere, including Iceland, Argentina, Brazil and Vietnam. This is terrible for borrowers who must pay that interest.

It is also a major blow for the government as this is, to quote The Guardian’s detailed analysis, “a pretty sad indictment of how the economy has been handled”.

From Monday, Australia has now joined the failing economies with the nominal cash rate below 1.5 per cent and negative real interest rates. Meanwhile, about fifty countries have now returned to the optimum range including OECD members Iceland, Chile and the USA.

Housing at an all-time low

*Housing access and affordability has declined disastrously across Australia since the change of government in 2013, and collapsed further since the 2016 election.

According to the Housing Industry Association, sales of Australian new homes plunged 11.8 per cent in April 2019 over the dismal March number to just 4,036 houses sold. The April fall was the greatest since 2005, and the lowest number recorded since the series began in 1999. The previous all-time low was 4,769 in August last year.

Gross debt second worst in the OECD

We now have debt levels for nearly all OECD countries to the end of 2018, so can update Australia’s standing.

Australia had the OECD’s third lowest level of federal government debt to GDP at the time of the 2007 election. Only Estonia and Chile were lower. Australia’s Labor Government then contended with the devastating global financial crisis (GFC) by spending extensively on infrastructure and other stimulus, most of it with borrowed money. So it would have been reasonable to expect Australia’s debt position to have worsened relative to the rest of the developed world.

In fact, it didn’t. All developed countries except Norway borrowed heavily and by the end of the GFC in 2013 Australia still had the third lowest debt to GDP.

Through the strong global boom which followed the GFC, most countries have managed to offload much of that debt. A clear majority of 22 of the OECD member countries reduced their debt to GDP by the end of last year, with only 14 having debt higher than in 2013.

Of these, only two have increased the debt since 2013 by more than ten per cent. Chile and Australia.

Unemployment lagging

Australia’s jobless ranking tumbled from ninth in 2013 [World Bank figures], to 13th in 2016 and now to a lowly 18th on the latest numbers.

Only five OECD member countries had higher jobless rates in April this year than in April 2011 and April 2012. Two of these, South Korea and Norway, have their jobless rates below 4.0 per cent, so are faring exceedingly well.

But three countries have high unemployment and are still above where they were in 2011 and 2012, despite the phenomenal global boom in investment, jobs and profits. They are Austria, Turkey and Australia.

Retail sales slide worsens

Last Tuesday’s retail sales numbers from the Australian Bureau of Statistics show the slump is getting worst, not better. Total retail turnover January to April 2019 was up just 3.06 per cent on the first four months of last year. With population up 1.8 per cent and inflation at 1.3 per cent, that is a real decrease in actual volumes sold.

Sectors to have suffered most severely since our report on the retail retreat in February include electrical and electronic goods, down 1.0 per cent in actual dollars, furniture, houseware and textiles, down 3.3 per cent, recreational goods down 5.4 per cent, and books and print products down a staggering 7.4 per cent.

For two years, the retail collapse has been tracked accurately by the alternative media here and elsewhere, denied by the industry press and virtually ignored by the mainstream media.

Finally, on Tuesday this week, the ABC caught up with the story. Well after the election.

Such is Australia’s fate.

——————–

Alan Austin is a freelance journalist with interests in news media, religious affairs and economic and social issues.

You can follow Alan on Twitter @alanaustin001.

 

 

 

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IT MAY YET TURN OUT THAT THIS WAS A GOOD ELECTION TO HAVE LOST

 

YEP …

‘AFTER six years in office, the Coalition cannot reasonably blame its predecessor for …

tepid wages growth

 weak productivity gains

spiralling household debt

a doubling of net government debt

and a depreciation of the Australian dollar by about 30 per cent since a Tony Abbott-led government took office in 2013.

Interest rate cuts may further weaken the dollar.  This would be good for commodities exporters, bad for consumers

A BOOMING PROPERTY SECTOR fuelled by easy credit and LAX FOREIGN INVESTMENT REVIEW BOARD (FIRB) Strictures on Chinese money   flooding the market contributed to an illusion of wellbeing, the so-called wealth effect: or, perhaps, better described as the ‘wealth illusion’.

AS A WHOLE COHORT OF AUSTRALIANS WERE LOCKED OUT OF THEIR OWN DOMESTIC HOUSING MARKET …

THIS TIME AROUND THE NASTY PARTY WON’T BE ABLE TO BLAME LABOR …

 

OPINION

It may yet turn out that this was a good election to have lost

Tony Walker
Tony Walker

Columnist and award-winning foreign correspondent

 

 

Scott Morrison may believe in miracles. He may go along with Deputy Prime Minister Michael McCormack’s statement that the Coalition has the “wind at our backs’’.

Morrison may be urging colleagues to “burn’’ for voters, whatever that means.

 

Prime Minister Scott Morrison with his new-look ministry after the swearing-in ceremony.
Prime Minister Scott Morrison with his new-look ministry after the swearing-in ceremony.CREDIT:ALEX ELLINGHAUSEN

But in the real world, miraculous outcomes, biblical allusions and meteorological metaphors don’t necessarily correspond with reality.

As the Reserve Bank of Australia meets on Tuesday to consider lowering interest rates to stimulate a faltering economy, what is clear is that a Coalition government has been re-elected at an awkward moment for the country economically.

 

 

If a shell-shocked Labor can draw encouragement from a disastrous outcome it is that the bloom may come off the Morrison government sooner rather than later.

 

Former opposition leader Bill Shorten: may have dodged a bullet.
Former opposition leader Bill Shorten: may have dodged a bullet.CREDIT:ALEX ELLINGHAUSEN

 

It is one thing for the marketer-in-chief to have fought a copybook scare campaign against a vulnerable opponent, made more vulnerable by electorally suicidal tax policies; it is quite another to deal with a slowing economy in a global environment that is dangerous, if not mad.

John Daley, head of Melbourne’s Grattan Institute, puts the government’s dilemma quite well when he asks the pertinent question: “How far is the economy going to slow?’’

We don’t know how far or fast the economy will slow, but the signs are not encouraging.

What is clear is that rather than having the “wind at our backs’’, the Australian economy is facing headwinds. These are threatening to become stronger, not weaker.

Downside risks, as World Bank forecasters say, have become “more acute’’.

This invites the obvious question: was this an election that will prove a good one to have lost?

While readers contemplate the answer to that question – with the caveat no absence from the Treasury benches is necessarily desirable – these are the headwinds.

Bowen drops out of leadership race

Looming Reserve Bank interest rate decision

Play video

0:34

Looming Reserve Bank interest rate decision

9News’ Finance Editor Ross Greenwood breaks down the effects of a possible interest rate cut from the Reserve Bank of Australia.

 

On the basis of the December quarter numbers Australia is already in a recession on a per capita basis.

It has been there before in its record-setting period of economic expansion, but there is a sense this time that it will be lucky to avoid a contraction.

Slowing economic trends are unlikely to have reversed in the first quarter of 2019. We haven’t seen those March quarter numbers yet, but they are unlikely to be good, and may be bad. Political uncertainties will not have helped.

What is in prospect is the sort of outcome that will compound the concerning result in the second half of 2018 when GDP slowed dramatically to 1 percent year-on-year.

If that slowdown becomes entrenched, Australia will tip into a recession for the first time in a generation with all the consequences that will follow.

This includes an indelible political context.

After six years in office, the Coalition cannot reasonably blame its predecessor for tepid wages growth, weak productivity gains, spiralling household debt, a doubling of net government debt, and a depreciation of the Australian dollar by about 30 per cent since a Tony Abbott-led government took office in 2013.

Interest rate cuts may further weaken the dollar. This would be good for commodities exporters, bad for consumers.

 

*A booming property sector fuelled by easy credit and lax Foreign Investment Review Board strictures on Chinese money flooding the market contributed to an illusion of wellbeing, the so-called wealth effect: or, perhaps, better described as the “wealth illusion’’.

 

Cuts to interest rates may give the economy a bump. The removal of the spectre of a Labor government, at odds with aspirational Australia, may encourage investment.

*However, what should be concerning the government, as it prepares for the first session of the 46th parliament in early July, is that unemployment in April ticked up to 5.2 per cent from 5 per cent, and underemployment jumped to 8.5 per cent.

*Finally, this brings us to Treasurer Josh Frydenberg’s pledge to bring the budget back into surplus in 2020-21 and begin paying down debt.

*If a recession bites that undertaking will not be worth the budget papers on which it is written.

Illustration: Jim Pavlidis
Illustration: Jim PavlidisCREDIT:

 

The question will then become whether – and how quickly – the Morrison government can bring itself to admit its budgetary projections, reaffirmed by a docile Treasury in its pre-election economic and fiscal outlook (PEFO), misfired.

Rather than surpluses as far the eye can see and tax cuts on the horizon it would be dealing with an entirely different scenario.

*What would be needed in that case is real stimulus for capital works projects rather than short-term fixes in the form of tax cuts that might be good for the sale of Harvey Norman flat-screen televisions, but will do little for wages growth or the economy overall.

In a year’s time, if it has put the stench of one of the most inept campaigns in Australian political history behind it, Labor may be empowered to ask some pointed questions – and possibly dream of a reversal in its fortunes.

It may even be in a position to “burn’’ Morrison politically, if not biblically.

Tony Walker is a vice-chancellor’s fellow at La Trobe University and a regular columnist.

 

Tony Walker writes on politics, North America and the Middle East. He was formerly the Australian Financial Review’s international editor.

 

 

Prime Minister Scott Morrison.

 

THE FIX IS IN: ADANI HOOKS INDIA’s POOR AND AUSTRALIA’s TAXPAYERS

 

 

MW:  “It is highly likely that a $1 billion, 30-year, 3 per cent annual interest rate loan will emerge from EFIC to entice Adani,” @TimBuckleyIEEFA on the pending Adani disaster 

 

The Fix Is In: Adani hooks India’s poor and Australia’s taxpayers

Government approves Adani’s water rights last month. Photo of former environment minister Melissa Price by SBS

 

Defying all odds, prospects for Adani’s coal mine in the Galilee Basin have never looked better. This is a risk for Australia, and the world. Energy expert Tim Buckley reports on the world’s most controversial mining project, Carmichael.

This is not just about Adani. Coal projects totalling 320 million tonnes per annum (Mtpa) could be set off by this first move, the move to approve Adani’s Carmichael coal mine in Queensland, especially as Clive Palmer has been so quick to jump on the subsidised export thermal coal bandwagon this week.

Despite the commercial viability of this mine being severely challenged, and with straight bank finance no longer an option, the Adani group could still finance the first stage itself. That would mean it would sell its expensive, dirty coal through newly-upgraded government contracts, and thereby lock in imported energy poverty for the poor people of Gujarat and Bangladesh, for decades to come.

Putting mythical accounting conventions aside, and spurious claims that Australia’s exported carbon emissions are irrelevant to one side, this is a global climate disaster in the making. Adani’s Carmichael mine is merely the stalking horse. A string of other fossil fuel projects are lined up behind it, coal and gas fracking.

Low reward, high risk

Even without these, the economic rationale is sketchy at best. The Galilee is the largest thermal coal basin proposed for development in the world. Adding up to 320mtpa of new high-ash, low-energy “HALE” coal would flood the seaborne thermal coal market with another 30 per cent of global capacity.

Such a massive injection of new coal supply would not just exhaust a big share of the remaining global carbon budget, but also likely slowly crush the thermal coal price in the process. It would crush the price of Australia’s largest export (well, neck and neck with iron ore).

It would do major damage to Australia’s existing thermal coal mines and result in the loss of thousands of existing Australian coal industry jobs over the coming decade.

With the re-election of the Coalition government, the last major Federal legal and approval barriers to opening up the Galilee Basin are largely resolved. The Queensland Government is being leant on by coal lobbyists, Adani and the Federal Government to ignore all credible scientific review of the facts surrounding this project and its affect on the world’s climate.

This, not withstanding that Adani has failed to answer the CSIRO’s questions on water  impacts. As to the endangered Black Throated Finch and the Great Barrier Reef, coal lobbyists and Murdoch media alike keep crying that both are irrelevant. It’s time to dig up all the coal Australia can, while we still can.

Drug pusher argument

The drug-pusher argument has rung loud, repeatedly and clearly over the airwaves. If it’s not our coal, the world will just buy coal from somebody else. Someone else will make the money.

Meanwhile, China’s MacMines has formally notified the Queensland Government this month that it has closed its Australian office and abandoned (but not relinquished) its $6.7 billion China Stone coal project, strongly underlining the dramatic advances which China has made to permanently reduce its addiction to thermal coal, reduce its chronic air pollution and drive global leadership in zero emissions technologies of the future.

Chinese investments are increasingly being directed to industries like rare earth and lithium mining, batteries, solar, wind, electric vehicles and smart grids – rapidly growing global industries – not to prop up dying industries of the past, which are increasingly uncompetitive against lower cost, zero emission alternatives.

China’s NDRC has also this month announced a $US25 billion tender for 21 gigawatts (GW) of renewable energy, the largest ever in world history.

What makes this all the more telling is that this tender marks a critical milestone – the tender is for zero subsidy renewables. So by 2020, China will see wind and solar both reach grid parity with domestic thermal power.

India and America reached grid parity back in 2017, and Indian renewable tenders have repeatedly been completed every month since at 10-20 per cent below existing domestic coal-fired power costs.

Renewable energy is cheaper than new coal, so why Adani?

Indian renewable costs are 20-50 per cent below the cost of new imported coal-fired power plant proposals. So the technology, finance and economics all show thermal coal has entered a slow terminal decline. Against this backdrop, the obvious question is, why would the Adani Group ignore the new economic reality and proceed with this long stranded proposal?

Firstly, having sunk $1.5 billion in this project to date, the Adani Group does not want to admit they made a bet at the start of this decade, a bet which failed – irrespective of the inevitable rising dominance of technology change in Indian renewables so clearly evident in Adani’s home state of Gujarat.

Secondly, it is clear, where a project is unviable and un-bankable on normal commercial grounds, a well connected billionaire thinks not of moving on, but of changing the rules.

As The Australia Institute’s Richard Dennis put it – any project is viable if you throw enough subsidies at it. The Carmichael coal proposal has long been underpinned by a raft of subsidies. Adani’s ratepayer gift of a $30-40 million new airport might have fallen over, and the heavily-fought-over $1 billion-30 year subsidised loan from the North Australia Infrastructure Fund (NAIF) has likewise been blocked.

But other taxpayer gifts remain in the offing. Adani will be able to use huge quantities of ground water for its coal mining and extensive washing of its HALE raw coal, no cost attached. The diesel fuel subsidy is worth hundreds of millions of dollars each and every year to Adani (aside from our deserving farmers, all Australian industry and all Australian voters paying fuel taxes, but not the mostly foreign owned, Australian operating coal industry).

Rehabilitation, the long game

The Government has done a great job updating Queensland’s mine rehabilitation legislation over last two years, but it did sneak in a final exemption just for Adani, such that they are entitled to leave a huge final toxic void in perpetuity. A void is a hole in the ground, in this case, a very big hole.

Adani is yet to provide the required financial assurance to garner its seven-year royalty holiday – a capital subsidy of $600 million to $700 million – but it is still on offer, which means precisely zero coal royalties are likely to flow into Queensland schools or hospitals from Carmichael this coming decade.

And expect to hear a lot more about the legislative change rushed through pre-election that dramatically expanded the fossil fuel funding capacity and scope of the Export Finance and Insurance Corporation (EFIC).

It is highly likely that a $1 billion, 30-year, 3 per cent annual interest rate loan will emerge from EFIC to entice Adani to actually start construction of its nine year odyssey to build a railway line to no-where (assuming thermal coal becomes obsolete sometime in the coming few decades).

But again, fence-sitting members of Parliament contend that – if one is convinced of this inevitable technology driven disruption being well underway already – then why not leave the collapse of this mine to market forces?

It will fail anyway, they say, not our problem.

Except for the fact that there is a global climate emergency right now. And the fact that the best time to start to prepare for an inevitable transition is now, not next decade.

IEEFA did point out a year ago that Adani put India’s largest coal fired power plant up for sale for a token Rs1. A $US5 billion investment made at the start of this decade for sale at 2 cents. Still there were no buyers.

Fast forward a year and everything has changed. All it took was for the Gujarat government to re-write the power purchase agreement to include a 30 per cent tariff uplift for the Mundra power plants for the next 30 years. So the poor people of Gujarat will pay Adani 30 per cent more for their imported coal electricity for the next 30 years.

Privatise the profits, socialise the losses

One cant expect a billionaire, after all, to wear the costs of unexpected events like currency declines and having to pay a market price for his coal … when he can foist the cost onto poor people.

And the poor people of Bangladesh have likewise agreed to underwrite Adani’s Godda import coal fired power plant at export tariffs close to double the wholesale price of electricity in India for the next 25 years.

But Adani Power was having trouble convincing thousands of land owners to vacate their ancestral homes, and private bankers were thinking this $US2 billion proposal was unviable.

So the fix went in. The Government of India gifted Adani Power a Special Economic Zone tax exemption for a decade or so, and the State Bank of India threw in a $US1.5 billion loan to a company which had been unable to avoid reporting losses for the last decade.

So, with long term expensive power purchase agreements providing a ready in-house market for the Carmichael mine, the market price of seaborne coal becomes less material.

Having been unable to secure one single global financial institution to invest in its Carmichael proposal, Adani has turned to self-financing the project because it has guaranteed returns from the poor people of India thanks to these government deals.

A deal looks close

Notwithstanding the Adani Group has significant financial leverage and numerous other multi-billion dollar projects in train already, Carmichael looks increasingly feasible.

An insightful report came out this week in India highlighting the myriad ways the Adani Group’s complex corporate structure is funded through inter-company loans, asset finance, equity margin lending and the sale of unlisted equity stakes in subsidiary entities.$

And this week the Adani Ports business has announced a $US1 billion global private debt placement with its full-year 2018/19 results. Secured against nine key ports across India, underpinned by India’s excellent long-term economic growth prospects, this debt raising should be completed in no time at all.

So self-financing looks likely. Multi-decade off-take agreements with sister companies within the Adani Group now provide a secure end market for the Carmichael coal at heavily subsidised prices locked in by government contracts. Add in Australian fuel, water, rehabilitation and financing subsidies.

All of which puts the Carmichael climate bomb on track to start work once those pesky First Australians get rolled (and bankrupted) by the Australian justice system and the Queensland government gives in to Federal demands to ignore intergenerational equity and precautionary principles.


Tim Buckley has written a number of reports for IEEFA on the Adani project. He is Australia’s foremost expert in Indian energy. It is worth following Tim on Twitter @TimBuckleyIEEFA if you would like to keep up with the latest in Adani, global energy markets and the remarkable revolution in renewables. 

————

 

 

 

Adani shown the door by traditional owners

How Adani stacked the landowner meetings before it sought court orders to bankrupt traditional landowner, Adrian Burragubba, who tried to stop its coal mine.

FRANKING CREDITS: HOW GOOD IS FREE MONEY!

LABOR’s policy was not to impact pensioners, part pensioners or self-managed Super funds … because it is the wealthiest who benefit the most!

NOW the AFR has found there were $16 BILLION in Franking Credits generated in the recent earnings season on the ASX!

RELATED ARTICLE:  Howard’s Junket …

https://caanhousinginequalitywithaussieslockedout.wordpress.com/2019/05/09/howards-junket/

DESPITE the Facts … Tim Wilson continued to misinform again on Q & A last Monday evening 27 May 2019 that Labor was after Pensioners …. with its reform of Franking Credits … 

THIS Disinformation Campaign has really done some damage to Our Nation!  That is such a shame!  Middle Class Welfare at its Worse!  If you spread a policy matter that is plainly untrue should you not be subject to the Trade Practices Act and treated accordingly?

 

Franking Credits: how good is free money!

Franking Credits: how good is free money!
Tim Wilson (Image courtesy http://featurettes9.rssing.com)

 

 

The cat is out of the bag. Bank shares have shot up since the surprise election result as new investors pile onto the great franking credits bandwagon. Sandi Keane reports.

“Hey, you got any of these franking credits,” older bloke asks mate. It’s two days post-election. I’m on my regular break from my home desk with my dog, Mackie, in Kew’s affogato central.

Leafy Kew was at the heart of Kooyong’s electoral battleground. The two men are at an adjoining table at the cafe. They’re talking about the “franking credits” campaign — the pitched battle to win the retiree vote. “No,” is the reply, “but I’m gonna look into them.”

That night, I’m on my way to Hamer Hall to an ACO concert with old pal, Rex. “I’ve transferred all my money into bank shares,” he announces, awaiting my reaction.

Then to press home the point, he jabs me in the ribs “I not only get all that free money but the share price has gone up!” He laughs. And he voted Greens!

Fast forward to the end of the week and I’m back in Kew cafe-land with the four-legged one, getting my coffee fix again. It’s a different cafe. We’re seated outside. A couple of elders go past. My ears prick up….they’re talking about “franking credits”. But they’re not congratulating themselves for keeping Bill Shorten’s hands off their “free money”. No, they’re wondering how they can get their hands on some! Jeez…

Seriously, how good is Tim Wilson and cousin Kevin, or is it Geoff?

Few of us silly old duffers had a bloody clue about “franking credits” until Tim and cousin Geoff started jumping up and down championing the unique advantage of owning shares with “franking credits”. And how good is Australia … the only country in the world to offer a cash reward!

Tim took care of the Parliamentary Inquiry and the town hall meetings focussing on the high retiree states of Tassie and Queensland.

Geoff harnessed his travelling roadshow, Wilson Asset Management, and headed up north to spread the word. Between them, they sparked ire in the hearts of Queenslanders and Tasmanians. Not only would they lose all that free money, but the world as they knew it would end. Worked a charm.

Post-election, Geoff was itching to congratulate himself for alerting the voters about franking credits. And avoiding Armageddon. Claimed his campaign helped deliver a fatal blow to Labor’s hopes of election. But he’s too modest by half. Thanks to the Wilson boys, not one of the nearly four million over 65s would be now be unaware of the “free money”gig when they retire. What a legacy, boys!

So, now we oldies have been enlightened, have we shown our gratitude, especially to Tim?  Such a formidable force for good should surely have been promoted to cabinet! 

What’s wrong with ScoMo? This reporter still remembers saluting Tim for duking it out (single-handedly, mind) against the Labor Government’s “plain packaging” proposals for ciggie packets.

Wilson the Younger stormed the airwaves on behalf of Big Tobacco, clocking up 13 radio interviews in one day, a robust opinion piece in The Australian, and managed to pop up, fresh as a daisy, on prime time 7.30 Report that night. Be afraid, he warned. Be very afraid. This outrageous plan would cost the public $3 billion in compensation!

If our government took away a company’s logo, it could be seen as stealing! Good to see Tim working with the government and on our side now!

So, on 22 May, I put out a Tweet to gauge the level of gratitude to Tim. It’s had over 10,000 impressions as of today:

 

and again the next day, over 10,000 for the first Tweet then jumping to over 20,000 for the 2nd:

 

 

I was inundated with responses. Was a spot worried I’d be seen as a self-serving, greedy oldie, you know, one of those “solipsistic slackers” that journos like Bernard Keane like to target. There was the expected bit of unfriendly fire —  but, by and large, I could tell the Tweeps were genuinely grateful to Tim.

Does anyone in Australia now NOT KNOW they can get #FreeMoney for investing in things like banks if they’ve retired and want to set up their own fund?

And the more of you who buy shares, the more the shares will go up! Double whammy! Win, Win! Whoohoo! As I said, “how good is Tim Wilson?” Get into it, guys. Follow me!

If you still want the nitty gritty on those franking credits, check out our Kitchen Table series by the redoubtable Westy who has translated complicated financial bafflegab into simple words that even I can understand (I call it “Franking Credits for Dummies”). Start with the one below:

The Kitchen Table: a Franking Credits Revelation

Editor’s Note: Treasury found up to 230,000 pensioners would have been affected by Labor’s original policy.

“The value of franking credits refunded has increased from $1.9 billion in 2005-06 to $5.9  billion in 2014-15,” Treasury found.

It is now projected to increase to $8 billion a year although the AFR found there were $16 billion in franking credits generated in the recent earnings season on the ASX.

——————

Sandi Keane is MW editor-in-chief and was formerly editor and environment editor at Independent Australia.

She has also conducted corporate investigations, principally into the energy and media sectors. Her investigation into the anti-wind lobby and Waubra Foundation was used to support Labor’s Clean Energy Bill, thus, making it into Hansard.

Sandi holds a Masters degree in Journalism from the University of Melbourne.

Describing herself as a “Twitter tragic”, Sandi has tweeted for ABC’s Lateline as well as the Melbourne Writers’ Festival. You can follow her on Twitter @jarrapin.

She has a quantity of franking credits in her SMSF and, until recently, never knew how they got there.

Is Howard’s Kyoto con trick about to be played out again?

 

 

SOURCE:  https://www.michaelwest.com.au/franking-credits-how-good-is-free-money/?fbclid=IwAR1rAgm0tY5MJ55m2De3tDttriUAmcfaljKNyr2399SuK1NgLOiCozEue34

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SBS: Liberals slammed for ‘misleading’ Chinese-Australians with posters 

KEY POINTS …

-the AEC says the Liberal how-to-vote Chinese posters had not broken any laws; and would not be removed

-the posters had the same font & colours as official information from the AEC

-and read ‘the correct way to vote is to put a number 1 next to the Liberals … ‘

-Labor has lodged an official complaint with the AEC

 

 

Australia

Liberals slammed for ‘misleading’ Chinese-Australians with posters

Chinese-language election signs in Melbourne, which are claimed to “trick” Chinese-Australian people to vote Liberal, have been criticised as a “massive rort”.

The Australian Electoral Commission says Liberal how-to-vote posters in Chinese at polling booths in Melbourne have not broken any laws and won’t be removed.

But the Labor party is not convinced the posters are fair play – and has lodged a complaint over what it says is “a pathetic and dirty attempt to deceive voters”.

Luke Hilakari, the Victorian Trades Hall Council secretary, tweeted an image of the posters in the electorate of Chisholm, claiming the posters had the same font and colours as official voting information from the Australian Electoral Commission (AEC).

He described them as a “massive rort” and an attempt to “trick” Chinese-Australian voters.

Mr Hilakari said the posters read “the correct way to vote is to put a number 1 next to the Liberals and number every other box”, and appear to be written like an official AEC instruction to voters.

“This is a rort. The Libs are trying to trick Chinese voters. Morrison’s Libs should never have approved these signs,” he tweeted on Saturday.

*AEC spokesman Evan Ekin-Smyth said the posters did not need to be taken down as they were properly authorised and no laws had been breached.

 

*”We don’t own the colour purple, and it’s not possible to do that. They just need to be appropriately authorised, which they are,” he told AAP.

*”While clearly the AEC would prefer no-one uses purple and (makes posters) to look like an AEC (poster), people can make posters so long as they are authorised appropriately.

“My understanding is that it meets the requirements of the Act. No law has been breached.”

 

Bill Shorten said he had not heard about the incident.

“Always look at who benefits from the dirty tricks and that generally is the culprit, isn’t it?”, he told reporters.

A Labor spokesperson said the party had lodged an official complaint with the AEC.

“This is a new low – a pathetic and dirty attempt to deceive voters because the Liberals have no policy to talk about,” they said.

 

 

SOURCE:  https://www.sbs.com.au/news/liberals-slammed-for-misleading-chinese-australians-with-posters?fbclid=IwAR28y3jIFnrTZBeEHm0VwWe0pxLf2XP9MWD0g45Z7A3DdawYhwIXY3GUFlA

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