Showing posts with label federal government. Show all posts
Showing posts with label federal government. Show all posts

Tuesday 6 March 2018

Is Australian welfare reform in 2018 a step back into a dark past?


Last year saw the completion of the Royal Commission into Institutional Responses to Child Sexual Abuse which revealed generational abuse within the Australian education and child welfare systems. 

That year also revealed the ongoing failure of the Dept. of Human Services and Centrelink to fix its faulty national debt collection scheme, which possibly led to the deaths of up to eleven welfare recipients after they were issued debt advice letters.

The first quarter of 2018 brought a scathing United Nations report on Australia's contemporary human rights record titled Report of the Special Rapporteur on the situation of human rights defenders on his mission to Australia.

Along with a report into elder abuse in Oakden Older Persons Mental Health Service in South Australia and the release of a detailed Human Rights Watch investigation of 14 prisons in Western Australia and Queensland which revealed the neglect and physical/sexual abuse of prisoners with disabilities, particularly Aboriginal and Torres Strait Islanders.

The National Disability Insurance Scheme represents yet another crisis. The Productivity Commission has warned there is now no carer of last resort for patients in an emergency, care provider agencies are reportedly owed up to $300 million and disabled people are often receiving inadequate care via untrained staff or sometimes no care at all, as government disability care services are being closed in favour of the new privatised service delivery scheme.

None of these instances stand in isolation and apart from either Australian society generally or government policies more specifically.

They all represent the frequently meagre nature of community compassion and the real level of care governments have been willing to organise and fund for vulnerable citizens. In reality the ideal level of support and care for the vulnerable - that politicians spout assurances about from campaign hustings every three years - is just so much political hot air unless ordinary voters insist that it be otherwise. 

As the Turnbull Coalition Government clearly intends to push forward with the full gamut of its punitive welfare reforms perhaps now it the time to consider if we have made any great strides towards a genuinely fair and egalitarian society in the last two hundred years or if we are only dressing up old cruelties in new clothes and calling this "looking after our fellow Australians”, "an exercise in practical love"an exercise in compassion and in love".


Over the last two decades, commissions and reports on institutional care across the western world have highlighted widespread physical, sexual, emotional and economic violence within caring systems, often targeted at society’s most vulnerable people, not least children, the disabled and the elderly. These have often come at significant cost not just to the individual, but the nation. As Maxwell has shown, national apologies, that require the nation to render itself shamed by such practices, and financial redress to victims, have impacted on political reputation, trust in state organisations, and finances. As each report is released and stories of suffering fill newspapers and are quantified for official redress, both scholars and the public have asked ‘how was this allowed to happen?’ At the same time, and particularly in the last few years as many countries have turned towards conservative fiscal policies, newspapers also highlight the wrongs of current systems.

In the UK, numerous reports have uncovered abuses within welfare systems, as people are sanctioned to meet targets, as welfare staff are encouraged to withhold information about services or grants to reduce demand, and through systematic rejection of first-try benefit applications to discourage service use. Often excused as ‘isolated incidents’ on investigation, such accounts are nonetheless increasingly widespread. They are accompanied by a measurable reduction in investment in welfare and health systems, that have required a significant withdrawal in services, and have been accompanied with policies of ‘making work pay’ that have required that benefits be brought in line, not with need, but with low working incomes. The impact of these policies and associated staff behaviour have been connected to increasing child and adult povertydeclining life expectancygrowing homelessness, and the rise in foodbank use.

Importantly, public commentators on this situation have described this situation as ‘cruel’. One headline saw a benefits advisor commenting ‘I get brownie points for cruelty’; another noted ‘Welfare reform is not only cruel but chaotic’. The system depicted in Ken Loach’s I Daniel Blake (2016), described by reviewers as a Kafka-esque nightmare, a ‘humiliating and spirit-sapping holding pattern of enforced uselessness’, and a  ‘comprehensive [system of] neglect and indifference’, was confirmed by many as an accurate depiction. Whether or not this representation of the current welfare system is held to be true, such reporting raises significant questions about when and how systems designed to provide help and support move from care to abuse. A focus on ‘isolated incidents’ today can be compared to the blaming of ‘isolated perpetrators’ in historic cases of abuse, an account that is now held by scholars to ignore the important role of systems of welfare in enabling certain types of cruelty to happen…..

The capacity of welfare systems to support individuals is shaped by cultural beliefs and political ideologies around the relationship between work, human nature, and welfare. Here late-eighteenth- and early-nineteenth-century Ireland provides a productive example. Ireland in this period was marked by significant levels of poverty amongst its lower orders, particularly those that worked in agriculture. The capacity to manage that poverty on an individual level was hindered by several economic downturns and harvest failure, that pushed people to starvation. As a nation without a poor law (welfare) system until 1838, the poor relied on charity, whether from individuals or institutions for relief. In the late eighteenth and early nineteenth century, the ‘state’ (usually local corporations) introduced more direct welfare, sometimes in the form of relief payments but more usually access to workhouses. 
After 1838 and until the crisis of the 1847 famine, relief payments were removed and all welfare recipients had to enter the workhouse. Accompanied by a growth in institutional charitable services, the success and ‘care’ of the system could vary enormously between areas and organisations. What it did not do is significantly reduce poverty levels in the population.

Indeed, it was important that the poverty levels of welfare recipients were not reduced by the workhouse system. Like current ‘make work pay’ policies, poverty relief measures were designed so that those in the workhouse or receiving charity elsewhere did not have a significantly higher standard of living than those who provided for themselves. This principle was determined based on the wage of an independent labourer, one of the poorest but also largest categories of worker. The problem for the system was that independent labourers earned so poorly that they barely managed a subsistence diet. Their living conditions were extremely poor; many slept on hay in darkened huts with little furnishings or personal property.

Those who managed the system believed that a generous welfare system would encourage people to claim benefits and so could potentially bankrupt those paying into the system. This encouraged an active policy of ‘cruelty’. Not only were benefit recipients given meagre food and poor living conditions, but families were routinely broken up, the sexes housed in different wings and prohibited from seeing each other. Welfare recipients were often ‘badged’ or given uniforms to mark their ‘shame’, and workhouse labour was designed to be particularly physically challenging.  

It was a system underpinned by several interlocking beliefs about the Irish, the value of work and the economy. Hard work was viewed as a moral characteristic, something to be encouraged from childhood and promoted as ethical behaviour. Certain groups, notably the Irish poor but also the British lower orders and non-Europeans more generally, were viewed as lacking this moral characteristic and required it to be instilled by their social betters. Welfare systems that were not carefully designed to be ‘less eligible’ (i.e. a harsher experience than ‘normal; life for the working poor), were understood to indulge an innate laziness…..

Throughout history, welfare services have required considerable economic investment. Unsurprisingly, this has required those who run institutions of care for people also to keep a careful eye on their financial bottom line. More broadly, it has also required a monitoring of services to ensure value for money for the state and its taxpayers and to protect the interests of the service users. As has been seen recently in discussions of targets placed on staff providing welfare provision in the UK, such measuring systems can come to shape the nature and ethos of the service in damaging ways.

A relevant historical example of this is from the Australian laundry system in the late nineteenth and twentieth century. Young women were placed in youth homes and registered as delinquent for a wide range of reasons from petty criminal behaviour to perceived immorality (ranging from flirting with the opposite sex to premarital pregnancy), to having been neglected by parents. These homes, often run by religious organisations, were designed to ‘reform’ young (and occasionally older) women, preventing them from entering prostitution or other criminal pursuits. The main mechanism for ‘reform’ was through a moral discipline of work, which in many of these organisations revolved around a professional laundry service. Work was often unpaid or paid at very nominal sums, given to women on their release. The service, which catered to the general public, kept institutions financially afloat, and many became significant-sized businesses. They required women to work very long hours, in challenging conditions. Accidents, particularly burns, were not unusual. As businesses grew, other ‘reform’ efforts that ran alongside, such as education, became rarer.

The laundry became the driving focus of the institution. The women were cheap labour, and managing that machine became not just a means to an end, but shaped the logic and functioning of the care service. It is an example of how an economic imperative can come to adversely impact on care, by disrupting the purposes and functions of the service. It was also a process that significantly reduced the level of ‘care’ that such institutions provided, not only through a physical job that wore on the body but one reinforced with physical punishment, which came to include emotional and sexual abuse, and poor food and living conditions……

There are significant variations between the institutional care described here for the nineteenth century and a contemporary welfare state that encourages users, as much as possible, to remain outside ‘the system’. The capacity for ‘the state’ to control every dimension of a person’s life today is significantly reduced; conversely, the ability of those in need to fall into service ‘gaps’ as they cannot access services or negotiate bureaucratic systems, is in some ways increased. Nonetheless, there are parallels in the operation of both systems that should give contemporary policymakers pause. Abusive care does not just emerge from individual perpetrators, from the institutional model, or even a lack of policies on staff-client relationships, but also from the wider values and beliefs that shape the production of welfare systems; from the financial and emotional investments that we place in institutions; and from the corruption or occlusion of institutional targets and goals.


Ensuring that the ‘cruel’ practices reported of current systems do not become systematic issues on the scale of previous institutional abuses therefore requires not just monitoring a few rogue individuals, but a clear goal about what our welfare systems should achieve. The needs and interests of service users should be placed at their heart, coupled with a significant social, cultural and political investment in ensuring that goal is achieved. All other goals and targets for welfare service providers, especially their frontline staff, should be secondary to that and carefully designed so as not to interfere with that end. With rising rates of poverty, homelessness and illness, welfare systems look to continue to hold a central role in society for the foreseeable future. It is imperative that the abusive practices of previous ‘caring’ regimes are left firmly in the past.

Sunday 14 January 2018

New public register published as part of a federal crackdown on non-complying day care centres


This month the Turnbull Government published a new public register as part of its crackdown on fraud in the day care sector.

Australian Department of Education, Child Care Enforcement Action Register. 6 January 2018:

The Child Care Enforcement Action Register is a list of services that have been the subject of a sanction and/or immediate suspension under the A New Tax System (Family Assistance) (Administration) Act 1999 (the Administration Act).

In accordance with section 201B of the Administration Act, the Department of Education and Training (the department) publishes a list of services that have been sanctioned under section 200 and/or suspended under section 201A of that Act. Information published on this page only relates to those enforcement actions permitted to be published under the Family Assistance Law (FAL).

The department has established the Child Care Enforcement Action Register because it considers that information on sanctions should be available to the public. Information about the responsibilities and obligations of approved child care services and the FAL can be found on the department’s website.

The information relates to enforcement action taken by the department between 1 July 2016 and 30 September 2017.

2017-2018 (First Quarter) - last updated in January 2018:


2016-2017 - last updated in December 2017:


Only one NSW North Coast service has been placed on this federal government name and shame file – Elite Edge Sports & Learning Centre at Terranora. With a suspension on the basis of “Non-compliance with State or Commonwealth Law” as of 2 June 2017.

The majority of named NSW child care centres and other services being in metropolitan areas.

Thursday 30 November 2017

Human Rights Law Centre & OECD Watch lodge international complaint over Australia's failure to investigate abuses by Manus Island contractor


Human Rights Law Centre, 27 November 2017:

Australian companies need to be held to account for human rights abuses they commit overseas, but Australia’s complaints system is woefully inadequate and in desperate need of reform.

The Human Rights Law Centre and OECD Watch have today requested the Organisation for Economic Co-operation and Development (OECD) to investigate the Australian Government’s handling of a complaint against its former security contractor G4S in relation to alleged abuse of refugees on Manus Island.

Keren Adams, Director of Legal Advocacy at the HRLC, said Australia’s OECD National Contact Point, managed by Treasury, has a history of rejecting complaints against companies on spurious grounds.

“When accountability mechanisms fail, injustices flourish. The National Contact Point is a toothless tiger that rarely investigates and has never made a finding against a company. It needs a total overhaul,” said Ms Adams.

The OECD appeal centres around an earlier complaint brought in 2014 against G4S for its role in the violence on Manus in which Reza Berati was killed and 77 other men were injured. A G4S security guard was one of two men subsequently convicted of the murder.

The Australian National Contact Point declined to investigate the complaint, stating that it was not its role to comment on Australian government policy. It also concluded that G4S had limited ability to influence the safety and security of the men in detention, given control of the facility was the responsibility of PNG.

“The handling of the G4S complaint was appalling. We are talking about an incident in which a company’s employees are known to have beaten a man in their care to death and attacked others with crowbars and machetes. For the National Contact Point to have found the matter didn’t even warrant investigating raises serious questions about its credibility,” said Ms Adams.

The appeal challenges these findings as a direct breach of Australia’s international responsibilities under the OECD’s Guidelines. It is the first time a country’s handling of a complaint of this kind has been appealed to the OECD.

Ms Adams said she hoped the OECD would compel Australia to lift its game in its handling of future complaints.

“We are asking the OECD Investment Committee to find that the National Contact Point failed in its obligation to operate accessibly and without bias. Even more importantly though we are asking them to make recommendations as to how Australia can improve this complaints body going forwards,” said Ms Adams.

The appeal coincides with the start of the United Nations Forum on Business and Human Rights in Geneva, where experts from around the world will gather to discuss how governments can better address human rights abuses by business.

Download the HRLC's original complaint here: OECD Guidelines-specific instance-G4S

Friday 13 October 2017

File this one under 'Who's guarding the guards?'


The politicians forming Australian state and federal governments assure us they are upright, ethical people with histories as pure as the driven snow. They tell us their advisors are trustworthy beyond doubt and their senior public service appointees & finance/security consultants ditto. While their big business mates like Gina, Twiggy and Co are genuinely true blue and philanthropic.

Yet, as step by step these same politicians lead us towards authoritarian governance and Big Brother mass surveillance, their feet of clay can’t help but show.

North Coast Voices readers may remember that SMEC Holdings Limited (now SMEC and Surbana Juronghas been a favourite of Malcolm Turnbull's since he was the Minister for the Environment and Water Resouces in the Howard Government ministry.

This company provided an error-ridden desktop study for Turnbull supporting damming and diverting water from NSW North Coast river systems, with a preference for visiting this environmental vandalism on the Clarence River system.

It is now allegedly a corrupt multinational corpration.

The Age, 4 October 2017:

An arm of the company tasked with advising the Turnbull government on its signature infrastructure project, Snowy Hydro 2.0, has been banned by the World Bank for alleged bribery and corruption, prompting further calls for a federal anti-corruption watchdog……

Prime Minister Malcolm Turnbull poses for a photo during his announcement of Snowy Hydro 2.0 in March.
Photo: Alex Ellinghausen

Engineering company SMEC had five of its subsidiaries banned by the World Bank last week after an investigation into "inappropriate payments" linked to projects in Sri Lanka and Bangladesh. 

SMEC was chosen to undertake the $29 million feasibility study back in May and the work is due to be finished by the end of the year. The firm was selected by the state and federal government-owned Snowy Hydro corporation, which runs the current power plant.

Last year, Fairfax Media revealed the details of some of the allegations around improper payments involving SMEC, including allegedly corrupt dealings between the firm and Sri Lankan president Maithripala Sirisena when he was a cabinet minister in 2009.

Those dealings and others are still under investigation by the federal police.

This is one wealthy individual audited by the Australian Taxation Office - venture capitalist and independent consultant to business & government for over twelve years, Anthony ‘Tony’ Castagna.

The Sydney Morning Herald, 7 October 2017:

Anthony Castagna's company helps protect the cyber secrets and detect financial crimes within the world's most powerful institutions, including the Serious Fraud Office in Britain, US Homeland Security, the Australian defence force, ASIC, even the Office of the President of the US.

Now the Sydney-based co-founder and chairman of Nuix, majority owned by Macquarie Bank, faces a potential 20-year jail term after being charged with tax evasion and dealing with the proceeds of crime.

Dr Castagna, 70, has been the target of two of Nuix's major clients: the Australian Federal police and the Australian Tax Office through Project Wickenby, their long-running tax probe.

The charges relate to payments from Macquarie Bank which were allegedly channelled into offshore companies controlled by his cousin Robert Agius, who was sentenced to a non-parole period of 6 years and 8 months' jail in 2012 for operating unrelated tax avoidance schemes via his Vanuatu-based accountancy firm.

In addition to Dr Castagna's criminal charges, the ATO is pursuing him for unpaid taxes and penalties in excess of $10 million.

For decades, the tech guru has been a rainmaker for Macquarie Bank. The bank has ploughed millions of dollars into his cyber security and forensic services company Nuix. A totally owned Macquarie Group subsidiary owns more than 70 per cent of Nuix and over the last year Macquarie advisors have been talking up a billion-dollar float of Nuix on the Australian stock exchange....

Dr Castagna, who denies any wrongdoing and is vigorously defending the charges....

Friday 5 May 2017

National Rural Health Alliance welcomes Labor commitment to National Rural Health Strategy and implementation


Medianet Logo
AAP Logo
 Medianet Release




26 Apr 2017 7:24 PM AEST - Welcome commitment to National Rural Health Strategy and implementation





The National Rural Health Alliance today welcomed the commitment of the Federal Opposition to the development of a dedicated National Rural Heath Strategy and Implementation Plan.

The commitment was made by Shadow Minister for Health Catherine King in the opening session of the 14th National Rural Health Conference, which started in Cairns today.

Alliance Chair, Geri Malone, said today that the commitment by Ms King represented an important breakthrough for the seven million people who live in rural and remote Australia.

"The Alliance has been encouraging broad, non-partisan support for a national strategy for rural and remote health and wellbeing," Ms Malone said.
"For too long, Australia has been without an overarching strategy and implementation plan which is dedicated to bridging the health divide between the city and the bush.

"There is overwhelming evidence which shows that where you live impacts on your health and wellbeing – that the further you are away from a capital city, the worse your health, and your access to services, tends to become.

"But we are now in a rare period in decades of rural health planning and reform where we do not have a current National Rural Health Strategy, and that needs to change."

Ms Malone said the first National Rural Health Strategy was released in 1994.
 
"There were various updates and revisions of the strategy over the ensuing years, with the last being the National Strategic Framework for Rural and Remote Health, endorsed by Health Ministers in November 2011. 
 
"At the time, the Alliance called for a National Rural and Remote Health Plan to be developed to operationalise the goals set out in the Framework, but it never eventuated.

"So the Framework has not been actioned in a consistent, comprehensive way, there are no national reports on progress against the Framework, and no action has been taken to update it."

Ms Malone said the Alliance recognised the effort being put into health workforce programs, including for rural and remote Australia.

"We also know workforce is only one part of a more complex equation about what's different and what needs to be done to fix the divide in health outcomes for rural Australia," she said.

"We constantly seem to have to remind the non-believers in our cause, be that politicians and funders, metro centric decision makers and influencers, that firstly as 30 percent of the Australian population, we are entitled to equity in health service provision. 

"This does not mean doing the same. One size does not fit all. We know there are many ways of achieving the same end result, but that requires adaptation and contextualization to make it work – contextualized to place, place-based and individualised care.

"It is not an easy task and it can become somewhat disheartening to have to plead our case repeatedly. 

"We therefore see a national rural health strategy and plan not as ends in themselves but rather they provide the framework within which policies should be developed, planned, implemented and measured.


Distributed by AAP Medianet
JN#:877826



© Australian Associated Press, 2017  

Friday 21 April 2017

Every man and his dog may soon have access to your personal medical history if you live in Australia


A federal government digital medical information storage and retrieval system, which will eventually contain information on every person permanently residing in Australia and which was hacked even before it publicly went online, is now going national – and it still has significant privacy problems.

The Daily Telegraph, 10 April 2017:

THE private health records of Australians can be accessed by more than half a million people under the latest bungle with the $2.2 billion electronic My Health Record.

News Corp Australia has learned that the privacy settings on the government’s computerised My Health Record, which lists every medicine a patient takes and records every medical visit and procedure, are automatically set on “universal access”.

This means every registered health practitioner in the nation — 650,000 people — can view them, not just the family GP, unless the patient specifically requested to opt out.

Occupational therapists working for an employer, doctors working for insurance companies, a dietitian, an optometrist or a dentist or their staff can view the record and see if individuals have a sexually transmitted disease, a mental illness, have had an abortion or is using Viagra.

“Potentially your employer’s occupational therapist can look at your record and get information they really shouldn’t be getting access to, its confidential data,” says former AMA president Dr Mukesh Haikerwal who was a government consultant on the My Health Record.

The bungle came about because the record was originally set up as an opt in system and when people set up their record they were given the option to set a PIN number to protect the information and determine who got to see it.

Nearly four million people set up a My Health Record under the opt in system but doctors weren’t using it because four years after it was established 83 per cent of Australians still did not have one.

Last year the Turnbull Government trialled turning the failed record into an opt out system.

One million people in the Nepean Blue Mountains area of NSW and Northern Queensland were given a record unless they opted out.

News Corp has now learned only 147 of these one million Australians automatically given a record under the trial set up a PIN number to protect their health information.

“147 My Health Records created in the trials have access controls set to restrict which healthcare providers can see the record, or have controls restricting access to certain documents in the record,” the Department said.

“This equates to 0.0151 per cent of My Health Records automatically created in the trials. This is consistent with the rates of access controls set by those who have opted to register for a My Health Record,” a spokeswoman for the department said.

The My Health Record lists a person’s medications and allergies, doctors can upload a health summary about the person’s health problems, eventually the system will include X-ray results, pathology results, hospital discharge summaries and other data that for the first time can be shared between medical practitioners.

The privacy problem is about to affect everyone because two weeks ago state and federal health ministers agreed to give every Australian a My Health Record unless they opt out.
This decision was made even though the results of the original opt out trial have never been made public.

And it means the health records of every Australian will soon be on open access.

The Australian, 27 March 2017:

Companies bidding for the Medicare digital payments system have been given the option of proposing a new identity card to protect against fraud and improve system capabilities.

As the federal government pushes ahead with electronic health records, in anticipation of a digital health revolution, The Australian has learned the Department of Health has made identity management a key part of the new payments system and left it open to companies to propose alter­natives.

Companies may suggest alternatives to the green Medicare card — which holds no data, just a magnetic strip and numbers for indiv­iduals whose information is stored in a database — and forms of identity for veterans’ affairs, aged care and related payments.

It would be the biggest shift since the Howard government proposed the Australian Access Card, a broad-function smartcard that attracted privacy concerns and comparisons to the ill-fated Australia Card of the 1980s and was dumped by the incoming Rudd government.

A departmental spokeswoman emphasised that there was no proposal for a new identity card under moves to develop a new digital payments system.

“While the Depart­ment of Health has not been prescriptive, the presumption is that the Medicare card and number will continue to be the basis for identification,” she said.

The option for a new identity management solution came after health ministers decided on Friday that the My Health Rec­ord system would be opt-out, making electronic medical records compulsory for all Australians unless they said otherwise, despite trials of that model having yet to report.

Australian Doctor, 27 March 2017:

Australian health ministers have officially agreed to a national opt-out model under which every patient will have a MyHealth Record created for them by default.

Yet precisely when the model will be rolled out remains to be seen.

Federal, state and territory health ministers met in Melbourne on Friday, where, according to a communique, they agreed "to a national opt-out model for long-term participation arrangements" in the My Health Record system.

The agreement precedes the release of findings from two pilot trials of opt-out enrolment systems, in North Queensland and NSW's Blue Mountains, which included nearly one million patients.

A little history…….

News.com.au, 11 September 2016:

THE man who led the dumped UK digital health record system has been put in charge of Australia’s bungled $1 billion e-health record and is being paid as much as the Prime Minister to fix it.

Former journalist Tim Kelsey will be paid a total remuneration package worth $522,240 a year, almost the same as Malcolm Turnbull and just shy of the $548,360 paid to the Chief of the Navy and more than the Chief Scientist, the head of the Fair Work Commission and the Inspector General of Taxation, a remuneration tribunal determination reveals.

The former NHS executive is an interesting appointment as CEO of the Australian Digital Health Agency because he was in charge of the UK digital health records scheme Care.data dumped by the UK’s National Health System in July.

The Department of Health stated that Mr Kelsey is uniquely suited to the role because of his experience with data and digital platforms in health and personal privacy.

The Care.data scheme to store patients’ medical information in a single database suffered multiple delays and was then scrapped after major problems emerged over patient confidentiality.

It was similar to Australia’s My Health Record that Mr Kelsey will now oversee.

Friday 24 February 2017

Company tax rate cuts in Australia and the banks that benefit


There has been some finger pointing in mainstream and social media of late over Labor’s use of $7.4 million as the amount banks would be able to retain under the Turnbull Government’s progressive cuts to the company tax rate included in the 2016-17 Budget.

According to the Australian Tax Office on 3 January 2016:

The government announced a reduction in the small business tax rate from 28.5 per cent to 27.5 per cent for the 2016–17 income year. The turnover threshold to qualify for the lower rate will start at $10 million and progressively rise until the 27.5 per cent rate applies to all corporate tax entities subject to the general company tax rate in the 2023–24 income year.

The corporate tax rate will then be cut to 27 per cent for the 2024–25 income year and by one percentage point in each subsequent year until it reaches 25 per cent for the 2026–27 income year.


ABC News reported in May 2016 that Treasury Secretary John Fraser told Senate Estimates: The cost of these measures to 2026-27 is $48.2 billion in cash terms.


So where did the $7.4 billion for banks come from?

Australia is thought to have four big banks – the National Australia Bank (NAB), Commonwealth Bank (CBA), Australia and New Zealand Banking Group (ANZ) and Westpac (WBA) and it appears that this amount is based on projections done with regards to these banks by think tank, The Australia Institute.

The Australia Institute, media release 2016:

Big 4 banks $7.4 billion budget gift

The Coalition Government’s business tax plan would deliver $7.4B to the big 4 banks.

“Cutting company tax rates delivers a massive windfall to an already highly profitable banking sector,” Executive Director Australia Institute, Ben Oquist said.

“It makes no economic or budget sense to deliver the big 4 banks a multi-billion dollar tax break when Australia already has a revenue problem.

“If your agenda is jobs and growth, targeted industry assistance would deliver a much greater return on investment,” Oquist said.

The value of company tax provisions was derived from 2015 full year annual reports for the big four banks. That figure summed to $11,123 million. That figure was projected forward to 2026-27 to give the no change scenario.

The projection assumed bank profit and hence tax payable would increase in line with nominal GDP. The nominal GDP projections used the figures in the 2016-17 budget papers which give nominal increases of:

2.5 per cent in 2015-16,
4.25 per cent in 2016-17, and
5 per cent in 2017-18 and subsequent years.

Company tax cuts do not affect the big banks until 2024-25 when the current 30 per cent rate will fall to 27 per cent for all companies with further reductions of one per cent per annum until they reach 25 per cent in 2026-27.

The results of this are presented in the following table:

Table 1. Benefit of company tax cuts for big four banks, $million
2024-25
2025-26
2026-27
Total
Savings on company tax
1,756
2,458
3,227
7,441

KPMG stated in Major Banks: Full Year Results 2015 that the Australian major banks reported another record earnings result in 2015 - a combined cash profit after tax of $30 billion.

By year’s end 2016 the major banks were reporting a combined cash profit after tax of $29.6 billion.

The Federal Government’s underlying cash balance for the 2016-17 financial year to 31 December 2016 was a deficit of $33,025 million and the fiscal balance was a deficit of $31,143 million. While net government debt for 2016-17 stood at an est. $326 billion.


There is an increasing global perception that banks put shareholders’ and executives’ interests ahead of their customers and the community. This perception is more real for banks than for other corporates as they are seen to rely not only on compliance with strict regulation, but increasingly on the goodwill of the community and government to continue to operate in their current form.

We are seeing heightened scrutiny of Australian banks, including through the recent Standing Committee on Economics (the Committee) inquiry, becoming a regular feature of media and political commentary, notwithstanding eight separate inquiries since 2009. There are many reasons for this increased level of oversight, with terms such as “trust deficit” and “trust gap” often cited as the root cause.

It has been argued that the financial services industry has lost touch with the core proposition customers are seeking by forgetting its real purpose in society and becoming too inwardly focussed. These themes were repeated in testimony to the Committee.

Readers can make their own minds up as to whether banks have lived up to the historic social licence granted them by community (see bank scandals since 2009 and alleged superannuation owing in 2017) and, if they actually need any further tax relief or if that $7.4 billion would be much better in the hands of the Commonwealth Treasury.


Monday 17 October 2016

Australia has joined the Open Government Partnership (OGP) - but will that make a difference?



The Gillard Government committed to this organisation's principles on 22 May 2013:

According to the France and the World Resources Institute Co-Chair Declaration for OGP, October 2016 - September 2017; Establishing an open government is essential for the renewal of democracy and public action. Open government is building a world where increased government transparency and stronger accountability to citizens leads to greater prosperity and wellbeing. A world in which access to information restores faith in government and rekindles a desire among citizens to engage with public officials and build trust. A world where open government means government for the people and which serves the larger public interest. A world where collective wisdom reinforces public action to address the great challenges facing our planet.

Unfortunately the level of redactions in Freedom of Information (FOI) documents supplied by Australian federal governments to date frequently makes a mockery of these aims.

Right to Know is a website dedicated to Australian requests for information made under FOI legislation.

If readers are interested they may browse the available requests as well as documents supplied here.

Thursday 6 October 2016

Using tax offsets as a principal funding device to encourage self-assessing corporations to conduct research and development. What could possibly go wrong?


Providing a tax incentive for industry to conduct, in a scientific way, experimental activities for the purpose of generating new knowledge or information in either a general or applied form. [C’wealth Income Tax Assessment Act 1997 - SECT 355.5]

What could possibly go wrong when a federal government primarily funds business research and development (R&D) by offering private corporations tax offsets for conducting such activities, while at the same time allowing them to self-assess whether they are eligible for these tax incentives and whether their research is genuine?

Well for a start, the companies involved tend to employ less science, technology, engineering and mathematics graduates to conduct their R&D.

Given that on 15 June 2016 The Australian reported that; the Productivity Commission says STEM graduates fare poorly in the job market, apart from those who have studied healthcare, mining engineering and surveying. The outlook for mathematics and computer science qualifications are only slightly below average, however there are big gaps for graduates in life sciences, chemistry and the physical sciences. Employment outcomes improve three years after graduation, but 20 per cent of people with bachelor degrees in natural and physical sciences have still not got a job. Of those who do get work, many are in an unrelated field. About a quarter of people with science degrees say their qualifications are not relevant to their employment, one has to wonder why business and industry in Australia are not availing themselves of these qualified graduates.

Then there is the fact that it appears that this government program is not always well targeted.

Another flaw in this system is that voters have no way of knowing which companies are receiving these tax incentives and how much they are receiving, or of assessing what government foregoing so much tax income annually actually achieves as outcomes for the economy.

If science actually matters to the Turnbull Government it should matter not just in universities and identified research institutes but in all its aspects – including allegedly market-driven R&D.

One has to suspect that a little more academic discipline in business research and development might lead to better outcomes.

BACKGROUND

Dept. of Industry, Innovation and Science, Review of the R&D Tax Incentive (Ferris, Finkel and Frasier) 4 April 2016:


The R&D Tax Incentive (the Incentive) is the largest component of Australian government support for innovation, with around 13,700 entities performing $19.5 billion of R&D at an estimated cost to government of $2.95 billion in 2013-14. The Government commissioned this review to:
‘identify opportunities to improve the effectiveness and integrity of the R&D Tax Incentive, including by sharpening its focus on encouraging additional R&D spending.’

Reviewing the programme against these terms of reference involves the evaluation of the programme against its objectives, weighed against the costs, to measure the net social benefit.
The objectives, as stated in the programme’s legislation, are to ‘encourage industry to conduct research and development activities that might otherwise not be conducted…to benefit the wider Australian economy’. In other words, the Incentive seeks to encourage additional R&D (additionality) that benefits others (spillovers).

Most OECD countries have incentive schemes for R&D. Australia and most other countries use tax incentives as part of their public support, but Australia, Canada and the Netherlands are unusual in having tax measures as the principal form of support for business R&D. Countries such as Finland, Germany and Sweden are examples at the other end of the spectrum, in that they do not use tax incentives at all but rather support business R&D through direct measures such as competitive grants.

Overall assessment

The review panel finds that the programme falls short of meeting its stated objectives of additionality and spillovers. There are a number of areas where improvements could be sought in order to improve the effectiveness and integrity of the programme and achieve a stronger focus on additionality.

Based on the best estimates of additionality and spillovers, the panel found that the programme could be better targeted. The areas of improvement identified in this review would be likely to generate greater benefit from the programme for the Australian economy.….

The panel notes that there is a modest amount of collaboration with publicly-funded research organisations (PFROs) within the programme, but it is not an explicit focus. The panel also notes the low employment level of Science, Technology, Engineering and Mathematics (STEM) PhD graduates in Australian industry relative to other OECD countries. This represents a lost opportunity for greater spillovers of knowledge between larger companies, PFROs and the broader marketplace…..

The panel notes that despite the level of coordination between AusIndustry and the ATO, the significant growth in the scale of the programme is placing increasing strain on the administrative and compliance model for the programme. The Government should consider options to improve administration. These could include: adopting a single application process rather than the current separation of registration and claims, introducing a single database for the entire programme, reviewing whether both AusIndustry and the ATO should continue to administer the programme jointly and closer collaboration and streamlining around review and findings. Either or both agencies may require additional resourcing to enable such improvements.

To place the programme into alignment with modern expectations and to allow public visibility of companies receiving public support for their activities, tax secrecy provisions should be adjusted to allow the publication of the names of companies claiming the Incentive and the amounts of R&D they have claimed…..