On the subject of income, welfare support and spending

Will negative wage growth, the acute poverty of jobless people combined with the avarice of employers and punitive federal government policy intesect to create a perect storm which will see household spending fall this year?   

Current state of play......

ABC News, 23 February 2019:

Rather, Dr Lowe saw stagnant household incomes is a much bigger threat to consumer spending, and thus to the 60 per cent of the economy based on it.

"Aggregate household income used to grow at 6 per cent, it's growing sub-3," he told the MPs on the committee.

"That's a big difference, and you accumulate that over three or four years and income is 8, 10 or 12 per cent lower than it otherwise would have been.

"Many people borrowed assuming their incomes would grow at the old rate and they haven't.

"They're having more difficulty, they've got less free cash and so they can't spend, so this is why I've put so much emphasis on the need for a pick-up in wage growth."

Dr Lowe told the committee he has been using speeches to try and lift wage expectations, while the RBA has been keeping interest rates low and stable for an extended period of time to relieve the pressure on households.

The RBA governor said, while the strategy seems to be working — with unemployment down at 5 per cent and wage growth starting to pick up from recent lows — he could use a bit more help from the Fair Work Commission and employers.

Fair Work last year awarded a 3.5 per cent pay rise for those on the minimum wage and linked awards, and Dr Lowe said that was a "sensible and right policy" and a similar increase this year "makes a lot of sense".

"If workers get their normal long-run share of that [productivity increase] then their real wages should rise by 1 per cent a year," he said.

Financial Review,  7 February 2019:

Consumer anxiety has reached its highest level in three years, with households spending less on discretionary items as they worry about their finances and the future.

The National Australia Bank consumer anxiety index rose to 62 points in the December quarter, and close to 40 per cent of those surveyed said they had experienced financial hardship during the quarter – the highest level in two years.

Households said they had pulled back their spending on things like travel, eating out and entertainment due to heightened anxiety about their financial conditions.

The primary causes of anxiety through the December quarter were how to finance one's retirement and how to provide for one's family's future....

"What's happening here is you haven't got much wages growth, you're paying off utilities, you're paying off debt, and you're doing things that you have to do."

Mr Oster said after doing all those things, there wasn't much money left for households.

Anxiety about job security reached its highest level since 2016, and 50 per cent of homes in hardship found their financial position impacted by high utility bills.

The Guardian, 17 September 2018:

A proposal to increase Newstart allowance by $75 a week would lead to a boost in consumer spending, creating more than 10,000 jobs and lifting wages, a new report shows.

The report by Deloitte Access Economics, released on Monday morning, said the policy to increase the incomes of more than 700,000 people by $10.71 a day would cost the federal budget $3.3bn a year.

But a “prosperity dividend” would see the government collect an extra $1bn in taxes as a result of a stronger economy, and the proposal was also projected to create 12,000 extra jobs in 2020-21 and increase wages by 0.2%.

It comes amid debate about the rate of Newstart, which at $272.90 for a single person has not risen in real terms in more than two decades. It will increase by $2.20 this week as a result of indexation.

The Australian Council of Social Service (Acoss), business groups, unions and a former prime minister, John Howard, have all argued for an increase, but the government has so far dismissed those calls….

The bulk of the economic benefits from increasing the payment would go to the bottom 5% of Australian income earners, who would receive “six times the dollars going to the highest income quintile”. The “poorest of the poor” would receive 28 times the relative boost to their disposable incomes, than the top income quintile.

Regional areas “most in need of help” would be key winners from increased spending….

The current rate is the equivalent to living on $38.99 a day. The report said a single person who also receives the maximum rent assistance and the energy supplement would be living on about $49.24 a day.

Previous research has shown that those on Newstart live on as little as $17 a day after their housing expenses and bills.

ABC NEWS, 9 September 2018:

It may not have garnered the same attention as the surprisingly strong second-quarter GDP growth, but an equally striking fact in last week's national accounts was household savings had just hit a post-GFC low.

It is not a new phenomenon. The household saving ratio — or the ratio of households' net saving to disposable income — has been shrinking since 2014.

What makes the latest figure uncomfortable is that there is now little fat left to trim, and on current trends households will be spending more they earn.

The ability of the Australian economy to keep growing in the face of a number of challenges in recent years owes a fair bit to the savings so prudently built up after the sobering experience of the GFC.

As JP Morgan's Tom Kennedy points out, the persistent decline in savings since 2014 has been an important part of Australia's real GDP growth performance, helping offset some of the spending drag associated with record low wages growth and an unemployment rate that has yet to fire up wages.

While the correlation between savings and spending is far from perfect, Mr Kennedy has drilled down into the figures, and is worried.

Sad statistics are generated by Australian Prime Minister Scott Morrison's war on the poor & vulnerable

Liberal MP for Cook Scott John Morrison has been a Cabinet Minister since 18.9.2013, was Minister for Social Services from 23.12.2014 to 21.9.2015, then Treasurer from 21.9.2015 to 26.8.2018 and now Prime Minister of Australia since 24.8.2018 – these are the sad statistics he leaves in his wake.

The Australian, 21 February 2019:

As Department of Human Services secretary Renee Leon faced heated questioning about the controversial “robodebt” program — which averages reported income and generates debts to current and former welfare recipients — she said it is not known whether people have taken their own lives due to the program.

“There is not an elevated death rate among the cohort who have received a debt notice. It’s not to say we are not troubled that people die,” Ms Leon said…

Greens Senator Rachel Siewert said the numbers are particularly troubling because 663 people out of the 2030 had “vulnerability indicators” attached.

Of the 2,030 people who died after receiving a Centrelink Online Compliance Intervention letter (‘robodebt’ ) which was generated sometime between July 2016 to October 2018:

102 were aged 16-25 years;

327 were aged 26-35 years;

347 were aged 36-45 years;

466 were aged 46-55 years;

536 were aged 56-65 years;

251 were aged 66-80 years; and

1 was aged 81-100 years.

By gender 637 of these welfare recipients were Female and 1,393 Male.

“If death rates remained similar throughout the period July 2016 - October 2018 ... approximately 6% of all deaths of 16-35 year olds in Australia occurred for people who were subject to Centrelink #robodebt compliance.” [Dr Ben Eltham on Twitter, 22 February 2019]

BACKGROUND

Gilbert Sullivan QC weiting in the Herald Sun, 21 February 2019:

The Model Litigant Policy of the Commonwealth is a direction issued by the Attorney-General under the Judiciary Act.

The claims reported to have been made by Centrelink are said to target 1.5 million people and aim to claw back $4.6 billion in what are alleged to be overpayments of welfare.

The claims date back to 2010 and Centrelink demands the repayment of what it alleges to be overpayments caused by the understatement of income; but it knows very well that it is unable to prove these claims.

Centrelink has destroyed its records and is entirely dependent on information obtained from the Australian Taxation Office. It divides the gross annual income obtained in this way by 26 to calculate what it terms an “apportioned actual income”.

It then proceeds to claim the difference between the fortnightly income declared by the payee and the apportioned actual income as an understatement by the recipient which it then claims as a debt.

It is only by sighting pay-slips or bank statements that the accuracy of the declared fortnightly income can be verified. Centrelink’s claims rest on it proving that the fortnightly income was falsely declared.

It can only succeed if it can prove this on the balance of probabilities. The ATO information on its own is worthless and needs a point of comparison in the form of contemporaneous records. Annual income does not translate into fortnightly income.

The absurdity of this methodology is obvious.

A full-time student in 2010 on a youth allowance may well have had a part-time job to support their studies. Some weeks they may have earned, say $150, other weeks nothing.

They may have entered the work force full-time in the last two months of the financial year and earned say, $8000.

Dividing the yearly income by 26 cannot establish a dishonest understatement for the weeks the student earned $150 or nothing. Without the contemporary records, no understatement can be proved.

This methodology is in breach of model litigant obligations in a number of respects.

First, the mathematical basis underpinning it is invalid and known to be so by Centrelink; and the maintenance of a claim known to be invalid is a fundamental breach of the obligation to act as a model litigant.

Second, to imagine that casual employees retain pay slips from 2010 is ludicrous; many of the employers from that time no longer exist and it is inconceivable that anyone can produce pay-slips.

Further, while some bank records are obtainable, they are archived and expensive to obtain. Placing the onus on a recipient to procure bank statements is yet a further breach of model litigant obligations.

There is no reason why Centrelink could not obtain these records by subpoena or otherwise. Furthermore, the actions of Centrelink reverse the onus of proof which, of itself, is a breach of model litigant obligations.

MammaMia, 21 February 2019:

“It was demeaning, embarrassing, and if it wasn’t for my son… I considered suicide.”

“It was dehumanising. I had only lost my husband months before… I was grieving.”

These two sentences represent how two women, from two different walks of life, in separate states felt – when they received a Centrelink debt notice.

Or more exactly what happened when they tried to deal with the fallout of a Centrelink debt notice……

The Centrelink letters are sent out through an automated system. In the old system, it equated to about 20,000 a year, but thanks to a new system in 2016 – it’s generating 20,000 letters a week.

Gabriella* received one of those letters just last year.

She received it when she was trying to come to terms with the death of her husband who had died in a boating accident a few months before.

She was left with two young children trying to work out how to move on with life.

She had never received anything from Centrelink, she hadn’t needed to. But Centrelink had sent her $13,000 in weekly increments, and they wanted their money back.

“The stress… I was already dealing with enough… I knew I didn’t owe them money,” she told Mamamia.

Turns out Centrelink had been sending her money that she hadn’t applied for – which had been bouncing back for months.

“I made a phone call first, they realised they’d made a mistake. But she [the person on the phone] couldn’t fix it.”

She was given a different number.

“I spent hours on the telephone waiting for them to answer [to help]. It’s impossible to get through,” explained Gabriella.

So instead, she was forced to take a day off work and go into the Centrelink office itself.

“She looked at me like I was lying,” Gabriella told Mamamia, of the moment she explained her story – yet again.

Gabriella is most frustrated at the time and effort she had to put in to fix this wrong. A wrong that was made by an automated letter, and which cost her a days’ wage, and almost cost her $13,000.

“I am grieving, but I am pretty stable… my head is pretty OK. But there are people who get these letters and they are not OK,” said a teary Gabriella.

“I am actually in the mental health industry, so I am probably more equipped than a lot at noticing triggers in myself. But what if I wasn’t?

“My situation never should have happened, if there had been a human being looking at my account they would have realised it was bouncing back.”

“It was dismay. It was a shock to the system. It is scaremongering, they don’t explain anything, and it’s very… dehumanising,” she said of her experience..........

Happy 49th to our local member, Nationals MP for Page Kevin Hogan

Happy 49th Newspoll, Kevin John Hogan. 

That's forty-nine published Newspoll surveys in a row in which the Coaltion has failed to pull ahead of Labor on a Two-Party Preferred (TPP) basis.

The last time the federal government - of which you have been a member since September 2013 under prime ministers Abbott, Turnbull and Morrison - has been ahead of Labor was on 27 June 2016.

That lasted a full thirty-five five days because by 30 August the gloss had worn off that July federal election win and you could only reach TPP 50 points in the August 2016 Newspoll.

In late September of that year the Coalition lost even that small comfort as Labor began to out poll the Turnbull Government and then the Morrison Government.

If you are wondering why this is happening the answer is easy to find. Turn a few pages of Hansard.

Every government backbencher, yourself included, votes on the floor of Parliament not in the interests of their electorate or that of the nation but in support of the hard-right ideology which dominates the Coalition Cabinet to the exclusion of even basic commonsense.

You have nobody to blame but yourselves.

So enjoy your 49th Kevin because your 50th is likely to be close on its heels.

*Image from Greeting Card Universe

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Newspoll survey of 1,582 respondents on 21-24 February 2019 was released on Monday 25 February:

Primary Vote – Labor 39 percent (unchanged) to Liberal-Nationals 37 per cent (unchanged), The Greens 9 per cent, One Nation 5 per cent.

Two Party Preferred (TPP) - Labor 53 per cent (unchanged) to Liberal-Nationals Coalition 47 per cent (unchanged)

Voter Net Satisfaction With Leaders’ Performance – Prime Minister Scott Morrison -6 points and Opposition Leader Bill Shorten -18 points.

If a federal election had been held on 24 February 2019 based of the preference flow in July 2016 then Labor would have won government with a majority 82 seats to the Coalition's 63 seats in the House of Representatives.

Yet another Australian health data base compromised

The Age, 20 February 2019:

A cyber crime syndicate has hacked and scrambled the medical files of about 15,000 patients from a specialist cardiology unit at Cabrini Hospital and demanded a ransom.

The attack is now the subject of a joint investigation by Commonwealth security agencies.

Melbourne Heart Group, which is based at the private hospital in Malvern, has been unable to access some patient files for more than three weeks, after the malware attack crippled its server and corrupted data.

The malware used to penetrate the unit's security network is believed to be from North Korea or Russia, while the origin of the criminals behind the attack has not been revealed.

The online gang responsible for the data breach demanded a ransom be paid in cryptocurrency before a password would be provided to break the encryption.

The Age understands that a payment was made, but some of the scrambled files have not been recovered, among them patients' personal details and sensitive medical records that could be used for identity theft.

Some patients were told that their files had been lost but were not given any explanation. Others have turned up for appointments for which the hospital had no record.

The Australian Cyber Security Centre, which is part of the Australian Signals Directorate – the government agency responsible for Australia's cyber warfare and information security – said it was assisting the hospital with cyber security advice.

The Australian Federal Police has also been briefed.

A Melbourne Heart Group spokeswoman said it was working with government agencies to resolve the issue.

Is the Great Barrier Reef not dying quickly enough for the Morrison Government and Australian Environment Minister Melissa Price? Are they trying to hasten its death?

Australia's Great Barrier Reef has been under threat from increased human activity for generations.

Sediment runoff due to land clearing and agrigultual activity, pollutants from commercial shipping, unlawful discharge of waste water from mining operations and coral bleaching due to climate change.

North Queensland Bulk Ports Corporation is a port authority responsible for facilities at Weipa, Abbot Point, Mackay and Hay Point trading ports, and the non-trading port of Maryborough.

Three of these ports are in the Great Barrier Reef World Heritage Area. One of these, Hay Point is reportedly among the largest coal export points in the world.

This is what the Morrison Government's Great Barrier Reef Marine Park Authority has given this corporation permission to do.............

The Guardian, 20 February 2019:

The Great Barrier Reef Marine Park Authority has approved the dumping of more than 1m tonnes of dredge spoil near the reef, using a loophole in federal laws that were supposed to protect the marine park.

The Greens senator Larissa Waters has called for the permit – which allows maintenance dredging to be carried out over 10 years at Mackay’s Hay Point port and the sludge to be dumped within the marine park’s boundaries – to be revoked.

“The last thing the reef needs is more sludge dumped on it, after being slammed by the floods recently,” Waters said. “One million tonnes of dumping dredged sludge into world heritage waters treats our reef like a rubbish tip.”

Acting on concerns from environmentalists, the federal government banned the disposal of dredge spoil near the reef in 2015. But the ban applied only to capital dredging. Maintenance work at ports – designed to remove sediment from shipping lanes as it accumulates – is not subject to it.

On 29 January the marine park authority granted conditional approval for North Queensland Bulk Ports to continue to dump maintenance dredge spoil within the park’s boundaries. The permit was issued just days before extensive flooding hit north and central Queensland, spilling large amounts of sediment into the marine environment.

Waters said the distinction between capital and maintenance dredging made little difference to the reef…..

North Queensland Bulk Ports, in a statement posted online shortly after the permit was issued, said it had to meet conditions to protect the marine environment. The ports authority said its dumping plan was peer-reviewed and considered best practice.

“Just like roads, shipping channels require maintenance to keep ports operating effectively,” the ports authority said. “Maintenance dredging involves relocating sediment which travels along the coast and accumulates over the years where our shipping operation occurs.

“Importantly, our assessment reports have found the risks to protected areas including the Great Barrier Reef Marine Park Authority and Great Barrier Reef Marine Park and sensitive habitats are predominantly low with some temporary, short-term impacts to (bottom-dwelling) habitat possible.

“The permits allow for the long-term, sustainable management of maintenance dredging at the Port and will safeguard the efficient operations of one of Australia’s most critical trading ports.”

Maintenance dredging will begin in late March. Initial dredging will take about 40 days.

BBC, 22 February 2019:

Australia plans to dump one million tonnes of sludge in the Great Barrier Reef.

Despite strict laws on dumping waste, the Great Barrier Reef Marine Park Authority (GBRMPA) gave the go-ahead.

A loophole was found - the laws don't apply to materials generated from port maintenance work.

It comes one week after flood water from Queensland spread into the reef, which scientists say will "smother" the coral.

The industrial residue is dredged from the bottom of the sea floor near Hay Point Port - one of the world's largest coal exports and a substantial economic source for the country....

It's just "another nail in the coffin" for the World Heritage-listed Great Barrier Reef, which is already under stress due to climate change, according to Dr Simon Boxall from the National Oceanography Centre Southampton.

"If they are dumping it over the coral reef itself, it will have quite a devastating effect. The sludge is basically blanketing over the coral.

"The coral relies on the algae, that's what give them their colour and what helps them feed - without this partnership the coral will suffer dramatically."

Dr Boxall says his worries about sludge-dumping are short-term - with the current Australian summer a time for "rapid algae growth".....

Dr Boxall says the impact will be lessened if the sludge is taken far enough offshore, but that it will still contain high amounts of harmful materials such as trace metals.

"If it's put into shallow water it will smother sea life," he says.

"It's important they get it right.

"It'll cost more money but that's not the environment's problem - that's the port authorities' problem."

Last year, Australia pledged A$500 million (£275m) to protect the Great Barrier Reef - which has lost 30% of its coral due to bleaching linked to rising sea temperatures and damage from crown-of-thorns starfish.

One of the threats listed at the time was "large amounts of sediment".

Another Liberal Minister caught out not passing the ‘pub’ test

The Canberra Times, 18 February 2019:  

      

Finance Minister Mathias Cormann's flights for a family holiday to Singapore were paid for by a travel company controlled by Liberal Party Treasurer Andrew Burnes within weeks of that company winning a $1 billion contract from Cormann's department.

Helloworld, a listed company of which Mr Burnes is the chief executive, booked the flights for Senator Cormann, his wife and two children on the company's "staff and family travel" account.

Records kept by Helloworld and obtained by The Age and Sydney Morning Herald reveal that the Melbourne-based travel company paid $2780.82 for the Singapore flights, which were booked in July 2017.

Helloworld announced the following month that its subsidiary, AOT, was the winner of the three-year-plus, $300 million per year finance department tender. Departmental sources claim Helloworld had achieved preferred tenderer status before Senator Cormann's flights were booked in July.

Senator Cormann and his family took the trip in early January, 2018.

The minister only paid for the return flights to Singapore from Perth on Monday afternoon, after Mr Burnes and Senator Cormann were contacted by The Age and Sydney Morning Herald.

Finance Minister Mathias Cormann's flights for a family holiday to Singapore were paid for by a travel company controlled by Liberal Party Treasurer Andrew Burnes within weeks of that company winning a $1 billion contract from Cormann's department.

Helloworld, a listed company of which Mr Burnes is the chief executive, booked the flights for Senator Cormann, his wife and two children on the company's "staff and family travel" account.

Records kept by Helloworld and obtained by The Age and Sydney Morning Herald reveal that the Melbourne-based travel company paid $2780.82 for the Singapore flights, which were booked in July 2017.

Helloworld announced the following month that its subsidiary, AOT, was the winner of the three-year-plus, $300 million per year finance department tender. Departmental sources claim Helloworld had achieved preferred tenderer status before Senator Cormann's flights were booked in July.

Senator Cormann and his family took the trip in early January, 2018.

The minister only paid for the return flights to Singapore from Perth on Monday afternoon, after Mr Burnes and Senator Cormann were contacted by The Age and Sydney Morning Herald.

Senator Cormann said on Monday he had "no idea" that the travel had been booked on the family and staff travel account, nor that his credit card had not been charged. He was "completely unaware of internal administrative arrangements at Helloworld in terms of how they managed private and personal travel".

Mr Burnes said it was "absolutely an internal administrative oversight" that Senator Cormann’s credit card had not been charged for the trip when it was booked, which allowed the politician and his family to fly for free to Singapore.

Senator Cormann, who is a close personal and political associate of Mr Burnes, a Liberal donor, has never declared the Singapore family holiday on his parliamentary register of interests….

When The Age and Sydney Morning Herald sought comment from Mr Burnes on Monday about why his travel group had booked the Cormann family’s travel, he said: “We sell $6.5 billion worth of travel. So many people use our company to book their travel.”

Sources close to the company said that his personal office had arranged the Perth to Singapore booking after a request from Mr Cormann some time before 17 July 2017.

A Helloworld source said it was “probably inappropriate” that Mr Cormann’s travel was booked via a “family and staff” account.

The Age and Sydney Morning Herald are not accusing Senator Cormann or Mr Burnes of any wrongdoing.

Read the full article here.

UPDATE

It's not just 'friends' who give Cormann trips for free, he has something of a history when it comes to having the taxpayer foot the bill......

Daily Mail, 14 February 2019:

Finance Minister Mathias Cormann charged taxpayers $4,400 to take his wife on a romantic beach getaway on her birthday.

The Liberal senator for Western Australia treated his new spouse Hayley Ross, a lawyer, to a weekend away in a remote resort town known for its beach camel rides on July 9, 2010.

To mark her 28th birthday on a Friday, he arranged for her to fly 2,200km from their home city of Perth to Broome in the far north of his vast state, Department of Finance records show.

This direct flight cost the public purse $1,741 as part of a three-day weekend away to Broome which cost taxpayers $4,397.

It included $221 in charter hire cars to get around Broome on Hayley Ross' birthday, and $118 in Commonwealth car transport to get the couple to and from Perth airport.  

The senator also claimed $676 in travel allowance for two nights' accommodation in Broome as 'electorate business'. 

This romantic weekend away on the public purse took place a year after the senator married Ms Ross, the daughter of West Australian wheat farmers. 

Political Cartoons of the Week

Cathy Wilcox

Matt Golding