The Government values the investments people make in their own skills and recognises the benefits of a tax deduction for work related self-education expenses. However, under current arrangements these deductions are unlimited and provide an opportunity for people to enjoy significant private benefits at taxpayers’ expense.
So the government is going to save $500 million dollars over the next few years by capping legitimate educational expenses on the grounds they were ‘unlimited’.
We could ask why negative gearing continues to be unlimited where taxpayers claiming the expenses of property speculation cost the Federal government eight billion dollars last year.
So Treasurer Wayne Swan says a salaried worker has effectively no limits on claiming losses from property speculation against their taxes but is subject to a ludicrously low limit for claiming education expenses.
This one comparison – between negative gearing and self education expenses – shows the magic pudding fairyland that Australia’s political leaders live in and their cowardice.
What’s bizarre about this policy is that most industries are undergoing major changes and almost every worker will have to reskill a number of times through their careers.
Many of those workers will be able to get their courses and education expenses under the limit, many others won’t.
As the New Australian points out, Wayne Swan – like most lifetime Australian political apparatchiks – has never to worry about reskilling as the party has nurtured and cared for him all his adult life.
In the real world though, Australia’s economic future will depend on the workforce picking up the skills to operate in rapidly changing times.
That Australia’s politicians and economic policies are focused on encouraging property speculation over skills only guarantees mediocrity.
Although mediocrity might be the world that suits Wayne Swan, Tony Abbott and the rest of Australia’s political classes.
Australia’s legal system makes it hard for journalists to tell the truth about business dealings.
“The biggest risk for Australian business journalists is being sued into oblivion” said Paddy Manning at a Walkley Media Talks Panel in Sydney last Thursday.
Joining Paddy on the panel was The Australian’s Anthony Klan, the ABC’s Tikki Fullerton and moderator Peter Ryan who looked at the challenges facing business journalists seeking to separate truth from business PR spin.
Business superinjunctions
The problem facing Australian business journalists is a legal system that favours those who want to suppress facts – it’s a game only the wealthy can play and rich fraudsters use it well as we’ve seen over the years in corporate Australia.
Manning described one occasion where he obtained information on a prominent businessman’s affairs and, within hours of asking the gentleman for comment, found he and the Fairfax had been hit with a court injunction with such vague wording it may have any of his employer’s outlets from mentioning the man at all.
These injunctions were the rule, not the exception. Manning went on to tell how Sydney Morning Herald business writer Michael West spends one day a week on legal matters while his colleague Adele Ferguson was even preventing from writing about documents that were on the public record.
Klan trumped that with the seventy injunctions he’s received over stories on the mortgage debenture scandals, an ongoing sore on Australia’s investment industry which threatens to steal many retirees’ savings.
The problem of pre-emptive injunctions stemmed from the ethical requirement of giving a ‘fair opportunity for reply.’ In seeking comment from those engaged in shoddy – or downright – illegal practices, it gives those with something to hide the opportunity to run to the courts who are all to willing to issue wide ranging orders.
An advantage for bloggers?
Interestingly, Justice Leveson of the UK inquiry into press conduct made an observation about the disadvantage mainstream media has before the law during his visit to Australia earlier this year.
online bloggers or tweeters are not subject to the financial incentives which affect the print media, and which would persuade the press not to overstep society’s values and ethical standards.
While Leveson had it wrong about financial incentives, it’s actually the media’s ethical standards which are the restraining influence. Professional journalists quite rightly don’t like breaching their trade’s code of conduct.
As Leveson opined, bloggers don’t necessary hold themselves to the same standards so they are more likely to publish and be damned.
Where Leveson was utterly and totally wrong is bloggers’ immunity to the law.
Bloggers rejoice in placing their servers outside the jurisdiction where different laws apply. the writ of the law is said not to run. It is believed therefore that the shadow of the law is unable to play the same role it has played with the established media.
That’s nonsense and it’s a matter of time before a blogger goes to gaol for disobeying a court. When that does happen it will be interesting to see how the established media reacts to this.
From the panel discussion it was quite clear that professional business journalists have no intention of breaking the law or their code of ethics, although all are united in their determination to protect sources if they were order to divulge by a court.
The cost of suppressing news
What really stood out from the panel was how the law is being used to stifle examination of Australian business behaviour. In the audience Q&A, veteran reporter Colin Chapman pointed out Australia sits at 26th on the World Press Freedom Index.
The lack of a truly free press could just be seen as journalistic hand wringing, but there’s a real world effect of this – those retirees who will be ripped off by crooked financial advisers and mortgage funds would have a better chance of protecting themselves were they able to see Anthony Khan’s articles on the topic.
Just as crooks have been able to prosper in the absence of press scrutiny, so too have supine, incompetent and lazy regulators.
All too often agencies – such as the ACCC, ASIC, ASX or ATO – have only been woken from their slumbers when prodded by a media scandal, lack of scrutiny has allowed government regulators to get away with not doing their jobs.
This poor enforcement is reflected in international comparisons. The World Bank ranked Australia as 70th in the world for protecting investors, way below Colombia, Thailand or Kazakhstan.Australian business reporters find themselves in a difficult position being caught between the tightening economics of the media industry and a legal system that is more focused on protecting knaves rather allowing society to be informed.That problem facing journalists is a problem for every Australian who’s being kept in the dark about their investments.
What triggered this comment was a speech by Australian Treasurer Wayne Swan to the Financial Services Council in Sydney last September where the Treasurer compared China’s economic performance to sprinter Usain Bolt;
It’s like Usain Bolt easing off a bit at the end of the 100 meters because he’s 10 meters in front and has already smashed the world record.
“My response was that if that’s the way Australia’s leaders are thinking about China’s economy, if that’s the dreamland that they are in, then they need to snap out of it really fast,” Chovanec said in his keynote.
“Because China is facing a very serious and potentially disruptive economic adjustment. A realistic idea of where this adjustment is going is essential to countries like Australia.”
Chovanec’s view is that China cannot sustain current growth rates by “providing the fodder of the consumerist economy.”
This was borne out in the Global Financial Crises where exports fell from 8% of GDP to 2%. To make up for the drop the PRC government stimulated the economy and investment went 42% of the economy to half.
The establishment view is that China will move from infrastructure spending driving the economy to a consumption driven society.
Moving to a consumption driven economy though means a very different Chinese society which means a different group of winners and losers, Chovanec warns.
He also doesn’t see urbanisation as the real driver of the Chinese economy, “If you look around the world, urbanisation has not always driven economic growth.”
“It’s based on a premise that moving people from a rural environment to an urban environment generates productivity gains.”
“Now for China over the past thirty years that has proven largely true,” says Chavonec, “but going forward most of that hanging fruit has been picked.”
“In order to realise productivity gains, China is going to have to discover new areas of competitive advantage.”
The biggest risk that Chovanec sees at present though is the level of bad debts in the economy and the rate of credit expansion with a trillion dollars pumped into the Chinese economy over the last quarter.
“You’re getting less and less bang for the buck from credit expansion.”
Chovanec doesn’t see China’s future as bleak though, “the China growth story doesn’t have to be over.”
“There are a lot of sectors in China where there’s real potential for true productivity gains – agricultural, logistics, health car, services, consumer branding, retail.”
“The challenge for China is not that the growth story is over but the engine of that growth story is going to have to change.”
Dealing with those changes is also a challenge for countries like Australia who have staked all on the current growth story.
Chovanec’s wake up call to Australia’s leaders is timely – the question is how quickly they can wake up to the changes in China.
Assuming the mining industry will drive Australian employment may turn out to be risky.
The Prime Minister’s comments at the ADC China Forum last week raised an important question about Australia’s mining boom – can the industry sustain employment as the construction of mines, ports and railways are completed?
In that interview, the Prime Minister was upbeat about the continued employment bonanza from the resources boom.
I think overwhelmingly the prospects are good for resources. There is nothing to fear here. The absolute peak of the price cycle has probably passed, but we will still be doing good business in resources. It will be supporting jobs.
Nev was a little more circumspect about the prospects for continued booming employment in the mining sector.
our capital expenditure program and expansion is coming to an end around mid-year. And then we’re into a very high volume phase and it’ll be a matter of driving the maximum efficiency out of the business through that phase.
So even if the iron price and export volumes do hold up, it looks like the resources employment boom may be reaching its end as mining projects move from the labour intensive construction phase to being relatively hands off production mines.
If Nev gets his way with ‘maximum inefficiencies there may be fewer jobs to go around.
The Prime Minister – along with all of Australia’s political leaders – remains hopeful, as she said in her speech.
So we are not, indeed we have never been, simply a quarry or a beach; ours is a diverse and sophisticated economy and a valued trading partner with the biggest global economies.
As the expansion phase of the mining boom tails off, that economic diversity is going to be tested. Hopefully there is a Plan B.
In a speech delivered last week the Australian Securities and Investments Commission’s Deputy Chair Belinda Gibson and Commissioner John Price gave some refreshing commonsense views on how businesses should handle public information.
The continuous disclosure advice given by Price and Gibson is aimed at meeting the requirements of Australian corporate law, but it’s actually good social media advice.
Having delegations in place for who has authority to speak on behalf of the company – whether in response to an ASX ‘price query’ or ‘aware’ letter, or when they become aware of information that needs to be released to the market, perhaps in response to speculation.
Ensuring that there is a designated contact person to liaise with the ASX, who has the requisite organisational knowledge and is contactable by ASX.
Have a clear rapid response plan and ensure all board members and senior executives are fully appraised of it. Give it a practice run every so often – a stress test of sorts.
Have a plan for when you will consider a trading halt appropriate.
Have a ‘Request for trading halt’ letter template ready for use.
Have guidelines for determining what is ‘material’ information for disclosure, tailored to your company.
Prepare a draft announcement where you are doing a deal that will
likely require an announcement at some time, and a stop-gap one in case of a leak
Having a nominated contact person with requisite organisational knowledge is possibly the most important point for any organisation.
Even if you think social media is just people posting what they had for lunch or sharing cute cat pictures, it isn’t going away and those Twitter feeds and Facebook pages are now considered official communications channels.
The intern running your social media is now your company’s official spokesperson. Are you comfortable with this?
A good example of where this can go wrong is the Australian Prime Minister’s Press Office where an immature staff member has been put in charge of posting messages. The results aren’t pretty.
The funny thing is the Prime Minister’s office would never dream of some dill getting up and saying this sort of thing on her behalf, yet allows an inexperienced, loose cannon put this sort of material in writing on the public internet.
On a more mature level, the ASIC executives also have some good advice on writing for social media.
Don’t assume that the reader is sophisticated or leave readers to read between the lines. Companies need to highlight key information and tell it plainly.
While the ASIC speech is aimed at the specific problems of complying with company law and listing requirements, it’s a worthwhile guide for any organisation needing to manage its online presence.
Don’t be like the Prime Minister’s office, understand that an organisation’s social media presence is an official channel and treat it with the respect it deserves.
On one level this isn’t suprising as starting a business in Australia is easy compared to many other countries with the World Bank’s Doing Business survey rating the country second after New Zealand for the ease of setting up an enterprise.
The Productivity Commission speculates this might be because the mining boom is encouraging workers to take resource contracts rather than set up their own businesses.
No doubt there’s some truth there, as much of the nation’s investment has been directed into the mines and associated infrastructure in recent years however there’s probably some more mundane reasons.
Top of the list would be the nation’s property obsession; it’s difficult to service a massive mortgage while running your own business.
Fifty years of mainly increasing property prices has groomed Australians into believing that having a steady job and a brace of investment properties is a much easier path to success than taking a risk with your own business.
Overwhelmingly these petty regulations hurt those starting new businesses rather than bigger corporations.
The good news though is that people still want to start their own businesses. In an economy that’s increasingly concentrated in fewer hands, diversification is critical.
In a world that’s becoming increasing automated, we need smart startups finding ways to use the new tools and create the jobs to run them. If Australia can get its policy mix right, kick the property and nanny state addictions then it might open some great opportunities.
As a low cost carrier, Jetstar is the reality of flying’s present and a vision of travel’s future. For the Australian economy class business traveller it pays to choose carefully.
For the budget conscious business traveller, flying economy is an important way of saving money. In Australia, often that means the choice lies between Virgin and Jetstar.
When you’re self employed, you tend to watch your pennies and choose based on what you get for your money rather than just being focused on the perks when somebody else is paying.
Generally freelancers tend to be flying at the back of plane where it’s not so much worrying about whether Krug or Bolly to entitled executives but whether you’ll get slapped a $70 surcharge for your bag.
In Australia, affordable business flying tends to be between Virgin and Jetstar with Qantas being the best example of an Australian business exploiting its domestic market position while running down international operations.
Tiger doesn’t qualify as an airline suitable for anyone who needs to be somewhere at a given time so it isn’t relevant to business travellers.
Dollars please!
Much of the difference between Jetstar and Virgin are the underlying business models.
Virgin Australia was set up as a low cost carrier to compete against Ansett and Qantas but shortly after Virgin started operations, Ansett went bust and the startup airline found itself the nation’s number two airline.
Under CEO John Borghetti, any pretense of Virgin being a low cost carrier has been dropped and now the service competes on service against Qantas.
Jetstar on the other hand remains true to its roots as Qantas’ low cost operation and it plays firmly from the Ryanair book of screwing money out passengers at every opportunity.
While Virgin isn’t shy at trying to upsell you, booking a ticket though Jetstar involves twenty minutes of declining various options and additions. By the time you finish booking a Jetstar ticket, you’ll often find the price has gone up in the meantime and you have to start again.
Another irritation with Jetstar is its codeshare arrangement with Qantas which means the airline inherits its parent’s screwy seat allocation systems which block out availability based on a passenger’s frequent flyer number.
You will obey
A big difference between Jetstar and Virgin is the customer service, Virgin’s cabin crew tend to be helpful and cheerful while Jetstar’s seem to be on a KPI which encourages frowning and stern warnings.
Jetstar’s attitude to mobile phones is instructive. Unlike Qantas and Virgin who allow passengers to use phones until the cabin doors are closed, Jetstar order customers to shut down before boarding. This is a nuisance if you’re running your own business.
Another nuisance is the airline’s attitude towards laptops where Jetstar’s crew usually insist passengers have to shut down when the plane starts descending rather than when the pilot turns the Fasten Seatbelts sign on Qantas and Virgin.
This sounds trivial but just this alone should be a deal breaker for many small business travellers.
On a one hour Brisbane – Sydney or Sydney – Melbourne flight, this effectively gives a time poor business traveller twenty minutes work time from 90 minutes on the plane.
The Seventh Circle of Hell
The seventh circle of hell in Jetstar’s Melbourne terminal
While we’re on the topic of Jetstar’s Melbourne operations, a special mention should be given to their poorly signposted gates at the airport.
Situated at the most remote part of the terminal building – almost as remote as Tiger’s abysmal tin shed – Jetstar’s gates are disorganised mess that make boarding difficult. The airline advises getting to the gate half an hour before the flight and at Melbourne that is good advice.
For those arriving in Melbourne, getting off the plane involves fighting your way through queues, lost children, Bedouins building campfires and peasants clutching chickens. If you’re really unlucky you may find yourself accidentally trying to board JQ5749 to Wagga Wagga.
What’s good about Jetstar
Decent legroom on Jetstar flights.
Despite airline’s drawbacks Jetstar has some things going for it, the main one is the airline’s modern fleet compared to Qantas or Virgin. Jetstar’s A321s have better leg room than the 737s flown by the other carriers – Qantas’ 767s are comfortable like your grandad’s armchair and almost as old.
If you’re flying longer distances such as Melbourne – Cairns or Perth – Sydney, particularly the ‘red eye’ flights heading east from Western Australia, then Jetstar is the more comfortable choice for economy fliers.
Then there’s cost – usually Jetstar is cheaper than Virgin for most flights and at busy times the cost savings may be worth the irritations – but check fares from all three airlines before booking as sometimes the Airline Gods may decide Qantas has the cheapest fares for the time you want to fly.
As a low cost carrier, Jetstar is the reality of flying’s present and a vision of travel’s future. If you have visions of glamour when catching a flight, then shell out for a business class fare.
