Ian Timmins comments on the Australian government

AUSTRALIA

27th July 2009 - Federal government to force ALL homeowners and renters to get environmental performance ratings.

Just how many Australians are aware that the Rudd government intends dipping their hands yet again into their pockets by forcing every home owner to obtain a compulsory disclosure of their property's environmental performance whenever they sell or rent their home? This is yet another cost for the public, and you can bet they will not be cheap.

The National strategy on energy efficiency 2009-2020 guidelines timeframe states " phasing in mandatory disclosure of residential building energy, greenhouse and water performance at the time of sale and lease, commencing with energy efficiency by May 2011.

So it will be necessary to disclose the efficiency of their homes in the areas of energy, greenhouse and water efficiency whenever they sell or rent.

Government's already have too much say over what we do. Enough is enough Mr Rudd. You can force compliance on new dwellings, but stop yet another retroactive measure similar to that which resulted in the pain and financial hardship that repeated retroactive changes to pool regulations caused many home owners in the past.

13th March 2009 - Federal government ties school funding to overt support of the government.

In what can only be seen as a move to a more authoritarian political system, the Rudd government has made receipt of funding for schools under the " Building the education revolution " plan conditional on the institution demonstrating active and overt support for the government.

In order to be eligible for the assistance, the educational insitiution must hold recognition ceremonies to which Julia Gillard is to be invited, the ceremony must not be on a scheduled Parliamentary sitting date, it must give Ms Gillard a minimum two months' notice of any ceremony relating to the event, and make provision for Ms Gillard or her representative to speak at the ceremony. Additionally it must acknowledge the funding assistance in any newsletters, web sites or articles, it must affix a Commonwealth supplied plaque to completed projects, and finally must affix a Commonwealth supplied roadside sign to their property.

These conditions are MANDATORY, and all must be complied with in order to receive the funding.

See page 13 of the Building the education revolution information document which can be downloaded here.

If this is not political indoctrination, then I don't know what is, and it is obviously the tip of the iceberg.

It looks like we should be prepared, as it appears comrade is on his way!

11th February 2009 - $80 million in stimulus payments sent overseas, while self-funded retirees ignored in Australia.

Out of the pensioner bonus paid under the December stimulus package, somewhere between $60 million and $80 million was paid to 58,000 pensioners who now live permanently overseas. See here

The biggest payments went to Italy, Greece, The Netherlands, Malta and Britain.

However, at the same time that the Prime Minister was sending Australian taxpayer funds to help prop up those overseas economies, he completely ignored the plight of self-funded retirees whose incomes have been savagely slashed through the collapse of interest rates and the stock market.

Charity begins at home, Prime Minister. Stop flitting continuously around the world trying to be a statesman, and spend some time at the grass roots to see just where our own problems are.

5th February 2009 ( update of 5th December 2008 )-Self-funded retirees being sacrificed to bail out the economy.

The average wage in August 2008 had reached $59,644 according to figures from the Australian Bureau of Statistics.

The Reserve Bank slashed the Cash Rate from 7.25% in September 2008 to 4.25% in December 2008, a reduction of over 40% in just THREE MONTHS. It reduced the rate a further 1% again in February 2009, taking the reduction in the rate of 4%, a total reduction of over 55% in FIVE MONTHS!

The Australian stock market slumped around 40 - 50% in the year from its highs in November 2007.

For anybody reliant on investment income alone, they would now need over $1,835,000 invested at the TOP cash rate to simply earn the Australian average wage. Self funded retirees do not receive ANY government assistance by way of a pension or similar benefit. Nor are they employed, so are NOT shielded from price increases by a wage which rises with cost of living increases. These people are AT THE MERCY of the market, with essentially no control over their income.

And as the cost of living escalates at an alarming rate caused by the wages-prices spiral ( higher wages causes higher prices which lead in turn to a push for higher wages etc ), these people are being consigned to a future of misery as the value of their assets slumps further and further behind. And they have NO WAY to break out of this slump.

Whilst SOME self-funded retirees MAY finally be eligible for the planned meagre $950 one-off " stimulus package " handout ( little compensation for the income they have lost ), essentially the Federal government has not offered one bit of assistance to this large group of taxpayers. It pours money into job creation schemes which have absolutely no positive impact for these people. It is sacrificing these older retired people to provide an escalating income for Rudd's " working families ", and does not care a damn about the serious problems now facing this group of people who will find it increasingly hard to survive.

23rd December 2008 - The recession we have to have.

I can hear the cries of outrage already, but what some Australians need is a decent recession. We've had them before, and we'll have them again. The wise learn from them, the stupid never will, but adversity is a compelling teacher.

Far too many have been brought up in the belief that they aren't really responsible for their own welfare, and that it's the duty of government, charities, and society in general to ensure their survival. Too many clamour for increasing help from government, then bleat when it imposes increased taxes or levies to fund those benefits.

In 1958 John Galbraith wrote " in the affluent society no useful distinction can be made between luxuries and necessities. "

And that's precisely the situation for many in Australia now. They simply have no concept of saving for the proverbial rainy day, consuming way beyond their ability to pay, then expecting others to save them when times turn tough.

Prior to 1941, parents received absolutely no government financial assistance in raising their children. Parents accepted that if they decided to produce children, it was their responsibility to provide for those children. In 1941, Child Endowment was introduced, paying 5 shillings ( 50 cents ) per week but only for the second and subsequent children.

Since then, Australia has turned into the developed world's baby factory, particularly in the past twenty years or so. Parents have demanded and received so much assistance from government that most would have no concept of being solely responsible for providing for their children. The huge sums that are thrown at them are too often wasted in many cases. Depending on eligibility, among the benefits available are the $5000 Baby Bonus paid on the birth of a child, Family Tax A benefits of up to $196 per fortnight for dependent children aged up to 24, Family Tax B benefits of up to $128 per fortnight, Parenting payments up to $546 per fortnight, $208 for Education Entry Payment, $173.50 per week Child Care Benefit, Child Care Tax rebate up to $7,500, and Maternity Immunization Bonus of $236 ( which can be paid even if the child isn't immunized ). If the child has a medical condition the parents may also be eligible for Carer Allowance.

Then there was the December 2008 " stimulus package " handout of $1000 per child.

Under the second " stimulus package ", the curent plan is to pay an extra $900 per child.

Also Prime Minister Rudd has given " in principle " support for government funded paid maternity leave of up to 18 weeks, and 2 weeks paid paternity leave. The unions are pushing for a weekly payment of $543.78, or a total of $9788.04. Additionally employers would be required to pay the 9% Superannuation Levy on top of that amount. The final payment has yet to be announced.

Then on top of these payments, parents can now claim the Education Tax Refund of a maximum of $375 for each primary school child, or $750 for each secondary school child.

But these cash handouts are not enough it seems. Many parents are unhappy if school class sizes exceed 20. In the 1950's, class sizes of 50 or more were quite common. And there were no teacher's aides, computers, nor air-conditioning that many are now demanding. Yet that generation turned out the people who developed the Snowy Mountains Scheme and Murrumbidgee Irrigation Area, the sugar cane harvesters, and earlier the combine harvester, among many other investions that are simply taken for granted nowadays.

Two car families were rare. Now many now believe they can't survive without the second car!

And whilst it must remain, the introduction of free medical help under Medicare has seen increasing exploitation of the system so that now health services are under immense stress. Prior to the introduction of Medibank ( now called Medicare ) in 1975, people also paid for their medical costs. Massive abuse of the system may be now endangering it. When people had to pay to use the medical system, they were less likely to make frivilous visits. The system needs a radical overhaul to eliminate abuse and waste.

Whereas the first home for older generations was a modest second-hand house, and for which they received no financial assistance, the government is now encouraging first home buyers to purchase brand new homes with overly generous grants. These will be millstones around the necks of many before these troubled times are over.

The older generations were brought up with the concept that if you wanted something, you saved until you could afford it. Now so many people believe that they have paid for an item when they use their credit card to make a purchase. They forget the payment comes later. There always comes a day of reckoning.

What recessions do is to make some people realize that they waste far too much on unnecessary consumption. To survive it, the smart ones adopt prudent behavior which they hopefully maintain when times become prosperous again. In some countries individuals have to survive for a year on what a family would spend on a meal at McDonalds or a night at the cinema.

As Galbraith said, too many cannot distinguish between necessities and luxuries. The harsh reality of a recession may teach that lesson.

13th November 2008 - Superannuation system needs urgent review.

The former government, with the enthusiastic support of Labor, created a situation which has contributed to the current financial instability in this country.

In their rush to wipe their hands of providing support for the aging baby-boomers, they introduced compulsory superannuation contributions from workers.

This has resulted in massive sums of money flooding into superannuation funds. With relatively limited areas for investment by these funds, they have poured money into the share and property markets, driving up the values to unsustainable and unrealistic levels as they outbid each other.

With the serious problems now unfolding overseas, these funds are left to scrabble as they attempt to preserve some value from their investments. Expect to see more pain as reality takes hold.

The government has to look at the superannuation model to see how it may be modified to reign in these funds. Otherwise we shall see similar problem reoccur in the future.

5th November 2008 - Blanket guarantees not the answer.

If any government allowed the deposits in any retail ( not investment ) bank to be lost through bank failure, then the entire financial system would collapse as there would be no safe haven for people's savings and there would be a run on the banks. That doesn't mean that banks' shareholders must be protected, only the deposits.

So bank deposit guarantees must be permanent. Perhaps the guarantee should be modified to relate in some way to the prevailing official cash rate, since the current guarantee enables banks to recklessly offer any rate they like to attract customers.

The belated attempt to limit the guarantee by charging an insurance for deposits over $1 million is laughable. All that anybody with such huge sums will do is simply split the deposits into accounts over several banks.

But to now spead the guarantee to market linked mortgage and investment trusts is simply unworkable.

A fundamental maxim in investing is that the higher the return, the greater the risk.

Investors in these trusts have enjoyed the higher returns during the good times that investors in the less-glamorous but safer bank deposits have prudently foregone in the interest of greater security. So to extend the guarantee to them now is to reward their gamble at the expense of bank depositors who settled for less. And exactly what is guaranteed? If it is the initial investment, then the public, through the government, is covering the potential losses from bad investments without benefitting from the gains during the good times.

And if this guarantee is extended to them, along will come another group of gamblers who also want protection.

The sad part is that if a former Labor government had not privatized the Commonwealth Bank which it owned, people who wanted the extra security could simply have moved their deposits to that bank.

Find another solution Mr Rudd before it all gets out of control.

7th January 2009 - The power of small savings.

Though probably the equivalent of a foreign language to some from generations X and Y, the old idioms of " look after the pennies and the pounds will look after themselves " and " a penny saved is a penny earned " never held truer than in these financially troubled times.

So many people treat their loose change as nothing more than a nuisance, but they should reconsider their attitude to this potential booty. They are looking at small amounts from the wrong perspective.

What many ignore is the difference that making a saving of only $1 per week can make. This equates to an annual saving of $52. To earn a similar amount from a bank savings account paying say 4%, you would need a deposit of around $1300, or in excess of $1500 allowing for tax, and even more if the account pays less interest.

The average Australian wage is now $59,644, or $1147 weekly. So a worker on the average wage has to save around one and a half week's income in order to accumulate the same funds necessary to produce that weekly $1. Another way to look at it is how much time would they have to work to earn the tax-free $52 itself?

So it seems a no-brainer that it is easier to save $1 a week. There are so many simple means such as buying food on special, reducing mobile phone costs, reduce ATM fees by more responsible funds management, cut out that expensive bought daily cup of coffee etc. And of course if you can save more than the $1 per week, then the benefits are multiplied.

People can save their way into a more secure financial position without pay increases if they simply control the small expenses. The old aphorism " use it up, wear it out, make it do or do without " also comes in handy!