Crispin Hull

As the end of the financial year looms and with the publication last month of every suburb’s average unimproved values we should get a clearer picture of Treasurer Ted Quinlan’s new rates system.

In the past week Quinlan very commendably has taken on board some criticisms and suggestions.

You will have to forgive the figures in the rest of this article, but if you want to go beyond the politicians’ adjectives and adverbs of “fair”, “just”, “reasonable”, “best” etc to the nouns and verbs of what it really means, you cannot escape some arithmetic.

June 30 is the big cut-off date. Those people who settle on their new dwelling after then will be as much as $8,000 worse off over the average stay in a dwelling of 11 years. Even in average suburbs you will be $5000 or so worse off.

This is because those people who have lived in their house for the whole 366 days of the 2003-2004 financial year will continue to have their rates for 2004-05 and subsequent years adjusted by the consumer price index. Those people who buy (and settle) on their new house part way through the year will have their rates for 2004-05 calculated according to the average unimproved value of the previous three years and only in subsequent years will their rates go up by just the CPI. The catch is that in the subsequent years their rates adjustment will be off a higher base. Let’s call the extra a surcharge.

The surcharge, coming off a higher base, has a compounding effect. So someone who buys in Deakin after July 1 will have a surcharge over the neighbours of about $680 in the first year. In the 11th year it will be about $940.
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There was no income tax cut in this week’s Budget. In fact, there was an increase in income tax.

It is just a question of the way you look at it: through smoke and mirrors or with a dose of reality.

The so-called tax cuts introduced by Treasurer Peter Costello come into force on January 1, 2004. They nowhere near compensate for inflation. Yes; we had some commentary about bracket creep, but a lot less about the exact extent of it.

The Howard Government came to office with a charter of Budget honesty. It should expand this to include an honest account of bracket creep for each year.

Doing the exercise over the period since the existing rates were introduced on July 1, 2000, to when the new ones come into force on January 1, 2004, reveals that for the past three budgets, Treasurer Peter Costello has INCREASED income tax by a total of about 9 per cent for the vast bulk of people – those on incomes between about $50,000 and $70,000. He has increased tax on the real strugglers on around $25,000 by a whopping 15 per cent. These increases are AFTER taking into account his so-called tax cuts.

The tables tell the story. The figures took a moderate amount of number crunching on an Excel spreadsheet and getting statistics from the Australian Bureau of Statistics publicly available material. Skip the next three paragraphs if you don’t like numbers.
Continue reading “2003_05_may_forum for saturday may 15 bracket creep”

Some things about the centuries-old Belgian city of Bruges make it distinctive. At first it is hard to work at what – because they are what is absent, not what is present.

First, you cannot see the tiniest bit of litter. It – down to the least cigarette butt – is swooped up quickly by discreet litter gatherers. It is a self-reinforcing task because it makes everyone conscious of cleanliness. It would be a graver sin to ignore an inadvertent dropping of a skerrick of paper in Bruges than in Sydney or even in tidy town Canberra.

I noticed the second thing quite a bit later, after taking a few photographs. In Bruges you do not see any power or phone lines, anywhere, ever. This is extraordinary given that electricity and the telephone came centuries after most of the buildings had been completed. But rather than detract from the elegance of a city with so many residential buildings dating back to the mid-17th century by just stringing up the power lines to deliver electricity in the cheapest way to the greatest number, someone in this aesthetically conscious city held up a hand and said: “No”, or perhaps “Non”. “The spires, shop fronts and civic buildings will not be despoiled by the ugly black lines of the 20th century.”

It must have cost a fortune, but it has been worth it in the long term. The city still has the benefits of street lights, power and telephones in the home and high speed internet connections without defacing its medieval charm.
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Peter Blackshaw left school with an ill-distinguished academic record.

He was not, he says, academically minded. He worked in a music shop where he sold the latest hits on vinyl records.

“I soon figured that you could work pretty hard to make a sale that would only make a $2 profit and it was probably better to work on a product that was going to deliver a bigger profit than $2,’’ he said.

So at 23 he went into real estate in the eastern suburbs of Sydney where he learnt things that would later transform the Canberra property market. His father, a solicitor, was a buyer and seller of property, so it was inevitable.

Fifteen years ago he took some time out on his father’s farm at Murrumbateman – “2500 acres [1000 hectares] with six k’s of Murrumbidgee river frontage”

Blackshaw had a privileged upbringing, but you can’t help what you are born with. He doesn’t shy away from it or put on some false poverty.

He explains his father’s farm with brief, beguiling openness: “Pitt Street farmer. Tax breaks. 1966.”

His wife, Andrea’s parents had moved to Canberra. So there was a beachhead. They came with their infant son (now 17). They also have a 15-year-old daughter.

“A friend of Andrea’s parents said, ‘You will probably do well in Canberra because it is not as advanced [as Sydney]. And it was not. I can remember looking The Canberra Times and just seeing a sea of type that was all just classifieds — whether it was a great house or just a guvvie on the outskirts.”
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How should a Governor-General be chosen?

Below is a suggestion that does not involve a republic, a referendum or a change to the Constitution.

The appointment of Peter Hollingworth casts doubt on the present system under which the Prime Minister alone chooses and “advises” the Queen to make the appointment. The Queen always follows the advice. Under the present system the Prime Minister alone can decide to terminate an appointment.

In the 1999 republic debate the weakness of this system was mentioned but not taken seriously because we had that nice William Deane as Governor-General even though he had been chosen by that horrible Paul Keating. The republicans wanted to change the Constitution so the Governor-General was chosen by two thirds of a joint sitting of Parliament and the Queen was taken out of the equation. Monarchists, scare-mongers and direct-election opportunists stymied that plan.

So let’s leave the Queen where she is in our system. But let’s not have the Prime Minister alone choosing or terminating the Governor-General. Parliament should do it. The present Prime Minister is unlikely to allow it but a future Prime Minister (Labor or Liberal) might do it.
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There is one sure way of destroying Medicare – prevent timely, reasonable changes that ensure Medicare fits changing circumstances.

Labor, the Democrats and the Greens seem to have a mindset that questions the motives of everything the Government does – and along with much of the media commentary, they assume everything the Government proposes must be bad.

Instead, they should look at the merits of what is being proposed. They should look at what is likely to happen if we continue on our merry way not adapting to circumstance. They should look at what is likely to happen if what is proposed is put in place and they should look at what is likely to happen if other proposals are put in place.

Since its inception 20 years ago, Medicare has never come near paying for itself. Last year it cost about $8 billion. The Medicare levy raised about $1.3 billion – just 16 per cent of the cost.

It would be more realistic to reduce income tax by 7 percentage points and increase the Medicare levy by 7 percentage points, so that the resulting 8.5 per cent levy would cover the $8 billion cost. People would then see on their tax returns the true cost of Medicare.
Continue reading “2003_05_may_medicare changes may 1”

Treasurer Ted Quinlan has certainly got his politics right with the new rates system – at least for the short term.

Whether he has the long-term financing right is another matter.

Quinlan introduced his rates legislation this week in line with an election promise that would cap rates increases for existing residents to the consumer price index. However, if a resident moved to another dwelling the rates would be set according to the value of the new property at the time of moving and only thereafter locked in to the CPI provided the resident did not move.

The short-term political benefit is that there will be no yelps from the suburbs when rates jump with increasing property values. Property values go up unevenly. So often the big increases will hit one or two areas. And residents of those areas scream in vote-changing ways. If the rates only go up by the CPI there will be no quarterly reminder of a major government sting.

Further, when people move to a new dwelling, they expect the rates to change, so it not a politically sensitive issue. When the move the new rates hit gets subsumed by the other large sums of money that go with a property transfer.

The CPI method will also apply to rented investment properties for as long as the property is held. So no ugly reminders of rate hikes even for investors.

That all helps Quinlan and the Stanhope Government to the next election.
Continue reading “2003_04_april_forum 5 apr rates”

The legal tide went out for Guy Edward Swain.

Swain dived into the water at Bondi Beach on November 7, 1997. He hit a sandbar, broke his neck and is now in a wheelchair for the rest of his life.

He sued Waverley Municipal Council which managed the beach.

Swain won $2.8 million damages after a trial before a jury of four.

An appeal by the council was allowed by the Court of Appeal this month. Swain is now left with a large legal bill and no damages. Inevitably, he will now be looked after by his own family and the state. It highlights the need for better care for the catastrophically injured who get no compensation, but that’s another story.

At the time of the original award, the case made headlines. Where would it end, all this suing for ordinary accidents? Insurance premiums were going through the roof.

Organisations like Waverley Municipal Council were copping huge rises in insurance premiums for public liability, as were hundred of charitable organisations running money-raising events. Their answer was to abandon surf patrols or to cancel the charitable events, especially as the insurance was often compulsory or required by lenders.

The reaction of State Governments was knee-jerk. They introduced laws to restrict access to damages and to cap the amount of damages. Sadly, the ACT seems to be set to follow suit, because the judges are responding without legislation.
Continue reading “2003_04_april_forum 12 april negligence”

It makes a ripper yarn in Western Australia.

Western Australia is being ripped off, according to WA Treasurer, Eric Ripper.

In a colourful statement this week he called for “a complete overhaul of the system for distributing Commonwealth grants to the States’’.

“It is a crazy system that sees WA subsidising the Volvo driving, latte set of the Australian Capital Territory who have the highest per capita income of all Australians,’’ he said. “WA deserves greater recognition of the wealth it generates for the nation. The irony is that with a fairer funding system, WA could generate even greater wealth for the nation.”

This jingoistic tripe is dished out regularly by one state premier or another whenever they see a financial disadvantage to their state or see that a bit of good old Canberra bashing will attract a few votes.

Remember in 1998, NSW Premier Bob Carr put out a newspaper advertisement stating, , “If you never never go, you’ll never never know where $540m of NSW taxes get snapped up every year.” Under a picture of a crocodile it explained, “The shores of Lake Burley Griffin has a more formidable predator than the salt-water crocodile. It’s called the Commonwealth State Grant system and it costs the NSW taxpayer and arm and a leg. Last year, for example, the combined demands of the Northern Territory, South Australia, Queensland and Tasmania put the bite on NSW for a staggering $1.5 billion.”

Ripper spun the same yarn. The grants system “fleeced Western Australians of $374 million this year’’, he said.

Ripper got himself into a big non sequitur. He said all those latte-drinking, Volvo-driving Canberrans had “the highest per capita income of all Australians’’ and so did not need the extra Commonwealth funding.

He misses the very point of federation. The “fairness’’ of the distribution of Commonwealth grants cuts both ways if viewed in Ripper’s simplistic way. On the distribution side, one might argue that the money should be distributed according to population. But what about the revenue side? Surely, if a state or territory contributes a give portion of revenue it should get the same portion back in distribution. Now, as Ripper states, the ACT has the highest per capita income in Australia and the highest gross sate product per head. That means it contributes more to Commonwealth revenue per head in income tax and GST. So surely, it should get a commensurately greater share back.

On the population equation, the ACT has 1.63 per cent of the population yet gets 1.86 per cent of the funding projected under the current Budget. Shock, horror. Subsidy to latte-drinking, Volvo drivers.
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It stands for Self-Contained Underwater Breathing Apparatus – SCUBA. It is a ticket to another world – a world of nature with little or no human despoliation. A world where there is no gravity, just buoyancy. It is a slow and silent world full of weird and wonderful life. It is a privilege to be in – a privilege only available to the ordinary citizen in the past few decades.

Before then, even the most experienced traveller on the sea was just that – a traveller on the sea who could only wonder at what was beneath.

Canberra, Australia’s only inland capital – and a cold one at that – does not seem a likely base for a scuba-diving industry. Scuba is usually associated with warm tropical waters and summer holidays.

In fact, Canberra has at least five scuba schools and there are dozens more in easy reach on the South Coast. And the South Coast of NSW – Canberra’s coastal doorstep – has some exquisite diving on world standards. The sea grasses at Jervis Bay, the seals and grey nurse sharks at Montague Island and the weird bubble cave at Black Rock off Malua Bay rate among the best.

This is the time to begin. Mid to late autumn is the best time to scuba or to learn scuba in this part of the world. It is all to do with currents and the difference in temperature between the ocean and the air.
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