Bracket creep !

We live in a world of wonderful inventions.    In the last two centuries humans have replaced candles with electric light, been able to communicate by telephone and both the aeroplane and automobile have given them mobility.    What a pity that nobody has been able to create a time machine so that we could go back to the past and correct some of the mistakes we have made !

One of the imposts that urgently needs review is stamp duty.   When people try and obtain that most basic of needs - a roof over their heads - they find a rapacious treasury with it's hand out for a huge fee for just stamping approval on the record of sale.     The average fee demanded on a Sydney property is now $ 25,000.

Way back in 1986 the stamp duty rate was increased from 2.5% to 4.5% on properties valued at over $ 300,000 and to 5.5% on those priced over a million dollars.   At that time, the median house price in Sydney was $ 98,325 and the average yearly salary was $ 22,000.    It was simply a tax grab aimed at the upper end of the market - but those stamp duty rates have not been adjusted for the bracket creep that has occurred in the housing market.   Now a $ 500,000 home is just " average " !

Realists know that the government needs a money flow to pay it's bills, but imposing a crippling tax on those trying to get their first home seems to be putting the cart before the horse.    The timing is lousy !   The first home buyer struggles to raise a deposit on an ever rising market and the early years of the average mortgage usually saps an onerous slice of their income stream.

Whoever dreamed up the idea of stamp duty simply applied it to the wrong end of the deal.   It would be better placed at the other end of the housing market - when that first home eventually goes on the market for resale.    By then the first home buyer has either cleared the mortgage or has significant equity - and the stamp duty impost is a lesser burden.

It is too late to make that adjustment now.   Stamp duty has already been paid on the vast majority of housing stock and to make that change would be a case of doubling the tax on existing owners.  The only possible relief would be to make a rate adjustment to take account of bracket creep, but that would deprive the government of a much needed money source - and would be anathema to treasury.

Unfortunately, this looks likely to be an ever widening problem.   The housing market is giving no indication that pressure on prices will ease and the present very moderate rate of inflation will see that stamp duty climb higher as the years progress.

Those aspiring to buying their first home can only hope that some genius will succeed in inventing a time machine - and then perhaps a lot of wrongs could be righted !

Busting the " Bikie " mob !

Sometimes the solution to seemingly intractable problems can be found by looking back into the past.  In the dizzy days of the 1920's the most celebrated gangster in the United States was Al Capone.   This swaggering bandit chief was constantly on the front pages of the nation's newspapers and his crime empire had tentacles into diverse avenues of American society.

What finally brought him down and landed him in prison - was tax evasion !

Bikie crime in Australia is big business.   It is estimated that it has an annual turnover of more than ten billion dollars spread across legal and illegal activities.  Drugs make a big contribution, but the bikie gangs have learned to diversify and they are now into tattoo parlours and car rebirthing rackets operating on the fringe of society.

The tax office is now going after these untaxed profits and as any honest business person will testify - fighting the tax office is usually a losing situation.  " Hot " money presents huge problems and trying to move it through the labyrinth of tax laws is like walking through a mine field.   At any stage the law is entitled to demand proof that this money was legally acquired - and then " proceeds of crime " legislation comes into play.

That is the situation that the 1200 members of the Rebels Motorcycle club are about to face.  It seems that 117 of them have never filed a tax return, and that can result in some very uncomfortable questions to be answered.    Cars - bikes - property - all manner of assets leave a money trail and it is up to the owner to provide proof that they were legally obtained.

Until now, the cops have been trying to bust the bikie gangs in the act of committing crimes.  Now the impetus has changed to the tax department going after the profits and making them pay their tax liabilities.
This reversal has changed the line of attack.   The bikie gangs have been very good at running their illegal activities out of sight but their lifestyle from the rewards is very public.

Accountants with calculators may be more dangerous than uniformed law enforcement officers with guns when it comes to gaining convictions in court.   That was something that Al Capone found to his horror - and resulted in him spending the rest of his life behind bars.

The bikie culture has every reason - to be very afraid !

Qualification checking !

Disgraced surgeon Jayant Patel was handed a two and a half year suspended sentence for fraud in the Queensland court this week and is free to return to the United States.   He bluffed his way into being appointed chief of surgery at Bundaberg hospital in 2003 - with disastrous results.

Patel was hopelessly under qualified and his efforts with a scalpel resulted in convictions for three counts of manslaughter and one of grievous bodily harm, for which he served two and half years in prison before being acquitted on appeal over a technicality.

Patel lied on his application for the job in Bundaberg and the selection people did not learn that he had been banned from major surgery in the American state of Oregon in 2000, and struck off the register of physicians in New York in 2001.    At least this disaster has shone the spotlight on deficiencies in the Australian qualification checking procedures which relate to overseas registered doctors.

How could a doctor with such glaring deficiencies slip through the net and get work as the chief of surgery in an Australian hospital ?   The people tasked with doing proficiency checks have a lot to answer for - and not the least of that is the lives lost by his sheer negligence.    The public has every right to know that those responsible have been removed from office - and that new procedures for checking qualifications are now in place to guarantee that such a disgraceful error can not be repeated.

One of the factors that influenced the decision to give Patel the job appears to be letters of reference from fellow doctors in the United States.   When the investigation into the Bundaberg deaths called on those who had written these references it was revealed that a very " in club " atmosphere existed within the medical profession.

It was common for those with only a fleeting acquaintance with another doctor to provide a glowing reference because that was the custom within the profession.    It seems that this is often the case throughout many other industries and even when someone is dismissed because of incompetence,  a glowing letter of reference is provided to help that unfortunate person gain another job.

Patel - now 63 - will shortly leave Australia and the Bundaberg case is now closed.   It is unlikely that he will gain another position anywhere in the medical profession, but at least there will be a benefit gained here if this
disaster has resulted in qualification checking being upgraded to a level where mere lies and spurious references fail to distort the system.

Salaries !

Red faces at the ABC now that the salaries of it's star performers were leaked to the media.   Most people consider the salary they earn to be a very private matter, but from today the public knows exactly what take home pay each of the public faces on their TV screens earn.

It also gives insight into the " pecking order " at the national broadcaster.   The salaries quoted range from a low of about $ 187,000 to a high of $ 355,000, and that must be a matter of embarrassment to those on the lower end of the scale.

It also reveals that the " politically correct " ABC is guilty of paying it's male stars more than women, and that people in the entertainment industry fare badly when compared to the really high earners in our banks and great public companies.   Despite that, stardom brings a salary far above the average $ 70,000 a year that is the average Australian annual earning.

Welcome to the world where charisma rules - and luck plays a big part - in getting noticed and attracting the ratings that determine your worth to the people who pay your salary.    That is certainly a case of many offering - and few chosen.    Hordes of behind the camera folk toil in the industry and most yearn for that lucky break which will put them before the cameras - and perhaps lead to a permanent slot as a news reader or a character in a feature programme.

The big players usually have a " manager " to look after their interests and negotiate salaries.   What they have to sell is " fame " - and that can range across a wide spectrum.    A person who attracts ratings in one form of media is of great interest to a competitor wishing to attract a wider audience - and thus improve profits by attracting more advertisers.

The employer who has a star under contract gets nervous about the time that contract is getting near renewal.  " Poaching " is rife in the entertainment industry and a wise star makes sure that his or her availability is a matter of salary offered.  In some cases, contract renewal boils down to little more than a bidding war.

Sadly, the public is fickle.   Tastes change and we have seen former stars fade back into the cosmos as their talent no longer holds viewer attention.     The clever ones " reinvent " themselves and many hold public attention in a variety of roles that correspond to both their age and changing demographics.

The stars of the ABC will just have to live with their salaries being public knowledge.   There will be some serious navel gazing amongst competitors in commercial television.   This has thrown down a yardstick from which many will be measured - and values recalculated.   An interesting mix of clashing egos balancing against monetary rewards !

Who Pays ?

Skimming through the daily newspaper brings a litany of interesting stories.  What we don't get to read about is the aftermath that affects someone else - because of the unusual circumstances that relate to that event.

This week we read about a " Love Triangle " that resulted in a grisly murder.   A man returned unexpectedly to find his girlfriend in a compromising position with a lover.  This resulted in a fight, in which the lover died from knife wounds, leaving a blood trail through the flat that some say looked like an " abattoir. "

A team of three professional cleaners spent sixteen hours  cleaning up the gore and this resulted in a bill for $ 1250.     Now comes the question - who pays this bill ?    The managing agents contend that this is the responsibility of the tenant, but the tenant's bond will not cover this amount and there will probably be rent loss also involved because letting any place associated with murder is usually both difficult and protracted.

In this case, the tenant is still alive, but in cases where the tenant is dead because he or she became the victim of the murder, it opens an interesting can of worms about who eventually settles the cleaning bill.

Another story concerns an Australian Ex-Pat living in Bali.   It seems that he was " King hit " outside a nightclub and suffered bleeding of the brain.   A local hospital removed part of his skull to ease the pressure, but he desperately needs to be repatriated to an advanced Australian hospital for care that is not available in Indonesia.

Most people visiting Bali for a holiday carry travel insurance, but obviously that is not an option for a person living permanently in a foreign country.   The cost of a Medevac air flight to Darwin would come to about $ 45,000 and his friends and family in Australia are desperately trying to raise this by a public appeal.   So far, nearly half that amount has been forthcoming from a generous public.

The question that will cross some people's minds - is what would happen if that person had no friends and family to try and get help.   Unfortunately, an Indonesian citizen with exactly the same medical problem will probably not survive because the medical facilities provided by his country are not adequately able to match that of an advanced country like Australia.

So it seems that luck plays a big part in what could be called " the lottery of death ".    If an Australian in trouble overseas has the good luck to catch the eye of the news media there is a very good chance that the publicity will spur some some of rescue operation.    The public will petition the government to provide aid and good hearted citizens will give money.

There must be a huge trove of untold stories lurking behind the headlines that appear in each edition of the daily newspaper - very few of which ever see the light of day !

A level playing field !

Alan Joyce, CEO of Qantas has called on it's employees to lobby the Federal government to stop rival Virgin from injecting a fresh three hundred million dollars of new capital by way of it's foreign capital plans. At present, airlines competing on the Australian domestic airline market are restricted to 49% foreign ownership.   The Virgin proposal would raise this to 72%.

Qantas is owned by it's shareholders and is a listed public company on the Australian stock exchange.  Virgin is part owned by Air New Zealand, Middle Eastern airline Etihad and Asian carrier - Singapore Airlines.  Qantas domestic traffic carries 48.3 million passengers annually, compared to the Virgin share of 19.3 million.

Where Qantas sees this new capital injection harming it's position is a coming tussle between Australia's 93 year old national carrier and foreign airlines in which the country of origin is either the partial or total owner - and therefore profitability is not the main criteria.    Some of these airlines are a source of national pride and state treasuries are quite happy if they run at a loss.

There seems a similarity between past controversy on the tactics used by Coles and Woolworths in dispatching competitors.    Small independent butchers, greengrocers and similar shops were subjected to a campaign of the duopoly selling below cost to force them out of business.   Once they closed their doors, prices returned to normal levels.   The duopoly ceased this practice under threat of disciplinary legislation.

If foreign owned airlines are allowed to gain control of Virgin, Qantas fears that similar tactics would be used to lower the Qantas seat share and drive them out of the airline business.  An " for profit " airline would be vulnerable to an attack by a competitor who was funded from rich state treasuries - and prepared to use price as a weapon.

Australian domestic airline seat prices are inducing more people to fly and the tourist trade is gaining great benefit from this bonanza.   Few would want to return to the bad old days of several decades ago.  At that time, Qantas was restricted to overseas flights and did not carry domestic passengers.  Domestic routes were serviced by two competitors - Ansett, which was a " for profit " company, and TAA - a wholly owned government entity.

These two carriers scheduled their services in tandem - and at times that suited the airlines rather than the passengers.   Their planes followed each other down the taxiway before takeoff - and they arrived at their destination like co-joined twins.    That same tandem also related to seat prices - and they were uniformly high by today's standards.   These shackles have been cut loose by deregulation - and competition.

The government regulator will need to move carefully in adjudicating this ownership proposal.   We certainly need healthy competition to keep our domestic fares competitive, but it would be easy to replace short term gain - with long term pain !    It is essential that those providing air services in Australia do so on a level playing field.

Qantas is one of this country's biggest employers of labour and the government will need to be sensitive  to the job risks that are involved.    The domestic air industry is heavily licensed which gives the government a much higher degree of control than in most other industry sectors.

Whatever decisions apply, they will need to be carefully and thoroughly thought through if we are not to see imbalances in this vital industry.

Schoolies !

The people who live permanently on the Gold Coast must have mixed feelings that their strip of coastline has become the venue for " Schoolies ".      First comes an absolute invasion of  " end of termers " from New South Wales and the southern states, celebrating the end of the HSC and their termination of the high school year.   Then when they go home, the mob from Queensland arrives.

This event is a celebration by those in a " difficult " age group.   Many are just under the law in New South Wales to legally drink alcohol, and yet booze and drugs will feature heavily in the celebrations that follow - and many now think that having sex is an essential part of the Schoolies experience.

Sadly, there will be regrets for some young people.   Many venues have closed off or locked the access doors to high rise verandas to stop fatal falls by drunken young revellers and the local police will have a torrid time keeping the crowds in the streets under control.   There will be arrests - and each year Schoolies  is marred by older men flocking to the event to take advantage of those whose wits have been dulled by alcohol.

Lurid tales of excesses are driving a wedge between school leavers and their parents.  Many school leavers see the event as a " right " - and bitterly resent parental refusal.   Other parents accept it as inevitable - and some knowingly pay and load the bags of their children with alcohol to fuel the party.

Inevitably, Gold Coast accommodation is booked out for Schoolies well in advance and most venues demand a healthy bond to guard against damage.   The kids are packed solidly into rooms to keep the cost down and the business community has a bonanza that equals the profits from both Christmas and Easter.

The Gold Coast civic authorities walk a fine line between cracking down on dangerous behaviour and "  Looking the other way " and ignoring most of the excess.    Schoolies is governed by the " herd instinct " - and that can change with bewildering speed.   Tastes in music or dress fashion can change in the blink of an eye and while the Gold Coast is the flavour of the month in recent years - that is not guaranteed indefinitely !

Many ordinary residents would probably welcome such a change, but Schoolies has become an integral part of the Gold Coast economy and most of the business community is geared to serving that need.   As a result, the " Blind eye " approach will continue.