Ley her off

Given only 18 months has elapsed since the Choppergate affair saw the dismissal of the speaker of the house, it is simply mind-boggling that expense rorts should surface so soon. Yet here they are centre stage, taking media focus and infuriating the electorate. I covered the last affair in some detail including some suggestions for improving the system (see Conflict of Interest and Footnotes on expense rorts ), so let me just restate a few of the conclusions.

It is hard to think of a case where politicians interests are less aligned with the people they represent than with our pollies' expense claims. Be it a family holiday to Uluru for the wife and kids for $12000 at taxpayer expense, or hiring a chopper for $5000 to get to fund raiser, one would think they lived on a different planet, totally out of touch with their constituency.

In the most recent case Ley's 16 trips to the Gold Coast, where her husband happens to have some business interest, simply doesn't pass the sniff test. Then by way of explanation claiming that a purchase of an $800,000 unit was 'unplanned'  Give me a break.

"a total failure of our political class, in the face of a clear conflict of interest, to set proper standards of behaviour"

It does not matter one iota that when caught the MP is contrite and makes some reparation payment. It does not matter that there is a bit of a penalty when a mis-claim has been identified. The public, the people these MPs are meant to represent are outraged. We don't accept such egregious conduct as a simple 'error of judgment' from those we elect to represent us.

There is a lack of scrutiny, a lack of clarity, and the lack of visibility of these expenses. No corporate entity would accept an open-ended expense system. Commercial operations clearly define the scope of claims, the means of travel allowed, and set and review budgets. Indeed where expenditure by a company has been seen to benefit an individual it is a 'Fringe benefit' which is taxable. Putting a system in place is not difficult. I have suggested a possible scheme and include below the key requirements. For further details see Conflict of Interest.

Expense claims must be Reasonable and Accountable
'Reasonable' simply means a claim must be consistent with accepted norms within commercial and non-commercial enterprises. This is just the 'sniff' test. Many travel claims, by our MPs certainly fail this 'sniff' test. If an MP has some doubt about what is reasonable, they should submit an application for pre-approval (see below).

Accountability requires all claims to be managed formally by an independent body and for the public interest they should be visible. If the MP's work on behalf of their constituents then they should 'report ' to their constituency. What better way to shine a light on the excesses than to publish all claims on a website.

Set the bar high

In view of the justified public outrage it is time our leaders established a business-like set of of rules for the eligibility and accountability of all expense claims. Moreover all such claims should be posted on a web site to provide visibility to the public. The punishment for non-compliance should be high and should comprise repayment plus a significant penalty, say double the original claim. Ministers should face immediate dismissal form the ministry for any proven non-compliance.

...but provide an amnesty

Unfortunately Ley's case is no doubt just the tip of the iceberg and many other ministerial transgressions can be identified were all MPs' claims closely scrutinized. So to prevent a wholesale dismissal of the cabinet, despite what the public may want, Turnbull should provide an amnesty for any offences that occurred before the  implementation of the new rules.

Given the politics this should not save Ley, she happens to have been caught out and should be sacked from the ministry. However effective from the date of the announcement any offence should see immediate dismissal. The ministry certainly has had fair warning.

It is time the government started to rebuild long lost trust in our politicians. Implementing a tough expense claim systems is a good place to start.

EOY reflections

looking back on the year just passed it is easy to get stuck in the short term crises on which the country spent much time. On greyhound racing, post election reflections, senate reform and One Nation selections, on 18C and Mediscare lies, domestic violence, and the use of 'guys'. Many of these held the us hostage for but a few days or weeks, then lapse into the background.

However one of the main themes throughout the year has once again been war and terrorism and the flood of asylum seekers be they refugees, or economic migrants into Europe. Multiple terror attacks in France and Belgium, a storm of sexual assaults in Germany, the closing of borders in Hungary, Greece, Italy in response to the mass migration have exposed the failure of the world to address the unraveling of law and order in the Middle Esat and North Africa.

It is a challenging time.

The Europe of old is being transformed and may never be the same again. Merkel, by her open-door policy has perhaps sealed its fate. Anit-immigrant sentiment is fertilizing the rise of nationalism and right of centre parties are back in favour. We know what that led to in the past. Perhaps not this time. But it highlights a moral dilemma for all leaders of Western democracies; "who is to receive priority, the citizens of the country they lead or the immigrants at the door?" What value do you give to preserving the culture and customs of the country you lead? Does its preservation deserve priority over suffering humanity? Opening the doors to large numbers of culturally different migrants will inevitably change the country and may well disadvantage its current citizens, but can you morally close your doors to those in need? In facing this dilemma Europe's leaders do not speak with one voice. It is straining the union and may well tear it apart.

Certainly it had a major impact on the Brexit decision, the first of the two major political cataclysms of the year. Despite all the predictions, despite the one-sided advocacy for the Bremain vote by the commentariat, despite most polls, the British voters did the unthinkable, they voted to leave the EU. It was and remains a surprise. The post-fact rationalizations are many and varied, but irrelevant. The picture is clear. A majority of voters decided that their future was better served without the EU. This clear rejection of the EU cannot be blamed on just a single issue, like immigration, although it no doubt had a part, but it is a judgement on the value and consequences of EU membership over decades. Having experienced the intrusion of EU into their daily lives Britons have decided they prefer to go it alone. The consequences are yet to be seen.

That brings me to the second political cataclysm of the year, the election of Trump. An arduous 18 month election carnival has resulted in one of the greatest upsets of all time, the election of a millionaire businessman with no political experience, and serious personality shortcomings to the most powerful position in the world. He has not yet taken his seat, yet his election has already changed everything. The air is filled with right wing elation and those who had been silent in the face of Obama's socialist agenda are out peddling their wares. The share-market too has shrugged off all negatives to ascend to heights never expected, especially after a Trump victory.

The appointment of the various cogs-of-state by the president-elect have received scrutiny and the predicable acclaim and critique from the supporting and opposing parties. Yet, the critiques by the democrats have not been as fervent as expected. Little surprise since the defeat in both houses means there is little they can really do about it. But also they are still busy trying to overturn the election of this 'unacceptable' president-elect. Mm do I recall the democrats complaining pre-emptively that democracy would be thwarted by a losing Trump? Clearly a case of pots calling the kettles black.

The ripples from the Brexti/Trump anti-establishment, anti-media, anti-norm are still spreading throughout the world and no doubt more counter-establishment upheavals will follow. In Aus too the Right is in the ascendant with a new bounce in their outspoken voices. I feel it too. While I have reservations, a lot of reservations about the unsavory and egotistical Trump, I have welcomed the home truths his election has confirmed; -

• The media is advocating rather than reporting, dictating rather than reflecting,
• the commentariat is one sided and fallible, 
• ALL people want to be represented in public discourse, ignore their needs nd they will turn on you. 

In short a direct "up-yours" to the establishment norms. It is a collective negation of order, sentiments usually reserved for the youthful. Yet of course it makes things less predictable, less orderly. Que Sera.

In Aus the political year started with such optimism and yet closes with such pessimism. The Turnbull government was riding high in the polls at the start of the year with plenty going for it, newly found poll success, a popular prime minister engaged in tax reform and an expansive economic agenda based on innovation.

Barely 12 months later, after an election that saw it lose its large majority, it faces a hostile senate with a larger number of unpredictable, populist senators and with no chance of passing its more important budgetary measures without debilitating amendments.

It highlights the serious problem with a multi-cameral system. How can the elected party govern when the senate can thwart all legislation. Yes I know this is a well worn argument and that despite this governments have managed in the past. Yes, but it is worse today, not only because of the number of cross-benchers, but due to the news cycle that elevates this motley crew into heroes, and especially so if they manage to exact some concession in an piece of high profile legislation, irrespective whether the concession is beneficial or not. Mr Hinch's intervention in the ABCC legislation is a prime and most disappointing example.

It is doubtful that such a senate will allow the deep cost cuts required for any reasonable balancing of our books. Yet Trumps' injection of confidence has raised the markets and this will help Aus's growth. Against all odds it may be Trump who saves us.

It has been a very full year with sufficient drama to fill many a reality show. Despite all our challenges, the sun is shining, and the Xmas slowdown beckons. I look forward to a break.

Thank you readers for the positive feedback and indeed all the feedback over the year. I hope I have kindled some debate out there.

I wish you a Merry Christmas and a healthy and peaceful 2017.

Orwellian doublethink

Those who have visited these pages from time to time would have come across references to the Prager University, a right of centre think tank reaching out to its audience by an extensive range of short videos. Their videos cover all the hot topics of the day, presented by experts in their field.While they advance the Republican, Liberal, world view, even if you do not agree with their conclusions you will learn from these well researched short presentations.

So why am I selling this today? For some reason my phone under the instructions of Google Now selects articles for me to read. Yes this is the type of 'invasive but helpful' technology that is taking control of our lives, but that's another story
One of today's selections  "Youtube bans another Prager video" piqued my interest. The banned video is titled "I was taught to hate the Jews". I accept that the title is provocative as it clearly refers to a racism. But after watching the video I am bewildered. The content is clearly an argument against racism.  Yes, it may contradict the accepted beliefs of some people.  Yes, it may be an 'inconvenient truth' for many. Yes, it may upset many of Youtube's audience. But is it racist?
What is racist about a person pointing out that he was indoctrinated with a racist view? How can we ever redress racism if we censor those who speak up against it?

How can we ever redress racism if we censor those who speak up against it?

I note that following protests from many Youtube has now re-instated the video, but why was that necessary?
In the same vein why is it necessary to censor some 17 other Prager University videos as 'unacceptable' when they clearly do not present material that breaks moral standards, they do not incite violence or vilification of any group gender, race or religion. All the videos present a point of view supported by reasonable arguments and facts. Indeed more often than not there are references to source material that support the facts. The only basis I can see for the banning is that the Google, Youtube or indeed the specific employees making these decisions happen to find the opinions expressed contrary to their own world view. This however is not how we expect those charged with dissemination of information to behave. Indeed by doing so they are betraying their users. No doubt there will be a consequence for so doing.

We live in a strange world where the very organisations that encourage open free communication believe it is appropriate to censor what information is presented.

The very idea of banning a video for racism when it is clearly about fighting racism is nothing short of Orwellian 'double-think'.

A rational perspective

In Towards Heaven or Hell I presented my perspective on the direction our civilization is heading. Despite the current chaos and despite all the threats to humanity, my conclusion was that whatever we have today is better than we had in the past and yet tomorrow will be better still. Given the very obvious challenges confronting us this optimistic view is counter-intuitive and many do not share my view. Yet I have found one, a most articulate one in Matt Ridley. In his 2013 Kemp memorial lecture, he covers all the reasons why civilisation feels threatened, yet offers strong, compelling reasons why we should be optimistic. So much so that you should not read the rest of this post but simply watch this video.

The 30 minutes is well worthwhile. If you don't have the time here are some snippets from his presentation.

We are much better off today than at any other time in history

• In 1800 the living standard of the average Brit was about that of someone in Mozambique today. People died of starvation and disease by the 10's of thousands every winter.
• In 1800 you had to work 6 hours on the average wage to buy a candle that would burn for an hour, today you have to work for less than 1/2 second to earn the money to switch on a lamp for an hour.
• Over the last 40 years life expectancy has increased by 1/3 and child mortality has fallen by 2/3 globally, income per head has trebled in real terms.
• Both the rate of poverty and the number of people in poverty is falling at a higher rate than at any other time in history.
• We are not only healthier and wealthier than ever before, but we are happier, safer, cleverer, cleaner, better fed, kinder, freer, more peaceful & more equal. Life satisfaction increases with wealth both within and between countries.
• Death rates from storm, floods and droughts have fallen by 98% since the 1920s.
• IQ is increasing in most countries and so is participation in education.
• Air and water pollution are dramatically reduced in wealthier countries. A modern car emits less pollution at 70 mph than a parked car, with the engine off, in 1970, because of leaks from the fuel tank.
• People are giving more to charity as a proportion of income than ever before.
• More people live in democracies than under autocracies than ever before.
• Fewer people died in warfare in the first decade of this century than any other decade since the early 1940's. 
• People in poor countries are getting rich much faster than the rate at which people in rich countries are getting rich. This is closing the gap between global gaps between the rich and poor.

The future always looks bleak

Riddley recounts the range of threats to civilization he lived through in the 1970s, including ; - 

• population explosion was unstoppable
• mass famine was imminent
• a cancer epidemic from chemicals in the environment was going to shorten lifespan
• the Sahara was advancing at a mile per year
• the ice age was returning
• oil was running out
• air pollution was choking us
• and a nuclear winter would destroy life on earth

It always looks bleak but doesn't turn out that way

"As Lord Macaulay put it, “in every age everybody knows that up to his own time, progressive improvement has been taking place; nobody seems to reckon on any improvement in the next generation. We cannot absolutely prove that those are in error who say society has reached a turning point – that we have seen our best days. But so said all who came before us and with just as much apparent reason.

“On what principle is it that with nothing but improvement behind us, we are to expect nothing but deterioration before us?” 

People always think they living in a world about to change and things will get worse. But history teaches us that it doesn't turn out that way. There is no rational basis for believing otherwise this time either.

The only reasonable conclusion is that the current positive trends in our collective quality of life will continue. We have good reason to remain optimistic about the future.

Super needs real reform

Although the new superannuation legislation is still 'hot off the plate', this new incarnation is far from ideal. Despite ever larger contributions, the average worker even after 40 years will end up relying on an aged pension. This is a far cry from the picture painted by Keating/Hawke when superannuation was first introduced.

Keep an eye on the prize

In order for a worker to be fully self-funded in retirement their Super fund balance at retirement must yield an annual income greater than the Aged Part-Pension cut-off.

Lets call this target balance the Self Funded Retirement Threshold. Today with the Aged Part Pension cut-off at just below $50,000 pa, at a yield of, say, 5% the Self Funded Retirement Threshold (SFRT) is $1,000,000. 

All superannuation policies should be focused on every retiree reaching this super balance.

5 Changes to Improve our Super

This objective leads us to consider a wide range of changes that can both lower the burden on our welfare budget and yet increase the number of workers achieving self funded retirement.


Here are 5 suggestions; -

• Taxation discounts on super contributions should be capped. There should be NO tax discounts on super contributions if the projected balance is greater than the SFRT.
• Super fund annual contribution limits should increase as the employee approaches retirement . There is no cost to the government in doing this as the tax discounts automatically cut off if the projected balance is greater thant SFRT
• Retirees should not be allowed to withdraw a 'lump sum' from their Super if by doing so its remaining balance would fall below the SFRT
• Government could issue a government guaranteed Superannuation Bond (SAB) with a fixed rate of return above inflation, say 5%.  There are two benefits to this approach. The government receives a ready source of funds in return for the tax 'discount' on super contributions. Funds that can be used for long-term infrastructure projects. At the same time the individual receives a guaranteed inflation adjusted return on at least part of their super contributions. There should be strict rules pertaining to this special purpose SAB. Here are some suggestions; - 
• Any SAB investment cannot be withdrawn till retirement and its value at retirement is the inflation adjusted value of the sum invested, ie no capital gain. 
• The maximum value of investment for any individual would be limited to the SFRT. 
• The government could manage the SAB to reduce debt and to fund infrastructure projects. 
• It could be mandatory for Super funds to purchase SAB as part of their annual contributions. This 'compulsory' contribution could be equivalent to the value of the tax discount provided on Super contributions. eg if a worker contributes $10,000 in any year to his super and has saved $1500 in tax in making this contribution he would have a mandatory contribution of $1500 to the SAB. 

No doubt more changes will come

Given the legislation has just passed the senate, it may seem that these suggestions have missed the boat. I guess in the short term that is true. But have no doubt the pollies have not finished fiddling with Super for long. Most likely it will be revisited in the not too distant future for another tax grab. Then again who knows, perhaps the inspiration fairy will strike some future PM with the fortitude to guide the parliament to sensible, long lasting Super reform.