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Tag: SMH

17/05/2023

Our government is being privatised by stealth.

SMH 17 May 2023

Geoffrey Watson

The PwC scandal is serious, but it seems to have been lost in the background noise of a coronation and a federal budget. Yet the scandal raises some very big questions about how we are being governed.

The facts are simple enough: in 2013, Australia was engaged in an international effort to crack down on multinationals avoiding corporate tax through cross-border income and asset transfers. Specialists from PwC were brought in as consultants and given access to highly secret materials, subject to confidentiality agreements.

PwC’s top international tax partner, Peter Collins, took the information and shared it widely inside the firm. It was then sold to the targets of the crackdown, teaching them how to sidestep the same anti-avoidance measures PwC was helping to draft. The misuse of the highly confidential material was given a name reflecting the targeted market – ‘‘Project North America’’. PwC probably made many millions of dollars.

Disgraceful conduct, but highly lucrative for the partners at PwC.

So how do we know about this? Well, we did not hear it from PwC. In fact, PwC was obstructive: when the Australian Taxation Office sought information, PwC declined to cooperate, claiming legal professional privilege – a tactic commonly deployed by those clients of PwC. Instead, we only know about this from the outstanding work of two journalists at the Australian Financial Review digging into the reasons why the Tax Practitioners Board was resisting the reregistration of Peter Collins as a tax agent. If not for them, this sorry tale would not have come to light.

As usual, there seem to have been few adverse consequences for those involved. Collins and the chief executive of PwC, Tom Seymour, have left PwC, but we don’t know upon what terms – they may have received handsome payouts. We don’t know how much money PwC made from its Project North America because the partners won’t say – and they have not made an offer to disgorge their wrongful profits. PwC has not told us to whom they sold the information, so we have no idea how much tax has been avoided. PwC has announced it will commission an internal inquiry, but that is obviously insufficient.

But this is much more than a story about misconduct by a Commonwealth contractor; it is far darker than just that. There are many questions, all unanswered.

The first question: Why on earth was PwC – a substantial contributor to the global problem of crossborder tax minimisation – involved in designing Australia’s response to that very problem? Anyone could see this was going to be a problem.

That raises the second and even larger question: Why is Australia outsourcing so much of its governing to private enterprise? Policy development and implementation are now routinely taken from the public service and turned over to private ‘‘consultants’’. Some will say this is because the most highly skilled and experienced people are in the private sector and, you know, this is probably true – but it is only true because the private firms have poached the most skilled and experienced public servants from the public service. This makes good economic sense for the big firms who can charge those services back to the Commonwealth at high rates.

I am not exaggerating. Look at the audit results published by the APS for 2021-22. The Commonwealth paid $21 billion for external labour – i.e. consultants, contractors and labour-hire contracts – in a single year. To give some perspective, that is roughly the same as the federal government spent on secondary education that year. This spending was not made public. The Coalition had boasted of massive costs savings through cuts and caps on public service employment without telling us the holes were filled by payments to private enterprise. Our government was being privatised by stealth.

It may be a coincidence but, over the last decade, the major beneficiaries of mass privatisation were donating heavily to both sides of political power – Labor and the Coalition. PwC was one of the largest donors. It is another sad story of inadequate federal election funding laws and the pernicious role of big money in our election cycle.

Will Labor be better? So far, the new government’s response to this debacle has been strangely muted. Existing contracts with PwC must be investigated. Negotiations with PwC for further contracts must be frozen. Heads must roll. We need an inquiry – surely we should not be outsourcing that to PwC.

We need to take a deeper look at the way in which we have been outsourcing government. It seems we have been going down the wrong path. It is time for change.

Geoffrey Watson SC is a director at the Centre for Public Integrity.

18/12/2022

Trust – a letter to Ross Gittins, who wrote the below article on Trust

18 December 2022

Dear Ross,

I congratulate you on your article on ‘Trust’. It is the glue that holds society together, and when it is broken there are huge consequences.

Since the first plane hijacking in 1970 checking people onto planes is a growth industry. Years ago you could walk into any office building, take the lift to the top floor and ask the General Manager’s secretary if you could speak to (almost always) him. Now everyone carries tags even to get in the front door or the lift. This may all be related to inequality or only mostly.

But it is also the rise of the manager. The best expose of this I have read is ‘The Political Economy of Health’ by Julian Tudor-Hart. He follows the British NHS from its founding till 1998. At first it was a noble experiment with all those in it paid adequately and trying to give health for all as well as they could. The whole thing was self-governing, and everyone was trusted to procure things as cheaply as possible and look after each other and the patients. Then managers came and asked ‘What is the cost of a day in hospital?’ or’ What is the cost of an X-Ray?’ Some said that it was unwise to ask this, as keeping records that detailed would simply add to costs, which everyone was reasonably sure were as low as possible already. Hart details successive management demands and consequent cost increases until the cost of management became about 35% of the total, without any apparent improvement in the service.

Managers do not trust people to do their jobs, so they insist on KPIs, which then become more important than the job itself, distort the tasks done and kill any initiative that might have been used by the staff. Since the task are all defined to be as simple as possible the staff are de-skilled or not allowed to use any initiative and the managers award themselves a pay rise, so the gap between the lowest and highest paid reaches its current obsene level.

We now have a situation where most people work down to their station rather than up to their ability. We have a huge workforce in security and no one is allowed to use their own initiative beyond their management defined protocols as they pour time into producing KPIs so that they can be checked up on. Management has created immense overheads, even on top of their own inflated salaries. And no one can figure out why productivity growth is stalled! More trust is one solution. I can think of others.

2022: The year our trust was abused to breaking point

Ross Gittins Economics Editor SMH

December 14, 2022

As the summer break draws near, many will be glad to see the back of 2022. But there’s something important to be remembered about this year before we bid it good riddance. Much more than most years, it’s reminded us of something we know, but keep forgetting: the central importance of trust – and the consternation when we discover it’s been abused.

Every aspect of our lives depends on trust. Spouses must be able to trust each other. Children need parents they can trust and, when the children become teenagers, parents need to be able to trust them. Friendships rely on mutual trust.

Trust is just as important to the smooth functioning of the economy. Bosses need to be able to trust their workers; workers need bosses they can trust. The banking system runs on trust because the banks lend out the money we deposit with them; should all the depositors demand their money back at the same time, the bank risks collapse.

Just buying stuff in a shop involves trust that you won’t be taken down. Buying stuff on the internet requires much more trust. Tradies call on our trust when they demand payment before they start the job.

Our democracy runs on trust. We trust the leaders we elect to act in our best interests, not their own. Our country’s co-operation with other countries rests on trust. Of late, our relations with China, our major trading partner, have become mutually distrustful.

The trouble with trust, however, is that it can make us susceptible. And, as Melbourne University’s Tony Ward reminds us, it can be just too tempting to the less scrupulous to take advantage of our trusting nature.

They can get away with a lot before we wake up. But when we do, there are serious repercussions. Much worse, the loss of trust – some of it warranted; much of it not – makes our lives run a lot less smoothly.

The truth is that, as a nation, we’ve slowly become less trusting of those around us. But this year is notable for events where trust – or the lack of it – was central.

It’s widely agreed that the main reason the federal Coalition government was tossed out in May was the unpopularity of Scott Morrison. The Australian National University’s Australian Election Study has found that the two most important factors influencing political leaders’ popularity are perceived honesty and trustworthiness.

Its polling showed Morrison 29 percentage points behind Anthony Albanese on honesty, and 28 points behind on trustworthiness.

By contrast, many were expecting Daniel Andrews to be punished at the recent Victorian election for the harsh measures he insisted on during the pandemic. It didn’t happen. We don’t have fancy studies to prove it, but my guess is he retained the trust of the majority of voters.

The ANU study always asks questions about trust in government. This year it found 70 per cent of respondents agreeing that “people in government look after themselves” and only 30 per cent agreeing that “people in government can be trusted to do the right thing”.

This helps explain why the federal election was no triumph for Labor. The combined primary vote for the major parties fell to 68 per cent, the lowest since the 1930s. Labor’s own election report explains this as “part of a long-term trend driven by declining trust in government, politics and politicians”.

Related Article

Jessica Irvine

Senior economics writer SMH

Ward reminds us of the benefits of a high level of trust. It reduces “transaction costs” – the cost of doing business. “Profits and investments are higher if you don’t have to spend lots of time and money checking whether other parties are honest or not,” he says.

“People invest more in their own education if they believe a fair system will reward their efforts. If you think the system is rigged, why bother?”

Comparing countries, economists have found strong links between more social trust and higher levels of income. Trust is one of the top determinants of long-term economic growth.

And high-trust societies, with less distrust of science, had better outcomes in tackling COVID. That’s one respect in which we didn’t do too badly this year.

29/04/2020

Welfare- the target of the conservatives.

2 November 2016 They can spend a fortune on Joint Strike Fighters that the Canadians have abandoned as a bad joke. They can spend $50 million putting diesel engines in French nuclear submarines. They can spend more being cruel to refugees than the entire UNHCR (Commission for Refugees) budget, but they still claim to be […]

11/09/2016

CTP Facebook Article- The Facts 11/9/16

CTP, Compulsory Third Party insurance (Green Slips) is an area where I work. In theory, if you are injured in an accident that is not your fault, all your treatment is currently paid for by your insurer. The law says that they must pay for ‘reasonable and necessary’ treatment, which I assume to mean the treatment that would happen in good routine medical practice. Wrong.

The insurers have 3 months to decide if they are liable for the accident. If they decide they are not they will not pay. If they decide that they will pay, all treatment decisions have to be referred to them as to whether they will pay or not, and sometimes, despite MRI scans, severe symptoms and a neurosurgeon saying that their life is at risk, they will not pay. I have a number of patients who have waited over a year in agony for treatments that are both reasonable and necessary but the insurers will not pay for. They say that the patients can get it themselves if they like (obviously if they can afford it), of they can get it on Medicare (if they have Medicare and if they can find a surgeon who will operate on Medicare for a third of the money that should be paid by the insurer. Such surgeons cannot be found).

The protocol for disputes vary slightly between insurers. For example, the NRMA protocol is that you can firstly approach the claims clerk who rejected it and ask him/her to change their mind. Secondly you can appeal to their team leader. Thirdly you can appeal to the NRMA Senior Claims Manager. Fourthly you can appeal to the government appointed Medical Assessment Service (MAS), which guarantees to assess the disputed issue and rule within 3 months! Or the treating doctor can try to find a Medicare surgeon, send them to a public hospital, or write yet another prescription for pain killers. (Mostly the insurers pay for pain killers, though they do argue over some other drugs). Many GPs have simply given up treating CTP patients.

All these delays, frequently running into months can be compared to the doctors and nurses in Emergency Departments of public hospitals who have to write long explanations for the Health Minister if patients wait more than 4 hours in the Emergency Departments. So if you think private medicine is better than public- think again. We are going the way of the US. Insurers control it all.

Patients are assesses by an iniquitous system devised by American Insurance companies in cooperation, (inexplicably enough) with the American Medical Association. This has resulted in a tome, the ‘AMA Guidelines for the Assessment of Permanent Impairment’ which supposedly gives a percentage of impairment of your body, so that injured people can get compensation based on the percentage impairment that they have. Doctors can do a course in how to use this guidebook and then do lucrative medicals based on it. The reason the book was produced was to lessen litigation on how injured someone was, which would save legal costs. As pain cannot be measured, this was left out, which is just the first reason why the book is a farce. Since pain is the main thing that stops people working, to talk of impairment without considering pain is almost like having a swimming race without water- just not quite. Secondly despite the tome’s carefully crafted descriptions, doctors assessment using the guidelines vary widely. Thirdly, it is very hard to get over 10% impairment, which is the amount Mr Baird’s reforms intend to define as more than a ‘minor injury’ so there will be many people with only a few percent impairment, and thus minimal compensation, who will be unemployed and unemployable. Fourthly, the guides only talk of ‘impairment’. Any one who works in disability knows that there is quite a difference between an impairment and a disability. For example if someone is very shortsighted they are impaired, but if they have good prescription glasses they may not be disabled by that impairment. People who work with their brains are similarly less disabled than those who need their physical strength, but have the same impairment. So physical workers are again disadvantaged.
The new scheme will cut out lawyers and advocacy, and will give a statutory small amount to ‘minor’ injuries. The insurers will dump long term patients on the welfare system and continue to get a lot of money for doing not much that is useful.

I would finish by saying that I think the whole system is appalling and that the way to solve the health system problem is to raise the Medicare rebate from 48% of the AMA fee to 85%, where it was when it started, and there would be no trouble getting doctors to treat the patients who needed it. There also needs to be a single insurer, so that disputes between insurers will not delay treatment, which they frequently do, and everyone should be covered, even ‘at fault’ drivers, who still need treating despite their error.

For the present six insurers, all are bad, but they are not all as bad as each other. There are no published figures to compare them rationally, but based on personal experience, I have just changed my insurance from NRMA to GIO. The TV ad about feeling ‘confident’ about your insurer is a bad joke.
Wish me luck, as I wish you.
Here is an SMH article by Anna Patty 12/9/16 which raises the issues in a somewhat understated way.

www.smh.com.au/business/workplace/green-slip-reforms-will-leave-most-motorists-to-fend-for-themselves-20160905-gr8zca.html