James Cook University and Bob Carter

A statement by James Cook University after they dismissed Emeritus Professor Bob Carter.

JCU believes debate lies at the heart of scientific endeavour and its Code of Conduct states that those involved with the University have the right to make public comment in a professional, expert or individual capacity, provided that they do not represent their opinions as those of the University unless authorised to do so. Dr Carter’s very prominent public contributions to the climate change debate is not something new. He has been promulgating his views, which of course he was entitled to do, for many years while holding an adjunct appointment. But what has changed over the years is the level of his contribution to the School of Earth and Environmental Sciences where he held his adjunct appointment. Academics holding adjunct appointments are expected to contribute on a regular and ongoing basis to one or more of the following University activities: •Teaching;
•Collaborative research;
•Postgraduate supervision; and
•Staff and student consultations.
The key question for an adjunct appointment is: “Proposed activities and Perceived Benefits to the School”. While Dr Carter has continued his own research and gives “public talks and advice about climate change and climate change policy” – again as he is perfectly entitled to do – such outreach activities are not related to the work of the School, and do not meet the need to contribute to the School as outlined above. The simple fact was that in the School’s view Dr Carter was no longer undertaking any of the activities within the School of Earth and Environmental Sciences that is required of an adjunct.

That statement turned up in a report on Bob Carter in a site dedicated to unmasking climate skeptics. It is generally well researched and I turned to it for a cv of Viv Forbes.

Posted in Global warming and climate change policy, Rafe | 19 Comments

More than a great cathedral has now been lost to us all

Today we merely saw a metaphor played out before us. What we have lost we have been in the process of losing for quite some time. The rest of this post is taken from here. And you should watch at least the first three minutes of Kenneth Clark’s opening in the video below.

There is no way to replace what Paris, what France, what Christendom, and indeed what humanity, has lost today. It is irreplaceable. For example, we literally cannot recreate the windows, which date from the time of Dante. We do not know how to do it. As a friend said to me, “You can rebuild the World Trade Center. You cannot rebuild Notre Dame de Paris.”

Embedded video

Kenneth Clark’s monologue opening his great 1969 TV series Civilisation (all of which is available on YouTube). Standing in front of the Notre Dame cathedral, Clark asks, “What is civilization?” He says he can’t define it in abstract terms, “but I think I can recognize it when I see it.” He then turns to the cathedral, and says, “I’m looking at it right now.” Watch:

Posted in Cultural Issues | 102 Comments

Peter Ridd wins a victory for academic freedom against political correctness

Will this be a shot heard around the world?

From Benny Peiser at the Global Warming Policy Forum picking up a feed from The Australian.

A Federal Court judge has ruled that James Cook University acted unlawfully when it sacked professor Peter Ridd after he publicly criticised the institution and one of its star scientists over claims about the impact global warming had on the Great Barrier Reef. Handing down his decision today, judge Salvatore Vasta said that the 17 findings used by the university to justify the sacking were unlawful. –The Australian, 16 April 2019

James Cook University may have already spent over $1 million in legal fees attempting to silence Peter Ridd. They have assumed that sooner or later he would run out of money and courage. But not Peter, with his legal team and support of people like Spectator Australia readers has kept going. Taking this fight to the Federal Court would not have been possible were it not for Peter deciding to take a stand in defence of the truth, to not back down regardless of the consequences. –Jennifer Marohasy, Spectator Australia, 16 April 2019

Some of the backstory.

In 2016 Professor Ridd informed a journalist that Australian Institute of Marine Science at James Cook University was feeding the media with misleading images of the reef to claim that it was suffering severe damage. He alleged that one of his colleagues Professor Terry Hughes was evasive when asked to explain what was going on. Hughes is one of many marine scientist getting major grants to produce research that purports of depict the reef in decline.

This earned Ridd a censure from the University for violating the corporate code of conduct. He repeated the claims on Sky News and earned a second censure. After a third violation, possibly related to email messages to friends, he was sacked in April 2018.

Jo Nova has a piece with many links to get the full story.

With any luck this will generate a wide-ranging and protracted public discussion of the way the universities and research institutes are doing business, especially in relation to climate science and other topics where political correctness is killing scholarship and public debate.

The ABC report.

In a statement, JCU Provost Professor Chris Cocklin disagreed with the judge and said the university was “considering its options”.

“[We] are also troubled by the fact that he fails to refer to any legal precedent or case law in Australia to support his interpretation of our enterprise agreement, or academic freedom in Australian employment law,” the statement said.

Provost Professor Cocklin maintained in the statement that Dr Ridd was not sacked because of his “scientific views”.

“Peter Ridd was never gagged or silenced,” the statement said.

“We maintain we have not taken issue with Dr Ridd’s, nor any other employee’s, rights to academic freedom.

A lot of comments on Watts Up With That.

UPDATE

Taking up a point from RobK’s comment drawing off the full text of the judgement.

Media reports have considered that this trial was about silencing persons with controversial or unpopular views. 2. 3. Though many of those issues were canvased and discussed throughout the hearing of this matter, this trial was about none of the above. Rather, this trial was purely and simply about the proper construction of a clause in an Enterprise Agreement. Whilst the Court acknowledges that there may be consequences that touch upon these other issues because of the Court’s construction of that clause, none of those consequences can play any part in the determination of the proper construction of that clause.
The clause in question is cl.14 of the James Cook University Enterprise Agreement. It is headed “Intellectual Freedom”. It, and it alone, is the focus of this judgement. Even though in this application, the Applicant is asking for the Court to make declarations that the Respondent breached the Enterprise Agreement and therefore contravened s.50 of the Fair Work Act 2009 (Cth) (“the FW Act”), the parties have asked me to simply rule whether certain findings and directions were lawful.

If it is possible to write enterprise agreements that restrict freedom of speech in a way that stands up in court, this changes the game to challenging the framework of law or conventions that allows such enterprise agreements to exist. This applies in the Folau case as well.

Posted in Global warming and climate change policy, Politics of the Left, Rafe | 40 Comments

Peter O’Brien on negative gearing

One of the most frustrating things about being an observer of the political scene is how easily politicians are let off the hook when they make misleading or specious claims.   The most outrageous illogicalities are meekly accepted by a media class that seems to have abandoned any pretence at intellectual rigour.

The usually astute Chris Mitchell has a piece in the Australian in which he opines:

In my view, a cap on the number of negatively geared properties is desirable to prevent high-earning surgeons and lawyers avoiding all tax by owning dozens of negatively geared properties.

As someone who, along with my wife, has based my retirement on property investment, I am always irritated when politicians and commentators routinely conflate property investment with ‘negative gearing’ – as if tax avoidance, rather than wealth accumulation, were the primary motivation.

And I am particularly intrigued by these canny surgeons and lawyers who are able to ‘avoid all tax’ through negative gearing.   I know a few surgeons and lawyers but none of them are in this category, so I have to imagine how the others do it.

Let’s say I’m a brilliant surgeon earning $1,000,000pa.   I pay a top marginal rate of 45c in the dollar.  So before any deductions I may have, I pay $423,097 income tax.

For the purposes of this example, let’s ignore all other deductions.  That leaves me with $576,903.

Let’s say I decide to live on half of this and, each year, to put a $300,000 deposit on a rental property worth $800,000.  I need to borrow $500,000 and secure an interest only loan over 30 years at 6%. (In reality, I wouldn’t maintain an interest only loan over such a long period but would pay down principal wherever I could but for simplicity’s sake go with me here).

Let’s say I get $600 per week rent – $31,200.

I am paying $30,000 p.a. interest on my loan.  That is tax deductible.

Let’s say I pay annual rates of $2,000 and insurance of $1,000.

And I engage a managing agent who charges, say, 10% or $3,120 pa.

My outgoings are $36,120.

So I’ve made a loss of $4,920.

So now my taxable income is $995,080 and tax payable is $420,883.  So I’ve ripped off the government to the tune of a measly $2,214.

Let’s say I do this every year for the next 20 years.  I now have 20 properties all structured the same way.   My annual loss is now $98,400 and my annual tax bill is $378,817, a saving of $44,280.  But I’m living on $53,720pa less than I otherwise would have.

In short, I’m a hell of a long way short of ‘avoiding all tax’.  Cultivating losses to avoid paying tax as an end in itself does not strike me as a good way to accumulate wealth.  Ultimately, short of breaking the law, tax must ultimately be paid.  The best you can do is delay paying it.

Does this seem to you a very unlikely scenario?  This is a very simplistic example.  I have deliberately and artificially structured it as a worst case scenario – one that produces the best outcome from a tax avoidance perspective.  Any tweaks to the scenario I have outlined above, to make it more realistic, eg incorporating regular rent rises for the older properties, regular increases in income, paying down principal etc etc, would all have the effect of reducing the tax avoidance potential.

A throwaway opinion in an op-ed in The Australian is not, of course, a world shattering matter and I would normally not have bothered to respond but Mitchell’s comments play into the Labor myth that property investment is just a tax dodge for the wealthy.    In fact, this is of a theme with the general subversion of the English language that passes for political debate.  The corruption of words such as ‘racist’, ‘sexist’ and ‘homophobic’ are the obvious and worst examples but there are many others.

For example we hear a lot now from Shorten and co, and echoed by many journalists such as Peter Van Onselen,  about ‘closing tax loopholes’, by which they mean the discount on CGT, negative gearing, tax deductions for accountancy fees etc.  A ‘loophole’ is a device unintentionally created by a deficient drafting of legislation that allows someone to legally circumvent the intention of that legislation.  All the tax provisions, relating to discount of capital gains tax, negative gearing etc that Labor do not like, are not loopholes – they have been specifically legislated to achieve a particular outcome.  If Labor wants to change that outcome as part of their tax grab that’s their business but they should refrain from smearing those who legitimately use these tax provisions as shysters taking advantage of a ‘loophole’.

As long as we have journalists parroting the Shorten li(n)es, what chance has the normal voter got of getting close to the truth, especially in this social media dominated world?

Posted in 2019 election, Guest Post | 30 Comments

Hi-Ya Ed-Ya-Kaytian

Remember the following words.  Record them to memory.

Do as I say not as I do.

In 2009, the punter’s friend, the ALP and the world’s greatest treasurer passed the National Consumer Credit Protection Act.  This act details the:

requirements in relation to the entry into, terms and enforcement of credit contracts and consumer leases.

Specifically, the Act:

contains requirements for persons who are involved in consumers obtaining credit contracts or consumer leases (including both the credit providers and lessors, and other persons such as finance brokers) to be licensed and to comply with responsible lending requirements.

Can TAFKAS repeat the key operating part – persons who are in the business are required to be licensed and to comply with responsible lending requirements.  The licence is called an Australian Credit Licence which is issued (on behalf of the government) by ASIC.

And what are the responsible lending requirements?  Well, according to ASIC’s RG209, meeting your responsible lending obligations will require taking three steps:

  1. make reasonable inquiries about the consumer’s financial situation, and their requirements and objectives;
  2. take reasonable steps to verify the consumer’s financial situation; and
  3. make a preliminary assessment (if you are providing credit assistance) or final assessment (if you are the credit provider) about whether the credit contract is ‘not unsuitable’ for the consumer (based on the inquiries and information obtained in the first two steps).

Well.  When the rubber hits the road.

Can anyone guest what is one of the largest pools of retail loans in Australia that is not mortgages, credit cards or personal loans?  Anyone?  Anyone?

Well …. They are HELP loans.  As in Higher Education Loan Program loans.  Still in doubt as to whether it is a loan?  Let’s go to the government’s web site ….

How many times does the word loan appear?

And here’s the rub.  Does the Commonwealth Government have an Australian Credit Licence and does the Commonwealth Government (through the universities) “take reasonable steps to verify the consumer’s financial situation”?

If you answered no to both those questions, well you have just won yourself a 12 month free subscription to Catallaxy Files.

If it is government policy to place the onus on the lender to assess whether it is appropriate for punters to borrow, why then not apply the same obligation on the government.  This might then impact the nature of the courses delivered in Australia’s universities.

Imagine the following.  The borrower (the proposed student) has to do the full disclosure to the lender (the government).  As part of the disclosure, the proposed student indicates both what they propose to study and then what they plan to do after they graduate.  You know, like with a normal loan.  What are you going to do with the money and how will you repay?

Imagine that the proposed student indicates that they wish to undertake a 6 year full time degree in Marxist Lesbian Dance Theory (either at La Trobe University or Sydney University, to be determined) and that upon graduation they will then move to Byron Bay to pursue a Newstart Allowance scholarship in vegan activism.

Having acquired a $100K debt accruing compound interest at the Commonwealth Bond rate, it is unlikely that said student would be able to ever repay the debt.  Should the government have loaned them the money?  Would you lend them money?  Would money bags Shorten lend them his personal money?  Is that responsible lending?  What would ASIC say?  What would APRA say?

Shall we ask Commissioner Kenneth Hayne his views?  The same Commissioner Hayne from whose Royal Commission flowed ASIC’s analysis that:

has highlighted shortcomings of the Household Expenditure Measure (HEM) – a standard benchmark of people’s annual living expenses used in assessing people’s borrowing capacity.

A measure that apparently the government does not use when it does not asses the capacity of budding Bachelor of Marxist Lesbian Dance Theory candidates to determine whether to lend them money.

Also, would said student, having gone through the loan application process, have pursued their studies in Marxist Lesbian Dance Theory?  Would they have gone to university at all in the first place and delayed their Newstart Allowance scholarship in vegan activism by 6 years?

The government claims that the basis of most business regulation is information and power asymmetry.  Well then, regulate thyself.  Perhaps then the government will better understand the costs and overheads of business regulation, not to mention kept thousands of kids out of indentured servitude.  And of course, with luck, there might be fewer Marxist Lesbian Dance Theory graduates pursing careers in vegan activism.

But hang on:

Do as I say not as I do.

Yeah yeah.  They will say that it’s not really lending because it is contingent.  You only have to pay once you earn over a certain amount.  But this is just structuring.  Interest accrues irrespective of the earnings of the borrower and the estate of the borrower is still liable upon the borrowers death.  Oh and the special bit.  You can’t clean the debt slate through bankruptcy like any other loan.

But of course it is negative gearing and capital gains tax that keeps the youngin’s from buying a house.

Posted in Uncategorized | 3 Comments

Weaponising the ACCC to address cartels: more market controls planned

Having seen the ACCC staffing levels increase 10 per cent since 2014 with a further increase of 14 per cent budgeted for next year, Chairman Rod Sims is out campaigning for additional resources to combat cartels. Sims’s views are in line with those of a predecessor, Graeme Samuel, who said ‘cartel behaviour is, in reality, a form of theft and little different from classes of corporate crime that already attract criminal sentences.’

Another predecessor of Sims at the ACCC, Allen Fels, like Sims was a long term ALP client/assister of the ALP and was rewarded with the ACCC job. Fels would mask his proclivity to intervene in markets (i.e. to “correct” them) by citing Adam Smith’s aphorism, ‘people of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.’

Neither Fels nor Sims would have agreed with Smith’s succeeding sentence, ‘It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice’.  Still less would they recognise that the words were in the context of a chapter in The Wealth of Nations that addressed the perverse effects of government regulation in creating monopolies; indeed, government facilitation is only means by which such monopolies can persist.

Ten years ago Julie (now Makayla) Novak and I examined cartel behaviour and its supposed combating by authorities in the US and Australia.  In so far as any of the cartels documented stuck, they collapsed as higher prices attracted new competitors or changed conditions meant the collaborators broke the agreement themselves.  In some cases, like shipping conferences, which the ACCC has long targeted, the agreements are cooperative measures to bring about benefits (in the case of conferences, assuring more regular services).

In The Australian article announcing the campaign for more resources, the long running ACCC litigation against cardboard box makers Visy, in particular its former Chairman, Richard Pratt, was mentioned.  In the end, the ACCC never could win damages against Pratt which encouraged them to press successfully to reduce the required level of proof of wrongdoing.

Actually, the Pratt case only superficially involved an agreement to collude between Visy and Amcor, which together dominated cardboard boxes in Australia.  Such agreements normally involve higher prices and stable market shares between the firms.  But following the agreement, Visy massively improved its market share especially in the non-seasonal, more profitable parts of the market.  It was, in fact an agreement that only one side kept. Pratt reneged on market sharing measures and never intended to do otherwise. There was no real collusion, just a cunning strategy of one firm to spike its competitor’s marketing.  Amcor was understandably miffed and spilled the beans in return for immunity. And far from customers being hurt, prices fell.

Sims has paved the way for regular joytrips to Washington via a new agreement to share information with the FBI (although it is the Federal Trade Commission that is responsible for combating cartels).  He wants three prosecutions a year and will search till he finds sufficient smoke.

Doubtless, what with banks and other businesses under attack from populist politics, Sims will get his additional resources, even under the Coalition which has shown no ability or willingness to rein-in its own anti-business agencies.  Under the ALP such additional resourcing is assured both as a means of further cowing business into acquiescing with its wealth transfer plans and reinforcing another agency that will facilitate government control of business.

It would be neat if the ACCC could confine itself to consumer misinformation and setting prices for natural monopolies.  But Winter is already upon us as the nation slouches towards socialistic control under the Coalition and there is every expectation of this being ratchetted up under a Shorten Government.

 

 

Posted in Uncategorized | 8 Comments

Reverse Sophie’s Choice

You’ve heard of the Reverse Robin Hood – the act of taking from the poor and giving to the rich.

Then let TAFKAS introduce you to the Reverse Sophie’s Choice – the act of deciding which of your children in going to kill you.

So here is your choice – who are you going to chose to tax you to the stone age; to send you to the poor house?  This headline from the online AFR.

Posted in Uncategorized | 15 Comments

Negative gearing policy cover up

Here is an interesting story from the AFR:

Labor has deleted substantial detail on its negative gearing and capital gains tax policies from its housing policy website.

On Tuesday Labor’s website has just over 10 paragraphs explaining the policies whereas less than a fortnight ago on April 5 there were almost 100 paragraphs with charts and diagrams.

The changed information comes less than a week after The Australian Financial Review revealed that Labor’s negative gearing could be overstatedby between $2.5 billion to $8 billion due to inaccurate assumptions on the level of investment in new housing stock.

To be clear – what the ALP don’t want us to see anymore is here.

What is particularly interesting is this segment.

Recall Chris Bowen has gotten into trouble with that particular statistic.

Looking at the Source for that graph I have been able to replicate it and update it.

So the ALP have been looking at housing finance data not individual purchase data. Okay – as a rough and ready proxy that would be fine in an academic study with heaps of qualifiers and robustness checks. But the ALP are doing tax policy.

So what have they done precisely?  They divided the data for “Investment housing – Construction of dwellings for rent and resale” by the sum of “Investment housing – Purchase for rent or resale by individuals” and “Investment housing – Purchase for rent or resale by others”.  On the assumption that all investment properties were homogeneous that might be useful information.

That just tells us that Landlords (as a business class) tend not to buy off the plan – not surprising, that is quite risky. I suspect it would be quite difficult to get a loan to do that for a small unincorporated business.

But let’s have a look at all new construction housing finance data. In the graph I show the data for all construction housing finance data and then investment construction housing finance data.

It seems to me – eyeballing the graph – that the investment construction housing finance data has been fairly stable over time. Since about 2000-01 the gap between the two series has been stable at about a third. Unsurprising given that the home ownership rate in Australia is about two-thirds.

Posted in 2019 election, Taking out the trash, Taxation | 7 Comments

Leading indicator of Economic Lagging

From Adam Creighton in today’s Australian:

The Office of Parliamentary Counsel, which drafts bills, scored an additional $900,000 to cope with an expected thicket of laws.

Presumably that’s not for new office space but rather for drafters.  At perhaps $150K to $250K each, that sounds like another 4-6 people drafting Commonwealth laws and regs.  This is on top of their existing “approximately 45 drafters“.  So perhaps a 10% increase in laws and regs.

So much for a government laser focused on red and green tap reduction.  And just imagine how many more will be employed after the coming change of government.

Perhaps time to change the National Anthem from Advance Australia Fair to Comply or Go to Jail.

Small irony that the Minister who made his “bones” leading the Liberal Government’s red tape reduction project is the same person who is implementing all of this.

Posted in Uncategorized | 12 Comments

Tax early. Tax often. Tax everyone and everything.

Last week, Opposition Leader Bill Shorten announced Labor’s plans to limit the amount people can claim against managing their tax affairs.  According to Mr Shorten:

Why should someone who pays $1 million to their accountant to minimise their tax for millions more, why should we pay for the double dip.

Firstly, who is this “we” Kemosahbee?  And secondly, are there any other costs earning an income that the ALP does not approve of that they will limit deduct-ability for?

Here’s and idea.  Let’s eliminate the deductability of union membership and political donations.  How about we stop that double dip?

There are many comic dimensions to the the Bill Shorten story, but one of the most amusing is that because he has an MBA (Master of Business Administration), he some how knows something about business.  Ha!

If he knew anything about business, he would know that individuals and firms don’t pay accountants large fees because they like the conversation.  They do so because of the scale and complexity of the Australian tax system – one of the most complex in the world.  It is not about minimising tax you nong.  It is about keeping yourself out of jail when the ATO jack boots come a knocking.

They only way you can consider paying accountants and advisors to help manage your tax affairs is act of “tax minimisation” is if you believe that paying anything less than 100% of your income and wealth in tax is minimisation.  Oh hang on.

But this is the best bit.  The Shadow Minister for not knowing the difference between owning something and holding something for someone else, Dr Andrew Leigh (for a doctor he somehow is) last week announced that a Labor Government would provide funding to:

help Melbournians navigate tax system with tax clinic

Does this mean that the tax system is sufficiently complex that people might need 3rd party help to navigate?  What a revelation.  If only there was a profession that helped people navigate the Australian tax system.

Shame about the people outside Melbourne who might need help to navigate tax system.

Posted in Uncategorized | 9 Comments