What goes around comes around

After much debate over the latest ‘work for the dole’ scheme and attending Nobel Laureate Prof. Joseph Stiglitz’s ‘Income Inequality’ lecture I thought it timely to revisit the concept of lifting vs. leaning. I touched on this in an earlier post.

Anti-narcissism

For right winged liberal capitalists, time on earth is typically measured by a key metric, money. How much can I make, how fast can I make it and how can I use it to improve my living standards.

Consider a collectivist notion of thinking about other people. Perhaps supporting your partner, family or children. Statistics prove that we are ALL going to need to rely on welfare at some point in our lives. Whether we become ill, need time off work to grieve or grow old – welfare is a social functioning instrument that can be described perfectly by the old saying ‘what goes around comes around’.

The launch of Superannuation by Keating in 1992 was a masterstroke by the Labor Government.  Mandatory savings that can be accessed upon retirement.  If only we all saved a little extra that could be accessed when we needed time off work , were grieving, had fallen ill etc too? I know I used a huge chunk of savings when I was sick for while.  Then we really wouldn’t need welfare!

Work, more than just an income

After studying ‘Work and employment’ copious amounts of research proved that work fuels social cohesion and reduces anti-social behaviour. Having routine, discipline, respecting authority, exercising the mind, having daily contact with a variety of different people all maintain a level of emotional health otherwise unattainable from choosing your own adventure each day.

The recent budget delivery proved labour productivity was key to maintaining our high living standards in Australia. Yes from an economic perspective, but from a social perspective it also is keeping people off the streets and mentally stimulated. Most of the homeless people you will meet have low emotional wellbeing. It’s all too often forgotten that such a huge component of our makeup as people is mental, as well as physical.

I support Tony Abbott’s new work for the dole scheme and believe it is a strategic policy making initiative not aimed at reducing the amount of leaners to reduce the tax burden but also to improve their overall wellbeing. Work is VIP beyond the fact that you earn money and pay taxes to support the community!

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Breaking the cycle

Statistics show that intergenerational poverty is rife. Many perpetuate the characteristics of the people and environments they grow up in and it can be hard to break the cycle. University in Australia is currently accessible by most thanks to a policy that ensures repayments are only made once you earn a reasonable salary. However, statistics have shown that those accepted into university have typically had a stable upbringing and are financially secure and therefore access is not representative of the diverse socio cultural make up of Australia.

Growing up in whatever environment you may find yourself in naturally causes a bias. I grew up very privileged and before I was educated enough in the area of sociology, assumed that there were those who chose to work hard to make a living and those who lived off those who worked hard. I honestly feel like a spoiled brat when I venture out to some areas of Sydney. There are people trying to scramble together money for bread and milk and I’m over here planning my next cocktail night and trip to NYC. And yet here many of us are wishing we could trade places? Working is more appealing than relying on welfare after all…

So how can we all run the same race?

Society and its diverse backgrounds need to be better represented at a policy making level via Politicians and Government representatives. If we embody the true values of democracy for example, we would see politicians in Australia encompassing a variety of ages, genders, cultures and backgrounds. I see a trend toward middle aged, caucasian middle class male politicians.

Did you know that 1% of the population in the US earn 25% of the total income? Financial speculation and making money without the production and consumption of goods and services also takes its toll on a well oiled economy. Perhaps taxes may increase for this type of income ?

Government’s can also focus their efforts on collecting the vast array of unpaid taxes, before developing new taxes. Think of speeding tickets = fair’s fair! We are only incentivised not to speed to save our own lives and those of others, when we bend the rules we pay. Or fuel taxes, those who consume the most petrol pay the most tax that can then be attributed to supporting investment in roads. Which is one pricey business. Taxing savings and income incentivises people not to save or work… So creative policymaking comes into play.

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Social functioning spend

Or “the budget” as most of us may be familiar with.  I touched on this in an earlier post as I have now entered the world of taking an interest in “the budget”. It really isn’t branded appropriately because what the budget aims to do is increase social cohesion, or functioning.  That is, the reduction in anti social behaviour (largely crime related) and increased welfare of citizens.

I was privileged to attend the NSW budget briefing delivered by the NSW treasury secretary and what an inspiring man.  Treasury have a pretty tough job – keeping millions of people happy through maintaining our living standards through effective fiscal planning!  He said if he could summarise the FY15 budget in a sentence, it would be through Ross Gittins’ (SMH economics editor) remark the new Premier ‘Mike Baird is nothing if not game. His first budget as Premier is a model of fiscal rectitude.’.  The >$60b tax payer funded fiscal plan takes us through to a surplus, which is ideal to maintain our strong economy.

Protecting and supporting fellow Australians

The NSW Government has said it will invest heavily in:

  • Child protection “Keeping them safe reform” – which is a sound strategy as a supportive childhood often leads to increased wellbeing as an adult.  Which in turn produces labour that is productive and enhances economic stability therefore leading to increased wellbeing due to sufficient living standards.
  • National Disability Insurance Scheme (NDIS) – ensuring that those who are less able have greater choice as part of their care plans. This scheme also seeks to support carers in their quest to support themselves and others.
  • Home owners grant extension – likely due to promote property ownership which in turn leads to greater labour productivity through motivating citizens to work to pay off their mortgage.  In turn, also creating a more stable lifestyle ensuring adequate housing and a potential profit making asset when sold to downsize upon retirement, or later enter an aged care facility.  The ageing population, as a result of the Baby Boomers post WWII, will put pressure on resource allocation through increased demand for aged care facilities, more health services and increases in welfare / pension distribution and reduced labour productivity.

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Revenue sources

  • Payroll tax reductions – ensuring revenue can be raised from a variety of sources and that low income earners see increased take home pay as the cost of living continues to rise.  In ACT for example, Land Tax is one of the greatest revenue raisers.
  • Asset recycling – will play a large role in heading to surplus by, for example, outsourcing infrastructure projects to international investors.  For example, the $400m Pacific Highway upgrade.
  • Private investment opportunities and partnerships – It’s no secret Australia’s federal treasurer has slashed health funding from 26% of the total budget to just 13%.  However it should be noted that there are greater incentives in place to keep people out of hospital and the health care system.  Another example of state’s increasing revenue bases from outside sources include private investment into the new Northern Beaches hospital to be built.
  • Potential for revisiting older models e.g. use of funds / source of funds.  Fuel excise at 3% goes straight back into maintaining and developing road infrastructure.

The end of the mining boom

One of the stand out components of the NSW budget delivery is the huge impact reduction in demand for Australia’s natural resources that are being mined which has affected Gross National Investment (GNI). This relates to income and subsequently affects expenditure, thus reducing Gross Domestic Product (GDP) i.e. production.

In good hands

In order to maintain a strong economy based on equal parts production (supply) and consumption (demand) we need strong labour productivity.  This in turn will continue to drive Australia’s largely globally envied living standards, ‘the lucky country’ and ‘the Australian way’.

Innovation in the public service is key with bureaucracy and old ways of doing things no longer feasible.  In order to serve the citizens of NSW effectively public servants must embrace change and new, more efficient and innovative ways of creating best practice service delivery and “unleashing talent”.  An example more recently of this has been the roll out of Service NSW branches, a one stop shop for many of your administrative needs e.g. licence, etoll, seniors card.

The NSW treasury secretary ended by saying he sees tax as needing to be fair and efficient and that effective roll out of the forecast budgeted projects requires collaboration, trust and clarity.

My take is that as long as we stay passionate about being educated, work hard, buy a property and stay healthy we will be all good! And for those of us who may be disadvantaged and unable to, those who can will support you.  Any criminals who impede achievement of these ideals will be punished….

I think we are in good hands…

The search for certainty

We all want it and the reality is we can’t always get it. The absolute conviction that forecast events will occur, that something is the case or that predicted outcomes will be reached.

Certainty is a component of our everyday lives.  We encounter certainty with contracts, wedding rings, solving crimes beyond reasonable doubt, cause analysis, financial speculation, “googling” and much more. Remember the days of getting public transport and ‘winging it’. Now I check the real time ETA every few minutes! Or those days when we said we would meet a friend at midday – and we met them then and there, no multiple text influx at 30 second intervals.

Society has become obsessed with rationalisation and the ability to predict and control outcomes. What happens when we face uncertainty? Society is in disarray… confusion and frustration prevail.

Question mark

Why don’t we know the answer?

In the case of flight MH370, uncertainty threw even the most powerful and resourced nations into a tail spin with over 26 countries committing to the biggest search and rescue operation over the past century.  The conversations I  read and heard appeared to centre around uncertainty and the frustration of ‘not knowing’.  WHERE is the plane? WHY can’t we find out? WHY can’t technology give us the answer? I think we need to look at the statistics in perspective.  There are approximately 18 million flights p.a and this is the only flight that has vanished in modern aviation history (~1903) – we are all familiar with a margin of error.

When a new disease is discovered and treatment is uncertain, again we have citizens begging medical practitioners for answers.  WHY don’t you know what caused this? WHY don’t you know how to cure it?

Recently scientists discovered a new galaxy.  A whole new planetary system that we had no clue about before….WHY did we not know about this earlier?

Uncertainty is deemed unacceptable

Uncertainty is the opposite and equally valid notion of certainty and society ought to embrace it if its actors stand any chance of progress. A few examples of events that have had major impacts on society that weren’t able to be ‘controlled’.

  • Global Financial Crisis and other economic disasters
  • Natural disasters
  • Disease
  • Unforeseen tragedies
  • Unsolved crimes

Adapt and embrace

I believe the only exception to the rule (and there is always one!) is the determination by police to solve a crime beyond reasonable doubt for years after the crime has occurred to ensure justice is served.  For example, the case of Daniel Morcombe, a ten year old boy who disappeared over a decade ago whose killer has finally been prosecuted.

It’s no secret that certainty about income, for example, can be necessary to one’s lifestyle.  When you drill down is it really? There is always welfare if you needed to maintain material subsistence, provided you had exhausted all avenues in your quest ‘to earn a quid’.  What if you adapted to a less expensive lifestyle and resorted to a job that perhaps paid less?

I’m personally making a special effort to ‘go with the flow’ and avoid predicting and controlling outcomes on a daily basis.  Something many of you may be familiar with – life ain’t black and white as they say! We need to embrace the grey area.

After all, are we really locked in to anything? We can say with certainty we will execute the deliverables of a contract, be with someone forever or believe it unlikely to contract a particular disease.  But the truth is – we don’t know, and nor should we.

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The voice of the media

Media. Mass communication.  A powerful vehicle to deliver messages to the masses quickly. Arguably one of the most powerful influences on society, vital in developing societal norms. Second only to the Government, which has the power to dictate media activity, or at least we are led to believe it does.

In the Australian media recently we have seen a few examples of the power of our media outlets. At what point does their quest for quality coverage cross the line? Below are a few productive and not so productive outputs of the media from a social perspective.

Solving crime

Distributing information and images / footage that may lead to a rapid arrest of a criminal or person of interest, enhanced recently through the use of social media by the police.  This is in our favour as we want to ensure a functional society, eradicating anti social behaviour as quickly as possible.

Driving community sanctioned rules which in turn shape Government laws

The media heavily influences public perception of the effectiveness of Government. The new 1:30am lock out and 3am last drinks laws were primarily fuelled by community outcry over the continued hospitalisation and in some cases death of young children, the victims of callous drunken attacks.  Government acted swiftly to pacify the community that ‘something would be done’ – a campaign which the community would never have known about without extensive media coverage.

Education

Media coverage enables us to understand and read about challenges and achievements experienced by members of society beyond our own location.  Its great to hear what may be happening in the world of our domestic and International counterparts and where we can obtain learnings.

At the end of various articles I find it quite useful to see relevant contact points e.g. an article on Cancer call Cancer Council Helpline.  An article relating to mental illness try Lifeline etc.

Driving forward a progressive society focused on marriage equality is another role of the media.

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Wasted resources

There has been that much media coverage on the Corby case the past decade I think we could have educated every Australian on human rights atrocities the world over by now.  Is this of value to us as society? Perhaps as a deterrent, which wouldn’t require a decade of media coverage.  The implications of ‘excessive Corby coverage’ has been far reaching with the Indonesian Government threatening to revoke Corby’s parole and The Australian Federal Police raiding the offices for information on a potential interview deal.

Publicity

Marketers are familiar with the value unpaid media exposure gives their product due to its vast reach and timeliness of message distribution. This in turn has the counter effect of negative publicity which can be damaging to a brand and business.  For example, the recent Qantas redundancy coverage.  Yes Alan Joyce could have made different business decisions earlier and Qantas may be in good shape today but life is full of could have, should have, would have but didn’t.  While some industries experience challenges based on the evolution of society e.g. car manufacturers others experience dramatic growth e.g. technology firms.

Negativity

The vast majority of media articles are negative e.g. about crime, misfortune etc.  How does this impact society? What are the implications of all this negativity? Is it possible to become tunnel visioned? thinking we are living in a crime filled society when in fact the stories we read represent only a small percentage of the activities of Australians.

We recently saw the exposure of the suicide of Charlotte Dawson.  A media personality renowned for a very public battle with depression.  Up until very recently media outlets did not publicise suicides for fear of suicide contagion. I assume this change the past year or so is in aid of mental illness to drive greater awareness and to publish the support services available.

Bias / Credibility

Can journalists disclose ‘the truth’ about anyone who is a major shareholder / owner / sponsor / regulatory authority (e.g. Government) or do they adopt a second set of principles to remain loyal and to keep financial incentives in tact? Are all messages from qualified sources?

Communist societies control messages so as not to distort desired public opinion for example, North Korea.  Is this beneficial to society? Should we be grateful for the freedom of speech we see from our writers today?

What next?

Mass media has a powerful voice – the key is how you use that voice and who determines what messages are most productive for society. Perhaps the answer is better ethics training for all journalists as it appears they are the key determinants for the mass communication received by society which in turn shapes our decisions.

http://www.abc.net.au/news/2014-03-24/mcdonell-media-frenzy-descends-on-mh370-mystery/5340242

http://www.theaustralian.com.au/news/latest-news/new-laws-may-allow-filming-in-nsw-courts/story-fn3dxiwe-1226864315601

Gross World Product vs. Gross National Happiness

I have always argued that corporations and their pursuit of profit is largely damaging to society socially and environmentally. Particularly in light of the recent community support against sledge dumping in the Great Barrier Reef. However without Mark Zuckerberg’s ingenious corporation Facebook would we indeed have been able to galvanise such support as effectively? These three academics discuss their view on the pursuit of economic growth.

  • Dr Chris Dey, Senior Researcher (Physics) at the University of Sydney believes the world’s fundamental physical limits come before economic limits with economic growth ‘the strongest doctorate in society, more so than religion’.
  • Dr Vandana Shiva is an Indian environmental activist that focuses on ‘Gross National Happiness’ as opposed to ‘Gross World Product’.  Dr Shiva questions the popularity of the term GDP and believes it to be more reflective of ‘an abstract number that can destroy everything that is real that sustains us socially and ecologically and it measures everything except that which makes life worthwhile’. Dr Shiva discusses how debt in India is pushing farmers to commit suicide with ‘annihilation of life the consequence of growth…the multiplication of money to mobilise others and not all’.
  • Durkheim argues that contemporary work societies, otherwise now known as market societies focus on organic forms of solidarity which ‘foster a sense of disconnection and alienation’ associated with higher rates of suicide.

However, when you begin to unravel the complexities of the economy you can deduce that corporations do also increase social capital.  It sounds outlandish I know, even for me…

  • Ross Gittins, Senior Economics Editor for the Sydney Morning Herald discussed how reduced consumption can also reduce employment and this in itself creates a dysfunctional society at a recent Sustainability forum.  Obama asks major corporates in the US to create jobs to curb their unemployment rate.
  • For centuries work has been vital in organising millions of people and minimising the impact of anti-social behaviour.  Unilever alone has created jobs for over 200,000 people worldwide.
  • Through creating favourable policies for transnational corporations Singapore was able to increase real income and employment with an increase in public revenues resulting in increased expenditure on health, housing and education (Hobson & Ramesh 2010).  Singaporeans saw the stable global economy that had been constructed critical to increased social capital and the State was favoured by most (Hobson & Ramesh 2010).
  • Galbraith discusses the positive attributes of consumption with many products enabling good health, happiness, social achievement or improved community standing (Galbraith 1972).  Over 95% of households in the UK, Canada, Indonesia and Vietnam use Unilever products each year (Roach 2005).

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Interestingly, at the recent Sustainability Forum by Collaborate Lab on Collaborative Consumption, Air BNB and Garage Sale Trail propose their sustainable business models around reuse and recycling.   It is evident though that the two Managing Directors of both organisations are happy to use the commercial acumen and sound profit making business models acquired from those corporations with which they condemn!

The World Trade Organisation is responsible for determining the rules governing international trade but is renowned for its ‘free trade committment’ (Stilwell 2012).  The State can impose tighter regulations on the market but often its the State that relies on the market in achieving a fully functioning society.  For example, the NSW Government’s re brand to ‘NSW Now, the new State of Business’ with the aim to attract international investment to build the infrastructure required to sustain employment.

The solution could be to impose tighter restrictions on trade  but what about the rules the State places on society like the new 1:30am lock out rule to reduce alcohol fuelled violence? When do we ever follow all the rules imposed on us anyway! Should corporates be expected to as well?

An example of the market overthrowing Government policy was the mining tax proposed in 2010 to curb ‘super profits’, which mining companies retaliated through political advertising resulting in the tax becoming only a modest reform.  In contrast, in 2012, Australia’s Health Minister announced the plain packaging policy to reduce tobacco related issues (SMH 2014).  Large global tobacco companies invested heavily in advertising and other tactics but were unsuccessful in overturning this policy, demonstrating the resilience required by policy makers in serving the best interests of citizens as oppose to corporations.

The challenge is to ‘engineer a new balance between market and society, one that will continue to unleash the creative energies of private entrepreneurship without eroding the social basis of cooperation’ (Guillen 2001). From the detrimental health impacts tobacco firms perpetuate to the life saving medicines developed by pharmaceutical firms,  society has faced challenges for centuries and it seems there is valid place in society for corporations after all.

http://clivehamilton.com/books/growth-fetish/

Tax. “The Budget”. NDIS. No comprende? Mucho importante.

I have avoided trying to understand the complexities of anything finance related my whole life.  I knew taxes existed, I always paid them, I knew they were partly used to subsidise ‘communal’ services and that they went to the Government…but that’s about the extent of my knowledge on tax. Until recently.

I was asked to complete an analysis of the FY14 Commonwealth Budget and boy was I excited!  Not really.  However, in pushing through this riveting piece of work I discovered that I genuinely found it interesting.  I decided to concentrate my analysis on the reform of key welfare initiatives and finished it feeling a lot less mystified and repelled by the notion of tax.

Did you know 35% of our taxes in Australia go toward supporting the welfare of our citizens? New initiatives like the National Disability Insurance scheme which will see a $20.3b investment over 7 years, will sure go a long way to providing much needed support to people with disability.  People with disability is a phrase that describes the 460,000 Australians who are less able than most as well as family, friends, carers or organisations that actively support them (Budget 13-14 2013 NDIS Policy).  The scheme will see increased supports so that people with disability can exercise more choice and control over their lives and achieve their full potential.  This in turn maximises the potential of the support networks of those with disability by broadening the support available to them.

Commonwealth Budget 13-14

I was recently privileged to hear Sally Richards (Australian disability advocate) speak at the International People with Disability Day.  One of Sally’s four sons was born severely intellectually disabled with her husband taking his own life a few years ago, unable to cope with the added pressure while battling mental illness.  I was truly moved by Sally’s story and her commitment to ensuring that people with disability are able to make a valid contribution in society.  Sally’s amazing courage, determination and sacrifice have led her son to now live in his own townhouse, with a carer, and work part time delivering mail.  Sally believes the NDIS is just one more step in fostering better access and inclusion for people with disability, which then has the flow on effect of supporting carers and family members in maximising their potential too.

For Australians not living with disability the increase in Medicare levy from 1.5%-2% of taxable income may not be welcomed, although this is an incremental investment compared to the $20.3 billion forecast to be generated for people with disability as a result of the increase in Medicare levy. We will all be touched by disability at some point in our lives, whether we obtain a disability or know someone who requires assistance.  DisabilityCare Australia will also incorporate the National Injury Insurance Scheme (NIIS), ensuring those who are affected by a ‘catastrophic’ injury can receive supports on a no-fault basis with reduced litigation and greater access to care required (Budget 13-14 2013 NDIS Policy).

http://everyaustraliancounts.com.au

Policymakers and Treasury aim to strike a balance between the State’s economic priorities and social outcomes through varying the investment allocated to certain initiatives every financial year. The key initiatives across welfare reform demonstrate a focus on research for informed policy making, inflation adjustments and labour force participation incentives to drive increased spending.  Effective budget allocation ensures resources are allocated to increase social capital through reducing the costs of anti-social behaviour and driving social cohesion for a fully functioning society which results in a strong economy (Cox 1995).