Simple as ABC – a public radio/TV licence

 

ABC-Budget-Cuts
Chart: ABC annual report 2016-2017

At first glance, Treasurer Scott Morrison’s plan to slash $83.7 million from the ABC operating budget seems mean-spirited. At second glance, when he tells reporters ‘everyone has to live within their means’, it still seems mean-spirited.

The Budget proposal comes at a critical time for the ABC, which has been dealing with cumulative cuts of $254 million since 2014.

The Federal Treasurer, having painted the picture large, sent a hospital pass to Finance Minister Mathias Cormann to handle the outrage. Mr Cormann defended the decision to freeze indexation for three years (which amounts to $83.7 million), saying that all taxpayer-funded organisations have to find efficiencies.

The national broadcaster has been tightening its belt so much there is no room left for another notch. Managing director Michelle Guthrie sent an email to all staff saying as much, which she amplified in a press release. Ms Guthrie said the impact of the decision could not be absorbed by efficiency measures alone, as the ABC had already achieved significant productivity gains in response to past budget cuts.

She referred to Budget measures starting in 2014 with a 20% cut to the operating budget. The ABC was told to slash $254 million from its operating budget within five years. The broadcaster began to make cuts which were expected to save $207 million in 2015.

Jobs were lost, through natural attrition or redundancy, and the ABC also started reviewing its property portfolio and transmission network. As I have written previously, there was a general hubbub of protestation about this, circa November 2014.

“Petitioners were petitioning, GetUp was getting up, the ABC Friends group was lobbying and raising funds. They should have seen it coming,” I wrote.

A graph in the ABC’s latest annual report (above) shows how its operational budget has waxed and waned, dropping 28% from 1985-1986 to 2017-2018. As the graph indicates, the ABC has weathered some very lean years, particularly 1997-1998, under John Howard and Peter Costello.

The ABC annual report says 2017–18 was the third year to reflect previously announced Government-funding reductions. As part of the ABC/SBS Additional Efficiency Savings measure, there was a year on year increase of $7.7 million in the cut to the ABC’s base funding, bringing the total decrease in base funding to $55.2 million per annum.

This week Ms Guthrie said the ABC was continuing to implement various savings initiatives to address funding cuts, comprising efficiency savings in support functions and transmission (to cover the previously budgeted reduction of $12.5 million required in 2018–19).

Back to the drawing board, then.

Ms Guthrie said the decision came at a critical time for the ABC, as it starts triennial funding negotiations with the Government.

“The ABC is now more important than ever, given the impact of overseas players in the local media industry and the critical role the ABC plays as Australia’s most trusted source of news, analysis and investigative journalism.”

There is also a risk that the Enhanced Newsgathering initiative will not be renewed (at a cost of $43 million). The ABC acknowledges a decision on this funding is yet to be made by the Government. Considering the hullabaloo that followed economic reporter Emma Alberici’s analysis of the government’s plan to cut corporate tax rates, these financial constraints must be seen as ideological and punitive.

Opposition leader Bill Shorten said the ABC was “one of the pet hates of the Liberal Party”, and it’s hard to disagree.

“Because the ABC occasionally asks questions of the government they’re going to wind back $83 million,” he told the ABC.

But Finance Minister Mathias Cormann says the ABC will still receive $3.2 billion over those three years.

“This is effectively equivalent to the efficiency dividend that applies to nearly all other government taxpayer-funded organisations,” he added.

One of the early victims of successive budget cuts was the ABC Fact Check Unit, which was closed down in May 2016. ABC news director Gaven Morris said at the time “Unfortunately, having a standalone unit is no longer viable in the current climate.”

In March 2017, however, the unit was revived as a joint venture between RMIT University and the ABC. The unit’s brief, as it was before, is to ‘test and adjudicate on the accuracy of claims made by politicians, public figures, advocacy groups and institutions engaged in public debate’.

Which governments taxed us the most?

You may have seen an infographic on social media which the Fact Check Unit verified. It shows which governments taxed us the most, spanning the years between Whitlam and Turnbull. Tax as a percentage of GDP peaked in the Howard years at 23.5%. The Whitlam years averaged 19.4%. The Abbott/Turnbull years thus far average 21.7%. Interestingly, the turbulent years of Rudd/Gillard/Rudd averaged 20.9%.

So isn’t it satisfying to publish information like that and know it has been fact-checked and found to be factual? In this era where fake news and what I’d call ‘sponsored news’ leaves us with a skewed perspective, it is refreshing to see the ABC has found a new way to maintain standards.

There were some moments in the Federal Budget one could choose to laud; tax cuts, better reverse mortgage opportunities for pensioners and more funding for the homeless, albeit dependent on State contributions. But there was no respite for people on NewStart and no real plan to address housing affordability.

And, as the Climate Council pointed out, there was nothing at all in the Budget to address climate change – the words were not even mentioned.

For perspective, take a moment to think about the Federal Treasurer’s $50 million plan to redevelop the Meeting Place Precinct in Botany Bay (including a $3 million statue of Captain James Cook). Yes, it’s in Mr Morrison’s electorate, but surely that’s a side issue, Leigh?

If I may revisit an idea from Simple as ABC in 2014, the budgetary travails of the ABC and the ideology motivating it could simply be avoided. All it would take is an annual public radio/TV licence; $35 per household per year would (now) raise about $300 million. If the government of the day would guarantee indexed funding of $1 billion a year, the ABC could plan, rebuild and restore quality for the long-term.

Let’s be reminded that we all paid a radio licence from 1920 and continued doing so until colour TV was introduced in the early 1970s. Not every household in Australia would be happy about paying this licence fee. Some would see it as subsidising those dangerous lefties and bleeding hearts at the ABC and SBS.

But something radical needs to happen, to arrest the decline in quality (e.g. ABC online), restore transmission to remote areas (try getting an ABC station on your car radio when travelling in country areas-Ed.) and ensure money can be found for important investigations.

Every week since 1961 the award-winning Four Corners has continued to unearth important stories. Investigative journalism is an expensive business which requires reliable funding and a relatively free hand.

If we want more important stories like the live sheep export scandal, the solution is simple as ABC: We need to consistently fund the national broadcaster and guarantee its editorial independence.

Further reading: Mr Denmore thinks the media should boycott the Budget Lockup:

http://bobwords.com.au/simple-abc/

http://bobwords.com.au/simple-abc-part-2/

 

Don’t touch my dividends, Dude

dividends-franking-credits
Photo: “How will we afford dog food without the franking credits from our dividends?” pixabay.com, CC Mike Flynn

There have been few occasions when dividends made it on to the front pages or lead item TV news. The first time was when Treasurer Paul Keating introduced the dividend imputation scheme in 1987, largely as a way of eliminating the double-taxing of company dividends. From that day, Australian investors were given franking credits on the dividends they received on their shares. This had the welcome effect of boosting the investment return for the investor or super fund.  It was just the sort of incentive needed to encourage Australians to prepare for their retirement and aim to become self-funded retirees.

Keating’s scheme did not, however, include the cash refund of the franking credit component of the dividend, which was introduced by John Howard and Peter Costello in 2001.

The second time dividend imputation was ‘trending’ was last week when Opposition Leader Bill Shorten said if Labor gets back into power he would scrap the current system. While emphasising Labor would keep dividend imputation, he said the plan was to scrap excess cash refunds on tax that was never paid in the first place,

The main targets are people with super fund balances of $1 million and more. There are plenty of those distributed among the large super fund managers but also around 30% of the self-managed fund sector are in that category.

In 2017, 1.12 million Australians were members of a self-managed super fund. There were almost 600,000 funds with assets totalling $696.7 billion. About 30% of SMSF assets are held in Australian shares, the ones that pay fully franked (tax-paid) dividends to investors.

What Mr Shorten’s plan appears to lack is a sliding scale which would exempt retirees whose fund balance is below a certain threshold or whose franking credit refunds are below the average ($5,000 a year).

A 2015 study which set out to debunk the myth that one needs a minimum $1 million to retire said that half of Australia’s workers approaching retirement have less than $100,000 in super. Three years hence, the proportionate numbers won’t have changed that much. The study by the Australian Institute of Superannuation Trustees (AIST) sets out to educate people that super is designed to work in tandem with the aged pension and that it’s OK to do that. Even a low super balance of $150,000 can nicely augment your pension.

Yet Bill Shorten says some funds are paying zero tax but picking up a $2.5 million refund cheque. At face value, that would seem to be a loophole worth closing. But at the other end of the scale are individual SMSF members with low fund balances who are undoubtedly already receiving a Centrelink part-pension. The shortfall caused by scrapping cash refunds on dividends will inevitably be recovered via a tweaking of government pension calculations on income and assets. Those who do not qualify for the pension will lose the lot.

Just how important a subject this is for retirees is shown in the Association of Superannuation Funds of Australia (ASFA) superannuation statistics: 1.427 million individuals received regular superannuation income in 2015-2016. Weekly payments averaged from $328 (term annuity), $496 (account-based) and $616 (defined benefit). Franking credit refunds on dividends from the ATO no doubt contributed to these payments.

Some industry super funds have come out in favour of Labor’s plan, but there is plenty of opposition, though so far there is no detail on which to base a counter argument.

ASFA says the proposal could have a significant impact on low-income retirees both inside and outside the superannuation system.

Chief executive Dr Martin Fahy said the system already has a $1.6 million cap in the retirement phase and reforms to superannuation and  retirement funding are working but they need time to bed down.

“If there is a concern about individuals with large retirement savings receiving the benefit of refundable imputation credits then this would be better addressed by measures more closely linked to retirement balance,” he said.

Currently, the Australian Taxation Office demands that if SMSF Trustees draw a Simple Pension, it must be a minimum 5% of assets (rising through increments to 14% for those aged 95 and over (!). For example, a fund with two members under the age of 80 and a balance of $450,000 must pay its members a minimum of $25,000 p.a. Providing their other assessable assets and/or income is under the threshold, they can also receive a part pension from Centrelink which could bump their annual income to around $45,000, (somewhere between a modest living and a comfortable retirement). The upside (for the country) in this fiscal strategy is that earnings will (hopefully) keep the members’ balances in the black for as long as possible. This in itself eases the burden on the aged pension system.

And if you need extra cash for a car, a bucket list trip to the Antarctic or to pay a ransom to a hacker, you can take a lump sum. If you’re Homeland’s Carrie Matheson, track down the troll, beat him up and demand he unlock the computer. (He just threw that in for light relief, Ed).

Policy on the run

You will forgive me for liberally quoting other sources on this thorny subject. The ALP has not published a policy paper or issued a media release. The only thing you will find is on Mr Shorten’s website, tucked away under the category: ‘Bill’s Opinion Pieces’.

I initially found Bill’s piece on a website run by the authority on all things super, Trish Power. Power, starting from the same position as all, except for Fairfax Media, which ‘has seen’ a policy draft, suggests it has all the hallmarks of ‘policy on the run’.

Trish Power’s website is a good place to visit if you want to avoid the scaremongering stories in the tabloids and current affairs TV. I bought a copy of her book “DIY Super for Dummies” and found it invaluable when starting our SMSF back in 2006. It may be overstating to say the promise of franking credit refunds was one of the attractions, but nonetheless it was.

Power and other guest writers are following this story while it remains a live issue so if you have a vested interest, here’s the link:

It does seem as if Bill Shorten is hanging his hat on this particular peg and plans to leave it there.

“When this (cash refund) first came in, it cost Australian taxpayers about $500 million a year,” he wrote. “Within the next few years, it’s going to cost $8 billion a year, more than the Commonwealth spends on public schools or childcare. It’s three times what we spend on the Australian Federal Police.”

You can see where he is shining his head torch when he writes that 50% of tax refunds go to SMSFs with balances of more than $2.4 million. Fine, stick it to the top end of town, but look further into this dodgy policy, Bill, and you will see that unless you giveretirees on modest incomes a break, they will be forced to rely more on the public purse. They will resent that and in turn resent you.

FOMM back pages: http://bobwords.com.au/super-end-week/

 

 

Chasing the youth vote

Melbourne climate change rally, photo by John Englart https://flic.kr/p/p3bVBw

Some of you may remember Federal Opposition leader Bill Shorten’s bid for the youth vote last year, proposing a voting age of 16. There was a hue and cry about this (in the meaning of a loud public outcry…from the French huer or loud cry). Shorten’s gambit coincided with his worst-ever polling (17%) in the preferred leader stakes.

The nation’s voting age should be lowered to 16, he said, because young Australians do not see their views reflected in Parliament. Shorten told the New South Wales Young Labor conference in Sydney that if people aged 16 and 17 could drive, work, pay taxes, join the military and make choices about medical treatment, they should be allowed to vote.

As the law stands, you can apply to be on the electoral roll at 16 or 17, but cannot vote until you turn 18.

The magic age of sweet sixteen triggers the legal right to say yes or no to some interesting things without asking one’s parents.

This notably applies to consensual sex (careful, the sex has to be with someone who is also 16 or older). If you live in South Australia or Tasmania, the age of consent is 17, and in Queensland, the law differentiates between homosexual sex (18) and carnal knowledge (16).

In most states and territories, a 16-year-old can move out of home without their parents’ consent and unless they are at risk, child welfare authorities are unlikely to force the youth to return home. Teenagers with a need to know about their rights, wherever they live, are often referred to www.lawstuff.org.au

Shorten wisely stayed away from the issues that provoke family brouhaha (a state of agitation over something relatively minor) like consensual sex, the right to leave home and the rights of (a girl) to be prescribed contraceptive pills.

He hedged his bets by including 17-year-olds because, for example, the Australian Defence Force only admits people aged 17 and over, although they can apply at 16. You can get a driver’s licence at 17 in all states and territories except the NT (16 and a half) and Victoria (18). At 16 you can leave school, work full-time, join a union, join an industry super fund, pay taxes, apply for legal aid, consent to medical and dental treatment and get your own debit card without involving Mum and Dad. You can get married, but Mum and Dad have to sign off, likewise if you apply for a passport. A 16-year-old can’t buy cigarettes or alcohol, although their peer group will smoke and drink if someone else buys it for them and it is consumed in private.

Shorten talked about other jurisdictions where people get the vote at 16, naming Austria, Scotland and Brazil. There are eight other countries where people get the vote from the age of 16. But there are just as many jurisdictions which cling to a voting age of 21.

In Australia, the latter was dropped to 18 in 1973, just one more major reform by the far-sighted Whitlam government.

Shorten’s big play for approval to drop the voting age was to tell us that more than 17,000 Australians under 18 paid $41 million in taxes (2012-2013 data). But his admission that 400,000 people aged 18-24 are absent from the electoral roll was not a great selling point. And it’s a bit early to say how many of them signed up for the 2016 election by the time the roll closed on Monday, May 23.

Kids are too immature to vote, aren’t they?

Many of the online replies to the ABC’s report panned Shorten’s youth vote idea, although Treefrog said if 16-year-olds were disadvantaged by policy (education cuts in the 2014 budget), they should get a say. Some wanted the voting age raised to 30 because ‘anyone under 30 was too immature to make the right choice’. Oh, and some correspondents wanted optional voting for the over-60s because ‘they have too much influence on public policy’. The public reaction to Shorten’s suggestion seems in line with an Australian Election Study in 2010 in which  94% of respondents opposed any change.

An analysis of Newspoll data by the Whitlam Institute, updated in 2013, suggests the youth vote may have determined the outcomes of the last four Federal elections. Director Eric Sidoti says of the research he did with Dr Chris Brooker that the collapse of the youth vote for Labor between 2007 and 2010 among 18-34 year olds and their intentions to switch to the Greens went a long way to explaining the hung parliament.

Despite a relatively high level of non-enrolment, many young people (15-24) are now directly engaged in big issue politics – human rights, racism, the economy and the environment. The Sydney Morning Herald said organisations like GetUp! And the Australian Youth Climate Coalition provided a glimpse of this changing political landscape.

Those who doubt the ability of youngsters to make informed political decisions should check out this elegant piece of research forwarded by Mr Shiraz. It tests voter turnout and the quality of choice in light of Austria’s decision to lower the voting age to 16 in 2007.

This is a weighty document but worth reading to reach the authors’ conclusion that: “a key criticism of lowering the voting age to 16 does not hold: there is little evidence that these citizens are less able or less motivated to participate effectively in politics.”

Smart kids with important things to say

The Whitlam Institute’s What Matters essay competition reveals more reasons why the youth vote is important. Overall 2015 winner Amelia Browns of Sutherland Public School (Grades 5 and 6) wrote a touching essay “Ben Matters’’ about losing her baby cousin to Spinal Muscular Atrophy (SMA).

Runner-up Madeleine Sylvester of St Agatha’s Catholic Primary School (also in grade 5/6), urged Australians that “Watts Matter,” explaining how our households squander electricity. Other category winners wrote about refugees, climate change, endangered species and the importance of physics. So tell me again why teenagers are not ready to vote at 16 or 17? These students, aged 10-14, are already putting together lucid prose that demonstrates they have a handle on the world and ideas to make it a better place.

Sunshine Coast songwriter Karen Law brought her family band to our lounge room a couple of week ago. The repertoire included a song about Nauru, written by Karen’s 13-year-old daughter Hazel. “What will they do with the island, in five years,” the writer putting herself in the asylum seeker’s sandals.

“Why do I keep living when no-one throws a thought my way?

So is something wrong with me, or something wrong with you?

Do you feel pain, or are you just oblivious

To the world you’re standing in?

There could be a hidden message in “What will they do with the island, in five years” – ostensibly about the government’s promise to process everyone on Nauru within five years. In five years Hazel Law, who shows a capacity at 13 to think and feel deeply about social issues, will be 18. If Bill Shorten gets the keys to the Lodge, she might even be eligible to vote at the next election, circa 2020.