The Last Post

Dear Cats.

For reasons more varied and complex to detail here, this will be Spartacus’ last post. Spartacus is retiring from blogging from this august site and elsewhere.

What started as a brief rant about something or other led to some 850 plus posts over the last 2-3 years.

Thank you to Sinclair for giving Spartacus the opportunity to write here and thank you to all the Cats for reading and especially those posting comments. Spartacus has learned much.

It’s been fun. It’s been grand. It’s been real.

So long, farewell, auf Wiedersehen, good night.

Feel free to write to Spartacus at iamspartacus42 at gmail.com.  Can’t promise a reply.

And just remember.  While I am Spartacus, we all are Spartacus.

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Super Trouper

To paraphrase the great Thomas Sowell, the Australian Superannuation system is not really about the retirement income of the masses. It is about the income of the financial services elites.

Even the 1980s ABBA song Super Trouper had a prescient vibe to it:

Tonight the super trouper beams are gonna blind me
But I won’t feel blue (sup-p-per troup-p-per)
Like I always do (sup-p-per troup-p-per)
‘Cause somewhere in the crowd there’s you

In the crowed there’s you and your superannuation.

Following the release last week of the interim report of the Banking Royal Commission, a lot of people were crying into their pillows.  Lots of different people were probably crying before, but the preliminary comments of Commissioner Hayne meant that a lot of holiday house and European holiday plans will be put on ice this week.

Whose plans?  The plans of the lawyers, compliance advisors and accountants who make a very comfortable living from the scale and complexity of the Australian Financial Services system.  And that Commissioner Hayne did not call for more legislation and regulation and more complexity may be very costly for these people.

But one thing that the Royal Commission had thus far indubitably highlighted is the power and scale of the Australian financial services industry.  And why is this so?  It is because of the Australian’s superannuation system.  A system that manages to surreptitiously take from the poor and give the the rich.  Much like most government designed and mandated schemes.

Although not everything highlighted in the Royal Commission is superannuation related, much of the power of the Australian Financial Services industry comes for the weight of superannuation and the rivers of gold that feed this system.  And whilst the vast majority of financial planners are good and honourable people, way too many are just used car salespeople in nicer suits.

Just some context.  The Australian superannuation system is the 4th largest pool of private pension savings in the world.  On a per capita basis, Australia must rank pretty close to if not first.

Millions upon millions of dollars are extracted annually from this pool, irrespective of performance.  Both the Murray Financial Services system inquiry and the Productivity Commission have highlighted the unbelievably large fees paid by Australian superannuants.

Earlier this year, Spartacus wrote about how a very small change announced in the budget to protect the savings of small balance holders had an $800 million impact on Link Market Services, just a tiny piece of this system of savings ticket clipping.

And recently Adam Creighton in the Australian wrote that despite its grand plans to reduce the number of Australians on the pension, even the Intergenerational Reports project some 80% plus Australians remaining on the pension.

From a cost benefit analysis perspective, the savings to the budget from reduced reliance on the pension are dwarfed by the cost taxes forgone.  And yes Spartacus knows that foregone tax metrics have nefarious implications, but this is just a means to compare policy alternatives.  Let’s also not forget the economy distorting impacts of too many people and too much capital being allocated to the financial services sector.

It’s time.  Yes it’s time.  It’s time that superannuation be made optional.  Everything else can stay the same, but it should be made non-compulsory.

Yes.  Paul Keating will scream to high heaven and will pull out what is left of his hair.  But this is not about his legacy or ego.  This is about the national interest.

Much like the ABC crisis, the Banking Royal Commission has presented Prime Minister Morrison another once in a generation opportunity.  And this is one is where the politics and economics are absolutely on his Government’s side.

How can the Labor Party campaign against letting low to middle income workers getting an additional 9.5% in their salaries; workers who have not had a pay rise in a long time and workers who will almost certainly wind up on the pension anyway.  If people want to keep paying into super, they can.  The current tax and regulatory regime can remain as is.

And having grown to its current scale, if the superannuation industry cannot make its case to Australians to invest with them, especially given the favourable tax treatment of supernnuation, then that says something in itself.

The other benefit is that the flows to the Industry Super Funds will slow which will also slow the flow of political funds to the Labor Party, the Greens and GetUp.  This is a win for workers and a win for the Liberal Party.

Yep.  It might hurt the Libs through reduced political donations, but it will hurt Labor and the Greens much, much more.

Will Prime Minister Morrison do something about this?  He should, but Spartacus suspects he won’t.

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Structurally Separate the ABC

Well, well, well.  The news coming out about the ABC shenanigans continues.

But honestly, is anyone really surprised.  An ungovernable, unaccountable, bureaucratic behemoth that is ….. to big to manage.  Yes too big to manage.

The media industrial complex, ABC division, is usually the first to call for and support government mandated structural solutions, especially when they apply to the private sector.  Perhaps it is time for the ABC to look inward because it is time for the structural separation of the ABC.

It happened with Telstra.  It is being argued for with the banks and energy companies.  Supermarkets are only a matter of time.  But what is the argued virtue of structural separations?  Simplification of governance, diversification of risk and dilution of power.  And where else can these benefits be achieved …. you got it.  At the ABC.

Much as Spartacus admires the work and thinking of Sinclair Davidson and Chris Berg in their recent book advocating for the privatisation of the ABC, sadly Spartacus does not think it will happen.  Privatisation that is.  As a second best solution, structural separation should be considered.

Spartacus would suggest that there are more than 1 separation models, but anyone of them would achieve benefits.

Infrastructure vs Content – ABC can be split along the content distribution and content production lines.  That way, the distribution part of new ABC (internet, television and radio pipes) can purchase content from other other part of ABC (eg the news division, the drama division).  The benefit of this would be that ABC-Distribution could source content from places other than just ABC-Content.

Radio vs Television – the business models of radio and television are different.  ABC-Radio and ABC-Television could/should be structurally separated.  The ABC “talent”, and Spartacus uses that word advisedly, would need to pick a team or alternatively become contractors offering services to both media, but also experiencing the employment risk that the most other Australians face.

State vs State – ABC is meant to be a national service.  Perhaps it be broken in to state/territory lines.  Separate management and separate boards to deal with separate local conditions and issues.

Most importantly, any structural separation should not cost a cent of additional money to the tax payers.   Ideally funding should be cut or frozen, but Spartacus won’t hold his breath.

Prime Minister Morrison has been presented with a once in a generation opportunity to do something important and creative.  If his government is not going to do the privatisation thing, they must consider something other than the status quo ante.  The ABC is too big and too complex to manage and govern.  If the government can’t get money back (through budget cuts), they should at least ensure that the ABC operates efficient and in compliance with legislation.  You know, like the ABC would like the banks to do.

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The New Normal

What do you call a collection of people who bend, bypass and break established rules, norms and standards? The answer my friends is the Democratic Party of America.

Trigger warning, this post is about US politics, a subject Spartacus generally avoids writing about.

Regular Spartacus post readers will know that Spartacus does not support President Donald J Trump. Yes for sure, President Trump will oversee a number of excellent policy and political outcomes.  President Trump also prevented the election of the Clinton family enterprise.

However, on balance, Spartacus believes that President Trump will be a net long term negative on the US.  The costs won’t necessarily be paid today, but much like the corporate lobbyist written, debt inflating tax cut and expenditure increases passed earlier, the payment won’t come due for a while.  And the payment will not only come by way of damage to important institutions and an erosion of democratic and behavioral norms, it will come through the enhanced electoral prospects of the insane left.  People like Bernie Sander, Elizabeth Warren and the Alexandria Ocasio-Cortez.

Yes.  Spartacus is a believer in the Rick Wilson Everything Trump Touches Dies (ETTD) thesis.  Sorry Cats and Dogs.  T

The thing about this though, is that for all the bad behavior of President Trump and his various acolytes, it should be noticed that President Trump is a creation of the Democratic Party. Lock, stock and barrel. President Trump may have used the Republican Party to achieve the Presidency, but he was born and reared of the Democratic Party.

President Trump was a prior member and significant donor to the Democratic Party.  And much of the behavior President Trump and the broader Republican Party are currently accused of engaging in was pioneered by the Democratic Party and its leaders.

But President Trump having pushed and breeched the boundaries and guard rail way further than prior, it will be under a future US President that the bill for President Trump will come due.

Remember that Eldridge Gerry of the famous Gerrymander was, guest what, a Democrat.  Remember also ….

When the Democratic Party and its leaders claimed that Senator John McCain and Governor Mitt Romney were misogynists, racists and otherwise evil for having the temerity, the gall, the impertinence to run against Barak Obama, what did the Democrats think was going to happen?

When then Vice President Joe Biden said to a mostly African American audience that the Republicans would put “y’all back in chains”, this notwithstanding that Abraham Lincoln led the process of getting African Americans out of what was mostly Democratic government chains, what did the Democrats think was going to happen?

When the same Joe Biden, then Senator and Chairman of the Senate Judiciary Committee, destroyed the reputation of Robert Bork, a Ronald Regan nominee to the Supreme Court, what did the Democrats think was going to happen?

When again the same Joe Biden, still Senator and Chairman of the Senate Judiciary Committee gave birth to the Biden Rule that President H W Bush should wait until after the election to appoint a Supreme Court replacement, or else appoint a moderate acceptable to the then Democratic dominated Senate, what did the Democrats think was going to happen?  You know, the same Biden Rule that the Republicans used to not give Merrick Garland a hearing.

When President Obama, rather than putting to bed the whole birth certificate nonsense, continued to troll and continued to give Donald Trump oxygen, what did the Democrats think was going to happen?

When President Obama, having declared DACA through executive order unconstitutional proceeded to implement DACA through executive order, what did the Democrats think was going to happen.

When candidate Senator Hillary Clinton called a large swathe of American voters a basket of deplorables, what did the Democrats think was going to happen?

And when the Democrats engaged in the most disgraceful abuse of process to damage Supreme Court Justice nominee Brett Kavanaugh, what do the Democrats think is going to happen?

The Democratic Party leadership’s conduct towards nominee Kavanaugh is the high water mark.  Having corrupted the Congress and the White House, the Democrats have now corrupted the Supreme Court.

Whatever comes of the Kavanaugh appointment, the damage done to the credibility and authority of the Supreme Court will take a very long time to undo, if it can be undone at all.

Australian’s should not laugh.  The stability and supremacy of the US is a geostrategic imperative for Australia.  This will cost us all.

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Why did the Labor Politician cross the road

Why did the Labor Politician cross the road? To increase their taxes as well. Of course.

Let’s just get something straight. By virtue of inflation, that wonderful thing the Treasury and RBA likes to keep bubbling away, the absence of an income tax cut means that taxes are increasing.

Sounds strange doesn’t it, but when you have a progressive income tax schedule, bracket creep results in a standing system of tax increases. Without touching anything, assuming nothing else changes, the Commonwealth government will collect more income tax next year than this year and even more the year after that.

This is why, partly, when Labor pledges bigger surpluses, it will only come from one place. By destroying the budgets and surpluses of Australian households.

Will Labor reduce spending anywhere? Nope. Will they even engage in fake reduced spending (by not increasing spending)? Nope. Taking more from Australians is their way.

So says Labor Treasury spokesperson Chris Bowen:

He reiterated that if Labor won the election, the budget would be “collectively” better off over the four-year forward estimates. The only caveat is that it will not match any “savings” that it deems “fundamentally unfair”, such as health cuts for example.

Don’t forget that on top of keeping bracket creep, Labor also promised to increase other taxes:

Labor has pledged tax increases worth more than $200 billion over a decade, from which it will fund its spending promises and use to tackle debt reduction.

Tackle debt reduction. What hoot. Jack up the debt, point Australia on an unsustainable trajectory and then increase taxes to fix it. Like Spartacus’ teenage son seeking praise for clean his bedroom, the room he mucked up himself.

But don’t just think it is Chris Bowen on this fiscal responsibility path. Speaking on SkyNews yesterday, Opposition Pork Barrelling Minister (Transport & Infrastructure), Anthony Albanese when asked about the Government’s better than expected FY18 budget result complained that not all of the budgeted “infrastructure” money was spent.

Could it be that projects were delivered for a lower cost than budgeted? Could it be that the project was cancelled because it was not needed? Culd it even be that the project was delayed?  Of course not. These are not relevant questions for people who have never run or built anything. The government must spend as much as possible, especially on areas which a dominated by a CFMMEU labour force and taxes need to be increased to balance the books.

Nowhere to run to baby. No where to hide.

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ABC – not who to blame but what to learn

What a debacle.  What an absolute debacle.

If there is a textbook case study in poor governance and organisational design, ABC is it.  Dis-functional board.  Sub-par CEO.  Insubordinate staff.  Bloated bureaucracy.  Rent seekers at 20 paces.

Can it get any worse.  You bet.  Wait for a Labor Government to put their finger prints on the organisation.  Have a listen to Shadow Communications Minister Michelle Rowland – not just what she say, but what she declines to say.  Lord know why the Labor Party want to come to the aid of a giant state media organisation that is to the left of the ALP and would rather have a Prime Minister Bandt than a Prime Minister Plibersek.

In the mean time, Spartacus would like to offer some policy suggestions to help remedy the situation at the ABC.  These suggestions are based on some of the other great policy ideas advocated by the ABC.  Please note that these are not new ideas but rather ideas that the ABC like to have applied to others:

  • Embedded regulatorsASIC and ACMA officers should be embedded into the ABC offices to ensure appropriate compliance with corporate governance standards and obligations of the ABC and other communications legislation.
  • Large Broadcaster Tax – the ABC should be subject to a Large Broadcaster Tax.  This tax, modeled on the bank tax, and would apply only to the largest broadcasters would reflect the financial support and guarantees provided by Australian tax papers.
  • Parallel Indigenous Board – a board, comprised only of indigenous Australians, should sit in parallel with the main ABC board to advise the main board and ABC management.
  • Quotas – Gender, sexual orientation, race, religion and educational level quotas should apply to ABC board and staff selection.  Representation consistent with the general population should be mandated.  The current ABC board, with 56% white females is not reflective of Australia given that 50% of the population is male.
  • Social Licence Statement – the ABC should publish an annual social licence statement demonstrating how it is is meeting its social licence obligations.
  • Pay Gap Reporting – The ABC should report on the pay gap between staff base on various identity groups – gender, sexual orientation, race and age.  And where the gap is more than 10%, a remediation strategy should be described.
  • Best Practice Corporate Governance – the ABC should be subject to the requirements embedded in the ASX Corporate Governance Council governance standards and its annual report should report against these standards on an if not, why not basis.
  • Remuneration Report Vote – as part of its annual report, the ABC should publish a remuneration report consistent with Corporations Act requirements.  And ABC shareholders, ie citizens, should be able to vote on this report annually.  If there is a 25% vote against the ABC remuneration report in any 2 consecutive years, the ABC board should be automatically spilled.

Clearly there are issues in public broadcasting in Australia and obviously the policy ideas the ABC would like applied to others should equally deliver quality outcomes for the ABC.

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