SBS TV's Dateline reported on Commercial IBT on Wednesday 10 March 2004.
Ratings Agency of Malaysia has just made this announcement.
23 April 2004
RAM has suspended the AA1/P1 ratings of Commercial IBT Pty Ltd pending the outcome of an investigation on the Company by the Australian Securities and Investment Commission (“ASIC”).
ASIC itself has yet to make an announcement.
Saturday, April 24, 2004
SBS TV's Dateline reported on Commercial IBT on Wednesday 10 March 2004.
Wednesday, April 21, 2004
In The Australian Financial Review an industry analyst explained that for an investor who bought a property for $600,000 and then sold it for an extra $200,000, the tax take would be $22,000 on the way in, $18,000 on the way out and $39,000 in capital gains tax - a take he described as "outrageous".
And then the spell broke.
The taxes in the analyst's example add up to just 39 per cent. Australia's top marginal rate of tax is 48.5 per cent. The rate below that is 43.5 per cent. About half of us pay those rates on every additional dollar we earn at work, as well as on every single dollar we earn in interest on our savings.
Looked at that way, the real question isn't "how did the taxes on trading in property ever get to be so high?" but "how did they ever get to be so low?"...
Most of the blame (or credit) belongs to two people: the Treasurer, Peter Costello, and John Ralph, the doyen of Australian company directors, at present chairman of both Telstra and the Commonwealth Bank.
In 1998 Costello asked Ralph to inquire into business taxation. One of the terms of reference was odd, and extremely specific. It dealt with individual, rather than business taxation. Costello wanted Ralph to examine "the scope for capping the rate of tax applying to capital gains for individuals to 30 per cent". Until that point capital gains had been taxed at the individual's marginal tax rate, minus inflation.
Ralph went further than Costello had suggested. In September 1999 he recommended that only half of each capital gain be taxed, which as he pointed out would effectively cut the top rate to 24 per cent.
What followed was an avalanche of funds pouring into investment real estate, and a change in our financial psyche. One in every eight Australian taxpayers now owns an investment property, firming to one in every three where annual income exceeds $100,000.
Ralph didn't see it coming. His report contained not a word about real estate. He said instead he expected the cut to bring about a surge in sharemarket investment, "particularly in innovative, high-growth companies".
Mark Latham saw it more clearly than most. In an extraordinarily prescient speech he said the cut would add "to the great Australian disease of asset and property speculation, particularly in our big cities. It will take away resources from the knowledge economy and put them into the least productive, least honourable aspects of Australian economic activity."
It was already legal to negatively gear. That is, to borrow so much to buy a property that your interest payments ensured you made a loss each year, which you could use to cut your income for tax purposes. It was also legal to claim a depreciation deduction after buying a new house or unit, regardless of whether or not the investment actually declined in value.
But as attractive as these benefits were, they did little more than defer the payment of tax. It would be paid on the day the property was sold. Or that was the theory, until September 1999. From that date, as Melbourne University's Professor Cameron Rider puts it, only half of the deductions were recouped - the other half were converted from a deferral of tax to a permanent exemption from tax.
The changes gave property an advantage over competing forms of investment. Shares could match it when it came to negative gearing and capital gains tax, but couldn't match the associated depreciation deduction, as scores of mesmerised Australians were being told in investment seminars each weekend.
Borrowing to buy property became the "smart" thing to do, even for Australians who had never borrowed before except to buy their home. As Macquarie Bank's Rory Robertson told his clients: "It is almost as though the Australian tax system has been screaming at taxpayers to gear up to earn increased capital gains rather than to work harder to earn increased wages or salaries."
Or to make money renting out the properties they bought. The Tax Office says six out of every 10 of Australia's landlords actually lose money on an operating basis.
This tax-driven diversion of money and effort away from work, away from small businesses, away from productive investments, is without recent precedent. It has helped push property prices into uncharted territory and may have brought on our last two interest rate increases.
All this from a change that Ralph recommended in order to "achieve a better allocation of the nation's capital resources".
When Latham tried to have Labor oppose it in September 1999 he was overruled by his leader, Kim Beazley. Shortly after becoming shadow treasurer last July he explored with Access Economics a plan to restore full tax to capital gains and use the billions of dollars liberated to cut the top tax rate for all forms of income. Access believed it could sell the plan as being fairer for both high and low income earners.
When news of the plan leaked last month, Latham ruled it out. He did so again this week.In election mode neither Latham, Howard nor Costello is likely to propose what an increasing body of expert opinion believes has to be done.
The Productivity Commission is said to have recommended some sort of action on property taxation to Costello. He is yet to release its report.
By rushing in and taxing where our federal leaders are scared to tread, Bob Carr and his Treasurer, Michael Egan, may have done the nation a favour.
And they get to keep the money as well.
Wednesday, April 14, 2004
Although that episode sets up everything that follows, the ABC was unable to broadcast it. Its problem: copyright.
For just a few seconds as the doctor's life flashed before him the episode showed a glimpse of his most infamous enemies: the pepper pot-shaped Daleks.
Copyright to the Dalek design is shared between the BBC and the family of the late writer Terry Nation and the two have fallen out. London reports say that before he died Nation told his executors never to let the BBC use the Daleks again. As a result the BBC cancelled its plans to rescreen the series last year. (The ABC appears to have been allowed to show some of the earlier Dalek episodes by negotiating a separate deal directly with the Nation estate.)
The use of copyright to attempt to stifle cultural celebrations is more common than you might think.
Last year Samuel Beckett's nephew threatened to shut down a performance of Waiting for Godot at the Belvoir Street Theatre on the grounds that it had some music in it.
In June the James Joyce Centre in Dublin is to celebrate Bloomsday on the 100th anniversary of the date on which the novel Ulysses is set. But it may not be able to read the novel out loud. Joyce's grandson has banned public performances, saying he will sue for breach of copyright if anyone tries... Fortunately the organisers of Australia's Bloomsday celebrations are in the clear. In Australia Joyce's works entered the public domain in 1991, 50 years after his death.
But they might not remain in the public domain for much longer. Australia's draft so-called Free Trade Agreement with the United States includes a little publicised clause that would extend our term of copyright from death plus 50 years to death plus 70, the new US and European standard.
Works such as Ulysses and books by authors such as Joseph Conrad, Ernest Hemingway and D.H. Lawrence, as well as music such as Rhapsody in Blue, are at the moment on a par with Shakespeare in Australia. It is legal to print, adapt and perform them without permission. If the Free Trade Agreement becomes law as it stands they will return to private ownership.
Would this really matter? You might be surprised to discover that the economics profession believes it would. Economists, more than most people, support the idea of private property. And yet a couple of years ago 17 of the world's most respected economists (among them five Nobel Prize winners) petitioned the US Supreme Court in an attempt to stop the extension of the US copyright term.
They argued that extending the term by another 20 years would actually impose extra costs on authors while at the same time providing next to no extra incentive for them to write.
Here's how: it is true that increasing the copyright term from zero to 20 years would provide a good deal of extra incentive to write. But increasing the term from an entire lifetime plus 50 years to an entire lifetime plus 70 years would provide much less incentive at the time when the decision is being made to write. A lifetime plus half a century seems so far away, let alone additional decades.
The economists estimated the size of the extra incentive. They said the prospect of an extra 20 years of copyright protection would be worth about the same to a would-be author as an increase in income of one third of 1 per cent. As one of the Supreme Court judges noted: "What potential Shakespeare, Warton or Hemingway would be moved by such a sum?"
This is not to say that the sums involved are small in the years that they are paid. The extra 20 years of copyright payments now legislated in the US are set to cost Americans an extra $US300 million ($393 million). Most of the money will go to the owners of works already created. For them it will be a windfall, an unexpected top-up. But it will give them the right to lock up the use of their work for years to come.
Many, perhaps most, works of art are created by retelling, remixing and playing with older stories. Certainly several of the Disney Corporation's most popular copyrighted works were created that way.
But Disney and its ilk are not keen to allow the creators that follow them the same access.
Lawrence Lessig is the Stanford law professor who led the unsuccessful Supreme Court challenge. He chillingly notes in his new book, Free Culture, that while a million patents are set to pass into the US public domain in the next 20 years, no copyrights are now set to do so.
In Australia a government-appointed committee recommended against extending our copyright term as recently as four years ago. It also recommended that no extension be introduced in the future "without a prior thorough and independent review of the resulting costs and benefits". The Government accepted both recommendations.
But the Government has now agreed to extend our copyright term, and unless the Free Trade Agreement is blocked in either the Australian or the US legislature that extension is set to pass into law.
There is still time for some sort of review. The Senate committee inquiring into the FTA is accepting submissions until the end of this month.
It might take heart from Canada. That nation enjoys a free trade agreement with the US and retains Australian-style copyright laws. Last week it knocked back a bill that would have extended those laws.
If you want find out to more, and get much more angry try:
Professor Lawrence Lessig and his stunning new book Free Culture which is available both in hardback and free on line.
There's the Subverted Public Domain List which effectively tells you which works are in the public domain right now in Australia but are still kept private in Europe and in the US as a result of the Sonny Bono Copyright Term Extension Act of 1998. The Australian public will lose those works, among them Rhapsody in Blue when and if the US Australia FTA becomes law.
One implication of the list is that the first audio Mickey Mouse went public in Australia on January 1 2004. Anyone want to start showing Steamboat Willie?
Our Senate Select Committee on the Free Trade Agreement wants submissions by Friday, 30 April 2004.
On one side of the economic argument are five Nobel Prize winning economists, among them Milton Friedman. Their brief is as clear as it awesome.
Justice Breyer of the US Supreme Court thought it didn't go far enough.
Lessig says the other side in US Court case didn't call any economists as witnesses, let alone Nobel Prize winners.
On the other side is an economists report commissioned by the Australasian Performing Rights Association and others. Headed: Copyright Term Extension: Australian Benefits and Costs (shouldn't that be the other way around?) It has no named author, other than the Allen Consulting Group.
I have quite a few problems with it (on which I will write later), but perhaps they are explained by the Allen Group itself which describes its mission as being "to identify the benefits" of copyright extension first, and then to "consider whether those benefits are outweighed by any demonstrable costs."
The whole question of copyright extension has been looked at before.
In 2000 Professor Henry Ergas's Intellectual Property and Competition Review Committee recommended:
"The Committee is not convinced there is merit in proposals to extend the term of copyright protection, and recommends that the current term not be extended. We also recommend that no extension of the copyright term be introduced in future without a prior thorough and independent review of the resulting costs and benefits."
Our government agreed.
Great Australian sites on this are:
Weatherall's Law, from Kim Weatherall, Associate Director of the Intellectual Property Research Institute of Australia, and
Dead poets society from Matthew Rimmer at the Faculty of Law, ANU.
By the way, there are even worse things than copyright extension in the FTA when it comes to intellectuazl property. Wetherall and Rimmer outline them.
John Quiggin has written about the FTA as well, and it was he alerted me to the pickle the Dublin organisers of Bloomsday find themselves in.
The Wall Street Journal has a view. It argues that "Viewed up close," copyright "looks like a constantly expanding government program run for the benefit of a noisy, well-organized interest group."
Bizarre, depressing, but apparently true: Girl Scouts in the US have been threatened with lawsuits for singing "Happy Birthday to You" on their camps.
AOL Time Warner owns the rights and apparently earns $US2 million a year by harassing "performers" of this song for funds, and now will do so for another 20 years. Australia is set to escape from its clutches soon. The copyright expires in 2010. Of course if the FTA as it stands becomes law in Australia we will continue to be harassed until 2030.
(At least AOL Time Warner hasn’t banned public performances of "Happy Birthday to You" as it is presumably entitled to do.)
A correspondent writes from Canada:
It would have been nice if (Canada's) Parliament had truly closed the door on copyright term extension in general.
The Canadian bill that was recently "knocked back" only concerned the copyright term for unpublished works by authors who died before 1949. Shades of Disney and Bono, it was largely the product of lobbying by the estate of Lucy Maude Montgomery ("Anne of Greene Gables" -- if you don't know, don't worry), who hoped to milk the long-deceased woman's diaries (not even her published books) for another 34 years. She died in 1942.
The extension, together with the broad scope of copyright (everyone's an "author", almost everything is a "work") would have locked up millions of historical documents, going back to the 1850s. Canadians would not have had the right to publish such material. Not even important records on their own community's history. Not even war letters by family members, given how copyright ownership can rapidly be diluted and made untraceable. Not even material out of the National Archives, which, for reasons unknown, gave its blessing to the copyright clause.
Then it got worse. The clause was originally restricted to authors who died after 1929. As later amended, it became open-ended. No matter how old the document -- from a "Dear John" email, 2004, to a Babylonian clay tablet, ca. 2900 BC -- it would have been "protected"! It was only a fluke of Parliamentary timing that prevented this draconian law from passing, forcing the government to withdraw.
The works in question became public domain in Canada on New Year's Day.
The forces that pushed Australia over the 50-year edge are still at work here. If Australia falls, it makes it harder for Canada, New Zealand, and
the dwindling band of nations with the minimum 50-year Berne Convention copyright term. Bad as it is losing your cultural sovereignty to the United States, it's galling to lose it to Walt Disney and Sonny (ugh) Bono.
I live in dread of the day our cultural glitterati, the shills of Disney and Bono, realize that our other NAFTA partner, Mexico, now has a 100-year term.