Wednesday, June 29, 2011

Alcohol. Coles and Woolworths try to do the right thing and...

This happens:

Coles and Woolworths are under attack in Alice Springs for banning cheap wine in an attempt to force up the alcohol floor price.

The Alice Springs town council has decided 5 votes to 3 to ask the supermarket chains to abandon the new rules due to come into effect Friday.

From then Coles will sell no bottled wine for less than $8 and no 2-litre cask wine setting an effective floor price for alcohol of $1.14 per standard drink. Woolworths will also cease selling 2-litre casks.

Mayor Damien Ryan argued strongly in favour of the ban Monday night, but having been defeated told The Age he would write to Coles and Woolworths as directed.

Alderman Murray Stewart who moved the motion said it would send a message to corporate Australia that Alice Springs would not be party to price fixing and profiteering under the cover of action against alcohol...

“It is not on in any town,” Mr Stewart said. “How would you like it in Sydney or Melbourne?”

“We have pensioners, we have grey nomads, backpackers, all of whom want consumer choice and reasonable prices.”

“We wouldn’t mind so much if the ban was national, but how would you like your wine casks taken away from you?”

Coles responded that it was not profiteering by pushing up prices, but simply removing from sale cheaper products that used to offer alcohol for less than the price per unit of beer.

Health Minister Nicola Roxon has asked her yet-to-be appointed National Preventive Health Agency to investigate a nationwide floor price for alcohol, an idea also considered by the former assistant minister for health Christopher Pyne before the Coalition lost office in 2007.

Published in today's SMH and Age


Related Posts

. Eight dollars per bottle. Coles does something good

. At last, an end to cheap wine?

. Please, put a floor under cigarette and alcohol prices

. Double the price of cask wine, do it now - Wine guru

. The end of cheap wine, and other things to look for in the Henry Review


Click to Read More...

NBNCo. Don't say you weren't warned.

Wednesday column

You know a business case is hopeless when the company that’s drawn it up has to bribe its competitors not to compete against it.

The NBNCo business case has a tenuous relationship with reality.

The publicly-released corporate plan detailing how the company will spend $27 billion of public money and hit its targets reads like a cry for help, and also an exercise in laying down a paper-trail so its executives can say “we told you so” when their targets are nowhere near met.

Optus cable passes 1.4 million homes in Sydney, Melbourne and Brisbane. Fast already, it is capable of being upgraded to a top speed of 240 megabits per second, far faster than anyone needs for conceivable uses; way faster than NBNCo’s entry level speed of 12 Mbps and on the way to the maximum NBNCo speed of 1000 Mbps.

Optus was in the process of upgrading its cable from 30 to 80 Mbps. Instead it will now “decommission” it in return for payments from NBNCo worth $800 million.

Telstra is already offering 100 Mbps on its Foxtel cables in Melbourne. As a condition of taking $9 billion from NBNCo over time it will “disconnect” its broadband customers from the cable although in its case it will continue to use it to deliver pay TV.

These ‘Do Not Compete’ agreements are not mere icing on the cake, enhancing a business model that already makes sense - they are necessary for the business model to make sense. NBNCo will never make a return on the cost of its capital or meet its customer targets if it faces competition. Its corporate plan says so, at point 1: “The plan assumes effective regulatory protection to prevent opportunistic cherry picking... the viability of the project is dependent upon this protection.”

Cherry picking means competing for good customers on price.

And cherry picking is impossible to prevent...

One of the reasons we don’t have a very fast train between Sydney and Melbourne is because as soon as the money was spent the airlines would discount the flights that competed with it to cream off its valuable customers.

In the case of the National Broadband Network as soon as it is built someone will come along and offer something cheaper to its most valuable city customers. The corporate plan tries to ensure against this, noting wistfully that “the government will consider the introduction of a levy, if necessary to prevent opportunistic cherry picking”.

The deal with Telstra requires Australia’s biggest supplier of wireless broadband to “not promote wireless services as a substitute for fibre based services for 20 years.”

Even if Telstra complied, and it has already indicated it won’t let the clause prevent it promoting wireless broadband, there’s nothing to stop a firm which hasn’t signed an agreement with NBNCo aggressively promoting a cheaper and more convenient product.

In the OECD fixed broadband connections are growing at 6 per cent per year; wireless connections are growing at 10 per cent per six months. South Korea, said to show the way for Australia because of its lightening-fast fibre to the home connections, has just 34 fibre or cable connections per 100 residents. It has 90 such wireless connections.

To some extent the new Korean figures are good for NBNCo - they show people buy wireless connections in addition to fixed lines. To a larger extent they are bad news. They suggest that even with fast fixed broadband on offer an awful lot of households forsake it for a still-fast, cheaper and more convenient alternative.

Research reported in NBNCo’s corporate plan finds that in Australia around 1 in 3 wireless broadband users have no fixed lines.

Acknowledging there is no real need for the very fast speeds it will be offering the plan says “the main limiting factor in the early years of the NBN will be the availability of applications that require high bandwidth”.

Further down the track it is expecting applications such as remote hosting and 3D imaging to become mainstream, pushing bandwidth demand towards 100 Mbps - which Telstra cable already provides. In the long-term it says ultra high definition video will require speeds of more than 250 Mbps - which would be encouraging had not Australian viewers already voted with their remotes and as good as closed down Australian HD TV broadcasts, preferring instead reruns of sixties and seventies sitcoms on low-definition channels such as GEM and 7Mate.

It’s a shaky foundation on which to build a business case.

Just as it will remain legal for anyone to offer a cheaper and lower-bandwith product competing with NBNCo, despite the NBNCo’s wishes, it will also be remain legal for large CBD-based organisations to take their high-bandwidth traffic “off-grid”. Why pay NBNCo a large sum to communicate internally when you can do it yourself for a fraction of the cost?

As the customers NBNCo is counting on are leached away it will have to continue to service what will eventually be $50 billion of capital and debt.

Its corporate plan says it won’t be to stay ahead servicing the debt. Its cost of capital will be 10 per cent, its internal rate of return will be 7.04 per cent.

And that’s assuming no corporate customers leach away to wireless, assuming the bleed to wireless-only households stops at 16.4 per cent, assuming no non-wireless competition, assuming Australians take up ultra high definition television in a way they have shown no inclination to, assuming it isn’t required by the government to deploy the superior single rather than split fibre technology the government will force it to test... in short, assuming every one of its judgement calls turns out right.

Including population growth. The NBNCo plan assumes housing growth of 177,000 premises per year to 2025. Downwardly-revised ABS projections released last week have just 151,000 households per year added over the coming two decades.

Maybe this will come right too. More likely, NBNCo will look sick. Those of us who have flicked through its corporate plan can’t say we weren’t warned.

Published in today's SMH and Age


Related Posts

. Overselling fibre. Ouch.

. Just build the NBN and bugger the expense

. The NBN is a slowly unfolding disaster

. We're spending a fortune on new wires, we'll disconnect the ones you have

. Questions for the NBN cheer-squad


Click to Read More...

Tuesday, June 28, 2011

Bloody hell. The market is pricing in a rate CUT, big-time.




Related Posts

. A second successive GFC? Surely not

. Reserve poised, however gentle its language

. Budget be damned. Why rates are going up regardless


Click to Read More...

Monday, June 27, 2011

Costings offer. Swan to Hockey, Hockey's response:

Who's serious?

Dear Mr Hockey

I write to formalise the offer made by the Prime Minister yesterday, to make available the full resources of the Commonwealth Treasury to provide an accurate costing of the Coalition’s current fiscal position combining any already-announced positions and opposition to key savings before the Parliament with the impact of any so-called ‘direct action’ climate change policies to reach the bipartisan emissions reduction targets, and the income tax cuts Mr Abbott promised on Saturday.

Given the Opposition Leader’s speech on Saturday indicated the only thing stopping the Coalition from costing tax cuts was a lack of access to resources, we are happy to remove that obstacle. The Prime Minister and I believe this is the best way to ensure this important debate is conducted in a way that allows the Australian people to compare the relative impacts on the budget of our alternative approaches to tax reform and climate change action.

The Government has been clear about how our tax cuts Will be funded — with revenue raised by charging Australia’s biggest polluters for the pollution they currently emit free of charge, but at great cost to the environment. Australians are entitled to know what the cost of the Coalition’s tax policy will be, and where the money is coming from.

If the Coalition is serious about providing income tax cuts, and if you genuinely intend to fund a regulatory approach to combating climate change instead of harnessing the market, you will accept this assistance. If you fail to do so, Australians would be entitled to View Mr Abbott’s tax announcement as a stunt, or something that would inflict serious budget damage, or both.

I would expect Treasury assistance would take the form of an initial meeting with relevant officials followed by the provision of a detailed tax plan for Treasury to analyse and cost. Your can contact my Chief of Staff on 02 6277 7340 to make the necessary arrangements with Treasury. To assist the debate I will release this correspondence into the public domain.


WAYNE SWAN


“The Treasurer should spend more time learning how to run the economy and less time worrying about the Coalition’s plan to give tax relief to Australians. The Coalition has a track record of delivering lower taxes, while Labor specialises in higher taxes and higher government spending. Our tax cuts will be delivered without a carbon tax and will be funded through prudent cuts to government spending and productivity improvements.”

Joe Hockey, Shadow Treasurer



Related Posts

. Coalition's "auditors" still under investigation

. Costings aftermath: Joe Hockey is to truth as....

. Coalition costings: The inexcusable, the inexplicable...


Click to Read More...

Australia's banks the world's most profitable


And with some of the world's widest interest margins.

Thank you Bank for International Settlements.


Related Posts

. Reserve calls banks bluff

. Wednesday column: The Governor won't back the banks

. Banks. Fattening their margins while complaining


Click to Read More...

A second successive GFC? Surely not.

The international organisation of central banks says the scene is set for a new global financial crisis unless Greece and other countries dramatically ratchet up interest rates and more rapidly slash debt.

In an apocalyptic warning released overnight in Basel the Swiss-based Bank for International Settlements says three years of near-zero interest rates in the major advanced economies are building the risk of “a reprise of the distortions they were originally designed to combat”.

“Pessimism has become tiresome, so optimism is gaining a foothold,” the report says before asking whether the reasons for global pessimism about the financial system have really been superseded by events.

Describing the task of avoiding a second financial crisis as “enormous” the report lists as dangers: “towering debt, global imbalances, extremely low interest rates, unfinished regulatory reform, and financial statistics still too weak to illuminate emerging national and international stresses”.

The BIS was the most vocal of the international organisations warning of a crisis in the lead-up to 2008 and has been redesigning global banking standards in a bid to stave off another one.

In a signal it believes the new standards might not be enough, it says international financial flows are now “staggeringly large”...

“A sudden reversal of such flows could wreak havoc with asset prices, interest rates, and even the prices of goods and services in countries at both ends of the flows,” it says.

While indebted nations such as Greece for the moment enjoyed the confidence of their lenders their problem was: “either you enjoy the confidence of the markets or you don’t”.

“A loss of confidence in the ability and willingness of a sovereign to repay its debt is more likely to be characterised by a sudden change in sentiment than by a gradual evolution,” the report says. “This means that governments that put off addressing their fiscal problems run a risk of being punished both suddenly and harshly. And if that day comes, experience teaches us the measures needed to regain the confidence of investors will be substantially larger, more difficult and more painful than they would have been.”

Demanding that Greece, Ireland and Portugal repay rather than restructure their debts despite “popular backlashes” the BIS says the turmoil in those countries “would pale beside the devastation that would follow a loss of investor confidence in the sovereign debt of a major economy”.

Near-zero interest rates in mainland Europe, the United Kingdom and the United States were delaying financial adjustments and “magnifying the risk that the distortions that arose ahead of the crisis will return”.

“If we are to build a stable future, our attempts to cushion the blow from the last crisis must not sow the seeds of the next one,” the report concludes.

Responding to the report Treasurer Wayne Swan said there were “clearly risks to the global outlook arising from uncertainty in parts of Europe”.

“However the prospects for our region remain much stronger as the weight of global activity continues to shift in Australia's favour,” he added.

Over the weekend Mr Swan backed the governor of Mexico’s central bank Agustín Carstens for the post of head of the International Monetary Fund, saying it was important the president be “chosen on the basis of merit and not nationality”. Until now every head has come from Europe, including the leading candidate, French candidate Christine Lagarde.

Published in today's SMH and Age


Related Posts


. What went wrong: David Gruen

. The Reserve Bank Annual Report reads like a thriller

. "Things were right on the edge" - the crisis as it unfolded

Click to Read More...

The GFC. Did Australia do something right?



From the Bank for International Settlements.



Related Posts

. What went wrong: David Gruen

. The Reserve Bank Annual Report reads like a thriller

. "Things were right on the edge" - the crisis as it unfolded



Click to Read More...

Friday, June 24, 2011

We're being swamped. Less.

Australia’s population growth is plummeting with NSW growing at the slowest rate of any state other than South Australia and Tasmania.

The latest figures show net migration has halved in the past two years, sliding from a peak of 316,000 in 2008 to just 171,000 in 2010 - coincidentally around the target of 170,000 adopted by the Coalition during the 2010 election campaign.

The slowdown comes as Australia is gearing up for a mining boom that will require more skilled workers and at a time when retail sales and house prices are stagnating.

The Bureau of Statistics figures attribute only part of the collapse in net migration to a slowdown in arrivals. Also in play is an explosion in permanent departures to 260,900 last year - a new record high and the first time permanent departures have eclipsed one-quarter of a million.

Detailed figures show the exodus from Australia accelerating with 138,400 residents leaving Australia in the most recent six months, up 13 per cent on the six months before.

“The high Australian dollar means purchasing power is very high abroad,” said CommSec economist Craig James. “Young people can get working visas to the United Kingdom and other places, try their luck, and know there are jobs waiting for them at home if it doesn’t work out"...

The government cut skilled migration places in 2010 exacerbating the slowdown. It has since increased them and the effect will be shown in future population figures.

“We don’t yet know whether they have done enough,” said Mr James. “They only make these adjustments once a year and its often too late. Businesses are crying out for skilled labour.”

Australia’s population grew 1.5 per cent in 2010, the slowest rate since 2005. NSW grew more slowly at just 1.2 per cent, well below Victoria’s and Queensland’s 1.6 per cent, and Western Australia’s 2.1 per cent.

New South Wales and South Australia were the only states to suffer net interstate emigration, with 11,243 locals leaving for other states, most bound for Queensland and Victoria.

Queensland gained 1808 migrants from other states and Western Australia 1315.

Western Australia sourced the bulk of its population growth from abroad taking in a net 18,695 residents from overseas in 2010 in the biggest per capita migration program in the nation.

NSW remained the favourite destination in terms of absolute numbers, taking in a net 51,000 new residents from abroad, around one third of the nation’s total.

Departures from NSW have slowed in lockstep with arrivals from overseas. Only half as many locals left for interstate in 2010 as in 2008.

The fastest growing regions in NSW were centred around Tamworth and Port Macquarie which grew by 2.0 and 1.9 per cent. Sydney grew 1.7 per cent and the Far South Coast 1.6 per cent.

The Bureau's central projection put Sydney’s population at 6.7 million in 2051, up from 4.5 million today. It’s central forecast has Australia’s population at 34 million by middle of the century, with a forecasting range of 30 million to 40 million.

The high projection has Melbourne overtaking Sydney as Australia’s biggest city by 2051, housing 7.5 million residents to Sydney’s 7.3 million.

Published in today's SMH

Leaving NSW: -11,243
Leaving South Australia: -715

Heading for Queensland: +1808
Heading for Western Australia: +1315
Heading for Victoria: +864

Net interstate migration, year to December, ABS 3101.0


Related Posts

. Immigration. At this rate they'll have nothing to worry about

. Oh, and we're slowing down the flow of migrants

. Who'd want to leave NSW? Hordes. NSW and SA suffer net emigration

3101.0

Click to Read More...

Eight dollars per bottle. Coles does something good.

Alice Springs Pastor Basil Schild by 1petermartin

"I have attended around 100 funerals. Two were for white people."

Eight dollars will become the new cheap in Alice Springs from next month. After July 1 it will be impossible to buy wine for less than $8 a bottle in Coles supermarkets and absolutely impossible to buy 2 litre casks.

The new regime, designed to ensure alcohol always costs at least $1.14 a standard drink is an Australian first and beats to the punch health minister Nicola Roxon who has asked her Preventive Health Agency to “develop the concept” as part of a nationwide move to combat alcohol abuse.

Coles managing director Ian McLeod announced the move at a Sydney retail function yesterday saying he began thinking about the company's practices when contacted by a Lutheran pastor in Alice Springs six months ago.

Woolworths followed suit within hours and announced that it too would phase out 2 litre casks in Alice Springs, abandoning a popular product that sold for $12.99 or 62 cents per standard drink. Coles casks sold for 10.99 or less than 50 cents per standard drink.

Dr John Boffa of the Central Australian Aboriginal Health Congress said the break though with Coles only began 10 days ago when a grop of liquor division executives came to Alice Springs to see conditions for themselves.

“You could see their views changing. They didn’t say much, but but they left with an appreciation of the damage cheap alcohol is doing. They’ve gone from being the worst of the retailers in the Territory to the best.”

IGA had already trialed a minimum price of $1.15 per standard drink in its Northside Alice Springs supermarket and was looking to extend the minimum price town wide...

In a letter to prime minister Gillard and Northern Territory chief minister Paul Henderson seen by the Herald Mr McLeod says Coles will “review the relevance of these new policy positions on a needs basis for other stores across Australia”. In most cases it believes there will be no need to make a change.

Coles at present sells branded wine for as little as $4.99 a bottle in cities, well below the new $8 Alice Springs floor price.

Dr Boffa said the immediate effect would be to sharply boost beer sales, with resultant health benefits.

“Dependent drinkers will still get drink but they will drink less and drink more slowly. By itself this won’t solve the Territory’s problems, but it is a necessary part of the solution,” he the Herald.

Published in today's SMH and Age


Related Posts

. At last, an end to cheap wine?

. Please, put a floor under cigarette and alcohol prices

. Double the price of cask wine, do it now - Wine guru

. The end of cheap wine, and other things to look for in the Henry Review



Click to Read More...

Thursday June 24 as told by my mobile phone camera, one year ago today













The children with Kevin Rudd and Therese Rein at the top are: Nicholas (born 1986), Marcus (born 1993) and Jessica.

I wrote:

We all looked at our shoes, not making a sound - not even a camera click - desperately willing him to go on.

It was like a prayer meeting.

We applauded at the end.


Commentator Taylor:

The poor kid at the back has a haunted look that I'm sure I will forever associate with Julia Gillard.


Related Posts

. Turnbull's demise - the mobile phone photos

. Take a journey through Gillard Land with Andrew Meares

. APEC, as really seen by the media


Click to Read More...

Thursday, June 23, 2011

"Dumping". If it was up to me I'd let the stuff in.

But Australian producers don't like ultra-cheap imports, so even the Productivity Commission found in favour of anti-dumping rules concluding that:

"...the ability for Australian industries, like those in most other countries, to use the [anti-dumping] system to address what are perceived by many to be ‘unfair’ trading practices, may have lessened resistance to more significant tariff reforms."

It called this the "political economy" argument for keeping our anti-dumping rules, but recommended they be relaxed by the inclusion of a public interest test and any penalties be time limited.

Trade Minister Craig Emerson yesterday rejected those recommendations, as a way of holding the line against suggestions raised in a Senate inquiry that were verging on the ridiculous:


Small business will get access to a dedicated support officer to help in anti-dumping investigations as part of a package designed to better administer Australia’s anti-dumping laws without changing the rules.

Trade minister Craig Emerson has resisted pressure from Coalition, government and independent Senators for tougher rules - including a reversal of the onus of proof - while rejecting Productivity Commission recommendations that would weaken anti-dumping penalties.

The Productivity Commission wanted to limit anti-dumping measures to eight years and impose a new “bounded public interest” test that would knock out more claims.

A Senate report released late yesterday broadly supported the existing rules but had the unusual distinction of being accompanied by three dissenting reports in which Coalition senators Alan Eggleston and David Bushby commended reversing the onus of proof, independent senator Nick Xenophon supported the idea, and Labor senators Doug Cameron and Louise Pratt commended a “workable rebuttable presumption of dumping.”

Dr Emerson and customs minister Brendan O’Connor said those kinds of tougher rules would invite retaliation from the World Trade Organisation.

Instead the ministers will boost the number of customs staff working on anti-dumping issues from 31 to 45... allow for provisional remedies to cut in earlier and set up an International Trade Remedies Forum with union and corporate members to oversee reforms.

Australian Industry Group chief Heather Ridout said the measures were a “positive step”. Australian Workers' Union secretary Paul Howes said they were a “crucial first step in giving local industry the chance to compete on a level playing field”.

Published in today's SMH and Age


Related Posts

. Emerson: I would rather not do trade deals, but...

. Hurt by the dollar? Don't expect support. Henry.

. Learn to love the higher dollar

Click to Read More...

Wednesday, June 22, 2011

Because you asked. Abbott's word cloud




Also from the ABC.


Related Posts

. Oh. The ABC's word cloud on Julia Gillard's first year in office

. Turnbullspeak. More impressive than Ruddspeak

. The Ruddspeak cloud


Click to Read More...

Today's Tobin Tax letter. Australia could be Robin Hood

Australia will be asked to throw its weight behind an international campaign for a “Robin Hood” tax on financial institutions in an open letter to be delivered to the prime minister today.

Sixty five signatories representing organisations including World Vision, the Uniting Church, Baptist World Aid and the Australian Council of Trade Unions have written to Mr Gillard asking for backing for a 0.05 per cent wholesale financial transactions tax at this year’s Group of 20 world leaders meting.

The so-called Tobin Tax has been championed by French President Nicholas Sarkozy as a means of targeting “socially useless” speculation in order to raise money for climate change and international development.

The letter says “as Australia builds its profile as a financial hub, we will need a stable and strong global economy in which to participate - this requires leadership and innovative solutions to address some of the root causes of the global financial crisis.”

The idea of a such a tax has received support from Reserve Bank Assistant Governor (Financial Markets) Guy Debelle who put it forward in a speech at the height of the financial crisis as a means of “throwing sand in the wheels” of global finance in order to “slow things down”...

“Yes, it's not going to be completely effective, the car’s probably still going to keep on driving, but that doesn’t mean you don't contemplate these sort of things,” he told forum at the Whitlam Institute.

World Vision Australia chief executive Tim Costello said yesterday a small financial transaction tax on speculative deals could slow financial flows while “raising the funds required to lift poor communities out of poverty and to cut greenhouse pollution”.

The open letter has been organised by the Jubilee Australia, set up to campaign for the forgiveness of third world debt in the lead up to the year 2000.

Academic signatories include University of NSW international finance law professor Ross Buckley, Sydney University adjunct professor of economics Colin Richardson, Melbourne University professor John Langmore and Queensland University professor Andrew McLennan.

Oxfam Australia executive director Andrew Hewett said the tax tax “would primarily be felt by hedge funds and investment trading, with a limited impact on ordinary investors.”

“It’s a minor reform that would see major change,” he said. “Australia should support it.”

Published in today's SMH and Age

Letter to Aust PM


Related Posts

. Want control? Chuck sand in the wheels

Click to Read More...

A gentler, more understanding RBA

While export earnings forecasts soar:


The Reserve Bank has pulled back from the brink, declaring there is now no urgent need to lift interest rates and pointing to Australia’s “subdued” non-mining economy and the Greek debt crisis.

The Bank’s changed position outlined in board minutes released yesterday came as the nation’s chief commodity forecaster substantially boosted forecasts for export income in the coming year, led by an upgrade in iron ore sales and prices.

“We have just witnessed a fairly significant Reserve Bank back-flip,” said ICAP Securities economist Adam Carr. “In May the board minutes were firmly eyeing a hike. The June minutes show the board has taken a step back. Its finger is no longer on the trigger.”

The Reserve Bank board minutes point to a weaker than expected domestic economy saying while there has been a strong pick-up in mining investment, activity elsewhere remains “quite subdued”.

Away from mining, investment intentions were “considerably weaker” with “little evidence of a pickup” in non-residential building construction. Households were “cautious,” the housing market “soft” and retail sales growth “moderate”...

The high dollar and the Reserve Bank’s own action in raising rates in November were acting as a drag on the economy as well as the withdrawal of budget stimulus measures which was set to “exert a significant contractionary impulse on aggregate demand over the next two years”.

The board expressed its strongest concern to date over the Greek debt crisis saying “whereas in earlier months the debt problems of Greece, Ireland and Portugal had been largely reflected in the interest rates of those countries, over the past month they had spilled over to long-term rates for some other European countries”.

The minutes say while “further tightening in monetary policy would be necessary at some point” the flow of data in the past month has “not added any urgency” to that need. Downside risks to the global economy had become “a little more prominent”.

The quarterly forecasts released by the Bureau of Agricultural and Resource Economics and Sciences have mineral exports reaching a record high of $218.3 billion in 2011-12, revised up from $214.6 billion.

Total commodity exports are expected to hit $256.3 billion, an increase of 18 percent on 2010-11.

While the Bureau has slightly downgraded its forecast of iron ore earnings in 2010-11 largely due to cyclone activity, it upgraded next year's forecast by $2.2 billion to $65.3 billion.

Coal export earnings have been revised down but are forecast to be 31 per cent higher in 2011-12 due to both higher volumes and prices.

Income from live cattle will be down 17 per cent in 2010-11 due to the ban on exports to Indonesia and also due to earlier restrictions imposed by the Indonesian government itself on the weight of cattle and the number of permits.

Published in today's SMH and Age


Related Posts

. The market is pricing in slight rate CUTS, until March 2012

. Reserve poised, however gentle its language

. Ouch! Commodity prices jab still higher

ABARES AUSTRALIAN COMMODITIES

Click to Read More...

Tuesday, June 21, 2011

Oh. The ABC's word cloud on Julia Gillard's first year in office


It's here.

Click to Read More...

"You rigged 'da what?" Why electricity charges are climbing

Rigged rules

The Australian energy regulator has taken aim at what it says is the real reason for rising power prices, saying it has nothing to do with the carbon tax and everything to do with “gold plating” by firms that know they’ll be able to pass on higher costs.

Pleading for change and speaking out for the first time since becoming AER chairman Andrew Reeves told a conference in Melbourne his hands were often tied when it came to approving the electricity price increases.

He was only allowed to knock back those that did not “reasonably reflect” the cost of planned investment.

“There is a clear incentive for the business to submit proposals that are either at or beyond the upper end of the range of reasonable estimates,” he said.

“Businesses routinely submit proposals that contain substantial engineering detail in support of the ‘reasonable’ estimate. We are then required to undertake a granular assessment of the proposal within a tightly-defined time frame. The inevitable consequence is an outcome that is not a central estimate of efficient costs, but one which is biased in favour of the service provider"...

Asked by the Herald how much higher power prices were now than if the AER had been able to make decisions using its own cost and pricing formulas Mr Reeves did not give an estimate but pointed to forecasts showing electricity distribution revenues in NSW and Queensland would roughly double over the next 4 years because of approvals the AER already given, sometimes reluctantly.

In Victoria where there not been overinvestment, revenues would be little changed.

Transmission and distribution charges made up about half of each electricity bill.

“If we decide against proposed increases the firms appeal to the Australian Competition Tribunal and usually win,” Mr Reeves told the Herald.

“We have had something like 22 issues before the Tribunal in the last three years and in 14 of those the the Tribunal has ruled in favour of the firms - and those were for big increases.”

Transmission and distribution firms were also able to spend more on capital equipment than had been approved, knowing that under tits rules the AER would be forced to approve price increases that would give them a reasonable rate of return on that capital at the next review.

“Ross Garnaut has called it gold plating,” Mr Reeves said. “NSW and Queensland are getting more infrastructure than we think they need and we are required to approve price increases to pay for it.”

The AER was also required to calculate the cost of capital for electricity firms using a formula that often overstated actual costs. Where it understated actual costs the firms could apply for a reassessment, but not the other way around.

“We are speaking out about this now because electricity prices are a concern to the community,” said Mr Reeves. “For years there wasn’t much interest. A lot of public servants working for the AER have been dedicated and frustrated.”

The AER has asked the Australian Energy Market Commission to review its rules to make them more like other regulators. The incoming head of the Australian Competition and Consumer Commission Rod Sims is understood to strongly support a change.

“We want to use best practice as our benchmark, not existing practice. The best-run power companies are the privately-owned ones in Victoria, we want to use them to benchmark the costs and spending in NSW and Queensland," Mr Reeves said.

Published in today's SMH and Age


Why Power prices are really rising:

Peter Martin Energy Prices NightLife March 9 by 1petermartin


NSW's AusGrid hits back

NSW electricity distributor AusGrid - formerly known as Energy Australia - has accused the prices regulator of putting power supplies at risk by attempting to take control of its investment program.

Angrily rejecting claims AusGrid was helping force up NSW power prices by “gold plating” its network with unnecessary spending, managing director George Maltabarow said the state had to spend more than other states in order to replace substations and poles and wires erected in the 1960s and 1970s.

“We have 700,000 more electricity customers than Victoria, one million more poles and 120,000 km of wires. Our network is older than Victoria’s and the replacement costs are coming earlier,” he said.

Australian Energy Regulator chairman Andrew Reeves claimed Monday NSW distributors were submitting grander than needed investment proposals in order to pass on the costs in higher prices. NSW distribution charges were set to double in the next four years while those in Victoria remained little changed.

Mr Maltabarow told the Herald the Mr Reeves appeared to want “take more power to control electricity networks without any of the accountability”.

“The AER is not accountable when a major substation fails and customers lose power. It is not accountable if our workers are put at risk of serious injury,” he said.

“Suggestions that we call the tune and the regulator’s hands are tied are from from true. It cut $460 million in capital funding from our most recent proposal and $170 million in operating costs. Its decisions were upheld by the Australian Competition Tribunal.”

“About half of our large electricity substations were built in the 1950s and 1960s. Electrical equipment generally has a life of 40 to 50 years and so we have reached the stage now where much has to be replaced.”



Related Posts

. Easy listening. Why power prices are really climbing

. Get set for higher power prices, with or without a carbon price

. Could baseload power demand be a myth?


Click to Read More...

Monday, June 20, 2011

The market is pricing in slight rate CUTS, until March 2012

Beyond that the chance of a rate hike is small


Latest update here.


Related Posts

. Reserve poised, however gentle its language

. Budget be damned. Why rates are going up regardless


Click to Read More...

Saturday, June 18, 2011

"Less tax than nothing. An interesting concept."

Laura Tingle's Friday column has been let out - unpaywalled!

It's about Twiggy Forrest.

Click to Read More...

Friday, June 17, 2011

New Tax Inquiry: self assessment

The Inspector General of Taxation will examine whether to turn back the tide on Australia’s system of self-assessment for income tax, in place since 1987.

Inspector General Ali Noroozi said self assessment shifted costs from the Tax Office to taxpayers when it was introduced but may now also be saddling them with disproportionate risks.

“Taxpayers now operate in an environment of ever increasing tax complexity,” he said. “Although self-assessment itself has benefits, my consultations suggest there may be issues with the current systems and their operation that imposed increased costs and uncertainty.”

When self-assessment was last examined in 2003 the Tax Office undertook to provide greater certainty in rulings and to limit the period in which it could amend earlier assessments.

Mr Norrozi will examine how successful those changes have been. He is seeking submissions by July 21...

Published in today's Age


Related Posts

. Human Guinea Pigs. How the ATO used us to test its computer

. Tax office: We want a ton of documents now, but we won't read them for six months

. There's another tax inquiry taking place...


Click to Read More...

Those bank fees John Laws used to spruik. They've been cut!

Banks are taking less out of our pockets for the first time on record. Reserve Bank figures show bank fee income from households slid 16 per cent in 2010, due largely to the removal or reduction of late fees and fees for overdrawn accounts.

Bank income from so-called exception fees charged to households roughly halved with the fees taken from deposit accounts sliding $395 million and the fees taken from credit cards sliding $220 million.

Late payment fee income from housing loans also fell despite an increase in the share of loans overdue.

Revenue from automatic teller machines also fell after the introduction of explicit charges for the use of ATMs in March 2009 which encouraged a flight from “foreign” ATMs to “own bank” ATMs which are generally fee-free.

Australian Bankers Association calculations put the average weekly bank fees paid by households at households $9.73 - down $2.13 from the year before...

Chief executive Steven Münchenberg said households were paying less even though they were using banks more often.

“At a time when budgets are under pressure from rising prices, this fall is a welcome result,” he said.

In contrast fee income from businesses increased, climbing enough to offset the loss of fee income from households. Income from facilities fees charged to maintain business lines of credit climbed 25 per cent. Income from merchant service fees charged from accepting credit and debit cards climbed 2 per cent.

“Prior to the global financial crisis, growth rates for bank service fee revenue from businesses were low,” Mr Münchenberg said. “Some lenders failed because their business model could not be sustained. That meant that businesses increasingly turned to banks to provide finance.”

Published in today's SMH and Age


Related Posts

. RBA to the banks: Get real - your golden days are over

. Friday surprise. Senior citizens are better at using ATMs

. The Aussie's sky-high, but...

Click to Read More...

Where 'da new jobs? Hint. Mining is down the list:


WHO’S HIRING?

Jobs growth, year to May

Health and Social Care +57,200
Education and Training +44,400
Retail Trade +44,000
Financial and Insurance +38,100
Mining industry +35,200
Administration and Support +27,900
Construction +25,800
Arts and Recreation +23,600
Accommodation and Catering +21,600
Public Administration and Safety +13,100
Electricity, Gas Water +8,700
Rent and Real Estate +8,000
Professional and Scientific Services +7,600

WHO’S FIRING?

Jobs lost, year to May

Media and Information Technology -4,000
Manufacturing industry -5,000
Wholesale Trade -14,400
Transport, Postal and Warehousing -17,600
Agriculture, Forestry and Fishing -45,100

Seasonally adjusted ABS 6291.0.55.003


Health and aged care employers are dominating job creation, relegating the mining industry to fifth place.

Detailed employment figures released by the Bureau of Statistics show the heath and social assistance sector took on an extra 57,200 workers in the year to May followed by education and training with 44,400 and retail with 44,000.

In forth place was a resurgent finance sector which more than took back all of the workers it lost during the financial crisis, boosting employment by 38,100 to push the industry to an all-time high.

The mining industry took on an extra 35,200 workers. Although dwarfed by the performance of the service industries, as a proportion of the workers already employed the growth amounted to an extraordinary 19 per cent.

Mining now employs 217,100 Australians, up from 181,800 a year ago.

“When it comes to growth the mining sector stands head and shoulders above the rest,” said CommSec economist Savanth Sebastian. “In fact the strength in mining employment goes a long way in explaining the disparity in employment growth across the states.”

Queensland took on 19,000 of the new mining workers, New South Wales 9000 and Western Australia 7300... NSW boosted employment by 101,900, Victoria 83,300, Western Australia 34,900, Queensland 24,200 and South Australia 12,900. Tasmania lost 200 jobs.

Health and social assistance is now clearly Australia’s biggest employing sector, having overtaken retail in February 2010. Construction has replaced manufacturing in third place taking on an extra 25,800 workers over the past year.

Manufacturing has lost 5000 jobs in the past year and 102,000 over the three years that encompassed the financial crisis.

The Westpac Australian Chamber of Commerce and Industry June quarter survey of industrial trends released yesterday (THURS) showed more manufacturers expected to lose staff than hire in the three months ahead, a turnaround from the March quarter survey when more expected to hire than let go of staff.

ACCI chief economist Greg Evans blamed the high dollar saying manufacturers were unable
to recover cost increases by raising prices.
A further interest rate rise make things even harder.

"We understand that the job of the Reserve Bank is clearly to deal with inflationary pressures," he said. "But our message is that a pre-emptive rate increase could severely damage those parts of the economy outside the mining sector."

Other industries to contract over the year include wholesale trade, losing 14,400 workers, the transport, postal and warehousing sector, losing 17,600 and agriculture which lost 45,100.

In the past three months 10 of the 19 sectors identified by the Bureau of Statistics shed workers as jobs growth slowed.

Employment growth slowed to a trend rate of 1800 per month in May, way below the pace of 26,000 per month twelve months earlier.

Male employment is now falling at the trend rate of 4200 per month while female employment continues to climb at a trend rate of 2400. All of the growth of female employment is in part-time jobs with full-time female and male employment falling.

Increased female and part-time employment has cut average hours worked to 33.7 per week, around two hours less than a decade ago.

Published in today's SMH and Age




Related Posts

. About that surging jobs market

. What's your chance of getting that job?

. We need workers for the mines... just not that many

6291.0.55.003

Click to Read More...

Thursday, June 16, 2011

We don't know how the carbon tax will work, so we're scared

Concern about the carbon tax appears to be undermining consumer confidence. The Westpac Melbourne Institute sentiment index slid to its lowest level in two years yesterday hitting a low last seen in the global financial crisis. Confidence about personal family finances slumped lower than in the crisis.

Asked what type of news they remembered hearing in the last month an extraordinary 44 per cent of those surveyed mentioned “budget and taxation”, almost twice the number who remembered hearing about interest rates and eight times the number who remembered hearing about politics.

“It is unusual for tax to register as so important,” said Westpac economist Matthew Hassan. “We have only ever had recall that big when there are major changes afoot - during the introduction of the goods and services tax in 2000, and during the mining tax debate in 2010.”

“In terms of the perceptions the tax is clearly negative. It comes in at an index level 61 where 100 is neutral - it is not as negative as were perceptions about the mining tax or the GST, but it is clearly negative.”

At 101.2 the Westpac Melbourne Institute consumer sentiment is barely positive after slipping 2.6 per cent between May and June.

Confidence about family finances and the economy has plummeted over the past year sliding from positive into negative.

Only when asked about the economy five years out and whether now is a good time to buy a major household item have consumer responses improved...

Mr Hassan said the carbon tax would be one of a number of issues weighing down on consumers - others would be high utility prices, interest rates and “the absense of any positive supports”.

Experience with the GST suggested that as the nature of the carbon tax became clearer and the implimentation date approached confidence would rebound. There was a big rebound in confidence two months before the introduction of the goods and services tax in 2000.

A seperate Battle for the wallet report to be released today by TNS research finds two thirds of Australians believe the cost of living to be substantially higher than twelve months ago. Only one third have received a pay rise in the past twelve months.

Reserve Bank governor Glenn Stevens told the economic society in Brisbane Wednesday his “central expectation” was that interest rates would have to rise “at some point” in order to contain inflation.

Published in today's SMH and Age


Related Posts

. First floods, now carbon tax. Confidence on the floor

. Fighting pollution without prices is like...

. Carbon tax, your questions answered


WMICSI

Click to Read More...

Wednesday, June 15, 2011

Oh boy. Rudd's misjudged 2010 Mid winter Ball speech

"A few people have asked me, for example, what I think about David [Marr]'s analysis that I am singularly motivated by anger. I've told them to get stuffed. Each and every one of them. I am not motivated by anger, I am motivated by incandescent rage."

Eight days later he was out of the job.

Wince as you read it here:

Rudd Mid-Winter Ball Speech 2010

Let's see how Julia goes tonight.

Click to Read More...

Fighting pollution without using prices is like...

Wednesday column

I bet you think you know where greenhouse gasses come from.

So did “Geoff,” a creation of the British economist Tim Harford who uses him to skewer politicians such as Tony Abbott who hold out hope of fighting climate change using so-called direct action and also those such as Julia Gillard who understand the power of prices but are at risk of screwing things up for Australian businesses by not properly applying them.

Back to Geoff, hero of chapter five of Harford’s new book Adapt.

Geoff has just seen An Inconvenient Truth and wakes up the next morning determined to take direct action to cut emissions.

He starts his day as he always does, “filling the kettle for a coffee”.

“But then he remembers the kettle is an energy-guzzler, so he has a cold glass of milk instead. He saves more by eating his usual two slices of bread untoasted. As he leaves the flat - pausing to unplug his mobile phone charger - he picks up his car keys, then thinks again and walks to the bus stop instead. By the time he hops off the bus, the lack of morning coffee is getting to him so he pops into Starbucks for a cappuccino.”

Deconstructing the day, Harford notes it wasn’t as successful as Geoff would have wanted.

“Let’s start with the milk, which requires a critical piece of equipment to manufacture: a cow. Cows emit a lot of methane. And methane is a more potent greenhouse gas than carbon dioxide... In producing about 250 ml of milk, a cow belches 7.5 litres of methane, which weighs around 5 grams, equivalent to 100 grams of carbon. Add all the other inputs to the milk - feed for the cows, transport, pasteurisation - and the 250 ml that Geoff drank produced the equivalent of around 300 grams of carbon dioxide. By not boiling his kettle he saved only about 25 grams of carbon dioxide. His first planet-saving decision, eschewing a coffee in favour of a glass of milk increased his greenhouse gas emissions by a factor of twelve. Dairy products are so bad for the planet Geoff would have done better to toast his bread but not butter it rather than buttering it but not toasting it.”

Needless to say Geoff’s cappuccino on the way to work was a greenhouse gas disaster. It’s almost all milk. Calculations by the UK government-funded Carbon Trust suggest that milk is responsible for two-thirds the emissions embodied of a block of Cadbury chocolate even though it makes up only one-third its mass. By contrast unplugging the mobile phone saved as little as 6 grams of carbon dioxide a day.

Harford’s point isn’t that we are ignorant. It is that no matter how much we knew - even if we had an app that used barcodes to correctly display on our mobile phones the emissions created by each the 10 billion products and services we commonly use - we couldn’t do the calculations. Our brains aren’t that powerful.

Fortunately we have already come up with something that is. This month in Melbourne the Institute of Public Affairs will host a symposium celebrating the Genius of Western Civilisation. That genius has perfected the system of market prices, what Harford describes as a “vast analogue cloud computer, pulling and pushing resources to wherever they have the highest value”.

Imagine, he says, a tax on carbon dioxide and equivalent emissions. It would lift the price of petrol a few cents a litre, creating a small incentive to drive less and more efficiently. A $14 per tonne tax would lift the price of an electricity kilowatt hour “by about a cent and a half if the energy came from coal, but only by three quarters of a cent if it came from natural gas, creating a small incentive to use less electricity and for power companies to build natural gas instead of coal-fired power stations”.

“This would not be because of any grand plan,” he says. “It would just happen: a trucker who ignored the higher price of diesel in setting his shipping charges would simply go out of business; so would a tomato cultivator who tried to absorb the cost of heating a greenhouse rather than raising his prices.”

“Geoff, arriving at the supermarket intending to buy tomatoes, wouldn’t have to point his smart phone at any barcodes: he could just look at the price. What the carbon tax would do is recreate the fantasy carbon calculator app, and give it teeth. Every decision maker, from the electricity company to Geoff himself would be given an incentive to reduce their carbon footprint using whatever tactics occurred to them.”

Harford is a making the same point as Australia’s Productivity Commission did last week, if more engagingly.

The take-home message for Tony Abbott is obvious. If he thinks using public money to hand out grants to worthy carbon abatement projects is better than setting a price for emissions and leaving things to the market, he is turning his back on the genius of western civilisation.

The message for Gillard is that, to a lesser extent, she is falling into the same trap. Agriculture won’t be in her scheme. Cows, beef cattle and sheep can belch greenhouse gas intensive methane as much as they like and Geoff can drink as much milk as he likes without paying the price that will face lesser emitters. The signs are that petrol won’t go up in price either. Without a price firms won’t find it as worthwhile to cleanup our farms and our cars.

Harford again:

“If there was some way to reduce the methane being belched out by cows and sheep - almost a tenth of the total gas emissions - that would be a huge achievement. Australian scientists have realised that kangaroos don’t emit methane and are now to trying figure out how to get kangaroo-gut bacteria into the stomachs of cows. It be a blind alley. It may not. But a proper price on greenhouse gases would encourage every path to be explored, even if one of the quests is to make cows belch like kangaroos.”

It would be a great business opportunity, if the price was right.

Published in today's SMH and Age


Related Posts

. Turnbull describes his party's climate change policy

. Carbon tax, your questions answered

. Here's how a carbon price would add 25 cents a litre to the price of petrol


Click to Read More...

How many mortgages are overdue?

Mortgage affordability is deteriorating rapidly with a new survey finding one in 80 Australian mortgage holders are behind by one or more repayments.

In disaster-ravaged Queensland the proportion of so-called delinquent mortgages shot up from 1.54 per cent to 2 per cent between November and March, meaning one in 50 Queensland mortgage holders was unable to pay on time.

The Fitch Ratings survey comes as Merrill Lynch forecasts a nationwide slide in house prices of 10 per cent from their mid 2010 peak.

Melbourne prices have already fallen 2.4 per cent since April 2010.

In a note to clients Merrill Lynch analyst Matthew Davison said prices would fall further as it became clear interest rates would climb with “recent reports suggesting this is occurring now”.

Victoria is the best performing state in the nation on the Fitch Ratings survey with a mortgage delinquency rate of just 1.34 per cent. It hosts five of the ten best performing regions in the nation and none of the ten worst.

NSW and Queensland dominate the worst performing regions and postcodes with the worst, Nelson Bay north of Newcastle having a delinquency rate of 5.6 per cent meaning one in 18 of its mortgages are overdue...

The rates remain low by United States and European standards and may overestimate deliwquent mortgages. The one million mortgages surveyed are those bundled and sold to investors rather those funded by deposits, meaning mortgages issued by Australia’s biggest banks are underrepresented.

A separately-released JP Morgan report blames the loans issued in 2009 after rates had been cut aggressively and the first home owners grant doubled to fight the global financial crisis.

The report’s author Scott Manning says the dramatic slide in official in the Reserve Bank’s cash rate from 7.00 per cent to 3.00 per cent between October 2008 and April 2009 “improved outcomes for borrowers when asking their mortgage providers how much they could borrow”.

“First home owners used the falling cash rate to increase the average amount borrowed by 25 per cent. They were not alone in expanding their gearing.”

Whereas traditionally unemployment has been the key driver of mortgage delinquencies “the gearing up of households over the last decade has seen them become a lot more vulnerable to increases in the mortgage rate”.

Bureau of Statistics figures released yesterday show lending for housing bounced in April, climbing 6 per cent after sliding for three consecutive months.

Reserve Bank figures showed the average credit card balance scarcely moved in April, climbing just $4.50 to $3326. The average balance is up just 2.9 per cent on a year ago – less than the rate of inflation. By contrast purchases made on debit cards were up 22 per cent .

“The new conservatism is no better illustrated than in the way that consumers prefer to pay for their goods,” said Commsec economist Craig James. “Purchases made on debit cards are growing well in excess of the pace of spending with credit cards.”


OVERDUE

Australia’s 10 worst regions

Percentage of mortgage payments more than 30 days late

1 Logan City & Beaudesert QLD 2.10
2 Outer South Western Sydney NSW 1.98
3 Central Coast NSW 1.88
4 Blacktown NSW 1.86
5 Fairfield-Liverpool NSW 1.85
6 Caboolture Shire QLD 1.84
7 Gold Coast West QLD 1.83
8 Outer Western Sydney NSW 1.82
9 South West WA WA 1.78
10 Ipswich City QLD 1.78


Australia’s 10 best regions

1 Lower Northern Sydney NSW 0.85
2 Inner Melbourne VIC 0.87
3 Northern Middle Melbourne VIC 0.90
4 Moreland City VIC 0.97
5 Boroondara City VIC 0.98
6 Eastern Suburbs NSW 0.99
7 Australian Capital Territory 1.03
8 Eastern Middle Melbourne VIC 1.04
9 Northern Territory 1.04
10 Northwest Inner Brisbane QLD 1.05

Fitch Ratings

Published in today's SMH and Age


Related Posts

. Reserve poised, however gentle its language

. There's the housing rally. And there's the Easter bunny

. One state, one city gets housing right



Click to Read More...

Saturday, June 11, 2011

A “balance of power” lunch with the three independents?

Yes.

It's one of the prizes in the Midwinter Ball charity auction.

Bid here.

Bidding closes Wednesday 5.00 pm


• The Prime Minister Julia Gillard is offering a spectacular dinner for six at The
Lodge or her Sydney residence Kirribilli House. This is a unique opportunity
for corporate Australia to dine with the nation’s leader. So far $4000

• Political junkies will love the 2010 “Campaign Blanket” – a unique piece of
behind the scenes election history - patchwork handicraft by the PM
Julia Gillard and her staff – it is 216 x 180 cm in size. So far $265

• The ball’s in the court of Opposition leader Tony Abbott who will host a
tennis lesson for one with Davis Cup Champion & Liberal MP John
Alexander. This is followed by a brunch or lunch for six people in Sydney. So far $4900

• Treasurer Wayne Swan is generously offering two people the chance to
attend the Brisbane Broncos v Gold Coast Titans rugby league match at
Suncorp Stadium on Friday July 15, 2011. Tickets and hospitality will be in
the Former Origin Greats Hospitality Box - with thanks to the Former Origin
Greats. Starting bid $3000

• The Leader of the Greens Bob Brown is offering an exclusive spring
breakfast for four in Canberra followed by a walk along Bob Brown’s
proposed Democracy Walk starting at Civic (in Canberra’s CBD) and
ending at Parliament House. Starting bid $2000

• A “balance of power” lunch or dinner for six with the three independents -
Tony Windsor, Rob Oakeshott & Bob Katter - in one of Parliament’s fine
dining rooms during a Federal Parliamentary sitting week. So far $2000

• Qantas, the Spirit of Australia, is generously offering a range of fantastic
overseas travel options for the successful bidder. Bidders can choose
from a range of travel hot spots return business class to London,
Shanghai, Johannesburg, Buenos Aires or New York. So far $5900

Buy yourself a piece of the action, for charity.


Click to Read More...

Friday, June 10, 2011

Plain Pack wars: The Dominican Republic takes on Australia!

Ouch.

From the World Trade Organisation June 7 intellectual property council meeting:


Australia’s plain packaging bill for cigarettes

In this new agenda item, the Dominican Republic objected to a draft Australian law requiring cigarettes to be sold in plain packaging without logos or trademarks. The brands would be identified simply in a standard typeface with large graphic health warnings.

Australia originally notified the draft and the public consultation on it under the Technical Barriers to Trade (TBT) Agreement, in document G/TBT/N/AUS/67, which contains details of the requirements. (See also this Australian government web page, which includes images of samples of the proposed packaging.)

Support or sympathy for the Dominican Republic came from Honduras, Nicaragua, Ukraine, the Philippines, Zambia, Mexico, Cuba and Ecuador.

The Dominican Republic said it has “serious and grave” concerns that the proposed law would also violate the WTO’s intellectual property agreement and the linked Paris Convention. Among the legal concerns was that it would be a “special requirement” that would “unjustifiably” encumber the use of trademarks “in a manner detrimental to its capability to distinguish the goods or services of one undertaking from those of other undertakings” (TRIPS Article 20).

The proposed law, the Dominican Republic argued, would hurt tobacco producers in small and vulnerable economies. It would fail to reduce smoking because the lower costs of the packaging and the competition on price — the only remaining marketing tool available — would make cigarettes cheaper and encourage higher consumption. It would also make counterfeiting easier, it said. But it added that it does recognize countries’ right to protect public health.

Australia explained why the law has been proposed — as the next available step in the campaign to deal with a major and lethal health hazard. Higher excise duties and the possibility of using anti-counterfeiting labelling would make the cigarettes more expensive and prevent smuggling, it said. Australia will do this in a way that complies with its international obligations, it added.

New Zealand, Uruguay and Norway said Australia’s draft law is justified. India did not comment on the law specifically but said studies show that plain packaging does reduce smoking. India, Brazil and Cuba stressed their view that countries have the right to implement public health policies without intellectual property being an obstacle — referring directly or indirectly to the 2001 Doha Declaration on TRIPS and Public Health.

Brazil, Chile, Ecuador and China described the issue as complex, requiring balance and a closer examination. Switzerland said it understands both sides of the debate and expects Australia to abide by its TRIPS obligations.

The World Health Organization (WHO), an observer in the TRIPS Council provided information on its policies and on the WHO Framework Convention on Tobacco Control.





Related Posts

. Please, put a floor under cigarette and alcohol prices

. Evil. Coles does more than merely sell cigarettes

. Why stopping smoking is hard


Click to Read More...