by Alan Thornhill
The Federal government wants no repeat of the Vodaphone scandal.
So it is calling finance industry leaders to Canberra this week, to discuss new laws to protect customer privacy.
News reports say the private details of millions of Vodaphone customers have been available to unauthorised people, through a company website.
These include home addresses, driving licences and credit card details,
One expert described this as “a major breach” of the company’s privacy obligations to its customers, and said it exposes them to criminal activity.”
A Federal Minister, Brendan O’Connor, whose responsibilities include Home Affairs, Justice and Privacy, avoided direct reference to Vodaphone in a statement on privacy obligations that he has just issued .
But he was blunt.
“Under the Privacy Act, financial institutions are required to protect consumers’ private information, including details they use to assess a customers’ eligibility for banking products,” Mr O’Connor said.
And he vowed that the present laws would be tightened.
“A binding Code of Conduct will be an integral part of the new credit reporting regime, helping to provide better protection for consumers and better guidance for business,” Mr O’Connor said.
“The Code will encompass more specific rules around access to clients’ personal information, data accuracy and complaint handling than is currently possible to include in legislation,” he added.
Mr O’Connor said Thursday’s meeting would “contribute to the development of the industry-led Code.
It would provide an open forum for interested parties to discuss any issues that worry them.
“The round table meeting will take place at Parliament House, Canberra on Thursday, 10 February 2011, Mr O’Connor said.
“Credit reporting agencies that collect, store and disclose consumer information, finance companies, and consumer and privacy advocates are invited to attend.”
The Government is already preparing draft legislation to implement its response to the Australian Law Reform Commission report
And draft provisions relating to comprehensive credit reporting would soon be finalised and referred to the Senate Finance & Public Administration Committee for inquiry and report.
“This meeting will provide a valuable opportunity for stakeholders to express their views on the credit reporting matters and to make significant progress toward an industry-agreed Credit Reporting Code of Conduct,” Mr O’Connor said.
But he added:”Any Code of Conduct developed by industry will need to be approved by the Australian Information Commissioner before taking effect.”
by Alan Thornhill
Tony Abbott’s campaign speech was brilliantly written and very persuasive.
Does it stand analysis, though?
What, exactly, does Mr Abbott mean, for example, when he says in the fifth paragraph of his speech, “we want to help you through your struggles.”
That’s comforting. But will: “all my trials Lord, soon be over?”
Mr Abbott has been very successful, in this campaign, in setting up shibboleths, or terrifying straw men, that seem to pose great dangers to the nation.
Debt. Government spending. Great big new taxes. People smugglers. These are his prime suspects.
Each is worth a cool, close look.
Oddly, perhaps, the Reserve Bank Governor, Glenn Stevens – a man who should know – isn’t at all worried about government debt.
He insists that Australia has absolutely no foreign debt problems.
That view is backed by Treasury figures, showing that Australia’s foreign debt, measured against the country’s output, or gross national product, will peak at 6 per cent. That is very low, by current international standards.
So what about government spending? This did rise, after the global financial crisis. The government responded with substantial stimulus packages, to avert recession. That worked, but there were problems, most notably with the home insulation program, as some reckless installers used aluminium foil coated batts in ceiling spaces, causing house fires.
Great big new taxes? The government got itself into trouble, when it tried to impose a super profits tax on the mining industry, arguing that big miners, with large profits, should pay something for the resources they are extracting. Mr Abbott placed less emphasis, though, in his speech on the quite substantial lift in the company tax rate he is proposing, for bigger companies, to fund his paid parental leave scheme. Labor is already calling this ” the Coles and Woolies tax,” predicting that it will lead to higher grocery prices. It has a point.
People smugglers? Even at the current rate of boat people arrivals, it would take those wicked people smugglers 20 years, to assemble a decent crowd at an AFL stadium. Is this really a danger to the nation?
Some people, including Tony Shepherd, the chairman of infrastructure company Transfield Services think not.
Speaking at a recent conference, on plans both major parties now have to restrict immigration and stop the flow of boat people, Mr Shepherd said:”This is a terrible debate.
”I’m amazed that Australia is even having it.
”A few thousand boat people coming out, they’ve got the gumption to go out in a leaky boat, cross the Timor Sea and come here – I would have thought that was a fair qualification.”
Now there’s a robust view.
by Alan Thornhill
A dream we all share.
Very saleable, too.
Indeed, it is one of the main hooks the banks use to encourage us to use their services.
So it should be no surprise to find that Australia’s bank chiefs, themselves, value this dream, very highly.
Naturally, that includes those at the very top.
The Productivity Commission noted, earlier this week, that Australia’s top 20 CEO’s must struggle by, on an average salary of just $10 million a year.
Australia’s top bankers would certainly be in this very select group.
Tom Wolfe called their counterparts, in the United States, the Masters of the Universe, in his highly prescient 1987 novel, The Bonfire of the Vanities. Twenty two years later, they became the very people whose reckless greed came close to wrecking the global financial system, with catastrophic results.
Australia’s bankers, certainly, have been more restrained. They stopped writing the word “Yes” on their walls, many years ago.
But their ideas of their own worth are similar.
That led them yesterday, to issue a statement praising the Productivity Commission, for rejecting the idea of caps, on their salaries and those of other top executives, in this country.
David Bell, chief executive of the Australian Bankers’ Association, said:”The community is fortunate to have an economic research organisation that can produce quality work in a very difficult public policy environment.”
We couldn’t agree more. Indeed, we are constantly amazed by the wisdom of those who agree with us.
by Alan Thornhill
Australia will – probably – not have to borrow, to sustain its economy through the present global crisis.
That, of course, is not yet certain.
But, with a crisis package worth $10.4 billion – against what, originally, was to be a $22 billion surplus, there appears to be a strong chance that borrowing won’t be needed.
The United States, where the crisis began, has not been so lucky.
It will have to go, once again, to foreign lenders, to see it through the present trouble.
Especially as the chairman of the US Federal Reserve, Ben Bernanke, is now advising Congress that heavy government spending – on top of the $US700 billion bail out package -will be needed to keep America out of a deep recession.
And that will be expensive.
Interest rates are low, at present.
However, we can expect that they will rise, as the global economy recovers.
Just where, though, does Australia really stand, in all this?
The truth is that not even the Rudd government itself knows that, at present.
The best estimate will come next month, when the Federal Treasury publishes its regular Mid Year Economic and FinancialÂ Outlook document.
Treasury economists are currently using a lot of electricity, working late into the night onÂ that paper.
But, even when it is published, the MYEFO, as it is affectionately known, will contain a lot of guess work.
Downturns do terrible damage to Federal budgets.
They cut tax receipts.
They increase spending, on items like unemployment benefits.
And the longer they last, the more damage they do.
by Alan Thornhill
Economists do live in their own little world.
But an occasional glimpse into it can be rewarding.
So, even if you don’t know the difference between a Phillips Curve and a Laffer curve, you might find a moment or two spent reading some recent Reserve Bank research, to be well spent.
There is a link to it, on the front page of the Reserve Bank’s website, at rba.gov.au.
We must admit that its title is not immediately inviting.
“Understanding the flattening Phillips Curve” is, perhaps, a little short of grabby.
But it deals with some issues that will have a direct impact, one way or another, on your future.
First things first, though.
The Phillips curve tracks the relationship between the rate of inflation and unemployment .
The trouble, according to Reserve Bank Economists Kenn Kuttner and Tim Robinson, is that “in recent years, inflation appears to have become less responsible to fluctuation in output and unemployment.
“That is, the Phillips curve has become flatter.”
This matters, because it affects the calculations the Reserve Bank makes, when reviewing interest rates.
The paper goes well beyond Economics I. Its calculations and reasoning are, at times, quite dense.
But there are glimpses of reality in it too, which are worth a little thought and reflection.
One is that the rise of China, as an industrial power, has fundamentally changed the way prices are set, in the wider world.
“In recent years, the greater role of China in the world economy has undoubtedly held down the price of imported manufactured goods,” the two economists say.
And they say this “may have encouraged domestic firms to be more productive.”
What do we take from that?
Perhaps that interest rate hikes might not be quite as necessary, in future, as they have been thought to be in the past.
by Alan Thornhill
The Prime Minister has finally come out and said it.
“The first responsibility that we have as a government is to ensure the strength of the Australian economy and the strength and stability of the Australian financial system,” he said after meeting State premiers in Perth last night.
Well, perhaps not quite the first.
Defending the realm usually takes that position.
But let’s not quibble.
Mr Rudd probably put it better, when he had a second go at the reporter’s question.
“This is fundamental,” he said.
“It is fundamental to everything.”
He is, of course, absolutely right about that.
Mr RuddÂ explaining why his government has softened its earlier position on Australia’s banks.
Even a week ago, the government was pressuring the banks to pass on any cut in Australia’s official interest rates, in full.
It isn’t, any longer.
That’s because the global financial meltdown is a whole lot worse now, than it might have appeared to be then.
And the dangers are that much greater.
Australia’s banks are, indeed, well governed and well capitalised, as the government keeps telling us.
But that does not mean that they could not be touched, to some extent, by the world’s financial crisis.
The government is right to take one step back, and allow Australia’s banks to protect their position, at this delicate stage, by passing on only part of the interest rate cut that the Reserve Bank is expected to announce next Tuesday.
by Alan Thornhill
The Federal government’s advisers are deeply divided over the future course of defence spending in Australia.
Lieutentant General Peter Leahy, who retired as head of the army last week, is far from alone, in the services, in pressing for the acquistiion of more high tech, high costÂ e quipment.
He sees that as nessary, in view of Australia’s heavy defence commitments overseas, both now and in the future.
However, Treasury economists are warning that Australia’s ability to pay for that equipment still “underpins” future acquisition programs.
Leahy warned, in a weekend interview, that further unrest lies ahead in what he calledÂ these “fractured and troubled” times.
He said that if unrest continued, Australia might well need a bigger – and better equipped – army.
At present, Australian forces in Afghanistan, regularly used Dutch helicopters and Dutch artillery, Leahy said.
Australia would have to think very seriously about providing its own fire support, if those facilities should be withdrawn.
The Treasury economists published their conclusions, in the latest issue of their publication Economic Roundup, which was released yesterday.
Their paper proposed alternative methods of projecting likely defence spending, into the future.
It said these approaches “provide some different ways of thinking about future defence spending trends.”
The economists admitted that defence spending has, actually, been declining, when measured as a proportion of Australia’s growth national product.
But they also said that had only happened because Australia’s economic growth rates had been higher than growth in defence spending.
They warned, too, that defence spending must always be balanced against “fiscal constraints.”
by Alan Thornhill
The Rudd Labor government will face its toughest test tomorrow.
That’s when Professor Ross Garnaut will present his draft report on climate change.
The government will follow that with a discussion paper, setting out the options.
That is, in bureaucratic talk, a green paper.
Professor Garnaut is to produce his final report in September.
That, in turn, will be followed by a white paper, in which the government will spell out its climate change policies.
Although the debate is still at an early stage, Professor Garnaut has already made central points clear.
The most basic is that while tackling climate change seriously now will be expensive, it will still be much cheaper than taking the apparently easier path, and doing little or nothing.
Rudd built, cleverly, on the early euphoria, with which accompanied his government’s early days.
His apology to Australia’s Aborigines, for their treatment at the hands of white Australians – and the 2020 Summit – were both brilliant moves.
Policies that tackle climate change, though, will -necessarily – involve all the expense and the discomfort, that can come with adopting new, tighter ways of living.
Rudd will have just one chance to make those changes.
That will be this year.
A combination of soaring fuel prices, higher food bills, steep falls in share prices and high interest rates will, certainly, erode public confidence, after that. This is happening already.
A strong , efficient carbon trading scheme will be central to the Rudd government’s climate change policies.
And they must include private cars, if those policies are to have a serious chance of success.
Brendan Nelson has already signalled, though, that the opposition will be looking for all the votes it can get, as all this proceeds.
He has already said that it is “not yet certain” that the opposition will support the government, in this area.
That would be a tragedy, of the first order, for future generations.
Weathercoast by Alan Thornhill
A novel on the murder of seven young Anglican Christian Brothers in the Solomon Islands.
Available now on the iTunes store.
Alan Thornhill is a parliamentary press gallery journalist.
Private Briefing is updated daily with Australian personal finance news, analysis, and commentary.
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