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Cuts to foreign aid have gone too far

By Joanna Hayter | December 14th, 2014

It’s gone too far.

In May, when the government announced the first $7.6 billion cut to aid, it became obvious they saw aid as an easy savings tool. Those in charge showed no understanding of the impact of this small part of our budget – its effect on our standing as a nation in the world.

This week, it reached unprecedented levels of human indecency. As pointed out by ANU’s Development Policy Centre, these cuts are:

The largest multi-year cuts to aid ever (33% versus the previous record of 17%)

The largest aid cuts in a single year (20% – $1 billion – in 2015-16 alone)

Taking Australian aid to its lowest level ever.

It is a shocking reality that our federal budget decision-makers cannot make the link between human rights and our nation’s prosperity and security.

The policy hypocrisy is shameful. Our leaders incur costs participating in global conventions and resolutions, only to trash the results. As an example, last month the Australian Government signed on to the G20 Communique saying:

We are committed to poverty eradication and development, and to ensure our actions contribute to inclusive and sustainable growth in low-income and developing countries…The G20 will focus on the implementation of our collective commitments. We will hold each other to account for our actions.

This week, the aid budget has been savaged for the third time in 12 months. The message is clear. Aid doesn’t matter to the Australian Government.

It was a choice they didn’t have to make. The choice now takes on global significance. It will reverberate through all our international relationships, undermining all of our existing global commitments.

To be honest, we just didn’t see this level of disrespect, ignorance and arrogance coming. Australia delivers its foreign affairs and international relations work linked to humanity and global citizenship predominantly through the aid program. This has apparently been summarily dismissed this week.

Policy evaporation is now the norm. This government does not understand how to make the most of its own investments. Development expenditure from the last decade will be lost as gains are now reversed. Our investment in long-term approaches to complex human security and rights issues will be trashed.

‘Cutting off the nose to spite the face,’ is an expression used to describe a needlessly self-destructive over-reaction to a problem. It seems this government is not only willing to do this but also to cut off its nose and lose face. I am reminded of messages from leadership training workshops I did in my 20’s where our teachers told us the difference between a manager and a leader was that managers do things right but that leaders do the right things. We expect our political leaders to do us proud in a globalised world, demonstrating courage and conviction. Addressing and tackling inequality, poverty, discrimination, exclusion, violence, exploitation, conflict, corruption, racism, nepotism… this takes leadership. The financial decision-makers in our government have this week shown a complete lack of integrity.

We now face a strategic reorientation of the aid program in dimensions we could never have imagined a year ago. What this means for IWDA is no more certain than it is for all other agencies and organisations engaged in international development work. The cuts will require much more than a shrinking of existing spending. We can expect regions, countries, sectors, partnership and research mechanisms and contracts to be dismantled or shut down entirely. Everything is threatened. The ultimate decision on what stays and what goes risks being gender blind, unable to demonstrate how women or men, girls or boys will be affected.

The Foreign Minister has championed gender equality and empowerment of women and girls through the Government’s Aid Paradigm since it was released in June this year. IWDA will be holding the government accountable to this over the coming months. We will be providing them with examples of why this is the smartest investment of all to promote prosperity, reduce poverty and enhance stability – the purpose of Australian aid as articulated by the Department of Foreign Affairs and Trade.

This week we are angry. This is not how we want to be seen as a nation. This is not the Australia we represent. Investing in Australia’s future? Australia is ‘open for business’? I don’t think so.

This article was originally published at: http://www.iwda.org.au/2014/12/18/the-season-of-goodwill-to-all-humankind-australian-government-aid-cuts-now-stand-at-11-3-billion/

 

Tags: Aid
Sectors: Government

Don’t let the tax tail wag the investment dog

By Catherine Robson | December 4th, 2014

Most of us want to pay less tax and achieving tax efficiency is a critical wealth creation tool – the less tax you pay, the more money you have to either meet your needs today or to reinvest for the future.

However one of the best ways to lose money is to let tax have a disproportionate influence on investment decision-making.

The most obvious example are the managed investment schemes which proliferated in the late 1990s and early 2000s, such as films, olives, emus and trees. It’s not to say that all investors lost money from this sector, in fact the first Crocodile Dundee movie made millionaires from many of its investors.

The problem with most of the schemes, was that investors looked at the tax benefit first and enticed by its attractiveness, treated the underlying investment as somewhat incidental.

When many of these schemes collapsed under the weight of their own debt and high cost structures, investors had indeed received the promised tax benefits, but had also lost all of their invested capital.

It’s easy to point to the specifics of managed investment schemes, however we can all let tax override our investment judgement from time to time.

For example, negative gearing into property can encourage huge borrowings and big associated risks only to save a small amount of tax and Self-Managed Super Fund trustees have been known to see the words “fully franked dividend” and look no further before deciding to buy one share in preference of another.

Reluctance to pay tax can also be damaging. In 2005 I met a senior executive of an ASX100 listed company who had been issued shares in his employer at listing. The subsequent dramatic increase in the share price meant that they came to represent 90 per cent of his entire wealth.

The need to diversify into other assets to reduce risk was obvious but he didn’t want to pay the hefty capital gains tax bill. Instead, he chose to borrow against the stock, leveraging up his lifestyle in the process. As the share price fell by more than 75 per cent during the Global Financial Crisis, not only did his capital gains tax problem disappear, but he came very close to losing everything, including his house.

To ensure that the tax tail is not wagging the investment dog, ask yourself the following questions:
• What is the expected investment return in the absence of the tax benefits?
• How does this compare with similar investments subject to similar risks?
• Would I make the investment if the tax advantages were not available, in which case they become just one aspect of total return or ‘icing on the cake’?
• Am I taking additional risks to avoid paying tax?

This article was originally published at: http://www.smh.com.au/money/tax/dont-let-the-tax-tail-wag-the-investment-dog-20141127-11v7ga.html#ixzz3KsxZPsOi

 

Sectors: Finance

Gender policy is not a substitute for real action

By Helen Conway | December 1st, 2014

Corporate Australia has been discussing the poor representation of women in management ranks for a decade. G20 leaders have put lifting the number of women in the workforce on the global agenda. Yet, the inaugural release of comprehensive data from the Workplace Gender Equality Agency this week shows employers are largely failing to act and instead are window-dressing their approach under the cover of “policies”.

Close to half of employers in this world-leading dataset have policies for gender equality, flexible working, supporting employees with family and caring responsibilities and those experiencing family or domestic violence. But as anyone who has worked in the real world of corporate Australia knows, policies count for very little.

What drives action in any organisation is a well-articulated strategy that is clearly connected to corporate imperatives, vision and values. Strategies with clearly defined performance metrics that are regularly communicated internally and to which management are held accountable drive action and ultimately results.

So we shouldn’t be surprised that only one in four of the top three layers of management are women. It should also be no surprise that the leadership pipeline is jammed for women at every layer of management, or that the women in the agency’s reporting population (which comprises a third of the Australian workforce and represents over 11,000 employers and about 4 million employees) earn around 20 per cent less than men – a number that blows out to almost 25 per cent when bonuses and other discretionary elements are factored in.

Why is this not surprising? Because fewer than one in five employers have a gender equality strategy, and less than 15 per cent have strategies for flexible working or supporting their employees with family and caring responsibilities (which of course relate to both genders).

So, what does an effective gender equality strategy look like? It will be different for every organisation. However, it must first articulate the need to overhaul the systems, processes and culture that have created an uneven playing field that advantages men and disadvantages women to the detriment of shareholders who simply don’t have a diverse group of the most talented people making decisions in their companies.

It’s changing the structure that says you can either be a mother or a worker, and shifting the norms that define management success with typically masculine characteristics.

Achieving that overhaul is a big job, but it is doable and the rewards are great.

It starts with a root and branch review of the systems, process and signals that dictate how work is done and rewarded. That requires engaging all stakeholders, internally and externally, so their views and concerns are heard and addressed. Leadership accountability, preferably through a balanced scorecard approach where diversity outcomes are tied to remuneration, is also required.

A crisp business case, specific to your organisation and based on corporate data that can be used to measure progress over time, is also essential but rarely done well. This business case, and regular progress assessments against it, ensures the focus and momentum that’s essential to achieving lasting change.

Reviewing all policies and processes – how teams are structured, work is divided, performance is measured, remuneration is set and suppliers are chosen – is essential to ensure they are inclusive of both genders. Reviewing should be done in consultation with employees, who are best placed to tell employers what perverse, unintended consequences certain policies may have. Less than half of employers in our reporting population consult with employees on gender equality issues.

Underpinning these efforts is embedding flexible working, and critical to achieving flexible work is managing people to outcomes, not inputs, which are usually measured by time at the desk.

Of course, what I’m defining here is a brave new world that ensures every person in an organisation, regardless of gender or caring responsibilities, is able to realise their full potential. And that starts with a deep appreciation of the fact that women’s potential in the workplace is limited by both the perceptions of feminine traits as being not aligned to leadership strength and their disproportionate caring burden. If we were to achieve this outcome, imagine the talent we would be nurturing and the impact that would have on business.

When we consider that Australian women are among the most educated in the world, yet are also among the most underutilised in the workforce, surely it’s time we made it a corporate imperative to build the management capability across Australian organisations to ensure we reap the promised benefits of true meritocracy. That requires bold leadership. I hope Australian business leaders, who are mostly men, rise to the challenge.

This op-ed was originally published at http://www.afr.com/p/opinion/gender_policy_is_not_substitute_svaQ3QMmoOQBEbKhv0vyyO

 

Sectors: Business