UPDATE – MARCH 2005

NSW Premier Bob Carr promotes failed minister Carl Scully in the portfolio musical chairs report for inept Ministers.

“No excuse for ignoring Glenbrook,” a lead story by State Political reporter Simon Benson for the Daily Telegraph – Friday January 28, 2005, page 21.

No amount of spin was going to save the Carr Government from the fact that, had it heeded the warnings from the Glenbrook disaster, Waterfall would never have happened.

The coroner appointed to investigate the deaths of seven people in the Waterfall disaster on January 31, 2003 delivered this blunt message yesterday.

A clearly angry Justice Peter Mc Inerney handed down his findings yesterday with a pointed warning for the State Government- noting it was the second time he had to preside over train disaster inquiries.

“As I have stated earlier in my reports to the Government I have identified a number of causes which I believe contributed to this accident,” he said.

“All of these causes, I believe were avoidable. Put shortly, this accident should not have occurred, regardless what spin the authorities may put on the circumstances.”

In short, the deaths of seven people could have been avoided if the NSW Government had heeded warnings the rail system was unsafe.

John Raymond Burt, Marie Genevieve Goder, Mark Hudson, Andrew Ludmon, James Ritchie, Yi Zhang and driver Herman Zeides died when a train derailed 2 km south of Waterfall railway station south of Sydney.

Justice Mc Inerney, who also conducted an independent inquiry into the Waterfall train crash and the Glenbrook train disaster, which killed six people in 1999, made an open finding on the death of Mr. Zeides.

He said it could not be determined whether he died from a heart attack, found to be a primary cause of the accident or from injuries he sustained from being flung from the train.

Justice Mc Inerney criticized the Government’s failure to implement earlier safety recommendations from Glenbrook.

“This is the second occasion in four years in which after conducting a special Commission of Inquiry, I have conducted a coroner’s inquest in relation to the deaths of seven passengers in respect of catastrophic rail accidents, “he said.”

“The first such inquiry related to the rail accident at Glenbrook and I made many recommendations in my final report into that accident, many of which were not implemented by the time of the Waterfall accident and which remain unimplemented.”

This damning report by Justice Peter Mc Inerney and yet Premier Carr and his Senior Caucus colleagues have the hide to insult his NSW Constituents by promoting Carl Scully to the Minister of Police, fully aware that Carl Scully was the failed State Rail Minister during the Glenbrook and Waterfall train disasters. This is clear evidence that the Carr Government place very little value on a loss of life, in fact in this instant, seven lives.

BUSINESS PAGE – DAILY TELEGRAPH FRIDAY, NOVEMBER 26, 2004

Huntsman chemical float to boost Packer fortune by Heath Aston

Kerry Packer’s profile in the US will increase when the company that began life making the old style polystyrene burger boxes for Mc Donald’s floats on Wall Street.

Australia’s richest man has a 7% minority stake in Huntsman, the world’s biggest privately owned chemical company, which plans to raise 1.58 billion dollars from investors before listing in New York.

Son, James is a director of Huntsman, overseeing the family’s stake, believed to be worth 400 million dollars plus in the Salt Lake City based company.

Founder Jon Huntsman was a health administrator in the Nixon White House in the 1970’s before going on to supply ‘clamshell’ burger boxes to fast food chain

Mc Donald’s.

But in 1994 Huntsman left packaging for chemicals via the acquisition of assets from Texaco Inc, growing to sales of about 11.6 Billion last year. The Packer family first bought into the sector in 1988, paying $130 million for the Chemplex unit of Monsanto. In 1993, it sold half to the Huntsman family before tipping more cash into the Texaco deal.

Today Huntsman employs 15,000 people in 40 countries including Australia where it owns Orica’s former polyurethane business in Footscray, Victoria.

The global company manufactures a wide range of chemicals, from polymers for plastics to advanced materials for aerospace and automotive parts as well as basic chemicals and polyurethanes.

Huntsman has posted a string of losses since 2001, but narrowed its deficit to $US 82.3 million in the first nine months of 2004.

Chief executive Peter Huntsman, who took over higher energy and debt expenses erode the benefit from improved chemical demands

One has to have grave concerns about the future of Australia’s Pharmaceutical Benefits Scheme (PBS) when you consider Huntsman Pharmaceuticals is going to float on the New York Stock Exchange and this was only made public after the US – Australia Free Trade Agreement (FTA) was acknowledged as a ‘done’ deal.

The Australian, Tuesday January 25, 2005 page 1. Drug Companies threaten price hikes. By Health Editor, Adam Cresswell.

Patients may be slugged up to 32 dollars more for common medicines if drug companies fail to persuade the Federal Government to water down its plan to slice 12.5% off the price it pays for some drugs available on the Pharmaceutical Benefits Scheme.

A confidential briefing document drawn up by the drug industry at the request of patient groups, a copy of which has been obtained by The Australian, also warns that drug companies may withdraw some existing medicines used by small numbers of patients.

“Under the Government’s proposed new pricing laws, some new medicines will simply not be available in Australia at all, or will only be made available years after their registration in other parts of the world,” the document says.

Federal Health Minister Tony Abbott last night insisted the reforms were “about getting decent value for the Australian taxpayer, without any reduction in the availability of medicines.”

According to the industry, drugs that could be affected by surcharges, which would be paid by the patient at the pharmacy in addition to the existing PBS co-payments, include some of the most frequently prescribed medicines.

The class of drugs knows as statins, used to lower blood cholesterol, could be hit with a surcharge of between 8 and 32 dollars every time a patient has a prescription filled according to the document.

The Federal Government announced the 12.5% savings policy at the height of the election campaign. It was then projected to save 830 million over 4 years, which was earmarked for extra payments for pensioners and self funded retirees.

Under the policy, the price the Government pays for all the drugs in a single therapeutic class, such as statins, will fall by 12.5% whenever a generic version of any of the drugs in that class enters the market.

The reductions are cumulative, so that if four brand name drugs in one class come off patent, as will happen with blood pressure drugs in 2006-07, all the drugs in the class will be hit with a total price cut of more than 40%.

The cuts will not flow through to patients who will continue to pay the existing PBS co-payments. These were increased on January 1, 2005 to $28.60 for general consumers and to $4.60 for concession cardholders. Patient groups such as Diabetes Australia and Arthritis NSW have expressed concern at the policy.

John Montgomery, chairman of the Generic Medicines Industry Association, said his industry would be “badly hurt” by the plans.

A spokesman for Medicines Australia said the brand name industry had “concern about the future of certain medications remaining available for patients in Australia.” For further information re: the PBS under the Free Trade Agreement with the US, Link – Update August.

Daily Telegraph Monday, January 24, 2005 page 2. Tax Cuts Worth $13 Billion, Push for real reform, By Fleur Anderson.

The Federal Government is investigating how to deliver further tax cuts worth up to $13 billion a year, one of Prime Minister John Howard’s senior ministers has revealed.

Top of the list is tackling bracket creep, which the Government estimates will cost Australians $4.2 billion a year within three years. Finance Minister Nick Minchin this weekend supported Coalition backbenchers’ calls for tax reform but urged colleagues advocating cuts to match “tax reform zeal” with realism on how to pay for them.

“We need a tax system which maximizes the incentive to work, save and invest but in a way that continues to deliver the revenue the Commonwealth needs to manage the economy and meet its expenditure obligations, Senator Minchin told a Federal young Liberal Convention in Hobart.

About 25 tax busting Coalition MPs, including Victorian Liberal Sophie Panopoulos, former Costello chief of staff Mitch Fifield and Gold Coast MP Steve Ciobo will present Treasurer Peter Costello with a blueprint for tax and welfare reform after July 1.

It is expected to include eliminating the top two tax rates and encouraging stay at home parents and the long term unemployed back to the workforce.

“Senator Minchin said some of the plans were quite expensive”. For the first time, he revealed the cost of eliminating bracket creep would run to $4.2 billion a year by 2008 – 2009. Bracket creep saps cash form workers when the impact of inflation pushes wages into higher tax rates.

More than doubling the amount Australians could earn, from $6000 to 12,500 without paying tax would cost $10 billion a year, Senator Minchin said. Eliminating the top tax rate of 47c in the dollar, which cuts in at $70,000, would cost $3 billion a year. Eliminating both the 47% and 42% tax rates, which cut in at $58,000 would cost a punishing $13 billion a year.

Senator Minchin said Government spending must be slashed for significant tax cuts. “Anyone can come up with very popular tax cutting proposals, the hard part is finding the expenditure savings to match,” he said.

However the “affordable” tax cuts advocated by Senator Minchin would directly benefit very few Australian taxpayers.

Senator Minchin said the superannuation surcharge, which hits those on $100,000 plus a year, should be canned with the federal budget in surplus. The second tax he wanted abolished was 3% tariff on imported business goods, if there was no similar Australian made item.

The money for more tax cuts might be found in Australia’s 206 tax breaks worth almost $33 billion this financial year. A commonwealth Treasury report at the weekend revealed another 22 tax breaks including a tax offset for workers 55 plus, a 25% discount on income tax bills to small business and rebates for small winemakers.

With all due respect we apologise for the aforementioned article, which contains the biggest load of “Crap” ever to be published. Senator Minchin as the Federal Finance Minister is either deliberately misleading the Australian people re: his proposed taxation plans or is completely incompetent in regards to finance.

We’ve formulated our opinion on his statement, “anyone can come up with very popular tax cutting proposals, and the hard part is finding the expenditure savings to match. Senator Minchin as your colleagues and the opposition political parties know fully well that Pauline Hanson was going to introduce a Debit Tax (Transaction Tax) which was going to make Australia’s tax system the world’s best, where every Australian taxpayer was going to be better off whether they are in small business on the land or a labourer. We were denied our democratic rights when you and the opposition parties banded together to brand Pauline Hanson a racist thus preventing her producing her Debit Tax Bill.

Senator Minchin the best advice we can give you is to move to our Link – Update January 2005 and learn how successive Federal Governments for more than 50 years have been subsidizing Foreign Multi-National Companies at the expense of every Australian taxpayer.

The Sunday Telegraph, January30, 2005.

Special Investigation

Cash Deals Beat Taxes

Billion now Spent on Secret Black Economy,

By Sarah Blake.

The Value of undeclared cash payments by passing Australia’s tax collection system now totals at least $4.6 billion.

A special investigation by the Sunday Telegraph has identified small businesses, the building industry and sole traders as key payers in thousands of hidden transactions, which occur each year. The introduction of the GST in 2000 had promised to stamp out much of the black economy.

Australia’s Tax Fiasco

Cash Deals Secret

Honest Workers Play it Straight

By Sarah Blake.

Money is rarely shorter than during a renovation so the temptation to seek a bargain from tradesmen id almost constant.

Rosebery building supervisor Guy Beaumont 30, decided soon after starting his career five years ago that he would play it straight, every time.

“You always get people wanting you to do a deal for cash with them, but it doesn’t help anyone if you agree to it,” he said.

“The work won’t have a guarantee the builder will be often unlicensed or uninsured and it keeps the honest tradies out of work.’

The ATO’s “dob in” line received more than 51,000 reports about suspect tax evasion in the year to June 2003 most of which were about the cash economy.

The complexity of tax laws also makes it difficult for legitimate operators, says gardener Jay Edmunds, 30, of Bondi Junction, who pays an accountant $150 a quarter just to supervise the Business Activity Statements for her business, Sunflower Gardens.

“I wouldn’t know where to start doing it by myself: there is just so much paperwork and it’s hard to get your head around it’ she said.

Billions spent on black market despite the GST

By Sarah Blake

Four years after the introduction of the GST, which promised to stamp Australia’s black economy undeclared cash payments amount to at least $4.6 billion. A special investigation by The Sunday Telegraph shows small businesses, the building industry and backyard operators are key players in thousands of hidden transactions each year.

The situation is so dire in the housing sector that as many as one in five building jobs is a cash deal, the Master Builders Association of Australia, says.

“There are a lot of pressures on builders, contractors and tradesmen by householders to pay cash on the basis of making a saving through not paying GST,” MBA chief executive Willhelm Harnisch said.

Estimates of the size of the cash economy in Australia vary widely given that it is almost impossible to monitor.

The University of Technology’s Dr. Christopher Bajada calculated it as 14% of gross domestic product in 2003 ($28 billion), while the Australian Bureau of Statistics states it is 1.3% or $4.6 billion.

The difficulty in tackling tax avoidance is compounded by the attitude of many who consider it a trivial offence.

“There is a definite attitude in this country of: ‘If I don’t have to pay, I won’t,’ “Tony Greco, from the independent advocacy group Taxpayers Australia, says.

Australian National University research found more than 35% of the population would not dob in a tax cheat and 56% consider tax evasion a trivial offence.

The research also shows the most common cash payments made with the knowledge tax will not be paid are for home repairs (45%) household services such as cleaning (23%) and gardening (21%).

The ease of operating within the black economy is apparent to those who undertake building and renovation work.

Many of the almost two dozen tradesmen who worked on a recent renovation project in the Sydney suburb of Croydon were willing to make significant discounts for cash.

A plumber was willing to install water and gas for the kitchen for $500 cash and even work on a Sunday, compared with the $750 fee a kitchen company quoted for its legitimate tradesman.

A tiler offered to cut his rate from $300 to $200 if paid in cash, while a building contractor said he could reduce his fee from $4400 to $4000.

In each case, the tradesman said they would be unable to offer a receipt for the work and therefore no warranty or insurance was available.

Shadow treasurer Wayne Swan said: “After nine years of reform, the tax system is still a mess. The complexity remains, families are paying more tax than ever, and the cash economy thrives.”

The Sunday Telegraph

Editorial

Black Market Still Thriving

Prime Minister John Howard and Treasurer Peter Costello promised one thing when they introduced the GST in 2000: that despite it’s unpopularity, the new tax would retrieve millions of dollars from the black economy thereby resulting in a fairer tax system.

As a political promise, it was big, but as with many such promises, it has turned out to be largely empty.

In fact as a special investigation by The Sunday Telegraph has revealed, the black economy that runs on undeclared cash payments is now conservatively estimated by the Australian Bureau of Statistics at $4.6 billion or 1.3% of the country’s Gross Domestic Product in 2003.

However, an economist at the University of Technology Sydney has a calculated the figure at a much higher 14.1% of GDP in 2003 approximately $28 billion.

In 2003 the Tax Commissioner Michael Carmody warned that around 70,000 businesses operating in high risk cash economies, “such as building and construction, restaurants, cafes and taxis, can expect to be contacted by one of our 660 cash economy investigators in the field.”

But, as the figures shows, the tougher measures have had little impact. Last year the ATO even admitted that it had no way of getting a real measure of the problem because it does not conduct any analysis to determine the size of extent of the cash economy.

Anecdotal evidence points to workforce willing to supply (goods) for cash. Australia has more than 1.1 million small business owners and most of them comply with the tax system. But they carry a large burden. Advocacy groups say the number one complaint of small business is the bureaucratic red tape.

Many small business owners point to the complexities of the tax system for deliberately operating outside the law.

For them, it is easier to avoid charging the required 10% GST in return for cash payments and subsequently fail to report the income than be strangled by red tape.

Anecdotal evidence points to a marked demand for cheaper products and workforce willing to supply it for cash payments.

The reasons however are not excuses for taxpayers to break the laws. Simply put the integrity of the tax system is compromised by the burgeoning black economy.

The Federal Government and the Tax Office must take immediate steps to eliminate the bureaucratic red tape that constricts legitimate small business owners and encourage everyone to operate within the law.

The Sunday Telegraph investigation shows the failure of the GST but fail to paint out to their readers a better alternative would be to scrap the GST and replace it with Pauline Hanson’s Debit Tax (a 1.5% Transaction Tax). There’s no doubt that the Federal Coalition and opposition parties in tandem with the electronic and print media remain secretive about the Debit Tax.

Link >>> Update January 2005.