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October, 2018

Counting the cost of state selling the farm

THE NSW government has pocketed about$21 billion in asset sale funds from the Hunter over almost three decades.
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So, where’s our $21 billionin funding?

It’s a tempting way to think about the way government works. When we think about the proceeds of privatisation, we tend to link it to big ticket spending items. Things that we can point to, and that politicians can pose next to.

In reality, it’snot so simple. Other things cost money too. Like health, education, and welfare. And, what’s more, we spend more on those things now as a percentage of our overall economy than we used tobecause, whether we realise it or not, the electorate expects more from its governments than ever before.

But it’s not our fault we think like this –it’s been a central tenet of this government. Mike Baird won an election arguing for the sale of the state’s electricity network on the back of the idea that it would fund infrastructure to grow the state’s economy.

Big ticket road and rail funding projects –mostly in Sydney –helped to convince the electorate that it was a good idea to sell those assets.

Part of the reason NSW has been able to do this is because of the Commonwealth government’s “asset recycling scheme” –a legacy of the 2014 budget–which rewards states for selling public assets by allowing them to apply for a 15 per cent top-up in funding for infrastructure projects built from the proceeds of asset sales.

The problem with this approach to government, some economists argue, is that it gives a false price point for public assets.

As the economist StephenKoukoulas told a federal Senate economics committee in 2015, “if anybody offered me 15 per cent more for anything, I would be very tempted to sell it whether I wanted to or not because I know I would be able to do something else with the money”.

“It is interesting that none of these assets have been sold until this bonus, or incentive … has been offered,” he said.

“Presumably all of a sudden these assets are not more valuable – arguably, in a low inflation environment with a very subdued rate of economic growth, they are worth less today than they were some time ago.”

Given the Hunter’s contribution to the state’s coffers, it’s beholden on the government to give projects such as the Lake Macquarie interchange serious consideration.

Issue: 38,492

Hospital build to start in 2018PhotosVideo

Hospital build to start in 2018 | Photos | Video Maitland Hospital forum. Hunter New England Local Health District chief executive Michael Di Rienzo. Picture: Perry Duffin
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Maitland Hospital forum. Picture: Perry Duffin

Maitland Hospital forum. Maitland Cr Loretta Baker and Fairfax Media Lower Hunter editor Eve Nesmith. Picture: Perry Duffin

Maitland Hospital forum. Picture: Perry Duffin

Maitland Hospital forum. Fairfax Media Lower Hunter editor Eve Nesmith. Picture: Perry Duffin

Maitland Hospital forum. Picture: Perry Duffin

Maitland Hospital forum. Maitland MP Jenny Aitchison. Picture: Perry Duffin

Lower Hunter hospital forum in Maitland. Picture: Perry Duffin

Lower Hunter hospital forum in Maitland. Picture: Perry Duffin

Lower Hunter hospital forum in Maitland. NSW Nurses and Midwives Association assistant general secretary Judith Kiejda. Picture: Perry Duffin

Maitland Hospital forum. Picture: Perry Duffin

Maitland Hospital forum. Picture: Perry Duffin

Maitland Hospital forum. Maitland Mayor Cr Peter Blackmore. Picture: Perry Duffin

Maitland Hospital forum. Gerard Hayes, Health Services Union. Picture: Perry Duffin

Maitland Hospital forum. Maitland councillor Henry Meskauskas. Picture: Perry Duffin

Maitland Hospital forum. Andrew Holland, ASMOF. Picture: Perry Duffin

Maitland Hospital forum. Picture: Perry Duffin

Maitland Hospital forum. Picture: Perry Duffin

Maitland Hospital forum. Picture: Perry Duffin

Maitland Hospital forum. Picture: Perry Duffin

Maitland Hospital forum. Picture: Perry Duffin

Maitland Hospital forum. Dr Ben Spies-Butcher, Macquarie University. Picture: Perry Duffin

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Bank levy could make us less shock-proof, industry claims

John Fraser Treasury Secretary appared before a Senate Committee at Parliament House in Canberra on Wednesday 10 February 2016. Photo: Andrew Meares Photo: Andrew MearesThe ability of banks to respond to future fast-moving financial shocks could be undermined by the government’s $6.2 billion bank tax, several of the country’s largest lenders claim.
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In submissions to Treasury on Monday, banks argued the budget’s levy would work against efforts for lenders to build up more liquid, or easy-to-sell assets, designed to help banks cope through a period of turmoil.

Since the global financial crisis, banks have been forced to run themselves in a way that means they could continue to stay open for business during a thirty-day period of financial stress.

The rule is meant to ensure banks have enough high-quality assets that could be easily sold to cover any short-term outflows. But submissions from the ANZ, Commonwealth Bank and National Australia Bank all claimed the tax would work against this goal.

It came as ANZ Bank’s chief executive Shayne Elliott told an Australian Shareholders’ Association conference it was “largely a nonsense” to say banks could “absorb” the levy, as the government has claimed.

The government has defended the bank levy as a relatively small slice of the industry’s profits, which will help the budget and also benefit consumers by boosting competition. Liquid risk

But in a letter to Treasury Secretary John Fraser, CBA chief executive Ian Narev said one of several “major risks” was that the levy would undermine efforts of lenders to strengthen their balance sheets.

Under a post-GFC package known as Basel III, banks have been forced to hold more liquid assets, and pushed to obtain more of their funding from longer-term wholesale debt. CBA argued there would now be a “disincentive” to do more than the bare minimum in both of these areas.

Mr Narev said CBA used debt to fund its purchase of high-quality liquid assets. The tax would make it more expensive to fund these assets because it would apply to debt issued by the bank.

The tax would therefore act as “disincentive” for the bank to hold more than the regulatory minimum of such high-quality assets, he said, which was contrary to what it had been told by the Australian Prudential Regulation Authority.

“The levy creates disincentives for banks to build liquidity and funding buffers, a critical part of being ‘unquestionably strong’,” Mr Narev wrote, referencing the central recommendation of the Murray inquiry in the financial sector

ANZ’s Mr Ellliott also highlighted the issue in a letter to Treasury that argued banks should receive an exemption, to remove the impact of the tax on liquidity buffers.

“Banks that independently strengthen their liquidity should not be disadvantaged by the new tax,” Mr Elliott said.

NAB’s chief financial officer, Gary Lennon, also requested that high quality liquid assets be excluded from the levy calculation. Profit considered

The big four banks made about $30 billion a year in combined profits in 2016, but the fact that banks will be forced to pay the levy even when they are unprofitable was also criticised by banks. Mr Narev warned this would make it harder for banks to attract capital “in tougher times when there are constrained profits.”

Speaking in Melbourne, Mr Elliott said the bank levy would directly impact its shareholders, many of whom “rely on those dividends for their livelihoods”.

“This is a tax on you, our shareholders,” he said.

“The idea this tax can be absorbed by the banks is largely a nonsense. We have a job to explain that.”

Another concern raised repeatedly by banks is that the levy could give a leg-up to some of the largest banks in the world. Foreign lenders such as Citi and HSBC who compete with the big four domestically will not be charged the fee.

Westpac’s chief financial officer, Peter King, said excluding large multinational banks would place the local lenders subject to the tax at a competitive disadvantage in businesses such as trading in government and corporate bonds, trade finance, and institutional deposit-taking.

While the big four banks have lost almost $14 billion in combined market capitalisation since the tax was announced last week, there has been no significant reaction in credit markets where banks raise most of their funding.

Mr Narev’s letter to Mr Fraser also raised concerns the levy could become an “ongoing tool for governments to fill Budget gaps” in the future, or it could be applied to other industries outside banks.

He said the levy “contradicts the idea that we want people and businesses in Australia to be productive and successful.”

“The levy implies that being profitable is a negative when, in fact, the banking industry’s profitability benefits and supports the whole economy,” Mr Narev wrote.

This story Administrator ready to work first appeared on Nanjing Night Net.

Phoenix soar to top of table

WINNERS ARE GRINNERS: Belmont with the Lennox-Robson Shield,PHOENIX Charlestown have claimed top spot in the Newcastle Major League with an emphatic 12-2 win over Toronto on Sunday.
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The 10-run defeat at Waterboard Oval was the Tigers’ first loss for the season and extended Phoenix’s unbeaten streak to four.

Phoenix shot out of the blocks to lead 2-1 after one inning before consolidating their advantage in the back end of the game, adding eight runs from the fifth to the seventh

Catcher Rixon Wingrove put an exclamation point on the result, smashing a two-run home run in the top of the ninth.

It was his fourth hit for the afternoon and the third and fourth runs he had driven in.

Only two Toronto players – Todd Bowden and Dylan Smider – managed more than one hit as the team totaled nine.

Toronto’s quiet afternoon of the plate can in part be attributed to Phoenix hurler Brendan Lower.For a second game the Illawarra native threw a complete game, striking out nine while allowing just one walk in 123 pitches.

Toronto will need to regain their best form quickly as they prepare for Sunday’s showdown with champions Belmont at Miller Field.

It will be the first meeting between the two rivals since last year’s decider after their opening round clash was washed out.

The Seagulls warmed up for the grudge match with a 4-1 win over White Sox at Miller Field.Belmont led 4-0 after two digs but failed to add another run.

Sox were playing for the Lennox-Robson Shield for the first time since the passing of club life member and long-time scorer Barbara Robson last year.

Margaret Lennox, her counterpart from Belmont, was on hand to present the trophy to the club she is a life member of.

Boomerangs had the bye on the weekend and will return to the diamond against Phoenix at Stevenson Park on Sunday.

GWS won’t get into a bidding war for star

Neither Greater Western Sydney nor young star Josh Kelly will renegotiate the terms of a two-year contract extension to keep him at the club, despite his rich vein of form this season.
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The club has no intention of boosting its financial offer to keep him from returning to Victoria; nor does the Kelly camp have any intention of asking for it.

Kelly has to decide whether to stay at the Giants or join North Melbourne on a mammoth nine-year, $9 million deal, while St Kilda are also in the hunt.

The Giants are believed to have tabled a two year offer, worth approximately $1.3 million.

While the club has the ability to raise that offer slightly, Kelly won’t be asking for more as he continues to mull over his decision.

Kelly had a career-high 36 disposals and laid 11 tackles in the Giants’ thrilling three-point win over Collingwood on Saturday.

The 22-year-old is averaging 28 disposals this year and has only failed to have more than 25 disposals just twice in the first eight games.

If Kelly were to stay at GWS, he wouldn’t sign a long term deal.

He would agree to a two or three-year extension with the aim of renegotiating when he comes into the prime of his career, at the age of 24 or 25.

The Giants are also trying to manage a list full of young stars and the club’s greatest challenge in its short history will be keeping the majority of them while remaining inside the salary cap.

The club hopes the strong possibility of consistent team success in the next five years will prompt players to choose to stay for less money than they would get at other clubs.

Kelly’s father Phil played 61 games for North Melbourne in the 1980s, with Josh growing up a die-hard Kangaroos’ supporter.

Kelly came very close to signing a two-year contract extension in late January, before being made aware of lucrative offers to return home.

It remains unlikely that a resolution surrounding Kelly’s contract will be reached in the near future, with a decision likely to be made near the end of the season.

It comes as both the Giants and the management of another young star, Lachie Whitfield,scoffed at suggestions that Whitfield may be on his way out of GWS.

Whitfield returned to football on the weekend for the first time since last year’s preliminary final, following an AFL-imposed ban for evading a drug test.

The 22-year-old had 25 disposals in his comeback game, having been in the Giants’ best few players during last year’s finals series.

He is contracted until the end of 2018 and he may even sign a contract extension by the end of the year.

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