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Tuesday, 24 June 2008 11:07 |
Ethics Of Corporate Money Lending
John Harris
Recent reports suggest that owner Larry King "borrowed" about $40 Million to personally invest in a racehorse stud, "Written Bloodstock", which has failed as a business. Mr King invested the money with Mark Peters, a former bankrupt, and banned gambler.
There were several options available to raise the money, including business and/or personal loans in the name of Mr King. What he did, it's been reported, is borrow $40 million from his other company, Beechwood Homes. At least some of this money would have had an attached liability on the balance sheet: it was money paid by customers for work that had yet to be done! It was also money needed by the company to ensure that it continued to receive other payments - that is, to continue its business operations.
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Monday, 23 June 2008 11:18 |
Punishing the Cartelist
Jason Soon
Cartels - explicit arrangements between competitors in the same industry not to compete – are condemned by regulators in almost all developed economies. The current government thinks existing civil penalties which include fines aren't steep enough.
In January this year it released for public comment a draft bill, that among other things, would send individuals found guilty of 'serious cartel conduct' to jail for up to five years.
The push for jail-terms for cartelists has much popular support, especially in light of the recent conviction of 'cardboard king' Richard Pratt for price fixing. (As it turns out he is also now facing possible jail time for allegedly lying about knowledge of his cartel). But what are the strongest arguments that can be made for prison?
One argument by the Chairman of the Australian Competition and Consumer Commission (ACCC), Graeme Samuel, is that cartel-related offences such as price fixing are akin to theft and fraud. But this analogy seems quite stretched. When you go out and buy something from the supermarket, you don't buy it on warranty that its price wasn't set cooperatively.
The strongest argument I can think of comes from economics and it relies on the claim that heavy fines are not enough of a deterrent. The decision to set up or join a cartel is effectively a calculated gamble taken by the businessperson and a good one at that. Cartels rely on secret agreements and if they can get up and running, they can raise prices quite substantially for a number of years, as research has shown.
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Sunday, 22 June 2008 01:09 |
Human Decency Test
John Harris
This week's news has been dominated by two events. A third event attracted not nearly as much attention.
Event 1
Alleged bad behaviour by Federal Labor MP Belinda Neal and her NSW Minister husband John Della Bosca. Decency? Enough said - there has been a mountain of material published.
Event 2
The Footy Show (Channel 9) host Paul Vautin ridiculed a bouncer who talked with difficulty when an "interviewer" thrust a microphone almost in his mouth and where the lights and camera also caused visible distress. Vautin said, "... that bloke was blind. He could hardly talk." The security guard concerned has a mild disability which affects his speech, and his eye movements.
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Sunday, 22 June 2008 23:52 |
Governments cannot pick winners but losers can pick governments
Sinclair Davidson
 To be fair new governments always make mistakes. A combination of inexperienced ministers and opportunistic public servants are likely to generate an alcopops tax. Rash election promises give rise to FuelWatch and GroceryWatch. Industry policy, however, has no such excuse. Government intervention in the microeconomy lies at the very heart of the federal government's economic policy.
When Kevin Rudd became leader of the opposition he made the point that he didn't want to be prime minister of a country that didn't "make things". To that end he installed Senator Kim Carr as Industry Spokesman; now Minister for Innovation, Industry, Science and Research. At the time Carr was quoted as saying, "The Howard government ... believe that industry policy can be fixed by the market. That sort of market fundamentalism is an old-fashioned view inconsistent with the facts". Actually industry policy has not just been mugged by reality, it has been savaged.
The ALP released a comprehensive plan setting out its industry policy well before the election. This plan can be summarised into three points; pick winners, throw money at universities, and streamline government. This was not just pre-election fluff; both Rudd and Carr were serious. That plan is now being put into operation.
Money is being spent from the Green Car Fund and yet another government think tank is being established. Money is been thrown at universities. While numerous inquiries are due to report in the second half of the year it is not entirely clear how government is to be streamlined. The intention to "do something" is clear.
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Friday, 20 June 2008 03:12 |
What lies beneath the Iraq line
Gerard Henderson
Kevin Rudd in government has continued the same ambivalence towards Iraq as he exhibited in Opposition. On June 2, the Prime Minister announced that the Australian Defence Force’s Overwatch Battle Group (West) and the Australian Army Training Team Iraq had formally ceased their operations and that combat troops would return home before the end of the month. He said that, notwithstanding the government’s “pride and appreciation for the service and sacrifice of our troops in Iraq”, Labor “did not support the decision to go to war”.
That’s correct, of course. In 2003, Labor leader Kim Beazley made it clear that the Opposition opposed the Howard government’s decision to join the Coalition of the Willing in invading Iraq and ousting Saddam Hussein’s regime. Labor’s position turned on the fact that the Coalition of the Willing – comprising the United States, Britain, Australia and Poland – did not have formal United Nations approval.
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