Australia worst on donations, gaming policies and bank cartel rip-offs

July 22, 2008

Here are Stephen Mayne's four stories from the Crikey edition on Tuesday, 11 April, 2006.

5. Australia heads for world's worst practice on political donations

By Stephen Mayne

It is good to see the Labor Party making some running on the Ho Advertisement

ward Government's quite outrageous attempts to weaken our system of campaign finance disclosure whilst also introducing yet another form of subsidy through an increase in the tax deductibility of political donations.

Alan Griffin's feisty speech to Parliament on 29 March spelt out most of the arguments but former WA Labor MP turned ANU politics lecturer Norm Kelly also landed some telling blows in this article for The Canberra Times on March 27, which included the following:

The Government argues that increasing the donation disclosure threshold to $10,000 brings Australia into line with comparable countries. This is misleading, if not blatantly incorrect. While the proposed new threshold is comparable with New Zealand ($A8600) and Britain ($A12,200), it is well above limits in Canada ($A200) and the United States ($A1400). However, these otherwise comparable countries all place campaign spending limits on parties and candidates, unlike Australia. These restrictions mean there is less likelihood of being able to "buy" an election. In Australia, the lack of spending caps or upper limits on donations means the capacity to unduly influence an election result remains real.
The reduction in disclosure by lifting the threshold from $1500 to $10,000 is just appalling, especially given that such disclosure already occurs belatedly on 1 February each year, seven months after the end of the financial year. Compare that with the UK which has quarterly donation disclosures that become weekly during election campaigns.

As for the increase in tax deductibility of donations from $100 to $1500, it is worth considering just how subsidised our political system already is through public funding – a rort that delivers candidates almost $2 a vote, which equates to about $30 million each Federal election. Why does our political duopoly then deserve the estimated $22 million in additional subsidies over the next four years through tax deductions of donations.

This political welfare has been spreading from state to state over the years. The Bracks government introduced public funding in 2002 which will run at $1.28 a vote in this year's Victorian election, provided candidates poll above the threshold of 4%.This will cost Victorian taxpayers more than $7 million.

Norm Kelly has sent through a table pointing to the disproportionate amount that lower income earners have to spend to make an equivalent $1,500 donation:

Taxable income Tax rebate Net cost to donor
$100,000 $705 $795
$50,000 $450 $1050
$20,000 $255 $1245

Isn't it funny how we have some of the most punitive income tax rates on wage earners in the western world , yet we're now giving them a new way to claim a deduction.

Despite receiving all this taxpayer largesse, political parties don't have to disclose a balance sheet each year when my local community run kinder has to annually tell the Bracks Government our net assets.

When you put all this together, it is clear that Australia is fast developing the weakest and most rortable system of political funding in the developed world. Yet more and more taxpayers subsidies are flowing into the system. Surely after the incredible AWB scandal, the disclosure of payments to governments or political parties should be strengthened rather than dramatically weakened as John Howard is now proposing to do.

12. Coming clean with price-sensitive gaming policies

By Stephen Mayne, shareholder in Tattersall's and Tabcorp

We've seen in the past with Telstra, media stocks and the old Crown Casino in the 1990s how continuous disclosure obligations to the ASX can sometimes clash with policy announcements or political decisions which contain market-sensitive information. In fact, any political statement about uranium policies is extremely price-sensitive in the current U-bubble environment.

Election results can also cause substantial sharemarket movements as we saw with the extraordinary rally in media stocks immediately after the 2004 federal election when the Coalition surprised most observers by securing majority control of the Senate.

Perhaps the biggest example of politically-driven share prices from a state government will come when the Victorian Government announces the structure of Victoria's poker machine industry after 2012 – when the 18-year Tabcorp and Tattersall's duopoly licences expire. Both licences are worth about $2 billion each on a "no change" basis but the government won't be announcing its plans until sometime in 2007 – after the November 2006 state election.

The extraordinary 21.5% statewide primary vote for No Pokies independent MP Nick Xenophon in the South Australian upper house last month might just change the dynamics of all this, especially with the new proportional representation voting system in Victoria's upper house giving minor parties a genuine chance at the balance of power.

Stand by for the Victorian Greens and Family First – the two best placed minor parties in Victoria – to both come out very strongly against the pokies, just as they did during the Tasmanian and South Australian elections before the Xenophon anti-pokies juggernaut was fully comprehended.

The political start-up that I'm toying with running for, People Power, is also going down a similar path, raising the prospect of a minor party anti-pokies auction against the lucrative Victorian duopoly system supported by both major parties because of the $1 billion-plus a year in tax generated.

In light of all this, surely the Bracks Government will have to outline its intentions before Victorians go to the polls to allow a fully informed policy debate. In fact, there's a strong argument that shareholders in both Tattersall's and Unitab should be given some sort of insight into the government's thinking before consummating their $4.3 billion merger because the most valuable asset in the combined group will be that Victorian pokies licence that Tatt's got for free from the incompetent Kirner Government.

Eli Greenblat was wrong in The AFR yesterday when he wrote that the separate Tattersall's lotteries licence, which expires next year, is worth "billions of dollars" over the next ten year licence period. With earnings of about $20 million a year it's only worth about $250 million, unlike the pokies licence which is worth "billions".

20. More fee rip-offs from the bank cartel

By Stephen Mayne

When the Australian stockmarket closed at yet another record high last Friday, our big five banks were valued as follows:

NAB: $60.15bn
CBA: $58.98bn
ANZ: $48.95bn
WBC: $44.35bn
SGB: $15.95bn
Total: $228.36bn

And where does about $200 billion of that value come from? The long-suffering and highly indebted Australian banking consumer, of course.

With every member of this exclusive club enjoying returns of more than 1300% since the Commonwealth Bank first floated in 1991, you'd think the $18 billion or so in pre-tax profits generated each year would be enough.

Sadly, you're badly mistaken if the front page splash in The AFR yesterday is to be believed. The story opened as follows:
The nation's biggest banks are set to reap more than $10 billion in charges this year as they look to offset cut-throat competition in the mortgage and deposit market with sharp fee increases for households and businesses. Stockbroking analysts believe the banks will increase their fee income by between 7 and 9% in 2006 as they raise charges on a range of products, including ATM transactions, telephone banking, Eftpos withdrawals and bank cheques.
Have you noticed how cartel members are all going in exactly the same direction. No bank is proposing to cut fees to attract customers.

I've long given up on Treasurer Peter Costello, RBA governor Ian McFarlane and ACCC chairman Graeme Samuel when it comes to protecting consumers from this cartel. Banking might be nominally heavily regulated but all members of the Australian cartel operate with a government licence which may as well say "feel free to abuse your position and charge as must as you can get away with".

Is there a fee increase that would awake this trio of soundly sleeping bank watchers from their inertia? It's at moments like these that you really wish Paul Keating was running the country again. The Latham Diaries revealed that Keating would be tempted to return to Parliament if he could "f*ck the banks".

It seems that perhaps the only option left is an anti-bank campaign against Peter Costello in his seat of Higgins at the next election. Nothing else seems to work.

21. Revealed: Australia's biggest small share portfolio

By Stephen Mayne, revitalised shareholder activist

Having bought another token $500 worth of shares in eight companies yesterday, my portfolio cracked the magical 100 stocks for the first time. There wouldn't be many individual retail investors who can make that claim and certainly no-one who – for all the trading, brokerage and paperwork – only has a portfolio worth $73,720.

That was the value of the 100 stock portfolio last night, before considering the $35,050 margin loan liability. The eight additions yesterday were ConnectEast, GRD, Funtastic, Indophil Resources, Oceania Gold, Senetas, Singtel and Unwired.

Having started buying stocks last April, it is interesting to note which have doubled to be worth more than $1000 over that period. Step forward BHP Billiton, Record Investments and Zinifex. Others, such as Just Group, CSR and Macquarie Bank, all got there briefly but have since fallen back.

I'm in the market for good advice to on controversial stocks to buy where there might be some interesting action to be had at forthcoming shareholders' meetings. The following 100 stocks have all been bought for that very reason and the bracketed figure is the size of each holding. The only stocks where more than $1000 has been invested are AGL, Gunns, PBL, News Corp and Telstra:

Stephen Mayne's top 100 AGM targets

ABC Learning (80), Alumina (100), Ansell (50), APN News & Media (115), Aristocrat Leisure (50), Atlas Group (420), Austar (500), Austereo (310), Australian Energy (270), AFIC (110), AGL (90), AWB (250), Babcock & Brown (32), Baycorp Advantage (150), Becton (1100), BHP Billiton (35), Billabong (40), Bluescope Steel (60), Brickworks (40), Caltex Australia (40), Central Equity (220), Challenger Financial Services (150), Chiquita Brands (670), Clime Capital (540), Coles Myer (50), Computershare (80), ConnectEast (425), CSR (220), David Jones (220), Everest Babcock & Brown (105), Fairfax (115), Funtastic (285), Gasnet (200), GPT (125), GRD (220), Gunns (1,140), Healthscope (100), Harvey Norman (200), Housewares (350), Incitec Pivot (33), Indophil Resources (666), IAG (95), IOOF (75), Iress Market Technology (100), James Hardie (60), Just Group (300), Macquarie Bank (12), Macquarie Goodman (125), Macquarie Infrastructure Group (130), Macquarie Leisure (240), Mayne Pharma (250), Mirvac (150), Multiplex (165), MYOB (500), NAB (16), News Corp (325), News Corp non-voting (25), Nexus Energy (700), Nufarm (45), Nylex (2,300), Oceana Gold (76), Orica (25), Oxiana (190), Pacifica (250), Pacific Brands (210), Palamedia (100), Paperlinx (200), Patrick (70), PBL (67), PMP (370), Perpetual (8), Primelife (370), Qantas (160), Ramsay Healthcare (65), Reece Australia (40), Record Investments (100), Resmed (100), Rio Tinto (7), Santos (45), Seek (200), Senetas (1000), SFE Corp (31), Sims Group (36), Singtel (230), Southern Cross Broadcasting (50), SP Ausnet (400), Spotless (100), STW Communications (180), Symbion Health (250), Tabcorp (35), Tassal (520), Telstra (610), Toll Holdings (40), Tattersall's (160), Unwired (1300), Virgin Blue (310), Village Roadshow (175), Woodside Petroleum (16), Wattyl (250), Zinifex (110).