Wednesday, November 3, 2010

Answers to Interest charges not simple

The perception that our Banks are monoliths run to the benefit of the Board of Directors needs to be dispelled if we are to have any rational debate on the delivery of affordable interest rates. Banks have shareholders participating both directly and indirectly ( through Super) They have depositors , they have borrowers and a very large workforce all of whom have a differing views as to whom should receive the greater benefit from the Banks operations.Having commenced borrowing from Banks and Finance companies since I was 18 yrs old and I believe made much more money for them than myself I am still grateful that they were around because without them I would never have made any money for myself.

I well remember the days of  many Banks including at least seven Govt. Banks plus over time a number of specialist Govt. Banks designed to respond to some politicians idea of need Over time they closed, went broke or were sold for a variety of reasons.One of which when Govts. like The Hawke Govt. who had once referred to such privatisations as an obscenity simply ran out of money.I do not recollect any of them being any more competitive on interest rates other than where a direct Govt. subsidy was provided at taxpayer expense.When borrowers experienced difficulty in meeting their commitments I found them the least flexible.I well remember such remarks as " Under Section --- of my Act I have no choice but to evict your constituent "

In my early forays into the realms of borrowing when Govt set interest rates the advice I received on many occasions was was "sorry Mr Tuckey I have Lent my monthly quota but I can assist by recommending you to our Finance Subsidiary " ( whose interest rates applied to the total sum borrowed for the term of the loan notwithstanding  monthly repayments.)

While Politicians make threats they also overlook the fact that our Banks still have the choice of lending or not and when they are forced to borrow overseas where the cost of that money includes extraneous charges such as currency hedging the Board and Share holders are entitled to query what particular market they might choose to service .Internationally Home Mortgages are no longer very popular and the generous lending ratios available in Australia are not always available.

It is also worth clearing the air on the role of the Reserve Bank in influencing interest rates .The rate announced by the Reserve is its cash rate for money advanced to or lodged with the Reserve overnight which process is utilised to allow the trading Banks to meet their statutory requirements From a business perspective it has little influence on the true cost of funds particularly when the Australian Govt is competing aggressively for every cent of domestic savings and paying slightly above the Reserve Banks Quote If I read the Media correctly whats more that Govt. paper is trading at 6% .So while you have such an accommodating Govt. why not close all your agencies and just keep say 100 staff just trading Treasuries?

I would like to return to the suggestions for a New Bank ( Govt. of course) At present a couple of operating examples of Govt. enterprise come to mind ie Medibank Private and the WA Landcorp both introduced years ago to create competition in the market place. I have yet to see Medibank exclude itself from the annual process of applications for fee increases and Landcorp is one of the WA Gov ts. largest profit earners.An example provided to myself and some other MPs recently was the case of a subdivision where the developed cost was $80,000 per lot but Landcorps selling price was $250,000. With such friends who needs enemies.

In WA the competitive home construction industry will erect a four bedroom two bathroom brick residence on your block for a little over $150,000 Farm land around Perth would sell in that market for say $2,000 per hec So how come that lot prices exceed the cost of the building and just how much is attributed to Govt. agencies? In NSW some estimates go over $150,000. The annual cost of interest on that amount at Reserve Bank rates is approx $7,000 plus repayments.The Comm bank. .025% increase over the Reserve quote on $400,000 is $10,000.So who is the villain and where should the attack commence.

Clearly all areas should be investigated but not only the soft political targets.

As far as competition in the finance sector is concerned a suitable market probably under the supervision of the ASX is the solution where borrowers and lenders could trade ie A borrower puts their loan requirements out for offer or a lender offers a loan product If such loan products were trade able in much the same fashion as other bond issues. A true market might develop and a new industry of advisers arise .Otherwise I think politicians should reflect on history and attend to the costs that their own actions impose on home owners and small business that greatly exceed the cost of Bank interest.

  Wilson Tuckey

Sunday, October 31, 2010

My Melbourne Cup Selection

As promised I list the horses I propose to include in a Box Trifecta the cost is I believe approx. $62.00 and will pay out if any three of your selection fill the placings which is a good fit for a family or syndicate at work.There is no need to follow my choices but I think it wise to include So You Think after which remember the formula and make your selection from the better performed lightweights.

  3 So You Think   11 Descarado  13 Manighar  20 Precedence  24 Maluckyday

Best of Luck Wilson Tuckey

Thursday, October 28, 2010

The Melbourne Cup -- Weight matters

Throughout my race horse training days I never ignored the old saying "Weight will stop a train"and that principle applies doubly to the Melbourne Cup Whilst statistics are always there to be broken in racing the best formula for profiting with a bet on the Cup is to draw a line through the field just below the lowest runner carrying 54Kgs and study the recent form of those runners below the line. It is also helpful to give some weighting to those in that category who featured prominently in the finish of the Caulfield Cup.

If the published betting markets prevail and make the two topweights the favourites you will find some attractive odds amongst the lighter weighted horses.This gives you the opportunity to back a number of runners and still make a profit provided the odds on each individual runner gives a return in excess of your total outlay.Place bets usually pay one quarter of the winning odds If novelty bets are of interest then the Totes offer a range of products where a larger number of horses can be included in the bet than is required to pay out.It pays in this situation to include a couple of long shots as if one such runner makes a place the return is much greater When having a day out with friends it pays to pool your proposed wager money and increase the number of runners on your ticket .A mixture of fancied runners with some carefully selected lightweight roughies spreads the risk whilst providing the option of a big result.

So lets study the statistics -Since 1984 there have been 26 winners of the Cup 14 of which carried less weight than 54Kgs Only 4 winners carried 56Kgs or more The mighty Makybe Diva carried 58 Kgs in her last victory the other three winners were in the 56Kgs range. In her other two victories the mare carried 51 and 55.5Kgs respectively. In terms of placed runners 32 of the 52carried less than 54Kgs whilst only 7 carried 56Kgs or more.

At todays declared weights The two favourites are Shocking at 57Kgs and So You Think at 56Kgs Shocking was a suprise winner last year but carried only 51Kgs Whilst it is open to critcism some pundits will apply so many lengths of disadvantage per Kilo of weight increase. Hypothetically were that disadvantage say two lengths per Kilo Shocking would have finished twelve lengths from the winner of last years  Cup if handicapped at 57Kgs.

In the case of So You Think the question in my mind is not his abillity to stay but his abillity to buck the statistical odds and lump his allotted 56Kgs over 3200 metres of what maybe a slow track For Bart and the general public I hope he can.Racing needs such a champion but Iwill keep my $20 bucks to invest on a couple of lightweights which I hope I can share with followers on Monday

Wilson Tuckey

Sunday, October 17, 2010

World Vision Donors should retain future donations to pay Tim Costello's Carbon tax

Tim Costello's public commitment to a carbon tax is a warning to small donors to his World Vision charity to retain such donations so they have enough money to pay Tim's Carbon Tax which he proclaimed today is essential to reverse Climate Change although he did not mention which change he wants to reverse ie The WET one in eastern Australia or the unseasonally DRY one in the West

Tim made these remarks in response to his appointment to one of the rash of Gillards New Tax justification Commitees all of which hide behind a billboard marked National Interest and economic reform.

Tim apparently has never researched the statistics related to the response of Australian consumers to tax hikes designed to alter their consuming habits. It never reduced tobaco , alcohol or petrol consumption other than in the short term as demonstrated by the increase in Govt. revenues that follow each such increase

Put simply a tax on carbon will not guaruntee a reduction in energy consumption but increasing the cost of this essental commodity will alter individuals discretionary spending decisions and stopping charitable donations is one of the less difficult. But then this might produce a secondary response which could be a reduction in overseas travel by overseas executives of such funds.

If Tim has genuine desire to reduce carbon emissions he might invite me along to the first meeting of his Commitee to hear just how cost effective big scale renewables could be and how if the Fed Govt. chose to be the primary purchaser and wholesaler of the necessary 60000 GWH of annual generation and  transmision  of such renewables how the necessary international capital and expertise would flock to our shores

Wilson Tuckey

Tuesday, October 12, 2010

Murray /Darlings True Enviroment defies the experts.

I once referred to the Murray/Darling system prior;to recent human interventions  as Australia's biggest STORM WATER DRAIN .As such it flooded to the ocean shifting its estuaries and discharge position by Kilometers depending on how long it was between heavy rainfall events. In between  it dried into often salty pools or long sandy stretches.At the time of European discovery its temporary estuary was that stretch of water named Lakes Alexandrina or Albert  and as Sturt discovered, that estuary was fast filling with sand and the river contemplating a new discharge point when a suitable flood eventuated.

In flood times the River Gums and other flora got a drink and the associated fauna took advantage of that.So intermittent was this event that even the Marsupials evolved to a situation of delayed pregnancy carrying partly developed foetus for very extended periods until food arrived.The Aboriginal population was also sparse and itinerant.

The Berri hotel features a photograph of the 1914 local Primary School picnic IN THE RIVER BED with only a small puddle in sight.Sturt's first encounter with the Darling was one of a chain of extremely saline pools .

This is the true environmental picture of the Murray- flood or dry. The Adelaide region that we know today grew no lawns, gardens or enjoyed  reticulated water supply and sewerage. Its residents had no quarrels with its nor eastern neighbors if the water flow did not reach their territory nor did they complain nor seek compensation in beads or trinkets if those whose territories being subject to excessive rainfall sent them a flood.If the flood produced excessive vegetation they set it on fire before in could become destructive thus ensuring also the longevity of the established trees from over population and the destructive wild fires which nature used  otherwise to correct such neglect.

The intervention of European settlement changed all that by installing dams and weirs and then the ultimate insult to the Rivers independence. The South Australian Barrage system .Worse they produced politicians whose views of the  ENVIRONMENT had nothing whatsoever to do with mmaintaining a river system based on historic evidence but everything to do with the demands of their voting consumers and more particularly in latter years a prosperous self serving educated elite financially independent of the reformed river system who use that status to defy the evidence of history in pursuit of community funded research grants based on altering an environmental situation of its own making.

So before some one gets the impression I am about to advocate the complete closure of the irrigation industry let me say I support it completely I am just browned off with those who defy the environmental history in the name of the environment.For instance considering the rivers stop go practices of the past what benefit is now achieved by allocating stored water to " ENVIRONMENTAL FLOW" other than of course to ensure the citizens of Adelaide get a ration of water that did not precipitate in that territory nor was it regularly available to evaporate in Lake Albert or Lake Alexandrina.Now that the taxpayers have funded a water conservation infrastructure why let a drop of that water flow to the sea or support a primarily recreational economic activity equally comfortable with sea water as evidenced in WA by the Dawsville Cut which allowed the sea into the Southern Estuary of WAs Murray River near Mandurah Thus delivering recreational,economic and significant environmental correction of a man made problem

WE have changed the environmental structures of the Murray / Darling and no one is going to remove the offending infrastructure from which we all benefit and if sufficient water is in the system why not grow things we can eat or clothe ourselves as compared to red gums whom the environmental lobby and the politicians who value their voting preferences have denied us the right to harvest for sustainable use instead of  allowing nature to burn them down periodically.

.The available water is then not over allocated to irrigation its rate of consumption can be controlled periodically  to respond to inflow and available storage If you want to water the flood plains to the historical average then achieve this by infrastructure such as temporarily raising some Weirs or pumping .Costly but cheap compared to the economic mayhem proposed by the current cutbacks to entitlements and certainly more environmentally effective than flowing that water down to the lawns of Adelaide or to evaporate in the Murray estuary so as to support recreational boating and fishing quite adaptable to salt water .

Let me also put the case for annual crops like Rice and animal grazing which can much more easily respond to the historic vagaries of river flow and therefore provide the balance with perennials for which reserves must be maintained.

To summarise   Directing stored water to flow to the sea is counterproductive both environmentally and economically.Such an initiative does not engender the intermittent flooding inherent in the environmental structure  of the river system and who wants to return to floods and a dry river cycle anyway?

This initiative will not maintain a permanent opening to the sea and the politically motivated dredging should be abandoned and the funding allocated to a permanent channel to connect the Coorong to the sea.

Finally those who prosecute their case on the emotive dogma of " ENVIRONMENTAL FLOW "should provide the empirical evidence of the achievement of a return of the historic environment of the River that this will achieve or is it a fact that the economic destruction of the irrigation industry by a thousand cuts is necessary to return the river to its past?

An additional Weir at or near Wellington is probably also a good idea


Wednesday, September 22, 2010

The Solicitor General on Pairs

Its just as well the Solicitor General does not charge independently for his opinions more particularly when all he does is state the bleeding obvious.

It has always been the right of an elected Member to ABSTAIN from a vote deliberately or accidentally it is not allowed however to coerce an MP to not exercise their vote and only Labor Party rules apply sanctions upon any of their members who" cross the floor" In my 30yrs my only recollection of that happening in the Labor Party was when Graeme Campbell did so (coincidentally) to oppose the introduction of a tax on Gold Miners.

I doubt however that there are any Coalition MPs who would volunteer to abstain and on the type of issues involved I would advise members new and old against being the "patsy " who is recorded in Hansard as virtually supporting a view CONTRARY to their conscience or the stated position of the Party Room and above all the views of their Electorate.

Tony Abbott and his leadership team should eschew any ideas of providing Pairs to anyone at any time. The Members of his Party were elected to vote accordingly along Policy lines and none should be denied the right to do so.

Wilson Tuckey

Combet on broken carbon tax promise

Greg Combet interview with Kerry O`Brien on Gillard's broken election promise to not  introduce a Carbon Tax reminded me of Paul Keating's LAW broken election promise. Tony Abbott should now introduce some LAW to the Parliament banning such a tax making it clear he will attend any Divisions involved.

This initiative will test Gillard and the Independents both in the debate and the vote. In particular to match their rhetoric with actual evidence as to the ECONOMIC  and ENVIRONMENTAL BENEFITS of such a measure.

Abbott might also include in his motion a preliminary prohibition on the use of such words as" National Interest" and the Speaker, by the use of the existing powers might require all speakers to address  the substance of the Bill by providing evidence not opinions from various self appointed experts whose utterances are equally bereft of hard facts.

Whilst a Gillard promise has a 24hr USE BY DATE she might just be prepared to provide a guaranteed  figure as to the reduction in CO2 emissions per 1% of tax imposed excluding of course those emissions that are exported to other countries.

During the election campaign I constantly raised the example of Julia "RELUCTANTLY" breaking the promises she never intended to keep to accommodate the Greens however as is typical in his Labor interviews O'Brien avoided the killer question to Combet which was  Considering the Greens had nowhere else to go on the Carbon tax issue and would NEVER support a Liberal minority Govt why was their any need to break this solemn promise?

Wilson Tuckey