Saturday, April 27, 2013

Context at last

"It costs how much? Are we being ripped off?"

Up on the masthead of Sydney Morning Herald this morning.

It refers to a full page story in the business section, headlined "Lucky country becomes the land of eye-watering prices."

It's just the latest in a whole series of media stories along the same lines, but at least this one has some context and includes points I've been making in earlier posts on the subject but which have been missing from earlier media stories.

This one quotes a Deutsche Bank report which shows Australia is one of the world's most expensive countries. Sydney comes in at number five most expensive overall and we're at or near the top of cost lists for various items.

But in this story there's context, at last.

What I said in my post about it in February was: We live in a capitalist system in which the market rules and market forces apply, so companies charge as much as the market can bear.

In Australia we earn far more on average than comparable countries. We earn more, so why do we expect to pay the same as or less than people who earn lower salaries?

Compare the US and UK for example, with conversion into Aussie dollars. The minimum wage in Australia is $15.51. In the US it's $7.25, the UK $9.13. The average wage in Australia is $73,000pa. In the US it's $47,000, in the UK it's $39,100.

We earn almost twice as much, so relative to our earnings we pay much the same, even less in many instances, for stuff we buy. Companies' pricing is based on ability to pay, on what the market will stand.

Nothing like that has been in the mainstream media stories, until now, so they've been misleading. Exclude the facts that get in the way of a good story, you might say. Ruth Williams'story today has the balance that's been missing.

She quotes various people making sensible comments and giving the all-important context.

Choice believes that many companies charge more for products in Australia simply because they can. ''It is about marketers deciding what is the highest price they can charge,'' chief executive Alan Kirkland says.

The Deutsche research confirms that many things that cost a lot more in Australia - such as hotel rooms, a flower delivery or a beer in a pub - involve labour, reflecting Australia's high wages.

Chris Morris, whose Colonial Leisure Group owns a portfolio of Australian pubs and restaurants and a conference and wedding venue in Dorset, England, says labour costs are a big factor in inflating the price of a beer. He estimates that Australian labour would cost, on average, three times more than in Britain.

Stephen Koukoulas, managing director of Market Economics, says the higher wages mean that, in many cases, Australians can actually afford to pay the higher prices.

Wages in Australia are about 50 per cent higher than in the US or New Zealand, and average weekly earnings have risen roughly 3.5 per cent a year for the past five years. Australian wages have outstripped inflation for more than a decade.

''If you want to pay the same as what Americans are paying, then accept American wages. You can't have the low prices without the low incomes,'' Koukoulas says.

And in a comment that applies to so many of these lists:

Saul Eslake, chief economist at Bank of America Merrill Lynch Australia, says the Deutsche report would have been more useful had it compared prices of items as a proportion of earnings in each country. This would show how affordable or expensive each item was for a person earning the local currency.

That's what it's all about, affordability. To simply compare prices is meaningless - for example, the report compares the price of a pack of cigarettes here against the price in Manila. Manila, where, for example, an HR manager on average will be paid $14,000 a year, in Sydney over $100,000.
There'll be many more of these stories and I sincerely hope the authors balance them by including the context.

Sydney Morning Herald story here.

Monday, April 22, 2013

The dangerous business chain

Another example is coming to light of the ridiculously long chains of supply that companies are getting themselves involved with, and getting themselves into trouble as a result.

I've posted about this before, the extra costs it causes, the middle men profiting, the loss of control over supplies.

The latest one involves Target, who are in legal trouble as a result of a chain.

Department stores Myers and David Jones have exclusive rights to sell Estee Lauder's MAC cosmetics, but Target decided to bring in grey imports of the range, advertising it at up to 40% discount.  Now they're being sued by Estee Lauder for selling counterfeit MAC product.

Target's problem is the chain - they don't know where the product came from.

The Sydney Morning Herald reports that Target has launched its own investigation to uncover where its supply of MAC was sourced...worryingly revealing that it cannot be sure who the eventual manufacturer was for the alleged counterfeit make-up.

Instead of dealing direct they stupidly got involved in a vague chain. They went to an Australian importer. The importer went to a wholesaler in Arizon. They went to a tiny one-woman company in Texas, called Mudd Puppy. The trail goes cold there and they're taking legal action against Mudd Puppy to reveal their source of supply.

Ridiculous. Stupid. Unprofessional.

We're not talking about a corner store here, a small family business.

Target is part of Wesfarmers, a huge conglomerate that dominates our retail economy. There are over 300 Target stores which turn over nearly $4 billion a year. You'd think they'd be able to source stock without setting up an unnecessary, costly and dangerous chain.

Why do so many companies do it?

Sydney Morning Herald has the details here

Thursday, April 18, 2013

PS on Boston

A PS to yesterday's post about the Boston bombs and how the killing and maiming of innocent people is seen differently depending on where the murderer comes from.

Reuters has put out this claim in a new report that the bomber may have been caught on camera:

The explosions at the Boston Marathon finish line killed three people and injured 176 others in the worst attack on U.S. soil since September 11, 2001.

The worst attack? There have been plenty of worse attacks on US soil since 9/11. Mass murder in schools and cinemas for example.

But it seems that as they were carried out by Americans with guns they somehow don't count.

I don't get it.

Here's the Reuters report in full.

Wednesday, April 17, 2013

When is a terrorist not a terrorist?

I'm intrigued by the reporting of the Boston outrage, just about everywhere being called a terrorist attack.

That phrase isn't used when Americans go on a mass shooting spree, killing their fellow Americans. Like the regular school massacres or the recent cinema massacre, with many more innocent people killed than in Boston. I don't recall seeing or hearing one reference to terrorism in relation to those.

So what makes it a terrorist attack?  The use of a bomb rather than firearms? The perpetrator being foreign rather than American?

Surely killing and maiming innocent people, or attempting to do so, is a terrorist act, regardless of the weapons of choice or the nationality of the criminal involved. Isn't it?

The FBI are saying they "will go to the ends of the earth" to find those responsible for the Boston bombing, but it's looking more and more likely to me that they won't have to go that far.

No group has claimed responsibility, there's been no crowing about having dealt a blow to the Great Satan. In my mind it's all pointing to a domestic terrorist.

Friday, April 12, 2013

Cavalier attitude with our money

As we know, any work done for or by any level of government attracts a cost that's simply unbelievable in the real world.

It's not their money, it's ours. We provide it with our rates and taxes. Not coming out of their own pockets is obviously the reason they throw it about with such abandon.

So it was with the now-gone rainbow crossing on Sydney's Oxford Street. Seven stripes of paint across a road, done for Mardi Gras and as a 'one month trial'.

This is it:

Photo: Daily Telegraph

Cost to paint it...ready?...$110,000. Paid by Sydney City Council. Or, more accurately, by Sydney City Council ratepayers.
Cost to remove it, by scraping off the surface and putting a centimetre or two of bitumen back in place...$30,000. Paid by the state government. Or, more accurately, by taxpayers.
The fuss seems to be all about whether the crossing should have stayed or gone. The real issue in my opinion is the outrageous costs involved. That's what we should be screaming about.

The full story's here.

Thursday, April 11, 2013

High speed train stupidity

I had to check the date, thinking we were back on April 1st, when I heard the latest on the high speed train proposal, going between Melbourne and Brisbane.

But no, it wasn't April Fools Day and it seemed we were supposed to take the pronouncement seriously.

Where but in Australia would a government minister seriously suggest that to build a 1,750 rail track would take a minimum of forty years!

And a cost of $114 billion.

A hundred and fourteen billion dollars for seventeen hundred and fifty kilometres. I make that $65 million per kilometre. Only in Australia.

But the real stupidity is the time frame.

Even if the impossible happened and the various federal, state and territory governments across that period could agree with each other, by the time it was built it'd be obsolete.

Government contracts always go way beyond the initial timeframe, so well over fifty or sixty years is much more likely.

In reality it's a non-starter, announced obviously for purely political reasons. Although what those reasons would be is beyond me.

You can read the story here.

Friday, April 05, 2013

Power corrupts...

The royal commission into the sexual abuse of children involving institutions is under way, with a mammoth task ahead of it.

They're expecting that at least 5,000 people will want to talk to them about their experiences. The institutions are defined as churches, schools, childcare centres, sports & recreational bodies and organisations/government departments involved in foster care.

This suggests to me that child sexual abuse is a far wider problem than I, and I suspect many other people, thought it to be.

It shows, too, that if you give people power over others, far too many of them simply take advantage of their position.

At least as bad as the abuse itself, in my opinion, is the cover-ups. The Cathlic church has rightly been attacked for this but I suspect they're not the only institution protecting its own. Instead of reporting the offences to the police the offenders were not only allowed to get away with their criminal acts, they were kept in positions where they could continue them on others.

The commission is already commited to spending $22 million of public money and the final bill will certainly be much higher than that.

Institutions found to have employed the criminals who carried out these acts, particularly those that protected them when their abuse was revealed, need to be forced to pay the costs of the commission.

It goes without saying that the individuals named in both the abuse and cover-ups, need to be charged accordingly and brought to trial.

Thursday, April 04, 2013

Besame Mucho

I love live music. Good music that is, played by true musicians.

First have a glass of your favourite drink. Then get a refill, sit back and relax while you watch one of my favourite tunes played in a fabulous way.

It's not only the fact that it's a favourite tune but the 'wish I'd been there' feeling. The good, solid musicianship. A feeling for the music they're playing. The relaxed atmosphere. The passers by. It's about the whole package.

Just click here

The sad thing is that our TV screens and radio are full of celebrity  'musicians' and 'singers' who all 'sing' exactly the same and in reality don't qualify even be roadies for musicians like this.

Tuesday, April 02, 2013

Too many cooks...

A couple of weeks ago in a post about the horsemeat-as-beef scandal I complained about the huge chain of companies involved.

 ...the chain is far too long. So many people/companies/countries are involved no-one can keep track. Opportunities for scams and fraud are obvious.

This chain nonsense is pervasive throughout business. It's totally unnecessary, is detrimental to both businesses and consumers and in my opinion it really is one of the major problems of our time.

It's cropped up again in relation to a court case involving the Fair Work Ombudsman and two oil companies operating offshore.

The basis of the case is that Filipino workers were paid $3 an hour, in breach of the Fair Work Act.

Yet the oil companies were paying $400 a day for each worker, the court was told.

It's the chain again. The middle men making all the money at the expense of the workers, the main players and subsequently their buyers and consumers.

Here's the ridiculous chain. The oil rig's management company, Maersk Drilling, hired the workers from  Perth recruitment company SurveySpec at $400 a day. SurveySpec hired the workers from Philippines-based Supply Oilfield Services at $88 a day. They in turn hired the workers from Hong Kong-based Pocomwell, who paid the workers $30 a day.

Bloody ridiculous.