Brought down on the side of ‘creative’ people – Caveat Emptor – the budget

The Government has not yet explained some Budget proposals in detail. Caveat Emptor: a principle in commerce: without a warranty the buyer takes the risk. The excitement is the budget will allow small business to get a tax advantage for spending, and being creative. The carrot is to encourage you to be a start-up. The beware warning is because; generally the announcements made, as part of the Budget will have to pass as legislation before they take effect. Therefore, Budget proposals should not be taken as fact yet, even if a starting date is proposed.

It is right to get excited, it is a policy turnaround with promise. A promise you will be rewarded for being creative. Now comes another issue: While it helps start-up, being creative just does not cut it at all when it comes to describing what you do (why you are a desirable product). You see a well thought out plan is more than a document; it is the display of your method to success.

As a small business owner you realize the measure of your worth is how you can innovate and compete. There is even a separate government program designed for that purpose. The necessary step is you must have a plan that is focused on an idea and method. If you think about this you realize a politician emphasizing ‘creative’ might be silly. Our PM has repeated wailed the word on the media as describing the primary need for being successful and rewarded by the budget.

What is wrong with the word ‘creative’ you ask? The word ‘creative’ may mean “deceptive in presenting financial information”. The dictionary tells us so, and it seems a poor choice of word to be used in the Budget meant to build confidence.

Maybe the Treasurer is doing a better job of showing an understanding of language – of the budgets intended purpose, and I quote: “If small business people are investing in innovation and job creation, we should be celebrating. That’s fantastic and that’s how you grow an economy.” Then we take notice the PM was reluctant to use the word ‘innovation’ in his address; he preferred to embellish ‘creative’.

Continuing with the Treasurer’s words: “We focused on continuing with our economic plan which is built on last year’s budget, is built on a number of decisions we have made since we came to government.

We are continuing with that economic plan”.

The above comments while confusing are at least reflective of a change to the mindset, or at least, a thought – Start-ups will save us?

Where did that idea come from? A recent start-up economy study undertaken by PwC and commissioned by Google Australia forecasts high-growth technology companies could contribute four per cent of gross domestic product (or $109 billion) and add 540,000 jobs by 2033 from a base of about 0.2 per cent of GDP today.

However, they also warn of market failure and the reason why it is likely.

Then comes the worrying bit of all this enthusiasm. According to a World Economic Forum report, “Australia’s start-up ecosystem is already lagging behind those of many other developed nations due to a lack of emphasis on entrepreneurship education, limited engagement with universities and poor cultural support for entrepreneurs.”

Back to more worry: Treasury makes no forecasts beyond 2016-17. After that, it only makes a technical assumption that all will be well over the following five years. In other words the assumption we will able to achieve nirvana. To this point we read one media report even said :It’s what Happy Joe’s Fairy Godmother might deliver for him, if he had one. It’s not what you would want to base our economic policy settings on.”

To recap earlier in the blog. The risk of being creative is the creator may be seen as deceptive in presenting financial information. The risk of presenting innovation is that might be seen as coincident and opposed to the purpose for the statement.  The case for the cost benefit for the policy would have to ask and answer: Is this idea creative or innovative. It cannot be both otherwise you might be opening for a consensus. Consensus has a habit of finding a rule against the ideals. If you have had policy training, you might be saying – bloody ‘creative’ budget got me going. If we play semantics with the wording, and the PM can spin this morning as encouraging ‘creative’ small – to mean what he did not intend? Did he intend to omit to say innovative small business to be encourage, the day after the budget?

We tested that thought, and to paraphrase some of the responses:

  • We need local employment opportunity to go along with the incentive, something we often see social planners forget about.
  • We to be producers too, not just service providers.
  • We see a different economic reason altogether, the incentive increases our reliance on imports. We have had our manufacturing sector stripped of its ability to compete.
  • Startups are not just IT companies. Real innovators make things, not just create.
  • They don’t get the supply demand balance!
  • Does anyone have a spare $200million laying around, we have a outstanding start-up ready to go. But we have no government support! That got our attention. It is real and the problem policy does not want to know.

Think again if you think they got. Than listen to this game of semantics, on ABC TV: Interviewer Leigh Sales (LS) and Interviewee Joe Hockey (JH) –

LS – The Government’s spending as a percentage of GDP is 25.9 per cent. That is the same as the previous Labor Government (was) spending at the height of the global financial crisis.

JH – Not true. They got to 26 per cent.

LS – You’re at 25.9 per cent?

Another commentator of the semantics, said:

Maybe Australians are thought they don’t know when their legs are being pulled!

Now the dust has started to settle on the hype of the budget. There is a realisation that the accelerated depreciation schedule that was announced for those nice to have tools of trade (sometimes called big boys toys) is not gifts. The scheme is designed to offset your tax liability when you earn enough money to pay for them. The issue them is one of equity. A positive of this is that the plumber or electrician is now fully aware that a market is supply and demand. Albeit the new measure makes them aware they do need to make enough money to pay for the toys. The story continues as we received a plumbing quote a week before the accelerated depreciation for small business was announced – it was $1,700. A few days after the announcement – it was changed to $2,400. Why, the reply to pay for items I need to buy? Why, do you need to buy them? Because I realised I had to earn more money to have a liability to pay tax and that tax is what I can claim from what I buy? And, we were to be a willing to pay for that purpose? Yes. We did not find that equitable – so we put off our purchase.

So the problem is ‘start-up’ are not stand-ups or creative types on how to make money. A genuine start-up is backed by a method that will create money and not just redirect money from old to new etc. We think – nay – still confused!

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ERF funding – is it a play on words.

The Government is confident it will stem the march of climate change with its $2.55 billion Emissions Reduction Fund and its Green Army of tree-planting enthusiasts. So confident, in fact, that it has commissioned $10 million for a new icebreaker in Antarctica.

At least one problem is solved – broken ice will be served with drinks. It sort of makes sense does it not?

But, where is the money, it was not mentioned at all in the budget speech. Even more interesting is submissions on the draft legislation for the ERF are due to close 23rd May 2014. So how will it be funded if it is to start 1 July 2014? As kids often say, Daddy it will just wish-t-appear – how mature of them to understand the minds of our pollies!

In her coverage of the Federal budget Annabel Crabb makes another point on health – why strip away the ability to service our health in order to fund health research. A similar parody could be said a tipping point is fast approaching that mankind is under threat for its existence – anthropogenic influences of climate change will outpace the ability to research a medical solution. Doesn’t make sense except give the opportunity for a fiddle! On reflection Annabel said something about twiddle – could that be what she meant?

Perhaps the last word should go to the Prime Minister, speaking on August 22, 2011:

“Nothing could be more calculated to bring our democracy into disrepute and alienate the citizenry of Australia from their government than if governments were to establish by precedent that they could say one thing before an election, and do the other afterwards.”

Source – Annabel Crabb is the ABC’s chief online political writer – www.abc.net.au .

Co2land org now asks about the $20 billion to be spent on health research, is that a play on words – a weasel? Another worry is as an Australian entity I am at a disadvantage at influencing the wealth of this country, and it is suggested we should register as an offshore entity and get preferential treatment in Australia? It is not a flippant comment: For example, register in Singapore as a $1 company ($500 setup cost), pass their Directorship rule test and there you go! You can sell back your Australian ideas as a new desirable off-shore package and thumb your nose on paying the correct tax. Albeit the UK now says money shifting will be discouraged via London markets. But I guess that only affects the likes of tech suppliers, mining etc. As they tend to use those markets.

What has this got to do with sustainable futures? Nothing. Even the economics make no sense in terms of society – but maybe a small community might do well from it!

Co2Land org has a theory it reflects in the term ‘hubris’. Hubris: The Inside Story of Spin, Scandal, and the Selling of the Iraq War (9780307346827): Michael Isikoff, David Corn: Books

www.amazon.com/Hubris-Inside-Story-Scandal-Selling/dp/030734682X.

The theory is we are being spun the same text book sell on something of an ideal as opposed to a solution. It is even something tried and failed in other political arenas of the world. As in Lewis Carroll’s Alice in Wonderland – Alice in wonderland grew a mile high after eating one mushroom. She was then subject to rule 42 which says that anyone taller than a mile must leave the court immediately. That thought line then mandates that if you think it is a joke you will be subject to rule 13. And, do not dare to ask what is rule 13. If you paraphrase this you just might understand Joe the Treasurer is a Lewis Carroll fan.

Maybe – yes, we are a fan of the real Malcolm Turnbull. He might just turn bull into hope. For those that did not know, he was a former Environment Minister in the Howard Government and is credited with strongly supporting sustainable solutions.

 

The trust envelope – a view

Warning: There’s been changes to the wording of different parts of the contract. Sound familiar, whether is it a Chemist, a Bank, Telco, or any transaction you may have experienced it before. The reality is you not asking hard questions means you have lost something. Let us quote Dr Sandy Donald responding to concessions given by the Queensland Health Minister reported on 15 April 2014: “There were a lot of areas that gave the doctors almost no power to influence decisions and also a lot of areas we felt were open to misinterpretation.” What is the point you say?

The point is it is modus operandi for most dealings today to exploit trust. A Prime Minister might say ‘I am confident’ rather than ‘I confirm’. However, we might expect the weasel word language from that profession. But what happens when a Chemist says: Will you accept a cheaper brand? Think about that question: Did the Chemist say I would pass on a price advantage to you? Well in all likelihood no, the contract is I will give you a cheaper brand, it makes no guarantee you will pay less. You need to ask that question: Will I pay less if I take a cheaper brand? You may find the answer is no!

Without a Bank example we are low end of the Scale, A major telco has used very similar language and supplementary information in a very similar way too. Namely, you received an offer to upgrade. On the surface you are much better off for a reasonable rise in administration fees. You receive a supplementary advice, including: ‘With approval bank, will transfer any promotional rates to the new account’. Feeling good, hey! The welcome pack arrives and the Letter of Offer contains the words: Acceptance will transfer the promotional rate for x period at xx%. Then in the second sentence it says: Upon Expiry, the rate will revert xxxx balance xxxx. Look carefully at this phrasing and supplementary information, as it is as the Dr in the opening part of this post said ‘open to misinterpretation’. Learn to ask the hard question: Did you or will you transfer the promotion rate to the updated card? Most likely answer is no. You might also be taken back to hear ‘If you did not ask the question we had no obligation to tell you’. It follows that once you accepted you have no power to influence the decision to expire the offer.

CO2Land org can hear you say, but we have rights. Not anymore, unless you ask the questions. Em, trust – that may be an error.

 

 

Weasel words

The use of weasel words was a tactic used to engineer that broad based ‘policy’ could be backed out of at any time and a ‘review’ was always the justification for doing so – Flip flop, weasel words, distortion of the truth, devotion to any story will do, maybe Malcolm Turnbull should take over, when he was the voice for the environment he could see ‘as it was, a true understanding of the real world’. As a leader Turnbull had a problem to overcome as he was of honesty, of being courageous and had a conscience.

What does the current leader of the opposition mean when he says “believe me” as opposed to what seems apparent to him saying ‘do as I say’? Check out the following interview taken during the term of this opposition – http://youtu.be/12PN66IBoPs – where there was support for the CARBON TAX by Tony Abbort – Will Turnbull returned as leader be able to stop the weasel?

Put all that aside, are the ‘real’ questions: What is the real price of carbon? What is the real price to business for uncertainty? What is the real cost of the tipping point to no return for the future?