tag:theconversation.com,2011:/ca/topics/acoss-4084/articlesACOSS – The Conversation2022-01-19T18:59:45Ztag:theconversation.com,2011:article/1751462022-01-19T18:59:45Z2022-01-19T18:59:45ZGovernment slashes COVID payment when people need it most<p>With Australia’s official COVID-19 infection numbers topping <a href="https://www.nytimes.com/interactive/2021/world/australia-covid-cases.html">100,000 a day</a>,
the federal government has slashed its last remaining pandemic support payment. </p>
<p>The decision is ill-timed, irresponsible and heartless. It is stripping away support for those most affected by the pandemic at the time they need it most. It will place those in low paid and precarious work in further financial stress as they lose income to isolate when infected or in close contact with someone else with COVID-19. </p>
<p>The Pandemic Leave Disaster Payment was introduced in August 2020 in response to concerns casual workers and others without sick or pandemic leave entitlements could not take time off work when infected or in contact with someone with COVID-19.</p>
<p>The leave payment was initially available to those not qualifying for JobKeeper – or, after JobKeeper ended in March 2021, the “disaster payment” introduced in response to <a href="https://theconversation.com/support-package-for-sydney-better-and-more-fit-for-purpose-than-jobkeeper-164394">the Sydney lockdown</a> in July 2021. Since that payment ended the Pandemic Leave Disaster Payment is the only individual financial support the federal government provides.</p>
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Read more:
<a href="https://theconversation.com/2-6-million-face-poverty-when-covid-payments-end-rental-stress-soars-157244">2.6 million face poverty when COVID payments end, rental stress soars</a>
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<p>Available to people who had contracted COVID, were a close contact or needed to care for someone who had COVID, until this week it paid A$750 a week for two weeks. You could claim the payment regardless of the number of hours of paid work you lost.</p>
<p>On January 18 the rules tightened – a move announced via a <a href="https://ministers.pmc.gov.au/mckenzie/2022/changes-pandemic-leave-disaster-payment">press release </a> on January 8 (a Saturday). </p>
<p>Now it only pays $750 if you lose 20 hours or more of paid work a week. If you lose 8-19 hours you get just $450 a week. If you lose less than eight hours you get nothing.</p>
<p>Getting the payment has also been made more difficult by imposing a 14-day time limit to apply, from the start of the isolation period. To qualify, you must show evidence of a positive PCR or rapid antigen test. Considering the difficulty of obtaining RATs, and delays in PCR test results <a href="https://www.smh.com.au/politics/victoria/test-samples-no-longer-suitable-after-seven-day-wait-20220108-p59ms1.html">of a week or more</a>, this is a unreasonable and unnecessary constraint. </p>
<h2>Flawed eligibility rules</h2>
<p>A major flaw in the eligibility rules for the leave payment it is not available to people receiving social security payments. This excludes all JobSeeker recipients, despite about <a href="https://data.gov.au/data/dataset/dss-payment-demographic-data/resource/80cc89a3-3208-4e0d-9745-598f7a882e28">one in four</a> being in some form of paid work – generally low-paid casual jobs. </p>
<p>The leave payment has been a vital part of the economic supports to help people stay safe and protect their loved ones and the community.</p>
<p>The peak body for the community services sector, the Australian Council of Social Service, has <a href="https://www.acoss.org.au/media-releases/?media_release=another-income-hit-for-casual-workers-massive-cut-to-pandemic-leave-disaster-payment">condemned this decision</a>. It says cutting the payment will leave people without enough to cover basic costs, let alone the extra costs of isolation such as delivery fees, rapid tests (if you can get them) and personal protective equipment.</p>
<h2>Worst time possible</h2>
<p>There could scarcely be a worse time to cut this payment, with Australia now in the worst stage of the pandemic.</p>
<p>Between August 5 2020 and July 8 2021 the Pandemic Leave Disaster Payment provided <a href="https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/rp/rp2122/Quick_Guides/COVID-19DisasterPayments">almost 15,000 grants</a> to support those in need. During this period the peak COVID case rate was just over 500 day, in August 2020. Consider, therefore, the likely need now we’re at more than <a href="https://www.nytimes.com/interactive/2021/world/australia-covid-cases.html">100,000 a day</a>. </p>
<p>With no other form of federal income support available you may apply for an unemployment or sickness payment like JobSeeker. But Services Australia advises this will be paid about <a href="https://www.servicesaustralia.gov.au/when-youll-get-your-first-jobseeker-payment?context=51411">two weeks after</a> a claim is granted. That is of little help to cover rent while you’re isolating with COVID. JobSeeker is also a maximum of $315 a week – inadequate to cover basic costs. </p>
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Read more:
<a href="https://theconversation.com/healthy-humans-drive-the-economy-were-now-witnessing-one-of-the-worst-public-policy-failures-in-australias-history-174606">Healthy humans drive the economy: we're now witnessing one of the worst public policy failures in Australia's history</a>
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<p>This cut will affect many of the same people <a href="https://www.dailytelegraph.com.au/news/national/pm-announces-national-day-of-thanks-for-pandemic-heroes/news-story/174c8ccb94814aaa554d79eea0193e4f">lauded as the heroes of pandemic</a> – essential workers employed casually in health and aged care, supermarkets, hospitality venues and warehouses. It will also hurt temporary visa holders, who are entitled to the leave payment and do not qualify for any other federal income support. </p>
<p>Last week <a href="https://www.acoss.org.au/media-releases/?media_release=community-sector-calls-for-collaboration-and-decisive-leadership-from-national-cabinet-to-deal-with-covid-debacle">ACOSS called for</a> the establishment of a civil society COVID Rapid Response Group to work alongside National Cabinet. We need the interests of people most at risk in the room at the highest levels when decisions like the future of the Pandemic Leave Disaster Payment are made.</p>
<p>Cutting this payment now is effectively telling low-paid workers at the worst stage of the pandemic in Australia that they’re on their own.</p><img src="https://counter.theconversation.com/content/175146/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Cassandra Goldie is chief executive of the Australian Council of Social Service, which receives funding from governmental, philanthropic and member organisations.</span></em></p>With Australia now in the worst stage of the COVID-19 pandemic, there could hardly be a worse time for Australian government to cut and restrict its Pandemic Leave Disaster Payment.Cassandra Goldie, Adjunct Professor and UNSW Law Advisory Council Member, UNSW SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/819872017-08-06T12:48:17Z2017-08-06T12:48:17ZPoor households are locked out of green energy, unless governments help<p>A <a href="http://www.acoss.org.au/wp-content/uploads/2017/07/ACOSS_BSL_TCI_Empowering-households.pdf">report released this week by the Australian Council of Social Service</a> has pointed out that many vulnerable households cannot access rooftop solar and efficient appliances, describing the issue as a serious problem. </p>
<p>It has provoked controversy. Some have <a href="http://reneweconomy.com.au/welfare-lobbys-misguided-and-self-defeating-attack-on-solar-11379/">interpreted the report as an attack on emerging energy solutions</a> such as rooftop solar. Others see it as exposing a <a href="http://reneweconomy.com.au/soaring-power-prices-caused-decade-policy-instability-13748/">serious structural crisis</a> for vulnerable households.</p>
<p>The underlying issue is the fundamental change in energy solutions. As I <a href="https://theconversation.com/the-national-electricity-market-has-served-its-purpose-its-time-to-move-on-80973">pointed out in my previous column</a>, we are moving away from investment by governments and large businesses in big power stations and centralised supply, and towards a distributed, diversified and more complex energy system. As a result, there is a growing focus on “behind the meter” technologies that save, store or produce energy.</p>
<p>What this means is that anyone who does not have access to capital, or is uninformed, disempowered or passive risks being disadvantaged – unless governments act.</p>
<p>The reality is that energy-efficient appliances and buildings, rooftop solar, and increasingly energy storage, are cost-effective. They <a href="https://theconversation.com/australians-can-have-zero-emission-electricity-without-blowing-the-bill-69869">save households money</a> through energy savings, improved health, and improved performance in comparison with buying grid electricity or gas. But if you can’t buy them, you can’t benefit.</p>
<p>In the past, financial institutions loaned money to governments or big businesses to build power stations and gas supply systems. Now we need mechanisms to give all households and businesses access to loans to fund the new energy system.</p>
<p>Households that cannot meet commercial borrowing criteria, or are disempowered – such as tenants, those under financial stress, or those who are disengaged for other reasons – need help.</p>
<p>Governments have plenty of options. </p>
<ul>
<li><p>They can require landlords to upgrade buildings and fixed appliances, or make it attractive for them to do so. Or a bit of both. </p></li>
<li><p>They can help the supply chain that upgrades buildings and supplies appliances to do this better, and at lower cost.</p></li>
<li><p>They can facilitate the use of <a href="http://www.ecogeneration.com.au/numen-device-indentifying-software-the-missing-%20link-in-energy-efficiency">emerging technologies</a> and <a href="http://www.smappee.com/au/home">apps</a> to identify faulty and inefficient appliances, then fund their replacement. Repayments can potentially be made using the resulting savings.</p></li>
<li><p>They can ban the sale of inefficient appliances by making mandatory performance standards more stringent and widening their coverage. </p></li>
<li><p>They can help appliance manufacturers make their products more efficient, and ensure that everyone who buys them know how efficient they are.</p></li>
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<p>To expand on the last suggestion, at present only major household white goods, televisions and computer monitors are required to carry energy labels. If you are buying a commercial fridge, pizza oven, cooker, or stereo system, you are flying blind.</p>
<p>The Finkel Review made it clear that the energy industry will not lead on this. It clearly recommends that energy efficiency is a job for governments, and that they need to accelerate action. </p>
<p>It’s time for governments to get serious about helping everyone to join the energy transition, not just the most affluent.</p><img src="https://counter.theconversation.com/content/81987/count.gif" alt="The Conversation" width="1" height="1" />
<h4 class="border">Disclosure</h4><p class="fine-print"><em><span> Alan Pears has worked for government, business, industry associations public interest groups and at universities on energy efficiency, climate response and sustainability issues since the late 1970s. He is now an honorary Senior Industry Fellow at RMIT University and a consultant, as well as an adviser to a range of industry associations and public interest groups. His investments in managed funds include firms that benefit from growth in clean energy. He has shares in Hepburn Wind. </span></em></p>A report released this week by the Australian Council of Social Service has pointed out that many vulnerable households cannot access rooftop solar and efficient appliances, describing the issue as a serious…Alan Pears, Senior Industry Fellow, RMIT UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/592292016-05-12T22:58:08Z2016-05-12T22:58:08ZElection FactCheck Q&A: is Australia among the lowest-taxing countries in the OECD?<p><strong>The Conversation is fact-checking claims made on Q&A, broadcast Mondays on the ABC at 9:35pm. Thank you to everyone who sent us quotes for checking via <a href="http://www.twitter.com/conversationEDU">Twitter</a> using hashtags #FactCheck and #QandA, on <a href="http://www.facebook.com/conversationEDU">Facebook</a> or by <a href="mailto:checkit@theconversation.edu.au">email</a>.</strong></p>
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<figcaption><span class="caption">Excerpt from Q&A, May 9, 2016.</span></figcaption>
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<p>One of the first facts, and it comes from the <a href="http://bettertax.gov.au/publications/discussion-paper/chart-data/chpt2/">Treasury’s own tax discussion paper</a>, is that we are one of the lowest-taxing countries in the OECD. – Australian Council of Social Service CEO Cassandra Goldie, <a href="http://www.abc.net.au/tv/qanda/txt/s4432624.htm">speaking</a> on Q&A, May 9, 2016.</p>
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<p>Voters will hear plenty of seemingly contradictory claims on tax in the lead-up to the federal election. Is Australia a <a href="http://www.smh.com.au/business/federal-budget/budget-2016-treasurer-scott-morrisons-budget-speech-in-full-20160502-gojvs0.html">high-taxing country</a> or was ACOSS chief Cassandra Goldie right to say that Australia is one of the lowest-taxing countries in the Organisation for Economic Co-operation and Development (OECD)?</p>
<p>Let’s unpack the facts on tax.</p>
<h2>Checking the data</h2>
<p>A spokesperson for ACOSS told The Conversation that Goldie’s statement was based on Treasury <a href="http://bettertax.gov.au/publications/discussion-paper/">documents</a> and OECD data. (You can read their full response <a href="http://theconversation.com/full-reply-from-acoss-59306">here</a>.) </p>
<p>The most recent OECD data for Australia, for the year 2013, lists Australia as having a tax-to-GDP ratio of 27.5%. This is the sixth lowest in the OECD after Mexico, Chile, Korea, United States and Switzerland.</p>
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<p>This ratio is based on tax as a proportion of GDP.</p>
<h2>Australia is above average for some taxes; below average for others</h2>
<p>The data above show us Australia’s total tax revenue as a proportion of GDP. However, within Australia’s tax mix are a range of taxes, including corporate tax, personal income tax, GST and many more.</p>
<p>A closer look at the breakdown reveals that Australia is above the OECD average for some tax categories, such as corporate tax.</p>
<p>Australia also has relatively high collections from income tax, but lower levels of consumption taxes than the average in the OECD. </p>
<p>The following table compares the OECD average tax rates with Australia for the most common taxes:</p>
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<p>The table shows that Australia collects more income tax and corporate tax as a proportion of GDP than the OECD average, but less tax on goods and services. </p>
<p>This is reflected in the relevant tax rates, which are higher than the OECD average for income tax and corporate tax, but lower for goods and services.</p>
<p>Here’s how Australia’s top marginal tax rates compared with the OECD average in 2013.</p>
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<p>Analysis of the tax mix must be treated with caution: for example, Australia is one of two countries in the OECD that does not impose a Social Security Tax, which averages 9.1% across OECD countries.</p>
<p>And any <a href="https://theconversation.com/factcheck-is-australias-corporate-tax-rate-not-competitive-with-the-rest-of-the-region-37226">discussion of the corporate tax rate</a> should take into account that Australia and New Zealand are unusual in adopting a full dividend franking system in respect of dividends paid to resident shareholders.</p>
<p>The ACOSS spokesperson <a href="http://theconversation.com/full-reply-from-acoss-59306">told</a> The Conversation that: </p>
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<p>The Australian corporate tax rate is above the OECD average, though comparisons are complicated by our dividend imputation system, which means that company tax is refunded to domestic shareholders.</p>
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<h2>Verdict</h2>
<p>Cassandra Goldie’s statement that Australia is the sixth-lowest-taxing country in the OECD is true for total tax revenue as a percentage of GDP. </p>
<p>However, Australia does rank higher than the OECD average on income tax and corporate tax collections, and lower than average on goods and services tax collections. <strong>– Helen Hodgson</strong></p>
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<h2>Review</h2>
<p>This looks like a fair analysis of the data. The OECD also <a>publishes</a> data showing total tax paid on corporate income <a href="http://www.australiancentre.com.au/sites/default/files/FAFF%20imputation.pdf">distributed as dividends</a> (taking into account imputation), which suggests a lower ranking for Australia. <strong>– Kevin Davis</strong></p>
<p><em>CLARIFICATION: On May 16, 2016, a category in the table titled “OECD average tax rates vs Australian tax rates for most common taxes (2013)” was changed from “GST as a % of GDP” to “Tax on Goods & Services as a % of GDP.”</em></p>
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<p><div class="callout"> Have you ever seen a “fact” worth checking? The Conversation’s FactCheck asks academic experts to test claims and see how true they are. We then ask a second academic to review an anonymous copy of the article. You can request a check at checkit@theconversation.edu.au. Please include the statement you would like us to check, the date it was made, and a link if possible.</div></p><img src="https://counter.theconversation.com/content/59229/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Helen Hodgson receives funding from AHURI. Helen Hodgson is a member of the Tax Policy Working Group of ACOSS and the Social Policy Committee of NFAW. Helen was a member of the WA Legislative Council as an Australian Democrat from 1997 to 2001, but has no current affiliation with any political party.</span></em></p><p class="fine-print"><em><span>Kevin Davis does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Australian Council of Social Service chief Cassandra Goldie told Q&A that Australia is among the lowest-taxing countries in the OECD. Is that accurate?Helen Hodgson, Associate Professor, Curtin Law School and Curtin Business School, Curtin UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/440072015-06-29T20:08:54Z2015-06-29T20:08:54ZAustralia’s ‘climate roundtable’ could unite old foes and end the carbon deadlock<figure><img src="https://images.theconversation.com/files/86675/original/image-20150629-9081-6xo6is.jpg?ixlib=rb-1.1.0&rect=15%2C11%2C2629%2C1614&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Business, environmental, trade union and social groups all see advantages in looking beyond high-emission industries such as coal-fired power.</span> <span class="attribution"><a class="source" href="https://commons.wikimedia.org/wiki/File%3ACSIRO_ScienceImage_9226_Eraring_Power_Station.jpg">Nick Pitsas/CSIRO/Wikimedia Commons</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span></figcaption></figure><p>Climate policy is in the media yet again, but this time it might be different. The <a href="http://climateinstitute.org.au/australian-climate-roundtable.html">set of policy principles</a> released by the <a href="http://www.australianclimateroundtable.org.au/">Australian Climate Roundtable</a> yesterday are extraordinary for two reasons. </p>
<p>First, the principles themselves offer some calm common sense in an arena that has been dominated by ferocious partisan politics and dramatic policy reversals. They could therefore offer a way to <a href="http://www.theguardian.com/environment/2015/jun/29/australian-climate-policy-paralysis-has-to-end-business-roundtable-says">break the current policy deadlock</a> and re-establish a bipartisan approach to climate change.</p>
<p>Second, the principles are the product of a <a href="http://www.abc.net.au/news/2015-06-29/australian-climate-roundtable-business-unions-policy-alliance/6579106">highly unusual alliance</a> of ten organisations, representing business, unions, environmentalists, and the community. It is unusual that such disparate groups can sit down together to talk, and downright extraordinary that they can agree on a common set of principles. So what is going on here?</p>
<h2>A principled approach to policy?</h2>
<p>On the first point, the principles state that: </p>
<blockquote>
<p>Our overarching aim is for Australia to play its fair part in international efforts to achieve this while maintaining and increasing its prosperity.</p>
</blockquote>
<p>The Roundtable’s ideal policy would lead to “deep reductions in Australia’s net emissions”, using policy instruments that are well targeted, well designed, based on sound risk assessments, internationally linked, operate at least cost, and are efficient.</p>
<p>On the environmental side, there is a demand for net zero emissions in the long run, an acceptance that there are market failures that need to be fixed, and a call for long-term planning based on climate change scenarios.</p>
<p>On the economic side, there are statements about achieving reductions at the lowest cost, avoiding regulatory burdens, ensuring no loss of competitiveness for trade-exposed industries, and the need for a smooth transition to a low-carbon economy, without undue shocks for investors.</p>
<p>Finally, on the social side are concerns about providing decent work opportunities, protecting the most vulnerable people, and helping communities to make the necessary transition.</p>
<p>While there is apparently something here for everyone, the contentious issues are avoided. There is no mention of the government’s Direct Action <a href="http://www.environment.gov.au/climate-change/emissions-reduction-fund">Emissions Reduction Fund</a>, the former government’s <a href="http://www.google.com.au/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=0CC8QFjAA&url=http%3A%2F%2Fwww.acci.asn.au%2FFiles%2FGovernment-Carbon-Tax-Plan&ei=xMWQVd_pDIa7mQWZ743gCQ&usg=AFQjCNGxrjjKVMKvRHZ4PKUl5SXIzlwHQA&sig2=-bNkkOJ_WxNIayZBHgxj6w&bvm=bv.96783405,d.dGY&cad=rja">price on carbon</a>, or the recently reduced <a href="http://www.environment.gov.au/climate-change/renewable-energy-target-scheme">Renewable Energy Target</a>. This is clever politics, as it allows for the establishment of a broad consensus without the need to quibble over policy detail. </p>
<h2>An unlikely alliance</h2>
<p>The roundtable’s membership is remarkably diverse: the <a href="http://aluminium.org.au/">Australian Aluminium Council</a>; the <a href="http://www.bca.com.au/">Business Council of Australia</a>; the <a href="http://www.aigroup.com.au/">Australian Industry Group</a>; the <a href="http://www.esaa.com.au/">Energy Supply Association of Australia</a>; the <a href="http://www.igcc.org.au/">Investor Group on Climate Change</a>; the <a href="http://www.climateinstitute.org.au">Climate Institute</a>; <a href="http://www.wwf.org.au/">WWF Australia</a>; the <a href="http://www.acfonline.org.au/">Australian Conservation Foundation</a>; the <a href="http://www.actu.org.au/">Australian Council of Trade Unions (ACTU)</a>; and the <a href="http://www.acoss.org.au/">Australian Council of Social Services (ACOSS)</a>. How and why did these disparate groups form such an alliance?</p>
<p>It is clear from the principles themselves that all the member groups want some policy consistency that will survive regardless of who is in government. The last thing they want is for the recent cycle of major policy changes to continue. </p>
<p>Such reversals impose waves of new compliance costs on industry and create uncertainty for investors, which is why business is so heavily represented in the Roundtable. Policy changes also make it difficult to consolidate significant emissions reductions, which is where the environmentalists come in. Finally, policy uncertainty has implications for employment options and the cost of living, which is why the ACTU and ACOSS are also on board. </p>
<p>There are also some specific strategic advantages to being involved in the Roundtable for each of the participants. </p>
<p>Business groups that have been getting bad publicity about their contributions to climate change might use the Roundtable to improve their image and frame the future policy debate in a way that suits them (for instance, by calling for a strong focus on costs and competitiveness). </p>
<p>Environmentalists, who have effectively been sidelined by the Abbott government on climate change, might see this is a way to deal themselves back into the policy game and make some progress in reducing emissions.</p>
<p>Unions concerned about their members’ future employment might see this as a way to manage the transition by creating new “green-collar” jobs that will offset the loss of employment opportunities in the older polluting industries.</p>
<p>Finally, ACOSS is clearly worried about the impact of climate polices on low-income households, and being part of the Roundtable ensures that their concerns are heard.</p>
<h2>A precedent for influencing policy?</h2>
<p>While unusual, alliances such as the Australian Climate Roundtable are not unknown in Australian environmental policy. Sometimes they have led to the creation of effective long-term polices; other times they have fizzled out, leaving little more than rhetoric.</p>
<p>One positive example is that of <a href="http://www.nrm.gov.au/">Landcare</a>. In 1989 the Australian Conservation Foundation and the National Farmers’ Federation proposed a grant scheme that would empower communities to rehabilitate their local environment. More than a quarter of century later, Landcare is still going strong with the support of all four leading political parties.</p>
<p>On the negative side, an extensive consultation process involving all levels of government, business, unions and environmentalists led to the creation of the <a href="http://www.environment.gov.au/about-us/esd/publications/national-esd-strategy">National Strategy for Ecologically Sustainable Development</a> in 1992. It is still on the books and referred to by <a href="http://www.environment.gov.au/epbc">current legislation</a>, yet we don’t appear to be much closer to sustainability.</p>
<p>So will this be a Landcare moment or not? Only time will tell.</p><img src="https://counter.theconversation.com/content/44007/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michael Howes received funding from the National Climate Change Adaptation Research Facility 2012-13.</span></em></p>The Australian Climate Roundtable unites business, environmental and social groups in calling for a strong climate policy. This unprecedented show of unity might even break down Canberra’s climate stalemate.Michael Howes, Associate Professor, Griffith UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/173522013-09-23T20:42:52Z2013-09-23T20:42:52ZShould only pharmacists profit from falling drug prices?<figure><img src="https://images.theconversation.com/files/31782/original/8jn8cwnk-1379917200.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Three consumer organisations have recently joined forces to campaign for cheaper medicines.</span> <span class="attribution"><span class="source">Waleed Alzuhair</span></span></figcaption></figure><p>The Consumers Health Forum has just <a href="http://ourhealth.org.au/drugged-reality-losing-2000-a-minute-and-counting">launched a website</a> containing information about the cost of generic drugs in Australia compared to other countries. Each day, Australians pay A$3 million more for these drugs than they would if they bought them in New Zealand or the United Kingdom.</p>
<p>The information on the website shows the cumulative cost of current medicines pricing policy. Unless the policy is changed, that A$3 million will add up to A$1 billion in lost savings by this time next year.</p>
<h2>How it works now</h2>
<p>In Australia, the prices for most drugs are set by the government through the Pharmaceutical Benefits Scheme (PBS). The government pays some of the highest prices in the world for generic drugs (medicines on which the patent has expired). </p>
<p>Take the commonly prescribed cholesterol-lowering drug atorvastatin, for instance. For a typical dose (40mg), the wholesale cost of a script in Australia is A$38. </p>
<p>The comparative cost in England and New Zealand for the same drug is less than A$3. Based on last year’s usage alone, atorvastatin cost the Australian government A$548 million; if it had paid English prices, the drug would have cost A$119 million and with New Zealand prices, it would have cost A$100 million.</p>
<p>Atorvastatin’s patent expired around 18 months ago and wholesale prices have been falling since as many new suppliers enter the market. </p>
<p>But the price paid for atorvastatin by the Australian government has remained high because the pricing of all generic drugs on the PBS is governed by an agreement that’s due to end in July 2014. </p>
<p>Under this agreement, a mechanism known as price disclosure sets future prices based on past wholesale cost of medicines to pharmacists. The problem with price disclosure is the rate of adjusting generic drug prices is too slow. </p>
<p>It currently involves collecting wholesale price information from the pharmaceutical industry for a year and it then takes another six months to implement the price changes. </p>
<p>So any discounts on the wholesale price of common generic drugs such as atorvastatin that flow to pharmacies do not translate into price reductions for the government or consumers for a period of up to 18 months.</p>
<p>Under current policies, pharmacies get to keep all of these discounts and they quickly add up to very large amounts. For a drug such as atorvastatin, more than A$400 million will flow to 5,200 pharmacies from wholesale discounts from the time it came off patent to December 2013.</p>
<h2>Moving towards a better model</h2>
<p>England also uses a system of price disclosure, but the cycle over which cost reductions are made is only three months – six times faster than what happens in Australia. </p>
<p>The figure below shows the current prices for the top eight generics in terms of total government expenditure in Australia and what we would pay if costs were equivalent to those in England.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/30979/original/rpt4sdmr-1378703117.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/30979/original/rpt4sdmr-1378703117.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/30979/original/rpt4sdmr-1378703117.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=639&fit=crop&dpr=1 600w, https://images.theconversation.com/files/30979/original/rpt4sdmr-1378703117.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=639&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/30979/original/rpt4sdmr-1378703117.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=639&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/30979/original/rpt4sdmr-1378703117.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=803&fit=crop&dpr=1 754w, https://images.theconversation.com/files/30979/original/rpt4sdmr-1378703117.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=803&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/30979/original/rpt4sdmr-1378703117.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=803&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
</figcaption>
</figure>
<p>The speed of adjustment clearly makes a lot of difference.</p>
<p>For the 20 most expensive generic drugs, Australia pays around A$1.8 billion each year, whereas if the government could pay English prices, that would be reduced to around A$735 million, a savings of A$3 million a day.</p>
<p>How could we spend less? A first step would be to ensure that policy reform adopted by the previous government in its last <a href="http://www.budget.gov.au/2013-14/content/economic_statement/download/2013_EconomicStatement.pdf">economic statement</a> is implemented. </p>
<p>Designed to take the first step towards speeding up the time it takes to adjust prices from 18 months to one year, the measure would return A$830 million from pharmacy owners to taxpayers or consumers. </p>
<p>In response to the changes, the Pharmacy Guild <a href="http://www.professionalpharmacy.com.au/older-australians-will-suffer-from-pbs-changes-guild/">ran a political campaign</a> arguing that up to 5,000 pharmacy jobs were under threat. And it indicated it wanted compensation for the changes. </p>
<p>It’s not clear if the new government will implement the reform and do more to reduce the prices of our most commonly used generic drugs.</p>
<h2>Deja vu</h2>
<p>Still, we have been here before. Tony Abbott introduced price disclosure in the final year of the former Howard government when he was health minister. He <a href="http://www.health.gov.au/internet/ministers/publishing.nsf/Content/9FCA731CD637B7ABCA257228002BAA26/$File/abb161106.pdf">said at the time</a> that it was a way to “harvest most of [the] discounts” that were accruing to pharmacy owners for taxpayers and consumers.</p>
<p>Abbott’s reforms included several hundred million in compensation for pharmacy owners for the loss of their discounts. But the payment was meant to be a one-off, <a href="http://www.health.gov.au/internet/ministers/publishing.nsf/Content/9FCA731CD637B7ABCA257228002BAA26/$File/abb161106.pdf">as he indicated in 2006</a>:</p>
<blockquote>
<p>The reason why the savings to government become much more significant in five years’ time and beyond is because there are about 100 major drugs that are coming off patent in that time and we are compensating pharmacists, we are explicitly compensating pharmacists for the loss of discounts over the next four years; but we are not explicitly compensating them for the much greater impact of the loss of discounts in the subsequent five and more years.</p>
</blockquote>
<p>The problem with the Abbott policy was that it was voluntary to supply real wholesale price data and industry chose not to do it for most drugs. </p>
<p>In the first round price disclosure reductions in 2009, the price of only four generic drugs fell. Commenting at the time, <a href="http://beta.guild.org.au/uploadedfiles/National/Public/Fact_Sheets/PBS_price_disclosure.pdf">the Pharmacy Guild claimed</a> that this debunked “myths about the extent to which community pharmacies are given discounts on generic drugs”.</p>
<p>Changes introduced by the former Labor government in 2010 were designed to fix these limitations, but their “accelerated” price disclosure was still <a href="http://www.theaustralian.com.au/news/health-science/drug-deal-costing-billions-medicines-australia/story-e6frg8y6-1225866384337">an extremely slow process</a> to reduce generic prices.</p>
<p>The most recent changes were simply a way of passing on these discounts more quickly to consumers and taxpayers. Isn’t it time all Australians shared in the discounts and got a slice of A$1 billion extra each year we are paying for common generic drugs?</p><img src="https://counter.theconversation.com/content/17352/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Philip Clarke provided the consumer organisations involved in lobbying for lower prices for medicines with information for their website. He was not paid for the information.</span></em></p>The Consumers Health Forum has just launched a website containing information about the cost of generic drugs in Australia compared to other countries. Each day, Australians pay A$3 million more for these…Philip Clarke, Professor of Public Health, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/101492012-10-15T23:29:23Z2012-10-15T23:29:23ZShame or sham? Assessing poverty in Australia<figure><img src="https://images.theconversation.com/files/16541/original/h496dzdv-1350343402.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Is the number of Australians in poverty increasing, or are the statistics being interpreted inaccurately?</span> <span class="attribution"><span class="source">Flickr\Vermin Inc</span></span></figcaption></figure><p>Over two million Australians are currently living in poverty, according to a <a href="http://www.abc.net.au/news/2012-10-14/acoss-poverty-report/4312252">report released yesterday by Australian Council of Social Service</a> (ACOSS). Dr Cassandra Goldie of ACOSS says that it is a “national disgrace” that poverty has increased in Australia despite 20 years of economic growth. Her sentiment is backed up by statements by the Social Justice Fund and the St Vincent de Paul Society, who describe the situation as “shameful, and by representatives of other prominent charity and social groups.</p>
<p>The implication that one in every eight Australians is deprived of basic needs, and that the living standards of these people have remained static or gone backwards over a decade, is certainly shameful. More so in a wealthy and fast-growing economy like Australia. Such a finding is surely a condemnation of our social welfare state and the suite of social welfare transfers, from unemployment benefits through to Medicare. </p>
<p>It would be shameful if it were true. But how can it be? How can poverty be increasing in spite of all the growth?</p>
<p>The answer is that it’s not. Specifically when this ACOSS report refers to "poverty”, it means something quite different from what the average reader might think.</p>
<p>For example, one might think that if every Australian’s real income increased by the same amount, then poverty would go down. According to ACOSS, you would be wrong. Using the definition of poverty in their report, if everyone became richer, “poverty” would stay exactly the same. </p>
<p>This is because the study defines those in poverty as anyone whose income is less than half the median income in Australia. This concept of poverty is relative. Everyone can get richer, but those who are the least rich are classified as being in “poverty”. </p>
<p>With this type of relative poverty measure there will always be some people in poverty, even if they are filthy rich in real terms. Indeed, the only way to eliminate “relative poverty” is for everyone to have the same income.</p>
<p>“Relative poverty” is a useful concept if it used carefully. The report itself, prepared by the Social Policy Research Center at UNSW, is well reasoned and informative profile of those in the lowest income groups. But the media statements claiming “national shame and disgrace” are reckless. It’s a sham to cry “shame” when the concept of poverty used means that there must always be poverty by definition. </p>
<p>What matters is whether the poorest have become better off in absolute terms. In a fast-growing economy, everyone can become richer. It may be that the rich have experienced more income growth than the poor. But nothing in the report suggests that the lowest income group hasn’t shared in the remarkable 20% growth in real incomes that Australia has experienced over the last decade. Likewise, nothing in the report suggests that living standards have declined for the poor.</p>
<p>That is not to say there isn’t real absolute poverty in Australia. There is. Moreover it may well be increasing. We simply can’t tell from the ACOSS study. </p>
<p>Poverty is a serious issue and deserves to be studied and fought with targeted and efficient policies. It is shameful to ignore it. But there is no virtue in exaggerating it.</p>
<p>Currently, around 7% of GDP is spent on income support programmes and transfer payments account for more than a quarter of Australian government spending. It is imperative that this money reaches the right people through understanding who the most needy are and why. Fudging the facts about poverty does not help the poor.</p><img src="https://counter.theconversation.com/content/10149/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Peter Robertson receives funding from Australian Research Council, AusAID.</span></em></p>Over two million Australians are currently living in poverty, according to a report released yesterday by Australian Council of Social Service (ACOSS). Dr Cassandra Goldie of ACOSS says that it is a “national…Peter Robertson, Winthrop Professor and Associate Dean Research and Research Training, The University of Western AustraliaLicensed as Creative Commons – attribution, no derivatives.