To drink cows milk or not to drink cows milk – that is the question

 

Righty-ho so let’s break down this CNN article by Wayne Drash which claims “Drinking non-cow milk linked to shorter kids, study suggests”.  The plan here is to assess some research about a very specific effect of cows milk on the height of young children so I’m not going to go into a bunch of other stuff around cows milk – just addressing the points of this research.

Remember from this article I wrote on “How to tell if that new research study your friend posted on Facebook should be shared or deleted” these were the red flags we needed to look out for:

  1. A self reported behaviour survey – especially one where the participant is being asked to recall something they did a long time ago
  2. The lack of a control group, test/treatment group (and in some cases) a placebo group
  3. Non randomised
  4. Non Blinded or Non Double Blinded
  5. Small sample sizes
  6. Non peer reviewed – i.e published in a dodgy journal
  7. Statistical significance without IMPORTANCE

So let’s review.  Firstly, we have to look BEYOND the article to the research itself.  The only link the article had was to the American Journal of Nutrition – there was no original source link but I found the original research paper by searching “Jonathon Maguire non-cow milk” (the name of the researcher and a keyword on the research topic) on trusty ol’ Google.

This is the link to the abstract for the research in the American Journal of Clinical Nutrition: http://ajcn.nutrition.org/content/early/2017/06/07/ajcn.117.156877.abstract

Sometimes you can take the full title of the abstract and do another Google search and find the full version posted somewhere (e.g. Association between noncow milk beverage consumption and childhood).  Very often I can find it on Researchgate which I have access to. Unfortunately I tried that in this case and it hasn’t been around long enough for any other sources to be hosting the full version.  If you’re a uni student, your uni email should give you access to a whole host of credible journals and so you’ll generally be able to access the full version.

Ok so for now we’ll have to work with what we’ve got – the research abstract.

  • Self reported behaviour survey: YES
    So we need to approach with caution.  The abstract says its a cross sectional study of kids enrolled in an existing research program called the “Applied Research Group For Kids”.  I looked that up and found this: https://www.ncbi.nlm.nih.gov/pubmed/24982016.  Looks pretty solid and as a longitudinal study, they’re basically asking a bunch of questions on a regular basis so participants aren’t having to remember what they did ages ago.  The program is also listed on the US National Library of MedicineNational Institutes of Health so I feel pretty safe about this.
  • Lack of control, test and placebo group: N/A
    Not really relevant here as its a longitudinal study which is just collecting a bunch of different data over time.
  • Non randomised: N/A
    As above, not relevant per above
  • Non Blinded or Non Double Blinded: N/A
    Not relevant as participants were not assigned to control, treatment or placebo groups because they weren’t testing any particular treatment
  • Small Sample Sizes: NO
    The sample size is 5,034.  This sample size is ok but I would use caution in applying these results more broadly because these are 24-72 month old Canadian kids, the majority of them are of caucasian background. Now given that 75 percent of African Americans and American Indians and 90 percent of Asian Americans are lactose intolerant – lactose intolerance develops in Asian and African genetic heritage in much higher rates than caucasian – this study may not be applicable in those cases. As a bit of background to lactose tolerance/intolerance, basically when you’re a baby you have a bunch of enzymes called “Lactase” which essentially helps your body to break down the sugar molecules in milk called “Lactose” and some of us don’t keep producing those enzymes once we’re done with breastfeeding! (some more info on this here).
  • Non Peer Reviewed: NO
    Nope this was published in a good journal.  Here are the results for the journal’s credibility.
  • Statistical Significance Without Importance: YES
    This is really the biggest problem with this whole study.  This is the assumption that the researchers have made “Cow milk consumption in childhood has been associated with increased height, which is an important measure of children’s growth and development”.

    That is true, but it’s also a misleading statement because they are not defining how much height is good.  Saying that “height is an important measure of child development ipso facto a taller child is a healthier child” is a fallacy.  This is like saying “Vitamin A is good for me so more is better”.  Well, that’s not true.  Too much Vitamin A can cause dizziness, nausea, headaches, coma and oh yes…death.Now I’m sure these researchers have good intentions, but they seem to have ignored previous research as a baseline or benchmark for their assumptions.

    Sure, western society holds up males in particular as being “better” for being taller.  But does that mean they’re healthier? Nope. All evidence points to shorter being healthier. This is info from the main US govt health site on this topic https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1071721/.  This overview of research to date on the topic is well worth the 15 minute read if you’ve got the time. Seriously, don’t take my word for it.

    Furthermore height is the main mediator of higher risk of hip fractures later in life for men – and is determined by their earlier intake of milk.  Here is the original study abstract for the above statement here: https://www.ncbi.nlm.nih.gov/m/pubmed/24247817/.

    The concern I have is how the researchers of the kids and nonmilk study choose to describe the background to their research:
    “Many parents are choosing noncow milk beverages such as soy and almond milk because of perceived health benefits. However, noncow milk contains less protein and fat than cow milk and may not have the same effect on height.”

    Is it true that soy and almond milk have perceived health benefits (that may, or may not be true depending on what research has shown vs what is widely believed). Yes that’s pretty true.

    And is it true that soy milk contains less protein than cows milk?  Let’s take a look…

  • 1 cup of Soy milk protein: 8 grams
  • 1 cup of Cow milk protein: 8 grams
  • 1 cup of Almond milk protein: 1 gram

    Gee…that doesn’t seem right…have they averaged out protein across Soy and Almond Milk perhaps to give “nonmilk” drinks an overall lower protein number? Because by my lay-person eye it looks to me as if they have the same amount of protein.  Of course milk may have other nutrient soy does not have and I’m not disputing that but why say something when it’s not true across the board?
    Surely you’d make sure you were looking specifically at who drank almond milk vs soy milk as a non milk alternative and understand the difference between both.
    Let’s ask a more important question.  Is it fat OR protein that contribute to height?
    Erm, neither exactly. Protein is part of it, but it’s actually calcium as well as the Insulin-like Human Growth Factor hormone that is present in cows milk at a much higher dose than that of human breast milk which is thought to contribute to height gain.

    And lets as a final and important question.  If western societies continue to promote health through consuming animal products through infancy through adolecence when more than than half of the world’s population is intolerant, what are we saying?  That only those who are lactose tolerant can be truly healthy? I’d love to see more studies that divide people into three groups:

  • Group 1: Conventional treatment (e.g. milk)
  • Group 2: Plant based supplement that meets all the same / similar nutritional properties that are thought to affect the variable (e.g. perhaps this is soy + other factors not present in soy as fortification)
  • Group 3: None or “on the market” options

Why are we only doing studies that suit a caucasian genetic makeup?

So what does all the above mean for this study ?
Well, the findings of association itself are not wrong.  But the assumption that is being created in the way the introduction is phrased are disturbingly misleading.  What should happen next?

As the abstract itself states at the end “Future research is needed to understand the causal relations between noncow milk consumption and height”.

This is absolutely true because milk consumption (or the specific properties within it) may not be the cause of different height growth.  Epigentic forces could be contributing to the outcome here.  i.e. mothers and fathers who drink noncow milk and plan to give noncow milk to their children could have a variety of other different diet habits that have a different impact at the point of conception and methylation.

Recent epigenetic research shows for instance that mothers who take less than around 300 grams of protein per day during the early stages of pregnancy alter the DNA methylation status at the site of the Vitamin E receptor gene and this contributes to the child’s percentage fat mass later in life.  I wonder, does it impact their height too?  Because if it does, this could be a critical factor in helping to explain this Canadian research as having an epigenetic cause.  It is possible that women who choose to drink noncow milk, may also have a lower protein intake in general which in turn contributes to these epigenetic changes upon conception!  PS that is just a completely untested hypothesis of mine…but it’s not entirely crazy I don’t think..

But furthermore, future studies should first seek to establish what is considered to be a bottom level AND top level healthy height in childhood through to adulthood.  And ensure that studies around the benefits for shorter adult height are fully considered in this assessment.

Only then is it really possible to start drawing insight around what types of foods/drinks to give children and give them the best chance of health throughout their lives.

—-

Lastly, while trying to find images for this post I came across the cutest awkward cow toy I have ever seen. 😀  I think I’m going to buy one!

Proof everyone is NOT doing their bit for the 2014 Budget

Tonight, the Australian Govt budget was released.  To see the number of organisations being interviewed afterward almost in tears was quite devastating to watch.  The CEO of St Vincent De Paul put it eloquently:

‘There’s nothing admirable about humiliating people who can’t find work, nothing good about building the economy on the backs of the poor, and nothing smart about making it unaffordable to see a doctor’.

Out of the 20 or so interviews I watched on ABC News 24 this evening, there was only ONE person who was positive outside of the lot, and that was the representative of a Corporate Australia group.  Unsurprising?  Now who knows, maybe that’s bias, but lets look at the facts.

I have heard a bunch of rhetoric around “everyone must do their bit” to fill this budget deficit, as an answer to the deep cuts. For the moment, lets set aside the stuff that Labour and Greens keep talking about in terms of whether we really do have a problem or not (or whether the problem is as big as Liberals say it is), just because we have a Triple A credit rating, better than the US (blah, blah blah).

What I want to know is, when a representative of Corporate Australia smugly says “we’ll cop it, we’ll do out bit for the good of the country” – is it a FAIR ‘bit’?  i.e. are corporates/companies copping a proportionately fair amount of either cuts to services or additional taxes?

I don’t have exact figures on this, it has got some assumptions and worked backwards from this pie chart which shows a breakdown of tax contributions by segment to the Australian Govt annual revenue.  It’s 12am and I should be sleeping before an 8am catch up in the city and not writing a blog but I need to get this out!

Tax-Mix

So based on this, lets assume Corporate Australia (or at least companies) make about $153 billion in revenue post-costs (as company tax rate is 30% and that’s 3 times 76.6 billion) and according to the budget, they’re going to cop a $500m reduction (+ some other minor millions for certain key industries such as the auto industry).  That’s a 0.3% contribution based on total company revenue.

Australian citizens on the other hand, they’ll pay a total of $138m for an average of 6.9 visits to the doctor annually, plus $400m from the “top earners” paying a short term 2% extra tax on any amount earned above $180k which is already taxed at 45 cents in the dollar – (in the mean time, companies pay 30 cents in the dollar despite earning billions).

Lastly add to that the losses, the cuts of $80 billion across Health and Education (forget the investment into Medical Research…$20 billion is nothing in the world of Pharma – if a cool $20 billion was all it took to cure cancer as Joe Hockey tried to sell, trust me, it would have been done).  So, we add the taxes and the losses together for the average Aussie citizen and we get a total of $80.5 billion.  That’s a 13%  “contribution” by Australian citizens who let’s say earn an aggregate of $600 billion in wages minus tax deductibles (again I’m guessing based on working backwards from the total tax bill).

Let me repeat and make clear: 13% effective contribution averaged across ALL Aussie citizens verses 0.3% effective earnings contribution from companies. So I think we can safely say, that corporate Australia is happy for a reason…because they have in fact, not come even CLOSE to putting in their fair share for these services cuts and new taxes.

In the mean time, companies like Apple are being investigated for massive tax evasion (they paid just $193m tax on $27 BILLION REVENUE – that’s right kids, close to 10 BILLION worth of the 80 billion budget cuts being made could have been covered by the tax bill of the company you bought your last iPhone or iMac from).

Then there is the LOST revenue of the carbon tax which was going to be over $4b a year – now resulting, instead, in cuts to health and education when that could have been borne by business.  Instead, Aussie’s were worried about it hitting their pockets through high electricity bills.  Well guess what, its hitting their pocket anyway…and its even worse than the electricity bill.

In the mean time, a single mum with 3 kids has just been told today she’s going to need to shell out an extra $7 every time she takes one of her kids to the doctor…and then more at the pharmacy…and then more when she fills up on petrol…

Now, I’m not a maths whiz by any means…nor am I anti-corporate or company.  I have 3 start ups and I run my own business!  But I am also a citizen of the world and it seems to be, something is seriously, seriously wrong here.

Let me put it this way:
– Apple pays their outstanding tax bill and keep that money comin’ in for another 2 years ($24b)
– Australian companies pay an extra 5% in tax for ONE YEAR – I’ll happily sign up for that to save my friends and family affected by this ($7.6b)
– Abbott govt DOESN’T scrap the carbon tax for 3 years ($12b)
– Abbott reneg’s on his ridiculous purchase of military fighter jets ($12b)
– Top earning Aussies contribute 2% of earnings for 3 years ($1.5b)

And that’s already $57 billion over a 3 year period.  Budget problem solved. Hehe.

Obviously I am oversimplifying it, I get that.  But, sometimes looking at things simply, can help gain perspective.  One of my startups had a business model with a very complex formula, and today the business valuer found an error because he checked the math doing some really simple backward calculations.

In my very humble opinion, we live in a highly symbiotic relationship – businesses, and individuals – particularly in the way our capitalist society with socialist elements has been set up here in Australia.  That means that any major structural changes…to either side, can be highly damaging.

You can’t just take from one segment, you must take in proportional amounts, and those proportionate amounts must take into consideration the fact that equal contributions may not be enough (i.e. company profits go back into the company but profits are not forced to be distributed into new labour hire so i.e. more money for companies doesn’t automatically equal more jobs. Often they go to shareholders in dividends, and people who can afford to purchase company shares, are not those living on the poverty line – which means companies could AFFORD to bear a greater financial burden, and yet instead they are currently being asked to be just a fraction of it).

To shift the cycle, the cuts MUST be done so carefully as to have a proportionate negative effect.  Are cuts necessary – may yes, maybe no – that’s actually beside the point.  The point is, for the cuts not to wreak havoc by potentially causing other issues (e.g. low education and health standards in research is always correlated to low GDP contribution and low employment rates…etc), the negative effect must be carried fairly by the variety of parties who currently make up the tax revenue for the Australian government.

Alright time for bed.  I just hope others can find the time and patience to do a bit of sense checking themselves, and come to an informed conclusion, rather than hearing and believing whatever is they hear on TV (regardless of which political party its coming from).

A Song for the Silent

OK today’s post is a little different and a tad scarey to be sharing!  Some of you may or may not know that I write songs as a hobby. Over the last few months I have been reading lot – books, The Conversation, I’ve shelled out money to get the Climate Council back in action in Australia after it was shut down as soon as Tony Abbott assumed office, I’ve had contractors in the Philippines affected by Typhoon and the flooding that preceded in the months prior and I’ve attended one of the largest climate rally’s in Australian history in Melbourne.  So I have had lots to think about and act on my beliefs which, prior to this year, I hadn’t done since I was a kid living over in PNG where my Dad worked as a volunteer doctor for 3 years.  For a long time I forgot that I actually stood for something and so it has been nice to rediscover that part of my humanity post corporate-life.

I’m not usually a massive fan of overtly political songs which is why I have tried to keep this one fairly nondescript.  Its ultimately about any scenario of the powerful vs. the powerless – whether in government, business, school or relationships.  My partner is a music producer and a song recording was a belated birthday present.  This is the first song of my own that I have ever had recorded properly.  Hope it speaks to you in some way. (if you can’t see the embedded player below, go here to listen)

LYRICS

V1
Let’s say we let it go
Let’s say it all came crashing down
Let’s say we planned it all
Let’s say its no mistake of ours

Let’s deny it. Let us hide it
Let’s pretend the worlds ok
Let’s say defeat it, not really mean it
Let’s do anything
Never be responsible

CHORUS
And if you stay silent
You’re no better than them
Swing words as your swords
Use your hearts as an emblem

You’ve been fraught with it
You’ve been caught in it
You’ve been hauled through it
You’ve been lost in it
But no more

V2
Let’s promise everything
Let’s give them nothing in return
Let’s set their fear alight
Let’s fake sympathy and concern

Let’s be liars. Let them buy it
Those stupid people never ever learn
Let’s say its all their fault
Let’s say it’s them that don’t belong

CHORUS
And if you stay silent
You’re no better than them
Swing words as your swords
Use your hearts as an emblem

You’ve been fraught with it
You’ve been caught in it
You’ve been hauled through it
You’ve been lost in it x2

Let’s promise everything
Let’s give them nothing in return

Copyright 2013 Michelle Bourke

What happens when State and Federal Governments fight

While I was doing a bit of random research the other day, I started seeing a patterns of disagreement between the State Government and the Federal Government.  It’s probably not something that has been thought about too often.  Actually, I can’t find a detailed analysis of it anywhere. I did find an article about Federalism in Australia vs. the Unity system in the UK.  Just as a quick refresher: In a country running with a federal system, the power of the State and the National governments are constitutionally divided – i.e. one is not the boss of the other!  Oh and they look after different things – the Federal govt deals mainly with tax, immigration, law and justice and the states look after education, health…etc.  The main leverage the Federal Govt has is that it control the budget and decides how much money to give the states for their stuff.  There’s pros and cons to the system.  Some say a federal system provides competition between the states and as a result more choice for people in terms of where to live, or get a job…etc – and more choice = better freedom (according to the proponents of the system).  On the other hand it makes for a bloated bureaucracy and the potential for serious communication breakdown…not to mention the fact that most people don’t actually get the difference anyway.

So anyway, back to this issue of states arguing with federal government…most of the articles I could find suggested these disagreements amounted to “healthy debate” based around issues whenever federal government sticks its nose into State based business and issues (like health and education and local government).  I’d like to suggest something different…

For instance, NSW Premier Barry O’Farrell and WA Premier Colin Barnett vs. Julia Gillard on the proposed changes to the constitution allowing the federal government to give funding directly to local governments without having to go via the state.  Another example: QLD Premier Campbell Newman vs. Julia Gillard on the proposed Gonski reforms.  Now, at first glace, you could put this down to the fact that both these issues were about Federal verses State control.

English: Prime Minister of Australia Julia Gil...

English: Prime Minister of Australia Julia Gillard (Photo credit: Wikipedia)

Yes these are both examples of areas where federal government is trying to control more of what is within the State’s remit – but you’ll also notice that in both cases, The Gillard Federal Govt was a Labor government, and each of the Premiers disagreeing were Liberal/Coalition. And what of the other states?  Why was it that in the only Barry and Colin that seemed to disagree with the then Federal Government with the local govt reforms?  Well, because every single other State Premier was Labor.

So that got me thinking a bit more…how deeply does a divide in party focus or values between State and Federal Governments affect the ability to pass legislation? So I put together a list of every Prime Minister since 1901 and then put it against every single State Premier and their respective party.  You can download it here.

Findings – Times of Communication Struggle

1.  In 1975, Gough Witlam’s first and only term with Labor in Federal govt, almost other major state was under a Liberal government and in his final year, WA went back to the Liberals too.

2.  Between 1993 and 1995 during Paul Keating’s last term, he also had to deal with all-liberal party states except for QLD.

3.  Between 2002-2007, the Howard governments last terms – every single Australian state was controlled by a Labor government, while Liberals (John Howard) were in federal government.

4.  Julia Gillard struggled with a complete split in governance of the states, in 2011 when after years of Labor state government, both NSW and VIC voted for a Liberal Party govt, and this worsened in 2012 when QLD joined the crowd.  Joining WA who were had voted the Liberals in back in  2009 – now every major, powerful state was under Liberal control.

English: Portrait of Sir Robert Gordon Menzies...

Menzies

So it seems that in times when there the Federal Govt is working against states governed by a different party…they’re usually  headed for their final term.  Which causes which (if at all)…I’m not sure.  The only exception to this pattern is Robert Menzies – the guy had staying power, through a time when the states were fairly evenly divided in terms of party governance.

Findings – Times of Unity

1.  1927 – Labor Prime Minister Stanley Bruce’s last year in government provided complete governance unity across federal and state.  However, in 1927…I’m not sure how much that would have mattered given media access, transport…etc.

2.  1932 – Liberal Prime Minister Joseph Lyons’ first year enjoyed almost complete Liberal control of Federal and State affairs (excluding SA)

3.  1946 and 1947 – Labor Prime Minister Joseph Chifley got the same in reverse – all Labor control of Federal and States (excluding SA)

4.  1969 and 1970 – Liberal Prime Minister Grey Gorton had party unity across every single state for two years (before that 1965-1970 enjoyed fairly majority control under Harold Holt and John McEwan)

5.  1976 to 1981 – Malcolm Fraser had a pretty good run with major states (minus TAS and  SA) under Liberal party control.  In 1982, every state was under Liberal governance.

6.  2008 – Labor Prime Minister Kevin Rudd got a dream Labor scenario.  With one of the highest popularity votes AND state unity – imagine what he could have done if he hadn’t caused all that internal disunity!  They could have been an absolute force to reckon with.  Between 2009 and 2010, there was more of the same.

Now I’d need to look at each of those times more carefully to find out whether relatively speaking there was much more agreement and it was easier to get legislation in those years, while harder in those others – but that would be my hypothesis.  Also, we’d need to consider the make up of the senate in any one year to be completely sure of any results.

I think with a bit more study, we’d probably find that the Australian version of the Federal system of internal governance actually undermines the unity of the entire governance process.  At the very least, it must create massive miscommunication issues where in the majority of cases over the past 112 years, party governance is not aligned across state and government levels.  For instance, in sharing information between state and government – there becomes a massive risk of silos that, unlike the promotion of competition BETWEEN states, promotes national disunity between states and government.

I wonder how this effects people’s experience of local vs. national media as well?  For instance, if they live in a Liberal governed state, they’re likely to see a lot of Liberal messages locally, and be confused with any cross fire messages from the National government.   I do wonder if this happened particularly in NSW, VIC and QLD in the lead up to the 2013 election.  If I were Tony Abbott, and really smart, I would have created a whole strategy around playing on the creation of a divide between Labor and the states to build mass confusion for the people and help lead them in the thinking that the government of the day was disorganised.  Obviously if this was an orchestrated effort by the Coalition, its strategy was significantly helped by the fact that at the Federal Parliament level there were some pretty massive internal rifts within Labor already.

On another note, the old corporate world has already gone through the process of accepting that restructure is necessary to cost cutting: breaking down silo’s that exist between departments uncovers massive cost savings, improves communication and basically helps get things done faster and with less frustration for everyone.  Although the restructuring process takes years and humans within it get tossed around in constant change and instability until its done, once it is done, there is an exponentially great ability to be more agile and responsive to the needs of the community (which a modern nation expects from its leaders, because that is how they live the rest of their lives).

And of course the timing differences between state and federal elections don’t help the situation at all – in fact it leads to a gap between the will of the local people and that of government.  At least aligning these election dates within the same month would likely mean alignment based on any changing community views were properly represented from a state to national level.

So…I wonder how the Liberal Federal Government can have a conversation about cost cutting and budget management, without having a good hard think about whether we actually need to relook at the efficiency and effectiveness of our democratic system.  After all, this stuff was made up by people colonising a completely new country, taking bits and pieces from different government set ups (mostly from the US – EXCEPT for the federal system which came from the US and Canada). I mean, can you really just stuff bits and pieces into a constitution based on different ideas from around the world and expect to still work perfectly in 112 years?  I’m gonna hazard a guess: No.

Don’t get me wrong, lots of things about it are great – for instance, we have a mostly dreamy preferencing system (apart from being able to preference votes “above the line” in the Senate), but that doesn’t mean we can’t improve a whole lot.  It’s not like democracy as a system itself has been around for that long anyway, Monarchies are more tested through time.  And back in 1901 when our federal level democratic system of government was formed, corporate national/multinational capitalism, globalisation and communication were not the mega-influencers of the society as they are today.  The country existed in a completely different social, political and technological landscape.

The first step, I humbly propose, is a conversation.  A conversation between Local Government, the States, the Federal Government and the Australian people.  Because the only thing that can be guaranteed to happen in life is change.  Isn’t proactive engagement and discussion a better approach rather than waiting until the system fails us – just like our Senate voting system has in the 2013 elections?

13 real policy ideas to help navigate Australia through to budget surplus + happy people!

So I took some time to read through the CIS report which you can read here.  I’ve taken half a day to study and research them and decide for myself whether I agree.  So hopefully this can benefit others who can’t be bothered spending half a day but can take a few minutes to read instead.  I’ve included links to my research sources where possible.

Here’s some really interesting take outs:

  • Australia’s welfare system accounts for 65% of government spending and has doubled over the last 10 years from $150 billion to over $300 billion.  A third of that goes to welfare cash payments (like Newstart, Family Allowance…etc) – most of which are more strongly means tested than other OECD countries – but current spending trends are unsustainable and contribute to ongoing dependence.
  • Close to half of all Australia’s welfare payments (over $150m) are accounted for by what is referred to as “welfare churn”, where an Australian (those of incomes higher than $18.2k per annum) pays taxes, and then those taxes come back to them as benefits – generally in kind benefits like education or health.
  • Between the ages of 15 and 55, an Australian’s benefits vs taxes is fairly even (even though it may not be happening at exactly the same time – e.g. students receive education benefits, but then pay for the next generation to receive those benefits with their taxes).  But after 55, there is a huge gap as taxes decrease significantly while welfare benefits increase significantly until the time of death.  This makes the policies around  welfare benefits to the growing ageing population one of the most crucial issues in the Australian Government’s budget.  It’s a $50 billion+ a year issue.  In comparison, that’s double Australia’s defense budget.

    Weekly value of total benefits and taxes

    Weekly value of total benefits and taxes

  • The biological essence of this issue – particularly over the next 20 to 30 years, is that Australians aren’t having enough babies who can grow up to get their own jobs and pay enough taxes so that the previous generation’s age cohort will be properly supported.  The population grew, but now its not replacing itself.  In terms of the environmental impacts of an ever growing world population, this is perhaps a positive, but in terms of the real experience of people living their lives in Australia right now and over the next 30 years (for example, people like me who will be 60 in 30 years), this is a serious problem.

Recommended policy changes

WELFARE CASH PAYMENTS

While there are some really great ideas for more progressive reforms, there’s a big problem with implementing them.  When you change a system that affects generations of people, there is a long period of time in which SOMEONE has to suffer…which means that reforms of that size never make it through parliament, or if they do – they come out the other end so changed that they can never have the effect that was intended – and if changed back by a new power in government, can due irreparable damage to the lives of people in had intended to help.

So, with that in mind, smaller changes, while not completely solving the dependency factor, can slowly reduce it and incentivise people to change over a long period of time, until such a time as major reforms are possible.

  1. Align the age at which someone can access their superannuation funds (60) with the age at which a person can apply for the pension (65) so that people don’t use the intervening 5 years to reduce their means-tested assets to the point at which they can benefit from the pension despite not necessarily qualifying for it 5 years earlier.
  2. Include a persons principal home as part of the means testing process for pensions, which will incentivise people to use their superannuation drawings to purchase income generating assets, rather than avoid them in order to qualify for the pension.
  3. Also link the age of retirement and access to super and pension, to life expectancy.  This is something the UK is considering.  To put this into context, Superannuation was introduced to Australia at a time by the Labor government when life expectancy at birth was 77.38 years.  In 2012, life expectancy at birth was 81.85 years.  That’s a difference of 4.47 years.  Now, I imagine this age would need to change based on the birth year of the child – or perhaps birth cohort of 10 years.  For instance, if 50 years from now, humans were living 50 years longer, it would make absolutely no sense for them to retire and be supported by the state for 50 years.  So if the age isn’t increase in line with life expectancy, then its up to the tax payers to bear the burden of the difference of X years.
  4. A more politically difficult item to implement would also be the limit index pensions to the Consumer Price Index.  Currently it is linked to both CPI and also the Pensioner and Beneficiary Living Cost Index (PBLCI) – whichever is higher.  The inherent problem I think being called out here is that if government spending on welfare increases at a higher rate than the CPI, then welfare earners spend more, thereby increasing their own Index, and of course since it will be higher than CPI, it will be used to define the exact amount of benefits…basically becoming a self-fulfilling cycle of increases that are instigated by government spending in the first place.  I’m not ENTIRELY sure my line of reasoning here is correct, but that’s what I’ve deduced.
  5. Aged care supports to be means tested just like every other welfare payment is.  So basically providing system consistency to ensure money goes to those who actually need it.

FAMILY WELFARE CASH BENEFITS

  1. Reducing tax churn for middle income earners – by ensuring that again, the benefits are delivered to the lower income families who need it most, but also that some of the savings made are distributed back to the middle and higher income tax payers.   Family Tax Benefits payments have two parts and were originally set up to support families with a stay at home parent.  Part A provides $100 per child per week for family’s with incomes under $75k and Part B provides lesser payments ($70 for kids under 5 and $50 for kids 5-18) for people with family incomes below $150k – so, helpful for anyone with a family earning between 76k and 150k per annum.  Now I wanted to double check this against Australian Poverty lines.  These obviously differ depending on whether you own your house outright and therefore don’t have to pay rent and also on how many children you have.  But line was set this month at $34k a year (Pre tax) for the 33% of Aussie’s who own their own home and have one child, and the line goes up to $79k (Pre tax) for those with 4 kids who don’t own their own home (although average number of kids is 2).  So I think it’s safe to say that households with a family income of $150k – which is more than double the income of a family living on the Australian poverty line, are not the ideal beneficiaries of the welfare system – they are better of having tax credits.  So based on my own research I would also conclude with the research paper that Part B could be phased out over time.   But I would add that Part A should be linked to the Poverty line index, so that as living standards change and the price of living increases, welfare benefit categories are seasonally adjusted.  Because I am sure the government brought the system in based on original poverty line figures…which inevitably change over time.  Based on the calculation of pre tax income, Part A should be increased to include family incomes up to $79k per year (where means testing shows they don’t own their property and have 4 children).
  2. Tony Abbott, Leader of the Liberal National Party Australia

    Tony Abbott, Leader of the Liberal National Party Australia

    The Liberal National Party’s plans to provide mothers with 26 weeks of wage replacement up to a maximum of $150k without means testing or a sliding scale of benefits based on income which the rest of our taxation and many other means tested systems are based upon.  This presents a significant financial concern.  Of course there are ways for empowering people to take paid leave and enjoy the beautiful time that all humans should enjoy in being a parent to a new child – without creating systems that contribute to welfare churn.  For instance, using a tax effective savings vehicle – where Australian’s are all provided with a way to save for education, health and new life creation (having babies!) in a particular savings account and if they do so, are taxed at a much lower rate (perhaps the effective tax saving difference based on welfare with- i.e. 30-40% rate saving – with the extra 15-20% kept to fund those who need it most).  People can then access these funds when they have children – or perhaps if they never do, they could access those funds after menopause??  That’s an interesting thought!  Childcare payments could then be reduced as people self funded time off to spend with their new or recently grown family.  Either way, the current Labor party’s child care benefits scheme is a more financially prudent policy.

  3. The report also suggests that for the above two items (and other family and child related welfare payments) there is benefit in reform across all of them.  The number of children you have is a major indicator of potential new costs, so the suggestion of replacing all these benefits with a non-means tested Child Tax Credit could be an option.  The issue I see there is that it provides more money for those who earn more and therefore pay more tax, and zero money for those who earn under $18.2k.  So, there would need to be some more thought put into how this could be achieved – particularly covering any transition period.  Would the tax credit happen as a part of someone’s weekly/fortnightly wage?  What of people who are paid monthly? Perhaps the tax credit could increase or decrease on a sliding scale based on income and then switch from a credit to welfare payments on the lower end of the scale?  I guess you’d need to do more modelling to check.
  4. CentrelinkThe other major component of welfare payments is within unemployment.  Interestingly 60-70% of people who take up Newstart move back to paid work within 1 year.  One proposal suggests people could use Personal Future Fund accounts to self fund this period…but I think this is a bit of a stretch.  That would require someone to have up to $40k in savings at any time JUST IN CASE they were unemployed for up to a year.  I think that Australian’s would find that a big stretch to agree to.  The other suggestion which I think makes more sense and is something Aussie’s are already familiar with, is to provide those who are recently unemployed with a loan amount that is paid weekly – but which must be paid back as soon as they start working and earning over a certain amount that would allow them to service the debt.  It works just like the HELP fee system so as not to disadvantage those who are unable to get paid work.  I think the debt would probably need to be capped at 1 years of benefits (given that is 70% of the cases anyway), because psychologically, the more someone felt they “owed” to the government, the greater the disincentive to find work because after 5 years they’d owe over $70k to the government which is 1/5 of a house loan – most humans would feel overwhelmed at that obligation.

DISABILITY SUPPORT CASH BENEFITS

  1. The Disability Support Pension was an interesting one.  I found this one difficult because there is so much complexity around physical and mental disabilities.  On the one hand there is a social etiquette which dictates we should avoid expecting the same from a disabled person as that of a normally abled person, on the other, there is much that an individual human can gain from positive and meaningful contribution to the workforce.  Of course the degree to which this is experienced is dependent on the individual, the type of disability and the severity.  Now ABS data shows that disabilities that begin in adulthood are most likely to occur in the 45-64 age bracket (prior to workforce retirement) – and those in the 55-64 bracket are the least likely to return to work.  At the moment the payments for DPS (Disability Support Pension) are not aligned to the objectives of the National Disability Insurance Scheme (which provides support for increased workforce participation).  The two programs are at odds – one provides the support, but the other does not require people to look for work in order to obtain benefits, so there is little incentive for someone to go and look for work – even if there is now a program structure to support it!  So by aligning the two – i.e changing the pension to require those with partial working capacity to seek out work, the aims of the NDIS can be carried out and the government can also save money on pension payments as a side benefit.  I think this is a good idea in principle, but it is a tricky one to means test by “working capacity” and might have the effect of causing public outrage – particularly in instances where there are people that may be physically partially able, but combined factors of mental preparedness and also workplace preparedness creates a difficult environment.

EDUCATION SUPPORT BENEFITS

  1. Christine Milne, leader of the Australian Greens Party

    Christine Milne, leader of the Australian Greens Party

    On Primary education, Rudd government wants to spend more and Abbot wants to spend less or perhaps distribute the balance across primary/secondary and tertiary – both have an impact on the ability of future government expenditure and the ability to pull Australia out of deficit.  On the other hand, the Greens proposal to means test government funding to private schools just pisses off any parent who is currently sending their child to a private school and is unlikely to be a policy that Parliament would accept as a solution.  But that’s not to say the track isn’t right…it just needs to be presented as a change for all that provides new freedoms and opportunities…rather than a new disadvantage for some.  The idea proposed is that the amount of tax money used to pay a public funded school position is instead provided as a tax credit that can be used for education.  The credit could be capped based on the price of attending the closest local school.  Now this still effectively lowers potential benefits to parents with kids going to private institutions – but its much more difficult to compare since now the decisions are being made by the individual, not by the institution. The approach increases competition within schools and raises the bar for all, while still providing education within an essentially socialist framework.

  2. On tertiary education, the current FEE help system takes no account of the earning POTENTIAL of the degree being studied as a means of determining % of HELP assistance available.  For instance, the average earning potential of a teacher is $64k per year, the average earning potential of a lawyer is nearly double that at $123k.  Reforms suggest this earning potential could be used as a means of reducing or increasing government subsidies as needed.  My personal thoughts are that this is a good idea in theory but individual job types and associated incomes vary wildly within particular industries, there are hundreds of jobs, and in some sectors salaries stay relatively the same over time while others go up and down – meaning the system would at least need to be smart enough to cater for all of these intricacies.  Certainly not impossible in the IT age…but important to consider.  Also increased fees for higher earning potential jobs could effectively cut out students from lower income backgrounds.  So I think if the system were to work, it would also need to include family means testing as part of the equation of potential fee help.

HEALTH SUPPORT BENEFITS

  1. MedicareFirstly I think it should be noted there is probably not too many Australian’s out there who aren’t fans of the socialist style medical system we have here in Australia.  Americans would say we are very lucky.  However, if we accept that the point of such a system is to provide healthcare to those who can’t afford it (unlike US where without health insurance, you’re in a real bind), then just like everything else, a socialist system needs to be implemented in a balanced way.  And this means means testing it in the way that practically all other welfare benefits are implemented in Australia.Here’s the issue: because you don’t pay (or you receive a rebate) on visits to the doctor or purchases of prescription drugs, and the doctor and pharmacist don’t lose out either – the system encourages people to use it more, leading to more spending that may be unnecessary – particularly if the same result and levels of population health could actually be achieved for less.  In America, cost benefit analysis is used to make decisions on how to best decide which drugs or equipment to subsidise.  Many suggest that the better approach is another measure: Quality Adjusted Life Year – which is a measure that I think makes more sense for this area where the “cost” is money and the “benefit” is life verses death or disablement so its not as simple as money vs. less final life benefits!  On top of this, means testing as a method of ensuring health welfare benefits go to those who most need it vs. those who can afford health insurance and the price of a visit to the GP seems like a common sense approach.Ultimately, why should someone earning $75k or more get exact same government help on healthcare as someone earning $18k.   Logic would say…well they pay their taxes just like everyone else – so they should get the benefit right?  But if, similar to the other suggestions in the report around tax credits, a percentage of their taxes could be used to go directly to health insurance which was perhaps expanded to cover a % of GP visits depending on means tested income – this, with the savings gained from other welfare areas, could potentially cover costs without any major change for high income earners – making it a more palatable solution for the whole of the Australian public.  Regardless, I think this idea needs more work because our healthcare industry is highly complex and involves many more intricacies in comparison to other welfare areas.

Overall, I think the ideas presented a pretty good – the question is then about implementation.  Change of this type in too many areas at once is not only difficult to achieve, it scares the population into thinking the government is cutting stuff willy-nilly because most people don’t have half a day to spend going through and really thinking deeply about exactly what the proposed reforms mean like I just did today!  So focusing on just one or two areas that would have the biggest impact as part of an election campaign I think would be the maximum that the Australian public could psychologically handle.

On a final note, what I found so interesting about all of this, was that the Australian governments policy attitude toward Indigenous Australians, is actually reflective of its policy attitude to ALL Australians.  Its paternalistic in nature.  But paternalism disguised as public generosity won’t save future Australians from having to deal with the fall out of policy decisions that drive our budget into further deficit, particularly as Australia’s population ages.