Why older Australians don’t downsize and the limits to what the government can do about it

Why older Australian's  Older Australians are not deterred by 
financial barriers as much as emotional ones, when it comes to downsizing. 

Encouraging senior Australians to downsize their homes is one of the more popular ideas to make housing more affordable. The trouble is, incentives for downsizing would hit the budget, but make little difference to housing affordability.

It sounds good: new incentives would encourage seniors to move to housing that better suits their needs, while freeing up equity for their retirement and larger homes for younger families.

But the reality is different. Research shows most seniors are emotionally attached to their home and neighbourhood and don’t want to downsize.

When people do downsize, financial incentives are generally not the big things on their minds. And so most of the budget’s financial incentives will go to those who were going to downsize anyway.

Financial barriers to downsizing

There are three financial hurdles to downsizing. Downsizers risk losing some or all of their Age Pension, because the family home is exempt from the pension assets test, but any home equity unlocked by downsizing is not.

Downsizers also have to stump up the stamp duty on any new home they buy. For a senior purchasing the median-priced home in Sydney that’s now A$32,000. Finally earnings from the cash released are taxed, whereas capital gains on the home are not.

The Turnbull government has flagged the possibility of financial incentives in next week’s federal budget for superannuants and pensioners to downsize their home.

One proposal would exempt downsizers from the A$1.6 million cap on super balances eligible for tax-free earnings in retirement, or from the A$100,000 annual cap on post-tax contributions. But this would benefit only the very wealthiest retirees – just 60,000 retirees have super fund balances exceeding A$1.6 million.

More seniors would benefit from a proposal to exempt them from stamp duty when purchasing a smaller home. And many would benefit from a Property Council proposal to quarantine some portion of the proceeds from the pension assets test for up to a decade.

The trouble with all these proposals is that they would hit the budget – because everyone who downsized would get the benefits – but they would not encourage many more seniors to downsize.

Staying – or downsizing – is seldom about the money

Research shows that for two-thirds of older Australians, the desire to “age in place” is the most important reason for not selling the family home. Often they stay put because they can’t find suitable housing in the same local area.

In established suburbs where many seniors live, there are relatively few smaller dwellings because planning laws restrict subdivision. And even if the new house is next door, there’s an emotional cost to leaving a long-standing home, and to packing and moving.

And so, few older Australians downsize their home. According to the Productivity Commission, about 20% aged 60 or over have sold their home and purchased a less expensive one since turning 50. Another 15% have “strong intentions” to do so in the future.

When older Australians do downsize, their decision is dominated by non-financial considerations, such as a preference for a different style of house and living, a concern that it is getting too hard to maintain the house and garden, or the loss of a partner.

These emotional factors typically dwarf financial considerations. According to surveys, no more than 15% of downsizers are motivated by financial gain. Stamp duty costs were a barrier for only about 5% of those thinking of downsizing. Only 1% of seniors listed the impact on their pension as their main reason for not downsizing.

There are better and cheaper ways to encourage seniors to downsize

If governments do want to use financial incentives to encourage downsizing, budget sticks would be cheaper and fairer than budget carrots. Even if they have little effect on downsizing rates, at least they would contribute to much-needed budget repair and economic growth.

The federal government should include the value of the family home above some threshold – such as A$500,000 – in the Age Pension assets test. This would encourage a few more seniors to downsize. More importantly, it would make pension arrangements fairer, and contribute up to A$7 billion a year to the budget.

Asset-rich, income-poor retirees could continue to receive a full pension by borrowing against the value of the home until the house is sold. The federal government would then recover the cost from the proceeds of the sale. If well designed, this scheme would have almost no effect on retirees – instead it would primarily reduce inheritances.

State governments should abolish stamp duties on property, and replace them with a general property tax, as the ACT Government is doing. This would encourage downsizing, although only at the margins.

But the real policy justification is that it would help working age households to take a better job that’s only accessible by moving house, and so improve economic growth. It’s a big prize: a national shift from stamp duties to broad-based property taxes could add up to A$9 billion a year to the economy.

In short, the downsizing debate is a prime example of how governments prefer politically easy options with cosmetic appeal, but little real effect, on housing affordability. If they’re serious about making it easier for young Australians to buy a home, they will have to make tougher policy choices.

This article was co-written by:
Brendan Coates - [Fellow, Grattan Institute] Brendan Coates – [Fellow, Grattan Institute] and
John Daley - [Chief Executive Officer, Grattan Institute]John Daley – [Chief Executive Officer, Grattan Institute]




This article is part of a syndicated news program via the Conversation


Age discrimination in the workplace happening to people as young as 45: study

 Survey participants reported discrimination both in job seeking and in employment.

Almost a third of Australians perceived some form of age-related discrimination while employed or looking for work in the last 12 months – starting as early as 45 years of age, our study finds.

We conducted a national survey of 2,100 men and women aged 45 years and over, and 100 telephone interviews. The most common form of perceived discrimination was negative assumptions about older workers’ skills, learning abilities or cognition.

Survey participants also reported limited or no opportunities for promotion or training, working in an organisation that undervalued them and difficulty securing work due to age.

Our findings align with previous research from the Australian Human Rights Commission where 27% of Australians aged 50 years and over had recent experience of age-based discrimination in the workplace. In this survey the most common forms were limited employment, promotion or training opportunities and perceptions that older people have outdated skills or are too slow to learn new things.

Older adults in our study described a subtle pressure from their colleagues and management to stop working in order to “make room for the younger generation”. This was regardless of their experience, enduring capabilities or working preferences.

Workers also faced patronising attitudes, where employers or colleagues assumed they would struggle to pick up new technology or work systems quickly, due to their age. Some survey participants felt they were not afforded the same promotional or training opportunities as their younger colleagues.

Experiences differed for men and women in our survey. Men were more likely to suggest discrimination based on assumptions about their physical abilities or working pace, and women reported the organisation they worked for undervaluing older workers as a group.

To avoid discrimination interviewees reported using strategies such as minimising health conditions, concealing their age or maintaining a “youthful” appearance.

Although there has been some research into industry specific experiences of age discrimination, there are limited comparisons in research of prevalence and type of discrimination between industries.

Our data indicates that age related discrimination traverses all industries in worrying proportions. Industries where age discrimination was particularly common included construction, administrative services, education, manufacturing, essential services, information technology and professional service industries.

Hiring and firing of older workers

Over two thirds of retirees in our study, who had experienced age related discrimination, attributed their retirement to involuntary factors such as “having no choice”, redundancy or dismissal. Negative experiences at work (with a colleague, management or client) or dissatisfaction with organisational changes were often the trigger events for retirement.

Older job seekers reported being candidly or surreptitiously rejected through recruitment processes on the basis of age alone. Education, training and a steady working history were not guaranteed to help study participants in their search for employment.

Some interviewees had found it necessary to accept work for which they felt overqualified. Job seeker services in particular were considered ill-equipped to assist older, highly experienced and often well-educated adults.

These findings are in line with similar research in which study participants interpreted suggestions from potential employees that they were over qualified or experienced for a role, to mean they were “too old”.

Our interviewees believed that younger managers can feel intimidated by older workers. This may be based on concerns regarding an older employee’s ability to take instruction from somebody younger, learn new work methods and technologies or readily adopt change.

Why we should fight age discrimination

Beyond the moral and ethical issues of how older adults are treated, the experiences recorded in our study can have tangible implications for individuals and employers.

The government is trying to reduce dependency on the aged care pension by encouraging workers to stay in the workforce longer and accumulate sufficient superannuation (and other assets). Employment in high quality work can support and protect the health of men and women as they age.

But adults who feel devalued in their workplace, or unable to find suitable employment, are more likely to enter retirement earlier than anticipated and less inclined to re-enter the workforce.

Our survey results also suggest that people experiencing work-related ageism tend to report poorer health, lower household incomes and lower total superannuation fund balances, than those who have not had this experience.

Mature aged workers bring with them a range of favourable characteristics such as stability, reliability, loyalty, experience, wisdom and maturity. One way to tackle work related ageism is to firstly address negative perceptions regarding the competency of older workers.

This may be best addressed by employment services and human resource staff who are often on the front line of helping these workers find suitable employment. These workers can be skilled to respond to the needs of mature age job seekers. The introduction or reinforcement of policies supporting diversity in the workplace is another important step to support older worker participation.

This article was written by:

Justine Irving – [Researcher older workers, retirement and ageism, University of South Australia]



This article is part of a syndicated news program via the Conversation


Who owns the world? Tracing half the corporate giants’ shares to 30 owners

 BlackRock Inc is relatively unknown outside financial circles, but it owns the largest share in the biggest 299 companies in the world

When people say share ownership is highly diversified, they think most large public corporations have lots of shareholders – and often the largest shareholder has less than 15%, sometimes less than 5%, of the total shareholdings.

But looking at it this way obscures the concentration that is taking place. The same organisations – usually finance capital, rarely families or individuals – own these public companies. We (David and Georgina) first researched this in 2009, and we’ve since found that the trend is of increasing concentration in several countries over three decades.

When one organisation alone controls more than 6% of shares in very large global corporations, and 30 control more than half of all shares in these corporations, that signifies very high concentration.

Our 2009 study found that various forms of financial capital controlled the great majority (68.4%) of shares in the world’s very large corporations. Individuals or families held only a minimal proportion (3.3%), and industrial companies held relatively little.

Banks were the most common specific type of individual or organisation that controlled the shareholdings in very large corporations.

Levels of concentration

Our study used a database of shareholdings in the 299 largest publicly-listed global corporations from the Bureau van Dijk global database of corporations, OSIRIS. This database combined information from around 100 sources and covers nearly 63,000 companies worldwide.

In some cases, the true ownership of shares is hidden by the use of “nominee” or “depository” organisations. These vary in significance and legal treatment between jurisdictions.

They include such entities as as Clearstream and Euroclear in Europe, the Depository Trust Corporation in the US, Hong Kong Securities Clearing Company Nominees in Hong Kong (which makes it to our list of the top-30 private shareholders), the Canadian Depository for Securities (which would be the second-largest shareholder in that country), and a variety of bank nominees in Australia – where nominee shareholdings are unusually important, accounting for half of significant Australian shareholdings in 2009-10.

The nominee normally is not exercising its own discretion in investment decisions. Rather, the – often-secret – beneficial owner of the shares exercises decision-making power and control.

This is quite different to the funds managers who dominate in our analysis and who mobilise money owned by other people and make investment decisions on their behalf. Broadly speaking, nominee holdings make little difference to the global picture presented here.

US-based very large corporations accounted for 29% of companies in our database. By region, Europe (mostly the UK, France and Germany) accounted for 37% of companies. This was greater than the share of the Americas (32%) and Asia (including Japan, Korea, China, the Middle East and Australia), at 30%.

The largest 30 shareholders (out of more than 2,100 share controllers) owned or controlled some 51.4% of the assets of the 299 companies. This is a significant concentration of resources and power – 1.5% of shareholders controlling 51% of shares.

These 30 shareholders were made up of 21 private-sector shareholders and nine public-sector (that is, government-owned) shareholders. Nine government agencies between them account for 17% of the assets of the 299 very large corporations.

Importantly, one company that is relatively unknown outside financial circles, BlackRock Inc, held or controlled 6.1% of the assets of the 299 companies (around US$3 trillion) in 2009. It is a US financial company, mostly a “fund manager”, with offices in 30 countries and about 8,400 employees.

BlackRock, as a fund manager, mobilises other people’s money to buy and control shares in the many companies in which it has a stake. So it exercises control of shares principally through the funds it manages rather than through buying shares for itself. More than 85% of its share ownership was via funds it controls.

BlackRock was the largest share controller not only internationally but also among Canadian, German, Italian and American very large corporations.

The next-largest private shareholders were AXA, (3.4%), JP Morgan Chase (3%) and Capital Group (2.5%).

The governments of the UK (4.7% in 2009, having “rescued” ailing banks in the global financial crisis, but now lower) and China (4.5%) were also large share controllers. And through its sovereign wealth fund, the Norwegian government controlled 1.2% of shares in very large corporations.

Six of the top ten private shareholders were based in, or at least originated from, the US, as did ten of the top 21. Three of the top ten were based in France, and one in the UK.

All of the top ten were financial institutions of one type or another: banks, financial companies, insurance companies, or mutual and pension funds or trusts.

The top eight shareholders each held shares in more than half of the top 299 corporations. So, their potential influence was spread across a very wide range of corporations. Eighteen of the top 21 shareholders each held shares in at least 100 very large corporations.

Different patterns of share control

We observed various distinct patterns of share control by looking at three key indicators:

  • the size of a shareholder’s holding in a company, as a proportion of the total value of that company’s shares;
  • the number of companies in which a shareholder had the largest shareholding; and
  • the number of companies in which a shareholder was among the top five shareholders.

We refer to the second and third of these indicators as measures of share controller “precedence”.

BlackRock and Capital Group were notable for having both wide influence (across many companies) and deep influence through high precedence – that is, they were often the top or the second-ranked shareholder. In 55% of its shareholdings, BlackRock was ranked among the top five. This was also the case for 45% of Capital Group’s shareholdings.

Yet in no very large corporation did BlackRock have shareholdings above 15%. Capital Group had such share levels in only one case.

Very few top private-sector share controllers aimed to (or perhaps could) secure shareholdings of 15% or higher. In 56% of very large corporations the top shareholding was less than 15%. In one in ten of these corporations the top-ranked shareholding was 5% or less.

At the other extreme, several companies gave low priority to having precedence, and avoided proportionately large holdings altogether. Some 98-99% of the holdings of several European share controllers (such as BPCE and Societe Generale) were valued below 5% of the relevant very large corporation’s shares. Around 80% or more were valued below 1%.

By implication, the European share controllers were potentially less activist in seeking to develop deep control in shareholdings.

What are the implications?

The global financial crisis displayed the consequences for the real economy of the financialisation of markets through the emergence of credit default swaps, derivatives and collateralised debt obligations.

Less obvious is the financialisation of ownership. Finance capital doesn’t only lend money to corporations to expand. Its impacts on share prices signal the successes or failures of corporate management. Finance capital orders and owns the corporations.

So, the distinction between finance capital and other types of capital (in particular industrial capital), while useful in some respects, is misleading in others. Ultimately, industrial capital is finance capital.

If there was once a time when a few families and individuals owned large public corporations – and their personal values, quirks and preferences shaped the way those corporations behaved and dominated the world – that time has passed. Today the world is dominated by corporations that follow the logic of finance capital – the logic of money.

This article was co-authored by:

George Soros, Hedging and Leverage.


1992, just a year and a half after Britain joined the European Exchange Rate Mechanism or ERM, the fixed exchange rate posed a serious problem. The ERM was a precursor to the EURO and was created in 1979. Countries weren’t ready to give up their national currencies, but they agreed to fix their exchange rates with each other instead of “floating” their currency and letting capital markets set the rates. The ERM ensured the British government would follow fiscal and monetary policy that would prevent the exchange rate between the Pound or GBP and the strongest currency in Europe the German Deutsche Mark (DEM) from fluctuating by more than 6%. The exchange rate was set at 2.95 DEM to the Pound, therefore if the exchange rate ever neared the bottom of its permitted range DM 2.773, the government would be obliged to intervene. With fixed exchange rates, countries can’t just “set it and forget it.” People trade currency every day, exchanging their currency to buy imports or sell exports, and the market applies pressure based on what it thinks the actual rate should be based on supply and demand for a currency.

Between 1990 and 1992 the ERM had a positive effect on the British economy, inflation decreased, interest rates eased, and unemployment was low by historical standards. In 1992, however, England felt the impact of a massive global recession, and unemployment spiked to 12.7% from just 7.7% two years prior. Britain also had a large current account deficit [the country was importing more than it exported].

Ordinarily, Britain could spur investment and spending by cutting interest rates during an employment crisis. But in this case, doing so would push the pound’s value below the agreed upon amount within ERM. So while the people of Great Britain dealt with a recession, the government’s hands were tied; they’d just have to ride it out.

In the Spring of ’92 George Soros was 62 years old and led the Quantum Fund, a hedge fund he founded in 1970 that bet on macroeconomic trends.

Since August, Soros and his Quantum Fund had been building a $1.5 billion position to bet that the price of Sterling would fall. The British government had full faith that it would not fall as the ERM would serve as an “autopilot” that kept the British monetary policy on proper course. The fundamental problem however was that Britain had joined the ERM at the wrong rate and the sterling was overvalued, meaning that the economy was stuck with a structural current account deficit.

The catalyst came on the 25th of August 1992, German central bank official Reimut Jochimsen, a Bundesbank council member, issued a speech saying that there was potential for realignment within the ERM. Sterling weakened. On September 10, an unnamed Bundesbank official was quoted as saying that a devaluation of sterling was inevitable. The pound fell. September 16th, 1992 President of the German Bundesbank, Helmut Schlesinger gave the interview to the Wall Street Journal saying he “does not rule out the possibility that, even after the realignment and the cut in German interest rates, one or two currencies could come under pressure”. Soros and the entire financial market took this to believe that the pound sterling was one of those currencies that could “come under pressure” and be devalued.

Stanley Druckenmiller a senior member of Soros’ Quantum Fund noted that their $1.5 billion bet against the pound was about to pay off and that they should consider adding to the position Soros agreed with “Go for the jugular” and instead of slowly building up a short position against the sterling, the Quantum Fund would short sell sterling on an unprecedented scale even by today’s standards. Doing so would not only help hasten the tumble of the sterling, but also increase the hedge funds profits. 

What is a hedge fund exactly? A hedge fund invests capital to make profits. They spread risk over a number of assets including shares, property, bonds and currency to name a few. A fund may make around a 20% return on its investments, as not every investment they make is profitable. Hedge funds also use financial instruments to “hedge” against other risks in order to more clearly isolate the trade that they want to make. For those that are new to the market it sometimes occurs that simultaneously opening long and short positions, essentially taking both sides of the trade, closing the loosing side early and letting the winning side run.

Another thing hedge funds do (if they’re pretty sure about their trade) is to borrow funds and put even more money behind the trade. Naturally a hedge fund might make a little bit of money on each side. But if they use mostly borrowed money, they can buy a larger position without fronting much capital. So if you’re really sure a trade is right, you might borrow a lot of money to enhance your payday, this is known as leverage. As Soros once famously said “There is no point in being confident and having a small position.”

When it comes to trading CFD’s online many fall into the ‘hedging’ trap, without really understanding how to apply the method properly.

Let’s look at an example, a trader’s account has $10,000 in equity. $1 million dollar positions are opened long and short on currency X at 1.0000 (using $4000 margin assuming 500:1 leverage). At $100 per point all that is required to wipe out the account entirely is a movement in either direction of 100 points.

This can happen in the blink of an eye and bang the traders account has been ‘blown up’. The point is this: no matter how much equity in your account because leverage is involved face value exposure will always be magnified by a much greater factor (i.e. 500:1). And it must also be mentioned that leverage is a central component to the profitability of CFD trading in the first place.

For this reason most successful traders use some form of strategy with the following components, as did George Soros and the Quantum fund in 1992

1.     Pick a market

2.     Pick a direction

3.     Set a stop loss and a take profit

Now lets look at an example successful way a trader can use hedging to increase or maintain their equity. A trader has 100 shares in company Y on the ASX, the only way our trader makes money is if the market is up and the price of the shares increase.

If the trader was to open a CFD trading account and open sell positions (assuming leverage of shares is 10:1) they would only need to sell 10 units to match the 100 physical shares. Then if the situation arose where the share price fell, the trader has protected his physical shares with the CFD sell position, meaning he will profit on the downturn and make up for the loss in the shares on the ASX.

If you are looking to learn how to use CFD trading to hedge your shares or other financial assets, call myFXplan today on +613 8393 1800 or visit www.myfxplan.com

What roles do Central Banks play in the currency markets?


What roles do Central Banks play in the currency markets?


Miguel Ángel Fernández Ordóñez, Spain’s former central bank chief was charged for enabling the Spanish people to buy shares in a new bank that he knew was guaranteed to fail. After it failed he would exercise his powers in the central bank to bailout the bank making him and the central bank a fortune twice over. Along with 65 other elite bankers who committed a string of financial crimes it is a massive effort by Spain to get rid of corruption within the banking system.

This is somewhat of a world first as Central Banks generally classified as above the law and independent. The independence of the central bank is enshrined in law. This type of independence is limited in a democratic state; in almost all cases the central bank is accountable at some level to government officials, either through a government minister or directly to a legislature. Even defining degrees of legal independence has proven to be a challenge since legislation typically provides only a framework within which the government and the central bank work out their relationship.


So what does a central bank do to warrant such power? A central bank, reserve bank, or monetary authority is an institution that manages a state's currency, money supply, and interest rates. Central banks also usually oversee the commercial banking system of their respective countries. In contrast to a commercial bank, a central bank possesses a monopoly on increasing the monetary base in the state, and usually also prints the national currency.

The Reserve bank of Australia (RBA) holds the role of Australia’s central bank and thus it conducts monetary policy, works to maintain a strong financial system and issues the nation's currency. It also manages Australia's gold and foreign exchange reserves. The bank aims to provide stability of the currency of Australia; maintain full employment and ensure the economic prosperity and welfare of the people of Australia.


It achieves these through goals through what’s called monetary policy or changing the official interest rates. Interest rates are the rate in which banks charge to borrow money. The theory behind the policy is that if rates are low then more people would borrow as it costs less in interest payments, as a result more people are buying and spending and in turn there is generally more economic activity. A situation when the RBA lowers interest rates, is called lose monetary policy as the ‘purse strings’ have been loosened. On the other hand tightening monetary policy is a situation where the RBA increases interest rates thus its more expensive to borrow money, there is less money in the market and economic activity slows. When the economy is overheating or too inflated the Reserve bank will maintain stability by tightening the strings.


There is generally a 9-12 month lag affect from when an interest rate decision is made and the economy starts to change in accordance. However it has an instant affect on a nations currency price. For example if the RBA came out and raised interest rates, the Australian dollar generally increases instantly in price. Similarly if the RBA decreases interest rates then generally the Australian dollar instantly falls. Knowing this gives a trader a distinct advantage in the lead up to an interest rate decision. If it is looking likely that the RBA will change rates then a trader can place a trade and if the direction is correct then the trader will profit. This opportunity comes around every month in Australia on the first Tuesday of the month.


The RBA in majorly concerned with three factors when considering an interest rate change Inflation, employment and currency stability. Australia has an inflation target of 2-4% meaning prices of all goods in the Australian economy should rise from 2-4% each year, they believe this encourages spending and investment as people are forced to buy now rather than later. It also discourages savings as money in the bank loses 2-4% of its value every year so people are encouraged to invest the money in order to beat the inflation rate. If Australia’s inflation rate is below 2% then the RBA may raise the interest rate to stimulate the economy and vice versa if the inflation rate is too high it may look to raise rates to dampen demand.

A somewhat controversial goal of the RBA is to achieve full employment. Again if unemployment is too high the RBA will look to lower interest rates to spark investment in employment. This policy has been debated heavily as monetary policy can be seen as an inefficient way of dealing with employment. A nation can be in a situation of stagflation which is when there is high inflation combined with high unemployment, a central bank has its hands tied as lowering the interest rate to spur employment would inevitably further raise inflation at the same time. There for when the Australian Bureau of statistics release the employment numbers or how many jobs have been created in the economy over the last month, the finance world looks on with much interest as this will have a major affect on the following interest rate decision.

On the first Friday of every month the United States release what is called the ‘Non-Farm Payrolls’. Basically every job created in America over the last month, that’s not farm related. This is seen to be the largest trading day of every month as it has a major affect on the US Dollar. If the numbers are good and more jobs have been created than expected then the dollar generally rises as the chances of a future interest rate hike increases.

The third factor is currency stability, we have seen recent examples here in Australia of the RBA seeing the Australian dollar too high and raising rates to bring the dollar back to a level, which suits our economic activity. The Reserve Banks governor Glen Stevens can also achieve this just by talking about the idea of raising interest rates, which is known as ‘jawboning’ the dollar. A high dollar is great for Australian importers but it has a detrimental impact on Australian exporters as people in other countries pay more for Australian goods. On 12 December 1983 the Australian government ‘floated’ the Aussie Dollar meaning through natural supply and demand the dollar generally corrects itself, however the RBA uses these intervention techniques to artificially create a price they think is fit.

There are many factors that drives the Australian dollar up and down and to keep abreast of its movements and how it reacts to certain geopolitical circumstances can be a very exciting. As the dollar moves there are opportunities to make great amounts of money through currency trading. Learning how to read economic news properly can help you achieve success in the money markets.

If you are interested to learn more about this then contact myFXplan today on +613 8393 1800 or visit www.myfxplan.com

War and Oil: a Russian Tale


War and Oil: a Russian Tale


For over 10 years the world has been heading towards a major war and it would take a major changes in multinational organisations, several sovereign nations including the United States to save us.

In 2007 at the 43rd Munich Conference on Security Policy, Russian president Vladmir Putin said uncontained hyper use of force – military force – in international relations, force that is plunging the world into an abyss of permanent conflicts. His strong comments condemned the United States and their uni polar grip on the world. Such power granted to the United States he deems “unacceptable” and as a result may spark a nuclear arms race between Russia and the US and intensify extremism in the Middle East.

Fast Forward 10 years to 2017 and those words seem prophetic, a return to the cold war where the two of the major world powers are grappling for supremacy. Lately we have seen headlines of Russian interference in the 2016 US elections in which Senator John McCain hungrily labelled “act of war.” This came at a boiling point after Russia and the US hand wrestled for respective sides in the Syrian civil war and disputed strongly on Russia’s annexation of Crimea.

While we see Russia’s contempt of America’s control in world politics, we also see America’s great envy of Russia’s rising influence and wealth. Russia has achieved this rise largely by becoming the worlds largest oil producer and as the world is becoming aware, war follows oil.


The Syrian conflict has led to the realisation of three natural allies. Ensuing Peace talks in Syria were led by Russia and involved Turkey and Iran, rapidly increasing Russia’s newfound influence in the Middle East. This coupled with the UK’s exit from the European Union and President Trump referring to NATO as “obsolete” the world is indeed in the midst of a power struggle of epic proportions.

The election of Donald Trump has in no uncertain terms opened a new era of US international diplomacy. An America first approach will see the US cutting down on illegal immigrants, developing only bi-lateral trade agreements and a return to pro-Israeli relations. Iran, Russia’s new found ally in the Middle East hit out at the new president for implementing a temporary Iranian-US travel ban by dropping the US dollar for foreign exchange reporting. The governor of the Central Bank of Iran, Valiollah Seif, added that the country would switch to another common foreign currency or a basket with a ‘high degree of stability” for all financial and foreign exchange reports. Iran’s most important export which is Oil will still be sold in US dollars and the move is largely seen as a complication to Iranian book-keepers but one of great symbolic confidence non the less.  On Jan 29 2017, Iran launched a new type of medium-range ballistic missile prompting an emergency meeting of the U.N. Security Council on the 31st of the same month. The now former US National Security Adviser Mike Flynn put Iran "on notice" in a strong damnation from Washington. Days later Fox News reported that Iran has removed a similar missile from a launch pad, this came at the same time Iranian Supreme Leader issued a new warning to the White House about the coming 38th anniversary of Iran's Revolution, "No enemy can paralyze the Iranian nation."


Turkey’s President Erdogan sees President Trump’s appointment as a chance to reset relations with the United States, which Turkish officials say had nearly collapsed in the last years of the Obama administration. Relations were at a low point when Turkey believed the US were involved in a failed coup against President Erdogan and also a long-running feud concerning American support for the leading Kurdish militia in northern Syria, which Turkey regards as a terrorist group.

Turkey is one of six countries recognised as a candidate for EU membership however it faces many large hurdles in the stringent process and may even go to referendum debating to enter or not. Turkey has been seen as unreliable in controlling its emigrants into Greece, it also does not recognise the Republic of Cyprus as a sovereign nation, a nation that it shares a border with and is indeed a current member of the European Union. Russian and Turkish relations have strengthened since Putin accused Turkey of smuggling oil exported by ISIS through the Syrian border in December 2015. Putin and Erdogan have since agreed to a big gas pipeline deal, agreed to resume work on a nuclear plant in southern Turkey and pledged to increase bilateral trade by more than fivefold, to $100bn a year. The speed in which these two historical foes have come together as new allies has been startling to the EU and the US it wasn’t even deterred by the Russian ambassador to Turkey has being shot dead by a Turkish police officer in December 2016. It’s in Turkey’s best interest to have the great Russian bear as a close friend because having Russia as a foe is much more painful. After Turkey shot down that Russian plane in 2015, Putin cut Turkey off from the Middle East. Russia implemented sanctions cost Turkey at least $10bn in tourism and trade revenue. Putin’s fighter jets bombed Turkey’s proxies inside Syria and Russia’s missile defence shield denied Turkey access to the airspace over Syria. Turkey is looking less likely to ally with the West should conflict arise as they debate entry into the European union and NATO.


Thanks to the amazing drilling success of American oil companies the States have increased output up to around 9.4 million barrels per day. Less than a decade ago the U.S. imported more than 55% of it’s oil needs a figure that fell to 24% in 2016, the lowest level since 1970. This gave the US much greater leverage when dealing with Saudi Arabia once a major exporter of oil to the US, in particularly in relation to forming the Iran nuclear deal framework, which was heavily criticised by the Saudi Arabia.

In 2016 OPEC called on the Saudis to cut their oil output to help stabilise prices. However the Saudis knew this tactic wouldn't work. If they cut production, they would simply loose market share to American and also Iranian oil companies who ramped up production in this period. It is America’s best interest to keep oil prices low to keep the pressure on Russia, the world largest producer. So the Saudis too decided to boost production, defending market share and being the world's lowest-cost oil producer they'll be able to withstand low prices longer than their competitors and push them out of the market. As a result the market experienced a massive glut and the price of oil bottomed out at around $27 per barrel in late 2015. Coupled with US and European sanctions after the annexation of Crimea, Russia’s economy fell into back-to-back years of economic recession. Russia stood strong and called the bluff of the Saudi’s, Russia's Finance Ministry announced in December 2016 that it is drawing up plans based on the price of oil as low as $30 a barrel until 2022. That scenario would have devastating implications for OPEC, according to Russia's Deputy Finance Minister Maxim Oreshkin. With the possibility that Saudi Arabia only has 5 years of oil left and these levels of production.


NATO has capitalised on the weakness pushing 10,000 plus soldiers into Russia’s Baltic and Northern neighbours. In March 2017 a total of 8,000 NATO soldiers have been deployed to the Finnmark region of northern Norway, 160-300 km from the Russian border, for a series of joint military exercises. Disguised in an attempt to curb Russian aggression in Crimea however is the real reason to curb Russia’s oil production and in turn renewed world power. With all this pending tension one must ask Russia, why Crimea? In one word – oil.


On the edge of collapse Putin doubled down strengthening positions with neighbours investing 1.5 billion in Indian power and infrastructure. The Russian bear received 2.4 billion from China for the extraction and processing of natural resources, agriculture, and the development of port and logistics infrastructure in the far east. In the early months of 2017 the global oil price has recovered somewhat giving the Russian economy a much-needed boost pushing up around 40 percent in dollar terms from the beginning of the year. Kirill Dmitriev told CNBC in Moscow, "The Russian economy really went through some difficult times but as of the beginning of the year it really reached a floor and is coming up and we expect growth to resume at the end of this year or early next year."


As tensions increase world wide 2017 is a year that will be remembered in history and the only thing that is inevitable is change. World prices of oil, gold and other commodities are predicated to fluctuate widely and if this indeed is a year that war breaks out the opportunity to make money presents itself. Through trading world markets you can Buy and Sell currencies and commodities to make profits online. myFXplan is a Melbourne based company that helps clients from beginners to advanced make money in the financial markets. Knowing how the markets react and being ahead of the game is the asset you need to become financially free.

Call myFXplan today on +613 8393 1800 or visit www.myfxplan.com

The government needs to better enforce the laws it creates, to protect franchise workers

Workers don’t have much recourse if they are underpaid by a franchise

The government’s recent proposal to amend the Fair Work Act makes it clear franchisors will be punishable for breaches of industrial law, the like of which we’ve seen in scandals surrounding retail franchises. But there will still be problems in enforcing this law. This is because of the obstacles workers face in successfully pursuing their entitlements and the inadequacy of our current penalties to deter these sorts of practices.

We’ve seen various scandals surrounding retail franchises, including 7-Eleven and Caltex stores, and takeaway food businesses such as KFC, McDonald’s and Hungry Jacks. The wages theft has taken several forms, with some franchisees paying workers far less than the minimum wage or modern award entitlements, failing to pay penalty rates and superannuation, and falsifying pay records.

A significant proportion of Australia’s labour force works in franchise organisations. According to the Franchise Council of Australia, while franchising accounts for only 4% of businesses, this includes about 1,200 franchising brands. Among these, there are approximately 79,000 operating franchisees which together employ more than 470,000 direct employees.

In the “commercial marriage” of franchisor and franchisee, the franchise agreement defines the rights and obligations of both parties. The franchisor is the senior partner in this relationship, and charges the franchisee an upfront fee, an ongoing fee (such as a percentage of revenue), or a combination of the two. Given this continuing financial bond, holding franchisors, as well as franchisees responsible for wage compliance, is crucial.

If employees have been underpaid

Under the Fair Work Act, employees of a franchise can pursue recovery of underpaid wages through the Fair Work Commission. The Fair Work Ombudsman can also investigate claims of underpayment by franchise operators. Following findings of noncompliance, the Ombudsman can issue compliance notices, infringement notices and engage employers in enforceable undertakings to remedy infringements.

However, in practice for individual workers, numerous obstacles exist to recovering stolen wages. Many workers simply do not know their wage entitlements or how to identify them.

Also, proceedings in the Fair Work Commission take time, and are costly, unless a worker belongs to a union or represents him or herself.

Self-representation is often infeasible, particularly for workers with English as a second language. Then, documentary records, such as payslips, time sheets and rosters are often missing in action or deliberately falsified. This was the case with those 7-Eleven franchises which recorded only half the hours worked, so that workers appeared to be earning the correct wage instead of only half that amount.

Migrant workers and international students may face the threat of deportation. As well, pursing the claim may prove fruitless if the franchisee lacks the financial resources to reimburse the wages.

The Ombudsman will be responsible for enforcing the proposed legal provisions, including the ones in the government’s latest proposal, but in reality this will require a substantial increase in resources.

While the Ombudsman has engaged vigorously in action against a number of franchise operators for significant breaches, its investigative capacity is constrained by inadequate resources, a limited power to compel employer cooperation and assistance, and companies liquidating after the Ombudsman files a matter in court.

Unless franchise workers are part of a union, it’s hard to fight cases of underpayment and other violations of industrial law. Dan Peled

The penalties and sanctions for franchises

The penalties and sanctions for punishing misbehaving franchises, available under industrial law, are also limited.

The financial weight of sanctions is low – the maximum fine is A$10,800 for individuals and A$54,000 for a corporation. This is unlike in other areas of law such as occupational health and safety, migration and consumer law, where criminal penalties apply, there are no criminal penalties for recalcitrant franchises.

The current system in Australia with these sanctions is that punishments for transgression become increasingly severe with repeated non-compliance. But the law currently steers clear of using the highest fines and other penalties, to avoid upsetting franchises that might be doing the right thing.

However, this relies on most employers being ethical, following the rules, and the availability of measures sufficient to encourage compliance and deter non-compliance. The existing sanctions for employer failing to pay award wages are unlikely to be sufficient to deter wage theft among either franchisees or franchisors.

Even under the proposed legal protections to cover franchises, including increased powers and resources for the Ombudsman, it will remain difficult to hold franchisors accountable for wage underpayments. This is because of the need to prove that the franchisor had actual knowledge of the franchisee’s contravention and intentionally participated.

What needs to change

The extensive public shaming of some franchise operators in recent months may have encouraged a return to compliance for those acting illegally. However, for the longer term, legislative changes are required both to make it easier for individuals to recover wages and to deter franchise operators more strongly from engaging in unlawful wage practices.

Individual workers need stronger protections to prevent retributive actions from employers towards whistleblowers. Workers must also be better informed about their wage entitlements and employers need to know that this information is easily accessible to workers.

Sanctions in recent legislation on workplace health and safety (2011), and in the heavy vehicle road transport sector (2012), provide an example to follow appropriately penalising and preventing misbehaviour in franchises. These new measures have included increased financial penalties, the disqualification of company directors from managing companies and criminal sanctions for serious and repeat offenders.

This article was written by Louise Thornthwaite [Senior Lecturer, Department of Marketing and Management, Macquarie University]

Cutting Sunday penalty rates will hurt young people the most

Hospitality workers, along with fast food and retail workers, will have Sunday and public holiday rates cut under the decision

The Fair Work Commission decided to cut Sunday and some public holiday rates of pay across the hospitality, retail, pharmacy and fast food industries for full time, part time and some casual workers.

This will hit young people the hardest as research tells us that while a third of Australians rely on regular Sunday shifts as part of their wage, nearly 40% of young people rely on penalty rates to survive.

Get the data

Penalising people on penalty rates

Penalty rates have been part of the labour market for almost 100 years, since the Australian Conciliation and Arbitration Commission ruled in 1919 that additional payment was required for working unsociable hours. This decision remains popular a century later. According to the latest polls, 82% of Australians support this compensation for working outside the usual working week.

The latest Fair Work Commission decision was the result of a full bench of commissioners hearing evidence from 143 witnesses after receiving 5,900 submissions. These submissions were from some of the largest interest groups in our society, such as the The Australian Council of Trade Unions (ACTU), the Australian Industry Group (AIG), Australian Chamber of Commerce and Industry (ACCI), National Retail Association (NRA), as well as submissions from individuals across Australia.

The timing of the release seems to be poor, as the latest Australian Bureau of Statistics (ABS) data shows that wage growth in the private sector is at an all-time lowand that the cost of living is at an all-time high. Given this context, it seems ill advised to reduce the wages of a largely casual workforce that already lacks security and stability.

Second class citizens?

The decision to cut wages in industries where the majority of the workforce is under 25, while shocking, should come as no surprise. This undervaluation of the work done by young people is well established by our longstanding junior rates system.

We occupy an unusual position in the global economy as one of only a handful of countries to have lower legal minimum wages for young people, along with Chile, Luxembourg, New Zealand, and the UK. Unfortunately for Australia’s young workers, our country has the lowest youth wage compared to minimum wage, in the world.

There is no evidence to suggest that reducing minimum entitlements like penalty rates will lead to net employment growth. Yet for young people, working these unsociable hours has a real impact on their social lives, ability to engage in family life, and overall health.

While Sunday is certainly not a religious day for most young Australians, researchconsistently finds that those who work on Sundays are most affected by the negative effects of working non-standard hours. In other words, while it no longer has religious significance, Sunday is still a day of rest.

Community, sporting and social events are also usually held on Sunday. While young people might be able to catch up with some areas of social life outside of the weekend, their parents and older family members are more likely to work in the week, making it difficult to find time to spend together as a family.

The loss of this additional pay will have large ramifications for the retail industry, where one in four young Australians are currently employed. By seeing their Sunday rates drop from A$38.88 an hour to A$29.16, young retail workers will need to pick up an extra hour’s work to make up for the lost Sunday pay, in order to maintain their current wage.

For those who work the minimum three hours on a Sunday, they will now have to work an additional hour. For those who work the maximum nine hour day, they will need to work an extra three hour shift to make up for the loss of penalty rates.
Otherwise, those who regularly work Sunday shifts in retail will be left between A$29.16 and A$86.78 worse off every week.

Living on the edge

The Life Patterns study conducted by the University of Melbourne’s Youth Research Centre has found that work-life balance and cost of living pressures are already creating a stressful transition to adulthood for young Australians.

Participants in this study are less likely to experience major milestones like starting a family, finding a secure job or putting a deposit on a house, due to their prolonged experience of low-paid, insecure work. They are increasingly reporting increased mental health issues and incidences of housing stress.

This study has also found those from Gen Y work consistently on weekends, well into their late 20s.

Ultimately, young people are at the coal face of any change to minimum entitlements, and face the greatest risk of losing out at the hands of this reform.

This article was written by Shirley Jackson [PhD Candidate in Political Economy, University of Melbourne]

Why Women Should Join Small Business Entrepreneurial Groups in 2017

What can be more empowering that watching your own female friend beat the odds? Watch work her entrepreneurial butt off and reap the rewards! If she can do it, so can you.

What are the benefits of joining such a group? Women appear to have the best ones.

Women’s Entrepreneurial Groups

‘There’s a Special Place in Hell for Women Who Don’t Support Other Women’

Or so said Madeleine Albright (or Taylor Swift quoting Albright). Whatever your gender, it is a daunting task to strike out on your own in the business world. Surrounding yourself with peers who are in the same boat as you, can be enormously beneficial – even if you just need to moan about how to apply for bank business finance? Or snarky customers, or the fact that you are so tired from working so hard trying to get your business off the ground.

This was the impetus which spawned Jane L’s and Gen George’s women’s business group, Like Minded Bitches Drinking Wine (LMB). LMB is exactly what it says on the tin: an informal community of current and aspiring female entrepreneurs who celebrate each other’s successes. They commiserate over setbacks, and share tips and advice on how to grow – preferably over a glass of wine, or champagne.

In the world of entrepreneurial groups, there are more formal options other than (LMB). Although, their informal style tends to generate even more contacts when networking as their events are more like parties with friends. Their Facebook page is loaded with new start-ups sharing their businesses. As well as fun memes to brighten the members’ day, queries, and advice. It’s a safe space for women who don’t mind being bold, as long as they – in the immortal words of Tina Fey ‘get sh*t done’.

No Better Place to Get Information

Networking and educating yourself on new business norms is a never ending process in the business world, . To succeed, you need to put yourself and your business out there. And, one of the best ways to educate yourself on women in business is to see it for yourself at a conference.

Conferences are a fantastic networking opportunity no matter what business you’re in; plus, you never know when you could come across a product that fits perfectly with your own to create a wonderful collaboration. The business version of the cronut, if you will. Check out the Run The World conference hosted by the League of Extraordinary Women. This annual conference is coming into its six year – 2017’s focus is on women in tech industry.

The founders four say that:

As four young female entrepreneurs, we decided we wanted to change the world by encouraging others to turn their dreams into reality.’

In 2012 they launched their first Run the World conference to an audience of 50 aspiring female entrepreneurs. It was Australia’s first ever all female, one day entrepreneurship conference.

Today, after tremendous organic growth, their community has expanded to North America as well as throughout Australia.

Improving Entrepreneurial Gender Diversity

Women want women to succeed in business, hence all the groups. Attitudes are shifting, more and more women are moving into managerial roles. Women are more likely than men to begin a start-up. Whatever kind of business woman you are? There is a group for you to help you grow your network beyond the contacts you make on LinkedIn. Whether you’re an Ausmumpreneur looking to balance life and work, or a lawyer looking for contacts. If you are a Womensentrepreneur there is a networking group for you and every kind of business woman.

Unfortunately, there is a trend showing that female start-ups often find it more difficult than their male counterparts to secure financing for their business. Even though international evidence shows that businesses led by entrepreneurial women which embrace diversity achieve better results. They have proved to be thrifty and use their resources very creatively, they are seen as more innovative, creative and earn better bottom lines.

In fact, female-led companies drive three times the returns of companies predominantly led by men. What’s more, female CEO’s are leading the push for inclusive leadership. They create companies where all staff can thrive and drive innovation.

As WGEA director, Libby Lyons, said “If we are serious about being an innovation nation, we need to start improving gender diversity in industries that will be growth areas in the years to come.”

Trading World Markets



ENTRY:    1.2500
STOP:      1.2600
TARGET:  1.2100

RISK / REWARD: 100 points / 400 points


Lightning struck thrice on the UK court case, BoE and better PMI print. GBP is left 1.2-1.4% higher vs. EUR and GBP – not outsized given new information. Though the BoE may have put an initial floor on real rates, we don’t see a sustained GBP rally and expect investors will use current levels to reinitiate downside.

Be advised that TRADE SET-UP outcomes are unknown!
Broker’s Commentary is subject to unpredictable events that may adversely affect the outcome of each trade.
Please use appropriate Capital Management.

Be advised that TRADE SET-UP outcomes are unknown! 

Broker’s Commentary is subject to unpredictable events that may adversely affect the outcome of each trade.
Please use appropriate Capital Management.

Contact us to learn how to trade World Markets…

PHONE: 03 8393 1800

E-MAIL: info@myfxplan.com


This information is general information only. Any advice is general advice only. Neither your personal objectives, financial situation or needs have been taken into consideration. Accordingly, you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice. Myfxplan Pty Ltd (CAR No.001241758) is a corporate authorised representative of Intelligent Financial Markets Pty Ltd (AFSL No. 426359). The past performance of this product is not and should not be taken as an indication of future performance. Caution should be exercised in assessing past performance. This product, like all other financial products, is subject to market forces and unpredictable events that may adversely affect future performance.