There's just no competition in Australia and consumers are ultimately the ones to suffer. Neither the government nor the agencies empowered by the government to curb anti-competitive behaviours by the predatory companies are doing anything about it. As they say, it's much better to hold shares in the Commonwealth Bank than to put your money in savings with them.
Let's start with the banks. On the same day the CEO of the Commonwealth Bank warned that interest rates may rise irrespective of the interest rates set by the Reserve Bank due to "higher funding costs", he also announced a record profit of $6.1 billion by the bank. The business model of banks used to be to borrow money from savers and pay them say 3% and lend the money to borrowers and charge them 6%. Nowadays, banks do more than just charge margin. They charge fees for a multitude of things like "account keeping", overdrawn account, handling fees, bad cheques, etc etc, some justified, some not and some even illegal. They also get involved with investing the money trusted upon them for safekeeping by investing in high risk investments which some go belly up like the "Storm Financial".
It may be harsh but I think the banks are just a bunch of thiefs. With the effects of the GFC and many families struggling to make ends meet, the banks are hurting those that are most vulnerable under the current environment, the battlers trying to put a roof over their heads. Now, a millionaire won't be affected as much if interest rates went up but lower to middle income families will and the banks have used the same old excuse of "rising funding costs" as justification for raising interest rates independant of the Reserve Bank. That's just plain wrong and neither of the big four crooks (banks) are able to show evidence that their funding costs have in fact risen. Not one iorta of evidence but they are still happy to announce record profit year after year after year. My level of economics doesn't go pass 101 but I would have thought the higher your costs went, the lower your profit would be as the facts never lie while the banks do.
Now let's get on to Coles and Woolies. There's no competition to this two big retail giants and the government is doing nothing to rectify that. Coles and Woolies account for 85% of the market share. Yes, that's 85%!!!! The rest of the 15% is shared amongst their other competitors like IGA, deli's and independant operators. What kind of price competition do you think consumers are going to get when there is lack of competition? Consumers are undoubtedly going to pay more for their groceries which will put more financial burden to those already struggling families.
Now I always thought that price fixing was illegal. In the USA, if the government could prove that you were even thinking of manipulating the price of goods, that was a serious crime and you could be put away for a long time. Yes, that's right, anti-competitive behaviour in America is a very serious offence and you could be hauled up before Congress to get a grilling. In Australia, nah....price fixing is a part of everyday life as common as a Vegemite sandwich. The worst offenders of price fixing are the Petrol companies. Irrelevant of the price of petrol in the international market, the prices moves in mysterious ways. It's usually more expensive during the weekends when more people tend to fill up and less expensive usually on Tuesdays and Wednesdays where less people tend to fill up. The grocery companies (Coles and Woolies) understand anti-competition so well that they in turn have jumped on the bandwagon (apart from their own) and gotten some action in the petrol market by partnering with Shell and Caltex by offering discount dockets at the bowser if you shop at their grocery stores. The scam though is that while the docket offers you a discount when you fill up in the petrol stations, those petrol stations that partner with Coles and Woolies usually price their fuel a couple of cents more than independant operators thus negating what you would save from the discount. What a sham, what a scam and the Anti-competitive watchdog ACCC says they have done nothing wrong.
Why are our taxes funding these useless watchdogs anyway when they seem toothless to get tough against these big oil, grocery and financial companies who are so clearly ripping consumers off? While the American congress rips through the directors of a failed financial venture between an Australian and American company, their Australian counterpart ASIC stated that the investors who decide to venture into a high risk investment should have and would have done their due diligence before putting their money into it, even though it was evident to them that most of the investors are just ordinary mom and pop investors without much sophistication in financial markets. If someone wanted to cheat or mislead you into buying a dud financial product, no matter how much due diligence you should be doing, you would expect the financial watchdog to ensure that those accused of cheating are hunted down and brought to justice, wouldn't you think. Not for ASIC though, they blame the investors and that is the end of that, how disgraceful and useless they are. There's almost no point having ASIC around at all.
Now I make all this criticism not just by the "arm chair critic" method although I am lying on my bed writing this piece. I have personally encountered how bad the watchdogs are in terms of protecting the consumers, first hand slug in the guts not only by the companies but ultimately by the final insult in the hands of the watchdogs. Firstly, was the dispute I have had when purchasing my current house. It was riddled with promises to rectify problems unfulfilled by the vendor which the realestate agent told me was done but I founf out later was not. I made a complain with the Real Estate Regulatory Board and they took 3 months to "investigate" and returned a verdict of insufficient evidence. Now, we all know not all dealings during the process of buying or selling a house is done in writing but I thought I had sufficient evidence in writing (not all) while the circumstantial evidence was overwhelming against the real estate agent but the final verdict was not even a slap on the wrist for the agent.
The other case was when I went to a grocery shop and found out that the proprietor had altered the "expiry date" a year forward I was flabbergasted, took a picture of the "evidence" (learning from the real estate experience) and proceeded to forward that with an official complain to the "Consumer Protection Agency". They told me that it was not their jurisdiction and referred me to the "Food Authorities". I took my complain up with them but to my annoyance I was in turn referred to the local council. You try to do the right thing but neither of the authorities were bothered at all to do the right thing by the people.
I'll end this blog entry today with a little analysis on how tough Australian families are doing it today. While the Australian economy remains the envy of many OECD countries and Australians can be called anything but poor, a closer look will reveal that many families are doing it tough. There's no point in earning a lot of money when the high cost of living erodes your ability to save for the future.
Let's take an average family income in Australia and I'll be generous here, $80,000 p.a. At that income, say the family pays about $20,000 in taxes (federal taxes), assuming medicare included. I specifically put federal taxes in brackets as in Australia, there are three levels of government, federal, state and local and each greedy government want a slice of your hard earned money.
Anyway, after taxes then the take home pay of the family is hence $60,000. Now the average mortgage for the average family is about $2,000 per month or $24,000 per year. This means after paying off the mortgage the family has $36,000 left.
The average family would have an average of two cars. The running cost of running each car including insurance, licence fee, servicing, maintaining, fixing, change tyres etc. averages to be $5,000 per car or $10,000 for both. This leaves the family with now $26,000 left.
If you owned a home, you would have the local taxes like your rates, water and usage of electricity and gas. Rates and water conservatively would be aroung $2,000 per year (most are north of this) and electricity and gas say $1000 (for easy calculation, most households are more than this). Add maybe another $1,000 for maintenance of the home like plumbing works, cleaning, broken fence, door etc. and that leaves the family around $22,000 a year.
An average family has 2 kids on average and the school fees, uniforms, excursions etc. conservatively would be $2,000 each if they went to a government school, so $4,000 for two kids. Child care would be around $1,000 (after government rebates) assuming the mother (or father) worked part-time and the family did not use child care very often. That leaves $17,000 to take care of other stuff.
Now telephony (internet, mobiles, fixed line) could be around $1,000 a year. Lunch if say an average of $5 per day (not sure what you're going to eat with $5 but let's say on average) with two hundred working days is already $1,000 (remember this does not even include coffee, usually around $4 for a decent one). Groceries for an average family is around $200 per week or $10,000 per year. Say eating out is a luxury and the family did it only once a month or about $1,000 a year. That leaves the family only $5,000 left.
Don't forget, with that $5,000, the family will need to carefully divide their pennies to take care of medical insurances, pharmacy, outings, clothing, hair cuts, household purchases, sending money back to their ageing parents etc. You can forget about holidays and that pet their children always wanted or worse still forget about another child if they ever wanted one or worse still saving for retirement or a rainy day, there just isn't any savings for that now is there? Now you see why it is ever more important for the government to ensure that these rip off merchants called Coles, Woolies, Caltex and the Commonwealth Bank are brought into line to stop the massive fraud they commit on a daily basis against struggling Aussie families trying to make ends meet while the Commonwealth Bank executives have their annual meeting in a five star international resort with never ending announcements of record profits.
Let's start with the banks. On the same day the CEO of the Commonwealth Bank warned that interest rates may rise irrespective of the interest rates set by the Reserve Bank due to "higher funding costs", he also announced a record profit of $6.1 billion by the bank. The business model of banks used to be to borrow money from savers and pay them say 3% and lend the money to borrowers and charge them 6%. Nowadays, banks do more than just charge margin. They charge fees for a multitude of things like "account keeping", overdrawn account, handling fees, bad cheques, etc etc, some justified, some not and some even illegal. They also get involved with investing the money trusted upon them for safekeeping by investing in high risk investments which some go belly up like the "Storm Financial".
It may be harsh but I think the banks are just a bunch of thiefs. With the effects of the GFC and many families struggling to make ends meet, the banks are hurting those that are most vulnerable under the current environment, the battlers trying to put a roof over their heads. Now, a millionaire won't be affected as much if interest rates went up but lower to middle income families will and the banks have used the same old excuse of "rising funding costs" as justification for raising interest rates independant of the Reserve Bank. That's just plain wrong and neither of the big four crooks (banks) are able to show evidence that their funding costs have in fact risen. Not one iorta of evidence but they are still happy to announce record profit year after year after year. My level of economics doesn't go pass 101 but I would have thought the higher your costs went, the lower your profit would be as the facts never lie while the banks do.
Now let's get on to Coles and Woolies. There's no competition to this two big retail giants and the government is doing nothing to rectify that. Coles and Woolies account for 85% of the market share. Yes, that's 85%!!!! The rest of the 15% is shared amongst their other competitors like IGA, deli's and independant operators. What kind of price competition do you think consumers are going to get when there is lack of competition? Consumers are undoubtedly going to pay more for their groceries which will put more financial burden to those already struggling families.
Now I always thought that price fixing was illegal. In the USA, if the government could prove that you were even thinking of manipulating the price of goods, that was a serious crime and you could be put away for a long time. Yes, that's right, anti-competitive behaviour in America is a very serious offence and you could be hauled up before Congress to get a grilling. In Australia, nah....price fixing is a part of everyday life as common as a Vegemite sandwich. The worst offenders of price fixing are the Petrol companies. Irrelevant of the price of petrol in the international market, the prices moves in mysterious ways. It's usually more expensive during the weekends when more people tend to fill up and less expensive usually on Tuesdays and Wednesdays where less people tend to fill up. The grocery companies (Coles and Woolies) understand anti-competition so well that they in turn have jumped on the bandwagon (apart from their own) and gotten some action in the petrol market by partnering with Shell and Caltex by offering discount dockets at the bowser if you shop at their grocery stores. The scam though is that while the docket offers you a discount when you fill up in the petrol stations, those petrol stations that partner with Coles and Woolies usually price their fuel a couple of cents more than independant operators thus negating what you would save from the discount. What a sham, what a scam and the Anti-competitive watchdog ACCC says they have done nothing wrong.
Why are our taxes funding these useless watchdogs anyway when they seem toothless to get tough against these big oil, grocery and financial companies who are so clearly ripping consumers off? While the American congress rips through the directors of a failed financial venture between an Australian and American company, their Australian counterpart ASIC stated that the investors who decide to venture into a high risk investment should have and would have done their due diligence before putting their money into it, even though it was evident to them that most of the investors are just ordinary mom and pop investors without much sophistication in financial markets. If someone wanted to cheat or mislead you into buying a dud financial product, no matter how much due diligence you should be doing, you would expect the financial watchdog to ensure that those accused of cheating are hunted down and brought to justice, wouldn't you think. Not for ASIC though, they blame the investors and that is the end of that, how disgraceful and useless they are. There's almost no point having ASIC around at all.
Now I make all this criticism not just by the "arm chair critic" method although I am lying on my bed writing this piece. I have personally encountered how bad the watchdogs are in terms of protecting the consumers, first hand slug in the guts not only by the companies but ultimately by the final insult in the hands of the watchdogs. Firstly, was the dispute I have had when purchasing my current house. It was riddled with promises to rectify problems unfulfilled by the vendor which the realestate agent told me was done but I founf out later was not. I made a complain with the Real Estate Regulatory Board and they took 3 months to "investigate" and returned a verdict of insufficient evidence. Now, we all know not all dealings during the process of buying or selling a house is done in writing but I thought I had sufficient evidence in writing (not all) while the circumstantial evidence was overwhelming against the real estate agent but the final verdict was not even a slap on the wrist for the agent.
The other case was when I went to a grocery shop and found out that the proprietor had altered the "expiry date" a year forward I was flabbergasted, took a picture of the "evidence" (learning from the real estate experience) and proceeded to forward that with an official complain to the "Consumer Protection Agency". They told me that it was not their jurisdiction and referred me to the "Food Authorities". I took my complain up with them but to my annoyance I was in turn referred to the local council. You try to do the right thing but neither of the authorities were bothered at all to do the right thing by the people.
I'll end this blog entry today with a little analysis on how tough Australian families are doing it today. While the Australian economy remains the envy of many OECD countries and Australians can be called anything but poor, a closer look will reveal that many families are doing it tough. There's no point in earning a lot of money when the high cost of living erodes your ability to save for the future.
Let's take an average family income in Australia and I'll be generous here, $80,000 p.a. At that income, say the family pays about $20,000 in taxes (federal taxes), assuming medicare included. I specifically put federal taxes in brackets as in Australia, there are three levels of government, federal, state and local and each greedy government want a slice of your hard earned money.
Anyway, after taxes then the take home pay of the family is hence $60,000. Now the average mortgage for the average family is about $2,000 per month or $24,000 per year. This means after paying off the mortgage the family has $36,000 left.
The average family would have an average of two cars. The running cost of running each car including insurance, licence fee, servicing, maintaining, fixing, change tyres etc. averages to be $5,000 per car or $10,000 for both. This leaves the family with now $26,000 left.
If you owned a home, you would have the local taxes like your rates, water and usage of electricity and gas. Rates and water conservatively would be aroung $2,000 per year (most are north of this) and electricity and gas say $1000 (for easy calculation, most households are more than this). Add maybe another $1,000 for maintenance of the home like plumbing works, cleaning, broken fence, door etc. and that leaves the family around $22,000 a year.
An average family has 2 kids on average and the school fees, uniforms, excursions etc. conservatively would be $2,000 each if they went to a government school, so $4,000 for two kids. Child care would be around $1,000 (after government rebates) assuming the mother (or father) worked part-time and the family did not use child care very often. That leaves $17,000 to take care of other stuff.
Now telephony (internet, mobiles, fixed line) could be around $1,000 a year. Lunch if say an average of $5 per day (not sure what you're going to eat with $5 but let's say on average) with two hundred working days is already $1,000 (remember this does not even include coffee, usually around $4 for a decent one). Groceries for an average family is around $200 per week or $10,000 per year. Say eating out is a luxury and the family did it only once a month or about $1,000 a year. That leaves the family only $5,000 left.
Don't forget, with that $5,000, the family will need to carefully divide their pennies to take care of medical insurances, pharmacy, outings, clothing, hair cuts, household purchases, sending money back to their ageing parents etc. You can forget about holidays and that pet their children always wanted or worse still forget about another child if they ever wanted one or worse still saving for retirement or a rainy day, there just isn't any savings for that now is there? Now you see why it is ever more important for the government to ensure that these rip off merchants called Coles, Woolies, Caltex and the Commonwealth Bank are brought into line to stop the massive fraud they commit on a daily basis against struggling Aussie families trying to make ends meet while the Commonwealth Bank executives have their annual meeting in a five star international resort with never ending announcements of record profits.
hey Damien,
ReplyDeletecheck out this link to see why the banks are making such a good profit:
http://www.debtdeflation.com/blogs/2010/08/11/bank-profits-a-sign-of-economic-sickness-not-health/
Bob vC
yeah read it Bob. Really troubling to know that these rotten scoundrels will do anything for a profit even if that means running a Ponzi scheme which is obviously illegal.
ReplyDelete