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                    [post_date] => 2017-07-17 22:40:11
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                    [post_content] => 

Deloitte Access Economics’ Chris Richardson sees a few worrying trends and signs on the horizon for Australian governments.

The world is motoring. Growth in the US, Europe and Japan is near 2%, with China and India doing the heavy lifting to raise overall global growth above 3.5%. But China has been tightening the screws, which will see its growth slow during 2018, with flow-on effects for the wider world. And there are structural headwinds for the medium term: the developed world is ageing, with its potential growth sapped by rising retirements. That’s true of China, too. And, at the same time, the business world has been reluctant to invest for a decade, spooked by rising political and economic uncertainty, as well as fears of regulatory and technological developments – creating an additional headwind.

Both the world and the Reserve Bank have been doing Australia favours, with China throwing red meat at those bits of its economy that buy big from the Lucky Country, and with the RBA’s 2016 interest rate cuts revving up housing prices. Despite that, production growth has been weak, as big gas projects finish construction, as the big home building boom of recent years starts to peter out, and as Cyclone Debbie took a toll. Yet our stuttering pace of production was still enough – thanks to higher commodity prices – to see national income chalk up a gain of near $100 billion in 2016-17. That brought an emphatic end to five years of ‘income recession’, though to date it has been profits rather than wages that have benefited, while the pace of home building is set to shrink further amid increasing evidence that gravity may soon start to catch up with stupidity in housing markets. And the gargantuan Chinese credit surge is finally easing back, suggesting the global economy won’t be doing Australia quite as many favours from 2018 onwards. Yet those are merely caveats on an otherwise solid outlook. Relative to the rest of the rich world, Australia’s economic outlook may not be quite as impressive as it once was, but we are still kicking goals.

Consumer price inflation remains a dog that isn’t barking, both locally and globally. And although global and local leading indicators of inflation are stirring in their sleep, they don’t look like getting out of bed any time soon. We see wage growth set to climb from 2018, as inflation lifts a tad, as retirement among boomers restrains growth in potential workers, and as the ‘income recession’ of the post-2011 period gives way to more settled gains in national income (and workers get their share of that). Even so, the pick-up in inflation and wage gains is likely to be both modest and slow.

The past decade saw a growing global gap between economies and interest rates, but the US Fed is continuing a slow grind towards closing the gap. The rest of the world will eventually follow, with Australia’s turn starting during 2018. Yet as J. Paul Getty so neatly put it: “If you owe the bank $100, that’s your problem – if you owe the bank $100 million, that’s the bank’s problem.” Australia’s heavily indebted families are now the Reserve Bank’s problem, which is why, although interest rates will indeed rise in the next few years, they won’t rise sharply. On the currency front, Australia will sit more towards the back of the queue for global interest rates normalisation, and there’s the risk of further price pain on commodities. That combination will weigh on the Australian dollar, but not by much.

Australia is within a hair’s breadth of a current account surplus for the first time since bell-bottomed jeans were all the rage. However, just like bell-bottoms, Australia’s dash for cash looks set to be very short-lived. We got close courtesy of spikes in coal and iron ore prices, but those same global commodity prices are once again curled up into a ball and rocking. That will increasingly show up as lower export earnings over the next year or so, cementing a return towards our customary deficits.

Job growth in the next couple of years will be solid: not as good as 2017 to date, but not as bad as 2016, either. There’s good news in the better gains in national income of late, but overall macro trends aren’t really giving a strong signal either way on job prospects. And while the bugaboos of the moment (disruptive technologies and new business models) grab the headlines, they do more by way of generating churn at the level of individual businesses than they do to ruffle the surface of overall job numbers.

The Federal Budget saw the Coalition abandon Plan A (a return to sustainable fiscal finances via spending cuts) to Plan B (tax and spend, amid increases to the Medicare levy, a bank tax, and Gonski2.0). Given Plan A spent years going nowhere, we see great sense in Plan B. But it’s a real worry that a conscious shift to the centre still didn’t unleash much bipartisanship in Canberra. That says official figures (which assume stuff passes the Senate) remain at risk. And, speaking of risks, commodity prices could yet spell trouble for the Federal, WA and Queensland Budgets, while – a little further out in time – housing markets may yet do the same for the NSW and Victorian Budgets.

The tussle at the top

Among industries, it’s still a tussle for the top of the growth leader board, as mining output rides the crest of earlier investment decisions, while health care rides a demographic dividend topped with technological treats. Both sectors look set to keep growing rapidly, with mining seeing huge gas projects ramp up their production levels (to meet export contracts, and to keep the home fires of domestic markets ticking over), and with health demands marching ever-upwards. But the prospects for both also come with caveats, as mining’s fortunes remain chained to China’s, and health to Canberra’s.

Like Manny Pacquiao, the reign at the top of the pops for finance has been long and gloried, but it’s looking a little long in the tooth as the cost of credit finally gets back off the canvas. That said, there’s a long tail of growth still left in finance, and its return to the growth pack may take a few years.

Challenges loom for property services too, where a slowdown has already commenced.

Similarly, the $A -fuelled rise of fast growth in recreation (thanks to more tourists) and education (thanks to more students) may soon start to moderate from here – the $A’s fall was a while ago, and its benefits are starting to fade. But at least the education sector has the lift in the birth rate over the last decade or so to provide better base demand via extra kidlet numbers.

Construction and manufacturing are both bumping along the bottom, but for construction it may be a relatively brief spell in the doldrums, whereas manufacturing’s challenges look rather more structural.

Question marks lie over the utilities, where balancing divergent aims (power that’s clean, reliable and cheap) is hard, but becomes even harder now that Hazelwood has closed and with the nation’s onion-eaters arguing the toss on Finkel. That suggests investors may stay sidelined, which is where they’ve already been for an awfully long time. Add in rising prices, and this sector – a pathway to growth for many other industries – is left reliant on population gains to generate much by way of growth.

It’s just a jump to the south and east

On the State and Territory front, the jump from a China boom to a housing price boom sent the nation’s money and momentum from its north and west towards its south and east. Yet although the ‘sunbelt’ – WA, Queensland and the Top End – is feeling pain as a result of that, much of the drama for those regions already lies in the rear view vision mirror. Their next phase will be one of recovery, albeit not quite yet.

And don’t forget that today’s heroes – NSW and Victoria – have clay feet. A house price boom borrows growth from the future, and both NSW and Victoria will have to pay back some of that in the years ahead as today’s housing prices gradually reconnect with reality.

Luck’s a fortune, and NSW has it in spades amid the shift to lower interest and exchange rates since 2012. But storm clouds are building, as the housing price boom has artificially supported retail and home building. There’ll be an eventual butcher’s bill to pay as those supports reverse.

Victoria has benefited as key cyclical drivers – exchange and interest rates – moved in a ‘Victoria- friendly’ direction in recent years. And this State is experiencing its strongest population gains for many a decade. Yet, relative to other States, its population and housing cycles may be near their peaks.

The key headwind to Queensland’s economy for some years now has been falling engineering construction, but that pain is increasingly history. While Cyclone Debbie and slowing housing construction are current negatives, Debbie’s impact will be temporary and gas exports are lifting.

South Australia has benefited from favourable shifts in interest rates and exchange rates. In fact, and despite popular opinion, the State economy’s growth actually picked up of late. Even so, some big challenges remain, given both demographics and an unfavourable industry structure.

The construction cliff is still weighing on Western Australia. This state saw a virtuous circle of reinforcing growth drivers during the boom, but it has been seeing a vicious bust for a while now. But there has been better news recently out of China, and even vicious cycles run out of steam.

Tasmania has been one of the bigger beneficiaries of the lower Australian dollar and lower interest rates, and the state economy’s growth is currently looking pretty good. But structural negatives on the longer-term outlook remain entrenched, suggesting caveats on current conditions.

The Northern Territory’s economy isn’t a one-hit wonder, but recent years saw a Gangnam-style blockbuster hit the charts. As construction on the Ichthys project increasingly winds down and its export phase ramps up, the Territory’s challenging conditions won’t disappear for a while yet.

The good news for the ACT is that, after the cutbacks and public sector hiring freezes of recent years, the Feds are returning to more of what might be considered business as usual. On top of that, the impact of lower interest rates on the ACT’s economy remains a powerful positive.

 
                    [post_title] => Gravity is starting to catch up with stupidity
                    [post_excerpt] => There are a few worrying trends and signs on the horizon for Australian governments.
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                    [post_content] => Melbourne, Australia - Auguest 28, 2015: Sign of Australia Post outside its office in Bourke Street, Melbourne

 

[analysis]

As the Prime Minister sets about recasting his Cabinet and the bureaucracy prepares for likely Machinery of Government changes, the challenge of rehabilitating the nation’s two highest risk legacy transactional systems from the inside is a dilemma that will only grow in complexity.

The demonisation of outsourcing Medicare’s payments engine became the electoral lightning rod during the election campaign. By logical extension, that means replacement of Centrelink’s core ISIS system and what role payments outsourcing providers can play there is now also logically in the mix.
Prior to Labor’s brutally effective ‘Mediscare’ campaign, the outsourcing of transactional banking services and payments facilities was one of the least controversial procurement policy decisions on both sides of the political fence.
For better or worse, it’s now the most controversial – and destined to remain so until the next election. So where to from here?   Legacy’s long shadow Most federal agencies use a transactional bank to make or take payments. They could be payments to government suppliers and contractors, the collection of fees or even just access to petty cash for everyday sundries like booking a function room or ordering sandwiches for a meeting. Most state governments gave up on owning and running their own banks several decades ago (unless they were going broke). The Commonwealth Bank of Australia was sold off by the Labor Hawke-Keating government in three tranches between 1991 and 1996. Telstra’s privatisation under John Howard came next. In the intervening period, four Australian prime ministers have grappled with how to bring the federal government’s three biggest transactional systems – Centrelink, Medicare and Tax – up to the same speed and consumer utility as modern customer facing businesses like airlines, banks and retailers.
Few outside the payments industry or government appreciate it, but it’s the Reserve Bank of Australia that provides transactional facilities for the likes of Medicare – a role that many including the RBA itself have come to regard as at best ancillary to the core central banking role of steering monetary policy.
The RBA’s role in the mass distribution of welfare payments has an added complexity too. The institution also oversees regulation of the wider payments industry – a coalescence not all in the commercial banking and payments sector regard as optimal. As both Medicare and Centrelink’s mainframe based systems have aged, policymakers on both sides have contemplated how to harness commercial payments innovations, especially online technology, to reform and modernise government interactions with citizens. Despite citizen dissatisfaction growing with every month and year that welfare legacy systems replacement is put off, the political stakes surrounding outsourced procurement are now so high that internal solutions will need to be found within government. The pertinent questions are how that internal transactional capability will be sourced, built and delivered after more than a decade of moving in the opposite direction. The only certainty so far is that if doing nothing was not an option before the election, it’s even less of one now.   Medicare refunds are already partly outsourced If financial services players were keen to take on management of Medicare’s payments infrastructure, they prudently avoided parading their ambitions in public given the public sensitivity and political volatility surrounding the organisation. Despite pumping out more than $30 billion a year in payments, Medicare’s scale in terms of volume and value is still well below that of other sectors like groceries, fuel, utilities or even phone bills making it a sub-premium proposition.
Further diluting Medicare’s commercial value for banks is the fact that institutions already take a cut of many of Medicare’s transactions through the Easyclaim channel, which automatically refunds a Medicare rebate to a claimant’s account from practitioner payment terminals.
The initial clip banks struck with the Howard government a decade ago for Medicare Easyclaim was a robust 23 cents a transaction. Given that level of existing fee flow – which is in effect partially outsourcing payments processing of itself – it’s not hard to see why some institutions would question how much margin was left in picking up processing what’s left. Then there’s the infrastructure and ownership dynamics of the Australian payments industry. As both BPAY and eftpos are effectively owned by the banks as collective low-cost service providers to them, an automatic question arises as to the efficiency of institutions running individual bids. That’s not necessarily the case for former government monopolies like Telstra which has often toed new ways to diversify its infrastructure and services business, particularly around verticals like health and payments. Given the recent intervention of politics, those responding the Department of Health’s call for proposals must be wondering why they bothered spending the money to pitch in the first place.   Could Australia Post become Medicare’s ‘Giro Bank’? One government organisation keen to trade on its government-owned status to pull in new business is the structurally challenged loss maker Australia Post. Like Medicare and Centrelink, don’t expect to see a prospectus soon. Post’s various attempts to elicit work from other government agencies, for example its Digital Mailbox, haven’t exactly set the world on fire. But Post’s positioning could be its saviour as political winds change.
Led by former National Australia Bank’s local chief Ahmed Fahour, Post’s long game has been to try and establish a highly trusted mix of digital services and physical logistics as business lines that can help counterbalance terminally haemorrhaging mail revenues.
Ordinarily, Australia Post would face insurmountable competition from financial services players to pick-up a payments processing contract like Medicare, but the reversal away from outsourcing could conceivably work in its favour. With the Reserve Bank of Australia unlikely to want to build and operate a new welfare payments hub after cajoling the banking industry into reforming its own infrastructure it’s not beyond possibility that Post could pull off a Steven Bradbury gold medal performance by being the last institution standing. One model with miles on the clock is that of Britain’s ‘Girobank’ that took on the role of pumping electronic direct deposits of what were welfare cheques in the 1980’s. Although not an immediate success, the clearing house gained sufficient volume and business to eventually be sold-off. At a wider level, in Europe, the ‘Postal Giro’ model typically enables electronic payments across banks and their customers for the likes of bill payments and person-to-person transfers from accounts.
Now that both sides of Australian politics have publicly sworn off outsourcing Medicare payments processing – and by logical extension probably Centrelink’s too – the creation of an Australian Giro facility could tick the ‘within government’ box for welfare payments modernisation.
Such a move would be unlikely to go down well with banks. But it may be a lesser evil than institutions fronting a warts-and-all Royal Commission. And it would not be the first marriage-of-convenience prompted by political expediency. For Turnbull, Medicare, Centrelink and Post alike, doing nothing is simply not an option. [post_title] => Could Medicare make Australia Post become a Giro Bank? [post_excerpt] => Welfare payments modernisation...where to now? [post_status] => publish [comment_status] => open [ping_status] => open [post_password] => [post_name] => could-medicare-make-australia-post-a-giro-bank [to_ping] => [pinged] => [post_modified] => 2016-07-15 09:07:48 [post_modified_gmt] => 2016-07-14 23:07:48 [post_content_filtered] => [post_parent] => 0 [guid] => http://www.governmentnews.com.au/?p=24397 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) [2] => WP_Post Object ( [ID] => 23993 [post_author] => 671 [post_date] => 2016-05-26 23:14:04 [post_date_gmt] => 2016-05-26 13:14:04 [post_content] => [caption id="attachment_23994" align="alignnone" width="300"]RBA relection_opt Reflected costs? pic: Newtown Grafitti[/caption]   Rapacious gouging of consumers through excessive credit card surcharging needs to be quickly and firmly checked by regulators if new Reserve Bank of Australia (RBA) rules governing the payments industry are to be successful in stamping out the practice, MasterCard's Australian chief, Andrew Cartwright, has said. The RBA on Thursday revealed its highly anticipated formal response to the hot button consumer issue, mandating that merchants can only pass-on actual costs of accepting card transactions when imposing surcharges, with the Australian Competition and Consumer Commission put in charge of sniffing out inflated fees and policing sneaky profiteers. “This affects all Australians and MasterCard is pleased this is being addressed. It’s long overdue,” Mr Cartwright said. However he cautioned that for the new excess surcharging bans to have a real effect, visible action against rule breakers and effective monitoring needs to be in place fast. [quote]“As well-meaning as the new rules around surcharging are, if there is not effective review and compliance it will come to nothing, Mr Cartwright said.[/quote] Consumer advocates and card schemes have been on the RBA and the federal government’s case for years over businesses using overblown surcharges as a way to make money on the side, with airlines, hotels taxis and utilities among the biggest abusers. Industry estimates put the annual cost of card surcharge gouging in Australia at around $1.6 billion a year, while consumer advocate Choice says it’s seen “mark-ups of up to 2670 per cent on the actual cost to merchants of processing a card transaction” which the group has branded as “both unjustifiable and unacceptable.” While schemes like MasterCard want a return to the practice of surcharging being stopped altogether under their own rules for merchants, payments regulators have insisted businesses should be allowed to recover the cost of accepting card payments by passing it on in the form of a fee. For many consumers and policymakers, the RBA’s nuanced cost recovery argument has largely been rendered academic after sectors like airlines started adding hefty flat fees between $8 and $12.50 per seat for each booking secured, with card payments rules accidently creating a lucrative “ancillary revenue” loophole that would otherwise be knocked out by drip-pricing rules. Without naming names, MasterCard and Mr Cartwright are now clearly hopeful that [quote]some of the biggest and worst offenders will either change their ways swiftly or feel some regulatory sting[/quote]. “I think the ACCC will actively watch the major players and if there is someone who is really out of line they will make an example out of whoever that merchant or retailer is. That’s what I’d like to think,” Mr Cartwright said. According to the RBA’s latest paper, the surcharging new framework takes effect for large merchants on from 1st September 2016 and for other merchants from 1st September 2017, with the ACCC given enforcement powers under the new regime. But some consumer advocates remain clearly unconvinced. “While today’s announcement following the RBA’s review of Card Payments Regulation addresses excessive surcharges in many large industries, uncertainties remain around surcharging card payments for smaller everyday consumer purchases,” said Christopher Zinn, the campaign spokesperson for the merchant-led Surcharge Free group. “The RBA guidelines do not engage with consumers’ negative feelings toward surcharging or the detrimental impact the practice can have on customer loyalty and advocacy for businesses of all sizes,” Mr Zinn said. Interchange and competition still a sticking point As expected fee regulation – especially the consistency of it – has remained a key area of friction in RBA’s big regulatory update for payments between card schemes, with the topic if interchange fees – that’s fees that flow to a bank that issues a card from the bank that accepts a card – still a sticking point. While the RBA decided to keep what’s known as the “weighted-average benchmark” for credit cards at 0.50 per cent, it’s dropped the benchmark for debit cards from 12 cents to 8 cents. But there are now also extra caps built-in for different kinds of credit cards, particularly in the area of what’s dubbed “premium” or “platinum plus” – bank issued credit cards that are marketed to higher spending customers and typically have rewards points and loyalty schemes attached to them. “The weighted-average benchmarks will be supplemented by ceilings on individual interchange rates which will reduce payment costs for smaller merchants,” the RBA said in its statement, adding that “commercial cards will continue to be included in the benchmarks.” Mr Cartwright argues that the downward pressure on interchange rates through the widening of where the caps apply could prompt issuing banks to try and find the revenue they will likely lose from elsewhere – potentially more directly from consumers and businesses. Like the opportunistic rash of excessive surcharging, the intent of interchange regulation could produce unintended consequences and arguably perverse incentives. “The consequence of [further interchange regulation] could be negative to consumers. What happened in 2003, when regulation first came in, was the banks needed to replace this revenue from other sources – be it through increased annual card fees, higher interest rate or reducing the value of rewards programs,” Mr Cartwright told Government News. “Given that millions of Australians have a platinum or above platinum card in their wallet this [could in reality] negatively impact millions of Australians. In the commercial card market – credit cards issued by banks to employees of government and businesses to cover and control expenses and smaller supplier payments – there’s also a rub in terms of competitive equality. Mr Cartwright notes that while European regulators have excluded commercial cards from broader interchange regulation directed at consumer products in recognition of the different economics at play, the RBA has moved in a different direction. “The risk is that it will be less attractive for financial institutions to issue [commercial card products], and therefore there will be less competition in the commercial card space” Mr Cartwright says. Notably, competitors to MasterCard and Visa like American Express, whose ‘proprietary’ cards (those issued by Amex itself rather than by a bank) still fall outside the RBA’s interchange regulation regime. That’s significant because Amex, whose corporate card is well established, is believed to hold around a third of the commercial card market in Australia. And although merchants have the option of passing on acceptance charges, in reality any intended pricing signal is neutralised because corporate cardholders don’t personally cop the extra fees because they are using a work card and don’t realistically have a choice of payment method. “The corporate Amex card [remains] outside [RBA] regulation, so we still do not have a true level playing field,” Mr Cartwright says. Amex’s other bank issued ‘companion’ cards have however been brought under the regulatory umbrella for interchange, a move that MasterCard has predictably welcomed. As the market for digital payments space heats-up, it’s an area that’s become more important daily for customers, market participants, policymakers and regulators alike. Watch this space . . . [post_title] => Surcharging: RBA applies stick, but more regulatory repair needed [post_excerpt] => Gouging green light goes red. [post_status] => publish [comment_status] => open [ping_status] => open [post_password] => [post_name] => rba-applies-surcharge-stick [to_ping] => [pinged] => [post_modified] => 2016-05-26 23:24:42 [post_modified_gmt] => 2016-05-26 13:24:42 [post_content_filtered] => [post_parent] => 0 [guid] => http://www.governmentnews.com.au/?p=23993 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) [3] => WP_Post Object ( [ID] => 22987 [post_author] => 671 [post_date] => 2016-02-04 19:53:44 [post_date_gmt] => 2016-02-04 08:53:44 [post_content] => qantas_a380_20081014_06f   The days of racking up taxpayer subsidised frequent flyer points by paying government bills using a credit card will soon be over in New South Wales, after the Baird government moved to extend surcharges to agencies not already imposing the fees, including  car registrations at Roads and Maritime. The state’s Finance, Services and Property Minister Dominic Perrottet on Thursday revealed the activation of the NSW Government’s new unified payments platform, a hub that ropes-in the various disparate payments engines that had been operating across government revenue raising agencies. The up-front sell to the public from Mr Perrottet is that the new facility opens-up access to contemporary online payment methods like PayPal that make it easy for citizens to hand over money directly from their desktops and mobile apps, all while delivering a consistent experience. It does, but the new platform has also allowed the NSW Government to start passing on the cost of accepting credit cards back to people paying the government for agencies that weren’t already doing so. “Streamlining the back-end payments infrastructure is an important waste-cutting reform, but it also looks to the future, opening up the possibility of incorporating payment methods like PayPal, Apple Pay, MasterPass, and Visa Checkout,” Mr Perrottet said. Of course it also lets the state government grab back the cost of credit card acceptance by hitting its 'customers' with percentage-based charges that are intended to reflect the cost of acceptance. Consumers or businesses who regularly use so-called premium and super-premium cards that can more quickly accrue loyalty or airline points won’t be thrilled by the decision; and nor will the big card schemes that have fought long and hard against the imposition of any card surcharges. “Merchant facility costs on credit card payments, currently met by taxpayers, will now be passed on to customers, in line with other government agencies,” Mr Perrottet said. The pricing of the credit card clawback provides a window into the kind of clip issuing banks and schemes stand to make off transactions, not least because government surcharges normally most closely reflect the actual cost of accepting a payment in line with Reserve Bank of Australia expectations. (Of course plenty of enterprising, merchants big and small, often add a little or a lot extra to card surcharges, a very convenient if disingenuous way of boosting profit margins, a practice the RBA has recently started to crack down on.) Airlines and hotels are widely regarded as the supreme gougers of credit card surcharges, though these days the double-dipping is usually labelled as an administration fee rather than a card charge per se to fly above regulatory turbulance. Under the NSW Government’s new payments platform, all MasterCard and Visa card payments to agencies will incur a surcharge of 0.44 percent to cover costs imposed by providers of card merchant facilities, while payments made using American Express cards will incur a heftier surcharge of 1.54 percent. Keep that in mind when you’re forking $8 or more as an extra fee on a domestic flight. Unsurprisingly, the NSW Treasury has been driving the cost recovery push for a number of years, though exact numbers on savings are pretty well to impossible to extract. Even so, it’s understood that the savings are sizeable enough for the Treasury and Finance Department to continue the credit card cost recovery crackdown, all in the name of value for taxpayers’ dollars. One of the most hard-nosed agencies is the Office of State Revenue which appears to have few qualms about limiting payment options to customers to keep costs down. Mind you, card payments are a two way street. State governments across Australia could soon be looking to save money by encouraging people to use credit cards, especially on public transport. Transport authorities across Australia are known to be closely watching Transport for London’s initiative that lets people tap their everyday tap-and-go payment cards – or phones enabled with contactless payment chips that use services like Apple Pay – at ticket barriers and on busses as an alternative to using an Oyster Card. The win for the government there is that if that trend takes off big time, it can make massive savings by scaling back its huge ticketing operation … and just watch the money roll in. MasterCard has already milked the promotional opportunities of tapping into transit customers, offering its cardholders in London a free day's travel on TfL late last year if they tapped on using on on of their cards. [post_title] => New credit card surcharges for Service NSW's online payments engine [post_excerpt] => Free ride ends for taxpayer funded Frequent Flyer Points. [post_status] => publish [comment_status] => open [ping_status] => open [post_password] => [post_name] => 22987 [to_ping] => [pinged] => [post_modified] => 2016-02-09 11:20:59 [post_modified_gmt] => 2016-02-09 00:20:59 [post_content_filtered] => [post_parent] => 0 [guid] => http://www.governmentnews.com.au/?p=22987 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 2 [filter] => raw ) [4] => WP_Post Object ( [ID] => 22069 [post_author] => 671 [post_date] => 2015-11-06 10:08:35 [post_date_gmt] => 2015-11-05 23:08:35 [post_content] => [caption id="attachment_22070" align="alignnone" width="300"]BPay00-399 BPAY chief executive John Banfield.[/caption]   Financial services juggernaut BPAY has long been the preferred method for the majority of government agencies and businesses to cheaply present and collect on their bills. But could BPAY be about to snap up hundreds of billions of dollars in volume business on the flipside side of the government payments coin? Probably Australia’s biggest cash pump, BPAY over the past week has revealed its rapidly preparing to clip the other half of the payments ticket: people accepting money going into their bank accounts rather than letting it go out. Think payroll, the myriad of welfare payments and rebates (effectively a payroll), tax refunds … and very importantly payments between individuals. BPAY (which is more or less cooperatively owned by Australia’s banks) quietly let loose a gorilla last week when it revealed it intends to have a suite of new wholesale real time products and services ready to hit the market by 2017. The new offering will allow government agencies, businesses and individuals to execute instant payments between accounts that will also carry a far richer data stream. Known as the ‘Initial Convenience Service’ (ICS) the new BPAY facility is a step shift in the way payments are delivered in Australia. It’s also the first major capability to emerge from the $1 billion overhaul of the of Australia’s antiquated interbank direct deposits payments system that has for decades meant that electronic payments executed in seconds take two days to clear – and more on weekends. Dubbed the New Payments Platform (or NPP), the big RBA propelled payments system rebuild (that's NPP, not ICS) replaces the myriad of ageing proprietary bilateral links between institutions that have been on the nose with the Reserve Bank of Australia (RBA) for years because of their propensity to stymie systemic innovation. (To avoid confusion the new BPAY product sits on top of the NPP in what is known as an ‘overlay service’. We’re looking for a simple analogy, but the best we can think of is like a railway: with NPP being the tracks, services like ICS being locomotives and bank and other institutional products being carriages.) Well before the NPP took shape, BPAY had previously made a concerted run at innovating and upgrading payment services between banks and their customers to real time through the MaMBO (Me at My Bank Online) project. But the bid ultimately fell over because of quarrelling and fears by competitors to the Commonwealth Bank of Australia that feared that bank could gain a formidable head start and competitive advantage. The hissy fit and walkout by Melbourne-based banks ultimately prompted the RBA to swap its regulatory carrot to stick to spur on systemic innovation in payments and the NPP was born. “MaMBO back in its time was well ahead of what BPAY were attempting to put into the market,” BPAY chief executive John Banfield told Government News. With the build of the NPP now well under way – with a dozen participants on the platform including banks, industry groups, online providers and the RBA itself – BPAY has well and truly returned to the innovation fray with a move that should quickly turn policymaker’s heads. For starters the launch of the ICS will position BPAY to potentially pick-up outgoing government payments as well as revenue coming in. That's huge. Mr Banfield characterises the new Initial Convenience Service as a significant extension of BPAY’s existing payment services to offer customers (businesses, banks and government) and everyday bank account holders the ability to push direct payments to each other in real time. No more overnight batching, depositing of cheques, wating for funds to clear… transactions happen there and then. Ask yourself why in 2015 it still takes two days for funds to clear. The new ICS will also have the capability to allow people – whether they are tradies, government agencies or just everyday people – to generate or ‘push’ account-to-account payment requests for an amount of money that can then be authorised by the recipient, with the funds moving instantly. This means you can split a bill at dinner or pay a tradesperson on the spot via a mobile phone number instead of using cash ... a development that will no doubt please the Australian Taxation Office far more than credit card schemes. The real time ICS transactions will also be able to carry the equivalent of a small document – 280 characters – in the payment message which will be able to show up as valuable rich data to indicate from whom and what the payment was made for – a huge jump from the previous 18 characters. At a strategic level, Mr Banfield confirms that the offering of the ICS – which was won through a competitive tender – firmly moves BPAY’s offering into the 'payables market', rather than sitting primarily in the receivables space, or bills. It’s quite a big deal for government and not for profits because two major opportunities for innovation open up in reas that have been sorely aching for upgrades for at least a decade. The first and by far the biggest opportunity is the hundreds of billions of dollars of payments a year paid out in the form of welfare payments, tax returns and rebates and refunds. In the 2015 financial year, payments from the federal Department of Human Services totalled around $165 billion and the amount will only grow with the population. At the same time the federal government has indicated it will spend between $1 billion to $1.5 billion on replacing Centrelink's 30-year-old Model 205 mainframe based welfare payments application. Although Mr Banfield and BPAY are staying diplomatically silent on the giant government system replacement, there's a glaringly obvious question as to what degree a government would need to build its own bespoke payments engine if there's already alternatives in the market. The elephant in the room is whether a commercial, off-the-shelf service already in the market could offer a significantly better degree of capability at a substantial discount for taxpayers. That might not please multinational software and systems integration companies, (think SAP and Accenture) but there is an argument such an outcome could serve taxpayers and welfare recipients better. (Also in the mix is the government’s approach to market via the Department of Health to try and outsource parts of Medicare’s payments claims processing, the present status of which remains unclear.) Just how far Centrelink’s plans for a system replacement have advanced is a bit of a moot point. Although there’s been plenty of ministerial jawboning and political backbiting, what the preferred architecture model looks like is still a little unclear with a formal approach to market from Centrelink yet to emerge. Mark Williams, BPAY’s chief development officer also diligently steers clear of the big Human Services system rebuild question, but he is very happy to talk in a general sense about the BPAY Initial Convenience System’s potential applications in government payments. “It’s the simple ability to send disbursements out in real time,” Mr Williams says, noting emergency payments are clear candidate for instant payments. He has a point. While few question the proficiency and professionalism of Centrelink’s emergency, disaster and crisis management responses the fact is that often welfare officers wind-up paying out cash to bushfire or flood survivors because it’s simply the fastest way to get the money moving. Not that Mr Williams mentioned Centrelink. And the bigger the disaster, the riskier cash gets. What ICS will potentially offer is the capability for government to inject funds instantly and directly into peoples’ bank accounts, send a message with the payment and visibility that every deposit has hit its mark. “The ability to send payments out in real time and get real time information of the fate of those payments, that they have actually reached the destination account and they are available to customers right now could be quite important,” Mr Williams says. Aside from emergencies, Mr Williams observes there could also be other efficiencies reaped by virtue of the richer information carried with new transactions. “The extra information could be quite important,” Mr Williams says. “Its hugely powerful because of the cost efficiencies of sending documentation electronically —but also because of the process costs when people ring up and say ‘I got this letter in the mail’ [or] ‘I’ve got this money in my bank account, what is it for?’.” Away from welfare payments the other clear big opportunity for BPAY’s new outbound payments offering is employee payroll and supplier payments. With an employee headcount of close to 2 million people, Australia’s public sector as market would have to be the single biggest employer in the country. And while retail and transactional banking services are typically competitively procured, what the BPAY ICS offering provides is a white-label ability for retail banks to rebadge capabilities and sell them into government payroll clients. Suppliers to government who get payments in the form of direct deposits from purchase orders, cheques and credit cards also stand to benefit, along with taxpayers. While both the federal and New South Wales governments have mandated that suppliers can be paid by credit card on request to speed up payments for purchases, corporate credit cards typically take a healthy percentage cut in the form of interchange and merchant service fees — a cost that is either absorbed by the supplier or sheeted back to the taxpayer by reloading it into the invoicing process. For banks supplying government it’s an interesting dilemma because they will have to balance the money made off issuing lucrative corporate cards against keeping a big transactional customer happy. But after decades of inertia, it’s nice to have a choice for a change. [post_title] => Government payday cheques out big time for BPAY [post_excerpt] => Real time data rich transactions to roll by 2017. [post_status] => publish [comment_status] => open [ping_status] => open [post_password] => [post_name] => government-payday-cheques-out-big-time-for-bpay [to_ping] => [pinged] => [post_modified] => 2015-11-09 10:56:24 [post_modified_gmt] => 2015-11-08 23:56:24 [post_content_filtered] => [post_parent] => 0 [guid] => http://www.governmentnews.com.au/?p=22069 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) [5] => WP_Post Object ( [ID] => 20069 [post_author] => 671 [post_date] => 2015-06-11 22:27:23 [post_date_gmt] => 2015-06-11 12:27:23 [post_content] => Shipwreck Polyexni   The Abbott government’s bitter and protracted enterprise bargaining dispute with Commonwealth public servants and the Community and Public Sector Union has seen pay increases in the federal sector flatline, leaving federal bureaucrats eating the dust of their state counterparts. The APS Remuneration Report 2014 released by the Australian Public Service Commission (APSC) this week reveals that public servants below the elite Senior Executive Service band received a negligible annual pay increase of just 0.1 per cent as at 31st December 2014, a figure that pales in comparison to the official measure of inflation, the Consumer Price Index, of 2.7 per cent for the year ended December 2014. The news was half as bad for APS bosses. They sill only netted only a 0.2 per cent increase for the same period after being left in the same moribund bargaining state as their reports. The latest dire APSC remuneration statistics are certain to add fuel to already inflamed tensions over bargaining between unions, public servants and the government as at least three state emboldened governments continue to poach public sector talent from Canberra following recent elections. In New South Wales, where the successive O’Farrell and Baird governments have adopted an innovative and pragmatic approach to increasing productivity and savings, bureaucrats managed a modest 2.5 per cent increase that will come into effect from 1st July 2015. Meanwhile, both Victoria and Queensland -- two states that dispatched Coalition governments after just a single term -- have moved quickly to try and make their peace with the public sector workforce and their unions after a period of large scale retrenchments. The bleak federal public service wage growth figures made for an awkward sell for acting Minister Assisting the Prime Minister for the Public Service, Christopher Pyne, who took an academic approach to talking-up a set of figures only the Department of Finance could take comfort in. Mr Pyne said that given the Consumer Price Index in “the December 14 and March 15 quarters, was 0.8 per cent annualised and the Employee Living Cost index 0.2 per cent annualised”, a rejected 1.5 + 1.5 + 0.55 increase offer at the Department of Human Services would have been “well in excess of current inflation”. A key reason for the rejection of that deal was a raft of so-called productivity offsets contained in DHS offers to staff -- which are effectively labour cost savings -- that acted to increase working hours and water down established entitlements and conditions. Mr Pyne’s comments also came after the APSC was forced into defending its own 1.5 per cent offer to its own employees, which came without the sting of diluted entitlements and conditions, in stark contrast to other offers on the table. Mr Pyne said that 91 APS agencies covering over 99 per cent of APS employees were now bargaining, but blamed “union campaigns” for “delaying public servants receiving further wage increases.” “Unlike the [CPSU], Australian Public Service employees understand that the Government needs to live within its means. To agree to the CPSU’s claims would result in 10,000 job losses across the sector.” Whether the government’s interpretation of that understanding -- let alone if another 10,000 job losses are plausible -- remains to be seen as strikes unfold over coming weeks. [post_title] => APS pay moribund and eclipsed by states [post_excerpt] => No deal, no growth, no compromise. [post_status] => publish [comment_status] => open [ping_status] => open [post_password] => [post_name] => aps-pay-moribund-and-eclipsed-by-states [to_ping] => [pinged] => [post_modified] => 2015-06-11 22:27:23 [post_modified_gmt] => 2015-06-11 12:27:23 [post_content_filtered] => [post_parent] => 0 [guid] => http://www.governmentnews.com.au/?p=20069 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 1 [filter] => raw ) [6] => WP_Post Object ( [ID] => 19435 [post_author] => 671 [post_date] => 2015-05-05 17:04:00 [post_date_gmt] => 2015-05-05 07:04:00 [post_content] => Reserve Bank of Australia in a reflective moment   The chief information officer of the Reserve Bank of Australia, Sarv Girn, has issued a rallying call to government and corporate leaders in Australia to show courage in embracing what he calls a “digital mindset” to better deal with the challenge of rapid disruptions to organisational and business models. Speaking at Committee for Economic Development of Australia (CEDA) forum in Sydney, the Australian central bank’s top technologist used a carefully measured speech to describe what he termed a “two-speed leadership” scenario that not only built on established leadership models but also incorporated new approaches that encouraged a “test and learn approach” for seed projects. The call from the RBA’s tech chief is certain to arouse interest in corporate and government circles as industry, policymakers and regulators try to keep pace with the onslaught of online business models -- both offshore and at home -- that have redefined the way people transact across sectors spanning from transport to retail purchases. Communications Minister Malcolm Turnbull has already mandated a start-up mentality for the new federal governments Digital Transformation Office that is tasked with making 80 per cent of government transactions available online by 2017. Mr Girn singled out both Uber and Airbnb as examples of the disruption of entire business models that “are being changed or are disappearing within short timeframes, and new models are appearing just as quickly to address unmet consumer needs – often that were not known of before.” “We have Uber redefining the taxi industry without owning any cars; Airbnb, which has more rooms available to travellers than leading hotel chains and yet does not buy or build hotels,” Mr Girn said. Like the Australian Taxation Office, the RBA has a strong if not vested interest in how new business models play out locally because of its role in setting the guardrails for the smooth operation of Australia’s payment system. The historical reticence of Australian banks to work together to develop a more modern domestic payments system that can work both online and overseas has been an innovation sore point with the RBA for years, fuelled by concerns that a ‘network effect’ was limiting innovation to the pace of the slowest participant. While Mr Girn judiciously avoided any references to payment systems regulation, it is no secret that the RBA has been pushing banks, card schemes and payment system operators to more quickly modernise their offerings to widen choices for consumers and businesses. One reason the RBA particularly interested in a modernised payments system -- apart from the fact it can still take days for otherwise instant electronic transactions to settle -- is that the data generated by electronic and online transactions provides a far more timely and telling picture of how the economy is functioning. Transactional and credit card data, like outstanding credit card balances that attract interest, has for years been used by economists and banks as a reflection of wider consumer confidence, with larger numbers of people lowering their exposure to credit card debt when they are uncertain about future conditions. Mr Girn reflected that today it took some courage for organisations to take on new ideas and allow them to “grow and prove themselves” or “stop them as a write-off if they do not deliver value.” Just as challenging was making a leadership call to pursue projects that “have the potential to redefine the business in non-traditional ways.” “This is not as easy as it may sound,” Mr Girn said. Mr Girn also observed “leadership on culture requires focus across two dimensions.” He described the first of these as “hardwiring” that roped in “policies, regulation and rules that govern a society or organisation and enables it to succeed.” “In a society or community sense, this is about leadership in laws and rules that encourage start-ups to flourish without inhibitors, and allowing their home presence to be retained as they become successful,” Mr Girn said. The second dimension was “softwiring” which Mr Girn said “refers to the behaviours and attitudes necessary for dealing with the digital era in a societal or organisational sense.” “In a society, this is about developing a culture that accepts digital change, which supports budding entrepreneurs to pitch ideas, gain feedback and grow. This requires a mindset change; an acceptance that start-ups may fail and an attitude that it's okay for them to start over. For many in Silicon Valley, the number of start-ups an individual has been part of is seen as a valuable saleable credential, not a black mark on their ability,” he said. “This clearly is a new paradigm for leadership which traditionally may see this as a failure.” Prior to taking on his role at the RBA, Mr Girn held senior technology management positions at both the Commonwealth Bank of Australia and Westpac. [post_title] => RBA tech chief calls for better digital leadership [post_excerpt] => “This is not as easy as it may sound” Reserve Bank of Australia CIO says. [post_status] => publish [comment_status] => open [ping_status] => open [post_password] => [post_name] => rba-tech-chief-calls-for-better-digital-leadership [to_ping] => [pinged] => [post_modified] => 2015-05-07 22:37:26 [post_modified_gmt] => 2015-05-07 12:37:26 [post_content_filtered] => [post_parent] => 0 [guid] => http://www.governmentnews.com.au/?p=19435 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) [7] => WP_Post Object ( [ID] => 18469 [post_author] => 671 [post_date] => 2015-03-05 23:40:56 [post_date_gmt] => 2015-03-05 12:40:56 [post_content] => Reserve Bank of Australia in a reflective moment ANALYSIS A funny thing happened on the way to Prime Minister Tony Abbott and Senator Eric Abetz’s brawl with the federal bureaucracy over pay. Or not funny at all if you’re a public servant, or a member of the military, hoping for a real pay rise. Stalling growth in prices and a stubbornly sluggish economy have handed the Coalition a numerical gift in the public service ‘pay rise’ debate, a figure which was exploited to its full potential on Wednesday. As Tony Abbott performed another conspicuous backflip of ‘good government’ and boosted the pay deal to uniformed Australian Defence Force personnel from 1.5 per cent to 2.0 per cent a year, what had been a below inflation cut in real terms became an above inflation rise. That’s the difference just six months can make to the Consumer Price Index (CPI), the measure of growth by which unions and bosses used to try and calculate claims and deals on remuneration. In June 2014 the CPI stood at 3 per cent. By December it hit just 1.7 per cent, off by almost half. Most wage negotiations are based on an assumption of inflation going up, but as Reserve Bank of Australia Deputy Governor Philip Lowe pointed out to the Goldman Sachs Annual Global Macro Economic Conference in Sydney on Thursday “looking around the world it seems probable that both workers and firms perceive that their pricing power has declined.” Australia’s annual inflation rate now sitting at just 1.7 per cent is the almost magic number that has allowed Abbott to claim the ‘above inflation’ high ground when the ADF pay offer was expediently upped to 2.0 per cent. Even so, the political and polling blood loss the 1.5 per cent offer must have been causing is underscored by the fact that ADF personnel effectively have no right to industrial action or negotiation other than the ballot box. The wider public service and the Community and Public Sector Union can hold out for around 4 per cent, which is unlikely to materialise, even if hard fought conditions and entitlements are traded away -- which they won’t be. Where there seems to be room to move, as Abbott rather desperately  demonstrated through the ADF deal, is on the headline number that pegs remuneration to price increases and the wider economy and the factors that have combined to keep inflation low, including interest rates. Deputy Governor Lowe’s observations included a quite telling assessment that even when interest rates have been pruned, consumer spending previously triggered by interest rate cuts is now being absorbed by a desire to pay down debt -- even when interest rates are historically low and money is very cheap to borrow. So cheap that some banks overseas are actually charging depositors fees rather than paying them interest. Public sector employees in Australia used to have what was regarded as more secure jobs than their peers in the private sector, but the sheer volume of retrenchments across state governments and the federal sector have been the biggest in almost two decades have pretty well eliminated that. For many households it becomes a matter of keeping a regular and predictable income coming in, riding out the storm, not taking on risk and eliminating exposure. Just play it safe. In this regard, no matter how Abbot and Abetz seek to negatively paint public servants, they are no different to the rest of Australia; whether they work for a local council or in central federal agencies. People are worried. Moreover, the sheer scale and rapid pace of Queensland’s public service reductions -- and the effect they had on sentiment and service delivery -- were abundantly evident by the dispatch of the Newman government after a single term despite one of the biggest first term majorities in Australian electoral history. Not just worried, pissed off too. Again, Deputy Governor Lowe summed up the dilemma and the mood well. “The current environment is one in which there has been a very large monetary stimulus, interest rates are very low and inflation is subdued. This is not exactly what the traditional textbooks would have predicted,” he said. And then there’s this: “The experience of the financial crisis has left deep scars in many economies, including a heightened sense of job insecurity. This insecurity has been compounded by the increased competition that globalisation has brought as well as by changes in technology. It has led to many workers in advanced economies feeling less inclined to seek the wage increases that they might once have sought – they feel that they have less market power and that keeping a job is more important than seeking a large pay increase. “A similar dynamic is probably playing out in the pricing decisions of many businesses. Globalisation has brought new competition in many markets for goods and services and the financial crisis increased business uncertainty. In this environment, putting up prices can seem to be a more risky proposition than it did previously,” Deputy Governor Lowe said. A big part of the problem the Abbott government faces with the public service, all its glaring public policy problems aside, is that it is running a very old school textbook industrial negotiation at a time when even the nation’s own central bank concedes traditional thinking is not working. Chief among obstacles is its absurdly strict and incongruous attempt to define productivity in bargaining negotiations as a decrease in labour costs as opposed to output. Senior and middle level public servants Government News has spoken to indicated two per cent was where they expected progress in talks between the government and unions to be made. Most said it boiled down to whether the government wanted to do a deal or start a fight… and that a fight was what they were expecting – leadership change notwithstanding --even if it was over just two per cent a year. One APS source put it this way: “When petrol goes up, and it will, everything changes.” Maybe the PM too. [post_title] => Is 2% as good as it gets for APS bargaining? [post_excerpt] => Falling inflation subdues wage growth. [post_status] => publish [comment_status] => open [ping_status] => open [post_password] => [post_name] => is-2-as-good-as-it-gets-for-aps-bargaining [to_ping] => [pinged] => [post_modified] => 2015-03-09 19:43:10 [post_modified_gmt] => 2015-03-09 08:43:10 [post_content_filtered] => [post_parent] => 0 [guid] => http://www.governmentnews.com.au/?p=18469 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) [8] => WP_Post Object ( [ID] => 18386 [post_author] => 671 [post_date] => 2015-03-03 15:15:31 [post_date_gmt] => 2015-03-03 04:15:31 [post_content] => Bitcoin IMG_2441 A leading economist has claimed that Australia and its Reserve Bank will be out of the physical cash printing business by 2025, opting instead to mint a digital cash equivalent to fuel electronic transactions. The bold call has been made by Professor Rabee Tourky, director of the Australian National University (ANU) Research School of Economics, a school that as earned a solid reputation for producing practitioners at the pointy end of the dark art. “In 10 years’ time there won’t be any paper cash. The big question is what’s going to replace it in Australia? Will it be Bitcoin? I don’t think so. More likely it will be ‘AusBit’, an Australian government issued digital cash,” Prof. Tourky said. While there is no doubt that the use of cash is certainly gradually declining, whether or not it will be redundant in just a decade certainly raises some interesting issues on the policy and regulatory fronts. The first, from a payments market perspective, is whether the government, through the RBA as the payments industry regulator, will need to intervene in the payments market to issue its own instrument in lieu of the folding stuff. Although so-called crypto currencies like Bitcoin have attracted cult-grade media coverage, the vast bulk of transactions flowing through electronic channels essentially moves between bank accounts and their parties which in turn are enabled by various payments services and card schemes. While many internet purchases are made using credit cards or their proxies – largely because of global interoperability requirements to enable overseas and cross currency transactions – the ultimate source of the money usually comes derives from a regular bank debit account. And while the transactions are as good as cash – after a the bank (in theory) holds your cash savings securely to withdraw as cash required – electronic and online transactions leave a trail of valuable data that can be exploited by everyone from regulators to marketers and economists. That kind of information has become a gold not just for commercial organisations looking to find ways to get you to spend more money, but government itself as it tries to get a more accurate and timely picture of how the economy is behaving. Electronic payment instruments have been sophisticated enough for years to tell you, at a broad level, whether spending on key commodities like petrol us up or down. You can also see how much debt people are carrying on their credit cards thanks to the publication of outstanding balances data published regularly by the RBA. As a general rule, consumers pay down outstanding credit card debt when they are fearful of wider economic conditions and job security prospects   basically so they don’t get stuck with a credit card debt that attracts interest rates that can be as high as fourfold the official cash interest rate. The societal and economic value of being able to see those movements and fluctuations, versus the largely anonymized cash-mimicking properties of crypto currencies like Bitcoin, is where the cyber money debate is now headed. One of the big social inclusion issues that has been generated by the explosion of online commerce is how to give people who can’t get or don’t want to use credit cards – and that includes merchants and shops   access to online payments. In Australia that’s spawned the evolution of direct payments juggernaut BPAY and a very significant revitalisation of the Eftpos network to modernise its offerings (both brands are essentially owned by Australia’s retail banks, although Eftpos also has supermarkets Coles and Woolies as stakeholders). Even so, most of the transactional availability of those is largely geared towards domestic or in county payments – rather than buying something on from an overseas vendor. This is where the crypto currency versus credit card debate starts to get interesting. For starters there’s a strong social equity argument that as many merchants – including government agencies that require and compel payments   gradually steer more and more customers to online payment channels as the default, those with the least access to credit cards shouldn’t be left. A state issued crypto currency could theoretically plug that hole, assuming that merchants accepted it. Acceptance is not necessarily a given, but if costs were low enough and the infrastructure worked there could well be a market. “One of the major economic issues we have now is the emergence of this great experiment with electronic cash, such as Bitcoin,” Professor Tourky says, noting that setting up a local e-cash instrument would just bring a new era of digital money but also a set of unique characteristics and challenges. “It’s also going to have some issues that cash as we know it doesn’t have, such as privacy, anonymity and the perhaps the emergence of anonymous markets. These are going to be big open questions in economics. It’s going to become a major issue for people studying money and banking.” Well perhaps. And perhaps not quite. Regulators are still more than a little wary of what crypto cash promises in terms of anonymity, especially those charged with policing illegal transactions to nefarious beneficiaries like proscribed terrorist organisations, Ponzi schemes, cults, illegal casinos, child pornographers and countries with sanctions. And given the escalating volumes of online fraud (more garden means more weeds) you can safely bet there would be a pretty hard-nosed attitude to entertaining systemic risk. Then there’s the small issue of the Reserve Bank’s rather lucrative sideline in actually running the printing machines for money, Note Printing Australia which don’t just produce our unique polymer notes, but also money and passports for other nations. From the payments industry side, the backlash against the creation of a sovereign crypto-currency would be tectonic because it could bypass payment schemes and their money-go-round of lucrative interchange and volume assessment fees altogether. Banks, despite making a mozza out of issuing cards, might however keep an open mind given that the margins on cash transactions are lower and costs higher. An especially open mind if they get to clip the ticket. The ANU is banking on getting a few enrolments from the financial services and regulatory sectors. The ANU College of Business and Economics this semester started incorporating digital cash into its first-year Money and Banking unit and claims it’s the first G8 university to offer students the chance to study crypto-currencies “This is an established course which we’ve changed to include studying the theory behind digital cash,” Professor Tourky said. “ANU economics students typically go into leadership roles, either in government or in the banking sector. In four or five years’ time they are going to be faced with these issues.” Government News also has a prediction. We anticipates that given Canberra’s first Bitcoin automatic teller machine has been installed in a shopping mall immediately adjacent the Australian Taxation Office’s main offices in Civic, some of the strongest practical and academic interest in the future of crypto currency will come from that agency. The digitisation of the cash economy might not be the future of payments they were thinking of. (Government News has contacted the Reserve Bank for comment). [post_title] => Australia will stop printing cash to mint local Bitcoin: ANU boffin [post_excerpt] => Reckons Reserve Bank will issue sovereign Aussie crypto currency. [post_status] => publish [comment_status] => open [ping_status] => open [post_password] => [post_name] => australia-will-stop-printing-cash-to-mint-local-bitcoin-anu-boffin [to_ping] => [pinged] => [post_modified] => 2015-03-06 00:22:54 [post_modified_gmt] => 2015-03-05 13:22:54 [post_content_filtered] => [post_parent] => 0 [guid] => http://www.governmentnews.com.au/?p=18386 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 1 [filter] => raw ) [9] => WP_Post Object ( [ID] => 16930 [post_author] => 671 [post_date] => 2014-10-31 01:35:43 [post_date_gmt] => 2014-10-30 14:35:43 [post_content] => Museum of Australian Currency Notes The head of the Department of Human Services has revealed that the Reserve Bank of Australia could be called in to take over the duty of delivering welfare payments to millions of Australians in the event industrial action at the welfare bureaucracy halts claims processing. In a fiery Senate Estimates hearing last Friday, Department of Human Services Secretary Kathryn Campbell said that “contingency arrangements in place” to deal with an “outage” included getting the RBA to repeat a fortnight old payments script it held “to ensure that people were paid.” The last resort measure to keep money flowing into bank accounts is part of a wider emergency back-up plan in the event that DHS’ ageing computer systems – in particular the unfortunately named ISIS legacy platform – unexpectedly fail to proceed. However the fall back arrangements would rely on a snapshot of just one payments cycle, resulting in valid new claims not being automatically paid and otherwise redundant payments still flowing creating a substantial clean-up operation. The notion that industrial action at Human Services could cripple welfare payments is highly contentious. The Department of Human Services itself has previously hosed down the possibility of such a scenario, while the Community and Public Sector Union has never itself raised the threat in anger during bargaining negotiations. Even so, the federal Opposition is pursuing the issue through the Estimates process with Senator Doug Cameron pushing for  answers on how long the Reserve Bank's contingency payments could endure. “What if you have no alternative and you are facing industrial action, how long can this last?” Senator Cameron asked during the Estimates hearing. Deputy Secretary for Human Services’ Service Delivery Operations Group, Grant Tidswell, responded that “obviously people's entitlements will change — things will occur in their set of circumstances — but we could continue to pay people for some considerable period of time. Some people will cease to be on payment.” In fact dead people would still get paid, while payments for newborns and their parents would be held up. The rudimentary fall back plans have underscored the challenge that Human Services faces in modernising its core transactional system, ISIS, which is underpinned by the 30 year old Model 204 mainframe system which relies on batch processing. The complexity and age of the mainframe legacy system has been compared with the challenge that the Commonwealth Bank of Australia recently faced in replacing its own homebuilt engine with a new system based on software from German vendor SAP. While no contracts have yet been signed between Human Services and SAP, the highly successful implementation at the CBA has made the German company a front runner in the quest to modernise the welfare bureaucracy’s systems. Banking sources have indicated to Government News that apart from the successful deployment at CBA, the availability of local labour already well versed in the system would be advantageous over flying in consultants from all over the world. Labor’s Senator Doug Cameron is certainly keen for any upgrade of Human Services’ core systems to harness local talent. Citing a figure of between $1 billion and $1.5 billion of likely IT spend needed to overhaul DHS’ IT systems, Senator Cameron pressed for answers on whether the money would stay at home. “Is the issue of how we can increase our local IT capacity through this investment being analysed?” Senator Cameron probed. “I am just asking now about the engagement between the [Industry Department] and [Human Services] in relation to initiatives that can be taken to promote Australian industry through this massive investment. Nothing has come from the Department of Industry so far. Is that what you are saying?” The official answer from that Human Services Secretary Campbell was that the Department would “continue to work with a number of parties, including the industry department.” However the technological spectre of what was once a system that made Centrelink the technological envy of comparable economies was not about to rest. With CPSU and Human Services bargaining talks now deadlocked, Senator Cameron pursued the Department and its Minister, Senator Marise Payne, on why management was pursuing the extension of working hours and other cost savings as a proxy for productivity increases . . . rather than upgrading technology “We have to do two things: we have to generate genuine productivity and we also have to generate cashable savings to enable us to pay. The overtime allowance is a cashable saving,” Ms Campbell told the Estimates hearing. Productivity, like beauty, is usually seen through the eye of the beholder. [post_title] => Reserve Bank standby for Human Services strike [post_excerpt] => Tech battle looms. [post_status] => publish [comment_status] => open [ping_status] => open [post_password] => [post_name] => reserve-bank-standby-human-services-strike [to_ping] => [pinged] => [post_modified] => 2014-10-31 01:35:43 [post_modified_gmt] => 2014-10-30 14:35:43 [post_content_filtered] => [post_parent] => 0 [guid] => http://www.governmentnews.com.au/?p=16930 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 1 [filter] => raw ) [10] => WP_Post Object ( [ID] => 6624 [post_author] => 655 [post_date] => 2012-06-18 14:01:07 [post_date_gmt] => 2012-06-18 14:01:07 [post_content] =>
By Lilia Guan

The Reserve Bank of Australia has decided, during a Payments System Board meeting, to vary the Standards relating to merchant surcharging on credit and scheme debit cards.
 
The variation allows card scheme rules to limit surcharges to the reasonable cost of card acceptance.
 
According to the Reserve Bank the variation continues to ensure that merchants can fully recover their card acceptance costs.
 
The decision to vary the Standards reflects the Board's concerns about the increase in cases where surcharges appear to be well in excess of acceptance costs or where surcharges are ‘blended’ across card schemes even though merchants' acceptance costs may be higher for some cards than others.
 
RBA intends that its variation will improve price signals by enabling a card scheme to address cases where merchants are clearly surcharging at a higher level than is justified for acceptance of its card products.
 
The variation to the surcharging Standards and the rationale for the Board's decision are discussed in detail in the attached Regulation Impact Statement .
 
The varied Standards will come into force on 1 January 2013.
 
The Bank has noted that some parties in consultation expressed a desire for more clarification as to the meaning of ‘the reasonable cost of acceptance’ in the varied Standards.
 
The Bank is therefore giving consideration to publishing a guidance note and a draft Guidance Note.

RBA said the draft Guidance Note makes clear that at a minimum the reasonable cost of acceptance includes the merchant service fee, but it may also include a range of other costs.
 
MasterCard has welcomed the decision by the Reserve Bank of Australia (RBA) banning excessive surcharges.
 
It means merchants will no longer be able to use surcharges on card payments to bolster their revenues.
 
MasterCard’s head of Strategy and Corporate Affairs David Masters said MasterCard supported the RBA’s decision.
 
“This change will provide welcome relief for consumers who have been subject to unfair fees or gouging by some merchants when they’ve used their MasterCard cards to pay,” he said.
 
MasterCard’s No Surcharge Rule – which prohibits merchants from surcharging for MasterCard transactions – was established to protect consumers.
 
In 2003, the RBA banned MasterCard from enforcing that rule in Australia which effectively heralded the start of surcharging here.
 
Mr Masters told Government News said surcharging effects anyone with a MasterCard or Visa.
 
“This will help stop merchants misusing surcharge as a way to add revenue – which never was the intention,” he said.
 
“Surcharging doesn’t just affect consumers, it also affects anyone with a corporate credit card including government agencies.”
[post_title] => RBA to cap credit card surcharges [post_excerpt] => [post_status] => publish [comment_status] => open [ping_status] => open [post_password] => [post_name] => rba-to-cap-credit-card-surcharges [to_ping] => [pinged] => [post_modified] => 2014-02-21 10:51:08 [post_modified_gmt] => 2014-02-20 23:51:08 [post_content_filtered] => [post_parent] => 0 [guid] => [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) ) [post_count] => 11 [current_post] => -1 [in_the_loop] => [post] => WP_Post Object ( [ID] => 27617 [post_author] => 670 [post_date] => 2017-07-17 22:40:11 [post_date_gmt] => 2017-07-17 12:40:11 [post_content] => Deloitte Access Economics’ Chris Richardson sees a few worrying trends and signs on the horizon for Australian governments. The world is motoring. Growth in the US, Europe and Japan is near 2%, with China and India doing the heavy lifting to raise overall global growth above 3.5%. But China has been tightening the screws, which will see its growth slow during 2018, with flow-on effects for the wider world. And there are structural headwinds for the medium term: the developed world is ageing, with its potential growth sapped by rising retirements. That’s true of China, too. And, at the same time, the business world has been reluctant to invest for a decade, spooked by rising political and economic uncertainty, as well as fears of regulatory and technological developments – creating an additional headwind. Both the world and the Reserve Bank have been doing Australia favours, with China throwing red meat at those bits of its economy that buy big from the Lucky Country, and with the RBA’s 2016 interest rate cuts revving up housing prices. Despite that, production growth has been weak, as big gas projects finish construction, as the big home building boom of recent years starts to peter out, and as Cyclone Debbie took a toll. Yet our stuttering pace of production was still enough – thanks to higher commodity prices – to see national income chalk up a gain of near $100 billion in 2016-17. That brought an emphatic end to five years of ‘income recession’, though to date it has been profits rather than wages that have benefited, while the pace of home building is set to shrink further amid increasing evidence that gravity may soon start to catch up with stupidity in housing markets. And the gargantuan Chinese credit surge is finally easing back, suggesting the global economy won’t be doing Australia quite as many favours from 2018 onwards. Yet those are merely caveats on an otherwise solid outlook. Relative to the rest of the rich world, Australia’s economic outlook may not be quite as impressive as it once was, but we are still kicking goals. Consumer price inflation remains a dog that isn’t barking, both locally and globally. And although global and local leading indicators of inflation are stirring in their sleep, they don’t look like getting out of bed any time soon. We see wage growth set to climb from 2018, as inflation lifts a tad, as retirement among boomers restrains growth in potential workers, and as the ‘income recession’ of the post-2011 period gives way to more settled gains in national income (and workers get their share of that). Even so, the pick-up in inflation and wage gains is likely to be both modest and slow. The past decade saw a growing global gap between economies and interest rates, but the US Fed is continuing a slow grind towards closing the gap. The rest of the world will eventually follow, with Australia’s turn starting during 2018. Yet as J. Paul Getty so neatly put it: “If you owe the bank $100, that’s your problem – if you owe the bank $100 million, that’s the bank’s problem.” Australia’s heavily indebted families are now the Reserve Bank’s problem, which is why, although interest rates will indeed rise in the next few years, they won’t rise sharply. On the currency front, Australia will sit more towards the back of the queue for global interest rates normalisation, and there’s the risk of further price pain on commodities. That combination will weigh on the Australian dollar, but not by much. Australia is within a hair’s breadth of a current account surplus for the first time since bell-bottomed jeans were all the rage. However, just like bell-bottoms, Australia’s dash for cash looks set to be very short-lived. We got close courtesy of spikes in coal and iron ore prices, but those same global commodity prices are once again curled up into a ball and rocking. That will increasingly show up as lower export earnings over the next year or so, cementing a return towards our customary deficits. Job growth in the next couple of years will be solid: not as good as 2017 to date, but not as bad as 2016, either. There’s good news in the better gains in national income of late, but overall macro trends aren’t really giving a strong signal either way on job prospects. And while the bugaboos of the moment (disruptive technologies and new business models) grab the headlines, they do more by way of generating churn at the level of individual businesses than they do to ruffle the surface of overall job numbers. The Federal Budget saw the Coalition abandon Plan A (a return to sustainable fiscal finances via spending cuts) to Plan B (tax and spend, amid increases to the Medicare levy, a bank tax, and Gonski2.0). Given Plan A spent years going nowhere, we see great sense in Plan B. But it’s a real worry that a conscious shift to the centre still didn’t unleash much bipartisanship in Canberra. That says official figures (which assume stuff passes the Senate) remain at risk. And, speaking of risks, commodity prices could yet spell trouble for the Federal, WA and Queensland Budgets, while – a little further out in time – housing markets may yet do the same for the NSW and Victorian Budgets. The tussle at the top Among industries, it’s still a tussle for the top of the growth leader board, as mining output rides the crest of earlier investment decisions, while health care rides a demographic dividend topped with technological treats. Both sectors look set to keep growing rapidly, with mining seeing huge gas projects ramp up their production levels (to meet export contracts, and to keep the home fires of domestic markets ticking over), and with health demands marching ever-upwards. But the prospects for both also come with caveats, as mining’s fortunes remain chained to China’s, and health to Canberra’s. Like Manny Pacquiao, the reign at the top of the pops for finance has been long and gloried, but it’s looking a little long in the tooth as the cost of credit finally gets back off the canvas. That said, there’s a long tail of growth still left in finance, and its return to the growth pack may take a few years. Challenges loom for property services too, where a slowdown has already commenced. Similarly, the $A -fuelled rise of fast growth in recreation (thanks to more tourists) and education (thanks to more students) may soon start to moderate from here – the $A’s fall was a while ago, and its benefits are starting to fade. But at least the education sector has the lift in the birth rate over the last decade or so to provide better base demand via extra kidlet numbers. Construction and manufacturing are both bumping along the bottom, but for construction it may be a relatively brief spell in the doldrums, whereas manufacturing’s challenges look rather more structural. Question marks lie over the utilities, where balancing divergent aims (power that’s clean, reliable and cheap) is hard, but becomes even harder now that Hazelwood has closed and with the nation’s onion-eaters arguing the toss on Finkel. That suggests investors may stay sidelined, which is where they’ve already been for an awfully long time. Add in rising prices, and this sector – a pathway to growth for many other industries – is left reliant on population gains to generate much by way of growth. It’s just a jump to the south and east On the State and Territory front, the jump from a China boom to a housing price boom sent the nation’s money and momentum from its north and west towards its south and east. Yet although the ‘sunbelt’ – WA, Queensland and the Top End – is feeling pain as a result of that, much of the drama for those regions already lies in the rear view vision mirror. Their next phase will be one of recovery, albeit not quite yet. And don’t forget that today’s heroes – NSW and Victoria – have clay feet. A house price boom borrows growth from the future, and both NSW and Victoria will have to pay back some of that in the years ahead as today’s housing prices gradually reconnect with reality. Luck’s a fortune, and NSW has it in spades amid the shift to lower interest and exchange rates since 2012. But storm clouds are building, as the housing price boom has artificially supported retail and home building. There’ll be an eventual butcher’s bill to pay as those supports reverse. Victoria has benefited as key cyclical drivers – exchange and interest rates – moved in a ‘Victoria- friendly’ direction in recent years. And this State is experiencing its strongest population gains for many a decade. Yet, relative to other States, its population and housing cycles may be near their peaks. The key headwind to Queensland’s economy for some years now has been falling engineering construction, but that pain is increasingly history. While Cyclone Debbie and slowing housing construction are current negatives, Debbie’s impact will be temporary and gas exports are lifting. South Australia has benefited from favourable shifts in interest rates and exchange rates. In fact, and despite popular opinion, the State economy’s growth actually picked up of late. Even so, some big challenges remain, given both demographics and an unfavourable industry structure. The construction cliff is still weighing on Western Australia. This state saw a virtuous circle of reinforcing growth drivers during the boom, but it has been seeing a vicious bust for a while now. But there has been better news recently out of China, and even vicious cycles run out of steam. Tasmania has been one of the bigger beneficiaries of the lower Australian dollar and lower interest rates, and the state economy’s growth is currently looking pretty good. But structural negatives on the longer-term outlook remain entrenched, suggesting caveats on current conditions. The Northern Territory’s economy isn’t a one-hit wonder, but recent years saw a Gangnam-style blockbuster hit the charts. As construction on the Ichthys project increasingly winds down and its export phase ramps up, the Territory’s challenging conditions won’t disappear for a while yet. The good news for the ACT is that, after the cutbacks and public sector hiring freezes of recent years, the Feds are returning to more of what might be considered business as usual. On top of that, the impact of lower interest rates on the ACT’s economy remains a powerful positive.   [post_title] => Gravity is starting to catch up with stupidity [post_excerpt] => There are a few worrying trends and signs on the horizon for Australian governments. 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rba

rba

RBA to cap credit card surcharges

By Lilia Guan The Reserve Bank of Australia has decided, during a Payments System Board meeting, to vary the Standards relating to merchant surcharging on credit and scheme debit cards.   The variation allows card scheme rules to limit surcharges to the reasonable cost of card acceptance.   According to the Reserve Bank the variation […]