Feb

15

Australia, from Larry Williams

February 15, 2007 |

 There are several things going on down under I thought Daily Spec readers might enjoy hearing about…

The first of course is the incredibly strong performance of the stock market. This is due in part to the fact that all Australians must pitch in part of their earnings to an investment program. It is privately managed, meaning a huge amount of money comes into their market month after month after month and keeps driving prices higher. Also, for the most part, their stocks are undervalued versus other stock markets in the world.

But all is not that well here…

At dinner the other night a friend told me he had a knee operation. I said, "Well that didn't cost anything; that must've been nice." His reply was, "It cost me quite a bit. I had to pay cash because in the publicly supported medical system it would've taken a couple of years to get an appointment." I confirmed that with a jogging buddy today, who said the same thing. There is a fast track for emergencies, for instance if you're in a car wreck. But for any significant discretionary operation you will wait a long time

His wife added that since there is no cost to go to a doctor, the doctors are flooded, as there is no disincentive to seek care.

This was the one that got me: After employing someone for 12 months it is mandatory to give him a one-month vacation. I've never had a one-month vacation in my life. Who would want one? You couldn't work. Nonetheless, when the worker gets that vacation he gets it with pay plus 19%. In other words, he earns 119% of his base salary on his off month. The thinking of the labor union leaders is that the vacation will cost him more money than staying at home. So he is entitled to more.

One of the big issues in the upcoming election will be free dental care. My dentist here doesn't do anything for free. I don't blame him, and we both wonder: who's going to pay for it? Obviously, it will be paid in some form of higher taxation, something politicians here and everywhere seem to enjoy. There is a 40% tax on wine made here, which means I can buy the same bottle of wine cheaper in America.

I could go on and on with other examples of the difficulty of running a business here.

It is a lovely country with great people and great future, but it seems to have been overrun by socialists and labor union leaders, which certainly will have an impact on the economy at some point.

Adi Schnytzer writes: 

And just imagine, there are millions of people all over the world just wishing they could get a visa for Australia. Go figure!

Larry Williams replies:

Sure! Can't get fired for stealing, get a month's paid vacation at 119% of base after 12 months of lounging around, free stuff! Ya, man let's go!

My point is that business people have read Atlas Shrugged and see it taking place here.

Adi Schnytzer adds:

Larry, how many people die for lack of operations, medicines, and doctors in Australia? What is the per capita number in the U.S.? No health system is perfect and no economic system is perfect and, yes, there are some stupid taxes, but how many homeless have you tripped over lately? If you want to compare Australia with the U.S's, the former being too socialistic for some tastes, why not do it properly?

Larry Williams replies:

I see about 100 homeless people here every day. Some are real characters to talk with. Come on a walkabout with me. They are flagrant and stink like heck but are courteous. They are all over here, on every major street. I certainly see more homeless people here than in San Diego, a city very similar to Sydney.

I do not know how many people die for lack of operations, but I suspect it's the same as in the U.S or U.K.

If an employee is caught stealing from you, all you can do is write a letter. It is not until the third time you can fire him.

Virtually every older Aussie I know vents these same complaints. I am just the reporter here!

 


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2 Comments so far

  1. moom on February 19, 2007 9:23 pm

    Australia has been heading in a less “socialist” direction over the last 20 years under both Labor and Liberal administrations. 30-40% of Australians have private health insurance which is encouraged by the government. Yes there is a requirement to give employees a minimum of 4 weeks vacation (you obviously don’t have to take it all at once). The one month 19% “holiday leave loading” just means that a salary offer would be (19/12)% lower than it would otherwise be. The compulsory superannuation system you refer to means that Australia is much better set up for future demographic change than the US is with its Social Security system - the Australian age pension paid to seniors without sufficient assets is much less generout than US social security payments. Government debt is a tiny percentage of GDP. As a result I see that Australian tax rates will probably fall relative to US tax rates over time. I currently live in the US but may return to Australia when marginal rates get nearer parity (the top rate of 46.5% in Aus compares to 44% or so in the highest taxing US states but comes in currently at I think at a much lower $A125k per year). There are though lots of loopholes for investors and no AMT type tax. The Australian tax system favors dividends and margin interest while the US one favors futures trading and long term capital gains. Overall the tax burden is similar.

  2. Tiffany Matthews on May 15, 2008 9:05 pm

    Larry, are you planning on staying in Australia or are you going to go home soon, you seem to like it there even with the problems in health care.

    I would also like to know if you still live in ST. Croix and if so how is the health care there is it up to par with the rest of the country.

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