The Week that Was…
“Can I…as I unwind this slowly for you, tell you about the most bizarre days I think I’ve ever experienced in more than 30 years of reporting on finance, on government and on business in this country.
What has taken place today, I have to say, has completely blown me apart to see that something such as this has occurred…”
On Monday, smashed avocado and coffee made news headlines all over the world again.
But this time, it was not due to demographer Bernard Salt.
Rather a 35 year old property developer I interviewed for 60 minutes.
Tim Gurner, founder of Urban Inc, one of the leading developers in Australia right now – is worth near half a billion dollars.
And he had something to say about people of his generation who whinge that they can’t afford to get into the housing market in Australia.
“When I was buying my first home, I wasn’t buying smashed avocado for 19 bucks and four coffees and $4 each…”
This statement caused such an outcry it became headlines in not only Australia, but in America and Europe.
And whilst the “Now Generation” might disagree with Tim Gurner and say that the exorbitant house prices of the east coast of Australia are the reason they can’t get into the property market, Tim does have a point…
Gen Y aren’t saving. They are indeed spending their money on smashed avocado for near $20 and having multiple coffees a day.
All of this adds up! All of that is money you could be putting towards your housing deposit.
Yes, property prices are very expensive in Sydney, Melbourne and Brisbane, but wouldn’t you rather that than a massive crash in the property market?
Then we would be in another basically Global Financial Crisis.
So to those who are Gen Y or know of a Gen Y looking to get into the housing market, move away from the cities. Move away from the big metropolitans!
If you want to get into the housing market, and still keep your lifestyle of luxury and smashed avocado, then you are going to have to sacrifice something else – location.
Another big worry this week for those coming into the housing market is the possibility of a rise in interest rates and surcharges with home loans of the big four banks, plus Macquarie.
As it was last week, the budget’s proposal of a bank tax of $6.2 billion was headlines again this week.
Dr Ken Henry, the former treasury secretary, and the current chairman of the National Australia Bank hit out at the tax saying it is bad policy.
Not only did Dr Henry said the bank tax was terrible policy, he also said the implementation process was poor, especially as there was no consultation, and that the tax would have to be passed on.
He called for a review of the governance arrangements for the financial system because the bank tax – along with measures that allow regulators to have bankers sacked – has completed a process of disrupting the roles of the Reserve Bank of Australia, the Australian Prudential Regulation Authority and the Australian Securities and Investments Commission.
Following these comments, the coalition hit right back.
“Let me tell you about Ken Henry…”, Treasurer Scott Morrison told me on Wednesday.
But the treasurer was not the only one.
Prime Minister Malcolm Turnbull and his senior ministers also had a few words to say about the “Labor-leaning, self-serving bank boss”, as the Australian Financial Review’s Phillip Coorey phrased it.
They also accused him of producing flawed policies during his time as former treasury secretary.
Now, whilst both the Labor and Green’s will support the bank tax, ensuring it passes through the Senate by the July 1 start date, Labor leader Bill Shorten will back a Senate inquiry that will enable the banks to make one last public stand against the impost that they say will be passed on to customers.
Now this is where the banks have to be careful what they wish for.
The Coalition government is simply putting a tax on them, quite a large tax but considering their multi-billion dollar profits, fairly reasonable.
But if the bank oppose this too much it will open themselves up for something they most definitely do not want.
As there is already a very strong chance Labor will be the next government, there will most definitely be a Royal Commission into the banks, as both Bill Shorten and the shadow treasurer Chris Bowen has committed to it.
So the banks better be careful about what they wish for right now – a $6.2 billion tax or a Royal Commission…
But the big news this week, which also happens to be the most bizarre case I’ve ever reported on in all of years of reporting on the world of politics, business and finance, was the $165 million Australian Taxation Office tax fraud scandal revealed yesterday.
Not only does this scandal involve some of top 20 most senior executives in the ATO, but also their biggest attack dog, Michael Cranston is somehow involved!
Michael Cranston, who is not only a deputy commissioner of the tax office, but for the past two decades has spearheaded Australia’s attack on high net-worth individuals trying to minimise their tax.
He is our most senior tax attack dog – think Project Wickerby that saw Actor Paul Hogan, the “Crocodile Dundee”, pursued for eight years before he was exonerated.
That same project that saw music promoter Glenn Wheatley jailed. And the person driving all of that was Michael Cranston.
Think The Panama Papers revealed last year, alleging massive tax abuse, think attacks on Phoenix companies – all of it…Michael Cranston.
There is still some confusion to what Michael’s exact role in this whole tax fraud ring was – with many believing he accessed unauthorised account information.
But one thing is for sure, his son Adam Cranston, and daughter Lauren Cranston are most definitely involved, as well as others.
Among the items seized under proceeds of crime were 25 motor vehicles, including luxury cars and racing cars, 12 motorbikes, 18 residential properties, two aircraft, $1 million from a safe deposit box, firearms, jewellery, bottles of Grange wine and artworks.
But how they did is, is the question. It is all to done with the payroll system Plutus.
Police will allege in court that the syndicate members ran a legitimate payroll company, Plutus Payroll, and accepted money from legitimate clients to process payroll on their behalf.
A statement from the Federal Police states “This money was transferred to seven sub-contracted companies known as Tier 2 companies, which then made payroll payments to individual workers or clients,”
The directors of those Tier 2 companies were known as straw directors, police say, and were essentially a front for the syndicate members, who retained effective control.
“As part of their contractual obligations to the legitimate payroll company’s clients, the Tier 2 companies are required to remit pay as you go (PAYG) withholding tax payments to the ATO on behalf of the clients,” police said.
“However, investigators found that only part of these tax obligations were paid. The remaining money was allegedly siphoned off by the syndicate members and channelled through a complex series of companies and trusts for their own personal gain.”
And as if things couldn’t get worse, they did.
Plutus Payroll has since been linked to at least four government agencies including, the Immigration and Border Protection, Social Services and Defence departments and the ABC as those identified so far.
Now, whilst the investigation into Plutus began some months ago from numerous sources including the Australian Federal Police and the tax office, on Thursday night I spoke to the founder of Ayers Management which is essentially Plutus’ completion.
Ayers management founder, Patrick Bourke, says very early on “I smelt a rat.”
Bourke then took it upon himself to conduct his own little investigation by placing clients within Plutus to see just how this all worked – turns out his suspicion was correct.
With this case, no doubt, to go on for a several months, if not years, it is going to be very interesting to watch…
‘Smashed Avocado’ certainly has become the infamous words associated with Gen Y and housing affordability; so much so that it made international headlines this week. For 60 Minutes on Sunday, I spoke to the people who have a solution to the problem: Australia’s multi-billion dollar property developers
Money News –
A week post-budget I spoke to the Treasurer Scott Morrison who reaffirmed the need for the banks to not oppose the bank tax as well as having a few choice words for the former treasury secretary and the current chairman of the National Australia Bank, Dr Ken Henry
Work. Life. Money –
There is not many Australian actors who have withstood the test of time to still be revenant in today’s society after famously doing a nude photo shoot back in the 1970’s but Jack Thompson is just one. This week he joins me ahead of his movie premiere “Don’t Tell”