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24 March 2014

Cutting red tape or lining the pockets of the rich and powerful?

Former Assistant Treasurer, 'he's just resting' Arthur Sinodinos, is in hot water for links to the famous Labor Party plutocracy, the Obeid family, through Australian Water Holdings and its machinations.

Being paid $200000 a year for 100 hours work for your political connections is also pretty nice work, if you can get it. You and I can't get work, let alone at $2000 an hour.

In fact, the real crime for which Sinodinos should be hung out to dry is the Abbott government's red tape offensive.

Offensive it certainly is. It is a disguised attack on low paid cleaners and in the main low paid working class Australians seeking financial advice.

Much of red tape abolition is harmless enough, getting rid of rules and regulations that no-one uses or which are redundant, like those applying to left handed seafarers ensuring they are compensated at the same level as right handed seafarers. As Tony Burke said it's a bit like vacuuming the spare room that hasn't been used for years.

This 'bonfire of red tape' gives the government the opportunity to sprout about freeing up business when in fact its real target is those regulations that protect the vulnerable and the poor, giving open slather for business.

Take the pay of government cleaners and more 'freedom' for financial advisers. One of the regulations the Abbott government will abolish is the Commonwealth Cleaning Services Guidelines from July 1. This Rule applies to cleaners employed on government contracts from July 1. According to Bianca Hall in The Age:

The regulations are a form of collective bargaining introduced by Labor that lift the wages of workers hired by businesses that win government cleaning contracts, by between $4.53 and $5.93 an hour above the minimum wage. This brings their weekly wage from $664 to $836 for a 38-hour week for level 1, and from $724 to $950 a week for level 3 workers.

So what would abolishing them mean? Hall again:

Some of the country's lowest-paid workers could lose almost a quarter of their weekly wages under changes quietly introduced by the Abbott government.
Thousands of workers will be hit by the changes, which will strip between $172 and $225 a week from the pockets of full-time contract cleaners who work in government buildings.

Attacking the poorly paid? Who would have thought that is what this Abbott government is about and would do?

That's the point. One important way to improve the profitability of business is to cut our wages. The fact the Abbott government has to try to do this on the sly shows it realises revealing its true agenda in all its blood soaked gory glory might alienate a lot of people.

That is certainly what it is doing with its financial adviser changes, justified on the same basis as the 'red tape bonfire' and introduced on the same day. The changes will 'save' about $190 a year in red tape but jeopardise billions in savings of ordinary working Australians. According to the ABC's Emma Griffiths:

The Future of Financial Advice (FOFA) laws stipulate greater controls on commissions, that advisers act in the best interests of their clients, and that they get agreement every two years from customers to continue receiving advice and paying fees.

But the Government wants to wind back the last two regulations and other measures.

The problem with financial advice commissions and a lack of a robust duty to act in the best interests of the client is that financial advisers can, do and will put clients into investments that yield the best commissions for the adviser, not the best return for the investor.

According to Peter Martin in the Sydney Morning Herald, the government has also indicated the regulatory body responsible for ensuring advisers let their clients know this June of their commissions won't prosecute advisers who don't do that.

One of the main beneficiaries of these changes may well be the wealth arms of big banks; you know, those poor, cut to the bone banks making record profits.

So in the name of reducing red tape and costs on business, the Abbott government is penalising investors billions in returns over the next decade.

Attacking low paid workers. Attacking often low paid investors (in Superannuation for example) by defending financial advisers from scrutiny and not requiring them to act in the best interests of their client.

This isn't about cutting red tape. It is about lining the pockets of the rich and powerful with even more money at the expense of the low paid. Just as Sinodinos tried to line his pockets with his $2000 an hour job, this is what he and the Abbott government are trying to do now for their mates in the one percent with their misnamed 'bonfire of red tape'. The only people being burnt are the poorly paid and less sophisticated, working class investors.

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