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Borrowing money isn’t always a bad thing – debt can be a sensible way to build wealth

<div class="theconversation-article-body"><a href="https://theconversation.com/profiles/bomikazi-zeka-680577">Bomikazi Zeka</a>, <a href="https://theconversation.com/institutions/university-of-canberra-865">University of Canberra</a> Debt, in some form or another, is part of our financial profiles whether we like it or not. And it can be a useful way to build wealth if it is managed carefully and wisely. For example, you may borrow money from the bank to buy an asset – a resource of economic value that generates income from its productive use. Investment property is an example. So investing in an income-producing property can be a good idea. If you are already in the property market, the home equity you’ve accumulated – the share of the property value that’s yours – can help you buy a second property. This time, you may not need a deposit as big as the initial investment. In the event that the rental market is booming and your tenants pay you more than what you repay on the loan, municipal rates and property manager fees, then the wealth-building machine will start to run itself. But debt makes many people uncomfortable. In South Africa, a person earning R20,000 a month commits on average <a href="https://businesstech.co.za/news/finance/585372/south-africas-middle-class-is-in-serious-trouble-right-now/">63% of their salary to repaying unsecured debt</a> – such as credit cards, personal loans, overdrafts or “buy now, pay later” facilities. As a general guideline, it’s suggested that <a href="https://www.investopedia.com/terms/d/dti.asp">no more than 40%</a> of your income should be used to service debt. Financial anxiety has its roots in some misconceptions. The main one is that all debt is bad. This isn’t true. Prudent borrowing to buy an asset can help build wealth in the medium to long term. So fears about debt need to be weighed against a broader understanding of wealth accumulation. Well-managed debt can play a role in that process. Here are the four biggest misconceptions about debt. Recognising them will help you develop a more nuanced approach to debt. <h2>The misconceptions</h2> All debt is bad debt. Indeed, debt is a problem when you can no longer manage it and it starts to manage you. One of the simplest ways to tell whether debt is working for you or against you is through “leveraging”. This refers to the use of debt to acquire an asset that is worth more than the value of the debt. It’s also known as positive or favourable leveraging. People who take out unsecured loans are leveraging unfavourably when the debt is driven by consumption. Often there’s nothing to show for what you’ve spent. Unsecured loans also tend to charge higher interest rates to compensate for the lack of collateral. Only financially reckless people are in debt. This is the next misconception. Second to unsecured loans, most South African consumer debt portfolios are taken up by <a href="https://businesstech.co.za/news/wealth/617685/these-income-levels-in-south-africa-owe-the-most-debt/">home loans</a>. The most realistic way to gain entry into the housing market is through a mortgage. You’re doing the right thing if your mortgage is paid off within a reasonable time. This will mean that, in the long term, the value of the property will surpass the home loan amount that was taken out to buy the property in the first place. But there are two misconceptions related specifically to mortgages. After you’ve paid the mortgage deposit, you won’t have other fees to pay. This isn’t correct. Banks charge a fee to open and close a home loan account. There can also be a penalty when a home loan is repaid prematurely. So be sure to read the fine print about discharge fees or closing costs. If you stick to the repayment amount for your mortgage, you’ll be able to repay the loan quickly. This isn’t true – even if interest rates fall and your mortgage repayments decline, your home loan is most likely tied to a loan term of 20 to 30 years. Many banks will quote a monthly mortgage repayment amount that seems affordable at face value but is in fact based on a 20-year term period. Banks are businesses and it works in their favour if you take longer to repay your mortgage because that translates into more interest repayments. The longer the duration of the home loan, the more interest you pay, the more profit they make. If it takes over 20 years to repay a bond, it’s often the case that the value of the interest repayments exceeds the initial loan amount. Home loan calculators are a useful tool that can help you assess how much you could afford to repay on a home loan depending on the deposit saved, if interest rates change and how long it will take you to repay the mortgage with topped-up contributions. It is essential to have a goal for when you’d like to finish paying off your mortgage and a plan in place to achieve this goal. If you don’t do this you could become a mortgage prisoner. <h2>Keeping your eye on the prize</h2> As we’re about to conclude the year and enter the festive season, it’s a good time to remember your financial goals and not let your guard down by unconsciously swiping or tapping that credit card. “Janu-worry” is around the corner, and so is the financial anxiety that comes with it. But it need not be the case. Debt can either be the cure or the cause of your financial position. Reconsider spending patterns that prompt you to use your credit card. Too much debt over short periods is an irregular spending pattern that is a warning sign. There’s no harm in buying what you can afford or staying in your financial lane if the alternative forces you to sacrifice your hard-earned income on servicing consumption-driven debt. For better or worse, debt is a part of our financial portfolios. But the road to financial empowerment is not always easy – financial planning can help you keep your eye on the prize.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/192630/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> <a href="https://theconversation.com/profiles/bomikazi-zeka-680577">Bomikazi Zeka</a>, Assistant Professor in Finance and Financial Planning, <a href="https://theconversation.com/institutions/university-of-canberra-865">University of Canberra</a> Image credits: Shutterstock This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/borrowing-money-isnt-always-a-bad-thing-debt-can-be-a-sensible-way-to-build-wealth-192630">original article</a>. </div>

Money & Banking

Lessons we can all learn from the "Forgotten Women"

“The greatest underutilised resource in our economy is mothers in their childbearing years,” lawyer <a href="https://womensagenda.com.au/latest/soapbox/time-forgotten-women-australia-rise/">Kate Asher wrote in this publication</a> in 2017. “We have told them since they were little girls that they can achieve anything in life. But after they become mothers, they discover the cruel truth: the system is rigged against them. We all know these women. Many of us are these women – the Forgotten Women.” Sadly, things haven’t changed much in the years since. The Forgotten Women sacrifice so much financially to raise their children – often while also caring for elderly parents or in-laws. The full cost of these sacrifices don’t become apparent until years later. Compounding effects Time away from work means no contributions going into superannuation and inappropriate investments eat away at what they did have. Coming on top of the gender pay gap, it leaves a massive retirement shortfall. Many women returning to paid employment struggle to resume their previous career or full-time work, instead forced into less secure, lower paid part-time and casual jobs. If student loans weren’t repaid before leaving work, those debts have ballooned under years of indexation. We know women bear the brunt of domestic violence. Many marriages end in divorce once grown children leave home. Meanwhile, <a href="https://www.abs.gov.au/statistics/people/population/deaths-australia/latest-release#:~:text=There%2520were%2520183%252C131%2520registered%2520deaths,by%252047%2520deaths%2520to%2520911.">far more men die in their 50s and 60s</a> – their pre-retirement years – than women, leaving many young widows. All these factors see women unexpectedly find their partner is no longer the source of income they had counted on. No wonder women over 55 are <a href="https://womensagenda.com.au/politics/local/advocates-call-on-support-for-older-women-and-dv-survivors-this-world-homelessness-day/">the fastest-growing demographic for homelessness</a> in Australia. What can we learn from this? There are many things we can take away from the traumatic experiences of these much-maligned women. Chief among them: don’t be complacent. Maintain visibility of finances, and take action. As a financial adviser, I have met lots of women; many who only sought advice after finding themselves in a financial black hole. I’m also passionately involved with various causes that support disadvantaged women and those fleeing violence. What strikes me about these women is that they almost unanimously say “I never thought this could happen to me”. And for many it can be preventable. We must be proactive in looking after ourselves – our current AND future selves – which means developing our own financial independence. Simply leaving money matters up to our husband or partner is not an option. We also need to get the message to friends, sisters, colleagues…. Breaking the cycle Too many women have sadly come unstuck because they relied on weak financial foundations. Just like the foundations of a house, you need strong foundations on which to build financial independence: <ul> <li>Emergency fund: a ‘get out’ fund should you ever need to flee danger (violence, natural disaster) or your household finances take an unexpected hit (redundancy, illness, another pandemic…). Not having readily available cash in an emergency can leave you stuck or forced to dip into investments or home equity, costing you dearly longer term.</li> <li>Spending and investment plan: more comprehensive than a budget, this plan offers visibility over your incomings, outgoings and assets. Visibility is key to cutting wasteful spending, staying on top of bills, and keeping you aligned on your money goals. Avoid sexually transmitted debt.</li> <li>Insurances: a valuable back-up plan to offset losses and help you recover financially from a disaster – personal and home. For women who are stay-home mums or carers, of particular importance is that your partner has life and income protection insurance, ensuring you can keep a roof over your head should they die or become unable to work, and possibly trauma insurance for yourself.</li> <li>Superannuation: Knowing up-front that you will have nothing going into super while you are not working means you can minimise the shortfall. For instance, consider ‘pre-paying’ extra contributions while you are still earning and/or have your partner make spousal contributions during your time out of work (and have them claim the associated tax benefit), and consider spouse splitting. But know what is happening in his super too, and if in your own business ensure contributions are made for both of you. </li> <li>Estate planning: Ensure your wishes are documented and your children are protected, both after you are gone and in the event you are ever incapacitated. Consider wills, guardianship, power of attorney, superannuation beneficiaries, and tax planning.</li> </ul> With good foundations in place, you can then look to other ways to build your independence. Invest early. Savings and investments you make in your early working years can offset your lack of income once you leave the workforce and continue growing in value for your retirement. Consider upskilling. Distance education allows stay-home parents to obtain new skills and qualifications, enhancing their future employability and earning potential. Stay level-headed in a separation. I’ve seen many women forgo money and investments in favour of keeping the family home, only to realise down the track they can’t afford its upkeep on their own. Or they sign on the dotted line without advice. Remember too that super is part of the joint assets – you could claim part of your ex’s super in the settlement, offsetting your time away from paid work. Finally, consider your approach to parenting. This is 2024: women don’t need to be the sole caregivers. Some couples now both go part-time, allowing them both to maintain a foot in the workforce (and continue earning income and super) while also enjoying time with their youngsters! Helen Baker is a licensed Australian financial adviser and author of On Your Own Two Feet: The Essential Guide to Financial Independence for all Women. Helen is among the 1% of financial planners who hold a master’s degree in the field. Proceeds from book sales are donated to charities supporting disadvantaged women and children. Find out more at <a href="http://www.onyourowntwofeet.com.au/">www.onyourowntwofeet.com.au</a> Disclaimer: The information in this article is of a general nature only and does not constitute personal financial or product advice. Any opinions or views expressed are those of the authors and do not represent those of people, institutions or organisations the owner may be associated with in a professional or personal capacity unless explicitly stated. Helen Baker is an authorised representative of BPW Partners Pty Ltd AFSL 548754. Image credits: Shutterstock

Money & Banking

Aussies urged to claim share of $241 million in unpaid Medicare benefits

More than 930,000 Australians are owed their share of $241 million in unclaimed Medicare benefits. The unpaid Medicare benefits have been withheld from recipients who have not updated their bank details, the Department of Social Services said on Thursday. The average Australian is owed about $260 each, but 200 Australians are owed more than $10,000. Young people seem to be owed the most, with more than $52m owed to more than 224,000 Aussies aged between 18 and 24. “Once you update your details, Services Australia will pay your unpaid benefits within three days,” National Disability Insurance Scheme and Government Services minister Bill Shorten said. He added that it takes less than a minute for the average person with a myGov account linked to Medicare to check and update their bank details. Those owed money are being notified directly through their myGov inbox. “Services Australia is in the process of sending over half a million notifications to people’s myGov inbox asking them to update their details,” Shorten said. He added that in the last financial year, Services Australia paid nearly $30bn in Medicare benefits, and since December 2023, they have reunited over half a million Australians with $117 million in unpaid benefits. “We know a bit of extra money is always welcome in the lead up to the holidays – so there’s no better time than now to check if your bank details with Medicare are current, and if you have any unpaid benefits," Shorten said. “With everyone doing it tough due to cost of living, this is good news for nearly a million Aussies from all walks of life all over Australia.” Image: Shutterstock

Money & Banking

Workmates win $30m powerball in twist of fate

A group of Perth workmates have won the incredible $30 million Powerball after a twist of fate. 15 men and women, ranging from their 30s to 60s, will each take home $2 million after becoming the state's first Powerball winners of the year. The group of friends have been trying to win the Saturday Lotto for years, but when one of them forgot to buy their weekly ticket, they decided to buy the Powerball ticket on a whim. “We all put money into a kitty and I buy a Saturday Lotto ticket every week, plus one for any jackpots of $50 million or more,” the ticket buyer said. "I couldn’t believe it when I realised I forgot to buy our ticket for Saturday Lotto. I was thinking of the grief I was going to get on Monday at work. “I saw that Powerball was at $30 million and bought a ticket for that instead on a whim.” “We should never have had a ticket for this draw," he added. “I’ve never expected to win but play happily knowing that some of the money goes to helping the community.” The man said he now has a plan to retire early and go caravaning around the country with his wife. Other members of the group have decided to help their children and book holidays they had always wanted to take. One woman joked that when she heard the good news she immediately bought her favourite treat - a pineapple. Lotterywest spokeswoman Zoe Wender said the three-week Powerball jackpot run raised $5.9m for Lotterywest’s grants program, which provides supports community groups throughout WA. “It was incredible welcoming this group of 15 winners into the Lotterywest Winners Room and seeing how ecstatic they were,” she said. “This is a life-changing win for this group of workmates, and how fantastic that they are sharing the joy of winning together.” Image: Lotterywest

Money & Banking

"Completely out of touch" boomer slammed for housing advice

An Aussie boomer has been slammed online after sharing advice for younger generations to buy a house, with her words of wisdom being labelled as "infuriating". The Sydney homeowner shared her matter-of-fact views when asked about her own property journey for a TikTok video by property app Coposit Street, who regularly hit the streets to ask people of all ages about their opinions on home ownership. The woman, who chose not to disclose her age or how much she has in savings, didn’t hold back when asked about younger Aussies, saying they “don’t make sacrifices” in order to break onto the property market. “When I was younger …. I never did brunches and partied and now (it’s what) they wanna do, she explained in the video, before admitting “it’s harder for them now”. “Things are so expensive but they can start off small. A lot of people buy places that are too big but you’ve got to make sacrifices.” When asked how she built her savings, she added, “I take my own lunch to work, I always have.” “If you want a place of your own, start small but make the sacrifices, do two jobs, work a lot. Don’t go out as much as you want to.” “I mean I feel sorry for the younger generation now because they’re thinking why bother because it’s too expensive, I’m just going to party and have a good time, which you can still do.” “When I entered (the property market) it was quite a while ago. I had a lot of difficulty because I was a single woman and I had prejudice against me so my father had to go guarantor and that was able to help,” she explained. “I had two jobs, I worked really hard. I was actually trying to save to go overseas and then I cancelled that and I was renting … and I thought, well, maybe if I saved a bit of money and worked hard, I could put a deposit down for myself.” These days, the woman acknowledged the cost of living in Sydney is “very expensive”, saying, “It’s terrible … Rents have all gone up and everyone’s willing to pay for everything so people are just thinking we’ll charge this and then everyone’s charging on top, and people aren’t getting assistance so it’s hard these days.” The woman's comments were met with a wave of backlash online, with many younger Australians calling her advice "infuriating". “We’ve turned our cars into taxis and our spare rooms into hotels to try and afford the same thing they had on a single income,” one person wrote. “How are people this completely out of touch?” another wrote. “Most of my mates have worked since 14/15 (years old), Not gone away internally (sic), have clacked out cars and still only scrape by. I’m 20 and I can’t even remember the last time I went clubbing.” “Yes not buying coffee is going to be enough to save for a house,” another sarcastically quipped. The woman's comments come after research conducted last year shows Gen Z and Millennials have a tougher path to buying a home than previous generations, with the latter facing mortgages 12 times their average income. Image credits: TikTok <p style="box-sizing: inherit; border: 0px; font-stretch: inherit; line-height: inherit; font-family: 'Helvetica Neue', HelveticaNeue, Helvetica, Arial, sans-serif; font-size-adjust: inherit; font-kerning: inherit; font-variant-alternates: inherit; font-variant-ligatures: inherit; font-variant-numeric: inherit; font-variant-east-asian: inherit; font-variant-position: inherit; font-feature-settings: inherit; font-optical-sizing: inherit; font-variation-settings: inherit; font-size: 18px; margin: 0px 0px 24px; padding: 0px; vertical-align: baseline;">

Money & Banking

Jackie O donates profits from her new memoir

Jackie O has revealed that she plans to donate all the profits from her book, just days after going public with the details of her past <a href="https://oversixty.com.au/health/caring/tearful-jackie-o-reveals-past-drug-addiction" target="_blank" rel="noopener">drug addiction</a>. The radio host shared the news of her past addiction live on air last week, admitting she was abusing prescription drugs and also had an alcohol addiction, which led to her checking into the Betty Ford Centre in Palm Springs, California to seek treatment. In a lengthy statement on her Instagram, Jackie O shared that she had received messages from people who are also battling with addiction, but are financially unable to get the same level of help. "Since sharing my story last week, I've been deeply moved by the thousands of messages I've received from people facing challenges similar to mine but unable to afford rehab," she wrote online. "I was fortunate enough to have access to treatment and I recognise how privileged that makes me. Unfortunately, not everyone has the same opportunity. Which is why all my profits from my book which is on sale tomorrow will be donated to Odyssey House Drug and Alcohol Rehabilitation Centre." Jackie O's memoir, The Whole Truth, shares more information about her battle with addiction, while also revealing secrets about her private life and extensive career. She ended the post with a message of thanks for the many people who have supported her and opened up to her with similar stories. "Thank you to everyone who has shared their personal stories with me. I'm still reading through your messages and will do my best to respond to each one. Your honesty and support means the world to me." Henderson opened up about her experience with addiction in a planned reading from her memoir on The Kyle and Jackie O Show last Thursday, where she told her co-host Kyle Sandilands, "I was scared to tell people and say this out loud, I know people will look at me differently and judge me, but I was in a really dark place." Image credits: Instagram

Money & Banking

The financial reality check after a major diagnosis

Once you have received and processed your doctor’s diagnosis, take stock of the situation, because this will determine how you respond and what resources you have available to support you going forward. Who received the diagnosis – you or your spouse (if you have one)? Is it a terminal illness, chronic condition or treatable setback? If you are not yet retired, will you be able to keep working, need a period off work or will this bring forward your retirement? If leaving work temporarily, what are your prospects for re-entering the workforce? Will your partner need to leave their work to care for you (or vice versa)? Once you have clarified and considered this, spring into action as soon as possible. Revisit your spending Healthcare is expensive by any measure. Pensioners and healthcare card holders may get much or all of your treatment covered, but waiting times in the public system can be lengthy. For self-funded retirees, even with private health insurance, there can be considerable out-of-pocket costs: specialist visits, diagnostics, symptom management, physiotherapy and so on. Depending on the type of diagnosis, you may also need to modify your home (install ramps, railings etc.) and/or obtain specialist furniture and equipment. Then comes care requirements – private nurses, retirement living, hospice or palliative care. Your lifestyle may also change, and quickly. Your clothes and shoes may no longer fit if you lose weight rapidly. You may no longer be able to drive. You may need help with household chores – cleaning, cooking, gardening. Covering these requires money if you don’t have family and friends able to lend a helping hand. Carefully look at what supports your new reality demands and whether they will be one-off or ongoing expenses. Some things will need to be purchased, others could be hired to split the cost over the longer term. Secure your income Once you’ve established the impact on your ability to work and your spending needs, determine how you will pay for everything going forward. Your emergency fund can provide short-term cash if you need to stop working suddenly or fork out for large, unexpected bills. Depending on your age and circumstances, it may be worth bringing forward your retirement – allowing you to draw income from superannuation and focus more on your (or your partner’s) health. Check your insurances to see what claims you could make – having paid the premiums, now is the time make use of them. Relevant insurances include total permanent disability, income protection, trauma or critical illness cover. Meanwhile some life insurance policies may pay out based on a specialist’s diagnosis, unlocking much-needed funds sooner. Depending on your diagnosis, policy and the type of insurance, payouts may be a lump sum or smaller payments spaced out over time. Update your estate plans A major diagnosis typically elicits thoughts about mortality, legacy and how you want your loved ones to be provided for. Crucially, it may also influence factors such as guardianship of minors and pets while you are unwell/in hospital, Power of Attorney to cover important legal and financial decisions if you are incapacitated, and palliative care arrangements if required. Before heavy medications, surgeries or further deterioration of your health cloud your judgement, ensure your will and estate plans are updated to fully reflect your current needs and wishes. Look after yourself Stress, shock, anger and despair are common emotions to feel when faced with a major diagnosis. As such, it’s important you look after your mental and emotional wellbeing too. It needn’t cost a cent – you could look to free counselling services available such as Lifeline and Beyond Blue; a daily walk by the beach or through the local park; catching up with loved ones for support and companionship. Keeping your spirits up, as much as you can under the circumstances, can improve your quality of life while also helping you make clearer decisions about your health, finances and relationships – making it arguably the best investment of all. Back that up with sound legal, tax and financial advice. There is much to consider where insurance, superannuation, inheritances, Centrelink and more are involved, and you can’t know everything – especially when your focus is rightly elsewhere! Helen Baker is a licensed Australian financial adviser and author of On Your Own Two Feet: The Essential Guide to Financial Independence for all Women. Helen is among the 1% of financial planners who hold a master’s degree in the field. Proceeds from book sales are donated to charities supporting disadvantaged women and children. Find out more at <a href="http://www.onyourowntwofeet.com.au/">www.onyourowntwofeet.com.au</a> Disclaimer: The information in this article is of a general nature only and does not constitute personal financial or product advice. Any opinions or views expressed are those of the authors and do not represent those of people, institutions or organisations the owner may be associated with in a professional or personal capacity unless explicitly stated. Helen Baker is an authorised representative of BPW Partners Pty Ltd AFSL 548754. Image credits: Shutterstock

Money & Banking

Australia’s fertility rate has reached a record low. What might that mean for the economy?

<div class="theconversation-article-body"><a href="https://theconversation.com/profiles/jonathan-boymal-392960">Jonathan Boymal</a>, <a href="https://theconversation.com/institutions/rmit-university-1063">RMIT University</a>; <a href="https://theconversation.com/profiles/ashton-de-silva-3066">Ashton De Silva</a>, <a href="https://theconversation.com/institutions/rmit-university-1063">RMIT University</a>, and <a href="https://theconversation.com/profiles/sarah-sinclair-385470">Sarah Sinclair</a>, <a href="https://theconversation.com/institutions/rmit-university-1063">RMIT University</a> Australia’s fertility rate has fallen to a new <a href="https://www.abs.gov.au/statistics/people/population/births-australia/latest-release">record low</a> of 1.5 babies per woman. That’s well below the “<a href="https://pubmed.ncbi.nlm.nih.gov/7834459/#:%7E:text=PIP%3A%20Replacement%20level%20fertility%20is,of%202.1%20children%20per%20woman.">replacement rate</a>” of 2.1 needed to sustain a country’s population. On face value, it might not seem like a big deal. But we can’t afford to ignore this issue. The health of an economy is deeply intertwined with the size and structure of its population. Australians simply aren’t having as many babies as they used to, raising some serious questions about how we can maintain our country’s workforce, sustain economic growth and fund important services. So what’s going on with fertility rates here and around the world, and what might it mean for the future of our economy? What can we do about it? <h2>Are lower birth rates always a problem?</h2> Falling fertility rates can actually have some <a href="https://www.rand.org/content/dam/rand/pubs/monograph_reports/2007/MR1274.pdf">short-term benefits</a>. Having fewer dependent young people in an economy can increase workforce participation, as well as boost savings and wealth. Smaller populations can also benefit from <a href="https://www.sciencedirect.com/science/article/abs/pii/S0927537112000620.">increased investment</a> per person in education and health. But the picture gets more complex in the long term, and less rosy. An ageing population can strain pensions, health care and social services. This can hinder economic growth, unless it’s <a href="https://pubmed.ncbi.nlm.nih.gov/21302431/">offset by increased productivity</a>. Other scholars have <a href="https://www.gsb.stanford.edu/faculty-research/publications/end-economic-growth-unintended-consequences-declining-population">warned</a> that a falling population could stifle innovation, with fewer young people meaning fewer breakthrough ideas. <h2>A global phenomenon</h2> The trend towards women having fewer children is not unique to Australia. The global fertility rate has dropped over the past couple of decades, from 2.7 babies per woman in 2000 to <a href="https://www.macrotrends.net/global-metrics/countries/WLD/world/fertility-rate">2.4 in 2023</a>. However, the distribution is not evenly spread. In 2021, 29% of the world’s babies were born in sub-Saharan Africa. This is projected to <a href="https://www.healthdata.org/news-events/newsroom/news-releases/lancet-dramatic-declines-global-fertility-rates-set-transform">rise to 54% by 2100</a>. There’s also a <a href="https://onlinelibrary.wiley.com/doi/full/10.1002/psp.2720">regional-urban divide</a>. Childbearing is often delayed in urban areas and late fertility is more common in cities. In Australia, we see <a href="https://www.abs.gov.au/statistics/people/population/births-australia/latest-release#data-downloads">higher fertility rates</a> in inner and outer regional areas than in metro areas. This could be because of more affordable housing and a better work-life balance. But it raises questions about whether people are moving out of cities to start families, or if something intrinsic about living in the regions promotes higher birth rates. <iframe id="U1wEx" class="tc-infographic-datawrapper" style="border: 0;" src="https://datawrapper.dwcdn.net/U1wEx/1/" width="100%" height="400px" frameborder="0" scrolling="no"></iframe> <h2>Fewer workers, more pressure on services</h2> Changes to the makeup of a population can be just as important as changes to its size. With fewer babies being born and increased life expectancy, the proportion of older Australians who have left the workforce will keep rising. One way of tracking this is with a metric called the old-age dependency ratio – the number of people aged 65 and over per 100 working-age individuals. In Australia, this ratio is currently about 27%. But according to the latest <a href="https://treasury.gov.au/publication/2023-intergenerational-report">Intergenerational Report</a>, it’s expected to rise to 38% by 2063. An ageing population means greater demand for medical services and aged care. As the working-age population shrinks, the tax base that funds these services will also decline. Unless this is offset by technological advances or policy innovations, it can mean higher taxes, longer working lives, or the government providing fewer public services in general. <h2>What about housing?</h2> It’s tempting to think a falling birth rate might be good news for Australia’s stubborn housing crisis. The issues are linked – rising real estate prices have made it difficult for many young people to afford homes, with a significant number of people in their 20s <a href="https://pursuit.unimelb.edu.au/articles/more-australian-adult-children-are-living-with-their-parents-longer">still living with their parents</a>. This can mean delaying starting a family and reducing the number of children they have. At the same time, if fertility rates stay low, demand for large family homes may decrease, impacting one of Australia’s most significant economic sectors and sources of household wealth. <h2>Can governments turn the tide?</h2> Governments worldwide, including Australia, have long experimented with policies that encourage families to have more children. Examples include paid parental leave, childcare subsidies and financial incentives, such as Australia’s “<a href="https://theconversation.com/what-the-baby-bonus-boost-looks-like-across-ten-years-81563">baby bonus</a>”. Many of these efforts have had only limited success. One reason is the rising average age at which women have their first child. In many developed countries, including Australia, the average age for first-time mothers has surpassed <a href="https://www.aihw.gov.au/reports/mothers-babies/australias-mothers-babies/contents/overview-and-demographics/maternal-age">30</a>. As women delay childbirth, they become less likely to have multiple children, further contributing to declining birth rates. Encouraging women to start a family earlier could be one policy lever, but it must be balanced with women’s growing workforce participation and career goals. Research has previously highlighted the factors influencing fertility decisions, including levels of paternal involvement and workplace flexibility. Countries that offer part-time work or maternity leave without career penalties have seen a <a href="https://faculty.wcas.northwestern.edu/mdo738/research/Doepke_Hannusch_Kindermann_Tertilt_Handbook_23.pdf">stabilisation or slight increases</a> in fertility rates. <h2>The way forward</h2> Historically, one of the ways Australia has countered its low birth rate is through immigration. Bringing in a lot of people – especially skilled people of working age – can help offset the effects of a low fertility rate. However, relying on immigration alone is not a long-term solution. The global fertility slump means that the pool of young, <a href="https://www.imf.org/en/Publications/fandd/issues/2020/03/can-immigration-solve-the-demographic-dilemma-peri">educated workers from other countries</a> is shrinking, too. This makes it harder for Australia to attract the talent it needs to sustain economic growth. Australia’s record-low fertility rate presents both challenges and opportunities. On one hand, the shrinking number of young people will place a strain on public services, innovation and the labour market. On the other hand, advances in technology, particularly in artificial intelligence and robotics, may help ease the <a href="https://www.sciencedirect.com/science/article/abs/pii/S0164070420302020">challenges of an ageing population</a>. That’s the optimistic scenario. AI and other tech-driven productivity gains could reduce the need for large workforces. And robotics could assist in aged care, lessening the impact of this demographic shift.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/241577/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> <a href="https://theconversation.com/profiles/jonathan-boymal-392960">Jonathan Boymal</a>, Associate Professor of Economics, <a href="https://theconversation.com/institutions/rmit-university-1063">RMIT University</a>; <a href="https://theconversation.com/profiles/ashton-de-silva-3066">Ashton De Silva</a>, Professor of Economics, <a href="https://theconversation.com/institutions/rmit-university-1063">RMIT University</a>, and <a href="https://theconversation.com/profiles/sarah-sinclair-385470">Sarah Sinclair</a>, Senior Lecturer in Economics, <a href="https://theconversation.com/institutions/rmit-university-1063">RMIT University</a> Image credits: Shutterstock This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/australias-fertility-rate-has-reached-a-record-low-what-might-that-mean-for-the-economy-241577">original article</a>. </div>

Money & Banking

Are older adults more vulnerable to scams? What psychologists have learned about who’s most susceptible, and when

<div class="theconversation-article-body"><a href="https://theconversation.com/profiles/natalie-c-ebner-1527554">Natalie C. Ebner</a>, <a href="https://theconversation.com/institutions/university-of-florida-1392">University of Florida</a> and <a href="https://theconversation.com/profiles/didem-pehlivanoglu-1527551">Didem Pehlivanoglu</a>, <a href="https://theconversation.com/institutions/university-of-florida-1392">University of Florida</a> About 1 in 6 Americans <a href="https://www.census.gov/library/stories/2023/05/2020-census-united-states-older-population-grew.html">are age 65 or older</a>, and that percentage <a href="https://www.ncoa.org/article/get-the-facts-on-older-americans">is projected to grow</a>. Older adults often hold positions of power, have retirement savings accumulated over the course of their lifetimes, and make important financial and health-related decisions – all of which makes them attractive targets for financial exploitation. In 2021, there were more than 90,000 older victims of fraud, according to the FBI. These cases resulted in <a href="https://www.ic3.gov/Media/PDF/AnnualReport/2021_IC3ElderFraudReport.pdf">US$1.7 billion in losses</a>, a 74% increase compared with 2020. Even so, that may be a significant undercount, since embarrassment or lack of awareness <a href="https://assets.aarp.org/rgcenter/econ/fraud-victims-11.pdf">keeps some victims from reporting</a>. <a href="https://ncea.acl.gov/elder-abuse#gsc.tab=0">Financial exploitation</a> represents one of the most common forms of elder abuse. Perpetrators are often individuals in the victims’ inner social circles – family members, caregivers or friends – but can also be strangers. When older adults experience financial fraud, they typically <a href="https://public.tableau.com/app/profile/federal.trade.commission/viz/AgeandFraud/Infographic">lose more money</a> than younger victims. Those losses can have <a href="https://doi.org/10.1057/sj.2012.11">devastating consequences</a>, especially since older adults have limited time to recoup – dramatically reducing their independence, health and well-being. But older adults have been largely neglected in research on this burgeoning type of crime. We are <a href="https://ebnerlab.psych.ufl.edu/natalie-c-ebner-phd/">psychologists who study social cognition</a> and <a href="https://ebnerlab.psych.ufl.edu/didem-pehlivanoglu/">decision-making</a>, and <a href="https://ebnerlab.psych.ufl.edu/">our research lab</a> at the University of Florida is aimed at understanding the factors that shape vulnerability to deception in adulthood and aging. <h2>Defining vulnerability</h2> Financial exploitation involves a variety of exploitative tactics, such as coercion, manipulation, undue influence and, frequently, some sort of deception. The majority of current research focuses on <a href="https://doi.org/10.1002/acp.3052">people’s ability to distinguish between truth and lies</a> during interpersonal communication. However, deception occurs in many contexts – increasingly, over the internet. Our lab conducts laboratory experiments and real-world studies to measure susceptibility under various conditions: investment games, lie/truth scenarios, phishing emails, text messages, fake news and deepfakes – fabricated videos or images that are created by artificial intelligence technology. To study how people respond to deception, we use measures like surveys, brain imaging, behavior, eye movement and heart rate. We also collect health-related biomarkers, such as being a carrier of <a href="https://pubmed.ncbi.nlm.nih.gov/8346443/">gene variants</a> that increase risk for Alzheimer’s disease, to identify individuals with particular vulnerability. And <a href="https://doi.org/10.20900/agmr20230007">our work</a> shows that an older adult’s ability to detect deception is not just about their individual characteristics. It also depends on how they are being targeted. <figure class="align-center zoomable"><a href="https://images.theconversation.com/files/593784/original/file-20240513-16-j9zy1i.png?ixlib=rb-4.1.0&q=45&auto=format&w=1000&fit=clip"><img src="https://images.theconversation.com/files/593784/original/file-20240513-16-j9zy1i.png?ixlib=rb-4.1.0&q=45&auto=format&w=754&fit=clip" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px" srcset="https://images.theconversation.com/files/593784/original/file-20240513-16-j9zy1i.png?ixlib=rb-4.1.0&q=45&auto=format&w=600&h=339&fit=crop&dpr=1 600w, https://images.theconversation.com/files/593784/original/file-20240513-16-j9zy1i.png?ixlib=rb-4.1.0&q=30&auto=format&w=600&h=339&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/593784/original/file-20240513-16-j9zy1i.png?ixlib=rb-4.1.0&q=15&auto=format&w=600&h=339&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/593784/original/file-20240513-16-j9zy1i.png?ixlib=rb-4.1.0&q=45&auto=format&w=754&h=426&fit=crop&dpr=1 754w, https://images.theconversation.com/files/593784/original/file-20240513-16-j9zy1i.png?ixlib=rb-4.1.0&q=30&auto=format&w=754&h=426&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/593784/original/file-20240513-16-j9zy1i.png?ixlib=rb-4.1.0&q=15&auto=format&w=754&h=426&fit=crop&dpr=3 2262w" alt="A figure with two circles and an arrow between them. One circle shows icons that symbolize individual susceptibility to deception -- like a brain, and a walking cane -- while the other has icons of types of deception, like mail or a text message." /></a><figcaption>Vulnerability depends not only on the person, but also the type of fraud being used. Natalie Ebner and Didem Pehlivanoglu</figcaption></figure> <h2>Individual risk factors</h2> Better cognition, social and emotional capacities, and brain health are all associated with less susceptibility to deception. Cognitive functions, such as how quickly our brain processes information and how well we remember it, <a href="https://doi.org/10.1177/1745691619827511">decline with age</a> and impact decision-making. For example, among people around 70 years of age or older, declines in analytical thinking are associated with <a href="https://doi.org/10.1037/xap0000426">reduced ability to detect false news stories</a>. Additionally, low memory function in aging is associated with <a href="https://doi.org/10.1093/geronb/gby036">greater susceptibility to email phishing</a>. Further, according to recent <a href="https://osf.io/preprints/osf/6f2y9">research</a>, this correlation is specifically pronounced among older adults who carry a gene variant that is a genetic risk factor for developing Alzheimer’s disease later in life. Indeed, some research suggests that greater financial exploitability may serve as <a href="https://doi.org/10.1016/j.neubiorev.2022.104773">an early marker</a> of disease-related cognitive decline. Social and emotional influences are also crucial. Negative mood can enhance somebody’s ability to detect lies, while <a href="https://doi.org/10.1037/xap0000426">positive mood in very old</a> age can impair a person’s ability to detect fake news. Lack of support and loneliness exacerbate susceptibility to deception. Social isolation during the COVID-19 pandemic has led to <a href="https://doi.org/10.1093/gerona/glaa077">increased reliance on online platforms</a>, and older adults with lower digital literacy are <a href="https://doi.org/10.1093/geront/gnac188">more vulnerable to fraudulent emails and robocalls</a>. Finally, an individual’s brain and body responses play a critical role in susceptibility to deception. One important factor is <a href="https://doi.org/10.1016/j.tins.2020.10.007">interoceptive awareness</a>: the ability to accurately read our own body’s signals, like a “gut feeling.” This awareness is correlated with <a href="https://doi.org/10.1093/geroni/igad104.3714">better lie detection</a> in older adults. According to <a href="https://doi.org/10.1093/gerona/glx051">a first study</a>, financially exploited older adults had a significantly smaller size of insula – a brain region key to integrating bodily signals with environmental cues – than older adults who had been exposed to the same threat but avoided it. Reduced insula activity is also related to greater difficulty <a href="https://doi.org/10.1073/pnas.1218518109">picking up on cues</a> that make someone appear less trustworthy. <h2>Types of effective fraud</h2> Not all deception is equally effective on everyone. <a href="https://doi.org/10.1145/3336141">Our findings</a> show that email phishing that relies on reciprocation – people’s tendency to repay what another person has provided them – was more effective on older adults. Younger adults, on the other hand, were more likely to fall for phishing emails that employed scarcity: people’s tendency to perceive an opportunity as more valuable if they are told its availability is limited. For example, an email might alert you that a coin collection from the 1950s has become available for a special reduced price if purchased within the next 24 hours. There is also evidence that as we age, we have greater difficulty detecting the “wolf in sheep’s clothing”: someone who appears trustworthy, but is not acting in a trustworthy way. In <a href="https://doi.org/10.1038/s41598-023-50500-x">a card-based gambling game</a>, we found that compared with their younger counterparts, older adults are more likely to select decks presented with trustworthy-looking faces, even though those decks consistently resulted in negative payouts. Even after learning about untrustworthy behavior, older adults showed greater difficulty overcoming their initial impressions. <h2>Reducing vulnerability</h2> Identifying who is especially at risk for financial exploitation in aging is crucial for preventing victimization. We believe interventions should be tailored, instead of a one-size-fits-all approach. For example, perhaps machine learning algorithms could someday determine the most dangerous types of deceptive messages that certain groups encounter – such as in text messages, emails or social media platforms – and provide on-the-spot warnings. Black and Hispanic consumers are <a href="https://www.ftc.gov/system/files/documents/reports/combating-fraud-african-american-latino-communities-ftcs-comprehensive-strategic-plan-federal-trade/160615fraudreport.pdf">more likely to be victimized</a>, so there is also a dire need for interventions that resonate with their communities. Prevention efforts would benefit from taking a holistic approach to help older adults reduce their vulnerability to scams. Training in <a href="https://doi.org/10.1007/s40520-019-01259-7">financial, health</a> and <a href="https://www.nature.com/articles/s41598-022-08437-0.pdf">digital literacy</a> are important, but so are programs to <a href="https://doi.org/10.1186/s12889-021-10363-1">address loneliness</a>. People of all ages need to keep these lessons in mind when interacting with online content or strangers – but not only then. Unfortunately, financial exploitation often comes from individuals close to the victim.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/227991/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> <a href="https://theconversation.com/profiles/natalie-c-ebner-1527554">Natalie C. Ebner</a>, Professor of Psychology, <a href="https://theconversation.com/institutions/university-of-florida-1392">University of Florida</a> and <a href="https://theconversation.com/profiles/didem-pehlivanoglu-1527551">Didem Pehlivanoglu</a>, Postdoctoral Researcher, Psychology, <a href="https://theconversation.com/institutions/university-of-florida-1392">University of Florida</a> Image credits: Shutterstock This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/are-older-adults-more-vulnerable-to-scams-what-psychologists-have-learned-about-whos-most-susceptible-and-when-227991">original article</a>. </div>

Money & Banking

Could a recent ruling change the game for scam victims? Here’s why the banks will be watching closely

<div class="theconversation-article-body"><a href="https://theconversation.com/profiles/jeannie-marie-paterson-6367">Jeannie Marie Paterson</a>, <a href="https://theconversation.com/institutions/the-university-of-melbourne-722">The University of Melbourne</a> and <a href="https://theconversation.com/profiles/nicola-howell-1160247">Nicola Howell</a>, <a href="https://theconversation.com/institutions/queensland-university-of-technology-847">Queensland University of Technology</a> In Australia, it’s scam victims who foot the bill for the overwhelming majority of the money lost to scams each year. A 2023 <a href="https://download.asic.gov.au/media/mbhoz0pc/rep761-published-20-april-2023.pdf">review</a> by the Australian Securities and Investments Commission (ASIC) found banks detected and stopped only a small proportion of scams. The total amount banks paid in compensation paled in comparison to total losses. So, it was a strong statement this week when it was revealed the Australian Financial Conduct Authority (AFCA) had <a href="https://my.afca.org.au/searchpublisheddecisions/kb-article/?id=f9f8941f-7379-ef11-ac20-000d3a6acbb4">ordered</a> a bank – HSBC – to compensate a customer who lost more than $47,000 through a sophisticated bank impersonation or “spoofing” scam. This decision was significant. An AFCA determination is binding on the relevant bank or other financial institution, which has <a href="https://www.afca.org.au/make-a-complaint#:%7E:text=Any%20determinations%20we%20make%20are,service%20is%20free%20to%20access">no direct right of appeal</a>. It could have implications for the way similar cases are treated in future. The ruling comes amid a broader push for sector-wide reforms to give banks more responsibility for <a href="https://www.fico.com/blogs/detection-prevention-tackling-scams-every-angle">detecting</a>, deterring and responding to scams, as opposed to simply telling customers to be “more careful”. Here’s what you should know about this landmark ruling, and what it might mean for consumers. <h2>A highly sophisticated ‘spoofing’ scam</h2> You might be familiar with “push payment” scams that trick the victim into paying money to a dummy account. These include the “<a href="https://www.acma.gov.au/articles/2024-01/scam-alert-re-emergence-hi-mum-scam">mum I’ve lost my phone</a>” scam and some <a href="https://www.scamwatch.gov.au/types-of-scams/online-dating-and-romance-scams">romance</a> scams. The <a href="https://www.smh.com.au/national/dragged-kicking-and-screaming-banking-giant-loses-battle-against-scam-victim-20241015-p5kide.html">recent case</a> concerned an equally noxious “bank impersonation” or “spoofing” scam. The complainant – referred to as “Mr T” – was tricked into giving the scammer access to his HSBC account, from which an unauthorised payment was made. The scammer sent Mr T a text message, purportedly asking him to investigate an attempted Amazon transaction. In an effort to respond to the (fake) unauthorised Amazon purchase, Mr T revealed security passcodes to the scammer, enabling them to transfer $47,178.54 from his account and disappear with it. The fact Mr T was dealing with scammers was far from obvious – scammers had information about him one might reasonably expect only a bank would know, such as his bank username. On top of this, the scam text message appeared in a thread of other legitimate text messages that had previously been sent by the real HSBC. <h2>AFCA’s ruling</h2> HSBC argued to AFCA that having to pay compensation should be ruled out under the <a href="https://download.asic.gov.au/media/lloeicwb/epayments-code-published-02-june-2022.pdf">ePayments Code</a>, a voluntary code of practice administered by ASIC. Under this code, a bank is not required to compensate a customer for an unauthorised payment if that customer has disclosed their passcode. The bank argued the complainant had voluntarily disclosed these codes to the scammer, meaning the bank didn’t need to pay. AFCA disagreed. It noted the very way the scam had worked was by creating a sense of urgency and crisis. AFCA considered that the complainant had been manipulated into disclosing the passcodes and had not acted voluntarily. AFCA awarded compensation covering the vast majority of the disputed transaction amount, lost interest charged to a home loan account, and $5,000 towards Mr T’s legal costs. It also ordered the bank to pay compensation of $1,000 for poor customer service in dealing with the matter, including communication delays. <h2>Other cases may be more complex</h2> In this case, the determination was relatively straightforward. It found Mr T had not voluntarily disclosed his account information, so was not excluded from being compensated under the ePayments Code. However, many payment scams fall outside the ePayments Code because they involve the customer directly sending money to the scammer (as opposed to the scammer accessing the customer’s account). That means there is no code to direct compensation. Still, AFCA’s jurisdiction is broader than merely applying a code. In considering compensation for scam losses, AFCA must consider what is “fair in all the circumstances”. This means taking into account: <ul> <li>legal principles</li> <li>applicable industry codes</li> <li>good industry practice</li> <li>previous AFCA decisions.</li> </ul> Relevant factors might well include whether the bank was proactive in responding to known scams, as well as the challenges for individual customers in identifying scams. <h2>Broader reforms are on the way</h2> At the heart of this determination by AFCA is a recognition that, increasingly, detecting sophisticated scams can be next to impossible for customers, which can mean they don’t act voluntarily in making payments to scammers. Similar reasoning has informed a range of recent reform initiatives that put more responsibility for detecting and responding to scams on the banks, rather than their customers. In 2023, Australia’s banking sector committed to a new “<a href="https://www.ausbanking.org.au/scam-safe-accord/">Scam-Safe Accord</a>”. This is a commitment to implement new measures to protect customers, including a confirmation of payee service, delays for new payments, and biometric identity checks for new accounts. Changes on the horizon could be more ambitious and significant. The proposed <a href="https://treasury.gov.au/consultation/c2024-573813">Scams Prevention Framework</a> legislation would require Australian banks, telcos and <a href="https://pursuit.unimelb.edu.au/articles/accc-vs-big-tech-round-10-and-counting">digital platforms</a> to take reasonable steps to prevent, detect, report, disrupt and respond to scams. It would also include a compulsory external dispute resolution process, like AFCA’s, for consumers seeking compensation for when any of these institutions fail to comply. Addressing scams is not just an Australian issue. In the United Kingdom, newly introduced <a href="https://www.bbc.com/news/articles/cy94vz4zd7zo">rules</a> make paying and receiving banks responsible for compensating customers, for scam losses up to £85,000 (A$165,136), unless the customer is grossly negligent.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/241558/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> <a href="https://theconversation.com/profiles/jeannie-marie-paterson-6367">Jeannie Marie Paterson</a>, Professor of Law, <a href="https://theconversation.com/institutions/the-university-of-melbourne-722">The University of Melbourne</a> and <a href="https://theconversation.com/profiles/nicola-howell-1160247">Nicola Howell</a>, Senior lecturer, <a href="https://theconversation.com/institutions/queensland-university-of-technology-847">Queensland University of Technology</a> Image credits: Shutterstock This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/could-a-recent-ruling-change-the-game-for-scam-victims-heres-why-the-banks-will-be-watching-closely-241558">original article</a>. </div>

Money & Banking

King Charles' $97k arrival gift slammed as "waste of money"

King Charles and Queen Camilla are set for a lavish welcome to commemorate their first visit since 2018, but taxpayers are not impressed with the massive cost. The sails of the Sydney Opera House will be illuminated from 8pm on Friday for four minutes with images from previous royal visits intended to show the "diverse ways in which Their Majesties have engaged with and celebrated NSW and Australia over the years." “We are lighting up the Sydney Opera House to warmly welcome The King and Queen to our beautiful harbour city," Premier Chris Minns said in a statement. "The photo projection on the Opera House sails celebrates a historic moment - The King’s first visit to NSW as Sovereign - and is a fitting tribute." The gesture does not come cheap, costing taxpayers an estimated $97,030, and many were unhappy about it. "Cannot support wasting our taxes on people who wouldn’t be here if we didn’t pay," one person wrote on Facebook. "At a time when rents are sky high ...more and more homeless.. Hospitals are overcrowded...Food and petrol prices are ridiculous...Do you really think it excites battling Aussies...having money spent this way?" another person asked. "How many homeless could be housed with the money spent on a visit by millionaires, paid by us?" another wrote. "Waste of money! Channel the funds to the needy. King who with the horse?!," another remarked. However, there were a few others who expressed their excitement about the royal visit. "I will definitely head in with the kids to see this," one wrote. "As a monarchist, yes I'm going there to warmly welcome them," another commented. "Can’t wait for their majesties arrival," a third added. Royal fans will have a chance to meet or see the monarchs, as they plant to engage with members of the public on the Sydney Opera House Forecourt on October 22nd at 4.20pm. Their appearance will be followed by a Fleet Review on Sydney Harbour, featuring an Australian Defence Force fly past. Members of the public can see the ships and fly past from various vantage points including Farm Cove, Royal Botanic Gardens and Mrs Macquarie’s Chair at approximately 4.50pm. Image: Instagram

Money & Banking

Pokies? Lotto? Sports betting? Which forms of problem gambling affect Australians the most?

<div class="theconversation-article-body"><a href="https://theconversation.com/profiles/alex-russell-133860">Alex Russell</a>, <a href="https://theconversation.com/institutions/cquniversity-australia-2140">CQUniversity Australia</a>; <a href="https://theconversation.com/profiles/matthew-browne-97705">Matthew Browne</a>, <a href="https://theconversation.com/institutions/cquniversity-australia-2140">CQUniversity Australia</a>, and <a href="https://theconversation.com/profiles/matthew-rockloff-569">Matthew Rockloff</a>, <a href="https://theconversation.com/institutions/cquniversity-australia-2140">CQUniversity Australia</a> Gambling, especially sports and race betting, is a hot political issue at the moment. This is largely due to the recommendations from a 2023 report from a nonpartisan federal government committee, chaired by the late Peta Murphy, called <a href="https://www.aph.gov.au/Parliamentary_Business/Committees/House/Social_Policy_and_Legal_Affairs/Onlinegamblingimpacts/Report">You Win Some, You Lose More</a>. This report <a href="https://www.aph.gov.au/Parliamentary_Business/Committees/House/Social_Policy_and_Legal_Affairs/Onlinegamblingimpacts/Report/List_of_recommendations">recommended</a> “the Australian government, with the cooperation of the states and territories, implement a comprehensive ban on all forms of advertising for online gambling”. This has led to lots of debate and controversy. Recently, Peter V’landys, head of the NRL and Racing NSW, <a href="https://www.smh.com.au/politics/federal/nanny-state-nrl-afl-storm-the-field-over-gambling-ads-20240920-p5kc2q.html">claimed</a> lotteries were more harmful than race and sports betting combined, citing independent statistics. Let’s explore the relative harm of different types of gambling and see if this claim holds up. <h2>Australians love a punt</h2> Gambling is widespread in Australia, with <a href="https://www.gamblingresearch.org.au/publications/second-national-study-interactive-gambling-australia-2019-20">more than half of adults</a> engaging in at least one form each year. According to the <a href="https://www.gamblingresearch.org.au/publications/second-national-study-interactive-gambling-australia-2019-20">latest national data</a>, lotteries are the most common type (40% of Australians buy a ticket annually), followed by race betting (17%), pokies (16%), scratchies (15.7%) and sports betting (9.6%). However, the popularity of a gambling form doesn’t necessarily reflect its harm. Different gambling activities have distinct characteristics. Two key factors mean that some gambling forms are more harmful than others: the speed of gambling and bet size. Pokies allow for frequent, small bets, with spins every three seconds. Race and sports betting can involve much larger sums and betting that is relatively fast, but still slower than pokie spins. Sports betting, in particular, is getting faster with in-play betting and <a href="https://pubmed.ncbi.nlm.nih.gov/30386964/">microbetting</a>. <figure><iframe src="https://www.youtube.com/embed/hI_XFOc4is0?wmode=transparent&start=0" width="440" height="260" frameborder="0" allowfullscreen="allowfullscreen"></iframe><figcaption>Poker machines, or ‘pokies’ are the biggest single source of gambling losses in Australia.</figcaption></figure> Lotteries, on the other hand, are much slower-paced. People typically spend a small amount on tickets and wait for a draw to find out if they’ve won. Although it’s possible to spend a lot on tickets, <a href="https://www.qgso.qld.gov.au/statistics/theme/society/gambling/australian-gambling-statistics">people tend not to</a>, unlike with faster gambling forms. The average spend on pokies among the 16% who play them is around $4,782 per year, compared to an average spend on lotteries of $377 per year. These are averages. Most won’t spend these amounts but some will spend far more, which raises the average amount. V’landys’ claim about lotteries being more harmful than race and sports betting was based on “independent statistics”. He said that of 100 people seeking help from a gambling hotline, 70 had issues with pokies, 15 with lotteries, eight with race betting, four with sports betting, and three with casinos. We were unable to verify these figures – if anyone has the data, we’d love to see the research to assess them. However, we do have publicly available data. <h2>What the data say</h2> The NSW GambleAware website’s <a href="https://www.gambleaware.nsw.gov.au/-/media/ghs-annual-activity-report-2020-21.ashx?rev=e070f9c8bdbf4031816a852f27246c54&hash=C5FC3AA23BE5F2EF69D551A5E2292BA9#:%7E:text=Of%20the%20clients%20receiving%20counselling,36.9%25%20of%20all%20female%20clients.">2020-21</a> report shows that of 2,886 people seeking help, 73.3% identified pokies as their primary form of gambling, while only 13 people (less than 1%) listed lotteries. Race betting accounted for 13.1%, and sports betting for 7.9%. These patterns were consistent with <a href="https://www.gambleaware.nsw.gov.au/about-us/corporate-documents">previous years</a>. People who experience problems also usually take part in more than one form of gambling, as the NSW report showed. When these secondary gambling activities were considered, sports betting was cited by 35.5%, race betting by 33.5%, pokies by 19.5%, and lotteries by 13.7%. <h2>What we discovered</h2> The best evidence on gambling problems and harm comes from large-scale prevalence studies, typically commissioned by governments and conducted by independent researchers. These studies offer high-quality insights into how each gambling form contributes to problems. While one prevalence study is great, our team recently combined data from seven national and state-based prevalence studies. This resulted in a very high-quality dataset that we can use to study this question. In <a href="https://akjournals.com/view/journals/2006/12/1/article-p182.xml">our analysis</a>, we used statistical techniques to show how strongly each gambling form is associated with problems. These techniques give us regression coefficients, which are just numbers that tell us how strong the association is. A higher number means a stronger association between that form and gambling problems. The most problematic form was pokies (coefficient = 0.147), followed by casino games (0.136), sports betting (0.068) and race betting (0.038). Lotteries, with a coefficient of 0.001, were the least problematic and were not statistically significant even in our large sample. As you might guess from such a low number, there’s very little relationship between lotteries and gambling problems. <h2>What about prevalence?</h2> Prevalence matters too – while pokies were most strongly associated with problems, the number of people participating in each gambling form is also important. Let’s consider an analogy – a car that gives out a lot of exhaust fumes. That car is harmful, but if virtually no one owns one, then it’s not going to account for much pollution. The same idea applies for gambling forms. If a gambling form is very harmful but very few people do it, it doesn’t account for many problems in the population. It works the other way, too – if there is a very clean type of car that many people drive, they also won’t add up to much pollution. Similarly, if we have gambling forms that have very little association with problems, it won’t add up to many problems in the population, even if lots of people take part. The regression coefficients tell us how problematic each gambling form is. Prevalance tells us how many people do it. When we combine these two bits of information, we can work out the degree of problems in the community that come from each form. When we did this, pokies were responsible for 52-57% of gambling problems in the community. Sports and race betting each contributed 9-11%, with a combined total of around 20%. Lotteries accounted for just 0.1-1% of problems. Even if we include scratchies as part of lotteries, this only adds another 2-5% of problems, still far below sports and race betting. <hr /> <iframe id="quxHH" class="tc-infographic-datawrapper" style="border: 0;" src="https://datawrapper.dwcdn.net/quxHH/" width="100%" height="400px" frameborder="0" scrolling="no"></iframe> <hr /> <h2>The real issue</h2> What’s the takeaway? Lotteries are widely played but are not typically associated with much harm. Sports and race betting, despite having fewer participants, are more harmful due to their faster pace and the potential for large, frequent bets. Lotteries involve slower betting and lower spending, making them much less risky. If we aim to reduce gambling harm in our community, the focus should be on pokies, which are widespread in pubs and clubs <a href="https://akjournals.com/view/journals/2006/12/3/article-p721.xml">outside WA</a>, casino games and race and sports betting. These forms have features that make them far more harmful than slower-paced gambling like lotteries.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/240665/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> <a href="https://theconversation.com/profiles/alex-russell-133860">Alex Russell</a>, Principal Research Fellow, <a href="https://theconversation.com/institutions/cquniversity-australia-2140">CQUniversity Australia</a>; <a href="https://theconversation.com/profiles/matthew-browne-97705">Matthew Browne</a>, Senior Lecturer in Statistics, <a href="https://theconversation.com/institutions/cquniversity-australia-2140">CQUniversity Australia</a>, and <a href="https://theconversation.com/profiles/matthew-rockloff-569">Matthew Rockloff</a>, Head, Experimental Gambling Research Lab, <a href="https://theconversation.com/institutions/cquniversity-australia-2140">CQUniversity Australia</a> Image credits: Shutterstock This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/pokies-lotto-sports-betting-which-forms-of-problem-gambling-affect-australians-the-most-240665">original article</a>. </div>

Money & Banking

Real estate agent flees the country after stealing from clients

A real estate agent from Melbourne has allegedly fled the country after reportedly taking off with hundreds of thousands of dollars she stole from clients and employees. According to <a href="https://www.9news.com.au/national/real-estate-agent-debra-lawry-accused-of-stealing-hundreds-of-thousands-from-clients-and-employees/29121a3e-546c-44fe-8dff-70253c14a8b0" target="_blank" rel="noopener">9News</a>, Debra Lawry, who traded as Debra Watchman with Ray White Romsey, has been accused of stealing money from her clients and staff by emptying the company's trust accounts and telling her colleagues she was in hospital while actually flying to Europe at the end of last month. One of Lawry's alleged victims is primary school teacher Shay Preston, who had just sold her family home with the estate agency. While she got the deposit back from Ray White, the theft cost the single mum thousands of dollars in extra expenses in the meantime. "It was very hard, very anxious, very stressful," Preston told 9News. "It's been a very stressful month." While clients are among those who have been stolen from, employees have also been impacted and are allegedly owed tens of thousands of dollars in unpaid super, leave entitlements and commission, including from Ms Preston's sale. "I felt horrible, they have done, they were doing a job for us and regardless of who they were working under, they did a job," Preston said. Staff at the agency claim they discovered their boss had been trying to book long-term accommodation in Italy after they found her office cleared out. "I hope she steps one toe out of wherever she is and just they get her, because that's a lot of people that she's hurt," Preston said. In the lead-up to Lawry's disappearance, Consumer Affairs Victoria publicly announced it was looking to suspend or cancel her estate licences, alleging she had deliberately failed to comply with auditing obligations over the last four years. Image credits: Ray White

Legal

"What a score": Woman finds rare gems in Vinnie's op shop

One lucky thrift shopper has stumbled upon a rare find in her local charity shop, spotting stunning opal earrings on sale for just $2. The shopper took to Facebook to share her find, posting a photo of the gold earrings adorned with a series of blue opals that she got from a Vinnie's op-shop in Queensland. Many were quick to agree that they were "such a rare find" because of the low price, as admirers described the jewellery as "Pretty", "amazing" and "beautiful". "Holy moly," one person exclaimed. "I can't breathe," one other said. "What a score," another agreed. While some people were skeptical that the gems weren't real, others said, "There's no way someone would set that many beautiful opals into costume jewellery so I'd say you have found a unicorn there." "They most certainly look genuine opal and diamond," another agreed — and so do the experts. Sebastian Heffernan from Lightning Ridge Opal mines told <a href="https://au.news.yahoo.com/womans-rare-2-find-at-vinnies-op-shop-worth-1000-absolute-steal-042951545.html" target="_blank" rel="noopener">Yahoo News</a> that while it's difficult to determine based on photos alone, the opals "don't appear to be fake". "It's normally pretty obvious when they are," he explained. "They would look a little bit too perfect a lot of the time. Whereas these ones, you can see that some of them have little dots of colour, some have medium flashes." Assuming the opals are real but the diamonds are fake and the gold is plated, rather than solid, Sebastian guessed the earrings could sell for just couple of hundred. However, Wayne Sedawie, who owns Opal and Gem Stone Auctions, reckons the lucky thrifter could fetch close to $1,000 for the earrings, if resold or cashed in to a reseller, and suggested she get them valued. "It's definitely good to maybe get them looked at by someone in person because they do look quite nice from the photo, and the metal itself could be worth a little bit if it is actual gold," Sebastian added. "But either way, two bucks is an absolute steal". "That's such a great find. They're beautiful," Wayne agreed. "Just clean them up and they'll last a thousand years." Image credits: Facebook

Money & Banking

10 signs you’re not on the right financial path

Dreaming of owning a big house, nice car and a boat? Or just having enough cash to be comfortable? Here are 10 signs that you are not (yet) on the path to financial freedom. 1. You don't think about ways to make extra money If you are paid a salary and nothing more, you are limited in the ways you can get ahead. The only way to save is to spend less. But if you switch it up and start to look for ways to earn more, your horizons open up. Most of the world's super wealthy have more than one income stream – some of which are usually passive, requiring no regular input. This could be something such as rental income from an investment property or the sale of a product such as an ebook. Add in some sensible savings habits and you will be on your way. 2. You leave your savings in a savings account If you stick your cash in a savings account, it is basically doing nothing. You are better to look at ways to put that money to work. You could put it in a managed fund, buy shares or even lend it out via a peer-to-peer platform, to get a better return. Make sure you get good advice to understand what you are doing. 3. You borrow to buy Borrowing to buy a house is fine. Borrowing to buy a car is (generally) not. If you are putting all your purchases on finance or credit card and paying them off with high rates of interest, you are pouring money down the drain. Live within your means if you want to get rich. 4. You don't know where your money goes The first step to getting on the right track is to have a clear idea of what you're spending money on. If you don't know, chances are you're wasting it. Have a look through your recent bank statements, draw up a budget. Stamp out some discretionary spending and you'll have more of that money to put to work that we mentioned earlier. 5. You're putting off planning for your retirement If you think you are too young to have to worry about the future, you are doing yourself a huge disservice. When you are working towards a long-term financial goal, such as retirement, time is a huge asset to have on your side. The power of compounding means that any returns you make in a vehicle such as your KiwiSaver account then attract their own returns, over and over each year until you withdraw the money. The later you start saving, the more of that compounding power you miss. 6. You hate risk It is great to be careful with your money but if you never take a risk, you miss out on returns. Over the long term, the biggest gains are usually from riskier investments, such as equities. You may also find ways to wealth by getting out of your comfort zone. Quitting your job and starting a new business is risky and scary, but could pay off if you have planned it well and know your stuff. 7. You don't have a plan If you don't know how you're going to get rich, it probably isn't going to happen. Write down your goals. What do you want to achieve this week, month and year? What about in 10 years? If you can, identify someone who is in a position you'd like to get to and find out what they did to get there. Work out what you need to do to follow suit and break it down into small, achievable steps. 8. You don't pay yourself first If you have decided to save money and think you'll just put aside everything that is left in your account at the end of the month, you will be horribly disappointed. This method almost always fails because there is invariably nothing left. Pay yourself first. Using your budget and plan, put aside the amount that you have worked out you can afford to save as soon as you get paid, and then live off the rest. 9. You think you're bad with money It's a self-fulfilling prophecy. If you think you are bad with money, you won't pay any attention to your finances and they will get out of control. Stop thinking money is some sort of secret club that you could not possibly understand. Everyone can get a handle on it. 10. You don't know the basics But having said that, it's important to get a good knowledge of the basic stuff. If you are not clear how your credit card works, or how your mortgage interest is calculated, get someone to help you break it down and bust the jargon. Websites such as Sorted have good tools or you can seek financial advice from your bank or an adviser. Image credits: Shutterstock Written by Susan Edmonds. First appeared on <a href="http://www.stuff.co.nz/" target="_blank" rel="noopener">Stuff.co.nz</a>.

Money & Banking

5 ways to reduce everyday bills

It’s not uncommon to get to the end of the month and be surprised by a figure in your bills. But this surprise needn’t be unpleasant. There is wide a range of simple measures you can employ to reduce your monthly bills without too much effort. Follow these five simple tips and save money. 1. Food and groceries Food can be a problem area in the average Australian’s budget, either because we’re physically eating too much, eating out too much or spending too much money on groceries. But that doesn’t mean you have to transition to a Spartan diet. Here’s how you can save on your grocery bill: <ul> <li>Reduce the amount of times you’re eating out or getting takeout a week</li> <li>Use a shopping list and coupons, pay for groceries (this means you’re less likely to splurge on items that you don’t need) and buy more non-perishable foods to store and save</li> <li>Consider starting a garden and grow your own fruit and veggies</li> </ul> 2. Energy Many people have found their energy bills have been increasingly steady over the past through years, but this doesn’t mean you have to be part of that trend. With a little bit of ingenuity and not a lot of fuss you can make your house energy efficient and enjoy huge power bill savings: <ul> <li>Switch to energy-efficient light bulbs. In many cases these bulbs do cost more than traditional bulbs, but they use much less energy and can last up to 10 times longer</li> <li>Unplug unused electrical devices that are draining electricity</li> <li>Make sure you home is airtight to prevent cold drafts in winter and the loss of cool air in summer. This will also reduce your heating/cooling bills accordingly</li> </ul> 3. Cars As fuel, registration and maintenance costs start to pile up, a car can seem less like a convenience and more like a money pit rolling around on four wheels. That being said, there is a range of ways you can enjoy the access vehicle ownerships provides, without having to pay through your nose: <ul> <li>Underinflated tyres reduces the value of your cars fuel economy significantly, so make sure you take a couple of minutes to check the air pressure and reinflate once a month</li> <li>Consider selling a vehicle if you’re not using it often. Without taking the cost of parking and toll roads into account driving vehicles costs thousands of dollars a year</li> <li>Use more public transport and consider setting up car pools with friends/colleagues</li> </ul> 4. Grooming and beauty Looking and feeling great is important, but it doesn’t necessarily have to be a hugely expensive ordeal. With a little bit of ingenuity, creativity and willingness to not spend $10,000 on that jewel encrusted headdress you can still be the belle/male-belle of the ball without breaking the bank: <ul> <li>Reduce the amount of money you spend on clothing by keeping your eye on sales</li> <li>Consider lower cost alternatives to your favourite beauty products</li> <li>Cut back on the amount of times you have your hair cut and styled</li> </ul> 5. Additional entertainment expenses Your deluxe gym membership might give you access to the power lifting body attack class, but are you really getting the full value for it and the other regular entertainment expenses you’ve signed up for? There are still ways to stay entertained without having to break the bank every week. <ul> <li>Consider cancelling club memberships for places you don’t visit often</li> <li>Investigate free events and inexpensive entertainment ideas like cheap movies Tuesdays</li> <li>Magazine and newspaper subscriptions can also become expensive if you’re not actually reading the papers, as well as pay television services that can be easily eliminated</li> </ul> Image credits: Shutterstock

Money & Banking

The surprising unknown road rule that is costing drivers

A woman has issued a warning to Aussie drivers after being threatened with a hefty fine for a common car decoration. Janelle McEvoy, a young woman from Perth, took to TikTok to recall the moment she learned that she could be facing a fine for having an air freshener hanging from her car’s rear view mirror. “I randomly got breath tested on the way to an event this morning and the police officer told me when I get home I need to remove this hanging from my car to avoid the $100 fine and the demerit point,” she said in her TikTok video, which has since had nearly 2 million views. “Doesn’t everyone have one of these hanging from their car? Where is it supposed to go?” Thousands of people flocked to the comments on the video to share their surprise over the obscure road rule, with one person writing, “The way my jaw dropped when you showed what it was cause I bought the exact same thing not too long ago.” Another added, “That’s crazy, I have like four air fresheners and two crystal chains hanging from my car.” The rule, which varies between states, can carry fines and possibly the loss of demerit points, if a police officer deems that the driver’s vision is obstructed from whatever is hanging from the mirror. In NSW, drivers without a clear view of the road can be fined $410 fine and have three demerit points issued. In other Aussie states, the fine for obstructed vision can range between $100 and $361. Image credits: Shutterstock

Money & Banking

What is bankruptcy?

<div class="theconversation-article-body"><a href="https://theconversation.com/profiles/jason-harris-147254">Jason Harris</a>, <a href="https://theconversation.com/institutions/university-of-sydney-841">University of Sydney</a> <blockquote> "Capitalism without insolvency is like Christianity without Hell." </blockquote> Those were the <a href="https://time.com/archive/6882727/the-growing-bankruptcy-brigade/">words</a> of former Apollo 8 commander Frank Borman, speaking as chairman of Eastern Airlines in the United States in the early 1980s. That company later <a href="https://www.airwaysmag.com/legacy-posts/eastern-files-for-chapter-11-bankruptcy">entered</a> Chapter 11 bankruptcy itself, in an attempt to deal with a staggering amount of debt. We all know what it means to run out of money, but what exactly is bankruptcy? It’s certainly been in the news a lot. Tupperware <a href="https://theconversation.com/tupperware-has-filed-for-bankruptcy-is-multi-level-marketing-in-trouble-239387">filed</a> for it last month. Two Australian airlines have <a href="https://theconversation.com/what-is-slot-hoarding-and-is-it-locking-out-regional-airlines-like-rex-235960">become insolvent</a> this year, and other Australian businesses have been going under at <a href="https://www.abc.net.au/news/2024-04-17/business-insolvencies-hit-record-highs-creditorwatch/103732960">record rates</a>. So how do companies go bankrupt – and what is bankruptcy protection under the law? What’s the famous Chapter 11? And is bankruptcy the end of the road? <h2>What exactly is bankruptcy?</h2> Sometimes, a person or company can’t pay all of their debts as they arise. In legal terms, we call this being “insolvent”. Receiving a large bill (such as a large tax bill) that you can’t pay on the day doesn’t necessarily make you insolvent. The law allows for a reasonable time to pay bills after receiving an invoice. But if large numbers of bills remain unpaid weeks or months after their due dates, it begins to suggest a person or business isn’t paying them because they actually can’t. Being unable to pay all of your debts makes you an insolvent debtor. Bankruptcy is the legal process that allows insolvent debtors to fairly resolve these debts. In Australia, insolvent individuals can file a bankruptcy petition with the <a href="https://www.afsa.gov.au/about-us/who-we-are">Official Receiver</a> in bankruptcy, a statutory office that is part of the Australian Financial Security Authority. A creditor who is owed at least $10,000 can also force another person into bankruptcy, by suing them in court and obtaining an order to make them bankrupt. For companies that can’t pay their debts, there are several options, including liquidation, voluntary administration and restructuring. More on these later. <h2>We let an expert take control</h2> When a person or company goes bankrupt, an independent external expert (or team of experts) is appointed to manage their assets and debt. For individuals, we call this person a registered bankruptcy trustee. In the case of corporate bankruptcies, we call them a registered liquidator. In both cases, the expert will take control of the debtor’s assets and affairs. They’ll be looking closely at why the debtor needed to declare bankruptcy in the first place, and whether anything can be sold to generate cash so at least some of the debt can be repaid. When a person goes bankrupt, not everything is up for grabs. The law allows them to <a href="https://www.afsa.gov.au/professionals/resource-hub/indexed-amounts#protected-property">retain</a> some basic essentials, such as clothes, furniture, tools of their trade, and a car valued at less than $9,400. Some categories of assets can also be exempt, such as superannuation and compensation for personal injuries. There are no similar extensions for corporate insolvency. All of a company’s assets are on the table. However, both types of debtor typically enter bankruptcy with few or no assets. In more than 80% of <a href="https://www.afsa.gov.au/sites/default/files/2023-12/ror_bankruptcies.xlsx">individual</a> and <a href="https://asic.gov.au/regulatory-resources/find-a-document/statistics/insolvency-statistics/insolvency-statistics-series-3-external-administrator-reports/#3.3">corporate</a> bankruptcy cases, there are no payments to the creditors they owe. <h2>Why seek bankruptcy protection?</h2> One key feature of formally filing for bankruptcy is that it imposes a “stay” on enforcement action against the debtor. This is a court order that gives the party owing money time to organise its affairs in an orderly way – such as by selling assets to raise cash. In corporate insolvency, there are formal procedures under Australia’s Corporations Act that aim to give a company the opportunity to negotiate a deal with its creditors. That might include formulating a plan to restructure, allowing it to exit insolvency and keep trading. But it could also include selling the business to a new owner so it can continue. Some large Australian companies, including <a href="https://newsroom.virginaustralia.com/release/virgin-australia-enters-voluntary-administration">Virgin Australia</a> and <a href="https://www.smh.com.au/business/companies/network-ten-heads-into-voluntary-administration-20170614-gwqo47.html">Channel Ten</a>, have previously used “voluntary administration” to save their businesses. Voluntary administration can give a company a chance to reduce its debts through a statutory compromise with creditors called a “deed of company arrangement”. This involves the majority of a company’s creditors approving a deal – usually, to compromise on some of their debt in exchange for a promise of future payments. The funds to make these payments might come from selling assets, or be a percentage of promised future profits. If successful, this can allow a company to keep operating and minimise job losses that would otherwise occur if it were simply shut down and its assets sold off – known as being “liquidated”. Once liquidated, a company will be deregistered by the Australian Securities and Investments Commission – that is, it will cease to exist as a separate company. <h2>What is Chapter 11 bankruptcy?</h2> You’ll often hear or read about companies filing for “Chapter 11” bankruptcy. This is because in the US, there is one law – the Bankruptcy Code 1978 – that covers both individuals and companies. Just like we’ve discussed in the Australian context, Chapter 11 of that law is specifically aimed at giving debtor companies a chance to enter into a deal with their creditors – to reduce their debts, sell some or all of the assets and hopefully allow at least part of the business to continue operating. This is what Tupperware did last month, following years of financial pressure. Where the law differs between Australia and the US is in the fact that Chapter 11 allows the debtor company’s management to remain in charge of the bankruptcy process. We call this “debtor-in-possession”. In Australia, in contrast, the liquidator – which acts as the administrator in a voluntary administration – remains in control of the company. Filing for bankruptcy can signal the end of a company’s operations, but not always. It may be possible for an external administrator to try to save the business or sell some or all of it to a new owner, paying down debt and preserving jobs. <hr /> This article is part of The Conversation’s “<a href="https://theconversation.com/au/topics/business-basics-157462">Business Basics</a>” series where we ask experts to discuss key concepts in business, economics and finance.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/239393/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> <a href="https://theconversation.com/profiles/jason-harris-147254">Jason Harris</a>, Professor of Corporate Law, <a href="https://theconversation.com/institutions/university-of-sydney-841">University of Sydney</a> Image credits: Shutterstock This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/what-is-bankruptcy-239393">original article</a>. </div>

Money & Banking

Aussie family's refusal to sell family home could land them a $60m fortune

An Aussie family that repeatedly said no to selling their much-loved family home to developers could land them a $60million in Australia's booming property market, but the defiant family refuses to sell. A year ago, the Zammit family from Quakers Hill in Sydney's north west caught worldwide attention when they refused to sell their 20,000 sqm parcel of land to developers who had purchased all the other land around them. The family received offers of up to $50m to sell their home to complete the new development named The Ponds, but they refused to sell. That didn't deter developers who are still offering the owners a massive amount of cash to sell their homes, with offers reportedly around $60m now, meaning the family have earned another $10m or 20 per cent over the past year. According to PropTrack home prices in Quakers Hill have risen by 8.5 per cent over the past 12 months, meaning that the Zammits would have earned at least another $4.25 million. The median price of a home in Quakers hill is now at $1.172m, around a decade ago it was $700,000. Last year, one of the property owners, Diane Zammit, 50, told news.com.au that the neighbourhood used to be “farmland dotted with little red brick homes and cottages." “Every home was unique and there was so much space – but not any more. It’s just not the same,” she said. It is estimated that 50 houses could fit on the block of land if they chose to sell, but some of their neighbours reportedly don't want them to, as they like living in a cul-de-sac. Ray White Quakers Hill agent Taylor Bredin previously praised the family for staying put. “The fact that most people sold out years and years ago, these guys have held on. All credit to them," he told 7News. “Depending on how far you push the development plan, you’d be able to push anywhere from 40 to 50 properties on something like this, and when subdivided, a 300 square metre block would get a million dollars.” Images: Channel 7

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Medicare is covering less of specialist visits. But why are doctors’ fees so high in the first place?

<div class="theconversation-article-body"> <a href="https://theconversation.com/profiles/susan-j-mendez-2219444">Susan J. Méndez</a>, <a href="https://theconversation.com/institutions/the-university-of-melbourne-722">The University of Melbourne</a> Fees for medical specialists are going up faster than <a href="https://www.abc.net.au/news/2024-09-25/medicare-rebates-only-covering-half-of-specialist-costs/104389360">Medicare rebates</a>, leading to a bigger gap for patients to pay. Recent data from the <a href="https://www.aihw.gov.au/reports/medicare/mbs-funded-services-data/contents/summary">Australian Institute of Health and Welfare</a> shows that in the first quarter of this year, Medicare rebates covered just over half (52%) of the total fees. This is <a href="https://www.abc.net.au/news/2024-09-25/medicare-rebates-only-covering-half-of-specialist-costs/104389360">down from 72%</a> two decades ago, and the lowest proportion on record. Doctors can charge what they like, while the government determines the Medicare rebate. The difference between the two, or the gap, is what impacts patients. For GPs, the government provides an incentive for doctors to <a href="https://www.health.gov.au/our-work/increases-to-bulk-billing-incentive-payments#1-november-2023-changes">bulk bill</a>, but there’s no such incentive for other specialists. Doctors blame large gap payments on rebates being too low, and they’re partly right. After adjusting for inflation and increasing demand, the average dollar amount one person receives in Medicare rebates annually dropped from <a href="https://www.aihw.gov.au/reports/medical-specialists/referred-medical-specialist-attendances">A$349 to $341</a> over the past decade. But this is only a part of the problem. When many people can’t afford hundreds (if not thousands) of dollars for essential specialist care, we need to look at why fees are so high. <h2>How do specialists set their fees?</h2> Although general practice is technically a speciality, when we talk about medical specialists in this article, we’re talking about non-GP specialists. These might include paediatricians, oncologists, psychiatrists and dermatologists, among many others. In determining fees, specialists consider a combination of patient-level, doctor-level and system-level factors. Patient characteristics, such as the complexity of the patient’s medical condition, may increase the price. This is because more complex patients may require more time and resources. Specialists, based on their experience, perceived skill level, or ethical considerations, may charge more or less. For example, <a href="https://www.sciencedirect.com/science/article/pii/S0277953623007104?via%3Dihub">some specialists report</a> they offer discounts to certain groups, such as children or pensioners. System-level factors including the cost of running a practice (such as employing staff) and practice location also play a role. Problems arise when prices vary considerably, as this often signals limited competition or excessive market power. This holds true for medical services, where patients have little control over prices and rely heavily on their doctors’ recommendations. In <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4909881">recent research</a>, my colleagues and I found fees varied significantly between specialists in the same field. In some cases the most expensive specialist charged more than double what the cheapest one did. <h2>Doctor characteristics influence fee-setting</h2> My colleagues and I <a href="https://doi.org/10.1016/j.healthpol.2024.105119">recently analysed</a> millions of private hospital claims from 2012 to 2019 in Australia. We found the wide variation in fees was largely due to differences between individual doctors, rather than factors such as patient complexity or the differences we’d expect to see between specialties. Up to 65% of the variance in total fees and 72% in out-of-pocket payments could be attributed to differences between doctors in the same field. To understand what doctor-level factors drive high fees, <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4909881">we looked at</a> data from a representative survey of specialists. We found older specialists have lower fees and higher rates of bulk billing. Practice owners tended to charge higher fees. We also found doctors’ personalities affect how much they charge and how often they bulk bill patients. Doctors who scored more highly on the personality trait of agreeableness were more likely to bulk bill patients, while those who scored more highly on neuroticism tended to charge higher fees. What we couldn’t show is any evidence fees were associated with competition. <h2>Effects on patients</h2> This is not a competitive market. On the contrary, it has high entry restrictions (long training requirements) and a limited supply of specialists, particularly in <a href="https://www.aihw.gov.au/reports/workforce/health-workforce">rural and remote areas</a>. Meanwhile, patients’ access is controlled by the need for referrals which expire, generally after a year. Patients are often unable to shop around or make informed decisions about their care due to a lack of information about the true cost and quality of services. For private hospital services, the fee structure is complicated by the fact that several providers (for example, surgeon, anaesthetist, assistant surgeon) bill separately, making it difficult for patients to know the total cost upfront. Despite efforts to introduce price transparency in recent years, such as through the government’s <a href="https://medicalcostsfinder.health.gov.au/">Medical Costs Finder</a> website, the system remains far from clear. Reporting is voluntary and the <a href="https://doi.org/10.1016/j.healthpol.2020.06.001">evidence is mixed</a> on whether these tools effectively reduce prices or increase competition. All of this contributes to high and unpredictable out-of-pocket costs, which can lead to financial strain for patients. About <a href="https://www.abs.gov.au/statistics/health/health-services/patient-experiences/latest-release#barriers-to-health-service-use">10.5% of Australians</a> reported cost was a reason for delaying or avoiding a specialist visit in 2022–23. This raises important questions about equity and the sustainability of Australia’s universal health-care system, which is built on the principle of equitable access to care for all citizens. <h2>What can be done?</h2> Patients can take steps to minimise their costs by proactively seeking information. This includes asking your GP for a range of options when you’re referred to a specialist. Note the referral from your GP can be used for any other doctor in the same specialty. Similarly, ask the specialist’s receptionist what the fee and rebate will be before making an appointment, or for a <a href="https://www.ama.com.au/articles/informed-financial-consent#Two">detailed quote</a> before going to hospital. Shop around if it’s too high. But responsibility doesn’t only lie with patients. For example, the government could seek to address this issue by increasing investment in public hospital outpatient care, which could boost competition for specialists. It could also publish the range of fees compared to the rebate for all Medicare-billed consultations, rather than relying on voluntary reporting by doctors. Price transparency alone is not enough. Patients also need quality information and better guidance to navigate the health-care system. So continued investment in improving health literacy and care coordination is important. If things don’t change, the financial burden on patients is likely to continue growing, undermining both individual health outcomes and the broader goals of equitable health-care access.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/239827/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> <a href="https://theconversation.com/profiles/susan-j-mendez-2219444">Susan J. Méndez</a>, Senior Research Fellow, Melbourne Institute of Applied Economic and Social Research, <a href="https://theconversation.com/institutions/the-university-of-melbourne-722">The University of Melbourne</a> Image credits: Shutterstock This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/medicare-is-covering-less-of-specialist-visits-but-why-are-doctors-fees-so-high-in-the-first-place-239827">original article</a>. </div>

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Medicare is covering less of specialist visits. But why are doctors’ fees so high in the first place?

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