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Funding for refugees has long been politicized − punitive action against UNRWA and Palestinians fits that pattern

<a href="https://theconversation.com/profiles/nicholas-r-micinski-207353">Nicholas R. Micinski</a>, <a href="https://theconversation.com/institutions/university-of-maine-2120">University of Maine</a> and <a href="https://theconversation.com/profiles/kelsey-norman-862895">Kelsey Norman</a>, <a href="https://theconversation.com/institutions/rice-university-931">Rice University</a> At least a dozen countries, including the U.S., have <a href="https://news.un.org/en/story/2024/01/1145987">suspended funding to the UNRWA</a>, the United Nations agency responsible for delivering aid to Palestinian refugees. This follows allegations made by Israel that <a href="https://www.wsj.com/world/middle-east/at-least-12-u-n-agency-employees-involved-in-oct-7-attacks-intelligence-reports-say-a7de8f36">12 UNRWA employees participated</a> in the Oct. 7, 2023, Hamas attack. The UNRWA responded by <a href="https://www.reuters.com/world/middle-east/un-palestinian-refugee-agency-investigates-staff-suspected-role-israel-attacks-2024-01-26/">dismissing all accused employees</a> and opening an investigation. While the seriousness of the accusations is clear to all, and the U.S. has been keen to <a href="https://www.nytimes.com/2024/01/30/us/politics/aid-gaza-israel.html">downplay the significance</a> of its pause in funding, the action is not in keeping with precedent. Western donors did not, for example, defund other U.N. agencies or peacekeeping operations amid accusations of <a href="https://www.hrw.org/news/2020/01/11/un-peacekeeping-has-sexual-abuse-problem">sexual assault</a>, <a href="https://www.justice.gov/usao-sdny/pr/former-un-general-assembly-president-and-five-others-charged-13-million-bribery-scheme">corruption</a> or <a href="https://www.hrw.org/legacy/summaries/s.bosnia9510.html">complicity in war crimes</a>. In real terms, the funding cuts to the UNRWA will affect <a href="https://www.unrwa.org/where-we-work/gaza-strip">1.7 million Palestinian refugees in Gaza</a> along with an additional 400,000 Palestinians without refugee status, many of whom benefit from the UNRWA’s infrastructure. Some critics have gone further and said depriving the agency of funds <a href="https://jacobin.com/2024/01/unrwa-defunding-gaza-israel">amounts to collective punishment</a> against Palestinians. Refugee aid, and humanitarian aid more generally, is theoretically meant to be neutral and impartial. But as experts in <a href="https://www.cambridge.org/core/books/reluctant-reception/558E2A93FF99B8F295347A8FA2053698">migration</a> <a href="https://www.routledge.com/UN-Global-Compacts-Governing-Migrants-and-Refugees/Micinski/p/book/9780367218836">and</a> <a href="https://press.umich.edu/Books/D/Delegating-Responsibility">international relations</a>, we know funding is often used as a foreign policy tool, whereby allies are rewarded and enemies punished. In this context, we believe the cuts in funding for the UNRWA fit a wider pattern of the politicization of aid to refugees, particularly Palestinian refugees. <h2>What is the UNRWA?</h2> The UNRWA, short for the U.N. Relief and Works Agency for Palestine Refugees in the Near East, was established two years after about <a href="https://theconversation.com/the-nakba-at-75-palestinians-struggle-to-get-recognition-for-their-catastrophe-204782">750,000 Palestinians were expelled or fled from their homes</a> during the months leading up to the creation of the state of Israel in 1948 and the subsequent Arab-Israeli war. Prior to the UNRWA’s creation, international and local organizations, many of them religious, provided services to displaced Palestinians. But after <a href="https://cup.columbia.edu/book/refuge-and-resistance/9780231202855">surveying the extreme poverty</a> and dire situation pervasive across refugee camps, the U.N. General Assembly, including all Arab states and Israel, voted to create the UNRWA in 1949. Since that time, <a href="https://www.unrwa.org/what-we-do">the UNRWA has been the primary aid organization</a> providing food, medical care, schooling and, in some cases, housing for the 6 million Palestinians living across its five fields: Jordan, Lebanon, Syria, as well as the areas that make up the occupied Palestinian territories: the West Bank and Gaza Strip. The mass displacement of Palestinians – known as the <a href="https://theconversation.com/the-nakba-at-75-palestinians-struggle-to-get-recognition-for-their-catastrophe-204782">Nakba, or “catastrophe</a>” – occurred prior to the <a href="https://www.unhcr.org/about-unhcr/who-we-are/1951-refugee-convention">1951 Refugee Convention</a>, which defined refugees as anyone with a well-founded fear of persecution owing to “events occurring in Europe before 1 January 1951.” Despite a <a href="https://www.unhcr.org/sites/default/files/legacy-pdf/4ec262df9.pdf">1967 protocol extending the definition</a> worldwide, Palestinians are still excluded from the primary international system protecting refugees. While the UNRWA is responsible for providing services to Palestinian refugees, the United Nations also created the U.N. Conciliation Commission for Palestine in 1948 to seek a <a href="https://www.refworld.org/docid/4fe2e5672.html">long-term political solution</a> and “to facilitate the repatriation, resettlement and economic and social rehabilitation of the refugees and the payment of compensation.” As a result, the UNRWA does not have a mandate to push for the traditional durable solutions available in other refugee situations. As it happened, the conciliation commission was active only for a few years and has since been sidelined in favor of the U.S.-brokered peace processes. <h2>Is the UNRWA political?</h2> The UNRWA has been <a href="https://www.migrationpolicy.org/article/palestinian-refugees-dispossession">subject</a> to political headwinds since its inception and especially during periods of heightened tension between Palestinians and Israelis. While it is a U.N. organization and thus ostensibly apolitical, it has <a href="https://cup.columbia.edu/book/refuge-and-resistance/9780231202855">frequently been criticized</a> by Palestinians, Israelis as well as donor countries, including the United States, for acting politically. The UNRWA performs statelike functions across its five fields – including education, health and infrastructure – but it is restricted in its mandate from performing political or security activities. Initial Palestinian objections to the UNRWA stemmed from the organization’s early focus on economic integration of refugees into host states. Although the UNRWA officially adhered to the U.N. General Assembly’s <a href="https://www.unrwa.org/content/resolution-194">Resolution 194</a> that called for the return of Palestine refugees to their homes, U.N., U.K. and U.S. <a href="https://cup.columbia.edu/book/refuge-and-resistance/9780231202855">officials searched</a> for means by which to resettle and integrate Palestinians into host states, viewing this as the favorable political solution to the Palestinian refugee situation and the broader Israeli-Palestinian conflict. In this sense, Palestinians perceived the UNRWA to be both highly political and actively working against their interests. In later decades, the UNRWA <a href="https://cup.columbia.edu/book/refuge-and-resistance/9780231202855">switched its primary focus</a> from jobs to education at the urging of Palestinian refugees. But the UNRWA’s education materials were <a href="https://cup.columbia.edu/book/refuge-and-resistance/9780231202855">viewed</a> by Israel as further feeding Palestinian militancy, and the Israeli government insisted on checking and approving all materials in Gaza and the West Bank, which it has occupied since 1967. While Israel has <a href="https://cup.columbia.edu/book/refuge-and-resistance/9780231202855">long been suspicious</a> of the UNRWA’s role in refugee camps and in providing education, the organization’s operation, which is internationally funded, <a href="https://www.crisisgroup.org/middle-east-north-africa/east-mediterranean-mena/israelpalestine/242-unrwas-reckoning-preserving-un-agency-serving-palestinian-refugees">also saves</a> Israel millions of dollars each year in services it would be obliged to deliver as the occupying power. Since the 1960s, the U.S. – UNRWA’s primary donor – and other Western countries have <a href="https://cup.columbia.edu/book/refuge-and-resistance/9780231202855">repeatedly expressed their desire</a> to use aid to prevent radicalization among refugees. In response to the increased presence of armed opposition groups, the <a href="https://cup.columbia.edu/book/refuge-and-resistance/9780231202855">U.S. attached a provision</a> to its UNRWA aid in 1970, requiring that the “UNRWA take all possible measures to assure that no part of the United States contribution shall be used to furnish assistance to any refugee who is receiving military training as a member of the so-called Palestine Liberation Army (PLA) or any other guerrilla-type organization.” The UNRWA adheres to this requirement, even publishing an annual list of its employees so that host governments can vet them, but it also <a href="https://www.crisisgroup.org/middle-east-north-africa/east-mediterranean-mena/israelpalestine/242-unrwas-reckoning-preserving-un-agency-serving-palestinian-refugees">employs 30,000 individuals</a>, the vast majority of whom are Palestinian. Questions over the links of the UNRWA to any militancy has led to the rise of Israeli and international <a href="https://cufi.org/issue/unrwa-teachers-continue-to-support-antisemitism-terrorism-on-social-media-un-watch/">watch groups</a> that document the social media activity of the organization’s large Palestinian staff. <h2>Repeated cuts in funding</h2> The United States has used its money and power within the U.N. to block criticism of Israel, vetoing at least <a href="https://www.un.org/depts/dhl/resguide/scact_veto_table_en.htm">45 U.N. resolutions</a> critical of Israel. And the latest freeze is not the first time the U.S. has cut funding to the UNRWA or other U.N. agencies in response to issues pertaining to the status of Palestinians. In 2011, the <a href="https://www.reuters.com/article/idUSTRE79U5ED/#:%7E:text=WASHINGTON%20(Reuters)%20%2D%20The%20United,grant%20the%20Palestinians%20full%20membership.">U.S. cut all funding to UNESCO</a>, the U.N. agency that provides educational and cultural programs around the world, after the agency voted to admit the state of Palestine as a full member. The Obama administration defended the move, claiming it was required by a 1990s law to defund any U.N. body that admitted Palestine as a full member. But the impact of the action was nonetheless severe. Within just four years, UNESCO was <a href="https://onlinelibrary.wiley.com/doi/full/10.1111/1758-5899.12459">forced to cut its staff in half</a> and roll back its operations. President Donald Trump later <a href="https://www.pbs.org/newshour/politics/u-s-and-israel-officially-withdraw-from-unesco">withdrew the U.S. completely from UNESCO</a>. In 2018, the Trump administration paused its <a href="https://www.nytimes.com/2018/08/31/us/politics/trump-unrwa-palestinians.html">US$60 million contribution to the UNRWA</a>. Trump claimed the pause would create political pressure for Palestinians to negotiate. President Joe Biden restarted U.S. contributions to the UNRWA in 2021. <h2>Politicization of refugee aid</h2> Palestinian are not the only group to suffer from the politicization of refugee funding. After World War II, states established different international organizations to help refugees but strategically excluded some groups from the refugee definition. For example, the U.S. funded the <a href="https://www.nationalww2museum.org/war/articles/last-million-eastern-european-displaced-persons-postwar-germany">U.N. Relief and Rehabilitation Administration to help resettle displaced persons after World War II</a> but resisted Soviet pressure to forcibly repatriate Soviet citizens. The U.S. also created a separate organization, <a href="https://academic.oup.com/ijrl/article-abstract/1/4/501/1598187">the precursor to the International Organization for Migration</a>, to circumvent Soviet influence. In many ways, the UNRWA’s existence and the exclusion of Palestinian refugees from the wider refugee regime parallels this dynamic. Funding for refugees has also been politicized through the earmarking of voluntary contributions to U.N. agencies. Some agencies receive funding from U.N. dues; but the UNRWA, alongside the U.N. High Commissioner for Refugees and the International Organization for Migration, receive the majority of their funding from voluntary contributions from member states. These contributions can be earmarked for specific activities or locations, leading to donors such as the <a href="https://www.peio.me/wp-content/uploads/2019/01/PEIO12_paper_107.pdf">U.S. or European Union dictating which refugees get aid and which do not</a>. Earmarked contributions amounted to nearly <a href="https://unsceb.org/fs-revenue-agency">96% of the UNHCR’s budget, 96% of the IOM’s budget and 74% of UNRWA funding in 2022</a>. As a result, any cuts to UNRWA funding will affect its ability to service Palestinian refugees in Gaza – especially at a time when so many are <a href="https://www.cnn.com/2024/01/30/middleeast/famine-looms-in-gaza-israel-war-intl/index.html">facing hunger, disease and displacement</a> as a result of war.<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/222263/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> <a href="https://theconversation.com/profiles/nicholas-r-micinski-207353">Nicholas R. Micinski</a>, Assistant Professor of Political Science and International Affairs, <a href="https://theconversation.com/institutions/university-of-maine-2120">University of Maine</a> and <a href="https://theconversation.com/profiles/kelsey-norman-862895">Kelsey Norman</a>, Fellow for the Middle East, Rice University's Baker Institute for Public Policy, <a href="https://theconversation.com/institutions/rice-university-931">Rice University</a> Image credits: Getty Images 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/funding-for-refugees-has-long-been-politicized-punitive-action-against-unrwa-and-palestinians-fits-that-pattern-222263">original article</a>.

Money & Banking

Couple who found love in chemotherapy raise funds for final trip

Ainslie Plumb, 22, and Joe Fan, 29, found love in an unexpected place, at the Royal Brisbane and Women’s Hospital. The couple met in 2022 while they were both undergoing leukaemia treatment. “We met at an event for young people with cancer and became friends following that,” Plumb told 7News. “(We) would hang out during our hospital stays, I asked him out in October 2022 and (we) have been together ever since.” While Plumb successfully entered remission, last October, Fan was told that he was now terminal, as doctors had run out of options to treat his Philadelphia chromosome positive acute lymphoblastic leukaemia. With only months left to live, Fan, who has actively given back to the hospital and cancer community by playing his violin for patients and staff and worked with the Queensland Youth Cancer Service, has one final wish - to travel. The couple have set a <a href="https://www.gofundme.com/f/help-joe-live-his-dreams" target="_blank" rel="noopener">GoFundMe</a>, to help raise funds which cover flights, accommodation and specialised travel insurance, for Fan's final trip. “I go through my cancer treatments and observe the toll that takes on my physical and mental wellbeing,” Fan said. “The end of a trip can hopefully mark the start of another — and I have held onto hope, looked forward and dreamed for one more trip, more time, one more experience with that someone I love.” Their first destination will be Taiwan and Hong Kong, where Fan's parents are from and where he spent a majority of his childhood. They also intend to travel to New Zealand and Western Australia to swim with whale sharks at Ningaloo in the state’s north. “We’re aiming at going at the end of February to give us time to co-ordinate with his doctors around his appointments and infusions, which are all booked in advance,” Plumb said. “We recently reached 75 per cent on the fundraiser and are hoping to hit 100 per cent perhaps by the end of January.” As of today, the couple have successfully raised over $21,000 from their $20,000 goal, and have thanked everyone in their community and strangers for their support. “Truly, words do not suffice,” the couple said. Images: 7News

Relationships

How do I find out what my superannuation fund invests in? A finance expert explains

You want your superannuation savings to be invested in things that also serve the planet’s long-term interests. But how can you be sure your fund’s values align with yours – or even its own claims? This question has become increasingly pertinent as demand for environmentally and socially sustainable investments <a href="https://asic.gov.au/about-asic/news-centre/find-a-media-release/2022-releases/22-141mr-how-to-avoid-greenwashing-for-superannuation-and-managed-funds/">grows</a> – and with it incentives for financial institutions to put the best spin on their offerings. One consultancy specialising in “responsible investment” reckons <a href="https://thenewdaily.com.au/finance/superannuation/2021/08/16/greenwashing-super-funds/">10% of the funds</a> it has examined do not have the sustainability orientation they claim. Among those <a href="https://www.edo.org.au/2022/08/10/hestas-fossil-fuel-investments-may-amount-to-a-breach-of-the-law/">accused of greenwashing</a> in recent months is one of Australia’s biggest super funds, HESTA (the industry fund for health and community service workers), which has promoting its “clean energy” credentials while still holding shares in fossil-fuel companies <a href="https://www.ai-cio.com/news/australias-hesta-accused-of-greenwashing/">Woodside and Santos</a>. So how can you check what your superannuation fund invests in? Super funds are legally obliged to disclose how they invest your money in two different disclosure documents – a Product Disclosure Statement and a Portfolio Holdings Disclosure. Both will be available on a super fund’s website, though how easily you can find them will vary. The rest of this article is going to explain what information these documents provide, how useful this information is likely to be, and your best bet to ensure your super fund reflects your values. <h2>The Product Disclosure Statement</h2> Product disclosure statements are required by the financial regulator (the Australian Securities and Investments Commission) for all financial products. This document outlines the most basic but important information of an investment product’s features, benefits, risks and costs, including fees and taxes. The format is standardised, with one section (Section 5) covering with “How we invest your money”. The information it contains is broad. At best you’ll learn how the fund splits its investments between safe and riskier assets, and between different asset classes – Australian shares, international shares, property trusts, infrastructure trust, cash and so on. <h2>Portfolio Holding Disclosure</h2> For a comprehensive look at where your money is invested in, you can consider the Portfolio Holdings Disclosure. This document lists a fund’s complete holdings – including the percentage and value of every single company stock held. Portfolio holdings disclosures are relatively new, being obligatory only since March 2022 under <a href="https://www.legislation.gov.au/Details/F2021L01531">legislation</a> meant to improve transparency in the sector. However, super funds aren’t obliged to provide this information in a consistent, easily understandable way. For a non-expert who doesn’t know what to look for, the level of detail can be mind-boggling. You may find yourself scrutinising a spreadsheet listing thousands of items. The Australian Retirement Trust’s Portfolio Holdings Disclosure for its “Lifecycle Balanced Pool”, for example, has more than <a href="https://www.australianretirementtrust.com.au/investments/what-we-invest-in/superannuation-investments">8,000</a> line items. Some super funds have made the effort to provide this information in a more user-friendly format. An example is Future Super, which allows you to <a href="https://www.futuresuper.com.au/everything-we-invest-in/?utm_source=google&utm_medium=cpc&utm_campaign=1757241588&utm_content=68234193065&utm_term=future%20super&campaigntype=SearchNetwork-1757241588&device=c&campaignid=1757241588&adgroup=68234193065&keyword=future%20super&matchtype=p&placement=&adposition=&location=9069039&gclid=CjwKCAjwmJeYBhAwEiwAXlg0AYOEe2tJViZiZBgUk3bt1h9LNuHx1jWnGy6VzqGaNjBzOEi60852JRoCel8QAvD_BwE">search and filter</a> portfolio holdings by asset class and country of origin. But if your concern is to avoid investing in some specific activity such as in mining fossil fuels or gambling, you’ll need to know the companies and other assets you want to avoid for this to be helpful. <h2>Your best options</h2> This is not to say portfolio holding disclosure obligations are useless. They are incredibly useful – a huge leap forward in the sector’s accountability. They just aren’t designed for consumers. So there is still much work to be done to make the sector truly transparent. What would really help is independent certification and ratings of super products, similar to government websites and programs that certify energy efficiency and allow comparison of electricity plans. In the meantime, I can offer you one big tip. Choose a specific superannuation product that markets itself on its environmental or social sustainability credentials. Most super funds now provide these choices alongside their more traditional investment options. There is a variety of “screening” approaches to ethical investments. Some exclude entire sectors. Others include the best environmental and social performers even among “sinful” industries such as tobacco or weapons. So just because a super product is marketed as “ethical” or “sustainable” doesn’t guarantee you will agree with all its investments. But there is a much higher likelihood of it living up to its claims due to greater scrutiny by third parties such as environmental groups as well as the financial regulator. The Australian Securities and Investments Commission put super funds on notice earlier this year with a “<a href="https://asic.gov.au/regulatory-resources/financial-services/how-to-avoid-greenwashing-when-offering-or-promoting-sustainability-related-products/">guidance note</a>” about the growing risk of greenwashing in sustainability-related financial products. It reminded funds that “making statements (or disseminating information) that are false or misleading, or engaging in dishonest, misleading or deceptive conduct in relation to a financial product or financial service” is against the law. So super funds know their portfolios are being scrutinised. Switching your investment option or fund is simpler than you think. You only need to fill out and lodge a form. Just be sure to compare fees and performance, and seek a second opinion from trustworthy adviser before “voting with your wallet”. Image credits: Getty Images This article originally appeared on <a href="https://theconversation.com/how-do-i-find-out-what-my-superannuation-fund-invests-in-a-finance-expert-explains-188802" target="_blank" rel="noopener">The Conversation</a>.

Retirement Income

Couple tackle the Nullabor to raise funds for polio charity

A Tasmanian couple are jumping on their bicycles ahead of their 2750-kilometre journey - and they’re doing it to raise funds for a good cause. Phil and Joyce Ogden, who have been members of Rotary for over a decade, are undertaking the trek from Perth to Adelaide as part of an epic fundraiser for Rotary’s END POLIO campaign. The campaign, which was started over 30 years ago by Rotary, UNICEF and the World Health Organisation, has been driving towards the goal of completely eradicating Polio, beginning with a project to vaccinate children in the Philippines against the disease in 1979. Now, Polio is believed to only be naturally spreading in Afghanistan and Pakistan, but according to the <a href="https://apps.who.int/gb/ebwha/pdf_files/wha65/A65_20-en.pdf" target="_blank" rel="noopener">World Health Assembly</a>, failing to eradicate the disease would be a “global health emergency”. “We feel the enormous effort which has gone into turning the tide of the disease will be lost if pressure, and fundraising, is not maintained until the final handful of cases is consigned to history,” the Ogdens said in a message to all Rotarians. With the support of their South Launceston Rotary Club, the Odgens have planned to begin their trip in mid-May and hope to raise awareness of the cause along the way. “If we take our collective eyes off the ball, the disease will re-establish,” the couple said. “So, we are still committed to making our personal donations every year but felt we might harness another of our passions, cycling, to push things along - once again with the assistance of Rotary.” With limited sources of water and no shops to buy food from along the Nullarbor, the couple will carry a week’s worth of food and two days of water at a time, and they’re relying on dehydrated food which will be mailed ahead of them. Their upcoming journey isn’t a first for the Ogdens, who have covered more than 100,000 kilometres from crossing the European Alps, the Pyrenees and the Rockies. Heather Chong, the Tasmanian District Governor, praised the pair and described them as “adventurous philanthropists”. The couple have started an <a href="https://raise.rotary.org/phil-ogden/fundraiser" target="_blank" rel="noopener">online fundraiser</a> with a goal of raising $40,000. As of publication, the fundraiser has already collected $10,000 in donations, with every $1 donated prompting the Bill and Melinda Gates Foundation to contribute $2. Image: Supplied

Caring

France’s pledge to Ukrainian artists

In order to help struggling artists in Ukraine who have been impacted by the Russian invasion, the French government has announced a $1.5 million relief fund to help workers in the arts. According to a statement from the French Ministry of Culture, the initiative will also be available to “dissident” Russian artists fleeing the nation’s crackdown on free speech. “The emergency reception program will finance Ukrainian artists and cultural professionals and their families for a period of three months, via the Pause program, [consisting of] residencies within the network of public establishments of the ministry and through the Cité internationale des arts [an artist-in-residence building in Paris],” the ministry’s statement said. Two thirds of the funds will be dedicated to an emergency telephone service offered in both Russian and Ukrainian that will offer support to imperilled artists through networking with regional professionals and studio space opportunities. The remainder of the funds will be directed to help Ukrainian students to enrol at colleges and cultural organisations in France. Roselyne Bachelot-Narquin, the French minister of culture, said the ministry “wants Ukrainian artists to be supported so they can continue their creative work in France…This additional support will be in the form of research grants and funding for artistic projects, but also for organising exhibitions.” Russia’s unprompted attack on Ukraine began on February 24th, and has seen at least 2.6 million Ukrainians flee their war-torn home country. According to the French interior minister, Gèrald Darmanin, the French government has pledged to accept around 100,000 Ukrainian refugees. Image credits: Getty Images

Art

Government funds bail out festival cancellations with Event Saver Fund

As another year of music festivals and summer events have been cancelled in the eleventh hour by the pandemic, the NSW government has put their hand up to help the arts. The state government recently announced the Event Saver Fund, which is aimed at financially supporting the state’s music industry that has been devastated by the latest wave of Omicron. At a recent press conference, NSW Treasurer Matt Kean revealed that a $43 million fund has been established for organisers of the cancelled events to be financially supported if they've been cancelled or may be affected by changes to public health orders. “This fund is a $43 million fund that will ensure that we will underwrite sunk costs for the festivals that could be impacted by changes to public health orders,” he said. The fund will help organisers to pay their staff and suppliers, as well as recoup other costs lost in the event planning that got cancelled or cut short due to lockdowns or border closures. Minister for the Arts Ben Franklin said the vital funding will give event organisers to continue to plan festivals without the stress of a last-minute cancellation costing them thousands. “Major events provide tremendous social benefits to the community, bringing us together to enjoy live performances,” he said. “As we look to rebound from the effects of the past two years, this funding will help support local jobs and ensure major event organisers can plan with confidence to safely deliver their events in 2022/23.” Australian Festivals Association chair Julia Robertson welcomed the Event Saver package, and emphasised how much the industry has suffered since the start of the pandemic. “This package is really great for building confidence,” she said. “For helping those festivals that have got events coming up — to maintain those festival lineups — but also to those events that have had to be cancelled over the last couple of weeks due to the Omicron variant. “We will be able to help those events recover some of those costs that they’ve lost. We’ve got a really long way to building that confidence for the festival industry, so thank you.” Image credits: Getty Images

Music

Labor’s proposed $10 billion social housing fund isn’t big as it seems, but it could work

The centrepiece of Labor’s election program so far is its A$10 billion social housing policy, officially called the <a href="https://alp.org.au/policies/housing_future_fund">Housing Australia Future Fund</a>. In the first five years the fund would be used to build <ul> <li> 20,000 social housing properties for people on low incomes - 4,000 of the 20,000 for women and children fleeing violence and for low income older women at risk of homelessness </li> <li> 10,000 “affordable” housing properties </li> <li> $200 million for the repair, maintenance and improvements of housing in remote Indigenous communities </li> <li> $100 million for crisis and transitional housing for women and children fleeing violence and for low income older women at risk of homelessness </li> <li> $30 million to build more housing and fund specialist services for veterans who are experiencing or at risk of homelessness </li> </ul> Although needed, its a far short of the 100,000 extra social housing units we would have had if social housing been growing in line with total housing in recent years, a gap that is climbing by 4,000 homes a year. And, like the frilled-neck lizard, the $10 billion looks much bigger than it is. Labor could probably do what it has promised to do for $450 million per year. Instead, it says it would borrow $10 billion at low interest rates, invest the money for much higher returns, and use the proceeds to pay for the program. If the fund earns 4.5% more than the cost of borrowing it’ll get the $450 million per year. Rather than use the money to build the houses it will use the money to fund service payments to community housing providers who build them. As Labor points out, it’s a mechanism used by the current government, which has set up five such funds in addition to the <a href="https://www.futurefund.gov.au/">Future Fund</a> used to fund public service pensions (of which more later). <a href="https://images.theconversation.com/files/440171/original/file-20220111-13-1erhnaj.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img src="https://images.theconversation.com/files/440171/original/file-20220111-13-1erhnaj.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" alt="" /></a> <a href="https://alp.org.au/policies/housing_future_fund" class="source">Extract from Labor's Housing Australia Future Fund election policy</a> Two of these funds, the Medical Research Future Fund and the Disability Care Australia Fund are actually bigger than the proposed Housing Fund. A problem with this structure designed to make the commitment look bigger than it is is that spending on social housing will depend on the returns of the fund. Allocating money from one source to spending on one particular purpose is called <a href="https://www.cis.org.au/app/uploads/2015/07/pm75.pdf">hypothecation</a>, a word closely related to “<a href="https://english.stackexchange.com/questions/429589/is-hypothecate-anything-to-do-in-origin-or-meaning-with-hypothetical/570700">hypothetical</a>”. <a href="https://images.theconversation.com/files/440181/original/file-20220111-19-6m0mfi.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img src="https://images.theconversation.com/files/440181/original/file-20220111-19-6m0mfi.png?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" alt="" /></a> Medicare funding is independent of the levy. Dean Lewins/AAP The Medicare Levy of 2% of most taxable incomes is intended to be for funding Medicare, but funds only part of it. In contrast, there doesn’t appear to be any plan to guarantee payments for social housing if in any year the Social Housing Fund fails to make money. The bigger question is whether it makes sense for governments to use funds like the Future Fund to put money into income-generating investments in private companies (the Future Fund invests in <a href="https://cdn.theconversation.com/static_files/files/1918/20200630_-_Top_100_largest_listed_equity_holdings.pdf">Apple, Microsoft and the Commonwealth Bank</a>) or to use any available funds to pay down government debt. The answer depends in part on whether the profits the funds earn are genuine or mere compensation for the risky business of investing in shares, which can always go wrong. My work on the so-called “equity premium”, the excess return for investing in shares, suggests that is <a href="https://core.ac.uk/download/pdf/15061616.pdf">genuine</a> and exceeds what’s needed to compensate for risk, making investment in the stock market an appealing option for governments in the absence of better opportunities. But the premium is not limitless, for two reasons. One is that if governments borrow enough and buy enough shares, we can reasonably expected the government’s cost of borrowing to rise and the rate of return on shares to fall, reducing the equity premium. The other is that if buying shares is pursued far enough, governments will become major, or even majority, shareholders in large businesses, effectively becoming owners. <h2>Future funds should invest in what governments do best</h2> Long experience suggests that while governments are quite good at running some types of businesses (especially those involving infrastructure and requiring large amounts of capital) they are not nearly as good at running others. Retailing comes to mind. If we accept that large debt-financed public investment can make sense, it follows that governments should own as much as 100% of some types of businesses (businesses such as Telstra come to mind) and little or none of others, such as shopping centres, which Australia’s government <a href="https://www.canberratimes.com.au/story/7139681/the-sale-of-belconnen-mall/">did indeed once own</a>. And that was generally the way Australia’s economy worked during the brief period of broadly shared-prosperity in the mid-20th century. Governments borrowed at low rates and invested in physical and social infrastructure, such as roads and communications services. The more funds there are like Labor’s proposed Housing Australia Future Fund the more likely it is we will get back there.<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; text-shadow: none !important;" src="https://counter.theconversation.com/content/174406/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> <a href="https://theconversation.com/profiles/john-quiggin-2084">John Quiggin</a>, Professor, School of Economics, <a href="https://theconversation.com/institutions/the-university-of-queensland-805">The University of Queensland</a> 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/labors-proposed-10-billion-social-housing-fund-isnt-big-as-it-seems-but-it-could-work-174406">original article</a>.

Real Estate

The compelling case for a future fund for social housing

As more and more Australians are forced into private renting, including Australians who once would have owned homes or lived in social housing, more are living in <a href="https://www.acoss.org.au/wp-content/uploads/2018/10/ACOSS_Poverty-in-Australia-Report_Web-Final.pdf">poverty</a>, suffering <a href="https://grattan.edu.au/wp-content/uploads/2018/11/912-Money-in-retirement.pdf">financial stress</a> and becoming <a href="https://blog.grattan.edu.au/2019/06/who-is-homeless-in-australia/">homeless</a>. Social housing – where rents are typically capped at 25% of tenants’ incomes – used to make a big difference to the lives of many vulnerable Australians. Infrastructure Victoria has found that it makes a big difference to homelessness. Only 7% of renters in social housing subsequently become homeless, compared to 20% of private renters. But the stock of social housing – currently around 430,000 dwellings – has barely grown in 20 years, during a time Australia’s population has grown 33%. Given that most social housing tenants stay for more than five years, the stagnating stock of such housing means there are few openings available for people whose lives take a turn for the worse. We not only have fewer social houses per person, we also have vastly fewer openings for anyone looking. <h2>The fund would leverage cheap money</h2> Social housing is expensive. The capital cost per unit over and above what is recouped in rent amounts to about A$300,000. A new Grattan Institute paper released on Monday makes the case for a $20 billion federal government <a href="https://grattan.edu.au/news/a-place-to-call-home-its-time-for-a-social-housing-future-fund/">Social Housing Future Fund</a>, which would make regular capital grants to state governments and community housing providers. Future funds are not unusual. The <a href="https://www.futurefund.gov.au/about-us/who-we-are/board-of-guardians">Future Fund Board of Guardians</a>, chaired by former Commonwealth Treasurer Peter Costello already manages $247.8 billion in assets across six funds addressing problems ranging from covering federal public servants’ superannuation entitlements to drought to disability care to medical research. <a href="https://images.theconversation.com/files/434062/original/file-20211126-27-iuq4w2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img src="https://images.theconversation.com/files/434062/original/file-20211126-27-iuq4w2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" alt="" /></a> Peter Costello chairs the Future Fune Board of Guardians. Dean Lewins/AAP The endowment for the Social Housing Future Fund could be established by borrowing at today’s ultra-low interest rates. Some states, including Victoria, NSW, and Queensland already operate social housing investment funds, some financed by privatisations, others financed by government borrowing. The funds would be managed by the existing Future Fund Board of Guardians with only the returns above inflation used to provide capital grants for housing, maintaining the real value of the fund over time. Capital grants for new social housing units would be allocated by the existing <a href="https://www.nhfic.gov.au/">National Housing Finance and Investment Corporation</a> via competitive tenders after specifying dwelling size, location and subsidies for tenants. As is the case with the existing Future Fund, the funding would be off budget, with only each year’s profits or losses affecting the budget balance. The extra $20 billion in gross government debt would be small compared to the nearly <a href="https://www.abc.net.au/news/2020-10-09/federal-budget-2020-debt-deficit-blowout-explained/12741472">$1 trillion</a> currently on issue, supported by about $500 billion a year in federal government revenues. <h2>How much could a $20 billion fund support?</h2> A $20 billion fund that achieved after-inflation returns of 4-5%, could over time provide $900 million each year – enough to deliver 3,000 extra social housing units a year in perpetuity, assuming capital grants of $300,000 per dwelling. Starting in 2022-23, the fund could build 24,000 social housing dwellings by 2030, and 54,000 by 2040. Future governments would be at liberty to top up the fund, helping expand the social housing share of the national housing stock. <hr /> <a href="https://images.theconversation.com/files/434215/original/file-20211127-23-1xithw8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img src="https://images.theconversation.com/files/434215/original/file-20211127-23-1xithw8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" alt="" /></a> Assuming $300,000 capital grant per dwelling, indexed to inflation. <a href="https://grattan.edu.au/news/a-place-to-call-home-its-time-for-a-social-housing-future-fund/" class="source">Source: Grattan analysis</a> <hr /> The <a href="https://alp.org.au/policies/housing_future_fund">Labor Party</a> has proposed something similar, in which funds are used for annual service payments to community housing providers rather than via upfront capital grants. The on-budget cost of our proposal would be modest: about $400 million a year, or less than 0.1% of federal government spending in the form of interest costs. Alternatively, part of the above-inflation return from the fund each year could be used to cover these costs, leaving $500 million available to fund the construction of nearly 1,700 new social housing units per year with no hit to the budget. The Commonwealth should require state governments to match its contributions. <h2>States could double the money</h2> Any state that did not agree to provide matching contributions would be ineligible for capital grants for social housing in that year, with the savings reinvested in the Future Fund and distributed across all states the following year. If matched state funding was forthcoming, the fund could provide 6,000 social homes a year – enough to stop social housing shrinking as a share of the total housing stock. This would double the build to 48,000 new homes by 2030, and 108,000 by 2040, boosting the current stock by one quarter. <hr /> <a href="https://images.theconversation.com/files/434216/original/file-20211127-23-h5zalb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img src="https://images.theconversation.com/files/434216/original/file-20211127-23-h5zalb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" alt="" /></a> Assuming $300,000 capital grant per dwelling, indexed to inflation. <a href="https://grattan.edu.au/news/a-place-to-call-home-its-time-for-a-social-housing-future-fund/" class="source">Source: Grattan analysis</a> By itself, a Social Housing Future Fund wouldn’t solve the housing crisis for low-income Australians. We would still need to boost rent assistance for people on income support and do more to boost housing supply to bring rents down. But it would give a much-needed helping hand to some of our most vulnerable, and keep social housing there for future generations should they need it.<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; text-shadow: none !important;" src="https://counter.theconversation.com/content/172508/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> <a href="https://theconversation.com/profiles/brendan-coates-154644">Brendan Coates</a>, Program Director, Economic Policy, <a href="https://theconversation.com/institutions/grattan-institute-1168">Grattan Institute</a> 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/the-compelling-case-for-a-future-fund-for-social-housing-172508">original article</a>. Image: Shuttershock

Real Estate

Dad spends daughter’s wedding fund on car and holiday

After posting about his situation on <a rel="noopener" href="https://www.reddit.com/r/AmItheAsshole/comments/mhgoq5/aita_for_spending_my_daughters_wedding_fund_on_a/" target="_blank">Reddit</a>, a father has been questioning whether it was wrong of him to spend the $35,000 (AUD $45,045) he had saved for his daughter’s wedding on gifts for himself instead. In the post, he explained his daughter’s wedding had been postponed for more than a year, ending with her choosing to elope rather than going through with the ceremony. Having saved the cash for the wedding fund, the man said he was ‘thrilled’ that his daughter was still able to get married, but also that he could ‘put [the money] to other use’. He revealed that he used the money to treat himself to a new car and take his wife on a holiday. ‘I didn’t think this was controversial,’ the man said. But, his decision has caused major controversy. Just weeks after the daughter had eloped, she asked whether she could dip into the fund of savings to put a down payment on a property. After learning that he had spent the cash, his daughter and ex-wife called him out as ‘selfish’. Her dad defended himself, saying, ‘I never told her it was a wedding or whatever she wanted fund, so I didn’t think I did anything wrong.’ But he’s questioning whether his opinion was biased. ‘I’m a blue collar guy. She knew that I had money put aside for her wedding,’ he added. ‘I never told her it was a fund for her to use on whatever. I paid for her [university] and planned on paying for her wedding but beyond that didn’t plan on paying her way through life.’ The Reddit post received over 1,000 comments, many sided with him and supported his decision to spend the money he’d earned on himself. ‘[This man] paid for his daughter’s entire [university] tuition and living expenses so she’s starting out in life with zero debt,’ one user replied. ‘Isn’t that gift enough?’ Another said, ‘[Your] daughter is allowed to be disappointed, but not an ungrateful, entitled brat.’ Offering a more neutral view, a third commenter said, ‘At the end of the day, it is your money and adult children are not owed houses, cars or weddings by their parents’, claiming they ‘personally’ would have ‘at least given her some of the money as a wedding present.’

Money & Banking

Man who rescued baby whale plans to donate fine funds to marine charities

<div class="body_text "> Django Hopkins didn’t think twice when he saw a baby whale calf tangled in shark netting and rescued the whale in his tinny. However, as Hopkins is from Queensland, it’s illegal to interfere with equipment used for shark control and he could have received a possible fine of up to $26,900. A fundraising page was set up to cover the costs of the fine and it quickly raised more than $20,000. "The GoFundMe page is by two guys I don't even know – they started it, and I think it's about $24,000 today," Hopkins said. He’s made it clear he’s not planning on pocketing the money, as a Department of Fisheries investigation has cleared him of any serious breaches. "It can either go to Sea Shepherd or it can go back to them - I'm not just going to get it and go to the pub when they open." The whole experience of saving the calf was “the best part of the whole thing”, according to Hopkins. "I'm a typical Aussie male, I do stuff first and think about it later. There was no real thinking, I saw it and that was it, you just get going and get in the water," Django told 2GB's Ben Fordham on Thursday. "(Saving the calf) was the best part of the whole thing. Because of the adrenaline going through the whole experience, I can barely remember any of it." <div class="embed-responsive embed-responsive-16by9"><iframe class="embed-responsive-item" src="https://www.youtube.com/embed/2jk90q1eTtc"></iframe></div> He also holds no ill will towards the Department of Fisheries and said they’ve done the right thing. "It's hard to put yourself in the position where you're going to break the law or help something or someone, but they have pulled bodies out of these things - so I get it on their behalf." The whole experience wouldn’t stop him from helping another animal in distress but warns others not to do the same. "I was going straight in. I'm not scared of it, to be honest," he said. "I wouldn't recommend everyone go and do it, its highly dangerous." </div>

Travel Trouble

"You can't teach stupid": Folau receives more funds in two days than farmers' rural aid in one year

<div> <div class="replay"> <div class="reply_body body linkify"> <div class="reply_body"> <div class="body_text "> A Facebook post by The NRL Roast criticising those who donated to Israel Folau’s legal battle has gone viral in just 24 hours. The post highlighted donations given to the Rural Aid Buy a Bale campaign raised in one year matched the money raised for controversial Folau’s legal battle against the Rugby League Association. “In 2 days, Israel Folau has received more in donations than Rural Aid's "Buy a Bale" campaign did in the 2017/2018 financial year,” the post began. “Folau may or may not be in the right in regard to why he got sacked and has every right to launch legal action. “That’s not my gripe. “It's the fact that every day Aussies would rather donate their hard earned, already taxed money, to a multi-millionaire professional athlete who can use the funds however he wants...TAX FREE, while people who actually make a worthwhile contribution to society, and our communities, are left in the lurch. “But you can’t teach stupid… You are just born that way.” <iframe src="https://www.facebook.com/plugins/post.php?href=https%3A%2F%2Fwww.facebook.com%2FTheNRLRoast%2Fphotos%2Fa.248365635620899%2F729888714135253%2F%3Ftype%3D3&width=500" width="500" height="435" style="border: none; overflow: hidden;" scrolling="no" frameborder="0" allowtransparency="true" allow="encrypted-media"></iframe> Folau has raised $2.2 million in just two days by 20,000 people. Since then, the fundraiser, which is located on the Australian Christian Lobby’s website, has been paused – a little less than $1 million short of the sacked rugby star’s $3 million goal. <blockquote style="background: #FFF; border: 0; border-radius: 3px; box-shadow: 0 0 1px 0 rgba(0,0,0,0.5),0 1px 10px 0 rgba(0,0,0,0.15); margin: 1px; max-width: 540px; min-width: 326px; padding: 0; width: calc(100% - 2px);" class="instagram-media" data-instgrm-permalink="https://www.instagram.com/p/BzATb_Wn3I_/" data-instgrm-version="12"> <div style="padding: 16px;"> <div style="display: flex; flex-direction: row; align-items: center;"> <div style="background-color: #f4f4f4; border-radius: 50%; flex-grow: 0; height: 40px; margin-right: 14px; width: 40px;"></div> <div style="display: flex; flex-direction: column; flex-grow: 1; justify-content: center;"> <div style="background-color: #f4f4f4; border-radius: 4px; flex-grow: 0; height: 14px; margin-bottom: 6px; width: 100px;"></div> <div style="background-color: #f4f4f4; border-radius: 4px; flex-grow: 0; height: 14px; width: 60px;"></div> </div> </div> <div style="padding: 19% 0;"></div> <div style="display: block; height: 50px; margin: 0 auto 12px; width: 50px;"></div> <div style="padding-top: 8px;"> <div style="color: #3897f0; font-family: Arial,sans-serif; font-size: 14px; font-style: normal; font-weight: 550; line-height: 18px;">View this post on Instagram</div> </div> <p style="color: #c9c8cd; font-family: Arial,sans-serif; font-size: 14px; line-height: 17px; margin-bottom: 0; margin-top: 8px; overflow: hidden; padding: 8px 0 7px; text-align: center; text-overflow: ellipsis; white-space: nowrap;"><a style="color: #c9c8cd; font-family: Arial,sans-serif; font-size: 14px; font-style: normal; font-weight: normal; line-height: 17px; text-decoration: none;" rel="noopener" href="https://www.instagram.com/p/BzATb_Wn3I_/" target="_blank">A post shared by Israel Folau (@izzyfolau)</a> on Jun 22, 2019 at 1:07am PDT </div> </blockquote> The ACL said the donations, which opened on Tuesday, had been “overwhelming". “ACL, Izzy and everyone involved is humbled and grateful. We are hitting the pause button. But if the case drags on and Israel needs more support, we will re-open this campaign,” a statement on the website said. The original campaign on GoFundMe was shut down after it was determined they had violated the site’s terms of service. “We are absolutely committed to the fight for equality for LGBTIQ+ people and fostering an environment of inclusivity,” Nicola Britton, GoFundMe’s Australian regional director said. Managing director of the ACL, Martin Iles, confirmed any money raised in the $3 million campaign will exclusively be used to meet Folau’s legal costs. In a poll conducted by Over60 with over 5,200 votes, it was determined 60 per cent of Australians believe Folau deserved to be sacked from his contract with Rugby Australia. However, 40 per cent voted Folau's controversial social post that claimed “hell awaits” gay people, among others, was not breaching his contract. NRL Roast’s post, which now sits with over 3,000 comments, has continued to stir debate with some users claiming the page was only adding “fuel to the fire". “If he can say whatever he believes then he should have the guts to face the consequences of his actions and use his own funds to fight his own battles,” one user wrote. Another added: “I don't see why people find this surprising. There are A LOT of people in the world with the same views as Falou.” “So you're complaining about people who are donating their OWN already taxed hard working money to Folau because they choose not to donate it to where YOU think they should donate THEIR money to?” an additional comment read. However, other people said it was “sad” farmers did not have “priority“. "If only those who so support a sportsperson's contract breach which has been turned into a fight for Christianity could support those who grow our food and keep food on our tables...” one comment said. Another stated: “An absolute disgrace that people give money so easily to someone who broke his contract, not once but twice, but can’t find the money for the farmers who help put food on our tables every day, nothing like getting your priorities right.” Folau’s $4 million contract was terminated by Rugby Australia last month after a post on his Instagram page claimed homosexuals, among others, would burn in hell. </div> </div> </div> </div> </div>

Legal

What are managed funds?

When you think of the ways you can invest, many people first think of buying an investment property or maybe some shares on the stock market. While these methods of direct investment have their own merits, many investors would be better served by using the investment power of a managed fund to achieve the goals of growth, security and diversity. But how do managed funds work and why are they an effective way to invest? Here are the basics about these funds to help you make the right decision. The concept of pooling funds If you are simply investing by yourself you are naturally limited in how widely you can spread your investment. Your capital will only go so far and your scope is usually limited to assets that are “visible” to you. For example, you can look at what properties are available in the local real estate window or check the financial pages to see what shares can be bought on the local stock market. Managed funds offer a fundamental difference simply through the collective power of pooling your money with other investors. With a much larger capital base, the pool of funds can be invested across a range of assets to help spread risk and to seek a wider selection of opportunities. This collective buying power allows more diversification, so that rather than being confined to just one or a few areas you have a complete portfolio in one neat package. Understanding types of managed funds There are different types of managed funds to suit different investor profiles and to pursue different investment objectives. In general terms, managed funds can be divided into two categories; single sector funds and multi-sector funds. Single-sector funds will generally focus on one type of asset class, such as cash, fixed interest (eg Government Bonds), property, local shares or international shares. Multi-sector funds will spread across a range of these asset classes and will normally target a certain risk/return profile by having a weighting toward certain types of assets. The weighting will normally be indicated by a term such as “growth funds”, which invest predominantly in shares and property; “conservative funds”, which lean toward less volatile assets like fixed interest; and “balanced funds”, which are somewhere in between. Each managed fund has a statutory requirement to publish documentation, which will detail the fund’s particular objectives and the parameters for how it invests. This allows you to choose the fund that best matches your personal requirements. Profit from specialised skills Another benefit of pooling your investment through a managed fund is that you gain access to the investing expertise and manpower that they possess. A fund manager will have a range of skilled personnel with skills in researching, analysing and allocating the pool of money to achieve the fund’s stated objective. Personal investors can leverage this expertise to achieve a significant advantage in the quality of assets chosen, in contrast with having to do all the research and asset selection yourself. Keeping a watchful eye Monitoring and managing a portfolio of investments takes considerable time and skill. By using a managed fund you automatically have the day-to-day operational management taken care of. You can then simply look at periodical statements from the fund to see how it is performing and how it is moving its assets about to achieve its objectives. But what about the cost? The level of skill, buying power and convenience that managed funds offer will, of course, involve some cost to the investor. Regulation of the industry ensures that such fees and costs are declared in a fund’s promotional material so that they are transparent. While you may think twice about whether such fees are worth it, remember that an investment that you buy into directly, (such as an investment property or company share), will still involve some form of cost – often much greater than what you would pay with a managed fund. Buying an investment property, for example, will involve legal fees, stamp duty and inspection costs. Buying shares directly will incur brokerage costs. When you take this into account, the fees of a managed fund can represent very good value for the level of expertise and diversity they provide. Choosing a fund to suit you If you are interested in the benefits of a managed fund, then your financial adviser can help you assess the type of fund that suits you by making an assessment of your specific lifestyle objectives, time horizon and risk appetite. They should also have up-to-date research on managed fund performance, which can help you make informed choices on the fund or combination of managed funds that are right for you. What do you see as the main advantage of a managed fund? Share your thoughts below. Written by Bridges. Republished with permission of <a href="https://www.wyza.com.au/articles/money/financial-planning/what-are-managed-funds.aspx">Wyza.com.au</a>.

Retirement Income

Make your retirement funds go the distance

You only get one shot at going into retirement, so it is essential that you go in with your eyes wide open. That means being aware of where your income may be coming from, how to plan for living and recreational expenses, and making decisions that are balanced and have an eye on the long term. The earlier you start preparing, the more options you will have, so here are some top tips to get the ball rolling. Where do you stand now? Even if you haven’t been especially concerned about financial planning throughout your working life, it is important to do so as you enter retirement, where you are no longer able to rely on earned income. The first part of the planning process is to get a clear understanding of where you currently stand financially. What assets do you have and what are they worth? This includes your home, your savings and investments accounts, your superannuation, and your possessions. Key dates to be aware of The next step is to establish the key milestones as you transition to retirement. The first milestone is your “preservation age” — the age at which you can access your super. Provided you have retired from the workforce, the minimum preservation age is 55 years if you were born before July 1960. This age increases on a sliding scale up to age 60 for those born after June 1964. The second milestone is the age at which you are eligible for the age pension. For those born before July 1952, this will be 65. For those younger than that, it can be as high as age 67, depending on your date of birth. Eligibility also depends on the income and assets tests. Plan around your lifestyle decisions Once you know when your super and pension income will kick in, you can start to plan your finances around the lifestyle activities you want to engage in during the potentially long years of retirement ahead. For example, you may want to: <ul> <li>Travel in the earlier stages of retirement, before settling down</li> <li>Make some renovations around the home in the earlier years, so you don’t have to worry about them later</li> <li>Make major recreational purchases, such as a boat or motorhome</li> <li>Downsize your home or move to a retirement village down the track</li> </ul> Ideally, all of these major lifestyle decisions should be projected early, so that you can allocate funds for them, decide where those funds should be drawn from, and ensure that you have enough left to generate an ongoing income. Assess your income options Get a clear picture of where your retirement income may come from. This could include: <ul> <li>Income from super</li> <li>Investments outside super</li> <li>Part-time employment</li> <li>The age pension</li> <li>Home equity release or selling the family home</li> </ul> In assessing these income sources, you need to consider whether one may impact another. For example, selling the family home or working part-time may impact your age pension. Take full advantage of entitlements While the age pension on its own may not be enough to fund the lifestyle you want to enjoy, it can certainly be a handy supplement to your ongoing living income. Apart from the pension itself, there may also be other benefits, such as travel concessions, cheaper medicines, and reduced council and water rates, which can translate into a significant amount of savings every year. Structuring your investments to maximise entitlements is therefore a critical issue and some professional financial advice can make a big difference in that regard. Is work an option? Not everyone is particularly keen on making a sudden shift from full-time work to full-time leisure, so if you are still interested in continuing to work part-time, it can help you delay drawing down on your super and other assets. There are incentives within the social security system to encourage this, so seek advice to see how it may be a good option for you financially. Budgeting is essential There may be a temptation to splurge a little when you first receive a large lump sum from your super, but make sure you project your living expenses properly before taking the plunge. More than ever, a simple budget is essential to ensure you don’t outlive your income in retirement, so ask for advice and get things in writing to make it as tangible as possible. Don’t forget to include emergency funds in your budget to take care of any surprises or spikes in expenses, such as unexpected illness, a house move, or a family crisis. Get advice early As you can see from the factors mentioned here, there are many interconnected elements to planning income and expenses for retirement: speak to a financial planner to help put the puzzle together, structure a diversified investment strategy, maximise entitlements, and map out your lifestyle and living expense needs. What are your biggest concerns about getting through retirement without financial worry? Share your thoughts below. Written by Bridges. Republished with permission of <a href="https://www.wyza.com.au/articles/money/financial-planning/make-your-retirement-funds-go-the-distance.aspx">Wyza.com.au</a>.

Money & Banking

How much should I have in my emergency fund?

An emergency fund is exactly that - it’s the money that will tide you over when an emergency happens. This includes losing your job, having to pay for urgent home or car repairs, and to pay for medical and dental emergencies. Because it’s meant to be accessed quickly, you should keep your emergency funds in a liquid bank account. How much do I need? First you should know how much you spend in a month. Keep track of your expenses for three to four months. You should already start saving some money while you do this exercise. An emergency fund should only be used to cover the necessities and not the luxuries, which means bills such as transportation, utilities, groceries and your rent or mortgage. You should not be using this money for holidays or shopping. How much should I save? Once you know your monthly expenses, start working towards saving three months’ worth. For example, if you need $3000 a month to cover all your bills, you should have $9000 squared away for emergencies. Having that amount will give you peace of mind that you can weather the storm until you get back on your feet. While it’s a good start, three months’ worth of savings is not nearly enough to cover larger costs. For example, if you lose your job, it may take you several months to find a suitable replacement. Which is why you should keep going and work towards having six months’ worth of expenses set aside. One financial expert, former TV host Suze Orman, even advocates setting aside eight to 12 months’ worth of expenses to feel truly secure. How can I start saving money? No matter how much you earn, try sticking to the 50-20-30 rule. This means not more than 50 percent of your income should go towards living expenses and essentials, while 20 percent should go towards savings, investments and reducing your debt. The final 30 percent should be used for discretionary spending, such as travel, gifts and entertainment. Adjust your spending accordingly using the guide. For example, if you’re consistently exceeding 30 percent of your pay on discretionary spending, you might need to find cheaper entertainment alternatives or cut down on nights out. And if you’re just starting out, you might want to save a little more aggressively in order to squirrel away that emergency cash. Do I keep going once I complete my emergency fund? After you’re satisfied that the amount in your fund will keep you secure for a good amount of time, you should look into saving money for other purposes, such as buying a home of your own, or your retirement. You may even want to explore investing for potentially higher returns. Be aware though that investments come with risks, so you should speak with a qualified financial consultant whom you trust before committing to any investments. And, of course, if you ever need to withdraw from your emergency fund, you should start building it back up again as soon as you’re able. Written by Siti Rohani. This article first appeared in <a href="http://www.readersdigest.com.au/money/how-much-should-i-have-my-emergency-fund?items_per_page=All">Reader’s Digest</a>. For more of what you love from the world’s best-loved magazine, <a href="https://www.isubscribe.com.au/Readers-Digest-Magazine-Subscription.cfm">here’s our best subscription offer</a>.

Retirement Income

From $230K to $28 – Grieving widow shocked to find late husband’s super fund drained dry

After Kim Garbutt’s husband, Craig, passed away 10 years ago, his family was expecting a cheque for more than $230,000 in death benefits from AMP – Craig’s superannuation fund. Instead, they received $27.64 13 days later. The grieving widow was shocked to find that the account had only a small sum of money, when she was under the impression that her husband had left her with $230,000. “When the account arrived, I was a bit dumbfounded,” she told <a href="http://www.abc.net.au/news/2018-08-13/widow-expected-$200,000-super-death-benefit-amp-paid-her-$25/10114662">7.30.</a> “Sometime after that I spoke to them and they were saying basically the account had run dry. They went, ‘So sad that he’s died but too bad, the accounts got no money in it.” Ms Garbutt only discovered the account was $233 in arrears – and that AMP had cancelled the policy – five months before Craig’s death. Before his death in 2008, Craig had fought an alcohol addiction which put strain on his marriage with Ms Garbutt. Although the two split shortly after the wedding, they decided to stay legally married for the sake of their two children. Craig, who passed away at the age of 39, was described by Ms Garbutt as someone who was “super smart…he was funny, he liked to dress well.” “He wasn’t ostentatious, he was bombastic, he was just a nice friendly guy. He was well-liked, he was well-loved.” While he tried to seek help by attending rehab facilities, in the end he couldn’t rid himself of his addiction. Before he passed away, Craig was using friends’ couches and his car to live out of after his business went bankrupt. “He was in debt to what we think is $300,000 to $400,000 to maybe six or seven creditors. Phones had been cut off,” said Ms Garbutt. After investigating, Ms Garbutt discovered that Craig had transferred $1786.55 into the account from his previous super fund in 2003, but in as little as 5 weeks, the amount was down to $1579.29 after he was charged over $207.08 in fees and premiums. Even though Craig had no further contribution to his account after the initial $1786.55, AMP continued to deduct fees and charges – many of which were hidden. AMP claims to have contacted Craig before his death to let him know that his account was low on funds and would be cancelled. They advised her that there was nothing more they can do. According to Ms Garbutt, AMP was not cooperative and refused to speak with her on compassionate grounds, and since Craig’s passing, she has been struggling to compete with the insurance company about Craig’s superannuation and insurance. Ms Garbutt reveals that while AMP sent her late husband letters regarding his fund, he was seriously ill and was not opening mail at the time. A spokeswoman from AMP said that the company “strongly rejects” the idea that Ms Garbutt had been uninformed throughout the process. “At no time were we informed that [Craig] was unwell, and we corresponded with him as early as seven months before his death that he was at risk of losing his valuable insurance,” said the spokeswoman. “We do allow customers to reinstate lapsed policies based on medical evidence, however we do not allow this where the reinstatement is due to the customer now wishing to claim.” Ms Garbutt claims to have “begged and pleaded” with the insurance giant regarding where Craig’s money had gone, but AMP remained uncooperative. “It was ‘Nope, we told Craig it was going to be cancelled’,” she said. “I went, ‘Craig wasn’t functioning, we wouldn’t have read the letters’.”

Legal

Trust funds can work but you must be wary

As a child I remember my father saying that one pound put into a bank account for a newborn child and left to compound for 30 years would be worth some huge amount of money. I do not recall the number, but to my young ears it seemed some incredible sum of money - like a telephone number (although remember that telephone numbers were only four digits in those days). Whatever the actual numbers, we all know that a relatively small amount of money invested for a newborn baby will be worth a tidy and useful sum in 20 to 30 years. There are many of us who want to help their child or grandchild - we want to make a gift of money and use the miracle of compound interest to support the new little miracle of life. So, how do we go about this? After all, intent is one thing but the practicalities are quite another. While it may seem a simple thing to use the power of compound interest for the years a child is growing, when you really look at it, things are not that simple. The first difficulty is the ownership of the fund that is established. If the fund is in the child's name, on turning 18, the money becomes that child's. That may be fine - you may be perfectly happy for the child to take the money and buy a motorbike and have a big party, but the intent of putting aside some money is more usually for the child's education or to help with the deposit on a house. As an alternative, you may hold the money for the child, resolving to give this money at a certain age or circumstance (eg, first house or tertiary education). The difficulty with this is that in the absence of any legal document to the contrary, the funds that you hold for the child will be yours and deemed so in areas like tax, asset testing, Working For Families, insolvency etc. To resolve this you could establish a trust - but if you have not already established a trust there will be considerable expense for establishment and ongoing management and interest from the child's fund could be taxed at 33c. The second difficulty is the investment strategy. It is easy enough to set up a bank account in the child's name and to make contributions to it which will mean that the interest will be taxed at the child's own low rate. However, a simple bank account will give low returns. This is important: for an investment of 20 years or more, there should be a very high proportion of shares and property. To illustrate, a gift of $10,000 put into a simple bank account earning 3 per cent would be worth $18,000, but a growth portfolio earning 6 per cent would be worth $33,000. The third difficulty is tax. This is linked to the ownership of funds: if the donor (parent, grandparent etc) owns the fund, the returns are taxed as their income; if the child owns the fund, they are likely to be taxed at a much lower rate. So, given the desire to use the power of compound interest to give the child the best start, what should you do? Well, there are options, but none of them is perfect: first, you could simply open a bank account in the child's name (but, as shown, the lower returns will mean that compound interest is lower too). Third, you could establish some kind of trust for the child (but the costs of this mean that you will have to gift a good deal of money to make it worthwhile - and there are also difficult tax considerations). I do not have an easy answer to this. Your love for that new little speckle of life means that you want to help, but you have to recognise that, in a practical sense, using compound interest to give that help is not simple. You need to weigh all the factors and then choose the best (although probably imperfect) means of help for your family. Have you set up a trust fund? Written by Martin Hawes. First appeared on <a href="http://www.stuff.co.nz/" target="_blank">Stuff.co.nz</a>. Martin Hawes is an authorised financial adviser. A disclosure statement is available on request and free of charge, or can be found at martinhawes.com. This article is of a general nature and is not personalised financial advice.

Legal

Why you must have an emergency fund

We were taught as children that it pays to have money set aside for a rainy day. The trouble is, it rains often. However, there is a big difference between a few light showers and a torrential downpour. When money is tight it is not easy to first of all find the spare cash to put into an emergency fund and secondly to leave it there. Life just keeps on getting in the way. The purpose of an emergency fund is to help you when you have a major life event, such as illness, losing your job, or a big bill you weren't expecting. These are events that either substantially decrease your income or increase your costs for a period of time. Your emergency fund should be enough to bridge the gap between your changed level of income and expenses until things get back to normal again. It should help pay essential living costs such as rent, mortgage, food and power bills. There is a rule of thumb that says you should always have access to enough money to cover three to six months' worth of expenses, but really the amount you need in your emergency fund depends on your personal circumstances and how security conscious you are. Basically, it's about how much financial risk you are exposed to. Things that can increase your financial risks are: <ul> <li>Poor physical or mental health, which might impact on your ability to work.</li> <li>Underinsurance of your income or your assets.</li> <li>Dependent children or elderly parents.</li> <li>Close relatives living in another country who may need support.</li> <li>Poorly maintained house or car.</li> <li>A poor credit rating which affects your ability to borrow.</li> <li>Relationship difficulties which could lead to separation or divorce.</li> <li>Prevention, as they say, is always better than cure.</li> </ul> The risk of experiencing a sudden loss of income or an unexpected bill can be lessened by choosing the right career path, keeping your skills up to date, working for a good company, maintaining your assets, keeping yourself in good physical and mental shape and building strong relationships. However, given that not all risk can be eliminated, you still need to have reserves to call upon. Emergency funds need to be readily accessible so don't use them to invest in shares or other long term investments – you might find you lose money if you have to sell up at short notice. On the other hand, if you have a mortgage or other debts, leaving money in a low interest savings account doesn't make a lot of sense. Some banks now offer a mortgage offset arrangement where your savings account balances can be used to offset the balance of a variable interest mortgage for interest calculation purposes. This is a great way to keep money on hand while keeping your mortgage interest payments down. If your bank doesn't offer this, the same effect can be achieved by turning part of your mortgage into a line of credit, to be used only for savings. Simply save into the line of credit and draw the funds down again if disaster strikes. If you have no mortgage or debts, your emergency fund can be kept in a high interest, online call account. If you lack the discipline to leave the account untouched, put your savings in a different bank than your everyday bank to keep them out of sight. Another option is to invest in a fixed interest managed fund which could give a higher rate of return than a savings account while still being accessible. Without an emergency fund you are much more likely to end up with short term, high interest debt when things go wrong. Get into the habit of setting aside even just a small amount per week to avoid seeing your money disappear on interest payments. Tell us in the comments, do you have an emergency fund set aside? How do you build it up? Written by Liz Koh. First appeared on <a href="http://www.stuff.co.nz/" target="_blank">Stuff.co.nz</a>. Any advice contained in this communication is general advice only. None of the information provided is, or should be considered to be, personal financial advice.

Retirement Income

3 things the best fund managers never do when investing

Kent Kwan is co-founder of AtlasTrend. With 15 years of professional experience in investing and international financial markets, Kent has successfully managed more than $1 billion in funds invested in international-listed shares. Many textbooks and articles will tell you how successful fund managers go about analysing companies when they invest. However, what they don’t tend to disclose is that a lot of investment success is also a result of never doing certain things. Here are the top three things that the many top performing fund managers will never do. Whether you are a beginner or expert share investor, you can easily apply the same rules. 1. Never believe “I really can’t sell those shares” Have you ever invested in shares and then the share price falls significantly because the company announced poor financial performance? Is your first reaction to say “I really can’t sell those shares” because I would be making a loss? This is a very common reaction and in fact psychologists have a term for this. It is called loss aversion. It simply means most people tend to feel greater emotions from losing money than from making money. This is why many investors tend to hang on to their losing investments in the hope that the share price will appreciate so they don’t have to feel the pain of realising an investment loss. The best fund managers never do this. Instead, the question they always ask themselves is whether there is a better risk adjusted investment available elsewhere versus their current investment. If the answer is yes (even if the answer is cash), they will sell the existing investment despite crystalising a loss. In fact, some fund managers will even go to the extreme of actively removing historical purchase prices from their internal portfolio tracking data in order to reduce the potential for loss aversion. It may sound counterintuitive but it works. For example, any investor in the large cap miners (e.g. BHP or Rio Tinto) in the last few years who held on while share prices fell around 50%, would have been much better off having never said “I really can’t sell those shares”. This doesn’t mean you should always sell your loss making shares, but rather you should always ask whether there are better opportunities for investment returns elsewhere for the money invested in those shares. 2. Never fall deeply in love with an investment It is great investment discipline to keep a close eye on the underlying company performance of the shares you’re invested in. However, there is a difference between closely monitoring company performance and falling in love with your investment. Let’s use a hypothetical example. An investor invests in Woolworths in 2012. Two years later, the investor has an unrealised capital gain of approximately 35 per cent. A very good result but unfortunately Woolworths’ earnings performance starts faltering soon after. The investor, having made an unrealised gain, is not too concerned having found research reports and articles suggesting it is just a short term issue at Woolworths. Unfortunately, more earnings downgrades come and the CEO resigns. Having shopped at Woolworths for many years as a customer, the investor continues to believe the business is fundamentally very sound but just needs some new direction. A selection of press reports also suggests Woolworths is potentially a great turnaround investment and the investor takes comfort from this while disregarding any commentary about Woolworth’s longer term issues. Unfortunately, by this time the share price has been falling substantially for two years. It is clear this investor has fallen deeply in love with Woolworths by only reading positive reports confirming their original investment hypothesis. Have you ever done this before? It is a very common human behavioural trait called confirmation bias. The best fund managers will actively try to avoid confirmation bias for all their investments. They do this by always looking for the opposing views to their investment thesis to help them better understand the material investment risks that others see. If you do the same, it will no doubt help improve your investment skills as well. 3. Never become trapped by fixed investment styles Are you a value investor or a growth investor? These are just two of the many investing styles that investors and textbooks advocate will help with generating strong investment returns. Traditionally, many investors follow one investment style for all their investments with the belief it will generate the best returns over the long term. However, is it really right to view investments with such a restrictive lens? Let’s look at perhaps the world’s most famous and successful investor, Warren Buffett. He is known widely as a value investor and tends to be perceived as someone who only invest in companies trading at low valuations. To many investors, he is the embodiment of value investing. However, he once wrote the following specifically about value and growth investing in Berkshire Hathaway’s annual letter to shareholders. “In our opinion, the two approaches are joined at the hip: Growth is always a component in the calculation of value […] a high price-earnings ratio, and a low dividend yield are in no way inconsistent with a “value” purchase.” The quote above sums up very well how Warren Buffett and the top fund managers invest. For them, investing is never about simply classifying a share as a value or growth share. It is about whether the current share price is lower or higher than the fund manager’s view of valuation for those shares. <a href="https://www.atlastrend.com/" target="_blank">AtlasTrend</a> is a global equities fund manager that makes it easy for anyone to invest in the world’s most thriving trends. To gain more actionable investment insights from the AtlasTrend team on profitable world trends (such as the growth of online shopping or rise of big data) and the listed international companies benefitting from these trends, click <a href="https://www.atlastrend.com/register/?group=oversixty" target="_blank">here</a> to sign up. Any advice contained in this communication is general advice only. None of the information provided is, or should be considered to be, personal financial advice. Related links: <a href="http://www.oversixty.co.nz/finance/money-banking/2016/08/10-more-items-you-must-never-buy-at-the-supermarket/">10 more items you must never buy at the supermarket</a> <a href="http://www.oversixty.co.nz/finance/money-banking/2016/07/understanding-the-huge-power-of-big-data/">Understanding the huge power of big data</a> <a href="http://www.oversixty.co.nz/news/news/2016/07/20-simple-ways-to-save-when-grocery-shopping/">20 simple ways to save when grocery shopping</a>

Money & Banking

Do you have an emergency fund?

So much time and energy gets put into fancy investments and get-rich-quick schemes that people often forget the most important part of any financial plan should be a cash reserve or emergency fund, to protect you and your quality of life in the lean times. Arguably, creating an emergency fund is even more important in retirement, particularly if the share market suffers a steep fall as investments markets can take quite some time to recover. It’s recommended that you have at least 12 months’ worth of payments. But how do you put one of these together? Here’s some basic advice for creating an emergency fund to ensure you quality of life should the unfortunate happen. Expenses an emergency fund is good for: <ul> <li>Expenses associated with a health emergency.</li> <li>The need to travel or finance other arrangements as a result of a family emergency.</li> <li>Major unexpected car repairs.</li> <li>The failure of a major appliance.</li> <li>Large and unexpected home repairs or deductibles.</li> </ul> Know how much money you need The first thing you should be doing when creating an emergency fund is figuring out the minimum amount you need each month to cover your essential expenses. To do this you need to separate expenses that are discretionary from those that are non-discretionary. Non-discretionary expenses that you have committed to like loan repayments, rates, electricity and other bills should be considered your essential expenses. Expenses like entertainment, clothing and gifts should not be considered part of this. Keep your emergency fund separate When you’re creating your emergency fund, you don’t want to feel tempted to access it unnecessarily. Creating a separate account will remove the temptation to access it and you may even be allowed to get better returns through higher interest. Celebrate when you reach your milestones. While you obviously don’t want to be splurging, celebrating when you reach certain financial milestones can provide an effective incentive to keep going, which might just make that next tide marker a little bit easier to hit. Related links: <a href="http://www.oversixty.co.nz/finance/retirement-income/2016/03/maori-veteran-humbled-by-support-for-cut-pension/">Maori Veteran humbled by support for cut pension</a> <a href="http://www.oversixty.co.nz/finance/retirement-income/2016/03/products-up-to-date-ageing-population/">Are products keeping up to date with the ageing population?</a> <a href="http://www.oversixty.co.nz/finance/retirement-income/2016/03/seniors-investment-income-suffering/">Seniors relying on investment income are suffering</a>

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