Why deny US-style Fair Use copyright laws to Australians?

Copyright reform needed: LaborWhy did we gain the restrictions of US copyright law but not the rights?After an 18-month review, the Australian Law Reform Commission (ALRC) has backed calls to bring Australia’s copyright laws into the modern age with “Fair Use” exemptions. The change would streamline our current hotch-potch copyright laws, which aren’t designed to cope with the rapid pace of technological change.  Australia’s current copyright laws need to be rewritten to account for every new technology, an approach which saw everyone breaking the law for almost thirty years until we gained the right to record free-to-air television in 2007. The ALRC’s “Copyright and the Digital Economy” report wants to replace this with proactive Fair Use laws which use four technologically-neutral “fairness factors” to determine whether an act of copying is within the law.Federal Attorney-General George Brandis agrees that copyright laws need an overhaul, describing them as “overly long, unnecessarily complex, often comically outdated and all too often, in its administration, pointlessly bureaucratic”. That sounds promising, until Brandis keeps talking and you realise he wants to focus all his attention on filtering the internet and chasing movie downloaders, rather than forging balanced copyright laws. Brandis has already signalled his reluctance to embrace Fair Use law due to the supposed uncertainty it would create for copyright holders. This of course conveniently ignores the fact that the United States – one of the world’s major content creators – has had similar Fair Use laws in place for decades.The ALRC report anticipated this kind of response from the likes of Brandis, and addressed it head on in the summary report:”The standard recommended by the ALRC is not novel or untested. Fair use builds on Australia’s fair dealing exceptions, it has been applied in US courts for decades, and it is built on common law copyright principles that date back to the 18th century.””If fair use is uncertain, this does not seem to have greatly inhibited the creation of films, music, books and other material in the world’s largest exporter of cultural goods, the United States.”Fair Use laws obviously aren’t creating too much uncertainty in the US, but our current laws are definitely creating uncertainty in Australia. The Optus TV Now and IceTV cases are two high profile examples where businesses were dragged through the courts even though they felt they were on the right side of the law – and so did the courts in some circumstances. Fair Use rules will create more certainty for copyright owners and businesses contemplating new services based on their content. What’s really frustrating is that Australians didn’t inherit Fair Use rights under the 2005 US Free Trade Agreement, in a text-book example of “do as we say, not as we do”. The agreement saw Australia adopt many of the restrictions of the US Digital Millennium Copyright Act, such as a ban on circumventing Digital Rights Management even if you’re exercising your rights under copyright law. Even if Australians are granted Fair Use exemptions for acts such as format-shifting our DVD libraries, these digital rights management (DRM) laws will stand in the way.If Fair Use does get up in Australia, it will be interesting to see if other services and copyright holders introduce token DRM protection just so they can neutralise Fair Use exemptions. Other agreements such as the secretive Trans Pacific Partnership also seem heavily weighted in favour of protecting copyright holders and at the expense of our rights under law.The ALRC clearly states that Fair Use does not include piracy, but some people are happy to muddy the water to ensure we get more copyright responsibilities without the corresponding rights. If Fair Use copyright laws are good enough for the US, why aren’t they good enough for Australia? Where do you think the balance lies? 
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Andrew ‘Twiggy’ Forrest pockets $103m as Fortescue joins dividend rush

Andrew Forrest at his iron ore mine at Cloudbreak. Photo: Quentin JonesFortescue Metals Group has joined in the dividend bonanza sweeping the Australian market, announcing a higher than expected half-year payout that will see close to $103 million flow to its biggest shareholder, billionaire rich-lister Andrew ‘Twiggy’ Forrest.
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The 10¢ per share dividend is equal to the dividend that came with full year profit announced by the company in 2013.

The dividend came as Fortescue reported a $US1.71 billion net profit for first half, which was slightly lower than the $US1.77 billion that a consensus of analysts were expecting.

But it was better than the $US1.67 billion that UBS was expecting.

The result is a stunning 259 per cent higher than the first half of 2013, and reflects the huge rise in production that is underway at the iron ore miner.

Fortescue has also benefited from higher than expected iron ore prices over the past six months.

Fortescue has kept its full year export guidance at 127 million tonnes, despite weather challenges over the past seven weeks.

Fortescue chief executive Nev Power warned last month that heavy rainfall was persisting through January and could interrupt production and shipments.

The wet weather has continued since then, and UBS analyst Glyn Lawcock noted this week that one year’s worth of average rainfall in the Pilbara had fallen in January alone.

That prompted Mr Lawcock to lower his export estimate to 125 million tonnes, but the company is so far holding its guidance at 127 million tonnes.

Fortescue was initially forecasting that exports would range between 127 million tonnes and 133 million tonnes in the 2014 financial year, but changed that in January to 127 million tonnes exactly.

Fortescue wants to gradually increase its dividends until it hits a consistent dividend payout ratio of between 30 and 40 per cent.

But the company will need to pay down more of its debt before it hits that level.

The dividend paid out by Fortescue was almost double the 5.3¢ dividend analysts had been expecting.

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‘Dairy wars’ not over as Bega Cheese positions for battle

Bega Cheese’s factory on the NSW south coast. Photo: Orlando ChiodoNSW-based Bega Cheese has hinted the dairy wars are not over, saying the company is well-positioned for further consolidation and the battle for milk supply as it reported an 18 per cent jump in first half profit to $18.7 million.
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The cheese company, which listed on the ASX in 2011, recently lost out to Canadian giant Saputo in the dramatic three-way takeover battle for Victorian dairy group Warrnambool Cheese & Butter.

But Bega said it has reaped $98.9 million, before tax and costs, for its 18.8 per cent stake in WCB and expects to report an after-tax profit of $44 million in its full-year accounts.

“The recent battle for control of WCB was a demonstration of both the value of dairy assets in Australia and Bega Cheese’s positioning as a key player in the ongoing rationalisation of the Australian dairy industry,” Bega said.

“Bega Cheese has a very strong balance sheet and is well-positioned to participate in the ongoing opportunities in the Australian dairy industry.”

The comment comes just days after the banker who led Saputo to victory in the $530 million battle for Warrnambool said he expects dairy deals to keep flowing.

“There’s a trend of bringing global companies like Saputo to the Australian market and helping them build out their position,”Rothschild managing director Sam Prentice said.

“Private equity firms are all looking at their portfolios and which of their investee companies are suitable for IPOs.”

Announcing its first-half profit, Bega said there are a number of organic growth opportunities it intends to pursue in further value-adding its whey and dairy nutritionals products.

“The group expects to consider a number of investment and corporate opportunities in the short to medium term.”

Adverse weather and competition for milk supply drove an 8 per cent drop in milk intake to 336 million litres, but group revenue rose 4 per cent to $510.6 million and earnings before interest and tax jumped 15 per cent to $30.2 million.

Near-record dairy commodity prices and the recent decline in the Australian dollar underpinned the growth in earnings.

Bega said the outlook for dairy commodities is positive primarily due to the insatiable demand from China for whole milk powders and whey powders.

The company said a key focus going forward will be on providing incentives to grow its existing milk pool and procure new supply, suggesting it is ready for a battle to win farmers from rivals like new entrant Saputo.

“A number of new entrants in milk supply procurement, strong competition amongst existing players and increased returns from international markets will continue to create a highly competitive market for milk,” Bega said.

Bega declared a full-franked interim dividend of 3.5¢, matching the dividend paid in the prior period.

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Cash splash: Another $6b to line investor pockets

Six of the major businesses reporting this week plan to pay out a total $6.3 billion in dividends. Photo: Peter BraigCompanies are continuing to line investor pockets with cash returns this reporting season, with more than $6 billion in dividends paid this week.
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Wesfarmers, BHP, Fortescue, Suncorp, Woodside and Seek are amongst the group of corporates splashing cash on investors.

Fortescue surprised investors on Wednesday, when it announced a total dividend payout of $US292 million ($324.41 million), of which close to $103 million with be paid to its biggest shareholder and company chairman Andrew ‘Twiggy’ Forrest.

Combined, six of the major businesses reporting this week plan to pay out $6.3 billion in dividends, a sign of confidence in their own businesses, and the Australian economy.

In the case of Woodside and Suncorp, dividends were increased, despite profits falling.

Forecasts have varied and there is still some worry surrounding Australia’s transition away from the mining economy, but payout ratios continue around record highs.

The 10-year average S&P/ASX 200 payout ratio is about 60 per cent but has been as low as 52.2 per cent – the payout in 2007 – Perpetual’s figures show.

Healthy dividends are popular with Australian investors and companies, despite cut-backs, have been keen to keep investors happy with solid and growing returns.

Consumer spending is slowly returning and the aggressive cost-cutting has allowed the flow of dividends to keeping pushing through.

Stronger balance sheets, repositioned asset portfolios and underlying profitability have given businesses the confidence to pay out increased dividends, Morgan Stanley head of investment strategy Malcolm Wood said.

”It is a vote of confidence in the future, of course. Companies don’t like mucking around with their dividends too often and the market still offers a very attractive dividend yield, vis-a-vis alternative assets,” Mr Wood said.

”I guess that management and boards are saying they’re fairly comfortable with the outlook.”

The yield theme has been prominent for the Australian market in recent years.

Falling bond yields, short and long term rate cuts, and less appealing term deposits have sent investors looking for a more profitable use of their money.

So far this earnings season, things have looked positive.

Of the 30 per cent of companies that have reported, more than half have beat net profit expectations, Deutsche Bank strategist Tim Baker said.

“The change to earnings is more modest (+1-1.5 per cent for financial years 2014 and 2015), but still positive. And this should be viewed against the backdrop of only very mild earnings downgrades coming into results, making the hurdle of beating expectations higher,” Mr Baker said.

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Why the ‘Penfolds curse’ could strike again

Penfolds’ earnings potential in the next two years is vast. Photo: Tamara DeanIs there a Penfolds curse at work? A succession of six corporate owners of Australia’s most famous wine brand over the past three decades have either been taken over or run into financial strife, and the prospect of it happening again remains high.
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It’s as if the ghosts of the founders Dr Christopher and Mary Penfold, who started Penfolds in 1844, are wreaking their revenge because the wine brand has strayed so far from its original purpose of being a medicinal benefit for patients of Christopher’s medical practice.

The latest custodians, Treasury Wine Estates, have earned the wrath of investment markets and the credibility of the board and management is in tatters, as they battle to try and restore some confidence in the company’s direction after a run of disasters. Much depends on the reception received by Treasury chairman Paul Rayner and his stand-in chief executive Warwick Every-Burns, who stepped out of the Treasury boardroom to run the company last September. They will attempt to defend their strategy on Thursday when they outline the full details of the $40 million full-year profit downgrade announced three weeks ago, as Treasury officially unveils its first-half profit results. But how long will Treasury be around in its current form?

The irony is that Penfolds itself is a highly-profitable business and the jewel in the crown of Treasury. Penfolds is estimated to make around $180 million in profits annually, which is about three quarters of the total profits of Treasury’s sprawling wine business which also includes the Beringer brands in the United States, and Wolf Blass, Rosemount, Seppelt, Lindemans and Wynns in Australia.

Penfolds’ earnings potential in the next two years is vast, as a treasure trove of up to $280 million worth of high-quality red wines currently maturing in barrel halls will hit the market.

This is why potential suitors are closely eyeing the corporate mess that Treasury has found itself in and the potential upside for a new owner. Speculation centres on Chinese firms and private equity buyers as those most interested.

The Penfolds brand, with a 170-year-old history, has proven very resilient over three decades of corporate ructions with the brand having passed through six different sets of corporate owners since the early 1980s. The prestige of the flagship Penfold’s Grange, the latest release of which the company was selling for $785 per bottle, is a huge strength and the halo effect down through the range is a winner in the marketplace.

Bruce Kemp was chief executive of Southcorp Wines, a forerunner of Treasury, for most of the 1990s and is today chairman of Tasmanian wine company Pipers Brook. He says Penfolds has enormous cache in the marketplace.

“It still stands out,” Mr Kemp says. Penfolds Grange and the higher-quality Penfolds range that sits underneath it were big profit drivers in the 1990s, and two decades on, the “halo” effect is still intact. “There’s a pretty big halo, and a big shadow down the line,” Mr Kemp says.

Bank of America Merrill Lynch analyst David Errington has all but given up on Treasury’s current board and management and says ”if the board’s focus turns to maximising shareholder returns, it will need to consider breaking the company up”.

A break-up would result in a scramble for the best assets, with Penfolds at the top of the tree. The one possible saviour in the ongoing Treasury saga is the prospect of a new, highly-respected chief executive being appointed soon. There are persistent rumours about the long-time boss of Coca-Cola Amatil’s Australian operations, Warwick White, having been approached to take the job. Outgoing CCA chief executive Terry Davis, who had been the subject of speculation that he has being courted, says he has not interest in taking another chief executive role at a public company.

But Penfolds has been through a lot. It’s had six owners in just over three decades. In the mid-1970s, Penfolds was acquired by then NSW brewer Tooth & Co, and then in the 1980s became part of corporate raider John Spalvins, Adelaide Steamship Company, which also owned Woolworths, David Jones and a host of big-name food brands including Peters ice-cream and Four’N’Twenty pies.

Mr Spalvin’s empire fell apart after the 1987 sharemarket crash under the weight of $7 billion in debts, and Penfolds was sold off to another beer company, SA Brewing, in 1990. SA Brewing, an ASX-listed company, changed its name to Southcorp in 1993, sold off packaging and water heaters businesses, and Southcorp Wines became a stand-alone wine business. It then merged with privately-owned Rosemount Wines in 2001 in what was effectively a reverse takeover, to become the world’s largest wine company. But things went awry under new management and in 2005 it was taken over by Foster’s Group. But plans by Foster’s to extract efficiencies from selling beer and wine into the same liquor retailers didn’t work properly, and after further management changes, Foster’s was split into two companies in 2011. The wine company was re-badged Treasury Wine Estates and in May, 2011 set sail on his new voyage as an ASX-listed debt-free wine group, with Penfolds as the biggest brand.

Chief executive David Dearie lasted a little over two years but was then punted by the board in September, 2013, taking the blame for $160 million in writedowns connected with the United States wine operations.

A potential predator of Treasury will be closely eyeing the red wine inventory sitting in barrel halls at Penfolds. Bank of America Merrill Lynch believes the profit increase from the Penfolds business over the next two to three years is substantial, with Penfolds having increased inventory levels of its higher-priced wines from $50 million worth in 2011, to $280 million in 2013. The stockbroking firm estimates that Penfolds currently contributes 75 per cent of Treasury’s total depressed earnings before interest and tax, and given the difficulties Treasury has faced with under $10 bottled wines in Australia with its other commercial brands, that proportion of profits may be even higher.

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Peter Betham says failure not an option for Waratahs back line against Western Force

Confident: Peter Betham throws a last-gasp inside ball in the Waratahs’ trial against Auckland Blues on February 7. Photo: Anthony JohnsonWaratahs winger Peter Betham is fully aware of the danger of the Force back row stifling vital ball supply to the NSW back line in Sunday’s Super Rugby clash at Allianz Stadium.
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But the New Zealand-born flyer says the threat will not provide just cause for the Waratahs failing to showcase the potency of the NSW back line. Such is Betham’s new strength of mind, galvanised by the confidence he gained from his performances last year that lead him to make his Wallabies Test debut.

Betham, 25, says he realises the quality of ball the NSW backs receive from their formidable forward pack will depend on their West Australian opposition. “Especially with the type of back row the Force always produce, it’s definitely going to be a battle at the breakdown,” he said. “It’s not an excuse for the backs to not play. We are definitely going to make gains.”

This time last year the former Brumbies and Rebels player was at the dawn of a new season with the Waratahs that would end with him scoring five tries from 15 games in Super Rugby. Last year also saw the Sydney University winger play his first – and so far only – Test for the Wallabies: in the starting side that lost 41-33 to the All Blacks in Dunedin.

Asked about his mindset on the eve of season two under Waratahs coach Michael Cheika, Betham said: “I am quietly confident. That lack of confidence which led to errors in games [beforehand] is pretty much a no-go for me. That [confidence] is one thing I will take into this season. I will put my [best] foot forward. It won’t stop me from doing the same things that I do.”

Betham, who has 24 Super Rugby caps, says he is physically superior now: “I am getting faster,’’ he said. ‘‘My general fitness is going pretty well, so when it comes to fitness your numbers generally get a bit higher with your speed.”

With this new speed and confidence, Betham hopes he will be more assured and effective on the field – from anticipating opportunities to running on to the ball. “It’s [about] getting the confidence up and putting yourself in situations where you are under pressure but confident in your ability to get the job done,” Betham said.

It helps being in a Waratahs back line that offers so much strike power and laden with various options in attack with Nick Phipps at No.9, Bernard Foley at No.10, Kurtley Beale at No.12, Adam Ashley-Cooper at No.13, rookie Alofa Alofa at No.14 and Israel Folau at No.15.

“It is a back line that has matured, and [with] the additions we have had with Kurtley Beale and Nick Phipps, it [has] more firepower,” Betham said. “It’s just about getting the right combinations on the day. It’s not exactly [that] the best players will be on the field, but the best players on the day will be on the field.”

Betham rates Foley’s skills at five-eighth highly: “There are a lot of things of his game that are unseen – his communication skills, his leadership role in the team.”

As for the competition for the NSW wing slots, heightened by Alofa’s push into the starting side after joining the Waratahs squad from the ranks of Shute Shield rugby? “It’s definitely healthy competition,” Betham said. “Having guys like Alofa is refreshing and it adds a different dimension to our back line.”

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Stevie Nicks reveals love of Game of Thrones: ‘It blows my mind’

Joffrey Baratheon (Jack Gleeson), who Nicks describes as ‘sickly, deeply, sadistically evil’, in Game of Thrones. Photo: SuppliedFleetwood Mac’s Stevie Nicks has confessed she’s a huge fan of Game of Thrones and wants to write music for the show.
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Nicks told Britain’s Radio Times that after she contracted pneumonia and her mother died in 2011, she became a recluse and was comforted by the HBO drama.

“I didn’t leave the house for almost five months … With my pneumonia and my mother’s death I watched the entire first season of Game of Thrones. That certainly took my mind off everything,” she said.

Nicks thought so much about George RR Martin’s characters and plot that she now wants to contribute to it.

“I would love to write some music for the show. I’ve written a bunch of poetry about it — one for each of the characters. On Jon Snow … on Arya … on Cersei … on Cersei and Jaime, the blonde on blonde … on Khaleesi …

“I’m always looking for that kind of inspiration, and I’m very inspired by it.”

Nicks admires Martin’s ability to create complex worlds with such well-drawn characters.

“The guy who wrote these stories [Martin] is my age now, and I think: how in the world does somebody come up with these 15 or so characters and then everything that’s wrapped around each one of the 15 characters? It blows my mind that he’s able to create this vast, interlinked world.”

Nicks admitted a fondness for many of the show’s female characters – whether good or evil.

“Khaleesi [Emilia Clarke] is my new favourite heroine. And Cersei [Lena Headey] is fantastic. She’s just mean as shit. And you know who else is mean? Not Joffrey [Jack Gleeson] — he’s beyond. He’s just sickly, deeply, sadistically evil. But no, the one that’s going to marry him, Margaery [played by Natalie Dormer]. She is just such a great evil person. And she thinks she is going to be able to handle him. And then you have Brienne of Tarth [Gwendoline Christie] — I love her.”

– Peter Vincent

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Best of Sochi: Day 11GALLERY

Martin Fourcade of France stretches for the finish line next to Emil Hegle Svendsen of Norway during the Men’s 15 km Mass Start during day 11 of the Sochi 2014 Winter Olympics at Laura Cross-country Ski & Biathlon Center on February 18, 2014 in Sochi, Russia. Photo: GETTY IMAGES Short track speed skaters compete in the Short Track Ladies’ 3000m Relay Final B at Iceberg Skating Palace on day 11 of the 2014 Sochi Winter Olympics on February 18, 2014 in Sochi, Russia. Photo: GETTY IMAGES
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Tina Maze of Slovenia reacts after a run during the Alpine Skiing Women’s Giant Slalom on day 11 of the Sochi 2014 Winter Olympics at Rosa Khutor Alpine Center on February 18, 2014 in Sochi, Russia. Photo: GETTY IMAGES

Marianne St. Gelais of Canada falls while competing in the Short Track Ladies’ 1000m Heat at Iceberg Skating Palace on day 11 of the 2014 Sochi Winter Olympics on February 18, 2014 in Sochi, Russia. Photo: GETTY IMAGES

Tina Maze of Slovenia wins the gold medal during the Alpine Skiing Women’s Giant Slalom at the Sochi 2014 Winter Olympic Games at Rosa Khutor Alpine Centre on February 18, 2014 in Sochi, Russia. Photo: GETTY IMAGES

Taihei Kato of Japan crashes as he competes in the Nordic Combined Men’s Individual LH during day 11 of the Sochi 2014 Winter Olympics at RusSki Gorki Jumping Center on February 18, 2014 in Sochi, Russia. Photo: GETTY IMAGES

Nathan Smith of Canada competes at the shooting range in the Men’s 15 km Mass Start during day 11 of the Sochi 2014 Winter Olympics at Laura Cross-country Ski & Biathlon Center on February 18, 2014 in Sochi, Russia. Photo: GETTY IMAGES

A coaching staff of South Korean short track team celebrate winning the gold medal in the Short Track Ladies’ 3000m Relay Final at Iceberg Skating Palace on day 11 of the 2014 Sochi Winter Olympics on February 18, 2014 in Sochi, Russia. Photo: GETTY IMAGES

Armin Bauer of Italy competes during the Nordic Combined Men’s Individual LH on day 10 of the Sochi 2014 Winter Olympics at RusSki Gorki Jumping Center on February 18, 2014 in Sochi, Russia. Photo: GETTY IMAGES

Martin Fourcade of France practises at the shooting range in foggy conditions before the Men’s 15 km Mass Start during day 11 of the Sochi 2014 Winter Olympics at Laura Cross-country Ski & Biathlon Center on February 18, 2014 in Sochi, Russia. Photo: GETTY IMAGES

Omar Visintin of Italy (red bib), Pierre Vaultier of France (green bib), Jarryd Hughes of Australia (blue bib), Hanno Douschan of Austria (white bib) and Konstantin Schad of Germany (yellow) compete in the Men’s Snowboard Cross Quarterfinals on day eleven of the 2014 Winter Olympics at Rosa Khutor Extreme Park on February 18, 2014 in Sochi, Russia. Photo: GETTY IMAGES

Hanno Douschan of Austria (white bib), Luca Matteotti of Italy (blue bib), Pierre Vaultier of France (green bib), Paul-Henri De Le Rue of France (yellow bib), Omar Visintin of Italy (red bib) and Cameron Bolton of Australia (black bib) compete in the Men’s Snowboard Cross Semifinals on day eleven of the 2014 Winter Olympics at Rosa Khutor Extreme Park on February 18, 2014 in Sochi, Russia. Photo: GETTY IMAGES

Michael Goodfellow and Greg Drummond of Great Britain sweep the ice while playing Norway during the Curling at Ice Cube Curling Center on day 11 of the 2014 Sochi Winter Olympics on February 18, 2014 in Sochi, Russia. Photo: GETTY IMAGES

Cameron Bolton of Australia looks on after the Men’s Snowboard Cross 1/8 Finals on day eleven of the 2014 Winter Olympics at Rosa Khutor Extreme Park on February 18, 2014 in Sochi, Russia. Photo: GETTY IMAGES

Joergen Graabak of Norway leads the pack in the Nordic Combined Men’s 10km Cross Country during day 11 of the Sochi 2014 Winter Olympics at RusSki Gorki Nordic Combined Skiing Stadium on February 18, 2014 in Sochi, Russia. Photo: GETTY IMAGES

Lavinia Chrystal of Australia makes a run during the Alpine Skiing Women’s Giant Slalom on day 11 of the Sochi 2014 Winter Olympics at Rosa Khutor Alpine Center on February 18, 2014 in Sochi, Russia. Photo: GETTY IMAGES

Ole Einar Bjoerndalen of Norway practises at the shooting range before the Men’s 15 km Mass Start during day 11 of the Sochi 2014 Winter Olympics at Laura Cross-country Ski & Biathlon Center on February 18, 2014 in Sochi, Russia. Photo: GETTY IMAGES

Janne Ryynaenen of Finland makes a trial jump as he competes in the Nordic Combined Men’s Individual LH during day 11 of the Sochi 2014 Winter Olympics at RusSki Gorki Jumping Center on February 18, 2014 in Sochi, Russia. Photo: GETTY IMAGES

Vanessa Vanakorn of Thailand prepares to make a run during the Alpine Skiing Women’s Giant Slalom on day 11 of the Sochi 2014 Winter Olympics at Rosa Khutor Alpine Center on February 18, 2014 in Sochi, Russia. Photo: GETTY IMAGES

Photo: GETTY IMAGES

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Why we didn’t see the GFC: OECD admits failures

Among their most prominent thinkers, there is no consensus as to how – or whether – governments in advanced countries can improve lackluster recoveries. All in all, the situation recalls a cruel joke:
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How many economists does it take to change a light bulb? None. When the one they used in graduate school goes out, they sit in the dark.

Recently, economists at the Organisation for Economic Cooperation and Development (OECD) published a retrospective study of its economic forecasts. This qualifies as an act of bureaucratic courage, because the record was predictably dismal. Not only did the OECD miss the 2008/09 financial crisis, but it routinely over-predicted the recovery’s strength. In May 2010, for example, the OECD forecast that the US economy would grow 3.2 per cent in 2011. Actual growth was 1.7 per cent. This is a huge error, and there were larger misses for some European economie as well. 

The OECD wasn’t alone. As the study notes, ‘groupthink’ is endemic among forecasters. The International Monetary Fund, private economists and government agencies — including the Federal Reserve and Congressional Budget Office — all committed similar mistakes.

In explaining its poor performance, the OECD cites three under-appreciated forces.

First, globalisation: The weaknesses of some economies, especially the United States’, depressed other economies through reduced trade and greater financial strains.

Second, fragile banks: Countries with undercapitalised banks fared especially poorly, presumably because the banks lent less.

And finally, economic regulation: Highly regulated societies had a harder time adjusting to adversity than more flexible societies.

All these underestimated factors made forecasts too upbeat, says the OECD. Interestingly, one item not on the list is “too much austerity.” The OECD economists found that they generally hadn’t underestimated the effects of spending cuts and tax increases intended to shrink budget deficits in Spain, Italy, Ireland, Portugal and elsewhere. Greece was a conspicuous exception.

This conclusion is surely controversial because many economists attribute the weak recovery to misguided austerity, especially in Europe. Just follow the advice of John Maynard Keynes (1883-1946), they say. When the economy suffers a massive drop in private spending, government should offset the loss by increasing its budget deficits. Europe’s budget cuts were too aggressive, they say, while US “stimulus” policies were not aggressive enough.

Perhaps history will vindicate this appeal to Keynesianism. Or perhaps not. The fact is that the United States did respond aggressively under both George W. Bush and Barack Obama. It certainly didn’t embrace austerity. Federal budgets ran massive deficits — $6.2 trillion worth from 2008 to 2013, averaging 6.4 per cent of the economy (gross domestic product). Nothing like this had occurred since World War 2. Yet, the economy limped along. Why wasn’t this enough?

It’s not just Keynesianism that’s under a cloud. The same fate has befallen monetarism — the doctrine that stable growth in the money supply can promote a more stable economy. Since 2008, the Federal Reserve has poured more than $US3.2 trillion into the economy to keep interest rates low and accelerate economic growth. By monetarist reasoning, so much money pumped out so quickly should spawn higher inflation. Some economists predicted as much; it hasn’t happened yet. Consumer prices today are up a mere 1.5 per cent from a year earlier.

If you add the last six years of US budget deficits and the Fed’s injection of cash into the economy, the total is approaching $US10 trillion. It’s hard to believe that all this stimulus didn’t aid the recovery, but the fact that it resulted in only modest growth has created an identity crisis for economists. The promise they held out was that, through suitable economic policies, they could produce long periods of stable growth and – just as important – avoid prolonged slumps and lengthy periods of substandard growth. Clearly, they aren’t delivering on this promise.

The Great Recession and financial crisis changed behaviour in fundamental ways that economists have yet to incorporate fully into their models or theories. The widespread faith that modern societies were sheltered from deep and sustained economic setbacks has been shattered, causing consumers, business managers and bankers to be more cautious in borrowing and spending. Economic stimulus may offset this caution, but if it signals that the economy is weaker than expected, it may also further depress private spending. There are countervailing tendencies.

The faith in economics was, in many ways, the underlying cause of both the financial crisis and Great Recession — it made people overconfident and careless during the boom — and the basic explanation for the weak recovery, as stubborn caution displaced stubborn complacency. To regain relevancy, economists are searching for a new light bulb — or better use of the old one. Meanwhile, most are still sitting in the dark.

Washington Post

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Found: the facelift alternative

Age-defying lotions and skin-plumping potions are all the rage today but in 2000, when Maria Hatzistefanis founded skincare business Rodial, her cutting edge anti-wrinkle formulations were ground-breaking.
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“There was a gap in the skincare market for a product that offered an alternative to cosmetic surgery,” she explains. “Nobody was making products like that.”

Ms Hatzistefanis’ background is in finance, not dermatology. She gave up a well-paid job at Salomon Brothers to spend a year researching the beauty market and meeting scientists. After countless trade shows and unsuccessful meetings in laboratories around Europe, she finally found a lab that could develop the formulas she wanted.

“From day one I always knew that I wanted to make original products, I didn’t want to copy anyone else,” she says. “We are still working with the same lab 14 years later and we still use only original ideas and concepts.”Ms Hatzistefanis started out with a single beauty brand, Rodial, which is sold through high-end retailers, including Harrods, Harvey Nichols and Space NK.

Over the past five years, the entrepreneur has rolled out Nip + Fab, which caters to the mass market. The company has doubled its revenues year-on-year and will turn over £15m in the year to March 2014.Part of Rodial’s allure is the brand’s eye-catching product names. “Some of our products sound scary,” admits Ms Hatzistefanis. “We have Snake Serum, Dragon’s Blood and Bee Venom. They are all very safe but we like to play with the names of our ingredients to create a talking point.”

Products start at £19 up to £375 for Bee Venom 24 Carat Gold Serum.

The company’s love affair with edgy names began with Snake Serum, launched in 2010. “When a snake bites you, it paralyses the muscles,” explains Ms Hatzistefanis. “The main ingredient in our Serum is a synthetic venom, called syn-ake, which performs the same way as viper venom.”

Snake Serum was unveiled with great fanfare. Adverts featured a black viper coiling around the products; Kate Moss and Victoria Beckham were rumoured to be fans and sales skyrocketed.

“There was the occasional person who didn’t like the product because they hated snakes but, mostly, it caused a lot of excitement,” says Ms Hatzistefanis. “So we thought, ‘What shall we do next?’ ”Dragon’s Blood is a bright red resin from a tree native to the Canary Islands and Morocco. The sap has been used for medicinal purposes since the times of the Roman Empire. “It helps to take down redness and irritation and I loved the name,” says Ms Hatzistefanis.

The skin plumping products are marketed as an alternative to dermal fillers, the so-called “liquid facelift”. “We added peptides and hyaluronic acid to make it really high tech and now Dragon’s Blood is our bestselling range.”

Bee Venom completed the animal-themed range. “Lots of customers were asking for it,” says Ms Hatzistefanis. “We took bee venom and the latest stem cell technology to develop a range for more mature skin.”

The business has made other bold moves in recent years. In 2012, the Nip + Fab brand launched a product called Tummy Fix.

According to the e-commerce site’s analysis, 40pc of the people buying the product were men. This convinced Ms Hatzistefanis to start researching the market for men’s skincare.“Women in London spend about £1,500 a year on skincare,” she says. “Men in London spend £1,100 – it’s not that far off.”

The Nip + Man range launched in May 2013. Products include Manotox, the men’s alternative to Botox, the Bicep Fix and the Ab Fix, with Gemmoslim to battle the bulge.

Nip + Man currently represents just 5pc of the company’s turnover, compared with Rodial, which has 55pc, and Nip + Fab with 40pc. “But it’s growing fast,” says Ms Hatzistefanis.

There has been one wrinkle in the firm’s growth trajectory, however. “A couple of years ago there was a big issue with a plastic surgeon who talked to a newspaper and said that our products didn’t do what they promised and could be harmful,” says Ms Hatzistefanis. “That was very shocking.”

Rodial’s lawyers sent a letter to the surgeon asking him to show evidence to back up his claims. A media storm ensued. “People said that we were threatening the plastic surgeon for expressing his opinion. The media called us bullies. Our integrity as a business was in question. Whenever we tried to clarify things, we couldn’t make it right. It was a really dark time.”

It took four months for the situation to blow over. Sales remained stable throughout but Rodial’s relationships with its customer base were sorely tested.

Today, the business is thriving. The products remain a firm favourite of celebrity make-up artists for the likes of Kylie Minogue and Lady Gaga, helping to generate positive press for the brand.

The company is expanding its presence in department stores such as Harrods by introducing its own beauty counters. TV shopping is another growth area and airport sales are booming. Bestsellers, or “classics”, are a rarity, with customers demanding a continuous stream of new products.

“Beauty has become more like fashion,” explains Ms Hatzistefanis. “You used to launch a range and then maybe add one product a season. Now, the customer expects something new every six to eight weeks.”As new lines are introduced, poorly performing products are phased out. This is a “brutal” process, Ms Hatzistefanis admits.

A new range called Super Acids, described as an alternative to chemical peels, is due to hit the shops this month, to be followed by a make-up range in September.

After 14 years, Ms Hatzistefanis, who owns 100pc of the business with her husband, still enjoys the cut and thrust of the beauty industry. She has no plans to sell up any time soon.

“There’s so much you can achieve with a skincare product now,” she says. “Just imagine what we’re going to be able to do in 10 years time.”

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The Big Dry through your eyesPHOTOS

Dust is part of everyday life for people like James Rogers and Jody Fraser, who work on a property near Cobar. Picture: Jody Fraser James Rogers pulls stuck sheep from a dam on a property near Cobar. Picture: Jody Fraser.
Shanghai night field

Hand-feeding sheep in the Riverina. Picture: Caleb Thomson

James Rogers at work on a property near Cobar. Picture: Jody Fraser

James Rogers pulls stuck sheep from a dam on a property near Cobar. Picture: Jody Fraser.

Dust is part of everyday life for people like James Rogers and Jody Fraser, who work on a property near Cobar. Picture: Jody Fraser

Just a few years after the last drought broke, paddocks are getting barer. Picture: Jody Fraser

Dams across the state are drying up, leaving mud holes perfect for stock to get stuck in. Picture: Jody Fraser

A familiar but heartbreaking sight for many on the land, this messy job is a regular one. Picture: Jody Fraser

Dust is part of everyday life for people like James Rogers and Jody Fraser, who work on a property near Cobar. Picture: Jody Fraser

Flat, open plains of “Furlong”, west of Hillston. Photo: Allan Vagg

Flat, open plains at “Furlong”, west of Hillston. Picture: Allan Vagg

Feeding cattle at “Furlong”, west of Hillston. Picture: Allan Vagg

Picture: Allan Vagg

Picture: Allan Vagg

Moving sheep lift a little dust. Picture: Allan Vagg

There’s a mob of sheep under that dust. Picture: Allan Vagg

A dust storm rolls into the Riverina. Picture: Allan Vagg

Picture: Allan Vagg

Picture: Ben Holmes

Picture: Ben Holmes

Picture: Ben Holmes

Picture: Ben Holmes

It’s dry at Mayfield, western NSW. Picture: Kayla Barrett

It’s dry at Mayfield, western NSW. Picture: Kayla Barrett

It’s dry at Mayfield, western NSW. Picture: Kayla Barrett

It’s dry at Mayfield, western NSW. Picture: Kayla Barrett

It’s dry at Mayfield, western NSW. Picture: Kayla Barrett

It’s dry at Mayfield, western NSW. Picture: Kayla Barrett

It’s dry at Mayfield, western NSW. Picture: Kayla Barrett

It’s dry at Mayfield, western NSW. Picture: Kayla Barrett

Drought conditions at “Barwonnie”, Mossgiel, NSW are a not-so-distant memory. Picture: Di Huntly

Drought conditions near Ivanhoe, NSW are a not-so-distant memory. Picture: Di Huntly

Drought conditions at “Barwonnie”, Mossgiel, NSW are a not-so-distant memory. Picture: Di Huntly

Drought conditions at “Barwonnie”, Mossgiel, NSW are a not-so-distant memory. Picture: Di Huntly

Drought conditions at “Barwonnie”, Mossgiel, NSW are a not-so-distant memory. Picture: Di Huntly

Drought conditions at “Barwonnie”, Mossgiel, NSW are a not-so-distant memory. Picture: Di Huntly

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Asylum seeker data bungle: Thousands could be granted refugee status

Details of thousands of asylum seekers across Australia were revealed, Immigration concedes. Photo: Luis AscuiFederal politics: full coveragePrivacy Commissioner to investigate data breachCall for independent Manus inquiry
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The Privacy Commissioner and the Immigration Department have launched investigations into how details of thousands of asylum seekers in Australia were inadvertently made accessible online.

The breach could potentially see thousands of asylum seekers in Australia who were previously ineligible for refugee status have their claims validated, one legal expert says.

Refugee lawyer David Manne said the law was “crystal clear that identification of a person seeking protection can result in them being granted protection on that basis itself”.

“It’s a fundamental principle of refugee law that a person seeking asylum should be free to make their claim free of disclosure of their identity to the authorities in their home country,” he said, describing the reported revelation as one of the most “grave and dangerous breaches of privacy in Australian history”.

Guardian Australia reported on Wednesday that the personal details of a third of asylum seekers held in Australia – making up about 10,000 people – were revealed on the Immigration Department’s website.

Privacy Commissioner Timothy Pilgrim announced on Wednesday afternoon that he had spoken to Immigration and had “been assured” that the information was “no longer publicly available”.

Describing the breach as a “serious incident” Mr Pilgrim said he would investigate how it occurred. He added that Immigration would provide a detailed report about the incident as part of the investigation.

Later on Wednesday, Immigration Minister Scott Morrison released a statement confirming that an “immigration detention statistics report” released on the department’s website on February 11 “inadvertently provided access to the underlying data source used to collate the report content which included private information on detainees”.

Mr Morrison welcomed Mr Pilgrim’s investigation and said Immigration Department’s secretary Martin Bowles had also tasked KPMG to review how the breach occured, with an interim report due next week.

He said the “unacceptable incident” was a “serious breach of privacy” by the department.

“I have asked the department Secretary to keep me informed of the actions that have been initiated, including any disciplinary measures that may be taken, as appropriate,” Mr Morrison said.

The Immigration Minister said that immediate steps had been taken to remove the documents from the department’s website after media alerted it of the breach.

“The information was never intended to be in the public domain, nor was it in an easily accessible format within the public domain,” he said.

Mr Morrison also told Sky News it was still to be seen whether the release of the information would have implications for the protection claims of the asylum seekers involved.

‘‘All people’s protection claims are considered individually on the merits of each specific case,’’ he said.

‘‘There would be no general rule that would apply to these sorts of things.’’

A report by Guardian Australia said the information online included all asylum seekers held in a mainland detention facilities, on Christmas Island and several thousand in community detention. Children were also included.

Despite the federal government’s insistence about the need for greater secrecy when it comes to immigration and border protection, the full names, nationalities, location, arrival date and boat arrival information was reportedly revealed on the department’s website.

Guardian Australia has not identified where the database was located online and said it told the department about the information before it reported the breach.

Refugee Council of Australia president Phil Glendenning said the release of asylum seekers’ information was “outrageous” and unprecedented.

“We are deeply disturbed by this,” he told Fairfax Media.

Mr Glendenning said the breach ran the risk of exposing people who were already vulnerable to “very serious danger”.

This not only included reprisals if asylum seekers were sent back to their country of origin, but their families – either in home countries, or transit countries in between.

The Refugee Council is also seeking particular assurances about the safety of people in community detention who may have had their location revealed.

Labor’s immigration spokesman Richard Marles said the report was an “enormous concern”. “Let’s be clear – this is a government with a culture of secrecy but it is utterly unable to manage secrecy,” he told reporters in Canberra.

Coalition MP Jane Prentice told Sky News that the breach was a “shocking mistake” and that the “full ramifications” would have to be examined.

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Brisbane protest calls for Manus Island closure

Protesters outside the Department of Immigration’s Brisbane office call for the closure of the Manus Island detention centre. Photo: Cameron Atfield Former senator Andrew Bartlett addresses a Brisbane protest calling for the closure of the Manus Island detention centre. Photo: Ashley Mackinnon
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Refugee advocates have protested outside the Department of Immigration’s Brisbane office calling for the Manus Island detention centre to be closed after the death of a detainee.

The Australian and Papua New Guinea governments have announced inquiries after violent clashes between security forces and asylum seekers on the PNG island left one Iranian asylum seeker dead and 77 injured.

Refugee Action Collective spokesman Mark Gillespie said his organisation had been in touch with asylum seekers, who were allowed phone access, and staff on Manus Island.

He said details of recent events were sketchy.

“All the messages we’re getting from the asylum seekers themselves and the staff at the detention centre are saying it was more than just them trying to get out, that it was an attack on the centre,” Mr Gillespie said.

On Tuesday night, Immigration Minister Scott Morrison conceded it was unclear whether the attacks happened inside or outside the detention centre.

“I can’t give you an absolute position on that as there are some conflicting reports at the moment and once those are resolved and the reasons for those conflicts then I’d be in a position to report on it,” he told reporters in Canberra.

Mr Gillespie said the Brisbane protest was organised on Tuesday following the violent clashes.

“A person has lost their life on Manus Island and we think that’s just tragic,” he said.

“We put it out on Facebook and, in less than 24 hours, this is the turnout.”

Former Queensland Democrats Senator Andrew Bartlett, now the state convenor for the Greens, said he had “seen firsthand” the damage done during the Howard government’s Pacific solution.

“(It was a) deliberate policy of putting people beyond the reach of the law and beyond the reach of the media,” he said.

“What is happening now on Manus Island is clearly far worse than any of the harmful atrocities committed under the Howard government.

“This is an inevitable consequence of what happens when you dehumanise people, when you put them outside the reach of media and public scrutiny.”

Among the 50-strong protest was Julie Mauger.

“The government promised two things to the Australian people, that they’d stop the boats and that the PNG solution would work effectively,” she said.

“The riots on Manus and what’s happened this week has just shown that it’s simply not workable.”

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