Feb 222007

Bannerman briefly flirted with the idea of maybe, perhaps, outlaying the necessaries for a Crikey_dot_com subscription. He is ever so glad he didn’t waste the exorbitant sum of $115.00 per annum for this sort of trash which rolls up daily in his email box by way of tasty snifters, encouraging subscription.

1. Banks gouging millions on penalty fees — but is it legal?

Michael Pascoe writes:

There’s a wave of consumer action sweeping the UK that must have Australian banks feeling very nervous – their bluff is being called on penalty fees they have no legal right to impose.

It is now becoming clear that, at the very least, there’s a grey area about whether the numerous and very profitable bank penalty fees are legally enforceable. More likely, the fabulously profitable Australian cartel has been getting away with ripping hundreds of millions of dollars out of customers who’ve been fooled into paying fees that can’t been legally justified.

Seven’s Sunrise show this morning picked up on the British consumer groups’ campaign, which includes supplying templates for bank customers to claim back the ubiquitous penalty fees for such commonplace matters as slightly exceeding overdraft limits and late payment of credit card bills. A single story in the Independent apparently resulted in 20,000 people downloading claim forms in one day.

The British campaign was sparked by an Office of Fair Trading ruling last year that credit card penalty fees were illegal. The OFT is investigating other bank penalty fees as well, but consumers are making successful claims for the return of fees paid over several years without waiting for that ruling.

Helen Ainsworth, of the consumer group Which?, told the Belfast Telegraph: "We believe bank customers paid £4.7bn in unauthorised overdraft charges last year alone — many have already claimed back some or all of this money, with awards ranging from £70 to thousands of pounds."

The irony for Australian bank victims is that there was an attempt to blow the whistle on penalty fees here in December 2004 that the banks successfully stared down.

Nicole Rich, supervising solicitor at Victoria’s Consumer Law Centre, conducted a study, "Unfair fees: A report into penalty fees charged by Australian banks" that could be the template for the British consumer action. The OFT has effectively verified the core of her report:

In Australia, it is a well established legal principle that a contractual term which requires one party to a contract to pay the other "innocent" party a sum of money upon a default or break of the contract is enforceable only if it provides for payment of a sum of money that is a genuine pre-estimate of the loss or damage suffered by the innocent party. This is sometimes called a "liquidated damages" term.

However, such a term is to be distinguished from a "penalty" term, which seeks to not compensate the innocent party but to penalise the other party for the break or default. Penalty terms are unenforceable at law.

The $30 late fee – on top of interest charges – for missing a credit card payment date is just such a penalty.

The Australian Bankers Association response to the argument is rather telling. When the Australian Consumers Association gave it a run in Choice two years ago, the ABA response ran thus: penalty fees are not illegal and all fees are disclosed to customers.

Which avoids the central issue: the fees may not be illegal, but it looks like they’re not legally enforceable either. It’s not illegal for me to tell you to send me $50 immediately – I just can’t legally enforce that demand. And, to steal a line from a British site, telling you I’m going to hit you in the head doesn’t make it legal for me to subsequently punch you.

The UK reports indicate the last thing the banks want to do is test the penalty fees’ legality in court. Sources have informed Channel Seven that one Australian legal challenge was contemplated but fell apart when discovery costs against the banks were estimated at $5 million.

Australia’s banks jealously guard the detail of their penalty fee income, claiming it to be commercially sensitive.

Over to the ACCC for some real action. Perhaps.

Disclosure: I was the interview talent for the Sunrise story using research by producer Paul Richards

and then this absolute gem from the Crikey founder, Stephen Mayne:

2. Could the Rudds have built a more government-dependent share portfolio?

Stephen Mayne writes:

It is now well-established that Therese Rein’s business, Ingeus, is highly dependent on federal government contracts as the largest privately owned company delivering job placement services for Australians.

However, a quick walk through the Rudd family share portfolio establishes that they like owning big companies that happen to be highly dependent on government concessions, contracts and licences.


While CSL is clearly the worst and most unacceptable example, the rest of the portfolio will raise a raft of conflicts if the Rudds make it to The Lodge.

Here is a full list of the Rudd family share portfolio as at December 2006, ranked by value based on last night’s closing prices and with explanations of the government-dependence:

CSL, $175,700: enjoys plasma monopoly and big spending Federal health initiatives such as national immunisation program for cervical cancer.

BHP-Billiton, $158,675: operates Australian resource projects worth more than $50 billion and would be big beneficiary from uranium expansion.

National Australia Bank, $153,900: federally licensed member of the lucrative banking cartel.

DUET Group, $116,270: second largest energy infrastructure company owning formally state-owned assets often subject to regulatory price determinations.

PBL, $138,815: federally licensed for TV and state licences for casinos.

Transurban, $113,250: Australia’s biggest tollroad company with key government concessions in Melbourne and Sydney.

Westfield, $111,036: Australia’s biggest shopping centre company with masterful ability to get support from all levels of government for big developments.

ANZ, $103,985: federally licensed member of the lucrative bank cartel.

Ramsay Healthcare, $88,875: Australia’s biggest private hospital company has enjoyed 15-fold share price rise over the Howard years as health spending ballooned.

Macquarie Bank, $33,228: federally licensed and loves buying monopoly assets from governments.

APN News & Media, $29,900: federally licensed radio operator and big beneficiary of new media laws.

Ventracor: $1,860, heart implant developer.

Total: $1,225,494

When the Herald Sun listed the portfolio valuations on 14 December last year, they were worth $1.134 million, so the Rudds have ridden the market for an apparent $91,000 paper gain over the past few weeks.

Given the stink that Labor and the media caused in the recent Queensland and Victorian state elections about conflicts of interest from shareholdings, the same should be happening to Kevin Rudd right now.

as well as:

3. How the Rudds profited from Janette Howard’s cancer scare

Stephen Mayne writes:

The market is in awe of CSL’s stellar profit figures released yesterday and The Australian’s business commentator Matthew Stevens attributed some of the upsurge to Tony Abbott running foul of our first lady:

CSL shareholders can thank, in part, federal Health Minister Tony Abbott and his department’s staggering rejection of a plan to vaccinate Australian schoolgirls against cervical cancer. The Prime Minister’s understandably keen intervention in the CSL approval process (wife Janette is famously a survivor of cervical cancer) resulted in a national immunisation campaign starting 12 months ahead of CSL’s schedule.

Which means income from Australian sales of anti-cancer drug Gardasil will begin flowing before the financial year’s end. Royalty income from Gardasil generated $21 million over the first half. It will more than double by year’s end and that is really just the start of what will be at least four years of high-margin income from a wonderful Australian innovation.

And which family has CSL as the largest shareholding in a $1.2 million portfolio? The Rudds, of course.

If the family bought their 2,270 CSL shares from the Keating government for $2.30 in the 1994 float, their paper profit would be a tasty $170,000. The stock rocketed $7.31 to a record high of $77.42 yesterday.

Regardless of when they bought in, it is now utterly inappropriate for the Rudds to have any interest in CSL, which enjoys a lucrative government-sponsored plasma monopoly. This has been subjected to adverse Auditor General reports and is meant to be unwound under the US free trade agreement, although the various Labor states are vigorously rejecting such a move.

The Australian’s Sean Parnell was spot on with this commentary last week:

The timing, and terms, of the deal are extraordinary. The Australian Red Cross Blood Service – which collects plasma from donors, sends it to CSL for fractionation, and distributes the end plasma products – had failed to meet its collection targets in 2005-06. And yet, despite record demand for products such as intravenous immunoglobulin (IVIg), the NBA has signed away up to 6.6 tonnes of plasma – around 6600 litres – to help a private company improve its product range.

The fractionation contract alone is worth $138 million to CSL and its rivals in Europe and the United States argue they could match, if not better, the service provided by CSL.

Tell Therese and the kids to sell, Kevin, as this is a terrible look. And don’t even think about transferring the holding into a blind trust.

Then this from the dullest of tools in the judicial shed, Peter Faris:

14. Kirby part two: Extreme Islam is no friend of Dorothy’s

Peter Faris QC writes:

On Tuesday, during argument in Jihad Jack Thomas’s case in the High Court, Kirby J had this to say to David Bennett QC (Solicitor-General of the Commonwealth) about terrorism:

MR BENNETT: … the possible threats to the polity, to Australia, to the people, to the physical land or whatever, are from the matters I have listed, the vulnerability aspects and the growth of the fanatical ideological movements, are of enormous variety.

One needs general powers to deal with a variety of threats which have largely replaced the quaintly old-fashioned idea of an invading army. To regard an invading army as the only threat that requires national defence and to ignore terrorism for that purpose, is what in the United States is sometimes described colloquially as “September 10 thinking”. One says to a person – – –

KIRBY J: Yes, but the Americans, with all respect, have become completely obsessed with September 11 and that is not an event that occurred in this country and I think we have to keep our eye on the threats to Australia. I mean, more people die every day from AIDS than died on 11 September.

MR BENNETT: Your Honour, with respect, it is precisely a threat to Australia. That is some of the evidence which is in the stated case. When the clearest one – yes, your Honour, the answer to that question is very simple.

KIRBY J: Where are you referring?

MR BENNETT: Page 196 where the man who did it says, “Yesterday, London and Madrid. Tomorrow, Los Angeles and Melbourne. Allah willing.” Your Honour, one cannot say that it is something that is only affecting the United States. The materials are replete with specific threats to Australia, which I will be taking your Honours to in due course. In my respectful thinking, the – – –

KIRBY J: Is this after Australia’s participation in the war in Iraq?

MR BENNETT: The date of this is – yes, it is, your Honour.

KIRBY J: I remember Chief Justice Barwick giving the French version that the animal is so wicked that it strikes back.

MR BENNETT: Your Honour, the first strike came from the other side in this one.

KIRBY J: It is a long struggle.

Kirby, a declared homos-xual and advocate of homos-xual causes, here disparages the War Against Terror. Using moral relativism, he compares AIDS to the War to the latter’s disadvantage. One problem is that, if we lose the War, homos-xuals like Kirby will swing by their necks in public executions. Kirby is concerned about the AIDS epidemic. Islamic extremists would go a long way to solving that problem by executing all homos-xuals. The War is about protecting everbody, including the most vulnerable in our society.

Hmm…..except for the poofta’s, eh, Pedro? Bannerman has rarely struck a rawer prawn than Mister Faris. That includes Tim Blair, by the by.

Look……Bannerman will agree that there is some really good, rational writing on Crikey. Many more articles than those above rolled up in today’s sampler from the virtual rag, and a great percentage of those looked worth the read. Bannerman didn’t read them because his appetite was soured by the idiotic scribblings in the immediate forefront of the email. Stephen Mayne………Bannerman sincerely trusts you consider yourself a satirist, as opposed to any form of investigative journalist, because you’re most certainly NOT the latter. Bannerman wonders just how many other pollies have share portfolios – declared and undeclared (let’s not be naive now) that look as good as or better than the Rudds’. Hells bells, Bannerman has NAB shares, purchased at a cut-rate staff price because he worked for them eons ago. Does that constitute a conflict of some interest or other?

As for the perennial arguments over bank charges….. for fuck sake, people. Read the terms and conditions documents the finance institutions hand to you – in accordance with legislation, mind – before you haul your undies up around your earlobes and get all red in the face over an issue you’ll look stupid over in the final washup. Are penalty fees legal? Of course they fucking are! Read the legal statutes permitting them and then get back in your boxes! More to the point, when your next credit card statement turns up with the T&C document included…….for the sake of all you hold dear, READ THE FUCKING THING!

As for Peter Faris Q.C., Bannerman refuses to spend more than the required disdain on a man who clearly has several million neurons loose in the top paddock.

Club Troppo contributor, Nicholas Gruen, recently offered to front a group subscription to Crikey. If you’ve taken him up on his invitation, Bannerman sincerely trusts you’re not disappointed. If you haven’t, he urges you to think several times before outlaying even the modest amount of $35.00. Crikey strikes the Bannerman as merely another collective of bloggers out to make a fleecing from other bloggers. Glenn Milne should have remained sober at the Walkleys and really laid a proper hay-maker on Mayne. He truly deserves it.

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