Living longer means it’s time Australians embraced annuities

From The Conversation.

Few people are likely to be interested in buying an expensive financial product which offers little return, particularly when that return is based on their life expectancy. But annuities, which provide a series of regular payments until the death of the annuitant in return for a lump sum investment, deserve closer attention.

Despite the benefits of annuitisation, there is considerable evidence of annuity aversion among individuals. This has led to what economists call the “annuity puzzle”. It’s like this: let’s agree there are some benefits, we won’t buy it anyway.

Retirees don’t always succeed in ensuring their retirement income lasts the distance. Image sourced from Shutterstock.com

The good…

Life annuities provide longevity insurance, which is another way of saying they guarantee the annuitant an income until death. Managing longevity risk is an integral part of any retirement system. The recent Financial System Inquiry (FSI) regards longevity protection as a “major weakness” of Australia’s retirement income system.

The most popular retirement product, Account-Based Pensions (ABPs), provides flexibility and liquidity but leaves individuals with longevity, inflation and investment risks. The FSI recommends that superannuation trustees pre-select a comprehensive income product for retirement (CIPR) that has minimum features determined by the government. This product will help members receive a regular income and manage longevity risk. This is the main job of annuities.

One important feature of annuities is the return of capital (ROC). Investors are guaranteed up to 100% return of capital in the first 15 years of annuity purchase. If the investor dies in this period and does not have a joint owner or nominated person to receive payments when they die, a lump sum payment is made to her estate.

The Bad…

The idea of losing liquidity by locking up capital in annuities does not make the product very appealing. Also, the lower rate of return compared to investing directly in financial markets or alternative financial products is a reason why Australians shun annuities.

Annuitising is also seen as an irreversible choice in most cases and therefore investors are careful when to commit to it. This decision is delayed further when individuals have bequest or capital preservation needs, making full annuitisation an unlikely choice for most retirees. Today’s annuity with ROC to some extent caters for some of these concerns, but some of these drawbacks continue to loom large in the minds of investors.

An alternative

Let’s consider deferred annuities instead. A deferred annuity is a financial security for which the annuitant makes a premium payment to the insurer. In return, the insurer agrees to make regular income payments to the insured for a period of time. However, unlike regular annuities, the first payment is deferred until an agreed future date, i.e. the deferred annuity does not make any payments until after the deferred period is passed.

They are cheaper compared to regular annuities, yet provide the necessary longevity insurance. Deferred Life Annuities (DLAs) continue payments until the death of the annuitant. DLAs have been acknowledged in 14 submissions to the Financial System Inquiry and received widespread support from industry bodies and associations encouraging its uptake. Legislative barriers, however, prevent the development of such a product in Australia.

The major risk to the annuitant purchasing deferred annuities is that she may not survive the deferred period, forfeiting her annuity premium. The Return on Capital concept could be employed to help overcome this. There is also a degree of counter-party risk involved since the life company might become insolvent before retirees’ income payouts begin.

What if we didn’t need life insurance companies to provide this longevity insurance? Could the big superannuation funds provide the income retirees need? They certainly could, by taking some lessons from the deferred annuities concept to build a Group Self-Deferred Annuity (GSDA). A certain percentage or amount of retiree’s wealth (depending on size of balance at retirement) goes to the superannuation fund’s “deferred investment pool” at retirement. This serves as premium for the deferred annuity. The retiree still holds liquidity and controls remaining wealth and has opportunity for higher consumption even before the annuity payments begin. Remaining wealth may be subject to account based pension regulations ensuring minimum drawdowns.

According to such a structure, the annuity begins to pay out at age 80 or 85 years and the retiree’s income level will be a function of the premium invested, investment performance and mortality assumptions. With this approach, superannuation funds would be able to provide the much needed longevity insurance without resorting to complex products outside of superannuation. The “deferred investment pool” would undoubtedly require meticulous management as it would serve retirees beyond the deferred age.

If the retiree died before reaching the income payment stage, a discounted amount of her premium may be returned to her estate. The upside to surviving the deferral period is that the retiree may receive high mortality credits; additional return above the risk-free rate of return on the annuity income. Mortality credits stem from the redistribution of pooled wealth among surviving participants from retirees who die in the payment period.

While we seek to have a comprehensive income product in retirement, there are several starting points. A Group Self-Deferred Annuity is one option.

Author: Research Fellow, Griffith Centre for Personal Finance and Superannuation (GCPFS) at Griffith University

Greece votes No: experts respond

From The Conversation:

The Greek people have voted, saying a resounding No to the terms of the bailout deal offered by their international creditors. What will this mean for Greece, the euro and the future of the EU? Our experts explain what happens next.

Costas Milas, Professor of Finance, University of Liverpool

Greek voters have confirmed their support for their prime minister, Alexis Tsipras, who now has the extremely challenging task of renegotiating a “better” deal for his country.

Nevertheless, time is very short. Greece’s economic situation is critical. On July 2, Greek banks reportedly had only €500m in cash reserves. This buffer is not even 0.5% of the €120 billion deposits that Greek citizens have to their names. It is only capital controls preventing Greek banks from collapsing under the strain of withdrawal.

Basic mathematical calculations reveal how desperate the situation is. There are roughly 9.9m registered Greek voters. Assume that – irrespective of whether they voted Yes or No – some 2.8m voters (that is, a very modest 28.2% of the total number of registered voters) decide to withdraw their daily limit of €60 from cash machines on Monday morning. Following this pattern, banks will run out of cash in three days and therefore collapse (note: 3 x 2.8m x 60 ≈ 500m).

There is therefore very little time for the Greek government to strike the deal with their creditors that will instantaneously give the ECB the “green light” to inject additional Emergency Liquidity Assistance (ELA) to Greek banks to support their cash buffer and save them from collapse. In other words, Greece does not have the luxury of playing “hard ball” with its creditors. An agreement has to be imminent.

Financial markets, expected to start very nervously on Monday morning, will probably stay relatively calm as the reality of the economic situation spelled out above is more likely than not to lead to some sort of agreement (provided, of course, that Greece’s creditors will listen to Tsipras). Whether this agreement is good for the Greeks, this is an entirely different story.

Richard Holden, Professor of economics, UNSW Australia

By calling this referendum and shutting off negotiations for nearly a week, the Syriza party has brought the Greek banking system very close to insolvency. Greece can’t print euros so Greek banks will soon need to issue IOUs, or the demand for money will not be met, leading to utter chaos. Who will accept these? How will they be valued? These are big, scary questions to which nobody knows the answer.

By voting No, Greece has tied the hands of European Central Bank president Mario Draghi. As a matter of politics there’s not much he can do in the short-term and with Greek banks insolvent he may not be able to do anything simply as a matter of law.

At least one if not all the major Greek banks are likely to fail early this week. When this happens, the Greek economy will essentially come to a halt. Nobody knows what will happen, but it surely won’t be good.

The other depressing consequence of the No vote is that Greek finance minister Yanis Varoufakis’s promise to resign if his fellow citizens voted Yes will not come about. It has been abundantly clear that Syriza representatives have been miles out of their depth from the time they took office.

Everyone with real knowledge and experience of financial markets and liquidity crises told them to stop playing chicken with the IMF and ECB. They should start listening immediately.

George Kyris, Lecturer in International and European Politics, University of Birmingham

A historic referendum for Greece and Europe tells a very interesting story. While results indicate that a sizeable 61% rejected existing policies towards the Greek crisis, polls have consistently shown that the majority of Greeks want to remain in the eurozone. This exposes the success of Syriza based on its populism, which has allowed Greeks to think that they can stay a credible member of the EU, while at the same time taking unilateral decisions and refusing to recognise the obligations of their eurozone membership.

This not only creates unrealistic expectations but it is also a very sad result for the relationship between the EU and its citizens, which, once again, falls victim to national governments’ short-term strategies. In this climate of unrealistic expectations, the Greek government embarks on a mission impossible to secure a better deal for the country, where economic, political and social peace has been seriously undermined in the past few months and week especially.

The first reactions of Greece’s EU partners to the No vote are far from positive.

In his address after the referendum, Alexis Tsipras indicated the formation of an ad hoc national council with the participation of major political parties to prepare the negotiation strategy. The next few days will show if a more united Greek front is possible and capable of improving things for the crisis-hit country.

Ross Buckley, Professor, Faculty of Law at UNSW Australia

The Greek people have decisively voted No to more austerity imposed from Frankfurt. This is unsurprising. Voters rarely vote for higher taxes and lower pensions. However other polls reveal clearly that the Greek people overwhelmingly also want to retain the Euro. So this is one giant gamble. The Greeks are betting that the potential damage to other countries, especially Spain and Italy, and thus to the very fabric of the Euro, is simply too great for the Eurozone to eject Greece.

When voting on Sunday most Greeks probably felt they were reclaiming control of their own economy. However, paradoxically, the No vote has done the opposite. Greece’s short to medium term economic future is now in the hands of others, particularly Germany and France.

Greek banks today are all but out of Euros. Normally in this situation a nation’s central bank simply prints more currency. Greece can’t do that, as no one country controls production of the Euro. So the options over the next month or so seem to be that either Germany, France and the European Central Bank blink, and extend more credit to Greece, or Greece’s financial system will cease functioning and ultimately it will be forced to print drachma.

Remy Davison, Jean Monnet Chair in Politics and Economics at Monash University

With eyes wide shut, Prime Minister Alexis Tsipras has sent his country to the wall.

The “OXI” voters in Athens last night were in full party mode. But in the cold, harsh light of day, the depressingly-painful hangover begins.

61% of voters will wish they didn’t drink so much of the OXI Kool-Aid. Especially when the realisation hits voters that they can only get €60 out of the ATM. Or €50, as €20 notes are now scarce.

The next hurdle for Athens is ominous. The government has a $3.5 billion repayment due to the ECB in mid-July. Defaulting on the 30 June IMF payment was not as serious as the media made out; the IMF default process is slow and ponderous. Conversely, the ECB controls Greece’s capital lifelines. Its emergency lending assistance (ELA) facility has kept Greek banks liquid up to this point. However, the ECB’s Governing Council and the Eurogroup ministers are unlikely to be sympathetic if Tsipras and Varoufakis attempt to renege on the ECB debt repayments.

A deal will ultimately be struck or Greek banks will not reopen without assistance from the ECB. Europe’s central bank will not refinance Greek banks endlessly, as the absence of capital controls before they were imposed on 29 June saw billions of euro offshored within days.

Tax evasion remains a systemic problem for Greece. A Swiss media source has reported that Athens is quietly offering amnesty from prosecution to Greek tax evaders, who have squirrelled away their euro in Swiss bank accounts, if they pay 21% tax.

A Grexit is still extremely unlikely. If there is one thing that government and opposition parties agree upon, it is that there will be no attempt to depart the eurozone. It is not in Greece’s interest, and there is no legal mechanism with which to do so.

An extra-legal attempt (i.e., outside the EU treaties) by a qualified or absolute majority of EU member governments to vote for Greece’s ejection from the eurozone would result in a Greek application to the European Court of Justice for an injunction. A hearing by the ECJ on an attempt to remove Greece from the eurozone could potentially take two years or more, given the complete absence of precedent and the considerable time and resources required to compile briefs for a case of such complexity. Financial commentators who believe in a high probability of a Grexit are either deluded, or have little comprehension of how the institutional mechanisms and procedures of the EU actually work.

The tragedy is that Tsipras and Varoufakis did not need initiate this crisis, as Greece and the IMF were only $400 million apart in their negotiations before the Greek government walked out. Tspiras and Varoufakis have spun the recent IMF report, which calls for debt restructuring, as somehow supporting their side of the story.

In reality, the IMF has been heavily critical of the Tsipras-Varoufakis government and its unwillingness to undertake the requisite, difficult structural reforms that Greece needs, including further privatisation, industry deregulation and competition policy reform, rigorous taxation restructuring in the Greek merchant shipping industry, and tackling offshore tax evasion. Why a far-left government in Greece wants to help rich Greeks to avoid tax defies logic.

In June, a reasonable compromise may have been reached between Athens and the Eurogroup. But it’s unlikely Euro Area ministers will have much sympathy to spare in the next round of negotiations.

Greeks may have voted with an overwhelming “OXI”, but it’s unlikely they realised they might also be voting for capital controls, insolvent banks and a financial system on the verge of meltdown.

Nikos Papastergiadis, School of Culture and Communication, University of Melbourne

A profound recognition has been given now, not just by economists, but by the people of Greece, that the economic policies pushed by the troika are counter-productive.

The government can now walk into negotiations in a strengthened position. They can honour their promises. They have no intention to leave the eurozone, let alone the EU, but can focus on a debt restructure, tackling tax evasion and modernising the state.

I expect some sort of financial resolution in the next 24-48 hours, because a move back to the drachma would be catastrophic.

When politicians in Europe say things like ‘It’s not a problem for us there is no risk of economic contagion,’ that is a profoundly immoral comment given there’s a real risk Europeans will die this winter as a result of their policies. Their sense of solidarity with the union is profoundly blinkered. The risk is not just economic contagion, it’s political contagion. They don’t want Syriza to be the example for other European governments. They wanted Greece to be humbled and crippled by these austerity measures. This divide and conquer attitude means there will be long-term political consequences.

I am so proud of the courage demonstrated by Greeks who have stood up in the face of their own oligarchs, who launched a smear campaign against the government, and said ‘enough is enough’.

James Arvanitakis, Professor in Cultural and Social Analysis at University of Western Sydney

The Greek people have shown overwhelming support for the Greek government and their stance against the so-called troika.

While most commentators may claim they suspected the outcome, I think those who are honest would say the decision was too close to call. The 61% vote in favour of the government does not indicate this, but the reality is the vast majority of Greeks did not know themselves what their vote would be.

In the end, the existential crisis of potentially leaving the Euro and even the European Union was usurped by the fact that they have had enough: enough of austerity that has driven the economy into the ground, enough of 25% unemployment and a lost generation of productivity with 50% youth unemployment, and enough of the troika and the bankers holding them to ransom. As one academic said to me when I was recently there:

“Who created the crisis and who pays for it? Like the GFC, it was those that lent the money, those that fudged the figures and those who have moved their money into offshore accounts. We lose our houses, they sip Retsina and watch sunsets on the islands.”

So what is next for the Greek people?

The obvious answer is uncertainty. But the uncertainty and potential for financial meltdown seems to have usurped the absolute hopelessness that is associated with ‘more of the same’.

Over the last five years we have seen the Greek government meet most of the austerity requests put forward by the troika. Economic theory tells us that in the “long run”, the austerity would work. For the Greek population however, the long run is too far away, unrealistic and a party trick they are no longer willing to fall for.

Greeks have said enough. They have decided it is better to reboot the economy and suffer the potential consequences than continue to see deeply flawed measures bring nothing but financial misery.

Over the next few days we will see continued celebrations. These will quickly disappear depending on the outcome of the negotiations. As I have written elsewhere, Greek society is fraying, how the negotiations go including a potential “Grexit” would determine just how far this unravelling goes.

The heartbreaking image of an elderly man, 77-year-old retiree Giorgos Chatzifotiadis, collapsed on the ground openly crying in despair outside a Greek bank, captured the attention of the world. It is a manifestation of what happens when economic policy and ideology is separated from the impacts on real people.

The “No” vote will restore the pride that has evaporated. But whether this pride turns into something productive or something that is a chauvinistic nationalism, no-one knows.

Nine things to know about Greece’s IMF debt default

From The Conversation.

Greece is set to miss the deadline on its €1.6 billion loan repayment due to the IMF. The country’s stalemate with its international creditors and the decision to hold a referendum on its bailout offer means Greece will become the first advanced economy to default to the fund in its 71-year history.

Here are nine essential things to know about the default:

1. The long-term damage may yet be minimal. If Greece is only in arrears to the IMF for a short period of time, it may be shown leniency down the line. The IMF’s policy on overdue payments does distinguish between short-term and protracted arrears.

2. This is not yet a full-blown sovereign debt default by Greece. This is still a first for an EU member state, but the IMF is keen to maintain a distinction between a country being “in arrears” and a “default”. This important semantic distinction is also made by major credit rating agencies. It means the consequences for Greece may be temporary and small, if they are able to find a speedy resolution and make the payment.

3. Being in arrears to the IMF is not a new phenomenon. Since 1997, arrears owed to the IMF that were at least six months overdue have ranged from €1.5 billion to €3 billion in any given month. This is not a position any country wants to be in, however. It places Greece in the company of countries whose governments are widely seen as dysfunctional, or even “failed states”. The only countries with IMF repayments at least six months overdue in the past decade have been Somalia, Sudan, Zimbabwe and Liberia.

4. The IMF will not allow any country to access its resources while it remains in arrears. For the IMF to be involved in any future new support package, arrears payments will first need to be settled, without the possibility of rescheduling payments. This makes Greece even more dependent on EU funding to bring liquidity back to its banks – making the outcome of the July 5 referendum even more important.

5. The IMF may now treat Greece even more harshly. It is hard to overstate how seriously the IMF takes the issue of prompt repayment of loans. In the past, countries that have deliberately missed payments have had to make significant moves towards adopting IMF policy preferences in order to regain access to its financial resources. This could include things like meeting stricter spending targets and enacting fundamental tax and pension reforms to gain future access to funds.

6. Greece is the IMF’s biggest-ever debtor. This means the stakes for the IMF are higher here than in other countries. Greece’s €1.6 billion payment would be the largest payment ever missed to the IMF.

Relations between Syriza and the IMF will not be easy going forward. EPA/Julien Warnand

7. Future relations are going to be tricky. It is difficult to see how the IMF could work with the Syriza-led coalition government after this default. There is an intense political dimension to the stalemate with the country’s creditors. The IMF does not like countries playing hardball over loan conditions. It likes populist appeals and inflammatory rhetoric even less. And it is fundamentally opposed to giving favourable deals to governments that violate their obligations to the organisation.

8. Greece’s default is a disaster for the IMF’s credibility. There is no positive spin that can be put on this. The IMF relies on countries making their payment obligations no matter what. This is why so few countries in recent years have gone into protracted arrears with the IMF. Greece’s credibility is already in dire straits, but the IMF has much to lose from its largest debtor “behaving badly”.

The IMF is already under fire from developing countries where Greece is seen as receiving special treatment. Unless the IMF brings the hammer down on Greece now, future borrowers outside of Europe will also delay IMF loan repayments when it is inconvenient.

9. Expect a severe response. If no quick resolution is found after Greece’s referendum on its bailout, the IMF must react strongly to preserve its credibility with other debtors. In the short term, the IMF is likely to step back sharply from seeking a compromise position with Greece. The IMF will insist the government makes key policy changes and meets its scheduled repayments before bailout negotiations can resume.

In the longer term, if Greece remains in arrears, the IMF could take the extreme step of suspending the country’s membership. Even if Greece didn’t need access to IMF resources, being suspended from the organisation would be another first for an advanced economy, and would see Greece’s reputation in the international financial community plummet further. Countries that remain in protracted arrears, such as Zimbabwe, have to complete an informal “staff-monitored programme” of policy conditions without funding as part of the process of normalising relations with the IMF.

Taken together, these nine points highlight the dangerous waters that Greece, the IMF, and the EU have now entered. Regardless of the referendum result, it is difficult to see the IMF cooperating with the government in Greece in the near future. Either fresh elections or a monumental change in policy direction will have to occur for that to happen.

Author: André Broome, Associate Professor of International Political Economy at University of Warwick

With the AIIB the world gets a new banker

From The Conversation.

Beijing was in full party mode this week as delegates from 50 countries gathered to sign the articles of incorporation for the Asian Infrastructure Investment Bank (AIIB). Seven more countries are due to sign by the end of the year when the bank is expected to formally open its door for business.

This marks yet another milestone in the establishment of a China-led development lender that, according to its charter, aims to finance investments in infrastructure and other “productive” activities in Asia.

The mean and the lean

The share and governance structures of the bank have been under the radar. On one hand, China has vowed to bring something new to the table with a “new type” of multilateral development bank. On the other hand, western countries, whether those that have jumped aboard the bandwagon or those remaining on the sideline (particularly the US and Japan), have been wary. They are concerned the AIIB is part of Chinese plans to expand its geopolitical and economic interests at the expense of “international best practice”.

The proposed structure of the bank has been a compromise between China’s ambition and western concerns. Contributing almost US$30 billion of the institution’s US$100 billion capital base, China collects 30.34% of stake and 26.06% of voting rights within the multilateral institution. This makes China the largest shareholder in the bank, followed by India, Russia and Germany, with Australia and South Korea being equally fifth in shares.

What is notable is that China offered to forgo outright veto power in the bank’s routine operations, which helped win over some key founding members. However, a 26% voting right will give China veto power over “important” decisions that require a “super majority” of at least 75% of votes and approval of two-thirds of all member countries.

According to a report by the Wall Street Journal, the new lender will be overseen by a lean staff, in the form of an unpaid, non-resident board of directors. Established development banks (such as the World Bank) have been accused of being over-staffed, costly, and bureaucratic. But the AIIB approach tilts the power balance to the bank executives who will be based in Beijing and led by a Chinese-appointed governor. More institutional details must be worked out to strike a better balance between transparency, accountability, and efficiency.

Be in it to win it

The fact that a host of its allies have flocked to join China’s AIIB despite a campaign of dissuasion from Washington has sparked some serious soul searching in the power circle of the United States. Ben Bernanke, former chairman of the Federal Reserve, blamed the US Congress for the impasse in approving reforms to the IMF in granting emerging powers, particularly China, greater clout in the institution. Lawrence Summers, former US Treasury secretary, wrote recently that America’s blunder on the AIIB may be remembered as the moment it “lost its role as the underwriter of the global economic system”.

Indeed, Washington could have kicked the ball back to Beijing if it had taken a more participatory approach. The articles of association prove external concerns can be addressed through negotiation and compromise, but one needs to be at the table rather than pointing fingers from outside the room.

The current institutional framework suggests that previous fears of an unfettered Chinese influence within the bank were overblown. Yes, China could exert its veto power on important decisions, but conversations with Chinese bureaucrats suggest China is very unlikely to invoke it. After all, hijacking the agenda with its veto power has been the very way the US governs the institutions under its control, from which China is trying to distance itself.

In addition, it is less noted that the voting rights of the “Western” block, in its widest terms, (including South Korea and Singapore), are more than 30% in total. This means a mutual veto between China and western interests. In practice, this delicate balance tends to lead to negotiated consensus rather than open confrontation.

Engaging the new banker

For a long time, China has been urged to be a “responsible stakeholder” for the international community. The AIIB could well be a touchstone for China to demonstrate its ideas and ways of leadership. As Lou Jiwei, Chinese finance minister, said:

“This is China assuming more international responsibility for the development of the Asian and global economies.”

It is time to turn the table around. Instead of an endless debate on China’s strategic intentions as an emerging power, what we should do is explore ways to shape China’s behaviour to be more aligned with international expectations.

The new development bank presents a rare opportunity to achieve this in a multilateral context. So far China has largely acted on the sidelines in major international institutions, such as the World Trade Organisation and the G20 (before the Brisbane summit), and had leadership experiences in mostly regional settings, such as the Shanghai Cooperation Organisation.

The world has a new banker. However, it lacks expertise in international development finance; it lacks international governance experiences; and its ideas are untested.

These are not reasons for pessimism about the bank’s future. On the contrary, these are the very reasons we should join the initiative. By doing so, we could more effectively shape China’s view of the world and its role in the world when it is in need of ideas, expertise, and most importantly, support.

Whether China will be a friend or foe largely depends on whether we treat it as a friend or foe. After all, as Hillary Clinton once said of the US relationship with China: “How do you deal toughly with your banker?”

Author: Hui Feng, Research Fellow, Griffith Asia Institute and Centre for Governance and Public Policy at Griffith University

Why Apple Music is set to take over the streaming business

From The Conversation.

After much anticipation Apple has launched its new music streaming service, Apple Music. It’s the latest addition to Apple’s burgeoning product ecosystem which includes devices, software, online digital payment systems and digital media stores. The launch of Apple Music also poses a substantial threat for existing companies that deliver on-demand music streaming services – most notably Spotify, the subscription-based music streaming provider that has achieved an impressive customer base of 75m (with 20m paying for the service) since 2008.

Competition between innovative companies is nothing new but in the hyper-connected digital world everything happens faster. The competitive advantage that a single product or service can give is much shorter-lived. The launch of a product or service on the market is immediately observed by millions of companies, globally. And the companies that have the right resources and technology to build on a good idea and possibly make more out of it are the ones that thrive. Enter Apple to the music streaming business.

Making more out of an idea

Having a good idea that creates value for customers is only the very beginning of a business’ journey – this is something colleagues and I reflected on recently in a paper published in the Academy of Management Review. Coming up with one way to make money out of it is a good start, but stopping there does not lead to success, certainly not in the longer term.

An idea is really a seed. A seed that can grow in many directions and generate other successful new ideas. Developing follow-up ideas can be the key to long-term success. Apple is an example of a company that does this extremely well.

In 2001 Apple developed the core idea of combining design, portability and connectivity. The first way it conceived to make money from this was the launch of a product for the music industry. The result was the iPod, a smoothly designed, ultra-portable device that enabled connection with other devices and access to content. The iPod was a huge success, but Apple did not stop there.

Building on the same basic concept and combining new telecommunication and computing functions it introduced the iPhone and the iPad. Today, continuing along the same trajectory the company is expanding in wearable technology with the recently-launched Apple Watch and now in music streaming with Apple Music. Electric car systems are the next objective. Each of these products is – in Apple CEO Tim Cook’s own words – “a very key branch of the tree”, originating from the same seed that led to the iPod in 2001.

Tim Cook, Apple CEO, rallies the troops at the company’s annual developers conference. EPA/John G. Mabanglo

Generating more

In our article we call this a “generative” strategy. Successful companies think about what else could be done with the same basic concept. They apply it to other contexts, develop complementary products to enhance their success and target new customer bases.

Uber is another example of this. It is building on the core idea at the basis of its car sharing service and is entering logistics with Ubercargo (a moving service) and Uberrush (a package delivery service).

Being generative makes sense for a variety of reasons. First, not all early applications of a given idea are successful. In its path to success Apple launched products that did not work, such as the tablet Newton and iTunes Ping.

Developing a portfolio of variations on the same idea makes a company less dependent on the success of each one of them. For instance, maximising the profitability of its music streaming service is less crucial for Apple than it is for Spotify because Apple Music is only one of many services the company provides.

Developing a system of interconnected products and services also has the benefit of locking customers into them, which competitors that focus on one idea will struggle to replicate. So developing a customer base for its new music service is going to be much easier for Apple than it has been for Spotify because Apple benefits from the millions of users (and registered credit cards) already tied to its iTunes accounts.

Exploiting potential

Being generative does not necessarily mean pushing multiple ideas. Rather, it means exploiting the full potential of each idea. Coming up with a large number of varying inventions is more likely to be detrimental for a firm, spreading its attention too thinly. Xerox Parc in the 1970s, for example, generated an incredible number of new ideas but didn’t succeed in exploiting their full potential. Some similar ideas did find commercial success though such as the first Macintosh computer.

In our research, we emphasise that organisational choices that foster creativity but also create pressure to deliver outcomes are an important way for exploiting existing ideas in new, profitable ways. These can include things like companies having challenging goals on invention and time sensitive creative processes that create a sense of urgency and provide rhythm to the inventive process – think Apple’s annual developer conference as a key deadline for the launch of new products. Developing a knowledge base that draws on a diverse range of experiences can also contribute to this goal.

Even after a successful invention, failing to recognise a product or service’s full potential might lead someone else to do it. If a company does not consciously try to further develop its ideas in all the feasible directions, it might end up leaving a lot of money on the table. And Apple is a company that is well-endowed to swoop in and clean it up.

Author: Elena Novelli, Lecturer in Management at City University London

Five things you need to know about the IMF’s stance on Greece

From The Conversation.

As negotiations go down to the wire, the IMF is once again being cast in the role of dictator. It is the enforcer of controversial structural reforms to a country experiencing severe economic distress, the social consequences of which have been disastrous over the last seven years. In many ways, however, the IMF is used as a scapegoat for promoting unpopular policy choices by the elected politicians and unelected bureaucrats of the eurozone who are well aware of the organisation’s fundamental commitment to favouring fiscal consolidation.

As the June 30 deadline approaches for Greece’s €1.5 billion debt repayment, here are the five key things to know about the IMF’s position.

1. Keeping the eurozone in tact

Keeping the eurozone together is a paramount concern for IMF negotiators. They will therefore almost certainly not recommend that Greece consider taking the nuclear option of abandoning the euro, which would be the likely result of defaulting on its debts.

This is because of the risk of systemic instability. And also because of the potential for eurozone rules to act as an external constraint on future economic policy choices in Greece – which the IMF has long seen as in need of further structural reforms and greater fiscal discipline.

Plus the organisation has a long history of exhibiting a status quo bias whenever it has been faced with the possibility of regional monetary distintegration, such as in the case of the ruble zone during 1991-93.

2. Reputational costs

The IMF is acutely aware of the reputational costs it faces if it is blamed for a sovereign default by Greece – let alone if Greece is eventually forced out of the euro. Here, the stakes involved with the terms of the Greek bailout, and whether or not Greece remains in the euro, differ markedly for the IMF compared with its “Troika” partners, the European Central Bank and the European Commission.

After the IMF took the lead in coordinating a multilateral response to the Asian financial crisis in 1997-98 it shouldered most of the blame for policy mistakes that inflamed the crisis. This motivated many countries to shun the organisation over the next decade until the onset of the global financial crisis in 2008.

The IMF’s Lagarde must take into account other eurozone economies. EPA/Olivier Hoslet

There can be no real winners from the high stakes poker match between Greece, the EU, and the IMF that has been running since the Syriza-led coalition came to power in January. But how the IMF’s reputation fares in the aftermath of the eurozone crisis will have a significant impact on its future crisis management role, both in Europe and beyond.

This is one of the reasons behind the IMF’s decision in 2013 to publicly admit to making notable errors in underestimating the damage that the initial round of austerity policies in 2010-11 would do to the Greek economy. This acknowledgement helped to place a small amount of distance between the IMF’s position and the apparent commitment of EU leaders to austerity-at-any-cost, while reducing the potential for the IMF to be used as the scapegoat for mistakes also made by its Troika partners.

A concern with protecting its reputation is also why the IMF has been at pains to emphasise in press briefings that it has pushed for “social fairness and social balance” in the design of reforms to the Greek pension system.

3. Greece’s commitment to structural reform

How flexible the IMF will be in reaching a compromise with the Greek government depends in large part on how they assess Greece’s commitment to implementing structural economic reforms.

Over the five months since it was elected, the Syriza government has demonstrated little or no political will for implementing major overhauls of the pensions system and the tax system, which are key concerns for the IMF.

A broader issue here is the IMF’s principle of “uniformity of treatment” for borrowers. There will inevitably be internal debates over how much the IMF should compromise with Greece over its bailout terms. But this principle constrains how flexible the organisation can be seen to be for any individual country, to avoid future borrowers also demanding softer loan conditions such as through looser policy targets or a slower pace of structural reforms.

4. Views on tax reform

The IMF’s long-standing views on tax reform also limit its flexibility towards Greece’s recent proposals for tax rises. Here, as in other countries, the IMF is seeking a substantial broadening of the tax base through the expansion and simplification of consumption taxes.

It is concerned that tax increases alone cannot plug the fiscal gap in a country with a notoriously leaky tax system. Though much of Syriza’s proposed changes may increase tax revenue in the short-term, the IMF is more interested in structural reform of the tax system that can help in shaping long-term policy.

In the meantime, cutting public spending in Greece, from the IMF’s perspective, is both easier for the government to achieve as a stopgap solution and is a better indicator for the country’s creditors of the government’s political commitment to implementing painful reforms.

5. Leadership

During the four years that former French finance minister Christine Lagarde has served as the IMF Managing Director, her public comments on Greece have gradually moved towards recognition of the need for debt relief. This is a significant shift from the organisation’s official position in 2010-11, and has expanded the negotiating space available to the IMF. Meanwhile it has placed pressure on its Troika partners to deliver some form of debt relief down the track.

Yet despite growing acknowledgement that debt relief will need to be part of any long-term agreement to achieve fiscal stability in Greece, this is only likely to be formally placed on the negotiating table after the government first agrees to a comprehensive package of structural reforms.

The end game

As the negotiations over Greece’s economic future enter the end game, the chasm between the debtor country and its creditors remains both wide and deep. The carrot of debt relief is only likely to materialise once substantial progress is made on implementing the structural reforms that have been deemed unacceptable by Greece’s Syriza government.

It is hard to imagine how a workable long-term solution can be fudged at this stage of the process. This would need either the creditors relaxing their demands for continued austerity or the government caving in and accepting the structural reforms it campaigned against in the election in January. The former is highly unlikely, given the signal this would send to other economies. The latter seems equally unlikely and if it happens might result in the collapse of the government and fresh elections, starting the messy process of muddling through negotiations all over again.

Author: André Broome, Associate Professor of International Political Economy at University of Warwick

Now the Greek people will decide

From The Conversation.

Greece will hold a referendum on July 5 on whether the country should accept the bailout offer of international creditors. The government’s decision to reject what was on offer and call the referendum is ultimately an attempt to take charge of its domestic policy and reaffirm its credibility with voters.

Although Greece is hard strapped for cash this is clearly a political decision with profound consequences for the future of the European Union. It is also the right one.

This is not merely useful as a negotiating tactic for obtaining a better deal with its creditors, as many commentators might suggest. The coalition of the left, Syriza, had no choice but to oppose further measures that would lock its economy into a deflationary spiral, the trappings of which are destroying Greek society.

The Greek position

Elected with the mandate to end the savage austerity policies already imposed, Syriza could hardly accept the further cuts demanded. These include cuts in income support for pensioners below the poverty line and a VAT hike of up to 23% on food staples. Even more onerous was the demand that Greece should deliver a sustained primary budget surplus of 1% for 2016, gradually increasing to 3.5% in the following years when its economy has already been contracting for six years.

By most counts the austerity policies imposed by Greece’s creditors in 2010 in exchange for the bailout money (of €240 billion) have been an abject economic and moral failure. The International Monetary Fund itself has acknowledged “a notable failure” in managing the terms of the first Greek bailout, in setting overly optimistic expectations for the country’s economy and underestimating the effects of the austerity measures it imposed.

The former IMF negotiator, Reza Moghadam, has acknowledged the fund’s erroneous projections about Greek growth, inflation, fiscal effort and social cohesion. The debt is now almost 180% of Greece’s GDP, up from 120% when the bailout program began. And this is mainly due to the fact that GDP has contracted by 25%, rather than the significantly lower projections by the IMF. The shrinking of the economy and rising unemployment levels have exceeded those that hit the US in the financial crisis of the 1930s.

The human and social costs have been even more staggering in Greece. Incomes have fallen by an average of 40%, and the unemployment rate reached 26% in 2014 (and higher than 50% for youth). With hundreds of thousands of people depending on soup kitchens, and thousands of suicides in the years 2010-2015, the moral case for debt forgiveness seems just as strong as the technical one based on economics.

The creditors’ offer

Yet in the terms presented to Greece by their creditors there is no commitment to reducing Greece’s crippling debt (which all commentators acknowledge is unrepayable). Nor is there any tangible proposal for rebuilding the Greek economy.

Germany, France, and the EU, aided by the IMF and ECB, continue to insist on implementing policies that have so manifestly failed Greece. They do so to avoid having to justify the massive bailouts of their own financial systems – shifting the burden from banks to taxpayers – if Greece fails to make the repayments. The leading EU partners must not be seen to act leniently towards Greece as this might encourage anti-austerity parties Spain and elsewhere.

Leader of Spain’s anti-austerity party, Podemos, Pablo Iglesias, rallying with Alexis Tsipras. EPA/Orestis Panagiotou

Broken Europe

But the social and political costs of these policies have put the legitimacy of the entire European integration project in question. By being locked into austerity policies, Europe is tearing itself apart.

This brings to the fore the faulty institutional framework that has exacerbated these issues. European integration was conceived by a set of elites, while many EU citizens have never fully embraced the idea: the EU tends to be regarded as an economic entity rather than a cultural or social one. The “ever closer union” remains an aspiration, while EU institutions patch up compromises between its most powerful members.

The ill-thought and haphazard implementation of the common currency is perhaps the most costly compromise of all. The Greek government is therefore right to ask for generous debt relief to allow the economy to have a fresh start in exchange for reforms that will address the perennial problems of corruption and inequality that bedevil Greek society.

The right decision

Greece has many problems – including unfair taxation (64% of taxes are paid by salaried employees and pensioners), corrupt elites who have governed the country for at least four decades with fellow European governments repeatedly turning a blind eye to their flouting of rules, and the oligarch-owned media which are neither independent nor free. But accepting the bailout would only feed into the system that got Greece into this crisis.

Meanwhile, the newcomer to Greek politics, Syriza, has been told it will only receive the funds agreed under the previous bailout terms if it is ready to implement further policies that will decimate the poor and impoverish the middle class even more. Cutting pensions, many of which are already below the eurozone average when almost one in two of them are facing poverty, would be a mistake.

So would conceding to the firing of an additional 150,000 public sector workers when their overall headcount has already been reduced by 161,000 since 2010 – a 19% reduction, according to the IMF.

Contrary to popular belief, the number of public sector employees as a percentage of the workforce in Greece is 14% below the OCED average, but austerity has had an even more disastrous impact on employment in the private sector, with an estimated 400,000 businesses closing down in the past five years.

No country has ever succeeded in emerging from financial crisis by means of austerity. Further austerity would have made the impossibly bad situation that Greece is in worse still. In rejecting the creditors’ further demands, the Greek government stands for the working people of Greece – and Europe too.

Author: Marianna Fotaki, Network Fellow, Edmond J Safra Center for Ethics, Harvard University and Professor of Business Ethics at University of Warwick,

Path to Grexit tragedy paved by political incompetence

From The Conversation.

Since our last episode, the crisis in Greece has escalated further. Negotiations between the government and its creditors collapsed over the weekend, and restrictions on bank withdrawals will now follow.

The next step is for the government to issue the equivalent of IOUs to pay salaries and pensions. The country is seemingly on the slippery slope to exiting the euro.

Many of us doubted that it would come to this. In particular, I doubted that it would come to this.

Nearly a decade ago, I analyzed scenarios for a country leaving the eurozone. I concluded that this was exceedingly unlikely to happen. The probability of a Grexit, or any Otherexit, I confidently asserted, was vanishingly small.

My friend and UC Berkeley colleague Brad DeLong regularly reminds us of the need to “mark our views to market.” So where did this prediction go wrong?

Why a euro exit didn’t make sense

My analysis was based on a comparison of economic costs and benefits of a country exiting the euro. The costs, I concluded, would be severe and heavily front-loaded.

Raising the possibility, however remote, of exit from the euro would ignite a bank run in said country. The authorities would be forced to shutter the financial system. Economic activity would grind to a halt. Losing access to not just their savings but also imported petrol, medicines and foodstuffs, angry citizens would take to the streets.

Not only would any subsequent benefits, by comparison, be delayed, but they would be disappointingly small.

With the government printing money to finance its spending, inflation would accelerate, and any improvement in export competitiveness due to depreciation of the newly reintroduced national currency would prove ephemeral.

In Greece’s case, moreover, there is the problem that the country’s leading export, refined petroleum, is priced in dollars and relies on imported oil, which is also priced in dollars. So much for the advantages of a depreciated currency.

Agricultural exports for their part will take several harvests to ramp up. And attracting more tourists won’t be easy against a drumbeat of political unrest.

What went wrong?

How did Greece end up in this pickle? Some say that the specter of a bank run was no longer a deterrent to exit once that bank run started anyway due to the deep depression into which the Greek economy had sunk.

But what is remarkable is how the so-called bank run remained a jog – it was still perfectly manageable until the Greek government called its referendum on the terms of the bail out deal offered by international creditors, negotiations broke down and exit became a real possibility.

Nonperforming loans — ones that are in default or close to it — were already rising, to be sure, but the banks still had all the liquidity they needed. The European Central Bank supported the Greek banking system with emergency liquidity assistance (ELA) right up to the very end of June. Only when Greece stopped negotiating did the Central Bank stop increasing ELA. And only then did a full-fledged bank run break out.

So I stand by the economic argument. Where I need to mark my views to market, however, is for underestimating the role of politics. In particular, I underestimated the extent of political incompetence – not just of the Greek government but even more so of its creditors.

In January Syriza had run on a platform of no more spending cuts or tax increases but also of keeping the euro. It should have anticipated that some compromise would be needed to square this circle. In the event, that realization was strangely late in coming.

And Prime Minister Alexis Tsipras and his government should have had the courage of its convictions. If it was unwilling to accept the creditors’ final offer, then it should have stated its refusal, pure and simple. If it preferred to continue negotiating, then it should have continued negotiating. The decision to call a referendum in midstream only heightened uncertainty. It was a transparent effort to evade responsibility. It was the action of leaders more interested in retaining office than in minimizing the cost to the country of the crisis.

A hard lesson learned

Still, this incompetence pales in comparison with that of the European Commission, the ECB and the IMF.

The three institutions opposed debt restructuring in 2010 when the crisis still could have been resolved at low cost. They continued to resist it in 2015, when a debt write-down was the obvious concession to Mr Tsipras & Company. The cost would have been small. Pretending instead that Greece’s debts could be repaid hardly enhanced their credibility.

Instead, the creditors first calculated the size of the primary budget surpluses that Greece would have to run in order to hypothetically repay its debt. They then required the government to raise taxes and cut spending sufficiently to produce those surpluses.

They ignored the fact that, in so doing, they consigned the country to an even deeper depression. By privileging their own balance sheets, they got the Greek government and the outcome they deserved.

The implication is clear. Never underestimate the ability of politicians to do the wrong thing. I will try to remember next time.

Author: Barry Eichengreen, Professor of Economics and Political Science at University of California, Berkeley

When monetary policy reaches its limits, what of fiscal policy?

From The Conversation. In a recent address to the Economic Society of Australia, the Reserve Bank Governor Glenn Stevens hit the nail on the head when he remarked that “monetary policy alone can’t deliver everything we need and expecting too much from it can lead, in time, to much bigger problems”.

What was particularly important in this address was the (implicit) suggestion that the answer goes hand in hand with another question; what should we expect from fiscal policy?

Though at first sight it might appear to be a rather tenuous link, a decent review of the taxation system and more generally of the revenue side of the fiscal equation, may be a big help in taking some of the burden off monetary policy from its current constraints.

Stevens is not alone in suggesting that too much might be being expected of central bankers in promoting growth and reducing unemployment. Similar sentiments have come from former Federal Reserve Chairman, Ben Bernanke.

It is useful to distinguish two aspects to the question of whether we expect too much of monetary policy. The first is whether we can expect it to work when the economy is on the downswing in the same degree as when it is on the upswing. In particular, can we expect an easing of monetary policy to stimulate growth as effectively as a tightening of monetary policy can choke it off.

Central banks for the most part have a brief of keeping inflation within a certain range and, with that done, to assist in keeping the economy’s growth rate near to trend; in the best of worlds, consistent with full employment.

Expectations about what more accommodating monetary policy can do for a sluggish economy have at times had to take a reality check here and in other parts of the world. Bringing interest rates down and making the assets side of bank balance sheets more liquid via “quantitative easing” can stimulate the real economy only to the extent that the binding constraint on spending by consumers and business is a financial one.

But in an environment where producers expect sluggish or even falling domestic or export demand, one would also expect to see sluggish investment demand, regardless of interest rates or the willingness of banks to lend. In other words, slow growth in demand may well mean expected rates of return from investment in new plant are revised down as much as interest rates.

As Stevens noted in his address, lower interest rates may not help consumption expenditure much either in present circumstances, since household sector’s debt burden means that it “has the least scope [compared with government and corporations] to expand their balance sheets to drive spending”.

And, as plenty of commentators have noted, injections of liquidity and easing credit conditions may be channelled into financial assets which don’t have significant stimulatory effects on the real side of the economy, which is where we need it for growth and reduced unemployment.

Some have even argued that a lengthy period of easy monetary policy has adverse distributional effects benefiting owners of stock and property. However the precise distributional effects of seem rather complex and less than clear cut, and will depend in part on whether or not accommodatory monetary policy stimulates the economy and hence employment growth.

The second and perhaps broader aspect related to expectations about what monetary policy can and should do is that it is often asked to effectively make use of a limited toolbox to deal with conflicting objectives. One could be forgiven for thinking that in this country we have only one macro policy instrument – interest rates – to both control inflation and manipulate growth in economic activity.

The obvious elephant in the room here is fiscal policy.

In his address Stevens actually raises an old and interesting idea about fiscal policy: that it can have a stimulatory role perfectly consistent with “sound financing” (to borrow a perverted phrase with which Keynes’ was forced to do battle); where stimulatory expenditure and any increased debt are on the capital or investment side of the budget.

Such fiscal stimulus may even have what some economists refer to as a “crowding-in” effect: a positive impact on expectations about growth, as Stevens notes. This idea also provides a bulwark against the nonsense about fiscal contraction or consolidation (as it’s euphemistically called) being necessary to stimulate the economy.

The caution here from the Governor is also sound it seems; that capital expenditure is not overnight, so the confidence boost is probably more important for the short-term than the actual direct impact on government expenditure.

In any case, if fiscal policy in general and government expenditure in particular is to come back into its own as a macro policy instrument, reform of the revenue base and thus the tax system is paramount.

But note here, a significant driver of tax reform should be the sustainable funding of an expenditure side which fulfils its macro economic role as a generator of demand growth and its social role in generating infrastructure.

Tax reform should not be seen exclusively as code for a lower taxes, this being an end, the means to which to point of is government withdrawing from its expenditure responsibilities. Unfortunately, this latter view seems to dominate much discussion in this country.

From a macro policy standpoint, looking at tax or more appropriately at the revenue side of the fiscal equation may well have a positive spin-off for monetary policy, leaving it to focus, if that is the continued wish of the political masters, on inflation.

And if one is worried about complex adverse distributional effects of monetary policy, expenditure on infrastructure, done properly, would surely help redress inequality by lifting the social wage.

Author: Graham White, Associate Professor, School of Economics at University of Sydney

The real reasons negative gearing on housing should be phased out

From The Conversation. In recent weeks, there have been signs sentiment may be changing around the contentious policy of negative gearing.

There are well-rehearsed arguments on both sides. Critics argue that the deduction of property losses from other sources of income (such as wages) is a tax shelter that imposes an unfair burden on other taxpayers. Defenders of the policy suggest that it is used by prudent savers to “get ahead”, and by high income individuals to lower unduly high tax burdens that blunt work incentives.

However, these arguments are tax policy concerns since taxpayers can negatively gear other financial investments such as shares. There are housing policy specific issues that instead warrant a focus on housing; three deserve particular attention.

The first is a familiar refrain. Given a fixed supply of land, negative gearing advantages property investors who are better able to out-bid other land users. Part of the tax break gets shifted into higher land and housing prices; some other users of land – first home buyers, for example – are “crowded-out”.

But a second reason, related to so-called tax “clientele effects” has been rarely mentioned. It is a more nuanced influence, yet it is important to an understanding of the supply side effects of reform in this area.

The Australian private rental housing stock is relatively large by international standards and mostly held by “mum and dad” investors. There are not enough high tax bracket investors willing and able to hold all the housing in this tenure. Lower tax bracket investors must be enticed into the market. These investors are often retirees looking for secure, regular flows of income, and are attracted to those segments of the market where rental yields are relatively high.

On the other hand, the appeal of property investment to the high tax bracket investor is that they can negatively gear the asset’s acquisition, yet an important part of the returns (capital gains) are lightly taxed compared to other types of investment income. The consequence is that high tax bracket investors crowd into segments of the market offering high capital growth but low rental yields. Low tax bracket investors concentrate in segments offering high rental yields but lower capital growth.

The removal of negative gearing is then likely to have supply side impacts that are not as straightforward as has been suggested in some of the media commentary. To be sure some high tax bracket investors will withdraw and as price pressures ease and rental markets tighten, rental yields will rise.

But those higher rental yields will prompt some growth in the number of low tax bracket investors, and especially so in today’s low interest rate environment. As low tax bracket investors face tighter borrowing constraints, the overall supply side impact will be negative. But it will not be the collapse in supply that some fear.

The third reason for change with respect to negative gearing and housing is perhaps the most important in the current context. The share of investment property loans in total debt has tripled from one-tenth to three-tenths in a little over two decades. Investors now take up a higher share of the value of new loans than do first home buyers.

According to the Australian Bureau of Statistics, investment housing accounted for 40% of the total value of housing finance commitments in April 2015. Of the dwellings that secured housing finance commitments within the owner occupation sector, only 15% was attributable to first home buyers. The presence of housing investors on such a large scale is a potential source of instability, especially if highly geared.

In their seminal research, the late Professor John Quigley and his colleague Karl Case note that when markets slump home owner behaviour differs from that of other investors.

They can “consume” the housing they have bought – by enjoying the surroundings and the comforts of home – and provided mortgage payments are met, they are invariably willing to “sit out” the slump. This can be an important source of stability in housing markets.

But property investors have not bought a dwelling to live in it. When prices slump some if not many will cut their losses and seek a safe haven for their capital elsewhere, especially if they are highly geared. Our research finds that negatively geared investors are more likely to terminate rental leases than equity-oriented investors. The former are also prone to churn in and out of rental investments as they refinance to preserve tax shelter benefits.

When large numbers of indebted investors come to bank on continued house price gains, and low interest rates, the resilience of housing markets is undermined. Phasing out negative gearing should be a priority for a housing policy fit for the 21st century.

Authors: Gavin Wood, Professor of Housing at RMIT University and Rachel Ong, Principal Research Fellow, Bankwest Curtin Economics Centre at Curtin University