Our Mannkal Economic Education Foundation was one of the first PPF/PAFs (Private Ancillary Funds) in W.A., formed in 2002, and over the years I have enthusiastically encouraged many people to form their own PPF / PAF.

Back in 2002, when I went into Freehills Office in Melbourne, I was instructed how to download the model constitution from the website and how to get started.  The whole exercise cost around $2,500 and we were up and away.

However, eleven years later I have just assisted in creating four new PAFs, for other people close to me, so I’m qualified to comment on how the procedure has deteriorated in ten years, both from a cost point of view but, even more significantly, from the administrative nightmare currently surrounding PAFs.

Last year it cost the Mannkal Foundation about $15,000, in legal fees to defend ourselves from the ATO who accused us of ‘doing too much’.

Granted that our PAF has expanded considerably over the eleven years, as one would expect, but there is no provision for expansion under the current PAF regime.

We are now accused of ‘benefiting students’ when a PAF is only permitted to ‘benefit universities or other DGRs’ (Deductable Gift Recipeints).

Our benefits to students are always via universities or DRGs.

Let me make an interesting comparison between the structure of such charitable giving in Australia vs the USA.

I’m on the Board of Overseers of the Atlas Economic Research Institute in Washington, DC where we oversee the operations of some 300 such philanthropic entities.

Granted, many have been operating much longer than Australia’s eleven year time frame.

In the U.S.A. the major drivers of discussions and planning are ‘donor intent’, and strategy to make your giving more effective.

In Australia the major drivers of such discussions are ‘compliance’ with the ever changing rules.

In the U.S.; philanthropy is enthusiastically encouraged.

If you read the PAF documentation in Australia it is laced with the language of threatening penalties.

When the latest range of changes to the governing rules were proposed, in December 2008, Mannkal submitted a comprehensive document demonstrating how so many of their proposed changes would have unintended long-term consequences wholly at odds with their own good intensions.

http://www.mannkal.org/downloads/submissions/sub20090108.pdf

Many of these changes were not proceeded with but some aspects of what did emerge appear to be a cross between the old BBC programs of Yes Minister and the Goon Show.

For example the Corporate Trustee for each PAF must have a ‘Responsible Person’.

Who in their right mind would take on the role of ‘Responsible Person’ when they are surrounded by a Board who could democratically vote to do something at slight variance to the rule book?

This builds in a potential conflict from day one.  

We have covered this particular ‘conflict’ with a comprehensive Directors & Officers Insurance Policy, but this now resembles the corporate world of nonsense, from which I had hoped to have escaped.

So, to sum up.

1              I can see only one remaining benefit for PAFs and that is to ‘warehouse tax liabilities’, i.e. if you have a particularly good year, it is difficult to efficiently donate a large amount, so this amount can be stored in a PAF and then efficiently distributed over ensuing years.

Other than that, I would recommend simply donating to your favourite charity directly and avoid the spider web of PAF complexities.

2              So, when anyone asks me, “Should they start their own PAF?” I say, “Stop, consider and talk to me over several cold beers.”

p.s.       I have just studied Philanthropy Australia’s submission –

http://www.philanthropy.org.au/pdfs/advocacy/charities_bill_final.pdf

 to this year’s voluminous proposed amendments, described as “Charities Bill 2013 and Charities (Consequential Amendments and Transitional Provisions) Bill 2013”.  I sincerely hope that some notice is taken of Philanthropy Australia’s suggestions, otherwise real philanthropy will suffocate in Australia or degenerate into a form of government sponsored philanthropy as described in Peter Kurt’s C.I.S. paper –

http://cis.org.au/publications/issue-analysis/article/4775-in-the-pay-of-the-piper-governments-not-for-profits-and-the-burden-of-regulation

Ron

The latest Super Fund ‘smash & grab’ strategy from Canberra is quite predictable.

What else could you expect from a government who has already ‘spent the profits’ (from the mining boom), long before the mining companies and their shareholders even received any of the ‘anticipated profit’.

Now Canberra looks longingly at the Super Funds that have been prudently accumulated by Australians who accept the responsibility of caring for themselves as they slip into old-age.

The proliferation of Super Funds was a result of previous greedy governments who had spent earlier funds set aside to replay taxpayers, in the form of ‘aged pensions’.

So, before their government profligacy could be discovered, the unsuspecting ‘punters’ (you and I) were encouraged to ‘take care of ourselves, because the pension cupboard is bare’).

Sounds a bit like the ‘Future Fund’ trick.

The politicians and public servants set themselves up with pension plans , well beyond the dreams of the ‘workers’ (this is where the word ‘unsustainable’ was invented), and then having realized that the ‘cupboard was bare’, decided to loot ‘our Telstra[i]’.

Nice work if you can get away with it, but try this immoral solution in the ‘private sector’ and it’s straight to a prison cell!

So it’s greed that ultimately brings all criminals unstuck, so will they get away with it this time as they plunder your Super Funds?

Ron Manners

April 2013.

Yes, it’s a simple decision, you must choose between complying with every tax and regulation or surviving.

A simple decision, but you can’t do both. There is a war on between taxing authorities and the business community.

Talking of success; every time I meet an extremely successful person I ask this question: “When you look back, what really gave you the winning edge?” Interestingly, not one has ever replied, that it was their formal education or the particular school they attended. Almost, without fail, after thinking, they explain that it was one or several sharp events in their lives that opened their eyes to the opportunities that lay ahead.

This resonates with me as I’ve identified three such events in my own life, as it guides us at the Mannkal Foundation (www.mannkal.org) where we have already created such short-sharp opportunities for over 600 young Western Australian youth leaders.

Word of mouth is effectively spreading the word about these opportunities and more are being created each year.

Watch for these opportunitites in ‘for students’ at www.mannkal.org

Ron Manners

We will continue to be plagued by bad service as long as we suffer in silence!

Perhaps the antidote is to speak up on each occasion that service is not delivered to your satisfaction.

I thought about that when I strode out of the Subiaco Post Office recently.

A simple matter, that should have taken only a few minutes, ended up costing me half a day.

Someone had sent me a parcel from Melbourne that required my signature and payment for their ‘under-stamping’.  However, on presenting the ‘collect card’, the staff at the Post Office, after a lengthy search, advised that, “The parcel cannot be found, so come back next week.”

I did, and this time they found the parcel and when I jokingly asked if, after two visits, did they think it appropriate to still charge me the $6.50 ‘under-stamping’ fee, their response was somewhat ferocious.

They were astounded that I should make such a suggestion, to which I responded, “You are lucky I don’t send you an invoice for my travel, time and parking.”

When I was asked why I insisted on taking with me the ‘collect notice’, I remarked that, “I’m a writer and I collect examples of bad service.”

Well, anyway, while I was in that vicinity I walked over the road to buy some new ‘joggers’.

Having selected a pair with a sale price tag that clearly showed $189.95, I was amazed that it was then processed through the cash register at the original price of $249.95 (the price on the box).

When I pointed out to the proprietor the actual sale price tag he simply said, “Okay I’ll change it.” (Probably thinking to himself, “I thought the silly old bugger would not even notice.”)

Then, arriving back into the office just in time to receive a telephone call from my daughter in London, to say that she had received a notice from U.K. Customs demanding a $100 payment to release a parcel.

She presumed the parcel to be Christmas presents for my granddaughters, however, when my daughter telephoned Her Majesty’s Customs they refused to reveal details of ‘the sender’.

All very unsatisfactory so I suggested as the grandchildren had missed out on Christmas, we would make some inquiries from our end as to why penalty rates apply to gifts being sent to the U.K.

The answer was, “to discourage people bringing in internet purchases.”  (Totally unrelated to gift sending).

The Happy Ending

However, after writing to the British Consul General, Perth, explaining that if the U.K. Customs confiscated and kept this parcel, it was a clear example of ‘stealing’, this parcel was subsequently sent back to me at their expense.

Now it has been successfully ‘smuggled’ into the U.K. so that two little grandchildren can enjoy a belated Christmas.

Warm feelings all around!

Click here to view an image of an unnammed smuggler with much travelled Christmas Presents… and click here to view the receipt of proof!

Mitchell’s Golden Rule explains that when the private sector grows faster than government, prosperity increases and when government grows faster than the private sector, misery increases.

In most major countries, including the U.S., government is growing faster than the private sector, and despite stirring political speeches, nothing much will change for them until they reverse the misery : prosperity ratio.

So what can Australia learn from this?

According to the IMF / Economist Magazine, Australia’s +3.4% growth of government in 2012 is out-stripping the U.S. growth of +2.2%.

Australia’s ‘bubble government’ is precariously kept afloat by one industry (mining) with one customer (China), so the assumption that “she’ll be right mate!” is not based on sound reasoning.

Why should we have confidence in governments to ‘do the right thing’, when they are pretty much financially / economically illiterate.

On average their understanding doesn’t go much beyond ‘buying votes’ by ‘stimulating the economy’ in bad times and ‘spreading the benefits of the boom’ in good times.

Their answer is always more spending and expanding government.

The real problem (as pointed out recently by Simon Cowan from CIS) is ‘the underlying trend towards big, unsustainable government.’

There are just a few things that we can legitimately delegate to government (external and internal defence, the law courts, land titles, etc.) but we are the real problem if we demand that they go beyond this, when we ask them to educate our children, take responsibility for our health and clothe and house us; plus feed us when we are hungry!

As a famous cartoon philosopher once said …………

                “The problem is us!”

Ron Manners

To celebrate the 15^th anniversary of Mannkal.org, a special edition of Mannkal’s Musings is constructed around a timeline which shows our continuing evolution.

No need to cover my early involvement (from age 16) with the world of “Free Market Ideas”, as this was detailed on pages 8–11 of my last book, Heroic Misadventures (Australia: Four Decades – Full Circle) – www.HeroicMisadventures.com.

The challenge remains to explain how ‘less government and more individual responsibility’ beats the hell out of socialism when it comes to improving the human condition for people at all levels of our community.

Working under the various banners, first as the Foundation for Economic Education (Australia) from 1978, and then as the Mannkal Economic Education Foundation Limited (1997), we were early adopters of the Internet—our www.mannkal.org website was registered on 25^th November 1997—and it is this 15^th anniversary that we are celebrating this year.

Mannkal.org takes on all the tasks that fall outside the very limited functions permitted by our tax exempt foundation which was registered in May 2002 as the Mannkal Economic Education Foundation.

That Foundation has the specific focus of supporting scholarships, internships and economic conference participation in Australia and internationally.

We have now financed over 600 of Western Australia’s brightest young people to avail themselves of such opportunities, and many of these young people have continued their relationship with us.  Their feedback and assistance in improving the nature of these scholarships to enhance their value for students has been invaluable. So much so that we now see students from all of Western Australia’s five universities enthusiastically seeking such opportunities for future years.

In addition to working with our universities we also work on a collaborative basis with both the Institute of Public Affairs (IPA) and the Centre for Independent Studies (CIS).

It’s convenient having Mannkal.org to ‘pick up’ the challenges that lie outside the Mannkal Foundation’s guidelines—particularly as the Foundation is not ‘permitted’ to have ‘opinions’, but simply provide scholarships.

Personally, travelling to over eight economic conferences this year (including New York, Turkey, Hong Kong, Israel, Shanghai and Prague) it would be impossible for me not to form some opinions on Australia’s current predicament.

As I write this (on the plane) returning from a week-long conference in Prague, it is easy to summarize how we look from a distance.

Australia is a first-rate country, currently being run by a second-rate bunch of union thugs, dispensing toxic economic policies, combined with corrosive rhetoric.

There is absolutely no mystery about why Australia’s competitive position in the world is falling like a rock, at a time when other countries realize the importance of lifting their game in a global environment where success can no longer be taken for granted.

There is no mystery about why our nation’s productivity is slipping and our ability to attain our true potential may remain forever a mirage shimmering in the distance.

Meanwhile, our challenges here at Mannkal.org remain: primarily to explain the benefits of shrinking government to its few legitimate roles, not simply by ‘putting the government on a financial diet’. The real challenge is to starve governments of the responsibility for doing things best left to individuals to do for themselves.

Anyone collecting examples of bureaucratic waste when governments step outside their legitimate functions could quickly make a full-time job of it.

From a Federal Government perspective, let me draw attention to the $500M of taxpayers’ money being sent to Indonesia to build Madrassas (Islamic schools).From a State Government perspective, last week it was the $1.5M State Government sponsorship to a basketball team (previously this has always been an easily explicable commercial sponsorship). And only this week, we have the talkback radio programmes running hot with news about the $1.5M advertising campaign deemed necessary to explain why we should enjoy the “new look” of Perth.

No, there is never a shortage of people willing to spend other people’s money, particularly when elections loom.

However, through all this gloom shines the ‘next generation’, and an encouraging sign is their increasing dissatisfaction at being burdened with the debts we are building up for them.

Please enjoy the 15th Anniversary publication which was prepared by our past and present participants.

Ron

(Concluding comments @ Mannkal / Murdoch University Conference – Oct. 13, 2012)

By Ron Manners

Nov. 2012

One of the aims of this conference is to explain why Australians are so attached to freedom of speech, and why we reject threats to this freedom.

How do we define these freedoms and how do we manage any conflicts?

Personally, I feel that our strong defence of free speech rests on three beliefs held by many Australians (even though we don’t have it as clearly enshrined in our Constitution as the Americans do with their First Amendment).

The first reason, is that we believe it is our right and our responsibility to decide for ourselves what to read, view or listen to. We might go and seek advice from other trusted advisers, but in the end it is our decision what we read, view or listen to.

As a matter of fact we are offended at the suggestion that we can’t make these choices for ourselves, no matter how poor or uneducated we happen to be.

The second reason, from experience, we have a highly developed sense of cynicism about government powers over such matters, and the ability of such powers to be corrupted and influenced in the direction that they might choose.

If government is filtering out what we can see and hear, then what is left for us to consider as a full range of options?

The third belief is simply that the competition of ideas and information, just like the provision of goods and services, will ultimately reward those who offer a truthful and quality product.

Some of the stuff served up may be nonsense, but again through competition and a range of alternatives, we can choose for ourselves which information we take on board.

Our strong defence of free speech does not put us under any obligation to defend the content of that speech, exactly the same way as we have learnt not to believe every advertisement we see or read.

In conclusion, again a personal observation, is that not everyone, in every country of the world, fully understands or accepts our strong commitment to free speech. In our own self-interest, we must do as we’ve done today, so eloquently put by our first-class range of speakers and our great contributing audience; we must continue the laborious task of explaining to the world the value and importance of maintaining free speech, as a way of developing the kind of societies that respect individuals, and such societies in which we choose to live.

Thank you all again.

Last night, 70 of us enjoyed Tom Switzer (editor of the Spectator Australia) presenting a pessimistic overview of how the United States continues its decline; as a result of both their major parties promoting the fiction that “we can all live at the expense of someone else” (as Bastiat used to say).

This political style of “buying” votes in order to gain political control guarantees a fairly bleak outcome, and we see how similar situations developed in various European countries as well as in our own country. This outcome is always grim when countries promote this “entitlement mentality”.

Last night also gave me an opportunity of mixing with 70 of Western Australia’s upcoming bright minds and following Tom’s presentation many conversations were shared, but it left me with the feeling that we needed more time.

Questions were asked about the current focus on teaching Keynesian style economics, which promotes more and bigger government as the solution to all human problems.

“Yes, you have to study Keynesian Economics because you have to pass your exams, but don’t try using it to run a business or run a country.”

I agree that it is far more popular/populist than any disciplined suggestion of taking self-responsibility for our own and our families lives.

This has been something that has been concerning me for some time (Click here for my 1975 views, yes, exactly 37 years ago).

There is now widespread concern. An example of this is an excellent conference in Hong Kong (the Economic Freedom Network Conference Nov 6-7, click here for details). The theme for this conference is “How welfare populism destroys prosperity: the populist challenge to economic freedom”.

Their concern is that current populist policies run counter to the Asian Values Work Ethic that has seen Asia emerge to take on the role of the prime driver for the World’s economy.

****

“Yes, there are alternative models for nations (and businesses and families) rather than encouraging addiction to more debt and constant bailouts.

Australia has the best system of corporate restructuring and it would be a good model even for U.S. and European governments to resolve their problems.”

****

“Yes, capitalism with its voluntary exchange and free-markets is the most moral system, so it would be superior to socialism on moral grounds, even if it were not the most efficient.”

****

“No, it doesn’t make much sense for our State Government to be borrowing money to establish a so-called Future Fund”.

****

“No, there is no single answer or single economic guru on which you should model your own developing philosophies, simply tap into all available sources and assemble your own philosophy to enable you to have a consistent thread linking your private life, career and family affairs together.”

****

So many questions from last night…”yes, Mannkal will organise many more student events like this one”, and I look forward to continuing these many interesting discussions at our next event.

Regards,

Ron Manners

This event was a joint venture between ECOMS (Economics and Commerce Student Society), Mannkal Foundation, and Stuart Hatch’s Prosperity and Freedom Meet-up group (For the website, click here).

It is the tradition of the Mannkal Foundation to acknowledge the intellectual genius of those who have created the mechanism of our civil society.  The economic and legal structures, without which our peaceful and prosperous society would not be possible.

Among such people, must be, Professor Milton Friedman.

Let me mention also that Professor Friedman always gave full credit to his remarkable economist wife, Rose, who jokingly claimed half of Milton’s 1976 Nobel Prize.

With parents like Milton and Rose, no wonder their son, David, is also a world-class Economist and David’s son Patri, continues the tradition of proposing radical solutions that benefit the human race.

Milton Friedman changed the world by using relentless and polite persuasion to bring about floating exchange rates, and to abolish wage and price controls, the legalisation of private gold ownership, for dramatic tax reductions, and an end to military conscription.  His 1957 Theory of the Consumption Function, fundamentally undermined Keynesian economics.

Friedman’s economics worked because he himself had worked.  He rejected ideas that worked in smart men’s heads but failed in working men’s lives.

As Author, Daniel J Flynn said, “Fellow economists laughed at him, before the 1970’s laughed back at them”.

He debated adversaries with unfailing patience and graciousness.  It was often said that economists liked to debate with Milton, particularly when he was not there.

My favourite two Milton Friedman books are:

• Capitalism and Freedom – it contains all the theories Friedman stressed during his career as a public intellectual.  It emphasised the inseparable link between economic and political freedoms; and
• Free to Choose – the book that accompanied the 10 part TV series by the same name.

That reminds me of what Queen Elizabeth said to him as the Friedmans boarded the Royal Yacht Britannia in San Francisco harbour.  It was, “I know you!  Philip is always watching you on telly”.

A year before Milton Friedman died, Stephen Moore, from the Wall Street Journal asked him, “What can we do to make America more prosperous?”

“Three things,” he replied instantly.

“Promote free trade, school choice for all children and cut government spending”.

“How much should we cut?” asked Moore, to which Friedman replied, “As much as possible”.

Milton Friedman visited Australia four times – which could be the topic for another time. Googling Milton Friedman and watching videos only gives you a brief glimpse of the range and scope of this man’s influence and this year we celebrate the Centenary of Milton Friedman’s birth.

Unlike our Federal Treasurer, we will not call upon the mystic spirits of present or past rock singers, to give credibility to our efforts.

We will let this document, itself, stand tall and hopefully inspire some vigorous debate and resolutions about the way forward for our great State of Western Australia.

(For a full version of the Project Western Australia handbook click here.)

Our Mannkal Foundation, over the past 15 years, has sent 600 of Western Australia’s brightest students to internships, conferences and seminars, both in Australia and overseas and that has put us in the privileged position of learning how our younger generation feel about whether our current generation is leaving for them an asset or a liability.

They ask some good questions like:-

• How can our Federal Treasurer say that Australia came through the Global Financial Crisis (GFC) ‘unscathed’ when Australia now has the highest level of household debt in the world?

The household debt of $82,000 for every Australian did not exist before the GFC. This is not ‘unscathed’. It is ‘mega scathed’.

They also ask:-

• How come our State Government is borrowing money to establish a Sovereign Wealth Fund?

Doing that doesn’t seem to make much sense.

These are very good questions; there is genuine concern, from the next generation.

So, if our Project W.A. handbook is to be dedicated to anyone, let it be dedicated to our next generation.

Background to this Handbook

In 2006 the Mannkal Economic Education Foundation was often asked; “Who in Western Australia is generating and developing State policies that look beyond the short-term political election cycles?”

There was mounting concern at the glacier-like process of our Local Government and State Government approvals process. So abysmal was this process that it gave rise to an expanding lobbying industry, as the only way of achieving any conclusive outcome. Mannkal recognised the need for thoughtful policy development and sought an experienced and credible joint-venture partner to join us in this task. The Institute of Public Affairs (IPA) was more than up to this task.

Taking the lead and maintaining focus on multiple deadlines were John Hyde (Mannkal), Andrew Pickford (Mannkal), John Roskam (IPA) and Chris Berg (IPA). Over these intervening six years a series of Discussion papers have been publicly launched and circulated with considerable feedback received. We also extend our sincere thanks to those un-named advisors.

Let me mention one point in particular; John Hyde, in his modest style, is no stranger to policy formation. In his past lives he generated several similar policy manuals for both Federal and State Governments. During his term, as Liberal Federal Member, with a small group (including Bert Kelly, Jim Carlton and Peter Shack), known as the Drys, were successful in generating policies that were implemented by the Hawke and Keating Governments, resulting in a remarkable acceleration of Australia’s economic progress, during those years (and I can remember the benefits that flowed through to every level of the economy).

So, with that example in mind, we don’t mind much who picks up these ideas from our current handbook as long as someone does so and enables us to pick up the pace.

Outcome of our Six Year Project

Now, this deceptively slim volume summarises all these endeavours to drive this discussion further.

Your input and thoughtful comment is welcome and, in fact necessary. We have made it easy for you to be part of this process. Simply click on the Project Western Australia button on our homepage – www.mannkal.org – and input your ‘comment’ indicating the subject covered and perhaps the page ref. from this attached handbook.

In this way we will maintain the momentum of our focus on constructive ideas for the future.

Ron