Day: July 27, 2018

Switch to safety worked

Good returns … after feeling the sting of the GFC, pension funds are coming good.Spare a thought for investors in pension products. While all super fund members copped a flogging during the global financial crisis, pension fund investors don’t have the luxury of being able to rebuild their retirement savings.
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Quite the reverse, in fact, as they still need to draw down money to live on.

Perhaps that’s why, while accumulation fund members have largely stuck with the more traditional balanced and growth funds in the wake of the GFC, pension fund investors have been more inclined to switch into more defensive investment options.

The the chief executive of SuperRatings, Jeff Bresnahan, says there has been a ”massive swing” by pension fund investors into capital-stable and cash options in recent years.

The GFC, he says, forced them to face the reality that it is up to them – not solely their super fund – to determine the right level of risk for their needs.

That switch certainly paid off in the past financial year with capital-stable funds outperforming balanced options fourfold. The average capital-stable pension fund surveyed by SuperRatings returned 4.8 per cent for the year, compared with a 1.2 per cent return for the balanced funds.

Balanced funds have between 60 per cent and 76 per cent of their investments in growth assets such as shares and property, whereas capital-stable funds hold more defensive investments such as bonds and limit their growth exposure to 20 per cent to 40 per cent. That still provides some upside when sharemarkets are rising, but protects investors from the full impact of a market fall.

Pension funds performed better over the year than accumulation funds, though this difference is largely due to favourable tax treatment. Pension funds pay no tax on their investment earnings.

Accumulation funds are taxed at 15 per cent, or an effective rate of 10 per cent on capital gains where the investment is held for 12 months or more.

SuperRatings says the top-performing capital stable pension funds returned more than 8 per cent last year, largely on the back of an 8.3 per cent return from fixed-interest investments. LGSuper’s defensive allocated pension topped the list with a solid 8.6 per cent return, followed by Commonwealth Bank Group Super with 8.1 per cent.

For those still in balanced options, the best return in the SuperRatings survey was 6.2 per cent with ESSSuper.

But thanks to the strength of bonds over shares, all other balanced pensions returned less than the top 10 capital stable funds.

Russell Investments’ director of client investment strategies, Scott Fletcher, says the GFC has highlighted the huge ”sequencing risk” faced by people nearing retirement.

This is basically the risk that they will need to draw on their money at the worst point in the investment cycle.

This story Administrator ready to work first appeared on Nanjing Night Net.

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Mind the gap

Steep climb … if you take contributions out of the picture, chances are your super balance hasn’t really budged.Here’s the good news. Your super is clawing its way back after the ravages incurred during the global financial crisis. But don’t hold your breath. If it wasn’t for contributions coming into your fund, chances are your retirement savings have gone absolutely nowhere during the past five years.
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And if your fund has been performing below par, you’re still likely to be sitting on substantial losses.

The 2011-12 financial year was a real roller-coaster for super funds. Up one month, down the next. In early June, there was a real chance that we were looking at another year of losses, but the average fund managed to scrape through with a return of 0.4 per cent.

The chairman of SuperRatings, Jeff Bresnahan, says while that might seem like a poor return, funds actually fared well considering Australian shares were down by 6.4 per cent over the year and international shares fell by 3.3 per cent.

Balanced funds, as measured by SuperRatings, hold between 60 per cent and 76 per cent of their assets in so-called ”growth” investments, such as shares and property, but sharemarket losses were offset by an 8.3 per cent return from fixed-interest investments, such as bonds over the year, and positive returns from property, cash and alternative assets, such as infrastructure and private equity.

Bresnahan says non-profit funds, in particular, have been gradually reducing their reliance on shares for their returns and have benefited from holding unlisted investments.

”There has been a drop of about 4 per cent in their exposure to shares over the past decade and it has gone into unlisted assets,” he says.

”But that raises the issue of whether all balanced funds are comparable and, unfortunately for consumers, they’re not. One balanced fund will behave quite differently to another and that’s unfair on consumers because they get put into these funds but there can be a 10 percentage point difference in performance

”That’s what happened this year and, over the longer term, a performance difference like that is a hell of a lot of money.”

While the top balanced fund, LGsuper, returned 5.1 per cent for the year, SuperRatings says the worst fund in the survey lost 3.5 per cent – a difference of close to 9 percentage points. First State Super’s Health Super Division medium-term growth fund returned 3.3 per cent, but the rest of the top 20 returned between 0.7 per cent and 2.8 per cent (see table on page 6).


The difference between the best and worst was even more spectacular for growth funds (holding between 77 per cent and 90 per cent in growth assets), with the top performer (ESSSuper) returning 4.9 per cent, versus a 5.7 per cent loss for the lowest-ranked fund.

And even in the more conservative capital-stable funds (which are 20 per cent to 40 per cent invested in growth assets), the difference between the best and worst was more than 7 per cent.

The top-ranked Commonwealth Bank Group Super option returned a solid 6.4 per cent, while the worst in the category made just 0.7 per cent.

But it’s the longer-term returns that tell the real story of how the global financial crisis is still affecting retirement savings.

Bresnahan says that while this year’s return isn’t anything to write home about, it has at least consolidated the recovery of the past two years.

”Funds have earned about 20 per cent over the past three years, which is a pretty reasonable result,” he says. Some of the better funds (the balanced options listed for First State Super’s Health Super Division, Recruitment Super, Commonwealth Bank Group Super and LGsuper) have all returned more than 8 per cent annualised during the past three years, which would push their recovery in this period to more than 25 per cent.

However, during the past five years, the picture is much uglier. SuperRatings says the average balanced fund has lost 0.2 per cent a year during this period and only three balanced funds (LGsuper, Commonwealth Bank Group Super and First State Super’s Health Super Division) managed to return more than 2 per cent a year.

Indeed, if it wasn’t for contributions coming into our funds, most fund members would be wondering why they had bothered. ”A lot of people wouldn’t have noticed the [poor] five-year returns because with contributions, they still see their account balance growing each year,” Bresnahan says.

”But you’ve also got to remember that we’ve been through what was arguably the biggest financial and economic crisis of our lifetimes. A year or two back, the three-year returns looked horrible, and the seven-year numbers will eventually look bad, too. It’s a timing issue.”

To put it in perspective, Australian shares have lost 4.2 per cent a year during the past five years. International shares have lost 2.15 per cent when hedged against currency movements or, thanks to the rising Australian dollar, 6.65 per cent a year unhedged.

Diversification has shielded fund members from the full extent of these losses, however, once again, some funds have done much better than others.

While the best balanced fund returned 2.6 per cent a year over the past five years, the worst lost 4.5 per cent a year – outstripping the losses of the local sharemarket.

Over the 20 years since the introduction of compulsory super,

Bresnahan says, the average balanced fund has still managed to beat its targeted return of 3 per cent to 3.5 per cent above the inflation rate.

The average fund has returned a solid 6.6 per cent during this period, while inflation has been about 2.8 per cent.


The problem is that many fund members had become accustomed to the double-digit returns of the boom period. As the graph on the previous page shows, annual returns during the past 20 years have been as high as 18 per cent, and returns in the four years before the GFC were 13 per cent to 15 per cent. Losses were rare and, up to 2008, had been limited to less than 4 per cent.

The director of client investment strategies at Russell Investments, Scott Fletcher, says returns in the mid- to high teens between 2003 and 2007 set unrealistic expectations.

”When you have returns which are completely out of line on the upside, you have to expect a period that will disappoint for a while,” he says. ”The depth and scope of this downturn is what has taken everyone by surprise, but it is a classic deleveraging market.

”Normally you’d expect the peaks and troughs to be over and done with in 12 to 18 months, but deleveraging can be more extended.”

Bresnahan says 6 per cent returns are much closer to what should be expected over the longer term, as balanced funds returns in the high single digits are actually pretty good.

But this doesn’t mean fund members have to accept poor returns.

The range of returns between funds shows that some funds manage market cycles better than others.

While it would be dangerous to ditch your fund after one year of poor returns, Bresnahan says if it has been underperforming similar funds during a five- to seven-year period you need to ask questions.

It may have chosen the wrong investments (funds with high weightings to international shares have been dragged down during this period) and fees can also play a role.

While recent research for the Financial Services Council by Rice Warner Actuaries shows average fund fees fell from 1.27 per cent to 1.2 per cent between 2010 and 2011 (and from 1.37 per cent in 2002), costs can still vary dramatically.

While the average fee for corporate, public sector and large corporate trusts was less than 1 per cent, and the average fee for industry funds was 1.13 per cent, the average for personal super funds was 1.87 per cent and members of small corporate master trusts were paying an average 2.21 per cent.

As with returns, fees also ranged widely within sectors. The cheapest industry funds, for example, charged less than 1 per cent, while the most expensive cost more than 3 per cent.

In the personal super segment, fees ranged from a little more than 1 per cent to about 3.7 per cent.

”A lot of retail funds and some not-for-profit funds need to review their fees and bring them down, especially in some of the cash options,” Bresnahan says. ”They’re returning 2 [per cent] to 2.5 per cent a year, whereas most other cash investments are doing 4 per cent.

”That’s because they’re taking 150 to 200 basis points out of the return in fees before any money goes to the member. Some of the investment platforms charge the same fees whether the money is in a low-cost investment like cash or something like international equities.”


Bresnahan says fund members also need to take ownership of their returns, rather than setting unrealistic expectations for their fund. He says they need to understand where their money is invested and what sorts of returns they can expect in different market conditions.

While most members remain in their fund’s default option, he says there are ”scores” of investment options to choose from if they are not happy with the risk they’re taking or the returns they are getting.

Fletcher says funds have also been working to manage risk more effectively. Before the GFC, he says, most assumed a mix of shares, bonds, cash and property would provide enough diversification to reduce risk.

But there is now a recognition that they need broader diversification to handle GFC-style risks where most of these traditional assets can all be hit at once.

”To maintain the same risk profile for investors, super funds are a bit like ducks swimming on water,” he says.

”Above the water, everything looks the same, but a lot more work is going on under the water to reduce the level of risk.”

Fletcher says funds are realising that it’s not enough to understand the particular risks of each investment class; they also need to understand how different investments interact, how those interactions have changed and how to achieve genuine diversification within each asset class.

”If you mention alternative investments, for example, people often think of airports and tollways,” he says. ”But different infrastructure investments have different levels of liquidity and other features that need to be managed.”

Bresnahan says funds are also reviewing their objectives, which, until the GFC, had not been tested thanks to 15 years of outperformance.

”They’re asking what sort of time period their objectives should be measured against,” he says.

”It obviously needs to be over the longer term. But if you say they should be measured over 20 years, it becomes a marketing ploy. They can underperform for several years and still say they’ve got plenty of time left before they’re held to account.”

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Don’t be caught napping

Deprivation … money under the mattress might be safe, but like fixed interest, the returns are poor. Illustration: Karl HilzingerTrustees of self-managed superannuation funds have a strong preference for investing in shares, cash and fixed interest. According to the Australian Taxation Office, SMSF trustees invest 32 per cent of their money in equities and 28 per cent in cash and term deposits.
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A strong weighting towards cash and fixed interest would have helped produce a good investment return in the year to June. The median return of the capital-stable funds surveyed by SuperRatings was 4.1 per cent for the year to June.

The ATO’s figures are based on a survey of self-managed accounts at the end of the 2009-10 financial year.

More recent research shows not much has changed. According to the SMSF administration company Multiport, as of June 30 this year, self-managed funds had 35 per cent of their money in Australian equities, 27 per cent in cash and term deposits, and 10.5 per cent in fixed-income securities.

SuperRatings says the average asset allocation in a capital-stable super fund is 40.2 per cent fixed interest, 22.6 per cent cash, 12.1 per cent Australian shares, 10.1 per cent international shares, 9 per cent alternatives, and 6.1 per cent property.

Growth portfolios in the SuperRatings survey lost an average of 1 per cent in the year to June, while balanced funds were up an average of 0.5 per cent.

The return for capital-stable super portfolios over the past five years is an average of 3 per cent a year, compared with an average loss of 1.7 per cent a year for growth portfolios, and a loss of 0.2 per cent a year for balanced funds over the same period.

Defensive assets have produced good returns throughout the financial crisis but now investment strategists are warning that cash and fixed interest may not be the best assets to be holding in the period ahead.

The head of investment strategy at AMP Capital, Shane Oliver, says: ”Throughout 2010 and into 2011, there were very attractive rates of interest being offered on bank term deposits.

”The trouble now is that the cash rate is falling as the Reserve Bank has cut rates to deal with softer than expected economic conditions. And just as term-deposit yields have fallen, so too have government bond yields.”

As bond yields fell over the past 18 months, bond prices went up, producing capital gains for fixed-income investors.

Bond yields have fallen to record lows. Anyone getting into bonds now will get a yield of not much more than 3 per cent if they hold the securities to maturity. And if bond yields start to rise again, investors will be exposed to the risk of capital loss.

Oliver says investors who are looking for the defensive qualities of a fixed-income security as well as a higher yield should consider corporate credit. Investment-grade corporate bonds are yielding about 6 per cent.

Investors have had plenty to choose from in the corporate bond market. About $8 billion in subordinated notes and convertible preference shares have been issued over the past 12 months, and all of them have been listed on the ASX. The leading banks have been big issuers and so have companies such as Woolworths, Tabcorp and, most recently, Caltex.

Typical of the returns on offer in this market is an issue of Westpac subordinated notes, launched last month and closing on August 16, paying a floating rate of 2.75 per cent above the 90-day bank bill rate. With the bank bill rate about 3.5 per cent, the notes will pay more than 6 per cent.

Compared with this, the best six-month term-deposit rates on offer at the moment are about 5 per cent. Westpac’s notes have a fixed maturity date of August 2022 but may be redeemed at the bank’s discretion in August 2017.

The executive director of fixed-income strategy at JBWere Wealth Management, Laurie Conheady, agrees investors need to take care with their cash and fixed-income investments.

Conheady says most of the recent fixed-income returns have come from capital gains, as the price of bonds and other fixed-income securities have rallied strongly.

The yield on a 10-year Commonwealth bond has been below 3 per cent this year, reflecting strong demand for the securities. Conheady says these long-term government bond rates are at levels last seen in the 1950s.

”While a repeat of the double-digit returns on government bonds is possible, we believe it is unlikely,” he says. ”Even if capital values remain at current levels, the relatively low running yields associated with current inflated values point to better risk-reward opportunities elsewhere.

”We suggest investors look to floating-rate corporate bonds and better-quality hybrids as a way to improve returns and diversify portfolios.”

This story Administrator ready to work first appeared on Nanjing Night Net.

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An eye for compliance

Looking out … the ATO is paying close attention to non-arm’s length transactions in pension funds.The strategy: To keep my self-managed super fund out of trouble with in-house assets and related-party transactions.
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Do I need to do that? These things keep cropping up in the Tax Office’s compliance program and this year it will be paying particular attention to non-arm’s length transactions in pension funds. It says pension income (which is tax exempt) does not include non-arm’s length income, so some funds are getting their claims wrong. The head of technical services at SuperIQ, Kate Anderson, says non-arm’s length income is taxed at 45 per cent.

Broadly speaking, Anderson says, income is regarded as non-arm’s length if it comes from a scheme or investment in which the parties weren’t dealing with each other at arm’s length, and if it is more than the fund might have expected to get if those parties had been dealing with each other at arm’s length.

For example, she says income received by a self-managed fund as a beneficiary of a discretionary trust is non-arm’s length income and would be taxed at the higher rate.

The Tax Office says it will contact 3000 pension funds this year to encourage voluntary amendments.

So I’m OK if my fund isn’t a pension fund or isn’t receiving this sort of income? Not at all. As a general rule, all super funds are required to invest on a commercial, non-arm’s length basis. The Tax Office says it will also review 100 self-managed funds this year to ensure they are complying with this requirement. Anderson says there are specific rules in the super laws relating to related-party transactions and in-house assets that all funds must comply with.

What are the rules? Unless an exception applies, the Tax Office says self-managed funds generally can’t lend money or provide financial assistance to related parties or buy assets from them.

A related party is any person, including the member themselves, who is related to you out to second cousins or any entity that is controlled by a related party, such as the fund’s employer sponsor.

Anderson says an exemption to the ban on related-party transactions allows super funds to buy listed securities or widely held trusts at market price or business real property (a technical term meaning the property must be used solely for business) from related parties, so long as the purchase is made on commercial terms.

Business real property can also be leased to a related party at a commercial rent. For assets that don’t fit the exemption there is a provision for a small amount of the fund’s value to be invested in in-house assets.

OK, I’ll bite. What is that? This limits assets bought from related parties, along with investments in or loans to related parties and assets that are leased to related parties, to no more than 5 per cent of the total fund’s assets.

Those exempt assets referred to earlier are also exempt from this rule.

The problem with the in-house assets test, Anderson says, is that it applies on a daily basis. So if your fund also owns shares and those shares fall in value, you could inadvertently breach the 5 per cent limit without changing your investments.

This caused problems for many self-managed funds during the global financial crisis.

She says funds also need to be aware of the sole purpose test – an overarching requirement that all investments made by the fund be made solely for the purpose of providing retirement benefits.

So if you enter into a transaction because you want to help your business or free up funds for personal use, you’ll run foul of the super rules even though you may be under the 5 per cent limit.

Twitter: @sampsonsmh

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Xstrata cuts spending as commodity prices slide

Swiss mining giant Xstrata has swung into austerity mode in the face of falling commodity prices, targeting cost savings of $US970 million and deferring $US1 billion worth of spending this year.
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Xstrata reported a sharp 31 per cent drop in interim earnings before interest, tax depreciation and amortisation to $US4 billion, compared with a year earlier.

It blamed the drop on slumping commodity prices in the first half of 2012, citing renewed turmoil in the eurozone and a slowing growth rate in China.

Earnings per share fell 23 per cent to 75 US cents, before exceptional items. The board declared an interim dividend of 14 US cents per share, up 8 per cent on a year ago.

Xstrata is in the throes of a friendly scrip merger with major shareholder Glencore International and today’s weak profit figures may undermine efforts by some investors pushing for a higher effective bid price. Shareholders are scheduled to vote on the merger on 7 September.

Chief executive Mick Davis said Xstrata’s “pro-active response to the cyclical downturn will defend margins and ensure our business emerges in a stronger competitive position to capture the benefits of stronger global economic growth”.

Mr Davis said the $US970 million in savings would more than offset expected cost increases of about $US580 million for the full year, resulting from the inevitable cost pressures of ageing operations reaching the end of their production, including lower grades.

“The resultant expected net real cost saving for the year of around $US390 million is a creditable cost performance against the very complex operating environment in 2012, compounded by the transition phase of our growth strategy and the potential risk of distraction arising from the proposed merger with Glencore,” he said.


After reviewing its development pipeline Xstrata had “resequenced capital spending and deferred $US1 billion of expenditure originally planned for 2012,” the company said. “Our 2013 budgeted spending will increase by $US400 million, with $600 million deferred beyond that, without affecting the commissioning schedule of any of our approved projects.”

“Consequently, we expect capital spending in 2012 to reduce to $US7.2 billion, $US1 billion less than our previous guidance, smoothing the profile of capital spending across the next two years.”

Impairments included: $US514 million against its investment in Lonmin, $US162 million lost in the revaluation of a hydroelectric project in Chile, owned in joint ventrue with Origin Energy; $US111 million from closure of the Brunswick zinc mine, and $US21 million in merger costs.

These were offset by a $US579 million “deferred tax asset” credit tied to July commencement of the Minerals Resource Rent Tax in Australia.

Last week, Xstrata reported commodity price falls across the board in its first-half production report, year on year, including for copper (down 14 per cent to $US8087/tonne), Australian coking coal (down 16.5 per cent to $US217/t), nickel (down 28 per cent to $US18,438/t), zinc (down 15 per cent to $US1978/t) and lead (down 21 per cent to $US2035/t).

Bucking the trend were gold (up 14 per cent to $US1651/oz) and Australian thermal coal (up 4 per cent to $US108/t).

This story Administrator ready to work first appeared on Nanjing Night Net.

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By hook or by Crook, Sky Blues will improve

Two months out from the start of the season, even before the first trial, is not the most advisable time to be making bold predictions. But here goes. Sydney FC will go close to winning the championship this season. Very close. And at last, they’ll go about it the right way.
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It’s easy, on a bright winter’s day watching the Sky Blues train on freshly cut grass at Macquarie University, to be seduced into a hasty, lazy, impression. But, no, it’s definitely there. You can smell it. You can see it. After three seasons of parade ground monotony under Vitezslav Lavicka, new coach Ian Crook – who’s been around the club on and off since formation – has put the spring back in the step of the A-League’s serial under-achievers. Two championships in seven seasons may suggest otherwise, but Sydney FC have never to lived up to the benchmark which matters. Rightly or otherwise, they not only have to win, but they have to win in style. Crook gets it, and is going to do something about it. It’ll be worth hanging on for the ride.

Crook is English, but he’s Tottenham English, not Stoke City English. Don’t make the mistake of judging him by his passport. Tutored in the youth ranks at White Hart Lane, where keeping possession was a non-negotiable, he went on to have a decorated career at Norwich City, where the passing game was equally revered. By the time he finished his playing career in the old NSL with Northern Spirit, his philosophy was as rounded as it was ever going to be.

That was 12 years ago, and since then he’s had plenty of opportunities to practise what he preaches during 11 coaching posts, including spells in Japan, back at Carrow Road, and perhaps most interestingly, as coach of the world’s worst national team, American Samoa. But in that milieu, only a three-year stint with Newcastle Jets in the old NSL could count as genuine head coaching experience. Until now.

A backroom coach by resume, and by nature, Crook was Sydney FC’s second choice behind Graham Arnold to replace Lavicka, but he may well turn out to be a wise choice. The fact the club came to him rather than the other way around gives him a rare sense of job security, and the luxury of being relatively relaxed. Not a bad thing given the A-League is likely to be the most evenly contested it’s ever been, and the Sky Blues will have newcomers Western Sydney Wanderers breathing down their necks.

Chilled or otherwise, Crook will still be stepping out of the shadows, and he readily admits this will be the biggest test of his coaching career. At the age of 49, he should be as as prepared as he’ll ever be, but don’t expect any bold declarations. “We haven’t lost a game yet,” he jokes.

When the Sky Blues do lose a game – and the pre-season kicks off with a trial against NSW second-tier side Macarthur Rams next week – the impression is Crook will be able to take it in his stride. But if there won’t be a hair-dryer in the Sydney FC dressing room, there will be a culture of expectation. “We’re a big club, we expect results, and the players need to know that,” he says. At training, every drill comes with a carrot and a stick. Do well, meet the benchmark, and you get a rest. Fail, or slacken off, and expect a few laps. “There’s got to be a difference between winning and losing,” says assistant coach Steve Corica as Crook nods his head.

Fate has delivered this opportunity for Crook at arguably the best possible time. Perhaps you make your own luck in life. Either way, few know the structural flaws which have beset the club better than Crook, who therefore is in a unique position to understand just how much things have improved.

Sydney FC go into the season with a clear chain of command – from the boardroom (David Traktovenko) to the chief executive (Tony Pignata) to the football director (Gary Cole) – for the first time in their history. That has allowed Crook to reshape the squad with clarity, and purpose. And that’s why there is such optimism that the Sky Blues can rise to the occasion.

Pace has been missing, so in come Yairo Yao and Fabio. Craft has been missing, so in comes Kruno Lovrek to take the burden off Nicky Carle. Lovrek and Yao can also be expected to get among the goals. Character has been in short supply, so in come Adam Griffiths and Ali Abbas. Throw in the fact that Brett Emerton will be playing without pain, Jason Culina could end up as a prized mid-season recruit, and Crook – last season’s youth team coach – will have no fear in giving young players like Mitchell Mallia, Joel Chianese, Gligor Hagi, Daniel Petkovski and Blake Powell their head, and there’s no doubt the Sky Blues are far more balanced in every respect. Turning that potential into reality will be Crook’s challenge, but the good news is he won’t be compromising his principles in the process.

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Coalition warns S E Asia could become ‘asylum magnet’

Scott Morrison, shadow minister for immigration.SOUTH east Asia threatens to turn into an ”asylum magnet” as regional talks to combat people smuggling drift away from deterrence towards processing, the Coalition has warned.
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Shadow immigration spokesman Scott Morrison defended plans to send asylum seekers to Nauru and turn back boats to Indonesia as the most human solution to stop people risking their lives at sea.

And he dismissed comparisons between modern asylum seeker boats and the arrival of Indochinese fleeing Vietnam and its neighbours in the 1970s.

”Apart from the fact that more people have turned up in Australia on boats in the last six weeks than in the thirteen years of the Indochinese crisis, the fundamental difference is that the

Indochinese crisis was a home grown regional problem,” Mr Morrison said.

”Today’s asylum seekers are secondary movers from Central Asia engaged in what the [UN refugee agency] refers to as ‘forum shopping’ – their phrase not mine.”

Mr Morrison said Australia and south east Asian nations were always willing to help, but must not be tempted to take responsibility for the world’s refugee problems.

He said a ”potentially conflicting agenda” had clouded regional negotiations on people smuggling – known as the ”Bali process” — after the Gillard government’s failed attempts to set up processing centres in East Timor and Malaysia.

He said this created an ”imported” problem in the region, putting a significant strain on Indonesia.

Mr Morrison delivered a speech to the Lowy Institute in Sydney yesterday pledging the Coalition would encourage regional countries to look into the ability of smaller vessels patrolling coastlines to stop smugglers.

Indonesia – made up of an archipelago of 15,000 islands – has consistently struggled to police its borders.

Mr Morrison said more sharing of identity data – including biometric information – was needed to tackle criminal networks.

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Judoka expelled after eating marijuana brownie

US judo competitor Nick Delpopolo was expelled from the London Olympic Games on Monday after testing positive for marijuana and apologised to organisers, fans and fellow athletes for unwittingly eating a brownie that had been baked with the drug.
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Delpopolo, 23, who finished seventh in the 73kg event, accepted his expulsion.

“My positive test was caused by my inadvertent consumption of food that I did not realise had been baked with marijuana, before I left for the Olympic Games,” said Delpopolo, who trains in New York.

“I apologise to the US Olympic Committee, to my teammates, and to my fans, and I am embarrassed by this mistake. I look forward to representing my country in the future, and will re-dedicate myself to being the best judo athlete that I can be,” he said in a statement.

The United States Olympic Committee told Reuters the food Delpopolo had eaten was a brownie containing marijuana.

The athlete waived the right for his case to be heard before the Disciplinary Commission, and the USOC said it fully supported the expulsion.

“The USOC is absolutely committed to clean competition and stringent anti-doping penalties. Any positive test, for any banned substance, comes with the appropriate consequences and we absolutely support the disqualification. We look forward to witnessing the continued success of our athletes and commend their dedication to clean sport.”


Cannabis’s place on the World Anti-Doping Agency’s (WADA) prohibited list has sparked much debate.

President John Fahey indicated earlier this year that WADA may look at changing the criteria for cannabis as a banned substance for athletes, but no decision is expected this year.

At the moment, a substance appears on the banned list if it meets the following criteria: it is proven to be performance enhancing, it goes against the spirit of sport, or it is dangerous to the health of athletes.

Marijuana, or cannabis, qualifies as a forbidden drug under the current rules, with athletes facing a two-year ban if it is found in their system.

While it is generally accepted that cannabis is unlikely to give athletes a performance advantage in fast-paced sports, some experts say it could prove helpful in sports like shooting or golf where a steady hand is needed.

Delpopolo brings the number of athletes suspended by the IOC to five since the start of the Olympic period on July 16.

He joins Colombian 400 metres runner Diego Palomeque Echevarria and Russian cyclist Victoria Baranova who both tested positive for testosterone.

Belarussian hammer thrower Ivan Tsikhan and Moroccan runner Amine Laalou were also ruled out with the International Association of Athletics Federations (IAAF) saying they had been charged with anti-doping rule violations.

Several other athletes, including Brazilian rower Kissya Cataldo da Costa who was expelled for failing a dope test for the blood-boosting EPO, have been sent home by their own federations.

Delpopolo is set to leave London for the United States on Tuesday where he will attempt to piece his career back together.

The stockily built blond-haired judoka, who only narrowly missed out on a place in the semi-finals of the 73kg category, told Reuters last week how he was aiming for the 2016 Games in Rio, and cheerfully looked to the future when talking about prospects for U.S. judo.

“It’s not an old team but it’s not exactly a young team either, so I think it depends on what we’re all going to do. If we all stay, look out,” he said.


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Taking your pulses

Brain booster … lentils are a tasty, no-fuss health food.*We might hear a lot about childhood obesity but another trend that’s got health authorities jittery is the spreading waistlines of the over 50s. It’s not just the rising risk of heart disease that goes with ageing and weight gain either – but the effect on the brain.
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“By itself, ageing is a risk factor for cognitive decline but obesity is another – and around 70 per cent of 55- to 74-year-olds are overweight or obese. We now have both factors working together to increase problems with brain function,” says Associate Professor Jon Buckley, Director of the Nutritional Physiology Research Centre at the University of South Australia.

But Buckley thinks ageing brains may have a new ally – foods like burritos, minestrone and dahl that are based on beans and lentils.

A preliminary study from Canadian researchers at the University of Manitoba has found that eating a serve of legumes daily for eight weeks improves the function of blood vessels, making them smoother and less rigid. Building on that evidence, Buckley is working on new research to see if eating legumes every day benefits the blood vessels supplying the brain.

Healthy blood vessels are more resistant to vascular dementia (the most common form of dementia after Alzheimer’s) as well as heart disease and stroke.

“Supple arteries cope much better with the pressure of blood pumping around our body every day because they can expand to accommodate the volume,” he explains. “But if they’re like steel pipes they don’t cope well and blood pressure increases.”

Legumes are already linked to healthier cholesterol levels because of their high fibre content, but other positive effects on arteries may come from a range of bioactive compounds that are found in these foods – as well as the fact that they might displace other less healthy foods on the plate.

The real challenge though is getting us to eat more of them – only 22 per cent of Australians eat legumes once a week according to a study by the Grains and Legumes Nutrition Council – not knowing how to cook them was one of the main reasons people gave for not eating them.

Legumes are a quiet achiever, sustaining poorer people all over the planet, but in meat-loving Australia, their status is also-ran. It doesn’t help that they’re known as meat alternatives or meat substitutes either – yet they’re not pretend meat any more than lamb chops are pretend lentils. With their earthy flavours, they’re in a class of their own and are a versatile base for creating curries, casseroles, soups and salads – if only we knew how. We need need someone to do for legumes what Adriano Zumbo did for macarons.

The big hurdle for lots of us is the idea of pre-soaking beans before cooking, but you can skip this step by using canned legumes. Once you’re an old hand you can work on soaking and cooking beans in bulk and storing in the freezer – but in the meantime, chickpeas, red kidney beans and cannellini beans are on every supermarket shelf. You’ll find canned black beans and borlotti beans at delis or larger greengrocers. Lentils don’t need pre-soaking. As for cooking, once you get started you soon realise that that making a pasta sauce or curry with beans or lentils is much the same as cooking with minced or chopped meat or poultry – you kick off with cooking some onions and then you toss in your legumes and flavours. Easy.

Including legumes in a dish doesn’t mean it has to be a meatless meal either. You can just use less meat instead and pump up the volume with legumes. Good combinations are chicken with chick peas, and beef with black beans, red kidney beans, or borlotti beans.

Another great thing about legumes is that they make it easy to increase your vegetable intake, adds Buckley.

“A serve of meat gives you protein, but a serve of legumes gives you two for one – protein and vegetable – both at the same time.”

What’s your favourite legume dish?

* Steve Manfredi’s lentil, carrot and turnip salad with hazelnut sauce recipe

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Brandis Q&A boos ‘a reflection of Queensland passion’

Coalition MP George Brandis.The executive producer of ABC’s Q&A program has denied there are issues with the show’s audience vetting process after federal senator George Brandis was repeatedly jeered by a Brisbane crowd supposedly dominated by Coalition voters.
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Broadcast live from New Farm’s Brisbane Powerhouse last night, the current affairs question-and-answer panel show included federal Trade Minister Craig Emerson (ALP), Senator George Brandis (LNP), and Katter’s Australian Party leader Bob Katter, the member for Kennedy, as well as singer-songwriter Katie Noonan.

The program’s live studio audience was, as always, selected by producers on the basis of federal political voting intentions, with last night’s audience supposedly comprising 43 per cent Coalition voters, 28 per cent ALP and 15 per cent Green voters.

However, repeated booing and jeering from the at times unruly crowd was largely reserved for Senator Brandis.

When Senator Brandis jumped to the defence of Queensland Premier Campbell Newman, after he was questioned about the necessity of the state’s public sector job cuts, the audience responded with loud jeering.

Today, the show’s executive producer, Peter McEvoy, attributed the audience response to the current political passion in Queensland.

“I don’t think it had anything to do with the proportions [of voters]. The bit of noise was a reflection of the passion that people are feeling about politics in Queensland at the moment,” he said.

“We saw a similar reaction towards [federal Labor MP] Craig Emerson in Queensland during the 2010 election, when people were very passionate and angry about the federal Labor government.”

Mr McEvoy said audience members were “generally very truthful” about their voting preference.

“We question people about their federal voting preference and they are generally very truthful about that,” he said.

“I think it’s a good thing that people in Queensland are passionate about their politics.”

Last night was the third time the live program has been filmed in Brisbane, but not the first time it has been taped in Queensland this year.

Last month, the program was broadcast from Toowoomba’s Empire Theatre, with a record crowd of 1300 in the audience.

Q&A relies heavily on audience interaction, with viewers able to submit questions for the panel online. Comments discussing the show on Twitter are displayed across the bottom of the broadcast.

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