Global profit split: An evolutionary approach to international income allocation

International taxation is concerned mainly with the equitable allocation of cross-border income between countries in which income-earning activities take place. Such allocation has traditionally been governed by the arm’s-length principle, which has been interpreted as requiring a comparable transactional pricing approach. This approach assumes that each member of a multinational enterprise (MNE) group is a separate entity and that the transactions between related parties can be separated and compared with arm’s-length transactions. It has, however, proved difficult to apply comparable transactional pricing to internationally integrated businesses, especially those involving intangibles and services, and formulary apportionment has been suggested as an alternative. Essentially, formulary apportionment treats the MNE group as a single economic entity. The group’s profit is allocated to members according to a formula that reflects the particular member’s contribution to the production of that profit. A rich academic literature exists which either defends or attacks this alternative approach. The OECD and national governments have rejected formulary apportionment mainly on the ground that it violates the arm’s-length principle. This article proposes a global profit split (GPS) method for allocating international income. The GPS would allocate the global profit of an integrated business to each country in accordance with the economic contributions made by components of the business located in that country. The allocation would be based on a formula that would reflect the economic factors that contribute to profit making. While the GPS draws on elements of the traditional formulary apportionment and profit split methods, it also differs from them. The author discusses in detail the key issues involved in designing the GPS. She also presents and evaluates the main policy and pragmatic justifications for the adoption of this innovative approach. The author argues that the GPS is not only theoretically and practically superior to traditional income allocation methods, but also consistent with the arm’s-length principle. On the basis of historical developments, interpretation of article 9 of the OECD model tax convention, and international tax policy considerations, the author establishes that the GPS is not a radical departure from the arm’s-length principle, but rather a natural development in its evolution. She concludes that the law of evolution ison the side of reform because the GPS would provide for a fair and effective allocation of income derived from globally integrated business activities.

Accountability and board functionality: National Australia Bank's experience

The National Australia Bank’s (NAB) experience of corporate governance has been contrary to current standards of good corporate governance, accountability and risk management. Over the last few years NAB’s misadventures have brought it under intensive media scrutiny with the HomeSide losses and the investigation by the Securities and Exchange Commission in the USA for breaches of auditor independence. More recently the unauthorised trading by its foreign exchange dealers violated NABs risk management practices and the subsequent board crisis resulted in significant downgrading of the share price on the Australian Stock Exchange (ASX). This paper briefly reviews the international history of corporate accountability and its growth in Australia. The increasing shareholder and legislative pressure to improve sustainability, accountability and board functionality have driven these issues to the forefront of Governing Boards’ agendas worldwide. The board remains ultimately responsible for all actions of the company and this is highlighted by APRA’s recent release of the new governance standard APG510 for implementation by October 2006. The impact of NAB’s board dysfunction on its overall performance is compared with the other major banks in Australia. Cost efficiency ratios, share price and total shareholder return are used as measures of performance and profitability. It is clear, from NAB’s recent experience, as the worst performer of all the majors, with a 19.7% fall in net profit and a cost to income ratio of 57.4% in 2004, that the NAB board needs to improve its performance and accountability to meet a sustainable increase in profitability and higher return for investors.

Wellbeing of Australians : income security

The Australian Unity Wellbeing Index monitors the subjective wellbeing of the Australian population. Our first survey was conducted in April 2001 and this report concerns the 15th survey, undertaken in May 2006. Our previous survey had been conducted seven months earlier in October 2005. This intervening period contained a number of significant events. The first Australian terrorist threat was marked by the arrest of people in Sydney and Melbourne alleged to be plotting an attack. In December rioting took place in Sydney between Muslim and non-Muslim youths, but whether this was due more to religious differences or a ‘turf-war’ is unclear. Then, in May 2005, the new Industrial Relations legislation came into force. Each survey involves a telephone interview with a new sample of 2,000 Australians, selected to represent the national population geographic distribution. These surveys comprise the Personal Wellbeing Index, which measures people’s satisfaction with their own lives, and the National Wellbeing Index, which measures how satisfied people are with life in Australia. Other items include a standard set of demographic questions and other survey-specific questions. The specific topic for Survey 15 is the extent to which people feel that their source of income is secure.

Corporate governance, board responsibilities and financial performance : the National Bank of Australia

This paper examines board responsibilities and accountability by management and Board of Directors in relation to the National Australia Bank's (NABs) performance. The NAB, an international financial service provider within the top thirty most profitable banks in the world, is compared with the Australian major banks. The evidence suggests that NABs poor performance was consistent with a lack of accountability, poor corporate governance and board dysfunction associated with fraudulent currency trading and the subsequent AUD360 million foreign currency losses. The NAB's performance is investigated by utilising accounting-based measures of profitability and cost efficiency as proxies for performance. Following the foreign currency trading losses in 2004 the NAB under-performed the other major Australian banks in terms of profits, cost to income ratio and growth in assets. In terms of profitability and cost efficiency NAB had the lowest ROE and ROA with a 19.7% fall in net profit and the highest cost to income ratio of 5 7.4% of any of the five largest banks. This case study provides an Australian example of poor corporate governance and suggests that financial institutions and regulators can learn from the NAB's experience. Failure to have top-down accountability can have significant impact on over-all performance, profitability and reputation. In particular, it suggests that management and Boards need to review their risk management procedures and regulators need to be more pro-active in their prudential oversight of financial institutions.

Modelling income group differences in the health and economic impacts of targeted food taxes and subsidies

Objective : To examine the effects, by income group, of targeted food taxes and subsidies on nutrition, health and expenditure in the UK.

Methods : A model based on consumption data and demand elasticity was constructed to predict the effects of four food taxation-subsidy regimens. Resulting changes in demand, expenditure, nutrition, cardiovascular disease (CVD) and cancer mortality were estimated.

Data : Expenditure data were taken from the Expenditure and Food Survey; estimates of price elasticities of demand for food were taken from a report based on the National Food Survey 1988–2000. Estimates of effect on CVD and cancer mortality of changing fat, salt, fruit and vegetable intake were taken from previous meta-analyses.

Results : (i) Taxing principal sources of dietary saturated fat is unlikely to reduce cardiovascular disease (CVD) or cancer mortality. (ii) Taxing ‘less healthy’ foods (defined by the WXYfm nutrient profiling model) could increase CVD and cancer deaths by 35–1300 yearly. (iii) Taxing ‘less healthy’ foods and subsidising fruits and vegetables by 17.5% could avert up to 2900 CVD and cancer deaths yearly. (iv) Taxing ‘less healthy’ foods and using all tax revenue to subsidize fruits and vegetables could avert up to 6400 CVD and cancer deaths yearly. Few obesity-related CVD deaths are averted by any of the regimens. All four regimens would be economically regressive and positive health effects will not necessarily be greater in lower-income groups where the need for dietary improvement is higher.

Conclusions : A targeted food tax combined with the appropriate subsidy on fruits and vegetables could reduce deaths from CVD and cancer.

Measuring the vulnerability of sub-national regions in South Africa

A small but growing literature has been concerned about the economic (and
environmental) vulnerability on the level of countries. Less attention is paid to the economic vulnerability of different regions within countries. By focusing on the vulnerability of subnational regions, this paper contributes to the small literature on the “vulnerability of place”. They authors see the vulnerability of place as being due to vulnerability in various domains, such as economic vulnerability, vulnerability of environment, and governance, demographic and health fragilities. They use a subnational data set on 354 magisterial districts from South Africa, recognize the potential relevance of measuring vulnerability on a subnational level, and construct a Local Vulnerability Index for the various districts. They condition this index on district per capita income and term this a Vulnerability Intervention Index, interpreting this as an indicator of where higher income per capita, often seen in the literature as a measure of resilience, will in itself be unlikely to reduce vulnerability.

Diabetes MILES - Australia (Management and Impact for Long-Term Empowerment and Success) : methods and sample characteristics of a national survey of the psychological aspects of living with type 1 or type 2 diabetes in Australian adults

Background Successful management of diabetes requires attention to the behavioural, psychological and social aspects of this progressive condition. The Diabetes MILES (Management and Impact for Long-term Empowerment and Success) Study is an international collaborative. Diabetes MILES-Australia, the first Diabetes MILES initiative to be undertaken, was a national survey of adults living with type 1 or type 2 diabetes in Australia. The aim of this study was to gather data that will provide insights into how Australians manage their diabetes, the support they receive and the impact of diabetes on their lives, as well as to use the data to validate new diabetes outcome measures.

Methods The survey was designed to include a core set of self-report measures, as well as modules specific to diabetes type or management regimens. Other measures or items were included in only half of the surveys. Cognitive debriefing interviews with 20 participants ensured the survey content was relevant and easily understood. In July 2011, the survey was posted to 15,000 adults (aged 18-70 years) with type 1 or type 2 diabetes selected randomly from the National Diabetes Services Scheme (NDSS) database. An online version of the survey was advertised nationally. A total of 3,338 eligible Australians took part; most (70.4%) completed the postal survey. Respondents of both diabetes types and genders, and of all ages, were adequately represented in both the postal and online survey sub-samples. More people with type 2 diabetes than type 1 diabetes took part in Diabetes MILES-Australia (58.8% versus 41.2%). Most respondents spoke English as their main language, were married/in a de facto relationship, had at least a high school education, were occupied in paid work, had an annual household income > $AUS40,000, and lived in metropolitan areas.

Discussion A potential limitation of the study is the under-representation of respondents from culturally and linguistically diverse backgrounds (including Aboriginal and Torres Strait Islander origin). Diabetes MILES-Australia represents a major achievement in the study of diabetes in Australia, where for the first time, the focus is on psychosocial and behavioural aspects of this condition at a national level.

Mutual obligation? Regulating by supervision and surveillance in Australian income support policy

Through an analysis of speeches by government ministers, documents and regulations, this article examines the Australian national government’s surveillance of unemployed people through what is known as Activity Testing, and more specifically as Mutual Obligation. It seeks to merge the social policy analysis of Mutual Obligation with a surveillance perspective in order to delve deeper into the underlying nature of the policy and its implications for people who are unemployed. It does this by 1. Outlining the neo-liberal political theory underlying these policies; 2. Illustrating the nature and extent of surveillance of people in receipt of income support, and 3. Employing Foucault’s concepts of the technologies of domination and the self to highlight the controlling and coercive aspects of Mutual Obligation in achieving certain of the Government’s political and policy objectives. In doing so, the analysis will make visible something of the power exerted over the disadvantaged while subject to such surveillance.

The contributions of first nations ethnicity, income, and delays in surgery on mortality post-fracture : a population-based analysis

Summary We examined the independent contributions of First Nations ethnicity and lower income to post-fracture mortality. A similar relative increase in mortality associated with fracture appears to translate into a larger absolute increase in post-fracture mortality for First Nations compared to non-First Nations peoples. Lower income also predicted increased mortality post-fracture.

Introduction First Nations peoples have a greater risk of mortality than non-First Nations peoples. We examined the independent contributions of First Nations ethnicity and income to mortality post-fracture, and associations with time to surgery post-hip fracture.

Methods Non-traumatic fracture cases and fracture-free controls were identified from population-based administrative data repositories for Manitoba, Canada (aged ≥50 years). Populations were retrospectively matched for sex, age (within 5 years), First Nations ethnicity, and number of comorbidities. Differences in mortality post-fracture of hip, wrist, or spine, 1996–2004 (population 1, n = 63,081), and the hip, 1987–2002(Population 2, n = 41,211) were examined using Cox proportional hazards regression to model time to death. For hip fracture, logistic regression analyses were used to model the probability of death within 30 days and 1 year.

Results Population 1: First Nations ethnicity was associated with an increased mortality risk of 30–53 % for each fracture type. Lower income was associated with an increased mortality risk of 18–26 %. Population 2: lower income predicted mortality overall (odds ratio (OR) 1.15, 95 % confidence interval (CI) 1.07–1.23) and for hip fracture cases (OR 1.18, 95%CI 1.05–1.32), as did older age, male sex, diabetes, and >5 comorbidities (all p ≤ 0.01). Higher mortality was associated with pertrochanteric fracture (OR 1.14, 95 % CI 1.03–1.27), or surgery delay of 2–3 days (OR 1.34, 95 % CI 1.18–1.52) or ≥4 days (OR 2.35, 95 % CI 2.07–2.67).

Conclusion A larger absolute increase in mortality post-fracture was observed for First Nations compared to non-First Nations peoples. Lower income and surgery delay >2 days predicted mortality post-fracture. These data have implications regarding prioritization of healthcare to ensure targeted, timely care for First Nations peoples and/or individuals with lower income.

National dance forum report

 The National Dance Forum aims to foster the artistic development of dance in Australia by providing a platform for discussion and engagement across the dance sector. Through a series of panels, keynote speeches, open forums and networking events, the 2013 National Dance Forum sought to increase the profile of Australian dance and to celebrate diversity and innovation across the industry.

The 2013 National Dance Forum was held at the Footscray Community Arts Centre, having moved from its 2011 location, Arts House. As in 2011, the participants for 2013 National Dance Forum included choreographers, dancers, independent artists, artistic directors, educators, researchers, dance producers and students. 177 individuals attended the 2013 Forum, with many traveling from interstate/overseas to participate in the Forum and to attend Dance Massive events.
This evaluation for the 2013 National Dance Forum has been developed to evaluate the success of the event against its stated aims and to assist in targeting new opportunities and directions for future Forums.

This evaluation has undertaken an analysis of the relevancy and effectiveness of this forum for participants using evaluation questionnaires developed by the National Dance Forum and issued to all participants on the final day of the Forum. This evaluation collates and analyses the responses of 64 respondents in the areas of their own individual professional focus, their experiences as participants in the 2013 National Dance Forum including the strengths and weaknesses of the event, and the relevancy and effectiveness of the Forum for the Australian dance sector.

Microinsurance: income risk, social security and the demand for private onsurance by low-income families

Insurance provision against uncertainties is present in several dimensions of peoples´s lives, such as the provisions related to, inter alia, unemployment, diseases, accidents, robbery and death. Microinsurance improves the ability of low-income individuals to cope with these risks. Brazil has a fairly developed financial system but still not geared towards the poor, especially in what concerns the insurance industry. The evaluation of the microinsurance effects on well-being, and the demand for different types of microinsurance require an analysis of the dynamics of the individual income process and an assessment of substitutes and complementary institutions that condition their respective financial behavior. The evaluation of the microinsurance effects on well-being, and the demand for different types of microinsurance require an analysis of the dynamics of the individual income process and an assessment of substitutes and complementary institutions that condition their respective financial behavior. The Brazilian government provides a relatively developed social security system considering other countries of similar income level which crowds-out the demand for insurance and savings. On the other hand, this same public infrastructure may help to foster microfinance products supply. The objective of this paper is to analyze the demand for different types of private insurance by the low-income population using microdata from a National Expenditure Survey (POF/IBGE). The final objective is to help to understand the trade-offs faced for the development of an emerging industry of microinsurance in Brazil.

The income distribution problem in Latin America and the Caribbean

Includes bibliography

National innovation surveys in Latin America: empirical evidence and policy implications

Includes bibliography

The evolution of world income inequality: assessing the impact of globalization

Includes bibliography