Government grants - an abrogation or management of risks?

New public management (NPFM), with its hands-on, private sector-style performance measurement, output control, parsimonious use of resources, disaggreation of public sector units and greater competition in the public sector, has significantly affected charitable and nonprofit organisations delivering community services (Hood, 1991; Dunleavy, 1994; George & Wilding, 2002). The literature indicates that nonprofit organisations under NPM believe they are doing more for less: while administration is increasing, core costs are not being met; their dependence on government funding comes at the expense of other funding strategies; and there are concerns about proportionality and power asymmetries in the relationship (Kerr & Savelsberg, 2001; Powell & Dalton, 2011; Smith, 2002, p. 175; Morris, 1999, 2000a). Government agencies are under increased pressure to do more with less, demonstrate value for money, measure social outcomes, not merely outputs and minimise political risk (Grant, 2008; McGreogor-Lowndes, 2008). Government-community service organisation relationships are often viewed as 'uneasy alliances' characterised by the pressures that come with the parties' differing roles and expectations and the pressures that come with the parties' differing roles and expectations and the pressurs of funding and security (Productivity Commission, 2010, p. 308; McGregor-Lowndes, 2008, p. 45; Morris, 200a). Significant community services are now delivered to citizens through such relationships, often to the most disadvantaged in the community, and it is important for this to be achieved with equity, efficiently and effectively. On one level, the welfare state was seen as a 'risk management system' for the poor, with the state mitigating the risks of sickness, job loss and old age (Giddens, 1999) with the subsequent neoliberalist outlook shifting this risk back to households (Hacker, 2006). At the core of this risk shift are written contracts. Vincent-Jones (1999,2006) has mapped how NPM is characterised by the use of written contracts for all manner of relations; e.g., relgulation of dealings between government agencies, between individual citizens and the state, and the creation of quais-markets of service providers and infrastructure partners. We take this lens of contracts to examine where risk falls in relation to the outsourcing of community services. First we examine the concept of risk. We consider how risk might be managed and apportioned between governments and community serivce organisations (CSOs) in grant agreements, which are quasiy-market transactions at best. This is informed by insights from the law and economics literature. Then, standard grant agreements covering several years in two jurisdictions - Australia and the United Kingdom - are analysed, to establish the risk allocation between government and CSOs. This is placed in the context of the reform agenda in both jurisdictions. In Australia this context is th enonprofit reforms built around the creation of a national charities regulator, and red tape reduction. In the United Kingdom, the backdrop is the THird Way agenda with its compacts, succeed by Big Society in a climate of austerity. These 'case studies' inform a discussion about who is best placed to bear and manage the risks of community service provision on behalf of government. We conclude by identifying the lessons to be learned from our analysis and possible pathways for further scholarship.

Optimal allocation of conservation effort among subpopulations of a threatened species: How important is patch quality?

Money is often a limiting factor in conservation, and attempting to conserve endangered species can be costly. Consequently, a framework for optimizing fiscally constrained conservation decisions for a single species is needed. In this paper we find the optimal budget allocation among isolated subpopulations of a threatened species to minimize local extinction probability. We solve the problem using stochastic dynamic programming, derive a useful and simple alternative guideline for allocating funds, and test its performance using forward simulation. The model considers subpopulations that persist in habitat patches of differing quality, which in our model is reflected in different relationships between money invested and extinction risk. We discover that, in most cases, subpopulations that are less efficient to manage should receive more money than those that are more efficient to manage, due to higher investment needed to reduce extinction risk. Our simple investment guideline performs almost as well as the exact optimal strategy. We illustrate our approach with a case study of the management of the Sumatran tiger, Panthera tigris sumatrae, in Kerinci Seblat National Park (KSNP), Indonesia. We find that different budgets should be allocated to the separate tiger subpopulations in KSNP. The subpopulation that is not at risk of extinction does not require any management investment. Based on the combination of risks of extinction and habitat quality, the optimal allocation for these particular tiger subpopulations is an unusual case: subpopulations that occur in higher-quality habitat (more efficient to manage) should receive more funds than the remaining subpopulation that is in lower-quality habitat. Because the yearly budget allocated to the KSNP for tiger conservation is small, to guarantee the persistence of all the subpopulations that are currently under threat we need to prioritize those that are easier to save. When allocating resources among subpopulations of a threatened species, the combined effects of differences in habitat quality, cost of action, and current subpopulation probability of extinction need to be integrated. We provide a useful guideline for allocating resources among isolated subpopulations of any threatened species. © 2010 by the Ecological Society of America.

Critical uncertainty factors for efficient allocation of demand risk in privately financed public infrastructure projects in Australia

Risk allocation in privately financed public infrastructure projects, which are mainly referred as public-private partnership (PPP) projects, is a challenging job due to the nature of incomplete contracting. Among the various risks that may eventually materialise, demand risk is one of the major challenges that PPPs face. Choosing a risk allocation strategy could be viewed as the process of deciding the proportion of risk management responsibility between public and private partners based on a series of characteristics of risk management service transaction in question. These characteristics are more or less related to the various uncertainty factors. In this study, various uncertainty factors have been examined in order to achieve efficient allocation of demand risk and minimise risk management-related costs in a long-term view. Critical uncertainty factors have been identified through an industry-wide survey in Australia. Future research directions are also set out.

Optimal allocation of a cross-connection and sectionalizers in distribution systems

In this paper, the placement of sectionalizers, as well as, a cross-connection is optimally determined so that the objective function is minimized. The objective function employed in this paper consists of two main parts, the switch cost and the reliability cost. The switch cost is composed of the cost of sectionalizers and cross-connection and the reliability cost is assumed to be proportional to a reliability index, SAIDI. To optimize the allocation of sectionalizers and cross-connection problem realistically, the cost related to each element is considered as discrete. In consequence of binary variables for the availability of sectionalizers, the problem is extremely discrete. Therefore, the probability of local minimum risk is high and a heuristic-based optimization method is needed. A Discrete Particle Swarm Optimization (DPSO) is employed in this paper to deal with this discrete problem. Finally, a testing distribution system is used to validate the proposed method.

Willingness to trial functional foods and vitamin supplements: the role of attitudes, subjective norms, and dread of risks

Australian non-users of vitamin supplements (N = 162) and functional foods (N = 226) responded to a questionnaire examining their attitudes, subjective norms, and perceived behavioural control from the Theory of Planned Behaviour (TPB), risk dread and risk familiarity, and willingness to engage in free product trials. The impact of participants’ gender and age was also examined. Attitude and subjective norms were significant determinants of non-users willingness to trial each of the health products. Participants’ dread of the risk associated with the product was also a determinant of willingness to use functional foods. The overall models predicted between 25% and 30% of the variance in people’s willingness to trial the products. The findings provided some support for the TPB in predicting people’s willingness to trial functional foods and vitamin supplements and suggested, for willingness to trial functional foods, that non-users are also influenced by their dread of the risk associated with product use.

Transaction Cost Analysis of PPP Risk Share

PPP (Public Private Partnerships) is a new operation mode of infrastructure projects, which usually undergo long periods and have various kinds of risks in technology, market, politics, policy, finance, society, natural conditions and cooperation. So the government and the private agency should establish the risk-sharing mechanism to ensure the successful implementation of the project. As an important branch of the new institutional economics, transaction cost economics and its analysis method have been proved to be beneficial to the proper allocation of risks between the two parts in PPP projects and the improvement of operation efficiency of PPP risk-sharing mechanism. This paper analyzed the transaction cost of the projects risk-sharing method and the both risk carriers. It pointed out that the risk-sharing method of PPP projects not only reflected the spirit of cooperation between public sector and private agency, but also minimized the total transaction cost of the risk sharing mechanism itself. Meanwhile, the risk takers had to strike a balance between the beforehand cost and the afterwards cost so as to control the cost of risk management. The paper finally suggested three ways which might be useful to reduce the transaction cost: to choose appropriate type of contract of PPP risk-sharing mechanism, to prevent information asymmetry and to establish mutual trust between the two participants.

Optimal allocation of water in village irrigation systems of Sri Lanka

This PhD study examines whether water allocation becomes more productive when it is re-allocated from 'low' to 'high' efficient alternative uses in village irrigation systems (VISs) in Sri Lanka. Reservoir-based agriculture is a collective farming economic activity, which inter-sectoral allocation of water is assumed to be inefficient due to market imperfections and weak user rights. Furthermore, the available literature shows that a „head-tail syndrome. is the most common issue for intra-sectoral water management in „irrigation. agriculture. This research analyses the issue of water allocation by using primary data collected from two surveys of 460 rice farmers and 325 fish farming groups in two administrative districts in Sri Lanka. Technical efficiency estimates are undertaken for both rice farming and culture-based fisheries (CBF) production. The equi-marginal principle is applied for inter and intra-sectoral allocation of water. Welfare benefits of water re-allocation are measured through consumer surplus estimation. Based on these analyses, the overall findings of the thesis can be summarised as follows. The estimated mean technical efficiency (MTE) for rice farming is 73%. For CBF production, the estimated MTE is 33%. The technical efficiency distribution is skewed to the left for rice farming, while it skewed to the right for CBF production. The results show that technical efficiency of rice farming can be improved by formalising transferability of land ownership and, therefore, water user rights by enhancing the institutional capacity of Farmer Organisations (FOs). Other effective tools for improving technical efficiency of CBF production are strengthening group stability of CBF farmers, improving the accessibility of official consultation, and attracting independent investments. Inter-sectoral optimal allocation shows that the estimated inefficient volume of water in rice farming, which can be re-allocated for CBF production, is 32%. With the application of successive policy instruments (e.g., a community transferable quota system and promoting CBF activities), there is potential for a threefold increase in marginal value product (MVP) of total reservoir water in VISs. The existing intra-sectoral inefficient volume of water use in tail-end fields and head-end fields can potentially be removed by reducing water use by 10% and 23% respectively and re-allocating this to middle fields. This re-allocation may enable a twofold increase in MVP of water used in rice farming without reducing the existing rice output, but will require developing irrigation practices to facilitate this re-allocation. Finally, the total productivity of reservoir water can be increased by responsible village level institutions and primary level stakeholders (i.e., co-management) sharing responsibility of water management, while allowing market forces to guide the efficient re-allocation decisions. This PhD has demonstrated that instead of farmers allocating water between uses haphazardly, they can now base their decisions on efficient water use with a view to increasing water productivity. Such an approach, no doubt will enhance farmer incomes and community welfare.

The allocation of taxing rights of ship and aircraft leasing profits under Australia's tax treaties

The Australian Federal Commissioner of Taxation recently released Draft Taxation Ruling TR 2008/D3 with the stated purpose of clarifying ‘what profits derived from the leasing of ships or aircraft fall within the ship and aircraft articles of each of Australia’s tax treaties’. In particular, TR 2008/D3 explains the taxing rights over different types of leasing profits, such as a full basis lease in respect of any transport by a ship operated in international traffic and bareboat leases which are ancillary to the lessor transport operations of ships in international traffic. This article outlines the Commissioner’s views on the application of the standard ships and aircraft articles in the tax treaties to which it is a party as well as considering the major variations on the standard adoption. In doing so, guidance is provided as to the allocation of taxing rights of ship and aircraft leasing profits under Australia’s tax treaties.

Double tax agreements and the international allocation of business income in Australia

Increasingly, the effectiveness of the present system of taxation of international businesses is being questioned. The problem associated with the taxation of such businesses is twofold. A system of international taxation must be a fair and equitable system, distributing profits between the relevant jurisdictions and, in doing so, avoiding double taxation. At the same time, the prevention of fiscal evasion must be secured. In an attempt to achieve a fair and equitable system Australia adopts unilateral, bilateral and multilateral measures to avoid double taxation and restrict the avoidance of tax. The first step in ascertaining the international allocation of business income is to consider the taxation of business income according to domestic law, that is, the unilateral measures. The treatment of international business income under the Australian domestic law, that is, the Income Tax Assessment Act 1936 (Cth) and Income Tax Assessment Act 1997 (Cth), will depend on two concepts, first, whether the taxpayer is a resident of Australia and secondly, whether the income is sourced in Australia. After the taxation of business profits has been determined according to domestic law it is necessary to consider the applicability of the bilateral measures, that is, the Double Tax Agreements (DTAs) to which Australia is a party, as the DTAs will override the domestic law where there is any conflict. Australia is a party to 40 DTAs with another seven presently being negotiated. The preamble to Australia's DTAs provides that the purpose of such agreements is 'to conclude an Agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income'. Both purposes, for different reasons, are equally important. It has been said that: The taxpayer hopes the treaty will prevent the double taxation of his income; the tax gatherer hopes the treaty will prevent fiscal evasion; and the politician just hopes. The first purpose, the avoidance of double taxation, is achieved through the provision of rules whereby the Contracting States agree to the classification of income and the allocation of that income to a particular State. In this sense DTAs do not allocate jurisdiction to tax but rather provide an arrangement whereby the States agree to restrict their substantive law. The restriction is either through the non-taxing of the income or via the provision of a tax credit.

On the allocation of a takeover purchase price under AASB1013

The purpose of this paper is to document and explain the allocation of takeover purchase price to identifiable intangible assets (IIAs), purchased goodwill, and/or target net tangible assets in an accounting environment unconstrained with respect to IIA accounting policy choice. Using a sample of Australian acquisitions during the unconstrained accounting environment from 1988 to 2004, we find the percentage allocation of purchase price to IIAs averaged 19.09%. The percentage allocation to IIAs is significantly positively related to return on assets and insignificantly related to leverage, contrary to opportunism. Efficiency suggests an explanation: profitable firms acquire and capitalise a higher percentage of IIAs in acquisitions. The target's investment opportunity set is significantly positively related to the percentage allocation to IIAs, consistent with information-signalling. The paper contributes to the accounting policy choice literature by showing how Australian firms make the one-off accounting policy choice in regards allocation of takeover purchase price (which is often a substantial dollar amount to) in an environment where accounting for IIAs was unconstrained.

Global, regional, and national comparative risk assessment of 79 behavioural, environmental and occupational, and metabolic risks or clusters of risks in 188 countries, 1990–2013: a systematic analysis for the Global Burden of Disease Study 2013

Background The Global Burden of Disease, Injuries, and Risk Factor study 2013 (GBD 2013) is the first of a series of annual updates of the GBD. Risk factor quantification, particularly of modifiable risk factors, can help to identify emerging threats to population health and opportunities for prevention. The GBD 2013 provides a timely opportunity to update the comparative risk assessment with new data for exposure, relative risks, and evidence on the appropriate counterfactual risk distribution. Methods Attributable deaths, years of life lost, years lived with disability, and disability-adjusted life-years (DALYs) have been estimated for 79 risks or clusters of risks using the GBD 2010 methods. Risk–outcome pairs meeting explicit evidence criteria were assessed for 188 countries for the period 1990–2013 by age and sex using three inputs: risk exposure, relative risks, and the theoretical minimum risk exposure level (TMREL). Risks are organised into a hierarchy with blocks of behavioural, environmental and occupational, and metabolic risks at the first level of the hierarchy. The next level in the hierarchy includes nine clusters of related risks and two individual risks, with more detail provided at levels 3 and 4 of the hierarchy. Compared with GBD 2010, six new risk factors have been added: handwashing practices, occupational exposure to trichloroethylene, childhood wasting, childhood stunting, unsafe sex, and low glomerular filtration rate. For most risks, data for exposure were synthesised with a Bayesian meta-regression method, DisMod-MR 2.0, or spatial-temporal Gaussian process regression. Relative risks were based on meta-regressions of published cohort and intervention studies. Attributable burden for clusters of risks and all risks combined took into account evidence on the mediation of some risks such as high body-mass index (BMI) through other risks such as high systolic blood pressure and high cholesterol. Findings All risks combined account for 57·2% (95% uncertainty interval [UI] 55·8–58·5) of deaths and 41·6% (40·1–43·0) of DALYs. Risks quantified account for 87·9% (86·5–89·3) of cardiovascular disease DALYs, ranging to a low of 0% for neonatal disorders and neglected tropical diseases and malaria. In terms of global DALYs in 2013, six risks or clusters of risks each caused more than 5% of DALYs: dietary risks accounting for 11·3 million deaths and 241·4 million DALYs, high systolic blood pressure for 10·4 million deaths and 208·1 million DALYs, child and maternal malnutrition for 1·7 million deaths and 176·9 million DALYs, tobacco smoke for 6·1 million deaths and 143·5 million DALYs, air pollution for 5·5 million deaths and 141·5 million DALYs, and high BMI for 4·4 million deaths and 134·0 million DALYs. Risk factor patterns vary across regions and countries and with time. In sub-Saharan Africa, the leading risk factors are child and maternal malnutrition, unsafe sex, and unsafe water, sanitation, and handwashing. In women, in nearly all countries in the Americas, north Africa, and the Middle East, and in many other high-income countries, high BMI is the leading risk factor, with high systolic blood pressure as the leading risk in most of Central and Eastern Europe and south and east Asia. For men, high systolic blood pressure or tobacco use are the leading risks in nearly all high-income countries, in north Africa and the Middle East, Europe, and Asia. For men and women, unsafe sex is the leading risk in a corridor from Kenya to South Africa. Interpretation Behavioural, environmental and occupational, and metabolic risks can explain half of global mortality and more than one-third of global DALYs providing many opportunities for prevention. Of the larger risks, the attributable burden of high BMI has increased in the past 23 years. In view of the prominence of behavioural risk factors, behavioural and social science research on interventions for these risks should be strengthened. Many prevention and primary care policy options are available now to act on key risks.