Thursday, June 30, 2016
S&P cuts EU rating after Brexit; Ozone layer hole may be healing; The war on youth is real
1 S&P cuts EU rating after Brexit (BBC) Ratings agency Standard and Poor's has cut its credit grade for the European Union after the UK's Brexit vote. S&P said the cut from AA+ to AA came after reassessment "of cohesion within the EU, which we now consider to be a neutral rather than positive".
The UK's Brexit vote had triggered "greater uncertainty" over long term economic and financial planning. On Monday, S&P cut the UK's top AAA credit rating, saying Brexit could hit the economy and financial sector. S&P said the change to its EU rating was because the previous assessment was based on all 28 states remaining in the bloc.
The agency said: "The rating action stems from S&P Global Ratings' view that the UK government's declared intention to leave the union lessens the supranational's fiscal flexibility, while reflecting weakening political cohesion.
3 Ozone layer hole may be healing (Oliver Milman in The Guardian) The vast hole in the ozone layer above Antarctica appears to be healing, scientists say, putting the world on track to eventually remedy one of the biggest environmental concerns of the 1980s and 90s.
Research by US and UK scientists shows that the size of the ozone void has shrunk, on average, by around 4m sq km since 2000. The measurements were taken from the month of September in each year, when the ozone hole starts to open up each year.
The study, published in Science, states that the phase-out of chlorofluorocarbon (CFC) chemicals means that the ozone layer is “expected to recover in response, albeit very slowly.” CFCs, once commonly found in aerosols and refrigeration, can linger in the atmosphere for more than 50 years, meaning that the ozone hole will not be considered healed until 2050 or 2060.
The Montreal protocol, a 1987 international treaty ratified by all UN members, successfully spurred nations to eradicate the use of CFCs in products. The UN estimates that2m cases of skin cancer a year have been avoided through the phase-out of CFCs.
The ozone hole opened up over the Antarctic due to the vast amounts of cloud that forms over the coldest continent on Earth. This cloud helps the CFC chemicals linger, causing the ozone layer to be eaten away. The void is at its greatest during the southern hemisphere’s spring.
3 War on youth is real (Jessica Irvine in Sydney Morning Herald) We hear a lot of whining from young people about a "war on youth" and their contempt for the easy ride the baby boomer generation seem to have enjoyed through life with free education, affordable housing, generous family benefits and super tax breaks. Meanwhile, university fees climb, house prices soar and the Newstart allowance goes nowhere.
Of course, it is a feature of youth to feel hard done by parents. So are young people today really getting ripped off? Is it getting worse? And is it any worse than what happened to our parents when they were young? "The answer is yes, yes and yes," says John Daley, the head of the Grattan Institute.
"It's been a long time since policy has favoured the young, rather than the old. By contrast, we can point to dozens of decisions which have favoured older voters: a series of changes to the age pension over and above average weekly earnings; superannuation in general, which has just been the most massive gift to older generations imaginable, primarily the wealthy ones; the capital gains tax discount, which only works for people who own assets, so it's been terrific for them."
Daley adds the little commented upon fact that Australians aged over 65 also enjoy a higher tax-free threshold than younger Australians, thanks to the Senior Australians Tax Offset, for no apparent policy reason - just simple age discrimination. "Old people just don't have to pay as much tax as young people," says Daley. "All these things are manifestly unsustainable."
He has done the numbers, and found households aged under 65 contribute an average of about $4000 to $5000 each year to government coffers – ie, what they chip in as tax, minus the benefits they take out. Households aged over 65, by contrast, are a net drain on the system to the tune of about $22,000 at the start of the mining boom, rising to a whopping $32,000 six years later in 2010.
But isn't it true that young people will inevitably grow old themselves, and take their rightful place on the taxpayer gravy train? "If young people think that, then they should adjust their expectations," warns Daley. It is becoming clear that the budget largesse shown towards older Australians over the past decade represents a one-off boost to the hip pockets of one generation of Australians that can neither be sustained, nor repeated again.
It is increasingly evident that the budget largesse heaped upon older Australians over the past decade has stretched the intergenerational compact to breaking point. No young person can realistically expect to enjoy the same spoils being enjoyed today by the baby boomer generation. Some will, of course, inherit their wealth. Many others will not be so lucky, deepening inequality in our society.