Monthly Archives: April 2016

Why WA Government Sells Off $1.35b

Keystart is owned by the WA Housing Authority and provides loans to disadvantaged buyers who are unable to meet the deposit requirements of mainstream lenders.

The plan to divest up to 40 per cent of the loan book was set out in the May budget as part of the State Government’s asset sales and debt reduction strategy.

Bendigo and Adelaide Bank has today been named the successful bidder.

Managing director Mike Hirst said the bank had taken on 6,000 of Keystart’s 18,000 loans, but only those with a good repayment history.

“The customers in the portfolio we are acquiring have, on average, a track record of meeting their loan repayments for more than five years,” Mr Hirst said.

“We will not be acquiring any loans that are more than one month in arrears.”

Nevertheless, WA Treasurer Mike Nahan said the sale provided a significant boost to state coffers.

“When finalised, this will mark the second transaction in the State Government’s asset sales program and will achieve a reduction in gross debt,” he said.

“This also represents an important step in ensuring a sustainable future for the home loan program by reducing its reliance on Government borrowings.”

Keystart’s total loan book is worth about $4 billion and makes up 18 per cent of the first homebuyer market in Western Australia.

‘No impact on loan holders under deal’

Premier Colin Barnett said the agreement would both reduce state debt and allow Keystart to continue.

“There is a legislative cap on the amount of Keystart finance, I think it’s around about $4 billion to $5 billion, and we’re approaching that now,” Mr Barnett said.

“Unless we share some of that loan book with the banking sector, the Government won’t be able to provide that amount of Keystart finance.

“It frees up the cap, allows loans to continue to take place and therefore allows houses to be built and jobs in housing construction.”

That deal leaves the State Government responsible for less attractive loans that have not been adopted by the bank.

“Obviously newer loans, in a financial sense, carry a higher level risk and the state bears that risk to support home ownership and to support the building industry,” Mr Barnett said.

“As the years tick by [the loans] become safer.

“The level of default on Keystart is very low and it’s a very good system, a very well managed system and it’s unique to Western Australia.”

The Premier moved to ensure existing Keystart customers the deal would have no impact on their loans.

“The Government fully stands behind all the contracts and all the obligations,” he said.

“People who have Keystart loans will see no difference at all

What is The Function Robots Is 5 Tech Giants

Five major technology companies said Wednesday that they had created an organization to set the ground rules for protecting humans — and their jobs — in the face of rapid advances in artificial intelligence.

The Partnership on AI, unites Amazon, Facebook, Google, IBM and Microsoft in an effort to ease public fears of machines that are learning to think for themselves and perhaps ease corporate anxiety over the prospect of government regulation of this new technology.

The organization has been created at a time of significant public debate about artificial intelligence technologies that are built into a variety of robots and other intelligent systems, including self-driving cars and workplace automation.

The industry group introduced a set of basic ethical standards for engineering development and scientific research that its five members have agreed upon.

In a conference call on Wednesday, five artificial intelligence researchers representing the companies said they thought the technology would be a major force in the world for social and economic benefits, but they acknowledged the potential for misuse in a wide variety of ways.

They said their effort was not intended to be an enforcement organization to force technology companies into self-regulation. Rather, they want to foster “public understanding” and set “best practices” for work in artificial intelligence.

“We passionately believe in the potential for it to transform in a positive way our world,” said Mustafa Suleyman, head of applied A.I. for DeepMind, an artificial intelligence development company acquired by Google in 2014. “We believe it’s critical now to start to think about new models of engagement with the public, new models of collaboration across the industry and new models of transparency around the work that we do.”

The group released eight tenets that are evocative of Isaac Asimov’s original “Three Laws of Robotics,” which appeared in a science fiction story in 1942. The new principles include high-level ideals such as, “We will seek to ensure that A.I. technologies benefit and empower as many people as possible.”

Nevertheless, at least one of the tenets implies that the companies realize they could be drawn into sticky ethical situations, and it calls on engineers to oppose the use of artificial intelligence technology in weapons or other tools that could be used to violate human rights.

“With the hyperbole about A.I. over the last two to four years, there have been concerns in an echo chamber of anxiety that the government itself will be misinformed,” said Eric Horvitz, managing director for Microsoft Research.

The Scandal of Credit Card Bankruptcies

University of Canberra lecturer and former financial counsellor Gregory Mowle has interviewed 26 bankrupts as part of his PhD research into personal bankruptcy.

Most finger the plastic for their financial woes.

“They say credit cards are very dangerous, we don’t like credit cards,” Mr Mowle told ABC’s The Business.

“We’d actually prefer to go to a payday lender, because at least that’s over a fixed term, it’s going to be paid off over say six months.”

Mr Mowle’s research is backed up by the experience of Victoria’s Consumer Action Law Centre.

“Around half the people that contact us actually have credit card debt of over $10,000,” said the centre’s chief executive Gerard Brody.

“Many have many thousands more than that in credit card debt and, in fact, we’ve worked out that at least one person a week that contacts our centre has credit card debt of more than $100,000.”

Mr Mowle said many people were stuck on a credit card “merry-go-round”.

“They actually made that work for a long period of time, in some cases three or four years, but eventually it just takes one little thing for that house of cards, excuse the pun, to completely fall down.”

Pensioner pursued for card debts after already losing home

It is an experience that many people the ABC spoke to can identify with.

Mary* asked for her identity to be concealed because she only just reached a deal with her bank to clear her debts.

It was mainly investment property loans that got Mary into financial trouble, but her $14,000 credit card debt proved almost as difficult to resolve.

After being forced to liquidate her investment properties and sell her own home to repay her loans, Mary was still inundated with calls from her bank’s overseas call centres about the card debt.

“The 40 phone calls, that was during working hours while I was trying to work, four or five calls a day, and then on Saturdays and on Sundays,” she said.

“It wasn’t very pleasant at all.”

The experience was all the more galling because Mary did not even ask for the card in the first place.

“That came with the investment loan — it was a $25,000 limit and I didn’t want it,” she said.

It has become common practice for banks to push credit cards onto home loan customers.

After years of battling the bank, Mary said it took the eventual intervention of the financial ombudsman and repeated pleas to various bank officers, right up to the chief executive, to have her matter resolved.

“I had sold my own home — I would get nothing out of that because during the time that I had borrowed money from different people I’d paid all those monies back — there was nothing left,” she explained.

“That’s why I had to sell the car, ’cause I was only on the pension at that stage and I didn’t have any money for that.

“So the bank officer agreed to take the credit card and wipe that as well. What else were they going to do?”

Mary should not have been approved for the home loan in the first place, let alone the credit card on top of it.

The ABC has seen loan documents that put her income at $500,000 per annum.

While she had earned $24,000 in a single month, Mary was on commissions and did not earn anything many other months.

She said her annual income was closer to $50,000 — something the bank should have known, given that all her accounts were with them.