Catch 22

Catch 22 was a phrase coined in 1961 from a novel by Joseph Heller, and refers to a situation a person is subject to but has no control over. He was referring to the situation at war times when drafted air force fighter pilots were sent on missions facing nearly certain death. The only way they could leave their positions was to be declared insane by a psychologist, however the act of asking for a psych test in the first place to avoid further duty proved their sanity. Referred to as a Catch 22, solving one part of a problem merely creates another problem that leads back to the original issue. In other words, the only options available are bad options. We experience them all too regularly in our lives. How would you respond to any of the below instances?

No one to do the work – you are looking to invest in your business, but find that there is a shortage of capable and willing people to fill the job. Do you:

  1. a)Put your plans to grow on hold, and hope you don’t lose the people you already have through over-working them?
  2. b)Settle for near enough is good enough: know you won’t have the required productivity, pray every day that people don’t injure themselves because it’ll be your fault, and allow for some re-work and not always delivering to your customers expected quality levels?
  3. c)Whilst it goes against your “support Australia” stance and involves sending profits overseas, do what happens in most other developed countries and import qualified workers?

New Tax – your country has decided to lead the way at something and decides to tax the air we breathe. They have decided that because you are a large business or Council, you will be required to pay a new tax when your smaller competitors don’t need to. Do you:

  1. a)Try to pass on the cost, in the process loosing profit and/or competitiveness, so you have to work harder for less reward?
  2. b)Realise you will be better off selling or splitting the business and living off the interest? As the work your business does still needs to be done (transport, power generation, waste collection, building materials production, etc), this means your employees and customers will have to get the work done elsewhere. The environment is not any better off either, it’s just that now the pollution is spread amongst many smaller users?

As Ronald Reagan famously said: “Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”

Retirement – you are 60 years old, and have worked hard all your life. You have spoken to a financial adviser, who has pointed out that your Super balance has gone south in recent years, but you are still projected to own “too many” assets (over $1,024,500 combined for a couple that are home owners) that the Government has deemed you rich and thereby ineligible for any retirement payments when you turn 67. Do you:

  1. a)Decide to “Live it up” now whilst you know you have your health, then rely on the Age Pension when you reach 67 year, in the mean time betting on that the Government will still be able to keep the age pension at $262.05 per week per person for you and your partner, and not further increase the age cut off?
  2. b)Keep saving, and estimate that you’ll retire on 2-3 times the Age pension until you reach the average mortality rate, which gives you perhaps not a life of luxury but some money to live on in the years when you have more time available? But you still won’t know what happens if you live longer than average.
  3. c)Change your plans and work up until the age of 73, hopefully having rewarding enough employment that you can extend your “economic life span” by a further 10 years.

Unattended children – You are at the shopping centre café with your 11 year old daughter and her friend, when your stomach starts to play up from last nights curry. Do you:

  1. a)Leave the two girls at the table and risk up to 3 years in jail for leaving a child under the age of 12 unattended, as has happened to 4 parents in the last month who have left children in the car whilst paying for petrol or left them out of immediate sight at the shopping centre, some for as little as 6 minutes?
  2. b)Take your daughter and girlfriend into the mens toilet, with all the issues that go with that?
  3. c)Face a very publicly embarrassing situation by staying at the café, and trying to manage the outcome of the stomach issue until you can make it home or a trusted person can make it to you?

Recycling – for years, you have been recycling metal products through the same provider. Suddenly, an upcoming environmental audit won’t be passed unless they only accept clean scrap, that is without any oil or other contaminants. Because they are one of the bigger recyclers, it’s only a matter of time before the others follow. Do you:

  1. a)Start paying up to $22 per drum to dispose of each drained oil drum?
  2. b)Spend time cleaning oil from engine components and other coatings (such as paint) off all of your scrap before sending it for recycling, and because this is not the main purpose of your business, you are almost certainly creating more environmental hazards by trying this in the first place?
  3. c)Break the law by leaving the scrap behind in the local creek on your next job?

Most of the above situations are real issues that come about when probably well intentioned people start to meddle with things they don’t understand in an attempt to make things better.

On a more positive note, whilst not being a Financial Adviser (seek your own advice, bla, bla, bla), there are a few things you can do before the end of the financial year. If you have Private Health Cover and have reportable earnings over $84,000 (for singles), you can pre-pay next years’ premiums this financial year, which means you’ll receive the full current rebate instead of the reduced rate from next year.

Finally, in terms of your business, it’s also worth considering that Repairs and Maintenance to your Earthmoving machine is fully tax deductible this financial year. Why not bring forward your repairs and replace now things that you know you’ll need to do in the next few months anyway, like Filter Kits, undercarriage replacement, Ground Engaging Tools, etc. So it may be quite beneficial to give RD Williams a call today to buy some more value for money Parts before June 30, and keep “the old girl” running smoothly next year too! At least not all decisions have to be bad ones!

As always, onwards and upwards!

Fred Carlsson

General Manager

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