by Alan Thornhill
Have you ever wondered what kind of income it takes to live in an upmarket, leafy suburb like, say Woollahra?
Or just what people in struggle city, like Wollondilly, on Sydney’s fringes have to get by on?
Well, with a little help from the Australian Bureau of Statistics, we can help you there.
Take Walter, of Woollahra, for example.
He’s the average wage earner, in that very refined Sydney harbourside suburb.
And his wage, back in 2005-06, was $1,419 a week, or $73,811.
But what about his distant cousin, Wally, who also happens to be an average wage earner, in Wollondilly.
His pay packet, back then, recorded a total weekly wage of $802, or roughly $41,733 a year,
The picture is broadly similar for small business operators in the two suburbs.
The average annual income, for the unincorporated business owner in Woollahra, at that time, was $64,932.
In Wollondilly, the comparable figure was $17,615.
What, though, about those with investment income?
In Woollahra, the average investment income, for those who have investments, was $49,169 a year.
In Wollondilli, though, the comparable figure was $4,737.
And what about superannuants and those living on annuities?
In Woollahra, their average income at that time was $61,421.
In Wollondilli, it was $24,282.
As you’ve probably guessed by now, Woollahra and Wollondilli weren’t the only suburbs, towns or regions that the Statistician studied.
The Bureau has done all of them, right throughout Australia, for all financial years, from 2001-02 to 2005-06.
In Statistician’s talk, this information is contained in 10 “data cubes.”
That is, really big computer files. You can see them at www.abs.gov.au.
The data we have used was contained in the Bureau’s Estimates of Personal Income for Small Areas 2001-02 to 2005-06.
Nothing like this has been produced in Australia before – and this publication is a mammoth achievement.
The Australia Tax Office helped with the data.
But it came at a personal price.
So if you see a cross-eyed person on your bus or train tomorrow, please treat him – or her – kindly.
They will probably be from theÂ Bureau.
by Alan Thornhill
You can expect to be paying more consumption tax in future.
That’s the clear message that is emerging from the overhaul of Australia’s ramshackle tax system, led by the Treasury Secretary, Ken Henry.
But it won’t be extra GST.
The Prime Minister ruled the unpopular goods and services tax, which raised $44.2 billion for the Federal government last financial year, off limits, so far as the inquiry is concerned.
Don’t want to be raising that one again.
But what is a consumption tax?
By definition, it is one you pay on something, as you consume it.
The GST, which is levied on just about everything, except food, is a consumption tax.
So is the excise you pay on the fuel you use.
Remember Paul Keating’s famous declaration?
“They are making every service station a branch of the tax office.”
Consumption taxes have never been popular.
But they have always been favoured in Treasury circles, where the phrase, “user pays,” is seen as a true sign of fiscal virtue.
That is showing up again, in a Consultation Paper, that Ken Henry’s review committee has just released.
It says, on page 14, that there are three bases for taxation, labour, capital and consumption.
The committee also notes that the Federal government has big expenses coming up, as Australia’s population ages.
It admits, in effect, that increasing tax on labour and capital is not easy.
So what will that mean, to you?
All that, according to the committee’s paper, is:- “suggesting an increased reliance on consumption taxes.”
That won’t be popular.
But it will happen.
The committee will make its final report to the government late next year.
by Alan Thornhill
The Australian economy is still slowing.
This is reflected in the Westpac-Melbourne Institute leading indicator, which has just been released.
The annualised growth in this indicator, which points the way the economy is likely move in the coming three to nine months, was just 0.6 per cent in October.
That is way below its long term average of 3.5 per cent.
The bank’s chief economist, Bill Evans, said today’s result shows further cooling, after the sharp fall registered on the same indexÂ in September.
“It is likely that growth in 2009 will, at best, show little improvement on the anemic 1.6 per cent growth we expect through 2008,” Evans said.
So what are the chances of a recession, which most economists define as two consecutive quarters of negative growth?
Westpac rejects that definition..
“Our preferred definition of a recession is if the economy actually contracts over the year,” Evans said.
On that criterion, Australia has experienced three recessions since 1965.Â They came in the mid 1970s, the early 1980s and in the early 1990s.
Mr Evans said his bank’s leading indicator had turned negative before all three recessions.
That hasn’t happened yet, this time.
by Alan Thornhill
Kevin Rudd believes his own survival takes precedence over the survival of the planet.
The emission reduction targets that he announced yesterday are certainly modest.
The 2020 target is 5-15 per cent below 2000 levels, by 2020.
Five per cent if other countries don’t match our efforts.
Up to 15 per cent if they do.
The government’s White Paper draws comparisons with the targets announced by other countries.
It said this target would leave Australia’s emissions up to 41 per cent below 1990 levels, on a per capita basis, by 2020.
Britain’s target would produce only a 39 per cent reduction, the White Paper says.
Politically, the government’s plan is clever.
It is a declaration that it wants some progress on reducing global emissions.
But the government, clearly, isn’t prepared to die in a ditch over the issue.
Cynics, who expected that Rudd’s plan would be crafted, on political, rather than environmental criteria, are probably the only people who were not disappointed, by what they saw.
Mitch Hooke, the voice of Australia’s mining industry, wanted no emissions targets, at all.
And why would he? The Minerals Council chief speaks for the coal industry, which is a major contributor to nasty global emissions.
On the other side, Greens Senator Christine Milne, says her office has been swamped with calls from protesters, furious at the government’s 5-15 per cent targets, which they regard as a Labor sell-out.
And the Greens are planning a national day of action, to protest at the plan.
by Alan Thornhill
The “millionaire factory” the Macquarie group is seeking a new partner in China, according to Bloomberg.
The financial wire service names Hengtai Securities as the likely partner.
So far, there has been no announcement of this reported move.
And Bloomberg, itself, is quoting only anonymous sources.
But if true – and successful – the venture would give Macquarie access to China’s $106 billion equity and bond underwriting market, at a critical time.
Finance from other international sources has virtually dried up, as a result of the global economic crisis.
Macquarie is said to have signed a memorandum of understanding with Hengtai last week.
Shares in Maquarie rose by 5.1 per cent yesterday as rumours of the new link spread.
The planned venture follows Chinese approval of a 20 per cent investment Macquarie made in that country’s Kunming InternationalÂ Trust company last month.
It is set to negotiate final terms on its new venture over the next few months.
by Alan Thornhill
The Federal government is issuing up to another $5 billion worth of Commonwealth Securities.
The Treasurer Wayne Swan says it is doing this to “ensure the effective operation of Australia’s financial markets.”
These markets, of course, are under great pressure at present, as a result of the global economic crisis.
And Swan says his latest decision is a response to market demand.
“There has been strong demand for Australian Government Treasury Bonds in the wake of the global financial crisis,” he says.
These securities are, essentially, risk free.
And very little else is, at present.
Mr Swan admitted, though, that even the latest $5 billion worth of securities is not likely to satisfy the market for long.
“There continues to be strong demand for Treasury Bonds,” he says.
“And further issuance is likely to be necessary over coming months…,” he adds.
Swan says the government will continue to watch the market closely.
by Alan Thornhill
The Prime Minister, Kevin Rudd will announce the Federal government’s long awaited emission reduction targets, in an address to the National Press Club today.
The announcement was to have been made byÂ his Climate Change and Water minister, Senator Wong, but she was bumped from the job at the last minute.
In a circular to its members, the Press Club described that change as “a surprise.”
Mr Rudd had been criticised over his earlier plan to leave the announcement to Senator Wong.
Sydney Morning Herald columnist Alan Ramsey, for example,Â said that, as usual, the unpleasant work was to be left to a woman.
Ramsey saw that, as a sign that the announcement, itself, wouid be weak.
If if it was to be a good one, the Prime Minister, Kevin Rudd, would make it himself, he said.
Rudd, himself, has already signalled, indirectly, that he is looking for a soft compromise.
He warned, recently, that the government’s announcement would not please either industry, or extreme environmentalists.
There is no doubt though that , Rudd, himself will have an unenviable task today.
The issue is critical, both for the government and the world.
Some scares do disappear quietly.
The Y2K bug comes to mind.
Climate change isn’t one of them.
There is solid science behind this one.
But the politics are important, too.
The Rudd government’s survival depends on it getting it’s climate change policies right.
The Opposition is showing all the foresight of a crack addict, in this debate.
The Deputy Opposition Leader Julie Bishop is declaring that the coalition will do nothing, in this area, that would damage business or send jobs overseas. while the global economic crisis continues.
The Climate Institute is pressing for a 25 per cent emissions reduction target.
The Greens would like to see 40 per cent.
The Minerals Council, though, wants no more than a 5 per cent target, with compensation for heavy industry.
Business also believes the proposed 2010 start, for an emissions trading scheme, would be premature.
There are very few wins, in this situation, for politicians.
by Alan Thornhill
Melbourne’s Bourke Street mall was packed with Christmas shoppers yesterday.
That’s hardly surprising, as Australia’s pensioners have just received a $4 billion bonus from the Federal government.
But retailers have not had a good year.
With interest rates – and petrol prices – both high earlier this year – Australian shoppers simply went on strike.
That, at least, is the assessment of one of the nation’s leading forecasters, Access Economics.
And in predictions, released today, Access warns that there is worse to come.
“There is already a long-lived retail downturn,” Access says, “but it is intensifying.
“Lost confidence means that shoppers are on strike.”
Access warns, too, that retailers who specialise in discretionary items will suffer most.
Its economists note that there will be more tax cuts next year.
“But job growth will slow,” they add.
“And so will wage growth.”
“The outlook will depend considerably on developments in housing prices and unemployment,” they say.
“The first dominates consumers’ wealth.
“And the second dominates their fears,” the economists warn.
Alan Thornhill is a parliamentary press gallery journalist.
Private Briefing is updated daily with Australian personal finance news, analysis, and commentary.
Thursday December 5
The Dow Jones index fell 24.85 points to 15,889.80
The Federal government and the Greens have reached a deal, under which the cap on Commonwealth debt will be abolished
Qantas warns of another 1,000 job cuts, over the coming year
East Timor’s prime minister says he is shocked by the Australian Government’s decision to authorise raids on a lawyer and whistleblower who were set to provide evidence against Australia in The Hague.
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