by Alan Thornhill
The Prime Minister, Kevin Rudd, has effectively extended the Federal government’s three stage stimulus package by offering 50,000 new green jobs and training places.
That was done, with due ceremony, at the opening of the ALP’s National Conference in Sydney yesterday.
The announcement will inevitably be seen as a trade-off with the unions, after Mr Rudd’s blunt rejection of their earlier suggestion that his government should revive old-style “buy Australian” policies while the global economic crisis persists.
Mr Rudd said at the time that policies of that kind had produced the Great Depression of the 1930s’.
But he said the plan he announced yesterday would, instead, “build a stronger and greener Australian economy.”
The four part plan offers:-
- A 10,000 strong “National Green Corps” of long term unemployed youths, who will spend 26 weeks on projects like bush regeneration, walking track construction and restoration and similar projects.
- Green skills training, for 30,000 apprentices, on areas such as smart heating techniques and maintenance of advanced green motor engines
- Another 4,000 training places for insulation installers and
- Another 6,000 new local green jobs.
The Treasurer, Wayne Swan, who also addressed the conference said that Australia still has big challenges ahead, but the government’s stimulus packages had “made a difference.”
The best news, for the government, though, came late in the day, when the Roy Morgan organisation reported that, on its own measure, consumer confidence in Australia is now back at pre-crisis levels.
At 117.8 points, consumer confidence is now 25.8 points higher than it was in July last year – and at its highest level since January 2008.
by Alan Thornhill
Optus is facing court action over its prepaid phone cards.
These are sold by a wholly Optus owned company called Prepaid Services Ltd.
The Australian Competition and Consumer Commission is alleging that this company had claimed that:-
- Certain cards would provide customers with a specified amount of call time when this is not so
- That there would be no other fees other than times call charges when other fees were charged
- That particular call rates would be charged, even though they were unlikely to be achieved.
The ACCC will argue its case before the Federal Court in Perth.
It is making similar charges against another telephone company, B0ost Tel.
The latest action follows other cases the ACCC has taken over pre-paid phone cards, in relation to Tel.Pacific and Cardcall Pty. Ltd.
In the latest case, the commission is alleging that both Prepaid and Boost engaged in misleading conduct and made certain false or misleading claims.
Preliminary proceedings in the case are scheduled to start in Perth on September 4.
by Alan Thornhill
The Prime Minister, Kevin Rudd, isn’t answering questions yet, on reforms proposed for Australia’s health system.
But he is working to clarify the issues.
And, at this stage, even that’s a positive step.
Mr Rudd told an ABC radio interviewer in Melbourne yesterday that the reforms, proposed by the government’s own National Health and Hospitals’ Reform Commission, would have to be “integrated.”
“It needs to be an integrated set of reforms,” Mr Rudd said.
This is not just a big ticket item for nation. It’s huge.
Australia already has a national health system that is the envy of many other countries, including the United States, where legislators are currently arguing bitterly over proposals for a much more basic system of universal health cover than Australia’s.
But Australia’s system, too, still has gaps.
There are big gaps, for eample, in preventative health measures. And Australia’s present system does little to help the poor meet their dentists’ bills.
And , as the old song says, the thigh bone’s connected to the kneebone.”
Mr Rudd acknowledged that.
“What we do in preventative health care relates to what we do in primary health care,” he said.
“That is with GP sand GP related services.”
And that, in turn, affects how Australia manages its overstretched public hospital system, the Prime Minister added.
The health industry, also, contains many deeply entrenched individual interests, that do not have a good record of co-operation.
The commission’s report does guarantee, though, that health will be a major issue at the next Federal election.
Especially as Mr Rudd has also made it clear that he will not be taking any major decisions on the report’s recommendations before the.
by Alan Thornhill
Australia’s shopkeepers have been gradually rebuilding their margins.
And they expect to keep doing so.
A business survey, conducted by the National Australia Bank, tracks both developments.
The survey showed both actual and expected retail margins plunged sharply after the global economic crisis struck last September. That gave many Australian shopkeepers a catastrophic Christmas.
But the Federal government’s stimulus package, which put extra money into many shoppers’ pockets and purses earlier this year, helped most shopkeepers recover at least some lost ground.
The Federal government’s decision to guarantee bank deposits is also helping Australia’s big four banks repair some of the damage that they, too, suffered as a result of the crisis.
They have not fully passed on the interest rate cuts that the Reserve Bank has made, in its marker rate, over the first half of this year.
But there are still big doubts ahead.
No-one yet knows, for example, whether Australian shoppers will stay as bold as they have been over recent months, now that the help they got from the first stage of the Federal government’s stimulus package is fading.
There is certainly some reason to doubt that, as both government and private forecasts suggest that Australia’s unemployment is likely to keep rising in the months ahead.
Surprisingly, though, the NAB’s June quarter business survey showed a sharp rise in business confidence throughout Australia over recent months.
That, however, must be kept in perspective.
Although business confidence leapt by 20 points during the quarter, it still stuck at minus four points.
Business conditions rose by 11 points, but it, too, stayed below zero at minus 9 points.
by Alan Thornhill
The Reserve Bank Governor Glenn Stevens says its becoming “much easier” to imagine “upside risks” in Australia’s economic outlook.
As the bank is traditionally committed to keeping inflation firmly under control, this comment is being seen as an indication that further interest rate cuts, on the bank’s part, are unlikely.
But Mr Stevens, who was addressing business leaders at a lunch in Sydney yesterday, also said that Australia may now have an opporltunity to increase its housing stock, without increasing house prices.
He said it would be very disappointing if it did not do so.
However Mr Stevens said Australians should not look for “easy prosperity.”
That would be a mistake.
He added, though, that confidence seemed to have regained ground in Australia.
“We cannot claim that Australia has avoided any downturn at all,” Mr Stevens said.
“It appears at this stage, however, that the downturn we are having may not turn out to be one of the more serious ones in the Post War era.”
Mr Stevens that contrasts with the experience of many other countries.
“It is becoming much more common for Australians to see the glass as half full than as half empty,” Mr Stevens said.
Mr Stevens predicted that the economic emergence of China and India would continue in the years ahead.
But he said that would present challenges as well as opportunities.
see the full speech at www.rba.gov.au
by Alan Thornhill
Your job – over the next year or so – may well depend on the Federal government’s stimulus package.
And there’s some good news.
Access Economics says the final – and most important – stage of that package is working.
That is government spending on infrastructure projects.
Access, which is sometimes called the Federal Treasury in exile, says these projects are now leading Australia’s investment growth.
But its assessment is still sanguine.
“We don’t expect government projects will fully compensate for the fall in private investment over the next two years,” Access says.
“But it is providing a decent offset.”
Does this really matter to ordinary Australians?
Access has no doubt about that.
“…just as business investment drove the boom in Australia’s economy,” it says, “it now threatens to be central to the bust.”
So far, at least, Australia has managed to avoid a technical recession. That is, two successive quarters of negative growth.
But falling export prices, weaker demand and tighter lending conditions have all combined to cut private investment.
And Access admits it is not optimistic about prospects for a recovery in this area in the immediate future.
It says it is “bearish” on the Australian business investment outlook.
“…the falls in croporate profits and capacity utilisation are likely to be large enough to see the pipeline of projects still shrink notably in 2009-10,” Access said.
by Alan Thornhill
“I have nothing to offer but blood, toil, tears and sweat.”
Kevin Rudd didn’t revive this famous phrase Winston Churchill famously borrowed from Theodore Rooosevelt, during World War II.
But the idea was there, right through the 6,100 word essay on the Australian economy that the Prime Minister wrote for the Sydney Morning Herald on Saturday.
“Unemployment will continue to rise even after growth returns,” Mr Rudd said.
But that was not his only warning, of tough times ahead.
“Over the next 18 months, rising growth will inevitably cause interest rates to rise,” he added.
“Third, as the global economy improves, demand for commodities will pick up, causing prices to rise.”
It is often useful, when assessing what a politician says, to ask why is he – or she – is saying that.
Is Mr Rudd, for example, copying the old-time doctor, who exagerates the patient’s illness, knowing that he can’t be blamed, whatever happens. If the patient dies, well he was very sick, wasn’t he? And if the patient recovers, the doctor must be a genius.
Mr Rudd is already past the half-way mark, in his present term in office.
The next scheduled election is due late next year.
And every politician tries to work out what will happen, at that time.
At present, Mr Rudd is still riding high in the opinion polls.
The vigorous stimulus packages, that he ordered when the global economic crisis struck, have been popular.
It’s not hard, though, to see that changing, if unemployment keeps rising, inflation returns and interest rates start rising, uncomfortably, again.
And all that could happen.
As Chris Richardson, of Access Economics warns, markets change quickly, but economies move slowly.
Employers, faced with falling sales, won’t be eager to start hiring again.
The Reserve Bank has never really been comfortable, cutting interest rates.
It sees raising them as more virtuous.
Australia’s banks, too, have been eager to restore their profits, to protect their balance sheets against damage caused by rising levels of bad debt.
All this could well mean that economic recovery comes slowly.
Recovery will inevitably present the government, itself, with new problems, too.
The stimulus packages have been expensive.
The government will have to cut its spending, to repair its budgets, over the coming year or so.
That won’t be popular.
So it’s no wonder that Mr Rudd is trying to get in early – to prepare voters for the times ahead.
His survival depends on his success, in all this.
by Alan Thornhill
Unlock your super?
That can seem like a great idea.
You are desperate, financially. And you have a big bill to pay.
And the nice man says he will fix it all up for you.
All he needs is your signature.
Then he will arrange to have that money that is tied up, in your poorly performing super fund at work, transferred to your own self managed super fund.
Then you can get immediate access to your money – and pay that nasty bill.
Sounds too good to be true, doesn’t it?
That’s probably because it is.
There are some things about this proposed deal that you might not have thought about.
The promoters, who deal with these schemes, have their own interests.
Typically, they charge a fee, which is often between 15 and 30 per cent of the sum that’s transferred.
Either way, that’s a big slice out of your retirement savings.
That is the money you will need to live on, when you are too old to work.
Remember, too, that the Tax Office will regard any of your superannuation money, that you might access illegally, as taxable.
So you are likely, also, to be faced with a bigger tax bill if you go down this path.
Even if the promoter promises better returns than your superannuation fund has been chalking up lately.
Alan Thornhill is a parliamentary press gallery journalist.
Private Briefing is updated daily with Australian personal finance news, analysis, and commentary.
Saturday May 18
The Dow Jones Index rose 121.18 points to 15,354.40
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- Pete on Rudd government had entered “paralysis:” Gillard
- Liam Knuj on The Prime Minister, Julia Gillard’s, New Year’s Message
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