The Federal government has served notice that it will bring back its carbon pollution reduction scheme after parliament resumes in February.

This inevitably raises the spectre of a double dissolution election, in the first half of 2010, as these bills, which have already been defeated in parliament, still have no clear path through the Senate.

The government took this – carefully calculated  – step when it released fresh data, which responds directly to Tony Abbott’s claim that the proposed scheme is just “a great big tax.”

The Acting Environment Minister Peter Garrett said, big polluters would have to pay, under the plan.

But everyone, who cut energy use or harmful emissions would be rewarded.

Mr Garrett’s main point, though, was that low income families would be more than fully compensated for the extra costs.

And half of Australia’s middle income earners would also be fully compensated.

He said Mr Abbott’s scare campaign was simply wrong.

In fact,  Mr Gattett said, Treasury modelling shows that  2.9 million Australians, who are on low incomes, would be better off under the government’s proposed plan.

On average, these families would be $190 a year in front.

But the Federal Finance Minister, Lindsay Tanner, also  said that people who are on  very high incomes,  like cabinet ministers, would not be compensated.

But the government left the main attack to Mr Garrett,.

“There are two simple facts nobody can avoid,” the former rock star said.

“The first is that there is no free way to tackle climate change.

“The second is that Mr Howard, Mr Costello, Mr Turnbull and the Rudd government all chose a carbon pollution reduction scheme to act on climate change.”

They had done so because this was the cheapest and most effective way to tackle climate change, as it puts a hard limit on emissions and funds compensation for families.

But the Opposition Leader persisted with his claim that the scheme is simply a tax.

“If the best the government can say is that 50 per cent of  of middle income earners will be no worse off, obviously a lot of people are going to be worse off under Mr Rudd’s great big tax,” Mr Abbott said.

So what have we  learnt, economically, from the year that is now passing?

Firstly, perhaps, that the economics of John Maynard Keynes are not dead, after all.

The new neo-classicists, who held that markets, alone, could be trusted to keep economies strong, were proved wrong, yet again.

Just as their predeecesors were back in the 1930s, when Keynes argued that monetary authorities and governments must intervene directly, at times, to support economic growth.

Ideologically, at least, Australia’s Liberals are still close to the neo-classicists, at heart.

That’s why the Opposition’s Treasury spokesman, Joe Hockey, was signalling shortly after the crisis struck, late in 2008, that the opposition’s response would be based, primarily, on tax cuts for those in the middle to high tax brackets.

That is, precisely, those who are most likely to save, not spend, any extra money they might receive.

That is not, necessarily, a hot way to tackle an all too imminent recession.

The Rudd government’s response, through stimulus packages, was much more full blooded – and effective

But Joe Hockey does have a point, when he says budget deficits can’t go on forever.

So has the Rudd government overshot the mark?

Two Treasury economists, Dr David Gruen and Colin Clark, made some pertinent remarks about that, in an article published earlier this month.

“…Federal governments of both political persuasions have demonstrated the resolve needed to bring deficit budgets back into surplus after the economy has recovered from recession,” they say.

The economists add, too, that governments, of both persuasions, have also “committed themselves to increasingly well articulated medium term policy frameworks for fiscal policies.”

Comforting thoughts, eh?

The best way to look at a crisis is to see it as an opportunity.

And figures released on Christmas Eve show Australians  are doing just that.

The data, produced by the Australian Bureau of Statistics, have received little attention, so far.

That’s a pity.

For they show that there are advantages to be had, as big players in the corporate world rebuild their financial strength, largely by borrowing.

The bureau reported, for example, that Australians lent no less than $13.6 billion to the nation’s banks and other financial corporations in the September quarter alone.

That looks like being a smart investment, in most cases.

These figures were part of the bureau’s September quarter National Accounts, in the Financial Accounts sector.

The bureau also reported that Australians, in what it calls the household sector, increased their demand for credit by $24.5 billion in the quarter.

The total household sector debt, at the end of September, was $1.3277 trillion.

For a nation of some 21 million people, that’s a truly impressive figure.

The ABC reported, over the holiday period, that on a per capita basis, Australians are now more heavily in debt than Americans.

It said that Reserve Bank figures show that Australian adults now owe an average of $74,000 each.

The share market recovery, over the past year, has helped to put some balance back into family finances though, even for Australians who don’t invest directly in shares.

The  crash, of September last year though, showed that thousands of Australian families do, in fact, have big interests in shares, through their superannuation funds.

The value of  superannuation payouts plunged, in the months after that crash.

Much, but not all, of the value wiped out at that time has since been restored, as share markets rose -  more quickly than expected – over the past year.

Don’t ring Wayne Swan.

The Treasurer will  be busy reading a “comprehensive report”  over Christmas on ways to make Australia’s ramshackle tax system “fairer, simpler and more competitive.”

If it actually achieves all that, of course, it might well qualify as Mary MacKillop’s third miracle.

The Treasury Secretary, Ken Henry, risked spoiling his boss’s Christmas, by handing the heavy report to him on December 23.

At  this stage, Mr Swan is giving no hints about what might be in the  report.

He said, only, that the government would consider  the document and release it “in early 2010.”

“I won’t be responding to any of the recommendations in the report,” Mr Swan told journalists.

“There will be enough time for that in the New Year,  when we will release the report and the government’s initial response.”

Mr Swan refused to say exactly when that would be.

“This is a comprehensive report,” he said.

“The government will take some time to study it in great detail

“And we will release it in the New Year.”

He thanked Ken Henry and the four other members of the Review Panel, which produced the report, after 18 months’ work.

The panel received some 1,500 formal submissions, zs well as more than 4,700 letter, during the course of its study.

It also held discussion panels right around the country.

Mr Swan said the government “will not be engaging in speculation” about the report, before it is publicly released.

It will leave that to the media.

So you kept your job, after the crash, and Christmas, now almost upon us, is looking pretty good.

What, though, of those who didn’t.

Before y9u mutter “bah, humbug” have a look at a few figures,

They are for July, so they might be a bit old, by now.

They are so grim, though, that they would, certainly, have put big holes in the Christmas budgets of thousands of Australian families.

The Statistician reports, for example, that the average bout of unemployment for men, at that time, lasted 17 weeks.

That is, on average, they lost more than four months’ wages.

The plight of women, wbo lost their jobs, was almost as bad.

On average, they lost 14 weeks, or three months employment, and pay.

With most Australian families now, geared to a two income budget, these are very serious shortfalls.

The main response young Australians received, when they sought work, was that “there are no vacancies at all.”

That was the blunt reply that 17 per cent received, when 1`5-19 year olds applied for jobs.

But 15 per cent of those over 45, who sought employment, were told that they were “too old” to be considered.

Ill-health or disability also prevented many people, classed as long term unemployed, getting jobs.

All had been out of work for almost a year.

Unemployment or sickness benefits probably helped most of these people, a little.

But there is still no substitute for a good, full time job.

Here’s the bad news.  The cost of living , for Australia’s retired people has been rising faster than that of the general population.

This effect, which may well be temporary. shows up in figures just released jointly by the Australian Superannuation Funds Association and the Westpac bank. They show, for example, that retired people saw their living costs  rise of by 0.7 per cent in the September quarter while those of the general population rose by just 0.4 per cent.

The difference arises largely from the different spending patterns or retired people and the general population.

Electricity prices, which affect the entire population, rose by 11.4 per cent in the quarter.

Their figures, published below, also give a very useful guide to how much you will need, in retirement, either to live modestly or to have a comfortable lifestyle.

They indicate, for example, that a retired couple in Australia now needs to spend $51,437 a year, to maintain a comfortable lifestyle.

You would need, of course, to adjust your plans each year, to maintain the value of your retirement savings, in real terms.

The present 9 per cent compulsory super levy will help with that, but it won’t be sufficient alone.

That’s because, by itself, it would provide barely enough to generate an income stream that could be described as “adequate,” let alone modest.

One of the great failings, of the present compulsory superannuation arrangements is that, by and large, Australians tend to set and forget their super funds, neglecting the fact that they need to be kept up to date.

Table 1: Budgets for various households and living standards

But there is good news, too.

Other figures, just released, show that there has been a strong recovery in super fund earnings, over recent months.

The independent agency, Superratings, reports that the funds have chalked up earnings growth of 10.07 per cent  over the past year.

Jeff Bresnahan of Superrattings, admits that the funds are still 11 per cent off the peak they reached in November last year.

But he said this is a far cry from the 25 per cent fall, evident just nine months ago.

In a second development yesterday, the Federal government released simplified product disclosure statements, for the superannuation and financial management industries.

Public comment is  being sought.

A year that most of would rather forget is now fading fast.

But the Federal Treasurer, Wayne Swan, says we still have reason to be proud.

“It should remain a source of pride to all Australians that we have achieved what virtually no other country could over the past year,” Mr Swan said, in a statement he has just released.

In short, the Treasurer said, Australia had avoided a recession, and “some of the destruction” that goes with it, despite the financial meltdown at the start of the year.

He said, too, that:-”Employers and employees deserve credit for doing the right thing by each other and the nation.”

Employers had cut hours, rather than jobs, when the crisis struck.

That had prevented an even bigger rise in Australia’s unemployment.

Mr Swan said he would also like to acknowledge the dedicated work that people in his department, the Federal Treasury, had done over that time.

So what lies ahead?

Access Economics says Australia’s shopkeepers can expect no more than mixed results, from this year’s Christmas trading

In fact, Access said, the nation’s retailers had seen their Christmas early this year, when the Federal government’s $900 cheques spurred consumer spending.

There have been subsequent signs, too, that the nation’s shoppers are cautious.

The Roy Morgan organisation, for example, reports that consumer confidence fell by 4.4 points last week.

However, it noted also, that confidence levels are still 22.5 per cent higher than they were a year ago.

Australia’s $1.1 trillion compulsory superannuation industry is impressive, but there are still big gaps in its coverage.

These are revealed in figures just released by the Australian Bureau of Statistics.

These show that almost two thirds (65 per cent) of retired Australians strill rely on the age pension, or some other kind of welfare, as their main source of income, in retirement.

Yet the Age pension – and similar benefits – were designed to help people in their retirement years.

They were – and still are – not meant to provide a comfortable standard of living.

The architect of compulsory super, Paul Keating, originally meant contributions to rise gradually to 15 per cent of salary.

But they have did not go beyond 9 per cent, either in the 12 years of the Howard government, which was decidedly cool – if not openly hostile to compulsory super – or under the subsequent Rudd Labor government.

The current superanuation minister, Chris Bowen, talks enthusiastically of seeking more than mere adequacy in retirement incomes, through super.

But he becomes distinctly nervous when asked if the present government is contemplating lifting compulsory superannuation contributions, even to 12 per cent.

Characteristically, though, Mr Keating, himself, remains bold.

He told an interviewer recently that he would push those contributions right up to the 15 per cent level, if he were to return to power.

That’s not likely to happen.

And the upshot is that Australians, who are now living longer than ever, are still quite likely to find themselves strapped for cash, in their retirement years.

There was good news for home buyers yesterday – and bad news – on two fronts – for the Federal government.

The Reserve Bank’s Deputy Governor, Ric Battelino, delivered the good news, when he hinted that there may be no more official interest rate rises in the months ahead.

He said that, in present circumstances “it would be reasonable to conclude that monetary policy is now back in the normal range.”

The bad news for the Federal government came when:-

• The Bureau of Statistics reported that the Australian economy grew by a bare 0.2 per cent in the September quarter, rather than predicted 0.4 per cent and
• Mr Battelino opened battle lines with the Federal government, when he staunchly defended Westpac – and other banks which increased their lending rates earlier this month, by more than the 25 basis point rise the Reserve Bank had announced.

That opened a wide gulf between the Reserve Bank and the government, which had earlier attacked Westpac and two other big banks, which took similar steps.

Only the NAB held its rate rises to 25 basis points.

The Prime Minister Kevin Rudd had attacked those banks, which followed Westpac’s example.

“I think Westpac should have a long hard look at itself,” the Prime Minister  said then.

“They are talking about people’s most basic things in life — a mortgage, an affordable mortgage, to underpin things as basic as a home,” he added.

The Federal Treasurer Wayne Swan had also said that banks which exceeded the Reserve Bank’s rate rises risked creating “distrust.”

Mr Battelino’s staunch support for those three big banks will have political consequences, raising memories of past differences between Labor governments and the banks.

These include Labor’s post war attempts to nationalise Australia’s private banks.

But the Deputy Governor’s message was clear.

“It is difficult for banks to adjust their lending rates in line with changes in the cash rate when the cost of their funds is rising substantially relative to the cash rate,” he said.

This is – essentially – the banana smoothie argument that Westpac had  raised earlier in its own defence.

In an animated television advertisement, Westpac said the cost of banana smoothies rose, if storms hit banana plantations , forcing up the price of bananas.

So, Westpac said, the price of the money it lent would also reflect the higher costs of raising it.

Mr Battelino said Australia’s banks had been sourcing more of their loan funds from deposits over recent months.

They had been forced to compete with other banks to do that.

He said that had “added substantially to their costs.”

Meanwhile, the cost of long term debt, which the banks also use to lend, had also risen, as a result of the global economic crisis, Mr Battelino said.

Mr Swan also said yesterday that the weaker than expected growth figures showed that the government had been right, when it rejected opposition demands for an early end to its stimulus measures.

The Australian economy grew by a bare 0.2 per cent in the September quarter.

Seasonally adjusted figures, just released by the Bureau of Statistics, also record that the nation chalked up growth of just 0.5 per cent in the 12 months to the end of September.

Even so, these growth rates are above those achieved in most other comparable countries, in the wake of the global economic crisis which struck last September.

The Federal Treasurer, Wayne Swan, who is in Canberra is planning to hold a press conference, to discuss these results, shortly.

The bureau also reported that final consumption spending rose by 0.7 per cent in the September quarter and by 1.9 per cent over the year.

New capital spending rose by 0.4 per cent in the quarter, but is still  fell by 4 per cent over the year.

Australia’s terms of trade improved by 1 per cent in the September quarter, though they still fell by 15.9 per cent over the year.

Real net disposable income rose by 1.7 per cent in the quarter, but was still 0.9 per cent down over the year.

All of these comparisons were made on seasonally adjusted figures.

As expected, the bureau’s figures also showed that the biggest contribution to the nation’s growth in the September quarter came from restocking.

Inventory growth, during the quarter, was almost 1 per cent.

Mr Swan is expected to say that these figures leave Australia well placed for recovery, in the most challenging economic times the nation has faced, since the Great Depression of the 1930s

Home building has surged in several parts of Australia – but this long awaited recovery is already being threatened by emerging labour – and land – shortages.

The Bureau of Statistics reported yesterday that the total number of new homes commenced rose by 9.4 per cent, on seasonally adjusted figures, in the September quarter.

However commencements remained 6 per cent below those of the same quarter last year.

The surge was concentrated in New South Wales, the ACT, Tasmania and the Northern Territory.

So far, though,  it has by-passed Victoria, Queensland, South Australia and Western Australia.

And the Housing Industry Association says that, even with the surge, the current rate of 136,328 starts a year is falling well short of the nation’s population growth.

Its senior economist, Ben Phillips, also said that substantial supply side obstacles are also starting to re-appear.

He said these include re-emerging labour and land supply shortages.

Mr Phillips noted, though, that the latest surge had followed two consecutive quarters of decline.

He said, too, that the Federal government’s First Home Owner grants had helped.

So had the government’s Social Housing Initiative – and low interest rates.

But the Reserve Bank noted yesterday that there had been “robust” increases in home prices over recent months.

The bank has made no secret of the fact that it has been worried by this development.

The Reserve Bank still has its finger firmly on the interest rate trigger, even though it admits that Australia’s inflation rate – at 1.3 per cent – remains below its target range.

This became clear when the bank released the minutes of the board meeting, earlier this month, which approved its third straight monthly rate rise of 25 basis points.

The minutes said, in part:”Members agreed that if developments unfolded as currently expected, monetary policy would need to be adjusted further to lessen the degree of stimulus.”

But the bank added:”The adjustment would not be intended to slow demand, compared with the current forecast path, but aimed simply at keeping the stance of policy appropriate for improving economic conditions.”

The bank’s target is to keep inflation within a 2-3 per cent range, over the course of a business cycle.

It noted that house prices, which have worried the bank in the past, had continued to rise “at a robust pace” in October.

And it said lending to home buyers is still growing “at a solid rate.”

The bank noted, also,  both that consumer sentiment is still “at very high levels” and that engineering  construction had been at “very high levels.”

These were expected to rise further as LNG projects pick up, the bank said.

There won’t be a fourth rise, next month.

The bank’s board will not meet again, to review rates, until February.

However, on current signals, the chance of another rise then must be rated as high.

The big four banks have tightened their grip on the Australian market – and new lending to business has plunged.

Figures released by the Australian Bureau of Statistics today show that commercial lending in Australia has been on a steep downward trend since February this year.

There have been persistent reports, over that time, that the banks raising their standards, for new business lending.,

The situation worsened in October, when commercial lending plunged bh 16.3 per cent, on a seasonally adjusted basis.

The banks lent the nation’s businesses less than $26 billion that month.

Home lending also fell by 1.7 per cent during the month on seasonally adjusted figures, while personal finance fell by 1.5 per cent.

Even lease finance was relatively flat during the month, rising by just 0.5 per cent.

However personal finance lending has been rising strongly, in trend terms, since June.

But David Liddy, chief executive of the Bank of Queensland, says Australia’s banking system has moved closer to a “retail style oligopoly” in the wake of the global financial crisis.

Mr Liddy said the higher levels of competition, which had built up over the 15 years before the crash, has now “basically gone.”

“The majors are writing 95 to 98 per cent of all new mortgages,” he said.

“So we have an issue in terms of consumer choice.”

The Prime Minister, Kevin Rudd and the Treasurer, Wayne Swan, have both attacked one of Australia’s biggest banks, Westpac, sharply,over the past fortnight,  because it  increased its mortgage interest rates this month by more than the latest rise in the Reserve Bank’s target rate.

Complex financial products have acquired  a particularly nasty reputation, over the past year or so.

They were central, after all,  to the global economic crisis.

And that has produced thes biggest financial shocks seen since the Great Depression of the 1930s.

But the trouble they cause doesn’t stop there.

All too often, Australian investors are faced with thick slabs of impenetrable legal jargon, when they prepare to put their money into one managed fund, or another.

Australia’s superannuation, life insurance and managed investment industries are all  littered with bad examples, of this kind.

And they erode clarity, fairness and efficiency.

This kind of  gobledeegook can be be  particularly dangerous in the field of  superannuation, because super, all too often, is a set and forget investment.

And that can, all too easily, leave superannuants with less to live on, in their retirements, than they had a right to  expect.

Small charges, for example, can lead to big differences in eventual payouts, with a 30-40 year investment, like super.

One small trailing payment, to the salesman who sold you that policy, thirty odd years ago, can do that, effortlessly.

And dangers like that do lurk in many current policies.

The Federal government wants these untidy clauses cleaned up.

That’s why the Federal minister for Financial Services, Superannuation and Corporate Law Chris Bowen is promoting public consultatio0n on these issues.

The latest step in that process is the publication of a proposals paper, issued by the Federal government’s super systems review.

It sets out its aims, very bluntly.

“The key issue in developing a product rationalisation framework is to ensure an appropriate balance between the interests of the various groups of stakeholders, in particular investors and product providers,” the review, headed by Jeremy Cooper, says.

“Adequate powers need to be provided for regulators to exercise their supervisory and enforcement function,” it adds.

The review team is seerking publc submissions on all this.

This is your chance to make a difference.

There’s more information at http://www.supersystemreview.gov.au/

Australia’s unemployment may already have passed its  peak.

That would indeed be remarkable  as its high point so far was the 5.8 per cent level, seen in October.

The Bureau of Statistics reports now that the rate fell to 5.7 per cent in November.

The Federal government – and the Reserve Bank – were both expecting Australia’s unemployment rate to go much higher, in the wake of the global economic crisis.

Back  in May, when he delivered his annual budget, the Federal Treasurer Wayne Swan said he believed Australia could see unemployment at 8.5 per cent, before the crisis passed.

Even in his mid year review, Mr Swan predicted a 6.5 per cent peak.

The Reserve Bank Governor, Glenn Stevens, admitted earlier this week that Australia’s s recovery has been stronger than many, including the bank, had expected.

“But who’s complaining?” Mr Stevens added.

Predictably, the stronger than expected result has led to predictions that the Reserve Bank will step up its present round of rate rises.

But it cannot do so immediately, as its board does not meet until February.

Mr Swan described the latest figures as “quite encouraging.”

The Bureau reported that 31,200 Australians found jobs in November, on a seasonally adjusted basis.

And the number counted as unemployed fell by 13,300 to 653,100.

However the impact of the crisis is still clearly evident in today’s figures.

The number of Australians unemployed, in November this year, was  27.2 per cent higher than that seen in the same month last year