Australia’s department and clothing stores were hit hard by a downturn in their trade during February.

The Bureau of Statistics said both saw their turnover fall  by 3.9 per cent during the month, on seasonally adjusted figures.

That was more than twice the overall fall – of 1.4 per cent – in Australia’s overall retail trade in February.

However this followed a rise of 1.1 per cent in January.

That result was boosted by the traditional post Christmas sales.

Cafes, restaurants and take away food stores fared better in February, increasing their sales by an average of 1.8 per cent.

These figures, too, are seasonally adjusted.

On raw figures, the sales of chain stores and other large retailers plunged by 15.1 per cent in February.

Smaller retailers saw their sales sink by 6.2 per cent during the month, on the same basis

The gradual withdrawal of the Federal government’s stimulus measures contributed to the set back many Australian retailers experienced in February.

The Bureau also reported that home building approvals fell by 3.3 per cent in February, on seasonally adjusted estimates.

However they remained 34.2 per cent above those of February 2009.

The “urban congestion” that Kevin Rudd says is “clogging up” Australia’s cities is unlikely to ease in the immediate future.

In fact, new figures suggest that it is likely to get worse.

The Australian Bureau of Statistics is reporting, for example, that the population of Australia’s capital cities grew faster, in 2008-09, than they had on average over the previous five years.

Perth’s recorded the highest  population growth of any capital, at 3.2 per cent.

And Brisbane saw its population pass the 2 million mark, during the year.

The average, for all Australian capitals, was 2.3 per cent.

Facilities in Perth’s inner suburbs were particularly stretched.

Their population exploded by 12.8 per cent over the year.

This was the highest growth recorded anywhere in Australia.

The difference between city and country growth rates is also at a 10 year high.

The population growth rate, outside Australia’s capitals, was just 1.9 per cent.

Western Australia, though, also recorded the highest population growth rates outside the nation’s capital cities.

The seaside town of Mandurah, for example, chalked up a 5.1 per cent rise in its population, over the year.

And Capel, in the State’s south west, saw a 6 per cent rise.

The Treasurer, Wayne Swan, told a growth management summit in Brisbane, that the population of that city is expected to  double, over the next 40 years.

He said, too, that the ageing of Australia’s population would complicate population growth issues, over that time.

However, Mr Swan  is still optimistic.

“Personally, I have no doubt that a nation which has defied the worst global recession  since the Great Depression is capabable of harnessing the benefit of a growing population, while intelligently managing the stresses that it brings,” he said.

Australia’s builders, though, warned that the nation is not building nearly enough housing to accommodate its rapidly growing population.

Australia’s birth rate is likely to rise under a Coalition government,  Tony Abbott says.

The  Opposition Leader made the claim today, in the first of three major speeches, setting out the “values and approaches” that he intends to take to the Federal election due later this year.

“There’s considerable evidence that decent parental leave can encourage women to have more children and raise Australia’s birthrate above the current 1.9,” Mr Abbott said.

“ A 2009 study in The Quarterly Journal of Economics suggested women might be 15 per cent more likely to have a second child when maternity leave provisions were strengthened,” he added.

Mr Abbott said, too, that the controversial maternity leave scheme, that he proposed recently, would meet this need.

He also reminded his audience, at a Leaders” Forum in Sydney, that it was the founder of the Liberal Party, Sir Robert Menzies, who had introduced child endowment in Australia.

Mr Abbott said the paid maternity leave scheme, that he is proposing, would be fully funded.

“Because all benefits have to be paid for, this will be funded by a tax levy of up to 1.7 per cent on companies’ taxable income over $5 million a year,” he  said.

He also promised  that a Coalition government government would curb spending and restore the  Federal budget to surplus,

Mr Abbott said the Rudd government had spent recklessly and needlessly in the wake of the global economic crisis.

He also promised tax cuts.

“Once Labor’s debt has been repaid and personal income taxes have been reduced, it should be possible to reduce company tax,” Mr Abbott said.

So even the levy, to fund his paid maternity leave scheme, might not be permanent.

“ If so, the levy would be only a temporary increase in tax for the 3200 companies with taxable incomes over $5 million a year,” Mr Abbott said.

Rising living standards in Australia are threatened by the country’s relatively poor productivity performance, according to the Prime Minister Kevin Rudd.

“Between 1994 and 1999, Australia’s productivity growth rate was second among OECD countries,” Mr Rudd told economists in Melbourne.

But it had since slowed since then and Australia now occupies 14th place.

“If we do not act now to lift Australia’s productivity growth rate, the nation’s  average living standards will decline,” Mr Rudd warned.

He said poor productivity is reflected in Australia’s slow and expensive access to the internet, clogged cities, inefficient ports, poor roads and outdated railways.

The Prime Minister  said his government would always pursue the twin goals of economic stability and long term growth.

That’s why 65 per cent of its stimulus spending, in the wake of the global economic crisis, had been allocated to investment in national infrastructure.

But there were still real challenges ahead.

With Australia’s population ageing rapidly, workforce participation rates would fall in the years ahead.

In 1970, there were 7.5 people of working age to support every person over the age of 65, Mr Rudd said.

“Today there are five.

‘By 2050 there will be just 2.7 people of working age to pay taxes for every person over the age of 65.”

“These are dramatic changes,” Mr Rudd said.

He warned, too, that health reform is not just a policy imperative, in  these circumstances.

“Health reform, equally, is an economic policy imperative.”

Mr Rudd said his government is working to produce both an economic and a skills revolution, to help meet these challenges.
“Without productivity growth, we do not have sustainable,long term economic growth,” Mr Rudd warned.

And Australia would then have no long term basis for improvements in its living standards.

Australia’s job market still a little too slow for you?

There may be some good news, if that is so.

Senior officials  in Papua New Guinea estimate that their country will need 10,000 new workers in the near future.

That’s right.  Papua New Guinea.

Our northern neighbnur  is about to become a Pacific powerhouse.

A $US15 billion deal, that the country’s Prime Minister, Michael Somare, has just signed with the energy giant Exxon Mobil is expected to double, perhaps even quadruple this still young nation’s gross domestic product.

The project is expected to produce more than 6 million tonnes of liquefied natural gas from the PNG Highlands for export, mostly to Asia, each year.

This would  should transform  PNG from a least developed country to that of a middle income nation.

PNG officials, though, concede that they will need help to achieve that.

Old colonials, though, need not apply.  The officials sai they will be looking for people with the sensitivity and good sense to respect local cultures.

There are risks, of course.

The long closed Bougainville mine, once the biggest gold and copper mine in the world, still serves as a salutary lesson.

However PNG’s veteran’s Prime Minister, Michael Somare, is determined to ensure that his government will not ignore the wishes of local villagers, in the new project area now, as it did in Bougainville in the 1980s

That, ultimately, is what led to the trouble on Bougainville, back then.

Mr Somare knows the dangers, only too well.

“Our people can be excitable,” he once said.

The arrival of the new project could not have been better timed,  for PNG.

The giant Ok Tedi copper mine, in PNG’s Western Province, is approaching the later stages of its life.

One estimate says it might close as early as 2013.

Ok Tedi, of course, has been a mainstay of the PNG economy for many years not only by  providing valuable jobs to its 2,000 strong, mostly Melanesian, workforce, but also through the taxes it pays to the national government.

Taking one of those 10,000 jobs, or one of the business opportunities associated with Papua New Guinea’s new mineral boom, would, of course, be a radical step.

It would require careful thought.  Your correspondent, though, once spent two years  working in the PNG capital, Port Moresby and another 20 months, much later, training young workers in the Solomon Islands capital of Honiara.

Those were great times.

It is still too early to say whether recent indications suggest that Australia’s residential property market is cooling.

That’s the conclusion the Reserve Bank’s Assistant Governor (Economic) Philip Lowe presented to a conference in Sydney yesterday.

Mr Lowe said Australia’s economic recovery generally presented a strong picture.

However, there were “a few contrary signs.” he added.

“Total housing loan approvals declined in October, November, December and January,” he said.

And the declines had  been broader than than just first home buyers  retreating after the scaling back of the Federal government’s  stimulatory grants.

“Some lenders have also tightened terms and conditions,” Mr Lowe said.

They had done that by further reducing maximum loan to value ratios.

“…in the lower priced suburbs of capital cities, housing prices have broadly moved sideways since October,” Mr Lowe said.

But this had followed “earlier significant rises.”

“Looking forward, it is too early to tell whether these contrary signs indicate that some cooling in the property market is in prospect,” Mr Lowe said.

“It is, however, important to avoid significant imbalances developing in the property market,” he added.

Mr Lowe said that applied to the supply-demand situation, pricing and “financing dynamics.”

“The pick up in dwelling construction that is occurring will be helpful here,” Mr Lowe said.

But he warned that “further increases are likely to be needed over the medium term.”

More at www.rba.gov.au

Australian families have had wild rides – financially – in the wake of the global economic crisis.

This is clearly illustrated in figures that the Reserve Bank has just released, as part of its Financial Stability Review.

Mostly, though, we have emerged from the turmoil surprisingly well.

The bank notes, for example, that the net worth of a typical Australian family at the end of last year, was $610,000.

That, it adds, is “only a little below the 2007 peak.”

This relatively good performance was, undoubtedly, due to the Australian habit of investing in the family home, rather than the stock market.

Share market investors, of course, were hit hard by the stock market crash.

However school leavers and recent retirees have been hit very hard, too.

Even the general unemployment rate, for recent school leavers, is currently 19 per cent.

That’s almost four times the rate for other Australians.

There are also many places, like the up-market Perth suburb of Wembley, where the unemployment rate for school leavers is above 30 per cent.

Recent retirees were shocked, too, when they learnt that their superannuation payments would be much smaller than they had confidently expected.

The bank said, though, that on balance real net worth per household rose by 11 per cent last year.

The price of dwellings had risen by 10 per cent last year, despite the crisis.

It said this made up about 60 per cent of Australian household assets.

The Reserve Bank noted, though, that real wages had fallen by 2.6 per cent last year.

That happened as thousands of full time jobs were converted to part time positions, as a result of the crisis.

However that fall  was more than offset by lower interest rates and the Federal government’s stimulatory packages.

“As a result, total disposable income per household increased by 3.5 per cent, in real terms,” the Reserve Bank said.

Australia has never been short of  financial scams, some of them very sophisticated.

Whether it be doubtful offers from Nigeria, or plausible local Ponzi schemes, the nation’s investors have very good reason to be cautious.

They will, however, soon have a new high tech friend, called IMSS.

That’s short for the Integrated Market Surveillance System,which should be operating by July 1.

The Australian Securities and Investment Commission, ASIC, has bought the new system, which it says will analyse activities and trends in market data.

Operating in that way, the new system is said to be capable of identifying suspicious trading activity and raising alerts.

This follows the Federal government’s decision last year to transfer surveillance of Australia’s financial markets  from the Australian Securities Exchange to ASIC.

“ASIC is well advanced in our planning for the transfer of market supervision powers,” ASIC Commissioner Belinda Gibson said.

“The procurement of lthe IMSS is an important milestone in the transition,” Ms Gibson added.

Your new, high tech friend won’t be working alone, though.

It will support a new surveillance team that ASIC has built up from its own staff, old hands from the ASX and “talent from the market,” Ms Gibson said.

“ASIC’s objective is to ensure a seamless transition of the supervision responsibilities with minimal disruption to participants,” she added.

ASIC bought the  IMSS system from SMARTS Market Surveillance Pty. Ltd.

A great deal of money is chewed up, in the back offices of Australia’s commercial superannuation funds.

Indeed a new report, by the Superannuation Review, estimates that $3.5 billion a year is spent, simply processing superannuation transactions.

That money might be better used, instead, to boost our ultimate retirement payouts.

That huge expense, perhaps, becomes a little more understandable when we see, as the report also notes, that there are about 100 million of superannuation transactions each year.

However the  Review team, is still far from satisfied with this situation.

It says, quite bluntly, that the time has come to drag the industry’s processing into the 21st Century.

“There are technological solutions now available which provide the basis for substantial improvements in superannuation back office processes,” it says.

This should result in substantial savings, which could be passed on to fund members, the report adds.

With modern processing, the report says, the cost of individual transactions could drop to just 5 cents each.

That would cut back office costs  to just $5 million  a year.

The reality, of course, is that savings like that are still some way off.

A great deal of work and re-equipment would be needed, to achieve them.

And even the review team admitted that this would have to be approached incrementally.

The industry, though,broadly, welcomed the report which is part of a broader pattern   of reforms, that the Federal government is promoting for the industry.

The Australian Superannuation Funds Association says it provides a solid platform on which to build a more efficient system.

Young? Unemployed?  Finding it hard to get a job?
Thousands of recent school leavers in Australia are now in this grim situation.
The Statistician reports that even the general unemployment rate, for these people, is currently 19 per cent,
And there are pockets – even in some relatively well off suburbs – where that rate exceeds 30 per cent.
Demand for skilled workers, though, is still relatively strong.
These facts, taken together, suggest a potentially valuable investment strategy.
Particularly when they are combined with the results of a recent Productivity Commission report.
You might, for example, decide to use the extra time you have on your hands, at present, to start studying for a degree.
What good would that do?
Well, the commission’s research suggested that a man with a degree, on average, will enjoy a wage that is 38.4 per cent higher than that of another, without one.
That’s for the rest of his working life.
The advantage, for women, is almost as high, at 36.7 per cent.
If a degree is not for you, perhaps a diploma or certificate would be.
That would purchase a 13.8 per cent wage advantage for men and put women 11.4 per cent ahead of their peers, without one.
A Year 12 Certificate, if you don’t have one, would be almost as good.
They put men 12.8 per cent ahead of those without that certificate, in the wage stakes, while women would enjoy a 10.1 per cent advantage.
In short, improving your education is probably the best investment you could make, at your stage of life.
Why?
The commission is blunt about that.
It says improving your education improves your productivity.
That will make it so much easier to get the job you want.
Remember, too, that your wages will rise, with the levels you obtain, in your education.

A cheaper home loan can give typical family budgets a big boost.

But where do you get one?

That’s a good question.  There have been some important developments recently.

So a thorough check, in perhaps unexpected places, might well prove profitable.

The AMP, for example, is not the first place people wanting home loans, at a good rate, usually look.

However, it has cut the rate on its standard home loans by 10 basis points last month.

Not much, perhaps.  But every little bit helps.  And there are further cuts coming.

The Treasurer, Wayne Swan, tells the story, in the weekly economic note he has just published.

He says a substantial investment the government made in Australian Residential Market backed securities, helped the AMP make that first cut.

“We have just received more good news,” Mr Swan added.

That came “with  AMP announcing that it will further reduce its introductory variable mortgage rate by 45 basis points and its basic variable mortgage rate by 22 basis points.”

Mr Swan would have been smiling as he noted these developments.  The Federal government has long believed Australia’s big four banks have been “gouging” their customers, through the rates they charge on their home loans.

The government wanted, primarily, to stabilise Australia’s home lending market, in the wake of the global economic crisis, when it made that investment in residential market backed securities.

The cuts the AMP made, following that investment, came as an unexpected bonus.

Mr Swan revealed that the AMP’s Chief Executive Officer, Craig Dunn, had written to him on the matter.

Mr Dunn had told him that it was the government’s investment “in large part” which had allowed his organisation to make these cuts.

On current trends, Australia is likely to  suffer an acute housing shortage within a decade.

That conclusion is reached in a new report produced by the Housing Industry Association.

It predicts that Australia could see a cumulative hshortage of  some 466,000 homes by 2020.

That is a grim figure.

There’s no secret, though, about the fact that the nation has been heading that way for years.

We simply haven’t been building enough new homes to house Australia’s rapidly growing population.

The consequences are all too predictable.

They include a tight rental market and a long term trend of rising house prices.2020.

Young families will suffer.

The situation is already bad.

The Association’s senior Economist, Mr Ben Phillips says Australia is already has a shortage of  109,000 homes.

“The reality in many regions and cities in Australia is that affordable, well located land is not available or abundant, ” Mr Phillips said.

He warned that more, planning restrictions, higher taxes labour shortages, and heavy  regulation  all added  to the problem.

“If we don’t get a comprehensive supply response to the accumulating housing shortage then the lack of affordable and appropriately located rental properties will only worsen, ” Mr Phillips said.

“A lack of skilled labour is an emerging threat to the much needed housing supply response,” he added.

“Current construction levels in most high demand areas are simply not sufficient to meet the needs of a fast growing population,” Mr Phillips said.

About 250,000 British pensioners, living in Australia, are to miss out on cost of living adjustments to their payments.

The Federal government says it is disappointed by this decision made by the Grand Chamber of the European Court of Human Rights

Families Minister Jenny Macklin said the British Government refuses to index its pensions paid to expatriates who live in Commonwealth countries such as Australia, South Africa, Canada and New Zealand.

However UK pensions are fully indexed for people who live in the European Union, the USA, the Philippines, Israel and other countries.

“The Australian Government believes this policy is discriminatory,” Ms Macklin said.

She said UK pensioners living in Australia had paid their contributions into the UK National Insurance Fund in good faith.

“We have been actively lobbying the UK Government on this issue,”Ms Macklin added.

“I raised this issue face-to-face with the then UK Secretary of State for the Department for Work and Pensions and the Australian Government will continue to pursue this matter.

“The UK’s policy severely disadvantages UK pensioners living in Australia, as over time their UK pensions have declined in real value.

“This policy continues to place an increasing burden on all Australian taxpayers, as the Australian Government picks up the tab for around 170,000 UK pensioners who also receive means-tested Australian pensions,” Ms Macklin said.

She said this cost Australian taxpayers  about $100 million a  year.

“Australia terminated our social security agreement with the United Kingdom in 2001 because of this issue,” Ms Macklin said.

“I congratulate the pensioners involved in the case for their tenacity and dedication in fighting hard for a fair go,” she added.

“The Australian Government will continue to support UK pensioners living in Australia,” she said.

Ever heard of a “trailing commission?”

That’s a nasty little device, sometimes hidden in  contracts, which allows the advisor, who sells you a financial product, a small commission for the life of the contract.

These items are often hidden in the fine print of contracts, that can run to a hundred pages or more.

You might never know about them until you start asking why you receive less than you expected, when that product matures, perhaps 20 years after you bought it.

Take heart.  Consumer protection, against hidden nasties like these, are about to be strengthened.

And the shonks, who write such deals, will find themselves facing fines of up to $1.1 million, for their unconscionable conduct.

That’s because  the Senate has just passed tough new consumer protection laws.

The Federal government says they represent the biggest reform of consumer protection in Australia since the Whitlam Government introduced the Trade Practices Act back in 1974.

The Consumer Affairs Minister, Craig Emerson said the new law would  ban unfair contracts between businesses and consumers.

He said this would put a stop to the  small print “nasties” which can trap unwary consumers.

“This new law, combined with a second bill I introduced into parliament this morning, provides a new deal for consumers,” Dr Emerson said.

“It offers protections for consumers never before available to all Australians.

“This means businesses will no longer be able to get away with unfair terms and conditions and will have to be upfront with their customers,” Dr Emerson said.

Businesses found guilty of unconscionable conduct – that is, behaviour so odious that any reasonable person would find it deplorable – would face massive fines.

“And businesses that dupe customers with false or misleading information about their product or service can be named and shamed by the Australian Competition and Consumer Commission,”  he warned.

The Australian Consumer Law is a single law which replaces 17 Commonwealth, State and Territory acts in one go, Dr Emerson said.

The Productivity Commission had  estimated that this streamlining would save up to $4.5 billion a year.

It would also take Australia towards a seamless national economy.

There will be a new national curfew on door- to-door sales, when the new law comes into effect before the end of this year.

This would ban such sales on Sundays and public holidays.

Consumers rights to refunds or repairs under warranties  would also be clarified.

“Importantly, for the first time, there will also be a national system of product safety, ensuring the same level of protection across the nation,”  Dr Emerson said.

“At the moment, the protections against dangerous or suspect products are fragmented.

“This brings it all together so the same rules apply regardless of where you live,” he said.

“Dodgy operators and shonks who flout the law will face the same tough sanctions wherever they go in Australia,” Dr Emerson said.

“These powers strengthen our hand in tackling bad business practices and problem businesses.”

The States and Territories will each adopt the ACL as their own law.

When the economy turns bad, Australian employers are more likely to retain women, on their staff, than men.

This previously unrecognised trend emerges from figures just published by the Australian Bureau of Statistics.

The Federal Treasurer, Wayne Swan, praised Australians yesterday, for their “co-operation” in the wake of the global economic crisis.

He was referring, particularly, to the fact that thousands of Australian companies offered their staff part time work, when they could not afford to retain their services, full time.

There was an element of self interest in this.  Those bosses remembered, all too well, the difficulty they had experienced previously in attracting and keeping the skilled people they needed, in better times.

So retaining their best workers, at least on a part time basis, made good business sense in the early months of the crisis.

The way women won out, over their male colleagues, though, as this was happening has only just become apparent.

The Bureau’s publication, Australian Social Trends, March 2010, tells the story.

The Statistician reported, for example, that more than half of the women who lost full time jobs, in those dreadful months, had been able to find part time work, instead.

Only one third of the men, who were displaced from full time work, were that lucky.

The Bureau also reported, for the first time, that young Australians were hit hardest by the global economic crisis.

“As with other downturns, the impact was greatest among people under 25,” it said.

“…more than half a million young people were not engaged in either full time study or full time work in 2009,” it said.

That’s 19 per cent of those in this age group.

Even more shockingly, the Bureau reported that Australians, from the nation’s poorer areas, suffer significantly worse health than others.

Their rates of heart disease, diabetes and disability are more than twice the national average.

They are also more than twice as  likely to smoke and had a considerably higher rate of obesity than other Australians.