Disability Insurance “aspirational” Abbott

Tony Abbott describes the National Disability Insurance Scheme, recommended by the Productivity Commission, as  “aspirational,” telling journalists at the National Press Club that it would have to wait until Federal budgets returned to surplus.

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We’ll still borrow for one thing

Australians are still borrowing to buy houses, but not for much else.

The Reserve Bank reported today that the amount Australians borrowed last year, to finance home purchases, was 5.4 per cent  higher than the amount borrowed the previous year.

That’s despite a 2.2 per cent fall in capital city home prices, throughout the nation, in the 12 months to the end of September.

Borrowing for owner occupied homes last year rose by 5.7 per cent, while home lending to property investors increased by 4.8 per cent.

But the amount Australians borrowed, for other personal purposes, fell by 0.1 per cent in December and by 1 per cent in 2012.

Business borrowing was also restrained, rising by just 0.3 per cent in December, to a level that was just 1.4 per cent up in 2012.

The Reserve Bank noted, though, that there were significant rises in Australia’s money supply, last year.

On its M3 measure, the nation’s money supply rose 1.2 per cent in December, to a level 8 per cent higher in 2012.

In normal circumstances, annual growth at that rate would be stop all talk of another rate cut, in its tracks.

]However, the global economy is so weak, at present, that a third rate cut is still expected, possibly as early as next Tuesday.

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Business numbers rise, despite economic instability

The number of active businesses in Australia is still rising, despite persistent economic instability.

The Bureau of Statistics reports, though, that the rate at the number of active businesses is increasing has slowed.

It fell to just 0.4 per cent in 2010-11, from 3.6 per cent the previous  financial  year.

The Bureau said Australia had more than 2.1 active businesses in June last year.

The construction industry was the biggest sector, with 17 per cent of the nation’s active businesses, followed by the professional, scientific and technical services sector, rental, hiring and real estate.

The vast majority – 96 per cent – were small businesses.

But the number of agricultural, forestry and fishing businesses in Australia is continuing to fall – along with the number of manufacturing businesses.

The bureau said  these sectors have been in decline since 2007.

Meanwhile, a separate study shows that business confidence in Australia improved slightly in December, despite continuing worries about European debt levels.

The National Australia Bank, which conducted  this survey  is also predicting two more interest rate cuts this year.

However the bank has cut its forecasts for Australia’s economic growth in 2012.

It lowered its economic growth forecast, for that time, from 4.5 to  3.75 per cent.

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Our butchers still cut it:report

Australians still prefer to shop at their local butcher’s, when they are buying fresh meat.

But the butchers’ lead over their major rivals, the local supermarkets, is shrinking.

That’s one of the retail trends identified in a new report by the Roy Morgan organisation.

The report shines a spotlight on the $76 billion Australians spend each  year in their local supermarkets , food and grocery stores.

It also shows that Australians still like their local fruit and vegetable stores, but adds that their future is now very much in doubt.

What, though, of the big boys?

The Roy Morgan Organisation says its report shows Woolworths ahead of both Coles and smaller supermarket rivals IGA and Aldi.

But Coles has been fighting back.

“In market share overall, although (Woolworths”) lead in many ‘fresh food’ areas such as bread, and fruit and vegetables has been shrinking in recent months due to a resurgent Coles,” the report says..

What, though, of our  bakers?

The report also says that the big  supermarkets are now leading fresh bread stores such as Bakers Delight and Brumby’s.

“In fresh meat we see butchers still leading the way, but only by a small margin,” the report adds.

Trend data, though, reflects the dominance  of Coles and Woolworths in the fresh delicatessen market.

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Managing our super better

Australians have a great deal of money invested in superannuation.

With more than $1.3 trillion already in that pot, it is one of the biggest sums of money held, anywhere in the world.

Super has produced its shocks.

Anyone hit by the losses sustained after the great crash of 2008 knows, now, just how much money our funds had invested in the share market.

The rules surrounding super, too, are well short of perfect.

Those shortfalls, though, are to be tackled seriously over the coming year.

That was made clear in a joint statement that the Treasurer, Wayne Swan and Superannuation Minister, Bill Shorten, have just issued.

They say the idea is to  “ consider ideas raised at the Tax Forum for providing Australians with more options in retirement and improving certain superannuation concessions.”

The two ministers said: “the government is already implementing important reforms to make superannuation concessions fairer for low-income earners and improve the adequacy and equity of the retirement income system”

They said these include increasing the superannuation guarantee, to 12 per cent,  introducing the low income superannuation contribution, abolishing the age limit on the superannuation guarantee and providing Australians with access to low-cost funds through MySuper.

So what else needs to be done, by a high powered expert committee called the Superannuation Roundtable, that the government has appointed to do this work?

“The first stage of work for the Roundtable will discuss and examine better ways to target and deliver certain concessions,” the two ministers said.

But everything comes with a price tag, in these days of tight budgets.

Superannuation reform is no exception.

“The Roundtable will need to consider offsetting savings from within the superannuation system for any proposals that have a budget cost,” the two ministers said.

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Trade your way out:Rudd tells Europe

Australia’s Foreign Minister, Kevin Rudd, has identified trade liberalisation as the next step, in dealing with the European debt crisis.

So far, austerity measures have dominated programs that Germany and other strong European countries have urged on weaker EU members, like Greece and Italy.

That has led to historically high levels of unemployment, riots and political instability in those countries.

Trade liberalisation measures that Australia took, under the Keating government did much to strengthen its economy.

Mr Rudd was interviewed, on Sky Television, in Davos, where he has been attending the World Economic Forum.

He said delegates, at the forum, had arrived pessimistic about prospects for dealing with Europe’s debt problems.

But they had left in a spirit that he called “small o optimism.”

Talk of trade liberalisation had helped to turn that about.

“ I think trade liberalisation stares everybody in the face as the obvious next step to go, subject to political will,” Mr Rudd said.

“… it doesn’t cost your budgets

“it’s not relevant to where monetary policy may go.

“ and  (it’s) a huge psychological shot in the arm in global demand, Mr Rudd declared.

He acknowledged, though, that trade liberalisation can be politically difficult, saying progress, in that area, would be “subject to political will.”

Mr Rudd said China’s growth is now driving economies in the Asian region, including that of Australia.

But Europe is still important.

“… let’s be very frank about it.

“If Europe is going bad, it affects global demand and therefore markets in our part of the world, “ Mr Rudd said.

Besides, he added…” Europe is a huge source of global capital investment.”

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Inflation:our last good figures?

Sharp falls in fruit and vegetable prices helped Australians to enjoy a brief respite from inflation over the past few months.

The Australian Bureau of Statistics reported that inflation, measured on the Consumer Price Index, did not rise at all in the final three months of last year.

On the same measure, inflation rose by 3.1 per cent over 2011, as a whole.

The Bureau also reported that the nation’s underlying inflation rose by 0.6 per cent in the December quarter and 2.6 per cent in the 12 months to the end of December.

The Reserve Bank uses a similar measure, which also excludes volatile items, like fruit prices, when it sets interest rates.

It aims to keep Australia’s underlying inflation between 2 and 3 per cent, over the course of a business cycle.

So the latest underlying inflation figures suggest that another rate cut is likely, when the bank’s board meets early next month, to review rates.

Although slow sales helped to keep most prices rises moderate last year, there were exceptions.

The price of insurance and financial services, for example, rose by 5.6 per cent lin 2011, as the costs arising from the floods in Queensland and New South Wales early last year worked their way through the system.

These can be expected to rise again this year, as those areas have, once again, been hit by serious floods.

The Bureau also reported that education costs leapt by 5.8 per cent last year.

Overall, though, the Bureau’s inflation figures reflected relatively good results.

Good economic figures, though, are likely to be scarce in the months ahead.

Major forecasters, including the International Monetary Fund, are now warning of imminent recession in Europe.

Australia’s Treasurer, Wayne Swan, says that must be seen as a warning to all countries.

Meanwhile, the lates Westpac Melbourne Institute leading index, which has just been released, is pointing, very clearly, to an even slower economy in Australia, over the months ahead.

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Inflation still moderate

Ausstralia’s underlying inflation rate rose 0.6 per cent in the December quarter, leaving annual inflation on this measure within Reserve Bank target rates, at 2.6 per cent.

This makes another rate cut even more likely in February.

Australia’s headline inflation remained unchanged in the December quarter.

The Australian Bureau of Statistics, which produced these figures, said that left the nation’s headline inflation rate at 3.1 per cent in the 12 months to the end of December.

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