by Alan Thornhill
Watch the Chinese consumer closely.
That’s the message John Fraser, the Secretary to the Treasury, gave to a Fixed Income Forum in Tokyo today.
And he wasn’t modest about it.
He said Chinese consumers could boost – or weaken – the Australian economy.
But his message was essentially positive.
“Australia is entering its 26th year of continuous economic growth,” Mr Fraser said.
“We did not fall into recession in the aftermath of the global financial crisis of 2008, unlike many economies.
“ And real GDP is growing by 3.3 per cent per annum, faster than every country in the G7,” he added.
So what does the Chinese consumer have to do with all this?
Well, Mr Fraser has a few words for the sceptics, on that issue.
“ Indeed, 8 out of Australia’s top 10 trade partners are in Asia,” he said.
Mr Fraser also noted that with the mining boom now well past its peak, lower levels of of mining investment have already become “a significant drag” on our economy.
And worse is to come.
“ Mining investment is expected to fall by 25 per cent in 2016-17 and a further 14 per cent in 2017-18,” Mr Fraser said.
But he added: “as this detraction eases it is expected that investment in other areas of the economy will pick up, despite uncertainty over the exact pace and timing of this recovery.”
This is where – hopefully – the Chinese consumer – or tourist – comes in.
Or, as Mr Fraser said: “of particular importance – for Australia and the world – are the implications of the transition of the Chinese economy towards a more consumer-driven growth model from its present reliance on investment.’
“ Sustainable growth in China is in our interest and China’s economic transition will present opportunities for Australia.”
“ However, this process is unlikely to be smooth and there is a tension between policies to support short-term growth and the structural reforms required to re-balance the economy.”
Mr Fraser added: “the potential for this transition to lead to a greater-than-expected slowdown in the Chinese economy remains a key risk to Australia, the region and the global economy.”
“We are leveraged into the Chinese economy through many channels,” Mr Fraser said.
by Alan Thornhill
The Federal government is expecting no more than moderate economic growth in the short to medium term.
But its economists, like those in the private sector, have been looking – with some interest – at the higher than expected prices Australian miners have beeen receiving for their coal, over recent times.
As well they might.
For if the higher prices last, government revenues will increase, and the job of getting the Federal budget back into order will become much easier.
However, no-one is singing in the basement of the Federal Treasury, just yet.
Economists, working for the National Australia Bank, have also been studying this situation very closely.
And, in an an assessment published last week, they concluded that Australians can still look forward to moderate economic growth – and possibly some further rate cuts.
However there are also some risks in sight.
They said their real forecasts for economic growth ( GDP) “are largely unchanged’.
They have been left at 3.0 per cent in 2016, easing to 2.8 per cent in 2017 and 2.6 per cent in 2018.
But they added: “the unexpectedly high settlement for Q4 coking coal prices however will provide a boost to Australia’s terms of trade, nominal GDP and government revenues.
They were not overwhelmed by those higher prices just yet, though.
“…this is unlikely to be sustained,” they said.
“And we retain our view that the recent surge in coal prices reflects short-term supply constraints and government initiatives offshore which will not continue,” they added.
So the real question now is just how long these higher prices will last.
How long will the surge be sustained?
Well, at least, we might say that Australia’s chances are looking better than they have for some time.
by Alan Thornhill
The Federal government says there has been ‘encouraging” progress with its efforts to reduce the gap between the pay of men and women.
The Minister for Employment and Women , Senator Michaelia Cash, said today this is reflected in the latest average weekly earnings figures published by the Bureau of Statistics.
These showed, on average, that men working full-time earned $1,613.60 a week in May this year, while women were earning $1,352.50.
Although Senator Cash admitted that this still represents a difference of $261.10 a week, she said a close look at the Bureau’s figures also suggests that women are starting to catch up.
For example, she said that: “between May 2015 and May 2016, women’s weekly earnings grew by 3.4 per cent while men’s weekly earnings grew by 1.3 per cent.”
She said there is other evidence, too, that the “gender gap” between the pay of men and women is being trimmed.
The ABS data, for example, also showed that the gap,for full time employees has narrowed to 16.2 per cent, a decrease of 1.7 percentage points from a year ago.
However Senator Cash also said that while this is “encouraging,” the Government’s determination to cut this still “stubbornly high gap is unwavering.”
“Given that less than two years ago the gender pay gap was 18.5 per cent, these figures demonstrate significant progress,” Senator Cash said.
She claimed progress, too, in the government’s efforts to employ more women.
“In the month of July, the level of employment for women rose by 8,100 and is now at a record high of over 5.5 million.
“Furthermore, the participation rate for women has also trended upwards over the last 12 months,” she said.
Senator Cash also said: “the Turnbull Government is working to close the gender pay gap by:
* Ensuring women have the skills and support they need to work in growth industries, with $13 million invested through the National Innovation and Science Agenda in
getting more women into science, technology, engineering and maths
* Shining the light on pay equity through the work of the Workplace Gender Equality Agency
* Setting a new target of men and women each holding 50 per cent of Australian Government board positions and strengthening the BoardLinks program and
* Its scholarship and mentoring programs, improving gender diversity in senior leadership roles
*Partnering with UnitingCare on the Springboard Project to give women the opportunity to train and build a career in the UnitingCare network, while also
providing the flexibility to care for their families
* Supporting Australian women to participate in the workforce through our Jobs for Families Child Care package
* Boosting the superannuation of women who have taken time out of work through the Low Income Superannuation Tax Offset.
Senator Cash said it is clear from these latest figures that employers are taking action and this effort is producing results.
“To see these encouraging results continue we all need to maintain our attention on improving gender equality and that applies to Government, employers and individuals – ensuring we achieve true gender equality will require a concerted and lasting commitment from everyone,” she added.
by Alan Thornhill
Young travellers will avoid Australia if the Federal government does not scrap its planned backpacker tax, tourism and transport operators warned today.
Margy Osmond, CEO of the Tourism and Transport Forum, said Australia would see an even bigger exodus of young backpackers from Australia if the government persists with the tax..
The backpacker tax, introduced in the last Federal budget, would have seen backpackers paying 32.5 cents in the dollar in tax, from the first dollar they earnt in Australia.
At present working holidaymakers only pay tax on earnings above the $18,200 tax threshold.
However the government announced before the July 2 election that it would review working holiday visas and postpone any changes to the current tax system until January next year.
The delay, in implementing the new backpacker tax will cost the Federal government an estimated $40 million.
However the tourism and transport operators want it scrapped altogether, not just suspended.
Ms Osmond warned that the most likely result of keeping the proposed tax would be an exodus of working holiday makers to other countries.
She described it as as “ill-considered cash grab.”
Ms Osmond said her Federation had welcomed the commencement of the review.
And she said it would be “… making the strongest case on behalf of the tourism industry for the Government to abandon the backpacker tax.”
Ms Osmond recalled that the Federation had been “…one of the first industry groups to sound the alarm on the impact of the backpacker tax.”
“…and we will continue to campaign for the Federal Government to abandon this ill-considered cash grab,” she added.
She said the tourist: “…industry wants to work in a positive and supportive manner with the Federal Government to grow the sector.”
“But a 32.5 per cent tax on backpackers on every single dollar they earn while working in Australia is simply absurd,” she added.
by Alan Thornhill
The Reserve Bank today cut its cash rate by 25 basis points, to its lowest level ever, just 1.5 cent.
Explaining the decision, the bank’s Governor, Glenn Stevens said: “the global economy is continuing to grow, at a lower than average pace.
“Several advanced economies have recorded improved conditions over the past year, but conditions have become more difficult for a number of emerging market economies.
“Actions by Chinese policymakers are supporting the near-term growth outlook, but the underlying pace of China’s growth appears to be moderating, “ Mr Stevens said.
He noted that: “commodity prices are above recent lows.”
However he added: “…this follows very substantial declines over the past couple of years.
“Australia’s terms of trade remain much lower than they had been in recent years.
“Financial markets have continued to function effectively.
Mr Stevens said: ” Funding costs for high-quality borrowers remain low and, globally, monetary policy remains remarkably accommodative.
“In Australia, recent data suggests that overall growth is continuing at a moderate pace, despite a very large decline in business investment,” he added.
“Other areas of domestic demand, as well as exports, have been expanding at a pace at or above trend.
“Labour market indicators continue to be somewhat mixed, but are consistent with a modest pace of expansion in employment in the near term.
“Recent data confirm that inflation remains quite low.
“Given very subdued growth in labour costs and very low cost pressures elsewhere in the world, this is expected to remain the case for some time.
“Given very subdued growth in labour costs and very low cost pressures elsewhere in the world, this is expected to remain the case for some time,” Mr Stevens said.
The Bureau of Statistics reported that Australia’s inflation rate, on the Consumer Price Index, stood at just 1 per cent in the 12 months to the end of June.
That is well below the bank’s target range – of 2 to 3 per cent inflation – over the course of a business cycle.
by Alan Thornhill
Australia’s housing markets – and its economy – presented distinctly mixed pictures today, as member of the Reserve Bank board met to review interest rates.
Some economists expect the board to cut the bank’s marker interest rates by another 25 basis points today, taking it to a new low point of 1.5 per cent.
However, the late advice they received today, shows that their choice will not be easy.
The Housing Industry Association, for example, reported that new home sales had bounced back in June.
It’s Chief Economist, Dr Harley Dale conceded that“The overall trend, reflected in a report his association published today “is still one of modest decline for New Home Sales.
However he added that “…a bounce of 8.2 per cent in June 2016 highlights the resilience of the national new home building sector.”
“The overall profile of HIA New Home Sales is signalling an orderly correction to national new home construction in the short term, as are other leading housing indicators,” Dr Dale said.
Meanwhile Corelogic, which studies property prices and rents, reported that while capital city dwelling values had reached a record high in July, rental yields had slipped to a record low.
The firm’s research head, Tim Lawless, said: “the recent moderation in the rate of capital gains should be viewed as a positive sign that growth in dwelling values may be returning to more sustainable levels.
“However, the growth trend rate is still tracking considerably faster than income growth resulting in a deterioration of housing affordability.” He added.
HIA New Home Sales bounce back in June.
The HIA New Home Sales Report, a survey of Australia’s largest volume builders, shows that total new home sales ended 2015/16 on a higher note, said the Housing Industry Association – the voice of Australia’s residential building industry.
“The overall trend is still one of modest decline for New Home Sales, but a bounce of 8.2 per cent in June 2016 highlights the resilience of the national new home building sector,” commented HIA Chief Economist, Dr Harley Dale.
“The overall profile of HIA New Home Sales is signaling an orderly correction to national new home construction in the short term, as are other leading housing indicators,” he noted Harley Dale.
“Below the national surface, the large geographical divergences between state housing markets have been a prominent feature of the current cycle – that will continue.
The New Home Sales series highlights this fact.
Comparing the June quarter this year to the same period last year, detached house sales are down very sharply in South Australia (-21.4 per cent) and in Western Australia (-27.5 per cent), yet sales are up by 17.0 per cent in Victoria and by 7.1 per cent in Queensland. New South Wales rounds off the detached house coverage provided by the New Home Sales report and sales are down by 7.3 per cent on an annual basis.”
The sale of detached houses bounced back by 7.2 per cent in the month of June 2016. ‘
Multi-unit’ sales continued their recent recovery, growing by 11.5 per cent after a lift of 4.9 per cent in May. In the month of June 2016 detached house sales increased in all five mainland states with the largest increases occurring in Queensland (+14.9 per cent) and WA (+9.1 per cent).
Detached house sales increased by 7.5 per cent in NSW, 3.7 per cent in South Australia, and 2.2 per cent in Victoria.
Business confidence seems set to improve,
The latest Dun and Bradstreet business expectations survey, which was also published today, showed that Business expectations for sales, profits and employment have all bounced back for the three-month period to 31 December 2016.
The firm said this is surprising, in view of the British vote to leave the European Union.
by Alan Thornhill
Tony Abbott has missed out on a place in Malcolm Turnbull’s new ministry and Christopher Pyne is to become Australia’s new minister for defence industry.
The Prime Minister has also named Josh Frydenberg Australia’s new environment minister.
This has angered environmentalists who say Mr Frydenberg has always favoured the coal industry over the Great Barrier Reef.
Mr Turnbull’s new ministry and cabinet are to be sworn in next week.
The Prime Minister’s decision to leave his predecessor, Mr Abbott, off his front bench comes as no surprise, even though hard right MPs, within the Liberal Party, would have welcomed such a move.
As he promised do before the election, Mr Turnbull generally avoided unecssary changes changes when he announced his new team today.
But Mr Frydenberg will become minister for the environment and energy.
Mr Turnbull said all his previous cabinet ministers had been reappointed although there had been some changes and expansions in their duties.
He said: “Senator Fiona Nash will add Local Government and Territories to her Regional Development and Regional Communications roles.
“Christopher Pyne will be appointed to the new role of Minister for Defence Industry, within the Defence portfolio.
“Mr Pyne will be responsible for overseeing our new Defence Industry Plan that came out of the Defence White Paper.
“This includes the most significant naval shipbuilding program since the Second World War.
“This is a key national economic development role. This program is vitally important for the future of Australian industry and especially advanced manufacturing.
“The Minister for Defence Industry will oversee the Naval Shipbuilding Plan which will itself create 3,600 new direct jobs and thousands more across the supply chain across Australia.
“Beyond shipbuilding, there is a massive Defence Industry Investment and Acquisition Program on land, in the air and inside cyberspace.
“This is a massive step change set out in the Defence White Paper. This investment in Defence Industry, as you know, is a key part of our economic plan.
“It will drive the jobs and the growth in advanced manufacturing, in technology, right across the country. And I’m appointing Christopher to be the Minister to oversee that and ensure that those projects are delivered.
“As I said at the outset, this is a term of government for delivery.
“We will be judged in 2019 by the Australian people as to whether we have delivered on the plans and the programs and the investments that we have promised and set out and described in the lead-up to the election.
Greg Hunt will move from Environment to become the Minister for Industry, Innovation and Science, where he will drive the National Innovation and Science Agenda.
“Can I say that Mr Hunt has been an outstanding Environment Minister and he served in that portfolio in Government and indeed, in opposition.
“He has a keen understanding of innovation, he has a keen understanding of science and technology and he will give new leadership to that important portfolio and those important agendas so central to our economic plan.
“Josh Frydenberg will move to the expanded Environment and Energy portfolio combining all the key energy policy areas.
“These include energy security and domestic energy markets for which he has been previously responsible in the current portfolio. Renewable energy targets, clean energy development and financing and emission reduction mechanisms which are part of Environment.
“Senator Matt Canavan will be promoted to Cabinet as the Minister for Resources and Northern Australia and I welcome Senator Canavan to the Cabinet in this key economic development role,” Mr Turnbull said.
by Alan Thornhill
By late tomorrow (Monday), we should know what the new Turnbull government will look like, but not what it will do about its proposed changes to superannuation.
The Prime Minister, Malcolm Turnbull, signalled yesterday that a decision on that matter is still some way off.
Labor called that a “humiliating back down.”
Its superannuation spokesman, Jim Chalmers noted that Mr Turnbull had had said before the July 2 election that the government’s proposed changes to superannuation were “absolutely ironclad”.
There are many critics, including some critical ones within the Liberal party, who don’t like the caps the government is proposing to put on tax free contributions to super.
Mr Turnbull, though, insists that they are needed, to make the system fairer.
But he warned reporters in Sydney today not to expect a quick resolution of this issue.
That’s good advice, as those internal critics, in particular, are very powerful.
And they would seriously embarrass the Prime Minister if they forced him to back down, from a position that he, himself, has described as “fair,” so soon after an election.
Mr Turnbull told reporters today that he is listening “very carefully” to the concerns that “my colleagues and others” have raised at the proposed superannuation tax reforms.
“And they will go through the normal Cabinet and party room process.
“We are listening very keenly, I am listening very keenly and carefully to concerns that have been raised by my colleagues, and of course by other people in the community as well,” he said.
But Mr Turnbull added that he would not say more at a press conference.
Mr Chalmers ridiculed Mr Turnbull’s new stance.
“Well, it will be champagne flutes at twenty paces tonight at The Lodge as the members of the Turnbull Government gather to brawl about their superannuation changes,” he said.
“ No amount of taxpayer-funded champagne and prawns will fix the deep divisions in the Liberal Party, in the Turnbull Government, over the mess they’ve made of superannuation,” Mr Chalmers added.
Mr Turnbull also coonfirmed today that there would be some changes between his old ministry cabinet and cabinet and his new ones.
His junior Coalition partner, the Nationals, for example, are expected to get at least one extra seat, because they polled well in the July 2 elections.
Weathercoast by Alan Thornhill
A novel on the murder of seven young Anglican Christian Brothers in the Solomon Islands.
Available now on the iTunes store.
Alan Thornhill is a parliamentary press gallery journalist.
Private Briefing is updated daily with Australian personal finance news, analysis, and commentary.
|Bhp Blt Fpo||25.06||-0.78||-3.02%|
|Nat. Bank Fpo||31.90||-0.19||-0.59%|
|Rio Tinto Fpo||62.88||-2.72||-4.15%|
The News This Week
- Postscript 1 – Australia in the age of Trump
- Thank you
- The news: Friday January 20
- Scrap debt reduction plan:Greens
- How prices are moving:ABS
- Trade:Trump warned
- The News: Wednesday January 14
- It’s one rule for them…and
- The news:Wednesday January 11
- Retail growth flattens
- The news:Tuesday January 10
- The news:Monday January 9
- The news: Sunday January 8
- Don’t come the raw prawn with us:Barnaby
- The news: Friday January 6
- agriculture (203)
- Airlines (329)
- Banking (3,951)
- Business (4,227)
- climate (107)
- Communications (127)
- corruption (33)
- crime (84)
- defence (105)
- Diplomacy (106)
- disability (19)
- Disaster (180)
- Economics (4,246)
- education (177)
- employment (435)
- Environment (214)
- farms (135)
- Financial advice (3,783)
- Health (266)
- Housing (1,094)
- Inflation (662)
- Insurance (155)
- Investment (3,169)
- Law (34)
- manufacturing (203)
- Markets (3,121)
- Media (157)
- medical (152)
- mining (577)
- pay (348)
- pensions (121)
- Politics (4,585)
- population (1,228)
- property (138)
- Regulation (1,460)
- retail (113)
- retirement (207)
- rural (68)
- Rural australia (185)
- Security (66)
- Social security (497)
- Superannuation (324)
- Tax (672)
- terrorism (29)
- The latest (1,519)
- Trade (1,572)
- transport (112)
- Uncategorized (1,005)
- welfare (219)