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
A leading motoring body has welcomed the consumer watchdog’s move to take Volkswagen to court over allegations of misleading conduct, in dealing with emissions from its diesel engines.
The Australian Competition and Consumer Commission said it would challenge the German car maker in the Federal Court.
The Australian Automobile Association said this is an important step in delivering clarity to affected owners.
Its Chief Executive Michael Bradley said: “The Volkswagen Group has been shown to have misled millions of consumers globally and is being pursued for alleged breach of laws in other countries.
“It’s fitting the legality of the company’s actions be tested against Australian law.”
US authorities found that Volkswagen had intentionally programmed turbocharged direct injection diesel engines to activate certain emission controls only during laboratory tests.
They ordered VW to pay each of its customers an average of $5,000 each in compensation.
The company has said it won’t be making similar offers in Australia.
“But irrespective of whether or not the Federal Court finds the company guilty of a breach of law, Volkswagen Group is clearly guilty of breaching the trust of the Australian owners of tens of thousands of vehicles,” Mr Bradley said.
He said, too, that Australian authorities need to do more to protect motorists and the environment.
“More broadly, the actions of Volkswagen Group have called into question Australia’s emissions compliance regime and highlighted the fact that no independent vehicle compliance testing is performed in Australia to protect consumers, or the environment,” he said.
Mr Bradley said the AAA itself would be undertaking critical work in this area.
“Amid growing concerns that laboratory emissions testing is susceptible to manipulation and does not reflect the true emissions or fuel usage profiles of vehicles on Australian roads, the AAA is investing $500,000 to conduct an on-road emissions pilot test program of 30 vehicles on the Australian market,” he said.
Initial test results are due next month.
by Alan Thornhill
Retail sales were flat in July, according to figures the Bureau of Statistics published today.
The bureau also reported that new private capital spending continued to fall sharply in the June quarter.
But it said and that the number of working days lost through strikes – and other industrial disputes – rose over the past year.
The bureau said retail turnover did not change in July, although it had risen by 0.1 per cent in June.
It made this comparison on seasonally adjusted figures.
On the same basis, there were rises in food retailing (0.7 per cent), cafes, restaurants and takeaway food services (1.2 per cent), and other retailing (0.2 per cent).
Sales of clothing, footwear and personal accessories also rose by 0.3 per cent.
However department store sales fell during the month.
The bureau also said that, in seasonally adjusted terms, retail sales rose by 0.5 per cent in Queensland, South Australia and Tasmania while sales in WA rose by 0.3 per cent and those in the ACT increased by 1.2 per cent.
Sales in the Northern Territory rose by 0.4 per cent.
However these rises were offset by falls of 0.6 per cent in Victoria and 0.2 per cent in NSW.
The bureau also noted that private new capital spending fell by 5.4 per cent in the June quarter of this year and dropped 17.4 per cent from the level seen in the same quarter of last year.
These falls are generally associated with the end of the mining boom.
The bureau also noted that Australia lost 100.7 thousand working days through strikes, in the 12 months to the end of June.
That was up from 76.8 thousand working days in the previous 12 months.
by Alan Thornhill
A sharp fall in the value of engineering work saw the total amount spent on construction in Australia fall significantly in the June quarter.
The overall fall – of 3.7 per cent – was driven by the collapse of the mining boom according to preliminary, seasonally adjusted figures, which the Bureau of Statistics published today.
The Bureau also noted that the value of engineering work done fell by 9 per cent in the June quarter.
The overall value of construction work done, in the June quarter of this year was 10.6 per cent below that of the same quarter 12 months earlier.
And the value of engineering construction alone fell by 24.9 per cent over the same time.
Once again, the collapse of the mining boom was largely to blame for these developments.
However the building industry did better.
The Bureau’s figures also show the value of residential building work done rising by 0.8 per cent in the June quarter and 9.4 per cent over the year.
But while the value of non residential building work rose by 2.1 per cent in the quarter, it rose by just 0.4 per cent over the year.
by Alan Thornhill
The Federal government says it is “absolutely critical” that Bill Shorten sticks to his promise to support some $650 billion worth of budget cuts.
But, speaking in a television interview, the Minister for Revenue and Financial Services, Kelly O’Dwyer, also hinted at the possibility of further adjustments to a superannuation policy that the Prime Minister, Malcolm Turnbull, once described as ironclad.
Ms O’Dwyer said it is for the Opposition Leader, Bill Shorten, not the government, to explain why Labor is no longer saying that it will support the budget repair measures that it promised to back, before the July 2 elections.
She said Mr Shorten would have: “…no economic credibility if he is prepared to walk back from the commitment that he made to the Australian people prior to the election.
“ Now they banked on over $6.5 billion worth of savings, they banked that in their bottom line, in their Budget figures.
“If they are saying now, ‘no we didn’t really mean it,” that would show that Labor cannot be trusted.
“ We absolutely believe it is important for Bill Shorten to honour his commitments,” Ms O’Dwyer said.
Several Liberal MPs, particularly in the Senate, have been pressing the government for bigger tax breaks on super, than it was prepared to concede before the election.
And Ms O’Dwyer’s reply, when questioned on the subject today, suggests that they may have been making some progress.
She said : “What we have said on superannuation is that as the fiscal pressures increase and as our demographics change we need to make sure that superannuation is fit for purpose going forward.
“That it is affordable, that it is sustainable and that it is flexible and that it allows Australians to be able to save for their retirement.
“We’re going to be legislating an objective for superannuation that says that it is for the retirement incomes of Australians that will either supplement or substitute for the Age Pension.
“What we’re doing at the moment is we are having discussions with stakeholders, we’re having discussions with colleagues as we would ordinarily do…”
She said that is being done with an open mind.
“ We’re encouraging people to put money into their spouse’s superannuation if they’ve got a lower income spouse.
“And we’re giving them a tax offset to do that.
“ We’re making it a level playing field for people who want to be able to have tax deductions for their superannuation contributions so that if they’re employed by a small business that doesn’t actually offer this, they’re not put at a disadvantage.
“ We’re creating a level playing field for people to be able to contribute to their superannuation because at the end of the day, it’s their retirement income and we want them to be able to have a good and strong retirement,” Ms O’Dwyer said.
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
New vehicle sales rose by 0.1 per cent in July, on trend figures the Australian Bureau of Statistics published today.
However, on seasonally adjusted figures sales fell by 1.3 per cent, over that time.
On trend figures, sales rose by 1.5 per cent in the 12 months to the end of July.
And on seasonally adjusted figures, the rise was 1.6 per cent.
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.
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|Anz Bank Fpo||32.40||+0.42||+1.31%|
|Rio Tinto Fpo||60.50||+0.68||+1.14%|
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