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
Labor has renewed its call for a children’s commissioner to investigate allegations of child abuse on Nauru and in other detention centres.
The shadow minister for immigration and border protection, Shane Neumann, urged greater transparency on the issue, when he appeared in a late night ABC television program last night.
He said: “We need action now.
“An independent children’s advocate would act on each case individual case, dealing with each case as it does in any court we deal with where there’s an independent children’s lawyer engaged.
“ That independent advocate would be able to deal with children, deal with those people engaged in mental health assistance and also advocate and report to Parliament,” Mr Neumann said.
This follows The Guardian’s publication of material from an 8,000 page leaked document, detailing some 2,000 incidents of alleged abuse on the island, including a “disproportionate” number of child abuse cases.
The Prime Minister Malcolm Turnbull has dismissed calls by the Greens for a Royal Commission into the allegations.
However he has promised an investigation
Human rights advocates are also calling for more transparency into Australia’s offshore detention system.
Hugh de Kretser of the Humn Rights Law Centre said: “ We desperately need to open up this system to scrutinise it.
“That’s a secondary issue to the humanitarian issue which is upon us now which is acting now to bring them here to Australia,” he added.
by Alan Thornhill
Many readers will think of Kim Beazley as the former Labor leader, who lost Federal elections in 1998 and 2001. But this story is not about him. It is about his father, also Kim Beazley. It has never been written before.
Kim Senior, as we will call him, was also a Federal politician. Education minister in the Whitlam government, in fact.
He was on the Right, in the Whitlam cabinet.
This was at the height of the Moratorium movement, as the protests against Australian involvement in the Vietnam war were known, back then.
And in those turgid times, Kim Senior was invited to “explain his views,” before a Trades and Labor council meeting in Perth. We all knew what that meant. Big Kim’s job was on the line. Left wing unions had the numbers 80-20 on the council back then.
So Kim Senior was fighting for his political life. Whatever happened, this would be a national story. Not just one for The West Australian, where I worked, as industrial reporter at the time. We knew, also, the result would come, either right on The West’s deadline, that night, or just after it. But the result, itself, was the thing.
Kim Senior looked remarkably relaxed, as he rose to speak at that meeting.
And his speech ran to just one, or two sentences.
“I do not support the Vietnam war,” he said.
“Because getting involved in a land war in Asia is the second worst military decision it is possible to make.”
He then sat down, leaving the assembled union officials turning to each other, to ask: “What’s the worst?”
After an interval of at least two minutes, Big Kim rose again, and said: “Oh. And by the way. The worst is to invade Russia in winter.”
In a long career as a reporter, I never heard a better speech.
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
The Prime Minister, Malcolm Turnbull, has had to accept the resignation of the man he chose to conduct a Royal Commission into the mistreatment of mainly aboriginal juveniles at the Don Day centre, in the Northern Territory.
The Opposition Leader Bill Shorten said Mr Turnbull must to learn to consult more widely before in future, making such appointments, to avoid similar embarrassments.
However Brian Martin, who was to have conducted that job, withdrew after certain Aborigines questioned his suitability for it.
He will be replaced by the Aboriginal and and Torres Strait Islander Social Justice Commissioner Mick Gooda and Margaret White.
The Law Council President, Stuart Clark, said the appointment of Mr Gooda and Ms White was a vital step to ensuring the Royal Commission could advance its critical agenda.
“This Royal Commission is absolutely vital, because of the need to examine, in detail, what appears to be a deep cultural and systemic problem within the NT juvenile detention system,” Mr Clark said.
“Mr Gooda and Ms White are extremely well qualified to carry out this important inquiry, with the necessary independence from the Northern Territory Government and confidence of the community.
“The broader issue of Indigenous imprisonment is one that overlaps inexorably with juvenile detention in Australia,” he added.
Mr Clark also congratulated Mr Martin on putting the community’s interests ahead of his own.
In a separate statement, Mr Martin also said both the Prime Minister, Mr Turnbull and his Attorney General, George Brandis, had been disappointed by his decision to quit.
But he also said the decision did not indicate that his critics were right.
Indeed, Mr Martin added: “Since my appointment was announced I have been extremely disappointed with the disingenuous and ill-informed comment that has ensued.
“ However, notwithstanding the ill-informed nature of the commentary, it has become apparent that, rightly or wrongly, in this role I would not have the full confidence of sections of the Indigenous community which has a vital interest in the inquiry.
“As a consequence, the effectiveness of the Commission is likely to be compromised from the outset.
“I am not prepared to proceed in the face of that risk,” Mr Martin said.
“This Royal Commission is far too important to undertake that risk and, in the public interest, personal considerations must take second place,” he added.
by Alan Thornhill
Malcolm Turnbull says his government will not support Kevin Rudd’s bid to become Secretary General of the United Nations.
The Prime Minister took the decision alone, after his Cabinet split on it yesterday.
by Alan Thornhill
A submarine led recovery?
That’s not advocated in any respectable economic text book.
Yet it is precisely the path the Federal government is taking us down.
At a cost of some $800 million over 10 years
Money the Productivity Commission says might well have been better spent elsewhere.
The government’s decision to build our new subs in Australia is being accompanied by the slow spread of what might well be called a ”barbed wire broadband.”
That is one based on copper wire, rather than the then superior fibre to the node system, that Labor was proposing when the two choices were first offered.
The slower copper wire system, that Malcolm Turnbull pushed, also ended up costing more than the snazzier Labor model.
Even though the man who is now Prime Minister said it would be substantially cheaper
And the man appointed to run it, has since described the Turnbull alternative as a “colossal mistake.”
However, as Mr Turnbull’s lieutenant, Christopher Pyne, has since explained “Australians don‘t need a faster internet.”
So that’s alright, then.
The government has its explanations.
Mr Pyne, for example, also says it will make Australia “a defence hub.”
But the Productivity Commission won’t have a bar of it.
It notes that building a sub in Australia means that it will cost 30 per cent more than simply buying one overseas.
While necessarily based on hypothetical data, because of time differences, its example reveals that the effective rate of assistance provided to Australia’s submarine industry might well exceed that provided to tne nation’s vehicle industry and its textile, clothing and footwear indsustries, while those payment were s their respective peaks.
The commission also notes that paying more to have the subs built in Australia without getting sufficient value in return diverts productive resources such as labour, capital and land away from more efficient uses that need less assistance. .
This damages Australia’s capacity to get the best possible benefits from the community’s resources.
Its report leaves no room for its readers to doubt about the fact that the commission regards the Federal government’s decision to promote with submarine construction in Australia was a dreadfully dud deal.
So why did it happen?
The commission notes that “iconic” factories were closing and local areas, particularly in South Australia and Victoria, were doing it tough, as a closely fought election, on July 2, approached.
And those who suspect that political, not economic judgements prevailed in this case, won’t get much argument from the Productivity Commission.
by Alan Thornhill
The main appointments Mr Shorten made to his new ministry and cabinet include:-
Deputy Opposition Leader and shadow minster for education Tanya Plibersek.
Shadow foreign affairs minister, and Senate Opposition Leader Penny Wong.
Shadow special minister of state and Deputy Senate Opposition Leader, Stephen Conroy
Shadow Treasurer Chris Bowen
Shadow minister for families and social services Jenny Macklin
Shadow minister for the environment and water Tony Burke
Shadow minister for climate change and energy Mark Butler
Shadow minister for defence Richard Marles
Shadow minister for finance Jim Chalmers
Shadow minister for employment and workplace relations Brendan O’Connor
Shadow Attorney General Mark Dreyfus QC
Shadow minister for immigration and border protection Shayne Newman
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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