by Alan Thornhill
The Reserve bank has cut its cash rate by 25 basis points to 1.75 per cent
In a statement explaining the decision the bank’s Governor, Glenn Stevens, said:”At its meeting today, the Board decided to lower the cash rate by 25 basis points to 1.75 per cent, effective 4 May 2016.
This follows information showing inflationary pressures are lower than expected.
“The global economy is continuing to grow, though at a slightly lower pace than earlier expected, with forecasts having been revised down a little further recently.
” While several advanced economies have recorded improved conditions over the past year, conditions have become more difficult for a number of emerging market economies.
‘”China’s growth rate moderated furthe”r in the first part of the year, though recent actions by Chinese policymakers are supporting the near-term outlook.
“Commodity prices have firmed noticeably from recent lows, but 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.
“Sentiment in financial markets has improved, after a period of heightened volatility early in the year.
“However, uncertainty about the global economic outlook and policy settings among the major jurisdictions continues. Funding costs for high-quality borrowers remain very low and, globally, monetary policy remains remarkably accommodative.
“In Australia, the available information suggests that the economy is continuing to rebalance following the mining investment boom.
“GDP growth picked up over 2015, particularly in the second half of the year, and the labour market improved.
Indications are that growth is continuing in 2016, though probably at a more moderate pace. Labour market indicators have been more mixed of late.
“Inflation has been quite low for some time and recent data were unexpectedly low. While the quarterly data contain some temporary factors, these results, together with ongoing very subdued growth in labour costs and very low cost pressures elsewhere in the world, point to a lower outlook for inflation than previously forecast.
“Monetary policy has been accommodative for quite some time. Low interest rates have been supporting demand and the lower exchange rate overall has helped the traded sector.
“Credit growth to households continues at a moderate pace, while that to businesses has picked up over the past year or so.
“These factors are all assisting the economy to make the necessary economic adjustments, though an appreciating exchange rate could complicate this.
“In reaching today’s decision, the Board took careful note of developments in the housing market, where indications are that the effects of supervisory measures are strengthening lending standards and that price pressures have tended to abate.
“At present, the potential risks of lower interest rates in this area are less than they were a year ago.
“Taking all these considerations into account, the Board judged that prospects for sustainable growth in the economy, with inflation returning to target over time, would be improved by easing monetary policy at this meeting,”Mr Stevens said.
by Alan Thornhill
Trend employment growth in Australia has eased.
The Bureau of Statistics reported today that this indicator, which the Bureau regards as the most reliable it produces, fell to just 2.2 percent in March.
That was down from 2.6 per cent in December last year.
On its more commonly used seasonally adjusted measure, the Bureau reported that the number of Australians with jobs rose by 26,100 in March.
That left the nation’s seasonally adjusted labour force participation rate for March at 64.9 per cent.
The Bureau said too that – on the same basis – the number of people unemployed fell by 7,300 during the month
This left Australia with a seasonally adjusted unemployment rate of 5.7 per cent for the month, 0.1 percentage points below the February level.
by Alan Thornhill
The Federal government has threatened to keep Parliament sitting until Easter if necessary to get controversial legislation, which would affect the way Senators are appointed passed.
The threat was made by a senior West Australian Liberal, Matthias Cormann, during debate on a bill containing this proposal.
Labor Senators responded angrily, saying they were prepared to sit until the middle of the year, to protect voters’ rights, to choose Senators from small parties or those who stand as independents.
So the Senate, unable to resolve its differences, sat past midnight, and was still sitting at 6am today.
All this has left the Prime Minister, Malcolm Turnbull, with very little time to call the double dissolution he is expected to hold on July 2.
by Alan Thornhill
The Turnbull government may be facing the rare prospect of a defeat in Federal parliament which could lead to an early election.
This prospect has arisen because the government of Prime Minister Malcolm Turnbull does not control the Senate and he is anxious to set up a building industry watchdog, the Australian Building and Construction Commission Bill.
This is one of a number of bills on which debate between the two houses of parliament, the House of Representatives and the Senate is deadlocked.
Control of the Senate is currently shared by the Labor party, the Liberals and Nationals, the Greens and various micro parties.
The micro-parties and independents would probably be wiped out if voting reforms that the government is also proposing area adopted.
For that reason – if no other-a fierce and messy debate on these plans has been predicted this week -and – in fact – it has already begun.
The Treasurer, Scott Morrison, was severely embarrassed yesterday when he was forced to admit in parliament that that cuts he had flagged earlier, for this year’s budget are no longer likely to be realised.
This led Labor members to suggest that his position is now untenable.
MrMorrison is now saying that individual tax cuts – which he has previously flagged – will not be possible until the budget is in better shape – he Morrison has dashing hopes he had previously raised, in that area. Now, he is saying that only tax cuts for business are still on the cards. Mr Morrison regards them as a tangible “growth dividend.” That is Treasury-speak for economic growth and higher employment rates.
So some opposition members are now wondering if the Treasurer is engaging in the traditional pre-budget game of expectation management, where gloomy predictions are seeded before delivering a bretter than expected outcome on budget nigh, to to sighs of relief.
However the shadow treasurer Chris Bowen sees the government’s mixed messages on tax changes with glimpses of a higher offset by loweri aand now earlier cuts in tax rates as evidence that Mr Morrison lacks authority.
“It took Joe Hockey two years to crash and burn,” Mr Bowen told Parliament.
It’s taken Scott Morrison six months.”
“When it comes to economic policy and tax reform, the last three years have been a waste, with the government promising three more years of the same.”
He said it was time Mr Morrison “considered his position”.
The comments followed media reports that the Treasurer has told colleagues that a lack of “fiscal headroom” made tax cuts for individuals impossible at present.
This is despite the fact htat Mr Morrison wasg among the most vociferous advocates of returning “bracket creep” to taxpayers who through wage inflation had drifted into higher taxation brackets.
The government effectively surrendered the scope for large-scale tax reform once it pulled out out of lifting the GST – a measure it was understood Mr Morrison was more inclined towards than Prime Minister Malcolm Turnbull.
On Tuesday, Mr Morrison attacked Labor’s proposed halving of the capital gains tax discount on housing, arguing it would inhibit rather than encourage investment.
Confusion over the finalisation and release of the tax package had seen it flagged for April, then in the budget, and then both, although a government source said it was merely a matter of keeping release options open allowing budget details to be reported in the days leading to it.
But the date of the budget itself remains in play
by Alan Thornhill
China is already Australia’s best customer.
However new research suggests it could be much better.
It also suggests that your business might well benefit.
The research, published by the Australia China Relations Institute points out that at 109 million in 2015, China’s middle class is already bigger than that in the United States.
Seventeen million bigger in fact.
So we can expect to sell more than iron ore and coal in future.
The Institute also says : “Australia’s ‘China Resources boom’ may have peaked but 57 cents in every dollar increase in Australian exports between 2009-10 and 2014-15 still came from China”
And it adds: “If managed well, Australia’s ‘China dining and services boom’ could run for decades.
There is much more on the Institute’s website at Australia China Relations.Org
Here, though, are some samples:-
In 2014-15 Australia’s agricultural exports to China stood at $9.0 billion
That was up from $3.7 billion in 2009-2010 and 72 percent more than to the US, our second largest customer.
In 2014-2015 Australia’s services exports to China stood at $8.8 billion.
This was up from $5.5 billion in 2009-2010 and 24 percent more than to the US, our second largest customer.
In 2015 more than one million Chinese tourists visited Australia spending $7.7 billion.
That was up from $3.3 billion in 2010 and more than double that of UK visitors in second place.
By 2020 Chinese tourist spending is forecast to reach $13 billion and account for 44 percent of the growth in total tourist spending to 2024-25,the Institute said.
It added:“ China’s middle class is no longer confined to the tier-one metropolises of Beijing, Shanghai, Guangzhou and Shenzhen.
By 2022 84 percent of the middle class is expected to live outside these cities.”
“In 2011 the only direct flights to Australia were from Beijing, Shanghai, Guangzhou and Shenzhen”
“ Now there are direct flights from 11 Chinese cities, including inland centres such as Chengdu, Chongqing, Wuhan and Xian.”
“ In 2015 there were 170,212 enrolments by Chinese students at Australian educational institutions, 2.4 times the number of students from India in second place
In 2013-14 the number of Australian student visa applications lodged from China’s traditionally less wealthy inland provinces was 12,345, up 30 percent from a year earlier.
“Those from coastal provinces stood at 23,805, up 24.6 percent.”
by Alan Thornhill
Barnaby Joyce’s imminent rise, to the post of Australia’s Deputy Prime Minister, is producing some apprehension in the nation’s capital, Canberra.
Not least on the issue of decentralisation.
Mr Joyce’s promotion became inevitable last week, when his National Party colleagues chose him to succeed the party’s previous leader, Warren Truss, who is retiring.
The National Party, now the junior partner in Malcolm Turnbull’s coalition government, was once called the Country Party.
And Mr Joyce retains its strong rural and regional focus.
That is reflected in his attitudes to decentralisation.
So no-one in Canberra was particularly surprised when plans to decentralise government scientific and other work to the Great Southern region, near Albany in Western Australia’s Great Southern region, Northam in that State’s Wheatbelt, or even to Tasmania, seemed to take on new life, with the announcement of Mr Joyce’s new job.
He doesn’t actually become Deputy Prime Minister, of course, until he takes the oath of office.
That is scheduled for Thursday this week,at Government House in Canberra.
Those looking for differences between Mr Joyce and Mr Turnbull, won’t have too much trouble finding them.
Mr Turnbull is, after all, a free-trader, right to the soles of his highly polished shoes.
There is something of a protectionist about Mr Joyce.
He would not shrink from a direct intervention in a market, if he believed that to be valuable.
All this is illustrated, clearly enough, in his attitude towards decentralization.
But he is clever about it.
Earlier this month, while announcing the relocation of three research organisations from Canberra to regional Australia, he said:”I have accepted proposals from three Canberra-based research and development corporations to increase their regional presence, which will boost jobs and growth in Dubbo, Wagga Wagga, Toowoomba and other areas.
“As well as being home to vibrant farming communities, these regions also have some of the best agricultural universities and research facilities in the country.
“It is logical that strong links should exist between the RDCs, universities and farmers on the ground in each industry.
“Being geographically closer to the industries they serve will strengthen their relationships and help the RDCs better understand their individual industry’s needs.”
There are limits to this kind of thing, of course.
Valuable knowledge, built up over years, in a sophisticated city like Canberra, which offers a wide range of educational and medical services, can be lost if a key scientist, chooses to leave a particular project, rather than accept a particular transfer.
And that whole process can become economically expensive, if adopted for political, rather than industrial reasons.
There are some fine questions of balance, here.
by Alan Thornhill
Growth among the number of Aboriginal students attending Australian schools now exceeds that emerging from the broader population.
This development, which shows up in figures the Bureau of Statistics published today, is being attributed partly to the success of programs designed to encourage more Aboriginal children to attend school.
The Bureau said 200,563 students attending Australian schools on 2015 identified themselves as either Aborigines or Torres Strait Islanders.
That represented a 4.2 per cent rise over the number seen the previous year.
Total enrolments in Australian schools rose by 1.5 per cent in the same time.
Aboriginal students now account for 5.3 per cent of total enrolments in Australian schools.
The Bureau said 3,750,973 students are now enrolled in Australian schools.
It said 65.2 percent of these students attended government schools, while 34.8 attended non government schools.
by Alan Thornhill
Universities have been admitting students who do not have the ability to complete their degrees.
One academic, in New South Wales, where the problem emerged, said some some could not even write an essay.
Others described the ATAR (Australia Tertiary Admissions Rank) which is used to regulate university admissions, as an imperfect measure.
Reports this week said students with ATAR rankings as low as 30, had been allowed to take on university studies.
This is causing concern, at the political level, as well as in academic ccircles.
The Shadow Minister for Education, Kim Carr, said Labor is disturbed by reports of declining standards in student enrolments.
He said it is calling for university entrance requirements to be more transparent so that students can make informed choices based on evidence.
“We are still seeing reports of universities admitting students with ATARs as low as 30, well below the advertised cut off,” Senator Carr said.
Research shows that almost half of all students who go to university with an ATAR below 60 fail to complete their university studies and are being left with a debt and no degree, he added.
Meanwhile Universities Australia said university is now within reach for a broader cohort of Australians
It said Aboriginal and Torres Strait Islander enrolments at university grew 7.6 per cent in the first half of 2015 and the number of students from low socio-economic backgrounds rose by 3.8 per cent.
The latest figures reveal that the removal of enrolment caps on university places for Australian students along with ongoing student support programs continue to drive an expansion of access to higher education for traditionally under-represented groups.
Regional student enrolments are up by 2.6 per cent and female student enrolments are up 2.9 per cent.
The government claimed credit for that.
As well as for record university enrolments.
A senior minister said the Coalition Government has overseen the biggest jump in indigenous higher education enrolments in nearly a decade, according to new student data released today that also highlights record overall enrolment numbers and increases in enrolments of regional and low socio-economic students.
Minister for Education and Training Simon Birmingham said despite the Labor Party’s fear campaign about the cost of university degrees, the new data shows more than 1.2 million students were enrolled in higher education in the first half of 2015, up 3.1 per cent on the same period last year.
Mr Birmingham said the Turnbull Government is committed to seeing more students enjoying the benefits of high quality tertiary education, while ensuring the higher education sector remains fair and affordable.
“This data shows Australians are continuing to enrol in record numbers in higher education institutions, despite the Labor Party’s best efforts to scare students about the costs of higher education,” Mr Birmingham said.
“Instead we’re seeing more students enrol than ever before, with strong growth in enrolments from indigenous students and students from regional areas – who together make up nearly one in five of all domestic enrolments.
“The value of higher education is clear as the new stats show university graduates have an unemployment rate of 3.4 per cent, compared with an overall rate of 5.9 per cent,” he added.
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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