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
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 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
The Reserve Bank admitted today that estimates of recent housing price growth had been “overstated.”
The admission, made in the minutes of the meeting of the bank’s board meeting on August 2 , is significant.
That’s because the bank has been relying on stronger than expected growth in the building and housing sectors to offset weaker performances in major resource export sectors, such as coal and iron ore.
However in today’s minutes the bank said: “data on housing price growth from CoreLogic, which had been discussed at previous meetings, indicated that housing prices had increased very strongly in several cities in April and May.”
But it added: “… new information had revealed that these growth rates were overstated.”
The bank said that had happened: “.. because of changes to CoreLogic’s methodology.”
And it added: “data from other sources indicated that housing price growth had instead remained moderate in the June quarter.
“Other information showed that, while auction clearance rates had recently picked up a little in Sydney and Melbourne, the number of auctions was lower than in the preceding year and the average number of days that properties were on the market had increased.
“Housing credit growth had been little changed in recent months and remained below that of a year earlier.
“Rent inflation had declined to its lowest level since the mid 1990s and the rental vacancy rate had drifted higher to be close to its long-run average.”
However, the minutes also noted that net exports are expected to make a positive contribution to output growth over the forecast period, supported by the earlier exchange rate depreciation and ramp-up in LNG production.
“ In contrast, mining investment was expected to fall further,” the bank said.
It said there had been some signs that non-mining business investment was rising in some parts of the economy.
But, overall, “it is still expected to remain subdued in the near term,” the bank’s notes said.
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
Australian lawyers are leading a campaign to protect people held in detention centres like Nauru from abuse.
This follows the leaking, earlier this week, of documents apparently detailing more than 2,000 cases of abuse on Nauru.
The lawyers are being supported, in their campaign, by social service workers and international human rights activists.
They launched their latest action by issuing a two page statement calling for Independent oversight of immigration detention and border protection laws.
In its statement, the Law Council of Australia said it had consistently stated that Australia retains responsibility for the health and safety of asylum seekers transferred to other countries for offshore processing and assessment under the Convention relating to the Status of Refugees.
The council is calling for the appointment of an Independent Inspector of Immigration Detention and an Independent Monitor for Migration Laws.
The Council’s President, Stuart Clark, said both Offices are necessary to monitor the integrity of Australia’s national security framework and ensure confidence in the safety and integrity of its border protection.
He added that: “making these key appointments could limit the risk of future harm to asylum seekers held in detention without undermining Australia’s border protection policies.”
Meanwhile the Australian Council of Social Service, the Human Rights Law Centre and the Australian Council for International Development added their voices to calls for better treatment of detainees.
I a joint statement they said: “the Royal Commission into Institutional Responses to Child Sexual Abuse has the power to examine the response of the Australian Government and its contractors to child sexual abuse on Nauru.”
They said this had been confirmed today by legal advice received from the Australian Council for International Development (ACFID), the Australian Council of Social Services (ACOSS) and the Human Rights Law Centre (HRLC).
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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