by Alan Thornhill
Exports are pushing Australia’s economic growth, which rose 1.1 per cent in the March quarter and 3.1 per cent through the year.
These seasonally adjusted figures were published by the Bureau of Statistics today.
The Bureau said the Australian economy is moving from mining based investment to production.
It said too that new engineering construction had fallen for the tenth consecutive quarter.
But mining production had grown by 6.2 per cent.
The Bureau also said mining related products significantly contributed to the 4.4 per cent growth in exports.
Service based industries were the other contributor to growth with Finance, Retail trade, Accommodation and food services, and Arts and recreation all increasing.
The Bureau said this is consistent with the steady growth in service to households.
However it added broad based price falls were evident across the economy this quarter.
This was shown in the Consumer Price Index (CPI) which fell 0.2 per cent.
The GDP price deflator, which shows the overall price movement in the Australian economy, fell 0.6 per cent in the March quarter.
The terms of trade fell 1.9 per cent in the March quarter and fell 11.5 per cent through the year.
by Alan Thornhill
Australia’s trade performance last year wasn’t quite as bad as we all feared.
This became clear today when the Bureau of Statistics published revised figures for the nation’s services trade in 2015.
These showed that the deficit in Australia’s services trade last year was $10.1 billion.
That was 1 per cent smaller than the deficit originally reported.
Although the revision was based on technical factors, it will encourage Australia’s economists.
They have been looking for an improvement in Australia’s services trade to offset some of the losses incurred when mineral prices fell.
The Bureau explained that it is now using a more accurate method of accounting for sea freight charges.
This is now sourced from Bloomberg and the World Shipping Register, instead of the direct commissions data that was previously used.
by Alan Thornhill
The Prime Minister, Malcolm Turnbull, announced new measures today to protect the Great Barrier Reef and other Australian tourist attractions.
He also said he had not been told in advance of plans by the Federal police to raid a Labor party office and homes in Melbourne searching for leaked material, about the woes of his troubled National Broadband network.
The broadcaster, David Attenborough, who recently completed a series of programs on the Great Barrier Reef, said later that it is mad to think that unlimited growth is possible in a finite world.
Mr Turnbull, who will face elections on July 2, said that before European settlement rainwater had sunk into Australian soils, and had been cleaned naturally before it reached the sea.
But he added: “As there is more development, you get more runoff.
“You get more nutrients in the water.
“And you see what’s called the wrack, the weeds, you see along the foreshore there and a deterioration of the quality overall.
He was speaking in the Tuggerah Lakes district, a series of three interconnected lagoons, on the New South Wales central coast.
Mr TurnbullHe said the government’s new policy: “… means installing more and better pollutant traps so that large, as you know, large bits of rubbish don’t float into the lakes.
Mr Turnbull said that – as they had developed their communities – European settlers had allowed water to rush through, rush down drains and storm water pipes, far too quickly.
“So the key is to slow it down< Mr Turnbull said. He said: "... one of the big priorities of the Great Barrier Reef, for example - is to build swales *along streams. (my dictionary says swales are "... low tracts of land, especially ones that are moist or marshy. The term can refer to natural landscape features or a human-created ones It says artificial swales are often designed to manage water runoff, filter pollutants, and increase rainwater infiltration). “So when the run-off comes off fields, particularly with fertilisers, instead of rushing straight into the water-course, it is slowed down, settles and sinks into the ground and is then naturally cleaned through the environment,” Mr Turnbull said. He also confirmed that his Communications Minister, Senator Mitch Fifield, had known about the Federal police investigation into the NBN leaks some months ago but did not tell him. “...yes, that’s right,” Mr Turnbull said when questioned on the matter. “I think it’s entirely appropriate,” he added.
by Alan Thornhill
Australians are not eating properly, according to new data that the Bureau of Statistics published today.
In the first publication of its kind, the bureau compared what we do eat with the 2013 Australian Dietary Guidelines.
They recommend minimum serves for vegetables, fruit, dairy products, lean meats and alternatives, and grain-based foods.
The comparison suggests that we are getting little more than half the vegetables we need.
The Bureau’s Director of Health, Louise Gates said that adults and children over eight consumed an average of 2.7 serves of vegetables, rather than the 5 serves recommended by the Australian Dietary Guidelines.
Ms Gates said this is shown by the latest results from the 2011-12 National Nutrition and Physical Activity Survey.
“Less than 4 per cent of the population consumed enough vegetables and legumes or beans each day,” Ms Gates said.
Ms Gates said, too, that only “One in 10 was meeting the guidelines for dairy products, while one in seven consumed the minimum number of serves of lean meats and alternatives per day.”
“Among the five food groups, fruits and grains had the best compliance, with nearly one in three people consuming the minimum recommended number of serves for each group.’
“ However, one-third of the fruit serves was from juice and dried fruit, and two-thirds of the grains and cereals were from refined grains rather than whole grain or high fibre sources,” Ms Gates added.
The report also found that over one-third of the population’s total daily energy intake came from energy-dense, nutrient-poor ‘discretionary foods’ such as sweetened beverages, alcohol, cakes, confectionery and pastry products.
by Alan Thornhill
One of our biggest banks says the Australian economy may have lost “some of its momentum.”
The ANZ said this is suggested by the results of its latest survey of job advertisements.
This index, which was published today, showed that hiring had turned down in April, after rising strongly in the second half of last year.
The bank said some weakness might be reflected in its latest survey of job ads.
It showed that job ads fell by 0.8 per cent in April, but rose by 6.3 per cent, over the year, on seasonally adjusted figures.
The Head of the bank’s Australian Economics division, Felicity Emmett, said: “The number of job ads has been broadly flat now for six months.”
“ This follows a period of substantial growth in employment, and some modest slowdown should probably not be surprising,” she added.
However the slowdown, coming just weeks before a Federal election, will worry the government.
Ms Emmett added: ”the moderation in job ads could alternatively reflect some uncertainty by firms around the near term outlook…”
She said there might also have been:”..a general softening of the economic outlook.”
Ms Emmett said:”the reaction to the 2016 Budget has been quite mixed.
“…and the RBA’s cut in its cash rate last week to an historic low of 1.75 per cent highlights the challenges for Australia’s economy.
“While business surveys suggest activity is still robust, the stimulus from housing and the lower AUD is likely to fade somewhat in 2016, and growth is likely to moderate, “ Ms Emmett said.
“Inflation is very low and likely to stay outside the RBA’s 2-3 per cxent target band for some time,” she added.
Ms Emmett also said the ANZ job ads survey suggests that the economy has lost some momentum.
She said that followed after strong growth in the second half of last year.
“Hiring looks to be taking a breather for the time being, and further significant inroads into the unemployment rate may be more difficult to achieve in the near term,” she said.
by Alan Thornhill
Each of the two major parties will take an important weakness into the July 2 elections.
For the Liberals, it came with the choice of tax cuts for the rich.
With Labor, it came along with the decision to fight this election campaign on what its leader, Bill Shorten, calls “fairness.”
The result, at this stage, is too close to call.
The latest Ipsos poll, published in the Sydney Morning Herald today, puts the government and the opposition running neck and neck at 50 points each, on a two party preferred basis.
But it does show that Malcolm Turnbull is still more popular, personally, than his rival, Bill Shorten.
The Liberals took a calculated risk, when they decided that the personal income tax cuts, which are central to their re-election policy, should go to the well-off.
The plan, which follows the example of former US President George Bush, is being promoted as a way of advancing economic efficiency.
But cynics dismiss it as yet another case of the well-off “looking after their mates.”
If voters agree Mr Turnbull would lose the July 2 election.
His Treasurer, Scott Morrison, explained in his budget speech that the government would:”“…back … average full-time wage earners by preventing them from moving into the second highest tax bracket.
“From 1 July this year, we will increase the upper limit for the middle income tax bracket from $80,000 to $87,000 per year,” he said.
“Those earning average wages – full-time or otherwise – should stay in the middle income tax bracket,” he said.
“This will stop around 500,000 taxpayers from facing the 37 per cent second top marginal tax rate in each and every year,” Mr Morrison added.
But critics said $80,000 a year is well above average wages in Australia.
What, though, of Bill Shorten’s alternative, based on “fairness?”
“Too expensive” his critics proclaim.
The Treasury Secretary, John Fraser, is not among them.
However he has been having a close look at Australia’s economic prospects, and he is drawing attention to what he calls a “transition” in China.
He says our best customer, which has been buying a lot of coal and iron ore from us, is rapidly changing into a consumer society.
Mr Fraser says there will be “opportunities for Australia in this transition.”
But will we be ready to grasp them?
It is possible to spend too much time arguing about fairness.
And it is an elusive concept.
by Alan Thornhill
More rate cuts?
What, really, are Australia’s economic prospects?
These are questions are critical, now that the Prime Minister, Malcolm Turnbull has visited government house, seeking the Governor General’s approval for an early double dissolution elections on July 2.
Puzzling ones, too, as this election will be held against a background of falling prices.
Not the inflation that most of us have come to know well.
So this will be a rare experience.
We will need the best possible information.
A chance to look behind what our politicians are telling us, in a fiercely fought election campaign.
Fortunately, the experts who have the best access to that information are much more generous in sharing it than they used to be.
They include people like the Reserve Bank’s Glenn Stevens, and the Secretary to the Treasury, John Fraser.
Of course, having good information, provides no guarantee that people will be right, in their conclusions.
A former Treasurer, Paul Keating, pointed that out quite forcefully, in a current book by Kerry O‘Brien, called Keating.
He was speaking there of the troubled times, in the late 1980s following the global economic crisis.
But it’s just as worthwhile consulting the experts now, as it was back then.
Even though they are still careful to avoid saying anything which might be regarded as politically partisan.
So what are they saying, now?
Mr Stevens issued statements, on Tuesday and Friday last week, explaining why the Reserve bank had cut its marker interest rate by 25 basis points, to a new low of 1.75 per cent.
Friday’s 66 page statement goes into some detail.
(And it is just the right length for downloading onto your Ipad, if you haven’t done so, already).
It notes, for example, that we appear to be spending more than we earn, at present.
“Growth in consumption is forecast to be maintained at a pace that is a little above average despite only modest growth in wages,” it concludes.
There is lot more like that on Australia’s present – and likely future – economy, in the Reserve Bank’s latest statement on monetary policy.
You’ll find it at www.rba.gov.au.
John Fraser, the Treasury Secretary, also had some interesting things to say last Friday, when he appeared before the Senate Economics Legislation Committee, to comment on the 2016-17 Budget estimates.
He noted, for example, that there “will be opportunities for Australia” in the current transition from a commodities based economy, to something much broader.
If you’d like to grab some of those opportunities, for your business or yourself, the Treasury website is also worth a visit.
You can see it at www.treasury.gov.au.
Even if all you want is a little help in deciding how you will vote on July 2.
by Alan Thornhill
Last night’s Federal budget favours the “big end of town” according to the Opposition Leader, Bill Shorten.
The Treasurer, Scott Morrison, concedes that the document he brought into Federal parliament then is not a traditional budget, with easily identified winners and losers.
However, he raised eyebrows by insisting that a modest income tax, for those on high incomes, benefits average wage earners.
But above all, this budget will deliver the one thing the Turnbull government wants most.
That is a clear run to the early election the Prime Minister, Malcolm Turnbull, will almost certainly call on July 2.
The parameters, on which that election will be fought, have now been clearly spelt out.
For Labor, its all about fairness.
The government will make a case for growth and jobs, with the mainly small – and bland – changes it announced in the budget.
And the Reserve Bank asserted its independence – on budget day – by cutting its marker interest rate by 25 basis points, to a new low of 1.75 per cent.
It says the risks of doing that are, at least, lower than those of not doing so.
So what else is the government aiming for, in its budget?
• A deficit of $37.1 billion this financial year.
However, it is also aiming to make big international corporations to pay their full share of tax, on the income they earn in Australia.
• 2.5 per cent economic growth, both this financial year and next.
• A 1 per cent cut in the small business tax rate, to 27.5 per cent.
• Cutting the company tax rate to 25 per cent for all companies, over four years.
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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