by Alan Thornhill
The Federal Treasurer, Joe Hockey, has welcomed the Senate’s decision to abolish the present $300 billion limit on Commonwealth debt.
That flowed from an agreement the conservative government of Prime Minister, Tony Abbott, reached with the Greens.
The Opposition Labor party had opposed the government’s initial request to raise the limit to $500 billion, offering a compromise at $400 billion.
However that was superseded by the Greens offer to abolish the ceiling, altogether.
Voting together, Labor and Green Senators would have had the power to keep the debt limit at $300 billion.
But that’s not how events transpired.
The old debt limit would have been reached later this week.
Mr Hockey said scrapping the limit would: “provide certainty to markets about the Government’s capacity to finance the budget, and increase transparency around Commonwealth borrowing.”
He said the limit, which had been increased several times previously, had been “created by the Labor Party”
And on four occasions Labor governments had broken their own self-imposed limits, Mr Hockey said.
by Alan Thornhill
The Federal Government has suspended processing operations at the Ranger Uranium Mine (Ranger) in the Northern Territory.
This follows the failure of a leach tank on Saturday 7 December 2013.
by Alan Thornhill
The Reserve Bank Governor, Glenn Stevens, is warning that Australia could be headed for an economic downturn.
Mr Stevens told The Wall Street Journal that this country has been”building up this myth of 22 years of uninterrupted growth.”
But he added: “We would be foolish to think that we have found the secret of completely eliminating the (business) cycle, because we haven’t.”
However his predictions were not catastrophic.
“… if we are sensible and prudent and just a bit lucky, we can have cyclical downturns that are not so deep,” Mr Stevens said.
“It is the deep ones that are damaging,” he added.
“It is the deep ones that cast a long shadow on unemployment for years after,” Mr Steven said.
by Alan Thornhill
Although many Australians are still retiring early, a substantial number are now planning to stay in the workforce until they are at least 70.
This is shown in new data, that the Bureau of Statistics released today.
The Bureau noted that almost one in five Australians, who intend to retire, now plan to do so when they are 70, or older.
The Bureau’s study follows a controversial report, by the Productivity Commission, saying the pension age may have to be lifted to 70, as Australians are now living longer.
Its survey showed that 50 per cent of the Australian men, who were retired in 2012-13, had left the nation’s workforce, while they were aged between the ages of 55 and 64.
Half of the remainder had left before their 55th birthdays.
And the rest had left on or after their 65th.
Retirement, for women, often comes earlier than it does for men.
The Bureau noted that 55 per cent of the nation’s retired women had left the workforce before they were 55.
It said 36 per cent had retired when they were aged 55-64.
And just 9 per cent had stayed on until they were 65.
The Productivity Commission urged the Federal government to study the increases in health and social security costs, that will come with an ageing population.
It also warned that, if they don’t act now, Australian governments would, collectively, face extra spending on health, aged care and the Age Pension, equivalent to 6 per cent of national GDP by 2060.
However a critic, Dave Roberts, said in a letter to the Canberra Times, that the Commission’s report “is a typical suggestion from a bunch of well-paid white collar public servants in their plush ivory tower.”
“Why don’t they go out and ask brickies, farmers etc how their bodies are holding up at 65 and whether they can work another five years?” he asked.
by Alan Thornhill
Australians are building more homes – and the building industry’s recovery is broadening.
High density housing is also becoming more popular.
However, a study identifying these trends, reports that it is still unclear whether the present shift to high density living will be sustained.
The study was undertaken by the Housing Industry Association and the results released today.
It showed that the trend improvement in building approvals, evident in the second half of this year, has strengthened.
The study notes, too, that there are now brighter prospects for builders outside New South Wales and Western Australia, the States which led the recovery, in its early stages.
It concludes, too, that: “Much of the aggregate growth has been driven by higher density approvals.”
However the report adds: ““Whether this will be sustained remains unclear.
“But recent growth in this category of approvals has been broad-based.”
However detached houses are still popular, with people who can afford them.
“Approvals for lower density dwellings continue to grind higher,” the report says.
by Alan Thornhill
The Federal Opposition says Holden “can and must be saved.”
Its Deputy Leader, Tanya Plibersek, gave that blunt assessment, in an interview on ABC radio today.
She was discussing reports that General Motors, which owns Holden, has already decided to close manufacturing operations in Australia from 2016.
Ms Plibersek said the car industry in Australia does get support, but that support is at a lower rate than in many other countries.
Another report, in Fairfax newspapers, says Holden has already set a price, for continued operations in Australia.
Those reports say the car maker did that in discussions with the previous Labor government.
Senator Kim Carr, who was Industry Minister, in that government, said Holden had agreed not only to continue operations in Australia until 2025, but to build two more “next generation” models, if it was offered $150 million extra in support.
However the Treasurer, Joe Hockey, has said that there won’t be any more “blank cheques” for the motor industry.
Ms Plibersek took a different view, when she was asked if Holden could be saved.
“Well I think it can be and it must be,” she said.
“We’re talking about 200,000 jobs related to the car industry in Australia, and a million jobs across the manufacturing sector if we keep losing these big important manufacturing sector employers.
“The car industry in Australia does get Government support, but it does get support at a much lower rate than comparable countries.
“Per person the United States subsidises its car industry fourteen times per person more than we do.
“And even the German car industry, which most people would say is considered a very effective one, they subsidise at a rate five times per person higher than Australia does,” Ms Plibersek said.
by Alan Thornhill
The Prime Minister, Tony Abbott, left a message for the Australian people today, before he flew to South Africa, for the funeral of Nelson Mandela.
After acknowledging, on social media, that Mr Mandela had been “one of the great figures of the last century” Mr Abbott appealed directly to the public for support, in his campaign to abolish the carbon tax.
In his recorded message, the Prime Minister said this is: “… the last sitting week of the year.
“It’s the week when the Senate will consider the legislation to repeal the carbon tax and the mining tax.”
On present indications, Mr Abbott’s bills, to abolish the carbon tax, appear headed for defeat in the Senate, at the hands of Labor and the Greens.
If that happens, the first step towards a double dissolution of Federal parliament – and fresh elections – will have been taken.
But a double dissolution is still far from likely.
Mr Abbott could avoid a fresh election, quite simply.
All he has to do is wait until July 1, when the new Senators, elected on September 7, will take their plush red seats in the upper house of parliament.
Mr Abbott will then have a good chance of getting the numbers he needs in the Senate to abolish both taxes.
Especially with the support of the Palmer United Party.
Will he wait, though?
Patience is not Mr Abbott’s most conspicuous virtue.
But the crash through, or crash alternative, of seeking a double dissolution, won’t be all that attractive, either.
Especially as recent opinion polls suggest that Mr Abbott might well lose an early election.
The prospective gain isn’t that great, either.
After all, Section 57 of the Constitution is blunt about that.
It says a disputed bill has to be blocked twice in the Senate – at intervals at least three months apart – to justify a double dissolution election.
So waiting would be a wise choice.
But, to misquote Shakespeare: “Some men are born wise; some achieve wisdom and some have wisdom thrust upon them.”
by Alan Thornhill
As the old song says: “There’s nothing sur-er, the rich get rich and the poor get poorer.< (Ain’t we got fun)
The Australian dream of a fair go is being silently tested by rising inequalities in income.
Even economists in that gilded tower, the Federal Treasury, admit that in a study just published.
Yet the World Economic Forum has declared income inequality “a top economic risk.”
So far, though, it hasn’t had anything like the amount of attention it deserves in this country.
Those old harlots, debt and deficit, have been crowding our minds.
But the Treasury report, called Income Inequality in Australia, is still disturbing, on several fronts.
It confirms, for example, that “income distribution in Australia has become more unequal over the last 30 years.”
The mining boom has been a factor, and no-where – in this country – have those differences risen more sharply, over recent years, than they have in Western Australia.
Economists measure inequality in incomes against the Gini coefficient, in which zero represents perfect equality and one is perfect inequality.
The Treasury economists, wisely, resisted the temptation to call that the Gina coefficient, when they identified the widening income gaps in Western Australia.
So what does their study show?
Well, income inequality has been rising faster in Australia than in other OECD countries.
We were line ball with those other wealthy countries back in 1995.
By 2010, though, our income inequalities, put us in the OECD’s top ten, behind the leaders, including Mexico, the United States and Turkey.
We may have found this less painful, though, as it occurred against a background of broadly rising incomes.
“A key driver of real household disposable income growth (in Australia) in recent years has been the income effect arising from our terms of trade,” the Treasury says.
“Strong world demand for Australia’s mineral exports has resulted in increased profits and real wages in the resources and related sectors…” it adds.
“…and increased revenues for governments, with flow on effects across the economy.
“This has contributed to higher real disposable incomes overall than would otherwise have been the case.”
You might doubt the trickle down effect.
But the Treasury doesn’t.
In fact, it points out that: “The only other countries which experienced similar levels of income growth over this period (from 1995 until recently) are Ireland and Spain.”
This comparison is disturbing.
But Treasury offers the comforting thought that both of those countries started out from positions well behind ours.
So who did best, in Australia, apart from our mining billionaires?
Perhaps surprisingly, the Treasury reports that: “While all household categories have experienced significant real income growth, the biggest gains have gone to singles between the age of 55 and 64 and couples without children, where both members are 55 or above and at least one member is below 65.”
But it’s not all good news for these folks, either.
They also experienced the “biggest increases in income inequality.”
But what of our biggest group, wage earners?
The Treasury reports that “labour earnings inequality has been falling in Australia at a household level, since 1998-99.”
Against all those stratospheric executive salaries?
Well, yes, Treasury says, for a perhaps surprising reason.
“This is because a greater access to – and participation in – the work force at the low end of the income distribution has more than offset the disproportionate increase in wages at the top.”
But the fact remains.
Inequalities in income have been rising.
So why haven’t Australians been protesting in the streets?
Aren’t we going down the American road, with sharp and very painful differences between the living standards of the rich and the poor?
While the Treasury economists don’t answer those questions directly, they do say that Australia has a very good tax and transfer system, which does a better job than most, in looking after the poor.
Well, Treasury economists would say that, wouldn’t they?
But they are unrepentant.
“…it does appear that Australian households towards the bottom end of the income distribution fared better than equivalent households in other OECD countries..” they conclude.
The report notes, too, that inequality in incomes isn’t all that matters.
It quotes research suggesting that “around 640,000 Australians, aged 18 to 64, have “multiple disadvantages.”
Although the report doesn’t say so, it’s a fair bet that a shamefully high proportion of these people are Aborigines.
But the Treasury economists do say, quite bluntly, that this group demands more “understanding.”
Alan Thornhill is a parliamentary press gallery journalist.
Private Briefing is updated daily with Australian personal finance news, analysis, and commentary.
Tuesday December 10
Holden’s future may become clearer today
Thai Prime Minister Yingluck Shinawatra says she will dissolve parliament and call an election, after sustained protests in the capital, Bangkok.
Parliament abolishes the debt ceiling just three days before the Government said the nation’s books would hit the cap of $300 billion.
|Aud To Usd||0.9102||N/A||N/A|
|Bhp Blt Fpo||36.770||+0.020||+0.05%|
|Bramb Ltd Fpo||9.280||-0.100||-1.07%|
|Cwlth Bank Fpo||74.900||-0.270||-0.36%|
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