by Alan Thornhill
John Keynes had some useful advice for Australians, as they prepare to vote in the Federal elections on September 14.
“Practical men,” he said, “ who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist.”
As Keynes, himself, has now joined the “invisible choir” of “defunct economists,” it is now up to us, to work out what those thoughts might mean for us now.
Keynes came up with a revolutionary idea, during the Great Depression.
He argued that governments should spend more, to keep economies going, when others, for whatever reason, stop spending.
That, apparently simple, idea has divided politicians and economists ever since.
That’s still happening, both in Australia and overseas.
The Nobel Prize winning US economist, Paul Krugman, an unreconstructed Keynsian, has been calling other economists, who advocate austerity in post crisis times, “deficit scolds.”
He argues, with some force, that we should not believe that “a fairy” will make everything right, if only we get spending back into balance.
But other US economists, including Carmen Reinhart and Kenneth Rogoff, say Krugman has been “spectacularly uncivil.”
There are some faint echoes, in all this, aren’t there?
Especially if we count Wayne Swan as a Keynsian.
That seems fair enough, as he has been stimulating the Australian economy since the Global Economic crisis struck, back in 2008.
Tony Abbott, though, is attracted by austerity.
He sees budget surpluses – however distant – as compelling milestones on the proper path to prosperity.
The German Chancellor, Angela Merkel, is, perhaps, the world’s most conspicuous champion of austerity.
So – for want of a better word – we might class Mr Abbott as a slave of “Angelanomics,” even though Ms Merkel is neither an economist nor, thankfully, defunct.
So how does all this work out, in the real world?
To differing degrees, both the Obama administration in the United States, and the Rudd/Gillard government in Australia, have been stimulating their respective economies, since the global crisis struck, in 2008.
With some success, too.
The US stock market, now, is hovering around record heights.
And Australia’s unemployment rate – at 5.6 per cent – is the envy of the developed world, even though spectacular adjustments, like Ford’s announced closure, from late 2016, are making many people nervous.
What of Angelanomics?
It might also be spectacularly uncivil to blame Ms Merkel for the present plights of Greece, Ireland and Spain.
But austerity has been advocated, at different times, as a remedy for all three.
The unemployment in Greece, at last count, stood at 27 per cent. Spain’s was even higher, at 27.2 per cent, while Ireland’s unemployment rate was 13.7 per cent.
by Alan Thornhill
Is your business ready to take advantage of high speed broadband?
A new report, ordered by the Australian Industry Group, reveals that many are not.
Confidence levels, in the small business sector, are particularly low.
The report “Ready or Not? Technology investment and productivity in Australian Business” makes that clear.
It is based on a survey of nearly 350 CEOs and discussion groups with business leaders around the country.
The report found that: “”While Australia is making a significant and important public investment in high-speed broadband, less than half of businesses are confident they can take advantage of it.
“Small to medium enterprises are the least confident, with 40 per cent of medium-sized companies and 47 per cent of small companies expressing confidence compared with 70 per cent of larger companies.
“Also disturbing is the finding that business investment in new technologies is expected to decrease in 2013 due to an uncertain economic outlook and rising cost pressures.
“ Only 22 per cent of all companies surveyed are looking to invest in new technologies in 2013.
“ This is a ten percentage point drop compared with 2012.
“Around a quarter of businesses (26 per cent) expect to reduce expenditure on new technologies.
“This is a fifteen percentage point rise compared with 2012.”
by Alan Thornhill
Broadcasts of live betting odds are to be banned on Australian television and radio.
The Prime Minister, Julia Gillard, announced the ban today.
And commercial television stations declared, shortly afterwards, that they would comply.
Ms Gillard said: “The public have had enough of odds and betting promotions being shoved down their throats while listening to and watching sport.”
She added: “Younger Australians, in particular, should continue to talk about which is the best football team, best netball team, or best rugby team, not which team is at the shortest odds to win a game.”
• All promotion of betting odds on broadcast media will be prohibited during live sports matches. This includes by gambling companies and commentators.
• All generic gambling broadcast advertisements will be banned during play. Advertisements of this sort would only be allowed before or after a game; or during a scheduled break in play, such as quarter-time and half-time.
• Banner adverts, sponsorship logos, and other broadcast promotions must not appear during play.
• When crossed to, representatives of gambling companies must not be at or around the venue. They also must not appear with the commentary team at any time and must be clearly identified as a gambling representative.
• The Government will monitor the intensity of generic gambling advertisements within the allowed periods. If it is found to go beyond reasonable levels, the Government will impose a total advertising ban.
Television stations accepted the government’s decision.
”These are unprecedented restrictions for broadcasters but we accept the government has acted in response to community concern,” Free TV CEO Julie Flynn said.
”We recognise that these are difficult issues and we will submit a revised code within the next two weeks in line with the Prime Minister’s announcement.”
Tony Abbott said the government had accepted the Opposition’s initiative, on this matter.
It had signaled, some weeks ago, that it would take similar action, if elected on September 14.
But not everyone is pleased.
The Greens – and Nick Xenophon – said the government had not gone far enough.
The South Australian independent asked why the government hadn’t gone further ”rather than stopping a third of the way.”
And the Greens spokesperson on gambling Senator Richard Di Natale, said said the ban would do nothing to end the bizarre loophole that allows gambling ads to be shown during children’s viewing times.
by Alan Thornhill
Do money worries leave you feeling stressed?
If so, you are not alone.
A new survey has revealed that even when things are going well, almost 40 per cent of people ‘stress out’ about money.
The survey was conducted by the ANZ Bank and Pacific Magazines.
Even in the good times Australians worry about money.
The survey also found that:-
* Women tend to worry more than men, with 51 per cent saying they find dealing with money stressful and overwhelming, compared to just 37 per cent of men.
* One third of respondents say worrying about finances causes sleepless nights, while 39 per cent feel anxious.
* 37 per cent of respondents talk to their partner or spouse to alleviate financial stress and one in three exercise.
* While the vast majority say it’s important to have a long term financial plan (84 per cent), just one in five respondents say they currently use a financial planner or adviser (21 per cent).
* 83 per cent of those not confident about their future financial security either “procrastinate” or “try not to think about it” when it comes to putting a financial plan in place.
* Most respondents say they have some form of financial fear; with the most common financial fears being not having enough money to live comfortably in the future (48 per cent), and not being able to maintain their current lifestyle in the future (28%).
* 44 per cent of respondents agree that “dealing with money is stressful and overwhelming”.
by Alan Thornhill
The Federal government says it will invest at least $200 million in early stage, high growth Australian companies.
The Minister for Climate Change, Industry and Innovation, Greg Combet, said this would be done through three new venture capital funds supported by the Gillard Government’s Innovation Investment Fund.
He said this is a key Government vehicle for providing small and medium sized enterprises with access to venture capital.
“This is a huge boost for Australian start-ups,” Mr Combet said.
“These funds will invest at least $200 million of new capital in start-up businesses.”
He said the IIF continues to commercialise leading Australian research to produce new technologies, products and services that will be sold around the globe.
“These new fund managers will provide crucial equity capital and essential management expertise to a whole range of promising companies across the economy.
“Venture capital helps turn ideas into successful businesses and new jobs. It is a vital part of our innovation system which is why the Government, as part of its Plan for Australian Jobs, has announced a new $350 million round of the IIF Program.
“Successful start-ups are essential to creating new products, jobs and economic growth. The IIF will continue to co-invest government capital with private investor capital into early-stage Australian technology based companies.”
The IIF commenced in 1998. Over three rounds, the IIF has established 16 funds and has co-invested in new companies including Seek, Bionomics, Pharmaxis and Benthic Geotech.
Details on the successful fund managers and examples of successful IIF investee companies are available at www.ausindustry.gov.au.
More information on the IIF program can also be accessed through the AusIndustry Hotline on 13 28 46 or email VentureCapital@innovation.gov.au/IIF
by Alan Thornhill
From an article by BBC reporter Madelaine Morris
Australia has managed to come out of the global financial crisis without a recession. But as a result of its booming economy, the cost of living is extremely high.
It was the limes that finally tipped me over the edge.
In the sleepy Australian seaside village where my parents live, not that far away from several citrus orchards, I was in a supermarket staring at a sign:
Two Australian dollars, twenty-five cents.
That’s £1.50 (US$2.30). Not for a bag. Not for a pair. Each. One lime cost £1.50. Infuriated, I stormed out of the shop, limeless.
“The country has lost it,” I fumed to my mum and dad over dinner that night. “How can anyone afford to eat in this country?”
“Darling,” my father replied. “Look around. People here are rolling in money. We live in an unbelievably wealthy nation.”
And he is right. In the 12 years since I last called Australia home, it has changed. It was always the lucky country, blessed with fertile land, abundant sunshine and plentiful natural resources……
by Alan Thornhill
Yours truly has been hit by cyber attacks, over the past week, apparently from two trusted sources.
A sister, no less, and an old friend.
They weren’t the real villains, of course.
One of those was on the other side of the world, in Poland.
Another was much closer, in South East Asia.
However these attacks have left Private Briefing looking very closely at a warning the Federal government issued today.
The new Attorney General Mark Dreyfus, warns that cyber attacks on Australian business are now more targeted and coordinated.
He said a new survey has shown that one Australian business in five suffered an electronic attack in the past year.
The survey also shows businesses and industries that provide essential services such as energy, defence, communications, banking and finance, and water, are now investing more heavily in tighter security.
“The 2012 Cyber Crime and Security Survey Report,…will establish baseline information on cyber attacks,” Mr Dreyfus said in Melbourne, as he launched the report.
“The digital economy has opened up myriad opportunities for Australian businesses to deliver goods, provide services and communicate with people more effectively,” he said.
“But with every online opportunity comes the risk of criminal exploitation,” he added.
“Cyber attacks have shifted from being indiscriminate and random to being more coordinated and targeted for financial gain,” he warned.
“ Most attacks occur from outside the business, although it appears internal risks are also significant.”
Mr Dreyfus said: “The most serious attacks involved the use of malicious software including “ransomware” and “scareware”, trojan or rootkit malware, theft or breach of confidential information and denial-of-service attacks.
“ In one case, an organization reported the theft of 15 years’ worth of critical business data.”
Mr Dreyfus also said: “A third of attacks involved the theft of notebooks, tablets or mobile devices.
He said the survey, commissioned by Computer Emergency Response Team (CERT) Australia and conducted by the Centre for Internet Safety at the University of Canberra, would become an annual event.
“CERT Australia, established by the Gillard Government, is working with closely with Australian businesses to create higher security standards, warning systems and a secure information sharing system to defend key organisations from cybercrime attack Mr Dreyfus said.
It is available at – www.cert.gov.au
by Alan Thornhill
Business is alarmed by the 15.3 per cent rise in electricity prices that accompanied the first three months of the Federal government’s new carbon tax – and it is calling for the tax to be repealed.
However, the Federal government insists that the carbon tax was not the only factor driving that rise.
That figure was among many the Australian Bureau of Statistics published, when it released its September quarter Consumer Price Index today.
These showed that Australia’s headline inflation rates rose by 1.4 per cent in the quarter and by 2 per cent over the 12 months to the end of September.
The nation’s underlying inflation rates were 0.7 per cent for the quarter and 2.4 per cent over the year.
These underlying rates are close to the figures that the Reserve Bank board will consider, when it meets to review Australia’s interest rates, on Melbourne Cup day next month.
Greg Evans, of the Australian Chamber of Commerce and Industry, said that although the latest CPI figures show prices have risen sharply, the latest figures still leave room for a rate cut, on the first Tuesday of next month.
He said, too, that the ACCI still opposes the carbon tax and believes it should be repealed.
The Federal Treasurer, Wayne Swan, said the latest data shows both headline and underlying inflation remain well contained within the RBA’s 2–3 per cent target band.
Mr Swan also said the CPI figures are consistent with Treasury’s estimate of the carbon price impact.
He said: “The quarterly increase in headline CPI reflects the modest impact of the carbon price in addition to a number of seasonal and temporary factors. ”
Mr Swan noted that bad weather had driven up fruit and vegetable prices in the quarter.
He said, too, that: “The recent electricity price increases attributed to the carbon price by state and territory pricing regulators have generally been consistent with the 10 per cent estimated by Treasury modelling.”
Mr Swan said factors other than the carbon price have been pushing up electricity prices over the past year.
Power suppliers have been trying to recoup investments they have made on poles and wires, to ensure reliable supplies.
Mr Swan said, too, that the impact of the carbon tax on prices was less than a third of the price impact from the GST under the Liberal Government.
Alan Thornhill is a parliamentary press gallery journalist.
Private Briefing is updated daily with Australian personal finance news, analysis, and commentary.
Monday April 27
The Dow Jones index rose 21 points to 18,080
It’s believed at least one Australian has been killed on Mount Everest as as 7.9 magnitude earthquake struck Nepal.
Tent cities spring up in the Nepalese capital after Saturday’s earthquake, which is now reported to have killed some 2,500 people.
Bali nine duo given notice that their execution is imminent. Andrew Chan and Myuran Sukumaran may have just three days left to live.
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