by Alan Thornhill
A trade reform package – that is expected to create more than 21 million jobs worldwide – has been approved in Bali.
Australia’s Trade and Investment Minister, Andrew Robb, said he “warmly welcomed this outcome, reached through the World Trade Organisation.”
Mr Robb said Trade Ministers from 159 countries have reached this “historic trade agreement.”
“The trade reform package will make it easier and cheaper for goods to flow through the ports and customs processes of 159 countries,” he added.
“The agreements adopted today reaffirm the global commitment to eliminate agricultural export subsidies, address genuine food security needs through non-trade distorting policies, and to maximise export opportunities under tariff rate quotas,” Mr Robb said.
“Despite some suggestions, the Ministerial meeting was not about North-South differences.
“The overwhelming majority of WTO Members wanted a result, and we got there,” Mr Robb said.
“After 13 years of talks, the Bali outcome offers us a real opportunity to re-energise the WTO and get back to its core business of delivering trade liberalisation,” he said.
“This result is a testament to the tireless efforts of WTO Director-General Azevedo and to Indonesia as the host of the Bali meeting,” Mr Robb added.
by Alan Thornhill
The Treasurer, Joe Hockey, greeted figures showing slower than expected growth today, saying:”This is the economy that we inherited.”
He was speaking to reporters in Canberra, shortly after the Bureau of Statistics reported that the Australian economy grew by just 0.6 per cent in the September quarter and 2.3 per cent over the year.
“I would say to our political opponents that now is not the time to oppose repeal of the carbon tax,” Mr Hockey said.
Nor was it the time to oppose repeal of the mining tax, or to play “silly games” with the budget.
Mr Hockey said the Bureau’s figures show that the Australian economy is “stuck in second gear.”
He said the government would reveal the state of the budget in its Mid Year Economic and Financial Outlook statement this month.
It would also launch its Commission of Audit next month.
He said the government would not proceed with wholesale spending cuts before then.
“We are not obsessed with cuts,” Mr Hockey said.
But he said the government is obsessed with getting the budget back into good shape and with creating jobs and growth.
“We have a steely determination to make the economy stronger,” Mr Hockey said.
The Bureau had reported earlier that Australia’s economic growth in the September quarter was below expectations, at 0.6 per cent.
Growth of 0.8 per cent had been widely expected.
This seasonally adjusted growth figure, that the Bureau of Statistics posted today, for the September quarter, took Australia’s annual growth rate to 2.3 per cent.
However the Bureau also noted that a broader measure, real net national disposable income fell by 0.6 per cent, in the September quarter, on trend estimates.
And annual growth, on this indicator, was just 0.6 per cent.
The Bureau said the mining industry drove Australia’s growth in the September quarter, contributing 0.3 per cent to the nation’s gross domestic product.
That was a remarkable achievement, as Australia’s terms of trade fell by 3.3 per cent in the three months to the end of September.
The Bureau said net exports made a 0.7 per cent contribution to growth in the quarter and final consumption expenditure had made a 0.4 per cent contribution.
However, the Bureau said, these increases were partially offset by a 0.5 per cent fall in the contribution from nation’s inventories.
by Alan Thornhill
Rises in actual – and expected – capital spending now point to economic recovery – but could prevent another rate cut.
The Bureau of Statistics reported today that actual new capital spending rose by 3.6 per cent in the September quarter, on seasonally adjusted figures.
The Bureau also reported that its fourth estimate of new capital spending, for this financial year, is now 3.2 per cent higher than its third estimate.
Actual capital spending, in the September quarter, was concentrated on buildings and structures, which saw a 6.3 per cent rise, above the June quarter results.
Spending on equipment, plant and machinery, though, fell by 1.5 per cent in the September quarter.
These figures reflect stronger capital spending than most economists expected, as the mining boom passed.
But if the Reserve Bank also interprets them as a sign of an already strengthening recovery, it is likely to put all thoughts of another rate cut aside and leave its marker rate at 2.5 per cent.
On seasonally adjusted figures, total new capital spending fell by 0.7 per cent, from the level seen in the September quarter of last year.
Spending on equipment plant and machinery, though, dropped 8.8 per cent over that 12 month period, while spending on buildings and structures rose 3.9 per cent.
by Alan Thornhill
Stronger mineral exports gave Australia a boost in its trade accounts during the September quarter.
The Bureau of Statistics reported today that, on preliminary estimates, the nation chalked up a $2.574 billion deficit on its goods and services account in the quarter.
That compares with a revised figure of $2.663 billion for the June quarter.
The latest figures show a 7 per cent rise in exports of metal ores and minerals in the September quarter.
by Alan Thornhill
The resource rich State of Western Australia now has the nation’s strongest housing industry, according to a scorecard published by the Housing Industry Association.
The association says the card reflects performance on thirteen key indicators against long term averages in each state and territory.
“Conditions in Western Australia’s residential building industry are currently the strongest in the country,” its chief economist, Dr Harley Dale said.
“The Australian Capital Territory currently holds down second position, with Victoria in third,” Dr Dale added.
He said there had also been an encouraging resurgence of the industry in New South Wales, even though that state is still in fifth place.
Dr Dale said Tasmania is still in last place on the scorecard.
by Alan Thornhill
Australia will need “a substantial increase productivity” to keep its living standards rising the Reserve Bank’s Deputy Governor, Philip Lowe, says.
Addressing economists in Sydney today, Mr Lowe said incomes had risen faster than productivity growth over the past decade.
This had been made possible by a substantial increase in the prices Australia receives for the commodities it exports and a “sweet spot” in its demographics.
That sweet spot, now passed, had occurred, despite the broad ageing of the community, as more young people had moved into the 15-64 working age group.
But Mr Lowe issued a warning.
“Over the next decade or so, if we are to achieve anything like the type of growth in real per capita income that we have become used to, then a substantial increase in productivity growth will be required.
“We can no longer depend on a rising terms of trade and favourable demographics to make us richer.
“If this lift in productivity growth does not take place, then we will need to adjust to some combination of slower growth in real wages, slower growth in profits, smaller gains in asset prices and slower growth in government revenues and services.
“In short, slower growth in our average living standard.
So the debate about productivity should not be seen as an esoteric one just for economists,” Mr Lowe said.
“Productivity growth matters and it matters a lot to our future living standards.
“On the positive side, we have seen some signs that productivity growth has picked up a bit recently,” Mr Lowe added.
“Many firms that we talk with – particularly those affected by the high exchange rate – report that they have made serious efforts over recent years to make their operations more efficient.”
See earlier story
by Alan Thornhill
Incomes have risen faster than productivity in Australia over the past two decades, the Deputy Governor of the Reserve Bank, Philip Lowe, said today.
Addressing economists in Sydney, Mr Lowe, said there had been a very substantial increase in Australia’s terms of trade over the past decade.
That was largely due to rapid growth in Asia pushing up the price of commodities.
However previously strong growth in Australia’s productivity had eased in that time.
Mr Lowe made two observations.
“The first is that over the past two decades we have seen unusually strong growth in the average real income generated by each hour of work in Australia,” he said.
“Since 1993, our effective purchasing power for each hour of work has increased by a cumulative 55 per cent, or around 2.25 per cent per year on average.
“This is much faster than in the previous decade and faster than in almost any other industrial country,” Mr Lowe said.
However the source of this very strong growth in income had changed over time.
Productivity growth had been “noticeably slower” over the past decade, Mr Lowe said.
Yet incomes had continued to rise.
“The reason for this is the very substantial increase in Australia’s terms of trade over this period,” Mr Lowe said.
“With rapid growth in Asia pushing up the prices of commodities, Australia’s export prices increased substantially relative to our import prices,” he added.
“…that has been central to the increase in our living standards over the past decade,” Mr Lowe said.
“ While not everybody in the community has benefited equally, there has been a very substantial improvement in our average standard of living since the early 1990s,” he said.
“ This improvement has exceeded growth in productivity by a substantial margin.
“For this to occur over such a long period is very unusual as growth in productivity and living standards are typically closely linked.
“ We have found ourselves in this rather fortunate position because of both our favourable terms of trade and our favourable demographics. “
Mr Lowe said that that the Australian population is in “a sweet spot.”
“While the population has been ageing, there has been a steady rise in the share of the population in the 15 to 64 age group due to a decline in the percentage of children in the population.”
by Alan Thornhill
The Federal government has asked a former Commonwealth Bank chief, David Murray, to head an inquiry into Australia’s financial system.
The Prime Minister, Tony Abbott and Treasurer, Joe Hockey, made the announcement tonight.
They said: “The inquiry will make recommendations to foster an efficient, competitive and flexible financial system, consistent with financial stability, prudence, integrity and fairness.
“ This should result in less costs, lower fees and greater efficiency in the allocation of capital,” they added.
Mr Abbott and Mr Hockey set out broad directions for the inquiry.
They said: “As part of our broader deregulation agenda, the Government intends to reduce the regulatory burden on the financial services sector wherever the benefits to competition, efficiency, market stability or consumer protection are questionable.”
They also recalled that it is now 16 years since Stan Wallis had led a similar inquiry and 32 years since Sir Keith Campbell headed the previous one.
Both inquiries had led to major reforms.
Mr Murray was the first head of the Federal government’s Future Fund.
Mr Abbott and Mr Hockey said he would head a committee of four eminent Australians, in conducting the inquiry, which would be a ‘root and branch’ examination of the nation’s financial system.
The government said the inquiry would be asked to report on:
* How the financial system can more efficiently allocate Australian sourced capital to minimise our exposure to volatility in global capital markets
* How we can best balance competition, innovation and efficiency, with stability and consumer protection
* The role and impact of new technologies, market innovations and changing consumer preferences and
* International integration, including international financial regulation and
* International integration, including international financial regulation.
Alan Thornhill is a parliamentary press gallery journalist.
Private Briefing is updated daily with Australian personal finance news, analysis, and commentary.
Sunday December 8
The Dow Jones index rose 198.69 points (Friday, New York time) to 16,020.20
Australia’s first same sex marriages take place in Canberra, but may over-ruled by the High Court Thursday
ACCC puts a cap on the fuel shopper dockets offered by Coles and Woolworths.
Qantas shares placed in trading halt
|Aud To Usd||0.9102||N/A||N/A|
|Bhp Blt Fpo||36.750||-0.030||-0.08%|
|Qbe Insur. Fpo||15.450||0.000||+0.00%|
|Anz Bank Fpo||30.990||-0.200||-0.64%|
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