by Alan Thornhill
Major public works may be advanced to help offset job losses arising from Holden’s decision to cease manufacturing in Australia from 2017.
This was discussed at a meeting between the Prime Minister, Tony Abbott, and State Premiers in Canberra today.
The discussions were not finalised.
However Mr Abbott expects to have more to say on this subject next week.
“… we will make an announcement early next week that, I think, will help to restore confidence in the areas most impacted by the impending departure of Ford and Holden,” the Prime Minister told reporters after the meeting.
“………I don’t believe for a second, that these are areas without fundamental economic strengths and I don’t believe that the staff at Ford and Holden are in any way incapable of being redeployed to really sustainable, satisfying employment in the future.
“Our objective is to transition people from one good job to another good job, not simply to help them out of a job and into retirement; that’s not our objective,” Mr Abbott said.
The South Australian Premier, Jay Weatherill, said structural adjustment measures, to help displaced auto workers, had also been discussed.
“ …..at a broader level we have joined with Victoria in the series of propositions we put to the Commonwealth about what that structural adjustment package should look like.”
Mr Weatherill said there had also been “a broader conversation about what sort of country we want to be.
“Do we want to be a country that manufactures things, and what our industry base should look like?
“So, there’s a lot of work to be done,” the South Australian Premier said.
“ We don’t have a minute to lose.”
by Alan Thornhill
The Reserve Bank Governor, Glenn Stevens, has told the Financial Review that he believes there is a future for manufacturing in Australia.
He said Australian workers are already making high tech aircraft parts for Boeing.
However Mr Stevens also said he wants to see the $A closer to 85US cents.
Holden chief, Mike Devereux, cited the high $A as one of several factors that forced his company to announce that it would cease production in 2017, throwing thousands of car workers into unemployment.
The Prime Minister, Tony Abbott, is discussing the future of manufacturing in Australia, in view of Holden’s decision, when he meets State and Federal leaders in Canberra today.
He urged them to take a co-operative approach at the meeting.
“I think pragmatic federalism is what we need in modern Australia and that is what we will do our best to implement in the hours ahead today,” M Abbott said as he opened the meeting.
Mr Stevens has been “jawboning” the $A for some time.
It is now at a four month low, having dropped below 90 US cents overnight.
In his interview with the Fin Review, Mr Stevens also said that a lower $A would probably be “preferable” to another interest rate cut.
by Alan Thornhill
Thousands of aged care workers are to miss out on a pay rise, that had been planned by the previous Labor government.
This became apparent today, when the Abbott government used its numbers in the House of Representatives to scrap a $1.2 billion fund that Labor had set up.
The aged care workers were to have received a 1 per cent pay rise on top of award increases.
The government’s intervention today follows its move earlier this week to scrap planned rises for child-care workers.
by Alan Thornhill
Australians now have the “highest median wealth” in the world, according to the former Prime Minister, Paul Keating.
He said that figure, for mid level wealth, in Australia is $US400,000 ($A442,000).
The comparable figure for Americans is $US67,000 ($A74,000), he added.
Mr Keating made these remarks, while addressing the Labor Caucus in Canberra, on the 30th Anniversary of Australia’s decision to float the $A.
Mr Keating, himself, was the prime mover behind that decision.
He said the income growth in Australia, that followed had “turned out to be unprecedented.”
Mr Keating also said the float of the $A had also been followed by low inflation, and a long period of unemployment under 6 per cent.
He said these developments would not have been possible without the dismantling of Australia’s “old protectionist” model.
“And, of course, it was done by the Labor party,” Mr Keating said.
“This is the point.
“The Liberals always say they believe in business.
“But they don’t believe in markets,” Mr Keating said.
“And there is a lot of difference between markets and business.”
Mr Keating said the Liberals don’t believe competitive markets are the things governments should provide.
“Governments should be steering the boat.
“But not rowing the boat,” Mr Keating said.
by Alan Thornhill
The Federal government moved yesterday to cancel a pay rise given to low paid child care workers – and asked them to give the money back.
But Labor stepped in later, attempting to block the government’s move.
The previous Labor government set up a $300 million fund, earlier this year, to make the pay rise possible for workers in long-day-care centres.
However the Assistant Minister for Education Sussan Ley said the fund was “fundamentally flawed policy” that would have boosted the pay packets of just 30 per cent of long day care educators.
She said the money would be re-directed into “professional development programs.”
“The objective is that every educator in every long day care service can benefit, not just a chosen few,” she said.
But $62.5 million from that fund has already been written into pay rise agreements with 16 child care providers.
Ms Ley says she is appealing to those providers to give up the funds in favour of the “greater good”.
“This is an opportunity to lift the entire sector and deliver quality outcomes for children,” she said.
However Opposition spokeswoman for Early Childhood Kate Ellis says the Coalition is breaking its election commitments and putting child care providers in an “impossible position”.
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.”
by Alan Thornhill
Profits have been rising faster than wages over recent months.
The Bureau of Statistics reported today that company profits rose 3.9 per cent in the September quarter, to a level 8.9 per cent above that seen 12 months earlier.
This comparison was made on seasonally adjusted figures.
The Bureau also reported that salaries and wages rose by 0.7 per cent in the September quarter, to a level 3.1 per cent above that of the same quarter last year.
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
Alan Thornhill is a parliamentary press gallery journalist.
Private Briefing is updated daily with Australian personal finance news, analysis, and commentary.
Friday December 13
The Dow Jones index falls 105 points to 15,739.
The $A drops to US 89.39US cents shortly after 8am, Sydney time
The Senate rises for the year, without passing government bills to abolish the carbon tax
Car industry workers’ plight to be high on the agenda, when the Prime Minister meets State premiers today
Australia’s unemployment rate rises slightly to 5.8 per cent in November 2013 (seasonally adjusted):ABS
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|Rio Tinto Fpo||65.090||-0.050||-0.08%|
|Cwlth Bank Fpo||74.200||+0.690||+0.94%|
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