by Alan Thornhill
The Prime Minister, Malcolm Turnbull, is trying to steer the election campaign back to where it started.
That is with his attempt to restore peace in the building and construction industry.
And in a speech to the American Australian Association & US Studies Centre last night, Mr Turnbull also argued that Australia’s increasing involvement with Asia is making this country’s reliance on America more important than ever.
He said the government had launched an unusually long –eight week – campaign for re-election “in order to break the deadlock between the House of
Representatives and the Senate over two critical pieces of legislation relating to industrial relations.
“and one of those is the restoration of the Australian Building and Construction Commission,” Mr Turnbull said.
That aim had – previously – been hardly mentioned during the campaign, which has now passed its half-way mark.
But, last night, Mr Turnbull declared that the course he had chosen is: “the only way we can get the rule of law restored to the construction sector.”
He said the sector employs one million people.
“ and the restoration of law to that sector is a vital economic reform, and part of our economic plan to secure our prosperity.”
“the only way we can get that passed is through this double dissolution and getting the numbers collectively in the House and the Senate to pass that law and restore rule of law through a joint sitting of the parliament,” Mr Turnbull said.
“ That’s our commitment,” he added.
Mr Tunbull also paid tribute to a previous Liberal Prime Minister, John Howard, who attended last night’s function.
He said: “John understood that the United States is the irreplaceable anchor to the global rules-based order – an order built upon shared political values and common economic and security interests.
“The truth of his insight has been affirmed by every subsequent Prime Minister of Australia.
“Earlier this year I visited and thanked our men and women serving alongside US forces in Afghanistan, in what is now the longest commitment in our military history.
“And also our forces in Iraq, where we are together with the United States and other allies jointly pushing back, rolling back the brutality and barbarity of Daesh or ISIL.
“And not a day, truthfully not a minute, goes by without our intelligence agencies working together – saving lives – in the fight against terrorism.
“Our ANZUS alliance and broader relationship is anchored in a history that is even deeper and richer than many of us realise,” Mr Turnbull concluded.
by Alan Thornhill
Australia’ s economic growth appears to have been surprisingly strong in the early months of this year.
Indeed the Statistician put it at 3.1 per cent in the 12 months to the end of March – and said trade had played a leading role.
The Prime Minister, Malcolm Turnbull, later made that an election issue later when he said this kind of growth does not happen “by accident.”
These developments make new research, that the National Australia Bank published today, particularly interesting.
For the bank states, quite bluntly, that our iron ore trade has been “riding an unsustainable wave.”
If that is true, the Prime Minister’s carefully crafted, but still merely implied claim, to have produced that growth, takes a hit.
Mr Turnbull conceded later that there are risks associated with both government and opposition forecasts.
The reality is that forecasts – there are always risks with forecasts I think everyone understand that.
“The further out you go, the more speculative those assumptions are.
He was replying to a reporter in Ulladulla.
“What will the iron ore price be?
“What will the foreign exchange rate be?,” Mr Turnbull asked rhetorically.
The bank, itself, avoided stepping into the current election campaign, contradicting Mr Turnbull directly.
But what the NABt does say is deeply disturbing to people who worry about Australia’s economic future, especially as iron ore has long been a very big item in this nation’s trade accounts.
It says that:” After trending lower across 2015, iron ore prices staged a short-term volatile rally in early 2016 – returning close to US$70 a tonne in late April.
“This coincided with a rapid increase in Chinese futures market trading volumes on the Dalian Commodity Exchange – with may indicate a temporary speculative bull market.
“Subsequent tighter regulation on the DCE brought prices back nearer to US$50 a tonne.”
Then the NAB adds:-
- This rally occurred against a backdrop of stronger Chinese steel market conditions – with demand recovering thanks to a rebound in construction activity (the sector that accounts for over half of China’s steel demand). Steel prices rose faster than input costs between February and April, driving steel maker profitability to its highest level in almost seven years.
- We argue that the rebound in construction is not sustainable, with policy changes that have relaxed purchase requirements, looser credit and the poor performance of alternative investment options re-inflating the property bubble that had somewhat deflated across 2014 and 2015.
- The short-term boost to profitability should not be allowed to overshadow the significant long-term challenges that China’s steel industry needs to address. Excess capacity in China’s steel sector exceeds 300 million tonnes (around three times the 2015 output of Japan, the world’s second largest steel producer).
- Medium term trends for steel – both in China and globally – appear subdued. Expectations that China’s steel consumption will continue to decline in coming years will be a major constraint on iron ore demand, while sub-trend economic growth elsewhere provides little opportunity for China’s declines to be offset. Over the medium term, we expect prices to settle at around US$40 a tonne.
by Alan Thornhill
Australia’s retail sales rose by 0.2 per cent in April.
And our trade deficit shrank by 20 per cent during the month.
These seasonally adjusted figures were published by the Australian Bureau of Statistics today.
The Bureau also said that, on similarly adjusted figures, sales in cafes, restaurants and take away food stores had all risen during the month.
We also spent more on clothing and shoes.
But we spent less on food.
Tne small rise in our spending in April followed a rise of 0.4 per cent on the same indicator in March.
The Bureau also reported yesterday that – spurred by exports – thee Australian economy grew by 3.1 per cent in the 12 months to the end of March.
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
The Prime Minister, Malcolm Turnbull, told voters tonight that growth is necessary for Australia.
He said that is fundamental.
And – taking care to appear Prime Ministerial – Mr Turnbull said his government had a plan to achieve growth that would produce new jobs and prosperity.
The Opposition Leader, Bill Shorten, responded by saying that fairness is needed for growth.
And he said the government’s plan to give big foreign companies $50 billion worth of tax cuts over the next 10 years is not fair.
He said a well educated population, with access to good health care, is essential.
The two leaders were speaking in the second of their debates in the current election campaign, leading to national elections on July 2.
Tonight’s debate was the first to be televised publicly.
The first was carried only on pay television.
Although both leaders were criticised tonight for not giving enough detail about their policies, both would probably be reasonably happy with their performances.
Both managed to avoid embarrassing mistakes.
And both stuck to carefully considered strategies.
Mr Turnbull sought to re-assure those who share his philosophies and to convince doubters that voting for a reckless spending Labor government on July 2 would be just too risky.
And Mr Shorten, who realises that he is less well known than his rival, took care to present himself as a moderate responsible leader, who will advance thoroughly thought out policies, in this campaign which still has five weeks to run.
by Alan Thornhill
The Federal Employment Minister Michaelia Cash says new figures, produced by the Statistician today, show that Australia’s job market is stable.
She also said: “… today’s data reflects a resilient Australian labour market and highlights the need to continue with the Coalition’s plan to strengthen the economy and stimulate further jobs growth.”
However Labor’s employment spokesman, Brendan O’Connor, said the bureau’s figures showed that 50,000 full time jobs had been lost, under the Turnbull government, this year.
And the bureau of statistics, itself, still has some doubts.
It said its April Labour force figures show that trend employment growth in Australia is still easing.
They had shown that trend employment had risen by just 4,100 – or 0.03 per cent – during the month.
“This monthly growth rate was below the monthly average over the past 20 years – 0.15 per cent – and down further from the recent peak of 0.26 per cent in October 2015,” the bureau said.
That left Australia with a trend unemployment rate of 5.7 per cent for the month.
Australia’s seasonally adjusted unemployment rate for April was also 5.7 per cent.
However part time employment is still surging, with 10,500 new part time jobs appearing in the month.
General Manager of ABS’ Macroeconomic Statistics Division, Bruce Hockman said this was: “.. “the eleventh consecutive monthly increase of more than 10,000 persons in part time work.
“In contrast, trend full-time employment decreased by 6,400 persons, its third consecutive monthly decrease,” he added.
Mr Hockman said this change is also reflected in the trend monthly hours worked in all jobs series.
This fell by 5.6 million hours (0.3 per cent) to 1,628.9 million hours, he said.
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
Australian shoppers are spending more and saving less, according to the Reserve Bank.
The bank made this observation in the May Economic statement, which it published today.
Its main purpose, in publishing this month’s statement, was to explain why the bank cut its marker interest rate by 25 basis points last Tuesday, to a new low of 1.75 per cent.
The bank confirmed, in its statement, that its board had been thinking of cutting this rate, for some time.
It peaked – at 17 per cent – in the late 1980s.
But the bank is expecting much quieter times, in the period ahead.
It noted that wage growth had been “modest.”
It said:“ This implies a further gradual decline in the household saving ratio over the forecast period.”
The bank also said:”The amount of residential construction work still in the pipeline is substantial and has continued to increase.”
“This points to further strong growth in dwelling investment, albeit at a gradually declining rate consistent with the decline in building approvals since last year.”
“ In established housing markets, conditions have stabilised over the past six months or so.”
“ Housing prices have grown moderately over 2016 to date, following a small decline at the end of 2015.”
“ Housing credit growth has eased a little over recent months to be around 7 per cent in six-month-ended annualised terms in early 2016.”
“ This follows increases in mortgage rates and the strengthening of banks’ non-price lending terms in response to supervisory actions.”
“In above average and business credit growth has picked up over the past year or so.”
“ Nevertheless, indicators of investment intentions suggest that non-mining business investment is likely to remain subdued for a time, although it is expected to gradually pick up later in the forecast period as overall demand strengthens.”
“ Mining investment is expected to continue to fall as projects are progressively completed,” the bank said.
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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