Superannuation fund members will soon start seeing better benefits as technical reforms – now under way – progress.

The industry and the government both believe the new systems – and clarifications – contained in the reforms will cut costs and boost benefits.

However the Senate could still block one key proposal.  That is to use Medicare’s powerful computing systems, as a financial services clearing house.

The Federal Superannuation Minister Chris Bowen said the Opposition has threatened to use its numbers in the upper house to do just that.

However the Parliament has now passed financial market supervision reforms, which the government proposed.

Mr Bowen said these would “enhance the integrity of Australia’s financial markets.”

The superannuation industry welcomed this news, praising the government, in particular, for extending consumer protection to superannuation borrowing arrangements.

This was done by declaring that these borrowings are financial products under the Corporations act.

Though technical in nature, the Australian Superannuation Funds Association, said this would help to curb the industry’s costs and the savings would be passed on to fund members.

Mr Bowen also welcomed an announcement by three of Australia’s largest superannuation fund managers, AAS, Pillar Administration and  Superpartners, that they would accept a common set of computer protocols, to cover the movement of data and money between funds.

“This agreement will make it easier and more efficient to transfer money between funds,”
Mr Bowen said.

That, too, would result in lower costs for fund members, he added.

A Reserve Bank heavy, Philip Lowe, has a fresh way of looking at Australia’s job market.

“….it is important to remember,” he says,”that one of the least productive things a society can do is leave large numbers of people at home who actually want to work.”

That cue from Mr Lowe, who is the bank’s Assistant Governor (Economics),  gives us a clearer look at the latest job market figures.

Yes.  Unemployment rose by 10,700 last month. And  the nation’s seasonally adjusted unemployment rate rose slightly to 5.3 per cent, from 5.2 per cent the previous month.

The Statistician’s labour force figures also show that 615,900 Australians were still out of work last month.

Mr Lowe was urging those who attended a seminar in Sydney, earlier this week, to remember that Australia must become more productive, if it is to keep a lid on inflation. That is, it must produce more.

So Mr Lowe would have been pleased, as he studied the bureau’s latest figures, to see that Australia’s male labour force under-utilisation rate is, once again, trending down.

That rate, for women, is also flattening, after rising sharply last year.

So what, really, is happening right now, in Australia’s job market?

Thousands of Australians were shifted to part time work, after the global economic crisis struck.

That helped them keep some income, at least.

However there are now some signs that move to part time work is being reversed, as Australia’s economy recovers.

In fact, the bureau reports 11,400 Australians actually found full time work in February.

That was offset, though, by a fall of 11,000 in part time employment.

A small, overall, improvement, perhaps.

This movement, though, is still positive.

So was that Mr Lowe smiling?

Surely not.  He’s an economist.

Australia’s housing finance figures might well be ringing alarm bells.

The Bureau of Statistics reports that home finance commitments fell steeply in January, both in terms of the number of home building starts financed and the amount lent to help people buy homes.

These figures, of course, are still affected by Federal government moves to wind back its stimulus spending.

So it may take some months yet for clear trends to appear.

Even so, the bureau reports that a bare $21.2 billion was lent in January to finance home purchases, a 3.3 per cent fall from the December level.

Indeed, the bureau’s figures now show that lending to build new homes has now fallen for three successive months.

The Housing Industry Association says recent rate rises are curbing activity in Australia’s housing market.

The Reserve Bank has  raised rates in four of the past five months.

The Association senior economist, Ben Phillip, said the situation now calls for care.

“The Reserve Bank must take stock of the impact that higher interest rates are having on the new home market,” Mr Phillips said.

The bank, itself, is aware of the problem, noting that spending on housing will have to be increased, over the medium term, if the demands of Australia’s strongly rising population are to be met, without fresh pressure on both house prices and rents.

The bank’s Assistant Governor, Phlip Lowe, acknowledged these risks, in a speech he gave to a seminar in Sydney.

(see next story)

Kids staying at home longer?

House bursting at the seams?

Don’t worry.  You are not alone.

The Reserve Bank knows of your problems.

Indeed, it fears that these trends could push house prices – and rents – even higher

Its Assistant Governor, Philip Lowe, spoke at some length about these issues, at a seminar in Sydney today.

He noted that the number of houses being built in Australia over recent years had been below average, even though the nation’s population has been growing strongly.

That had meant house prices had been rising and rental vacancy rates had been very low.

Mr Lowe spoke of other, less obvious, trends, too.

He said that, on average,  more Australians are now living in each house and more money is being spent on renovations, rather than new buildings, now.

“Obviously examples of this are the trend towards young adults staying in the parental home longer and a rise in the number of people sharing accommodation,” Mr Lowe said.

“In a sense, as a society, there has been a trade off between quality and quantity.

“In particular, we have chosen to build bigger and better appointed dwellings, rather than more dwellings,” Mr Lowe said.

Mr Lowe said if strong population growth continues over an extended time, Australia might have to devote a bigger share of its gross domestic product to housing in future.

“If this does not happen further adjustment in housing prices and rents is likely to occur,” Mr Lowe warned.

We’ll all  be out shopping again soon – this time with our own money.

The economists at  Access Economics, who have just published new retail forecasts, are confident about that.

Naturally they admit that our spending has been boosted over the past year by stimulus measures, such as tax breaks,  subsidies and low interest rates, which left extra money in many budgets.

However they say those times are now rapidly  passing , to be replaced by new growth, based on a stronger job market.

“Ultimately,” they say,”spending growth is regulated by income growth.”

Th Access economists say, too, that job growth is the “bedrock” of consumer spending.

Access noted that almost 200,000 jobs had been created in the five months to January.

It said, too, that about half of those new jobs had been full time.

“A greater sense of security makes for a more confident consumer,” Access said.

Its work is backed by other economic research.

The National Australia Bank, for example, is reporting that business confidence has returned to the surprisingly strong levels of last November.

That means business confidence is now back at levels not previously seen since May 2002.

And the ANZ bank said the number of job ads, appearing in Australia, had leapt by 19.2 per cent in February.

The ANZ said the nation is now “enjoying solid employment growth and reduced unemployment.”

However it warned that “a record 30.2 per cent” of all Australian jobs are now part time or casual.

The bank’s chief economist, Warren Hogan, said this represents “a significant degree of spare capacity or underemployment.”

Access has reservations, too.

It says, for example, that there are still “plenty of factors which will stop retail sales from being spectacular.”

These would include further interest rate rises, which would slow growth in house prices and ultimately affect consumer confidence.

These rate rises would eat directly into shoppers’ incomes, Access said.

Women’s votes have never been more important to Australia’s political parties than they will be in the Federal elections due later this year.

And the Federal Opposition Leader, Tony
Abbott, has put in a high bid for them, with a six month paid parental leave scheme, which he has just announced.

It would see parents paid the equivalent of their current salary, up to an annual rate of $150,000, for a period of six months.

The new scheme, which would be funded by a 1.7 per cent levy on big business, leaves Labor’s rival scheme in the shade.

Labor is merely offering  women 18 weeks’ pay at minimum wage levels.

This means parents could get up to $75,000, under the Coalition’s scheme, against just $9,800 under the government’s plan, which still has to go to the Senate.

Mr Abbott estimates his tax on Australia’s 3,200 firms earning more than $5 million a year would net $2.7 billion.

He said he did not expect big business would be pleased with his plan.

“I don’t expect anyone to cheer about having to pay more but I expect that even people who operate in big business think of themselves as citizens as well as business people,” Mr Abbott told reporters.

He was right about that.

Several business leaders including Peter Anderson, chief executiveChamber of Commerce and Industry attacked his idea.

“Imposing additional costs like these on the business community is not fair because the benefits to business are uneven and are far less significant than the benefits to the mums and dads who are going to be taking the maternity-paternity leave,” Mr Anderson said.

Two government ministers, Jenny Macklin and Tanya Plibersek, ridiculed Mr Abbott’s announcement, dismissing it as “a thought bubble.”

“His sham policy has no detail, no costings and no timeline,” the two ministers said.

“Australian families need certainty on paid parental leave to plan for the future,” they added.

“This is yet another backflip on parental leave from Mr Abbott,” the two ministers said.

“As a minister in the Howard government he campaigned for years against paid parental leave, saying it would be introduced ‘over his dead body.’”

Mr Abbott’s announcement was timed to coincide with International Women’s Day.

Despite real progress, over recent decades, the long held goal of equal pay, for Australian women, remains as elusive as ever.

The latest figures, from the Australian Bureau of Statistics, show the average weekly earnings of the nation’s women are still barely two thirds those of its male workers.

The Prime Minister, Kevin Rudd, says his government will not increase tax, as proportion of national income.

Mr Rudd renewed this pledge – first made before the 2007 election – in the wake of speculation that the government will have to increase taxes, to meet rising health costs.

However the Prime Minister’s promise may not provide all that much comfort to taxpayers.

Mr Rudd said the costs of his planned hospital funding reforms would be met from the Federal budget.

He added, though, that, any politician who would not acknowledge that Australia’s health costs would increase, over the long term, “is not worth a pinch of salt.”

Despite that tax, measured as a proportion of the overall economy, would not rise.

“That’s what we said before the election.

“That’s what we’ve stuck to since the election.

“That’s what we’ll adhere to in the future,” Mr Rudd said.

He was speaking in a Sydney radio interview.

“We have said consistently that we will not increase tax as a proportion of Gross National Product,” Mr Rudd added.

The Australian economy grew by 0.9 per cent in the December quarter and 2.7 per cent in 2009.

This followed a rise of 0.3 per cent in the previous quarter.

But growth of some 4 per cent is needed to absorb each year’s school leavers into the nation’s workforce,

Figures released by the Australian Bureau of Statistics today show that the Federal government’s stimulus package – reflected in a 10.2 per cent surge in government investment – was the main reason for the quarter’s relatively strong rise.

However private investment also rose by 3.5 per cent in the final three months of last year.

Household spending rose by 0.7 per cent.

A fall in Australia’s net exports, though, restricted growth in December quarter.

Import growth, of 7.7 per cent in that time, was far greater than the nation’s export growth of just 1.7 per cent.

Manufacturing surged by 5.1 per cent in the final three months of last year in seasonally adjusted volume terms,  while wholesale trade rose 3.6 per cent .

Final consumption spending rose by 0.9 per cent in the quarter and 3.2 per cent over the year.

Australia’s terms of trade rose by 2.9 per cent in the final three months of last year.

But they were still down 11.2 per cent over the year.

The Bureau also reported that real net disposable income rose by 1.2 per cent in the December quarter.

However it was still 1.2 per cent over over the year.

New South Wales was the nation’s powerhouse last year, chalking up 5.2 per cent growth in State final demand.

That was exceeded only by the ACT, which saw 7.6 per cent growth on the same indicator.

Victoria saw 4 per cent growth, Queensland recorded a contraction of 1.1 per cent, South Australia chalked up 5 per cent growth, Western Australia 3.3 per cent, Tasmania contracted by 0.3 per cent and the Northern Territory experienced a 6.3 per cent contraction.

The Reserve Bank raised its target interest rate by 25 basis points to 4 per cent today, even though building approvals, throughout Australia, plunged by 7 per cent in January.

This followed three consecutive interest rate rises late last year.

The building industry had warned that approvals for unit and semi-detached housing in Victoria plunged by 29.1 per cent in January.

However the Reserve Bank Governor, Glenn Stevens, insisted that the latest rise is necessary.

“The global economy is growing,” Mr Stevens said.

“And world GDP is expected to rise at close to trend pace in 2010 and 2011.”

He admitted though that the expansion “is still hesitant in the major countries,”

Mr Stevens said that was  due to the continuing legacy of the financial crisis, which is producing “ongoing excess capacity.”

” In Asia, where financial sectors are not impaired, growth has continued to be quite strong,” Mr Stevens said.

“The authorities in some countries are now seeking to reduce the degree of stimulus to their economies,” he added.

But Mr Stevens also said:”Global financial markets are functioning much better than they were a year ago.

“And the extraordinary support from governments and central banks is gradually being wound back.

“Credit conditions remain difficult in some major countries as banks continue to face loan losses associated with the period of economic weakness.

“Concerns regarding some sovereigns remain elevated.

Mr Stevens said Australia’s domestic economic conditions had been  stronger than expected, last year,  after a mild downturn a year ago.

“Inflation has, as expected, declined in underlying terms from its peak in 2008,” he added.

This had been  helped by the fall in commodity prices at the end of 2008, a noticeable slowing in private-sector labour costs during 2009, the rise in the exchange rate and the earlier period of slower growth in demand.

“CPI inflation has risen somewhat recently as temporary factors that had been holding it to unusually low rates are now abating,” he said.

“Inflation is expected to be consistent with the target in 2010,” he added.

The Reserve Bank aims to keep Australia’s annual underlying inflation rate in a 2-3 per cent, over the course of a business cycle.

The lure of the January sales proved as strong as ever last month, with retail sales throughout Australia rising 1.2 per cent during the month,

This followed disappointing pre Christmas trade, with sales falling by 0.9 per cent in December.

The Australian Bureau of Statistics  reported that Australia’s department stores, clothing and shoe shops and grocery chains all increased their sales in January.

However the nation’s cafes, restaurants and take-away food stores saw their trade fall, during the holiday period.

The bureau also reported today that home building approvals fell by 7 per cent during January.

This followed removal of the Federal government’s stimulus subsidy, for first home buyers.

However the Housing Industry Association reported, earlier this week, that home sales, by Australia’s volume builders, rebounded by 9.5 per cent in January.

The association took this as a sign that upgraders and investors are re-entering the nation’s housing market.

The Reserve Bank board, which is meeting today to review Australia’s interest rates, will take all of  these figures into account.

It’s decision is to be announced at 2.30 this afternoon.

Although car and house sales have been strong, easing price pressures might save Australia from another interest rate rise today.

At this stage, though, that is still far from certain and we will all have to wait until 2.30 this afternoon before we will know for sure.

That’s when the Reserve Bank plans to release the results of a review of Australia’s interest rates, that its board will conduct early today.

Either way, figures that the Australian Bureau of Statistics has just published are sure to weigh heavily on the board’s deliberations.

These include the bureau’s balance of payments figures and business indicators for the December quarter.

Other figures, published by the Housing Industry Association, are also likely to be influential.

They showed a 9.5 per cent rebound in the sales of Australia’s large volume residential builders in January.

The association’s chief economist, Harley Dale, said a sustained improvement, of this kind, would suggest that a recovery, driven both  by people upgrading  – and investors – would be “achievable.’

The Federal government’s now discontinued subsidy for first home buyers has been driving the market for some time now.

The bureau’s balance of payments figures showed some mixed results.

They revealed, for example, that Australia’s current account deficit rose by $2.7 billion, or 19 per cent, in the quarter to almost $17.5 billion.

That is expected to detract 1.3 percentage points from Australia’s economic growth in the December quarter, on a  volume measure.

The bureau’s figures also showed that Australia’s net foreign was almost $648 billion at the end of December.

That represented a rise of 2 per cent over 2009.

Detailed figures, in the Statistician’s bulletin, also suggested that new vehicle imports had  been particularly strong during the quarter.

But one figure, in the Statistician’s bulletin, stood out.

A technical indicator, called the implicit price deflator, fell by 2.1 per cent in the December quarter.

This suggests that Australia’s imports, in the December quarter, will have a significant impact on other price pressures in the economy.

The strength of the $A, over most of the December quarter, helped there.

The Reserve Bank aims to keep Australia’s inflation in a 2-3 per cent range, over the course of the business cycle.

It looks at pressures, like these, very closely, when it reviews Australia’s interest rates, as it will do today.

The self-deprecatory remarks that politicians  occasionally make are worth watching as they can be revealing.

Especially in election years, when voters have big choices to make.

Take Tony Abbott, for example. What are we to make of a man who is prepared to say, publicly, that his daughter, Frances, regards him as:”a lame, gay, churchy loser.”

Or of Kevin Rudd, who admits that he had been described, by a colleague, as:”a first class policy wonk.”

“I think it’s also fair to say – in terms of one of the other criticisms that’s made of yours truly – is that I’m probably not the world’s best communicator,” Rudd added, in his reply to a reporter who had questioned him at the weekend.

That tortured sentence, in itself,  illustrates his point.

Perhaps that’s why he also promised, at the weekend, that Australia’s schools would be stressing grammar, in future.  He, certainly, missed out on the clear speaking lessons,  all those years ago.

There was an echo of something deeper, too, in Rudd’s words at the weekend.

Just a few days earlier, he had described Peter Garrett as “a first class minister.”

But, on Friday, he finally demoted Garrett, over the home insulation disaster.

Rudd’s use of the words “first class” to describe himself, just one day later, invites reflection.

Gough Whitlam stormed to power on the two word slogan “It’s time.” That captured his political message, back in the early 1970s, perfectly.

Paul Keating’s words were also powerful, even though he sometimes damaged himself, by speaking recklessly.  “This is the recession we had to have was, of course, the prime example.

Back, though, to the challenger, Tony Abbott. He is quite comfortable with the nickname, “the mad monk,”  which he inevitably acquired, in the corridors of Parliament house.

His revelation, of his daughter’s biting word, certainly reflects a man of some  charm – and good humour. It also speaks, though, of a man who is not entirely sure that he is in tune with the tempo of the times.

That’s not an entirely unattractive picture, a fact reflected by the Opposition Leader’s advancement, over recent weeks, in the polls.

At this stage, though,  the coming choice appears, at least superficially, to be between a man who can’t speak clearly and a glib rival who hasn’t, so far, had all that much to say about what he would do, as Prime Minister.

Both could do better.

Australia’s economic recovery is deepening.

And the Federal government’s economic stimulus is playing its part.

Fresh evidence, on both fronts, showed up in  new capital spending figures, that the Bureau of Statistics has just released.

These showed that spending on industrial equipment, plant and machinery leapt by 12.4 per cent in the December quarter to $15.1 billion, on seasonally adjusted figures.

That was  7.2 per cent higher than the amount spent in the December quarter of 2008.

The bureau took the rare step of noting that
a large number of companies, which responded to its survey, said they had taken advantage of a tax break, that the government offered, to purchase new cars.

That break was part of the Federal government’s stimulus package.

The bureau’s figures strongly suggest that Australian car makers increased investment in their plants, to cope with this extra demand.

The bureau also reported that full time average weekly earnings, in the private sector, rose by 1.5 per cent in November and by 5.4 per cent over the year.

The comparable figures, for the public sector, were 1.3 per cent growth for the month and a 5.7 per cent rise over the year.

The Treasurer, Wayne Swan, told parliament that investment in private sector housing had fallen by more than 20 per cent last year, in the wake of the global economic crisis.

“But that has been offset by an increase of 42 per cent in public construction activity,” he added.

The Federal government has announced a $41.2 million program to help workers who were    retrenched after its home insulation was cancelled, as a result of safety issues.

The industry estimates that some 6,000 workers have already been put off.

The Prime Minister, Kevin Rudd, who made the announcement blamed a small proportion of unscrupulous firms in the industry for the trouble.

Four insulation workers have been killed – and more than 100 homes have become fire traps – as a result of shoddy insulation work, performed  under the government’s home insulation scheme.

Some of the sacked workers will be offered financial assistance.

Others will be eligible for retraining.

The issue has dominated question time in Federal parliament all week, with the Opposition demanding the sacking of the Environment Minister, Peter Garrett.

However Mr Rudd struck back at opposition members, who have questioned him aggressively on the matter.

He said the jobs these workers had held would never have existed under a Coalition government.

Mr Rudd said  his government had  initiated the home insulation scheme to create jobs, after the global economic crisis struck.

“There would have been no such program under the Coalition,” the Prime Minister said.

Mr Rudd said any insulation worker, who lost his job, would also be eligible for assistance under the Federal government’s Compact for Retrenched Workers.

This would mean immediate access to high level support.

People who can’t afford private health insurance are being forced to subsidise it for “millionaires,” according to a Federal minister.

The Federal Finance Minister, Lindsay Tanner made the charge in parliament.

He did so shortly before his colleague, Health Minister Nicola Roxon announced that private health fund premiums would rise by an average of 5.78 per cent from April 1.

Mr Tanner said the “subsidy”  is the result of the opposition’s decision to block changes the government is trying to make to the private health insurance rebate in the Senate.

Mr Tanner said the Opposition is now facing a big test, on two fronts.

These were fairness and fiscal responsibility.

“Are you going to support the government or will you continue to subsidise private health insurance for millionaires?” Mr Tanner asked.

The Treasurer, Wayne Swan, announced in his budget speech last May, that the government would cut the private health insurance rebate for people on higher incomes.

Mr Swan also said that the Medicare Levy surcharge would also be increased for higher income earners.

However the Opposition, with the support of the Greens and other Senators, is blocking these moves in the Senate.

Mr Tanner said the Coalition’s obstinance would cost the government almost $10 billion over the next 10 years.

This would damage its efforts to get the Federal budget back into surplus.

He said the government had been forced to make tough decisions in its last budget.

One of these had been to apply a means test to the private health insurance rebate.

Mr Tanner said he would pay more, himself, under the government’s proposals.

“But I am afraid, Mr Speaker, that I don’t see the logic of why ordinary working people – on fifty grand – sixty grand a year – should have their taxes pay subsidies to my private health insurance, when many of those same working people can’t afford private health insurance for themselves,” he added.

“What the opposition is doing is protecting subsidies for higher income earners; doing great damage damage to the government’s budget settings; at the same time as claiming that they would be more fiscally responsible and that they would have lower deficits than the government.”

Mr Tanner said, too, that the Opposition’s Finance spokesman, Senator Barnaby Joyce, had initially supported the government’s position, but had later retreated.

“I am worried that he has been got at or something,” Mr Tanner said.

“I would like to see him step back up to the plate on this issue.”