by Alan Thornhill
The Federal government will haul Australia’s banks before a powerful parliamentary committee as it seeks to persuade them to pass on the Reserve Bank’s latest interest rate cut in full.
The Prime Minister, Malcolm Turnbull and his Treasurer, Scott Morrison, made the announcement in a joint statement today.
Labor might well have gone further.
It promised a royal commission into the behavior of Australia’s banks, before last month’s Federal elections.
Mr Turnbull said that in challenging economic times globally, it is important that Australians retain faith in our financial institutions and the decisions they are taking.
“The Australian economy depends critically on the performance and strength of our banking and financial system,” Mr Turnbull said.
” Banks operate under a social licence and have responsibilities to the Australian public.”
He said they would be asked, particularly about several matters.when they appear before the House of Representatives Economics Committee.
In particular the banks would be required to explain:
- International economic and financial market developments and how these are affecting Australia
- Developments in prudential regulation, including capital requirements, and how these are affecting the policies of Australian banks
- The costs of funds, impacts on margins and the basis for bank interest rate pricing decisions
- How individual banks and the banking industry as a whole are responding to issues previously raised in Parliamentary inquiries through their package of reforms announced in April 2016
- Bank perspectives on the performance of the Australian economy, including strengths and risks.
The appearance by the banks will ensure they have the important opportunity to transparently account for their decision making and how they balance the needs of borrowers, savers, shareholders and the wider community, Mr Turnbull said.
The initial response from Australia’s banks was cautious.
Andrew Thorburn, the National Australia Bank’s Chief Executive Officer, said for example that his bank is looking forward to the dialogue around “how we balance” the needs of different stakeholders.
He said it is also anticipating “outlining the full cost of being an unquestionably strong bank and bringing further insight to the topic of how we set our interest rates.
“I am proud to be a banker,” he added.
” It has always required carefully thought through decisions,” he added.
“But the focus has been on serving the many people who rely on us to get these decisions right. ”
by Alan Thornhill
Retail sales rose 0.1 per cent in June on seasonally adjusted figures the Bureau of Statistics published today.
The Bureau said this followed a rise of 0.2 per cent in May 2016.
It said that in seasonally adjusted terms, there were rises in clothing, footwear and personal accessory retailing (3.5 per cent), household goods retailing (0.3 per cent) and department stores (0.7 per cent).
But there were falls in food retailing (-0.6 per cent), cafes, restaurants and takeaway food services (-0.1 per cent) and other retailing (-0.1 per cent) in June 2016.
In seasonally adjusted terms, retail sales rose in Queensland (1.1 per cent) and Western Australia (0.1 per cent).
Turnover in South Australia was relatively unchanged (0.0 per cent).
And there were falls in New South Wales (-0.2 per cent), Victoria (-0.1 per cent), the Australian Capital Territory (-0.6 per cent), the Northern Territory (-1.1 per cent) and Tasmania (-0.2 per cent).
The Bureau also said that the trend estimate for Australian retail turnover rose 0.2 per cent in June following a 0.2 per cent rise in May 2016.
Compared to June 2015 the trend estimate rose 3.1 per cent.
Online retail turnover contributed 3.4 per cent to total retail turnover in original terms.
In seasonally adjusted volume terms, turnover rose 0.4 per cent in the June quarter 2016, following a rise of 0.5 per cent in the March quarter 2016.
The largest contributor to the rise was “other retailing,” which rose 1.9 per cent in seasonally adjusted volume terms in the June quarter 2016.
by Alan Thornhill
Malcolm Turnbull directly challenged Australia’s big banks today, saying they should pass on the rate cut the Reserve Bank announced earlier this week in full, or explain why.
So far the banks have been passing on about half of the 0.25 per centage point cut.
That has left families with $300,000 mortgages some $20 a month out of pocket.
The Prime Minister said Australia had needed a period of economic transition after its huge mining construction boom.
“That’s why we have the big trade export deals, the big deals, the big free trade deals,” he said.
However the shadow Treasurer, Chris Bowen disagreed.
He said the government was simply “chest beating” on the rate cut.
So, this is a Government which is being exposed for a lack of economic leadership, for a lack of economic plan,” Mr Bowen said.
He said the government had no plan to increase investment in the non-mining sector, to ensure that we have jobs for the future. “
Malcolm Turnbull and Scott Morrison are simply not up to the job,” Mr Bowen said.
by Alan Thornhill
Hard working Australians, who leave themselves little time to shop, are buying more of their food and groceries online.
The National Australia Bank, which watches these trends, says we spent more than $20 billion, making online purchases over the past year.
And the strongest growth, seen in that time, was among those aged 35 to 44.
That is people of prime working age.
Their spending on groceries and liquor rose by 20,5 per cent over the past year.
They also spent 19.2 per cent more on homewares and appliances.
Meanwhile 18-24 year olds spent 22 per cent more on fashion and 19.9 per cent more on media.
The bank said that while overall growth in online spending was still quite strong, it had flattened from that seen back in 2011 when the index was first established.
The bank’s Chief Econmomist, Alan Oster, said “the $20.1 billion spent online by Australians in the last year is equivalent to 6.8 per per cent of spending in the bricks and mortar’ retail sector.
“And growth by online businesses is far outpacing these traditional retailers,” he added.s
by Alan Thornhill
By Alan Thornhill
Twice this year, Glenn Stevens has done something that central bankers don’t like doing.
That is cutting interest rates to previously unprecedented levels
That happened first in May.
Then – again – from Wednesday.
Both time rates were cut by 25 basis points
The reason Reserve bank chiefs, like Glenn Steven, don’t like taking this step is simple.
But not, necessarily, obvious.
After all, young home buyers will generally welcome the relief they will get in their home loan repayments, when their banks pass, at least some of the benefit they receive on to them.
If that’s all there was to it, Mr Stevens would, undoubtedly be among the most popular men in the country right now.
But although he is, by all accounts, is a fine fellow, things aren’t as simple as that.
What about those probably somewhat older people, we might call the Savers, who have been relying on a little interest income, perhaps through their superannuation accounts, to help them pay their grocery bills in retirement.
There is another thing, too, that can keep central bankers awake at night, when interest rates fall to unprecedented levels, on their watch.
That’s walking down a dark path, on a moonless night.
Who knows what might go wrong?
by Alan Thornhill
The Reserve Bank today cut its cash rate by 25 basis points, to its lowest level ever, just 1.5 cent.
Explaining the decision, the bank’s Governor, Glenn Stevens said: “the global economy is continuing to grow, at a lower than average pace.
“Several advanced economies have recorded improved conditions over the past year, but conditions have become more difficult for a number of emerging market economies.
“Actions by Chinese policymakers are supporting the near-term growth outlook, but the underlying pace of China’s growth appears to be moderating, “ Mr Stevens said.
He noted that: “commodity prices are above recent lows.”
However he added: “…this follows very substantial declines over the past couple of years.
“Australia’s terms of trade remain much lower than they had been in recent years.
“Financial markets have continued to function effectively.
Mr Stevens said: ” Funding costs for high-quality borrowers remain low and, globally, monetary policy remains remarkably accommodative.
“In Australia, recent data suggests that overall growth is continuing at a moderate pace, despite a very large decline in business investment,” he added.
“Other areas of domestic demand, as well as exports, have been expanding at a pace at or above trend.
“Labour market indicators continue to be somewhat mixed, but are consistent with a modest pace of expansion in employment in the near term.
“Recent data confirm that inflation remains quite low.
“Given very subdued growth in labour costs and very low cost pressures elsewhere in the world, this is expected to remain the case for some time.
“Given very subdued growth in labour costs and very low cost pressures elsewhere in the world, this is expected to remain the case for some time,” Mr Stevens said.
The Bureau of Statistics reported that Australia’s inflation rate, on the Consumer Price Index, stood at just 1 per cent in the 12 months to the end of June.
That is well below the bank’s target range – of 2 to 3 per cent inflation – over the course of a business cycle.
by Alan Thornhill
The Prime Minister, Malcolm Turnbull, has had to accept the resignation of the man he chose to conduct a Royal Commission into the mistreatment of mainly aboriginal juveniles at the Don Day centre, in the Northern Territory.
The Opposition Leader Bill Shorten said Mr Turnbull must to learn to consult more widely before in future, making such appointments, to avoid similar embarrassments.
However Brian Martin, who was to have conducted that job, withdrew after certain Aborigines questioned his suitability for it.
He will be replaced by the Aboriginal and and Torres Strait Islander Social Justice Commissioner Mick Gooda and Margaret White.
The Law Council President, Stuart Clark, said the appointment of Mr Gooda and Ms White was a vital step to ensuring the Royal Commission could advance its critical agenda.
“This Royal Commission is absolutely vital, because of the need to examine, in detail, what appears to be a deep cultural and systemic problem within the NT juvenile detention system,” Mr Clark said.
“Mr Gooda and Ms White are extremely well qualified to carry out this important inquiry, with the necessary independence from the Northern Territory Government and confidence of the community.
“The broader issue of Indigenous imprisonment is one that overlaps inexorably with juvenile detention in Australia,” he added.
Mr Clark also congratulated Mr Martin on putting the community’s interests ahead of his own.
In a separate statement, Mr Martin also said both the Prime Minister, Mr Turnbull and his Attorney General, George Brandis, had been disappointed by his decision to quit.
But he also said the decision did not indicate that his critics were right.
Indeed, Mr Martin added: “Since my appointment was announced I have been extremely disappointed with the disingenuous and ill-informed comment that has ensued.
“ However, notwithstanding the ill-informed nature of the commentary, it has become apparent that, rightly or wrongly, in this role I would not have the full confidence of sections of the Indigenous community which has a vital interest in the inquiry.
“As a consequence, the effectiveness of the Commission is likely to be compromised from the outset.
“I am not prepared to proceed in the face of that risk,” Mr Martin said.
“This Royal Commission is far too important to undertake that risk and, in the public interest, personal considerations must take second place,” he added.
by Alan Thornhill
Bill Shorten says Aboriginal people must be given a bigger role in the proposed Royal Commission into the mistreatment of juvenile offenders at the Don Day correctional facility in the Northern Territory.
The Opposition Leader said Aboriginal people want the commission to be “authentic.”
And they had told him they wanted to see two Aboriginal co-commissioners appointed to help the commission do its job.
He described the mistreatment, which included hooding a juvenile offender, while strapped to a chair as “barbaric.”
Mr Shorten also said 97 per cent of the young offenders were Aboriginal, and previous inquiries had established, years ago, that they were being badly mistreated.
He urged the Prime Minister, Malcolm Turnbull, to visit the Northern Territory to check Aboriginal views on the controversy which followed fresh exposure of these abuses on the ABC Four Corners program last Monday.
Mr Turnbull has not responded, so far.
However Mr Shorten did make that journey, himself, at the weekend, attending the Garma Festival at Gulkula.
He said the Festival was “… a place for balanda to sit down with people, to listen and learn.”
Mr Shorten also said there was much hurt and anger, both in the Aboriginal and broader communities, at the events the ABC had exposed.
“I know there is a lot of pain, great frustration that families feel and of course anger, legitimate anger.
“This week, the media and the ABC spotlight illuminated a horrific failure.
“The abuses of young people in the Don Dale detention centre, right here in the Northern Territory.
“No young person should ever be treated in such a barbaric fashion.
“On Monday night, Australia and the world witnessed a low point in Australian justice.
“Australian justice can never be a 14 year old boy hooded, stripped and strapped to a chair.
“It is a disgrace,” Mr Shorten said.
“Yet, tragically, unforgivably, there was nothing especially new about those terrible images that people were witness to.”
“ How can any young Aboriginal teenager watching those images not feel, in some fashion, made unwelcome in their own country?” Mr Shorten asked.
“It is not right to have that sort of humiliation, that sort of degradation.”
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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