Extra help for flood victims

The Federal government is offering extra help to communities hit by floods in and Queensland and New South Wales.

The Prime Minister Julia Gillard said clean-up and recovery grants of up to $25,000 would be provided to communities in Queensland.

Similar grants, of up to $15,000, are being offered in New South Wales.

In Queensland primary producers, small businesses and not-for-profit organisations in the local government areas (LGAs) of Balonne, Barcaldine, Blackall-Tambo, Maranoa, Murweh and Paroo will be eligible.

In New South Wales, Ms Gillard the said the local government areas of  Moree, Narrabri and Gwydir would qualify.

Full details

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A missed chance: builders

The Reserve Bank missed a chance to  bolster  the confidence of Australian families and the business sector when it decided to keep rates on hold, builders say.
“A rate cut today would have been appropriate for current economic conditions,” the Housing Industry Association’s chief economist, Harley Dale said. “But sadly that decision was not taken.”

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Rates on hold – for now

The Reserve Bank has surprised many economists by leaving its marker interest rate on hold at 4.25 per cent.

Another small cut had been widely expected.

However, the Bank’s Governor, Glenn Stevens, said  a “moderate” economic expansion is occurring in the United States.

He said too that  “acute financial pressures” in Europe  had been “alleviated considerably” late last year.

Mr Stevens also said that the two rate cuts, that the bank announced late last year, had left the rates Australia’s borrowers pay close to their “medium term average.”

“With (domestic) growth expected to be close to trend and inflation close to target, the Board judged that the setting of monetary policy was appropriate for the moment,” the Reserve Bank Governor added.

The decision has, at least, postponed a looming stand off between the Federal government and Australia’s big four banks.

The Treasurer, Wayne Swan, had called on those banks to pass on any rate cut in full.

He said that  banks which did not do so would be acting to protect their “huge profitability.”

The banks might well have resisted that demand, if the Reserve Bank had cut its marker rate.

Bank executives, including Westpac’s chief, Gail Kelly, argue that the costs Australia’s banks now incur, raising funds for home and business loans, has risen as a result of the European debt crisis.

The risk of an all out confrontation between the Federal government and the banks eased when the Reserve Bank kept rates on hold.

Mr Stevens did admit that more needs to be done to bring Europe’s debt problems under control,

“Much remains to be done to put European sovereigns and banks on a sound footing, but some progress has been made,” he said.

Mr Stevens admitted, though, that financial market sentiment “remains skittish.”

He also said : “information on the Australian economy continues to suggest growth close to trend,

Mr Stevens admitted, though, that differences between sectors still persist.

“Labour market conditions softened during 2011 and the unemployment rate increased slightly in mid year, “ he said.

However unemployment had been steady over recent months.

Consumer price inflation “has declined as expected,” he added,

Mr Stevens said that had happened as fresh food prices eased, as the large rises resulting  from last year’s floods, passed.

“Year-ended CPI inflation will fall further over the next quarter or two,” he added.

“In underlying terms, inflation is around 2½ per cent,” Mr Stevens said.

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Treasurer slaps the big banks

Wayne Swan has sharply attacked Australia’s big banks, saying they are determined to protect their “huge profitability.”

The Treasurer was speaking, in a television interview,  just days before the Reserve Bank board meets to review Australia’s interest rates.

A third rate cut, also of 25 basis points, is widely expected.

However, bank executives, including Westpac’s chief Gail Kelly, have been signalling that they might not pass on the full amount of any rate cut, that the Reserve Bank might announce on Tuesday.

Mr Swan’s pre-emptive response was swift and sharp.

“Customers would have every right to be angered if their bank decided to hang on to part of a rate cut to boost their profits,” he said.

“There’s no doubt Australia’s major banks are hugely profitable,” the Treasurer added.

“Despite the current global volatility, their net interest margins are still around pre-crisis levels and are around their average over the past decade.

“Their return on equity is much higher than most of their global peers,” Mr Swan said.

That is not what the banks have been saying.

Ms  Kelly, for example, has said that the funding costs Australia’s banks face rose quite strongly in the second half of last year.

Westpac, itself, admitted last week that it is planning to cut 300 to 400 jobs and union sources have said that as many as 560 jobs could well disappear at that bank.

The ANZ bank, too, has already cut more than 100 jobs and more jobs are expected to go at the ANZ over coming months.

Other banks are also understood to be reviewing their staff levels, in the light of recent developments.

Mr Swan described recent announcements of job cuts,  most notably in the banking and car industries, as “disappointing.”

Speaking principally of the car industry, he said: “There’s no doubt that many sectors are doing it tough at the moment, particularly with the high Australian dollar.”

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Bank jobs go as Australians shun new loans

Job losses are spreading in Australia’s banking industry, as their customers remain cautious about taking out new loans.

Westpac is the latest to announce cut backs, admitting that 300-400 jobs will go.

The Prime Minister Julia Gillard refused to comment, saying the bank had not made a formal announcement when she met reporters.

However she insisted that the nation’s  finance industry has “a bright future.”

News of the planned Westpac cuts came shortly after the Australian Bureau of Statistics reported that home building approvals fell by 1 per cent in December.

The Housing Industry Association said approvals  fell three times in the last four months of last year.

The association’s chief economist, Harley Dale, urged the Reserve Bank to lower interest rates, yet again, when its board meets next Tuesday.

Otherwise, he warned,  housing starts will fall to a level below that experienced during the depth of the global financial crisis.

Dr Dale also urged Australia’s banks to pass on any rate cut, in full.

There have been signs that at least some of the banks may be reluctant to do that, even though banking profits are still strong.

Ms Gillard admitted that job losses present family problems..

“…. for anybody to lose their job or to be confronted with a redundancy is a very tough moment for them and for their family.

“… they have all of our thoughts and all of our support,” she added.

But she  was optimistic.

“…when we look at the future, we can see a bright future for financial services,” Ms Gillard said.

“We live in a region which is growing. “

The  middle classes in both China and India are growing.

“ So I believe our financial services sector has a very bright outlook,”

However the Finance Sector Union described the latest job cuts as “a disgrace.”

Its national secretary Leon Carter told the ABC:”Times are tough out there.

“… the only people who aren’t doing it tough are big banks like Westpac that are making multi-billion-dollar annual profits.”

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Big – phased – pay rises for community workers

The Prime Minister, Julia Gillard, has hailed  big pay rises granted to  community sector workers as “historic” and “a significant advance” for equal pay for women.

Fair Work Australia  granted rises of between 23 and 45 per cent to about 150,000 workers that Ms Gillard said are among the lowest paid in the nation.

The Prime Minister said 120,000 of threse workers are women, working with difficult jobs in a caring industry.

Their work included counseling families in crisis, running homeless shelters and working with victims of domestic violence and sexual assault.

Fair Work Australia had previously identified these workers as  underpaid.

The ABC reports that in its ruling today, Fair Work Australia said the highest paid employees would receive a 41 per cent, or $24,000 pay rise, bringing their annual salary to $83,000.

Workers on the lowest award rates will receive a rise of 19 per cent, an increase of around $6,000 per year.

The new rates would be phased in over an eight-year period beginning on December 1.

Ms Gillard said an appropriate phasing in period is “unquestionably needed.”

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New deal proposed for vocational students

Thousands of vocational students would no longer have to pay expensive upfront fees, and others would be guaranteed a subsidised training place worth up to $7800, under “sweeping reforms” the Federal government is proposing.

The Prime Minister Julia Gillard said the reforms would mean thousands of Australians would finally be able to afford to get the skills they need to get a job or a promotion and improve their job security.

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Australia’s huge investment queue

Investment is still booming, even though several other parts of the Australian economy are flat.

The latest issue of the Deloitte Access Economics investment monitor shows that $415.4 billion worth of  “definite” projects are now in the nation’s investment queue.

That’s a 43 per cent rise in the 12 months to the end of December..

This matters.

“The value of projects under way provides a healthy buffer against a potential global slowdown in 2012,” the authors of the study say.

“Indeed it is already providing the bulk of growth for the Australian economy at the moment,” they add.

The authors also recalled  the famous wartime “Brisbane Line,” a policy which would have seen Australia abandon all of its territory north of the Queensland capital, if Japan had launched a full scale invasion.

“Fast forward to today and the Brisbane Line could be used to characterise the Australian economy,” they say.

“Today it is economic activity to the north and west which is defining Australia’s prospects…” they add.

That area provides just 20 per cent of Australia’s jobs.

“Yet when it comes to major investment projects under construction, that part of Australia….dominates, with $161.3 billion of investments under construction, or 46 per cent of the total,” the study concludes.

Mining projects dominate.

The authors also say that  the present investment surge is not likely to ease any time soon.

Instead, they predict that investment levels will continue rising over 2011-12 and the two following  years.

“This is very much driven by the healthy pipeline of investment projects awaiting approval,” they say.

The authors say, too, that spending on flood reconstruction and the National Broadband Network would also continue for some time yet.

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