by Alan Thornhill
We are already starting to see the issues on which the next Federal election will be fought.
The first glimmer, perhaps, was buried deep in the text of a speech the Treasury Secretary, John Fraser, gave to other economists in Brisbane, last Friday.
He said then “…the best way to improve the material living standards of Australians over the long term is by improving our productivity performance.
“Other countries are not standing still in this regard.
“Spain, as it emerges from the GFC, has embarked on a wave of ambitious reforms to support growth.
“This includes liberalising its labour market, broadening its tax base and reducing tax rates for both companies and individuals.”
To most Australians, these thoughts would seem innocent enough.
Just the kind of thing economists say, when they get together.
In politics, though, context and timing are everything.
Running to more than 3,000 words, Mr Fraser’s speech was clearly meant to hit its mark, even if the speaker, himself, declared that it would be “possibly boring.”
To Labor’s Employment Spokesman, Brendan O’Connor, though it was anything but.
He declared that Mr Fraser had “let the cat out of the bag.”
“The government is planning to bring back Work Choices,” he added.
“There is no doubt that the Government is using its chief economic adviser to make the case for its plans to cut pay and conditions,” Mr O’Connor concluded.
That unpopular policy which contributed so much to the downfall of the Howard government?
Didn’t Tony Abbott say, back in 2010 when he was still Opposition Leader, that:” it’s dead, it’s buried, it’s cremated now and forever?”
But he also added:”but obviously I can’t give an absolute guarantee about every single aspect of workplace relations legislation.”
Mr Fraser also raised Labor’s suspicions with other things he said, last Friday.
He described the Productivity Commission’s current inquiry into the Framework of Australia’s Workplace Relations, for example, as “timely.”
That was after the Commission had noted that – “despite previous reforms – Australia appears to give more weight than other English-speaking countries to elaborate rules for workplace relations processes.”
No self-respecting Labor MP could fail to recognise the coded threats, to so much that their movement holds dear, in observations like that.
How credible is it, though, to suggest that a senior public servant, like Mr Fraser, would go out and – effectively – try out a still undeclared – in fact an already denied – policy like this – even in an off-Broadway production?
A Resurrection Shuffle for Work Choices, on a grand scale?
Mr Fraser would, of course, be appalled at any suggestion that he was taking anything like a direct role in politics, when he made that speech.
But he hasn’t always been a public servant.
He held senior positions with major financial market operators, like the UBS Group and the Swiss Bank Corporation, before he took up his present post with the Treasury, in January this year.
And he did say, on Friday, that the sustained, long-term growth Australia needs, to secure rising prosperity over the mid to long term would clearly require structural reform.
And financial markets do have their own approved mind-sets in such matters.
The Abbott government chose Mr Fraser, specifically, for his present job, because it believed he would pursue Australia’s national prosperity in the Right Way.
So perhaps Mr O’Connor has a point in saying there were signals – in Mr Fraser’s speech – flagging how the government might choose to fight the Federal election that is due next year.
The speech is worth reading anyway – and it’s not “boring” – even though Mr Fraser feared it might be.
It’s on the Treasury website. www.treasury.gov.au
by Alan Thornhill
Woodside has won Federal approval for the renewal of five Commonwealth retention leases earmarked for the proposed Browse Floating LNG project it will operate.
It has also secured similar decisions from the West Australian State government.
The decisions were announced jointly by the Federal Minister for Industry and Science, Ian Macfarlane and West Australian Minister for Mines and Petroleum, Bill Marmion.
The ministers said their statement recognises the proposed project’s significant development potential.
“The Australian and WA Governments have been working closely with the Browse project Joint Venture to ensure they have the right approvals and frameworks to allow the significant investment,” they said.
“This includes addressing questions over the impacts of new coastal waters boundaries in the Browse Basin.
“Our Governments are conscious of the need to ensure these valuable resources can be developed in a manner that is commercially viable and maximises benefits to the Australian community,” Mr Macfarlane said.
“The global gas market is increasingly competitive and governments and industry must continue to work together to ensure Australia remains an investment destination of choice for LNG supply to the burgeoning Asia-Pacific regional economy.
“The floating LNG technology proposed for this project is cutting edge and opens up new opportunities to develop gas resources that could otherwise be stranded – Shell’s landmark Prelude Floating LNG project will showcase this technology when it arrives in the Browse Basin in 2017.” Mr Macfarlane added.
by Alan Thornhill
The Reserve Bank kept interest rates on hold today, even though Glenn Stevens concedes the Australian economy may have “spare capacity” for some time.
In his traditional statement, explaining his board’s decision to hold the bank’s marker rate at 2 per cent, the Reserve Bank Governor said the Australian economy had continued to grow continued to grow over the past year, “but at a rate somewhat below its longer-term average.
“The rate of unemployment, though elevated, has been little changed recently,” he said.
“Overall, the economy is likely to be operating with a degree of spare capacity for some time yet.
“With very slow growth in labour costs, inflation is forecast to remain consistent with the target over the next one to two years, even with a lower exchange rate.”
(The Reserve Bank aims to keep Australia’s inflation between 2 and 3 per cent over the course of a business cycle).
“In such circumstances, monetary policy needs to be accommodative,” Mr Stevens said.
“Low interest rates are acting to support borrowing and spending.
“Credit is recording moderate growth overall, with stronger borrowing by businesses and growth in lending to the housing market broadly steady over recent months.”
Mr Stevens noted, too, that:” Dwelling prices continue to rise strongly in Sydney, though trends have been more varied in a number of other cities.”
He said :”The Bank is working with other regulators to assess and contain risks that may arise from the housing market.
“In other asset markets, prices for equities and commercial property have been supported by lower long-term interest rates.
“The Australian dollar has declined noticeably against a rising US dollar over the past year, though less so against a basket of currencies,” Mr Stevens said.
“Further depreciation seems both likely and necessary, particularly given the significant declines in key commodity prices,” he added.
And he said:” The Board today judged that leaving the cash rate unchanged was appropriate at this meeting.
“Information on economic and financial conditions to be received over the period ahead will inform the Board’s assessment of the outlook and hence whether the current stance of policy will most effectively foster sustainable growth and inflation consistent with the target,” he concluded.
by Alan Thornhill
A former director of Provident Capital Limited, John Patrick Sweeney of Sydney, has been banned from providing financial services for two years.
The Australian Securities and Investments Commission, which imposed the ban, said Mr Sweeney had failed to comply with financial services laws.
ASIC also said Mr Sweeney had been a non-executive director of Provident Capital Limited (Provident Capital) from 30 July 2008 to 7 May 2014.
“Provident Capital went into receivership on 3 July 2012 and into liquidation on 24 October 2012,” the commission said.
“ASIC suspended Provident Capital’s Australian Financial Services Licence on 15 October 2012,” it added.
In a statement today, the industry watchdog also said:” ASIC’s investigation found Mr Sweeney engaged in misleading or deceptive conduct in relation to a financial product.”
And it added:” this specifically related to his conduct from September 2010 to March 2012 when he approved Provident Capital’s Quarterly Reports and Benchmark Reports issued to ASIC and Australian Executor Trustees Limited.”
The commission said it expects better.
“ASIC and the community expect directors of companies to behave in a manner appropriate to their position,” ASIC Commissioner John Price said.
“ASIC’s action against Mr Sweeney demonstrates ASIC will take action against people who fail to meet their obligations.”
Mr Price said:”Mr Sweeney has the right to appeal to the Administrative Appeals Tribunal for a review of ASIC’s decision.”
And he added:”ASIC’s investigation into Provident Capital is continuing.”
by Alan Thornhill
The “very accommodative” policies pursued by many of the world’s central banks are likely to continue “for quite a while,” Glenn Stevens says.
However the Reserve Bank Governor also warned the economic recoveries these central banks are pursuing, may arrive slowly.
He was addressing the Financial Institutions Forum in London.
Mr Stevens said that extra-ordinary developments seen in the global economy over recent years had forced some central banks respond with extra-ordinary policies.
He said the “dire” threats central banks had faced had left them with no choice in 2007 and 2008 apart from trying “unconventional” policies.
“For this was more than just the injection of liquidity as a response to a brief panic,” Mr Stevens said.
“The threat to real economic activity was so dire that the stance of monetary policy had to be changed aggressively.
“Economic activity turned down very sharply, all around the world, in the closing months of 2008.
“Interest rates were slashed and in the major jurisdictions they quickly reached very low levels or, effectively, zero.
“This wasn’t enough either to prevent many countries entering deep recessions or, subsequently, to generate reasonable recoveries.
“Hence, ‘unconventional’ measures were rolled out to try to provide additional stimulus,” Mr Stevens said.
He said these had included using more of their own “leverage” to point economies in the right direction.
“They can and have run an extended period of easy money,” Mr Stevens said.
This had included “… being innovative with their own balance sheets.”
“In all likelihood, very accommodative policies will continue for quite a while,” Mr Stevens added.
But he warned:”During that period, central banks will have little choice but to rely in part on regulatory tools to try to contain potential financial excesses, without convincing evidence of the power of such tools.
“But they will also have to learn to live, I suspect, without the earlier neat distinction between monetary policy and financial stability policy,” he added.
“In the end, of course, central bank policies can’t restore the situation ex ante.
“Whatever adjustments economies needed to make, and may still need to make, in respect of financial and – or economic structure from their pre-crisis situation, cannot be avoided.”
“Those adjustments are ongoing.
” I am optimistic enough to think that, in due course, they will have advanced sufficiently such that stronger growth, accompanied by less extreme central bank policy settings, could be anticipated.
“Needless to say, the more other policies, outside of the central bank’s ambit, can contribute to that, the better,” Mr Stevens said.
by Alan Thornhill
Australia is a deeply worried nation.
This is confirmed in the results of a major poll conducted by the Lowy Institute for International policy.
They show, for example, that feelings of safety among Australians have hit their lowest point in 11 years.
And our optimism about Australia’s economic performance in the world, has fallen sharply to the lowest level seen in the 11years in which the Institute has been conducting polls of this kind.
But that’s not all.
The poll also showed that most of us – 69 per cent – see Islamic State as a high risk to Australia’s security.
It also revealed that 69 per cent support Australia’s military participation in Iraq.
Yet only 20 per cent think that will make Australia safer from terrorism in the future.
The Poll also recorded the third consecutive rise in Australians’ concern about global warming.
The Institute said, when releasing the results of its latest study today, that it had built on its tradition of studying how Australians have responded to the year’s events,and how their views on the big international issues of our time have changed.
“After the Martin Place siege and Islamic State’s barbaric actions in Iraq and Syria, this year’s Poll finds that fewer Australians feel safe now than at any time in our history of polling,” it said.
“And terrorism ranks high in Australians’ threat perceptions,” the Institute added.
“When Indonesia signalled its intention to execute Andrew Chan and Myuran Sukumaran early this year, we commissioned a series of additional short polls from Newspoll to better understand Australian attitudes to the executions and to the death penalty generally;” the Institute said.
“These polls show that Australian sentiment has mobilised against the death penalty for drug trafficking offences, but that the majority want their government to respond with quiet diplomacy rather than with harsh sanctions,” it added.
“After the executions, Australians’ feelings towards Indonesia – which have never been warm – and have at times been characterised by wariness – and even fear – have fallen to their lowest point in eight years,” it added.
The survey also dealt, in detail, with many other worries that are deeply troubling Australians, at present,
One felt very keenly is that of foreigners – particularly the Chinese – buying either residential – or farming – properties in Australia.
This has already led the Federal government to announce crack-downs in both areas, over recent weeks.
The poll showed 70 per cent of Australians believe the Government allows Chinese investors to buy ‘too much’ residential real estate in Australia.
It also found that 50 per cent nominated the Middle East as a source of too much investment.
Only minorities, though, objected to current levels of investment from Japan, Russia, the United States or Europe.
The Institute also said its 2015 Poll had recorded the third successive rise in Australians’ concern about global warming.
“Half the adult population – up 5 points since 2014 and 14 points since 2012- say ‘global warming is a serious and pressing problem’
“A solid majority, 63 per cent, say that in the lead-up to the 2015 UN climate change conference in Paris, ‘the Australian Government should commit to significant reductions so that other countries will be encouraged to do the same’, it added.
by Alan Thornhill
The Federal government wants to improve the way Australia’s superannuation funds are run – and it says more independent people are needed to do that.
That is the basis of reforms it is proposing, in new legislation.
The Federal Treasury is seeking public comment on the government’s draft bill by July 23.
The Assistant Treasurer, Josh Frydenberg, said that given the size of the superannuation system, and its importance in funding the retirement of Australians, good governance is absolutely critical.
However, some critics see the government’s move as an attempt to curb the financial power it sees unions accumulating in industry super funds.
Mr Frydenberg said the exposure draft legislation, released today, would require Australian Prudential Regulation Authority (APRA) regulated superannuation funds to have at least one third of their directors independent.
They would also need to have an independent director on their trustee board and an independent chair.
He said this would apply to corporate, industry, public sector, and retail funds.
But he added:”The new governance rules will not apply to self-managed superannuation funds.”
The Industry welcomed the proposed reforms.
The Association of Superannuation Funds of Australia said robust governance would be a positive for super.
by Alan Thornhill
A Senate Committee has delivered a stinging rebuke to the Abbott government over its health policies.
In an interim report just published, the Senate Select Committee on Health noted that since “coming to power the Abbott Government has repeatedly called into question the sustainability of Medicare.”
But it added:” the evidence given to this committee and documented in this report reveals the fallacy of such claims particularly with regard to GPs and the Medicare Benefits Scheme.”
In fact, the committee said:” Australia delivers some of the best quality and best value hospitals and primary healthcare in the world.”
And it does so at low cost.
The committee says Australia’s spending on health at 9.1 per cent per cent of GDP – is lower than comparable OECD countries.
The committee says health spending in the United States accounts for 17 per cent of that nation’s GDP.
In France health care spending takes 11.2 per cent of GDP.
Canada spends 10.6 per cent of its GDP on health care.
And in New Zealand, health care costs amount to 10.3 per cent of GDP.
But in both the United Kingdom and Spain these costs are broadly similar to Australia’s, at 9.1 per cent.
The committee also recalled that, before the last election, Tony Abbott had promised that there would be “no cuts to health” if he became Prime Minister.
Yet in its first Budget, his government “had abolished a number of national partnership agreements with the States and Territories,” the committee said.
At question time in Parliament later, the Opposition Leader, Bill Shorten, asked Mr Abbott, why he had cut $50 billion from projected health spending.
The Prime Minister’s response was brief.
“There is no truth whatsoever in the Opposition Leader’s assertion,” he said.
The report had said: “The cuts to health were met with the opposition from each premier and chief minister.”
And the public had been affected.
“The impacts on State and Territory budgets and the healthcare sector are already well documented and being felt in frontline delivery,” the committee said.
And that is likely to get worse.
” The 2014-15 Budget reveals cuts to health in the order of $50 billion dollars over the next ten years,” it added.
The committee didn’t have a kind word, either, for the Federal government’s unpopular plan for a $7 co-payment by patients who visit bulk-billing doctors, even though that plan was finally axed in March this year.
In fact, after conducting hearings throughout Australia, it found that:” the overwhelming sentiment of witnesses was that the $7 co-payment will have a negative impact on the health and wellbeing of all Australians and is practically unworkable.”
The committee also found that the government had been guided by ideology, rather than facts, in its decisions on health issues.
“They appear to be driven by ideology rather than based on evidence and have not been developed within a vision and framework of systemic reform,” it 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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