by Alan Thornhill
Australia’s banks are holding out on the nation’s farmers.
Although the Reserve Bank has now cut official interest rates by a total of 50 basis points, over November and December, the banks have passed on only a fraction of that cut, at best, to their rural customers.
Yet it is those very farmers who have produced the hams and turkeys that the bankers, themselves, will enjoy at Christmas.
One financier, Suncorp Agribusiness, stands out, in the results of a survey that the National Farmers Federation has just published.
It – alone – has passed on the cuts, in full.
The Federation said “Suncorp Agribusiness reduced its term loan rate by 0.25 per cent in November and another 0.25 per cent in December, matching the Reserve Bank of Australia’s (RBA) interest rate cuts.”
The Federation also said Four other banks, ANZ Agribusiness, Bananacoast Community Credit Union, Bendigo Bank and Westpac Agribusiness also reduced their term loan or overdraft rates in December by between 0.03 per cent and 0.25 per cent.
But it noted that among the big four banks, only the ANZ had also reduced its rates last month.
John McKillop, who chairs the Federation’s Economics Committee said: “We…. appreciate that unstable financial markets continue to dominate headlines, and that the economic turmoil in Europe is having an impact on credit markets both at home and abroad.
“However, in saying that, the NFF is keen to ensure that Australian farmers are getting the best possible deal from their financial lenders, and that these lenders are competing aggressively for their agribusiness customers.
“That’s why we created the Agribusiness Loan Monitor – to provide transparency for farmers as to how the banks are adjusting their agribusiness loan rates and to help them make informed decisions about their finances,” Mr McKillop said.
Get the full picture.
by Alan Thornhill
More interest rate cuts are likely.
The Reserve Bank admits, in a bulletin just released, that it has been maintaining a “mildly restrictive” stance in its monetary policy.
However that might not be necessary in future.
The bank says that while Australia’s inflation is “expected to pick up a little” it should also remain consistent with its target rate.
The bank aims to keep Australia’s underlying inflation within a 2 -3 per cent range, over the course of a business cycle.
It says inflation should remain about its present levels, if wage growth remains about “its current pace.”
The Bank says its “central scenario” continues to be one in which the European authorities do enough to avert a disaster, but are not able to avoid periodic bouts of considerable uncertainty and volatility.
“A worse outcome in Europe would adversely affect the Australian economy, and underlying inflation would be likely to decline,” the bank warns.
“The main upside risk to inflation comes from growth in unit costs turning out to be faster than is currently expected due to either a continuation of low productivity growth or a pick-up in wage growth,” it adds.
The bank admitted that it has been concerned, for most of the past year, about the potential for inflation to be above the target band over the period ahead.
“Given these concerns, it has maintained a mildly restrictive stance of monetary policy, with most lending rates in the economy a little above their medium-term averages,” it admits.
“Broader financial conditions have also been tighter than normal, with credit growth subdued, the exchange rate at a high level and asset prices lower than earlier in the year,” it says.
These financial conditions have helped contain the inflationary pressures in the economy, with underlying inflation a little below the midpoint of the target band.
“At its meetings over recent months, the Board has reviewed the improving outlook for inflation and ongoing moderate growth in the overall economy,” the bank says.
“At its November meeting, the Board judged that a more neutral stance of monetary policy was now appropriate given that, over the period ahead, inflation was likely to be consistent with the medium-term target and that economic growth remained moderate.
“As a result, after holding the cash rate steady at 4.75 per cent since last November, the Board reduced the cash rate by 1?4 percentage point to 4.5 per cent.
“At its future meetings the Board will continue to set monetary policy so that it is consistent with achieving sustainable growth and 2–3 per cent inflation over time,” the bank concludes.
by Alan Thornhill
Australia’s farm export earnings expected to rise by 6 per cent this financial year, to be worth $34.5 billion.
The Agricultural commodities report for the December quarter, published by the Australian Bureau of Agricultural and Resource Economics makes this forecast.
It credits both higher exports and relatively favourable agricultural prices.
The Federal Agriculture Minister Joe Ludwig, described these estimates as “welcome news.”
Recent rains, particularly in the West Australian wheatbelt town of Williams, though, have not been.
Late rains can wreak havoc on unharvested wheat crops.
Overall, though, the Bureau still expects, export earnings from wheat to rise by 3 per cent.
Mr Ludwig hailed the peformance of Australian farmers.
“During my visit to North Asia this past week, I’ve been encouraged to see so much Australian produce on supermarket shelves,” he said.
“ABARE’S forecasts the demand for agricultural products in the Asian region is expected to remain strong, with more than 60 per cent of Australia’s farm exports to the Asian region in 2010-11,” Mr Ludwig added.
ABARE also forecasts that livestock and livestock products will increase by close to 2 per cent in 2011-12, reflecting higher lamb turn-off rates and increased wool and milk production.
“The good news continues for livestock producers, who are expected to continue to rebuild herd and flock numbers to take advantage of relatively favourable seasonal conditions,” Mr Ludwig said.
Fisheries and forestry export earnings are forecast to increase too, to around $1.4 billion and $2.5 billion in 2011-12 respectively, taking the total value of Australian agricultural, fisheries and forestry exports $38.4 billion in 2011-12, an increase of around 6 per cent from $36.1 billion in 2010-11.
“The forecast for increased export earnings is good news for producers at any time, but particularly when world economic growth is expected to slow down,” Mr Ludwig said.
“The forecasts in this report are great news for Australia’s agricultural, fisheries and forestry exporters and are evidence of the hard work and ground-breaking approaches adopted by Australian producers,” he said.
by Alan Thornhill
Julia Gillard has named Greg Combet as Minister for Industry and Innovation, in her new ministry, which is being expanded to 22 members.
The Prime Minister said her reshuffle has been designed to keep the Australian economy strong and spread the benefits of national prosperity to all Australians.
Key ministers, such as the Treasurer, Wayne Swan, keep their jobs.
Ms Gillard’s announcement followed the Resignation of Small Business Minister Nick Sherry, a Tasmanian.
The Prime Minister said Mr Combet would retain his Climate Change responsibilities.
She said, too, that Chris Evans would become Minister for Tertiary Education, Skills, Science and Research.
Bill Shorten will become Minister for Employment and Workplace Relations.
The Left’s Kim Carr, a Rudd supporter, will be pushed to the outer ministry, with the junior portfolios of Manufacturing and Defence Materiel.
Bill Shorten will become Minister for Employment and Workplace Relations.
In appointments that will increase the responsibilities of women in her Cabinet, Ms Gillard also named Tanya Plibersek as Health Minister and Nicola Roxon Attorney General.
Robert McLelland will become Australia’s first Minister for Emergency Management.
Jenny Macklin will remain Minister for Families, Community Services and Indigenous Affairs, but be sworn in also as Minister for Disability Reform.
Tasmanian MP Julie Collins will join the ministry, with responsibilities for Community Service, Indigenous Employment and Status of Women.
Sid Sidebottom will become Parliamentary Secretary for Agriculture, Fisheries and Forestry.
by Alan Thornhill
The Federal government is likely to revive its plan to means test the present private health insurance rebate.
This is a direct result of Julia Gillard’s victory last week, in elevating a former Opposition member, Peter Slipper, to the Speaker’s chair in Federal parliament.
That has given her minority government one extra vote, as the former speaker, Harry Jenkins, will be returning to the floor of the House, to vote with fellow Labor members
It also takes a vote from the Opposition, as the Speaker traditionally abstains from voting on major issues, in normal circumstances.
The government has made no secret of its belief that the rebate should be means tested.
However, it has been unable to apply that test, so far, because it did not have the numbers to push that measure through parliament.
Its ability to do that is still in doubt, but the task will, at least, be easier, with just three independents, instead of four, to convince.
And the government is under pressure, on all sides, to find whatever savings it can, to get its budget, for the new financial year, into surplus.
The Treasurer, Wayne Swan, admits that instability on world financial markets is slowing parts of the Australian economy.
That reduces revenue flows.
The government has already shown that it is prepared to resort to unattractive options, to raise extra cash, as it did with its deferral of a promised tax break, on overseas bank transactions.
The government will be sorely tempted to means test the private health insurance rebate.
The rebate cost it $3 billion in 2004-05.
So it’s a big ticket item.
It would, of course, face bigger bills for public hospital treatment, if it did so.
However those would be much lower than the savings it would make on the rebate.
And Mr Swan is making no secret of the fact that he believes he is trapped between a rock and a hard place, right now.
by Alan Thornhill
The Federal government is promising that all future coal gas seam projects – and large coal developments – will be subjected to rigorous scientific assessment.
This follows talks the government held with two key independents, Tony Windsor and Rob Oakeshott.
The independents declared their support for the government’s controversial minerals rent tax, after those talks.
Their declaration was quickly followed by a statement issued jointly by the Prime Minister, Julia Gillard and the Treasurer, Wayne Swan.
They said: “coal seam gas and coal can bring huge opportunities – but to do so must maintain community confidence, especially in regard to impact on water.”
The government said it had:“ moved to ensure that all future decisions about coal seam gas projects and large coal mining developments are based on the most rigorous scientific evidence available.
“This can only be achieved by ensuring all environmental approvals and licensing decisions are made on the basis of transparent, objective scientific evidence,” the government said.
“The new science-based framework being introduced by the Government will provide certainty for regional communities around coal seam gas and large coal mining developments, jobs and investment, as well as protection of water resources.” it added
The Government also promised to:-
* Provide $150 million to establish a new Independent Expert Scientific Committee that will provide scientific advice to governments about relevant coal seam gas and large coal mining approvals where they have significant impacts on water; oversee research on impacts on water resources from coal seam gas and large coal mining projects; and commission and fund water resource assessments for priority regions.
* Establish a new National Partnership Agreement with the states through COAG, agreeing that the Commonwealth and states have to take into account the advice of the Committee in their assessment and approval decisions.
* Provide $50 million in incentive payments to the states to deliver this outcome and
* Mandate that the Independent Expert Scientific Committee publicly disclose its advice to ensure local communities have all the best information available to them.
It said these arrangements will provide all Australians with greater confidence that projects will be subject to rigorous and objective scientific assessment.
by Alan Thornhill
The convoy of road warriors still protesting in Canberra has clear aim.
Its organiser Peter Whytcross declares:” “The primary objective is to make the Governor General make the Government stand down.”
However, the protest, which began yesterday, was smaller than expected.
It was also largely peaceful.
Mr Whytcross billed it as “the convoy of no confidence.”
However, a senior Federal minister, Anthony Albanese, dismissed it as “the convoy of no consequence.”
Its political tactics were confused.
Just how these truckies planned to force Australia’s gentle Governor General, Quentin Bryce, to sack the Prime Minister, Julia Gillard, is still unclear.
There are precedents.
Back in 1974 and 1975, rebellious conservative Senators first withheld, then blocked supply, to bring down the Whitlam Labor government.
Although he was just Opposition Leader, back in 1975, Malcolm Fraser managed to persuade the Governor General, at the time, Sir John Kerr, to sack the Whitlam Labor government.
As the truckies don’t have a single seat in the Senate, though, they cannot “make” Ms Bryce to follow Sir John’s example, that way.
So they night have to blockade all roads into the national capital – stopping grocery supplies – to starve Ms Bryce into submission.
The idea, of course, is ridiculous.
But so is the idea that the truckies can force the government to stand down.
Their protest might prove to be superfluous, anyway.
The government’s majority of just one is looking very shaky, right now.
Labor backbencher, Craig Thomson, is trapped in a scandal over credit card payments to an escort agency.
The anti-pokies independent, Andrew Wilkie, is also waiting, none-too-patiently, for the government to introduce pre-set limits on poker machines, as it agreed to do in the post-election deal that won his support for Labor.
So Julia Gillard’s minority government is far from secure, even though, it has not yet reached the mid-way point in its three year term.
The truckies’ protest is aimed – essentially – at the government’s proposed carbon tax and its its ban on live cattle exports.
Some drivers are making big sacrifices, to press their case.
One said the fuel, to take his rig from Port Hedland, to the national capital and back, would cost $3,500.
But the truckies won’t be allowed to blockade Parliament, as its Spring sittings resume.
Any attempt to stop traffic into, or out of Government House, the Governor General’s official residence in the lakeside suburb of Yarralumla, would also attract a swift police response.
However local authorities do expect morning peak hour traffic in the nation’s capital to be severely disrupted, with long delays, everywhere.
Shock tactics – like these – thrive in uncertain times.
They are well worth watching.
Historical lessons, to be drawn from the Great Depression, show that.
The radical politics, that arose then, led straight to World War II.
The truckies, themselves, deserve respect.
There is something distinctly uncomfortable, though, about their tactics.
Professional lobbyists are alarmed.
The Australian Trucking Association, the National Road Freighters’ Association and the National Farmers’ Federation have all quickly distanced themselves from the convoy of no confidence.
The – still rumbling – global financial crisis is – of course – at the heart of the present unrest.
The convoy is just one symptom.
Australians new habit of saving more and spending less is another.
But these are risky times.
by Alan Thornhill
Age pensioners have faced stiff price pressures over the past year.
The prices they pay rose by 4.4 per cent, in the 12 months to the end of June.
Things have been even tougher for families with at least one breadwinner employed.
Their prices rose by an average price rise of 4.5 per cent, over the same time.
These figures, calculated by the Australian Bureau of Statistics, are surprising.
In both cases, these increases are well above the 3.6 per cent rise that the Bureau,itself, chalked up on its broadest price indicator – the Consumer Price Index – for the same period.
So what is going on here?
The Bureau’s latest figures show how various groups, in the Australian community, have been affected by price rises over the past year.
The groups covered were employee households, age pensioner households, others on government welfare and self funded retiree households.
Sadly, the bureau did not publish figures for other groups, such as young, carefree singles, or adult students.
Its figures, though, suggest that groups like these must have escaped price pressures relatively lightly.
Some people certainly did.
After all, self funded retirees faced a 4 per cent price rise, over the past year, on the Bureau’s calculations.
And those other welfare recipients were hit hardest of all, with 4.6 per cent rise in their prices.
The expenses each group faces does, of course, differ according to different needs.
Age pensioners, for example, often have higher health costs than other Australians.
Working families suffer most when interest rates rise.
These differences, though, are not the whole story.
The Bureau also gave notice of some technical changes it plans to make to the its Consumer Price Index.
These will start, later this year, with the September quarter figures.
Meanwhile, in its latest paper, the Bureau “re-referenced” its June quarter CPI figures, raising the June quarter rise from 0.9 to 1 per cent and the annual rise from 3.6 to 3.7 per cent.
There were exceptional factors, too, in all cases.
Cyclone Yasi, which wiped out most of Australia’s banana crop this year, sent banana prices into orbit.
Floods, too, pushed up other food prices, for young and older Australians alike.
The latest figures are not expected to influence Australia’s interest rates, though.
These are set are set by the Reserve Bank, which aims to keep Australia’s inflation in a 2-3 per cent range, over the course of a business cycle.
However, the bank looks at a “trimmed” figure – currently 2.7 per cent – to measure inflation, when it assesses possible changes to Australia’s interest rates.
The bank is less hawkish on rates now, than it was earlier in the year.
It has noted that several sectors in the economy – including retail sales and the building industry – have been subdued, over recent months.
Alan Thornhill is a parliamentary press gallery journalist.
Private Briefing is updated daily with Australian personal finance news, analysis, and commentary.
Thursday December 5
The Dow Jones index fell 24.85 points to 15,889.80
The Federal government and the Greens have reached a deal, under which the cap on Commonwealth debt will be abolished
Qantas warns of another 1,000 job cuts, over the coming year
East Timor’s prime minister says he is shocked by the Australian Government’s decision to authorise raids on a lawyer and whistleblower who were set to provide evidence against Australia in The Hague.
|Aud To Usd||0.9027||N/A||N/A|
|Bhp Blt Fpo||36.780||-0.020||-0.05%|
|Cwlth Bank Fpo||75.500||-1.300||-1.69%|
|Bramb Ltd Fpo||9.420||-0.090||-0.95%|
The News This Week
- Qantas “under pressure” PM
- PM announces free trade agreement with the Republic of Korea
- Trade deficit jumps
- Deeming accounts:a warning
- The $A stumbles, then…
- Debt cap:the row continues
- Competition law review ordered
- Limitless debt:Hockey explains
- Federal debt cap to be scrapped
- Treasurers trade blows
- “This is what we inherited,” Hockey says as growth comes in at 0.6 per cent
- Services sector stirs
- Consumer confidence rises
- Our students are “slipping” Report
- Rates:the explanation
- Airlines (81)
- Banking (2567)
- Business (2679)
- Communications (58)
- crime (15)
- Disaster (119)
- Economics (2651)
- education (1)
- Environment (128)
- Financial advice (2403)
- Health (102)
- Housing (710)
- Inflation (528)
- Insurance (107)
- Investment (2186)
- Markets (1982)
- Media (133)
- medical (41)
- mining (265)
- pay (110)
- Politics (2715)
- population (165)
- Regulation (1026)
- retirement (86)
- rural (14)
- Rural australia (113)
- Security (23)
- Social security (254)
- Superannuation (233)
- Tax (400)
- The latest (124)
- Trade (737)
- Uncategorized (391)