Browsing articles in "rural"
Friday 7th October 2016 - 4:12 pm
Comments Off on Banking woes:we’ve been here before

Banking woes:we’ve been here before

by Alan Thornhill

Our big four banks have a privileged position in the Australian economy.

It allows them to charge 18 per cent on credit card debt, when some banks overseas are offering similar products on ionterest free deals, just to get the business.

And 2 per cent is considered to be an acceptable commercial rate.

Economists have a name for such situations.

They call them oligopolies.

Years ago. when I was studying economics at university, a fellow student pronounced that word as it rhymed with “roly poly.”

The correct pronunciation is much closer to that of another word economists love.

That, of course, is “monopoly.”

This is appropriate because an oligopoly is nothing more than a shared monopoly.

So who pays for the extra-ordinary privileges that Australia’s banks have now?

You do, of course.

And who’s to blame?

In a superb series of talks, that a senior Financial Review writer, Trevor Sykes, produced for the ABC, he came up with an answer that will surprise many.

Alan Bond,

Along with other large scale speculators, such as Robert Holmes a Court, Bond owed billions to Australia’s banks, when the global financial crisis arrived with a major stock market crash in October, 1987

As Kerry Brien recalls in his book Keating, Australia emerged from this crisis with a brand new Reserve Bank and a promise of better behaviour from Australis’s commercial banks, who admitted back they had, previously, lent recklessly at times.

But that was almost 30 years ago.

There has been some deterioration since then, though, and government MPs are now pushing for stronger competition in Australia’s banking sector.

There has been little sign of that yet, though,

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Tuesday 9th August 2016 - 2:48 pm
Comments Off on New risks loom

New risks loom

by Alan Thornhill

A new business survey shows that while the Australian economy is still strong, medium to longer term risks are becoming more apparent.

 

These are the conclusions the National Australia Bank’s Chief Economist, Alan Oster, reaches from the results of the bank’s  latest monthly business survey.

 

The bank sid: “for a while now, the NAB Business Survey has provided a relatively consistent message on the health of the Australian economy.”

 

And it added: “It continues to show a steady recovery in non-mining activity, with the services sectors clearly leading the way.”

 

However Mr Oster added a warning.

 

He said:  “there were some notable differences in business conditions across industries this month. “

 

“The largest deterioration was in mining, followed by big falls in transport and wholesale.”

 

“Retail saw the largest improvement, following a weak result last month.”

 

But  Mr Oster said:  “…the contribution from major industries suggests a relatively mixed bag.”

 

He said the service sectors continue to be the best performers.

 

“ Signs of a broadening recovery in recent months have again become more obscure following sharp deteriorations in transport and wholesale – although the recovery in retail conditions was encouraging.”

 

The bank said the economy could run into headwinds from 2017.

 

And it added: “these headwinds may require additional policy action to support growth, especially if the RBA hopes to see inflation return to within its target band.

 

“ Both global and domestic disinflationary pressures are expected to keep CPI inflation below the target band for an extended period.

 

And structural shifts in the economy and modest economic growth would leave the unemployment rate under pressure.

 

“To stabilise the unemployment rate (at around 5.5 per cent) we expect the RBA will feel the need to provide further medium term support through two more 25bp cuts in May and August 2017 (to a new low of 1 per cent).

“And thereafter raises the prospect of the RBA thinking about the use of non-conventional monetary policy measures,” it added.

Tuesday 12th July 2016 - 1:42 pm
Comments Off on PM’s “get out of jail” card

PM’s “get out of jail” card

by Alan Thornhill

Analysis

 

What happens now that Malcolm Turnbull has at least the 76 lower house seats that he needs to form majority government?

 

We can expect to see tight government, as the Prime Minister takes up the reins, to start his fresh three year term.

 

Not quite as tight, though, as the independent Bob Katter has suggested.

 

 

Mr Katter warned, not altogether seriously, that a government with a majority of one, might lose a critical vote, if he left Parliament to attend his mother’s funeral, or to respond to a call of nature.

 

That’s not a worry

 

Australian parliaments, thankfully, have civilised arrangements called “pairing” to deal with exigencies like these.

 

The Opposition Leader, Bill Shorten, though, did raise as serious matter, when he warned of divisions in the Liberal party, particularly those involving the hard right, which supported Tony Abbott against Malcolm Turnbull, last September.

 

They have not forgotten or forgiven.

 

That became clear this week, when one member, Cory Bernardi, sent e-mails to supporters, urging them not to “… allow the political left to keep eroding our values, undermining our culture and diminishing our important institutions.”

 

The ratings agency, Standard and Poors, delivered the biggest challenge Mr Turnbull will face late last week, though, when it put Australia’s triple A credit rating on “negative watch.”

 

It cited both uncertainties which then existed about the July 2 election results and high levels of both domestic and international debt.

 

This means that the agency might well downgrade Australia’s presently excellent credit rating, if we don’t get those issues under control, over the next two years.

 

An astute Prime Minister might see it as more than that, too.

 

A “get out of jail free card” in fact.

 

Even governments which want to keep their pre-election promises often find it very difficult to do so.

 

So what could Mr Turnbull do, if he finds himself in that all-too-likely position?

Mr Shorten warned, during that eight week election campaign, that this is no time to be giving big companies $50 billion worth of tax cuts, over 5 years, even if they are to be phased in slowly.

 

And a report funded by Getup and published just days before the election said big miners and cigarette companies would be among the main winners, from that policy, which Mr Turnbull repeatedly said would create more “jobs and growth.

 

The miners, perhaps.

 

The cigarette companies.

 

Never.

 

So some adjustments can be expected there.

 

Nick Xenophon might also  be in for some disappointment when he comes to Canberra, seeking more money, to protect the jobs of steel workers, in his home State of South Australia.

 

Mr Turnbull might even be able to convince voters that some restraint in these areas is virtuous, as well as necessary, to avoid extra interest rate pain, for home buyers and others.

 

 

If he is astute enough.

 

 

Thursday 7th July 2016 - 6:13 pm
Comments Off on Politicians squabble over Triple A warning

Politicians squabble over Triple A warning

by Alan Thornhill

The Federal government and opposition differed sharply today, after a major ratings agency, Standard and Poors, put Australia’s prized triple A status on negative watch.

 

It did so citing both the still unresolved Federal election result and high levels of both household and external debt.

 

The Treasurer, Scott Morrison, said the agency’s move, “reaffirmed the government’s fiscal direction and the need to “stick to the plan” the Coalition set out in its last budget.”

 

However the shadow treasurer, Chris Bowen, said it underlined the government’s “fiscal failure” and cast further doubt on its budget projections.

 

 

The agency’s warning means that  Australia’s AAA credit rating might be slashed in future  if there is no improvement in its budgetary performance.

 

 

This  could  increase  government borrowing costs and weaken international investment.

 

Mr Bowen said S&P statement is “sombre reading.”

 

He said the agency  “…calls out the Government on three years of fiscal failure, based on unrealistic Budget revenue forecasts and savings measures that will never pass the Parliament.

 

“S&P makes it clear that it doesn’t have much faith in the Government’s Budget revenue forecasts – a point Labor has consistently made since the Budget in May,” Mr Bowen added.

 

However Mr Morrison took a different view.

 

 

He said the agency’s warning reinforces the government’s message that Australia must “live within its means”.

 

 

He said S&P were clearly concerned about the outcome of the election and that “the pace of fiscal consolidation may be postponed”.

 

Mr Morrison said it would be irresponsible to increase the deficit over the next few years, because “that increases the debt and you can’t get that money back”.

Tuesday 5th July 2016 - 4:25 pm
Comments Off on Glenn Stevens drops a hint

Glenn Stevens drops a hint

by Alan Thornhill

The Reserve bank left interest rates on hold today, but hinted that there could be another rate cut soon.

 

After a meeting of the bank’s board today, its Governor Glenn Stevens noted that Australia’s inflation is low – at 1.3 per cent – and likely to remain so.

 

 

Then he added:  “Over the period ahead, further information should allow the Board to refine its assessment of the outlook for growth and inflation and to make any adjustment to the stance of policy that may be appropriate.”

 

Mr Stevens also said:  “Several advanced economies have recorded improved conditions over the past year.”

 

However he added:  “but conditions have become more difficult for a number of emerging market economies.

 

He said:  “China’s growth rate has moderated further, though recent actions by Chinese policymakers are supporting the near-term outlook.”

 

 

The bank last cut its marker interest rate from 2 per cent, to a new record low of 1.75 per cent, in May.

 

Mr Stevens said:  “Commodity prices are above recent lows, but 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.”

 

He also noted the impact of Britain’s Brexit decision to leave the European Union but said nothing about Australia’s cliffhanger election, last Saturday.

 

Mr Stevens said global financial markets had been “volatile recently as investors have re-priced assets after the UK referendum.

 

 

“But most markets have continued to function effectively,” Mr Stevens added.

 

“Funding costs for high-quality borrowers remain low and, globally, monetary policy remains remarkably accommodative.

 

“Any effects of the referendum outcome on global economic activity remain to be seen and, outside the effects on the UK economy itself, may be hard to discern,” he concluded.

Monday 4th July 2016 - 8:46 am
Comments Off on Australia’s next PM? The one who is better on the blower

Australia’s next PM? The one who is better on the blower

by Alan Thornhill

Australia’s political leaders will be hitting their phones this week, trying to scrape together enough support to give the country stable government for the next three years.

 

The main rivals, Prime Minister, Malcolm Turnbull, who heads a conservative coalition and Bill Shorten, who leads the Labor party both found themselves short of the 76 seats they would need, in the House of Representatives, to govern in their own right, at the end of the initial, but still incomplete, count.

 

Late yesterday, Labor had 67 seats, the Coalition 65, others 5 and 13 were still in doubt.

 

The Australian Electoral Commission had counted 78.2 per cent of the votes cast, at that point.

 

It will not resume the count until Tuesday, and the final result, for the House, will probably not be known until some time next week.

 

Mr Turnbull had made much of the need he saw for stability, during the late stages of the eight week election campaign, particularly after Britain’s vote to leave the EU.
However the swing to Labor, evident in Saturday’s election, showed that voters were more impressed with Mr Shorten’s warning that only Labor could be trusted to protect Australia’s health insurance system, Medicare.

 

Mr Turnbull had sought support for a plan centred on tax cuts for big companies and high income earners.

 

He had warned that a big spending Labor government could not be trusted to manage Australia’s economy responsibly.

 

And, at a news conference today, he welcomed a question from a reporter who asked him if the election result could threaten Australia’s TripleA credit rating.
He thanked the reporter and said: “This is why it is very important … for me to explain what is happening at the moment.”

 

“We are simply going through a process of completing a count,” Mr Turnbull said.

 

The Prime Minister also said that he could still form a new government, for the next three years.

 

However Bill Shorten greeted the initial count with a triumphal declaration.

 

He conceded that the public might not know the outcome of Saturday’s election : “…for some days to come.”

 

“But there is one thing for sure – the Labor Party is back.” he said.

 

But which of these two men is likely to be Australia’s Prime Minister over the next three years?

 

The answer to that question will depend, very much, on their relative telephone skills.

Tuesday 28th June 2016 - 7:25 pm
Comments Off on Bill Shorten sets his “markers”

Bill Shorten sets his “markers”

by Alan Thornhill

The Opposition Leader, Bill Shorten, set out his objectives for a Labor government after July 2, in his final speech of the current campaign to the National Press Club in Canberra today.

 

He said:   “We are setting our markers for the Australia of 2030.”

 

These were:-

 

  • Strong, universal, affordable Medicare
  • A school system back in the top 5 in the world
  • 50 per cent renewable energy
  • A first-rate, fibre NBN, putting us at the centre of the Asian Century
  • Revitalising advanced manufacturing and apprenticeships
  • Building the nation building, productive infrastructure unclogging our cities and joining our economic operations
  • 3 per cent of our GDP dedicated to science, research and technology
  • 300,000 more women in work
  • Halving the national suicide rate, and
  • Reducing the rates of ovarian cancer.

 

He said all  of this would be  matched with an economic and fiscal plan for the next decade, ” to fully-fund our investments in the future.”

 

This would mean: “Delivering the needed structural savings and tax reforms that will bring the budget back to balance in the same year as our opponents forecast, and build stronger, more sustainable surpluses in the years that follow.

 

“Achieving these goals over the next decade means starting work next week.

 

“My team and I have a clear set of priorities for our first 100 days.
“A new Labor government will hit the ground running:

–    Offering certainty to Arrium in South Australia – and protecting jobs in Laverton, Rooty Hill and Acacia Ridge

–    Setting up our transition fund to support 200,000 automotive supply chain jobs

–    Developing the Financing Mandate for our new $10 billion Concrete Bank, so we can get private investment flowing into public infrastructure

–    Drawing up the terms of reference and appointing a Royal Commissioner to investigate the rip-offs, scams and credit card interest rate rorts in the banking sector

–    And convening a National Crisis Summit on Family Violence, an assembly of the frontline: counsellors, law enforcement, community legal centres, state governments and – most importantly – survivors.

 

 

These are the  people who know, better than anyone, what is wrong with our system and what we need to do to end family violence.

 

“Underpinning all of this – our long-term objectives and our immediate plans for action – will be an old-fashioned focus on good public policy.

 

“A careful and considered approach – recognising that government is a most serious business, a long-term policy institution.

 

He said a Labor government would be “Dealing honestly with the challenges we face and being upfront about our plans.”

 

 

Sunday 26th June 2016 - 3:23 pm
Comments Off on PM urges Australians to vote for “stability”

PM urges Australians to vote for “stability”

by Alan Thornhill

Malcolm Turnbull says:  “the shockwaves in the past 48 hours from Britain’s vote to exit the European Union are a sharp reminder of the volatility in the global economy.”

Delivering his policy speech in Sydney for the July 2 elections, the Prime Minister also spoke of the need for stable majority government, experienced economic leadership and a national economic plan.

An edited copy of  his 4,000 word speech is reproduced below.

After praising senior Liberals who attended the launch, Mr Turnbull said Australia needs a national economic plan  which “recognises the nature of our times – both the opportunities and challenges – and gives us the resilience we need to succeed.”

“Only the Liberal National Coalition can deliver that plan, that security, that leadership,” he added.

“Everything we seek to achieve, all of our hopes, our dreams depend on strong economic growth, “ Mr Turnbull said.

In a strong economy, business is  confident and  prepared to risk investing, expanding and hiring.”

Mr Turnbull said:  “Our business tax cuts encourage small and medium businesses to do just that.

“A strong economy means a mum whose kids are now at school and wants to work a few more days, or work full time, will have plenty of opportunities to do so,” Mr Turnbull said.

“And our childcare reforms will make it easier for her to do so too,” he added.

“It means that young men and women who have left school and are looking for a job will find an employer who is hiring and is happy to give them a start.”

“Our PaTH program with job training and internships will provide additional support to youth employment,”Mr Turnbull added.

A strong economy means we can fund our Innovation and Science Agenda to ensure our kids learn the digital skills of the 21st century, our research is commercialised to create jobs here at home and investors support start-up companies.

A strong economy means that senior Australians know their children will be in good jobs, their investments will deliver better returns and that Government will have growing revenues to support their pensions and health care.

It means that the farmer is getting much better prices for his cattle and can afford to hire a local contractor to replace his fences, clean out a dam or build a new hay shed.

It means the cafe, the restaurant, the hotel has more tourists and they hire more staff to cater for them.

All thanks to our export trade deals.

A strong economy means that builders will be hard at work on new homes and tradesmen will have more jobs.

It means that a manufacturer has more export orders, can buy more equipment, hire more workers and expand their business.

A stronger economy means we can fund over $50 billion in 21st century road, rail and other infrastructure including the Western Sydney Airport and the 39,000 jobs it will create.

“A stronger economy means we can afford to fund world-class education and health services, including Medicare, without weighing down our children and grandchildren with more debt and deficits,” Mr Turnbull said.

A strong economy means we can meet and beat our international obligations  to address climate change and do so without massive hikes in electricity prices as Labor would do.

“We have a national economic plan because the prosperity and security of 24 million Australians depend on it,” he said.

Mr Turnbull said success in the 21st Century cannot be taken for granted.

“Always expect the unexpected.”

“We will need to renegotiate vital trade deals with Europe and Britain,” Mr Turnbull said.

“We concluded five in the last three years – Japan, Korea, China, Singapore and the Trans Pacific Partnership.

“In six years Labor concluded none,” he said.

“We have carefully considered what we need to do to succeed, to make the transition from an economy fired up by a once in a century mining construction boom to one that is more diverse, more innovative, smarter, more productive – an economy that wins, and keeps on winning.”

“So there is a clear cut choice at this election,” Mr Turnbull said.

“We present our fellow Australians with a national economic plan every element of which supports more investment, stronger economic growth and more jobs.

“Our plan invests $1.1 billion to promote leading-edge innovation in our industries and to prepare our children for the jobs of the future.”

Our plan promotes export trade deals to generate 19,000 new export opportunities, giving our businesses premium access to the biggest economies in our region.

Our plan invests in local defence industries to ensure every defence dollar possible supports advanced manufacturers and thousands of Australians jobs.

Our Enterprise Tax Plan provides tax relief to tens of thousands of small-to-medium family businesses now and to all companies over time so they can invest, grow and hire more Australians.

“On the other hand, our opponents in the Labor Party have no economic plan.”

“Labor believes its best hope of being elected is to have trade union officials phone frail and elderly Australians in their homes at night, to scare them into thinking they are about to lose something which has never been at risk,” Mr Turnbull said.

“That’s not an alternative government, that’s an Opposition unfit to govern.”

Every element of Labor’s platform would discourage investment and employment.

He described it as: “a recipe for economic stagnation.”

“If returned at this election, we will convene a joint sitting to restore the rule of law in the construction industry and reinstate the Australian Building and Construction Commission, Mr Turnbull said.

So Australians could  have the building infrastructure  they need  “at a price they can afford.”

He said:  “housing values would fall in a fragile property market and rents would rise, because of Labor’s investment destroying ban on negative gearing and 50 per cent hike in capital gains tax.

“This threat is real.

“ So we need to be crystal-clear about what our votes will mean,” Mr Turnbull said.

“If your local vote is for Labor, Greens or an Independent, and you are in one of the 20 or so key battleground seats across the country, it is a vote for the chaos of a hung Parliament, a budget black hole, big Labor taxes, less jobs and more boats,” he warned.

Only a Liberal or National vote ensures stable government, a clear economic plan, real funding for the aged, Medicare and education; more jobs and strong borders.

Mr Turnbull urged Australians to: ““Vote for your local Liberal or National in the House and in the Senate.”

“In the last calendar year, there were 300,000 new jobs,” the Prime Minister said.

“Our unemployment rate of 5.7 per cent is well beneath what was anticipated when the Coalition came to office,” he added.

None of this happens by chance. Strong economic leadership supporting hard-working Australians means that, even with difficult global headwinds, we continue to grow our economy and expand our workforce.

And, today, I can announce additional policies from our Coalition team to support our national economic plan for jobs and growth.

Mr Turnbull said his government is determined to ensure none of our regional communities are left behind as we make the transition to a stronger new economy.

“… our regions must be at the frontline of the drive for innovation, jobs and growth,” Mr Turnbull said.

Our ‘Regional Jobs Fund’ is a major commitment… he added.

“As we build a stronger economy, it is vital that we also do all we can to ensure all Australians, especially young Australians, are not left behind,” he added.

So the Coalition woulds deliver a record $73.6 billion over the next four years for all Australian schools,” he said.

“Today, I can announce an additional $48 million for scholarships under the Smith Family’s Learning for Life program, to help disadvantaged students to complete year 12 and transition to work or further education and training,” he added.

“The Coalition will also invest $31 million in programs to encourage more girls and women to study and work in science, technology, engineering and mathematics,” Mr Turnbull said.

It would also help older Australians get smartphones.

He said only about one household in five, with people aged 60 or above, had a smartphone.

“To make their lives easier, to help them retain their independence, and to keep them connected to families and friends, I am announcing today a $50 million Coalition strategy to assist seniors who want to improve their digital literacy skills,” he said.

“And as announced earlier today, my Government will be investing $192 million more in front line mental health services including twelve suicide prevention sites around Australia and ten more headspace centres; and at the same time using smart phone and other technology to make these services more accessible,” he said.

This complements our support for Veterans’ mental health programs, itself a reminder that we best honour the diggers of Gallipoli and Fromelles by supporting the veterans and their families of today.

Mr Turnbull said; “only a strong Australia can be a safe Australia.

“After six years of abject Labor neglect and indecision, our continuous shipbuilding strategy will ensure Australia retains a sovereign capability to build and sustain naval vessels, securing thousands of advanced manufacturing jobs for decades to come,” he added.

Mr Turnbull said:”Labor’s abandonment of John Howard’s proven border protection policy opened the door to the people-smugglers:

The results had included:-

  • 50,000 unauthorised arrivals on 800 boats,
  • 1200 deaths at sea, of which we know,
  • Over 8000 children put into detention,
  • 17 detention centres opened, and
  • An $11 billion border protection budget blowout.

“In contrast, the Coalition has restored security at the border, integrity to our immigration program – and with it, public trust,” he said.

“I am proud to announce that today marks 700 days without a successful people-smuggling venture to our country,” he added.

“I am also very proud to announce that we have removed every child from detention in Australia,” Mr Turnbull said.

Labor had failed Australia before.

“The people-smugglers are looking for the earliest sign that an Australian government will waver,” he added.

Mr Turnbull said: “our policies are tough.

“But  these policies have stopped the drownings at sea, and restored the integrity of, and trust in, our large but orderly immigration and refugee programs,” he added.

To further strengthen our domestic security I announce initiatives that go to that most fundamental of liberties – the right to live without fear of violence.

Mr Turnbull also said: “my first announcement as Prime Minister was a new $100 million package to encourage all Australians to confront squarely and honestly the ugly truth of violence against women and children in our society.

“Today, I can announce a $64 million commitment to crack down on the trafficking of illegal firearms on our streets, in particular by criminal gangs,” he added.

He said he is asking Australians to make a clear choice — to back a strong and stable Coalition majority government that can press ahead with its plan for a stronger new economy.

That would deliver the economic security that enables Australians to fulfill their aspirations.

“That is why I am asking my fellow Australians at this election to support our Coalition’s National Economic Plan for a Strong New Economy,” he said.

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Alan Thornhill is a parliamentary press gallery journalist.
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