Browsing articles in "rural"
Sunday 10th May 2015 - 7:32 pm
Comments Off on The death of a salesman:by Tony Abbott

The death of a salesman:by Tony Abbott

by Alan Thornhill


So Joe won’t be sacked.

The Prime Minister is adamant about that.

Tony Abbott declared, in a radio interview last week, that Joe Hockey will still be Treasurer, up to the time of the next election.

What Mr Abbott did not say, though, is that Mr Hockey will be relieved of a key duty.

The Social Services Minister, Scott Morrison, is to be top salesman, for Tuesday night’s budget.

This decision, by a Prime Minister who once, famously, declared that “no one – “however smart, however well-educated, however experienced … is the suppository of all wisdom” is a clear slap down for the Treasurer.

Understandable, perhaps.

After all, Mr Hockey has still not convinced Australians, at large, that his first budget, last year, was what Australia needed.

So why let him loose, on the public, again?

But the show must go on.

And Mr Morrison, is to be the star.

Still, all this is very strange.

Let’s lift the curtains a little, to see what is happening.

Mr Hockey’s first budget, last year, was based on a false, but powerful analogy.

That is a comparison between family finances and the national budget.

His message was, apparently, simple.

Paraphrased, it goes something like this.

“We all know if we spend too much, we will get into trouble.

“Labor spent too much and now we have to clean up the mess.

“So we have to cut back on our spending.

“Austerity is necessary.”

Many find that message is hard to accept, from a comfortably proportioned man, who likes his cigars.

But is it well based?

If it was, Australia would certainly have lost the high international credit rating, that it won under Labor.

But it hasn’t.

In fact in a world flushed with money, that isn’t all that sure about where it should go, Australia is still has its high spot among the world’s safest places to invest.

Could Keynes have been right, after all?

John Maynard Keynes, the greatest economist of them all, declared during the Great Depression of the 1930s, that governments could – and should – spend a little more to get economies moving, when thing are slow.

As they are again now, though not as slow as they were back then.

The Reserve Bank confirmed that, last week, in its latest statement on monetary policy.

It declared then that Australia’s economic growth is not only below trend, but likely to stay that way for longer than even it had expected, as recently as February.

The bank’s recognition of this grim situation was – undoubtedly – behind its decisions to cut official interest rates, to a new low of just 2 per cent.

In making these decisions – in February and May – the bank defied the risk that its cuts might simply stoke the Sydney home price boom.

That has seen home prices in the Harbour City soar by an average 14.5 per cent over the past year and leap by as much as 42 per cent in some suburbs.

But the bank knows – as well as anyone – that rate cuts – alone – won’t restore economic growth.

With both investment – and consumer spending – still low – a little pump priming will be necessary to restore both economic growth – and government finances – to robust health.

That should start with Tuesday night’s budget.

But Joe Hockey, the man – and his austere message – are now so closely associated, that they can’t be separated in the public mind.

That’s why Scott Morrison got the role.

Our Scott is, undoubtedly, a tough man.

One who gets things done.

The man who “stopped the boats.”

But none of that will matter, if Tony doesn’t realise that his pre-budget dance is, essentially, a two-step.

If he doesn’t also ease back on the austerity – and allow a little pump priming ahead, Australians will see grim times, of low growth and rising unemployment, extending well into their futures.

That is not an ideal picture, for a government facing an election in less than 18 months.

The remedies, required now, go well beyond a switching the leading man, in its Budget sales play.

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Wednesday 6th May 2015 - 7:29 pm
Comments Off on Treasurer warns banks

Treasurer warns banks

by Alan Thornhill

Joe Hockey is warning Australia’s banks they will face his “anger” if they try to profit from the Reserve Bank’s latest 25 point cut in official interest rates.

The Treasurer said the banks are making “good profits” and he would be “very angry, very angry” if that happened.

The ANZ has already announced that it will be passing the full 25 point cut to its home loan customers.

But the Commonwealth says it will cut its home loan interest rates by just 20 points.

The National Australia Bank will follow suit and Westpac will cut its home loan interest rates by 22 basis points.

However there will be some rises in bank deposit interest rates.

The situation is complex and the Treasurer said the government would be watching it closely.

The full cut would leave a family with a $300,000 home loan $47 month better off.

Asked about the Commonwealth Bank’s position early today, Mr Hockey said:”Well, I understand they’re passing it along in full for small business.

“I also understand some of the other banks have put forward proposals that, as compensation for not passing on the cut to mortgages in full, they are in fact increasing the interest rate they’re paying for people, particularly self-funded retirees and pensioners, on their savings accounts.

“We’ll look at all the details.

“I expect the banks to pass on interest rate cuts in full.

“And I will be very angry, very angry, if the banks are seeking to profit from the decision of the Reserve Bank.

“The banks are making very good profits.

“And we need our banks to be profitable.

“But when the Reserve Bank acts, we expect the banks to also act in full as well.”

Mr Hockey is also urging Australians to spend the extra money many will have, as a result of the latest cut, to boost the national economy.

Meanwhile the Small Business Minister, Bruce Billson, took a softer line with the banks.

In a statement today, he said:” I commend the banks which have already pledged to pass on the interest rate cut announced by the Governor of the Reserve Bank of Australia (RBA) yesterday.

“I thank the Commonwealth Bank in particular for making it immediately clear the cut would be passed on in full to small businesses,

“I encourage other banks to pass on the interest rate cut as soon as possible, so we can get the money into the economy and see the benefits flow,” Mr Billson said.

Wednesday 1st April 2015 - 11:30 am
Comments Off on What’s worrying Australian shoppers

What’s worrying Australian shoppers

by Alan Thornhill

Anxiety levels among Australian shoppers have risen again, causing consumers to cut their purchases of many “non-essentials.”

This is reflected in the latest issue of the National Australia Bank’s quarterly Consumer Anxiety Index.

Its findings, for the first three months of this year, show that worries about government policy are now the prime cause of anxiety among shoppers.

This follows a short-lived easing in anxiety levels in the final three months of last year.

The bank said worries over government policies have now overtaken the cost of living as the single biggest cause of consumer stress.

But it said concerns had risen in all categories except health.

The NAB’s Chief Economist Alan Oster said: “Government policy is now the single biggest cause of anxiety for consumers, just ahead of cost of living, while job security continues to cause the least stress.”

The NAB’s study also found:-

* Anxiety rose and was most pronounced among self employed, lower income earners and consumers living in Victoria and Queensland.

* The anxiety gap between young women and men closes.

* Professional workers reported a significant fall in anxiety.

* Consumers living in Tasmania, NSW, the ACT, rural towns and the bush and part time workers were the only other groups to report lower anxiety.

The bank said that with overall anxiety increasing, consumers are allocating a bigger share of the household budget to paying off debt, utilities and medical bills, while cutting back on many “non-essentials.”

These include entertainment and many household items.

“In terms of their overall household financial position, however, not having enough to retire, being able to provide for the family’s future and meet medical costs were causing the greatest concern” Mr Oster said.

Wednesday 11th February 2015 - 5:51 pm
Comments Off on Rules for foreign investment in Australian farmland tightened

Rules for foreign investment in Australian farmland tightened

by Alan Thornhill

The Federal government is tightening the rules governing foreign purchases of Australian agricultural land.

The Prime Minister, Tony Abbott, and Treasurer, Joe Hockey, made the announcement in a joint statement today.

They said it would lead to: “better scrutiny and reporting of foreign purchases of agricultural land — delivering on our commitment to the Australian people at the last election.”

But they added that foreign investment would still be welcome.

“The Government will continue to welcome foreign investment, but the community must have confidence that this investment is coming in on our terms and for our nation’s benefit,” they said.

They said the Government would reduce the screening threshold from $252 million to $15 million from 1 March 2015.

“The new $15 million screening threshold will apply to the cumulative value of agricultural land owned by the foreign investor, including the purposed purchase,” they said.

“The Government will also establish a foreign ownership register of agricultural land to strengthen reporting requirements and provide a clear picture of foreign investment in Australia’s agricultural sector,” they added.

“From 1 July 2015 the Australian Tax Office (ATO) will start collecting information on all new foreign investment in agricultural land regardless of value. ”

They said ATO would also commence a stocktake of existing agricultural land ownership by foreign interests.

“The Government will continue to work with state and territory governments so that the ATO register will use land title transfer information,” they added.

“These measures are a significant step in protecting Australia’s national interests and in giving the community greater confidence in our foreign investment regime,” they said.

Tuesday 3rd February 2015 - 3:58 pm
Comments Off on This cut has its risks

This cut has its risks

by Alan Thornhill


The Reserve Bank put aside the spectre of a Sydney housing price boom today, and cut its marker interest rate by 25 basis points to just 2.25 per cent.

The cut is expected to flow into variable home loans interest rates – and it might boost home sales and house prices.

If passed on in full, it would cut repayments on a $300,000 mortgage by $44 a month.

The Housing Industry Association welcomed the cut, noting that it was the first since August 2013 and saying it provided an opportunity for the economy to grow.

However, the bank’s Governor, Glenn Stevens warned – as he announced this remarkable decision – that his bank is “working with other regulators” to assess and contain the economic risks that may arise from the housing market.

These are substantial.

Home prices in Sydney have risen by 13 per cent over the past year, while those in Melbourne jumped by 7 per cent.

In both cases, these rises are well above even Australia’s underlying inflation rate of 2.25 per cent.

On the Consumer Price Index, our inflation rate is even lower, at 1.7 per cent.

But the Reserve Bank chief left no doubt about why his board had acted as it has.

He described overall growth in domestic demand as “quite weak.”

“As a result, the unemployment rate has gradually moved higher over the past year,” he said.

Mr Stevens also noted that the $A had “declined noticeably” against a rising $US, but “less so” against a basked of currencies.

But he signaled that the bank is still not satisfied with that, saying the Aussie dollar is still “above most estimates of its fundamental value.”

He said that was particularly so, “given the significant decline in key commodity prices.

“A lower exchange rate is likely to be needed to achieve balanced growth in the economy,” Mr Stevens warned.

The $A duly obliged, falling from 78.1 US cents shortly before the bank’s decision was announced to 76.22US cents little more than an hour later.

Tuesday 3rd February 2015 - 6:43 am
Comments Off on Reserve Bank board to ponder a rate cut, but….

Reserve Bank board to ponder a rate cut, but….

by Alan Thornhill

The Reserve Bank board might cut its marker interest rate by 25 basis points, when it meets today.

And Westpac economists are predicting that it will do so.

However those at the Australian National University are urging the bank to keep rates on hold again, for the 19th successive month.

The bank’s decision is to be announced at 2.30 today.

The ANU’s Shadow Board says another decision to hold rates would help to stimulate Australia’s domestic economy, in the wake of lower global oil prices and a lower $A.

Its chairman, Dr Timo Henckel, said that while Australia’s economic outlook is uncertain, core inflation remains within the RBA’s target band of two to three per cent.

“The ANU Shadow Board continues to recommend with confidence that the cash rate be held at its current level of 2.5 per cent,” he said.

“Core inflation, a measure of inflation that excludes volatile items such as energy and food, currently lies at 2.1 per cent – within the official inflation target band,” Dr Henckel added.

“It suggests that the drop in energy prices does not call for an immediate reduction in the cash rate.”

“If the dollar remains below 80 US¢ for some time, exports, in particular the tourism and education sectors, should expand appreciably and boost domestic production,” he added.

Tuesday 13th January 2015 - 2:53 pm
Comments Off on Wind farmers blame PM

Wind farmers blame PM

by Alan Thornhill

Wind farmers are blaming the Federal government for a sudden collapse in investment in their industry.

The Australian Wind Alliance’s National Coordinator, Andrew Bray, said the government’s “uncertainty” is “annihilating” the industry.

Bloomberg has reported that investment in large-scale renewable energy projects, such as wind farms, has fallen by 88 per cent in Australia .

It reported, too, that, overall investment in the industry is at its lowest level since 2009.

Mr Bray said: “weak and uncertain policies will see regional communities losing critical investment.”

He said: “the renewable energy sector is crucial for many farmers and their local communities that rely on wind farms for secure employment.

“Wind farms provide investment in regional areas, as well as income and employment certainty for those regions,” Mr Bray said.

Labor supported his remarks.

The Acting Shadow Environment Minister, Anthony Albanese, said Tony Abbott’s anti-renewable energy agenda and his broken promise to keep the Renewable Energy Target had caused the damage.

“While there has been a massive decline in investment in Australia, other countries are enjoying surge in investment,” he said.

Indeed China had recorded a 32 per cent increase to $89.5 billion, Mr Albanese added.

Tuesday 6th January 2015 - 1:54 pm
Comments Off on Climate change arrives

Climate change arrives

by Alan Thornhill

Feeling the heat?

Or anxiously watching television reports of fierce bushfires, destroying homes in the Adelaide Hills?

In both cases, the Climate Council says, climate change is “a major factor.”

In all of that – and a whole lot more.

Despite Tony Abbott’s continuing scepticism, the Council today issued an historic statement on the subject.

The Council is an independent organisation, set up to provide clear, easily understood facts on climate change.

It was formed by former members of the Climate Commission after the Prime Minister, a self-proclaimed climate change sceptic, abolished that body last year.

Professor Will Steffen, a Councillor in the new organisation, is an acknowledged expert on climate change.

A scientist, he has conducted extensive research on climate change, at the Australian National University.

And he was not holding back, in a statement he issued, on the Council’s behalf, today.

It declared today that: “…climate change is a major factor in the record-breaking heat that Australians experienced throughout 2014.

“This follows from the announcement from the Bureau of Meteorology that Australia has experienced its 3rd hottest year since records began.”

The Council also said: “2013 was the hottest year on record, and 2005 the second hottest.

“In the last 35 years 29 years have been hotter than average, while only six years have been below average.”

And it declared bluntly: “It is worrying that these sort of records are now being broken so regularly.

“The impact of climate change on these trends is very clear.

“Climate change is making Australia hotter and more prone to bush fires,” Professor Steffen said.

“Another in Australia’s string of ‘Angry Summers’ is underway,” he warned.

“Severe bushfires are raging in South Australia and Victoria following the hottest Spring on record and the hottest November on record.”

“An obvious implication of hotter temperatures is worsening bushfire conditions.

“Over the past four decades, climate change has increased the occurrence of high fire danger weather in the southeast – exactly the type of conditions that have led to the early January fires in South Australia and Victoria,” Professor Steffen said.

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Alan Thornhill

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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