by Alan Thornhill
A submarine led recovery?
That’s not advocated in any respectable economic text book.
Yet it is precisely the path the Federal government is taking us down.
At a cost of some $800 million over 10 years
Money the Productivity Commission says might well have been better spent elsewhere.
The government’s decision to build our new subs in Australia is being accompanied by the slow spread of what might well be called a ”barbed wire broadband.”
That is one based on copper wire, rather than the then superior fibre to the node system, that Labor was proposing when the two choices were first offered.
The slower copper wire system, that Malcolm Turnbull pushed, also ended up costing more than the snazzier Labor model.
Even though the man who is now Prime Minister said it would be substantially cheaper
And the man appointed to run it, has since described the Turnbull alternative as a “colossal mistake.”
However, as Mr Turnbull’s lieutenant, Christopher Pyne, has since explained “Australians don‘t need a faster internet.”
So that’s alright, then.
The government has its explanations.
Mr Pyne, for example, also says it will make Australia “a defence hub.”
But the Productivity Commission won’t have a bar of it.
It notes that building a sub in Australia means that it will cost 30 per cent more than simply buying one overseas.
While necessarily based on hypothetical data, because of time differences, its example reveals that the effective rate of assistance provided to Australia’s submarine industry might well exceed that provided to tne nation’s vehicle industry and its textile, clothing and footwear indsustries, while those payment were s their respective peaks.
The commission also notes that paying more to have the subs built in Australia without getting sufficient value in return diverts productive resources such as labour, capital and land away from more efficient uses that need less assistance. .
This damages Australia’s capacity to get the best possible benefits from the community’s resources.
Its report leaves no room for its readers to doubt about the fact that the commission regards the Federal government’s decision to promote with submarine construction in Australia was a dreadfully dud deal.
So why did it happen?
The commission notes that “iconic” factories were closing and local areas, particularly in South Australia and Victoria, were doing it tough, as a closely fought election, on July 2, approached.
And those who suspect that political, not economic judgements prevailed in this case, won’t get much argument from the Productivity Commission.
by Alan Thornhill
Australia’s annual inflation rate fell to just 1 pr cent in the June quarter.
That was the weakest annual rise since the June quarter of 1999.
This is shown in the June quarter Consumer Price Index figures just released by the Australian Bureau of Statistics.
The fall in the annual rate – from 1..3 per cent at the end of the March quarter – occurred even though consumer prices rose by 0.4 per cent in the June quarter.
This followed a fall of 0.2 per cent in the March quarter.
The Bureau said the most significant price rises this quarter are in medical and hospital services (+4.2 per cent), automotive fuel (+5.9 per cent) and tobacco (+2.1 per cent).
But it added: “These rises are partially offset by falls in domestic holiday travel and accommodation (–3.7 per cent), motor vehicles (–1.3 per cent) and telecommunication equipment and services (–1.5 per cent).
The bureau also said that the increase of 4.2 per cent for medical and hospital services was driven by the annual increase in Private Health Insurance (PHI) premiums.
These rise on 1 April every year.
It said also that the increase of 5.9 per cent for automotive fuel follows three consecutive quarterly falls.
The rise included increases in unleaded, premium and ethanol fuels.
The bureau noted that world oil prices increased from a 12-year low last quarter.
by Alan Thornhill
Lawyers are urging the Federal government to proceed cautiously with its plan to keep dangerous terrorists in jail after their sentences have expired.
The plan is to be discussed by the Federal and Sate governments this week.
The Law Council President, Stuart Clark, acknowledged that the Federal Government has a clear responsibility to ensure the nation is safe and secure.
However he added: “.. it is crucial we do not compromise Australia’s commitment to the rule of law in the process.”
Mr Clark said “… if Australia abandons its rule of law principles then the forces of global terrorism will have secured a significant victory over our nation.”
He warned that the appropriate balance must be struck between ensuring national security on one hand and safeguarding the fundamental legal rights that are central to our democracy on the other.
“Applications for post-sentence controls must always be put before a court, and orders but must only be made by a judge exercising his or her own discretion.
“There must be a proper hearing before the court where the person who is the subject of the application is given the opportunity to answer the material on which the application is based.
“Any order must be periodically reviewed and the scheme monitored by those responsible for its administration, the Parliament and the Independent National Security Legislation Monitor,” Mr Clark said.
“The person who is the subject of the order must also be able to apply to the court to have their case reviewed should their circumstances change,” he added.
“The legislation itself should also be reviewed within three years of its commencement.”
The Prime Minister, Malcolm Turnbull, said the proposed scheme would: “… of course only apply to individuals who as they approach the end of a sentence of imprisonment, continue to pose an unacceptably high risk to the community because of the failure to – their failure to be rehabilitated as a result of a penal sentence.”
He said : “this system will enable a continuing period of imprisonment for high risk terrorist offenders.
“It will be supervised by the courts similarly to the arrangements that apply in a number of our jurisdictions for sex offenders and extremely violent individuals.”
The Shadow Attorney General, Mark Dreyfus, offered Labor’s support for the plan.
He said: “Labor’s approach on matters of national security, as it has always been, is to work in a bipartisan fashion with the government to keep Australians safe.
“This is an approach which has worked very successfully through the last Parliament and I hope will work equally successfully during the 45th Parliament. Labor is committed to the thorough scrutiny of any new legislation that is proposed by the Government through the processes of the Parliament and in particular of the Parliamentary Joint Committee on Intelligence and Security to ensure that the balance between security and our precious freedoms and liberties is maintained.”
by Alan Thornhill
The Federal government says it has “struck a deal” to secure the jobs of South Australian steel workers.
In a joint statement late today, the Prime Minster, Malcolm Turnbull, said his government “is delivering” on its its “election commitment to support South Australia’s steel sector and workers at Arrium .“
He said the Export Finance and Insurance Corporation would provide a loan of $49.2 million for new machinery at the Iron Knob and Iron Baron mines.
This would be done under the National Interest Account.
Mr Turnbull said this would enable Arrium’s OneWhyalla business to process iron ore to export quality and is expected to boost Arrium’s cash flow by more than $200 million over the next five years.
The Prime Minister said this investment would build on his government’s ongoing commitment to support Australia’s steel industry.
He said the measurers already announced included:-
- Using Australian steel across our naval shipbuilding program
- Upgrading 1200 kilometres of rail line between Adelaide and Tarcoola, a project worth approximately $80 million to Arrium
- Strengthening Australia’s anti-dumping system.
Mr Turnbull said his government would continue to work closely with the administrators as they prepare Arrium’s businesses for sale.
by Alan Thornhill
Thinking of starting a new small business?
You are not alone.
A new survey, that the National Australia Bank published today, shows that one Australian in three shares your ambition.
The bank says this shows that the start-up culture is alive and well, in this country.
So what did the survey find?
The key conclusions, according to the bank, were:-
- Around 1 in 3 Australians would like to own their own business with young Australians clearly the most aspirational (nearly 1 in 2)
- Over 1 in 2 men and 41 per cent of women say they have “good” to “excellent” levels of entrepreneurship
- The most popular new businesses are cafés and retail, followed by IT and personal services
- Most budding entrepreneurs would go it alone or with their spouse or partner
- Around 40 per cent of budding entrepreneurs and 75 per cent of existing business owners need or needed less than $50,000 to get their business off the ground
- Over 1 in 3 aspirational and existing business owners would be keen to be part of “community” of other entrepreneurs
The NAB’s Executive General Manager for Micro and Small Business Leigh O’Neill said a healthy start-up sector is critical to fostering a new wave of growth for the Australian economy.
“Small businesses are so important to creating future jobs and economic growth, and understanding their motivations and needs means we can help support the right ecosystems for growth,” Ms O’Neill said.
“We’ve got a huge community of budding entrepreneurs eager to get their ideas off the ground, and it’s clear that they need more than money.”
The release of the research coincides with the launch of NAB Startup, a service that allows aspiring small business owners to become operational quickly, with guidance on setting up an ABN, ACN, business and domain name registrations, as well as website creation and invoicing functionality.
“We see plenty of small business owners juggling full time jobs while setting up their new ventures.
“They have huge amounts of excitement and energy, but very little time, so they need things to be simple, quick and connected,” said Ms O’Neill.
“Services like NAB Startup, our new unsecured $50,000 QuickBiz Loan and digital marketplace for small business Proquo, help entrepreneurs get their business ideas off the ground more quickly and connect with other small businesses.”
The full survey ‘The Lure of Entrepreneurship – Australia’s Start-up Culture’ in available at www.news.nab.com.au.
by Alan Thornhill
Tony Abbott has missed out on a place in Malcolm Turnbull’s new ministry and Christopher Pyne is to become Australia’s new minister for defence industry.
The Prime Minister has also named Josh Frydenberg Australia’s new environment minister.
This has angered environmentalists who say Mr Frydenberg has always favoured the coal industry over the Great Barrier Reef.
Mr Turnbull’s new ministry and cabinet are to be sworn in next week.
The Prime Minister’s decision to leave his predecessor, Mr Abbott, off his front bench comes as no surprise, even though hard right MPs, within the Liberal Party, would have welcomed such a move.
As he promised do before the election, Mr Turnbull generally avoided unecssary changes changes when he announced his new team today.
But Mr Frydenberg will become minister for the environment and energy.
Mr Turnbull said all his previous cabinet ministers had been reappointed although there had been some changes and expansions in their duties.
He said: “Senator Fiona Nash will add Local Government and Territories to her Regional Development and Regional Communications roles.
“Christopher Pyne will be appointed to the new role of Minister for Defence Industry, within the Defence portfolio.
“Mr Pyne will be responsible for overseeing our new Defence Industry Plan that came out of the Defence White Paper.
“This includes the most significant naval shipbuilding program since the Second World War.
“This is a key national economic development role. This program is vitally important for the future of Australian industry and especially advanced manufacturing.
“The Minister for Defence Industry will oversee the Naval Shipbuilding Plan which will itself create 3,600 new direct jobs and thousands more across the supply chain across Australia.
“Beyond shipbuilding, there is a massive Defence Industry Investment and Acquisition Program on land, in the air and inside cyberspace.
“This is a massive step change set out in the Defence White Paper. This investment in Defence Industry, as you know, is a key part of our economic plan.
“It will drive the jobs and the growth in advanced manufacturing, in technology, right across the country. And I’m appointing Christopher to be the Minister to oversee that and ensure that those projects are delivered.
“As I said at the outset, this is a term of government for delivery.
“We will be judged in 2019 by the Australian people as to whether we have delivered on the plans and the programs and the investments that we have promised and set out and described in the lead-up to the election.
Greg Hunt will move from Environment to become the Minister for Industry, Innovation and Science, where he will drive the National Innovation and Science Agenda.
“Can I say that Mr Hunt has been an outstanding Environment Minister and he served in that portfolio in Government and indeed, in opposition.
“He has a keen understanding of innovation, he has a keen understanding of science and technology and he will give new leadership to that important portfolio and those important agendas so central to our economic plan.
“Josh Frydenberg will move to the expanded Environment and Energy portfolio combining all the key energy policy areas.
“These include energy security and domestic energy markets for which he has been previously responsible in the current portfolio. Renewable energy targets, clean energy development and financing and emission reduction mechanisms which are part of Environment.
“Senator Matt Canavan will be promoted to Cabinet as the Minister for Resources and Northern Australia and I welcome Senator Canavan to the Cabinet in this key economic development role,” Mr Turnbull said.
by Alan Thornhill
A body representing older Australians is urging the government to “stick to” its promised reforms to superannuation.
The Council on the Ageing says its “integrity will be at stake” if it doesn’t.
The council’s, Chief Executive Ian Yates said a small number of Liberal members are seeking bigger tax breaks for the rich, at the expense of less well off Australians.
In a statement today. Mr Yates said: ““The Coalition Party Room needs to stand strong on this.
He said that is necessary: “.. in the interests of good social and economic policy, electoral integrity and Budget reform
“… otherwise they will send a message that they govern for the financial interests of the top few percent of wealthy Australians.
Mr Yates said there are fundamental equity issues here .
“…superannuation tax breaks cost over $25 billion in foregone revenue.
He said that is“ – over ten per cent of income tax – and growing fast.
“Middle and lower earners, the majority of whom are women, have to pay more in taxes – both now and in the future – to pay for super tax breaks that largely benefit high-income men,”Mr Yates said.
He said: “…said the fact that the Prime Minister and Treasurer are under pressure to reverse sound policy to make super fairer, based on a weak narrative about selected poor election results and fewer well-heeled supporters manning polling booths, would be laughable if it wasn’t so serious.”
“In fact a few Coalition dissenters giving air to the complaints of a privileged minority created space during the campaign for Labor to ‘dog whistle’ a so-called threat to super; while later banking the whole of the savings from the super reforms” Mr Yates said.
by Alan Thornhill
By late tomorrow (Monday), we should know what the new Turnbull government will look like, but not what it will do about its proposed changes to superannuation.
The Prime Minister, Malcolm Turnbull, signalled yesterday that a decision on that matter is still some way off.
Labor called that a “humiliating back down.”
Its superannuation spokesman, Jim Chalmers noted that Mr Turnbull had had said before the July 2 election that the government’s proposed changes to superannuation were “absolutely ironclad”.
There are many critics, including some critical ones within the Liberal party, who don’t like the caps the government is proposing to put on tax free contributions to super.
Mr Turnbull, though, insists that they are needed, to make the system fairer.
But he warned reporters in Sydney today not to expect a quick resolution of this issue.
That’s good advice, as those internal critics, in particular, are very powerful.
And they would seriously embarrass the Prime Minister if they forced him to back down, from a position that he, himself, has described as “fair,” so soon after an election.
Mr Turnbull told reporters today that he is listening “very carefully” to the concerns that “my colleagues and others” have raised at the proposed superannuation tax reforms.
“And they will go through the normal Cabinet and party room process.
“We are listening very keenly, I am listening very keenly and carefully to concerns that have been raised by my colleagues, and of course by other people in the community as well,” he said.
But Mr Turnbull added that he would not say more at a press conference.
Mr Chalmers ridiculed Mr Turnbull’s new stance.
“Well, it will be champagne flutes at twenty paces tonight at The Lodge as the members of the Turnbull Government gather to brawl about their superannuation changes,” he said.
“ No amount of taxpayer-funded champagne and prawns will fix the deep divisions in the Liberal Party, in the Turnbull Government, over the mess they’ve made of superannuation,” Mr Chalmers added.
Mr Turnbull also coonfirmed today that there would be some changes between his old ministry cabinet and cabinet and his new ones.
His junior Coalition partner, the Nationals, for example, are expected to get at least one extra seat, because they polled well in the July 2 elections.
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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