by Alan Thornhill
Lending to property investors surged in March, according to the Housing Industry Association.
The HIA, which based its statement on figures released earlier by the Bureau of Statistics, said lending to investors who are building new housing, rose by 54.1 per cent during the month
“While total home lending edged marginally lower in March, lending to investors in the new housing market jumped by 54.1 per cent,” HIA economist, Diwa Hopkins said.
“This moderated the effect of declining lending that occurred in each of the other components of housing finance,” she added.
Total housing finance in March 2016 was worth some $32.74 billion, with lending to investors constructing new housing accounting for $1.83 billion of this total.
Lending to investors is heavily influenced by negative gearing and capital gains tax laws.
These have become contentious in the present election campaign, with the Turnbull government promising no changes if it is re-elected and Labor saying it would introduce new restrictions.
Ms Hopkins said the value of home lending fell by by 1.2 per cent in the March quarter to a level 3.7 per cent lower than in the March 2015 quarter.
“Today’s housing finance results add to a string of positive updates for the residential construction sector that indicate 2016 will represent another healthy year of activity,” she said.
She said, too, that the number of loans to owner occupiers constructing or purchasing new homes in the March 2016 quarter was higher than in the March 2015 quarter in five of the eight states and territories.
These were:- New South Wales (+7.6 per cent); Victoria (+3.7 per cent); South Australia (+12.7 per cent); the Northern Territory (+25.7 per cent) and; the Australian Capital Territory (+7.4 per cent).
Elsewhere, there were declines over this period: Queensland (-0.9 per cent); Western Australia (-23.5 per cent) and; Tasmania (-31.3 per cent), Ms Hopkins said.
by Alan Thornhill
Australians are not eating properly, according to new data that the Bureau of Statistics published today.
In the first publication of its kind, the bureau compared what we do eat with the 2013 Australian Dietary Guidelines.
They recommend minimum serves for vegetables, fruit, dairy products, lean meats and alternatives, and grain-based foods.
The comparison suggests that we are getting little more than half the vegetables we need.
The Bureau’s Director of Health, Louise Gates said that adults and children over eight consumed an average of 2.7 serves of vegetables, rather than the 5 serves recommended by the Australian Dietary Guidelines.
Ms Gates said this is shown by the latest results from the 2011-12 National Nutrition and Physical Activity Survey.
“Less than 4 per cent of the population consumed enough vegetables and legumes or beans each day,” Ms Gates said.
Ms Gates said, too, that only “One in 10 was meeting the guidelines for dairy products, while one in seven consumed the minimum number of serves of lean meats and alternatives per day.”
“Among the five food groups, fruits and grains had the best compliance, with nearly one in three people consuming the minimum recommended number of serves for each group.’
“ However, one-third of the fruit serves was from juice and dried fruit, and two-thirds of the grains and cereals were from refined grains rather than whole grain or high fibre sources,” Ms Gates added.
The report also found that over one-third of the population’s total daily energy intake came from energy-dense, nutrient-poor ‘discretionary foods’ such as sweetened beverages, alcohol, cakes, confectionery and pastry products.
by Alan Thornhill
Australian shoppers are spending more and saving less, according to the Reserve Bank.
The bank made this observation in the May Economic statement, which it published today.
Its main purpose, in publishing this month’s statement, was to explain why the bank cut its marker interest rate by 25 basis points last Tuesday, to a new low of 1.75 per cent.
The bank confirmed, in its statement, that its board had been thinking of cutting this rate, for some time.
It peaked – at 17 per cent – in the late 1980s.
But the bank is expecting much quieter times, in the period ahead.
It noted that wage growth had been “modest.”
It said:“ This implies a further gradual decline in the household saving ratio over the forecast period.”
The bank also said:”The amount of residential construction work still in the pipeline is substantial and has continued to increase.”
“This points to further strong growth in dwelling investment, albeit at a gradually declining rate consistent with the decline in building approvals since last year.”
“ In established housing markets, conditions have stabilised over the past six months or so.”
“ Housing prices have grown moderately over 2016 to date, following a small decline at the end of 2015.”
“ Housing credit growth has eased a little over recent months to be around 7 per cent in six-month-ended annualised terms in early 2016.”
“ This follows increases in mortgage rates and the strengthening of banks’ non-price lending terms in response to supervisory actions.”
“In above average and business credit growth has picked up over the past year or so.”
“ Nevertheless, indicators of investment intentions suggest that non-mining business investment is likely to remain subdued for a time, although it is expected to gradually pick up later in the forecast period as overall demand strengthens.”
“ Mining investment is expected to continue to fall as projects are progressively completed,” the bank said.
by Alan Thornhill
Australians spent more on clothing and shoes as winter approached.
This is reflected in retail trade figures that the Bureau of Statistics released today.
The Statisticia’s figures showed that these purchases contributed to a 0.4 per cent rise in seasonally adjusted retail sales for March.
The Bureau also noted that, on the same basis, sales in the March quarter of this year were 0.5 per cent higher than those seen 12 months earlier.
It said, too, that the amount we spent on clothes and shoes and personal accessories, in March this year, was 0.7 per cent higher, in trend terms, than comparable sales in February.
But it noted that the amount we spent in cafes, restaurants and take away food stores had been “relatively flat” over that time.
In another key economic indicator, also published today, the Bureau reported that Australia’s trade deficit fell by $881 million – or 29 per cent – in March.
It said the value of Australia’s exports had risen by 4 per cent in the month, while imports of consumption goods had fallen by 2 per cent.
by Alan Thornhill
Falling prices have allowed the Reserve Bank to shave interest rates.
But how well with this fit, with the Federal government’s economic policies?
We don’t know yet, because at the time of writing the Treasurer, Scott Morrison, still had not delivered his budget speech, in which he is expected to spell out those aims, in detail.
But we can say, safely, that the patience of Australian investors will be tested, in the months and years ahead.
The Reserve Bank’s decision today, to lower its cash rate from 2 to 1.75 per cent, is of historic significance, in the management of the nation’s finances.
The bank’s Governor, Glenn Stevens, was frank about the bank’s assessment of the circumstances in which it was made.
He said:” This follows information showing inflationary pressures are lower than expected.
“The global economy is continuing to grow, though at a slightly lower pace than earlier expected, with forecasts having been revised down a little further recently.
” While several advanced economies have recorded improved conditions over the past year, conditions have become more difficult for a number of emerging market economies.”
That’s not what investors are looking for, when they decide where to put their money.
Low risk and the prospect of reliable returns are more attractive, or even just acceptable prospects.
Will Mr Morrison’s budget help to produce happier circumstances of that kind?
Well, Australia is, once again, going through a time of quite basic adjustment.
The minerals boom is over.
Investors must look for fresh opportunities, in this time of adjustment.
They will be available.
But will tonight’s budget be compatible with them?
Perhaps that’s the real question.
by Alan Thornhill
Australian wines, lobster and cherries are starting to appear on Chinese tables.
And that’s just the start of it.
The Federal Minister for Trade and Investment, Steven Ciobo, says our Chinese customers are also buying more fresh mangoes, abalone and boneless beef from us as well.
So our trade, with our most important customer, now goes well beyond their traditional purchases of iron ore and coal.
Mr Ciobo wants us to keep all this in proportion.
In a statement today, he merely says Chinese trade data shows “encouraging early signs that the China-Australia Free Trade Agreement (ChAFTA) is delivering for Australian business.
“Between January and March 2016, Chinese imports of Australian bottled wine grew more than 60 per cent compared to the same period 12 months previously, to reach $200 million, as tariffs were cut twice, from 14 per cent to 8.4 per cent,” he added.
He also said:”with tariffs cut, China’s $11.6 million worth of imports of fresh Australian lobster between January and March were triple those of 12 months ago, and exceeded China’s entire 2015 imports of Australian lobster.
“Milk powder and fresh cherry imports more than doubled.”
Mr Ciobo also said: “Chinese imports of other products – including fresh mangoes, fresh abalone, fresh and frozen boneless beef, various types of cheese, and hay and chaff – grew impressively as ChAFTA cut tariffs and boosted Australia’s competitive position.”
“Imports of Australian manufactures that benefited from tariff cuts – like titanium for pigments, unwrought zinc and various mixed food preparations – also grew strongly.
He said that:”These impressive results occurred alongside the third round of tariff cuts in early 2016 under both the Korea-Australia Free Trade Agreement (KAFTA) and Japan-Australia Economic Partnership Agreement (JAEPA), which are also driving increased Australian exports to these two major markets where protection is being reduced.”
“Through the trifecta of FTAs Australian businesses now have preferential access to all three giant north Asian markets – access that is unmatched by other major advanced economies.”
“This positions Australia to continue to capitalise on the rapid expansion of Asia’s middle classes and their demand for the high quality produce and other goods we can provide.”
“This means exciting opportunities for Australian businesses and will drive jobs and growth in the Australian economy.”
“With tariffs on Australian products continuing to be cut annually into north Asian markets, these three FTAs will continue to deliver for Australian business for years to come,” Mr Ciobo said.
by Alan Thornhill
Malcolm Turnbull warned today that Labor’s “reckless” plans to reform negative gearing would “devalue” every home and property in Australia.
However Labor dismissed the Prime Minister’s warning, with the Shadow Treasurer, Chris Bowen,describing it as “a stunt” by the government
Mr Turnbull and his Treasurer, Scott Morrison, were speaking to reporters in the Sydney suburb of Penshurst, when he delivered his message.
He said the government would never adopt Labor’s policies.
“…they’ll devalue every home, every property, in Australia,” the Prime Minister said.
” They’ll result in increased rents because they will reduce the number of rental properties available,”he added.
” So it is an extraordinary trifecta of outcomes the Labor Party is proposing in their recklessness.
“They are going to drive down home values, drive up rents and discourage investment.”
” That’s why we won’t have a bar of it,” the Prime Minister warned.
However Mr Bowen said Mr Turnbull does not care at all about home affordability.
“Malcolm Turnbull is saying that he doesn’t have a plan for housing affordability,” Mr Bpwen said.
” He thinks it’s more important for an Australian buying their tenth or eleventh property to get a tax break than it is for first home buyers to get into the housing market.”
“… Tony Abbott knew how to run a scare campaign,”Mr Bowen said.
“but now we know that Malcolm Turnbull has no more than this for an election campaign.”
by Alan Thornhill
Malcolm Turnbull is finding it hard to convince voters that his government is serious about tackling the kind of corporate tax avoidance confirmed in the Panama Papers.
And the Prime Minister did not help his case by giving an apparently confused answer to a reporter’s question on the role his government is actually playing, in this matter.
Meanwhile the Federal Opposition, keen to take whatever advantage it can from this situation, issued a press release today, seeking to do just that.
Its Shadow Assistant Treasurer Andrew Leigh, said the reply Mr Fraser had given conflicted with one a senior tax official had given, to a parliamentary committee.
Mr Leigh noted that that Mr Turnbull had said Australia is “leading the charge globally in going through the Panama Papers”.
Mark Konza had told parliament’s Economic Reference Committee that Australia is part of an international leadership group, that is tackling the matter.
“…I don’t want to say we’re leading, but we’re batting above our weight,” Mr Konza had added.
However Mr Leigh said Mr Turnbull had gone well beyond Mr Konza’s, relatively modest position, when he replied to the reporter’s question.
Mr Konza, Deputy Commissioner, International, ATO, had said only that “ What we are doing is we are taking a, we are part of a leadership group at the OECD.
“ I don’t want to say we’re leading, but we’re batting above our weight,” the tax official had added.
Mr Leigh said:” A Government that has slashed 4,700 ATO jobs and watered down tax transparency laws cannot be trusted in clamping down on tax avoidance.”
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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