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$A rises against the $US, after the Reserve Bank keeps interest rates on hold at 4.25 per cent

The Prime Minister Julia Gillard said clean-up and recovery grants of up to $25,000 would be provided to communities in Queensland.

Similar grants, of up to $15,000, are being offered in New South Wales.

In Queensland primary producers, small businesses and not-for-profit organisations in the local government areas (LGAs) of Balonne, Barcaldine, Blackall-Tambo, Maranoa, Murweh and Paroo will be eligible.

In New South Wales, Ms Gillard the said the local government areas of  Moree, Narrabri and Gwydir would qualify.

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Another small cut had been widely expected.

However, the Bank’s Governor, Glenn Stevens, said  a “moderate” economic expansion is occurring in the United States.

He said too that  “acute financial pressures” in Europe  had been “alleviated considerably” late last year.

Mr Stevens also said that the two rate cuts, that the bank announced late last year, had left the rates Australia’s borrowers pay close to their “medium term average.”

“With (domestic) growth expected to be close to trend and inflation close to target, the Board judged that the setting of monetary policy was appropriate for the moment,” the Reserve Bank Governor added.

The decision has, at least, postponed a looming stand off between the Federal government and Australia’s big four banks.

The Treasurer, Wayne Swan, had called on those banks to pass on any rate cut in full.

He said that  banks which did not do so would be acting to protect their “huge profitability.”

The banks might well have resisted that demand, if the Reserve Bank had cut its marker rate.

Bank executives, including Westpac’s chief, Gail Kelly, argue that the costs Australia’s banks now incur, raising funds for home and business loans, has risen as a result of the European debt crisis.

The risk of an all out confrontation between the Federal government and the banks eased when the Reserve Bank kept rates on hold.

Mr Stevens did admit that more needs to be done to bring Europe’s debt problems under control,

“Much remains to be done to put European sovereigns and banks on a sound footing, but some progress has been made,” he said.

Mr Stevens admitted, though, that financial market sentiment “remains skittish.”

He also said : “information on the Australian economy continues to suggest growth close to trend,

Mr Stevens admitted, though, that differences between sectors still persist.

“Labour market conditions softened during 2011 and the unemployment rate increased slightly in mid year, “ he said.

However unemployment had been steady over recent months.

Consumer price inflation “has declined as expected,” he added,

Mr Stevens said that had happened as fresh food prices eased, as the large rises resulting  from last year’s floods, passed.

“Year-ended CPI inflation will fall further over the next quarter or two,” he added.

“In underlying terms, inflation is around 2½ per cent,” Mr Stevens said.

The first, by Dun and Bradstreet, shows a big jump in business confidence, taking the outlook for sales to its highest level in almost a decade.

This survey, which looked forward to the June quarter of this year,  recorded a 21 per cent boost in expected sales and an 8 per cent rise in expected profits.

Dun & Bradstreet’s  CEO, Christine Christian, said sales expectations are now at their strongest level since the December quarter 2003, well before the onset of the global financial crisis.

However a second survey, conducted by the Australian Chamber of Commerce produced much bleaker results.

It showed “virtually all actual and expectation indicators worsening in the December quarter.”

Greg Evans, who heads the Chamber’s Economics and Industry Policy section, put most of the blame on the European debt crisis.

“Business confidence is wilting in response to the uncertainty generated by the sovereign debt crisis in Europe,” Mr Evans said.

The timing focus of the two surveys might explain much of the difference between their results.

Worries over European debt probably peaked in the final months of last year.

They might be  now be fading, as more upbeat assessments about the year ahead gradually take hold.

Ms Christian is certainly optimistic.

“We are also no doubt seeing businesses increasingly factoring in the impact of further interest rate reductions on their operations,” she said.

“This improvement has not, however, translated into plans for long-term employment growth, with businesses recording a three point drop in employment expectations for the June quarter,” Ms Christian cautioned.

“This would appear to indicate that businesses are still taking a cautious, wait-and-see approach on trading conditions before looking to expand their operations or their workforce.”

The D&B Business Expectations Survey shows that for the June 2012 quarter:

* Sales Expectations have climbed above the previous high point for December quarter 2010 and are now 25 points above the ten-year average index

* Profit Expectations continue to recover from the first negative index in two years and are now 14 points above the ten-year average index

* Employment Expectations have dipped by three points and are only two points above the ten-year average index; and

*   Investment Expectations have reached a plateau and are seven points below the previous peak in December quarter 2010.

“Despite the general improvement in business expectations some caution was still evident through measures of credit growth across a majority of sectors,” Ms Christian said.

She said: “The Australian Government today activated direct payments of additional disaster assistance for communities in Queensland and Northern NSW hit by flooding as a result of recent heavy rainfall.

“The Australian Government Disaster Recovery Payment (AGDRP) of $1000 per adult and $400 per child will be made available through Centrelink to people who have been impacted by flooding in disaster declared areas.

“In Queensland, these areas include the shires of Balonne, Barcaldine, Blackall Tambo, Maranoa, Murweh and Paroo. This payment is also available to people in Moree, Narrabri and Gwydir in New South Wales.”

This suggests that the Australian economy is still gathering strength, however slowly.

The Bureau reports that, in trend terms, the nation’s retail sales rose by 0.2 per cent in December, despite a fall of 0.1 per cent, on seasonally adjusted figures.

The trend movement has now been steadily upwards since 2009.

So Australians are starting to spend again, even though they are still worried by Europe’s unresolved debt problems.

There is much, though, that was distinctly unseasonal, about the December retail sales figures.

On seasonally adjusted figures, for example, we  cut our spending on Christmas cake – and other food – by 0.7 per cent that month.

We cut our spending in restaurants, cafes and take away food stores, too, by 1.8 per cent.

We spent more, though, on clothes, shoes and accessories.

Even our long suffering Department Stores managed to chalk up higher sales in December, without putting on extra staff.

Job figures, that the Bureau had released earlier, showed that many young women missed out on their usual part time and casual shop assistant jobs, last year, in the pre-Christmas period.

Oddly, too, the Bureau reported that Australia’s resource rich States, Queensland and Western Australia – led the way down  in December’s retail sales – on seasonally adjusted estimates.

The Bureau, though, prefers its trend figures, even though they contain elements of averaging, from previous periods.

Journalists, who want nothing but the latest, have been difficult to persuade, on that matter.

This time, at least, though the Bureau has a good point.

The trend, in retail sales, is clearly upwards.

If  it continues, that will soon put new strength in the economy, as Australians, once again, start flashing their credit cards in the nation’s shops.

The Bureau of Statistics reports that retail sales fell more in Queensland and Western Australia in December, than in other parts of the nation.

On seasonally adjusted figures, the Bureau reports that Australia’s retail sales fell by 0.1 per cent in December, after a rise of the same size the previous month.

Queensland and Western Australia led the way down, with falls of 1.4 and 0.7 per cent, respectively.

Sales in the Northern Territory also dropped sharply, falling by 2.6 per cent.

The Bureau reports that pre-Christmas sales also fell in New South Wales, South Australia and Tasmania.

However pre-Christmas sales rose by 1.5 per cent in Victoria and 1.8 per cent in the ACT.

Food sales fell by 0.7 per cent in December, while sales in cafes, restaurants and take away food stores dropped by 1.8 per cent.

However, we spent more on clothes, shoes and personal accessories in December.

Department stores also chalked up a 1.1 per cent rise in their sales that month, while sales of household goods rose 0.2 per cent.

For other retailers, though, sales were mostly flat.

Up to 100,000 Australian families that might be eligible are not getting this help.

That estimate comes from the Minister for Early Childhood and Child Care, Kate Ellis.

She urged people  to check their situation.

“I would urge families using child care to visit the mychild.gov.au website and access the estimator tool, in order to find out what assistance they could be missing out on,” Ms Ellis said.

The Child Care Benefit and the Child Care Rebate payments are designed to help working families meet the costs of child care and support parents who are returning to the workforce.

“Our Government is delivering record levels of investment in child care affordability and we want to make sure that all eligible Australian families are taking that assistance up,” Ms Ellis added.

She said it would set aside a record $18.1 billion, for this kind of assistance, over the next four years.

So what is available?

Ms Ellis said  that in 2008, the Federal Government had increased the Child Care Rebate from 30 to 50 per cent of parents’ out of pocket costs.

It had also increased the maximum amount per child from $4,354 to $7,500 a year.

“As a result of these changes, the percentage of family income spent on child care fell from 13 per cent in 2004 to 7.5 per cent in 2011.,” Ms Ellis said

Since July last year the Government has also given parents the option to receive Child Care Rebate payments fortnightly, to help ease cost of living pressures being faced by many families, Ms Ellis said.

Still confused?

Why not ring the Family Assistance Office on 13 61 50 to make inquiries?

Despite an improvement in the latest Herald Neilsen poll, published in The Sydney Morning Herald  today, Labor still trails the Coalition 47 -53.

Ms Gillard also saw a 6 point rise in her approval as Prime Minister.

Even on these figures, though,  Labor would still be soundly defeated in a general election.

Even so, that was still an 8 point improvement for Labor.

Meanwhile, the Opposition Leader Tony Abbott has also virtually ruled out an attempt to bring down the Gillard government, by mounting a no confidence motion, when parliament resumes this week.

Instead, the Prime Minister told reporters she was looking forward to a planning session with Labor MPs, when she arrived for a Caucus meeting yesterday.

The meeting decided to attack the opposition on the economy, with MPs saying Mr Abbott had failed to set out an alternative plan for Australia’s economic management, when he addressed the National Press Club last week.

Ms Gillard told the meeting that Labor needed to present its message more clearly.

She also called for discipline, warning MPs to stop backgrounding reporters.

Meanwhile the Treasurer, Wayne Swan, who strongly supports Ms Gillard, reminded the public of Labor’s achievements, since it took office.

Mr Swan said families with a typical $300,000 home loan,  are now saving $3,000 a year on repayments, through lower interest rates.

He also said the Reserve Bank’s marker cash rate, which had been 6.75 per cent, when Labor came to power, is now 4.25 per cent.

Mr Swan also described Australia’s big four banks as “hugely profitable.”

He said they would be well able to pass on any rate cut the Reserve Bank might announce on Tuesday, in full. (see separate story)

Mr Swan claimed, too, that the government’s record of job creation is “outstanding” with 700,000 Australians gaining jobs over the past four years.

Tony Abbott, though, insisted that Australians still  needs a “better government right now.”

“I think we need an election,” Mr Abbott said.

However, Mr Abbott  said that while ever Craig Thompson is in Parliament “I think this government is firewalled against a no confidence motion…”

In a television interview, Mr Abbott also accused Fair Work Australia “or elements of it” of collusion with the government, in the Craig Thompson case.

Fair Work Australia has been investigating allegations that Mr Thomson, now a Labor MP,  misused union credit cards.

However FWA has not yet produced a report on the case, despite long proceedings.

Mr Rudd, the Foreign Minister, who is overseas on duty, did not attend the Caucus meeting, which was followed by a barbeque Ms Gillard held for Labor MPs, at the Lodge.

Although she is likely to survive as Prime Minister, at least in the short term, Ms Gillard’s position remains weak.

Both public and private polling has shown, consistently, that she does not have the public support she would need, to win the Federal election due next year.

That polling also shows that Kevin Rudd, the man she deposed from the nation’s top job, would have a much better chance of victory in that election.

Ms Gillard dismisses talk of a Rudd challenge as media “chatter.”

But Labor party bosses are not completely convinced.

And the chance of even a highly embarrassing victory next year, with a recycled Rudd leading the campaign still tempts them.