Washington Post: Beware the TPP trade deal

ScreenHunter_3418 Jul. 23 10.44 By Leith van Onselen The Washington Post has joined the chorus of experts warning about the dangers lurking in the Trans-Pacific Partnership (TPP) trade agreement - the US-led trade deal between 12 Pacific-rim nations (including Australia) - which is expected to be signed within the next month: Who will benefit from the TPP? American workers? Consumers? Small businesses? Taxpayers? Or the biggest multinational corporations in the world? One strong hint is buried in the fine print of the closely guarded draft. The provision, an increasingly common feature of trade agreements, is called...
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Weak labor folds on data retention

ScreenHunter_6181 Feb. 23 14.54 By Leith van Onselen As expected, the Labor Party has folded in its opposition to the Government's data retention plan, paving the way for the Government to pass legislation requiring internet providers to store customers' metadata for two years. From The AFR: Labor has called for some amendments but largely backed the most controversial parts of the plan – its duration and scope. There is also no firm push to detail exactly how much the government would pay for the plan, which internet service providers have warned could lead to higher service prices. Under the changes, the definition of...
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RBA meeting preview: Expect another rate cut

ScreenHunter_02 Apr. 22 19.55 From Bill Evans, chief economist at Westpac, who believes that the RBA will cut rates by another 0.25% at Tuesday's meeting and will adopt an easing bias: The Reserve Bank Board meets next week on March 3. We expect that it will decide to cut to overnight cash rate by 25bps from 2.25% to 2.00%. On December 4 last year we forecast that the Bank would decide to cut the cash rate by 25bps at both its February and March meetings. At that time market pricing put the probability of consecutive rate cuts at around 15% with the probability of the February rate cut alone (that has since been delivered) at...
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Investor mortgage growth keeps on rising

ScreenHunter_12 Sep. 23 12.54 By Leith van Onselen The Reserve Bank of Australia (RBA) today released its private sector credit aggregates data for the month of January: A chart showing the long-run breakdown in the components is provided below: Personal credit growth (0.0% MoM; 0.0% QoQ; 0.8% YoY) remains in the gutter, whereas business credit growth (0.8% MoM; 1.6% QoQ; 5.5% YoY) and housing credit growth (0.6% MoM; 1.8% QoQ; 7.1% YoY) are stronger, but remain below their long-run average growth rates (although housing credit is still growing more than twice as quickly as wages and off a ginormous debt...
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Melbourne property “so far out of whack”

ScreenHunter_02 Apr. 23 10.34 By Leith van Onselen If you get a spare 10 minutes today, make sure that you listen to the above interview with property developer/investor, Michael Drapac, from Tuesday's Mornings With Jon Faine show. Drapac is a prominent developer/investor that has been in business since the 1970s. In the mid-2000s, he held the biggest portfolio of CBD land in Melbourne (now sold-off). And now, he holds a multi-billion dollar land portfolio in South Eastern United States. According to Drapac, Melbourne is home to one of the world's biggest property bubble, and anyone that "believes this time is different...
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Budget under more pressure as nominal GDP fades

ScreenHunter_88 Sep. 05 08.32 By Leith van Onselen Stephen Anthony, principal of consulting group Macroeconomics, has today warned that the Federal Budget is facing more downgrades as growth in nominal GDP disappoints. From The Australian: [Anthony] said “nominal” GDP, or the value of all the goods and services produced, was not rising as quickly as projected because of the fall in export commodity prices, a currency that was still too high and very weak wages growth. Although he commended Treasury for heavily marking down its forecasts for nominal GDP for 2014-15 in the midyear budget update, he said the outlook was...
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Long-term unemployment soaring

ScreenHunter_6256 Feb. 27 08.10 By Leith van Onselen Fairfax's Ben Schneiders has penned two good pieces today (here and here) on the growing scourge of long-term unemployment, which has risen some 150% since the GFC hit in 2008: An analysis of Bureau of Statistics data by Fairfax Media shows that the number of people out of work for more than a year rose to 175,200 people in January, an increase of more than 150 per cent since mid 2008. ...both the young - without skills and experience - and the old, in particular those in declining industries, were being hit by long-term joblessness. The Bureau of Statistics data shows...
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Coalition to “save” the ABS

ABS_Logo_Small_mono By Leith van Onselen In a strange turn of events, the Abbott Government is planning to rescue the Australian Bureau of Statistics (ABS) by merging it with the nation's health statistics agency - the Australian Institute of Health and Welfare (AIHW) - and injecting $250 million to update the Bureau's ageing computer system. From The Canberra Times: The reform effort has been dubbed "Project Archer" and would include the integration of AIHW's 340 public servants with the ABS's 2800 workers, with the smaller agency allowed to retain some of its identity. A target date of July 1 has been set for the...
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Deteriorating economy drives exodus to NZ

ScreenHunter_6250 Feb. 26 16.27 By Leith van Onselen Statistics New Zealand yesterday released its permanent & long-term migration figures for January 2015, which revealed that net migration to New Zealand hit the highest level on record: Moreover, migration from New Zealand to Australia is at its lowest level in 22 years: According to Statistics New Zealand: The increase in migrant arrivals between the January 2014 and January 2015 years was led by India (up 5,100), Australia (up 3,500), China (up 1,700), and the Philippines (up 1,300). The increase in arrivals from Australia included 2,600 more New Zealand...
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Hewson: foreign property restrictions “jingoistic”

ScreenHunter_6248 Feb. 26 15.11 By Leith van Onselen I have a lot of time for former Liberal leader, John Hewson. But his comments yesterday afternoon about the Abbott Government's tightening of the foreign investment regime pertaining to residential property are ridiculous: “It may help first-home buyers in the market for new apartments, where there has been a lot of foreign investor interest, it seems mostly to do with that, but I think there may be a jingoistic element to it, for the government to be seen to be doing something about foreign investment,” he said. “But how far can a country like Australia, totally...
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High density housing’s biggest myth

ScreenHunter_07 Feb. 10 11.46 By Ross Elliott, author of The Pulse Advocates of higher density housing development in Australia’s major cities – inner city areas in particular - are fond of pointing to a range of statistics as evidence of rising demand. Dwelling approvals, dwelling commencements, tower crane counts and various other sources, both reputable and dodgy, are referenced and then highly leveraged to support claims that our housing preferences have fundamentally changed in favour of high density apartments. But what’s the one inescapable fact that these advocates are missing? “Higher density living on the...
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RP Data weekly Australian house price update

ScreenHunter_07 Mar. 20 20.55 By Leith van Onselen In the week ended 26 February 2015, the Core Logic-RP Data 5-city daily dwelling price index, which covers the five major capital city markets, rose by 0.22% (see next chart). Home prices rose in rose in all major capitals except Perth (see next chart). So far in February, home values nationally have risen by 0.33%, with values in Sydney, Melbourne and Adelaide rising and Brisbane and Perth falling (see next chart). Since the beginning of the year, home values have risen strongly in Sydney and Melbourne, are up slightly in Brisbane, and have fallen elsewhere...
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Links 27 February 2015

ScreenHunter_01-Apr.-02-06.192 Global Macro / Markets / Investing: Meet the Most Powerful Female Hedge Fund Manager in the World - Bloomberg Global equities hit new record as cheap money reigns - Yahoo ‘Feeling Certain’ and Other Mistakes That Trip Up Investors - Wall Street Journal After the Bitcoin Gold Rush - New Republic Liquidity risk and systemic banking crises - VOX North America: Yellen Seeks Right Blend of Inflation Data to Raise Rates - Bloomberg Marijuana Legalized in Washington D.C., But Congress Isn’t Happy - Bloomberg Elizabeth Warren is furious over Obama’s proposed trade deal -...
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Foreigners pile into NZ property

ScreenHunter_08 Jul. 01 09.14 By Leith van Onselen The crackdown on foreign investment into residential real estate announced by the Abbott Government has raised the pressure on New Zealand's National Government to implement similar rules to restrict foreign purchases. The policy change in Australia coincided with the release of a report yesterday by KPMG, which revealed that bank bosses in New Zealand are becoming increasingly agitated by foreigners inflating New Zealand's asset values. From Interest.co.nz: KPMG’s annual Financial Institutions Performance Survey says bank executives spoken to are concerned about foreign...
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Average weekly earnings take a hammering

ScreenHunter_04 Feb. 08 21.40 By Leith van Onselen The Australian Bureau of Statistics (ABS) has released the Average Weekly Earnings (AWE) data for the six months to November 2014. A breakdown of the key changes is provided below: According to the ABS, on a seasonally-adjusted basis, national total AWE increased by just 0.5% in the six months to November 2014, to be just 1.3% higher year-on-year. A time series of annual average wages is shown below. According to the ABS, the average Australian earned $58,692 per annum as at November 2014, with the average full-time worker earning $80,054: You can see from the...
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Actual capex falls as mining cliff steepens

ScreenHunter_01 Feb. 17 18.55 By Leith van Onselen The Australian Bureau of Statistics (ABS) today released data on capital expenditures (capex) for the December quarter of 2014, which registered a 2.2% seasonally adjusted fall in capex over the quarter and a 3.6% decrease over the year. The result disappointment analyst’s expectations of a 1.6% fall over the quarter (see below table). While Houses and Holes has covered the forward-looking capex plans over the coming years, below are some backward looking charts showing actual capex up to the December quarter of 2014. The first chart below shows actual capex by...
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Abbott capitulates on country-of-origin labelling

ScreenHunter_6148 Feb. 19 09.16 By Leith van Onselen Prime Minister Tony Abbott has finally rolled on country-of-origin labelling in the wake of the Patties frozen berry scandal, which saw around 20 Aussies become infected with hepatitis A after consuming frozen berries imported from China. Facing stiff pressure from the National Party and the community, Abbott has commissioned a cabinet proposal to overhaul country-of-origin labelling, conceding there may be a case for a “modest” impost on business. From The Australian: A cabinet submission — to be prepared by Agriculture Minister Barnaby Joyce and Industry Minister Ian...
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Hockey rules-out super reform

ScreenHunter_29 Oct. 16 14.49 By Leith van Onselen You cannot make this stuff up. Despite declaring a "Budget emergency" and waging a "war on entitlements", Treasurer Joe Hockey has this morning ruled-out following The Greens proposed reforms to Australia's inequitable and costly system of superannuation concessions, which was estimated by the Parliamentary Budget Office to save the Budget $10.3 billion over three years. From The AFR: Mr Hockey reaffirmed the government's commitment not to change superannuation policy in this term of government... Mr Hockey said it was very hard to take the Greens seriously when they refused...
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Bureaucrats at war with pollies over pay

ScreenHunter_07 Oct. 11 11.09 By Leith van Onselen A war is brewing between the federal public service and its master over pay and conditions. Amid scrooge-like pay offers, such as the less than 1% offered to federal Department of Infrastructure staff in exchange for working three extra days, or the 1.4% rise over three years offered to Employment Department staff in exchange for working 30 minutes more a week, anger is mounting. The Commonwealth Public Sector Union (CPSU) is planning to take the fight direct to Employment Minister, Eric Abetz' office, hoping to disrupt the information flow between the department and its...
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Residex: House prices fall despite Sydney boom

ScreenHunter_15 Mar. 05 15.42 By Leith van Onselen Residex has released its house and unit price results for January, which revealed a 0.55% fall in house prices nationally, but a 0.59% rise in unit values: As shown above, performance was mixed with the two biggest capitals - Sydney and Melbourne - continuing to lead the way, driving values nationally. According to Residex, Sydney is experiencing bubble-like conditions with median house values rapidly closing in on $1 million: The median value of all houses in Sydney is now a staggering $911,500. Growth in dollars for the month was $11,000. Sydney home owners are...
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Greens propose sensible superannuation reform

ScreenHunter_6220 Feb. 26 07.54 By Leith van Onselen The Australian Greens have stolen a march on the major parties by embracing the growing push for reform to announce sensible changes to Australia's superannuation system, which would see concessions more evenly distributed. Under the Greens' proposal, the current flat superannuation tax rate of 15% would be replaced with a progressive system that is closely based on a person's marginal income tax rate. The proposal has been costed by the Parliamentary Budget Office (PBO) and is forecast to raise $10.3 billion in budget savings over the first three years, whilst still...
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Property spruikers flip to foreign buyer crash alert!

ScreenHunter_6219 Feb. 26 07.17 By Leith van Onselen The AFR and The Australian are today running articles warning that the Abbott Government's planned crackdown on foreign investment into residential real estate (summarised here) could "shock the market". Here's The AFR: Ray White Real Estate chairman Brian White said the plan, announced on Wednesday, which will raise $200 million, was a shock. “The amounts now proposed have the potential to shock the market – and no market appreciates or responds well to shocks,” he said... CBRE residential projects chairman Justin Brown also said the new taxes were...
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Links 26 February 2015

ScreenHunter_01-Apr.-02-06.192 Global Macro / Markets / Investing: Saudi satisfaction with ‘calm’ oil markets signals $60 anchor – Reuters Pimco Domination Fades in Developing-Nation Debt - Bloomberg Bond Traders Clashing With Analysts on Yellen May Win Regardless – Bloomberg Long-Term Thinking as a Contrarian Approach - A Wealth of Common Sense The 20 Best Investing Blogs of 2015 - thecollegeinvestor.com North America: Major US retail chains raise employee wages to $9 an hour - Bloomberg The 2005 Bankruptcy Reform and the Foreclosure Crisis - New York Fed U.S. new home sales steady near multi-year...
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Highlights: Foreign property investment paper

ScreenHunter_01 Jun. 08 23.33 By Leith van Onselen As noted earlier, the Abbott Government has today announced that it will implement the parliamentary inquiry's recommendations to tighten data collection, surveillance and penalties surrounding foreign investment in Australian residential real estate. The announcement has been accompanied by a consultation paper, with a closing date for submissions on 20 March 2015. Below are some key highlights from this paper, with sub-titles added for navigational purposes. Current Regime: Non-resident foreign persons are generally prohibited from purchasing established dwellings...
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Real wages growth turns positive

ScreenHunter_6210 Feb. 25 13.35 By Leith van Onselen As noted earlier, figures released today by the ABS revealed that Australian wages growth fell to the slowest pace on record (1997) in the December quarter, clocking it at only 2.5% seasonally-adjusted and 2.5% trend over the year: The news was better when adjusted for underlying inflation, however, with annual wages growing by 0.2% in the year to December in trend terms, thanks to a decline in annual underlying inflation between to September and December quarters (from 2.5% to 2.3%): The unpleasant reality is that real wages will need to continue stagnating...
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