Wollongong council pimps first home buyers

ScreenHunter_4733 Oct. 31 14.57 By Leith van Onselen In what could easily be some kind of Halloween joke, the Illawarra Mercury this week spruiked a new home deposit scheme that would provide low-to-middle income first home buyers (FHBs) with assistance to get "into the housing game": The West Dapto Home Deposit Assistance Program is the first of its kind and is designed to allow low-to-middle-income singles, couples or families to buy a new house or land package in the suburb’s new release area. The grants will be administered through a partnership between IMB and the council and will be available for loans worth up to...
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PPI shows lack of inflationary pressures

ScreenHunter_4728 Oct. 31 14.22 By Leith van Onselen The Australian Bureau of Statistics (ABS) today released Producer Price Index (PPI) data for the September quarter, which has registered a 0.2% quarterly increase in final (stage 3) prices and an increase of only 1.2% over the year: The 0.2% increase in final (stage 3) prices was driven primarily by increases in the prices received for building construction (+1.0%), partly offset by falls in the prices received for electricity supply; gas supply; and water supply, sewerage and drainage services (-3.6%) and petroleum refining and petroleum fuel manufacturing...
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ANZ perpetuates bank capital myths

ScreenHunter_4572 Oct. 20 10.36 By Leith van Onselen ANZ Chief, Mike Smith, has once again warned that Australia's Big Four banks risk becoming globally uncompetitive if they are required to raise capital levels to withstand external shocks. From The Canberra Times: In a market briefing on Friday, Mr Smith argued Australian banks were already well capitalised compared with peers. Tougher capital rules would push up the cost of credit across the economy, he said. "We need to think very carefully about importing other people's solutions to other people's problems, and frankly, Australia deserves a better debate on this issue...
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New Zealand seeks to avoid “generation rent”

ScreenHunter_02 Jun. 14 21.43 By Wendell Cox, reproduced with permission from New Geography: The political leadership and others in New Zealand are talking about the consequences of its land use policies. Under the "urban containment" land use policy (also called by terms like "smart growth," "growth management," and "livability") in effect in every urban area, house prices have doubled relative to incomes over the last 25 years. The principal causes have been the restrictions inherent in urban containment policy, such as making most suburban land off limits for housing development, (which raises its price, like rationing...
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Investor mortgage growth accelerated in September

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 September: A chart showing the long-run breakdown in the components is provided below: Personal credit growth (0.2% MoM; 0.6% QoQ; 1.0% YoY) and business credit growth (0.5% MoM; 0.7% QoQ; 3.8% YoY) continue to grow at a modest pace in annual terms, whereas housing credit growth (0.6% MoM; 1.7% QoQ; 6.8% YoY) is stronger, but remains below its long-run average growth rate; although it is still growing more than twice as quickly as wages and off a very...
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RP Data: home prices up 1.1% in October

ScreenHunter_15 Mar. 05 15.42 By Leith van Onselen RP Data's price results are in for October, with the daily index recording a 1.08% rise over the month at the 5-city level, with values rising in Sydney, Melbourne and Brisbane, but falling in Adelaide and Perth (see next chart). It was the fifth consecutive monthly increase in values, with values also up by 2.37% over the quarter (see next chart). Price growth appears to be well past its peak, with annual growth trending down nationally on the back of Sydney and Melbourne (see next chart). Values are now 11.4% above the October 2010 peak at the 5-city...
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Why metadata is an expensive erosion of privacy

sdfsad By Leith van Onselen The Abbott Government's metadata legislation to require telecommunications companies to store detailed information about the calls and internet use of its customers for two years has met stiff resistance from a number of quarters. The Guardian's Geordie Guy has labelled the legislation as "desperate, confused and contradictory" while significantly impeding civil liberties: Retention poses enormous concerns for anyone who’d prefer their Internet provider didn’t store everything about them. Of course giving the authorities the right to peruse your data without judicial...
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It’s time to ban SMSF leverage

Its_Time_badge By Leith van Onselen The AFR is reporting today that self managed superannuation funds (SMSFs) are gearing into property at an increasing rate, with the amount of debt held in limited-recourse mortgages more than tripling from "$2.5 billion at the end of June 2012 to $8.7 billion at the end of June 2014". A few weeks back, former Treasurer, Prime Minister, and architect of Australia's compulsory superannuation system, Paul Keating, called for curbs on SMSFs using leverage to invest in Australian residential property, arguing that it "is making it nearly impossible for younger people,...
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Boomer dole boom as Abbott floods with coolies

ScreenHunter_4715 Oct. 31 07.55 By Leith van Onselen The Australian is reporting today that the number of over-50s that are on NewStart unemployment benefits has soared by 9% in a year, prompting accusations of 'dole bludging': THE Employment Department has accused baby boomers of ­“retiring’’ on the dole, as the number of over-50s on Newstart jumped 9 per cent in a year. Unemployment is rising five times faster for Australians in their 50s than for those in their 20s, the latest social-security data reveals, creating a “grey army” of 50,000 long-term jobless. Older jobseekers will soon be forced to hunt for...
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How big are Australia’s developer land banks?

ScreenHunter_18 Jul. 05 10.22 By Leith van Onselen Prosper's David Collyer has released an excellent new report examining listed developer land banks in Australia, using data derived from ASX annual reports. Below are the key extracts. First Collyer examines some of the underlying reasons behind land banking, which support my own views (outlined here): Listed property developers report their land holdings to the Australian Stock Exchange, which opens a window into the murky world of ‘englobo’ landbanking. Their 2014 annual accounts show they have 272,000 lots in development, with a disclosed end value of $81...
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Weekly RP Data Australian house price update

ScreenHunter_07 Mar. 20 20.55 By Leith van Onselen In the week ended 30 October 2014, the RP Data-Rismark 5-city daily dwelling price index, which covers the five major capital city markets, was essentially flat (+0.02%).  The result follows five consecutive weekly increases (see next chart). Home prices rose in Sydney and Brisbane, were essentially flat in Melbourne and Adelaide, and tanked in Perth (see next chart). Values are up by 1.11% so far in October, with all major capitals except for Adelaide rising (see next chart). Since the start of the year, home values nationally have risen by 7.49%, with...
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Links 31 October 2014

ScreenHunter_01 Apr. 02 06.19 Global Macro / Markets / Investing: Why Oil Prices Went Down So Far So Fast - Bloomberg Are gold miners a value trap? - ETF Shale LNG trading volumes are picking up - Wall Street Journal Predicting stocks with bond market - Alpha Architect The fiendish bond market needs a radical rethink - Financial Times Why high yield bond investors should pay attention to the stock market - CSSA North America: Fewer Americans filing for job benefits - Bloomberg Real GDP increased at 3.5% annualised - Calculated Risk What did QE accomplish? - The Upshot 2015 could be the year of the...
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Bankers do the crime but not the time!

imgres Cross-posted from The Conversation: Recently, the head of the Australian Securities and Investments Commission, Greg Medcraft, called Australia a “paradise” for white-collar criminals. Soon after he recanted, claiming he didn’t want the country to become a haven for financial fraudsters. This rephrasing likely followed when Finance Minister Mathias Cormann leaned on Medcraft. The mass media has done an admirable job bringing the CBA financial planner scandal to light, forcing ASIC to finally investigate, the Senate to inquire and the CBA to apologise and provide compensation. Despite this,...
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Australia’s terms-of-trade pounded

ScreenHunter_4694 Oct. 30 12.08 By Leith van Onselen The Australian Bureau of Statistics (ABS) released export and import prices for the September quarter, which portends big falls in Australia's terms-of-trade when the national accounts are released next month. According to the ABS, export prices fell by 3.9% in September quarter and by 9.5% over the year. By contrast, import prices fell by a more moderate 0.8% over the September quarter and by 1.1% over the year (see below table). The fall in export prices were driven by the following factors: This [3.9% quarterly] fall was driven mainly by falls in the prices...
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What Robb must cut out of the TPP

ScreenHunter_3418 Jul. 23 10.44 By Leith van Onselen Labor member for Fremantle, Melissa Parke, has posted a fantastic article in The Guardian warning of the dangers to Australia arising from the investor state dispute settlement (ISDS) clause in the Trans-Pacific Partnership (TPP): ISDS clauses enable foreign corporations to sue a host country for laws or policies, or even court decisions, they find inconvenient and objectionable. This has the effect of giving foreign investors more rights than local investors; more influence than local citizens... They were originally created to protect businesses that invested in...
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Greens whither in petrol excise heat

ScreenHunter_4693 Oct. 30 09.40 By Leith van Onselen Richard Denniss, Executive Director of The Australia Institute and previously Senior Strategic Advisor to former Australian Greens Leader Senator Bob Brown, has slammed the Greens' blanket opposition to, and hypocrisy over, re-indexing fuel excise: Back in 2006, the Greens included the abolition of fuel tax indexation on their list of the top ten budget mistakes made by John Howard. Indeed, they rated it number 1. In 2006, they also called for the reintroduction of fuel tax indexation to fund a climate disaster fund. And in 2010, they had the reintroduction costed by the...
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The GST is regressive. So what?

ScreenHunter_4690 Oct. 30 08.20 By Leith van Onselen Former Australian Treasury official and co-founder of Access Economics, Geoff Carmody, has written a great reposte to those whom oppose raising/broadening the GST because it is 'regressive'. From The AFR: ... a flat tax on consumption, like the ideal GST, is regressive. But offering GST exemptions (fresh food), or a lower GST rate, means giving much larger absolute dollar concessions to the rich rather than the poor. The budget cost of such concessions overwhelmingly favours people who aren’t poor. This is wasteful and ineffective redistributive policy... More importantly,...
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Mining town property markets crash spectacularly

ScreenHunter_4683 Oct. 30 07.37 In this week's SQM Research free weekly newsletter managing director, Louis Christopher, provided a detailed update on conditions in Australia's mining town property markets, which are experiencing a sharp downturn, particularly in hard commodity towns associated with iron ore and coal: It has been sometime since we wrote an update on the mining town property crash that has taken place around Australia, most notably in Western Australia. We last wrote a special in our 2013 Housing Boom and Bust Report. At the time we made note the “hard commodity towns” had well and truly entered their...
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RBNZ shows Australia the way

ScreenHunter_4689 Oct. 30 08.01 By Leith van Onselen The Reserve Bank of New Zealand (RBNZ) conducted its Official Cash Rate (OCR) review this morning, which left the official interest rate at 3.5% as expected. However, RBNZ Governor, Graeme Wheeler, did drop talk of future interest rate rises saying "a period of assessment" is warranted, and also warned once again on the overvalued Kiwi dollar: The Reserve Bank today left the Official Cash Rate unchanged at 3.5 percent. The global economy is growing at a moderate rate although recent data suggests some softening in the major economies, apart from the United States. Monetary...
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Links 30 October 2014

ScreenHunter_01 Apr. 02 06.19 Global Macro / Markets / Investing: What’s An Investor To Do About Bonds? - A Wealth of Common Sense Markets' best six months begin with November - Jeff Hirsch The most important charts in the world - Business Insider Being a contrarian is a lonely business - Millennial Invest Why CEOs love share buybacks - Wall Street Journal Does stock picking work in emerging markets? - Alliance Bernstein North America: Are student loan balances the reason behind more adults living with their parents? - Real Time Economics Peter Schiff : Fed Will NEVER Stop Q.E! The US Economy Will Collapse!...
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Rupert Murdoch is not captain of ‘Team Australia’

ScreenHunter_3706 Aug. 11 08.55 Cross-posted from The Conversation Rupert Murdoch’s special address to an exclusive meeting of the world’s most powerful finance ministers got a second airing this week. In a breathless front-page “exclusive” in The Australian, Paul Kelly reported that his boss warned the world’s financial grandees their policies were serving to widen the gap between rich and poor, which was leading to social polarisation. Kelly’s article was not an “exclusive” – others had reported the same speech on October 17 – and it was not “news” as the dinner had been held on October 9. While...
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“Bullshit jobs” are costing the economy

ScreenHunter_4672 Oct. 29 12.35 By Leith van Onselen Deloitte-Access Economics has released a new report claiming that excessive 'red tape' and compliance is costing the economy some $250 billion in lost productivity, much of which has been brought about by companies' own internal rules. From Peter Martin: Deloitte Access says government regulations cost about $27 billion a year to administer and cost businesses $67 billion a year to comply with. But it says red tape imposed by businesses themselves costs $155 billion a year - $21 billion to develop and administer and $134 billion a year to comply with... "Businesses...
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Do liberals kill housing affordability?

539w By Leith van Onselen Trulia's chief economist, Jed Kolko, has produced an interesting analysis showing how the more liberal Democratic strongholds in the US tend to have far lower housing affordability than the more conservative Republican states: Trulia categorized the 100 largest metros as red [Republican] or blue [Democratic] depending on their 2012 presidential vote. ...when we compare red and blue markets in terms of affordability and related measures... none of the 10 reddest markets had a median asking price per square foot above $130 in Sept. 2014. But nine of the 10 bluest markets did....
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How to get the states on board federal reform

ScreenHunter_4651 Oct. 27 12.31 By Leith van Onselen The AFR's Alan Mitchell has written a solid piece prognosticating about the best tax reform options to reform Australia's federation. Predictably, Mitchell mentions raising/broadening the GST in exchange for lower income taxes, which according to the OECD could produce a long-term increase of almost 1% in Australia’s GDP in the event of a 1% shift in the tax mix. The OECD's estimate is broadly supported by professor John Freebairn, who has previously noted that “changing the tax mix from (income taxes to indirect taxes) brings gains of 20c to 30c in the dollar and...
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Accountants highlight 457 visa flaws

ScreenHunter_4668 Oct. 29 07.44 By Leith van Onselen Back in July controversy arose after it was revealed that the Abbott Government had chosen to keep accountants on a list of in-demand occupations for skilled migrants, going against the both the Department of Employment's and the Australian Workforce and Productivity Agency's (AWPA) recommendations to remove accounting from this list due to significant labour surpluses and “deteriorating outcomes for graduates . . . relatively low pay rates for bachelor graduates and weak employment outcomes for masters graduates”. It was understood that universities, which derive...
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