Hockey’s super guarantee pause is good policy

ScreenHunter_3902 Aug. 22 15.25 By Leith van Onselen The Abbott Government has set to delay the planned increase in the superannuation guarantee - the amount that employers must contribute into employee's super accounts - by three years in a bid to ease pressures on the Budget. From Peter Martin: Superannuation contributions at present are set to climb from 9.5 per cent of salary to 12 per cent over the next five years. The Coalition wants to delay the next scheduled 0.5 percentage point increase for three years to ease pressure on the budget. Rushed through the House of Representatives on Monday as part of the mining tax...
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Commodity price index posts small rebound

ScreenHunter_07 Nov. 26 16.13 By Leith van Onselen Yesterday evening, the RBA released its commodity price index for August, which registered a 1.6% rise in Aussie dollar terms – the first monthly increase in 2014 – and also a 1.6% rise in SDR terms – the first increase since December 2013: Preliminary estimates for August indicate that the index rose by 1.6 per cent (on a monthly average basis) in SDR terms, after declining by 1.3 per cent in July (revised). The largest contributor to the increase in August was the price of iron ore. The base metals subindex rose in the month while the rural commodities subindex...
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Links 2 September 2014

ScreenHunter_01 Apr. 02 06.19 Global Macro / Markets / Investing: Has the market overpriced stocks and long bonds? - Econbrowser How the relentless bid from share buybacks has driven this rally - The Reformed Broker How sports betting is similar to the stock market - CNN Money Private debt funds are the new banks - Financial Times Alarm at Basel impact on shorts and swaps - Financial Times Hedge Funds Cut Gold Bull Bets to Lowest Since June - Bloomberg UN predicts climate hell in 2050 - The Guardian A global economy divided into the good, bad and ugly - The Guardian North America: Why many Americans...
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Australia’s world-class health system

ScreenHunter_64 Sep. 01 14.23 Cross-posted from The Conversation: There is an old joke about one fish asking another about the state of the water and the other answering “what’s water?” When you’re immersed in something and that is your daily experience, you are not able to step outside it – all you see is what you know. But with all the talk about Australia’s health system being unsustainable, it’s useful to step back and look at the Australian health system in an international context. So, how do we perform against our peers? The short answer is pretty well. Comparing inputs and outcomes Much of the...
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Australia’s growing youth unemployment scourge

ScreenHunter_3946 Sep. 01 12.43 By Leith van Onselen The Brotherhood of St Laurence has today released a new report on the growing scourge of youth unemployment and underemployment in Australia, which is at the worst level since records began in 1978, with more than 580,000 Australians aged 15 to 24 either under-employed or unemployed: Today, young people are more likely to be underemployed – to have some work but want more hours – than at any time in the last 36 years... Presently, there are more than 310,000 people aged 15 to 24 who are underemployed in Australia. When you add the numbers who are without any work,...
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Mining exploration falls, petroleum lifts

ScreenHunter_03 Jul. 23 09.31 By Leith van Onselen The Australian Bureau of Statistics (ABS) today released its Mineral & Petroleum Exploration data for the June quarter, which revealed a sharp fall in mineral exploration expenditure, but a large lift in petroleum exploration expenditure. Nationally, expenditure on minerals exploration fell by a seasonally-adjusted $35.8 million (-7.5%) over the June quarter. The fall was driven by Queensland, where exploration expenditure fell by $30.2 million (-24.5%): The various components, presented below in non-seasonally adjusted raw terms, actually rose over the quarter by...
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Today’s cigarette tax hike will punish the poor

ScreenHunter_3942 Sep. 01 11.09 By Leith van Onselen Today, the price of a packet of cigarettes is scheduled to rise by between $1.12 and $2.81 due to the decisions of the former Rudd Government to raise the tobacco excise by 12.5%. Excise also will be increased under the normal twice-yearly indexation introduced 30 years ago by the Hawke government, although now it will rise in line with average weekly ordinary-time earnings, rather than the Consumer Price Index, as was previously the case. Last year, in response to the Rudd Government's decision to raise tobacco excise, Sam Oldfield, who is an economics student at...
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More reports of foreign buyers evading FIRB

ScreenHunter_06 May. 06 09.27 By Leith van Onselen Another day, another report of foreign investors in Australian property slipping through the Foreign Investment Review Board's (FIRB) net, this time from The AFR: Real estate agents and property lawyers are willingly helping foreign investors to illegally buy prestige homes in Melbourne and Sydney, says buyers’ agent David Morrell... Mr Morrell likened the powers of the FIRB to “a slap in the face with a wet lettuce”. He said estate agents, whom the FIRB relied upon to report foreign buyers flouting the rules, were looking the other way in return for higher...
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Sloan’s negative gearing defence sours

images By Leith van Onselen After her dreadful defence of negative gearing in July (thoroughly debunked here), The Australian's Judith Sloan has returned with another abusive post aimed squarely at us "lefty" doomsayers that dare question the merits of Australia's famed tax expenditures on investment property. Sloan's article is chock full of straw man arguments, misrepresentation and insults in lieu of reason. Let's take a look at her latest installment: Without the faintest clue of the rationale or application of the relevant tax rules, these advocates for “social justice” will still quote...
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Auction clearances rise

ScreenHunter_19 Mar. 13 13.12 By Leith van Onselen The national auction clearance rate jumped sharply over the weekend on the back of big rises in Sydney and Melbourne. According to RP Data, the national weighted average preliminary auction clearance rate was 72.2% over the weekend, which was up 5.5% from the 66.7% preliminary clearance rate reported last weekend. Sydney’s clearance rate rose by 4.9% to 81.1%, whereas Melbourne’s rose to 71.0% (last weekend 64.1%). Brisbane, which typically only has a small number of auctions, experienced a decline in its clearance rate to 47.0% from 52.1% the weekend before. Overall...
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RP Data weekend property market update

ScreenHunter_18 Mar. 18 17.58 Click to view RP Data’s latest weekly housing market update, which provides a useful snapshot of the housing market as at 31 August 2014. This week’s report includes: Latest weekly dwelling value results; Auction results & clearance rates; Latest median house & unit prices; Average time on market & vendor discounts; Mortgage market activity; and New listings...
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RP Data house prices jump in August

ScreenHunter_07 Mar. 20 20.55 By Leith van Onselen RP Data’s daily house price index for 31 August was released yesterday, which has enabled me to calculate monthly price movements for the five major capital city markets. As shown below, home values at the 5-city rose by 1.18% in August, driven by a big 1.84% gain in Sydney and a 2.26% jump in Adelaide, although gains were recorded across all major markets: It was the third consecutive lift in values after May’s large seasonal fall: Values at the 5-city level have now increased by 6.21% since the beginning of the year, with all major capitals, except...
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Links 1 September 2014

ScreenHunter_01 Apr. 02 06.19 Global Macro / Markets / Investing: Maybe this whole indexing thing has gone too far - Aaron Task Why the stock market feels riskier after a fall - A Wealth of Common Sense Making money by agreeing to disagree - Vitaily Katenelson There are a lot of definitions of risk, many of which are wrong - Aurora Signals Successful retirement planning involves making some tough choices - ThinkAdvisor CONTAGION—How market selloffs happen - Fortune Investors Still Hate the ’Hated Bull Market’ - Wall Street Journal North America: A big chunk of the upper middle class doesn’t save...
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Investors hog as owner occupier’s slow

ScreenHunter_05 Apr. 15 22.08 By Leith van Onselen The Reserve Bank of Australia (RBA) today released its private sector credit aggregates data for the month of July: A chart showing the long-run breakdown in the components is provided below: Personal credit growth (0.2% MoM; 0.5% QoQ; 0.8% YoY) and business credit growth (0.3% MoM; 1.5% QoQ; 3.4% YoY) continue to grow at a modest pace in annual terms, whereas housing credit growth (0.5% MoM; 1.6% QoQ; 6.5% YoY) is stronger, but remains at fairly subdued levels relative to its long-run average growth rate; although it is still growing more than twice as quickly...
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Coalition retreats from draconian dole requirements

ScreenHunter_10 Mar. 29 12.46 By Leith van Onselen The Abbott Government has backed away from its draconian plan to require unemployed jobseekers to apply for 40 jobs a month in order to receive the dole, admitting the plan would have created a "meaningless" burden on employers that would have had to sift through piles of sham job applications. From The AFR: “It is clear that, overwhelmingly, people say that if you're unemployed, your full-time job should be job seeking,” he said. “On the other side, there is the view - and I think it's a legitimate view – that getting people to apply for 40 jobs in a meaningless...
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BIS Shrapnel bull turns bear

imgres By Leith van Onselen BIS Shrapnel has predicted tough times ahead for the Australian economy, forecasting that domestic consumption and investment expenditure will experience its weakest four-year run since the early-1990s recession, averaging just 2% per annum to 2017-18. From Ferret: Richard Robinson, senior economist at BIS Shrapnel warns that employment growth will be soft with only 668,000 jobs created over the next four years. Robinson comments that it will be a slow and difficult transition from an economy driven by the huge resources construction boom, which largely underwrote...
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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 28 August 2014, the RP Data-Rismark 5-city daily dwelling price index, which covers the five major capital city markets, rose by 0.28% (see next chart). Growth in this week's home values was fairly broad-based, with all capitals except Brisbane experiencing rises (see next chart). So far this month, home values have risen by 1.32%, with gains across the board but strongest growth in Sydney and Adelaide (see next chart): Values are up by 6.36% so far in 2014, with all major capitals except for Perth experiencing growth, and particularly...
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Mining gets its coolies

ScreenHunter_59 Aug. 29 07.46 By Leith van Onselen Despite overall unemployment at 12-year highs (and rising), a budding youth unemployment crisis, and its own Department of Employment revealing that skills shortages are at an "historic low", with employers able "to recruit skilled workers without marked difficulty" and "generally large fields of applicants vying for skilled jobs and employers filled a high proportion of their vacancies", the Coalition has announced that it will materially loosen rules to enable employers in specific regions to import more labour from overseas. From The Australian: ...the federal government...
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Links 29 August 2014

ScreenHunter_01 Apr. 02 06.19 Global Macro / Markets / Investing: The stock market can decline without an inversion of the yield curve - Pension Partners Albert Edwards warns on the end of the stock buyback boom - Business Insider Investors can’t help themselves chasing performance - A Wealth of Common Sense Dividend paying stocks are not a substitute for bonds - Pragmatic Capitalism Which hedge funds are attracting big assets - Bloomberg Why S&P 500 index funds are a second-best choice - Rick Ferri North America: Weekly initial unemployment claims continue to trend below 300k - Calculated...
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Dump stamp duty for land taxes

ScreenHunter_30 Aug. 27 15.36 By Leith van Onselen The Housing Industry Association (HIA) yesterday released a report lamenting the high cost of stamp duty in Australia, which "makes household indebtedness worse by increasing required borrowings" and damages the "long-term financial well-being of ordinary homebuyers": “The typical homebuyer in Victoria is hit with a $24,100 stamp duty bill, the highest in the country,” remarked Shane Garrett. “In states like New South Wales and Western Australia, the average homeowner can look forward to handing almost $20,000 over to the state government before the removals truck...
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Why super lump sums must go

ScreenHunter_44 Aug. 28 13.16 By Leith van Onselen First Super chief, Bill Watson, has hit back at calls to require superannuation members to withdraw their super as an annuity to ensure that retirement savings last longer and create less of a drain on the Aged Pension. From The Canberra Times: Mr Watson said he was very concerned by the "kite flying by the Financial Services Council on denying retirees the option of a lump sum and forcing them to take a pension of some description". Referring to the council's push to require retirees to use part of their savings to buy a product that makes periodic payments, such as an...
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Actual capex in surprise lift

ScreenHunter_07 Apr. 05 12.46 By Leith van Onselen The Australian Bureau of Statistics (ABS) today released data on capital expenditures (capex) for the June quarter of 2014, which registered a surprise seasonally-adjusted 1.1%lift in capex over the quarter but a 4.0% decrease over the year. The result beat analyst’s expectations of a 0.9% fall over the quarter (see below table). While Houses and Holes has covered the more important capex intentions survey, which covers industry’s forward-looking capex plans over the coming years, below are some backward looking charts showing actual capex up to the June quarter...
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Australia’s boom to bust

ScreenHunter_01 Feb. 17 18.55 By Leith van Onselen Find above an interesting video interview on The AFR with Lindsay David, author of the new book Australia Boom to Bust. In the interview, David slams Australia's record high mortgage debt (see next chart), claiming that "no one in the Western world has ever done what we are doing”. He also claims The AFR article attached to the interview that the three pillars of the Australian economy: real estate, resources and the banks will eventually collapse: He says that as Chinese authorities appreciate, they’ve built more houses and apartments than they need, demand...
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SMSF lobby hogs the tax trough

ScreenHunter_05 Apr. 15 22.08 By Leith van Onselen In an extraordinary showcase of self-interest, the lobby group representing self-managed super funds (SMSFs) - the SMSF Alliance - has slammed calls to tighten tax concessions around superannuation, arguing that the rich are entitled to their tax breaks. From The AFR: The $1.8 trillion superannuation industry has defended its generous tax breaks, saying it should not be used as a cash cow to rescue the budget deficit at the cost of healthy retirement savings. ...an alliance of self-managed funds said that the rich were just as entitled to benefits... “People who...
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RBA too late the hero on mortgage risks (members)

ScreenHunter_31 Aug. 28 07.42 By Leith van Onselen The Reserve Bank of Australia (RBA) has provided its second submission to the Murray Financial System Inquiry (FSI), which reportedly warns against moves to bolster competition in the mortgage market for fear that it would pump even more funds into property and heighten financial system risks.  From Business Spectator: “The supply of mortgage finance in Australia is ample,” the RBA said. “Therefore, any proposed policies that could further increase that supply should be subject to rigorous analysis of their costs, benefits to consumers and risks to financial...
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