Unconventional Economist


Grattan delivers blueprint for fair super reform

By Leith van Onselen The Grattan Institute has delivered another excellent report entitled Super tax targeting, which argues that the Budget could save a combined $6.6 billion a year by better targeting superannuation contributions (saving $3.9 billion a year), along with implementing a 15% tax on the earnings of retirees (saving $2.7 billion a year).


The fuel driving the Syd/Melb housing bubbles

By Leith van Onselen Among all of the factors that drive house price growth, arguably the most important is the flow of housing finance commitments, which has shown an incredibly strong correlation over the past several decades (see next chart). On Friday, the ABS released its State Accounts for the year ended June 2015, which


Trade deficit narrowed in Q3

By Leith van Onselen The ABS today released its preliminary estimate of the September quarter trade balance, which registered a $3,508 million (2%) improvement in the trade deficit to $7,438 million. The main components contributing to the balance of goods and services were: goods exports, up $3,614 million (6%), with: non-monetary gold, up $1,648 million


Parko’s revenge

By Leith van Onselen Prime Minister Malcolm Turnbull has given former Treasury Secretary, Dr Martin Parkinson, a new lease on public life, appointing him head of the Department of Prime Minister and Cabinet, according to The AFR. This is great news. Dr Parkinson has an excellent understanding of tax reform and is well placed to


WA construction poised to crash

By Leith van Onselen Reality is dawning that the Western Australian economy is facing a serious decline in activity and jobs as the joint housing and mining construction booms unwind. From  The Western Australian: The WA economy and State Budget are facing fresh pressures, with warnings the house construction sector is going to rapidly slow


NSW cabbies to receive Uber compensation

By Leith van Onselen ABC Radio has reported today that New South Wales taxi plate owners are likely to receive compensation from the Government for competition arising from ride-sharing services such as Uber: TIM PALMER: The New South Wales Premier Mike Baird has signalled his Government will consider compensation for the taxi industry if Uber


Consumer confidence retraces again

By Leith van Onselen The ANZ-Roy Morgan Research consumer confidence index retraced by 1.4points in the week ended 22 November after hitting a 22 month high two week’s back (see next chart). The slight fall in the index was driven by reduced confidence towards future finances, which fell 4.7% and is down 0.2% on a


NZ housing “significantly overvalued”, to bust

By Leith van Onselen Via David Hargreaves at Interest.co.NZ comes a new research report from First NZ Capital examining New Zealand’s housing market. The report notes five demand-side factors supporting New Zealand housing values, namely: Strong net migration Demand pressures coming from the destruction of the Canterbury housing stock Low interest rate settings Increased investor


Sydney the least affordable rental market

By Leith van Onselen Not only is Sydney the least affordable housing market to purchase in, but renting sucks there as well. Despite the billions of taxpayer dollars used to subsidise negatively geared landlords, many working families – those on low to moderate incomes – are experiencing severe housing stress, according to the inaugural Rental Affordability


NSW/VIC housing valuations turn nuclear

By Leith van Onselen Earlier this month, the Australian Bureau of Statistics (ABS) released its 2014-15 Australian System of National Accounts (ASNA) data release, which provided a detailed presentation of annual national accounts data. Locked away on Table 61 was my favourite section of the release: data on aggregate land values at the state and


New identity rules closes net on illegal foreign buyers

By Leith van Onselen In September 2014, the Victorian Government amended the Transfer of Land Amendment Act 2014 to require mortgagees/lenders to take positive steps to verify the identity of mortgagors/borrowers and their authority to deal with the land being mortgaged (see here for details). A reader last night informed us that on 30 September,


Links 24 November 2015

Global Macro / Markets / Investing: How Demographics Rule the Global Economy – WSJ The Lingering Effects of the Financial Crisis – A Wealth of Common Sense The anti-poor effects of large exchange rate devaluations – VOX Is the Surge in Stock Buybacks Good or Evil? – WSJ A new historical database on economic freedom


Australia needs a new model for universities

Cross-posted from The Conversation: Australia is in need of a new model for universities. That isn’t the impression you get from the delighted students, contented staff and shining buildings pictured on every university website. But that’s a fantasy. University managers now hire a considerable number of advertising staff to create the pretty picture. Behind the


HIA: End is nigh for dwelling construction boom

By Leith van Onselen The Housing Industry Association (HIA) has today released its Spring 2015 National Outlook, which once again forecasts the peaking of Australia’s dwelling construction boom in 2014-15 before recording a 5.5% decline in dwelling starts this financial year followed by a further decline of 13.4% in 2016/17. From the Media Release: “New


Auckland chokes on its own population ponzi

By Leith van Onselen It is becoming abundantly clear that the New Zealand Government is following the Australian script of artificially pumping the economy with large numbers of migrants, in the process creating all kinds of pressures on infrastructure, congestion, housing, and living standards. According to the permanent & long-term migration figures for October 2015,


Kiwi exodus recession indicator flashes brighter red

By Leith van Onselen Statistics New Zealand has released its permanent & long-term migration figures for October 2015, which revealed that net migration to New Zealand continues to boom: According to Statistics New Zealand: Unadjusted figures showed a record net gain of 62,500 migrants in the October 2015 year. The annual gain in migrants has


Sydney auction clearances crashing

Core Logic-RP Data released its auction market report yesterday, which posted a fall in the national clearance rate driven by the ongoing slump in Sydney and a sharp drop in Melbourne’s clearance rate. The preliminary national clearance rate was 60.8%, down from the 63.8% rate recorded last weekend, according to Core Logic-RP Data: Sydney’s preliminary


Victoria crowns itself ponzi-economy king

By Leith van Onselen You’ve gotta wonder about the economic literacy of the Victorian Government. After the ABS released the state accounts for the year ended June 2015 on Friday, Melbourne’s radio and newpaper pages were littered with triumphant claims from the Government that Victoria was the strongest non-mining economy in Australia in 2014-15. Here’s


Australian foreign worker exploitation “systemic”

By Leith van Onselen The fallout from the the joint Fairfax-Four Corners investigation into 7-Eleven’s labour hiring practices continues, with Fairfax today revealing that Two-thirds of all 7-Eleven stores in Australia appear to have been underpaying its workers, according to a Senate Inquiry investigating the matter: The panel reviewing wage compensation claims for 7-Eleven workers


Population ponzi killing our universities

By Leith van Onselen The more I look at it, the more it seems like Australia’s higher education system is busted. Rather than focusing on delivering the best possible education to students, in turn boosting the productivity and competitiveness of the Australian economy, higher education has turned into one giant “degree/diploma factory” whereby providers sell


Links 23 November 2015

Global Macro / Markets / Investing: Will $4.6 Trillion Leveraged Loan Market Cause The Next Financial Crisis? – Forbes Speculators test Saudi currency as oil crisis deepens – The Telegraph Global Oil Job Cuts Top 250,000 – Bloomberg Are High Yield Bonds Sending A Warning Message To The Stock Market? – Forbes What Hedge Fund


Realtors can’t turn a blind eye to foreign buyers

By Leith van Onselen The new enforcement regime governing investment in Australian property by foreign buyers, which comes into effect on 1 December, will for the first time include financial penalties for third parties that knowingly assist foreign buyers to break the rules. And this has created some confusion amongst the real estate community. According


Kiwi households party like its 2007

By Leith van Onselen Our friends across the pond sure have become a reckless bunch, lifting spending well above their incomes and plunging the household saving ratio into negative territory. From statistics.gov.nz: Household income was $134.4 billion (up 0.8 percent), while household spending was $135.3 billion (up 3.3 percent) in the March 2015 year, Statistics


Government reaps what it sowed on foreign asset sales

By Leith van Onselen Treasurer Scott Morrison is coming under increasing pressure to review laws that have allowed the states to flog-off vital infrastructure assets to foreigners. Amid controversy over the deal to offload the Port of Darwin to Chinese interests, along with the State Grid Corporation of China’s interest in purchasing the $8 billion