Australian Economy

24

Low interest rates aren’t spurring businesses

By Leith van Onselen Barclay’s chief economist for Australia, Kieran Davies, has argued that uncertainty about consumer spending and inflexible expectations of investment returns has made Australian companies less inclined to invest in response to reductions in interest rates. From The AFR: …the abundance of cash on companies’ balance sheets and high hurdle rates – the

4

Capex cliff revisited

This week is the all important private capex update from the ABS and today Bloxo offers an orthodox take on where it’s headed: After driving growth for several years, mining investment has peaked and is declining significantly, in line with falling commodity prices. The rebalancing of growth away from mining investment is progressing, but only slowly. Low

13

The five stages of iron ore grief

It’s not altogether easy to judge whether a large resources endowment makes a nation stupid, or being stupid leads a nation to rely heavily upon a large resources endowment. It’s probably both caught in a feedback loop. Either way, Australia is going through some kind of rude awakening when it comes to its iron ore dependency.

2

Red Book: Consumer firms but WA crashes

From Westpac’s consumer bible, the Red Book: ― The Westpac–Melbourne Institute Consumer Sentiment Index rose 6.4% in May from 96.2 in Apr to 102.4. This is a positive result and the highest reading since Jan last year. ― The two driving forces behind this month’s gain are the Budget and the RBA’s May rate cut. The survey detail suggests a

162

Weekend Links May 23-24, 2015

China A cautionary tale from the muddy waters of Chinese business – FT.com Weak Chinese Demand Is Pummeling Mining Stocks Everywhere, Except in China – Bloomberg China pushing ‘build now, pay later’ model to emerging world – Bruegel Development Finance with Chinese Characteristics? – Project-Syndicate The Irresistible Rise of the Renminbi – Project-Syndicate China getting

71

Solar power to transform the electricity market

By Leith van Onselen The electricity “death spiral” has, for a long time, been a key risk facing electricity generators/distributors globally. The “death spiral” arises when demand for power declines, due in part to customers taking up solar, leading to higher prices to cover fixed network costs. That is, the more people that take-up solar

25

Madometer signals top of everything

From the contrarian indicator The Madometer today: So it is that we face the development of a positive feedback loop. We have a sudden boost to confidence, as the nation celebrates a more pragmatic budget and the apparent end of the RBA’s easing cycle.   This adds momentum to an already solid rebound in consumer spending, encourages a

12

Opposition parties too late the hero on TPP

By Leith van Onselen At the eleventh hour, Labor, the Greens and the cross-benchers have united to raise concern about the Trans-Pacific Partnership (TPP) trade deal, which is entering its final stages of negotiation. From The Guardian: The Australian parliamentary working group, founded by Labor’s Melissa Parke, Greens senator Peter Whish-Wilson and independent senator Nick

9

Was QLD really in recession last year?

By Leith van Onselen New Queensland Treasurer, Curtis Pitt, argued yesterday that the state economy was in recession in late 2014, recording two consecutive quarters of negative growth in gross state product (GSP) between June and December – figures disputed by the Liberal Party. From The ABC: [Pitt] said the state accounts show that gross

16

Salt of confusion

By Leith van Onselen KPMG’s Bernard Salt has posted an article in The Australian today predicting a recession in 2018: If my decade-long wave theory is correct, there will be no buffer in 2018 and a lack of experience in dealing with a recession by the electorate, by politicians and by business leaders and this

20

Kiwi exodus turns to flood

By Leith van Onselen Statistics New Zealand has released its permanent & long-term migration figures for April 2015, which revealed that net migration to New Zealand remained near record highs in seasonally adjusted terms: Moreover, net annual migration from New Zealand to Australia hit its lowest level in more than 23-years, with April also recording

8

Investor visa reforms miss on innovation

Cross-posted from The Conversation: The review of the Significant Investor Visa (SIV) program was pitched by the government as an initiative to spur innovation in Australia. An outline of the revised SIV scheme was released last week, with full details yet to be released. While the review will lead to some welcome improvements, overall the

6

Rail network privatisation to force-up costs

By Leith van Onselen David Irwin, a director of ­Pacific National, has issued a warning today that the $4 billion privatisation of the Australian Rail Track Corporation (ARTC), which controls access to the nation’s 8,500 kilometre standard gauge rail network, could increase the cost of access for above-rail operators and run counter to a push

6

Beleaguered consumer manages a smile

From Bill Evans at Westpac: The survey was conducted over the period 11 – 16 May. The Reserve Bank announced a 0.25% cut in its cash rate on May 5 and the Federal Budget was announced on the evening of May 12. A number of initiatives in the Budget had been signalled by the government

17

And now a green rich man buys policy!

So, interfering in policy is the not preserve of the self-interested wealthy but also the altruistic wealthy, from the AFR: Wotif.com’s millionaire founder and prominent philanthropist Graeme Wood is helping to bankroll an Aboriginal group fighting big coal projects in central Queensland worth more than $20 billion. Mr Wood, an environmental campaigner and financial backer ofThe Guardian website in

11

Coalition’s shipping deregulation a good move

By Leith van Onselen The Abbott Government will today announce new plans to slash the cost of shipping in Australian coastal waters through a new “streamlined” permit system that will allow both foreign and Australian-flagged ships to carry goods and passengers. From The ABC: As part of the changes, foreign-flagged ships will be able to

15

Are public servants right to strike for pay hikes?

By Leith van Onselen A fight is brewing between the federal public service and its master over pay and conditions. Amid scrooge-like pay offers, Community and Public Service Union (CPSU) members at the Bureau of Meteorology and Department of Agriculture stopped work on Tuesday for one hour, which follows rolling stoppages that had already seen

8

QLD regions crash down capex cliff

By Leith van Onselen The latest ABS labour force data for April painted a dour employment picture in Queensland’s mining regions. Across the regions as a whole, unemployment rose to 6.8% in the 12 months to April – the highest reading in 11 years (see next chart). It has been well documented on this site

19

Consumer confidence launches after Budget

By Leith van Onselen The ANZ-Roy Morgan Research consumer confidence index has rebounded strongly following last week’s Budget, jumping by 4.0 points to 114.0 in the week ended 17 May, to be tracking above the long-run average of 113 (see next chart). According to ANZ chief economist, Warren Hogan: “The initial positive reaction of Australians

29

Coalition in new beef over TPP trade deal

By Leith van Onselen The Australian is reporting today that the Trans-Pacific Partnership (TPP) trade agreement, which enters its final stages of negotiation, could require that Australia allow access to US beef imports that are potentially contaminated with Mad Cow disease: The US has previously suggested increasing Australia’s access to its sugar markets in return

14

Coalition caves in to rent seeking pharmacies

By Leith van Onselen You would be hard pressed to find a bigger racket than Australian pharmacies. How many any other industries in Australia have had laws implemented that ban new entrants from opening within 1.5 kilometers of an existing business? How many other industries allow only registered professionals in the field to own and