Australian Economy

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Cabcharge in hypocritical attack against Uber

ScreenHunter_5210 Nov. 28 10.23 By Leith van Onselen Russell Balding, the Chairman of one of Australia's biggest rent seeking companies, Cabcharge, has hypocritically attacked Uber's ridesharing service, Uber-X, calling for a government crackdown on the grounds that it is both "dangerous and illegal". From ABC's The Business (video above): "It's a rideshare activity that's illegal. And alls I'm asking governments to do is to look at the issues of having a level playing field"... "I welcome competition. I welcome app-based competitors. But the taxi and hire car company operates in a regulated market, and I think all...
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OPEC declares oil war on US (and Australia)

A861wWarDeclared_thumb The Aitken oil crash is really warming up now. Here's how the OPEC meeting broke up: Recording its concern over the rapid decline in oil prices in recent months, the Conference concurred that stable oil prices – at a level which did not affect global economic growth but which, at the same time, allowed producers to receive a decent income and to invest to meet future demand – were vital for world economic wellbeing. Accordingly, in the interest of restoring market equilibrium, the Conference decided to maintain the production level of 30.0 mb/d, as was agreed in December 2011. As always, in...
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Parko departs with bitter message from the pulpit

ScreenHunter_05 May. 21 15.13 By Leith van Onselen Outgoing Secretary of the Australian Treasury, Dr Martin Parkinson, has given his final speech to the Committee for Economic Development of Australia (CEDA), in which he Below are the key extracts. First, Dr Parkinson outlines the conundrum facing the Australian economy, whereby GDP growth will be supported by rapidly rising mineral export volumes, given a reasonable "headline figure", but national income and employment growth will be anaemic due to falling commodity prices (terms-of-trade) and declining mining investment: Australia’s growth over the past decade has...
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Big cuts to NSW power bills as death spiral looms

fig11.1 From the AFR: NSW power customers will see their power bills fall 10 percent, more than after the scrapping of the carbon tax, thanks to a landmark regulatory decision that reins in “gold plating” at electricity networks. AER chairman Paula Conboy said: “We estimate that our draft decisions, if implemented, would reduce annual electricity bills for a typical residential household living in NSW, on average, by $219 (10 per cent) in 2015–16. The AER decision will force the networks to slash costs to adjust for the slower growth in power demand and lower financing costs. Capital expenditure will...
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Actual capex records surprise lift

ScreenHunter_5182 Nov. 27 11.43 By Leith van Onselen The Australian Bureau of Statistics (ABS) today released data on capital expenditures (capex) for the September quarter of 2014, which registered a surprise 0.2% seasonally adjusted lift in capex over the quarter but a 5.9% decrease over the year. The result beat analyst’s expectations of a 1.9% 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 September...
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Expected capex holds up

0 The Australian Bureau of Statistics (ABS) has released the fourth estimate for expected capex for 2014/15 for the September quarter and the result is a slight positive with expectations firming a little. Estimate 4 for total capital expenditure for 2014-15 is $153,210m. This is 7.5% lower (-$12,492m) than Estimate 4 for 2013-14. The main contributor to this decrease was Mining (-$17,355m). Estimate 4 is 2.2% higher (+$3,262m) than Estimate 3 for 2014-15. The main contributor to this increase was Other Selected Industries (+$2,594m). MININGEstimate 4 for Mining for 2014-15 is $86,253m. This is...
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The Australian budget’s illusory strength

gnetbwe From the SMH blog: A recession in the next five years could have a devastating effect on the world's heavily indebted nations, although Australia would emerge relatively unscathed, a report shows. Global investment manager Standard Life Investments, in its report Defusing the Fiscal Timebomb, said that developed nations with high debt could be in deep trouble if current forecasts for economic recovery did not eventuate. ...The report divides countries into four categories based on their level of vulnerability. Greece, Ireland, Italy, Japan and Portugal are most...
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‘Straya: Determined to be dumb

ScreenHunter_16 May. 13 15.31 By Leith van Onselen Australia is cementing itself as a houses and holes economy, with the report today that the CSIRO will cut 1,400 science jobs: Previous governments have fought to stem the flow of our cleverest minds offshore in their search for better pay and research facilities. Now, cuts from the previous and current Federal Governments are driving out one in every five jobs at the nation’s internationally renown research centre, CSIRO. That’s the total loss of about 1400 scientists and assistants. Science communicator Julian Cribb told ABC Radio yesterday the cuts were...
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BREE’s cupboard is dangerously bare

thyj64u The now dead Bureau of Resource and Energy Economics (BREE) has released its last update on the pipeline of major Australian resource projects and reading between the lines the future is bleak. Here's the summary: This release of the Resources and Energy Major Projects Report provides an update on resource and energy project developments over the period May 2014 to October 2014. It comes at a time when investment in Australia’s resource and energy sector has been declining in response to a general decline in commodity prices. The environment of lower prices has encouraged resources companies...
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PM Pork to pull funding if VIC votes Labor

Capture By Leith van Onselen Prime Minister Pork has warned Victorians not to vote for the Labor party in this weekend's state election, claiming that he would pull funding allocated to the East-West Link road project if Labor fulfills its promise to tear-up the contract to build the road if it forms government. From The Australian: “I want to make it absolutely clear to the people of Victoria that the $3bn the commonwealth government has committed to this project is for one purpose and one purpose only — and that is to build East West Link. “Let me repeat: the $3bn the commonwealth government has...
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NT LNG boom softens construction downturn

ScreenHunter_5170 Nov. 26 12.01 By Leith van Onselen The ABS has released data on the value of construction work done for the September quarter of 2014, which registered a seasonally-adjusted 2.2% fall in total construction activity over the quarter and a 5.1% decline over the year. The result disappointed analysts' expectations of a 1.9% fall over the quarter. The 2.2% quarterly decline in construction activity was broad-based, with engineering construction falling 3.2% and building construction falling 1.0%: Residential construction – the great hope as the mining investment boom unwinds – disappointed, falling...
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PPL ball and chain drags on Budget progress

bloom By Leith van Onselen With the year winding down, and many of the May Budget measures still stuck in limbo, the Abbott Government is preparing to "clear the barnacles" and water down or junk some unpopular measures in order to start the new year on the front foot. As reported in The AFR today, the $7 medical co-payment is set to be scrapped by the Government, along with the attached Medical Research Fund, with Abbott's signature paid parental leave (PPL) policy also likely to be watered down. It is also seeking a compromise with the Senate on university fee deregulation: Senior government...
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Phil Lowe’s grand plan to kick the can

imgres By Leith van Onselen As noted by Houses & Holes earlier, RBA deputy governor, Phil Lowe, has delivered another Panglossian assessment of the prospects facing the Australian economy, effectively endorsing Australia's 'population ponzi' economic model and 'selling dirt' without adequately considering the downsides to Australian's living standards. Lowe's comments about Australia's rampant immigration intake are particularly curious: Over the past decade, Australia has had almost the fastest rate of population growth in the OECD and this is expected to continue for some time to come...
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Phil Lowe celebrates houses and holes

url My great hope for the future of the Reserve Bank of Australia is fading away. Deputy Governor Phil Lowe showed great promise in the early century as he led from below the bank's push against the Greenspan doctrine of the time. Alas, the independence of thought that characterised that young man appears to have been molded by the bank's awesome powers of group think into just another broken record pushing Australia further and further into structural imbalances. Last night, vice-Capt' Lowe described Australia's houses and holes economy beautifully while completely overlooking its internal...
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Taxis and hire cars declare war on Uber

ScreenHunter_5153 Nov. 25 11.54 By Leith van Onselen The fight against Uber's ridesharing service, Uber-X, is getting ugly, with taxi and hire car companies resorting to making citizens' arrests against drivers illegally carrying passengers. From The SMH: Hire car owner Russell Howarth has now carried out multiple arrests of uberX drivers, and other drivers are attempting to mobilise in various ways against what they see as an existential threat to their pay and conditions... The incident demonstrates the volatility of situations where the incumbent industry attempts to turn the tables on its upstart competitor... Anger...
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Capex preview

imgres From Westpac come a preview to tomorrow's capex release: The ABS survey of private business investment plans, the CAPEX survey, will provide some further guidance to growth prospects. The September quarter edition will be released on November 27, with responses received over October and November. This update will include the fourth estimate of plans for 2014/15. The 3rd estimate for 2014/15 pointed to a decline in business capex, with a sharp downturn in mining only partially offset by a lift in service sector investment. These broad themes are likely to be restated. What policy makers will...
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Consumer confidence tracks sideways

ScreenHunter_15 Mar. 18 16.24 By Leith van Onselen The ANZ-Roy Morgan Research (RMR) consumer confidence index rose by 1.3 points in the week ended 23 November to 114.3, to be just above its long-run average reading of 113.2 (see next chart). ANZ chief economist was particularly happy with the result, noting that “alongside low interest rates and rising house prices, this should support consumer confidence and retail spending as we head into the Christmas season”. ANZ also provided the below chart, which compares the sub-index of the financial situation compared to a year ago against real household consumption...
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Aussies flee to New Zealand

ScreenHunter_5145 Nov. 25 09.48 By Leith van Onselen Statistics New Zealand has today released its permanent & long-term migration figures, which revealed that New Zealand net migration is at record highs, with net migration from Australia to New Zealand also at the highest level in 21 years: Seasonally adjusted permanent and long-term (PLT) migration figures showed a net gain (more arrivals than departures) of 5,200 migrants in October 2014. This surpasses the previous high, recorded in August 2014 (4,800). Before 2014, the last peak was in February 2003 (4,700). Net migration has increased in most months over the...
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Last stand of a dying economic model

url The AFR is reporting that: Australia’s big four banks are tipped to raise $134 billion from wholesale markets this financial year, the most since 2009-10, as lenders use cheaper global funds to fuel domestic competition. ...The last time banks raised this much wholesale money was in financial 2010, when the government was guaranteeing bank borrowings in response to the financial crisis. The trend helps to lower banks costs, as most of the wholesale money being raised replaces more expensive funding secured during the crisis. Three cheers for them! Here are the latest offshore borrowing...
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The population monster that’s swallowing Victorian governments

ScreenHunter_5140 Nov. 25 08.03 By Leith van Onselen The Australian's Judith Sloan has questioned why Victorians are set to throw-out the one-term Napthine Government when its performance has not been all that bad: It’s not as though the Coalition government has been especially bad. There is a good news story to tell about fiscal management, expense control and initiatives for some needed new infrastructure. Victoria retains its AAA credit rating, which is in marked contrast with most of the other states. To be sure, the Victorian economy has been sagging along with the rest of the economy. And given the relative...
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NZ gives Oz an income thrashing

ScreenHunter_5138 Nov. 25 07.35 By Leith van Onselen Statistics New Zealand has released its annual National Accounts (Income and Expenditure) data for the year to March 2014, which revealed that New Zealand national disposable income increased by a strong 8.2% over the year: New Zealand earned $14.4 billion more as a country than in 2013, Statistics New Zealand said today. National disposable income was up 8.2 percent to $189.2 billion, in current prices, in the March 2014 year. The growth was led by business profits, while income from employment also grew. Business profits were up $9.0 billion (9.8 percent), due to large...
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East coast leads national income shock

ScreenHunter_5123 Nov. 24 15.26 By Leith van Onselen The income shock afflicting the Australian economy has been well documented on this site. Essentially, the ending of the biggest commodity price (terms-of-trade) boom in the nation's history in 2011 ushered in a new era of sluggish income growth, whereby real national disposable income (NDI) would significantly lag the growth in the economy, as measured by GDP. This situation is best captured by the next chart showing the falling terms-of-trade dragging down NDI per capita: As well as the below charts showing NDI per capita falling relative to GDP since...
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QLD’s mega-casino fails

rca__casino_550 From the AFR: Hong Kong billionaire Tony Fung said he is still committed to building the $8.5 billion integrated casino resort at Yorkey’s Knob in Far North Queensland, despite failing to acquire the Reef Casino in Cairns. ...The acquisition of the Reef Casino was crucial to Mr Fung’s plans as the Cairns casino licence was a fall-back if probity checks failed on the Aquis Resort. Aquis said it could not meet the deadline for regulatory approvals for the Reef Casino due by this Friday. I'm sure Comrade Campbell can come up with...
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BIS’ happy mining cliff

ScreenHunter_08 Nov. 07 08.52 By Leith van Onselen BIS Shrapnel is out today warning of a 40% slump in mining investment: the biggest decline on record. From The ABC: BIS Shrapnel has released the findings of its Mining in Australia 2014-2029 report which points to a 40 per cent collapse in investment in the sector over four years. "Already we're seeing a substantial slump take place in iron ore and coal investment around the country but now with the LNG investment boom about to end we're about to see the biggest slump ever in mining investment," spokesman Adrian Hart said. He said the current slump had barely...
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Senate to block cuts to auto industry assistance

ScreenHunter_5113 Nov. 24 07.42 By Leith van Onselen The Australian is reporting today that the Senate will block the Abbott Government's bid to cut assistance to the automotive sector (known as the Automotive Transform­ation Scheme, or ATS) by $900m between 2013-14 and 2020-21, by bringing forward the end date for the scheme and lowering the amount that individual firms can claim: Blocking the bill would reverse $500m in cuts to 2017-18 announced in last year’s Mid-Year Economic and Fiscal Outlook and a further $400m in savings announced in the May budget... “All available evidence shows that decimating the...
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