By Nathan Lynch, Head Regulatory Analyst for Australia & New Zealand, Thomson Reuters A petition from 40,000 Australians has called on the government to reverse its plans to privatise the Australian Securities and Investments Commission’s corporate registry operations. The campaign said privatising the ASIC Registry could permanently entrench some of the world’s highest company search
A brief history of the Australian economy.
The “miracle” Australian economy (with its famous run of 24 years without a recession) is an amalgam of pre-modern and post-modern industries with very little in between.
Most economies run at least partially upon the productivity gains produced out of manufacturing and ‘making things’ but in Australia productive investment is supplanted with commodity exports (which make up half of exports) and the recycling of the resultant income is deployed as cash flow for borrowings offshore to pump house prices.
The former step is basically the selling of dirt, a pre-modern activity. The second step is managed via the sophisticated use of derivative markets and is essentially a post-modern activity.
Not that GDP cares given it is only the mindless measure of whirring widgets.
However, both of these activities systematically reduce economic competitiveness by inflating both input costs and the currency. “Dutch disease” by another name. This continuous “hollowing out” of productive activity means the broader economy relies heavily upon the non-stop import of capital, either in the form of debt or in the form of assets sold to foreigners, to generate ongoing income growth.
So long as the underlying income from dirt keeps flowing then the leveraging into house prices that supports consumption can continue, supported by both tax distortions and government spending.
If, however, the dirt income flow halts the hollowing out of modern industry will leave the Australian economy very exposed to a current account adjustment. A second risk is that the debt accumulation simply becomes overly onerous for the underlying economy to service, also resulting in a current account adjustment.
MacroBusiness covers all apposite data and wider analysis of these issues daily.
The CBA’s Gareth Aird has written another ripper report examining the casualisation of the Australian workforce and its implications. Below are the key extracts. Key Points: The ABS report that 87% of the lift in jobs over the past year has come via an increase in part-time employment. The rise in the number of part-time
From CommSec: The Australian Bureau of Statistics (ABS) has released trend (annual average) data on regional labour markets. Unemployment rates remain high across regional Queensland and remain low across many Sydney regions. Unemployment has averaged just 2.7 per cent in the Eastern Suburbs of Sydney over the past year… The region with the highest unemployment
The FT’s always provocative LEX column did Australia today: Sometimes, confidence is enough to make it through testing times. This week, the ANZ and Roy Morgan consumer confidence gauge showed Australians at their most upbeat since late 2013. While it is tempting to infer a market recovery, too, confidence alone cannot galvanise a rally. Australia
By Leith van Onselen A group of eight Australian academics have penned a piece in The Australian questioning the efficacy of Australia’s recent free trade agreements (FTA) and their purported benefits: Australian National University economist Shiro Armstrong has… used the analytical framework developed by the Productivity Commission, and the decade of performance data since AUSFTA
By Leith van Onselen As already noted by Houses & Holes, Treasurer Scott Morrison today delivered a speech to Bloomberg in Sydney. While Houses & Holes has already analysed the overall content, I want to focus on just one part: the discussion on Australia’s debt trajectory, which Morrison claims is perilous if various Budget measures
From Treasurer Scott Morrison: Australia has just concluded its 25th year of consecutive economic growth. This has not occurred by accident – it is the product of more than 30 years of economic reform and hard work, ingenuity and sacrifice from millions of Australians. Events have both assisted us and challenged us – but overall
By Leith van Onselen Earlier this year, the Senate Education and Employment References Committee has released a scathing report entitled A National Disgrace: The Exploitation of Temporary Work Visa Holders, which documents the abuses of Australia’s temporary visa system for foreign workers. The most damning assessments from the Committee were regarding Australia’s Working Holiday Maker
Has the capex cliff just passed its deepest quarterly point? From UBS: Construction work -3.7% q/q…as -9% engineering dominates 1% building gain Q2 real construction work done (private & public) was weaker than expected, for the 2nd consecutive quarter, dropping 3.7% q/q (UBS: -1.2%, mkt: -2.0%). However, Q1’s prior 2.6% q/q drop was revised to
By Leith van Onselen The Department of Employment (DoE) has released its Internet Vacancy Index (IVI) for July, which registered a decline in the number of job vacancies over the month, with the trend also fairly weak: The decline in vacancies was broad-based, with all jurisdictions except South Australia experiencing falls in July: Blue collar
By Leith van Onselen The ABS has released data on the value of construction work done for the June quarter of 2016, which registered a seasonally-adjusted 3.7% fall in total construction activity over the quarter and a 10.6% decline over the year. The 3.7% quarterly fall in construction activity was driven by engineering construction (mostly
By Leith van Onselen The conga-line of commentators criticising Australia’s demand-driven university system just grew a little longer, with Fairfax’s Nicholas Stuart penning a well-argued piece on the massive waste inherent in the university system: Degrees have become commodified; just another product. The only difference is they operate in a hugely protected and subsidised market.
From The Australian today: Deepening divisions over immigration and racism threaten to shatter Australia’s acceptance of new migrants according to a disturbing study revealing a “polarisation” in attitudes that will shape a growing fight over multiculturalism and free speech. High levels of discrimination are making it harder for migrants to settle, exposing some to property
By Leith van Onselen The Department of Employment (DoE) has released its Skills Shortages Statistical Summary for 2015-16, which has found that “the proportion of skilled occupations in shortage remains low by historical standards”: According to the DoE, competition for available vacancies remained strong in 2015-16. For each skilled vacancy there were (on average): 11.5
By Leith van Onselen One of the most profound changes affecting the Australian economy and society over the past 12 years has been the massive lift in Australia’s net immigration, which surged from the mid-2000s and is running at roughly twice the pace of long-run norms (see next chart). With much of this immigration flowing
By Leith van Onselen Two sets of data came out last week highlighting how male workers, particularly those seeking full-time employment, have borne the brunt of Australia’s labour market adjustment towards services. First, the Average Weekly Earnings (AWE) data, released on Thursday, revealed that male full-time earnings grew by just 1.2% in the year to
From the Australian Competition and Consumer Commission (ACCC) comes news that retail petrol prices are at their lowest level in 14 years, although retail margins are at their highest: The Australian Competition and Consumer Commission’s latest report on the Australian petroleum industry shows that average petrol prices in 2015–16 were at their lowest levels since
By Leith van Onselen Australia’s Productivity Commission (PC) has long been opposed to strengthening Australia’s intellectual property (IP) rules. Essentially, the PC’s empirical work on IP has found that, as a net importer, Australia would lose more than it gained by granting stronger IP rights, whether that involves: lengthening the period of the protection; broadening
There are not many authorities around the world that would be fretting about a lift their terms of trade but Australia is one of them. The reason is that the material lift in dirt prices driving recent improvements in the terms of trade has also raised the Aussie dollar and in so doing has completely
From Macquarie Bank: Construction activity is likely to fall in 2Q16, but public infrastructure spending is rising. Earlier (1Q16) commencements data suggest some early signs of the long-awaited upswing in infrastructure spending. Whilst this will support construction activity as a whole, it is unlikely to be enough to offset headwinds in the private engineering and
By Leith van Onselen Senator Nick Xenophon has co-written an article today arguing that the RBA should abandon its 2%-3% inflation target in favour of a 5% nominal GDP growth target. From The Age: Wages are growing at recessionary levels, profits for small and medium-sized businesses are flat and the budget deficit constrains government spending.
By Leith van Onselen Last week’s ABS labour force release for July revealed a further deterioration in trend unemployment for those aged 15 to 24 years old, with unemployment rising for the sixth consecutive month to 13.0%, versus 4.2% unemployment for the rest of the labour market (see next chart). As you can see in
The east gas gouge rolls on but at least it was cheaper last week at home than it was in Japan as the local Winter squeeze winds down: However, the trend remains up and much higher volumes of gas are headed offshore yet. So, on Friday the government’s market reforms were agreed, from The Australian:
So much for that part time jobs surge, from Peter Martin: Full-time employment has slid 64,500 since December while part-time employment has surged 136,600. The net result of 72,300 extra Australians in work reflects a hollowing out of employment rather than a boost in hours. There were scarcely any more hours worked in July than