By Leith van Onselen The Australian Medical Association (AMA) has urged the Australian government to reject provisions in the Trans Pacific Partnership agreement (TPP) that “could undermine the Pharmaceutical Benefits Scheme and compromise the ability of governments to improve public health”: The AMA Federal Council has called on the Federal Government to reject “any provisions in trade agreements that could reduce Australia’s right to develop health policy and programs according to need”. The Association said it was concerned that aspects of the proposed TPP could be used to...

By Leith van Onselen Infrastructure Australia boss, Mark Birrell, has urged the Senate to stop bickering and allow through the Abbott Government’s “asset recycling” program, arguing that it is essential to clear the project backlog in Australia. From The AFR: He said the plan, unveiled in the May budget, was a crucial next wave of reform that would mirror competition payments to the states in the mid-1990s. “Asset recycling is a key part of the future because it’s a fresh way of funding infrastructure that would otherwise not be built,” Mr Birrell told The Australian Financial...

Cross-posted from Martin North's DFA blog: The CPI data which came out from the RBA yesterday registered 3%. This was very bad news for households with savings in deposit accounts at the banks, because ever more are finding that returns after tax are well below CPI. This is part of a worrying trend for many, and is prompting them to seek out alternative and possibly higher risk saving vehicles. Today we examine this issue in the light of latest data from our household surveys. First, here are some benchmark savings rates mapped to the CPI and RBA benchmark rate. Many savings rates are now below...

By Leith van Onselen Boston Consulting Group CEO, Andrew Clark, and Deloitte Digital head, Frank Farrall, have today urged Australian business to embrace the digital revolution to ensure that it maintains competitive with the world. From The AFR: “Australian companies are in danger of being pushed aside by innovative competitors from at home and abroad unless they move more quickly to catch up with the digital revolution”... Mr Clark said in an interview... “Up until a few years ago, you had Bernie Brookes from Myer saying our customers don’t want to shop online and you had Gerry...

Aurizon CEO Lance Hockeridge needs a new speech writer: Aurizon chief executive Lance Hockridge has claimed the expansion of a coal export terminal at Queensland’s Abbot Point will be done in an “environmentally sensitive manner” as he reiterated confidence in Asian demand for Australian resources. “The ‘Chicken Little’ view of resource demand does not recognise the reality of the long term dynamics in China, Indian and other Asian economies,” Mr Hockridge told the Israel Chamber of Commerce in Brisbane on Wednesday. “Despite the emergence of renewables, coal will remain the...

By Leith van Onselen As noted briefly by Houses & Holes, the Australian Bureau of Statistics (ABS) has released the Consumer Price Index (CPI) data for the June quarter 0f 2014, which registered a modest quarterly increase in prices, with the result also coming in line with economists’ expectations. According to the ABS, headline CPI rose by a modest 0.5% in the June quarter, which follows March’s 0.6% rise (see next chart). On an annual basis, headline CPI growth rose to 3.0% from 2.9% in the March quarter, which is at the top of the Reserve Bank of Australia’s (RBA) target...

The Australian Bureau of Statistics has just released the June quarter CPI and it's about expected at 0.5 headline with slightly higher analytical measures. The dollar jumped on the latter. At first blush it looks like tradable inflation is still firmish but the dollar has overreacted because it's priced for cuts. JUNE KEY FIGURES Mar Qtr 2014 to Jun Qtr 2014 Jun Qtr 2013 to Jun Qtr 2014 Weighted average of eight capital cities % change % change All groups CPI 0.5 3.0 Food and non-alcoholic beverages 0.4 2.5 Alcohol and...

The Department of Employment (DEEWR) job vacancies report for June is out and firmed 1.5%: The trend remains weakly up: Composition was unexciting (economically) with carers taking the gong: Skilled looks more encouraging: No change, really. Insipid labour market. Full report...

From Westpac comes the following Q2 CPI preview (released today): Our Q2 headline CPI forecast is 0.6%qtr/3.2%yr. Core  inflation, as measured by the average of the trimmed mean and weighted median, is forecast to rise by 0.7%qtr/2.8%yr. We estimate that the 6 month annualised pace of core inflation eased back to 2.5%yr in Q2 from 2.8%yr in Q1 and 3.0%yr in 2013Q4. The pulse of core inflation has eased back from the top of the RBA’s 2-3% target band and the lack of wage inflation, well anchored low inflation expectations and a robust AUD suggests that the most likely outcome is for this...

By Leith van Onselen Australia's independent infrastructure umpire, Infrastructure Australia, has launched a scathing attack on road-based infrastructure investment undertaken by Australia's governments, arguing that it has been "hideously inefficient" in a new leaked report. From The Canberra Times: More than $20 billion a year of national road funding is being spent in a “hideously inefficient” manner, according to a leaked assessment by Australia’s independent infrastructure umpire... “The unhealthy focus of road agencies appears set on ‘getting, controlling and spending’ more...

"Mad" Adam Carr today launches a broadside at Professor Ross Garnaut: Australia does not have a debt problem. Professor Ross Garnaut should stop saying that we do. ...Professor Garnaut’s Melbourne Economic Forum appears to have adopted an unnecessarily alarmist position on Australia, our prospects and our prosperity. Debt is only one aspect of their alarmism, but it’s an important one as we come into what may be a rising interest rate environment. Professor Garnaut’s view, for instance, is that the country is ‘unusually vulnerable to international interest rates rising above their...

By Leith van Onselen Business Spectator's Rob Burgess has written a spirited post slamming the Abbott Government's roads fetish and advocating a massive lift in public transport investment: In the past decade there has been a shift back to public transport as sprawling Australian cities make commuting by car more expensive -- both in terms of fuel, time spent battling congestion, and skyrocketing parking costs... Infrastructure Australia... recommended recently: “Australia's transport systems are especially struggling ... with public transport growing rapidly in recent years and reaching...

With the solid bounce in Roy Morgan consumer confidence over the past two weeks, I thought I'd take a look at the BDO fast retail index, which tracks same store sales week-on-week. Here's the headline index showing an slightly positive ongoing struggle for momentum   Fashion especially appears to be struggling:   Other too: But furniture and homewares are riding the bubble to post-Budget recovery: And so too recreational goods: You might describe that a positive a non-discretionary...

By Leith van Onselen The ANZ-Roy Morgan Research (RMR) consumer confidence index has now more or less recovered from its Budget-induced slump, rising another 4.8 points in the week ended 20 July to 113.5, and is now basically in line with its long-run average reading of 113.7, and only some 2.2% lower than April’s pre-Budget high (see next chart). The below chart, which plots the most recent Westpac-Melbourne Institute’s Consumer Sentiment index against the ANZ-RM Consumer Confidence index, highlights the mood of the Australian consumer more clearly: Expect next month's Westpac...

By Leith van Onselen The inaugural Melbourne Economic Forum was held yesterday, which brought together a wide range of economists to discuss the Australian macroeconomic outlook and policy choices following the end of the mining boom. The discussion was centered around new modelling by the Centre of Policy Studies at Victoria University, which found that real per capita incomes and consumption will continue to slide for the rest of the decade and beyond as the fallout from falling commodity prices and the terms-of-trade takes hold, with real income per Australian forecast to be around 2%...

From the AFR, Australian economist Adrian Blundell-Wignall, special advisor to the OECD’s Secretary-General on Financial Markets, and one smart cookie: “What people are doing when you have zero interest rates around the world is they go into higher risk assets and at the moment it’s basically corporate debt in Asia. There has been a huge super highway of money flowing into emerging market credit because it has got much higher yield. The question is whether this super highway is a dual carriageway.” ...“Things are fine at the moment, but when people try to get out of it, you get big...

By Leith van Onselen Yesterday, Statistics New Zealand released its permanent & long-term migration figures, which revealed that New Zealand net migration is booming and Kiwis are returning home from Australia: In the June 2014 year, permanent and long-term (PLT) migrant arrivals numbered 100,800 (up 14 percent from 2013), the first time more than 100,000 arrivals have been recorded in a year. Migrant departures numbered 62,400 (down 22 percent). This resulted in a net gain of 38,300 migrants, the highest annual gain since the October 2003 year (39,300)... In June 2014, New Zealand had...

HSBC's Paul Bloxham has nice report out today looking at the Asian integration trends that are a "key reason for our continued optimism about Australia’s growth prospects": In the past six years, Australia’s economy has grown 16%. By comparison, the US has grown 6%, while the British economy has not grown at all and Europe’s is 2% smaller. China's economy has grown by 65%. No other OECD economy has a larger export exposure to Asia than Australia and the largest part of this is to China. Around 73% of Australia’s exports go to Asia, and we expect this to rise to 80% by 2020e. Three...

By Leith van Onselen I noted on Friday how the Senate had responsibly placed limits on the Abbott Government’s “asset recycling” program, pushing through changes to the bill that would: 1) require that infrastructure projects worth more than $100 million be assessed by Infrastructure Australia with a published cost-benefit analysis; and 2) require that all incentive payments by the Commonwealth to the states require a legislative instrument, effectively meaning the upper house can reject payments which it does not believe deliver taxpayer value. Unfortunately, the Coalition has rejected...

By Leith van Onselen Callam Pickering at Business Spectator has swallowed the Grattan Institute's Kool Aid and wholeheartedly accepted the findings of their latest report (debunked here) that the CBDs are the centre of Australia's economic universe: Australia’s economic activity is highly concentrated within our cities but poor town planning and public transport services mean many Australians are unable to take advantage of the choices that offered by city-living. A shift towards higher-density, inner-city living could provide a boost to productivity and activity in the years ahead... Few...

By Leith van Onselen The AFR's Alan Mitchell has penned a sensible article arguing against the proliferation of so-called "free trade agreements" (FTAs): If all the Sydney G20 trade ministers’ summit produces is a resolution to negotiate more free trade agreements, it will be a failure... Trade reform has been largely reduced to the negotiation of so-called free trade agreements, which are politically achievable only because they produce so little in the way of additional free trade... In favour of widespread unilateral and multi-lateral reform: ...governments need to conduct systematic...

By Leith van Onselen The mainstream media is slowly coming to the realisation that the pending huge growth in resource exports will provide the domestic economy with few economic benefits, since most of the profits will flow offshore and few workers will actually be employed. Professor Ross Garnaut, writing in The AFR, has penned a well-argued piece today warning of "immiserising growth" - a situation whereby a nation's citizens can actually be made worse-off from an expansion in resource exports: The growth in mineral exports over the past year has caused a fall in prices large enough to...

By Leith van Onselen The Grattan Institute has published a new report entitled Mapping Australia’s economy: cities as engines of prosperity, which maps the Australian economy by the location of economic activity, defined as the dollar value of goods and services produced by workers within a particular area. The Grattan Institute argues that a "great reshaping of Australia's economic geography is underway", whereby "the nation has moved from prosperity coming from regional jobs in primary industry a century ago, to suburban jobs in manufacturing after World War Two, to city centre jobs in...

Cross-posted from The Conversation. After the parliamentarians finally head off for the winter break, the government desperatelyneeds the major win it had this week to flow through to the opinion polls -- because it is struggling with headwinds on so much else. The Coalition at last ticked off the repeal of the carbon tax, the iconic item on top of its check list, but it has had serious setbacks in this first fortnight’s sitting of the new Senate, which was marked by considerable chaos and the start of a dramatic erosion of the budget’s savings. The repeal of the carbon tax went through the...

By Leith van Onselen CommSec has today released its Bank Business Sales Indicator for June, which tracks spending broadly across the economy by measuring the value of credit and debit card transactions processed through Commonwealth Bank merchant facilities. According to CommSec, economy-wide spending growth has slowed to its weakest pace in two years, with spending in June 0.2% below the decade average in trend terms: Economy-wide spending slowed again in June and growth is now the weakest in almost two years. The Commonwealth Bank Business Sales Indicator (BSI) – a measure of...