Australian Economy

Viewing posts in the Australian Economy category

The east coast gas crisis is overblown

fgw4g From the Grattan Institute today: For some time the price of natural gas has been rising well above  the cost of living. As with electricity, rising network prices are the  main reason for a 36 per cent increase in average gas bills over  the past five years. But in the next few years, huge changes in the  gas market will push up prices even more sharply, adding more  than $300 a year to the average household gas bill in Melbourne  and over $100 a year in Sydney and Adelaide. The increases will  mean tough decisions for many households and businesses. Natural gas is one of Australia’s main...
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Population ageing and the Australian economy

ScreenHunter_08 Feb. 03 14.45 By Leith van Onselen Reserve Bank of Australia (RBA) deputy governor, Christopher Kent, has today given a speech to the Leading Age Services Australia National Congress on the impacts of population ageing on the Australian economy. Kent identifies three causes of population ageing: Population ageing is driven by three different forces. The first is the baby boom that followed the Second World War. The second is the drop in fertility rates thereafter. Combined, these two changes led to a ‘bulge’ in the age distribution of the population. The early part of this cohort began to retire from...
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Desalination plants pump endless stupidity

ScreenHunter_16 May. 13 15.31 By Leith van Onselen The cost to Australian consumers from the construction of costly desalination plants continue to soar as rising dam levels make the investments redundant. From The Australian: ...the Victorian desalination plant, southeast of Melbourne, will have cost water users $1.2bn by the November 29 state election, rising to $2bn by the end of the next financial year. The cost has soared, despite no water having been drawn from the facility since its opening in 2012 and dams being more than 80 per cent full... Average yearly water-bill increases in Melbourne of about $200 have been...
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More 457 visa rorts revealed

ScreenHunter_2531 May. 22 07.09 By Leith van Onselen Fairfax revealed further rorts of Australia's 457 visa system over the weekend, with an audit of 1,800 of the so-called 200,000 skilled foreign workers in Australia by the Fair Work Ombudsman showing that 40% of audited 457 visas potentially breached visa rules. From The Canberra Times: The Fair Work log suggests that certain cafes and restaurants in populated urban areas are almost entirely staffed by foreign workers. For example, a restaurant called Goa Indian Fusion on Queensland's Gold Coast has five staff on 457 visas. The Gold Coast has a youth unemployment rate of...
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Dour consumers going nowhere

3 From Westpac's excellent Red Book,the bible of consumer attitudes: ― The Westpac–Melbourne Institute Index of Consumer Sentiment rose by 0.9% from 94.0 in Sep to 94.8 in Oct, a slight improvement but still leaving the index stuck in a pessimistic range. ― The Oct result appears to reflect a mix of negatives from financial market developments (the ASX fell 6½% between the Sep and Oct surveys) and positives on ‘Budget and tax’ issues with the Government announcing it was setting aside controversial Budget measures. ― CSI±, our modified sentiment indicator...
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ABS inflation figures dodgy as well

ScreenHunter_4566 Oct. 17 14.40 By Leith van Onselen Following the Australian Bureau of Statistics' (ABS) admission that its unemployment data was dodgy, The AFR is this afternoon reporting that the ABS' consumer price inflation (CPI) figures are no longer a reliable indicator of general price increases across the economy: Top economists say the ABS waits too long to change the items and base weightings it uses to measure the rate of in­flation in the economy – a key that helps decide interest rates, wages and some social security benefits. Items that are increasingly irrelevant to Australian life such as ­answering...
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Light rail divides the nation’s capital

ScreenHunter_06 Jun. 06 09.33 By Leith van Onselen The ACT Light Rail Project - the $610 million to $783 million 12-kilometre line connecting Gungahlin in the north and Civic - is dividing the nation's capital. Earlier this week, David Hughes - an economist and former manager of major project analysis for ACT Treasury and director of the economics branch from 2002-2005 - labelled the Light Rail Project as "folly", claiming that the cost-benefit analysis used to support the Project is chock full of erroneous assumptions, spurious benefit inclusions, and double-counting. In another article, Hughes summed-up the Project as...
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Carbon tax removal to tame September CPI

ScreenHunter_4562 Oct. 17 11.57 By Leith van Onselen Find below Westpac's preview of the September quarter consumer price index (CPI), which is due to be released by the ABS on Wednesday: Westpac is forecasting a 0.6%qtr rise (2.4%yr) in the headline CPI in the September quarter. September is historically a seasonally strong quarter due, in part, to the annual price setting for administrated prices (such as utilities, property rates and charges). The ABS seasonal factors suggest that this positive seasonality is worth +0.2ppts with the seasonally adjusted CPI forecast to rise 0.4% in Q3. The core measures, which are...
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Australia’s cities don’t need more rents

ScreenHunter_30 Jul. 02 10.28 By Leith van Onselen Dr Tim Williams, chief ­executive of the Committee for Sydney, yesterday gave an extraordinary speech to the National Growth Areas ­Alliance Congress in Adelaide, arguing that Australia's cities have become the "orphans of public policy" and demanded that they receive a greater share of public funding for infrastructure. From The AFR: “Australian cities are the real orphans of public policy”... “They create most Austra­lian wealth but their role is not recognised in ­Federal policy and their infrastructure is not a focus of the ­federal government’s funding...
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How Coalition FTAs hurt health policy

ScreenHunter_4541 Oct. 16 13.03 Cross-posted from The Conversation: Health is rarely a priority in trade negotiations. But recent developments in Australia suggest it is an even lower priority for the Coalition government than usual. Over the past two decades, it has become increasingly clear that trade and investment agreements can have significant health impacts. The current case by tobacco giant Philip Morris Asia against Australia’s tobacco plain packaging laws has cast these issues into sharp relief. The Coalition’s Policy for Trade, released just before the 2013 election, marks a significant shift in Australian...
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City versus country jobs

ScreenHunter_4536 Oct. 16 11.58 By Leith van Onselen The Australian Bureau of Statistics (ABS) has today released its detailed monthly labour force statistics, which includes breakdowns of employment and unemployment across Australia's capital cities and regions. According to this release, the unemployment rate in Australia's capital cities was 5.8% in September in raw terms, up 0.1% from August. By comparison, unemployment in Australia's rural and regional areas was 6.4%, which was unchanged from August. The below chart, which is presented on a rolling 12 month average basis to smooth volatility, illustrates the trends in...
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Inflation expectations falling

Capture From Westpac: The Melbourne Institute (MI) Inflationary Expectations are now reported as a 30% symmetric trimmed mean utilising all responses except for the ‘don’t know’ responses. •These changes have added about 2ppt to the level of the index compared to the old trimmed mean (chart 5). But more importantly, the new series appears to express a greater cyclical amplitude (chart 6 & 7) which is useful for picking turning points in the inflation cycle. •The consumer expected inflation rate fell by 0.1ppts to 3.4% in Oct. The trend of the trimmed mean series also eased 0.1ppt to 3.3%...
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Unemployment expectations improve in October

ScreenHunter_4525 Oct. 16 07.21 By Leith van Onselen Westpac has released its Australian Consumer Unemployment Expectations Survey for October, which revealed an improved jobs outlook amongst Australian consumers, with the index falling 3.9% in October -  the largest monthly fall in just over a year - taking it 9.6% below its March 2014 peak. A lower reading from the index indicates reduced concern around the labour market. Nevertheless, despite the recent improvement, the index remains very high: And employment continues to lag population growth, which suggests rising unemployment: My own view is that...
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CFO confidence sags

1 From the Deloitte quarterly CFO survey:     Note that the colours are incorrectly marked on the next one:   Pretty telling stuff. Full report...
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Kouk sounds the alarm on Australian unemployment

ScreenHunter_30 Oct. 10 06.15 By Leith van Onselen Stephen Koukoulas (aka "the Kouk") has posted a good article in The Guardian sounding the alarm on Australia's deteriorating labour market, which shows no signs of improving without concerted policy action: The debacle of the Australian Bureau of Statistics (ABS) being unable to publish reliable monthly seasonally adjusted labour force data does not hide the trend of deterioration in unemployment over the past couple of years... There are no signs in other indicators that suggest this will be the peak in unemployment and there are plenty of unfolding trends that point to...
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Australia’s addiction to private debt

ScreenHunter_4503 Oct. 15 07.54 By Philip Soos and Paul D. Egan A perennial and divisive issue in politics and economics today is the matter of public debt. It is commonly asserted that rising public debt threatens the economy and needs to be reined in. Governments are often portrayed as ‘irrational’ actors when they incur a fiscal deficit, causing unnecessary inflation and interest rates to rise by borrowing to meet the shortfall. Private sector lending is supposedly ‘crowded out’ by lifting the cost of money and limiting access to a finite lending pool by government actors. A large stock of public debt and...
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New car sales jump

ScreenHunter_01 Apr. 17 11.28 By Leith van Onselen The Australian Bureau of Statistics (ABS) today released new motor vehicle sales for the month of September 2014, which registered a 2.9% seasonally adjusted jump in the number of sales, and a 0.8% increase over the year (see next table). Sales in September rose in all major jurisdictions across Australia. As shown in the below, new car sales are recovering after trending down since November 2012. Sales of Sports Utility Vehicles (4WDs) are particularly strong, partly offset by weakness in the other categories: Looking at the mainland states, you can see the...
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Westpac-Roy Morgan consumers diverge

ScreenHunter_4508 Oct. 15 11.29 An interesting divergence has appeared between the Westpac consumer sentiment index and the Roy Morgan consumer confidence index:   The 3 month moving average doesn't improve things: I have no explanation and a similar spread was apparent in 2010/11. It may say something about how unusual is the consumer's condition relative to...
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Consumers dour as house price hopes tank

sfwfs From Bill Evans: The Westpac Melbourne Institute Index of Consumer Sentiment rose by 0.9% from 94.0 in September to 94.8 in October. This is the eighth consecutive month that the index has printed below 100, indicating that pessimists have outnumbered optimists for eight consecutive months. That had followed sixteen months where the index had registered above 100 on all but one occasion. The current reading for the index is 1.2% below the average for those eight months indicating that while the index seems to be “stuck” in a pessimistic range there is no sign, at this stage,...
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Coalition completes ultimate betrayal of local workers

blood_hands By Leith van Onselen The Abbott Government yesterday announced sweeping changes to the 457 'temporary' work visa program to make it much easier for Australian businesses to import so-called skilled foreign workers. From The Australian: The application process for the temporary visa program would be streamlined and English language testing relaxed, Mr Abbott said. "We want it to be less burdensome for the businesses that are doing it," he told reporters in Canberra. "We want these to be a way of helping business to grow"... "There will be no dilution of the requirement that people be paid...
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Busted economy to sink VIC government?

ScreenHunter_4491 Oct. 14 12.32 By Leith van Onselen Fairfax's Peter Martin has posted an interesting article today on the worsening employment situation in Victoria, which threatens to scuttle the incumbent Liberal Government: No state other than Tasmania performed as badly. Victoria's Coalition government inherited an unemployment rate of 4.9 per cent and will bequeath to its successor something close to the present 6.8 per cent. Australia's national unemployment rate was also 4.9 per cent when the Victorian Coalition assumed office. But it is now 6.1 per cent, well below Victoria's... Employment is now only 3.1 per cent...
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Westpac jobs index climbs

NAB There are many business surveys out there and most have questions, in some shape  or form, that are applicable to the labour market. To generate a broader and deeper  labour market indicator, Westpac compiles all the relevant indicators from these  surveys into the proprietary Westpac Jobs Index. With the release of the NAB monthly survey we can complete our Sep Jobs Index.  The Index is based so the long run average equals 50. The Index firmed a little more in Sep, rising 1.1ppt to 49.1 in Aug. It has been on a general firming trend  since the recent low of 44.8 in Apr 2013. Westpac's...
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Queensland mining jobs crash

ScreenHunter_03 Jul. 23 09.31 By Leith van Onselen DFP Recruitment has released its mining and resources jobs index, which registered a further 3.8% fall in September - the fifth consecutive monthly fall - with the index also down 25.6% nationally over the year, with Contract and Temporary roles falling by 19.6% over the year and Permanent Vacancies by 30% (see next chart). DFP also notes a strong correlation between commodity prices and mining job vacancies: On the 1st of October, the Reserve Bank of Australia reported its latest index of commodity prices. We have looked closely at the RBA Bulk Commodity Price...
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NAB business survey deteriorates

fghet The September NAB business survey is out and the flush of post-election exuberance is fading as expected. Here are the key numbers: Confidence down to 5 from 8 and 12 at the peak. Conditions down to 1 from 3 and 7 at the peak.  Employment fell to -4 from -1. NAB reckons: Business confidence lost ground in September –lowest level since pre election – in the face of a persistently soft operating environment for many firms. Forward orders remained soft, prompting de-stocking and competitive pricing which appears to have weighed on profitability. Confidence varies significantly across...
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Roy Morgan business confidence lifts in September

ScreenHunter_4484 Oct. 14 10.53 By Leith van Onselen Roy Morgan Research (RMR) has released its business confidence survey for September, which registered a 6.8 point (5.9%) rise over the month to be 9.8% below the peak recorded in October 2013 following the federal election, but above the average of the last four years (see next chart). The proportion of firms believing the next 12 months would be a good time to invest in growing their business rose to 61%, up from 57% in August and is now at the highest level since January 2014. Reflecting the ongoing growth in the FIRE economy, “finance and insurance” (138.1)...
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