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. However, both of these activities systematically reduce economic competitiveness by inflating both input costs and the currency. “Dutch disease” by another name. 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. MacroBusiness covers all apposite data and wider analysis of these issues daily.


ALP to crackdown on foreign labour rorts

By Leith van Onselen Finally, some good news on the immigration front with Labor vowing to force businesses to advertise locally before reaching for a 457 foreign worker. From Federal Labor wants to force employers to advertise locally before seeking temporary foreign workers. They will be required to advertise job opportunities for a minimum


Major parties launch new population ponzi pillar

By Leith van Onselen As if a decade of rampant population growth (immigration), clogged roads and public transport, unaffordable housing, and degrading public services wasn’t enough. Now both major parties want to double-down on the population ponzi by allowing parents of Australian residents to migrate here on five-year visas. From SBS: The Coalition has promised


Random housewife better fiscal manager than Barnett

From Bloomie: “Where is Turnbull going to get the jobs from?” said Bernadette Heath, 55, at a shopping center in the electoral district of Burt — one of four lower house seats being targeted by Labor around the state capital, Perth. “There are no jobs to be had.” Her 57-year-old husband, Brian, took a 40 percent


The rise and rise of the bedpan economy

The Australian Bureau of Statistics (ABS) yesterday released its quarterly labour force report, which breaks-down employment at the industry level to May 2016. Below are some key charts, which present the changes in employment aggregates on a trend basis. First, the quarterly change in employment by industry: As you can see, Health Care & Social Assistance


Melb and Syd maintain manic population growth

By Leith van Onselen The ABS released its Australian demographic statistics for the December quarter of 2015, which revealed that Australia’s overall population growth rate accelerated slightly, with rebounding growth in New South Wales and Victoria offsetting plummeting growth in Western Australia and South Australia. According to the ABS, Australia’s population rebounded to 1.38% in


Quigley: Turnbull butchered the NBN

From Domainfax: The first chief executive of the National Broadband Network has weighed into the election debate on broadband policy to declare the Coalition’s multi-technology rollout a “colossal mistake” and back Labor’s plan to increase the use of fibre directly to the home. In a rare public intervention, Mike Quigley told the University of Melbourne


Australia’s Kiwi exodus passes its peak

By Leith van Onselen Statistics New Zealand has released its permanent & long-term migration figures for May 2016, which revealed that net permanent and long-term migration into New Zealand continues to boom, smashing records: Unadjusted figures showed a record net gain of 68,400 migrants in the May 2016 year. This is the 22nd month in


Leading index edges out of ditch

From Westpac: • The six month annualised growth rate in the WestpacMelbourne Institute Leading Index, which indicates the likely pace of economic activity three to nine months into the future, rose from –1.19% in April to –0.42% in May. Although the index continues to point to sub-trend growth, the May update showed a material improvement


FTA secrecy is against the national interest

By Leith van Onselen Greg Wood – a former deputy secretary in the Department of Prime Minister and Cabinet, a former High Commissioner in Canada, and former senior bureaucrat at the Department of Foreign Affairs and Trade – has penned an excellent piece in Fairfax today slamming the secrecy surrounding Australia’s free trade agreement (FTA)


Sustainable Australia Party dissects the population ponzi

By Leith van Onselen Sustainable Australia Party (SAP) head, William Bourke, appeared on Sydney’s 2UE radio yesterday and gave a ripper interview discussing population growth – the “unmentionable elephant in the room” this election campaign. Below are the key extracts. You can listen to the full interview here. Radio Host: “Every problem we talk about.


US alliance support tumbles

From the new Lowy Institute poll: The dominance of the Coalition in external issues is pretty extraordinary: Unless you put a fool in charge: US alliance on the nose: Strayans still pretty committed though and happy to sail between the two increasingly hostile super powers of the future. Full report.


Why Australia won’t run-out of workers

By Leith van Onselen ANZ analysts Richard Yetsenga and Toby Roberts have penned an article, entitled “Why Australia is going to run out of workers”, which claims that Australia risks running out of workers as its population ages and its economy shifts towards services. From The AFR: We all know Australia’s population is ageing –


Why agriculture – not LNG or coal – matter for Australia

Cross-posted from Independent Australia: Recently released ABS figures illustrate steady growth for agriculture over coal and gas. Lachlan Barker reports. THE AUSTRALIAN BUREAU of Statistics (ABS) recently released their industry figures and those in the gas and coal industries will not want to read them. It is really a story of graphs. As you can see, from


Australia versus chaos theory

According to Wikipaedia “chaos theory is a branch of mathematics that deals with complex systems whose behaviour is highly sensitive to slight changes in conditions, so that small alterations can give rise to strikingly great consequences”. Australia exists in a state of blissful ignorance of this theory. How else to explain an economic model that relies upon


Greens demand FTA scrutiny

By Leith van Onsele The Australian Greens have demanded greater parliamentary oversight of so-called free trade agreement (FTA) negotiations and approval of deals before they are signed, as well as an end to investor-state dispute settlement provisions that allow foreign corporations to sue taxpayers. From Sky News: ‘A fundamental problem with trade deals is that


Turnbull pisses Whyalla money away

I did warn that any Arrium rescue must be kept away from the Australian Treasury because its dirt fixation meant it would completely miss the point. And voila: Federal Liberal Member for Grey Rowan Ramsey says Prime Minister Malcolm Turnbull’s $49m commitment to the Whyalla steelworks is “fantastic”. ”It is fantastic news because it means they can


You have to adandon Highrise Harry, Gotti

Gotti is out defending Highrise Harry’s interests yet again today: BT’s Vimal Gor says that during the commodity boom times the Australian banks borrowed massive amounts of money, mostly in the form of long-term bank bonds, from foreign markets. This grew the banking system to today’s massive size. Gor says we effectively borrowed against the


Is the casualisation of Australian work bad?

From Peter Martin today: In the Coalition’s three years in office, part-time employment grew 306,000 and full-time employment just 150,600. Australia is becoming a part-time employer, and that signals badly for the quality of work. This long-term hollowing out of employment stands in stark contrast to Labor’s six years in which full-time and part-time employment