From Crikey's Bernard Keane comes a tale of Lockheed Martin entitlement in Australia's quest to dominate SE Asian skies: The problem is, the F-35 program is not under control, even according to the US government. In September, thePentagon Inspector-General issued yet another in a long line of scathing reports about the program, having found over 700 separate problems with the program's administration that led to over 300 findings. "The F-35 Program did not sufficiently implement or flow down technical and quality management system requirements to prevent the fielding of nonconforming hardware and...

By Leith van Onselen The ANZ-Roy Morgan Research (RMR) consumer confidence index has been released for the week ended 20 April, which registered its first rise in four weeks, jumping 3.4 points (+3.0%) to be above its long-term average (113.0) but well below the highs reached after last year’s Federal Election: The improvement in the week was driven by strength in consumers’ perceptions of ‘economic conditions next year’ and ‘financial situation compared to a year ago‘; with the latter sub-index most correlated with household consumption growth. Below tracks the ANZ-RM...

From the AFR: NSW households are set to be slugged with an increase of up to $225 a year on their gas bills as of July 1 as the start-up of LNG exports from Queensland places a squeeze on east coast supplies. The price hikes recommended by the state pricing regulator IPART on Wednesday are lower than those sought by AGL Energy and Origin Energy, but represent a hefty annual increase of 17.6 per cent, the third straight year of price rises. IPART put the rises down to rising gas costs. The report goes on to quote one Phil Laird, national co-ordinator for the Lock the Gate Alliance: “Gas...

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 March quarter 0f 2014, which registered a modest quarterly increase in prices, with the result also coming in well below economists’ expectations. According to the ABS, headline CPI rose by a modest 0.6% in the March quarter, which follows December’s strong 0.8% rise. The 0.6% increase in the March quarter was 25% below analyst’s expectations of an 0.8% increase over the quarter. On an annual basis, headline CPI growth...

The Australian Bureau of Statistics has released March quarter inflation numbers and the bullhawks can flee back to their their dung-bottomed eyries with an undershoot on every measure, headline at 0.5% and 2.9% annual and trimmed mean at 0.5% and 2.6% annual: No rate hikes are coming. The dollar was smashed lower by a half cent: More to come from...

The Department of Employment and Education (DEEWR) has released its March job vacancies index and the news is pretty average, falling 2.6%: There is only stabilisation, no recovery: It's broad based weakness by state: And occupation: Those expecting a  sharp jobs recovery are very likely going to be disappointed. Full report...

By Leith van Onselen The Australian has published new research by the Canberra University’s National Institute for Social and Economic Modelling (NISEM), which sows that Australian wages rose by only 0.1% over the December quarter versus a 0.7% rise in living costs, meaning that real wages and living standards are going backwards. And NISEM sees no immediate relief in sight: AVERAGE living standards fell in the December quarter and the outlook for households is now weaker than at any time since the Hawke government in the 1980s... NATSEM principal research fellow Ben Phillips said the net...

From CIMB's Michael Knox: Australia is at the very beginning of a recovery from an extended growth recession. A growth recession occurs when growth in employment is slower than growth in the labour force. The average growth rate of employment in Australia since the beginning of this century is 2.05% per annum. As you can see in the chart below, employment in the past two years has only been a fraction of this: Two employment measures published by the Australian Bureau of Statistics are the seasonally adjusted measure and the trend measure. The seasonally adjusted measure seems to be favoured by...

By Leith van Onselen Business Spectator's Callam Pickering has written another good piece today, this time questioning the merits of Australia's world-beating immigration program, which risks lowering the living standards of the pre-existing population: ...high migration levels are not achieved without a cost. High population growth puts pressure on existing infrastructure and commonly leads to greater congestion on our roads and public transport. Not to mention the impact on our natural resources and environment. There is also considerable debate as to whether high migration policies...

By Leith van Onselen Former infrastructure and transport minister, Anthony Albanese, is the latest to jump on the high speed rail (HSR) bandwagon, writing a spirited article in The Guardian over the long weekend entitled No ifs, no buts: Australia needs high speed rail: High-speed rail would revolutionise interstate travel, and would also be an economic game-changer for dozens of regional communities along its path. That's why the politicians need to exercise vision, and think way beyond the current political cycle... The passage of time is likely to make high-speed rail more and more...

By Leith van Onselen Business Spectator's Callum Pickering has written another good article today on a particularly important issue: Australia's growing youth unemployment: Australian society is failing its youth and setting itself up for economic disaster. The persistent rise in youth unemployment will reverberate across the economy for decades to come, potentially reducing productivity and limiting creativity and innovation... The unemployment rate for 15 to 24 year olds has increased significantly since 2008, rising to around 12.5 per cent in February... Since 2008 the participation rate...

By Leith van Onselen The Australian Bureau of Statistics (ABS) has just released new motor vehicle sales for the month of March 2014, which registered a 0.3% seasonally adjusted fall over the month and a 2.8% decrease over the year (see next table). It was the third consecutive monthly decline in sales. Sales in March fell in six states and territories and rose in two. As shown in the below, overall new car sales peaked in the first quarter of 2013 and have since drifted downwards, with even sales of the once booming Sports Utility Vehicles (4WDs) slowing: Looking at the...

By Leith van Onselen Around six months ago, I attended a friend's bucks party in Melbourne's CBD. As bucks nights usually go, we ended up at some seedy bars along King Street, where the night ended around 2 am. As is so often the case in Melbourne, we were unable to find a taxi. Luckily my friend, who is seemingly more technologically savvy than I am, had the Uber app installed on his smart phone and used it to order a town car, which arrived around five minutes later. For those of you that have not heard of Uber, it is a company that has been recently acquired by Google, which links...

By Leith van Onselen Yesterday's dwelling construction data, released by the ABS, revealed a fall in actual completions over the December quarter, but a big pick-up dwelling commencements, which are following approvals upwards. The below chart, presented below in rolling annual terms, summarises the situation well, with approvals and commencements finally beginning to catch-up to the recent strong population growth, with actual completions set to follow later this year: What is most interesting about the current cyclical upswing in housing construction is the extent to which it is...

Westpac has released its March quarter consumer price index (CPI) forecasts, with the bank seeing inflation edging-up to a headline 0.9% QoQ/3.2% YoY (from 0.8% QoQ/ 2.7% YoY) and an underlying 0.7% QoQ/ 2.8% YoY (from 0.9% QoQ/ 2.6% YoY): Our Q1 headline CPI forecast is 0.9%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. March is traditionally a seasonally strong month and has historically been worth about +0.2ppts on the CPI. We see this seasonality again this quarter which is part of the reason for the...

David Bassanese has a questionable analysis of house prices this afternoon: As should be clear, house price cycles have differed across states. Relative to average weekly earnings per worker in each state, the peak in Sydney house prices came in 2003, followed by peaks in Hobart, Brisbane and Perth just before the financial crisis in late 2007. Melbourne and Darwin’s peaks did not come until 2010. All up, interest rate driven cycles have tended to be led by Sydney – to be then followed by other States. The resource boom has added an extra dynamic to price trends in Perth, Brisbane and...

By Leith van Onselen  The Australian's Janet Albrechtsen has written a cracking article today attacking the Abbott Government for refusing to free-up competition in the pharmacy industry, which she argues is one of the nation's biggest entitlement racket: So here we are again. A Coalition government is back in Canberra, with the same union-busting, free-market messages in addition to one heck of a new target — ending the age of entitlement. Yet, in a case of deja vu, one union behind one industry in Australia has done a clever job of removing itself from the dartboard of reform... [The]...

Aside from the anti-Midas touch of Mark Rowsthorn, this is worth noting because McAleese's difficulties appear to go to demand as much as ineptitude: The McAleese Group, owner of Cootes Transport, has issued its second profit warning in two months, saying trading in the March quarter has been more difficult than expected due to safety breaches and falling demand for its heavy haulage services. The wholesale sector has been consistently more weak than other sectors in the NAB survey over recent months and has suggested the underbelly of the cyclical bounce was soft. This may also be the result of...

From Westpac: The six month annualised deviation from trend growth rate of the Westpac Melbourne Institute Leading Index which indicates the likely pace of economic growth three to nine months into the future rose from –0.15% in February to –0.09% in March. Read...

Capital Economics has produced a little note on China with which I entirely agree. It examines the slowing growth base case, as well as very plausible Chinese hard landing scenarios if reform has a little accident on the way. China’s changing growth model Before getting into what a hard-landing would look like, it is important to stress that this is not how we see things playing out. We expect growth in China to ease over the coming quarters, as policymakers try to strike the right balance between structural reform and supporting short-term growth. Slower growth that is less reliant on...

By Leith van Onselen The ANZ-Roy Morgan Research (RMR) consumer confidence index has been released for the week ended 13 April, which fell for the third consecutive week (down 1.3 points) to be a touch below its long-term average (113.0) and well below the highs reached after last year’s Federal Election: The fall in the week was driven by weakness in consumers’ perceptions of ‘financial situation in the year ahead’ and ‘… a year ago’, with the latter closely correlated with consumer spending. While this sub-index can be volatile, it is now around 5% lower than its average...

Cross-posted from The Conversation: Australia faces a fall in living standards unless policy action is taken. This is due to de-industrialisation and loss of economic complexity. The higher the economic complexity, the stronger the economy’s value-creation prospects. Australia languishes at 79 in global rankings of economic complexity. Modern industry policy could help correct this but is poorly understood. Hence it is frequently maligned in Australia. Any intervention should aim to improve business environments or influence a shift in the economy. The goal should be a structure that...

By Leith van Onselen Prime Minister Tony Abbott has today announced that Badgerys Creek in Sydney's west will be home to the city's second airport, with work on the $2.5 billion project expected to commence in 2016 and reaching full operating capacity within a decade. From The AFR: The federal government will bear some costs with planning but is expected to announce later this week a large investment of its own in roads and other transport infrastructure to service the new airport... Mr Abbott assured the roads would be built before the airport... Mr Abbott said “for more than 50 years...

By Leith van Onselen The AFR's Lucy Kellaway has written an interesting article today calling for the re-introduction of the nine-to-five workday: We start the daily email orgy before we get out of bed in the morning and then pass the hours till dusk in tiresome meetings and video conferences, only to continue to commune with our smartphones late into the night. Every day feels like a marathon, only by the end of it we have hardly covered any distance... Nine-to-five has a long, splendid pedigree and used to work very well. Only in the past 15 years has it fallen out of...

By Leith van Onselen The number of job vacancies in the mining industry have plummeted nearly 23% in the past nine months, according to the latest DFP Mining and Resources Job Index, which provides month-end data for March. The Index dropped 1.9% from February to 77.34 for the month of March 2014 and the number of job vacancies has now fallen 22.66% in the last 9 months. Moreover, permanent employment opportunities have declined the sharpest, down 30% in 9 months (see below chart). Queensland job vacancies have declined the sharpest, down roughly half from June last year (see next...

From the AFR: The federal government is facing demands from China that it be allowed to import workers for projects funded by Chinese investors as part of the free-trade agreement. The government is resisting, saying there would be a severe domestic political backlash should it ever agree. Eager to land the FTA with China, it is looking at ways to target the issuance of 457 visas towards projects that the Chinese want to build and for which the workers and the skills cannot be obtained in Australia. Is it any wonder? Given the huge labour costs in remote projects have played a significant...

From COMMSEC: Figures released from the Reserve Bank show that the average credit card balance rebounded from a 4-year low in February, lifting by $58.70 (1.9 per cent) to $3,205.60. The average credit card balance was still 2.3 per cent below a year ago. In smoothed terms (12 month average) the average balance was down by 2.6 per cent, unchanged on January but slightly down from the 2.7 per cent fall recorded in November (the biggest fall in 19 years of records). Of credit cards attracting interest charges, the average outstanding balance rose by $1.40 in February to $2,246.90. The average...

Anyone reading the weekend papers cannot have missed the great coal whinge that was led by The Australian: THE world’s biggest miners have united in sounding the alarm that Australia’s $60 billion coal sector is under extreme pressure, with global giant Rio Tinto warning the industry is “staring down the barrel”. Harry Kenyon-Slaney, chief executive of Rio Tinto’s energy product group, says the sector is facing a wide range of challenges: lower prices, the strong Australian dollar, high taxes, increasing regulations, delays in gov­­ern­ment approvals and community opposition to...

From Westpac: ― The Westpac–Melbourne Institute Index of Consumer Sentiment edged up 0.3% in Apr from 99.5 in Mar to 99.7. The essentially fl at result leaves sentiment fi rmly around ‘neutral’. ― The flat result was a little disappointing given last month’s reading was clearly impacted by high profi le lay-off announcements. Positive news on jobs and housing could also have been expected to give a lift. Policy infl uences in the month are likely to have been minimal. ― The survey detail showed that improved assessments of family fi nances and the near term economic outlook were...

Cross-posted from The Conversation Governments seem to be enamoured with financial markets, judging by the support they give them around the world to encourage their growth. The assumption seems to be that there’s always a positive relationship between the size of the financial system and its contribution to the economy. This assumption that bigger is always better is one that Australia’s financial system inquiry would do well to test as it considers “how the financial system could be positioned to best meet Australia’s evolving needs and support Australian economic...

By Leith van Onselen The Australian Bureau of Statistics has released Lending Finance data for the month of February, which registered a seasonally-adjusted 0.7% fall in total finance commitments, with the 2.5% fall in commercial finance loans more than offsetting rises in the other broad components. In trend terms, total finance commitments rose by 1.3% in February to be up 25.5% over the year, with increases recorded across all of the four broad components (see next table). The below chart plots total lending in trend terms. As you can see, the volume of lending is fast approaching...

By Leith van Onselen The Age is reporting today that Victorian taxi fares are set to jump by up to 30%, in a bid to improve service and improve driver's incomes: The cost of catching a taxi is set to rise by up to 30 per cent next month after the Napthine government decided to raise fares for the first time since 2008. Exactly how much more passengers have to pay will depend on a range of factors including the time and day of travel and the distance... The size of the increase varies, but will be greatest for short trips and at times of high demand such as Friday and Saturday...

Excerpted from Renai LeMay at Delimiter. Usually once a week or so, I get the chance to catch up with a senior Australian IT industry figure of some kind or another for a detailed chat. It could be a managing director of a major technology vendor or telco, it could be a senior industry analyst, it could be a chief information officer or it could be a politician such as an MP or Senator, or one of their staff members. Usually I do this sort of thing over the phone, but sometimes it’s over coffee. It’s all off the record — usually we’re just shooting the breeze and sharing background...

David Uren today captures the premature jobs celebration that has taken hold of the nation's more flighty analysts: STRONG jobs growth has raised hopes that unemployment has passed its peak and puts pressure on Treasury to revise up pessimistic growth assumptions behind next month’s budget. ...the strength...bodes well for the nation and suggests that the coming fall in resource investment could be managed without significant disruption. “The handover from the ­resource sector to the rest of the economy is happening and that will bring a regional switch in where the growth is,”...

From Callam Pickering at Business Spectator: Month after month, the market incorrectly assesses the labour market because they focus on the wrong data. The Australian Bureau of Statistics makes it very clear that the trend data is more reliable than the seasonally-adjusted estimates. Using the seasonally-adjusted data, the ABS is 95 per cent confident that employment growth was somewhere between a 39,000-person fall and a 76,000-person rise during March. They are also 95 per cent confident that the unemployment rate was somewhere between 5.2 and 6 per cent. Wide confidence intervals are a...