Unconventional Economist

9

Universities post healthy surpluses amid international student “collapse”

Since the beginning of the coronavirus pandemic, we have witnessed Australia’s universities warn of financial catastrophe from the collapse of international students. We also saw universities cry foul after they were denied the JobKeeper wage subsidy. Fast forward to today and it appears the universities were crying wolf, with many posting healthy surpluses. Earlier this

0

Third time lucky for Victoria’s hotel quarantine

The Victorian Government has announced that international flights into Melbourne will resume within a fortnight. The state’s hotel quarantine system has already failed twice – in June last year and in February 2021 – resulting in local transmission and hard city/state-wide lockdowns. However, a number of changes have been implemented to prevent another failure, including

1

No Grattan, don’t extend JobMaker to everyone

Treasury officials have confirmed that the Morrison Government’s JobMaker wage subsidy is a failure.  Only 609 jobs have been created in the first six weeks of the scheme, well below initial expectations that 450,000 jobs would be created by the end of 2021. Writing in the New Daily, The Grattan Institute has called JobMaker’s eligibility

6

Proof apartments are a dud investment

There are many reasons to avoid investing in apartments (units), especially the high-rise variety: They hold minimal land value: land appreciates, buildings depreciate. The holding costs are high due to things like body corporates and maintenance levies. The quality is often dubious: apartments tend to be built for tax minimisation and marketed to gullible investors

9

Construction sector faces critical supply squeeze

The Morrison Government’s HomeBuilder subsidy, alongside similar state government programs, have been too much of a success in stimulating the construction industry. As illustrated in the next chart, loans for dwelling construction have soared to unprecedented highs: The Housing Industry Association has reported similar booms across new home sales and renovations, whereas the Australian Bureau

19

The $34b corporate welfare payment nobody talks about

The Morrison’s $34 billion Cashflow Boost was a gigantic corporate welfare scheme launched at the beginning of the Coronavirus pandemic that has received little scrutiny or media attention. It provided between $20,000 and $100,000 of free cash to all employing entities below a certain turnover threshold. All businesses had to do was lodge their activity

7

Lifting compulsory super would worsen gender gap

Professor Deborah Ralston was a member of the Australian Treasury’s Retirement Income Review, which released its final report late last year. Professor Ralston has published an article in The Conversation warning that lifting the compulsory superannuation guarantee (SG) to 12% would worsen the wealth imbalance between men and women by widening the retirement income gap:

8

Links 25 March 2021

Global Macro / Markets / Investing: US Treasury Labels 2 Countries as Currency Manipulators – Investopedia Microsoft in Talks to Buy Discord for More Than $10 Billion – Bloomberg Microsoft to start reopening headquarters on March 29th, with hybrid workplace focus – The Verge Dow closes 300 points lower as Caterpillar leads afternoon slide –

5

Aussie job postings one-third higher than before COVID

The V-shaped recovery in the Australian labour market rolls on, with new data from global jobs site Indeed showing that job postings are now tracking 32.9% above their pre-COVID level: According to economist Callam Pickering via Twitter: Australian job postings continued to strengthen throughout the first half of March. By March 19, job postings were

6

CoreLogic: regulators aren’t about to rein-in risky lending

CoreLogic’s head of research, Eliza Owen, agrees that Australia’s financial regulators are unlikely to act quickly to rein-in ‘risky’ mortgage lending via macroprudential tightening. First, Owen notes that the proportion of interest-only lending remains at low levels (19.2% in December 2020), less than half the mid-2015 peak (45.6%): Second, while the proportion of mortgages made

36

Westpac: NZ investor tax reforms will crash property prices

New Zealand’s Ardern Labour Government yesterday announced sweeping property tax reforms targeted at investors, namely: extending the term of the Bright Line Test for taxing capital gains on investment property from five years to 10 years; and fully removing the tax deductibility of mortgage interest payments on residential investment properties. The reforms came out of

1

Death of enterprise bargaining agreements a good result

Domino’s Pizza Enterprises has ruled out returning its employees to the enterprise bargaining system after the Senate rejected key elements of the federal government’s industrial relations omnibus bill. Rival fast-food group McDonald’s has also indicated that its workforce will remain on the industry award after it abandoned the enterprise agreement system in 2020. Business Council

18

Turns out, Aussies aren’t fleeing from cities to the regions

Since the COVID-19 pandemic began, there has been anecdotal evidence suggesting that Australians are fleeing from capital cities to the regions. For example, the Australian Bureau of Statistics (ABS) latest internal migration data shows that Australia’s capital cities lost around 22,000 residents in the June and September quarters of 2020, led by sharp falls across

2

Hospitality industry demands visa slaves while sacking Aussie workers

Restaurant and Catering Industry Association of Australia (RCIAA) chief executive Wes Lambert was one of the first lobby groups to praise the government-led Joint Standing Committee on Migration’s recommendations to allow Australian businesses easy access to cheap foreign labour. To recap, the Committee recommended: Significantly watering down or outright abolishing labour market testing rules, depending

8

Why do mutual obligations only apply to the unemployed?

Last week, Tasmanian Liberal MP Bridget Archer broke rank to attack the Morrison Government’s mutual obligations changes to recipients on JobSeeker. Under changes passed last week by the Australian Senate, JobSeeker recipients will have to apply for 15 jobs a month from 1 April, which will be increased to 20 jobs per month from 1

16

Links 24 March 2021

Global Macro / Markets / Investing: Serial Lawbreaker: Amazon Faces 3rd Wage Theft Fine In 3 Months – The Techee Our financial markets have become vapid, non-physical, unsecured, diluted, unsustainable, unproductive, risky, volatile, mispriced, misrated, manipulated, corrupted, ponzified, criminal regulator, executive and board compensation schemes. – NPR The Pandemic Stalls Growth in the Global Middle

15

Telstra sets sights on NBN acquisition

Telstra continues to maneuver its way into purchasing the National Broadband Network (NBN) from the federal government. Telstra has announced that it plans to split into four operating businesses under a new holding entity to be known as Telstra Group, subject to the approval of its shareholders. The four new businesses will include InfraCo Fixed,

7

Industry super spits dummy over biased modelling

The lobby group for 15 Australian industry superannuation funds, Industry Super Australia (ISA), has taken aim at the federal government’s Retirement Income Review, which it claims was inherently biased in cautioning against lifting the superannuation guarantee (SG) above 9.5%: “The troubling conclusion is that the review was rigged to get the outcome some government MPs

26

NZ government whacks housing speculators with massive tax changes

The New Zealand Government has taken direct aim at property investors, extending the term of the Bright Line Test for taxing capital gains on housing and fully removing the tax deductibility of mortgage interest payments on residential investment properties. The measures are expected to come into effect this weekend. Moreover, the Government will extend the

64

The rise and rise of Aldi

Aldi is arguably one of the biggest disruptors to hit the Australian economy over the past 20 years, single handedly busting open the Woolworths/Coles supermarket duopoly. Aldi now has 570 stores nationwide, capturing a 10% market share, and is expected to open another 20 stores this year. In the process, Aldi has expanded its footprint

4

Get ready for a ‘caring’ jobs boom

The National Skills Commission (NSC) has released its employment projections for the five years to November 2025. The NSC forecasts that total employment will rise by 991,600 (7.8%) by November 2025. Healthcare and social assistance (249,500) are the sectors that will record strong growth in jobs, followed by hospitality (139,900); professional, scientific and technical services

3

Rents grow at fastest pace in 9 years

CoreLogic’s March Housing Update reveals that rental growth nationally has reached its highest level since March 2012, growing by 3.2% in the year to February 2021: This growth is being led by Australia’s regional markets, which experienced 7.3% rental growth in the year to February 2021, more than double the 3.2% rental growth experienced across

23

Why you should refinance your mortgage

CoreLogic has released its March Housing Market Update report, which contains the below chart showing the sharp fall in mortgage rates over the past year across various owner occupied and investor loan types and terms. Specifically, the average housing lending rates for new loans declined 70 basis points for owner occupiers, and 70 basis points

4

How Labor should reform Australia’s skilled visa system

Last week, the Coalition-led Joint Standing Committee on Migration recommended radical reforms to Australia’s skilled visa system to make it much easier for businesses to bring foreign workers into Australia. In a nutshell, the recommendations included: Watering down or abolishing labour market testing requirements. Lowering business costs and speeding up approval times for importing foreign

6

Links 23 March 2021

Global Macro / Markets / Investing: Visa Taps Deeper Into Bitcoin Through New Global Partnership With Crypto.com – Forbes G7 agrees to back IMF reserve boost to help poorer nations – Aljazeera How Amazon Crushes Unions – NY Times Why Bond Yields will Climb Further after last week’s Fed Inflation Forecast – Matthew Fear Grieve