In the 2017-18 financial year, Sydney added a whopping 93,411 people, driven by a 77,091 net overseas migration (NOM): And in the 14 years to 2017-18, Sydney added a whopping 1,045,000 people, again driven overwhelmingly by NOM. Residents across Sydney feel the impacts everyday, from being gridlocked in traffic, being sardine packed onto a slow
The Australian Budget has a history of running small deficits and surpluses with occasional blowouts. Contemporary history has seen General Government net debt to GDP approach 20% under Labor in 1995 and the Coalition in 2017. In between, a Coalition government under Prime Minister John Howard and Treasurer Peter Costello ran surpluses sufficient to pay net debt down to zero during Australia’s mining boom.
Ratings agencies have adjusted the sovereign credit rating over time to reflect this ebbing and flowing of debt. In 1975, Standard and Poors rated Australia AAA. By 1989 the rating had dropped two notches to AA. It was subsequently upgraded again to AAA as the Howard Government operated consecutive surpluses.
The major vulnerability for the Australian Budget is the external imbalance in an economy that runs persistent current account deficits. Because Australian banks borrow so much money in international markets largely to fund domestic mortgages they are constantly at risk of international liquidity shocks.
The Australian Budget steps in with public guarantees to the banking system when this happens. Thus, although the Australian Budget has relatively low debt-to-GDP metrics, credit rating agencies demand that they remain that way to preserve the AAA rating as a backstop to bank borrowing.
Australian politics insists that Australia sustain budget surpluses ostensibly because it is equated with good economic management. In truth, the surplus is simply a figment of the property bubble at the heart of the Australian economy that requires the support of the tax-payer to persist. The Australian Budget is the key stone in the Australian credit arch.
In recent years the Australian Budget has deteriorated as the structure of the economy has left is denuded of growth sources. As the mining booms passed and the enormous household debt (186% of GDP) stalled consumption and investment, fiscal deficits became a key component in GDP growth.
As well, the disintegration of Australian political integrity associated with the end of the mining boom period doomed the Budget to successive regimes of neglect.
This very obviously undermined its role in the above system exposing Australia to deeper adjustments during future periods of global stress.
MacroBusiness covers all apposite data and wider analysis of these issues daily.
Back in April, the head of the Australian Competition and Consumer Commission (ACCC), Rod Sims, lamented that Australians were paying more for lacklustre broadband internet under the $50 billion National Broadband Network (NBN): “We are now observing prices of low-speed NBN plans offered to new customers that are at least $10 per month higher than
The Guardian’s Greg Jericho has completed some excellent analysis of this week’s quarterly experimental employment data from the ABS, which shows that there are actually more than there are people employed because a record 6% of earners work multiple jobs: In the June quarter this year there were 14.53m jobs available in Australia. Of these,
For several years, media outlets like The Australian ran a campaign against the so-called ‘blowout’ in welfare spending, backing claims made by the Coalition Government that nearly half of the population receives more in welfare than they pay in tax. The Australian Institute of Health and Welfare (AIHW) 2019 welfare report has debunked this myth,
The Morrison Government continues to face mounting pressure to raise Newstart benefits for Australia’s unemployed. Yesterday, Monash researchers released a study showing that many Newstart recipients are suffering from poor health and often too sick to work or study: “It’s hard to work when you’re sick. We found large disparities between the health of people
A new distraction is upon Australian macro management. It’s the Recessionberg versus Lunatic RBA circus. There’s lots of stories on it but the AFR captures the big yawn: Economist Richard Holden says the tension between fiscal and monetary policy is “Australia’s big economic dilemma”. …“Monetary policy cannot deliver medium-term growth,” Lowe told central bankers at
Via the AFR: Over recent weeks [Shadow Treasurer Jim] Chalmers has been busy travelling the country consulting caucus colleagues as part of the policy process one described as a review but “not with a capital R”. …If there is one consistency in the responses it is that Labor cannot abandon the fairness principles which underscored
European Union trade negotiator, Cornelis Keijzer, insists the abolishment of Australia’s 5% import tariff on European cars and the 33%tax on luxury cars will be a key condition of any free trade agreement (FTA) with the EU. Trade Minister Simon Birmingham says the federal government will be open to requests from the EU with regard
We have watched in horror since the election as the Property Council Government has set about a single-minded agenda to re-inflate the property bubble, which has included: driving for stimulus despite collapsing domestic demand to force interest rates lower; tax cuts and deposit insurance for principle to leverage; winding back Hayne Royal Commission changes at
More details have emerged about the Victorian Government’s signature $50 billion, 90 kilometre suburban rail loop, which is scheduled to start construction in 2022: Premier Daniel Andrews confirmed the preferred route for the much anticipated 90km rail loop would run from Cheltenham to Werribee and connect every metropolitan train line in-between. New underground stations will
Today we will see the Recessionberg Stupidity Index at new lows, one way or another: He appears to have absolutely no idea what’s happening, via News: “Our economic plan is working,” he declared. “The fundamentals of the Australian economy are sound, but there are genuine and clear risks emerging both at home and abroad. “The
The Committee for Sydney has called on the NSW Government to provide more transport networks. Committee CEO, Gabriel Metcalf, believes Sydney has grown to the point that it needs a mass transport system like London’s, but that the Government does not have the money required to fund more infrastructure projects. It suggests the Government should
A week after it was revealed that Australians pay the highest broadband costs in the OECD and ranks 67 out of a wider list of 83 countries: Embattled NBNco has admitted that it is running way behind schedule in connecting homes to the NBN network: Half a million homes will have to wait longer to connect
Bloomie today: Australia is on track to close twin deficits that were once seen as the Achilles heel of its small and open economy. Yet the dramatic turnaround is probably not what the Reserve Bank is after. Data Tuesday could show the first current-account surplus since 1975, while the government’s budget is also close to
Research from the Australian Parliamentary Library reveals that Australia has the least affordable entry-level access to broadband among developed OECD economies, and ranks 67 out of a wider list of 83 countries: NBN researcher and University of Sydney infrastructure lecturer, Tooran Alizadeh, has described the result as “disappointing, devastating, but not surprising” that Australian are
Over many years, we’ve warned that the enormous pot of money on offer under the $22 billion National Disability Insurance Scheme (NDIS) would spawn a whole range of middle-men and providers seeking to cash in, leading to significant waste, or worse fraud. We’ve seen this before with the rorting of the private Vocational Education and
There is no science to it. But there’s common sense. Jason Murphy at News kicks us off: Australia’s economy is in a spot of bother. Let us count the ways: • A trade war threatening the economies of our two biggest trading partners. • Monstrous levels of household debt combined with pitiful wages growth. •
Australia’s pretend infrastructure boom to the moon! At the AFR: “It looks like the boom is going to be a bit more protracted than we previously thought,” said Nigel Hatcher, director at Macromonitor, which specialises in economic forecasts for the construction industry. Transport construction activity around Australia is expected to hit a record $42 billion
Basically everybody can see that Josh Recessionberg is an idiot. The AFR can: Corporate Australia doesn’t need advice on capital allocation from the Treasurer. Josh Frydenberg has no skin in the game of capital allocation, unlike board directors who need to explain to their shareholders once a year – rather than every three years for a politician
Earlier this year, it was revealed that the Australian Taxation Office (ATO) had collected an extra $7.7 billion in unpaid tax liabilities since July 2016 via its tax avoidance taskforce, with 44 multinationals changing their business models in order to meet their Australian tax liabilities. Today, The Guardian reports that the ATO’s multinational tax avoidance
The NSW Office of State Revenue has released stamp duty data to July, which reveals a massive $1.69 billion (25%) decline over the past year and a $2.45 billion (33%) decline since stamp duty receipts peaked in October 2017: The slump in stamp duty receipts follows a sharp 24% decline in property transfers in the
From Josh Recessionberg at The Australian: Josh Frydenberg will issue a rallying call to company bosses to invest more in new technologies — rather than returning excess cash to shareholders — in a bid to kickstart flagging productivity and boost wages by $3000 a year. In a wide-ranging address to the Business Council of Australia,
The Actuaries Institute has published a discussion paper examining a range of options for overhauling Australia’s retirement income system, which includes as its central recommendation including the family home in the pension assets test, but conveniently not for the baby boomer generation. From The Australian: Actuarial expert David Knox, former regulator Anthony Asher and public
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The ScoMo Government is a masterful fake. It is currently pretending to cut immigration, pretending to reform banking, pretending to build infrastructure, pretending to be a good economic manager, pretending to care about weak wages, pretending to care about energy prices, pretending to care about anything and everything other than rising house prices. This we
No QE says monetary curmudgeon Stephen Grenville: QE1 was a powerful instrument in rescuing key financial markets which had frozen, but this experience has no relevance for Australia in the foreseeable future. When the current monetary system was put in place in Australia in the 1980s, ‘free markets’ were the lodestone of policy. The RBA
Earlier this week, the Business Council of Australia (BCA) called on the federal government to introduce an broad-based investment allowance to help stimulate the economy. Now, the BCA has received support from the Australia Institute. Ben Oquist, the executive director of the progressive think tank, says an investment allowance is preferable to a general cut
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