Despite the cut in international students, salaries of university vice-chancellors remain bloated, according to new analysis by Fairfax: Unbelievably, some vice chancellors scored pay rises in 2020 at the same time as revenues tanked, rank and file staff were retrenched or had their wages stolen, and students were pushed into sub-standard online teaching. As shown
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 given it is only the mindless measure of whirring widgets.
However, both of these activities systematically reduce economic competitiveness by inflating both input costs and the currency. “Dutch disease” by another name. This continuous “hollowing out” of productive activity means the broader economy relies heavily upon the non-stop import of capital, either in the form of debt or in the form of assets sold to foreigners, to generate ongoing income growth.
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. We saw this in the global financial crisis but the flow of dirt income was restored sufficiently quickly to prevent any deep adjustment.
A second risk is that the debt accumulation simply becomes overly onerous for the underlying economy to service, also resulting in a current account adjustment. Well north of $1trillion of the debt is owned externally and household debt is a world-beating 186% of GDP so this is a real risk.
It is offset by a relatively clean public balance sheet that deploys fiscal stimulus in times of economic stress. However, in recent years, as both of the two above risks have increased, the public balance sheet has deteriorated as well, setting Australia up for a famous adjustment to end its famous bull run.
MacroBusiness covers all apposite data and wider analysis of these issues daily.
You have got to love the contradictory statements coming from the Australian Chamber of Commerce and Industry (ACCI), which continues to talk with a forked tongue on the labour market. The ACCI recently sent a submission to the Morrison Government’s migration program review whereby it demanded easier access to foreign workers to ameliorate purported crippling
By Gareth Aird, head of Australian economics at CBA. Key Points Wages and salaries paid into CBA bank accounts lifted over May which points to growth in employment and hours worked in the month. The number of CBA customers receiving the JobSeeker payment continued to decline over May which indicates unemployment fell over the month.
Has the ABC been living under a rock? Last night The Business reported in disbelief that many Australian workers will have their take home pay cut when the superannuation guarantee (SG) is lifted from 9.5% to 10% on 1 July: Employment lawyers say if an employee’s contract says their super is included in their total
By Gareth Aird, head of Australian economics at CBA Key Points The domestic economic landscape has changed significantly as a result of COVID‑19; it means that we are much more likely to see a lift in wages growth and consumer inflation over the next few years. The Commonwealth fiscal stance has shifted radically in favour
MB has comprehensively debunked Australia’s claimed $40 billion of education exports, which are wildly exaggerated. In a nutshell, the majority of education ‘exports’ comes in the form of expenditure on goods and services in Australia, as explicitly acknowledged in a recent Mitchell Institute report: The majority of the $20 billion loss of economic value is
For months we have witnessed Australia’s hospitality industry whine over labour shortages and lobby the federal government to give it easier access to foreign workers. At the same time the hospitality industry contradictorily called for an extension of JobKeeper and has lobbied to freeze the minimum wage. We are seeing the same shenanigans over the
NSW has recently flagged plans to replace stamp duty with an annual land tax. But NSW Treasurer Dominic Perrottet contends it will be “tough fiscally” to pursue stamp duty and broader GST reform without the help of the federal government: “It makes sense for them to support [it]. Things can be politically challenging but they don’t
One of the most asinine COVID restrictions that will continue into next week is the banning of gyms. Gyms were singled-out and banned from reopening in Regional Victoria last week, despite no reported COVID cases, and they will be singled out again in Melbourne when it reopens at midnight tonight. As happened last year when
Indeed economist Callam Pickering has updated his job postings data to 4 June 2021, which have softened from recent highs: Victorian job postings have softened in recent weeks and are a bit weaker than the national average, up 38.7% on their pre-COVID level. Job postings across the rest of the nation are also down from
A recent report from the National Agricultural Labour Advisory Committee admitted that Australian farmers’ extreme reliance on cheap migrant labour is having detrimental productivity impacts by preventing farms from adopting new methods and investing in automation: In many ways, Australia is at a crossroads. Either its enterprises go all out to modernise by learning and
Roy Morgan Research has released new data on CBD people movements, which reveals that all CBDs across the Australia are experiencing significantly lower traffic levels than pre-COVID: Not surprisingly, Melbourne’s CBD has been hit hardest following four lockdowns, with the current lockdown pushing people movements to only 19% of ‘normal’ pre-COVID levels. My view is
The ABS has released its Weekly Payroll Jobs and Wages in Australia data for the week ending 22 May 2021, which reported that payroll jobs are now tracking 2.6% above their pre-Covid level, whereas total wages are tracking 3.1% higher: The next table shows the breakdown across jurisdictions, which shows all states & territories reporting
Genomic sequencing has confirmed that the outbreak of the highly infectious Delta variant of COVID-19 in west Melbourne has been traced to a returned traveller who arrived from Sri Lanka on 8 May and tested positive for the virus on the same day. The man in his 40s was released from the Novotel Ibis quarantine
Call it lockdown if you want. What it really is is Morrison Government failure on vaccines and centralised quarantine. Via Westpac: • The Westpac-Melbourne Institute Index of Consumer Sentiment fell 5.2% to 107.2 in June from 113.1 in May. The Index has now fallen by 9.7% over the last two months. We think the initial
Policy makers and urban planners have for generations attempted and failed to diversify Australia’s economic activity and settlement away from the cities. These same central planners also regularly touted so-called ’20-minute cities’ where people can live, work and socialise, only for commute times to grow as workers shunted into the CBD on crowded trains and
Australia’s evolving Cold War 2.0 circumstances continue with stunning speed. The personality-disordered PM is on the hustings today with a new round of China-bashing: Morrison has warned about an emerging struggle between authoritarianism and liberalism. The Indo-Pacific is its epicentre with the rising risk of conflict. He aims to reform the WTO to fight economic
Judo Bank CEO Joseph Healy yesterday expressed concern about the “almost uncontrollable rise in household debt” across Australia. This was 180% of disposable income at the end of 2020, according to data from the Reserve Bank. Healy is particularly concerned about the growth in mortgage lending, arguing that it is “foolhardy” to assume that interest
The ANZ-Roy Morgan consumer confidence index has taken another hit from Victoria’s latest lockdown, falling by 0.6% in the weekend of 6/7 June: According to ANZ Head of Australian Economics, David Plank: Consumer confidence fell another 0.6% as the lockdown in Melbourne was extended until at least 10 June. Confidence fell by 2.4% in Melbourne
The Australian’s Judith Sloan has penned a terrific article explaining why the “Tidal wave of overseas students must stop”. Sloan claims that senior administrators at Australia’s universities are relentless rent-seekers and will take every opportunity to lobby the federal government to open the nation’s international borders to foreign students. Instead, Sloan insists that any decision
A report by Bain & Company and Chief Executive Women has found that 95% of employees would take up a flexible work arrangement in the next three years if it were offered by their employer. The overwhelming majority of employers also said that they had maintained or boosted productivity during the past 15 months of
Shock horror! Fairfax is reporting that higher income earners pay the most tax, with Australia’s “Budget reliance on high and middle income earners” reportedly growing: The report draws on data from the Australian Tax Office (ATO) showing that nearly 14.7 million individuals paid a combined $213 billion worth of income tax during the 2018-19 financial
The NAB business survey used to be a quite useful forecaster of GDP and its segments. These days it’s become more like a PMI, only useful for directional rather than positional judgements. To wit, this is an unprecedented boom across all metrics: Capacity utilization has been pushed the highest measures in living memory which would
As Morrison’s Prison Island falls ever further behind in the vaccine race, the northern hemisphere is beginning to open up to tourism. Europe is preparing to launch vaccine passports. Domestic US tourism is exploding higher. Now Canada is leading the reopening of borders to the vaccinated: Wokester Justin Trudeau is considering easier border controls. The
Roy Morgan has released its inflation expectations survey for May, with Australians expecting inflation of only 3.7% over the next two years – well below the RBA’s inflation target of 2% to 3% inflation annually: However, Inflation Expectations are now tracking well above where they were a year ago (3.3%). Inflation Expectations are now 1%
Over the weekend, ABC business reporter, Gareth Hutchens, published an article suggesting that “stagnant wages” and “labour market ‘slack’” are part of the “federal government’s plan”. Hutchens sites the collapse in wage growth over the past decade or so: He then notes that the mass immigration policy pursued by the federal government meant that despite
Data just in from the Victorian Government reveals that there were only 2 new local COVID infections reported over the past 24 hours – both linked to current outbreaks: The two locally-acquired cases are linked to the current outbreaks. [2/2] — VicGovDH (@VicGovDH) June 7, 2021 With all of the new cases linked to existing
Last week’s national accounts confirmed that Australian corporations have made like bandits during the coronavirus pandemic with total gross operating profits soaring by 11% in the year to March 2021 in rolling annual terms: Company profits were obviously boosted by government stimulus, in particular: the $34 billion Cashflow Boost – a gigantic corporate welfare scheme
Friday’s lending indicators data posted a sharp decline in loans for new dwelling construction, which fell for the second consecutive month by a combined 21% from February’s peak: Nevertheless, they remained 72% higher year-over-year. According to the Housing Industry Association: “This is the first ABS data to show that we are past the peak in
Despite having constitutional responsibility for quarantine, and having the nation’s deepest pockets, the Morrison Government continues to pass the buck. At Friday’s National Cabinet meeting, the federal government again rejected Queensland’s sensible proposal to construct a mining-style quarantine facility near Toowoomba because it is supposedly is not located near an international airport, is too far