The Morrison Government is hailing the success of its regional visa scheme after new figures reveal that the number of ‘skilled’ migrants landing in Tasmania has more than doubled: Figures to be released today by Immigration Minister David Coleman show 609 people came to Tasmania between July and September under the regional sponsored migration and
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.
Exclusively from Gerard Minack: House prices bounce but Australia remains stagnant Australia’s housing correction is, for now, over. A lift in prices points to rising housing turnover, which will help some retailers. But none of this changes the stagnation in incomes and the sub-par growth outlook. And none of this reduces the risk of a
Earlier this year, ABC’s Four Corners aired a damning report entitled “cash cows”, which heavily criticised Murdoch University for achieving a 92% surge in international students enrolments between 2017 and 2018 by dropping English language standards and “dumbing down” courses for profit, thereby driving increased incidences of plagiarism, academic misconduct, and rising failure rates. The
Labor has stepped up its attack against the Morrison Government’s plan to privatise Australia’s visa system, with Labor senator Helen Polley claiming it would raise costs, make border enforcement more difficult, and lead to greater exploitation: “Privatising our visa system will lead to increased costs of visas, greater risks of worker exploitation, data security breaches
Via the excellent George Theranou at UBS: Based on our proprietary survey, our Q3 headline CPI forecast is unrevised at 0.4% q/q, slowing from Q2’s bounce to 0.6% (driven by petrol). This is partly due to retracement of fuel (-2.3%, -0.07%pts); while the UBS Evidence Lab Grocery Tracker has food up 0.7%. The y/y should
Oh yes, via the AFR: Treasurer Josh Frydenberg has rejected a renewed push by NSW to bring back federal incentives for state asset recycling, a privatisation scheme designed to help fund large infrastructure projects, saying the state’s budget is in better shape than the Commonwealth’s and needs no more handouts. Speaking ahead of today’s meeting
The Coalition’s Dave Sharma – chairman of the Joint Standing Committee on Treaties and the member for Wentworth – has penned a spurious article spruiking the latest batch of so-called Free Trade Agreements (FTAs): In these times of growing global economic uncertainty and mounting trade tensions, countries such as Australia need to stand up for
So says Gottiboff today: Until now the fact that the NBA was very strong in China was seen as a wonderful development as it brought the two nations together, reinforcing deep commercial ties. Now it separates them. …more importantly, if the Hong Kong protests continue for much longer then China, given the extreme nationalism sweeping
With Victoria’s population growing out of control on the back of turbo-charged immigration: And Melbourne’s population projected to more than double over the next half century: You would think that the Victorian State Government would be seeking to boost the stock of social housing in order to prevent vulnerable residents from becoming homeless. Not so,
Labor has one again attacked the high number of asylum seekers entering Australia by plane, which is being spearheaded by Malaysians arriving on electronic tourism visas: Labor argues the number of [asylum seeker] arrivals in July and August suggests 2019-20 is likely to bring the largest number of arrivals on record… The Government links the
Via The Australian comes the oligarchs: Fortescue Metals Group boss Elizabeth Gaines has warned that China will look to develop alternative iron ore supplies outside the Pilbara if Australia neglects its relationship with its biggest trading partner…Ms Gaines said the Australian business community needed to maintain its influence in public debate on political policies. “The
More trade scuttlebutt this afternoon, via Bloomie: The White House is looking at rolling out a previously agreed currency pact with China as part of an early harvest deal that could also see a tariff increase next week suspended, according to people familiar with the discussions. The currency accord — which the U.S. said had
Recessionberg! Via Martin North: In our latest release to September 2019, the DFA Household Financial Confidence Index fell again, having move sideways more recently. In essence households are simply reflecting that rate cuts, a lower dollar and the international bad news from Trump’s Trade Wars, Brexit and Hong Kong are all making them more concerned,
The Joint Standing Committee on Trade (JSCOT) has released its report rubber stamping the Hong Kong and Indonesia Free Trade Agreements (FTAs). The Indonesian FTA, in particular, will permit several thousand more Indonesians working rights, thus leading to more temporary migrant rorting, more low cost labour for business, and further undermining Australian wages and working
As we already know, Australia massively increased its migrant intake in the early-2000s, and this has driven a three-fold increase in Australia’s net overseas migration (NOM) compared to the historical average: Accordingly, the Australian population has ballooned by around 6.4 million people (34%) so far this century. The Australian Bureau of Statistics’ (ABS) median projections
Cross-posted from One Step off the Grid: The calendar says winter is over. Warmer days lie ahead. But this past winter was one when Australians in all-electric homes could be comfortable and count the dollars saved while burning no fossil gas. Home-economic studies show Australians can save money with all-electric homes by tapping in to renewable
Have we finally started to make a difference? Earlier this week we learned that several Australian universities have blocked access to Indian international students from Haryana, Uttar Pradesh and Punjab. These changes to university admissions follows the Department of Home Affairs’ reclassification of student visa applications from India, Nepal and Pakistan as “high-risk”. This means
Oh yes, via Damien Boey at Credit Suisse: Over the past few days, we have witnessed some rather sharp deterioration in the leading indicators of Australian growth: Westpac consumer confidence fell sharply in early October to 92.8 from 98.2. For reference, readings below 100 have historically been associated with contraction. Westpac home-buying sentiment fell in
The ABC has published an interesting profile on the outer-Western Melbourne suburb of Tarneit, which is fast morphing into a modern migrant slum nightmare: When the Bahadur family moved into their new home in Melbourne’s booming outer west four months ago, they dreamed of suburban bliss. But it turned out to be a nightmare. “We
Via the AFR today: The chair of the Energy Security Board Dr Kerry Schott says the rapid take-up of household rooftop solar panels in Australian cities is causing energy security problems for energy distribution companies. …”The so-called duck curve is really causing security issues for the distribution networks,” she said.Dr Schott said Australia’s power grid
The Recessionberg plan building confidence day by day! Via Westpac: • The Westpac-Melbourne Institute Index of Consumer Sentiment fell 5.5% to 92.8 in October from 98.2 in September. This is the lowest level of the Index since July 2015. The Index has fallen by 8.4% since the Reserve Bank started cutting rates in June and
Yesterday we reported how the Harvard Kennedy School’s Center for International Development has ranked the Australian economy amongst the least sophisticated, with Harvard labelling Australia “rich, dumb and getting dumber”. Today, a variety of mainstream Australian economists have addressed Harvard’s rankings, with some dismissing the findings and others showing concern. From The AFR: “Complexity of
Yesterday’s NAB survey beautifully exposed why the Aussie economy is no danger of any kind of rebound worth the price of admission. The charts are from Westpac. For a decade, the prow of the SS Aussie economy, that has cut threw the global swells, has been construction. But it has hit an iceberg as dwelling
Department of Home Affairs officials have confirmed that around 95,000 asylum seekers have arrived in Australia by plane over the past five years, which Labor claims is fuelling “exploitation and slavery”: The figures were disclosed in answers to Questions on Notice from Labor’s spokesperson for Home Affairs and Immigration Kristina Keneally. “There’s nothing wrong with
Last week, a group of academics released a report, entitled Temporary Graduatification, which sounded the alarm over the exposure of international student graduates to unscrupulous migration agents: … many international students who want to stay on and apply for the 485 [Graduate] visa are vulnerable to being exploited by a growing number of ‘dodgy’ agents
Via NAB: Business conditions recorded a sixth consecutive below-average month, pointing to ongoing weakness in the business sector. In the month, conditions edged up 1pt and confidence edged lower. While both conditions and confidence remain below average levels +6 index points – the broadbased trend decline since mid-2018 appears to have slowed. In the month,
Something of a slowing in the ANZ job ads negative trend: After falling 2.6% m/m in August, ANZ Job Ads recorded a small gain of 0.3% in September. This saw the annual decline fall to -10.4%. In trend terms, job ads fell -0.2% m/m and -10.9% y/y. ANZ Senior Economist, Catherine Birch, commented: Job ads
The latest medium population projections from the ABS has Melbourne’s population more than doubling to 10.2 million by 2066, with the city’s population projected to increase by 109,000 people annually: As you can see above, 89% of Melbourne’s population increase is projected to come from net overseas migration (NOM), meaning that without positive migration, Melbourne’s
The Harvard Kennedy School’s Center for International Development has developed an Atlas of Economic Complexity, with Australia being ranked as having one of the least complex economies. The Atlas measures the diversity and sophistication of national exports, with almost all of Australia’s exports not requiring a degree to make. The Center for International Development contends
Treasury analysis, obtained under Freedom of Information, claims that raising Australia’s superannuation guarantee (‘compulsory superannuation) to 12% would lower wage growth and would make the gender retirement savings imbalance even worse: Though compulsory SG contributions are paid for by employers, wage settings generally takes into account all labour costs. As such, it is widely accepted