Australian Economy

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.

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Unemployed Aussies locked-out of farm work

As we know, the Morrison Government has introduced a new Agricultural Visa that from the end of this month. This visa will allow regional businesses across the horticultural, meat processing, fisheries and forestry sectors to hire an uncapped number of indentured migrant labour from 10 South-East Asian nations with the promise of permanent residency if

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Victoria’s COVID cases surge higher

Victoria has recorded an outbreak high 473 locally acquired COVID cases over the past 24 hours: Reported yesterday: 473 new local cases and 0 cases acquired overseas. – 30,032 vaccines administered – 49,037 test results received More later: https://t.co/lIUrl1hf3W#COVID19Vic #COVID19VicData [1/2] pic.twitter.com/d71MFYyTsL — VicGovDH (@VicGovDH) September 12, 2021 More than half are mystery cases. Of

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Would Melbourne open up with 500 cases a day?

Denmark on Friday ditched vaccine passports and axed its remaining COVID restrictions after coming “out the other side of the pandemic”: With no masks in sight, buzzing offices and concerts drawing tens of thousands, Denmark on Friday ditched vaccine passports in nightclubs, ending its last Covid curb. The vaccine passports were introduced in March 2021

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Victoria records 392 new COVID cases

Victoria has recorded another 392 locally acquired COVID cases over the past 24 hours: Reported yesterday: 392 new local cases and 0 cases acquired overseas. – 36,534 vaccines administered – 48,063 test results received More later: https://t.co/lIUrl1hf3W#COVID19Vic #COVID19VicData [1/2] pic.twitter.com/BwAX6H3S6H — VicGovDH (@VicGovDH) September 11, 2021 Most are mystery cases: of the 392 infections, so

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NSW COVID cases rocket to new high

NSW Health has recorded a pandemic high 1,599 locally acquired COVID cases: NSW recorded 1,599 new locally acquired cases of COVID-19 in the 24 hours to 8pm last night. pic.twitter.com/SbdI3mqHzt — NSW Health (@NSWHealth) September 11, 2021 Another eight people have died with COVID: A man in his 30s A man in his 40s A

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Victoria’s COVID outbreak spirals further out of control

Victoria has recorded another 450 locally acquired COVID cases over the past 24 hours – a fresh outbreak high: Reported yesterday: 450 new local cases and 0 cases acquired overseas. – 39,148 vaccines administered – 42,765 test results received More later: https://t.co/lIUrl1hf3W#COVID19Vic #COVID19VicData [1/2] pic.twitter.com/AJIyX0DHWZ — VicGovDH (@VicGovDH) September 10, 2021 The overwhelming majority were

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Economists: Rebooting immigration will drive up unemployment

For many months, the Reserve Bank of Australia (RBA) has argued that Australia’s unemployment rate will need to fall toward 4% or lower to tighten the labour market significantly enough to generate wage growth. Thanks to the heavy fall in migrant workers due to COVID: Australia’s unemployment rate fell to 4.6% in July – the

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SEEK job ads dive on lockdowns

Below is the August SEEK employment report: OVERVIEW OF AUGUST 2021: STATE OF THE NATION: SEEK job ads were down 5.3% month-on-month (m/m). SEEK job ads were up by 55.9% in August 2021 when compared to August 2020 (y/y) and were up 15.2% when compared to August 2019. Applications per job ad declined by 1.3%

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Victoria records another 334 COVID cases

Victoria has recorded another 334 locally acquired COVID cases over the past 24 hours: Reported yesterday: 334 new local cases and 0 cases acquired overseas. – 39,027 vaccines administered – 42,998 test results received – Sadly, 1 person with COVID-19 has died More later: https://t.co/lIUrl1hf3W#COVID19Vic #COVID19VicData [1/2] pic.twitter.com/73DOLPmdVe — VicGovDH (@VicGovDH) September 9, 2021 More

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More proof collapsing immigration is helping Aussie workers

Chief Economist at IFM Investors, Alex Joiner, has dissected the latest quarterly ABS Labour Account, which shows that the loss of migrant workers is unambiguously benefitting Australian workers. As illustrated in the next chart, the labour account data implies there were almost 200,000 less people employed in Australia in Q2 than before the pandemic. This

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Australia’s vaccine hesitancy wanes

According to Deloitte Access Economics, Australian’s vaccine hesitancy continues to grow with only 20% of Australians now unwilling or unsure about getting the jab: At 5 September, 63% of Australians aged 16 and over had received at least one dose of a vaccine, and 38% were fully vaccinated. While this uptake reflects greater supply of

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NSW records 1405 COVID cases

NSW Health has recorded another 1405 locally acquired COVID infections over the past 24 hours: NSW recorded 1,405 new locally acquired cases of COVID-19 in the 24 hours to 8pm last night. Two new cases were acquired overseas in the 24 hours to 8pm last night, and 23 previously reported cases have been excluded following

2

Biggest fall in job ads in 16 months

Preliminary skilled job vacancies in August fell by 5.6% (12,828 job ads) to 216,031, and have fallen 9.1% since peaking at 240,039 in May, according to the National Skills Commission. It was the biggest monthly fall in 16 months. Nevertheless, job vacancies are still way above pre-COVID levels: Locked-down NSW has predictably driven the job

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Victoria’s COVID outbreak soars by 324

Victoria’s COVID outbreak has well and truly grown out of control with locally acquired cases surging by 324 over the past 24 hours: Reported yesterday: 324 new local cases and 1 case acquired overseas (currently in HQ). – 37,604 vaccines administered – 54,242 test results received More later: https://t.co/lIUrl1hf3W#COVID19Vic #COVID19VicData [1/2] pic.twitter.com/SIb5uNZaFu — VicGovDH (@VicGovDH)

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Proof rebooting mass immigration will slaughter Australia’s youth

Fairfax’s senior economics writer, Matt Wade, penned an article yesterday claiming that Australia is failing its youth, who have struggled for job opportunities and wage growth since the Global Financial Crisis (GFC): Before the coronavirus outbreak economists were warning today’s young Australians were in danger of being the first generation in memory to have lower

4

How JobKeeper took taxpayers to the cleaners

60 minutes did a terrific investigative report on JobKeeper, which aired on Sunday night and has been released on YouTube (video below). The segment highlights how more than 150,000 companies that weren’t in trouble – many of them actually thriving – received $13 billion taxpayer dollars. It also highlights the hypocrisy of the Morrison Government

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Infrastructure projects ruled by political pork

Cross-posted from The Conversation Politicians love the vote-pulling power of major transport projects. They also quite like to keep details of of how they’ve decided to fund a project under wraps, avoiding the pesky scrutiny the public deserves. Of 32 projects larger than A$500 million Australian governments have committed to since 2016, the Grattan’s Institute’s analysis shows

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NSW records another 1480 COVID cases

NSW Health has recorded another 1480 locally acquired COVID cases over the past 24 hours: NSW recorded 1,480 new locally acquired cases of COVID-19 in the 24 hours to 8pm last night. No new cases were acquired overseas in the 24 hours to 8pm last night, and 23 previously reported cases have been excluded following

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Melbourne braces for COVID tsunami

Several epidemiologists and experts believe that Melbourne is staring down the barrel of a COVID tsunami, whereby daily cases could rise into the thousands. Adelaide epidemiologist Adrian Esterman was quoted in The AFR yesterday saying: “I’ve done a forecast for Victoria, which is not looking good because the effective reproduction (Reff) number for Victoria is

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Victoria records 221 COVID cases

Victoria has recorded another 221 locally acquired COVID cases over the past 24 hours, down from 246 respectively over the prior two days: Reported yesterday: 221 new local cases and 0 new cases acquired overseas. – 36,716 vaccine doses were administered – 42,429 test results were received More later: https://t.co/lIUrl1hf3W#COVID19Vic #COVID19VicData [1/2] pic.twitter.com/iEdGj4Sr1U — VicGovDH

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Consumer inflation expectations surge

The weekly ANZ-Roy Morgan consumer confidence survey was released yesterday afternoon, which fell another 1.8% to a neutral result of 100.0: Four out of the five sub-indices registered losses last week with the consumer sentiment index now down 14.2 points from its 23 May peak: According to David Plank, head of Australian economics at ANZ: