A Liberal-chaired parliamentary committee has renewed calls for a dedicated agriculture visa, claiming that easier access to migrant workers is needed to alleviate purported chronic skills shortages: The lower house’s standing agriculture committee on Monday released its findings from an inquiry into growing the sector to a $100 billion industry by 2030. WA Liberal MP
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.
The on again, off again Trans-Tasman travel bubble has been approved in principle by New Zealand Prime Minister Jacinda Ardern. This means Australians will be able to travel to New Zealand without quarantining in by March 2021, provided the COVID-19 situation in both countries remains as it is currently. Jacinda Ardern said a commencement date
ANZ-Roy Morgan Australian Consumer Confidence: Most subindices at or higher than pre-pandemic levels, with the confidence in future economic conditions at an 18-month high. The exception is current financial conditions, which ~10% lower than mid-March and below neutral. #ausecon pic.twitter.com/7CppPfXuM6 — ANZ_Research (@ANZ_Research) December 14, 2020
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The Australian Bureau of Statistics (ABS) yesterday released arrivals and departures data for the month of October, which revealed that the number net long-term arrivals collapsed to only 107,440 over the year, down 64% from the peak of 297,040 recorded in August last year: Annual net long-term arrivals are now tracking at levels not seen
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During the beginning of the COVID-19 pandemic, Australia’s media and left-leaning think tanks were jumping up and down over the purported “pink recession” – the notion that women were being disproportionately impacted by the crisis. This “pink recession” claim originated from social and economic commentator George Megalogenis, who pointed out that unlike the 1990s recession
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The Property Council of Australia (PCA) has demanded national cabinet to restore migration flows and return workers to offices in order to support the CBD property market: Property Council of Australia CEO Ken Morrison says office occupancy in major CBDs is still well below pre-COVID levels, and most building owners or managers don’t expect that
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Fourteen years ago, the Australian Government agreed to implement the Tranche 2 global anti-money laundering (AML) rules for lawyers, accountants and real estate agents in a bid to prevent laundering of illicit funds, especially into Australian property. However, these reforms have been continually postponed amid fierce lobbying by shadowy vested interests negatively impacted by the
The ABC runs a big (54,000 responses) annual survey called Australia Talks. This year’s survey has been released and reveals that a big majority (61%) of Australians believe that population growth is a problem for Australia, with nearly one quarter (24%) believing population growth is a major problem: A smaller majority of Australians (54%) also
After the global financial crisis of 2008 the Australian government responded with a large fiscal stimulus. Initially worth about $10 billion, it soon grew by $42 billion by February 2009. Out of this total about $21 billion came in the form of direct cash payments to households. At the same time the RBA reduced the cash rate,
Some economists argue that government spending on social housing is the best way to help the economy bounce back from the pandemic while also easing a shortage of affordable housing. The latest Victorian Budget announced a record $5.3 billion spend in the sector, whereas the NSW Government earmarked $812 million in its state budget. But
When the China-Australia Free Trade Agreement (ChAfta) was signed five years ago, both parties agreed to review the pact after five years. However, Australia is showing little enthusiasm to do so: The first five-year review of the historic free-trade deal between China and Australia appears dead in the water as the two countries continue their
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Australia’s university chancellors have ordered a review into its peak lobby group – Universities Australia – because of its lack of success in influencing the Morrison Government: Education consultancy PhillipsKPA will assess Universities Australia’s core functions — and its relationships with key cabinet ministers and top public servants — handing its findings to vice-chancellors next
The Australian Bureau of Statistics (ABS) has released its Births 2019 survey, which reported that Australia’s fertility rate hit a new record low: The total fertility rate required for replacement is currently considered to be around 2.1 babies per woman to replace herself and her partner. Australia’s total fertility rate: was 1.66 babies per woman
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The New Daily’s Rod Myer reports that people over the age of 65 have experienced the biggest increase in their wealth in the 16 years to 2018, whereas people aged between 18 and 34 experienced minimal improvement. Conny Lenneberg from the Brotherhood of St Laurence says one of the reasons for the intergenerational disparity in
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Via Bill Evans at Westpac: • The Westpac-Melbourne Institute Index of Consumer Sentiment lifted by 4.1% to 112 in December from 107.7 in November. The surge in the Index continues. It is now 48% above the low in April and has reached its highest level since October 2010 – marking a ten year high. After
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