Australian economy

[HBS Guy]

I predict the cash rate won’t change or that if it does it will be a minor uptick.

Reason? At 2.5% it is at about the same rate as inflation, effectively a zero percent rate for the banks. Demand for credit isn’t high, for reasons totally unrelated to the interest rate. What is needed is stimulus by the federal government, and that is not going to happen. House building and prices are increasing but not at a rate suggesting a boom needing to be nipped in the bud.

[HBS Guy]

Are these people happy with the government they bought? (more on donations later)

http://www.smh.com.au/business/australi ... 2mg6i.html

Would be horrible, just horrible if James Packer went broke, wouldn’t it? One nice thing—gambling has declined with the economy.

[HBS Guy]

The Howard government’s generous regime of tax concessions on superannuation is proving a major headache for Treasurer Joe Hockey as he escalates his crusade to balance the government’s budget.

Each year, the federal government forgoes $45 billion in revenue because it levies special tax rates on super contributions and payouts.

With the government poised to release its whitepaper on tax reform, it seems Australia’s superannuation system is on the cusp of a tax overhaul that could have material effects on future returns and benefits of super members.

http://thenewdaily.com.au/money/2015/01 ... ions-rich/

hehehe poor little RWNJs think the sun shines out of John Cunting Howard’s arse. Dunno if anyone has posted this on PolSux but if they have Longy, Armpit etc will be vociferously poo poohing this figure. Next financial year the concessional tax on super will return to 10–20,000 richest Australians over $50Bn, more than is paid out in pensions, age and DSP.

If, as I suspect, nothing but a token change gets made, the Age of Entitlement is still roaring along!

Howard was a disaster both as Treasurer and as PM!

[Celetina]

Forgoes $45 billion per year?! That money would fix homelessness and provide all schools with breakfast and lunch programs for children living in poverty. F uck the age of entitlement. F uck it to hell.

[HBS Guy]

15/16 it will be even more. Swan had started on this but Hokey reversed that.

I could MURDER the next stupid fricking Lib troll who says Swan was a crap Treasurer etc etc. You don’t get 9As, your economy does not grow to 12th largest if your Treasurer is an idiot.

Anyway, Abbott & Hokey have blown a HUGE fucking hole in the Budget and the economy. Wonder what November unemployment will be? 6.5%, 7%? The deficit will be blowing out until Jun30th—people not spending thanks to the shambles, wages growth being really low, this means lower PAYE tax revenue coming in, more NewStart going out.

Oh, and nobody is investing much in renewable energy.

[HBS Guy]

CPI for December quarter just 1.7% annualised.

The spectre of deflation draws a little nearer.

[HBS Guy]

Richard Denniss has perfectly refuted the liberals’ “debt and deficit disaster” bullshit.

From his brilliant article

Companies don’t grow by reducing debt; they grow by borrowing to make the right investments. BHP Billiton has been around for 130 years and is currently carrying $66 billion in debt with no plans to repay it. Indeed, since the mining boom their net debt increased by a massive 315 per cent from $16 billion in 2004 to $66 billion now.

Exactly! It’s why we have a house mortgage, or borrow for business purposes. It’s what makes the world go round.

Everyone should read Denniss’s article. It’s so compelling, its logic so self-evident, that one should memorise it.

Debit (judicious debt) is necessary.

http://pbxmastragics.com/2015/01/30/farcical-friday/comment-page-2/#comment-175833

[HBS Guy]

What a colossal mess Abbot and Hokey have made:

http://www.afr.com/p/national/joe_hocke ... uyacn25ilJ

Still “can’t find savings” FFS. Easy:

1. Restrict the concessionary 15% tax on super contributions to the first 9.25% (current rate IIRC) Save like $50Bn

2. Abolish negative gearing

3. Kick asset millionaires off the Old Age pension (that is $1.25m in declared assets OTHER than the family home.)

4. Tax those on high retirement incomes

5. Tighten the FBT—heaps!

6. Stop offshore processing of ASs—better ways of handling this.

7. Tackle the arsewipe multinationals who avoid paying their fair share of company tax. Just “deem” EBIT from revenue figures and tax payable by deeming from EBIT

8. Tackle the “Australia tax” not a direct revenue gain but lower cost of living, remove a lot of the need to buy stuff overseas, so the economy gets a boost.

9. Scrap all four FTAs, none do us much good at all.

10. Get down on bended knee to Toyota and GM, get them to stay here.

11. Let Age pensioners do some work without losing the pension—they will do that, earn money and pay tax on that. Cut Centrelink paperwork and so reduce staff.

With the savings and some sensible borrowings—run out FTTH, get interstate rail working better, boost NewStart.

Maybe that is simplistic but the savings ARE there!

[Lefty]

The more our economy slows as the two huge drivers that have been pushing it for near a decade-and-a-half between them (an absolutely enormous private sector credit boom, mainly to inflate the price of housing and an unprecedented mother of all mining investment booms) begin to fade, the greater the chance of tipping into recession.

And once that happens, the greater the chances under the circumstances that we do do not see a short, sharp hit and then a relatively quick bounce back but rather a situation where stagnation and heavy unemployment simply persist, rather like the situation described by Keynes as he lived through it and railed against it all those years ago, and like what has been occurring in Europe for almost seven years.

We have mis-used monetary policy and financial sector de-regulation to create and maintain the mother of all private sector credit booms, and for years it worked as the great aggregation of private individuals borrowed and spent ever more, the credit money flowing out into the economy to turbocharge growth. And now here we are, needing stimulus.....and we've almost reached the point where borrowing money just can't be made significantly cheaper. We've almost reached the end of the line for the monetarist approach.

Paul Keating said back when he was PM "government today is more about steering the boat rather than rowing the boat". That approach must now be consigned to history, it's time is almost past. If the private sector can no longer spend enough to maintain strong growth and low unemployment, there is only one sector that can.

The time for ongoing federal budget surpluses is over. They are not historically normal anyway. Can we cast aside the surplus idol and do what must be done?

[Lefty]

I should add that the so-called "independent" central bank governor attended a cabinet meeting the other day, just before he handed down his interest rate cut.

I don't know what was said but I'll bet he was telling the government in no uncertain terms that he just can't keep propping up growth with interest rate cuts, it will no longer work - it's up to fiscal policy now.

[HBS Guy]

There certainly has been a change in words coming from Hokey—no more fiscal consolidation but I doubt more well–designed spending.

FFS, swallow your pride, run out FTTH at full speed, this will be of immediate benefit like any stimulatory spending, plus having increasing amounts of fibre in use will see industry and commerce, primary industry included, become more efficient and take on more employees and export more, households spend more on pay TV (other than FoxTel which really only does sport) and so on: more jobs, more GDP, more exports.

[HBS Guy]

Peter Martin “The govt is a brake on the economy:”

Here's what's missing: trust. Not just between Abbott and his backbenchers, but also between Abbott and us. If anything, the leadership contest has made things worse.

As Abbott brought forward the timing of the leadership vote on Sunday, his supporter and finance minister Mathias Cormann told the ABC the economy was "heading in the right direction". He wanted "to build on the achievements we made in 2014".

Without trust we lack confidence. We are neither spending nor investing what we should.

Take a moment to consider the achievements and the direction in which things are heading. That year began with a quarterly rate of economic growth of 1 per cent. After the budget, it slid to 0.5 per cent, and then to 0.3 per cent. It's falling, rather than rising. The direction is down. (Ignore the through-the-year figures Cormann quoted. They make the budget look good by including the very strong economic growth that preceded it.)

The Reserve Bank made its view about economic growth clear on Tuesday. Here's what it said when it cut rates an hour or two before its governor briefed Cormann and others in cabinet: "In Australia the available information suggests that growth is continuing at a below-trend pace, with domestic demand growth overall quite weak."

It's weak and it's bleak. It isn't heading "in the right direction".

Looking ahead, the Reserve Bank expects growth to remain "a little below trend for somewhat longer, and the rate of unemployment peak a little higher, than earlier expected." Unemployment has climbed from a quarterly rate of 5.3 per cent at the end of 2012 to 5.8 per cent at the end of 2013 to 6.2 per cent at the end of 2014. We get the first figures for 2015 on Thursday.

Unemployment is worse than it was at the peak of the global financial crisis. The Reserve Bank expects it to get worse still.

Hockey and Cormann will tell you that while unemployment is growing, employment is too. But it's not, really. The number of hours worked per month grew barely at all throughout 2014. More people may have been employed at the end of the year than the start but on average they've been working less, some shifting to part-time work and others to fewer hours of full-time work. Disturbingly, the Reserve Bank says the number of hours worked per month has scarcely changed since December 2011 despite three years of population growth.

http://www.smh.com.au/comment/why-the-government-is-a-brake-on-the-economy-20150210-13972i.html

[OldMate]

What a colossal mess Abbot and Hokey have made:

http://www.afr.com/p/national/joe_hocke ... uyacn25ilJ

Still “can’t find savings” FFS. Easy:

1. Restrict the concessionary 15% tax on super contributions to the first 9.25% (current rate IIRC) Save like $50Bn

2. Abolish negative gearing

3. Kick asset millionaires off the Old Age pension (that is $1.25m in declared assets OTHER than the family home.)

4. Tax those on high retirement incomes

5. Tighten the FBT—heaps!

6. Stop offshore processing of ASs—better ways of handling this.

7. Tackle the arsewipe multinationals who avoid paying their fair share of company tax. Just “deem” EBIT from revenue figures and tax payable by deeming from EBIT

8. Tackle the “Australia tax” not a direct revenue gain but lower cost of living, remove a lot of the need to buy stuff overseas, so the economy gets a boost.

9. Scrap all four FTAs, none do us much good at all.

10. Get down on bended knee to Toyota and GM, get them to stay here.

11. Let Age pensioners do some work without losing the pension—they will do that, earn money and pay tax on that. Cut Centrelink paperwork and so reduce staff.

With the savings and some sensible borrowings—run out FTTH, get interstate rail working better, boost NewStart.

Maybe that is simplistic but the savings ARE there!

The FIRST thing I would do is tax the religions I think the total tax holiday for religions is $30bil P.A. or will you tell me Halal certification is kosher and not a business, and all that property the churches own. And their wages by whatever name they give them. And I would have a better, more equitable royalties regime.

[HBS Guy]

Oh yeah, tax churches, less what actual servives they deliver (e.g. Salvos.)

[HBS Guy]

Unemployment up to 6.4%

http://www.abs.gov.au/ausstats/abs@.nsf ... Jan%202015

[Lefty]

The Australian economy is not dying but it is most certainly not firing on all cylinders. The RBA will almost certainly cut the cash rate to at least as low as 2% next month - equal to the lowest in history.

This also means that the RBA are close to running out of bullets - my understanding is that interest rate cuts will stop being passed on well before we reach an official RBA ZIRP. They may well be less than 100bp of cuts left.

I think we are approaching a juncture in history - monetary policy as a primary economic management tool will no longer be effective. Our approach to economic management must be re-structured.

[HBS Guy]

And we have a perfect way to get some movement: go back to running out FTTH. Direct stimulus plus all the benefits increasingly ubiquitous ultra reliable superfast FTTH.

Heh, one guy said he had FTTH to his apartment (crap, FTTB more like) and it was expensive and no improvement to upload speed. I think he was lying—and if true had a lousy ISP and equally lousy copper in his apartment building.

[Lefty]

Too bad Tone made it his mission to destroy the NBN - the completely stupid phukking twat!

[HBS Guy]

Yup, read the NBN threads here—and weep. The Senate Estimates Committee interrogated the NBN board and showed their “Strategic Review” to be nothing more than figures plucked from the air ($73Bn to roll out FTTH was one such figure) and a rollout deliberately throttled back but it also talked to businesses (especially content creators, professional photographers, film makers etc) and some rural councils like Griffith, NSW, council whose wine etc producers find it difficult to track produce past farm/factory gate—the Telstra CAN is holding the country back!

[HBS Guy]

The truth about welfare and bludging:

http://www.theguardian.com/business/gro ... is-falling


(Grogs Gamut aka Greg Jericho)

[Lefty]

Hokey dribbles shit from both corners of his mouth (even more than usual)......

Treasurer Joe Hockey has warned Australia must not fall into a position like Greece where it would be subservient to global bankers.

He was responding to Palmer United Party leader Clive Palmer in parliamentary question time who asked him why the government was destroying living standards with austerity when Australia's debt was less than the OECD average.

Mr Hockey said the yet-to-be-released intergenerational report would identify Labor's legacy of debt and deficit.

When a nation imported money from the rest of the world to fund growth, it was at risk of being exposed to the volatility of global capital markets.

"It makes you, in one sense, subservient to the bankers and the rest of the world," he told parliament on Monday.

The extreme was what was happening in Greece where it was totally subservient.

"We do not want to be in a position where we are subservient to other nations."

Mr Hockey said the fastest way to pay down debt and reduce exposure to the people that lent to Australia was to have a government that lived within its means.

http://www.sbs.com.au/news/article/2015/02/23/we-must-not-end-greece-hockey

There is ZERO comparison between Australia and Greece - we are a fully sovereign nation, they are not. We issue our own currency and set our own policy interest rates, they gave up those two critical rights in order to join a deeply-flawed monetary union and now truly are subservient for as long as they choose to remain a member of the Euro.

It seems that Hokey and Mr Wabbit are hell-bent on causing a recession before they are booted out in around 18 months time.

[HBS Guy]

Wages growth stagnant—implications for GST, PAYE and company tax collections:

Wage growth continues to moderate and the unemployment rate remains elevated as the Australian economy continues to struggle in the aftermath of the Chinese mining boom.

With the terms of trade declining and prospective job growth modest, the household sector is expected to struggle throughout 2015.

Australian nominal wages excluding bonuses rose by 0.6 per cent in the December quarter, meeting market expectations, to be 2.5 per cent higher over the year. Wage growth remains at its slowest annual pace in around 16 years (the measure only goes back to 1998).

Wage growth remains weak across both the private and public sectors, with growth moderating considerably over the past couple of years. Private sector wage growth is now below its crisis trough, while public sector wages are rising at their slowest pace since the turn of the century.



MORE FROM CALLAM PICKERING

09 FebRecord jobs numbers will kickstart a US spending boom
06 FebThe economic clouds are darkening
06 FebThe RBA's spark won't see house prices rocket
05 FebDecoding the two sides to the retail story
04 FebAustralians are missing out on the benefits of rising exports
A distinguishing feature of this wage slowdown has been the moderation of public sector wages, which simply didn’t occur during the global financial crisis. Some will be quick to blame the current federal government, but the slowdown pre-dates the Coalition's election win and is also present at the state level.

If anything, moves by the Coalition to ease the public payroll have simply built on the work of the previous Labor government, which saw real government expenditure decline in both the 2010-11 and 2012-13 financial years.

http://www.businessspectator.com.au/art ... ip-pockets

[Lefty]

Weak capex numbers increase rate cut chances

Non-mining capex is failing to come to the party. Monetary policy is now almost spent, all it's doing is inflating the mother of all housing bubbles in Sydney, with average prices closing in on a million. Government must SPEND! There is no other way.

[HBS Guy]

Nope.

Can just cry thinking about the NBN, such promise to boost business and employment, gone, money being spent now is money wasted, achieving little.

[Lefty]

Parko's replacement wants austerity

Like everywhere else in the world it has been tried, it will fail. But the trying to implement it will end up hurting a lot of Australians (but not those who are pushing it). Kvunts