Australian economy

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Re: Australian economy

Postby Bam » 13 Dec 2017, 08:43

HBS Guy wrote:Boost NewStart by $50/week and see a surge in final demand!

Newstart was last increased over inflation in 1994.

The cost of living for the basics such as housing and energy has seen massively disproportionate increases for people on low incomes. Jobseekers have also seen significant increases in their costs because such expenditure as internet access, a mobile phone and a computer are now mandatory when looking for work. The so-called "mutual obligation" requirements also increases costs on jobseekers, and the government has not ever paid for these increased compliance costs with increases to the dole because the "mutual obligation" isn't actually mutual.

Restoring Newstart to the same purchasing power it had in 1994 would need an increase of closer to $100 a week.

Rent assistance also needs to be doubled. For singles, the maximum payment is $133.00 per fortnight for a fortnightly rent of $295.93 or more. How many places are available to rent for a single person for $295.93 a fortnight?
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Re: Australian economy

Postby HBS Guy » 13 Dec 2017, 09:02

Boosting the dole would boost the economy, why can’t the stupid Libs see that? We have seen the failure of cutting penalty rates—just cutting final demand in the economy.
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Re: Australian economy

Postby Lefty » 13 Dec 2017, 09:03

Bam wrote:Yes - our unemployment assistance regime is appallingly inadequate. "Punitive" might be a closer description. Punish the unemployed for the crime of being unemployed, even as our system quite deliberately creates a pool of unemployment at the bottom in order to serve as a shock absorber against inflation (which is yesterday's bogeyman) and advantage capital over labour.

Any meaningful increase would be helpful.

My first preference would be for government to re-embrace the old post-war policy of full employment, which ran for decades following the end of WW2 and successfully pushed Australia's involuntary unemployment rate down to almost effective 0% for all those years.

The modern version would be a job gaurantee, whereby government stands ready to offer as much employment as needed to fill the gap, at a rate equal to ( and only equal to) the basic minimum set down by law. Thus ensuring those unable to otherwise secure employment a basic living, while not competing with private sector and so not feeding inflationary tendencies.
Yes - our unemployment assistance regime is appallingly inadequate. "Punitive" might be a closer description. Punish the unemployed for the crime of being unemployed, even as our system quite deliberately creates a pool of unemployment at the bottom in order to serve as a shock absorber against inflation (which is yesterday's bogeyman) and advantage capital over labour.

Any meaningful increase would be helpful.

My first preference would be for government to re-embrace the old post-war policy of full employment, which ran for decades following the end of WW2 and successfully pushed Australia's involuntary unemployment rate down to almost effective 0% for all those years.

The modern version would be a job gaurantee, whereby government stands ready to offer as much employment as needed to fill the gap, at a rate equal to ( and only equal to) the basic minimum set down by law. Thus ensuring those unable to otherwise secure employment a basic living, while not competing with private sector and so not feeding inflationary tendencies.
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Re: Australian economy

Postby Bam » 14 Dec 2017, 13:23

Lefty wrote:My first preference would be for government to re-embrace the old post-war policy of full employment, which ran for decades following the end of WW2 and successfully pushed Australia's involuntary unemployment rate down to almost effective 0% for all those years.

The modern version would be a job gaurantee, whereby government stands ready to offer as much employment as needed to fill the gap, at a rate equal to ( and only equal to) the basic minimum set down by law. Thus ensuring those unable to otherwise secure employment a basic living, while not competing with private sector and so not feeding inflationary tendencies.

I have been looking at the universal basic income versus job guarantee debate for some time. I have decided that a job guarantee should be preferred.

There's no reason why two million Australians should be forced to live in poverty against their will, just to knock one or two percentage points off inflation. Why can't the spare capacity in the economy be taken up with useful work for award wages?

If anyone doubts that it can be done consider that last year Australians worked over $130 billion worth of unpaid overtime. Converting that into paid employment for the jobless would do a lot to reduce unemployment and poverty. We could almost eliminate involuntary unemployment by abolishing unpaid overtime and reducing the working week to 35 hours.
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Re: Australian economy

Postby HBS Guy » 14 Dec 2017, 13:40

Mobile phones and email means employees are contactable at all hours. If we had more workers belonging to a union then something could be done.
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Re: Australian economy

Postby Lefty » 15 Dec 2017, 06:59

HBS Guy wrote:Mobile phones and email means employees are contactable at all hours. If we had more workers belonging to a union then something could be done.


Happens to my brother all the time.
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Re: Australian economy

Postby Lefty » 15 Dec 2017, 07:51

Bam wrote:
Lefty wrote:My first preference would be for government to re-embrace the old post-war policy of full employment, which ran for decades following the end of WW2 and successfully pushed Australia's involuntary unemployment rate down to almost effective 0% for all those years.

The modern version would be a job gaurantee, whereby government stands ready to offer as much employment as needed to fill the gap, at a rate equal to ( and only equal to) the basic minimum set down by law. Thus ensuring those unable to otherwise secure employment a basic living, while not competing with private sector and so not feeding inflationary tendencies.

I have been looking at the universal basic income versus job guarantee debate for some time. I have decided that a job guarantee should be preferred.

There's no reason why two million Australians should be forced to live in poverty against their will, just to knock one or two percentage points off inflation. Why can't the spare capacity in the economy be taken up with useful work for award wages?

If anyone doubts that it can be done consider that last year Australians worked over $130 billion worth of unpaid overtime. Converting that into paid employment for the jobless would do a lot to reduce unemployment and poverty. We could almost eliminate involuntary unemployment by abolishing unpaid overtime and reducing the working week to 35 hours.


Yes, it's a deplorable situation. One made possible by the fact that Joe Public does not understand that the bulk of unemployment is involuntary and a creation of the system and that true "dole bludgers" are in the minority. And that the way policy is conducted ensures that there are always more people needing a job than there are actual jobs to be had.

The parable of 100 dogs and 94 bones sums up the situation in a way that anyone should be able to understand

As you point out, there was clearly enough demand for Australians who are already employed to do huge amounts of unpaid work on top. In addition, great sums of public money are spent on the "unemployment industry", comprising of entities like private job network providers who mostly just serve to shuffle the dole queue.

So discussions regarding the nature of a fully-sovereign fiat currency issuing government aside, there is clearly no shortage of resources to fix this. It continues to exist because those at the levers of power don't see it as a problem. As long as the electorate continues to believe that most or all unemployment is a voluntarily-chosen state, the ruse is easily maintained.

And the business community is happy with what is sees as a "Goldilocks" level of unemployment - low enough so that demand for their product isn't too severely hampered but high enough so that the threat of redundancy is always available as a weapon in their hands against organised labour. Workers are empowered when they can always walk out of one job and into another and the threat of falling into unemployment and poverty is all but non-existent. Menzies railed against the policy of full employment for exactly that reason - without explicitly stating that the logical summary of what he was saying was that he was in favour of a permanent pool of poverty and disadvantage so his mates in the business sector could fend off unions more easily. He just wan't game to go ahead and remove the policy that the Curtain Labor government had set in place at the end of WW2 for fear of political repercussions. The conservatives had to wait until the oil shocks of the 70's triggered runaway inflation through wage-price spirals before they could start dismantling the inclusive society.

As an aside, yesterday's labour force figures looked pretty good - but that merely reverses several weak months before it. I wouldn't say any trend is apparent just yet.
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Re: Australian economy

Postby HBS Guy » 19 Dec 2017, 10:28

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Re: Australian economy

Postby HBS Guy » 19 Dec 2017, 10:32

the return to annual wages growth of 3 per cent or more has been pushed back from next year to the second half of 2019, underscoring that household incomes remain the budget’s weakest link.

Bump NewStart a bit and pensions a smaller bit—that money will get spent! Yes, means spending money—priming the pump. Instead the stupid Libs do the opposite and will dump more than half a billion dollars in welfare reforms but expects to pocket savings by targeting a new debt recovery method at families.

http://www.canberratimes.com.au/national/public-service/coalition-dumps-580m-in-welfare-reforms-but-targets-families-in-new-ones-20171218-h06hmh.html

Crazy! Kill off final demand!
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Re: Australian economy

Postby HBS Guy » 20 Dec 2017, 08:16

Number 3 tax cheat:

According to the latest tax transparency data from the Australian Tax Office, EnergyAustralia racked up 23.9 billion in revenues from 2014 to 2016. Tax expense … wait for it … zero.

While households in their thousands are simply “going off grid”, disconnecting because they cannot afford the exorbitant cost of energy, EnergyAustralia directors and executives have been rollicking in a 50 per cent pay-rise; up from $12.5 million to $17 million last year alone.

While 42,000 Australian families are now wallowing in “energy poverty“, this company – owned by a clandestine entity in the Caribbean – managed to eradicate almost all of its taxable profits, booking just $51.8 million in taxable income over three years on which it paid the glorious total of zero income tax.

While state governments scrambled for political solutions to the crisis, putting taxpayer money on the line to subsidise poor families unable to meet their power bills, EnergyAustralia has been rewarding PwC, its auditors and tax advisors, with $2 million a year in fees.


https://www.michaelwest.com.au/energyaustralia-nailing-energy-customers-and-taxpayers-to-boot/

I reckon big rainwater tanks, solar cells and a windmill will hopefully see me pay the absolute minimum to these avaricious, tax dodging, rip off charging areseholes!
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Re: Australian economy

Postby HBS Guy » 21 Dec 2017, 07:58

Snowy 2.0 will cost 50% more than first thought – and that’s BEFORE it starts! And transmission line upgrades will cost just as much again.

http://www.smh.com.au/federal-politics/political-news/snowy-20-will-go-ahead-but-cost-increases-50-per-cent-20171219-h07onp.html

Libs LOVE wasting taxpayers’ money and why not? They pay fuckall tax!
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Re: Australian economy

Postby HBS Guy » 21 Dec 2017, 08:37

Hmmmm, part of the cost of the ridiculous Snowy II scheme is to buy the shares of the NSW & Vic governments in the Snowy scheme. Big mistake to sell those shares—Malcolm will flog the whole scheme off to Chinese interests in a jiffy! Could be the whole justification of this harebrained idea (there are MUCH better places to build pumped hydro, ones that do not involve digging huge tunnels and building new transmission towers and lines etc.

Malcolm is an idiot, his ego is much higher than his intelligence!

Malcolm Turnbull’s Snowy 2.0 project could cost $7b

http://www.afr.com/news/malcolm-turnbulls-snowy-20-project-could-cost-7b-20171213-h04646
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Re: Australian economy

Postby HBS Guy » 03 Jan 2018, 08:01

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Re: Australian economy

Postby HBS Guy » 23 Jan 2018, 08:38

Greg Jericho believes the economy and the picture of employment is good enough to get the coalition re-elected:

https://www.theguardian.com/business/grogonomics/2018/jan/23/economic-picture-leaves-coalition-in-solid-position-to-be-re-elected

What has he been smoking?
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Re: Australian economy

Postby Lefty » 24 Jan 2018, 07:29

HBS Guy wrote:Greg Jericho believes the economy and the picture of employment is good enough to get the coalition re-elected:

https://www.theguardian.com/business/grogonomics/2018/jan/23/economic-picture-leaves-coalition-in-solid-position-to-be-re-elected

What has he been smoking?


Yeah, I saw that one.

Employment has improved markedly over the past year. [http://bilbo.economicoutlook.net/blog/?p=37843]Bilbo is not easy to impress with such figures and even he says 2017 was pretty good[/url]

It's been something of a puzzle because on the surface at least because with dismal wage growth, the outcome appeared to support the neoliberal fiction that lowering wages creates jobs as business can hire labour more cheaply. The part they don;t acknowledge is that employees are also consumers and their purchasing power is critical as to whether or not most businesses (exporters excepted) can sell their output. Workers can't spend what they aren't earning without recourse to ever increasing debt - and they are very squeezed for that now.

So someone has had to have been stepping in to cover the 50%+ of the economy that is supported by consumer spending - and this has been government at both state and federal levels. 2017 saw the biggest surge in infrastructure spending in history by state governments. The rollout of the NDIS has also been a major contributor.

Break down the employment growth of the past year and we see that healthcare and construction are far and away the two standout areas of employment growth - exactly what we would expect to see as state and federal governments pump money into the economy in exactly those areas. Government stimulus works!

But will voters return this appalling mob to power - the long-running polls don't look likely for that outcome. The infrastructure spend is also close to peaking as well. Not sure about the NDIS.
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Re: Australian economy

Postby HBS Guy » 24 Jan 2018, 10:09

Yeah, saw construction was a major part of it and knew that was temporary.
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Re: Australian economy

Postby HBS Guy » 27 Jan 2018, 08:29

It is beginning to look like the housing boom might be over:

JP Morgan advises that Sydney and Melbourne house prices face a serious risk:
http://www.smh.com.au/business/the-economy/sydney-and-melbourne-are-most-at-risk-of-a-significant-property-price-correction-jp-morgan-20180126-h0opnm.html

And, possibly this year the RBA will start lifting rates.

As a saver higher rates will benefit me but I don’t really expect them this year.
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Re: Australian economy

Postby HBS Guy » 27 Jan 2018, 08:39

Michael Pascoe reckons Australian conservative dogma tends to be highly derivative – find out what the boys in America’s right wing are having and we’ll have some too. He tell us to be wary of what’s on the other boot – extensive cost cutting to pay for the corporate tax cuts. And he does a great hatchet job on Tom Switzer’s article from yesterday. A good read:

http://www.smh.com.au/business/the-economy/beware-the-other-boot-after-scomo-s-tax-cuts-20180125-p4yyve.html

And Rob Burgess says that we’re being duped into cutting ‘high’ corporate taxes:

https://thenewdaily.com.au/money/finance-news/2018/01/25/trump-tax-plan-corporate-tax-australia/

Couple of links from the PBX blog—haven’t had time to read them yet.
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Re: Australian economy

Postby Lefty » 27 Jan 2018, 09:20

Yeah, they've been drifting backward for a while now. I still think the powers that be will pull out absolutely every trick they can muster in order to keep them going up - because they know what will happen if they don't stop going down. If a collapse looks on the cards I think they will legislate that first time buyers can use what super they've accumulated as a deposit. Not only would that probably prevent (for a while at least) collapse, it would probably have the effect of pushing prices to new unprecedented highs.

Plus there's always this sort of thing....

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Hopeful first-home buyers across Victoria will soon be able to apply for the state government to cover up to a quarter of their mortgage.

The shared equity scheme, known as HomesVic, will be available to low-income earners looking to buy in select growth areas and regional centres.

The state government announced it would co-purchase up to 400 properties, taking an equity share of up to 25 per cent of each home. When the properties are sold, the government would then recover its share of the equity.

https://www.domain.com.au/news/victorian-government-to-copurchase-houses-with-400-firsthome-buyers-20180124-h0no16/

I'm going to take the cynical veiw that this is more about ensuring constantly rising prices which enormously benefit state governments through the stamp duty take. The government itself is becoming something of a property speculator under the guise of helping those locked out - they seem to actually expect that the owners will only live in them long enough until the equity has grown enough to become house flippers themsleves.

The only way housing will ever become truly affordable again is for prices to collapse by a significant amount. Since the economic fallout from this would be severe, there is no way it will be allowed to occur (although eventually nothing may be able to prevent it).

I still have doubts about interest rates rising by any significant amount any time soon. I don't believe our economy would remain functional at significantly higher rates because it's structure has become adapted to very low ones. Digital Finance Analytics calculates (can't find the article though) that a 2% rise in mortgage interest rates would see close to half of all households in some degree of difficulty, with the 20% best off of that category having to reign in their consumer spending while the bottom 20% would be at risk of default.



We really need to appreciate just how much money ordinary households are owing today on mortgages. 20 years ago you would have said it was impossible for households to owe so much. With prices for around half the housing market hovering around the three-quarter million to a million plus, it's clear that this is only sustainable by way of very low rates of interest. The point is that what's done is done - large numbers of ordinary Australians owe astronomical sums of money on their mortgages and can't get out of it. Most people have the option to fix rates but the time frame is limited and eventually their mortgage will re-set to the new higher rate, leaving them financially disadvantaged.

If mortgage interest rates were to return to the 7% average that it was when I bought, many mortgages of today would cost between $1000 and $2000 per week to service. I'm sceptical that this could be broadly sustained without widespread collapse.
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Re: Australian economy

Postby HBS Guy » 27 Jan 2018, 12:45

After decades spent unchallenged as lenders of capital, the major banks find themselves rivalled by union-run superannuation funds. Now big business is going to the funds for investment:

https://www.thesaturdaypaper.com.au/news/economy/2018/01/27/big-business-chases-industry-super-partnerships/15169716005717
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Re: Australian economy

Postby HBS Guy » 28 Jan 2018, 14:27

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Re: Australian economy

Postby Lefty » 31 Jan 2018, 06:40

Overvalued housing puts economy 'at the precipice': Industry Super Australia


Unsustainably high housing prices put Australia's economy "at the precipice" of a once-in-a-century bust if global borrowing costs rise more than 150 basis points, warns Industry Super Australia, the peak body for industry super funds.

Housing prices in Melbourne and Sydney rose to nearly seven times average weekly earnings last year from four times in 2000 even as real bond yields – a proxy for lending costs – more than halved, and a country of highly indebted households would suffer if interest rates rose, ISA's chief economist Stephen Anthony said.

"In the 2000s it has gone ballistic, to a point where it looks unsustainable," Mr Anthony told The Australian Financial Review.

"If we have a rapid rise in borrowing costs faced by banks through global markets – we look at long-term US interest rates [which] even this year have risen by 40bp since Christmas ... Once you start getting a 150 basis-point-plus rate increase, you think that a lot of these highly exposed households are in significant trouble.

The figures, which track the ratio of Australian dwelling prices to earnings since 1880 (when the ratio was just over three), add to concerns of a possible hard landing in Australia's hyper-charged property market, even at a time when few analysts expect the Reserve Bank of Australia to raise domestic rates fast any time soon. Since 1945, the average property price-earnings ratio is about 3.3, the figures show.


http://www.afr.com/real-estate/overvalued-housing-puts-economy-at-the-precipice-industry-super-australia-20180129-h0qco3
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Re: Australian economy

Postby Lefty » 11 Feb 2018, 10:49

Greg Jericho arguing that the economy is now fundamentally changed from before the GFC (I agree).

Economy returning to normal? It can only be the "new normal"

The main engine of our growth under neoliberalism - the expansion of debt in the private sector, especially the great mass of households - is probably close to being tapped out.

Ongoing government surpluses (all levels of government combined) are a thing of the past. As a fact of basic accounting at the national level, the total sum of the government sector budget surplus exactly equals the total sum of the private sectors deficit and vice versa. The long run of surpluses posted by the Howard government came not from great economic management but simply from a private - especially household - sector willing and enabled to plunge into a level of deficit never previously seen. This is reflected in the enormous run-up in household debt.

Australian households are now so indebted at rock-bottom interest rates that they are no longer in a position to support overall government surpluses by continuing to expand their debt at a rapid clip. Government deficits are here to stay. The surpluses at the end of the chart are "projected".

Image
https://www.rba.gov.au/chart-pack/government.html

And this is not a bad thing. Far from being "evil" government deficits support growth. A country like Australia whose national government issues it's own non-convertable floating fiat currency does not have to tax everyone more heavily in the future to pay for deficits run today - the commonly understood analogy of the fully-sovereign Australian government being just like a household or business might sound like logical sense but it has no basis in fact.

It's true that our government has largely privatised money creation and that most of the $AUSD in existence are the result of commercial bank lending - the banks are entities that have been given very special license to leverage the sovereign governments own high-powered money and accordingly, 95% of all Aussie dollars today originated as loans written into existence by the baking sector. Which perfectly suits the neoliberal bias.

But in order to support this, the private sector must become ever more heavily indebted and we seem to be finally reaching the stage where the private sector is leveraged to the eyeballs on one hand while on the other, servicing that massive debt cannot be made much cheaper, if at all.

Something eventually has to give, though who knows when.
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Re: Australian economy

Postby HBS Guy » 13 Feb 2018, 08:39

The Kouk reports the RBA was “shattered” by the low GDP figures and jump in unemployment in December:

Buoyant business confidence is not being driven by top line economic growth, rather the squeeze on input costs – eg, wages. This is fine, but not as good for the jobs market if it was because business was booming. This is a vital change in dynamics for analysing the business surveys and what they are saying about the economy.

Capex/public spending are looking good for now: Risks tilting down on an 18 month time horizon especially as several infrastructure projects near completion. This is a risk to the 2019 forecasts. . .


https://thekouk.com/item/577-the-rba-is-for-turning-it-might-take-a-while-but-we-ll-get-there.html

Well, the fuckwits have emptied their ammunition locker with unnecessary interest rate cuts. The stupid Libs won’t do anything but persist in giving overseas shareholders a dividend increase aka big business tax cuts.

Geez, I hope this Barnyard corruption brings down this totally incompetent and corrupt government!
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Re: Australian economy

Postby johnsmith » 13 Feb 2018, 12:53

the corporate tax cuts, if they get through will only worsen the structural deficit. I don't care how they try to justify it with their bullshit, less money coming in means less ability to pay back money.

Imagine if I told you to cut your income in half because that would encourage you to go out and get a second job, thereby improving your financial position . Cause that what the libs are claiming the tax cut will do for the budget
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