Thursday, March 23, 2017

The Macro View – Health, Financial And Political News Relevant To E-Health And The Health Sector In General.

March 23, 2017 Edition.
The big issue this week has been the increasing unease in the public around the risks to the economy coming from the housing sector as well as the issue of housing affordability. The Reserve Bank clearly has some concerns:

Reserve Bank of Australia flags new rules to curb investor loans

  • The Australian
  • 9:35AM March 14, 2017
The Reserve Bank of Australia is prepared to take more action if growth in investor home loans remains stubbornly high.
RBA assistant governor of the financial system Michelle Bullock says the Australian Prudential Regulation Authority’s (APRA) 2014 directive that banks limit annual growth in their loans to investors to 10 per cent has addressed some risks.
“While the resilience of both borrowers and lenders has no doubt improved, the initial effects on credit and some other indicators we use to assess risk may fade over time ... (and) we are continuing to monitor their ongoing effects and are prepared to do more if needed,” she said in speech today.
Overseas we have seen the US raise interest rates and gradually accumulating evidence the world economy is very slowly improving. I hope President Trump does not derail things. Despite this some are still a little anxious.
  • Mar 13 2017 at 10:00 AM

Are we edging closer to a 'sell everything' market?

by Joe Rennison and John Authers
One of the longest and most important trends in world finance may be on the cusp of a reversal. US 10-year Treasury bond yields, used as a benchmark in transactions the world over, have been in decline since inflation came under control in the early 1980s.
But in the past week, yields have risen to their highest in almost three years, while the US jobs market has grown its fastest in more than a decade. With equity markets suggesting that growth and inflation are in store under President Donald Trump, and with the Federal Reserve committed to raising its base rates this week for the third time in a decade, some bond market luminaries are convinced that the great "bull market" is over. From now, they expect interest rates to rise steadily.
"I believe the secular decline in yields is over," says Henry Kaufman, the Wall Street economist known in the 1970s as Doctor Doom for his accurate forecasts of higher inflation and interest rates. "It will not come back." His latest book carries the ominous title Tectonic Shifts in Financial Markets.
Wed Update - Looks like the time to bail out has arrived! Trust in the trump-bump has just died!
Here are a few other things I have noticed.

National Budget Issues.

Negative gearing deductions cap in 2017 budget frame

  • The Australian
  • 12:00AM March 13, 2017

David Uren

Capping the size of negative ­gearing deductions and cuts to the capital gains tax discount are among options the Turnbull ­government is considering as it brings together a package of housing­ affordability measures for the May budget.
The government is consulting property, housing and community groups over its housing package and is emphasising its belief that the biggest issue is a bottleneck in the supply of housing, rather than excessive demand.
Scott Morrison says negative gearing is an important concession that helps the supply of rental accommodation and he believes there is political mileage in attacking Labor’s sweeping ban on fresh negative gearing. However, the government is not ruling out changes to the tax treatment of housing investment in its discussions with industry.
  • Mar 13 2017 at 10:03 AM

Cut negative gearing to lower house prices? Don't be 'ridiculous' says Scott Morrison

Treasurer Scott Morrison has rubbished the idea that curbing negative gearing would bring down house prices but made no mention of the effect of cutting capital gain tax concessions, which is under consideration.
Speaking on radio 2GB, the Treasurer said the idea that curbing negative gearing would ease housing prices was "just ridiculous", claiming all it would do was drive up rents.
"I don't just see how an increase in your rent improves housing affordability, particularly if you're renting."

Abused public servants help bring Turnbull down

Ross Gittins
Published: March 12, 2017 - 9:35PM
There's no clearer sign that the Turnbull government is in deep political trouble than the never-ending saga of the Centrelink robo-debt stuff-up.
A well-functioning government would have closed down the controversy more than a month ago. If the relevant senior or junior minister hadn't had the wit to do it himself, the Prime Minister would have told him to.
Instead, the controversy's been allowed to roll on, while the junior minister, Alan Tudge, and more particularly the man allowing himself to be described as general manager of Centrelink, Hank Jongen, have repeatedly denied that there's any problem with the automated debt recovery system that's been making life miserable for many Centrelink "customers", including many who, in truth, owe the government nothing.

Here’s a plan: put family home in pension assets test

  • The Australian
  • 12:00AM March 14, 2017

Adam Creighton

Ronald Reagan said the nine most terrifying words in the English language were “I’m from the government and I’m here to help”. Brace yourself: the Turnbull government is here to help with “housing affordability”.
Governments have a poor track record on this score. The infamous first homeowner’s grants put a rocket under house prices and succeeded mainly in shuffling money from taxpayers to vendors.
A new piece of feel-good idiocy is about to emerge, it seems. The May budget reportedly will include measures to allow older people to sell their homes without losing their age pension. Since 1912 the principal residence has been excluded from the pension eligibility test. Financial assets are included.

Cashless welfare card ‘cuts use of alcohol and drugs

  • The Australian
  • 12:00AM March 14, 2017

Sarah Martin

A cashless welfare card that stops government benefits being spent on drugs and alcohol will be made permanent in two remote communities and looks set to be ­expanded, after trials found it greatly reduced rates of substance abuse and gambling.
The Turnbull government will today release the first major independent audit of the cashless welfare system and announce that the card will continue in Ceduna and East Kimberley, subject to six-monthly reviews.
Establishing a clear “proof of concept” in the two predomin­antly indigenous communities also paves the way for the ­Coalition to roll out the welfare spending restrictions further, with townships in regional Western Australia and South Australia believed to be under consideration.

Reserve Bank worried about collapse in apartment prices

Peter Martin
Published: March 15, 2017 - 5:32AM
The Reserve Bank is considering tighter bank lending standards amid concern about how the financial system would handle a collapse in housing prices, beginning with Brisbane apartments.
The Bank's assistant governor (financial system) Michele Bullock told a business event in Sydney that the Reserve Bank was particularly uneasy about the "looming oversupply of apartments in Brisbane in particular, and possibly in some parts of Melbourne".
Sydney apartments were less of a worry.
"There are indicators that, in the event of a downturn, there might be systemic issues for the banking system," she said.

An inconvenient truth gets in the way of the company tax cut chants

Michael Pascoe
Published: March 15, 2017 - 12:15AM
"When profits go up, so do wages," Business Council of Australian president Grant King declared last week as he struggled to keep alive the dream of a tax cut for his members. It would be equally simplistic but a bit closer to the truth at present to turn the statement around: When wages go up, so do profits.
The reality is that higher profits aren't translating into higher wages. Higher wages are something every employer wants for all workers bar his or her own. While labour is readily available, there's no reason to pay more for it and businesses generally don't. The old, closed-system theoretical models hand-cranked by Treasury and parroted by the government and BCA are of limited use.
The government's only apparent plan for economic stimulus – corporate tax cuts – looks lonelier by the day. Sliding away in the polls, embarrassed by the WA election, locked into inaction by internal politics and with another budget looming, the idea of giving foreign companies a present isn't generating wild enthusiasm. The latest Essential poll hot off the telephones finds only 24 per cent of voters supporting the idea, down from 28 per cent last month.

Australian housing markets 'defy belief' but bank warns against knee-jerk policy reactions

Eryk Bagshaw
Published: March 15, 2017 - 3:46PM
The Sydney and Melbourne housing markets are continuing to "defy belief" but banks have warned that government measures designed to address affordability could actually drive up prices. 
National Australia Bank chief economist Alan Oster said property prices were showing no signs of slowing, despite growing concerns about affordability two months out from the federal budget.
The analysis from NAB shows median dwelling prices have climbed up to nine times higher than gross household incomes in Sydney and seven times higher in Melbourne on the back of surging investor demand. 

Federal Budget package to help first home buyers

March 14, 20172:59pm
ARE your grandparents blocking the way to you buying a nice home at a relatively low price?
Older real estate owners are among the enemies of affordable housing listed by the government, as it moves towards the May Budget and the promise of measures to boost home ownership.
Treasurer Scott Morrison believes if the elderly could be encouraged to downsize there would be more options for younger buyers frustrated by high prices.

Can budget 2017 fix housing affordability? Here are seven options

What policy levers can Scott Morrison pull? Here are the most popular policy proposals – and their political likelihood
Housing affordability is battling with energy and penalty rates to be the hot-button issue in Australian politics. There was a time rising house prices was seen as a political win, but now the issue is big enough that the government is making noises about making it a key part of the May budget.
The latest housing finance figures served to highlight that the issue of housing affordability remains unsolved. After a period of relative easing of investor borrowing, the past six months has seen an explosion in investors getting loans.
Investor lending has grown by more in the past year than it has since September 2014. Such growth invariably leads to increases in house prices, so any a cooling in the market appears a ways off:

'Living in a fool's paradise': Business sounds the alarm on federal budget

James Massola
Published: March 17, 2017 - 12:00AM
The Business Council of Australia has sounded the alarm over the federal budget, warning the Turnbull government its plan to return to surplus by 2020-21 is "fragile" and calling on the Parliament to back further spending cuts.
In its budget submission, the BCA says real spending will rise too quickly at 3 per cent annually from 2020 because of new spending programs and an ageing population outpacing economic growth. Left unchecked, by 2055 spending could hit 30 per cent of GDP, up from 25 per cent now, locking in structural deficits of at least 3 per cent of GDP. That is an equivalent to an extra $50 billion debt per year.
To head off that potentially massive increase in debt, the business lobby group says the Turnbull government must limit spending growth to 2 per cent per year, secure support for its $13.2 billion savings package and if the current savings can't pass the Senate, find savings elsewhere.

How the two-speed economy worm has turned

Ross Gittins
Published: March 18, 2017 - 12:15AM
If you learn nothing else about the economy, remember that it moves not in straight lines but in cycles of good times followed by bad times, and bad times followed by good.
Nowhere is that truer than with our famed "two-speed economy".
For most of the decade to 2012, the resources boom meant that the two main mining states – Queensland and, especially, Western Australia – were growing much faster than the rest of the economy, which was being held back by the effect of the boom-caused high dollar on other export industries.

Lift GST, says OECD in dismal report card for Australia

Peter Martin
Published: March 18, 2017 - 1:30AM
The Organisation for Economic Co-operation and Development has castigated Australia for inadequate progress on tax, Indigenous affairs and support for business in a report card to be presented to finance ministers from the group of 20 leading industrial nations in Germany on Saturday.
Entitled Going for Growth, the report examines progress on undertakings made at the 2014 Brisbane G20 leaders meeting overseen by then prime minister Tony Abbott and former treasurer Joe Hockey.
At the Brisbane meeting, Australia pressed world leaders to pledge actions that would inject an additional $2 trillion into the world economy over five years and "create millions of jobs".

Brace for the sell-off: property market at a tipping point

  • Roger Montgomery
  • The Australian
  • 12:00AM March 18, 2017
It has begun. The much maligned prediction of a sell-off in property prices is beginning to come true.
Of course, you wouldn’t know it looking at the headline-grabbing median prices and the ridiculous prices being paid for shoe boxes in Sydney — “Hey,” says the buyer, “what’s an extra million when the additional interest is $45,000 a year.”
And that is the point. We know the boom in property prices has little to do with anything other than historic low interest rates, which appears to have made paying an extra million at auction as insignificant as an impulse purchase of a bar of chocolate at the supermarket checkout.

Health Budget Issues.

ACT's out of pocket hospital medical costs twice national average

Daniel Burdon
Published: March 13, 2017 - 12:15AM
Canberrans are paying twice the national average in out-of-pocket payments for hospital medical services, at an average $258 for each patient in an ACT hospital.
Patients in ACT hospitals face an average gap payment for hospital medical services, where the gap was paid, of $258, compared to the $125 national average, the latest quarterly statistics on private health insurance show.
Similarly, the ACT's hospital system have the lowest proportion of specialist services with no gap, at just 78.5 per cent, compared with most other states at about 85 per cent.

High income earners to be slugged with higher Medicare costs under Greens plan

Adam Gartrell, political correspondent
Published: March 13, 2017 - 12:15AM
High-income earners would pay at least $900 more in taxes under a Greens plan to raise an extra $13 billion for the health budget.
The crossbench party wants all high-income earners - singles on more than $90,000 or families on more than $180,000 - to pay the Medicare levy surcharge, regardless of whether they have private health insurance.
Greens leader Richard Di Natale had the policy costed last month by the independent Parliamentary Budget Office, which found it would raise an extra $13.37 billion for federal coffers over the next four years.

Push to cut costs of medical devices

  • The Australian
  • 12:00AM March 15, 2017

Sean Parnell

Health Minister Greg Hunt has called for fresh data on the cost of medical prostheses in public hospitals, signalling that the federal government will consider additional measures to reduce the high price of similar devices in the private sector.
As a Senate committee today holds its first public hearing on problems with the private sector’s regulated Prostheses List, Mr Hunt has commissioned a report on the issue from the Independent Hospital Pricing Authority.
Faced with complaints from insurers that the high cost of ­prostheses was helping drive up premiums, the government last year initiated several reforms to the list. Then minister Sussan Ley legislated to cut the price of ­cardiac devices and intra-ocular lenses by 10 per cent, and hip and knee prostheses by 7.5 per cent, to save insurers $86 million in the first year alone, and also revamped the Prostheses Listing Advisory Committee.

Health Insurance Issues.

Ministerial committee hears of doubts over health policy categories

  • The Australian
  • 12:00AM March 13, 2017

Sean Parnell

Organising tens of thousands of health insurance policies into gold, silver and bronze categories could affect participation rates and premiums, a reform committee has been told.
The Turnbull government asked the Private Health Ministerial Advisory Committee to look at minimum standards for insurance policies, including excesses and co-payments, and align them in comparable categories.
Former health minister Sussan Ley suggested gold, silver and bronze categories would help members navigate the “murky world” of policy variation but it appears such a change could have a greater effect.

The ‘criminal cartel’ pushing up your health fund premiums

Sue Dunlevy, National Health Reporter, News Corp Australia Network
March 15, 2017 12:00am
A GOVERNMENT price-fixing system for hip and knee replacements has been compared to a “criminal cartel” that adds $150 to your annual health premium.
Medical device manufacturer Applied Medical said the scheme that sees health fund members pay prices five times higher than public hospitals benefits wealthy private hospitals and is being exploited.
The company has been trying to bring cut price medical devices to Australia and even took the government to court over the issue but has been stymied by the system.

Private health insurance CEOs warned they could be summoned by Senate over soaring premiums

By political correspondent David Lipson
15 March, 2017
Health insurance bosses have been warned they could be summoned to appear before a Senate inquiry over the latest round of premium price rises.
Last month, the Government approved an almost 5 per cent rise in health insurance premiums — three times the rate of inflation and worth as much as $200 more a year to families.

At a glance:

  • 13 million Australians have private health insurance
  • 5pc rise in premiums is three times the rate of inflation
  • It will cost up to $200 a year extra for families
  • 28pc increase in premiums since 2012
A Senate inquiry into the sector is underway, but so far private health CEOs — some who earn more than $13 million a year — have declined an invitation to attend.

Your premiums are going up, and the Senate wants answers

How much is too much? Especially when you find out how much the CEOs are making.
Starts at 60 Writers
Economy 16 Mar
It seems enough is enough for the Senate as the increasing Private Health Care premiums have led them to put the CEOs on notice.
The government did approve a near 5 per cent last month which sees some with Private Health Care out of pocket more than $200 a year.
The area of interest of the Senate is that these companies are constantly stating that they need to raise the rates but the CEO’s pocket multimillion dollar salaries.  Some reports say that some of the CEOs make more than $13 million a year.
Labor senator Sam Dastyari who has called for the investigation told the ABC, “I believe we should be looking at that power. It will ultimately be the committee in the Senate’s decision”.  Mr Dastyari added, “My view is you should have to front and have to explain.”

Pharmacy Issues.

Guild calls on Hunt to deliver

While the Health Minister’s APP keynote speech provided much-needed hope and encouragement, the pharmacy sector is at a tipping point, says Pharmacy Guild Executive Director

Minister for Health Greg Hunt impressed the community sector with his off-the-cuff speech at APP last week, writes Guild Executive Director David Quilty in his Forefront editorial published Thursday.
However he adds that there are issues that the Guild is closely working on with Minister Hunt to ensure they are urgently addressed.
“What absolutely distinguished Minister Hunt’s speech was his genuine empathy for community pharmacies as small businesses and for pharmacists as health practitioners,” says Mr Quilty.

Uni training gaps threaten pharmacy expansion

17 March, 2017 Heather Saxena 
A gap between uni training and the commercial reality of modern pharmacy has been identified as a risk for the future.
The problem is that pharmacists are graduating without enough training in core skills, such as providing vaccinations.
This could jeopardise the push for an expanded role for pharmacists, Pharmacy Guild president George Tambassis says.
His concerns were aired at an APP2017 panel discussion, where it emerged that many pharmacies rely on banner groups, the Guild and PSA to fill in gaps in interns’ under-graduate training.
I look forward to comments on all this!

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