March 9, 2017 Edition.
The big economic news of the week has been yet another alarm about the level of debt and price of houses in Australia. We seem to have had many of these scares and so far all has been well. We can only hope our luck continues – but each time it happens it might just play out badly – so do stay alert but not alarmed.
On the Trump front things are seemingly pretty rocky on the weekend with claims on Twitter regarding electronic spying by the previous President. I become increasingly worried that the man is unhinged – time will tell I guess.
Here is the Australian bad news:
- Updated Mar 3 2017 at 12:01 AM
OECD rings alarm on housing 'rout'
by Jacob Greber
Australia's vulnerability to a house price collapse morphing into a recession has sharpened because of ballooning household debt and the dominance of big banks, according to the Organisation for Economic Co-operation and Development's latest report on the economy.
Putting the risk of a recession at around one in five, the Paris-based OECD says alongside a shakeout in China and ongoing weakness in business investment, the single biggest threat to the nation is from a potential hard landing in the property market after years of double-digit price gains.
OECD officials – writing in what is their first major review of Australia's economy since 2014 – said the housing market may not "ease gently" and could develop into a "rout on prices and demand with significant macroeconoimc implications".
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Here are a few other things I have noticed.
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Trump Issues.
With Donald Trump scaring allies, Australia has never been so popular
Peter Hartcher
Published: February 28, 2017 - 12:00AM
Published: February 28, 2017 - 12:00AM
The leader of the Jewish state was in Australia last week, the first time in the country's 69 years that any serving Israeli prime minister has set foot here.
Overlapping his time in Sydney was a visit by the leader of the world's biggest Muslim-majority state. Even though the distance from Indonesia to Australia at its closest is only a quarter the distance from Sydney to Melbourne, Joko Widodo is just the fourth serving Indonesian leader to visit in the 72-year history of his country.
Jerusalem and Jakarta do not recognise each other diplomatically. The two leaders were in Sydney on the weekend and studiously ignored each other.
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George W. Bush takes on Donald Trump on Russia, immigration and media
Jennifer Epstein
Published: February 28, 2017 - 3:17AM
Published: February 28, 2017 - 3:17AM
Former United States President George W. Bush, in his first interview since the start of Donald Trump's administration, said he sees a need for an investigation into the Trump team's ties to Russia and voiced scepticism about his successor's approach to immigration and the media.
"We all need answers," Mr Bush said during an interview with NBC's Today program on Monday regarding the Trump campaign's involvement with Russia prior to the November election. He declined to say whether he thinks a special prosecutor should be named and said he trusted congressional committees to make that call. "You're talking to the wrong guy," he said, quipping that he's "never been a lawyer."
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- February 28 2017 - 12:29PM
Seeking to destroy Obamacare, Donald Trump admits healthcare is 'so complicated'
New York: US President Donald Trump is on a mission to replace his predecessor's signature healthcare policy, but he is finding being in government not as easy as making grand promises on the campaign trail.
"Nobody knew that healthcare could be so complicated," he reportedly told a meeting of the National Governors Association on Monday.
Trump's budget focuses on defence, public safety
At a meeting with governors, President Donald Trump said his first budget will focus on "public safety" and "national security."
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A Yale history professor’s powerful, 20-point guide to defending democracy under a Trump presidency
Written by
Timothy Snyder Housum Professor of History at Yale University, author of Black Earth: The Holocaust as History and Warning
Americans are no wiser than the Europeans who saw democracy yield to fascism, Nazism, or communism. Our one advantage is that we might learn from their experience. Now is a good time to do so. Here are twenty lessons from the twentieth century, adapted to the circumstances of today:
1. Do not obey in advance.
Much of the power of authoritarianism is freely given. In times like these, individuals think ahead about what a more repressive government will want, and then start to do it without being asked. You’ve already done this, haven’t you? Stop. Anticipatory obedience teaches authorities what is possible and accelerates unfreedom.
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National Budget Issues.
- Opinion
- Updated Feb 26 2017 at 11:45 PM
The growth deficits threatening prosperity
by The Australian Financial Review
NAB chairman and former federal Treasury secretary Ken Henry says politics is such a shambles that business must take the lead to drive economic growth, jobs and the foundations of a good society.
After a quarter of a century of unbroken economic growth, Australia remains an envied and prosperous nation. Yet we have emerged from our biggest ever resources development boom with at least four deficits that threaten this prosperity.
First, the biggest national income boom since the 1850s gold rushes has given way to entrenched government budget deficits that could strip Australia of our AAA sovereign credit rating within months.
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Cut company tax and you cut national income, says Grattan Institute
Peter Martin
Published: February 26, 2017 - 9:00PM
Published: February 26, 2017 - 9:00PM
The Turnbull government's proposed company tax cut would drop national income for years before it boosted it and would never be self-funding, a new analysis from the Grattan Institute has found.
One of the key justifications for the proposed phase down in the company tax rate from from 30 per cent to 25 per cent over 10 years has been that it would boost national income and wages.
"Even assuming you get those things in the long run, there will be a period of time in which national income falls," said the director of the Grattan Institute's productivity growth program Jim Minifie.
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- Updated Feb 26 2017 at 9:00 PM
Scott Morrison says workers win 50pc of company tax cut benefits:
Treasurer Scott Morrison will argue this week that half the benefits from the Turnbull government's 10-year tax cut plan will flow through to workers through higher wages, as Labor prepares a "work choices" style against last week's penalty rate cuts to low-income workers.
Federal parliament will begin debating on Tuesday afternoon the $50 billion tax cut plan as the first step of passing it through the House of Representatives before it will hit major blockades in the Senate.
"Modelling has shown that half of the benefits of the tax cuts would flow through to workers through higher real wages, a necessary boost to workers given subdued wages outcomes," Mr Morrison said.
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Missing: Political courage. If found, please return to Canberra
Shane Wright
Monday, February 27, 2017 11:42AM
This is the tale of three speeches.
Sadly, unlike usual tales there is unlikely to be a happy ending. For readers and for voters.
These three speeches were delivered here in Australia in the past week. One by a former American congressman, one by a former public servant and one by the current Reserve Bank governor.
And each of them goes to the heart of some of the biggest economic issues facing the country.
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Welfare crackdowns a $270 million flop: audit
Noel Towell
Published: February 28, 2017 - 6:12PM
Published: February 28, 2017 - 6:12PM
Government efforts to crack down on welfare have fallen hundreds of millions of dollars short of their targets, the National Audit Office has found.
The new report shows a shortfall of $270 million on a target of $790 million from headline "compliance" efforts, announced by both Labor and Coalition governments since the 2012.
The audit, published on Tuesday found senior bureaucrats at the departments of Human Services and social services failed to honour commitments to keep their political bosses and other departments in the picture about how the compliance projects were tracking.
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Investors driving a red-hot market
- The Australian
- 12:00AM March 1, 2017
Michael Roddan
Investor lending in the property market is running hot and analysts say the frenzy is likely to continue unless there is a “dramatic” tightening of lending standards.
Data from the banking regulator shows Commonwealth Bank grew its investor loan book at twice the rate of the entire banking system during the seasonally slower month of January.
Meanwhile, a report released by ratings agency Standard & Poor’s yesterday said “a continued build-up of economic imbalances” was heightening the risk of a “low probability scenario of a sharp correction in property prices”. “There is a significant risk of continued build-up of private sector debt and house price growth” due to low interest rates and the lack of housing supply, S&P credit analyst Sharad Jain said.
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Battle over budget as Treasurer Scott Morrison won't commit to saving mining windfall
Peter Martin
Published: March 2, 2017 - 12:45AM
Published: March 2, 2017 - 12:45AM
Australia's top economic bureaucrat has begged the government not to spend the coming windfall from soaring coal and iron ore prices, saying if it did it would repeat the mistakes of prime minister John Howard and treasurer Peter Costello in the early 2000s.
Treasury secretary John Fraser was appearing before the Senate economics committee 10 weeks before the May budget and just ahead of economic growth figures showing the strongest rebound in national income in half a decade.
Australia's real gross domestic product soared 1.1 per cent in the December quarter after slipping 0.5 per cent in the September quarter. Over the year to December, it grew 2.4 per cent, up from 1.8 per cent, and close to the Treasury forecast.
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Don't waste commodity windfall: Treasury
- on March 1, 2017, 1:57 pm
If Scott Morrison heeds the advice of his departmental chief, the treasurer won't be squandering any revenue windfall the federal budget might receive from a surge in commodity prices.
Treasury secretary John Fraser on Wednesday told a Senate committee it was unclear how much of the recent surge in coal and iron ore prices were driven by temporary or more persistent factors, presenting difficulties in preparing the budget.
"If these elevated prices continue, we should prioritise budget repair and ensure any additional revenue is banked as an improvement to the budget bottom line," he said.
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OECD warns of 'rout' in house prices if investors head for the doors
Peter Martin
Published: March 3, 2017 - 6:25AM
Published: March 3, 2017 - 6:25AM
The OECD has warned of a "rout" in Australian house prices, leading to a new economic downturn, saying both prices and household debt have reached "unprecedented highs".
The warning is in an otherwise positive biennial assessment released overnight that broadly mirrors the Australian Treasury's.
The survey says in real terms house prices have climbed to 250 per cent their level in the 1990s, with much of the increase taking place in the past few years, "straining affordability, especially for first-time buyers in Sydney".
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Economy roars to life, warding off recession
The economy recorded strong 1.1 per cent growth in the final three months of the year.
- The Australian
- 12:00AM March 2, 2017
David Uren
The economy has roared back to life, buoyed by booming commodity prices and rising confidence among businesses and consumers, with Treasury increasingly confident Australia will retain its AAA credit rating.
After the shock 0.5 per cent fall in GDP in the September quarter, which raised fears of a recession, the economy recorded strong 1.1 per cent growth in the final three months of the year. The turnaround was sufficient to pull the 12-month growth rate up from 1.9 per cent to 2.4 per cent, which Scott Morrison said was faster than achieved by any of the world’s biggest seven advanced nations.
“These growth figures say we are at the top of the pack, and while last September quarter’s figures were surprising and disappointing, what we’ve seen in the December quarter is a return to the strong momentum that we’re seeing in our economy,” the Treasurer said.
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The recession that never was, didn't happen... Phew
Ross Gittins
Published: March 4, 2017 - 12:00AM
Published: March 4, 2017 - 12:00AM
Fabulous news on the economy this week. The recession that never was, didn't happen. Phew. That's a relief.
After going backwards by 0.5 per cent in the September quarter of last year, we learnt from the Bureau of Statistics' national accounts that the economy rebounded by 1.1 per cent in the December quarter - meaning, according to the overexcited children of economic reporting, that we've escaped "technical" recession.
Actually, anyone with sense knew three months ago we would. The detail of the national accounts showed the contraction was no more than a pothole on the economic road, the product of an unusual accumulation of negative one-offs.
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Wellbeing Index reveals life got better for Australians in 2016
Matt Wade
Published: March 3, 2017 - 5:00PM
Published: March 3, 2017 - 5:00PM
Australia's collective wellbeing grew at more than twice the rate of the economy last year.
The Fairfax-Lateral Economics wellbeing index - which provides a broader measure of national welfare than traditional economic figures - rose 5.8 per cent in 2016. That compares with annual gross domestic product growth of 2.4 per cent revealed by official figures on Wednesday.
The wellbeing index adjusts GDP to take into account changes in knowhow, health, work life, social inequality and environmental degradation to put a dollar figure on Australia's collective wellbeing.
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Health Budget Issues.
All high earners to pay Medicare levy surcharge under budget proposal
Peter Martin
Published: February 27, 2017 - 12:15AM
Published: February 27, 2017 - 12:15AM
All high-income Australians would pay the 1 to 1.5 per cent Medicare levy surcharge under a budget proposal that would raise a breathtaking $4 billion per year, more than six times the net amount saved in the first Turnbull budget.
At present only high-income Australians without private health insurance are made to pay the extra levy.
Extending it to all families earning more than $180,000 per year and all individuals without children earning more than $90,000 per year would raise at least $900 per year more from each high-income Australian with private health insurance, and would offset the removal of the high-income temporary budget deficit repair levy, which expires in the middle of this year.
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What we know and don't know about the PIP overhaul
Antony Scholefield | 2 March, 2017
GP groups are currently wrestling with the coming shake-up of the Practice Incentives Program. Australian Doctor reports.
Whenever the Federal Government talks health reform, there must be a Pavlovian shiver running down the spine of general practice.
Conditioned to expect the worst, GP groups are currently wrestling with the coming shake-up of the Practice Incentives Program (PIP).
The pretext is that the scheme that has been running since the late 1990s is widely seen as another heavy bureaucratic impost on practices — tolerated for the money it generates rather than the support it provides to good care.
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How much Australians spend on health
Georgina Dent
Published: February 26, 2017 - 12:15AM
Published: February 26, 2017 - 12:15AM
Personal spending on health is about $28.6 billion a year in Australia. This includes $3 billion on hospitals, $5.5 billion on dental care and almost $11 billion on medication. We shell out a further $21 billion each year on health insurance premiums.
As private consumers, we contribute almost one in every five dollars spent on health care. Among wealthy countries, we have the third-highest reliance on out-of-pocket payments and it's growing.
Data from the Australian Institute of Health and Welfare shows funding from non-government sources – mostly out-of-pocket costs – increased four-and-a-half times faster than government funding in 2014-15.
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What does the health sector want from the Federal Budget?
Health reform is on the agenda in Canberra with the Federal Government in the process of developing the 2017/18 Federal Budget and Labor signalling a major review of its policies via its Health Policy Summit, to be held tomorrow.
Luckily for all sides of politics there is no shortage of expertise and willingness within the health sector to provide advice on potential reform options.
Most major health organisations have provided details Budget Submissions identifying the funding and policy changes they believe are required to improve the functioning of our health system. A complete list of Budget Submissions can be found on the Treasury website.
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Health Insurance Issues.
Forget the banks – health insurance makes them look like amateurs
Michael Pascoe
Published: February 27, 2017 - 2:32PM
Published: February 27, 2017 - 2:32PM
More Australian than hot summers and bagging cricket selectors is the habit of criticising the Big Four banks' "outrageous" profits.
Forget the banks, they're relative amateurs. If you want outrage, check out the private health insurance rip-off as demonstrated by NIB and Medibank.
Little NIB was one of this reporting season's star turns, the market applauding the 65 per cent surge in its first-half net profit to $71 million, and its chief executive afforded a lap of honour in the AFR, where he called for his industry to return to the good old days before Whitlam introduced Medicare, when 70 per cent of the population bought health insurance instead of the present 46-point-something per cent.
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States urge hospitals to bill insurers
- The Australian
- 12:00AM March 4, 2017
Sean Parnell
Sarah-Jane Tasker
State governments are actively encouraging public hospitals to bill health insurers for their members’ treatment, driving up premiums and threatening the stability of Australia’s two-tier health system.
The states have become so dependent on revenue from insurance payments there are concerns that public hospitals will prioritise insured patients, blowing out waiting lists.
Reports have emerged of members being offered free meals and parking for their family members if they bill their insurer, or being told they will be helping hospitals to buy new equipment or fund medical research.
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Pharmacy Issues.
Guild raises the ante on risk share and other 6CPA issues
The Pharmacy Guild has subtly upped the pressure on the federal government to honor the 6CPA.
In a full page advert in Tuesday’s Australian, the Guild congratulates Federal Health Minister Greg Hunt (pictured) on his new position. But the text also encourages the government to honour the 6CPA.
The advert says: “We appreciate the Coalition’s strong commitment to the community pharmacy model and look forward to working with you to deliver the Sixth Community Pharmacy Agreement in full.
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Superannuation Issues.
There’s a superannuation tsunami heading our way
- The Australian
- 12:00AM March 2, 2017
James Kirby
With just four months to go before a sweeping set of changes is unleashed in the superannuation system on July 1, the lack of understanding on the issue is alarming: the government must act immediately to inform the broader public what is going to happen and who will be affected by the changes.
Though there is effectively only weeks to go before people could possibly organise significant changes to their arrangements in relation to super, a public education program from the government is nowhere to be seen.
Even financial advisers are struggling to grapple with the finer points linked with the changes which are set to change both investing patterns across Australia.
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I look forward to comments on all this!
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David.
"Nobody knew that healthcare could be so complicated," he [Mr Trump] reportedly told a meeting of the National Governors Association on Monday.
ReplyDeleteEveryone except Mr Trump have said "the healthcare system IS complicated", it's only Mr Trump who was self deluded to think the healthcare system was simple during his campaign.
~~~~ Tim C