May 16, 2019 Edition.
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We are down to the pointy end of the Australian general election and it seems like a Labor win is all but assured. It really is only the margin that is under discussion as that will finally decide how much of their agenda they can put into action. What happens from here we will all now in about 4 days time.
What can one say. Trump is now fighting with China, Iran, North Korea and half of Latin America. Even for a US President that would seem to have a lot on the go at once! Who knows where it will all end. I do not expect any of it to be pretty!
It looks like the UK PM will be out on her ear pretty soon – watch this space!
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Major Issues.
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Auctions 'bounce back' as downturn eases
May 5, 2019 — 1.09pm
The east coast auctions market has held up even as overall activity picked up following several weeks weighed down by the Easter and and school holidays.
On preliminary results the national clearance rate hit 58.8 per cent across the combined capitals, up from last week’s final clearance rate of 50.4 per cent.
By contrast, this week last year the clearance rate was 62.1 per cent. The final clearance rate is expected to fall back to the low 50 per cent range once all results have been collected, on CoreLogic's view.
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Universities: both sides should clean up the mess they've made
By Ross Gittins
May 6, 2019 — 12.10am
Among the many issues needing early attention from the winner of the federal election is universities. Trouble is, neither side seems to have much idea of how to fix the mess both parties spent decades creating, before Julia Gillard brought things to a head with the brainwave of moving to “demand-driven” funding.
Her idea of shifting control over the size of annual federal-funded undergraduate admissions from budget-conscious bureaucrats in Canberra to individual universities ignored the decades of funding repression to which the unis had previously been subjected.
Governments of both persuasions had gone for years trying to get the universities off the budget books by a process of de facto privatisation. Unis were given the power to charge (government-set) tuition fees to local students – HECS – and unrestricted power to charge overseas students – but with commensurate cuts in government grants.
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Housing will hit bottom next year: Frasers chief Rod Fehring
- 12:00AM May 6, 2019
The country’s housing market is expected to bottom later next year but a recovery in prices is still some time away and unlikely to materialise before 2021, according to Rod Fehring, the Australian chief executive of multinational developer Frasers Property.
The Singapore-listed group, with assets of $S33.2 billion ($34.8bn) and a substantial Australian operation, on Friday reported a $S37.2 million lift in profit for the six months to March 31 to $S266m, with residential projects from Australia and China significant contributors to the result.
“A feature of this downturn has been how fast it has happened. And it has never happened before without a big interest rate lift,” Mr Fehring said.
“This has happened by monetary policy without interest rates being part of it.”
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Why time is the most important element of your retirement planning
Here's how to strike the right balance between ensuring there's enough money in the pot to last the distance and not giving up too much lifestyle spending now.
Nathan Zahm
May 6, 2019 — 10.17am
When planning for retirement, one of the most common questions is: “How long until I retire?” The answer to this important question influences how much you should save while your salary is still rolling in.
But as retirement creeps closer, the question shifts to “how long will I live after I retire?” This is the question that probably affects your retirement planning the most.
Governments, actuaries and financial institutions can use average life expectancy information to be fairly certain about the length of time in retirement for a group as a whole. But as individuals, the length of retirement is fairly uncertain.
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Franking credit spotlight on super funds
- 2 hours ago May 6, 2019
Claims by the country’s largest super funds that they will not be affected by planned changes to franking credits are set to be tested if the Labor Party wins government.
Hundreds of thousands of retirees inside the nation’s dominant industry funds are paid a “crediting rate”, which is designed to allow for the special tax status of pensioners who are entitled to franking credit refunds.
But no more franking credit refunds under an ALP regime will mean funds must review how they pay members in pension phase.
If the funds continue to pay retirees under the current system it will mean they are allowing for a tax benefit that will no longer exist — this could upset members who have not retired but find themselves cross-subsidising retired members.
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The $100 trillion question: What to do about wealth?
Columnist
We live in an age obsessed with economic inequality. There is too much of it, most people seem to agree. After President Trump — his personality, behavior and policies — inequality may well become the dominant issue in the 2020 election. This poses dangers, the most obvious being the tendency to blame the rich and the super-rich for everything that ails us or displeases us. Still, we can’t (and shouldn’t) duck the issue.
Americans have long tolerated some inequality, because almost everyone would like to strike it rich. If you harbor these ambitions, you’ve got to accept the consequences. But today’s gaps between rich and poor, or between the super-rich and upper middle class, long ago exceeded these permissive limits. The present inequality must make all but the most avid enthusiasts of laissez-faire (“let it be”) squirm.
Anyone who doubts this should consult a recent study by the Federal Reserve. Until now, most studies of inequality have focused on income — what people earn or receive in a year. By contrast, the Fed study concentrates on the less common subject of wealth — what people own, from cars to homes to stocks.
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Desperate savers create 'diabolical' dilemma
May 6, 2019 — 7.30pm
Ultra-low interest rates on online savings and transaction accounts have created a "floor" that will make it more challenging for banks to manage additional cuts to official interest rates, the chief financial officer of Westpac Peter King warns.
Mr King was speaking after Westpac reported a 22 per cent lower half-year profit and as analysts flagged concerns that savers will suffer if the Reserve Bank reduces the official cash rate to 1.25 per cent.
While the major banks offer term deposits where interest rates averaging 2.3 per cent could still be cut further on the back of an RBA cut, many deposits are held in accounts paying much lower interest.
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Species extinction is on the agenda at this election
May 7, 2019 — 12.00am
Australia derives so much of its identity from its unique flora and fauna that it should take special interest in a damning report by the United Nations released on Monday on the global crisis of extinctions.
The UN biodiversity report warned that close to a million species around the world face extinction, many within decades. Of course, species come and go just like the dinosaurs but the UN says the current rate of extinction is tens to thousands of times faster than at any other time in history.
Nature is losing the battle against pollution, human population growth, agriculture and climate change.
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Million species on brink of extinction, call to arms issued
- By Tom Whipple
- The Times
- 12:00AM May 7, 2019
A million species are at risk of extinction as a result of human activity, according to a UN report on biodiversity.
The assessment, the first of its kind since 2005, involved almost 500 experts from 50 countries and is the most comprehensive study yet into the overall state of the world’s ecosystems.
The authors, who considered thousands of studies and scientific sources, warned that the loss of wildlife at this level posed as big a threat as climate change to humans, as humans relied on many animals for “ecosystem services”, such as pollination and the cleaning of water.
Robert Watson, chairman of the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services, which produced the 1800-page report, said: “Our destruction of biodiversity and ecosystem services has reached levels that threaten our wellbeing.” Sir Robert also said there was a “closing window of opportunity to act”.
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ACCC misreads mobile market
ACCC chairman Rod Sims is headed for what is almost certainly an embarrassing defeat in court following the decision to reject the Vodafone merger with TPG Telecom.
May 9, 2019 — 12.00am
Rod Sims is kidding himself if he thinks the Australian Competition and Consumer Commission can win the federal court case defending its rejection of the $15 billion merger of Vodafone Australia and TPG Telecom.
All the available evidence here and from international experience points to the ACCC suffering an embarrassing loss – just as it did in all of the high profile challenges to its rejection of merger decisions over the past 20 years.
In 2003 the Federal Court threw out the ACCC rejection of the AGL/Loy Yang merger and in 2011 the Federal Court tossed out the Metcash/Franklins rejection, allowing it to proceed.
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Labor franking credit furphies hurt the most vulnerable
Could there be a clearer example of fake news: repeating that tax wasn’t paid when clearly it was?
Adrian Blundell-Wignall
May 8, 2019 — 11.00pm
Regardless of who wins the next election, the question of trust and ethics in our politicians will remain. Ethical issues are normally hard to dissect, when generalisations and vagueness abound. But the Labor Party assertion that people who get franking credit refunds haven’t paid any tax, so the taxpayers are giving them a gift, raises an ethical issue. These people have paid tax – they are the beneficial owners of companies and had a 30 per cent tax paid for them by the “legal person” charged to do so on their behalf.
Confiscating their refunds undermines property rights.
The latest Edelman Trust Barometer shows that Australians do not trust their governments. Just 45 per cent of men and only 39 per cent of women trust government in Australia. Employers (77 per cent) and general business (52 per cent) are trusted more than government – imagine, governments trusted less than the finance sector, which underwent the royal commission.
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Credible climate policy hijacked by costings fight
Labor's climate target will definitely cost more than the Coalition's, but we don't know enough about either policy to accurately assess it.
Tony Wood
May 8, 2019 — 6.43pm
Labor seems to have decided that attaching specific costs to its climate change policy objective – to reduce greenhouse gas emissions across the economy by 45 per cent below 2005 levels by 2030 – was difficult to do and unnecessary in the overall election campaign. Securing the moral high ground on climate change would be enough.
Not surprisingly, the Coalition parties decided to focus all their attention on proving Labor’s target was economically irresponsible – and they needed some modelling to do that.
Despite Labor’s claims, of course a 45 per cent target can be modelled using the sort of tools that Brian Fisher of BAEconomics uses.
Labor would be well-served by being clear on two things. First, a 45 per cent target will cost more than the Coalition’s 26 per cent target – cleaner costs more than dirtier. So, Labor must prosecute the case that justifies the higher target. Second, despite Labor’s claims, of course a 45 per cent target can be modelled using the sort of tools that Brian Fisher of BAEconomics uses. But the results should not be taken as a forecast of the future costs that would arise from meeting that target.
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Britain goes a week without coal power saying this is 'the new normal'
By Nick Miller
May 9, 2019 — 4.38am
London: Britain has gone an entire week without burning coal for power for the first time since the Industrial Revolution.
And the country’s electrical grid operator says this will be “the new normal” - and mean lower power prices for consumers.
New power generation projects are on the table, but the federal government and opposition are divided on the source.
The last coal generator went offline at 1.24pm on Wednesday May 1, local time. Since then Britain got by on 46 per cent natural gas, 21 per cent nuclear, just under 10 per cent from overseas connectors and more than 16 per cent from wind, solar and hydro.
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Absurd ACCC's destructive telco fantasy will only make things worse
By Stephen Bartholomeusz
May 9, 2019 — 12.15am
It’s off to court they go after the Australian Competition and Consumer Commission announced, prematurely, that it opposes the planned $15 billion merger of Vodafone and TPG Telecom.
After "inadvertently" - and embarrassingly - publishing its decision on its website a day earlier than planned, the commission has blocked a merger that would have created a more substantial and viable competitor to Telstra and Optus in the wireless and fixed-line broadband markets.
It has done so despite the reality, after TPG’s decision to abandon its plans to build a 4G network, that Vodafone and TPG aren’t substantial competitors in any market today and won’t be substantial competitors in any market in the near future, if ever.
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'Legally forseeable': regulators warn companies on climate change risks
By Nick Toscano, Cole Latimer and Anthony Colangelo
May 8, 2019 — 8.00pm
Company boards and large investors are under pressure from Australia's financial regulators to ramp up disclosures and take stronger action on long-term risks posed by climate change which they say are now "legally forseeable" across many industries.
Senior officials from the Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulatory Authority (APRA) on Wednesday said the effects of climate change no longer presented merely ethical issues for Australian businesses but must be considered a major financial risk.
"The climate as we know it is no longer stable ... and that introduces a whole new paradigm for firms, regulators and the broader community," said Geoff Summerhayes, head of insurance at APRA, told the Australian Council of Superannuation Investors (ACSI) annual conference.
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Consumers winning out in prices-versus-wages tug-of-war
By John Collett
Updated May 8, 2019 — 7.52pm first published at 12.00am
The cost of living is a key battleground of the federal election but new figures from the Australian Bureau of Statistics show that the cost of many high-spending areas of household budgets are actually coming down.
The prices of the Australian Bureau of Statistics inflation category of audio, visual and computing equipment has fallen by more than 70 per cent over the past decade, the data show.
And the price of women’s clothes are down 20 per cent over the same period, together with the cost of telecom equipment and services (down almost 20 per cent).
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Key sectors shedding jobs warns JPMorgan as RBA puts spotlight on labour market
- 1:01PM May 9, 2019
Key “bellwether” sectors of the economy have been shedding hundreds of thousands of jobs since the start of the year, according to a new analysis of the Australian jobs market, which reveals publicly funded jobs growth has been masking significant weakness in the labour market.
In the first quarter of 2019, jobs lost across the manufacturing industry, the construction sector and retailers totalled close to 140,000, according to JPMorgan economist Tom Kennedy.
“There has been a sharp, though not surprising, reversal in employment growth in the construction sector, with labour demand cooling alongside the moderation in building approvals and overall residential construction activity,” Mr Kennedy said.
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'Smart beta' investing might not be so smart after all
Noah Smith
May 10, 2019 — 7.39am
Money managers are constantly searching for a sort of Holy Grail: Some formula to offer investors superior returns while minimising risk. Their latest effort, known as factor investing or smart beta, could be no less fleeting than its predecessors.
As any professional knows, diversification is key to reaching the best balance of risk and reward. When you invest in multiple stocks, their random ups and downs tend to cancel out, earning you the same expected return with fewer fluctuations. But there's always some part of risk that can't be diversified away - for example, when the market crashes like it did in 2008, even a large portfolio won't be safe.
Some stocks tend to hold up better in crashes. The Capital Asset Pricing Model or CAPM - a theory that won its inventor, economist William Sharpe, the Nobel prize in 1990 - says that these stocks command a premium in the market, which reduces their expected future returns. Thus, according to the CAPM, a stock's expected return should be proportional to how much it tends to swing with the ups and downs of the overall market. Those that swing more - that have higher market risk, or "beta" - should also deliver larger returns over time.
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'The correction is nearing its end': Property prices will soon be at rock-bottom, says HSBC
By David Scutt
May 10, 2019 — 10.37am
Australia’s housing market downturn, already one of the largest on record in terms of price falls and duration, is likely to come to an end in the second half of this year, says Paul Bloxham, Chief Australia and New Zealand Economist at HSBC.
“We expect the housing market to stabilise by the second half of 2019,” Bloxham said in a note to clients.
“Our forecasts are that national housing prices will have a peak to trough decline of around 10 to 15 per cent, so our central case is that the correction is nearing its end.”
Bloxham’s view, more optimistic that other Australian housing market commentators, is underpinned by recent housing-related data which has, at least compared to what was seen late last year and earlier this year, shown some tentative signs of bottoming out.
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RBA slashes consumption forecast
May 10, 2019 — 11.41am
Falling property prices and weak household incomes have led the Reserve Bank of Australia to downgrade consumption and dwelling investment levels further, signalling an interest rate cut within months.
After keeping rates on hold at 1.5 per cent for the 30th time in a row this week and downgrading both economic growth and inflation forecasts, the bank said on Friday that the biggest risks were now weaker consumption and reduced dwelling investment.
"The near-term outlook for consumption growth has been revised lower because weaker housing market conditions and income growth are likely to continue to drag on spending,” the bank said in its statement on monetary policy.
"There is a risk that dwelling investment declines by more than currently forecast in the near term."
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If you think there's more to our welfare than GDP the news isn’t so flash
By Ross Gittins
May 10, 2019 — 11.45pm
Scott Morrison says the economy is growing strongly, Bill Shorten says it isn’t. Either way, if you think there must be more to our welfare than gross domestic product, the news isn’t flash.
According to the Herald/Age-Lateral Economics index of wellbeing, in 2018 the gain from growth in real GDP was reduced by setbacks in the nation’s health - a jump in obesity and worsening mental health – and a surprising decrease in the population’s post-school qualifications.
These major deteriorations more than countered gains in other aspects of Australians’ lives, including increased life expectancy, better early childhood education and care, and less long-term unemployment.
As a result, the wellbeing index grew by just 0.3 per cent over the course of the year, compared with growth in real GDP of 2.4 per cent.
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The UN says we're destroying the world. This should change everything
By Caitlin Fitzsimmons
May 12, 2019 — 12.00am
When the United Nations put out a report last week warning that humans are destroying nature at such a rate that life on Earth is at risk, it naturally grabbed headlines.
But it’s rather telling that it didn’t hijack the news agenda in the manner of a major terrorism attack or declaration of war. The talking point of the day was the young woman who threw an egg at the Prime Minister; the talking point of the week was Bill Shorten’s mother.
Focus, people. Your life – and everything and everyone you’ve ever cared about – depends on it.
The report from the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) is clear on what’s at stake and what needs to change.
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Credit card fees remain high while rewards points dive
By John Collett
May 12, 2019 — 12.00am
Fees on credit cards have levelled out after rising by more than 20 per cent to an annual average of $135 during the past five years, with some cards having fees of several hundreds of dollars.
Over the same period, purchase interest rates have decreased by just 0.13 percentage points, despite the Reserve Bank's official cash rate being cut from 2.5 per cent to 1.5 per cent over that time, figures from comparison site Canstar show.
In just the past three years, the average value of rewards points have dropped by more than a quarter – from $257 to $189 – for someone spending $60,000 on their rewards card.
Steve Mickenbecker, Canstar's finance expert, says for those who pay off their credit card in full each month, rewards cards can be worthwhile, particularly for those who put most of their spending on their cards.
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Federal Election.
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Morrison sees 'difficult years ahead'
Matthew Cranston
May 5, 2019 — 9.55am
Prime Minister Scott Morrison has softened the ground for an interest rate cut this coming Tuesday pointing to difficult years ahead and the risks to the economy from trade tensions and Labor's major tax changes on property investment.
Visiting one of the most marginal seats in the country, Forde, south of Brisbane for the fourth time this year on Saturday, Mr Morrison dismissed questions of leadership challenges if he lost the election.
He also described Opposition leader Bill Shorten's performance at a leadership debate the night before as "cabaret" and raised concerns about more dirty tactics with swastikas on Treasurer Josh Frydenberg's posters in his electorate and a supporter of Liberal MP Sarah Henderson - reporting that a dog was shot and laid at the foot of a corflute.
Mr Morrison gave some clear warnings about economic and geopolitical storm clouds.
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Ipsos poll: Labor will be nervous about these numbers - but it has a plan
By Peter Hartcher
Bill Shorten has launched an election campaign for Australia's era of post-charisma leadership.
Instead of relying on charisma to get himself elected to government, he has set out a purpose. And in place of personal appeal, a pretty serious program.
Which is just as well. Australia doesn't love Bill. The government has been behind in the polls for three years yet the voters are hesitating on the cusp of embracing Labor.
While the people's impression of the Labor leader is improving, he remains behind Scott Morrison in his popularity and in his standing as preferred prime minister, as Monday's Ipsos poll shows.
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Ipsos poll: Bill Shorten leaps as preferred prime minister but two-party contest narrows
By David Crowe
May 5, 2019 — 11.45pm
Australian voters are shifting their support behind Bill Shorten as preferred prime minister less than two weeks out from election day, but Prime Minster Scott Morrison commands an edge over his rival on key leadership qualities including economic management.
An exclusive Ipsos poll shows Mr Shorten holds a significant lead on the most decisive measure in the election contest, with Labor ahead of the Coalition by 52 to 48 per cent in two-party terms compared to a lead of 53 to 47 per cent one month ago.
Bill Shorten, introduced by wife Chloe, spoke at the Labor campaign launch in Brisbane.
A majority of voters believe Mr Shorten will be prime minister after the May 18 election, with 52 per cent predicting a Labor victory compared to 33 per cent who expect the Coalition to prevail.
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'Lack of goodwill with tech giants': Labor vows action on Google, Facebook
By Fergus Hunter, Jennifer Duke and Sumeyya Ilanbey
May 6, 2019 — 12.00am
The likely communications minister in a Labor government has put the tech giants on notice, declaring the party is ready to act on a range of issues including market dominance, use of consumers' data and harmful online content.
While cautioning that the issues should be treated separately, opposition communications spokeswoman Michelle Rowland said Labor would be taking "evidence-based" action across the board if elected on May 18. She acknowledged there was now a "lack of goodwill" in Canberra towards companies like Facebook and Google after a series of controversies and a perception that they were hostile to increased regulation.
Ms Rowland said the conduct of the companies after the Christchurch terrorist attack — which was livestreamed on Facebook and subsequently proliferated on other platforms — had left officials "exasperated".
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Chris Bowen is done waiting
At the treasurer's debate, the long-time shadow treasurer hit a new gear of clarity and aggression, even as he occasionally overstepped.
May 6, 2019 — 2.28pm
Chris Bowen set expectations for the treasurers' debate early.
He took to Twitter in the morning with a line he would repeat in his opening remarks, "I've faced three Liberal treasury spokespeople in three elections. It's time to end the instability and chaos".
Fighting words. But they pointed to a less flattering statistic.
At last count, Mr Bowen had been shadow treasurer for five years and 229 days. That is 1,971 days longer than the number of days he had been treasurer in the last days of Kevin Rudd's second term.
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No end in sight to Labor's $60b spree
May 7, 2019 — 12.00am
Bill Shorten's spending spree has topped $60 billion in the election campaign and is set to rise further, putting Labor on track to lift federal spending as a share of the economy to nearly as much as the Rudd government's financial crisis-era stimulus.
Under a Shorten Labor government, The Australian Financial Review projects that ultimately, besides the 2008-09 crisis spending, payments-to-GDP would only have been higher during Paul Keating's 1990s "recession we had to have" and in 1986 when the then-treasurer warned Australia risked being a "banana republic".
Labor's commitments include $22 billion for infrastructure projects and community facilities, $16.2 billion for climate change and energy, $8.6 billion on healthcare and an initial $9.9 billion for education over four years, according to Financial Review analysis of more than 100 spending announcements by the Opposition.
The full costs over a decade are yet to be disclosed and will be multiples higher.
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Industry leaders caution against government wage intervention
By Cole Latimer
May 6, 2019 — 12.15am
Some of Australia's biggest companies have warned that increased wage regulation may not deliver the best pay outcome for workers and could lead to job losses and investment uncertainty.
In some of the strongest comments yet from business leaders on Bill Shorten's plans to intervene in wages, leading miners and energy players said they needed wages flexibility to weather downturns and urged consultation with industry before any laws were passed.
Opposition leader Bill Shorten has pledged to legislate to the let the Fair Work Commission give increased importance to cost of living pressures when setting the minimum wage to encourage broader wage growth.
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Climate change threat now tops Australians' concerns, Lowy poll finds
By Peter Hannam
May 8, 2019 — 9.47am
Australians rate climate change as the top threat to the country's "vital interests", the first time it has topped the list of concerns, according to Lowy Institute polls going back to 2006.
The polling, of 2130 adult respondents between March 12 and 25 by the Social Research Centre, found 64 per cent agreeing climate change was "a critical threat".
That rating was matched by cyber attacks from other countries, and eclipsed international terrorism at 61 per cent and North Korea's nuclear program at 60 per cent, Lowy said in a statement on Wednesday.
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The odds favour a Labor victory but don't assume it's all smart money
By Shane Wright
May 9, 2019 — 12.00am
Polls get it wrong. Favourites get beaten. Clairvoyants fail to predict the future.
Prognostications, from the weather to the chances of our football team winning this weekend, are part of the human condition.
When it comes to politics, most attention turns to opinion polls but over the past decade the real surge has been in recognition of betting markets.
A string of companies now invite Australian voters to make money on whether Bill Shorten will hold his seat (he's paying $1.01 on a $1 investment) to whether independents will win Cowper, Wentworth and Warringah (paying $6.50).
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The campaign body language has shifted
The campaign body language indicates a shift in momentum towards Labor. This week, Morrison has been back on the defensive while Shorten has shifted his focus back to Coalition seats.
May 9, 2019 — 6.00pm
In August 2007, just before the election was due to be called, some bright spark in the government thought it was a good idea to leak a story about how Kevin Rudd had visited a New York strip club four years earlier.
Upon publication in the Sunday tabloids, Rudd fessed up, admitting he had gotten blind drunk with New York Post editor Col Allan who then took him to the "gentleman's club'', Scores.
There were suggestions, never substantiated, of inappropriate behaviour. Rudd said he was too shickered to recall.
"Notwithstanding the fact that I had had too much to drink, I have no recollection of any incident occurring at the nightclub, or of being asked to leave," he said.
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The big risk to private health Labor is not ruling out
May 10, 2019 — 12.00am
Investors wondering which healthcare companies will win or lose from a Labor government should consider what the party is not saying, rather than focusing on the $7.5 billion in new funding it has promised, Citi analyst John Deakin-Bell says.
With just over a week until the May 18 election Labor has announced six major health policies. The major promises include $2.3 billion over four years to better fund cancer treatment, $2.8 billion extra in public hospital funding and capping health insurance premium rises at 2 per cent for the next two years.
Mr Deakin-Bell said medical conglomerates Healius and Sonic Healthcare will marginally benefit from promises that boost funding for cancer diagnostics and dental care. On the other hand Ramsay Health Care and Healthscope will be disadvantaged by the caps on health insurance premium rises and a prioritisation of public hospitals.
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Labor's $446b tax hit to 'top end of town'
By Eryk Bagshaw
May 10, 2019 — 12.16pm
Labor will deliver a $446 billion tax hit to retired shareholders, property investors, superannuation accounts and high-income earners in order to fund a pay rise to child care workers, dental for pensioners and the highest surplus in Australian history.
Shadow treasurer Chris Bowen said the Opposition's policies would reform Australia's "two-class tax system", redistributing billions of dollars from the "top end of town" to "normal players" while rapidly increasing the return to a surplus of 1 per cent of gross domestic product.
The costings, released on Friday morning to mark the final stretch of the election campaign, show the $154 billion in tax raised will be delivered to those on lower incomes and to fund education and subsidies for cancer treatment, on top of a reversal of almost $300 billion in tax cuts already legislated.
Mr Bowen said 96 per cent of Australians would not be impacted by the tax changes.
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Younger generations cop a 'dud deal' from a system stacked against them: Shorten
By David Crowe
Updated May 10, 2019 — 10.53amfirst published May 9, 2019 — 11.45pm
Younger Australians are getting a "dud deal" from a system that is stacked against them, Opposition Leader Bill Shorten has declared in a call for an election mandate for his sweeping plans to restore penalty rates, scale back tax breaks and take more action on climate change.
Mr Shorten vowed to fix the inequities that punish the young if he takes power at the May 18 election, as he accused the Morrison government of presiding over a policy "wasteland" for the next generation.
In an exclusive interview with The Sydney Morning Herald and The Age ahead of the release of Labor's policy costings on Friday morning, Mr Shorten said many older Australians also suffered from laws that were tilted against those who earned income compared to those with assets like property, citing negative gearing concessions.
"People under 40 in this country are getting a dud deal from the government," he said.
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'A diminution of our democracy': Shorten attacks News Corp's monopolies
By Peter Hartcher
Updated May 10, 2019 — 12.40pmfirst published May 9, 2019 — 11.45pm
A day after clashing with a Murdoch newspaper over its coverage of his statements about his late mother, Bill Shorten has said the Australian media market needs more competition.
The Opposition Leader said elements of the Murdoch media were running a blatant political campaign against Labor: "Not everyone in News Corp is the same, but some days they should just put that they're a political party, they should put 'written and authorised' on their front page."
The Labor leader also called for more tax transparency in the affairs of multinational corporations, including Murdoch's News Corporation: "More transparency about what these companies pay will wake people up," Mr Shorten told The Sydney Morning Herald and The Age in an interview on Thursday.
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ALP hospital plan to cost billions
- 12:00AM May 10, 2019
A Shorten government may be forced to pay billions of dollars more to the states for public hospital services after Labor confirmed — ahead of being in a position to negotiate a new funding agreement — that it planned to remove the cap on federal contributions.
Labor’s largesse — which most states were content to go without — could make the public system more inefficient and is in stark contrast to its plan to cap private health insurance premium increases at 2 per cent and review the $6.1 billion government rebate.
All states and territories except the Labor governments in Victoria and Queensland had previously accepted Health Minister Greg Hunt’s proposal for the federal government to keep paying 45 per cent of growth, subject to a 6.5 per cent cap. That would see it pay the states an estimated $29bn in 2024-25 at the end of the next five-year agreement.
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Labor’s fiscal fantasy
Voters should be sceptical that a Labor government could restrain its spending and raise the projected revenue to deliver higher aggregate surpluses.
May 10, 2019 — 1.43pm
Labor’s costings of its big spending and higher taxes sound too good to be true.
Fairer taxes. Tens of billions of dollars in extra spending on health, education and childcare. Bigger budget surpluses. And, somehow, capacity for a potential $200 billion of tax cuts in the medium term.
Bill Shorten calls it the “trifecta” of Australian politics.
Shadow treasurer Chris Bowen has done a good job getting his pre-election numbers to add up on paper.
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Labor's $32 billion plan to tax the 'top end of town' will hit 10 per cent of taxpayers
By Eryk Bagshaw
May 10, 2019 — 11.45pm
Labor’s attack on the "top end of town" will hit 10 per cent of Australian taxpayers – workers, shareholders and property investors – who will pay $32 billion more in taxes over the next four years.
Opposition Leader Bill Shorten first used the "top end of town" label to criticise US technology giant Apple in 2016, but is using the phrase daily during the election campaign to defend Labor's plans to curb tax concessions for high-income earners, investors, trust holders and superannuation contributors.
Bill Shorten has laid his cards on the table, revealing the full extent of his big spending plans and where he'll find the cash
The acceleration in Labor’s rhetoric – fuelled by a direction from Labor campaign headquarters for frontbenchers to use the saying in every public appearance – has led Prime Minister Scott Morrison to accuse Mr Shorten of "class warfare", and sets up a stark election contest between aspiration and fairness.
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Labor election plan risks the rise of 'zombie' taxes
By David Crowe
May 10, 2019 — 7.45pm
Labor is asking Australian voters to endorse a hugely ambitious tax agenda that could be cut to shreds in the next Parliament even if Bill Shorten becomes prime minister.
Labor depends on highly contested policies to raise $160.5 billion in revenue over a decade – and it needs an unpredictable Senate to back the lot.
Just as the Coalition struggled with "zombie savings" that it proposed but could not legislate over the past six years, a Shorten government risks having "zombie taxes" on its books.
Labor needs changes to superannuation, negative gearing, capital gains tax, accountant deductions, multinational taxation, dividend imputation and family trusts. Another policy imposes a 2 per cent levy on earnings over $180,000.
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Don't trust pollies to tell you the truth about tax
By Ross Gittins
May 11, 2019 — 1.20am
“You don’t grow the economy by taxing it more,” Scott Morrison declared in the ABC’s election debate. Then his Treasurer, Josh Frydenberg, claimed the Coalition’s $300 billion in tax cuts would make income tax “more progressive” not less. As a prospective major beneficiary of those cuts, I’d love to believe both claims. Unfortunately, there’s little evidence to support either.
Meanwhile, higher income-earners should be in no doubt they’ll be paying a lot more tax should Bill Shorten and Chris Bowen come to power and get their plans through the Senate.
Labor plans to reduce the concessional treatment of negative gearing and capital gains, unused franking credits and family trusts, abandon the second and third stages of the $300 billion tax cuts, and increase the top rate of income tax by 2¢ in the dollar for three years.
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The worst possible election outcome awaits
- 12:00AM May 11, 2019
There have been only three possible outcomes for next Saturday’s federal election, and it now looks as if we are heading for the worst of the three.
The options have been a big Labor victory, in the wake of the damage done by the Liberal coup last August; a narrow Labor victory (as a minority government or with the barest majority) because Labor’s vote gets dragged down by Bill Shorten’s personal unpopularity; or the final option, in which the Coalition pulls off the most remarkable comeback in Australia’s political history.
A big Coalition win has never been on the cards. Were the final option to happen it would be courtesy of several factors: Shorten’s unpopularity; the quality of the government’s scare campaign; genuine community concerns over Labor’s big-target agenda; and, to be fair to Scott Morrison, the Prime Minister’s relentless campaigning. However, with only a week of campaigning left, this scenario isn’t the likeliest.
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Open door on hospital claims not factored in
- 12:00AM May 11, 2019
Labor has not factored into its costings the prospect of the states ramping up public hospital activity in the absence of a cap on the federal government’s contribution.
The Australian revealed yesterday that Labor would remove the existing 6.5 per cent cap, in addition to its commitment to increase the federal share of growth funding from 45 per cent to 50 per cent. However, its official costings only cover the already announced $1 billion cost of increasing the federal share during the next five-year agreement. There are no growth projections, despite Labor states long complaining of being short-changed by the Coalition government.
The agreement would need to be negotiated by the incoming government, however, all states and territories except Queensland and Victoria had accepted the Coalition’s proposed continuation of the 45 per cent federal contribution and 6.5 per cent cap.
With speculation that Victoria is planning a move to 13 per cent growth, the extra cost to the federal government in the next agreement could be as high as $33bn if all states and territories followed suit and put up more funding.
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Royal Commissions And Similar.
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10 charts that clearly explain why aged care is in crisis
Mr Donegan is a data and interactives editorial Intern at The Conversation.
6th May 2019
The Royal Commission into Aged Care Quality and Safety begins hearings on residential aged care facilities, or nursing homes, in Sydney this week.
The standards of nursing homes in Australia have been in the public eye since the Oakden Aged Mental Health Care Service in Adelaide became embroiled in an elder abuse and neglect scandal, sparking reviews, inquiries and investigations across the sector.
This was the most prominent of a series of incidents of abuse and negligence that eventually led to the establishment of a royal commission.
So what are the challenges facing nursing homes and why are they under so much strain?
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Restrictive practices in residential aged care in Australia
3 May 2019
Description
This paper provides a high-level introduction to restrictive practices in residential aged care in Australia. It has been prepared by staff of the Office of the Royal Commission into Aged Care Quality and Safety but does not represent a direction or position of the Royal Commission in relation to this area. Any views expressed are not necessarily the views of the Commissioners.
The use of restrictive practices in residential aged care in Australia is contentious. There is significant public interest in the issue of restraint and ways to reduce or avoid it. Numerous media reports and inquiries have highlighted accounts of the misuse or overuse of physical restraint and psychotropic medication. This includes personal accounts from members of the public about residents being physically restrained frequently, or for long periods of time, or restrained without consent.
Restrictive practices can elicit concern for a number of reasons. Fundamentally, they impact on the liberty and dignity of the care recipient. In circumstances where they are not absolutely necessary, their use is likely to sit uncomfortably for many. Their use without lawful consent may infringe the resident’s legal rights and constitute a civil or criminal offence, such as assault or false imprisonment, although there are very few cases in Australia where a criminal or civil complaint has been pursued to challenge the use of a restraint in an aged care setting.
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‘Heart spray taken, patient aids rationed’
- 12:00AM May 7, 2019
A nursing home resident had her crucial heart medication spray taken from her for “three or four days” when she asked for a replacement and has told the royal commission about the rationing of incontinence pads.
Darryl Melchhart, 90, told the aged care royal commission in Sydney yesterday that without the Glyceryl Trinitrate (GTN) spray for angina, she “could have heart failure and die, or I could go to hospital”.
Ms Melchhart said she was instructed to carry the spray with her at all times to use if her condition flared up and had some in her purse while she gave evidence at the commission.
In wide-ranging evidence, the elderly woman also described being attacked by other residents with dementia while using her walker and highlighted the “rationing” of incontinence pads.
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How to age gracefully in just one move
Village operators are teaming up with property developers to build "one stop shops" where you can stay put when you need more care and the financing is simpler.
May 8, 2019 — 10.14am
The continuing jest about aged care is it is cheaper and more appealing to see out your final years on a cruise ship than go into a nursing home.
It’s simple. You sell your house, rid yourself of your worldly goods and book yourself on to endless cruises.
Whether it is true or not will depend a lot on your age, care needs and the services on board. It could cost a lot more emotionally and financially if you suffer from sea sickness or cabin fever or end up in a land-based hospital unable to return to sea.
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Aged-care resident’s dentures ‘left in for weeks’
- 12:00AM May 9, 2019
An elderly woman with dementia was put on a heavy-duty dose of a sedating antidepressant because she was “agitated” and had her dentures left in for weeks at a time.
The aged-care royal commission yesterday heard evidence about an 85-year-old woman known as Mrs CO — her name is not being released — who is still a resident of the Anglicare facility Brian King Gardens in the northwest Sydney suburb of Castle Hill.
The hearing probed multiple aspects of her care, including the “failure” to provide proper dental hygiene at least for a four-month period. Notes from a November 2017 check-up by Mrs CO’s dentist are particularly alarming.
“Patient’s dentures must be removed at night, teeth cleaned and denture upper should not be returned to the mouth,” the notes say.
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National Budget Issues.
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Rates are 'almost at emergency levels': Bowen
May 6, 2019 — 2.15pm
Shadow Treasurer Chris Bowen has alarmed financial markets by saying interest rates are now "almost at emergency levels" and could be reduced further, showing "real concern" about the economy.
Financial markets have priced in a 46.6 per cent chance of a 0.25 percentage point rate cut on May 7 - the first since August 2016 rising from 40 per cent last week.
Speaking at the Treasurer's debate at the National Press Club, Mr Bowen said there was now heightened uncertainty about the economy.
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RBA keeps rates on hold at 1.5pc
May 7, 2019 — 2.30pm
The Reserve Bank of Australia has extended its record run of inaction on interest rates, keeping the official cash rate at a record low 1.5 per cent, and resisting financial market pressure for a pre-election cut.
The bank said it "recognised that there was still spare capacity" in the economy and has kept to its target for economic growth of around 2.75 per cent in 2019 and 2020.
However it said a "further improvement in the labour market was likely to be needed" for inflation to be consistent with the target.
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The Reserve kept rates on hold: I suspect I know why
By Ross Gittins
May 7, 2019 — 3.39pm
The Reserve Bank may have decided not to cut interest rates right now, but it’s likely to be only a few months before it does start cutting, and it’s unlikely to stop at one. So, is it just waiting until after the election? I doubt that’s the reason.
The Reserve has moved interest rates twice during election campaigns – raising them in 2007 (much to the surprise of Peter Costello, whose mind was on politics at the time) and cutting them in 2013 – so, had Reserve governor Dr Philip Lowe considered an immediate cut was needed, I doubt he would have hesitated to make it.
The Reserve acts independently of the elected government, so it is – and must be seen to be - apolitical. Lowe’s predecessor, Glenn Stevens – who instigated both those previous moves – decided that the only way to be genuinely apolitical was for him to act as soon as he believed the best interests of the economy required him to, regardless of what the politicians were up to at the time.
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Health Issues.
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Now anti-vaxxers stoop to misappropriating the Star of David
By Dr Sue Rodger-Withers PhD and Professor Robert Booy
May 6, 2019 — 12.00am
It’s not news that the anti-vaccination movement attempts to justify its position by misrepresenting and falsifying science. But as authorities boost measures to contain some of the worst measles outbreaks in recent decades throughout Europe, USA, the Philippines and now Australia, anti-vaccination advocates have added the exploitation and distortion of history to their subterfuge: in a move that has incurred the wrath of the international community, they have co-opted of the yellow Star of David, emblazoned with the words “No Vax”.
Measles is a serious and dangerous disease. During a significant outbreak within a largely unvaccinated Jewish community in Rockland County, New York, an emergency quarantine was recently declared. Despite an immediate increased uptake in vaccinations for measles, mumps and rubella, a New York state judge temporarily blocked the declaration following protests by anti-vaccination parents.
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US health insurers start to feel 'the Bern'
The Lex Column
Updated May 6, 2019 — 1.55pm, first published at 1.52pm
Bernie Sanders is not US president yet but he is forcing a confrontation with Corporate America.
A centrepiece of his policy platform is a single payer healthcare system that seemingly would replace America’s private insurance scheme. David Wichmann, boss of UnitedHealth Group, an insurer with an enterprise value of $US250 billion ($358.5 billion), spent time assailing so-called “Medicare for All” in a recent earnings call.
Revolutionary change to the American healthcare is not imminent. Still, as their cost burdens soar, Americans are dissatisfied with their employer-based insurance. Investors sense that the business models of health insurers are imperilled. UnitedHealth’s shares have fallen more than a tenth in the past six months.
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What are the major parties promising on health this election?
May 7, 2019 6.11am AEST
Labor has promised A$8 billion in new health expenditure, while the Coalition has focused on the difference new pharmaceuticals can make to individual Australians. Shutterstock
Author Stephen Duckett
Director, Health Program, Grattan Institute
The major parties’ manifestos for the 2019 federal election present voters with starkly contrasting health policies. These policies are shaped and constrained by the overall themes presented by the party leaders, but have some unique elements.
Liberal – money in your own hands
The Liberal campaign has two main messages: standing on the government’s claimed record as good economic managers, and offering significant tax cuts in the long-term. The tax cuts are marketed as giving people the power to make their own choices about how the money should be spent.
In health care, this spending-light approach has led to a focus on re-announcing existing policy, and spending down the Medical Research Future Fund with research announcements popping up every other day.
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Patient safety put at risk by negative workplace cultures
By Johanna Westbrook
May 7, 2019 — 12.00am
If you are dismayed, exhausted or just bored by the relentlessly combative tone of the federal election campaign, you should be. An increasing body of international research is confirming what many of us instinctively feel. That is, the constant engagement in, or exposure to, negative ways of communicating erodes our ability to work effectively. In the case of politics, a professional culture of scorn, point scoring and name calling arguably undermines our MPs’ capacity to represent the interests of their diverse constituents, the very jobs they are currently competing so raucously to secure.
Negativity is not, of course, confined to politics. I work in healthcare systems where my team’s research is revealing that unproductive professional cultures are jeopardising the quality of healthcare delivered, and, at times, putting patients’ safety at risk. Studies across the legal, judicial and public service professions have also found a similar link between negative workplace cultures and professional and organisational underperformance.
What’s interesting is that we are not merely talking about bullying, which is a concerted and protracted campaign of negative behaviour targeting an individual. Negative cultures affect us all. Our ability to do our jobs well can be compromised even by the absence of common courtesy, civility and compassion.
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Robert chose the pill-free route; he ended up on my operating table
By Nikki Stamp
May 7, 2019 — 8.06pm
Robert* was just 55 years old, too young it would seem to have suffered a serious heart attack. He told me how he was diagnosed with extremely high blood pressure and high cholesterol pressure a year ago. Robert opted to avoid the nasty medicines and chose lifestyle changes. Now, I was about to operate on his ailing heart.
The problem was that years ago, the only advice Robert got given to treat his blood pressure was to have a good diet and do some exercise. He missed out on medications that are lifesaving. He went for the attractive pill-free route when the less attractive but more efficacious medications may have stopped him meeting me for open heart surgery.
So-called lifestyle diseases such as diabetes are taking over the world at the same time as conventional and proven medical treatment is being increasingly shunned. After all, the logical treatment of lifestyle disease must be lifestyle medicine. More than 70 per cent of us will die from non-communicable diseases, heart disease or cancer, as a product of our genes and the modern lifestyle of excess; excessive food, alcohol, stress and sitting.
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Doses of flu vaccine reach six million
- 12:00AM May 8, 2019
Authorities have already distributed six million doses of the flu vaccine and quietly overhauled supply arrangements after a damning review of how the 2018 season was handled.
In the wake of the 2017 flu season, the worst since the 2009 pandemic, there was a run on vaccines last year that exposed weaknesses in the system, raising concern Australia might be caught short by another pandemic.
The Council of Australian Governments Health Council ordered a review that found supply, distribution and monitoring problems, mixed messaging for the public, and confusion over eligibility for free vaccines.
Even though the 2018 season proved relatively subdued — 58,844 laboratory-confirmed cases compared to 251,165 the year before — a spokeswoman for the Department of Health said jurisdictions were working together to improve preparedness and responsiveness.
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Appalling' online anti-vaxxers are hindering immunisation rates: Health Minister
By Lydia Lynch
May 8, 2019 — 3.56pm
Hardline inner-city anti-vaxxers are a lost cause and the focus needs to be on “uncertain” parents, health minister Steven Miles said.
Mr Miles said “irresponsible” celebrities and uneducated people on social media posed a challenge in convincing those on the fence to get their children vaccinated against preventable diseases.
“There is a section of the community who identify as being opposed to vaccinations and are very difficult to convince to get vaccinated and get their kids vaccinated,” he said.
“Our focus has to be on the people in between who might just be uncertain or who might just be disorganised.”
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Antibiotics use fuels rise of the superbugs
- 12:00AM May 9, 2019
Aged-care facilities and hospitals remain hotbeds for the overuse and misuse of antibiotics, fuelling the rise of superbugs and creating a serious infection risk in the community.
According to the third annual surveillance report from the Australian Commission on Safety and Quality in Health Care, several superbugs continue to pose a threat, with E. coli building resistance to frontline antibiotics.
Salmonella, Neisseria gonorrhoeae and Neisseria meningitidis too are increasingly resistant. Of particular concern is the evolution of Staphylococcus aureus and its geographic shift. Rates of community-associated methicillin-resistant Staphylococcus aureus (MRSA) are dropping in hospitals but rising in the community, particularly in remote areas and indigenous populations.
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Political ads by GP college have doctors in revolt
- 12:00AM May 9, 2019
Doctors have criticised the college of GPs for running politically charged election ads depicting people unable to afford medical care and comparing Australia’s healthcare system with that of the US.
The Royal Australian College of General Practitioners has a unique role in the health system as both the professional standards body and lobby group.
Half of its 40,000 members are fellows of the college.
But the college’s increasingly political advocacy has seen it being compared with the Australian Medical Association — and not all members are comfortable with that.
Having run ads in 2016 warning that patients would pay more to see a doctor, the RACGP is now running ads warning patients cannot afford to see a doctor. The Medicare freeze might be ending but the RACGP wants $1 billion put back into the system to “maintain universal healthcare”.
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Queensland hospital contracts at risk of corruption, watchdog says
By Stuart Layt
May 10, 2019 — 5.39pm
Staff in charge of contracts at some of Queensland’s hospital and health services have been cutting corners when awarding contracts, opening them up to corruption risks, an extensive audit has found.
The Crime and Corruption Commission conducted an audit of five of the state’s hospital units - Metro South (which includes the Princess Alexandra and Logan hospitals), Townsville, North West (which manages several regional hospitals including Mount Isa), West Moreton and Sunshine Coast.
The CCC found in multiple cases the procedures in place did not adequately protect the services from corruption and meant they were potentially losing taxpayers’ money on expensive contracts where a better value one was available.
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New blood test for breast cancer developed
- By Agencies
- AAP
- 6:29AM May 12, 2019
A blood test that can detect breast cancer is expected to begin clinical trials within three years.
The test, developed by Olivia Newton-John Cancer Research Institute researchers, checks breast cancer patients’ blood for DNA specific to tumours, News Corp Australia reports.
The research has been awarded a $385,000 National Breast Cancer Foundation grant.
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International Issues.
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Trump announces tariffs on $750b of Chinese goods as talks drag on
May 6, 2019 — 4.01am
Washington | Donald Trump has dramatically threatened to shatter a five-month trade war truce by announcing tariff hikes on more than $US525 billion ($752 billion) of Chinese goods because Beijing is moving too slowly on a deal.
The sudden escalation in a series of incendiary Sunday afternoon (Monday AEST) tweets coincides with another round of talks due to resume between the two sides this week in Washington and after negotiations continued in Beijing last week.
After months of buoyant market action amid signs of gradual progress towards a US-China trade pact the White House brinkmanship could to put financial markets under renewed pressure in coming days.
Emboldened by another power-house jobs report on Friday - which showed payrolls grew by an expectations-busting 263,000 jobs, pushing the unemployment rate to its lowest since 1969 - Mr Trump is gambling that any pressure from higher tariffs will hit China harder than the US.
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US deploying forces in bold warning to Iran
- By Agencies
- AAP
- May 6, 2019
The United States is deploying a carrier strike group and a bomber task force to the Middle East to send a clear message to Iran that any attack on US interests or its allies will be met with “unrelenting force”, US national security adviser John Bolton says.
Amid rising tensions between the United States and Iran, Bolton said the decision was “in response to a number of troubling and escalatory indications and warnings”.
“The United States is not seeking war with the Iranian regime, but we are fully prepared to respond to any attack, whether by proxy, the Islamic Revolutionary Guard Corps or regular Iranian forces,” Bolton said in a statement. It marked the latest in a series of moves by President Donald Trump’s administration against Iran in recent weeks.
Washington has said it will stop waivers for countries buying Iranian oil, in an attempt to reduce Iran’s oil exports to zero. It has also blacklisted Iran’s elite Revolutionary Guard Corps.
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PNG thrown into chaos amid defections
- 3:35PM May 4, 2019
Australia’s nearest neighbour has been thrown into political chaos amid a surge of defections from Papua New Guinea Prime Minister Peter O’Neill’s ruling party ahead of a likely move on his leadership next week.
Australian officials are closely watching developments in Port Moresby, where the instability has placed a $16 billion gas deal at risk, and could force a reframing of one of Australia’s most important bilateral relationships.
Opposition parties today claimed to have secured the backing of 57 MPs in the 111-seat parliament, which would be sufficient to bring on a vote of no confidence in Mr O’Neill as early as Tuesday.
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Beijing stays cool as Trump tactics rattle investors
May 7, 2019 — 10.27am
Shanghai | Donald Trump has been called many things but a super villain with the power to wipe out half the universe is not usually one of them.
Chinese social media was flooded on Monday with memes comparing the US president to Thanos, the square-jawed alien giant who wipes out 50 per cent of the universe's population in the latest Marvel movie, Avengers: Endgame.
This reference to a movie, which is currently dominating the box office both in China and the United States, suggests Trump also has the power to wipe out half of the value of China's equities markets with a presidential snap of the fingers.
China's state-run official media has been mute on Trump's threat to raise tariffs on more than $US525 billion ($750.8 billion) worth of goods, but investors headed for the hills on Monday. The country's benchmark Shanghai Composite Index is not necessarily a reflection on China's economic health because it is dominated by retail investors. But when the main stockmarket falls more than 6 per cent, it's saying that Trump remains a problem for China.
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'An erosion of commitments': Trade talks in trouble as US accuses China of backtracking
By Matthew Knott
May 7, 2019 — 8.56am
New York: Donald Trump's top trade advisors have accused China of reneging on promises made during recent negotiations and confirmed that the US will increase tariffs on US$200 billion ($286 billion) worth of goods this week.
When the US President tweeted about the tariff hike on Sunday, local time, many investors and analysts hoped it was a short-term negotiating tactic designed to extract a better deal from China.
After initially plummeting on Monday, US share markets recovered throughout the day and closed only slightly lower than at the end of last week, signalling optimism that the talks were still on track.
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https://www.afr.com/news/economy/the-theory-that-possibly-explains-trump-s-trade-war-20190508-p51l2o
The theory that (possibly) explains Trump's trade war
May 8, 2019 — 6.29am
When it comes to trade with China, it often seems that Donald Trump is his own worst enemy. Unilaterally raising tariffs, as Trump is threatening, is akin to punishing US consumers for China's misbehaviour.
Most economists view lower tariffs as a win for the US economy, even if China doesn't reciprocate. Of course, they say, the world economy would be even stronger if tariffs were lowered across the board. There are a handful of economists, however, who disagree - and they can be split into two basic schools of thought, one of which might provide some hint of a method to Trump's madness.
Call the first the neo-mercantilist school. Neo-mercantilists, such as Trump advisor Peter Navarro, see the US's trade deficit with China as inherently bad. Since imports subtract from GDP while exports add to it, Navarro argues, the US economy would be stronger if it imported less and exported more.
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Wall Street gripped by fear as tariff hikes loom
May 8, 2019 — 5.53am
Washington | Wall Street's nerve is being seriously tested for the first time this year as increasingly wary investors - prompted by the Trump administration - worry about the US and China failing to resolve their trade dispute.
Already jittery investors appeared to lose their cool as markets in the US barrelled through their final hour of trading in a blur of spiking volatility and collapsing valuations.
At its bleakest point the benchmark Dow Jones Industrial Average tumbled 648 points before a brief rally in the minutes before the bell saw it close the session on Tuesday (Wednesday AEST) down 473 points, or 1.8 per cent.
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How our low inflation world was made
May 8, 2019 — 11.45am
If we are to make sense of where the world economy is today and might be tomorrow, we need a story about how we got here. By “here”, I mean today’s world of ultra-low real and nominal interest rates, populist politics and hostility to the global market economy.
The best story is one about the interaction between real demand and the ups and then downs of global credit. Crucially, this story is not over.
Amazingly, prior to 2009, the Bank of England never lent to banks at a short-term rate below 2 per cent. That had been low enough to cope with the Napoleonic wars, two world wars and the Depression. Yet, for a decade its rate has been close to zero.
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'We are now in a constitutional crisis:' Panel votes to hold AG Barr in contempt of Congress
By Rachael Bade
May 9, 2019 — 6.39am
Washington: The US House Judiciary panel voted to hold Attorney-General Barr in contempt of Congress, escalating a fight over the Mueller report.
The contempt vote followed the Justice Department's rejection of House Democrats' demands for the full Mueller report and the underlying evidence.
"We are now in a constitutional crisis," Jerrold Nadler, the committee's Democratic chairman, told reporters after the panel approved the contempt resolution on a party-line 24-16 vote, with Democrats in favour and Republicans opposed.
"This was a very grave and momentous step that we were forced to take today to move a contempt citation against the attorney-general of the United States. We did not relish doing this. But we had no choice," Nadler told reporters after the vote.
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N Korea launches more missiles; US seizes coal ship
Josh Smith and David Brunnstrom
May 10, 2019 — 3.15am
Key Points
- Trump says "nobody is happy" but "relationship continues"
- South Korea calls launches worrisome and unhelpful
- US says seized one of North Korea's biggest cargo ships
- Washington condemns North Korea over human rights
Washington | North Korea has fired what appeared to be two short-range missiles in its second such test in less than a week, and the US said it had seized a North Korean cargo ship as tensions flared between the two countries.
President Donald Trump said "nobody is happy" at the launches, but still appeared to hold the door open for more talks with North Korea. South Korea said the tests were worrisome and unhelpful and likely a protest against Trump refusing to ease economic sanctions on North Korea at a failed summit in Hanoi in February.
"I know they want to negotiate, they're talking about negotiating. But I don't think they're ready to negotiate," Trump told reporters at the White House. CNP
The US has given no sign of willingness to budge on sanctions and on Thursday the US Justice Department announced the seizure of a North Korean cargo vessel it said was involved in the illicit shipping of coal.
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US goods trade deficit with China tumbles to five-year low
Lucia Mutikani
May 10, 2019 — 5.13am
Washington | The US goods trade deficit with China, a focus of the White House's "America First" agenda, shrank to its smallest in five years in March, which could embolden President Donald Trump as he escalates his trade war on Beijing.
The report from the Commerce Department on Thursday (Friday AEST) came as the United States and China began two days of make-or-break talks to salvage a faltering trade deal.
Trump said on Thursday he would start paperwork to launch tariffs on a new $US325 billion category of Chinese imports previously untouched by the trade feud. This is in addition to an expected increase of duties on $US200 billion worth of Chinese goods to 25 per cent from 10 per cent on Friday. China has promised to retaliate if the tariffs are imposed.
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Trump's bullying and bluster is the wrong way to deal with China
By Andrew Browne
May 11, 2019 — 9.33am
US President Donald Trump has good reason to be skeptical about China's willingness to live up to its commitments in any trade deal. Seasoned foreign business executives on the mainland know that any agreement there represents the start of a bargaining process, not the end. Nor is it uncommon for Chinese officials to unpick terms at the last moment, just as they seem to have done ahead of talks this week in Washington, D.C.
Even before those meetings, Trump's top aides had been displaying a five-page document, printed on both sides in small type, listing every unkept promise made by China over years of shuttle negotiations starting under the George W. Bush administration. Yet, the fact remains that imposing more tariffs on the country as the US just has, raising duties on $US200 billion ($286 billion) worth of Chinese goods to 25 per cent, isn't the way to get Beijing to behave better.
It's important for the White House to recognize that even when Chinese negotiators are sincere, they're often handcuffed by domestic politics. The Chinese bureaucracy can be unyielding, and Chinese leaders are powerful but not omnipotent. Not even President Xi Jinping, perhaps the most dominant Chinese political figure since Mao Zedong, can deliver what Trump wants: a full makeover of the Chinese state-led industrial system. That would challenge almost every bureaucratic interest group in China.
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Trump takes over July 4 celebrations, inserts himself into the program
By Josh Dawsey, Juliet Eilperin and Peter Jamison
May 11, 2019 — 3.55pm
Washington: US President Donald Trump has effectively taken charge of the nation's premier Fourth of July celebration in Washington, moving the gargantuan fireworks display from its usual spot and making tentative plans to address the nation from the steps of the Lincoln Memorial, according to top administration officials.
The President's starring role has the potential to turn what has long been a non-partisan celebration of the nation's founding into another version of a Trump campaign rally. Officials said it was unclear how much the changes may cost, but the plans have already raised alarm among city officials and some lawmakers about the potential impact of such major alterations to a time-honoured and well-organised summer tradition.
Fireworks on the National Mall, which the National Park Service has orchestrated for more than half a century, draw hundreds of thousands of Americans annually and mark one of the highlights of the city's tourist season. The event has been broadcast live on television since 1947, and since 1981 has been accompanied by a free concert on the West Lawn of the US Capitol featuring high-profile musicians and a performance by the National Symphony Orchestra.
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China holds fire in latest trade fight with US
- By Chao Deng
- May 12, 2019
China held back from immediate retaliation for higher US tariffs, unlike in past rounds, taking time to weigh its options amid uncertainty over how the Chinese economy would weather a full-bore trade conflict.
A failure to break an impasse in talks in Washington on Friday opened a new phase in the trade fight after more than five months of back-end-forth negotiations. This time, some economists and analysts said, Beijing is taking stock of potential economic damage from higher tariffs.
The US raised punitive tariffs to 25 per cent from 10 per cent for $US 200 billion in goods leaving China on Friday and thereafter. President Trump also ordered staff to begin the paperwork to impose levies on the more than $US 300 billion worth of everything else China sells to the U.S.
While Beijing has met previous volleys of tariffs from the US by raising duties on American goods — and the government has promised to retaliate — it held its fire.
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I look forward to comments on all this!
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David.
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