May 23, 2019 Edition.
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The election has turned out to be utterly different to what was expected and all that we need to know now is what the final counts in both houses tell us, but clearly ScoMo remains PM. Well I never! Really no one saw this coming! Just what will happen next is hard to predict and the Coalition was not preparing to govern!
Trump is battling on all sorts of fronts and now some barmy red states are wanting to make abortion illegal again. This may not end well with the new Supreme Court over there. The battle with China is very serious in my view and I am not sure Trump is up to it.
Ms May is out and Boris J is circling with talks with Labour having broken down. Who know, as usual, what happens next! A vote in the next week will seal Ms May's fate and possibly that of the UK!
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Major Issues.
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'Desperation mode' as auction volumes halve
May 12, 2019 — 2.21pm
A paltry selection of properties going to auction is driving some desperate buyers to make poor decisions as the number of homes scheduled for auction last weekend halved compared with the same weekend last year.
The preliminary clearance rate recorded this weekend was 56.3 per cent, from just 962 scheduled auctions nationally, according to Domain Group data. Twelve months ago it was 54.6 per cent from 1,821 auctions.
In Sydney, 58.7 per cent of homes sold at auction on the weekend, albeit from just 348 scheduled auctions, compared to 577 auctions a year earlier.
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Australia's increasingly complex role in Asia
James Curran
Updated May 12, 2019 — 11.53am, first published at 11.46am
Regardless of who wins office in Australia on May 18, the new government will face once more the challenge of achieving security in a turbulent strategic environment.
Since the 1970s — when both sides of politics began comprehensively engaging with Asia — Australia has been able to conduct its regional diplomacy largely in the knowledge that economic growth and prosperity does not necessarily come at the expense of strategic stability. The assumption that failure in Vietnam would precipitate a US withdrawal proved a mirage, and Washington retained military predominance in the region when China’s economic rise accelerated in the 1990s.
But disruptive trends have been clear for some time. The United States, while still in the region, can no longer call all the strategic shots and is looking for its allies to do more. China is steadily and intentionally making clearer its goal of achieving regional strategic predominance. Other powers are also rising rapidly — especially India and Indonesia with demographics on their side.
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What's keeping these Aussie mega investors awake
Global trade, low returns and the emergence of new business models are interrupting the sleep of three of our biggest super fund chief investment officers.
May 13, 2019 — 12.00am
They’re far too modest and sensible to ever admit it, but the chief investment officers of industry super funds are increasingly taking their place among the powerful stars of Australia’s changing capital markets.
So it was fascinating to see three of the brightest – Mark Delaney from the $150 billion AustralianSuper, Sonya Sawtell-Rickson from the $50 billion HESTA and John Pearce from the $70 billion UniSuper – up on stage at the Australian Council of Superannuation Investors’ annual conference in Melbourne last week.
And even more fascinating was their answers on the question of what keeps them up at night.
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Let's stop kidding ourselves the old normal is just around the corner
By Ross Gittins
May 13, 2019 — 12.00am
Just as a new chief executive makes sure their first act is to clear out all the stuff-ups left by their predecessor, so a new federal government needs to release its econocrats from the ever-more dubious proposition that nothing in the economy has changed and we’ll soon be back to the old normal.
That’s the old normal of productivity improving by 1.5 per cent a year, the economy growing by 2.75 per cent and wages growing more than 1 per cent faster than the 2.5 per cent inflation rate, with unemployment of 5 per cent and a fat budget surplus rapidly returning the government’s net debt to zero.
That’s the happy fantasy the econocrats have been predicting every year since 2012, the year they helped former treasurer Wayne Swan delude himself he was “delivering” four budget surpluses in a row.
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One in 25 home loans underwater, warns Macquarie
May 16, 2019 — 4.12pm
One in 25 mortgage holders is in negative equity according to analysis performed by Macquarie, but the data is patchy and the proportion could be much higher.
Analysis by Macquarie’s Victor German has sought to measure the extent of negative equity after the big four banks, using different methodology, reported vastly different numbers at the first-half results.
Worsening economic conditions such as higher unemployment could have a compounding affect, increasing the proportion of home owners who owe more than their home is worth and driving mortgage-related losses higher.
If just 1 per cent of loans were to default, it would wipe out between 4 per cent and 10 per cent of annual bank profits, although the figure would be partly offset by lenders mortgage insurance (LMI), the analysis noted.
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Larrikin, scholar and Labor's most successful PM
May 16, 2019 — 9.13pm
Bob Hawke, who presided over Australia's transformation into an open economy, and was the ALP's most successful prime minister, died on Thursday at his home. He was 89.
Hawke might not have been the great originator, but, like Mikhail Gorbachev, who presided over the transformation of the Soviet Union, he was the great facilitator.
Former Prime Minister Bob Hawke has died peacefully at home at the age of 89 years.
He was a politician, trade union leader, industrial advocate, consultant, real estate investor, keen punter, cricket tragic, Rhodes Scholar, beer-drinking champion, drunk, abstainer, carouser, adulterer, hell-raiser, serial budgie-smuggler wearer – even a hotel greeter. A life force who made people feel good, but who also had a mean temper and could be rude and vulgar, Hawke secured the economic reforms that liberalised the economy and gave Australia a future.
In earlier days, when he was a larrikin dazed by alcoholism, or distracted by casual affairs, few people forecast he would achieve so much. But a remarkable, later-in-life exercise in self-restraint, combined with sharp intelligence, drive, courage, the popular touch, confidence and deep understanding of how Australia works, underwrote his achievement.
Two key sentiments – treat people fairly, but make sure you get a "quid" on the way – were writ large in the Hawke persona, and resonated among many Australians. Voters felt uniquely close to him, reflected in his record 75 per cent popularity rating in the AC Nielsen poll.
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Darling River's health likely to be downgraded in next audit
By Peter Hannam
May 19, 2019 — 12.00am
Farmers along the Darling River are resorting to using sulphuric acid to counter high salt levels as attention turns to the quality of the water that remains in the drought-hit system.
One in three native fish species in the NSW section of the Murray Darling Basin is threatened with extinction, according to the State of Environment report released earlier this month. However, the situation is likely to be worse since the report was based on a 2017 audit of the system by the Basin Authority, before the massive fish kills of the past summer.
The 2017 audit described the Darling's condition was described as "moderate". Sampling during the winter months by fisheries would determine if the endangered status of native species has worsened since then, a spokeswoman for the Department of Primary Industries' fisheries unit said.
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Federal Election.
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Morrison targets first home buyers in new scheme to lower deposit requirement
By David Crowe
May 12, 2019 — 12.55pm
Prime Minister Scott Morrison has outlined a major plan to help younger Australians buy their first homes in an election campaign launch that urged voters to reject the “experiment” of installing a Labor government.
Mr Morrison said a re-elected Coalition government would set up a scheme to offer loan guarantees for first home buyers so they could buy their properties with deposits of just 5 per cent of the price.
The proposal is a significant departure from previous government attempts to help younger people trying to get into the housing market, requiring $500 million in guarantees and possibly more over time.
But it will not be open-ended. The government intends to borrow $500 million so it can invest the money in the National Housing Finance and Investment Corporation, which would offer the guarantees to aspiring home-owners.
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A federal election is just six days away - apparently policy purity will have to come later
By Shane Wright
May 12, 2019 — 4.07pm
The Liberal Party ridiculed Kevin Rudd and Wayne Swan for their plan during the depths of the global financial crisis to bankroll the commercial property sector.
A decade on it's time to walk through the front door of the Bank of ScoMo, where every taxpayer in the country is exposed to the vagaries of the $1.9 trillion mortgage property market.
Just a week ago, the Coalition was accusing Bill Shorten of being a communist for his plan to subsidise the wages of childcare workers.
Now, they have gone all Karl Marx by outlining a plan that effectively means the government of the day has an equity share in the private mortgages of home owners.
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Left's faux fairness puts opportunity society at risk
One of the ironies of current politics is that a swing in only a few seats could result in a huge ideological shift in Australia.
Tom Switzer Columnist
May 12, 2019 — 11.00pm
There are economic battles you think you’ve won, only to discover you need to fight them all over again. Look around and you can see them everywhere: from taxes and spending to industrial relations and productivity-enhancing reform. The federal election campaign is a classic case in point.
Labor wants to increase taxes on property investors, self-funded retirees and higher-income earning wealth creators. At the same time, it plans to re-empower unions to pursue pattern bargaining – even though they account for about 10 per cent of the private workforce.
The Coalition fails to prosecute any counter-narrative on how pro-market reforms would deliver rising wages. It surrenders to the Opposition’s health and education narrative that it is inputs, not outcomes, that matter for patients and students. As they’ve become cosy with power, fewer Liberals share Peter Costello’s passion for a tax-cutting, economic-growth agenda.
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Home loan scheme could increase negative equity risk, economists say
By Clancy Yeates
May 13, 2019 — 12.00am
Both major parties' pledges to guarantee thousands of mortgages with deposits of only 5 per cent could result in more people ending up with a loan that is bigger than their house is worth, if the house price slump continues, economists say.
After Prime Minister Scott Morrison on Sunday announced the scheme to lift housing affordability, market economists said the idea brought with it the risk of borrowers finding themselves in negative equity, where the outstanding balance on a mortgage is greater than the house's value.
After banks cut back on low-deposit home loans in recent years, Mr Morrison on Sunday unveiled a new scheme that he pledged would allow buyers to overcome the difficulties of saving for a 20 per cent deposit, which is what is generally required by banks to avoid the cost of mortgage insurance.
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Presence of a capable future leader hints at a possible revival for an exhausted party
By Peter Hartcher
May 12, 2019 — 8.00pm
Scott Morrison’s personal energy could not conceal the fact that he is leading a government and a party showing every symptom of exhaustion.
His skills as a spruiker could not overcome the fact that he lacks a program to spruik.
His lovely family could not disguise the fact that the Liberal family was missing all its former prime ministers.
Nor could his celebration of the women in his life compensate for the absence of women in his leadership team.
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Labor’s tax attack on savings counter-productive
HENRY ERGAS and JONATHAN PINCUS
• 12:00AM May 13, 2019
Australia may find ¬itself next week on the path to the largest peacetime tax increases since Federation. It is not simply the magnitude of the tax rises that makes Labor’s plans exceptional — both in historical terms and relative to global trends — it is that they are so heavily focused on penalising saving.
In the debate about those proposals, Labor and its critics have concentrated on who would, and who would not, pay the higher taxes. However, the costs that tax increases impose are never limited to those who sign the cheque.
Rather, as people adjust their behaviour, the economy shrinks. The precise extent of the effects is controversial. What is uncontroversial is that for each dollar of ¬revenue raised, taxes on savings do more damage than taxes on ¬income or on consumption.
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First-home buyer plans a poor joke
John Durie
• May 13, 2019
The sheer hypocrisy of politicians is a wonder to see, with Prime Minister Scott “Cry Me a River” Morrison’s last-minute $500 million scheme to encourage first-home buyers a case in point.
Two years ago, when he unveiled his $6.2 billion bank tax on budget night, Morrison was asked about the banks’ reaction and he responded: “Cry Me a River.”
He has kicked the bank can down the road consistently ever since, being bettered only by the ALP, which has stupidly and mindlessly agreed to provide the same deposit backing as the Coalition.
On the one hand the politicians are doing their very best to make it harder for the banks to lend money to anyone, let alone first-home buyers.
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ScoMo's loan scheme nationalises bank of Mum and Dad
There is now bipartisan support for scheme that puts taxpayers on the hook for home loans without even basic modelling.
Satya Marar
May 13, 2019 — 1.00pm
It’s a week before the federal election and both major parties now endorse a housing deposit scheme where the government will guarantee 75 per cent of the standard 20 per cent deposit on home loans required in lieu of paying Lender’s Mortgage Insurance.
The policy helps prospective home buyers enter the market as they will only need to save 5 per cent of the value of the property since the government (read: taxpayers) has guaranteed to pay the remainder. Although noble in intent, such heavy-handed intervention could have disastrous and costly results.
Lenders generally demand a 20 per cent deposit from borrowers because it recognises the credit risk of financing a greater portion of the loan, and insulates the lender from the risk of a housing market crash or downfall in prices that could leave them out-of-pocket should a foreclosed property sell for less than what it was bought for.
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Labor's promise to fix aged care 'would cost billions': Peak body
By Dana McCauley
May 13, 2019 — 11.45pm
Labor's promise to fix the aged care system would cost billions of dollars, the peak body for the sector says as Bill Shorten approaches the May 18 election with questions hanging over the price tag for the party's reforms.
Leading Aged Services Australia chief executive Sean Rooney said $3 billion was needed over the next two years to address "the crisis in residential care funding", reduce the waiting list for home care packages - currently 128,000 people - and build the aged care workforce.
Mr Shorten waited until after releasing Labor's costings before announcing his aged care plan on Sunday, which includes a pledge to "immediately investigate" how to better triage those waiting for home care packages, fast-track a workforce strategy and encourage GPs to do home visits.
But its plan contains no costed measures to address what advocates say is a crisis in the nation's aged care system, signalling that a Labor government would wait until after the Aged Care Royal Commission reports next April to deliver substantive reforms.
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Why big banks don't care about the first-home buyer stunt
By Elizabeth Knight
May 14, 2019 — 12.00am
You would think the country’s largest mortgage lender, the Commonwealth Bank, would be doing cartwheels at the prospect of both political parties introducing policies that would facilitate aspiring first-home owners to get a toehold in the property market.
To be sure the CBA chief executive Matt Comyn, made a positive(ish) comment – along the lines of, in principle, anything that’s broadly supportive of the first-home owners market is welcomed.
It was difficult to hear any excitement in his response – no sense that he was curbing his enthusiasm.
However, the reaction from some economists to the federal government’s latest piece of pre-election policy was alarm bells. They said first-home buyers who put down a deposit of 5 per cent could be left with a home loan that’s larger than the value of their house if the property market continues to fall. This phenomenon is called negative equity.
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Forget the surplus and use tax cuts to jump-start economy
- 12:31AM May 14, 2019
The incoming federal government faces an urgent problem to jump-start the economy, which is slowing and looking increasingly fragile.
The election itself may be part of the problem because business and consumers tend to put big-ticket spending on hold pending the outcome.
But each day as the election approaches the anecdotal evidence builds of an economy in need of a jump-start.
This is not good for either party, with economists noting that while the economic impact of the keynote ALP revenue measures — negative gearing and a crackdown on franked dividend perks — is uncertain, “they won’t help”.
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British scheme points to pitfalls with PM's first-home buyers plan
Hans van Leeuwen Europe correspondent
May 14, 2019 — 9.51am
London | A £22 billion ($41 billion) British scheme to help people buy a home with a smaller deposit may have pushed up house prices, distorted developers’ decision-making and prompted borrowers to take bigger risks.
Britain’s ‘Help to Buy’ scheme doesn’t work in exactly the same way as Prime Minister Scott Morrison’s mortgage guarantee plan, unveiled on Sunday; but its six-year experiment with subsidising struggling home buyers does point to some of the potential pitfalls in any policy of this kind.
Both schemes are aimed at reducing the amount a home buyer needs to save for a deposit to as little as 5 per cent of the house’s price, rather than the standard 20 per cent.
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What Australians want from the next PM
Phillip Coorey Political Editor
May 14, 2019 — 11.00pm
Key Statistics
• 58% Honesty
• 12% Compassion
• 10% Long-term thinking
• 7% Environment and climate change
• 5% Leadership
Honesty is first. Daylight is second.
That is the key finding of a survey of what voters want most from whoever emerges as prime minister on Saturday.
The Australian Futures Project, a data-driven, non-profit and non-partisan exercise dedicated to "ending short-termism in Australia", finds 58 per cent of voters believe honesty is the most important attribute the next prime minister should have.
Compassion is next on 12 per cent.
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A politician always wins, but this time the choice really matters
By Ross Gittins
Updated May 15, 2019 — 10.09amfirst published at 12.00am
If you judged it by the way Labor's been so quick to match the Coalition’s backdated doubling to $1000-a-year of its tax cut for middle income-earners (good idea) and now the Coalition’s plan to help first-home buyers (con job), you’d be justified in thinking that, despite all their furious arguing with each other, there’s little to choose from between the two sides. For once, however, such a conclusion would be dead wrong.
Not for many moons have voters faced such a clear-cut choice between Labor and Liberal.
It’s true that, if you judge the pollies by the way they behave, they’re just as bad as each other. Both sides refuse to answer the question, never say yes or no when they could dissemble, keep saying tricky things calculated to mislead, claim to “feel your pain” when they don’t, keep badmouthing each other and answering a question about their policies by attacking their opponents’ policies, and make promises they’re not sure they can keep.
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Abbott camp issues SOS as Coalition war erupts
Phillip Coorey Political Editor
May 15, 2019 — 1.28pm
The Liberal Party has issued an SOS for volunteers in Tony Abbott's seat of Warringah after a civil war sparked by a campaign to have Liberal Senator Jim Molan re-elected robbed Mr Abbott of firepower on the ground and infuriated the Nationals.
Senator Molan's push has caused the Nationals to split from the NSW Liberals and run their own campaign in the final days to have their Senate candidate, Perin Davey, elected.
Mr Abbott faces a tough task on Saturday to hold his seat against a spirited challenge by independent Zali Steggall.
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The first step down Fannie and Freddie's path
Government meddling in the housing market is a slippery slope, as the experience in the United States shows.
John Kehoe and Jacob Greber
May 15, 2019 — 3.37pm
Canberra/Washington | When Scott Morrison unveiled a surprise election commitment to help first home buyers get a loan with a low deposit, it sent shivers down the spine of Australia's former top banking regulator Jeffrey Carmichael.
"We have worked hard over the years to get the government out of financial services, for the simple reason that they are simply not very good at it," says Carmichael, the first head of the Australian Prudential Regulation Authority until 2003.
"In view of the royal commission’s focus on responsible lending, I would also suspect there to be a material moral hazard issue if the government were to end up encouraging borrowers into loans that the market has assessed they cannot afford.
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Negative gearing crackdown not worth the risk
Robert Harley Contributor
May 16, 2019 — 12.00am
Last year, at a debate I chaired, one of Australia’s leading developers of residential land spoke up to defuse an increasingly acrimonious debate about negative gearing.
Negative gearing is going, he said. Get over it and move on. The removal of the concession on second-hand homes, and the increase in capital gains tax on all assets, now grandfathered until December 31, has been ALP policy for years.
In the developer’s view, the property industry would achieve more by dropping its trenchant opposition and instead working co-operatively with Labor on all the issues facing housing.
I sympathise. Like Treasury, I believe that the loss of negative gearing will have no impact in the long term. Ultimately it is demand and supply – finance, household formation and new building – that sets the price of housing.
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There's a $7.5b reason why the RBA is stalling on rate cuts
By Elizabeth Knight
May 16, 2019 — 12.10am
The Commonwealth Bank has an answer to the riddle of why the Reserve Bank continues to baulk at cutting interest rates - and it’s the same reason why chief executive Matt Comyn is quite upbeat about the economy’s prospects after the election.
CBA analysis points to last month’s federal budget, which has promised a cash splash equivalent to that gifted by Kevin Rudd during the GFC. And much like during the 2009 Rudd stimulus, households will receive a lump sum.
According to the author of the CBA report, Gareth Aird, the upcoming tax bonus that many households are set to receive has largely flown under the radar, and thus hasn’t yet fed into consumer confidence.
But it will be meaningful for consumers, and for the companies active in the discretionary retail sector.
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The big Shorten: The shares investors have loved and hated in the run-up to the election
By Tom Westbrook
May 16, 2019 — 10.45am
As Australia's real-estate prices fall at the fastest rate in a generation, some investors are buying property stocks in a bet that Bill Shorten will win Saturday's federal election.
Other investors fear a profit squeeze on health insurers after Labor promised to cap how fast premiums can rise. Short positions in the country's biggest private health insurer have jumped.
In a country where elections rarely move stock prices or significantly impact the business outlook for either listed or private companies, investors are watching the vote closely.
Labor is heavily favoured to triumph on Saturday and the election is taking place as Australia's 28-year run of economic growth is sputtering, and with policy differences between the major parties at their widest in years.
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Electoral Commission warns record number of early votes could delay results
By Michael Koziol
Updated May 16, 2019 — 10.02amfirst published May 15, 2019 — 5.35pm
The Australian Electoral Commission has raised the possibility that a record number of early votes will delay counting and make it more difficult to declare a winner on election night.
As the number of pre-poll votes cast this year surged past the 2016 record on Wednesday, commissioner Tom Rogers said "there may well be some delays" in announcing results on Saturday due to the additional complexity of counting such ballots.
The consistent rise in the popularity of early voting has prompted politicians to question whether the three-week pre-poll period needs to be shortened, and the issue will almost certainly be canvassed as part of the customary post-election review.
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The fate of our nation? It's in the toilet
By Jessica Irvine
May 15, 2019 — 11.13pm
Four toilet blocks, all alike in dignity, in marginal electorates of Australia, where we lay our scene.
Beer was poured, cake was cut, there was a campaign launch and chaos at a school. Check out how Scott Morrison and Bill Shorten spent the final week of the election campaign.
Scene 1 takes place in the outer-south-eastern Melbourne suburb of Pakenham, where a recent online review of the local Rotary Park has exclaimed: "Barbecue area without toilets. Shocking!"
So shocking, indeed, that the injustice has not escaped the attention of Liberal MP Jason Wood, who is seeking to hold his federal seat of La Trobe on a slim margin of 3.2 per cent.
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Non-electric vehicle sales may have peaked globally, says new research
By Cole Latimer
May 16, 2019 — 12.00am
A global research house says sales of petrol and diesel cars have passed their peak and by 2040 more than 60 per cent of new cars sales will be electric vehicles, boosting Labor’s election pledge to turbocharge Australia’s uptake.
Bloomberg's New Energy Finance annual electric vehicle report comes after Scott Morrison's Coalition government attacked Opposition Leader Bill Shorten’s push for half of all new cars sold in Australia to be electric by 2030.
This target was criticised by the government, which claimed it would force Australians to abandon petrol-driven 4WDs and ruin people's weekends.
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Testing times ahead for election winner
May 17, 2019 — 10.06am
“This may be a good election to lose.”
That's the private assessment of a former senior Canberra economic bureaucrat, who believes Saturday’s election winner will face mounting economic and geopolitical challenges over the next term of government.
The appraisal appears paradoxical.
After almost six years of Coalition rule, unemployment is a relatively low 5.2 per cent, the federal budget is poised to return to surplus and interest rates are at record lows.
China continues to buy vast amounts of Australia’s iron ore, coal, natural gas, agriculture, tourism and education services.
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In this election, truth was the biggest loser
May 17, 2019 — 9.35am
"The statistics don't lie," Labor spokeswoman Kristina Keneally intoned in a Labor Party ad.
But politicians do. Above almost every other facet of a campaign that will likely mark an inflection point in political history, the 2019 election was stained by dishonesty.
A weakened media establishment and a furiously partisan social media backdrop liberated the parties to exaggerate, mislead, embellish and lie.
The Labor Party's fundamental critique of the government was based on blatant dishonesty. The Coalition fabricated a Labor policy it has vowed never to implement.
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Shorten's united team will end years of instability
May 17, 2019 — 12.03am
History will not look kindly on the past decade of Australian politics in which four elected prime ministers have been overthrown by their own parties.
The knifings of Kevin Rudd, Julia Gillard, Tony Abbott and Malcolm Turnbull have undermined faith in politics, damaged Australia's international reputation and wasted time that should have been spent dealing with urgent problems such as climate change.
The Herald believes that above all else voters must use this election as a chance to put an end to that cycle of instability and with that in mind there is no choice but to endorse Bill Shorten and the ALP.
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A form guide to Labor’s bold tax plans - and why they're too bold
By Robert Carling
May 17, 2019 — 12.00am
Taxation has been a bigger issue in this election campaign than in any other since the GST-dominated elections of 1993 and 1998.
Labor is upfront about seeking a net increase in taxation. This is a major point of differentiation from the Coalition, which – although not shy about increasing some taxes in office – now proposes larger reductions in personal income tax than Labor.
Both sides like to talk about amounts to be raised or given away over 10 years, but these 10-year aggregates are designed more to shock or impress than to elucidate.
For a more meaningful picture, let’s fast-forward to 2024-25 for a comparison of annual figures.
On the heroic assumption that estimates so far into the future are reliable, Labor is planning to collect in round terms $42 billion more than the Coalition. This is a very substantial amount, resulting in the equal highest tax-to-GDP ratio in recorded history.
On the heroic assumption that estimates so far into the future are reliable, Labor is planning to collect in round terms $42 billion more than the Coalition. This is a very substantial amount, resulting in the equal highest tax-to-GDP ratio in recorded history.
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https://www.afr.com/news/politics/national/no-end-to-the-political-fear-and-loathing-20190517-p51ok0
No end to the political fear and loathing
May 17, 2019 — 7.51pm
No matter the result of Saturday’s election, it is likely to be no more than a pause in the strife and division that have wracked Australian politics over the past decade.
However, the election result itself will determine whether this political fear and loathing continues mainly among Coalition or Labor politicians.
If the Labor Party wins, the Coalition split over climate change and energy policy will resume with venom.
Scott Morrison has scored admiration within many his party – though not all – over how he has conducted himself since taking over the prime ministership from Malcolm Turnbull last August.
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Divide widens between young, older voters
The final pre-election The Australian Financial Review/Ipsos poll shows exacerbating schisms between the generations.
May 17, 2019 — 5.00pm
Key Points
- Younger Australians aged under 40 overwhelmingly back Labor.
- The Coalition is more popular among over 55s
The political divisions between younger and older voters have widened sharply at the 2019 election, amplified by different views over tax, housing prices and climate change.
The final pre-election The Australian Financial Review-Ipsos poll shows exacerbating schisms between the generations.
Younger Australians aged under 40 overwhelmingly back Labor over the Coalition by larger margins than on the eve of the 2016 election.
Seventy-one per cent of voters aged up to 24 favour Labor, compared to just 29 per cent of that same age group supporting the Coalition, in two-party preferred terms.
That's a four percentage point swing compared to three years ago.
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A campaign conducted on the basis of delusion
By George Megalogenis
May 18, 2019 — 12.05am
History has never really been on the side of the federal Labor party. On the six previous occasions that Labor came to power, it found itself in the eye of a global storm. The entry dates to office underline both the burden, and the bad luck: 1914, 1929, 1940, 1972, 1983 and 2007. That covers both world wars and the four biggest crises of modern capitalism – the great depression, the oil shock, stagflation and the global financial crisis. It is one of the most striking things about our political system. The Australian people shift to Labor in times of national peril, and in most cases quickly come to regret that choice.
Three of those economic crises erupted within the opening year of the new government, cruelling the prime ministerships of James Scullin, Gough Whitlam, and Kevin Rudd. All three lost their jobs within three years of a barnstorming election victory. Scullin’s government split, and was forced to an early election which it lost in a landslide. Whitlam’s government was dismissed by the governor-general, while Rudd was sacked by his own party.
Only Bob Hawke’s government in 1983 had the benefit of knowing the enemy on arrival. The economy was already in deep recession, and his ministry had witnessed the chaos of the Whitlam era and were determined not to repeat that history.
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Scott Morrison re-elected in a 'miracle', Shorten resigns
Updated May 19, 2019 — 12.58am, first published at 12.16am
Scott Morrison has pulled off one of the most memorable victories in Australian politics to secure the Coalition a third consecutive term.
In a tight result which saw little change from the status quo, Labor failed to meet its own expectations and underperformed in every state.
In what Mr Morrison called a miracle, the nation is headed for either a minority Coalition government, or a Coalition government with a small majority in its own right.
With more than two-thirds of the vote counted, the Coalition had secured 74 seats, one more than it started with and just two short of the bare majority of 76.
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Tony Abbott's political career ends in stunning loss
May 18, 2019 — 11.12pm
Former Liberal Prime Minister Tony Abbott may have effectively bowed out of parliamentary politics on Saturday night after his stunning election loss to independent Zali Steggall in the Sydney north shore seat of Warringah.
Mr Abbott’s loss marks the likely end to a tumultuous political career that has enjoyed the ultimate highs of a smashing election victory in 2013 and the prime ministership, to the lows of being voted out of the top job by his own party room in 2015 and Saturday night’s defeat in what had traditionally been a blue-ribbon Liberal seat.
Speaking to a highly charged, clapping and cheering audience of Liberal supporters in the Manly Leagues Club shortly after 8.40 pm on Saturday, Mr Abbott said the “good news” was the “extraordinary” results achieved by the Coalition nation-wide.
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The biggest losers in a shock election result
Updated May 19, 2019 — 12.27am, first published at May 18, 2019 — 11.32pm
This year's election has produced plenty of big losers: Bill Shorten, Tony Abbott, Clive Palmer, SportsBet.
But one of the biggest will be opinion pollsters. All the major media polls including The Australian Financial Review's Ipsos, Newspoll and Nine's election day exit poll put Labor's headline two-party preferred lead in the 51-52 per cent range.
Ipsos got closest at picking the primary vote of the major parties, putting Labor's support 33 per cent - it ended up at 34 per cent - and the Coalition on 39 per cent (the Coalition parties collectively received 41 per cent). The final Newspoll overestimated Labor's vote, putting it at 37 per cent, while it underestimated the Coalition's support at 38 per cent.
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And with that, a lifetime of Bill Shorten's hopes and plans were gone
By Tony Wright
May 19, 2019 — 12.53am
They were, without much doubt, close to the toughest words Bill Shorten has had to utter.
"I know that you're all hurting and I am too," he said.
"And without wanting to hold out any false hope, while there are still millions of votes to count and important seats yet to be finalised, it is obvious that Labor will not be able to form the next government."
And then came, without any doubt, the toughest words of all.
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What the Morrison government promised to do next
By Zach Hope
Updated May 19, 2019 — 7.23amfirst published May 18, 2019 — 10.26pm
The Liberal Party has promised to simplify the tax system and introduce rolling tax cuts across the wage spectrum to take hold between July this year and July 2024.
Your money
Phased in tax cuts. The Coalition’s signature election policy. It will provide tax breaks for more than 10 million Australians and simplify the system by removing the 37 per cent tax bracket entirely. The measures will cost Treasury coffers $158 billion over 10 years, but don’t hold your breath for them all.
From July 2022, the Coalition will raise the 19 per cent tax bracket from $37,000 to $45,000.
From July 2024, if it holds onto government that long, it will reduce the 32.5 per cent rate to 30 per cent and do away with the 37 per cent rate. This will make a flat 30 per cent tax rate for anyone earning between $45,000 and $200,000.
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Election 2019: Shades of Hillary v Trump as TV pundits left reeling
By Neil McMahon
May 18, 2019 — 11.18pm
As expectations unravelled on Saturday night, it seemed like Australia’s Trump v. Hillary moment.
Did your HD TV set cover the indeterminate hue of ashen?
Such were the faces of Labor panellists, not a few embarrassed pundits and many viewers as a wild election night on the couch unfolded.
Opinion polls were thrown out the window early - by ABC oracle Antony Green, no less. The results didn’t look anything like them. In the end, it seemed polls might be banished for good - no less a figure than Green himself declared it a failure of historic significance.
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Federal election 2019: What a Coalition win means for you, major policies explained
Scott Morrison’s stunning win saw the Coalition remain in government, but some changes are still coming soon. Here’s what you need to know.
After a long and grinding election campaign, Scott Morrison claimed victory.
Australians are set for three years of Liberal government. So what does this mean for you?
Labor and the Coalition had offered voters a slew of different options before the election, with the parties agreeing on few policy pieces.
Here’s what you need to know now Coalition is back in power.
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Polls predicted Labor landslide but Scott Morrison performed a ‘miracle’
An election night panel has slammed the polls that predicted — for two entire years — a Labor victory. How did they get it so wrong?
For two whole years, Labor outperformed the Coalition in the only real tangible measurement the public had to rely on.
The polls were emphatically skewed towards a future Bill Shorten government.
They were the catalyst for the overthrow of former Prime Minister Malcolm Turnbull.
Forty-three consecutive Newspoll results put Labor ahead of the Coalition on a two-party preferred basis.
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Royal Commissions And Similar.
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CBA's Hayne fallout to top $2b
James Eyers Senior Reporter
May 13, 2019 — 9.09am
Commonwealth Bank has set aside a new, $714 million provision for customer remediation costs, bringing total refunds and related costs for failings in its banking and wealth divisions to more than $2 billion.
The bank's quarterly earnings update on Monday highlighted the tough environment for banks, as its cash earnings fell sharply lower, the group net interest margin contracted and impaired loans ticked slightly higher. CBA reported "pockets of stress" emerging, with some home loan customers "experiencing hardship".
CBA also announced on Monday that non-executive director David Higgins would retire at the end of the calendar year, as a program of board renewal under chairman Catherine Livingstone continues.
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'Societal shift': ASIC warns companies to heed Hayne lessons
By Clancy Yeates
May 17, 2019 — 11.53am
The lessons of the banking royal commission apply equally to companies outside the finance sector, underlining the need for all businesses to consider non-financial risks, the corporate watchdog says.
As banks feel the fallout from the Hayne royal commission, deputy chairman of Australian Securities and Investments Commission (ASIC) Daniel Crennan on Friday said all corporate businesses must be aware of a "societal shift" in public expectations of higher standards of conduct.
"The mandate of the royal commission was limited to financial services, but the philosophical underpinning of that analysis and the recommendations that arose from that analysis equally applies to all corporate activity,” Mr Crennan said at ASIC's annual conference in Sydney.
Karen Chester, also a deputy chair at ASIC, underlined the need for all corporate leaders to think about "non-financial risk," pointing to the massive financial pain the issue is causing banks. Ms Chester added there was a misconception among some that the obligations on directors under corporations law had changed - but this wasn't the case.
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National Budget Issues.
RBA running out of options, and the banks aren’t helping
12:00AM May 13, 2019
Not content with a record run of inaction on official interest rates now stretching to 30 months, the Reserve Bank last week made an unusual plea to the banking sector, asking the lenders to do the central bank’s job for it.
With the economy slowing — there was next to no growth over the second half of 2018 and all indicators are pointing towards a tougher first quarter — discussion has rightly turned to how the RBA plans to counteract stalled household spending and slowing credit growth.
The cash rate has been on hold at a record low of 1.5 per cent since 2016 and, amid the gloomy economic outlook, financial markets are now pricing in two cuts by the end of the year — a projection the RBA acknowledged it has now factored into its own economic forecasts, which were downgraded on Friday.
With so little firepower left at its disposal to help stimulate economic activity, the RBA is evidently reluctant to cut interest rates further.
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Budget and economy heading for another universe
By Shane Wright
May 14, 2019 — 12.00am
Election campaigns can sometimes feel as if they are being run in a different universe. Prime ministers and opposition leaders run around parts of the country that, for most voters, could be as distant as Mars.
They and their senior representatives set out policies that, with the precision of Newton's laws, will deliver some sort of economic and budget Utopia. There is never room for doubt, except when casting it on the other side's agenda.
But this election there is a larger than normal doubt being thrown over both what is on offer from the Coalition and the ALP. That debt is being cast by the Reserve Bank of Australia.
Its latest forecasts for the state of the economy outwardly look similar to those from Treasury contained in the budget and the pre-election budget update. Growth and unemployment, for instance, are about the same from the two organisations.
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Australian wages growth still depressed
• By James Glynn
• Dow Jones
• 56 minutes ago May 15, 2019
Australian wages growth remained depressed in the first quarter, highlighting a key vulnerability of the economy and supporting the case for interest rates to be cut in coming months.
Wages rose by 0.5 per cent in the quarter, slightly less than expected by economists. The index rose by 2.3 per cent from a year earlier, the Australian Bureau of Statistics said.
Private sector wages increased by 0.5 per cent in the quarter, while public sector wages rose by 0.4 per cent over the same period. The strongest sectors for pay growth were health, social assistance and education.
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Unemployment rate rises to a higher-than-expected 5.2pc
• By James Glynn
• Dow Jones
• 22 minutes ago May 16, 2019
Australia’s unemployment rate rose in April, despite a strong gain in employment, bringing closer the first interest rate cut in three years.
The unemployment rate rose to an unexpected 5.2 per cent in April as more people were looking for work, the Australian Bureau of Statistics said. The bureau also revised March’s unemployment rate up to 5.1 per cent from 5.0 per cent.
The Australian dollar sank after the jobs data to a four-month low of US68.93c, down from US69.22c.
The number of people employed in April rose 28,400, higher than the expected 15,000. Full-time employment fell by 6300 but the number of those in part-time work rose by 34,700.
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Health Issues.
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Labor pledges $13.5 million for national roll-out of addiction program
By Sumeyya Ilanbey
May 14, 2019 — 8.56am
Frontline counselling services for Australians battling with drug, alcohol and gambling addiction would be given a $13.5 million boost, if Labor wins the election.
Under the funding package, an addiction treatment program that has been running in Victoria would be rolled out nationwide, Labor will announce on Tuesday.
The package would allow addiction treatment centre Turning Point to expand its ‘Ready 2 Change’ online and telephone counselling program across the country and reach vulnerable Australians, particularly those who are living in rural and regional areas.
Turning Point director Dan Lubman said the program that has been running in Victoria for the past five years, linked people with local services and addressed the underlying issues fuelling their addiction.
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Young Aussies taking opioids at highest rate in world, survey finds
By Liam Mannix
May 16, 2019 — 5.03pm
A third of Australians surveyed in a huge global drug study said they used prescription opioids in the past year, the highest number of all countries surveyed.
Globally, half of people using prescription opioids said they took them to get high.
About three Australians a day die from drug overdoses involving opioids. It's a grim number that far outstrips the lives taken by heroin.
Most opioids are given to people over 65. But the new survey data suggests many younger people are using them as well.
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International Issues.
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US gives China one-month reprieve
Shawn Donnan, Saleha Mohsin and Ye Xie
May 11, 2019 — 7.46am
Washington | President Donald Trump's administration told China it has a month to seal a trade deal or face tariffs on all its exports to the US, even as both sides sought to avoid a public breakdown in negotiations despite a developing stalemate.
The threat was made during talks in Washington on Friday, hours after Trump upped the ante by imposing a second round of punitive duties on $US200 billion in Chinese goods.
The talks are under close scrutiny across global financial markets, and US stocks turned positive after negotiators on both sides said the session had gone fairly well.
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China, Trump and security issues swirl perilously around us
- 12:00AM May 11, 2019
This week three things happened of immense strategic consequence to Australia — each in its way much more important than the national election we are having.
One, the trade dispute between the US and China reached a new level of intensity.
Two, North Korea resumed testing short-range ballistic missiles.
Three, former prime minister Paul Keating launched a considered and savage attack on our intelligence and national security agencies in a bid to move Australia into a decisively more pro-Beijing orientation, apparently to end or reverse the modest measures we have recently taken domestically and in the South Pacific to protect our core national interests, and therefore to move us decisively away from the US alliance. Keating’s bizarre position received some disturbing support.
All three developments are intimately linked and matter fundamentally to Australia.
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Brexit Party has more support than Theresa May's Conservatives: poll
By Edward Malnick
May 12, 2019 — 4.32pm
London: The Brexit Party has overtaken the Conservatives in national polling for the first time, with Nigel Farage predicted to win 49 seats in a general election, a bombshell poll reveals.
The ComRes survey for the Telegraph (London) found that if a general election campaign led by Theresa May took place now, it would put the Tories on course for their worst result in history – apparently confirming the fears of Conservative MPs and activists in uproar over the Prime Minister’s handling of Brexit.
Labour would become the largest party by a margin of 137 seats, allowing Jeremy Corbyn to lead a minority government as the Tories fell to third place in terms of vote share.
The survey results were echoed by a second Opinium poll in the Observer, which showed that Farage's new Brexit Party has more support in the Britain for this month's EU elections than the Conservatives and Labour combined.
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US trade hawks flying high in battle with China
James Politi
May 13, 2019 — 10.17am
Washington | Hours after Donald Trump ramped up trade tensions with China by inflicting higher tariffs on the country’s imports, Lou Dobbs, the conservative Fox Business Network anchor, led his evening broadcast by showering praise on the move.
“For far too long communist China has been cheating the United States on trade,” he said. “President Trump has made it clear: the failure of previous presidents to aggressively represent US interests in foreign policy and economic policy has ended, and president Trump made believers out of the Chinese today,” he added.
Mr Dobbs is one of Mr Trump’s favourite pundits because of his hardline views on trade and immigration, and his predilection for conspiracy theories. His satisfaction with the president’s stance on trade reflects the glee among hawks in Washington at the direction of the negotiations with Beijing, even as the stand-off has sounded alarm bells for the global economy.
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Four ships targeted by 'sabotage' off United Arab Emirates' coast
By Aya Batrawy
May 13, 2019 — 5.29am
Dubai, United Arab Emirates: The United Arab Emirates said on Sunday that four commercial ships off its eastern coast "were subjected to sabotage operations," just hours after Iranian and Lebanese media outlets aired false reports of explosions at a nearby Emirati port.
Emirati officials declined to elaborate on the nature of the sabotage or say who might have been responsible.
However, the reported incident comes as the US has warned ships that "Iran or its proxies" could be targeting maritime traffic in the region, and as America is deploying an aircraft carrier and B-52 bombers to the Persian Gulf to counter alleged threats from Tehran.
Tensions have risen in the year since President Donald Trump withdrew the United States from the 2015 nuclear deal between Iran and world powers, restoring American sanctions that have pushed Iran's economy into crisis. Last week, Iran warned it would begin enriching uranium at higher levels in 60 days if world powers failed to negotiate new terms for the deal.
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The US-China trade tussle is only the first test of tensions between the superpowers
By Ana Swanson and Keith Bradsher
May 13, 2019 — 12.51pm
Washington: A year-long trade war between the United States and China is proving to be an initial skirmish in an economic conflict that may persist for decades, as both countries battle for global dominance, stature and wealth.
Progress toward a trade agreement nearly collapsed this past week, with both sides hardening their bargaining positions. And even if a trade deal is reached, it may do little to resolve tensions between the world's two largest economies.
The United States is increasingly wary of China's emerging role in the global economy and the tactics it uses to get ahead, including state-sponsored hacking, acquisitions of high-tech companies in the United States and Europe, subsidies to crucial industries and discrimination against foreign companies.
The Trump administration has begun trying to limit China's economic influence in the United States and abroad, warning about China's ambitions in increasingly stark terms. Secretary of State Mike Pompeo compared China's ambitions to Russia and Iran in a speech in London on Wednesday, saying Beijing poses "a new kind of challenge; an authoritarian regime that's integrated economically into the West in ways that the Soviet Union never was".
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US steams into deep waters over Iran
- By Louise Callaghan
- The Sunday Times
- 12:00AM May 13, 2019
In his office behind blast barriers and tetchy armed guards in Baghdad, the Iraqi militiaman fumed. It was February and US President Donald Trump had just said America wanted to keep a military base in Iraq to “watch” Iran.
The militiaman, whose group is closely allied with Tehran, saw this as a direct threat — a sign of how an increasingly hawkish US administration was pushing for war in the Middle East.
“They’re trying to provoke us,” he spat. “We see it as a challenge.”
His militia fought the Americans after the 2003 invasion of Iraq. They then battled on the same side as the US against Islamic State. Now they are enemies again and the militia blame the Trump administration for an escalation that has brought them to the brink of war. A year after Trump withdrew from the 2015 treaty that curbed Iran’s nuclear program in return for lifting international sanctions, military conflict is looking increasingly likely.
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Trump 'loves the position we're in' as China retort smashes Wall St
Michael Smith and Jacob Greber
May 13, 2019 — 10.41pm
Washington | Wall Street is in freefall, with more than $1.4 trillion wiped off the value of equity markets, after China announced a plan for retaliatory tariffs on $US60 billion ($83 billion) of US goods from June 1.
In a jarring contrast to last week's nonplussed trading close, the bleak reality of a worsening trade dispute smashed stocks, sent bond yields tumbling and doubled the odds of a Fed rate cut this year to 80 per cent. The Dow Jones Industrial Average closed down 617 points.
The market reaction for the first time suggests investors are starting to price in harsh consequences of tariffs, including the kinds of monetary policy reactions normally associated with recession.
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Doomsday scenario: How the world will look in 2024 if trade talks fall apart
By Anna Isaac
May 14, 2019 — 10.45am
The year is 2024. While the world is not yet in a state of all-out violence, military tensions between Washington and Beijing are provoking talk of a gathering storm.
A doomsday warning from the World Trade Organisation five years previously has come true. A full-blown trade war between the world's two great superpowers has wiped 17 per cent off global trade - a more extreme drop than that seen during the 2008 great financial crisis - precipitating a global downturn and a Chinese currency shock that sent a disinflationary wave across Asia.
China's third aircraft carrier is now two years old. It's steering a course uncomfortably close to the coast of Queensland, Australia. Once only a route for spy ships that were easily deniable, this is now openly hostile.
An unexplained communications blackout that lasted three days in the highly sensitive African port of Djibouti is about to be debated at the UN. The diplomatic circuit is buzzing with reports that London, which supplied much of the Djiboutian government's technology infrastructure, has sent a joint Pentagon and GCHQ task force to rebuild its IT network and check for any Chinese bugs.
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'Risk has increased substantially': Morgan Stanley sounds global recession warning
By Elena Popina
May 14, 2019 — 9.52am
After a tumultuous week ended on an up note, it seemed Wall Street might escape the trade spat with only bruises. Then came Monday, when the biggest sell-off in four months more than doubled last week's damage.
What changed? The reality of a potential impasse took hold. Maybe the US and China won't come to terms. Maybe the stock market won't be able to right its ship. And maybe the consequences will be too much for the economy.
It's a minority view, to be sure, but for Mike Wilson, Morgan Stanley's chief equity strategist, the escalation has increased the likelihood for a prolonged economic downturn - the most reliable killer of bull markets. JPMorgan Chase & Co's head of cross asset fundamental strategy, John Normand, warned that stocks could fall another 10 per cent.
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Trump (and the rest of the world) is confused about where the US-China trade talks stand
By Stephen Bartholomeusz
May 13, 2019 — 1.37pm
Markets are confused, unable to decipher whether last week’s trade negotiations between the US and China have broken down irretrievably or whether it’s just another hiccup in the process.
They are not the only ones confused. The Trump administration, and Trump himself, appear just as befuddled, with Trump’s latest tweets only adding to the uncertainty.
The United States and China appeared at a deadlock over trade negotiations on Sunday as Washington demanded promises of concrete changes to Chinese law and Beijing said it would not swallow any “bitter fruit” that harmed its interests.
When the talks in Washington last week between the administration and a Chinese delegation ended without a resolution and the US followed through with its threat to increase the tariffs on $US200 billion ($287 billion) of China’s exports, it appeared the two sides were locked in an escalating and destructive trade war. US equity markets fell.
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Trump threatens China with tariffs on $US300 billion worth of goods
By Matthew Knott and Kirsty Needham
Updated May 14, 2019 — 11.13am first published at 8.57am
New York: The Trump administration has started the official process to impose tariffs on Chinese goods worth an additional $US300 billion ($432 billion), a move that would dramatically escalate its trade war with China and lead to significant price rises for ordinary Americans.
The proposed new 25 per cent tariff announced on Monday, US time, would mean that virtually all Chinese goods imported into the US would be covered by tariffs.
The decision followed an announcement earlier in the day that China would impose tariffs on $US60 billion worth of US imports following a separate tariff hike imposed by the US last week.
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Trump has China on the defensive
By Peter Hartcher
May 14, 2019 — 12.02am
Donald Trump was much ridiculed for his famous remark that "trade wars are good and easy to win". It's not over yet, but on developments so far you'd have to say that he is winning his trade war with China.
After Trump fired the first shot in the trade war eight months ago, the world's two biggest economies slapped punitive trade taxes on each other's goods while they negotiated a new deal.
Last week they seemed to be on the brink of an agreement. The two sides were even discussing the details of when and where Trump and Chinese President Xi Jinping would hold the signing ceremony for the new pact.
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Australia on the front line of the US-China trade war
Chinese students support our education industry and the inner city apartment market. Both stand to suffer in a US-China trade war. Pic: Tony Gough
Robert Gottliebsen
• 8:00AM May 14, 2019
A prolonged US-China trade war will hit Australia harder than any other developed nation.
Because of our unique situation we are arguably more exposed than either China or the US.
Indeed, when the rest of the world discovers what is happening Down Under, they will be aghast. The Australian dollar is vulnerable.
Both China and the US have been preparing for a possible trade war since President Donald Trump took office.
Australia’s two major political parties — but particularly the ALP — have assumed it will not happen and have all the wrong policies for such an event.
And, of course, they may be right, and China and the US will reach agreement as seemed likely a week or two ago.
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Trump's tariffs are starting to look permanent
Shawn Donnan
May 14, 2019 — 4.55pm
Washington | President Donald Trump has repeatedly portrayed the punitive tariffs he has imposed on China and other countries as tools to create leverage and draw them into new trade deals that benefit the US.
Increasingly, however, it is looking like Trump's tariffs are here to stay and more tangible than any of the deals the president has promised. And that, economists agree, bodes badly for the US and global economies.
With his move to raise tariffs on $US200 billion ($288 billion) in Chinese imports last week and to order up plans for tariffs on all further trade from China, Trump has deployed import taxes on a scale not seen in decades, with some economists reaching as far back as the 19th century for comparisons.
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The trade war is back – what went wrong, what it means for share markets and Australia
14 May, 2019
Key points
• The trade war between the US and China has returned after talks to resolve their trade differences broke down.
• Our base case remains that a deal will be reached to resolve the issues, but the risks to global growth are now higher (given the escalation in tariffs from the US) and share markets may need to fall further in the short term to remind both sides of the need for a deal.
Introduction
After taking a back seat over the last six months as negotiations appeared to make progress the US/China trade war is back on with the President Trump – “tariff man” - ramping up tariffs on Chinese imports again and threatening more and China moving to retaliate. This note takes a simple Q & A approach to the key issues.
What is a trade war?
A trade war is where countries raise barriers to trade with each other (such as tariffs or quotas on imports or subsidies to domestic industries) usually motivated by a desire to “protect” domestic jobs often overlaid with (or dressed up by) “national security” motivations. To be a “trade war” the barriers need to be significant in terms of their size and the proportion of imports covered. The best known global trade war was that of 1930 where average 20% tariff hikes on US imports led to retaliation by other countries and contributed to a plunge in world trade.
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Trump calls tariff war 'a little squabble'
Alexandra Alper and Susan Heavey
May 15, 2019 — 3.19am
Washington | US President Donald Trump insisted that trade talks with China have not collapsed and called the widening US-China tariff war "a little squabble", even as his administration readies 25 per cent duties on all remaining Chinese imports.
Expanding on a stream of optimistic early morning tweets about the state of talks, Trump told reporters that he has a "very good dialogue" going with China and touted his "extraordinary" relationship with Chinese President Xi Jinping.
"We have a dialogue going. It will always continue," Trump said. "But we made a deal with China ... We had a deal that was very close but then they broke it. They really did."
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No backing down for both sides in trade war
The rhetoric and retaliation in the US-China trade wars are only intensifying. How much worse can this get? Possibly a lot.
Jennifer Hewett Columnist
May 14, 2019 — 7.00pm
Here we go again. The markets have finally acknowledged their misplaced complacency that mutual self-interest, political and economic, would eventually ensure a trade deal between the US and China. Instead, the rhetoric and retaliation are only intensifying. How much worse can this get? Possibly a lot. Risk off. But that interferes with the hopes the economic party can keep going a while longer yet. Risk a bit back on?
In politics, the big picture comes with even sharper edges. Neither side looks like backing away right now, given the public threats and counter threats – with an aggrieved US Administration believing China has retreated from commitments already agreed on in negotiations.
China, after having been relatively restrained in its initial reaction to Donald Trump’s provocative moves, is responding in kind, with its state-controlled media declaring China is “not afraid of it [a trade war] and will fight back”.
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Rhetoric heats up, markets dive as US-China trade war escalates
GLENDA KORPORAAL
• 3:10PM May 14, 2019
Within days of the Federal election, world markets have been plunged into a new round of turbulence with increasing acrimony between the US and China as their trade talks look to have broken down.
What looked like a last minute negotiating ploy a week ago, with President Trump’s threatened tariff hikes on $US200 billion ($275bn) worth of goods from China, has rapidly deteriorated into a new series of threats and counterthreats between Washington and Beijing.
China’s announcement of a new round of tariffs wiped more than $US1.4 trillion off shares on Wall Street on Monday, with the Australian market losing more than $25bn in early trade today in reaction to the news.
The price of gold rose as financial markets tried to cope with yet another bout of uncertain relations between the world’s two largest economies.
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Fire or ice: how the long debt cycle might end
Some warn that the world of high debt and low interest rates will end in the fire of inflation. Others prophesy that it will end in the ice of deflation.
Martin Wolf Financial Times
May 15, 2019 — 10.12am
Some say the world will end in fire, Some say in ice.” These brilliant lines by the poet Robert Frost capture the world’s possible economic prospects. Some warn that the world of high debt and low interest rates will end in the fire of inflation. Others prophesy that it will end in the ice of deflation.
Others, such as Ray Dalio of Bridgewater, are more optimistic: the economy will be neither burnt nor frozen. Instead, it will be neither too hot nor too cold, like the baby bear’s porridge, at least in countries that have had the fortune and wit to borrow in currencies they create freely.
William White, former chief economist of the Bank for International Settlements, presciently warned of financial risks before the 2007-09 financial crisis. Last year, he warned of another crisis, pointing to the continuing rise in non-financial sector debt, especially of governments in high-income countries and corporations in high-income and emerging economies. Those in emerging countries are particularly vulnerable, because much of their borrowing is in foreign currencies. This causes currency mismatches in their balance sheets.
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‘Stupid’: Chinese President dismisses 'clash of civilisation' talk
By Kirsty Needham
May 16, 2019 — 5.19am
Beijing: Chinese President Xi Jinping has told Asian leaders that anyone who thinks their civilisation is superior and will replace others is “stupid”, in comments widely viewed as a swipe at the United States.
Chinese president Xi Jinping has told Asian leaders at the Conference on Dialogue of Asian Civilisations that anyone who thinks their civilisation is superior and will replace others is 'stupid'.
A senior US official stunned American allies this month by describing the country's rivalry with China as the first time “we will have a great power competitor that is not Caucasian”.
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White House launches tool to report right-wing social media 'bias'
May 16, 2019 — 10.24am
San Francisco: The White House has launched an online form asking people to share their experiences if they think political partisanship has led them to be silenced by social media sites.
The launch comes on the heels of President Donald Trump's repeated assertions claiming anti-conservative bias by tech companies.
The White House's official Twitter account tweeted a link to the form Wednesday, saying that "The Trump Administration is fighting for free speech online."
The tweet continues that "no matter your views, if you suspect political bias has caused you to be censored or silenced online, we want to hear about it!"
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Trump resisting hawks' aggressive posture on Iran
John Hudson, Shane Harris, Josh Dawsey and Anne Gearan
May 16, 2019 — 4.52pm
Washington | The Trump administration has been on high alert in response to what military and intelligence officials have deemed specific and credible threats from Iran against US personnel in the Middle East.
But President Donald Trump is frustrated with some of his top advisers, who he thinks could rush the United States into a military confrontation with Iran and shatter his long-standing pledge to withdraw from costly foreign wars, according to several US officials. Trump prefers a diplomatic approach to resolving tensions and wants to speak directly with Iran's leaders.
Disagreements over assessing and responding to the recent intelligence - which includes a directive from Iran's supreme leader, Ayatollah Ali Khamenei, that some American officials interpret as a threat to US personnel in the Middle East - are also fraying alliances with foreign allies, according to officials in the United States and Europe.
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Trump’s Huawei Threat Is the Nuclear Option to Halt China’s Rise
Bloomberg News
May 16, 2019, 6:16 PM GMT+10 Updated on May 17, 2019, 3:53 AM GMT+10
- The White House’s campaign could disrupt 5G rollouts globally
- The struggle to contain Beijing may also hurt America
The Trump administration is pulling out the big guns in its push to slow China’s rise, with potentially devastating consequences for the rest of the world.
The White House on Wednesday initiated a two-pronged assault on China: barring companies deemed a national security threat from selling to the U.S., and threatening to blacklist Huawei Technologies Co. from buying essential components. If it follows through, the move could cripple China’s largest technology company, depress the business of American chip giants from Qualcomm Inc. to Micron Technology Inc., and potentially disrupt the rollout of critical 5G wireless networks around the world.
“The Trump administration action is a grave escalation with China,” Eurasia Group analysts Paul Triolo, Michael Hirson and Jeffrey Wright wrote in a note. If fully implemented, the blacklist would “put at risk both the company itself and the networks of Huawei customers around the world, as the firm would be unable to upgrade software and conduct routine maintenance and hardware replacement.”
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What could happen if China used its 'nuclear option' in the trade war
Jonathan Garber
May 17, 2019 — 8.32am
Key Points
- This week, the editor-in-chief of the Global Times, a state-aligned Chinese tabloid, said Chinese scholars were looking into the possibility of China dumping US Treasuries.
- UBS looked at the Federal Reserve’s tapering to try to figure out what kind of impact China selling $US1.1 trillion of Treasuries would have on the bond market, and concluded the 10-year yield could rise by up to 40 basis points.
- Bloomberg’s Joe Weisenthal thinks yields could actually fall if China sold its holdings.
- The debate is likely for naught as China needs to hold Treasuries, according to one analyst.
Chinese scholars are reportedly looking into the so-called nuclear option in the trade war – Beijing dumping US Treasuries.
“Many Chinese scholars are discussing the possibility of dumping US Treasuries and how to do it specifically,” Hu Xijin, the editor-in-chief of the state-aligned Chinese tabloid Global Times, tweeted on Monday, setting off a debate about what the consequences would be if China divested its holdings.
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China toughens trade rhetoric
Ben Blanchard and David Shepardson
May 18, 2019 — 10.22am
Beijing | China struck a more aggressive tone in its trade war with the United States, suggesting a resumption of talks between the world's two largest economies would be meaningless unless Washington changed course.
The tough talk capped a week that saw Beijing unveil fresh retaliatory tariffs, US officials accuse China of backtracking on promises made during months of talks and the Trump administration level a potentially crippling blow against one of China's biggest and most successful companies.
We believe if there is meaning for these talks, there must be a show of sincerity
— China's foreign ministry
Chinese foreign ministry spokesman Lu Kang, asked about state media reports suggesting there would be no more trade negotiations, said China always encouraged resolving disputes with the United States through dialogue and consultations.
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Brexit talks collapse as PM May's authority drains away
By Nick Miller
May 18, 2019 — 6.43am
London: The Brexit talks between the UK government and Labour opposition have collapsed, leaving the country stuck in its democratic deadlock over its departure from the European Union.
The talks had been intended to fashion a Brexit plan that would win the support of both sides of politics – most likely a “softer” version of Prime Minister Theresa May’s original deal struck with Brussels.
European Union leaders agreed to grant British Prime Minister Theresa May a new Brexit deadline of October 31, unless she can find a majority backing for her exit deal before then.
But Labour leader Jeremy Corbyn called a halt, blaming the government’s “increasing weakness and instability”.
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What the world can expect from Labor
- 12:00AM May 18, 2019
In Washington, the Bureau of Intelligence and Research, the State Department, the Pentagon and even the Asia division of the National Security Council have been looking closely, among their many other tasks, at one thing: what would a Bill Shorten-led government mean for Australian foreign and defence policy? Similar questions are being asked in Beijing, Tokyo, London, Singapore and Paris, where any change is examined for possible implications for the $50 billion submarine deal.
Australia is an important country, with the 13th or so biggest economy. It is also a critically important ally of the US in the Indo-Pacific. Many national capitals are examining any possible changes in Canberra’s outlook.
The Morrison government has gone missing so completely in defence and foreign affairs in this election campaign that the only expectation if Scott Morrison pulls off an upset victory is for a stodgy continuation of the status quo. The only action available to any Coalition voter concerned with national security is, if they live in NSW, to vote below the line for retired major-general Jim Molan, the only senior Coalition politician to have any profile on national security during this campaign. However, the politics of foreign policy for whichever party wins today will be more complex and challenging than it may now seem.
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Austria set for snap election as right-wing coalition collapses over Russia influence
By Katrin Bennhold
May 19, 2019 — 10.57am
Berlin: Austria's chancellor called on Saturday for snap elections after the country's far-right vice-chancellor resigned over a secretly filmed video from 2017 that renewed questions about whether Russia had a direct line into a government at the heart of Europe.
The video showed Vice-Chancellor Heinz-Christian Strache of the far-right Freedom Party promising government contracts to a woman claiming to be the niece of a Russian oligarch.
"After yesterday's video, enough is enough," Chancellor Sebastian Kurz told a room packed with reporters Saturday night in the capital, Vienna. He said he had asked Austria's president to hold a new election "as soon as possible."
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I look forward to comments on all this!
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David.
1 comment:
It looks as though Sussan Ley is back from the dead. I wonder if she will go anywhere near Health and what will happen to Greg Hunt.
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