October 20 Edition.
Parliament has now come back and by the time you read this it will have gone until the 7th of November. I wonder what mess we will have emerged by the time we all get to be reading this.
Both here and overseas one gets the feeling we might be heading into a soft patch. Time will tell if I am right.
That said there is one piece of really good, if temporary, news on the Budget.
COMMENT
Peter Martin
What if, suddenly, we were out of the woods?
Quietly, the mining industry has just doubled the price of coking coal. Instead of getting $US81 per tonne as it did back in March, for the next three months it'll get $US200 per tonne from Japan, the most in four years. And Japan has reason to be grateful. The so-called spot price has surged even higher, to $US213 per tonne.
Australia has reached the bottom of a major cycle, according to mining magnate Andrew 'Twiggy' Forrest. Courtesy ABC
If it stays there, or even near there, a good chunk of Scott Morrison's budget problems will have vanished, just as they vanished for Peter Costello during the mining boom at the start of the century.
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Thursday Update:
After the third of the three presidential debates I think, baring a huge mistake, we will see President Clinton - Mark II on November 8. That might help a little global stability!
Here are a few other things I have noticed.
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Budget Issues.
Vanessa Desloires
Australia's economy is in "bust" territory for just the second time in two decades, but that doesn't necessarily point to a hard landing, according to Citi.
Economists for the investment bank, led by Paul Brennan, have developed a "bubble meter" for the economy, which creates a "Z score" by measuring terms of trade, mining investment, bond yields, apartment approvals and house prices.
Glenn Stevens: The future of property
Former RBA governor Glenn Stevens explains in September how the bank seeks to balance the needs of the property market with the broader Australian economy.
"Some investors, especially those overseas, worry that the bursting of record commodity prices, house prices, apartment approvals, household debt and mining investment would derail the economy," Mr Brennan said.
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- Oct 10 2016 at 6:32 PM
- Updated Oct 10 2016 at 6:32 PM
The federal government is pushing its company tax package as key to the long-term salvation of the budget but admits privately it is likely to be severely curtailed by the Senate.
A day after Treasurer Scott Morrison told The Australian Financial Review that monetary policy had run its race in terms of stimulus and budget policy needed to do the heavy lifting, both he and Finance Minister Mathias Cormann made overt appeals for the adoption of the government's entire company tax package.
At a cost of $48 billion, it would reduce the company tax rate for all incorporated companies to 25 per cent by 2026-27. But sources confirmed that, at best, the government would secure Senate support next month for the first phase, which would grant a rate of 27.5 per cent to companies with an annual turnover of up to $10 million. The legislation for the 10-year plan is scheduled to pass the House of Representatives this week and will be debated in the Senate in November.
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Colin Brinsden, AAP Economics Correspondent - AAP on October 10, 2016, 3:54 pm
S&P; warns of 'extreme' foreign debt
Treasurer Scott Morrison has returned from an international economic gathering in the US, boasting there is not an economy in the world that would not want to be Australia.
His upbeat appraisal though was tempered by a global credit rating agency again warning Australia could lose its treasured tripe-A rating as foreign debt balloons.
Mr Morrison attended the annual meetings of the International Monetary Fund and World Bank in Washington last week.
"There is not an economy in the G20 or other wise that would not want to be Australia at the moment and would not want to have the strong financial and banking system that ensures that we can have the resilience to ensure we underpin jobs and growth in this country," he told parliament on Monday.
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October 11, 20164:16pm
Colin Brinsden, AAP Economics Correspondent Australian Associated Press
Malcolm Turnbull insists his government is continuing the hard task of budget repair but a think tank doubts Australia's financial books are any nearer to a surplus.
The prime minister told parliament his government has already delivered $11 billion in budget repair.
"We are making the 45th parliament work," he proclaimed on Tuesday.
But national chairman of the Committee for Economic Development of Australia Paul McClintock still believes the budget has more than a savings problem.
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AAP – 18 hours ago
Treasurer Scott Morrison hopes Labor's recent decision to back a $6 billion savings bill wasn't just a one-off, as a national think tank doubts the budget is any nearer to reaching a surplus.
The opposition backed the $6 billion so-called omnibus savings bill through parliament in September.
But with more than $6 billion of welfare savings stuck in the parliament and the government's 10-year business tax plan now hanging in the balance, Mr Morrison accused the opposition of just "trying to play wrecker".
"We had the one example of the omnibus bill on savings that we were able to get through but I hope that doesn't prove to be the exception to the rule, because the rule at the moment is Bill Shorten playing politics with everything, absolutely everything," he told Ray Hadley on Sydney's 2GB radio.
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Paul Osborne, AAP Senior Political Writer - AAP on October 11, 2016, 10:35 am
The federal government faces an uphill battle to get its corporate tax cuts through parliament after Labor confirmed its opposition in a dissenting inquiry report.
The Greens are also expected to confirm their opposition after a partyroom meeting on Tuesday, meaning the coalition will need to seek crossbench backing.
Treasurer Scott Morrison says Labor is more interested in paying out more money in welfare than giving small businesses with turnovers of less than $10 million a tax break.
Labor senators issued a dissenting report on Monday night on the government's tax cut draft laws, saying the cut should only apply to businesses with turnover of less than $2 million and that to extend the break beyond this threshold is unaffordable.
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12 Oct 2016 - 3:44pm
Treasurer Scott Morrison has dismissed calls from a national think tank for higher taxes to repair the budget quickly.
Source:
AAP 12 Oct 2016 - 3:44 PM UPDATED YESTERDAY 3:44 PM
Treasurer Scott Morrison has dismissed advice from a national think tank that revenue measures are the only way to balance the federal budget quickly.
"We are not going to be part of the high tax club which says to Australians that the path to prosperity is higher taxes, that somehow the path to growing the economy, supporting jobs is to have higher taxes," Mr Morrison told parliament on Wednesday.
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COMMENT
- October 14 2016 - 12:00AM
Jessica Irvine
The Human Services Minister, Christian Porter, is on a crusade to break the intergenerational linkages which lead to "welfare dependency".
He should know a thing or two about the intergenerational transfer of occupational status. His father, Charles "Chilla" Porter, was a director of the West Australian Liberal Party and his grandfather, Sir Charles Porter, served in the ministry of Joh Bjelke-Petersen.
In an address to the National Press Club last month, Porter jnr laughed while recalling that as a university student he was quite enamoured with the idea that "all tax was theft". "We all grow up a little, I guess."
By how much, remains to be seen.
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- Updated Oct 13 2016 at 8:08 PM
Scott Morrison may be about to become the luckiest treasurer in at least half a decade if the latest surge in commodity prices is sustained, potentially wiping around a third from his budget deficits almost overnight.
An indicative estimate by The Australian Financial Review based on research by Commonwealth Bank and Treasury suggests a surge in income from exports could cut as much as $23 billion off the $63.2 billion budget deficit for 2016-17 and 2017-18.
While at first glance the latest bounce in commodity prices is heartening, it also underscores that the Coalition government still has a massive task ahead of it in reducing the total $84.6 billion in deficits over four years and pulling back a debt load it has claimed could reach $1 trillion.
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- The Australian
- 3:54PM October 13, 2016
Daniel Palmer
The Reserve Bank will deliver a healthy $3.2 billion dividend to the government despite reporting a 58 per cent slide in net profit in 2015-16.
In its annual report, the central bank said it had logged a net profit of $2.9bn in the 2016 financial year, down $4bn on the prior year.
Its earnings available for distribution jumped $1.1bn on the prior year to $4.6bn, however, allowing it to hand a welcome $3.2bn dividend to Treasurer Scott Morrison.
The payout is the highest since then Treasurer Wayne Swan claimed $5.2bn during the depths of the financial crisis in 2008-09 and represents a $1.3bn improvement on last year’s corresponding number.
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- The Australian
- 12:00AM October 15, 2016
Adam Creighton
The US is still the richest country in the world but Americans aren’t. For almost a decade the typical Australian family has been better off than their American counterpart, for the first time in more than a century. The gap is narrowing, however, as US households enjoy a remarkable yet little noticed rebound, while the buying power of the Australian dollar wanes.
In a bid to burnish the long and insipid Obama presidency, Democrats seized on an unexpected skerrick of good news last month. After years of stagnation, US households enjoyed the biggest jump in income for more than 40 years in 2015, the US Census Bureau revealed. Median US household income — annual, from all sources, adjusted for the increase in prices, and before taxes — increased 5.2 per cent to $US56,500, the biggest rise since consistent records began in 1968. And that followed a 3.2 per cent increase in 2014, also among the largest.
As Donald Trump was riding a wave of rage to the top of the Republican ticket, incomes were surging in the US, across all income groups and demographics. And the number of Americans living in poverty, on less than about $US12,300 a year, fell to 43.1 million from 46.7 million in 2014, the lowest poverty rate since 2008.
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COMMENT
Jessica Irvine
Freshman Reserve Bank governor, Philip Lowe, kept interest rates unchanged at his first board meeting as governor this month.
Does that mean the Reserve Bank has abandoned its job of supporting the economy?
No. It's a natural tendency of mortgage holders - and the media - to focus on interest rate changes, when the bank decides to lower its official cash rate, with immediate flow-on effects to commercial rates – the rates that households and businesses actually pay.
But it's important to take a step back and remember that interest rates are already at half century lows. Even if interest rates stay the same for the foreseeable future, low interest rates are working every day behind the scenes to stimulate the economy.
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Health Budget Issues.
Human lifespan may have a natural limit that is unlikely to be exceeded, according to an analysis of global demographic data published online in Nature. The maximum age of death ever documented for humans is 122 years, and the odds that this record will be broken appear small. Using data from the Human Mortality Database, the authors from the Albert Einstein College of Medicine in the US, showed that the age with the greatest improvement in survival plateaued around 1980. The authors then focused on the maximum reported age at death in France, Japan, the United Kingdom and the US, as reported in the International Database on Longevity. This analysis revealed that age at death plateaued close to the time of death of Jeanne Calment — the oldest person ever documented — in 1997. The authors suggested that this could represent a natural limit of human lifespan. Their model predicted that the likelihood of a person exceeding the age of 125 years in any given year is less than 1 in 10 000.
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Authored by Sarah Colyer
HEALTH reform is discouragingly unscientific, according to a new book which warns that “too often, improvement is assumed, not measured”.
Comparing the experiences of health system changes in 30 countries, an international team of authors concluded that “the most striking similarity” was “the absence of evidence to link specific reforms with positive outcomes”.
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Lucy Cormack
Statements linking a price increase of Panadol Osteo to its removal from the Pharmaceutical Benefits Scheme were "ambiguous" but not misleading, an investigation by the Australian Competition and Consumer Commission has found.
Price hike set for Panadol Osteo
The maker of Panadol Osteo is slammed by the Federal Health Minister in December 2015 over its plans to raise the price of the popular painkiller by 50 per cent.
In December last year, pharmaceutical giant GlaxoSmithKline told its wholesalers it would lift its prices for Panadol Osteo by 50 per cent from January 1.
The hike meant the cost of one box rose to $7.50, if pharmacies passed on the full price rise to consumers.
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- The Australian
- 12:00AM October 11, 2016
Sarah Martin
Almost 6000 children previously listed as conscientious objectors have been immunised since the government introduced its “no jab, no pay” policy, the Australian Medical Association says, as it turns its attention to wealthier Australians failing to vaccinate their babies.
Launching a new booklet on the science of vaccination in Canberra yesterday, AMA chief Michael Gannon said that while immunisation rates were up generally in Australia, some areas still had rates as low as 86 per cent, including the Gold Coast, western Sydney and the NSW north coast.
“These lower rates are unlikely to afford the individual or the community with protection from outbreaks of vaccine-preventable disease,” he said, adding that between 90 to 95 per cent of people in a community needed to be vaccinated to protect “the herd” from disease.
“Vaccines are safe. Vaccines save lives.”
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12:10pm October 10, 2016
By AAP
Doctors and the federal government fear a new wave of anti-vaccination sentiment in some parts of Australia could lead to higher rates of serious illness.
A revised booklet on the science and benefits of vaccination was launched by Health Minister Sussan Ley, leading scientists and doctors in Canberra on Monday.
Ms Ley said vaccination rates had risen from 53 per cent in the late 1980s to over 90 per cent today, but there was still a need to be vigilant.
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- Oct 11 2016 at 6:30 PM
- Updated Oct 11 2016 at 6:30 PM
by Mark Abernethy
While the overwhelming consensus among health professionals and politicians is Australia's health system in its current form is unsustainable, trying to reform the system for the future is akin to herding cats.
As chairman of the Western Sydney Local Health District Professor Stephen Leeder proclaimed at the recent Future of Healthcare round table co-hosted by The Australian Financial Review and Philips, that health reform is a little like your Facebook status where you can write single, married, de facto or it's complicated.
"Why is health reform difficult? Because it is extremely complicated," Leeder says.
NSW Health Minister Jillian Skinner acknowledges reform is difficult but as an optimist she says she's up for the challenge.
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Health Insurance Issues.
- Updated Oct 10 2016 at 12:00 AM
by Jessica Gardner
Private health groups led by the country's two largest hospital operators, Ramsay Health Care and Healthscope, will call on the Health Minister to establish medical savings accounts as an alternative to the troubled $20 billion health insurance sector.
Through their lobbyist representative on Minister Sussan Ley's private health advisory committee, led by public service veteran Dr Jeffrey Harmer, the two giants will argue for a huge shift in the way hospital visits and ancillary care, like dentistry and optical, is funded. "I totally support government getting involved in trying to encourage people to make private choices but I'm not convinced that health insurance is the right horse to back any more," said Ramsay chief executive Chris Rex.
While private health insurers are their major source of revenue, Ramsay and Healthscope are increasingly battling against demands for cuts to the prices they can charge for hospital services with the focus now on the high cost of prostheses.
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- Oct 10 2016 at 12:00 AM
- Updated Oct 10 2016 at 12:00 AM
Ramsay Health Care chief executive Chris Rex has called the almost $1 billion figure that the private health insurance industry estimates could be saved on prosthetic devices each year "ridiculous" and denied the company is the main beneficiary of the overspend.
Based on prices paid by public hospitals and private operators overseas, the private health insurance industry argues it is forced to pay anywhere between $700 million and $1 billion more than it should to cover the cost of devices like heart valves and replacement hips used in surgeries.
While public hospitals can negotiate good deals with suppliers for large volumes, private hospitals, which pass the cost on to the insurer, must pay a regulated price decided by the government's prostheses list advisory committee (PLAC) that consists of industry representatives. The list covers 9000 devices (although not prosthetic limbs).
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- The Australian
- 12:00AM October 12, 2016
Sarah-Jane Tasker
Private patients forced to use their health cover in a public setting overwhelmingly agree they are failing to get the service they expect when made to pay through their insurance, new data reveals.
HCF, Australia’s largest not-for-profit health fund, has released data from a survey of 35,000 of its members, conducted over the past three years, that highlights a significant disconnect between member expectations and actual experiences in public hospitals.
The survey revealed 60 per cent of HCF members did not receive their choice of doctor in a public hospital and only 20 per cent received a single room, despite being admitted as a private patient. HCF chief benefits officer Cindy Shay questioned how much of the push by public hospitals for insured patients to use their cover was a revenue enhancement compared with a service enhancement.
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Pharmacy Issues.
Location, ownership rules and Guild-government agreements all in the firing line for CHF
A major shake-up to pharmacy regulations are needed to move the profession into a more central role in Australian healthcare, the Consumers Health Forum of Australia says.
In its submission to the Review of Pharmacy Remuneration and Regulation, CHF recommends alternative arrangements to current bi-lateral pharmacy agreement process between the Government and the Pharmacy Guild representing owners, and for the de-regulation of location and ownership rules governing the whereabouts of pharmacies and who can own them.
“The rules governing pharmacies, which will receive $18.9 billion over five years under the current pharmacy agreement, need to change to reflect changes in community expectations and potential health reforms which will change pharmacists’ working relationships with other health professionals,” said Leanne Wells, CEO of the consumer organisation.
The group says funding needs to be spread outside the purely retail setting and needs to move away from a bilateral negotiation between the Pharmacy Guild of Australia and the government.
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Superannuation Matters.
- Updated Oct 9 2016 at 8:00 PM
Treasurer Scott Morrison's relaxing of the restrictions on making tax deductible contributions to superannuation are to be applauded but they don't go far enough.
Given the lack of retirement savings held by the self employed, the government – with help from the super industry – needs to make greater efforts to ensure that independent contractors are aware of, and understand their ability to make tax-deductible contributions. Alternatively, the government should consider extending the compulsory super system to include the self-employed.
As part of the budget, Mr Morrison said that from July next year the government would enable all individuals, regardless of their employment circumstances, to claim tax deductions for super contributions up to the pre-tax, or non-concessional limit, which is to be set at $25,000. This is an improvement on the current far more complex system, whereby an individual cannot claim a deduction for super contributions if they obtain 10 per cent or more of their income, reportable fringe benefits or total reportable employer super contributions as an employee.
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I look forward to comments on all this!
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David.
