April 20, 2017 Edition.
It the last week President Trump seems to have gone all military on us with cruise missiles, huge bombs and a stand-off with North Korea which seems to be loving all the attention!
Markets all over have got nervous. Additionally confidence of Pres. Trump delivering major legislation any-time soon is certainly fading.
In OZ we have had the usual Budget run-up and a huge number of kites have been flown! Most will never see the light of day! Political agreement as to both the problems and even more so what to do with them seems rare indeed. We will all have to just wait and see!
May 9, 2017 is Budget Day if you are wondering.
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Here are a few other things I have noticed.
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National Budget Issues.
Too many stuff-ups about to put economic reform into reverse
Ross Gittins
Published: April 10, 2017 - 5:57AM
Published: April 10, 2017 - 5:57AM
I have bad news and worse for advocates of micro-economic reform. First, the jig is up. There'll be few if any further major reforms. Second, the backlash against mounting wreckage from failed reforms is about to begin.
Since the reform push has degenerated into little more than business rent-seeking – let's cut tax on business and increase it on consumers; let's push the legislated balance of power in industrial relations further in favour of employers – it's neither surprising nor regrettable that voters have called a halt.
Micro reform has lost all credibility with voters. Most oppose company tax cuts for big business, cuts in penalty rates and a freeze on the minimum wage. Neither side of politics will pursue these "reforms" with any enthusiasm.
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Scott Morrison's housing fix: no change to negative gearing, affordable rentals
James Massola, chief political correspondent
Published: April 10, 2017 - 12:00AM
Published: April 10, 2017 - 12:00AM
The federal government is spending $6.8 billion each year to fix housing affordability for renters but the problem is getting worse, not better, according to Treasurer Scott Morrison.
And while the overall rate of home ownership in Australia fell from 71 per cent to 67 per cent between 2002 and 2014, young people are being hit hardest by soaring house prices in Sydney and Melbourne, in particular, and are being forced out of the housing market.
For 25 to 34 -year-olds in this period, home ownership rates fell by nearly 10 percentage points to less than 30 per cent and for 35 to 44-year-olds, it fell by more than 10 points to 52.4 per cent.
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Cuts to the $22 billion NDIS behemoth would cost more in the long run
Jessica Irvine
Published: April 10, 2017 - 12:00AM
Published: April 10, 2017 - 12:00AM
Everyone knows the National Disability Insurance Scheme is a great idea, but hopelessly over budget – an expensive Labor extravagance – right?
Don't buy the lie.
The $22 billion behemoth is certainly vulnerable to cost-over runs (which I'll get to).
But the most remarkable thing about this important scheme is the extent to which it has, since its conception in 2011, remained on-budget and on-time.
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Cradle-to-grave housing plan
- The Australian
- 12:00AM April 10, 2017
Simon Benson
The Turnbull government will pursue a “cradle-to-grave” housing affordability package in the budget likely to include a mutual-obligation superannuation plan for first-home buyers, tax breaks for downsizing the family home in retirement and a social housing plan to alleviate rental stress.
The government is also considering a plan to unlock and better use federal government land for housing, to address big housing supply issues facing the states.
In a speech to be delivered today, Scott Morrison will also place the rental crisis at the heart of the housing package, with incentives planned for institutional investment in social and affordable housing.
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Budget measures to encourage migrants out of capital cities
Adam Gartrell, Political Correspondent
Published: April 9, 2017 - 2:32PM
Published: April 9, 2017 - 2:32PM
The Turnbull government is considering new measures to encourage more migrants to settle in regional or remote areas to relieve pressure on house prices and infrastructure in Sydney and Melbourne.
With one month until budget day, Immigration Minister Peter Dutton says his department is working closely with the treasury and finance departments to assess the likely impact of a possible shift in the migration program.
House prices rose 19 per cent in Sydney and 16 per cent in Melbourne in the year to March, locking more people out of the market.
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Scott Morrison makes the case for negative gearing change
Michael Pascoe
Published: April 11, 2017 - 12:15AM
Published: April 11, 2017 - 12:15AM
It's hard to decide which was more impressive: the case Treasurer Scott Morrison made to the Australian Housing and Urban Research Institute for changing our negative gearing rules, or the contortions he subsequently performed to deny any need for changing negative gearing.
Having promised that next month's budget will "do something" about housing affordability, Morrison appears to have closed off all federal options beyond an improved funding mechanism for social housing. It's small beer indeed around the barbecue-stopper of housing affordability.
ScoMo is making a considerable show of "doing something" on housing, billing his AHURI speech as the second in a series, presumably culminating in budget presentation.
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May budget: Axe hovers over government's $648.5 million work-for-the-dole program
James Massola, chief political correspondent
Published: April 11, 2017 - 12:15AM
Published: April 11, 2017 - 12:15AM
The Turnbull government's powerful expenditure review committee has discussed axing one of Tony Abbott's first major policy achievements, the work-for-the-dole program.
But a group of backbench MPs have lobbied Treasurer Scott Morrison as part of a rearguard action to save it, with one describing work for the dole as "red meat for the base" and warning that axing it would infuriate the party's conservative supporters.
Fairfax Media has been told axing work for the dole was discussed when the budget razor gang met last week but a final decision has not been made.
The proposal to axe the policy, introduced by Mr Abbott in 1998 as a junior minister in the Howard government, was floated as the Turnbull government continues to hunt for savings.
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Government's piecemeal housing fix simply won't work
Jenny Smith
Published: April 10, 2017 - 3:29PM
Published: April 10, 2017 - 3:29PM
The Treasurer's highly anticipated speech on housing affordability on Monday has succeeded in articulating the depth and breadth of Australia's affordability crisis, but failed to provide a comprehensive policy response.
It is a positive development that the federal government recognises that housing affordability, for both buyers and renters, is bad and getting worse. It is also positive that the struggles of low-income households, including families and retirees, is on the agenda.
The problem is in the solutions being put forward. The Treasurer sees lack of supply and private sector investment as the root of the problem and this is driving the policy approach.
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Seniors incentive to free up housing stock, help elderly
Renee Viellaris, The Courier-Mail
April 10, 2017 7:25am
PENSIONERS would receive a financial incentive to downsize their family home under a Budget plan that will release housing stock across the country and ease the pressure on cash-strapped seniors.
Treasurer Scott Morrison is believed to be considering measures to motivate older Australians to reap the equity in their homes and improve their quality of life.
The Courier-Mail has been told that some in the Government believe there is merit in a Budget submission from National Seniors Australia that calls for aged pensioners to downsize or quarantine a portion of cash from the sale of their home to invest in Government bonds.
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Radical overhaul of middle class welfare could fix deficit
Tom Minear, Federal Political Reporter, Herald Sun
April 9, 2017 8:00pm
A RADICAL overhaul of the middle-class welfare system could be the circuit-breaker solution to wipe out Australia’s mammoth deficit.
Official modelling obtained by the Herald Sun shows the country could save $36.5 billion over the next decade by slowing the growth of welfare payments to inflation.
Another $28 billion could be returned to the Budget bottom line over 10 years if unemployment payments were frozen for as long as the recipients were out of work.
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- Updated Apr 12 2017 at 12:01 AM
House prices 'dangerously dumb' and 30pc overvalued: Chris Richardson, Deloitte
by Jacob Greber
Recession will be unavoidable if China stumbles because Australian households are being crushed by the world's second-largest debt burden and "dangerously dumb" property prices that are more overvalued than at any time since at least the early 1980s, says a top forecaster.
Modelling to shown by Deloitte Access Economics partner Chris Richardson at the National Press Club in Canberra on Wednesday shows a China crisis would wipe almost $140 billion from Australia's economy, send unemployment up, cut house prices by 9 per cent, and destroy almost $1 trillion of national wealth.
The modelling, which underscores the degree to which Australia's exposure to what happens in China is greater than at any time in the last two-thirds of a century, will also show that the federal budget would blow out by another $40 billion in over just two years.
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What happens if China stumbles? A $140 billion doomsday scenario
James Massola, chief political correspondent
Published: April 12, 2017 - 2:01AM
Published: April 12, 2017 - 2:01AM
Australia is more exposed to the economy of a single nation - China - than at any time since the 1950s, when Britain was our major trading partner.
While the gains from that economic relationship have been huge, the risk if China's economy slows are potentially just as large, new modelling warns.
The analysis, from Deloitte Access Economics' Chris Richardson, to be released on Wednesday at the National Press Club, says that if economic growth in China halved from its current rate of about 6.7 per cent to 3 per cent, Australia would be forced into recession as the nation "just doesn't have the ammo to fight it off anymore".
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- Updated Apr 11 2017 at 5:00 PM
Scott Morrison leaves regulators to do heavy lifting on housing
by Chris Bowen
There are many reasons why negative gearing and the capital gains tax discount need to be reformed. Housing affordability. Budget repair. And importantly, financial stability.
Financial stability is important because it maintains the smooth and efficient flow of funds between savers and borrowers, making the economy more resilient in the face of shocks.
What the GFC taught economies around the world is that there is a real human cost of financial instability – financial distress for families, people losing their homes, business bankruptcies and high unemployment. If there is one thing above all else that Treasurer Scott Morrison should be focused on, it is keeping the financial system stable.
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Federal Treasurer Scott Morrison rules out plan to change negative gearing
EXCLUSIVE, Sharri Markson
National Political Editor, The Daily Telegraph
National Political Editor, The Daily Telegraph
April 11, 2017 12:00am
SCOTT Morrison’s conservative Cabinet colleagues have shot down a plan to change negative gearing — a Budget policy the Treasurer was considering after new $200,000 Liberal Party research highlighted the critical issue of housing affordability.
The Daily Telegraph has confirmed Mr Morrison had been exploring the case for changes to negative gearing by limiting the deductibility of interest on residential investor mortgages.
The Treasurer firmly ruled out negative gearing changes after Prime Minister Malcolm Turnbull told him privately he needed consensus from the leaders of the Right, Immigration Minister Peter Dutton and Finance Minister Mathias Cormann, before he would consider the Budget measure.
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It keeps getting rejected but the idea of using retirement savings for first homes won’t go away
April 10, 2017 10:38pm
IT’S the housing funding idea that keeps getting clubbed by the experts but won’t go away, and now it’s dividing Cabinet.
Using superannuation to help buy a first home is being condemned by ministers who insist the consequences would be harmful rather than helpful. And officially no such proposal exists.
But it keeps being raised as a live Budget option and is most associated with Treasurer Scott Morrison, who appeared to be backing it today, and his junior minister Michael Sukkar.
But it is being questioned by other ministers including Finance Minister Mathias Cormann.
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What if inflation rises and wages don't?
Michael Pascoe
Published: April 13, 2017 - 12:15AM
Published: April 13, 2017 - 12:15AM
There's a bigger economic threat starting to rumble ominously just beyond our immediate headline hogs of housing affordability and energy: What if inflation rises and wages don't?
It's a problem exercising the minds of retail analysts as their sector (already in a spot of bother) would be the first to feel the obvious impact of such a scenario – weaker consumption spending.
And with consumption accounting for about 60 per cent of the economy and the government relying on real consumption growth of about 3 per cent to keep the overall GDP growth above trend, Houston might not have a problem but Canberra and much of the rest of the nation would.
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Turnbull enters row over affordable housing measures to dump dipping into retirement savings
April 12, 20174:01pm
Deloitte's Chris Richardson says Turnbull was 'right' to embrace innovation during campaign
MALCOLM Turnbull has moved to settled a cabinet brawl before it erupted over using superannuation accounts to fund first homes of young people.
It’s a bad idea, he indicated.
The numbers show a dip into retirement savings isn’t going to happen, and the proposal might not even get as far as the expenditure review committee which decides the contents of the Budget.
That means Treasurer Scott Morrison will have to look elsewhere to find effective Budget measures to increase housing affordability in the crisis cities of Melbourne and Sydney — the big promise at the centre of the May statement.
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Negative gearing, the common good and the political reality
John Warhurst
Published: April 13, 2017 - 12:15AM
Published: April 13, 2017 - 12:15AM
The Turnbull government has doggedly defended negative gearing, the policy by which the losses on investment properties can be offset against other income, most recently through Treasurer Scott Morrison before the May federal budget. Many experts blame the policy, in part, for rising house prices, which keep many younger first-home buyers out of the property market. It lowers the taxable income of such investors and thus hurts the overall budget bottom line, too.
But the policy is also popular with many investors, almost to the point that the idea of having an "investment property" has developed something of a cult following. For some people, it seems a way of life that promises otherwise unachievable prosperity.
There is no magic bullet to reining in rising house prices that squeeze out young home buyers in favour of investors. But to just about every responsible party besides the government, reforming negative gearing should be on the table as part of a possible solution. It is the government's apparent obduracy rather than the call for change that which needs explanation.
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Reserve Bank sounds warning about new mortgages
Eryk Bagshaw
Published: April 13, 2017 - 8:03PM
Published: April 13, 2017 - 8:03PM
One third of mortgage owners have less than a month's buffer against financial instability, the Reserve Bank has warned, in a review highlighting increased risks in the heated Sydney and Melbourne property markets.
The RBA's half-yearly financial stability review, released on Thursday, also took aim at the noticeable rise in investor credit, stating a decline could trigger a sharp downturn in the market.
"The concern is that investors are likely to contribute to the amplification of the cycles in borrowing and housing prices, generating additional risks to the future health of the economy," the RBA said.
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Scott Morrison must forget the spin and downplay expectations on housing
John Hewson
Published: April 13, 2017 - 4:45PM
Published: April 13, 2017 - 4:45PM
Effective management of expectations is fundamental to political success. It is counterproductive, if not fatal, to create expectations and then fail to deliver. This was certainly the defining aspect of Barack Obama's presidency. It is a principal reason for the collapse in Malcolm Turnbull's standing in the polls.
However, as obvious as this may be, our politicians seem incapable of learning the lesson. They are all too anxious to grab an issue, raising the expectations that they can "solve it".
An excellent example is housing affordability. Gladys Berejiklian has sought to make it the hallmark of her premiership. Scott Morrison is happy to make it the focus of his budget this year. Yet, realistically, they can only hope, at best, to make a marginal improvement in the crisis, although admitting it as a crisis may allow them to do somewhat more than would otherwise have been the case.
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Why will no one admit that improving housing affordability means bringing down prices?
Jacqueline Maley
Published: April 15, 2017 - 12:00AM
Published: April 15, 2017 - 12:00AM
Is there any political tradition more dispiriting and stupid than the pre-budget dance? The flying of "kites", the choreographed leaks to newspapers, the winky denials from politicians of the same ideas their press office has led journalists to believe are being seriously considered?
That's without even mentioning the infamous "rule-in/rule-out game" – which politicians are fond of saying they will not play, like it's something immoral, akin to admitting you hunt babies on weekends.
Even though they won't play it, the rule in/rule-out game was definitely invented by politicians, because they're obsessed by it. They talk about it all the time.
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Time to admit failed doctrine on low interest rates
- The Australian
- 12:00AM April 15, 2017
Alan Kohler
So according to the Reserve Bank, one third of households have no buffer, or a buffer of less than a month’s repayments.
This was mumbled on page 21 of the Financial Stability Review, before moving on quickly to commercial property. No one ran out into Martin Place with hair on fire, no one resigned in sackcloth and ashes, or apologised and, as far as we know, there was no roast from the Prime Minister or Treasurer, declaring their loss of confidence in the central bank.
Interest rates have been cut to the lowest level in history, yet inflation remains bogged below 2 per cent, unemployment is stuck at 5.9 per cent and now a third of borrowers are so far in debt they are bufferless. They are up to pussy’s bow, full stretch, bone on bone: no cartilage.
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Health Budget Issues.
Federal budget 2017: Budget razor gang to consider medicine scheme shake-up
Adam Gartrell, Health Correspondent
Published: April 11, 2017 - 11:45PM
Published: April 11, 2017 - 11:45PM
The Turnbull government's budget razor gang is set to consider changes to the $10 billion Pharmaceutical Benefits Scheme designed to bring down the price of medicines and kill off a potentially damaging fight with pharmacists.
Health Minister Greg Hunt is close to finalising a new strategic agreement with pharmaceutical industry body Medicines Australia that will underpin the changes to go before the expenditure review committee within days, Fairfax Media can reveal.
Well-placed sources in the medicines sector say that under the agreement the industry will bring down the cost of some drugs in exchange for price certainty and stability. The agreement will fill the void left after negotiations on an earlier agreement ended in acrimony in 2015.
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You’ll soon be slugged hundreds for X-rays and scan tests, as Medicare cover shrinks
Sue Dunlevy, National Health Reporter, News Corp Australia Network
April 11, 2017 10:00pm
YOU’LL pay more for X-rays and scans with out of pocket costs to rise to over $200 per screening, as the Turnbull Government prepares to ditch its election promise to raise Medicare rebates for the tests.
The broken promise will be a particular slug on cancer patients who need multiple tests for diagnosis and to check their cancer has not returned.
On the eve of the 2016 election, the Turnbull Government pledged to index the Medicare rebate for medical imaging for the first time in 19 years to head off a damaging advertising campaign from radiologists.
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How a $40 medical test became a $1000 test overnight
15 Apr 2017, 12:32 a.m.
Some doctors have increased their fees by up to 400 per cent, knowing the bill would be footed by taxpayers and not their price sensitive customers.
The federal government has parked its attempts to rein in the Extended Medicare Safety Net, despite a blowout in costs that the Department of Health warned in 2015 was largely the result of medical practitioners increasing their prices.
It will not be included in the May budget.
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Health reporting in sickly condition
- The Australian
- 12:00AM April 15, 2017
Sean Parnell
Australia has been ranked sixth on a global health transparency index, marked down for a lack of routine, uniform reporting on hospital rates of unexpected death, avoidable infections and unplanned readmission.
While Australia shared top place on the KPMG International analysis for finance, and earned a bonus point for publishing contract and procurement information, deficiencies in reporting quality issues held Australia back behind Scandinavian countries and Britain.
KPMG Australia healthcare partner Dan Harradine said there was a need for better and more consistent reporting of poor quality outcomes, and also better measurement and publication of patient outcomes and sentiments, to improve the system.
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Health Insurance Issues.
Med-techs propose new prostheses price model
- The Australian
- 12:00AM April 10, 2017
Sarah-Jane Tasker
A group of Australian med-tech companies is seeking a meeting with Health Minister Greg Hunt to push a new pricing model for the Prostheses List to end the bitter battle with private health insurers.
LifeHealthcare chief executive Matt Muscio is spearheading the proposal, saying the next couple of months are critical, given a senate inquiry on the controversial pricing list for medical devices is scheduled to report its findings.
“If we’re not part of the solution we are going to remain part of the problem,” Mr Muscio said.
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Private health funds to stop paying to fix botched surgeries
April 15, 20179:19pm
EXCLUSIVE
PRIVATE health insurers will stop paying for public hospital surgeries that leave policyholders with scalpels or scissors inside them.
Currently a fund, and possibly a policyholder, could end up having to pay twice — once for the bungled surgery and again for the fix.
News Corp Australia can also reveal that with the number of private patients in public hospitals increasing, insurers will seek binding contracts with state governments or public hospitals stipulating quality levels and costs.
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Private health insurance complaints on the rise
Complaints about the private health insurance industry have skyrocketed in recent years and new memberships have slowed, according to a new report from the Private Health Insurance Ombudsman.
The PHIO’s annual State of the Health Funds report showed an uptick in complaints across a range of insurers and regarding a host of issues including refunds for canceled memberships and administrative hurdles switching from one insurer to another, as well as problems with automated payments or delays and glitches in responding to queries.
In 2015-16 the private health insurance industry experienced growth of just 1.35% with 86,939 new memberships, compared with some 158,000 the previous year.Three major funds — HCF, Medibank and Westfund — saw their membership base contract.
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Pharmacy Issues
Pharmacists set for $600m Budget boost to stop overdoses
Wednesday, 12 April 2017 10:28AM
Chemists are in line for a $600 million windfall to expand community pharmacy programs in a bid to stop patients suffering bad reactions or overdoses from their medicines and having to be admitted to hospital.
The West Australian understands the money is likely to be announced in the Budget, helping boost pharmacists’ role in providing primary care services such as screening for chronic disease and ensuring medicines can be supplied in the bush and to indigenous communities.
It comes as the Federal Government gets closer to a deal with major drug makers to slash the cost taxpayers pay for some prescription drugs in return for five years of price certainty.
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I look forward to comments on all this!
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David.
