October 03, 2019 Edition.
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The big news this week – and for the next few months – will be the move by the Democrats to up the ante on the Ukrainian Affair and trying to get rid of him via Impeachment. The stress seem to be getting to Trump and he is becoming more and more erratic.
The UK is in utter chaos. Who knows where it will end
In OZ the biggest issue is management of our relationship with China which right now seems to be spinning out of control. The US / China relationship is the biggest issue of out time I believe and poses all sorts of challenges for Australia. The 70 year anniversary and the chaos in Hong Kong are both important to OZ!
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Major Issues.
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Six themes for the next five years in markets
In the second of the series we examine what the next five years could hold for equity investors and identify six key themes to watch. From disruption to de-globalisation, just how could these themes impact market leadership from here?
Key points:
- Geopolitics is likely to continue to dominate markets. Whilst the world is now pre-occupied with US-China, more flare-ups are conceivable.
- If the ascendance of protectionism and de-globalisation continues, there will be far reaching implications on markets.
- Given the increasing focus on ESG factors, it seems highly likely that ESG investing will derive a meaningful performance advantage for compliant companies going forward.
1. Growth or value?
The past few years have seen some marked stylistic trends within markets. Notably “value” has significantly lagged “growth”. In fact, over the past five years we have seen the cheapest stocks (on price/earnings ratio) get cheaper and the most highly-rated stocks become dearer. Clearly this is a trend that cannot persist for ever - and reflects both low prevailing interest rates and increasing uncertainty over the direction of economies.
Once again, it may be instructive to look at Japan to see how markets can behave in lower growth periods. Take, for example, the period from 1995 to 2005 (which straddles the technology bubble and avoids the later financial crisis).
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Sovereign wealth fund to fix super: Tuckwell
Sep 23, 2019 — 12.00am
London | Australians have been overcharged and under-serviced by their superannuation fund managers for too long – and they need the government to set up a low-fee, open-access sovereign wealth fund to fix the system, says the $575 million Financial Review Rich Lister Graham Tuckwell.
“Billions and billions of dollars a year are being sucked out of the Australian superannuation pot by service providers in one form or another,” he says. “If you compel people to put savings aside, you should give them the ability to invest at a very, very cheap rate. Not just fees but all the associated costs.”
As he returns to live in Australia after a decade abroad, Tuckwell is calling on the Morrison Government, or Future Fund chairman Peter Costello, to set up a Singapore-style option. Ordinary Australians’ super contributions would be “invested at virtually no cost and no fees, and it’s invested responsibly and you get proper investment returns – a true sovereign wealth fund for the people”.
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Morrison falls in behind Trump's trade war
Sep 23, 2019 — 12.00am
Scott Morrison has dug in behind Donald Trump's push to win significant concessions from China on trade - especially the cessation of intellectual property theft - and is prepared to adjust the budget to help the economy ride out what looms as a protracted dispute.
After Mr Trump warned on the weekend that it may be more than a year before a resolution to the trade war was reached, Mr Morrison said it was worth holding out for a proper deal rather than a compromise which did not address the key concerns about China's trade practices.
"It's got to be a sustainable outcome, it's got to be a durable outcome, it's got to deal with the real issues that are there in their relationship,'' Mr Morrison said.
"Things like intellectual property."
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This was a reassuring visit for the US hosts as well
The US made no big ask of Scott Morrison in exchange for dinner on the White House lawn. But there are still many unresolved questions.
Simon Jackman
Sep 23, 2019 — 12.00am
At a conference in Los Angeles in January 2017, shortly after Donald Trump’s inauguration, Kim Beazley recommended that the way Australia ought to manage its relationship with the United States under the new administration was to “grab them by the lapels and pull them in closer than ever”. This seems to have been exactly what Australia has done, using levers as diverse as Greg Norman, Anthony Pratt and the Australian embassy’s PR campaign trumpeting “100 years of mateship” between Australia the US.
Scott Morrison’s official visit to Washington is one of the highlights of this campaign, a fitting capstone to Joe Hockey’s tenure as ambassador. The Prime Minister departs Washington with Australia’s credentials as an ally and partner of the US stronger than ever.
But the visit is a case of the Americans grabbing Australia by the lapels, reminding Morrison – and Australia – of how much they value the deep and broad US-Australia relationship.
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The narrowing clamour of Trumpworld
Scott Morrison got a close-up, white knuckle view of how the free wheeling president has changed Washington politics.
Sep 23, 2019 — 12.39am
Washington | There’s no doubting the Oval Office’s ability to strike awe. Stand in there and the familiarity is unnerving.
All those hours watching news feeds, Hollywood blockbusters and TV serials have embedded an impression of the space that’s strikingly accurate.
For example, the room is no smaller than you’d imagine it to be. It’s just as you’d expect. Perhaps the ceiling is taller. How many powerful eyes have gazed up from the sofas at the soothing white dome capped with the presidential seal?
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Climate change impact accelerating, last five years worst on record: experts
By Emily Beament
Updated September 23, 2019 — 10.40amfirst published at 9.29am
London: The World Meteorological Organisation says climate change is accelerating, with carbon dioxide levels increasing, sea levels rising and ice sheets melting faster than ever.
The warning forms part of a "united in science" review for the UN climate action summit at which countries are being urged to increase their ambition to tackle emissions. The report studied climate change and its impacts over the past five years between 2015 and 2019, the hottest five-year period on record.
The world has warmed by 1.1C since pre-industrial times, and by 0.2C just compared to the previous five-year period 2011-2015, the report showed.
And with levels of carbon dioxide and other greenhouse gases rising more quickly than before, to new highs in the atmosphere, further warming is already locked in, the WMO warned.
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How the ESG debate in Europe is a world away from Australia
Sep 23, 2019 — 2.23pm
London | Assistant Minister Ben Morton certainly kicked off a conversation when he chastised corporate Australia for pandering to activists on issues such as climate change at the expense of core economic issues. The message seemed to be: stick to your lane, and back out of this environment, social and governance (ESG) alley.
Now let’s step through the looking glass, and into the northern hemisphere.
In Europe that same week, the UN Principles for Responsible Investment (UN PRI) network – a sort of global think tank for asset managers keen to entrench ESG standards – held its annual conference in Paris.
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PM push to wind back China's trade benefits
Sep 24, 2019 — 12.01am
Chicago | Scott Morrison has urged that China lose its developing economy status and be stripped of concessions as part of an urgent reform of the global trading system.
The Prime Minister has also laid out the key principles which will guide Australia’s approach to the Indo-Pacific region, ahead of two regional summits in November where it is inevitable the tensions between China and the US will again dominate.
In a major foreign policy speech overnight to the Chicago Institute for Global Affairs, Mr Morrison issued a collective appeal for WTO reform.
“We must demonstrate that collectively we have not lost the ability to adapt and adjust our trading system to new realities,’’ he said.
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Frydenberg's $2.9trn super question
Treasurer Josh Frydenberg is a skillful enough politician to recognise the potential dangers in allowing the Future Fund free rein to expand its role in super.
Sep 24, 2019 — 12.00am
Treasurer Josh Frydenberg has adroitly sidestepped some ticklish political issues in his planned retirement income review, but there is one super question that he'll find much more difficult to dodge – whether to give the Future Fund carte blanche to compete in the country's $2.9 trillion superannuation industry.
There's no doubt that there's a superficial appeal in allowing the $162.6 billion government-owned Future Fund to set up a new consumer fund that would actively compete for members with retail and industry super funds.
After all, the Future Fund delivered a stunning 11.5 per cent return in the year to June 2019, eclipsing the performance of most top super funds.
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Major household item buying index slumps
· Australian Associated Press
The number of consumers who think now is a good time to buy a major household item has hit a 10-year low, an ANZ survey suggests, confounding economists' expectations.
The overall ANZ-Roy Morgan Australian Consumer Confidence index was up 0.7 per cent, regaining some ground after a 3.5 per cent drop in the previous week, with respondents' perception of the economic outlook for the next 12 months gaining 3.6 per cent and sentiment about the next five years up 1.0 per cent.
The weekly measure of consumer mood, which is based on about 1,000 face-to-face interviews conducted on Saturdays and Sundays, recorded a sharp 3.8 per cent fall in its "time to buy a household item" metric to its lowest level since 2009.
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Time for a rethink of the rules on China’s status
One of the main themes of Scott Morrison’s United States visit has been China. That might sound slightly strange to say, but it’s true, and in various ways.
Today he used a speech in Chicago to say that China can’t expect to continue to benefit from developing nation concessions in the WTO. He’s right, even if he’s wrong when he says China is no longer a developing nation. Yes it is, it’s just too big and too undemocratic to get the same concessions smaller developing nations do.
Donald Trump is in the midst of a trade war with China, and he’s looking for allies: not necessarily to enter the fray, but rhetorically to back him up.
It’s in this context that Morrison found himself standing next to Trump at media conferences, campaign rallies and various other events.
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Solar investors choke on $1b hit from grid congestion
Sep 24, 2019 — 2.56pm
Renewable energy investors including Macquarie and BlackRock have banded together to push for changes in the way transmission losses on the country's choked power grid are allocated after seeing about $1 billion wiped off the value of wind and solar assets across the sector in the past 2-3 years.
The 20-strong group, which includes AGL Energy's PARF renewable fund with QIC, is urging immediate modifications in the system to avoid derailing about 10 gigawatts of wind and solar generation projects that they have in the development pipeline.
The concerted action comes as the group instigator, London-listed major John Laing Group, in August took a £66 million ($121 million) write-down on three Australian renewable energy projects as unprecedented congestion on the power grid eroded plant profitability. It also froze future investment in the sector.
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RBA's Lowe says monetary policy less effective
Sep 24, 2019 — 10.18pm
Reserve Bank of Australia governor Philip Lowe says monetary policy has become less effective but he still expects house prices to rise further as people use interest rate cuts to "run to the bank" and reduce debt instead of running to the shops to spend.
In responding to questions after a speech at the Armidale Business Chamber in regional NSW, Dr Lowe dismissed talk of a global bond bubble, and said he didn't feel any pressure from financial markets or politicians on cutting rates.
Before his speech, financial markets were pricing in an 76 per cent chance of a 0.25 percentage point rate cut to 0.75 per cent on October 1.
All of the big four banks are expecting the rate cut. Following the speech the chance of a rate cut slipped back to 70 per cent.
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'It disturbs me': RBA boss hits out at CEO salaries
Sep 25, 2019 — 6.00am
Reserve Bank of Australia governor Philip Lowe has criticised the business community for extraordinary high salaries saying people should be happy to deliver value to a company without $20 million pay.
Speaking at the Armidale Chamber of Commerce in regional NSW, Dr Lowe said that, if anything, the broader workforce should be receiving wage increases of 3 per cent or more.
"As a regular Australian, it disturbs me. Some people who are paid extraordinarily high amounts of money and working Australians have relatively low wages and getting small wage increases, I think it's an issue for the society," he said.
Dr Lowe, whose base salary was $903,000 in the 2018 financial year, said he told his board he didn't want a performance based salary structure.
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Global forces give RBA little choice
Philip Lowe says the global downward pressure on rates can't be ignored. But whether another cut is coming as soon as next week is still very much up in the air.
Sep 24, 2019 — 11.00pm
Australian savers and bank bosses should brace for another interest cut. But there's still at least a bit of doubt as to whether it's coming next week.
That's the message from Reserve Bank Governor Philip Lowe's speech to the Armidale Business Chamber on Tuesday evening, in which he made it clear the RBA could not afford to stand by and ignore the global push by central bankers to bring interest rates lower.
But Lowe has also provided a ray of good news on the outlook for the Australian economy, declaring it has reached a "gentle turning point" that should see a return to trend growth next year.
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Why investors are shunning active and chasing passive
Sep 25, 2019 — 12.00am
Active managers have struggled with fund flows this year as investors opt out into cheaper passive funds.
The local sharemarket has gained more than 20 per cent since the start of the year, a performance many active managers have struggled to match. Even including the drawdown in the final quarter of last year, the market has returned close to 10 per cent to investors over the last 12 months.
While the move towards passive funds has been building in the last five years, wealth advisers say the interest has peaked in the last two years.
"It's coming to a head because of the very ordinary performance of Aussie equity managers over the last 12 to 18 months," says Colonial First State general manager of investments Scott Tully.
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Get 'perspective' on climate PM tells kids
Sep 25, 2019 — 7.43am
New York: Scott Morrison agrees climate change is a serious issue but plastics pollution in oceans was a more immediate threat.
In a prelude to his first address to the United Nations General Assembly on Thursday morning (AEST), the Prime Minister has also warned against creating too much anxiety among children.
Swedish teenager Greta Thunberg set the scene at the start of UN leader's week in New York with a speech excoriating world leaders for collective inaction on climate change.
"People are suffering, people are dying, entire ecosystems are collapsing. We are in the beginning of a mass extinction and all you can talk about is money and fairy tales of eternal economic growth," Ms Thunberg said.
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Government seeks to thaw relations with China after backlash on trade
By David Crowe and Eryk Bagshaw
September 25, 2019 — 11.58am
The Morrison government has moved to contain the blowback over its declaration that China is no longer a developing nation, setting up "positive" talks with Chinese Foreign Minister Wang Yi for the second time in two months.
Foreign Minister Marise Payne met her Chinese counterpart in New York on Tuesday amid complaints in Canberra that the Australian government was leading an "attack" on China.
A delegation organised by the Chinese embassy on Tuesday accused Australia of being "a pioneer of global anti-China sentiment" and said any country following Australia's lead would be viewed as "extremely unfriendly" by Beijing.
The tensions emerged after Prime Minister Scott Morrison declared China should be treated as a "newly-developed" nation and should lose some of its special treatment at the World Trade Organisation and climate change.
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Fasten your seatbelt as Australia boards the Trumpmobile
This US President wants to hear positive, self-reinforcing views from other leaders. Scott Morrison delivers.
Sep 24, 2019 — 6.15pm
Scott Morrison is keen to emphasise the shared thinking as well as the shared values of the US and Australia during his blockbuster American trip.
"I think that's why there is so much engagement. You’re going to go invest. You’re going to go and participate. You’re going to go and be involved when you get each other and you understand each other and you believe the same things," he enthusiastically told the American Australian Association in New York. “We think the same way, we look to the world through the same lens.”
Well, to a point. I still recall an alternative perspective offered by a senior Australian diplomat in Washington with considerable experience in both Australian and US politics.
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Rethinking the grid for rooftop power and digital meters
Australia's power lines are to transform from a one-way supply chain to a platform that can handle new technologies. That means changing the way that we pay for power.
Sep 26, 2019 — 12.00am
Australians are at the forefront of a technological revolution in energy – which has the potential to significantly improve our day-to-day lives and bring down power bills.
Households and businesses are now able to produce and store energy through rooftop solar and batteries. Digital appliances and home automation are creating new and exciting opportunities for efficiently managing energy demand.
To maximise the benefits of these technological developments, the Australian Energy Market Commission has today made a package of recommendations through our Grid of the Future review, undertaken at the request of the COAG Energy Council.
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Stopgap fix to restore 'Australian made' to vitamins sector
Sep 26, 2019 — 8.50am
The Morrison government will use stopgap regulation to restore access for the complementary medicines sector to the respected "Australian made" logo, amid growing frustration from the $5 billion industry.
Industry, Science and Technology Minister Karen Andrews and her department quietly announced plans for an interim regulatory change covering Australian exports, until legislation changing consumer laws can pass federal Parliament.
Plans to address a block on access for medicine and supplements products being sold as Australian made where they were manufactured locally using wholly imported ingredients have been in train since April.
Ms Andrews said before the May election complementary medicine giants including Blackmores and Swiss would be allowed to brand export products with the Australian Made logo, provided they were manufactured in Australian facilities regulated by the Therapeutic Goods Administration.
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Great Scott: Morrison finds his place in history
Tony Wright
Associate editor and special writer
"How good's this?" Prime Minister Scott Morrison breathed to his speechwriter, Chips Rafferty jnr, "They won't forget my visit in a hurry."
Morrison beamed at no one in particular and practised his thumbs-up technique as President Donald Trump spun by, hair askew and spittle flecking his lips, screaming for his Secret Service detachment to quit trying to snap handcuffs on British Prime Minister Boris Johnson.
"Unlawful doesn't mean illegal; how many times have I got to say it," cried Trump. "Boris only lied to his Queen. We all do that. I've had three wives, you know."
Speaker Nancy Pelosi stormed in and handed a summons to Trump, announcing an impeachment inquiry into his efforts to put the squeeze on Ukraine to dig dirt on Joe Biden's son.
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Lowe warns rates could stay low 'for a long, long time'
Sep 25, 2019 — 4.40pm
You have to appreciate the governor of the Reserve Bank for his willingness to take questions and reply candidly (when he can).
On Tuesday evening Philip Lowe spent close to an hour doing just that following a speech in Armidale.
There might have been an occasion when he has devoted more time to questions following a public speech, but I can’t think of one. (He spends much longer when he testifies.)
A few questions were from the usual suspects: Sydney economists and journalists who had made the five hour-plus trip to the green lawns of New South Wales' Northern Tablelands. They were there mostly in the hope of getting the governor to let slip a clue about whether he will cut rates to 0.75 per cent when he sits down with his board next week.
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'Shocking reading': UN report says oceans, ice reeling from damage
Chris Mooney and Brady Dennis
Sep 26, 2019 — 11.57am
Washington | Climate change is already having staggering effects on the oceans and ice-filled regions that encompass 80 per cent of the Earth, and future damage from rising seas and melting glaciers is now all but certain, according to a sobering new report from the United Nations.
The warming climate is already killing coral reefs, supercharging monster storms, and fuelling deadly marine heatwaves and record losses of sea ice. And Wednesday's (Thursday AEST) report on the world's oceans, glaciers, polar regions and ice sheets finds that such effects only foreshadow a more catastrophic future as long as greenhouse gas emissions remain unchecked.
Given current emission levels, a number of serious consequences are essentially unavoidable, says the report of the Intergovernmental Panel on Climate Change.
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'Loose with the truth': Albanese slams PM for blaming media for 'prejudiced' climate views
By Rob Harris
Updated September 26, 2019 — 12.45pmfirst published at 11.10am
Labor leader Anthony Albanese has accused Prime Minister Scott Morrison of being "loose with the truth" over Australia's efforts to counter climate change.
Mr Morrison has blamed the media's reporting of his government's climate achievements for a "prejudiced" view of Australia's efforts in cutting emissions.
Speaking in New York after his address to the United Nation's General Assembly, Mr Morrison said the leaders of other nations were "quite surprised" when he told them Australia's emissions per capita were at 29-year lows.
Days after Swedish activist Greta Thunberg made a scathing speech about the inaction of world leaders, Mr Morrison reprised his remarks to journalists about the danger of "needless anxiety" about climate change.
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'One-sided and unfair': China hardens rhetoric against Scott Morrison
Sep 26, 2019 — 10.42am
China is hardening its rhetoric against Scott Morrison's push to reclassify it is as a developed country, describing the Prime Minister's proposal as "one-sided and unfair" and accusing Australia of simply repeating US grievances over China's trade practices.
The Chinese embassy in Canberra issued a statement reiterating the gap between rich and poor was still too great for China to lose trade concessions the World Trade Organisation bestows on developing nations.
"The assertion of China being a 'newly developed economy' by the Australian side doesn’t hold much water. It is both one-sided and unfair. And it is basically an echo of what the US has claimed," the embassy's statement said.
"It is true that China, through its own efforts, has made remarkable achievements in economic and social development over the past decades and become the world's second largest economy.
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Home loan restrictions 'torturous', CEOs say
Sep 26, 2019 — 6.21pm
The chief executives of Australia's biggest real estate companies are backing the government's calls to break overly stringent lending restrictions to get credit flowing again and avoid a dangerous slowdown in construction.
Speaking at The Australian Financial Review Property Summit in Sydney, the CEOs also demanded that the government start to act on measures to stimulate business investment and cut red tape estimated to cost the sector $176 billion a year.
With financial markets pricing in a 70 per cent chance of a 0.25 percentage point rate cut this Tuesday to 0.75 per cent, pressure is building on banks and regulators to start freeing up credit.
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PM hits back at claims he's spreading 'colossal bulls---' on climate
Katina Curtis and Matt Coughlan
Sep 27, 2019 — 6.38am
New York | Scott Morrison has accused activists and the media of spreading "completely false" information about Australia's action on climate change.
But Labor says the prime minister is being loose with the truth, while the Climate Council labelled Mr Morrison's speech to the United Nations in New York as "colossal bullshit".
Mr Morrison said Pacific leaders were often surprised to learn what Australia was doing on climate.
"Oftentimes the criticisms that have been made about Australia are completely false," he told reporters.
"Where do they get their information from? Who knows? Maybe they read it, maybe they read it."
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PM's big decision defines his leadership
David Crowe
Chief political correspondent
September 27, 2019 — 12.00am
Prime Minister Scott Morrison knew what he wanted to say about China during his tour through the United States this week and how he wanted to reinforce his message when he knew it would be resisted in Beijing.
This was not a lurch in foreign policy in response to the elaborate welcome for Morrison at the White House, where Donald Trump duchessed the Prime Minister with military ceremony and a lavish dinner.
In a speech in Chicago, the PM has urged China to admit it's new status as a developed economy and says the special treatment it gets with trade deals needs to be reviewed.
This was a step along a path begun some time ago.
Morrison named the problems he saw with China in a speech in Sydney in June when he said a "rising power" had additional responsibilities – code for not being able to seek special treatment forever.
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Special forces left hanging, vehicles run three years late
Defence has admitted 89 new off-road patrol vehicles for elite special forces units are running more than three years behind schedule and won’t be declared battle-ready until December 2020 — more than six years after the contract was signed.
New documents released under FOI also reveal a 12-month blowout in the expected delivery of 1100 Hawkei Protected Mobility Vehicles — and a blowout in delays to new defence satellite communications capabilities to more than three years.
The March quarter performance report on major defence acquisitions shows $6.1bn worth of projects have slipped by a cumulative 111 months since the December quarter of 2018.
Defence had previously refused to disclose the delay to the $332m special forces vehicles. It claimed the $2bn Hawkei project was running on schedule in the December quarter report.
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Superannuation, savings targeted in retirement review
Sep 27, 2019 — 2.52pm
The Morrison government has unveiled a sweeping review of the retirement income system's "three pillars" of superannuation, the age pension and voluntary savings including home ownership.
The broad inquiry will explore a range of politically sensitive areas on superannuation, tax concessions, means testing for the age pension, the retirement system's distributional impacts across incomes and generations and the cost to the federal budget.
The review, recommended by the Productivity Commission, is set to probe whether the $2.8 trillion superannuation pool and the system's generous tax breaks are effectively reducing the cost to taxpayers of the government age pension.
The government has already ruled out touching several "sacred cows" that could hurt Baby Boomer voters who helped the Coalition win the election, with Treasurer Josh Frydenberg on Friday reaffirming the government would "never" include the family home in the asset test for the age pension.
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Super review loaded with political landmines
We have no idea whether the super system is delivering a net increase in national savings and saving the government money - an original purpose of super.
Sep 27, 2019 — 4.20pm
It is telling that Treasurer Josh Frydenberg's retirement income review terms of reference note one of the three pillars of the system is "voluntary savings".
Not only does this confirm that the politically perilous review will be broader than the complex interactions between compulsory superannuation and the age pension.
It also suggests the Coalition government is not necessarily wedded to the belief that compulsory super is the sole or always the best - for savers and taxpayers - retirement savings vehicle to build a nest egg.
Frydenberg, on the advice of the Productivity Commission, wants to delve into the overall benefits and costs of - and the interlinkages between - the three pillars of the retirement savings system; the age pension, compulsory superannuation and private voluntary savings.
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Stockmarket returns in a world of negative rates
By pushing official rates below zero, central banks have altered the way key financial assets perform through the cycle. What's less clear is what happens next.
Sep 27, 2019 — 3.52pm
Central bankers have signally failed to spark the animal spirits that lead businesses to invest and pay workers more – preconditions for higher inflation.
But what they have achieved is keeping the economic cycle from tipping over into recession and deflation.
The American expansion since the global financial crisis, for example, is the longest, but also the shallowest, since World War II. Here and in other advanced economies there are lots of jobs, but precious little wages growth. Inflation remains stubbornly – and, in the case of Europe, worryingly – low.
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For $900bn a year, Coalition ready for super industry fight
The biggest decision facing the Morrison government isn’t about climate change.
It’s the bread-and-butter question of whether an extra 2.5 per cent of workers’ wages should be compulsorily taken off them and put, mainly, into superannuation funds with a bias towards the Labor side of politics.
Josh Frydenberg deserves credit for following the Productivity Commission’s advice in establishing a review of the effectiveness of the nation’s retirement income system. As it stands, compulsory superannuation costs taxpayers a fortune, not to mention the extraordinary complexity it imposes on households and businesses.
The government forgoes about $36bn in revenue a year owing to super tax concessions to save about $9bn a year in Age Pension outlays. It doesn’t take a PhD in economics to realise this forces income tax to be higher — for a given level of spending — undermining the incentive to work and save.
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Scott Morrison has gone rogue on international relations
By Glenda Sluga
September 28, 2019 — 12.00am
At a time when the international order is in crisis, high on the list of uncertainties is the place of China in any re-orientation of international relations and long-established multilateral institutions – the UN at their disappearing centre.
Given this, we need to ask: what role will Australia play in the future of the international order? This has long seemed an unlikely question because Australia is a middle-power rather than a major player.
Also, Australian populations and governments, to the extent they think about this at all, are accustomed to believe that they act in accord with the principles of international law that have governed international politics since the nineteenth century, if more by convention rather than compliance. Recent developments suggest any complacency is misplaced.
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The team that is helping Morrison steer the middle course
Australian officials have to win a level playing field with China while stopping the US shooting itself in the foot.
John Kehoe Senior Writer
Sep 27, 2019 — 1.14pm
When US President Donald Trump delivered his effusive opening address to welcome Prime Minister Scott Morrison on the White House south lawn last weekend, standing in the front row was the PM’s bespectacled chief of staff, John Kunkel.
Not many people outside Canberra would be familiar with “The Kunk”, but as Morrison tries to navigate the escalating US-China trade war it is instructive to explore who is in the PM’s inner sanctum advising him.
Kunkel published his PhD thesis and subsequent book, America's Trade Policy Towards Japan: Demanding Results, in the 1980s and '90s.
“Demanding results” is precisely what Trump is doing with China.
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Royal Commissions And The Like.
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https://www.afr.com/companies/financial-services/ioof-the-pub-test-and-members-money-20190923-p52tx6
IOOF, the 'pub test' and members' money
IOOF boss Chris Kelaher lost his job after his appearance at the Hayne inquiy but a judge has now found he did nothing wrong, in a decision that changes the superannuation law.
Sep 23, 2019 — 8.32pm
Of all the case studies heard by the Hayne royal commission, the one involving wealth company IOOF was the most dense and arcane.
The one aspect of the testimony that was easy for observers to grapple with was the alleged misuse of contingency reserve funds to compensate members for losses caused by other companies in the IOOF group or a third party. Surely "members' money" should not be used in such a fashion?
So impugned was former IOOF chief executive Chris Kelaher by his appearance before the royal commission that by the time the Australian Prudential Regulation Authority launched its case against IOOF in December, he was out the door.
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IOOF ruling looks bad for Hayne, not just APRA
The financial services royal commission had the public and financial community in awe last year. But the stark reality is that the first time its findings were tested in court — in the IOOF case — it lost categorically.
Last week’s Federal Court decision was written up as an unmitigated disaster for APRA, but the royal commission looks no better on the issues.
APRA was railroaded into the case, under fire for its own inability to regulate. And yes, it chose this case to show its strength.
Arguably it handled the case badly, as some have said, and maybe some issues which were raised during the royal commission, like alleged conflicts of interest, were not pushed hard enough.
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Banking code of conduct still lacking: ACCC
The consumer watchdog has called for broader changes to the Banking Code of Practice than those proposed by the Australian Banking Association to ensure the new code will benefit low-income consumers and drought-affected farmers.
The Australian Competition and Consumer Commission wants further reforms to strengthen the changes already proposed by the ABA, saying that under the current proposal, some bank accounts could still be overdrawn without the customer’s agreement, and that banks could continue to charge high interest rates on overdrawn amounts.
“This could lead to low income customers getting into debt from overdrafts they did not agree to, which is exactly the kind of problem the Hayne royal commission sought to address,” ACCC deputy chair Delia Rickard said.
The ACCC’s proposed conditions of authorisation would not allow interest to be charged in these cases, or would require any such charges to be repaid to the customer.
The code of practice, which is to be revised on behalf of Australian Banking Association members in the wake of last year’s royal commission, is set to include changes that prevent default interest being charged on agricultural loans in drought-affected areas.
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National Budget Issues.
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Review on retirement income reined in
Sep 23, 2019 — 12.00am
The scope of the Morrison government’s planned retirement income system review is being narrowed to dodge tackling fraught superannuation tax and pension policies that could have upset Baby Boomer voters.
Treasury correspondence published Friday night separately said superannuation, private savings, the age pension and home-ownership all play a role in people's retirement outcomes.
Treasury noted the potential role for annuity-style "Comprehensive Income Products for Retirement" (CIPRs), instead of superannuation pensions, to "assist average households" in retirement.
The yet-to-be-released terms of reference for the retirement income review are being cautiously drafted by Treasurer Josh Frydenberg, with Prime Minister Scott Morrison also making sure the review does not open up a Pandora’s box of political problems.
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Reality check for monetary policy
Paul Bloxham
Interest rates around the world have fallen to extraordinary new lows. At present, there are a record $US15 trillion ($22 trillion) worth of government, corporate and other bonds trading at negative interest rates.
The European Central Bank has just cut its policy rate to a new low of minus 0.5 per cent, while the Bank of Japan’s policy rate is minus 0.1 per cent.
The US 10-year bond is trading at 1.8 per cent and the German 10-year bund trades at minus 0.5 per cent.
Only a few years ago, these interest rates would have seemed unthinkable.
Today they are reality. How did we get here? The short answer is the world has excessive saving relative to the amount of investment. High saving reflects a range of factors, including ageing populations, high debt levels, which encourage deleveraging, and uncertainty about the future.
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'Weird': a glimpse through the negative interest rate looking glass
Jessica Irvine
Economics writer
September 25, 2019 — 11.51pm
Wow, you look away for a few months and the Australian economy goes full Alice in Wonderland!
Through the new looking glass, once unmentionable "unconventional measures" such as "negative interest rates" and a mass bond-buying spree by our central bank are now serious topics of conversation.
“Unlikely,” insists our Reserve Bank governor, Philip Lowe. But, as he prepares to trim the nation's cash rate to below 1 per cent, you might need to finally wrap your head around the idea of negative interest rates.
First, ask yourself this: what’s an interest rate, anyway? Typically, it’s a payment to a lender from a borrower, expressed as a percentage of the loan, designed to compensate the lender for the "time value of money". That’s the relatively simple idea that a dollar today is worth more than a dollar tomorrow. Why? Because if you get a dollar today, you might think of something worthwhile to do with it, like investing it in a new profit-generating business. Then tomorrow you’d have not only your dollar but also whatever value you managed to create with it. If you just waited until tomorrow to get your dollar, you’d miss that opportunity.
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Big surpluses on the way as tax take from lower-income earners grows
By Shane Wright
September 26, 2019 — 3.19pm
The federal budget is on track to reach the end of next decade with the largest surplus since the days of John Howard but it will be built on a soaring tax take from low and middle-income earners.
The Parliamentary Budget Office (PBO), in its annual review of the budget and its long-term projections, said a combination of strong revenue and tight control on spending meant the budget was heading for a $53.7 billion surplus in 2029-30. At 1.6 per cent of gross domestic product (GDP), it would be the largest surplus since 2007-08.
The PBO noted surpluses were likely to drop in some years as the government put in place its planned tax cuts but the overall trend was positive because of solid revenue flows.
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Parliamentary Budget Office warns of surplus tightrope
The government’s planned budget surpluses depend on unprecedented expenditure restraint, ever rising income tax and “above trend” economic conditions for the next decade, according to parliament’s independent budget watchdog.
Bracket creep will see the federal income tax haul climb by more than any other revenue source over the next decade, rising from 11.5 to 12 per cent of GDP, the highest share in more than a decade, when it will make up 47 per cent of government receipts.
“Even with the (government’s) tax cuts, average tax rates are projected to continue to increase with growth in incomes, particularly for low- to middle-income groups (those with a taxable income in the range of $20,000 to $58,000),” the Parliamentary Budget Office said in its annual projection of taxes and expenses over a decade.
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Health Issues.
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Australians spend $30 billion a year on out-of-pocket health costs
By Dana McCauley
September 25, 2019 — 12.05am
Australians are spending more than ever on self-funded healthcare amid rising out-of-pocket costs for medicines, hospital stays and specialist fees, new data shows.
The latest health spending data from the Australian Institute of Health and Welfare, to be released on Wednesday, shows patients spent $3.9 billion on out-of-pocket hospital expenses in 2017-18, up $560 million or 17 per cent over the financial year, and quadruple the amount spent a decade earlier.
Specialist out-of-pocket costs increased by almost $200 million in 12 months, and GP out-of-pockets by $38 million, both significantly faster than inflation.
The AIHW figures also show the growth in federal health spending in 2017-18 was almost four times slower than the increase in tax revenues.
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We all foot the bill for ailing health system
Thankfully I don’t have much interaction with the health system. But I broke my left foot — two metatarsals — a few weeks back, visiting Perth, after very poorly negotiating some stairs in the dark.
At Sir Charles Gairdner Hospital I was X-rayed, plastered up, handed crutches and told I’d probably need surgery in a couple of weeks.
I didn’t pay a cent for any of this, and the hospital hasn’t even chased me up for the crutches. It’s a blessing to live in a country with such high-quality healthcare, but we could collectively pay a lot less in taxes and premiums for the same or better outcomes.
I should have had to pay something, $100 say, however token, as a way of helping the state government defray the enormous cost of running hospitals.
As I waited, sitting with a large, discoloured foot, I noticed a few patients who didn’t appear to be suffering any particular emergency. It’s possible some were there for the convenience or the price — zero.
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We need to humanise the way PTSD is treated in Australia
John Hewson
Columnist and former Liberal opposition leader
September 26, 2019 — 1.00am
Prime Minister Scott Morrison has demanded that the public service focus on "service delivery", with a particular focus on issues such as mental illness.
Post-traumatic stress disorder (PTSD) is a mental health condition that refers to a group of stress reactions that can develop after witnessing a traumatic event, sexual/domestic violence against ourselves or others, and natural disasters.
PTSD can be particularly acute for those repeatedly exposed to trauma such as emergency workers, first responders, and military combat personnel.
Feelings of fear, depression, sadness, anger and grief usually predominate – all aspects of a natural human response to danger. The consequences are not only significant for the sufferer, but also for their family, fellow workers, and others on whom they rely on for support.
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Almost a million Australians throw out their mental health plan each year
By Dana McCauley
September 27, 2019 — 12.02am
Australians with depression and anxiety are visiting their GPs in droves - but more than 40 per cent of those given a mental health plan do not use it, new data reveals.
The Australian Institute of Health and Welfare report on Medicare services shows that while 2.1 million Australians got a mental health plan from their GP in 2017-18, only 1.2 million - 57 per cent - went to a psychologist or other allied health provider, such as a mental health social worker.
It means 900,000 people did not use their mental health plan to pursue treatment beyond their GP.
Data released by the institute earlier this year showed that 4.2 million people received mental health-related drug prescriptions - such as anti-depressants, anti-psychotics and anxiety medications - over the same period.
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Many patients to pay $1700 more for bowel cancer tests
By Melissa Cunningham
September 26, 2019 — 11.31pm
Fewer Australians will be able to get Medicare-funded colonoscopies under a contentious overhaul of the system aimed at tightening regulations around the diagnostic test used to detect bowel cancer.
Experts fear the changes will make it harder for people with a family history of the disease to be screened unless they fit stringent eligibility criteria, including that their relatives were diagnosed with the disease before the age of 56.
Those with family members aged 55 or more when diagnosed with disease wanting a colonoscopy could be left up to $2000 out-of-pocket. This compares to the current Medicare rebated out-of-pocket cost of about $300.
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Jump in prostheses use puts lower rise in premiums at risk: Medibank, Bupa
Private health insurers have warned that lower premium increases are at risk because promised savings from affordability reforms have been wiped out by a jump in prostheses volume.
The revelations have prompted Health Minister Greg Hunt to order a review of the Prostheses List, which sets the price health insurers must pay for medical devices. A spokesman for Mr Hunt told The Australian that the Health Department had been asked to ensure that currently listed items met the listing criteria.
“It is important prostheses utilisation is commensurate with clinical need,” he said. “Reviews of the Prostheses List groups will be undertaken to ensure items listed on the list are clinically effective and cost-effective.”
Medibank and Bupa have revealed that the $200m in savings that insurers were banking on from prostheses reform was eradicated last year by an increase in medical device use.
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International Issues.
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Australia risks '100 years of solitude' over US ties: Chinese media
Sep 22, 2019 — 6.30pm
Shanghai | Australia faces "100 years of solitude" if it isolates itself from its Asian neighbours by strengthening military ties with the United States, a Chinese academic has warned in The Global Times.
In an opinion piece published on Saturday as the Australian and American political leaders met in Washington, academic Yu Lei wrote: "This Australia-US alliance will not bring the benefits Australia hopes for. This will bring a long-term military and political confrontation between Australia and Asian countries.
"Australia will not get the 100 years of friendship [it hopes for] but 100 years of solitude."
The article in the hawkish tabloid that regularly criticises Australia was referencing Prime Minister Scott Morrison's comment that his visit to Washington would lay the foundation for "another 100 years" of friendship with the United States.
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Modern Monetary Theory: Global Saviour Or Highway To Hell?
Feature Stories | May 15 2019
This article was first published for subscribers on May 6 and is now open for general readership.
The evidence is in: QE hasn’t worked. How now to stem the global slowdown when all options have been exhausted?
-QE hasn't worked
-Governments have not done enough
-MMT is not a new idea, but is gaining traction
-Something has to be done
-Governments have not done enough
-MMT is not a new idea, but is gaining traction
-Something has to be done
By Greg Peel
Quantitative easing hasn’t worked, economists have decided. And they have the evidence to prove it.
It seems odd, given Wall Street has rallied from its 2009 bottom, when the US Federal Reserve first initiated QE, to this week’s new all-time high, by 340%. And having suffered The Great Recession, the US has since enjoyed a decade of uninterrupted economic growth. But things are not as rosy as they seem.
US GDP growth has averaged 4.4% per annum since World War II. In the period 2009-2019 to date, that average is 1.9%.
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'Vaguely troubling': Negative yielding debt hits $US17 trillion
By Clancy Yeates
September 23, 2019 — 4.00am
The Bank for International Settlements (BIS) has underlined the extent to which once "unthinkable" financial trends are now "routine," after the global stock of debt with negative interest rates hit $US17 trillion ($25 trillion).
In its latest quarterly review, the BIS noted that as global interest rates have plunged, the amount of corporate and government debt trading at negative rates has surged.
Claudio Borio, head of its monetary and economics department, said the $US17 trillion figure was equal to about 20 per cent of world gross domestic product, and negative interest rates had become more pervasive than in previous episodes of market jitters.
While much of the debt with negative yields is held by large financial institutions, he noted that even some households overseas were able to borrow at negative rates.
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Alarm sounded on loss-making bonds
· The Times
The Bank for International Settlements has warned of the “troubling” rise of negative-yielding bonds to more than $US17 trillion and sounded a further alarm over the growth in securitisation similar to that which caused the financial crisis.
Claudio Borio, head of the monetary and economic research department at the Swiss-based BIS, said that the phenomenon of so many negative-yielding bonds would have been “unthinkable” even during the depths of the financial meltdown.
Last month, it was estimated that the global pile of debt in which investors are guaranteed to lose money had increased to more than $US17 trillion, which Mr Borio said was equivalent to about 20 per cent of world GDP.
Bond yields had reached “a new nadir”, he said, as the bank published its quarterly review. Worries about a slowing global economy and loose monetary policies pursued by central banks have pushed investors into safe-haven bonds and in turn sent yields on sovereign and corporate debt ever lower. Bond yields move inversely to prices and investors that hold negative-yielding bonds to maturity are certain to lose money.
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The world is watching: the Middle East is primed
Tony Walker
Columnist and award-winning foreign correspondent
September 22, 2019 — 11.25pm
Waiting for the other shoe to drop! This was the expression correspondents would use to describe the aftermath of an endless series of Middle East convulsions.
Sure enough and before too long a shoe would drop in the form of revenge air strikes, or acts of sabotage, or a quid pro quo assassination, or a cross-border incursion. Middle East players are not much given to turning the other cheek. However, in the case of what is a blatant assault by Iran at the very heart of Saudi Arabia’s oil industry, retaliatory options are limited and risky.
US Secretary of State Mike Pompeo called Iran's actions an act of war. They are bold words and ominous words, especially for our military back home in Australia.
Donald Trump would get this. He campaigned in 2016 against further American involvement in foreign conflicts. He has been seeking to run down troop deployments in the Middle East. But now he finds himself trapped between a foolish decision to abrogate the Iran nuclear deal that was keeping the peace in the world’s most volatile region and a desire not to be perceived as weak in the face of a blatant Iranian provocation. This is a devil’s dilemma. The world is watching. The Middle East is primed.
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'Weather events will be catastrophic': UN report outlines climate crisis
By Ben Weir
September 23, 2019 — 12.01am
Climate change is having dangerous impacts and countries will need to triple their emissions reduction levels to meet agreed upon commitments.
The United in Science report, compiled by scientists from around the world, will be presented to the UN Climate Action Summit in New York on Monday, and it paints a dire warning of a "climate crisis" which will have dangerous impacts for generations to come.
"There is a growing recognition that climate impacts are hitting harder and sooner than climate assessments indicated even a decade ago," the report said.
Global commitments to cut greenhouse gases outlined under the Paris Agreement will lead to temperature rises of between 2.9 degrees and 3.4 degrees by the end of the century, the report said.
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In trying to limit GFC mess, regulators may have caused cash chaos
Stephen Bartholomeusz
Senior business columnist
September 23, 2019 — 1.32pm
When the cost of borrowing in the "repo" market in the US suddenly soared last week, forcing the New York Federal Reserve Bank to pump liquidity into the market for the first since the financial crisis, the Fed largely attributed the event to an unfortunate coincidence of events. Others aren’t quite so sure.
The repo market provides short-term liquidity – cash – to companies and institutions in exchange for collateral, generally high-quality assets such as short-term Treasury bills. The agreements enable the borrower to repurchase the collateral at a higher price, effectively creating an interest rate, over periods that can range from less than 24 hours to 90 days or more.
Last Tuesday the cost of those repos suddenly rocketed from about 2 per cent to as much as 10 per cent, indicating an acute shortage of cash in the system.
The NY Fed responded by providing four $US75 billion ($110 billion) tranches of liquidity on a daily basis last week and then announced another $US75 billion a day of overnight operations until at least October 10 as well as at least three $US30 billion a day, 14-day facilities. Repo rates subsided to more normal levels.
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https://www.afr.com/policy/energy-and-climate/how-dare-you-teen-scolds-world-leaders-20190924-p52u8v
'How dare you': Teen scolds world leaders
Emily Chasan and David Wainer
Sep 24, 2019 — 7.40am
The 16-year-old environmental activist Greta Thunberg scolded heads of state at a United Nations summit on Monday, saying they're robbing her generation of a future by focusing on money and not on fighting global warming.
"You have stolen my dreams and my childhood with your empty words," Thunberg said in a speech at the UN Global Climate Action Summit in New York.
Swedish climate activist Greta Thunberg chastised world leaders for failing younger generations by not taking sufficient steps to stop climate change.
"People are suffering, people are dying, entire ecosystems are collapsing. We are at the beginning of a mass extinction and all you can talk about is money and fairy tales of endless economic growth. How dare you!"
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Fed's Williams says repo turmoil raises question on reserves
Matthew Boesler
Sep 24, 2019 — 5.59am
New York | Last week's turmoil in money markets raises questions about the appropriate level of bank reserves in the financial system, Federal Reserve Bank of New York president John Williams said.
It is "important that we examine these recent market dynamics and their implications for the liquidity needs in relation to the overall amount of reserves held at the Federal Reserve", Williams said in a speech.
The New York Fed chief's comments follow a week of volatility in money markets that was unprecedented in the years since the financial crisis. Short-term interest rates jumped amid the strain, pulling the US central bank's benchmark rate above the target range and forcing the New York Fed to intervene with overnight cash loans for the first time in a decade to quell the surge.
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Climate change, natural disasters posing greater risk to mortgages: Moody's
By Shane Wright and Clancy Yeates
September 23, 2019 — 5.07pm
Climate change is driving up the number of natural disasters hitting Australia, says one of the world's major ratings agencies, warning more people could fall behind on their mortgage payments as a result.
Moody's on Monday released research saying an increase in natural disasters across Australia could prove an economic risk to banks and their customers. Queensland and NSW had been the worst affected by disasters such as floods and fires since 1970, Moody's said, with an increasing number of all types of natural disasters over the past 49 years.
The agency, citing Bureau of Meteorology and CSIRO research, said Australia's average temperature had increased by 1 degree since 1910, there had been a lift in extreme fire weather and an extension in the length of the fire season, while there were now more frequent "marine heatwaves" because of warming oceans.
"The frequency of natural disasters in Australia is increasing and climate change is likely to result in more extreme weather events," it said. "Natural disasters can disrupt economic activity and therefore reduce borrowers' incomes, which can in turn lead to mortgage delinquencies and losses. Natural disasters can also result in significantly lower property values in affected areas."
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‘Get out of Gulf’: Iran moves closer to Russia and China
· The Times
Iran will join China and Russia in naval exercises in the Gulf of Oman as a growing alliance of anti-American powers seeks to take advantage of confusion about Donald Trump’s Middle East policies.
Iranian President Hassan Rouhani, who will address the UN general assembly in New York this week, told America and the West to leave the Gulf.
“Your presence has always been a calamity for this region and the farther you go from our region and our nations the more security would come,” he said at a military rally in Tehran. He said Iran wanted the region to take its security into its own hands.
At the same time Iranian news agencies reported that China and Russia, who have emerged as key strategic partners, had been invited to join naval exercises just outside the Strait of Hormuz. Brigadier-General Ghadir Nezami said the drill had both military and political purposes.
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Boris broke law, court rules, in huge blow
Updated Sep 24, 2019 — 10.37pm, first published at 7.51pm
Brighton, England | Britain's highest court has ruled that Prime Minister Boris Johnson's suspension of parliament was illegal, prompting the Speaker to recall MPs to work on Wednesday and punching a hole in the government's "do or die" Brexit strategy.
The Supreme Court's unanimous decision from 11 judges, delivered on Tuesday (AEST), represents a stunning political defeat for Mr Johnson: it allows MPs to resume their suspended sitting and ratchet up the pressure on the Prime Minister's increasingly stretched ambition to leave the EU on October 31 "come what may".
Mr Johnson said he respected the court's decision and accepted the resumption of parliamentary proceedings, but he would plough ahead with plans to unveil a new legislative agenda (a so-called "Queen's speech") and also with his push for an October 31 Brexit. He has reportedly spoken to the Queen by phone following the decision.
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Donald Trump faces formal impeachment inquiry
Sep 25, 2019 — 5.24am
New York | Donald Trump will face an impeachment inquiry after House Speaker Nancy Pelosi and other top Democrat leaders dropped their resistance to a formal investigation.
“The actions taken to date by the President have seriously violated the constitution,” Ms Pelosi said after emerging from a meeting of House Democrats in the basement of the Capitol. Mr Trump, she said, “must be held accountable. No one is above the law”.
Ms Pelosi said that the House of Representatives will launch a formal inquiry into whether the President should be impeached.
The Democratic-controlled House will examine whether Mr Trump sought Ukraine's help to smear former vice president Joe Biden, the front-runner for the 2020 Democratic presidential nomination.
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World's wealthiest families stockpile cash as recession fears grow
Suzanne Woolley and Ben Stupples
Sep 25, 2019 — 8.48am
New York | Rick Stone, a former partner at Cadwalader, Wickersham & Taft, sees treacherous times ahead for family offices trying to deploy cash.
The head of Stone Family Office said he doubts the bond market will provide any real return over the next decade, that equity markets will suffer a substantial drop and then be flat, and that too much venture capital and private equity money will continue to chase too few opportunities.
"It's a very hard time for family offices to allocate money," said Stone, 60, whose initial wealth came from class-action litigation fees.
Stone has a good vantage point on the action, since he runs the bi-monthly meetings of the Palm Beach Investment Research Group, a network of 35 family offices in Palm Beach, Florida. "The areas to invest in are fewer, and there is a lot of money looking for those spaces," he said.
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Trump urged Ukraine's leader to 'look into' Biden
Sep 26, 2019 — 5.30am
Washington | Donald Trump pressed his Ukrainian counterpart to launch an investigation into leading Democrat 2020 presidential contender Joe Biden, according an official account of the phone call released by the White House, which it says clears the President of any wrong doing.
The document shows Mr Trump told Volodymyr Zelensky to "look into" Mr Biden and Hunter Biden's, activities in Ukraine. Mr Trump made the remarks shortly after discussing US military aid for Ukraine.
While the official account doesn't demonstrate any explicit quid pro quo into the exchange, it does confirm that Mr Trump was eager for Mr Zelensky to look into Mr Biden.
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Battlelines drawn in brawls for political supremacy
The three years since the vote for Brexit and the election of Donald Trump have produced a virulent struggle for supremacy in Western democracies. Now it's come to a head.
Sep 25, 2019 — 6.00pm
It’s the revenge of the establishment over the revolt of the insurgents.
The simultaneous timing of the announcement of congressional impeachment proceedings against a US president and of a UK Supreme Court ruling that a British PM acted illegally in suspending Parliament may be weird coincidence. But it also reflects the much larger battleground now dominating Western liberal democracies.
The popular vote in favour of Brexit in mid-2016, followed a few months later by the election victory of Donald Trump, stunned conventional political theory and expectations. Suddenly, the establishment in both countries found itself on the far side of electoral momentum rather than ensconced at its centre.
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Johnson government hits back at 'constitutional coup' by UK court
By Nick Miller
September 25, 2019 — 5.16pm
The UK government has accused the country’s highest court of staging what one senior minister reportedly called a “constitutional coup”, after it ruled that Prime Minister Boris Johnson had acted unlawfully by shutting down Parliament for five weeks.
The new rhetoric has prompted a warning from the country’s Bar Council that it poses a “serious threat to the proper operation of our legal system”.
Boris Johnson gets ready to face MPs after Britain’s highest court found he broke the law by suspending parliament.
Tensions were high on Wednesday, as the Prime Minister flew back for the return of a parliament that he had told the Queen to suspend.
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Trump impeachment move has pitfalls for Pelosi
Gerald F. Seib
· The Wall Street Journal
For months, US house Speaker Nancy Pelosi resisted pressure bubbling up from the liberal base of her Democratic Party to begin impeachment hearings against President Donald Trump.
After all, she knew the risks. She lived through the impeachment of Bill Clinton, during which the man who lost his job wasn’t the Democratic president who actually was impeached by the house, but rather the one who led the impeachment march, Republican house Speaker Newt Gingrich.
Suddenly, on Wednesday (AEST), Pelosi’s ability to resist the impeachment urge collapsed within hours. What had started as a fringe idea within the party became a mainstream demand with remarkable speed. The result was Pelosi’s announcement that the house would launch a formal impeachment process.
That doesn’t mean those risks have gone away. The stakes in the impeachment debate that now lies directly ahead are obvious for the President and fellow Republicans. Yet they also are considerable for his Democratic pursuers.
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China’s cutting-edge attack drone remains under wraps
China is poised to unveil one of its most cutting-edge military capabilities — a new stealth attack drone — amid questions over the size and effectiveness of Australia’s defence innovation program.
Defence experts believe a tarpaulin-cloaked aircraft photographed during rehearsals for an October 1 military parade marking the 70th anniversary of communist China is “almost certainly the Sharp Sword drone”.
The Lowy Institute’s international security program director Sam Roggeveen said the drone was more advanced than any unmanned combat aircraft yet developed by Western nations.
“What makes Sharp Sword different is that it is stealthy, which means it is built not for Afghanistan-type scenarios where the enemy is equipped with little more than rifles, but for situations where it might have to evade sophisticated air defences,” Mr Roggeveen said.
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Fed's repo man has a $US250b image problem
Sep 26, 2019 — 4.04pm
The Federal Reserve Bank of New York's strategy for dealing with an unruly repo market seems quite simple: just keep throwing money at the problem and hope it goes away.
Unfortunately, the bill for becalming short-term US dollar funding markets has escalated quickly, climbing to $US250 billion ($370.31 billion) with the latest upsizing of the Fed's intervention in this vital market.
Remember, that number was zero less than two weeks ago.
The New York Fed, which is the Fed's pointman for financial markets, has tried to re-assert its authority over spiking overnight and short-term lending rates though repurchase agreements, or repos.
The plan involves showering cash on those banks who need short-term liquidity in exchange for collateral like US government bonds. Simple.
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White House slammed by Ukraine cover-up allegation, Trump lashes out
Sep 27, 2019 — 5.04am
Washington | Top White House officials rushed to "lock down" all records of the telephone call during which Donald Trump pressed Ukraine's President to investigate a potential 2020 election rival, according to a redacted copy of an explosive whistleblower complaint.
Setting off a day of high drama in Washington, Congress released a nine-page copy of the complaint which alleges White House lawyers ordered officials to shift electronic copies of the call onto a secure computer system reserved for the most secret and sensitive documents.
"This set of actions underscored to me that White House officials understood the gravity of what had transpired in the call," the whistleblower said, according to the complaint, declassified on Thursday (Friday AEST).
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'Explosive' whistleblower complaint on Trump's Ukraine phone call released
By Matthew Knott
September 26, 2019 — 11.27pm
New York: Donald Trump used his presidential power to solicit foreign interference in the 2020 election, according to a whistleblower complaint that accuses the White House of seeking to cover up the contents of Trump's controversial phone conversation with his Ukrainian counterpart.
The whistleblower complaint released on Thursday, local time, is the document that triggered the deepening scandal about the Trump administration's relationship with Ukraine.
The whistleblower alleges Donald Trump risked US national security in his phone call with Ukraine's President.Credit:AP
The complaint was viewed in secret by politicians on Capitol Hill the day before, with Democratic members of Congress describing it as "deeply disturbing" and "nothing short of explosive".
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Giuliani Sits at the Center of the Ukraine Controversy
Ukrainian officials saw him as a direct conduit to Trump; former New York mayor featured in whistleblower complaint
By Rebecca Ballhaus in Washington, Alan Cullison and Georgi Kantchev in Kyiv and Brett Forrest in New York
Sept. 26, 2019 9:12 pm ET
A key figure at the heart of the burgeoning impeachment probe is former New York Mayor Rudy Giuliani, who as personal attorney to President Trump pressed Ukraine on pursuing an investigation of one of his boss’ political rivals.
A whistleblower complaint released Thursday depicts Mr. Giuliani, 75 years old, as eager to thrust himself into U.S. foreign policy. In some instances, he acted on his own, and in others his actions were in conjunction with U.S. government representatives.
Ukrainians seeking influence in Washington viewed him as a direct conduit to Mr. Trump. And when Mr. Giuliani’s actions were in conflict with the U.S. government’s national-security and foreign-policy apparatus, it was unable and at times unwilling to deter him. Some senior government officials knew little, if anything, of his work.
“My only knowledge of what Mr. Giuliani does—I have to be honest with you—I get from the TV or the news media,” said Joseph Maguire, acting director of national intelligence, in testifying before the House Intelligence Committee Thursday about the complaint. “I’m not aware of what he does for the president.”
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Whistleblower Alleges White House Effort to Conceal Details of Trump Call With Ukraine
Complaint claims White House sought to ‘lock down’ call records and describes several officials as ‘deeply disturbed’ about president’s communications with Zelensky
Four Takeaways From the Whistleblower Complaint
A whistleblower complaint released Thursday alleges President Trump sought to use the powers of his office to coerce Ukraine to investigate a political rival. WSJ's Gerald F. Seib examines four key takeaways from the report.
By Dustin Volz, Warren P. Strobel and Siobhan Hughes
Updated Sept. 26, 2019 8:16 pm ET
WASHINGTON—President Trump sought to use the powers of his office to push Ukraine to investigate Democratic rival Joe Biden, and White House officials acted to conceal evidence of the president’s actions, a whistleblower complaint alleges.
The whistleblower’s complaint, released Thursday, concerns a July phone call between Mr. Trump and President Volodymyr Zelensky of Ukraine. The controversy has become the biggest political danger to Mr. Trump’s presidency as it rallied House Democrats this week to launch impeachment proceedings.
“In the course of my official duties, I have received information from multiple U.S. government officials that the President of the United States is using the power of his office to solicit interference from a foreign country in the 2020 U.S. election,” the complainant wrote. “This interference includes, among other things, pressuring a foreign country to investigate one of the President’s main domestic political rivals.”
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Ukraine conspiracy is bigger than just the President
Release of the whistleblower complaint shows that, in addition to Donald Trump, whoever was involved was acting in intentional, deliberate violation of the law.
Jennifer Rubin
Sep 27, 2019 — 10.31am
Washington | The whistleblower complaint released on Thursday morning (Friday AEST) is detailed, professional and compelling. It tells the story of an ongoing scheme primarily by President Donald Trump and his personal lawyer Rudy Giuliani to invite and even pressure a foreign power to interfere in the 2020 election.
Former federal prosecutor Joyce White Vance tells me: "If this doesn't end the Trump presidency, nothing will." The complaint is striking on three grounds.
First, as House Intelligence Committee chairman Adam Schiff (Democrat, California) put it in a written statement: "The committee this morning will be releasing the declassified whistleblower complaint that it received late last night from the ODNI [Office of the Director of National Intelligence]. It is a travesty that it was held up this long. This complaint should never have been withheld from Congress. It exposed serious wrongdoing, and was found both urgent and credible by the Inspector-General."
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Bombshell document reveals Ukraine whistleblower's methods
Greg Miller
Sep 27, 2019 — 2.51pm
Washington | The whistleblower's identity remains obscured, the details of his work for the CIA cloaked in secrecy. But the document he delivered reveals almost as much about the investigative mission he carried out in stealth as it does about the alleged abuses of power by the President.
From the moment he learned about President Donald Trump's attempts to extract political dirt on former Vice President Joe Biden from the newly elected leader of Ukraine on July 25, the CIA officer behind the whistleblower report moved swiftly behind the scenes to assemble material from at least a half-dozen highly placed - and equally dismayed - US officials.
He wove their accounts with other painstakingly gathered material on everything from the intervention of Mr Trump's personal lawyer Rudy Giuliani in the US-Ukraine relationship to alleged efforts by American diplomats sent to Kiev and lawyers in the Office of the White House Counsel to contain or suppress the accruing damage.
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'This could be the president's Watergate'
The coming months will be consumed by impeachment war on Capitol Hill. This has potent implications for financial markets and for the global geopolitical landscape.
Ambrose Evans-Pritchard
Sep 27, 2019 — 4.27pm
London | The release of the whistleblower complaint against Donald Trump is not a smoking howitzer but it probably spells the end of the Trump presidency as we know it.
The coming months will be consumed by impeachment war on Capitol Hill. The Washington press corps will enter a feeding frenzy. Subpoenas will fly. The US will tear itself apart.
This has potent implications for financial markets and for the global geopolitical landscape. The poisonous atmosphere on Capitol Hill makes it even less likely that there will be any fiscal stimulus if the US economy slows further and drops to stall speed. It might therefore raise recession risk.
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Trump considers delisting Chinese firms from US markets
Alexandra Alper
Sep 28, 2019 — 4.53am
Washington | President Donald Trump's administration is considering the possibility of delisting Chinese companies from US stock exchanges, a source briefed on the matter said on Friday (Saturday AEST), in what would be a radical escalation of trade tensions between the two countries.
The move would be part of a broader effort to limit US investments into China, the source said, confirming an earlier report by Bloomberg that sent shockwaves through financial markets.
Shares of Alibaba Group Holding, JD.com, Pinduoduo, Baidu, Vipshop Holdings, Baozun and IQIYI fell between 2 per cent to 4 per cent in afternoon trading.
China's yuan currency, traded in off shore markets, fell by 0.4 per cent against the US dollar after the news to trade near its weakest against the greenback in about three weeks.
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Trump, Johnson kneecapped by the system
There are differences of style and of substance, but the strategies are similar - and are sparking similar reactions from a needled establishment on both sides of the Atlantic.
Sep 28, 2019 — 12.00am
London/Washington | There they were, together at last: the Western world's leading embodiments of populist, anti-establishment, nationalist revivalism.
It should have been a moment of high triumph for Boris Johnson and Donald Trump. Mavericks flipping a mutual bird at their naysayers.
A hotel conference room in New York near the United Nations General Assembly on Wednesday (Thursday AEST) brought them knee to knee, two kindred transformative leaders whose sacred missions involve no less than the complete tearing down of the political order, come hell or high water.
But rather than delivering a lasting image they could treasure – something on par perhaps with the iconic "special relationship" pictures that defined Ronald Reagan and Margaret Thatcher, idols to Trump and Johnson – this scene was irrevocably overshadowed by the reality that both men were simultaneously being kneecapped by the very systems they seek to transcend.
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Seven important and awful signs for Trump
Donald Trump is even less circumspect, disciplined and rational than usual. And why wouldn't he be? asks Jennifer Rubin.
Jennifer Rubin
Sep 28, 2019 — 5.50am
The whistleblower complaint is so damning President Donald Trump and his minions tried to conceal it from Congress and the public.
It is so damning that a long list of Senate Republicans claimed not to have read it or refused comment.
As distressing as it is to see such a lack of regard for their duties, it is a sign that there are some things even Trump and Fox News cannot spin.
Indeed, it is the muted reaction of Senate Republicans that leads the list of disastrous signs for the President. The assumption that there could never be a vote to remove him or that it would never get Republican votes needs to be rethought.
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How to be a dictator
The 20th century's worst despots created a diabolical playbook.
Frank Dikotter
Sep 27, 2019 — 9.45am
Throughout the 20th century, hundreds of millions of people cheered their dictators, even as they were herded down the road to serfdom. Across large parts of the planet, the face of a dictator appeared on hoardings and buildings, with portraits in every school, office and factory. Ordinary people had to bow to his likeness, pass by his statue, recite his work, praise his name, extol his genius.
The glorification of a dictator has been called the cult of personality, and at its heart lies a paradox. The paradox is that the modern dictator must create the illusion of popular support. In an age of democracy, the people are supposed to be sovereign and select their leader through an election. But dictators opt to seize power – for instance, by organising a coup or by rigging the system. Yet, as all dictators find out, power seized through violence must be maintained by violence, although violence can be a blunt instrument.
A dictator must rely on military forces, secret police, a praetorian guard, spies, informants, interrogators, torturers. But it is best to pretend that coercion is actually consent. A dictator must instil fear in his people, but if he can compel them to acclaim him he will probably last longer.
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Whistleblower, working in stealth, almost single-handedly set impeachment in motion
By Greg Miller
September 28, 2019 — 2.15am
Washington: The whistleblower's identity remains obscured, the details of his work for the CIA cloaked in secrecy. But the document he delivered reveals almost as much about the investigative mission he carried out in stealth as it does about the alleged abuses of power by the President.
From the moment he learned about President Donald Trump's attempts to extract political dirt on former vice president Joe Biden from the newly elected leader of Ukraine on July 25, the CIA officer behind the whistleblower report moved swiftly behind the scenes to assemble material from at least half a dozen highly placed - and equally dismayed - US officials.
Senior officials in the White House have been accused of covering up details of Donald Trump’s controversial phone call.
He wove their accounts with other painstakingly gathered material on everything from the intervention of Trump's personal lawyer Rudy Giuliani in the US-Ukraine relationship to alleged efforts by American diplomats sent to Kiev and attorneys in the Office of the White House Counsel to contain or suppress the accruing damage.
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Disaster or game play? Ukrainians split on Zelensky
· AFP
Volodymyr Zelensky, a popular comedian until his shock election to the Ukrainian presidency this year, is at the centre of a global scandal following a phone call with US leader Donald Trump.
In Kiev, opponents have lashed out against the “disaster” call but supporters say the transcript released this week showed Mr Zelensky playing Mr Trump to his own advantage.
During the conversation, Mr Zelensky seemed to agree to Mr Trump’s request to probe his political rival Joe Biden — which US Democrats have used to launch an impeachment process.
Mr Zelensky also supported the US President’s criticism of Kiev’s European allies. While Mr Zelensky’s critics say the transcript shows him to be inexperienced and weak in the face of a major power, analysts say the main political impact of the call will be felt in Washington rather than Kiev.
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Globalists, nationalists and a polarised world
Democracy seems to be in trouble. It will probably recover from the current mess, but it’s a long way back.
And it’s made especially pointed by the contrasting success and relative calm of the undemocratic People’s Republic of China, although that, too, is under attack in Hong Kong.
Superficially — at least in the US and Britain — it’s about the legislature battling the executive branch of government: in Britain it’s the House of Commons versus 10 Downing Street, and in the US, it’s the House of Representatives versus the White House. Whether either of the executive leaders, Johnson or Trump, gets ousted or prevails will be the main subject of media coverage, but in a way that’s beside the point. The fight itself is the story.
In both Britain and the US, the supporters of each side — already dangerously divided — are hunkering down deeper into their camps and believing more strongly in their chosen storylines. It’s not just happening in the US and UK. Italy is now run by a pro-EU coalition, even though a sizeable majority of the electorate voted for anti-EU parties in the 2018 general election, and an even bigger majority in the 2019 European election.
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White House slammed by Ukraine cover-up allegation, Trump lashes out
Jacob Greber United States Correspondent
Sep 27, 2019 — 5.04am
Washington | Top White House officials rushed to "lock down" all records of the telephone call during which Donald Trump pressed Ukraine's President to investigate a potential 2020 election rival, according to a redacted copy of an explosive whistleblower complaint.
Setting off a day of high drama in Washington, Congress released a nine-page copy of the complaint which alleges White House lawyers ordered officials to shift electronic copies of the call onto a secure computer system reserved for the most secret and sensitive documents.
"This set of actions underscored to me that White House officials understood the gravity of what had transpired in the call," the whistleblower said, according to the complaint, declassified on Thursday (Friday AEST).
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Lessons the Democrats could learn from impeachments past
· The Times
Democratic Party leaders have resisted calls for President Trump’s impeachment for almost as long as he has been in office. Conventional wisdom holds that the impeachment of President Clinton in 1998 backfired badly on the Republican Party that pushed it.
Mr Clinton was cleared by the Senate and finished his second term, leaving office with record approval ratings that soared even as proceedings went on. Republican senators were among those who voted to clear him. Still, the cloud of sleaze hung over Al Gore, the vice-president who lost the 2000 presidential election to George W Bush. The Republican Party paid with losses in the 1998 congressional elections that followed the impeachment vote but retained control of both houses of Congress, making up those losses and more in 2002.
The Clinton lesson looms large over the current Democratic leadership. Polls showed that the American public, then as now, dislike impeachment.
While the allegations against Mr Clinton were serious - perjury and obstruction of justice - many did not see them as a matter for impeachment, intended to deal with the undermining of democracy.
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Pompeo subpoenaed for Ukraine files
House Democrats have subpoenaed Secretary of State Mike Pompeo for Ukraine-related documents as they plunged into an impeachment probe of President Donald Trump.
The heads of three House committees gave Pompeo one week to produce the documents, saying a number of State Department officials have direct knowledge of Trump’s efforts to enlist the Ukraine government’s help in his domestic political campaign for reelection.
“The Committees are investigating the extent to which President Trump jeopardized national security by pressing Ukraine to interfere with our 2020 election and by withholding security assistance provided by Congress to help Ukraine counter Russian aggression,” they said.
“The subpoenaed documents shall be part of the impeachment inquiry and shared among the Committees. Your failure or refusal to comply with the subpoena shall constitute evidence of obstruction of the House’s impeachment inquiry,” they wrote.
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Ukraine call: officials listened in with growing dread
· The Times
As soon as President Trump put down the receiver in the White House residence, alarm bells rang among the dozen or so officials tuned into the call.
In the situation room of the West Wing, national security staff and intelligence agents had been listening. To the east, in Foggy Bottom, an aide to Mike Pompeo, the secretary of state, had also tuned in. Many listening had never wanted the July 25 call to take place.
In the weeks leading up to it, officials working on the Ukraine file had become concerned by an apparent shadow diplomatic effort by Mr Trump’s personal lawyer, Rudy Giuliani, to dig for dirt in Ukraine on the president’s political opponents. Mysteriously, the US ambassador to Ukraine was ordered back early and on July 18 the White House told national security agencies that $391 million in military aid to the country had been suspended.
Were the president to speak to his Ukrainian counterpart, officials feared that what they believed to be his intentions would become explicit and he would push Volodymyr Zelensky for dirt on his most likely rival, Joe Biden. The call went ahead and officials took notes and combined them with voice recognition files to make a transcript. They had little doubt it was evidence of abuse of power.
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A dangerous decade ahead as China's rise falters
Economists, defence planners and security strategists have begun testing the consensus around China's inevitable rise and have come up with some surprising predictions.
Angus Grigg National Affairs Correspondent
Sep 27, 2019 — 11.00pm
On September 26 last year, China passed a milestone that was barely mentioned and certainly not celebrated.
The People’s Republic had on that Wednesday in autumn outlived its one-time ally and patron, the Soviet Union.
It was an achievement that showcased both the success of China’s Communist Party and the fallibility of authoritarian regimes, an awkward combination that ensured the occasion was marked with silence by China’s state-controlled media.
At an elite level, however, the milestone has always hovered around the Party’s official literature and was referenced in a speech by President Xi Jinping released in June.
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I look forward to comments on all this!
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David.
