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It has been an amazing week with Trump being acquitted in his Impeachment Trial and then firing some of those who gave evidence against him. He is becoming a very little vengeful little man I believe. He is now working hard to blow up the US Department of Justice and its independent values. This will not end well if he is re-elected...
Boris is down in the weeds now working out just what to do next.
In OZ the first week of parliament has gone badly and ructions within the Coalition are really in full flight. I sense this will not end well! Really the National Party is looking more and more non-viable and if it implodes there goes the Government I reckon. Watch this space.....
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Major Issues.
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Bridget McKenzie resigns over sports rorts
Feb 2, 2020 — 5.01pm
Nationals MP Bridget McKenzie has been forced to resign from Cabinet as the federal government sought to draw a line under the sports rorts scandal.
The Morrison government was keen to end the matter before Parliament resumed this week.
Late Sunday afternoon, Prime Minister Scott Morrison announced her resignation, based on the findings of an inquiry of his departmental secretary, Phil Gaetjens, which he received last night.
The report found Ms McKenzie breached ministerial standards by failing to manage a conflict of interest, in that she was a member of a Wangaratta gun club that received a $36,000 grant from the program.
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Test case for Frydenberg’s integrity
If the Coalition wants to show it has learnt from the royal commission, stopping conflicted advice and the rorting of mums and dads would be an important first step.
Jan 31, 2020 — 11.29am
Labor’s financial services spokesman, Stephen Jones, asks: has the Coalition learnt anything from the royal commission, or will history repeat itself over and over again?
Responsibility for answering this question lies in the capable hands of Jones’ friend, Treasurer Joshua Frydenberg, for whom this column has held out great hope.
Highly intelligent with an unrelenting work ethic, Frydenberg has all the makings of an excellent treasurer and, perhaps one day, prime minister.
Yet the same could be said of many of his peers, almost all of whom have failed to live up to the hype.
Now under the bright lights with nowhere to hide, Frydenberg’s fate will almost certainly be determined by whether he can prove himself to be an outstanding decision-maker in situations characterised by imperfect information and extreme duress.
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Voters flame Morrison's leadership: Poll
Feb 3, 2020 — 12.01am
Voters of all political stripes have marked down Scott Morrison over his handling of the bushfire crisis but committed Liberals tend to be more forgiving and more likely to believe the Prime Minister can recover.
Exclusive focus group polling conducted by Ipsos over two nights last week showed the fire crisis has challenged what has been an entrenched polarisation of views towards Mr Morrison since the election.
Views towards him are in stark contrast to those of the premiers of NSW and Victoria, Gladys Berejikilan and Daniel Andrews, both of whom were considered to have done what was required of them.
"The state premiers were both seen as having played a competent and appropriate leadership role in managing the response,'' the research concluded.
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McKenzie exit does not end the PM's problems
The Morrison government has been hit by the trio of trouble: personal flaws, outside events, and all compounded by a lack of political purpose.
Feb 3, 2020 — 5.16am
Agriculture minister Bridget McKenzie has been fired on a convenient technicality, not for the industrial-scale rorting of government sports grants for the Coalition’s election advantage, over which 12 days ago The Australian Financial Review said she must go.
Rather than expose the government for its collective political corruption, the minister has taken the fall for a personal subset of it.
Some good may come of it. The Prime Minister has approved the recommendation from his hand-picked top bureaucrat, Phil Gaetjens, that ministers must now justify changes that they make to funding proposals by bodies like Sport Australia, even though he concluded that Senator McKenzie had not done anything she wasn’t entitled to do.
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Bridget McKenzie's head is a start
Scott Morrison and Josh Frydenberg have to be seen to deliver real economic and political leadership to recover. Bridget McKenzie's head is the least of it.
Feb 3, 2020 — 12.00am
Australian Treasurers and their budgets are always hostage to events beyond their control.
But Josh Frydenberg must still be shocked to be suddenly juggling an extraordinary combination of crises creating havoc with the economic outlook and consumer and business confidence at the start of 2020.
The magnitude of the continuing bushfire and coronavirus disasters at least put the fiasco of finally dealing with the political future of the hapless Bridget McKenzie in a bigger context.
But the inexcusable delay – and the carefully targeted rationale for sacking her as minister on Sunday afternoon – have only contributed to the confusion undercutting the government’s messaging.
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Angry voters unload on 'terminal' PM
By David Crowe
February 2, 2020 — 11.50pm
Australians who never liked Scott Morrison do not hold back when asked about his leadership during this horror summer.
One of them, Nerida, is scathing about the Prime Minister.
“If you can’t show empathy in one of Australia’s biggest natural disasters, I’m sorry, but what use are you?” she says during an Ipsos focus group conducted for The Age and The Sydney Morning Herald.
Morrison is paying for his own poor judgment. He rejected the need for a meeting with premiers when the crisis approached. He went overseas without naming an acting prime minister. He mishandled his meetings with fire victims when he returned.
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A lack of trust in modern politics is making economic reform impossible
Ross Gittins
Economics Editor
February 3, 2020 — 12.00am
Life’s getting a lot tougher for optimists. I’m starting to wonder whether our politics has passed the point of peak economic reform and controversial policy changes are no longer possible.
We keep berating our politicians, urging them to show leadership and have the courage to make much-needed reforms, but they never do. Right now, it’s easy to look at the way Scott Morrison has fumbled the bushfire response, the need to get real about climate change, and even his reluctance to take a stand against blatant rorting of taxpayers’ money, and decide we have a Morrison problem.
But though we’re discovering the miracle election-winner’s various shortcomings, it’s a mistake to think one man is the cause of our reform problem. It’s possible to argue things have got steadily worse in the revolving-door period since the departure of John Howard, but the greater truth is that the problem’s systemic.
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Coalition still behind in latest Newspoll
Prime Minister Scott Morrison and the Coalition has suffered another blow from the ongoing bushfire crisis and sports rorts controversy.
AAP
Prime Minister Scott Morrison and the Coalition are still taking a hit from voters over the handling of the bushfire crisis, and more recently over the sports rorts saga.
The latest Newspoll indicates that on a two-party preferred basis, the Coalition trails Labor 52 to 48.
The prime minister’s personal approval rating has stayed steady for the second fortnight in a row at 37 per cent, after falling eight points in the first survey of the year, according to the Newspoll conducted for The Australian.
Opposition Leader Anthony Albanese’s rating has fallen from 46 to 43 per cent.
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Low interest rates open generational divide: poll
Feb 4, 2020 — 12.00am
Voters are polarised over Australia's chronically low interest rates – mortgage holders are in no hurry to see them rise while retirees say they are being forced to take more risks with their money to get by.
Focus group polling conducted last week for The Australian Financial Review also shows mixed views among voters about the economic outlook, ranging from Australia being on the brink of another financial crisis to things being not as dire as is being made out.
The research was conducted by Ipsos over two nights last week, with one session in Sydney and the other in Melbourne.
On Tuesday, the Reserve Bank will meet to assess the economic impact of the coronavirus and the bushfires but is expected to leave the cash rate unchanged at its record low of 0.75 per cent.
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Gaetjens makes a mockery of public service standards
The head of the Prime Minister's department, Phil Gaetjens, has effectively green-lighted behaviour that would not be tolerated in the public service he leads.
Feb 3, 2020 — 6.59pm
If a fish rots from the head, then the finding by the Secretary of Prime Minister and Cabinet that there was no basis for suggesting political considerations were the primary determining factor for allocating $100 million in sports grants makes a mockery of the Australian Public Service commitment to the highest ethical standards among its leaders.
As head of the public service, Phil Gaetjens is the one who sets the standard for others to follow. By finding political considerations were not the primary reason for the awarding of the grants, he has directly conflicted the Australian National Audit Office finding that 61 per cent of successful applicants would have failed if the minister and her office had not intervened with their focus on marginal seats.
The audit office report could not have been clearer: “The award of funding reflected the approach documented by the Minister’s Office of focusing on ‘marginal’ electorates held by the Coalition as well as those electorates held by other parties or independent members that were to be ‘targeted’ by the Coalition at the 2019 Election.”
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Business' role in disaster response needs to be planned
Business is making a significant contribution to bushfire aid, but has little involvement with disaster management planning. This needs to change.
Feb 3, 2020 — 12.04pm
The Business Council of Australia is to be commended for its focus on long-term disaster assistance and preparedness.
BCA’s Community Building Initiative, supported by The Australian Financial Review, will focus on co-ordinating disaster support from the business community such as providing employment opportunities for volunteers and victims who have lost work as a result of the disasters, additional services for communities, reconstruction support and financial relief. And it will set up an Australian Volunteer Support Trust to be a permanent and ongoing fund to support the children of volunteers who have died fighting these fires and in future disasters.
Many companies have announced they are providing paid leave for emergency services volunteers. But it can do more to enhance its own resilience efforts and its assistance to the community, before, during and after a disaster.
The relationship between business and our disaster management organisations is ad-hoc. But in this new era of disasters we now need a partnership between business and our emergency authorities.
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What is happening in federal politics?
Federal parliament is back with a bang as a Nationals leadership spill and bushfire speeches dominate the first sitting day for the year.
Daniel McCulloch
Australian Associated PressF ebruary 4, 202011:19am
WHAT IS HAPPENING IN FEDERAL POLITICS?
* Michael McCormack has survived a challenge from Barnaby Joyce to remain leader of the Nationals and deputy prime minister
* David Littleproud has been elected Nationals deputy leader
* The leadership spill will trigger a reshuffle of cabinet positions in the Morrison government
* Adam Bandt has been elected unopposed as Greens leader following the resignation of Richard Di Natale
* Larissa Waters and Nick McKim will serve as his deputies
* Political leaders attended a church service in Canberra to mark the first sitting day of the parliamentary year
* Normal parliamentary business has been suspended so that politicians can spend the day delivering speeches about bushfire victims and emergency services personnel.
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Tricky times for investing in China
Investors need to be aware of Australia's fraught political relationship with a country to which it sends 38 per cent of its total exports.
Feb 4, 2020 — 11.51am
It is the year of living dangerously for Australian companies doing business in China and that could have dramatic implications for investors.
Multiple dangers are looming. In the short term there is the economic impact of coronavirus. Over the longer term there is the issue of how Australia can have such a fraught political relationship with a country to which it sends 38 per cent of its total exports.
After a decade of negotiations, Australia's free trade agreement with China formally came into force on December 20, 2015. In hindsight it has been downhill ever since in terms of the health of that trading relationship as Australia has angered its biggest trading partner by taking a high profile stand on China’s poor human rights record and potential theft of intellectual property through state-influenced companies such as telco giant Huawei.
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Failed Joyce coup sparks fresh climate row
Phillip Coorey Political Editor
Feb 4, 2020 — 2.07pm
An explosive new row over climate change has erupted inside the Morrison government following a failed bid by Barnaby Joyce to wrest the Nationals leadership from Michael McCormack.
Moments after Mr Joyce lost the spill, he and his backers including George Christensen and David Gillespie, spoke in the joint party room meeting against climate change policy.
They were taken to task by Liberal colleagues, who say climate change is an even more red-hot issue in their seats following the bushfires and they want the government to do more on policy.
Mr Joyce ran for the leadership on an anti-environmental platform. Backed by Matt Canavan, he vowed to do more to promote coal, enable widespread land clearing and to wind back the Murray-Darling Basin plan so less water was dedicated to the health of the river system.
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The Coalition's crisis is about its core
Scott Morrison is having a crisis that has penetrated into everyday real-people conversation. This is a moment in which the PM’s relationship with quiet Australians is genuinely in play.
Feb 4, 2020 — 4.30pm
There’s no sugar-coating it, the Coalition is having a political crisis. A proper one, not just a Twitter beat-up; a multi-headed crisis that won’t die easily because it is about the unrenovated sports clubs people gather in, the town communities that must come together to rebuild after catastrophic fires, and the fear of the coronavirus making schools and universities feel unsafe.
The Coalition’s crisis originated in events outside its control, but it has revealed a crisis of meaning at its core.
Scott Morrison is having a crisis that has penetrated into everyday real-people conversation, the sidelines of sports matches, the school gate, the sandwich shop queue, the water-cooler, the Facebook mummy groups, the family WhatsApp chats.
They may not be talking about the Prime Minister’s leadership style or his communication strategy outside the Canberra bubble, but this is a moment in which the PM’s relationship with the quiet Australians is genuinely in play.
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RBA’s foot-dragging leaves economy dangerously exposed
The Reserve Bank should signal its willingness to do whatever it takes to return inflation to the mid-point of its target range in short order.
Feb 5, 2020 — 12.00am
The Reserve Bank of Australia left its official cash rate unchanged at 0.75 per cent on Tuesday, a decision that was widely expected by financial markets.
Yet the case for monetary policy to do more remains compelling. The RBA presides over an extended undershoot of its inflation target and an unemployment rate above its own estimates of the "full employment" rate.
The Reserve Bank continues to expect a "gradual" improvement in both these key indicators, but this gradualness is entirely of its own making.
The RBA believes quicker wages growth is needed to return to its inflation target. But wages growth won’t rise while inflation remains low and the labour market won’t tighten quickly or significantly without further support from monetary policy.
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Pro-coal agenda is rat poison for Morrison
The core of Joyce's support came from Queensland. It will be a problem for Morrison to manage, despite it delivering him victory last year.
Feb 4, 2020 — 8.00pm
From an optical perspective, the timing of Tuesday's Nationals' leadership challenge could not have been worse.
With the first Parliamentary day of the year set aside to discuss the bushfires and remember the victims, the Nationals moved to install as leader a fellow who does not subscribe to the science of climate change and does not rate it as an issue of concern.
The anti-'greenie' push was ill-timed after a savage summer of fire saw lives lost, homes destroyed and forests and animals wiped out en masse.
Barnaby Joyce and his co-conspirator Matt Canavan were running on an anti-environmentalist agenda of coal-fired power, land clearing and tearing up the Murray Darling Basin Agreement.
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Scott Morrison stuck between a rock and hard place on China
The world, and Australia in particular, is being given a dry run on what its dependency and vulnerability to the authoritarian China growth locomotive really means, with global and Australian growth certain to take a hit — pointing to an ever tougher first half of 2020 for the Morrison government.
As the rich-world nation whose living standards have benefited the most from China’s 21st-century boom, Australia is about to discover the meaning of interdependence on China. The Morrison government faces a triple event scenario, drought, bushfires and the coronavirus, each a serious challenge, each more lethal in its economic impact.
Large parts of the world’s major growth economy are being shut down. Uncertainty and panic are on the march. Three issues are fused in a dangerous domino effect: the spread of the virus, the China economic closures to halt the escalation of infection, and the transmission impact across global markets in finance, investment, tourism and education.
China’s economy grew at only 6 per cent last year, one of its worst results in three decades. It will be under more pressure in 2020, exacerbated by the coronavirus, whose impact to this stage defies reliable prediction. Early estimates are that the damage may reach one percentage point of GDP in this quarter and that must have a detrimental global impact, as China constitutes about 20 per cent of global GDP.
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How a man called Wilbur could blow up trade war truce
Stephen Bartholomeusz
Senior business columnist
February 5, 2020 — 3.00pm
Just when it appeared there would be a lengthy hiatus in Donald Trump’s trade wars, his Commerce Secretary, Wilbur Ross, is threatening to open a new and unusual front.
This week Ross followed through on a proposal he first aired last May, publishing a "final regulation for imposing countervailing duties on products that benefit from unfair currency subsidies which in turn cause harm to domestic industries".
For "countervailing duties" read tariffs, Trump’s weapon of choice in the protectionist stance his administration has adopted to "Make America Great Again".
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Debt funds are not toxic time bombs
Mums and dads are desperate for income. But in the context of the last 15 years, what they are being sold is of surprisingly high quality.
Feb 6, 2020 — 3.39pm
At 1.24 am on August 31, 2005, I sent off a distressed e-mail to a well known CDO guru in Chicago. Earlier that day, I’d had a shocking conversation with a council finance director who said he had invested 90 per cent of a $30 million cash balance into collateralised debt obligations.
The reason the director gave was that CDOs offered the best return available for his AAA credit rating constraint.
The guru dismissed my plea, but since that moment I've paid close attention to corporate debt markets and the toxicity of products pedalled to punters.
CDOs, of course, blew up soon after. But in the wake of the credit crisis, Australian households got extremely well compensated for taking no risk by parking their cash in 8 per cent government-backed bank deposits.
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Government 'knew robo-debt was illegal': emails
Rebecca Gredley
Feb 6, 2020 — 5.24pm
The federal government was told its so-called robo-debt welfare recovery system was illegal, internal emails show.
The emails between senior bureaucrats released to a Senate inquiry reveal discussions from late November on the day the system was scaled back.
"They (the Department of Social Services) have received legal advice that debts based solely upon DSS own income averaging of ATO annual tax data are not lawful debts ('robo-debts')," the email says.
"They have also suspended the raising and recovery of robo-debts as of today."
The debts were not due to the Commonwealth and therefore not legal, the emails say.
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Stockbroking shuns retail investors
Stockbrokers have been part of Australia's financial system for almost 170 years. But it's only in the past decade they have been forced to transform their businesses to ensure long-term survival.
Feb 8, 2020 — 12.00am
The controversy generated by the EL&C Baillieu tapes and Treasurer Josh Frydenberg's intense focus on the allegedly evil custom of paying commissions for capital raisings could well give investors the wrong impression about stockbrokers.
The ill-informed could be forgiven for thinking the broking profession, which started in Australian in the 1850s, is a machine designed to pump shares through a corporate finance arm into the arms of investors, including special allocations of hot stocks to "mates".
A further outdated and somewhat cynical view would be that brokers always have an eye for generating commissions through the churning of share portfolios, including replacing the odd poorly performing IPO stock with newly issued ones.
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Sorry, politicians can't make the boss pay for your super
Ross Gittins
Economics Editor
February 8, 2020 — 12.00am
When the government compels employers to contribute to their employees’ superannuation, it seems obvious that it’s forcing the bosses to give their workers an extra benefit on top of their wage. Obvious, that is, to everyone but the nation’s economists.
They’re convinced it’s actually the workers themselves who end up paying because employers respond to the government’s compulsion by giving their workers pay rises that are lower than they otherwise would have been.
But can the economists prove their intuition is right? Not until this week.
The argument about who ends up paying for compulsory employee super is hotting up. The Hawke-Keating government’s original scheme required employers to make contributions equal to 9 per cent of a worker’s pay. But when former prime minister Tony Abbott took over from Labor in 2013, he inherited a law requiring the contribution to be gradually increased to 12 per cent.
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Separate $150m sports grants program bring fresh headache for Morrison
The president of a community football club in the marginal Liberal seat of Aston says local MP Alan Tudge promised him $1.1 million in funding ahead of the May election for redevelopment works if the Coalition was returned to office.
The Lysterfield Junior Football Club never lodged any formal application for funds to redevelop its pavilion and was unaware it had been selected when Mr Tudge, the Minister for Cities, Urban Infrastructure and Population, made the pledge at a club family night “right before the election.”
Club president, Rohan Smith, told The Weekend Australian he didn’t fill out a single form related to the $1.1 million awarded to his club under the $150 million Female Facilities and Water Safety Stream Program which Labor on Friday dubbed “sports rorts on steroids.”
“Alan Tudge actually came down to the club on one of our family nights right before the election and pledged it. He said if the Liberals win government we’d get the $1.1 million. And then he confirmed it after the Liberals won the election,” Mr Smith said.
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Angus Taylor fake document affair shows how much you can get away with in politics
Michael Koziol
Political correspondent
February 9, 2020 — 12.05am
No one can say for sure whether Energy Minister Angus Taylor or someone in his office falsified a document designed to paint Sydney's lord mayor Clover Moore as a climate change hypocrite. But one thing is clear: they may as well have. And it may yet happen again. Because this whole unseemly affair goes to show that, if you want to do something like this, you can absolutely get away with it.
Let's remind ourselves of what we know happened: Taylor's people furnished The Daily Telegraph with some hopelessly wrong figures about City of Sydney councillors' air travel habits.
Federal Police conclude its investigation into Angus Taylor, accused of falsifying information regarding Sydney Mayor Clover Moore.
They were dutifully turned into a hatchet job on Moore, whom News Corp has long despised. But once it was revealed the numbers were cooked, the whole thing backfired and the cops were called in to investigate.
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Ethics in Australian public life have reached an all-time low
By Jon Faine
February 8, 2020 — 11.55pm
You could not have a better week to illustrate the crisis in ethics that bedevils public and corporate life in Australia.
It came, ironically, on the exact anniversary of the Hayne royal commission. The former High Court judge blasted away the claptrap and spin from our supposedly “best in the world” financial institutions and exposed how the top bank bosses and their fellow financial gurus saw their role in society and the Australian economy.
Farmers, small business people and the financially illiterate were vulnerable fodder, ripe for the picking. The bankers' indignation at being called to account was even more revealing than, for instance, the contrived and dishonest “fee for no service” scam.
But this week's grim pickings go way beyond that. Nicola Gobbo, the double agent "barrister/informer/gangster moll" revealed she had scored the top marks in her legal ethics class at university. Hilarious.
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Bushfire Crisis And Climate Policy
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Australians back climate change action while science divides along party lines
By David Crowe
February 4, 2020 — 12.00am
A clear majority of Australians have backed the case for action on climate change in a new survey that shows 68 per cent believe the trend poses a "serious threat" to their way of life.
The new research concludes that 64 per cent believe Australia should be "doing more" to address the problem while 60 per cent believe the country should be a "global leader" in reducing greenhouse gas emissions.
But the findings also reveal a deepening partisan divide on climate science and show no spike in concern after the summer bushfires, despite claims the emergencies would be a "wake-up call" to galvanise political action.
The Ipsos survey of 1014 voters last month matches the findings from two focus groups held for The Age and The Sydney Morning Herald last week, when participants expressed concern about climate change but were not sure of the best policy response.
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Britain ups the ante for this year's global climate accord
Feb 5, 2020 — 5.41am
London | British Prime Minister Boris Johnson has thrown down the gauntlet on climate change to countries including Australia, urging them to come to a major UN climate conference in Scotland this November with a plan to get their economies carbon-neutral by 2050.
"The UK is calling for us to get to net zero as soon as possible, for every county to announce credible targets to get there, that's what we want from Glasgow," he said in a speech on Tuesday (Wednesday AEDT).
Mr Johnson has significantly upped the ante for the UN conference known as COP 26 – successor to the meetings that crafted the Kyoto and Paris agreements – which Britain and Italy will co-host in Glasgow in November.
"Of course it’s expensive, of course it’s difficult, it will require thought and change and action. People will say it’s impossible and it can’t be done; my message to you all this morning is that they are wrong."
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The $1.3trn cost of leaving energy underground
Vast reserves of oil, gas and coal may never be extracted because doing so would intensify global warming. The cost of writing off so-called 'stranded assets' would be breathtaking.
Alan Livsey
Feb 5, 2020 — 1.11pm
Donald Trump was thinking about the teenage climate activist Greta Thunberg when he took aim at what he called the “prophets of doom” at Davos in January. But just as easily he could have been targeting global investors whose trenchant criticism of hydrocarbons has led to a shift in investment away from the traditional energy sector and into renewables.
This move represents a big problem for energy groups such as Exxon, BP and Saudi Aramco. Vast swaths of their oil, gas and coal reserves may never be extracted and burnt because doing so would intensify global warming, worsening weather events and threatening the loss of farmland and huge population displacement.
That could leave them with large numbers of what are known as “stranded assets”.
In that context of the climate emergency, the cost of writing off stranded assets could be seen as a small price to pay. But the amounts involved would be breathtaking. According to Financial Times estimates, around $US900 billion ($1.3 trillion) – or one-third of the current value of big oil and gas companies – would evaporate if governments more aggressively attempted to restrict the rise in temperatures to 1.5C above pre-industrial levels for the rest of this century.
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Judge warns of tide of climate cases
Feb 5, 2020 — 4.45pm
Australian governments, big business and regulators face a growing tide of legal challenges linked to climate change policy failures, warns former High Court chief justice Robert French.
Describing a shift in societal views taking place around the world, Mr French said Australia was in the realm of "a frightening new bushfire paradigm" and predicted an increase in landmark legal cases, as seen in Europe and North America.
"Despite decades of warnings by scientists in a variety of disciplines, many governments, reflecting in part a degree of societal inertia and pressures from various constituencies, have failed to take decisive action to reduce global emissions," Mr French said in an address to the Law Society of Western Australia.
He described the nation's deadly summer bushfire season and changing debate about climate change as a source of concern and division in Australian society and around the world.
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Fire royal commission accepts the role of climate change: PM
Feb 5, 2020 — 5.46pm
The royal commission into the bushfires will operate on the assumption that the scale and severity of the blazes was fuelled by climate change, Scott Morrison says.
As the Coalition again grapples with internal divisions over climate change, the Prime Minister gave the undertaking to stop the royal commission being distracted by the brawl over whether climate change was real.
While Mr Morrison is unambiguous in drawing links between the fires and climate change, others in his party continue to hedge or deny.
Nationals leader Michael McCormack, who on Monday survived a leadership spill led by Barnaby Joyce and others who do not subscribe to climate change science, is choosing his words carefully so as not to further inflame his already-fractured party.
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What all leaders can learn from the bushfires
Reflecting on those who inspired as the nation burned – and those found wanting – is a valuable exercise for leaders in any field.
Feb 5, 2020 — 4.45pm
It’s hard to escape the sense that the bushfires that have ravaged Australia this summer have changed the country in a way few other natural disasters have done before.
Much like the smoke that spread from the blazes across our capital cities and even overseas, the impacts of this disaster are far-reaching. Disaster management, health systems, climate change, land management, insurance, federal-state relations – it will be years before we act on the answers to the questions these fires have left.
The horrors of the fires have also helped crystallise what the community expects from leaders during times of crisis. Reflecting on these expectations – and looking at the leaders who inspired and comforted us, and those who were found wanting – is a valuable exercise for leaders in any field.
The first leadership lesson is perhaps the most obvious: be present.
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How Morrison quietly sounded the death knell for coal
The Prime Minister has begun to accept the need for mitigating climate change. But electoral considerations remain paramount.
Feb 6, 2020 — 8.00pm
First, the self-indulgent behaviour of flicking government leaders, which began with Julia Gillard rolling Kevin Rudd 10 years ago this year, is alive and well.
Notwithstanding that, Labor and the Liberals have moved to mitigate such behaviour by introducing thresholds for future votes.
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No appetite for coal-powered plant: Labor
The federal government is promising a $4 million grant for a new Queensland coal-fired power station but Labor believes investors won't touch it.
Colin Brinsden
Australian Associated Press February 8, 20201:17pm
Federal Labor says private investors won't touch the Morrison government's plan to support a coal-fired power plant in Queensland "with a barge pole".
The government says it will spend up to $6 million in grants for two new Queensland electricity generation projects, including a coal-fired power plant, as part of a bid to lower power prices.
About $2 million has been set aside for a pre-feasibility study on a 1.5 gigawatt (GW) hydro electric plant to be developed as part of the planned Urannah Water Scheme, while up to $4 million will support a feasibility study for a 1GW "high efficiency, low emissions" coal plant at Collinsville.
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Record temperature of 18.3c fuels fears over ice
Antarctica has hit its highest temperature on record with a reading of 18.3c at a research station on its rocky peninsula.
The temperature easily beat the 17.5C reached in 2015 at the same Argentinian base. Scientists have warned about instability in the Thwaites Glacier – a block of ice at the base of the peninsula that is roughly the area of Britain.
In the Antarctic summer temperatures on the peninsula typically hover a little above zero, but with big fluctuations.
John King, from the British Antarctic Survey, said that the single record, hit at Esperanza station and based on data going back to 1961, was less troubling than the trend.
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Coronavirus And Impacts.
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The Coronavirus and its impact on markets
30 Jan, 2020
The Coronavirus is slowly jumping international borders after its initial spread in China, and markets have not been immune to its impact.
Coronaviruses are a large family of viruses which have long been known to create illnesses. There is currently a new coronavirus affecting people who have recently been in the city of Wuhan, China. From a public health perspective, this is a rapidly evolving situation and there remains “much to learn” about how it is spread, its severity, and best treatment1.
The World Health Organisation (WHO) has now agreed that the outbreak meets the criteria for a public health emergency of international concern. This means that WHO can coordinate the global response by advising countries on public health measures and recommending travel bans.
The virus has spread outside China. At this stage there are a few cases globally including in Thailand, Japan, Singapore, Australia the US and France.
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China announces economic stimulus to counter virus hit
Feb 2, 2020 — 3.17pm
Shanghai | China will make it easier for companies to borrow money under a raft of stimulus measures aimed at cushioning the world’s second-largest economy from the rapidly-spreading coronavirus.
The country's financial markets on Monday reopen for the first time since the outbreak, which has hit hard the country's services sector and forced a shutdown of its main manufacturing hubs.
People's Bank of China vice-governor Pan Gongsheng said at the weekend regulators would provide "adequate liquidity, strengthen counter-cyclical adjustments and keep stable interest rates".
Companies badly hit by the virus, which has resulted in much of the country being shut down for three weeks, would be allowed to roll over or renew debt if they had difficulties paying back loans. The cash amount that the country's big banks must have in reserve would also be lowered.
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Treasurer warns on virus hit to economy
Feb 2, 2020 — 9.12pm
Canberra/Shanghai | The Morrison government has warned of a hit to the Australian economy, and is no longer discounting contraction for at least one quarter, as it races to assess the twin impacts of the bushfires and the coronavirus.
A day after Scott Morrison announced a ban on almost all arrivals from China for at least a fortnight in a bid to contain the spread of the virus, Treasurer Josh Frydenberg said his department was trying to assess the impacts on the economy of both crises.
China said on Sunday the death toll from the virus had risen to 304, with 14,380 reported cases. The 2590 new cases and 45 additional deaths, mainly in China's Hubei province, suggest there has been no dramatic slowdown in the rate of infection, which has now shown up in 23 countries.
Among the toll is the first death outside of China, that of a 44-year-old man from Wuhan, the virus epicentre, in the Philippines.
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Markets have been too complacent about coronavirus
The Dow Jones Average dropped 2.1 per cent on Friday after the World Health Organisation declared the Wuhan coronavirus a global emergency.
That was the first fall in four days. In general, financial markets have been far slower to respond to this new epidemic than the Chinese government, which is saying something, and as we enter the sixth week since the first infections in the last week of December, with 14,628 confirmed cases and 305 deaths, the markets have some catching up to do. That could mean a rocky week ahead.
The problem is that the advice to investors from banks and brokers has been based mainly on comparisons with the SARS epidemic of 2003, which has led them and their clients astray.
There are three key reasons why the SARS outbreak isn’t much help in understanding this one, and why the impact may be much greater this time.
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Ray Dalio’s tip for coronavirus' nasty side-effect
As the coronavirus outbreak worsens, investors need to deal with a new outbreak the WHO is calling a "infodemic". Ray Dalio's prescription is simple.
Feb 3, 2020 — 11.26am
It’s the speed that Australian investors need to watch with the coronavirus outbreak – and not just the speed of the actual outbreak.
While the latest numbers from the World Health Organisation (WHO) are certainly worrying – the number of new cases jumped more than 21 per cent to 14,557 on Sunday night – it’s worth noting that the WHO also declared another outbreak.
This one it has labelled an “infodemic”, which it defines as being “an over-abundance of information, some accurate and some not, that makes it hard for people to find trustworthy sources and reliable guidance when they need it”.
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Coronavirus will hit global growth
We might be about to see something new: a global slowdown led by China, rather than the US.
Updated Feb 3, 2020 — 10.22am, first published at 9.57am
Last week, I enjoyed a city break in Istanbul with my teenage daughter. It was made even better by the fact that we were upgraded to a €1000 ($1658) room for only €250 — in large part because our hotel, which expected to be booked solid by wealthy Chinese holidaymakers, was nearly empty.
Everywhere around the city, merchants displaying “Happy Chinese New Year” signs were even more aggressive than usual in hawking their wares to passing tourists. There weren’t many of us. “It’s coronavirus,” said the concierge. “Last year around this time, we were packed. This year, nothing.”
We might be about to see something new: a global slowdown led by China, rather than the US. The past four global recessions have been triggered by American consumers. But China’s place in the global economy has grown dramatically over that time.
China today accounts for about one-third of global growth, a larger share than the US, Europe and Japan combined.
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China confident of winning the fight against coronavirus
Feb 3, 2020 — 4.56pm
Many Australian friends are concerned about the outbreak of novel coronavirus in China. I want to reassure everyone that in the face of this extraordinary challenges, China has started an all-out battle to prevent and control the virus with unprecedented actions.
The prevention and control of the outbreak is the most important task of the Communist Party of China and the Chinese government. President Xi Jinping has issued important instructions on many occasions, emphasising that we must put people’s life and health as the top priority and take more resolute measures to curtail further spread of the virus. The Chinese military has been ordered to actively participate in the nation’s fight against the epidemic.
The Central Committee of the Communist Party has established a leading group to co-ordinate and command the whole country’s efforts. A nationwide prevention and control system has been put in place. And the most comprehensive and rigorous measures have been enforced in both urban and rural areas in order to cut off the infection of the virus. Premier Li Keqiang went to Wuhan to lead the fight against the epidemic.
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Economic strain of coronavirus hits home
Feb 3, 2020 — 5.30pm
The Year of the Rat is not starting well.
Welcome to the new world of globalisation, hyper-charged by instant communication spreading shared panic as well as information. It’s not certain how effective the extraordinary attempts by other countries to isolate China will be in limiting global infection rates for the coronavirus. What’s already clear is the damage the virus is already imposing on global economic activity and worldwide trade and supply chains, with the potential to do far worse.
The 1.3 per cent stumble on the ASX 200 benchmark Monday came nowhere near the 8 per cent plunge of an always volatile Chinese sharemarket when it reopened after an extended Lunar New Year break. Consumer, transportation and financial stocks in China were among those dropping by 10 per cent – the maximum daily fall allowed.
Such negative sentiment overwhelmed the Chinese central banks’s decision to pump 1.2 trillion yuan ($255 billion) into financial markets to try to stabilise the system.
But the strain on the whole global economic system is also evident, with even less co-ordinated ability by central banks and governments to counter the growing impact of the virus.
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Coronavirus should snap investors out of ‘buy the dip’ mentality
The coronavirus outbreak amplifies two vulnerabilities: structurally weak global growth and less effective central banks.
Updated Feb 4, 2020 — 11.33am, first published at 11.30am
Last week’s fretting over the coronavirus was a good illustration of a tug of war that has been playing out in financial markets for a while: between favourable sentiment and mounting longer-term economic uncertainties.
Until now, at least, that contest has been resolved in favour of ever-higher stock prices. But investors need to decide if they want to opt for more of the same, by continuing to implement an investment playbook that has served them well, or if they want to treat the viral outbreak for what it is — a big economic shock that could derail global growth and shake markets out of their “buy-the-dip” conditioning.
If investors still insist on immediately buying dips, they should do so in a much more differentiated manner by favouring higher-quality issuers that are underpinned by strong balance sheets. AP
Entering 2020, investors faced the challenge of balancing favourable short-term market technicals with weaker fundamentals, and doing so with government bonds providing little protection given the very low — and, in some cases, negative — level of yields in advanced countries.
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There's a sickness more virulent than coronavirus and it's the PM's job to stop it
Peter Hartcher
Political and international editor for The Sydney Morning Herald
February 4, 2020 — 12.00am
Even if you do somehow catch the coronavirus, your chance of dying is just 2.2 per cent, based on Chinese government data so far. In other words, even if you catch it and happen to live in China, your chances of survival are 97.8 per cent.
More virulent than the coronavirus is the fear virus. It travels faster, requires no physical contact and does a lot more damage to a country's overall wellbeing. The world is well on the way to containing the coronavirus. It is only just beginning to feel the full effects of the fear virus.
Thousands of passengers arriving from China are being screened at Sydney Airport.
Fear kills confidence. And when confidence evaporates, commerce suffers. So does social trust as suspicion runs amok. Fear- central today is China. Reports have emerged of Chinese villages where residents go house to house to purge any outsiders and warn against accepting returnees.
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Will the coronavirus become a pandemic? The experts weigh in
As the number of infected people reaches 20,000, there is no consensus on what happens next
4th February 2020
The 2019 novel coronavirus may be poised to develop into a pandemic, according to some of the world’s leading infectious diseases experts.
“It’s very, very transmissible and it almost certainly is going to be a pandemic,” Dr Anthony Fauci, director of the US National Institute of Allergy and Infectious Disease, told the New York Times.
“But will it be catastrophic? I don’t know.”
The coronavirus that emerged in Wuhan, China, has infected more than 20,000 people, with the death toll rising to 425 on Monday evening, up by a record 64 deaths from the previous day, according to official figures from China.
The number of confirmed cases in Australia remains at 12.
Professor Mary-Louise McLaws, an epidemiologist in infectious disease control from UNSW Sydney, says there is potential for a pandemic, if temperature and humidity continued to favour the virus.
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Coronavirus could collapse world's supply chains - and even reverse globalisation
Stephen Bartholomeusz
Senior business columnist
February 4, 2020 — 1.13pm
The great unknowable about the impact of the coronavirus for businesses, investors and economic policymakers is just how much damage it will inflict on the global economy.
That’s why the markets are gyrating, with the US stockmarket tumbling on Friday and then recovering half those losses on Monday.
Oil prices have fallen more than 20 per cent since the outbreak, copper is down about 13 per cent, iron ore prices have fallen about $US10 a tonne and soy beans, which were supposed to benefit from the Phase One trade deal between the US and China, have fallen about 8 per cent.
The US yield curve has inverted at the short end – three month interest rates on Treasury securities are now higher than two and five-year rates – signalling, if not an economic slowdown, a flight of global cash to safety.
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The coronavirus is far from under control, and the threat to the global economy is growing
By Ambrose Evans-Pritchard
February 6, 2020 — 10.45am
The workshop of the world is closed. China is on a total-war footing. The Communist Party has evoked the "spirit of 1937" and mobilised all the instruments of its totalitarian surveillance system to fight both the coronavirus, and the truth. Make GDP forecasts if you dare.
As of this week, two thirds of the Chinese economy remains shut down. More than 80 per cent of its manufacturing industry is closed, rising to 90 per cent for exporters. The Chinese economy is 17 per cent of the world economy and deeply integrated into international supply chains. You cannot shut it down for long without shutting down the world.
Brief investor euphoria at reports of two new drugs from Zhejiang University that "inhibit" the virus show how badly unhinged the market has become. This is not the way that medical science advances. Nor could these drugs possibly be in time to avert serious economic upheaval.
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Josh Frydenberg warns of 'significant impact' of coronavirus on economy
By Jonathan Kearsley and Shane Wright
February 6, 2020 — 8.52am
Treasurer Josh Frydenberg has warned of a "significant impact on the Australian economy" from the coronavirus as seafood businesses fear they will have to close their doors.
Already the virus is costing tourism $1 billion a month and damaging other industries too due to a lack of more than 106,000 international students.
Josh Frydenberg vows to restore budget amid threats of Coronavirus and bushfires.
Mr Frydenberg told Channel Nine's Today Show on Thursday his job was to "make sure that the economic harm to the economy is mitigated" but would not say whether the budget, which has been impacted by bushfires and drought, will still be in surplus.
Treasury is crunching numbers to indicate the full scale of the impact on the economy and the federal budget, from the disease which has so far claimed more than 400 lives worldwide, and resulted in 15 Australians testing positive to the virus.
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Coronavirus infections ‘will double every six days’
Scientific modelling has predicted the number of coronavirus cases confirmed in China — estimated to be far in excess of what has been publicly reported — will double every six days, with some experts predicting the virus will never be contained.
The Lancet has estimated that as of January 25, as many as 75,815 people could have been infected with coronavirus in Wuhan — a number that far eclipses the total number of cases reported in China to date of 24,324.
Based on The Lancet’s estimated doubling time of 6.4 days, close to 300,000 people in Wuhan alone could now be infected with coronavirus. That was based on modelling which indicated each infected person would infect an average of 2.68 others.
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China virus death toll spikes to 563, Hong Kong imposes quarantine
Feb 6, 2020 — 12.11pm
Shanghai | China has recorded the highest daily death toll from the rapidly spreading coronavirus so far, with 73 new fatalities, as the country extends school shutdowns and considers whether to allow hundreds of millions of people back to work next week.
China's National Health Commission said overnight on Wednesday that the death toll in mainland China was 563, with 28,018 confirmed infections after another 3694 were reported on Wednesday. There have been two deaths outside mainland China, one in Hong Kong and the other in the Philippines.
While there is no sign of a slowdown, China's leaders are assuring its 1.4 billion citizens it is confident of getting the outbreak under control.
Scientists expect the number of confirmed cases to increase sharply in coming weeks as more people are being tested and hospitalised in the central Chinese province of Hubei, which is at the heart of the outbreak and has been cut off from the rest of the country. The number of patients recovering each day is increasing.
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Universities bracing for virus revenue hit
Coronavirus could wipe up to 10 per cent of the Australian National University's total revenue, Chancellor Julie Bishop says.
Australian Associated Press February 7, 20208:59am
The coronavirus outbreak could wipe 10 per cent off the Australian National University's total revenue, Chancellor Julie Bishop has warned.
Ms Bishop said about 5000 Chinese students are enrolled for this year, but only 1000 were already in Australia when the travel ban was put in place.
"So there are about 4000 students that we will be supporting to continue to deliver courses to them while they're overseas, but hopefully they'll be there in time to start either the first or second semester," she told ABC Radio on Friday.
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China reports 73 new coronavirus deaths
· Reuters
The death toll from a coronavirus outbreak in mainland China has reached 636 as of the end of Thursday, up by 73 from the previous day, the country's National Health Commission has said.
Out of the total rise in the toll, central Hubei province - epicentre of the outbreak - reported 69 deaths, including 64 in the provincial capital Wuhan.
Across mainland China, there were 3,143 new confirmed infections on Thursday, bringing the total so far to 31,161.
The number of deaths in Hubei province has risen to 618.
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Economic risk of coronavirus is bigger than SARS: RBA governor
By Eryk Bagshaw, Jennifer Duke and Shane Wright
February 7, 2020 — 11.42am
Reserve Bank governor Philip Lowe says the economic risk of the coronavirus is greater than SARS, as the infection rate surges and countries shut their borders.
Dr Lowe said there were hopes the number of cases would fall and the economy would bounce back but he said "it is possible the number of cases escalates and so does the interruption to China's economy".
The number of cases of the virus has risen by up to 20 per cent each day this week. There are now almost 30,000 confirmed cases from the flu-like disease, including 14 in Australia. On Monday there were 14,550. Of those, 565 people have died and 1382 have recovered.
Dr Lowe said the response from China compared to the severe acute respiratory syndrome epidemic in 2003 is "much more extensive". The SARS epidemic cost the global economy $60 billion and hit Australian tourism and export sectors, but China only accounted for 5 per cent of global GDP at the time. It is now worth more than triple that.
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https://www.afr.com/world/asia/china-s-fight-against-coronavirus-could-go-either-way-20200207-p53yns
The virus outbreak will end in one of three ways
If there’s no sign of a turning point within a week, reopening schools and workplaces might only serve to boost the number of second-generation cases.
Zhang Wenhong
Feb 7, 2020 — 11.10am
The nationwide coronavirus epidemic does not appear to be under control, and I’ve predicted the outbreak will end in one of three ways.
Best-case scenario: Treatment of all patients will be completed in two to four weeks, and the national epidemic will be brought under control in two to three months.
Worst-case scenario: The virus sweeps across the world as controls fail.
Stalemate: The number of infection cases grows within a controllable range, and the battle goes on, possibly as long as six months to one year.
In the best-case scenario, we have comprehensive control over infection cases in Hubei, the central province around Wuhan, and have medical personnel from across the country come to provide support.
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Coronavirus: Putting lid on coronavirus outbreak not so simple as SARS
The spread of the coronavirus around the world will be much harder to contain than the SARS epidemic 17 years ago, according to a world-leading microbiologist who has told countries outside China to brace for deaths.
Neil Ferguson, director of Imperial College London’s MRC Centre for Global Infectious Disease Analysis, said infected people who were displaying mild symptoms were likely to be mainly responsible for the spread of the virus in China.
He estimated only 10 per cent of cases of the coronavirus were being detected in China, and only a quarter of cases in countries around the world.
“We estimate that there are maybe up to 50,000 new infections a day occurring in China, which is much larger than the official case numbers,” he said.
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An American sneeze now a Chinese virus: Australia's economic contagion
By Shane Wright
February 7, 2020 — 5.43pm
The old economic rule of thumb was simple: when the US sneezed, Australia caught a cold.
It was an explanation of Australia's dependence, along with the rest of the developed world, on the American economy and its millions of well-paid consumers. But what happens when Australia's largest trading partner, China, shuts down key parts of its economy because of an outbreak of the coronavirus?
When China was hit by SARS in 2003, Australian iron ore exports to the country were worth just $1.7 billion. By 2018, they had reached $51.4 billion
In the past 24 hours companies as different as Toyota and Nintendo have warned of an economic fallout from the virus, which is forcing firms to shutter operations on mainland China with flow-on impacts to its suppliers.
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Ericsson withdraws from the Mobile World Congress, the world’s biggest telecommunications conference, due to coronavirus
One of the largest 5G providers, Ericsson, has withdrawn from the world’s premium telecommunications conference due to coronavirus, further placing the event in jeopardy.
Ericsson has joined LG and ZTE in deciding not to attend Mobile World Congress (MWC) in Barcelona at the end of this month due to the ongoing surge in the spread of coronavirus, with numbers of infections and deaths increasing in the past week.
Ericsson’s decision however is a bigger blow to the conference, as it is one of three largest providers of 5G equipment in the world, Huawei and Nokia being the other two. A major theme of the conference this year is the rollout of 5G which is gathering momentum across the world.
Its decision poses an even bigger question – just how many international business conferences will have to be rescheduled over the next months due to the virus?
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Royal Commissions And The Like.
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Why one of the biggest threats to banks is low rates
While we should applaud the progress towards higher standards in the banking industry, as investors we should also be clear about the second order impacts.
Kate Howitt
Feb 2, 2020 — 11.00pm
It’s easy and very appropriate to condemn the poor conduct that was put on display by last year’s royal commission into the banking, superannuation and financial services industry.
One clear culprit has emerged: complexity. The concept of being 'too big to fail' could be taken as a synonym for 'too big to properly govern'. We’ve seen similar issues raise their head across the globe in recent years – they are not unique to Australia.
Both in Australia and elsewhere, conduct issues are being dealt with via a one-off raising of industry standards. The post-financial crisis decade saw the imposition of a multitude of policies to reduce banks’ financial risk; now, we are seeing the imposition of a layer of costs to address operational risk.
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Banks tipped to settle as ASIC prepares fresh wave of lawsuits
By Clancy Yeates
February 3, 2020 — 12.00am
The deputy chairman of the corporate watchdog expects major financial institutions will admit to wrongdoing and settle litigation as the regulator prepares to launch a fresh wave of lawsuits triggered by the Hayne royal commission.
Daniel Crennan QC, the second in command at the Australian Securities and Investments Commission, revealed most legal cases against the banks and other financial firms over misconduct will be underway by the end of the year, with fresh action coming “quite soon."
The comments come on the one year anniversary of the Hayne royal commission's final report, and they suggest big banks will be hit with significant legal action in 2020.
Senior bankers including Westpac's acting chief Peter King have recently issued statements vowing the royal commission would have a lasting impact in stamping out bank misconduct.
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Banks lobby against $1m fines for executives
Feb 7, 2020 — 12.00am
The big four banks have stepped up lobbying of Treasury to abandon a proposal for million-dollar penalties for individual executives during a series of closed-door briefings held in Sydney on Tuesday and in Melbourne on Thursday.
The banking, superannuation and insurance industries are intensifying efforts to water down a key plank of the new executive accountability regime that exposes executives who have done the wrong thing to fines of up to $1.05 million per breach.
The Australian Financial Review understands the banks are so concerned about the changes they sent their own representatives to the roundtable meetings in addition to the industry bodies that traditionally represent them.
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National Budget Issues.
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House price climb continues in January
· Australian Associated Press
House prices climbed across every capital city in January as the housing sector continues to climb, despite a slight easing of momentum during the first month of the year.
Australian homes gained 0.9 per cent in value for the month, with Sydney up 1.1 per cent and Melbourne up 1.2 per cent to be the strongest performers despite the pace of growth slowing from December, according to property data firm CoreLogic.
CoreLogic head of research Tim Lawless said the speed of national growth for the month was down from the 1.7 per cent peak in November, though he said January data could be hard to read due to fewer listings and sales.
The nation's annual house price growth rate to January was 4.1 per cent - the highest 12-month rate since December 2017.
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Even before the summer from hell, the RBA was doing a lot of heavy lifting
Shane Wright
Senior economics correspondent
February 3, 2020 — 4.00pm
Before the excuses, before the rationalisations, let's remember one thing. The official cash rate, as of Tuesday morning before the Reserve Bank board's first meeting of the year, is just 0.75 per cent.
That is a record low. And markets expect it to go lower with many economists tipping the RBA to engage in quantitative easing.
Studies on Australian consumers show it may take years for the market to recover from the Australian bushfire crisis.
In other words, the cost of money in this country has never been lower and there's a real prospect of Philip Lowe and his team setting up a printing press in Martin Place.
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Fees, contributions in focus as submissions to retirement review close
By Charlotte Grieve and Jennifer Duke
February 3, 2020 — 11.55pm
A lobby group for private capital has urged the government to move away from using fees as a yardstick for superannuation fund performance, in a submission to the Treasury's retirement income review.
The Australian Investment Council claimed a "narrow focus" on fees and costs is likely to lead to lower super balances for retirees, as it pushed for a change to disclosure settings that allow for a greater focus on returns, rather than fees.
"In the same way that a country cannot 'tax its way to prosperity', a pension system cannot 'bargain its way to long-term wealth'," the AIC said.
The submission was one of hundreds lodged to a government inquiry examining a broad range of issues in the sector, including adequacy, equity and the sustainability of the system.
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RBA keeps rates on hold at 0.75pc
Feb 4, 2020 — 2.30pm
The Reserve Bank has held the official interest rate at a record low of 0.75 per cent as it awaits to see more evidence of improvement in the economy.
"With interest rates having already been reduced to a very low level and recognising the long and variable lags in the transmission of monetary policy, the Board decided to hold the cash rate steady at this meeting," RBA governor Philip Lowe said.
The central bank decision comes after stronger employment figures, slightly higher inflation, improving housing markets and trade balances. However the recent hits to the economy from coronavirus and bushfires weighed on the central bank board's decision.
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GDP ‘largely unaffected’ by bushfires, says RBA’s Dr Philip Lowe
Reserve Bank governor Dr Philip Lowe says economic growth for this year “as a whole will be largely unaffected” by the bushfire crisis, as he mounted a strident defence of the central bank’s three 2019 rate cuts, saying the economy “would have been weaker” had the bank not acted.
On Tuesday the RBA board held rates steady at 0.75 per cent, as expected, but shocked some in the economics community by not downgrading its growth forecasts for the year, despite the toll from a horrific bushfire season and the climbing losses associated with the coronavirus.
In his first speech for the year, given in Sydney on Wednesday, Dr Lowe repeated that he expected growth to lift to 2.75 per cent this year – a marked acceleration from the 1.7 per cent pace set over the year to September.
“There are a number of factors contributing to this outlook,” he said.
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How to survive the 2020 twilight zone
Despite a range of existential risks, markets are riding a wave of central bank liquidity to bid up assets to new highs.
Feb 7, 2020 — 4.00pm
Welcome to the 2020 twilight zone. In one month, markets have faced the spectre of global conflict with Iran launching 22 ballistic missiles against US bases in Iraq, climate change-induced hell on earth with the worst fires in local history and a Resident Evil-style viral apocalypse.
And yet care of the tidal wave of central bank liquidity and crazy-cheap money, investors have managed to look through these horrific risks and bid up asset prices to unprecedented levels.
Actually, it would be more accurate to state that central banks have been blowing bubbles left, right and centre by buying assets themselves, crowding out private agents, while debasing the cost of capital (and hence hurdle rates) to the lowest levels we have seen.
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Reserve Bank chief Philip Lowe remains buoyant but says economy has significant issues
Reserve Bank governor Philip Lowe says the coronavirus will hit the economy harder than the SARS epidemic, that the economy is doing “OK”, but could do better, and that his greatest fear is that Australia is becoming a less dynamic place than it used to be.
RBA assistant governor Luci Ellis also said the scheduled lift in the compulsory superannuation guarantee in 2021 meant the benefits of a tighter labour market in the coming two years would not translate to higher wages.
Speaking at a biannual appearance before the House of Representatives economics committee on Friday morning, Dr Lowe reiterated that more extreme monetary policies, such as buying government bonds to lower the long-term interest rate - so-called quantitative easing, or QE - were not on the agenda.
It was put to Dr Lowe that the Australian economy’s much heavier reliance on China made the potential impact of the coronavirus epidemic “significantly higher” than the 2003 SARS epidemic. The governor agreed, saying: “that would be my assessment”.
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What does the Reserve Bank really want?
“The Governor and the Treasurer have agreed that the appropriate target for monetary policy in Australia is to achieve an inflation rate of 2-3 per cent, on average, over time.”
— The Reserve Bank’s inflation target, as described on its website.
At what point, we wonder, does the “over time” bit of that agreement with the Treasurer get called? Five years? Six years? Not four years, apparently.
Inflation is 1.4 per cent and has been below the target for four years. I’m guessing that if it had been well above the target band for four years, we’d be in recession by now, with the cash rate at 10 per cent.
In his National Press Club speech this week, governor Philip Lowe said: “We continue to expect a gradual increase, with underlying inflation expected to approach 2 per cent over the next couple of years.” So, more than six years is OK then.
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Economists see RBA as too optimistic
The marked rebound in the Australian economy this year being forecast by the RBA is far too optimistic, economists say.
Colin Brinsden
Australian Associated Press February 8, 20201:49pm
Economists believe the Reserve Bank is being far too optimistic in expecting a marked rebound in the Australian economy by the end of the year and anticipate the need for a further cut in interest rates in the coming months.
The central bank has cut its near-term economic growth forecasts because of the drought, bushfires and the coronavirus outbreak.
But releasing its latest forecasts on Friday, it still expects the economy to rebound to an annual rate of 2.75 per cent by the end of 2020 and to three per cent by end-2021.
Annual growth was a sluggish 1.7 per cent in the September quarter - the last official reading of the state of the economy.
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Health Issues.
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Urgent review needed into private health insurance system: APRA
The prudential regulator has questioned the ongoing viability of Australia’s ailing private health insurance system and called for an urgent government review into its future, as insurers continue to punish policyholders with increased exclusions and higher premiums.
The Australian Prudential Regulation Authority on Tuesday warned only three private health insurers will have a sustainable business model by 2022, as young health fund members continue to dump cover and as more older and costly members continue to take up insurance.
Despite repeated warnings from the regulator to shore up their businesses, APRA executive Geoff Summerhayes said the industry was “seemingly waiting for the government to find a miracle cure” for the headwinds facing the sector.
He said an independent inquiry must investigate whether insurers should be able to continue to subsidise older policyholders with cheaper younger members, the way hospitals and doctors charge insurers, and the role of mental health in private health cover.
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Health funds must 'merge or fold', APRA warns
Feb 4, 2020 — 11.30am
The prudential regulator says the vast majority of private health insurers will be unviable within two years, and has warned those most at risk to clean up their act or consider merging with other funds.
Echoing the Grattan Institute's assessment of an industry in death spiral, Australian Prudential Regulation Authority board member Geoff Summerhayes said the continued exodus of younger members from health funds was puting the sustainability of the industry in peril.
He said this was compounded by the rising cost of medical services, which were not being matched by premium increases. As a result, on current trajectories he warned just three private health insurers would have sustainable business models by 2022.
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Australia's opioid crisis: Deaths rise as companies encourage doctors to prescribe
Dispensing rates of opioids have increased 15-fold and some people are becoming addicted via prescriptions then hitting the dark web for their fix. Still governments have been slow to act.
February 4, 2020
Australia had almost 8500 opioid-related deaths in six years as pharmaceutical companies with links to the US drug crisis spent millions of dollars aggressively marketing powerful painkillers to doctors.
New data from the National Coronial Information System and obtained by The Age and The Sydney Morning Herald shows that opioid-related deaths skyrocketed between 2010 to 2016 (the last year nationally consistent court records were available) fuelled by some of the strongest narcotics on the market. In 2016 opioids killed more people than the road toll.
As Australia confronts a rising death toll from prescription drugs, Dr Nick Carr says doctors need to be more accountable.
Of the 8421 fatalities over that period, 1881 involved oxycodone, an addictive painkiller trading under brand names like OxyContin or OxyNorm; while a further 757 involved fentanyl, a synthetic opioid up to 100 times more powerful than morphine.
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Geoff Summerhayes’s wake-up call on private health insurance
APRA member Geoff Summerhayes’ strong warning to the private health insurance industry on Tuesday was the last thing federal Health Minister Greg Hunt wanted to read.
The strongly worded Sydney speech was nominally directed at the industry, but in reality it was a wake-up call to the politicians, starting with Hunt.
Summerhayes is a prudential regulator and his job is to call out when he sees financial trouble, which is written in capital levels all over the health sector.
His suggestion for a major inquiry divided the industry, with some preferring the politicians actually make the call themselves, but others welcoming the chance to have a comprehensive review that may rid the sector of its complicated web of conflicting misdirected regulations.
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'Inflammatory' APRA is ignorant: Insurers
Feb 5, 2020 — 4.50pm
Private hospitals and health insurers have joined forced to accuse the Australian Prudential Regulation Authority of making "ill-informed and inflammatory" comments about the health insurance industry, in a choreographed attack.
The extraordinary broadside was directed at APRA board member Geoff Summerhayes, who claimed on Tuesday that only three Australian health insurers would be viable within two years, and the rest might be forced to "merge or fold".
Mr Summerhayes argued the exodus of young people from private health combined with the rising cost of hospital care was creating what the Grattan Institute has dubbed a "death spiral", and without mergers many smaller not-for-profit funds would not survive.
But Matthew Koce, chief executive of not-for-profit health fund industry body Members Health, rejected Mr Summerhayes assessment, saying he had failed to understand the business model of not-for-profits, which did not require profit margins of more than 1 per cent.
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Global study uncovers underlying genetic causes of cancers
By Stuart Layt
February 6, 2020 — 5.00am
An international research project has uncovered the genetic “fingerprints” of a range of cancer causes, with Australian experts saying it points the way to future personalised treatments.
Many cancers are the result of damage to a person’s DNA through exposure to ultraviolet light and tobacco smoking, which cause genetic mutations.
The study, the largest of its kind, looked at more than 2600 DNA samples from 38 different tumour types to try to find similarities between those genetic mutations.
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Health insurers demand regulator be sacked
James Fernyhough Reporter
Feb 8, 2020 — 12.00am
Health insurers have called on the government to sack Geoff Summerhayes as head of insurance at the Australian Prudential Regulation Authority after what they say were "inflammatory" comments on the sustainability of smaller funds.
In a letter to Treasurer Josh Frydenberg, Members Health Fund Alliance chief executive Matthew Koce said Mr Summerhayes' comments, which suggested most smaller insurers were on track to fail, were "inflammatory and ill-informed" and had "recklessly damaged public confidence in the entire private health sector".
Geoff Summerhayes had some tough medicine for health insurers. Now they want him sacked.
"Members Health has lost confidence in Mr Summerhayes’ role as an ‘objective regulator’ and in the strongest possible terms, we urge you to remove him from his role effective immediately," the letter concluded. It was delivered to the Treasurer on Friday afternoon.
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International Issues.
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India is changing and Australia is not paying attention
The days of making easy distinctions between security and economics and a democratic India and authoritarian China are long gone. India is changing in ways that may push it more towards rather than away from China.
Priya Chacko
Feb 2, 2020 — 11.32am
With bilateral trade negotiations stalling and India choosing not to join the Regional Comprehensive Economic Partnership (RCEP) agreement, attention has shifted away from economics and towards defence and security co-operation as the key to building a closer relationship between Australia and India.
This year, the two governments plan to sign a logistics-sharing agreement that will allow for reciprocal military access to facilities and operational support. Potential agreements for information sharing and maritime co-operation will facilitate greater military co-operation in the Indian Ocean.
A memorandum of understanding to increase collaboration in the research and development of new defence technologies is also in the works.
By boosting defence co-operation with India, Australia hopes to limit the extent to which China will dominate the Indo-Pacific region as its political and economic power grows. Underpinning these hopes are assumptions that India and Australia share democratic values and have a similar conception of a rules-based order in the Indo-Pacific.
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Trump acquitted in impeachment trial
Feb 6, 2020 — 8.25am
Washington | Senators have acquitted Donald Trump on two historic articles of impeachment, rejecting a welter of evidence that was dismissed by all but a single Republican as insufficient to throw him from office.
Two long-awaited rounds of voting late on Wednesday (Thursday AEDT) brought an end to one of the most divisive and aggressive periods in Washington's political history and cleared the path for what is expected to be a bruising battle for the White House in November.
The victory galvanises Mr Trump's dominance of the Republican Party, which swung almost its entire support into blocking the Democrat's attempts to remove him from office.
A White House statement said the "sham impeachment attempt" had ended in Mr Trump's "full vindication and exoneration".
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How zombies ate the Republican Party's soul
If this week shows anything, it's that there is no line for Donald Trump. His party will stand with him all the way.
Feb 6, 2020 — 9.01am
Is this the week American democracy dies? Quite possibly.
After all, everyone in Washington understands perfectly well that Donald Trump abused the powers of his office in an attempt to rig this year's presidential election. But Senate Republicans acquitted him without even pretending to look at the evidence, thereby encouraging further abuses of power.
But how did we get to this point? Part of the answer is extreme partisanship and right-wing political correctness (which is far more virulent than anything on the left). But I also blame the zombies.
A zombie idea is a belief or doctrine that has repeatedly been proved false, but refuses to die; instead, it just keeps shambling along, eating people's brains.
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From 'carnage' to confidence: How Trump wins again
By David Brooks
February 7, 2020 — 4.00pm
Washington: As several people have noticed, this was the most politically successful week of the Trump presidency.
First, President Donald Trump's job approval numbers are rising. When the impeachment inquiry got rolling in October his Gallup approval rating was 39. Now it's 49. If he can hold this level, he'll probably be reelected.
Second, impeachment never became a topic of conversation among rank-and-file Democrats, let alone independents and Republicans, so it was easily defeated in the Senate.
To the extent that it was noticed, impeachment worked for Republicans and against Democrats. Approval of the Republican Party is now at 51 per cent, its highest since 2005. More Americans now identify as Republicans than as Democrats. As Gallup dryly observed in announcing these numbers, "Gallup observed similar public opinion shifts when Bill Clinton was impeached."
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Trump purges officials who testified against him
Jeff Mason and Karen Freifeld
Feb 8, 2020 — 9.00am
Washington/New York | Two days after President Donald Trump's impeachment acquittal, his administration on Friday (Saturday AEDT) ousted Army Lieutenant Colonel Alexander Vindman, his twin brother and US Ambassador to the European Union Gordon Sondland.
Alexander Vindman and Sondland had provided damaging testimony about Trump in Democratic-led congressional hearings.
Sondland issued a statement saying he would be removed from his post hours after Vindman's lawyer announced that the military officer - the White House's top Ukraine expert - was being removed from his National Security Council job.
Vindman, a Ukraine-born US citizen and decorated Iraq war combat veteran, was escorted out of the White House, his lawyer David Pressman said in a statement, adding that the move was retribution for Vindman's testimony.
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I look forward to comments on all this!
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David.
