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The US is currently facing a strategic
trifecta with riots on the streets, COVID-19 and a real problem with the
US-China relationship. I am not sure Trump is up to handling this without
things spinning out of control. There have now been 9 days of protests and Trump is handling things pretty badly
In the UK things are running ahead of control of the virus. It feels that it might not work out well.
In Australia we have seen the National
Cabinet made permanent and the COAG blown up! Additionally we have seen the
Government admit computers can be dangerous for many citizens welfare and that
they can be used for what we discover later are illegal purposes. We also see there is more stimulus - this for the housing sector. The money seems to just keep coming!
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Major Issues.
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Shareholders, please join the back of the queue
Kate Howitt Ms
May 24, 2020 – 11.59pm
I ventured out of the house on the weekend and discovered that getting anything done now involves joining a queue by taking your place on the appropriate-spaced circle on the ground. Just as shoppers will need to get used to waiting their turn, investors should also recognise that from here on they will be standing in a line - and they won’t be at the front of the queue.
Whatever your views on the theory of shareholder primacy, the governance lesson of 2019 was that the practice of running large companies has shifted to stakeholder primacy.
That is, boards and management teams must look to the interests of all stakeholders, and anchor their decisions on the longer term, where, as Kenneth Hayne reminded us, “the interests of all stakeholders associated with the entity converge.” With the royal commission providing a warm-up lap for boards, it’s encouraging to see that the exhortations to not cause financial distress to customers has been taken to heart by corporate Australia.
Whether it’s the cutting of loan repayment requirements by the banks, or the provision of unlimited data by the telcos, corporates have been doing their bit to ease the burden on customers.
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Road maps won't drive us to clean energy
The government's Roadmap looks at 140 carbon reducing technologies. But picking the best depends on putting a value on lower emissions.
Tony Wood Contributor
May 24, 2020 – 1.45pm
The federal government’s Technology Investment Roadmap discussion paper, published last week, paints a comprehensive picture of the technologies that will be necessary for Australia’s transition to a low-emissions future. It is not, and does not purport to be, the vehicle to deliver that future.
It is self-evident that the mix of technologies that contribute to Australia’s greenhouse gas emissions today must change if we are to meet our future emissions reduction targets. The road map provides an excellent review of the technologies that could contribute to that change, and how much each could contribute. It also provides an analysis of the technical and commercial readiness of those technologies.
The inclusion of technologies such as gas, carbon capture and storage (CCS) and nuclear power attracted inevitable criticism, even though the road map sees their roles as minor. Indeed, there is little in the road map to support the contention that it is all about gas or fossil fuels.
There are grounds to be optimistic. The road map suggests this government is committed to find a way out of the climate wars.
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A star-spangled spanner in the works: how US secrecy controls Australian weapons
By Brian Toohey
May 25, 2020 — 12.00am
The loss of Australian sovereignty within the American alliance is rarely raised amid the current alarm about whether the US is a reliable ally. Successive prime ministers have given the US a de facto veto over whether Australia can use its own weapons systems to defend itself.
At the same time, they have allowed Australian forces to become so tightly integrated into the Pentagon’s that it presumes Australia will automatically participate in a horrendous new American war, even when it’s an illegal act of aggression like the invasion of Iraq.
The erosion of our national sovereignty has not occurred suddenly. A Parliamentary Library research paper warned back in 2001 that American restrictions meant Australia could only use its advanced weapons for a short time before they became inoperable. Since then, Australia has become more reliant on complex weapons systems whose sensitive components have to be sent back to America for maintenance and repairs. Perversely, American secrecy prevents Australian personnel from learning how to perform these tasks.
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https://www.afr.com/companies/media-and-marketing/news-corp-to-axe-up-to-1000-jobs-20200528-p54x65
Hundreds of jobs to go as News Corp confirms restructure
Max Mason Media & Marketing editor
May 28, 2020 – 8.58am
News Corp has confirmed sweeping changes to its Australian newspaper portfolio, with hundreds of jobs to go, the closure nearly 100 community and regional print titles, a range of which will move to digital-only.
The Australian Financial Review previously revealed News Corp Australia’s plan to close a large range of community and regional print editions in favour of digital only models, something the company has been experimenting with since 2018, launching 16 digital-only titles.
The company announced on Thursday that the bulk of News Corp’s community and regional titles would go digital only and the company will invest in "digital advertising and marketing solutions".
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Class warfare: The fight over corporate Australia's most reviled legal tactic has begun
By Charlotte Grieve and Tammy Mills
May 30, 2020 — 12.00am
The directors of IOOF would have breathed a sigh of relief on Monday when one of the shareholder class action lawsuits thrown at the firm following the banking royal commission was dropped.
IOOF would pay no money to the plaintiff, its lawyers or the litigation funder backing the case. "IOOF is very pleased with the outcome," the troubled wealth manager said in a statement filed to the ASX.
It was a fitting development in a week when the Morrison government effectively declared war on the class action and litigation funding industry.
IOOF was hit with damaging findings in the royal commission– from allegations of front running and compliance issues in 2015 to regulators seeking disqualification of directors over mishandling super members' money. But in this particular instance, it was facing litigation based on a regulatory case that was itself thrown out, nominally on behalf of shareholders but led by a Los Angeles headquartered law firm and funded by offshore funder Regency.
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Lead and we follow: country of over-achievers in times of crisis
By George Megalogenis
May 30, 2020 — 12.01am
There is a rhythm to the global shocks of the 21st century that should be familiar by now. Australia rises to the challenge, while the United States offers a counter example of systems failure.
Last week we grieved the death of the 100th Australian victim of the coronavirus. This week, the US became the first country to pass 100,000 confirmed deaths. The global pandemic of 2020 traces the storyline of the Great Recession of 2008-09 when Australia's unemployment rate remained below 6 per cent while in the US it peaked at 10 per cent.
Leadership, and a respect for expert advice, only partly explains Australia's success. It is our obedient nature as a people in a crisis that turns a timely policy response into over-achievement. Kevin Rudd told us to go shopping as an act of patriotic duty in 2008, so we spent our stimulus cheques.
This year, Scott Morrison told us to stay at home, so we learned how to make sourdough. Australians want to be led.
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Coronavirus: Centrelink to refund $721m welfare recouped under robodebt
The Morrison government will refund more than 370,000 Australians $721m recouped under its flawed “robodebt” welfare overpayment scheme after Government Services Minister Stuart Robert said the system was “not sufficient under law”.
With a class action over the scheme still pending, Mr Robert announced the refund late on Friday, saying all welfare payments the government had recovered that had been calculated using the Australian Taxation Office’s discredited income averaging method would be repaid, along with interest and recovery fees.
"We have advice now that shows that when the program started five years ago, the information for the use of averaged ATO income was not sufficient and further proof points were needed,” Mr Robert said.
"So, therefore, we will return that money and move forward with our income compliance program with further proof points.”
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Bushfire Crisis And Climate Policy
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Share investors not heeding climate change yet: IMF
By Shane Wright
May 29, 2020 — 11.00pm
Australian investors rank among the worst in the world for ignoring the threat climate change poses to their stock picks and the broader financial system.
In research released overnight, the International Monetary Fund said over the 20 years to 2017, Australia was one of 10 nations where investors had failed to take into account the impact of temperature variations on particular companies.
A portfolio of the top 20 per cent of stocks most sensitive to temperature underperformed by at least 0.5 per cent a month over the study period even when standard risk factors were taken into account.
"The presence of such a pricing anomaly indicates that equity investors in most economies have not paid enough attention to climate variables and suggests that they may not be paying sufficient attention to climate change risk either," it said.
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Coronavirus And Impacts.
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The two phone calls that ignited Australia’s pandemic response
In early January, while organisations involved in pandemic planning in Australia were just stirring, here's how Brendan Murphy pushed the go button at a political level.
Jill Margo Health editor
May 25, 2020 – 12.00am
Four months ago, federal Health Minister Greg Hunt answered a phone call in the car that would initiate a change in Australia’s lifestyle and economy that no one could have imagined.
It was Monday, January 20, the country was burning and the bushfire crisis, with terrible loss of lives and property, was consuming the nation’s attention.
On the line, Hunt heard the measured voice of the nation's chief medical officer, Dr Brendan Murphy, suggesting there could be another crisis, too.
He didn’t put it that way, he just quietly said he had confirmation of human-to-human transmission of the new coronavirus in Wuhan in central China.
Although Australia didn’t have a single case of infection with this virus, he told Hunt no one knew how it would travel, whether it would get out of Hubei province into the rest of China, and whether it would get out of China into the rest of the world.
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https://www.afr.com/chanticleer/covid-19-tipping-point-for-bloated-super-sector-20200524-p54vuz
COVID-19 tipping point for bloated super sector
Analysis of Australia's super sector suggests the pandemic will exacerbate pressure building on funds and could force consolidation that leave as few as 10 funds.
May 25, 2020 – 12.00am
Superannuation funds reeling from the double blow of lower returns and the government’s decision to give members emergency access to their savings have been given a blunt message about their future.
The best outcome for members would be for 90 per cent of the nation’s funds to cease existing in their current form.
That’s the stark assessment of Melbourne management consulting group Right Lane, which was set up in 1997 to work with industry and public sector funds. It will today release its 2020 Industry Super Forces at Work report, its eighth annual look at the state of the sector.
Right Lane’s view is that the COVID-19 crisis will be a tipping point for the sector. It will exacerbate the pressures from rising costs and falling fees, through unemployment in the near term, and through structural change in the longer term, such as what Right Lane sees as the likely dismantling of the fund default regime. Small, medium and even well-performed large funds will have no choice but to reconsider their place in the sector.
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Nation faces 'generational loss' of biotechs warning
Carrie LaFrenz Senior reporter
May 25, 2020 – 12.00am
The head of Australia’s largest life science investment fund has urged the government to provide a COVID-19 support package to the $170 billion sector, including changing JobKeeper eligibility and the scrapping of controversial legislative changes to the R&D tax incentive.
Dr Chris Nave – founding partner of Brandon Capital which manages the Medical Research Commercialisation Fund – has warned the nation could face "generational loss" of biotechs and medtechs that are not eligible for the JobKeeper subsidy since it does not support pre-revenue innovation companies.
While JobKeeper continues to be vitally important for many sectors crushed by COVID-19 measures, these early-stage companies will struggle to survive the crisis without access to government support, he claims.
"For a lot of innovation companies, while they are employing Australians who are paying tax, they are not generating any revenue," he told The Australian Financial Review.
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https://www.afr.com/chanticleer/household-fragility-points-to-post-covid-pain-20200525-p54w4d
Household fragility points to post-COVID pain
New data suggesting that 40 per cent of households have a financial buffer of less than one month the jobs supporting them were lost will add to calls for the government to keep stimulus measures in place.
May 25, 2020 – 11.57am
A new week starts with a little bit of optimism.
Another big chunk of Australia’s school students are beginning to head back to class, allowing the nation’s parents to breathe a collective sigh of relief.
More parts of the economy are starting to emerge from hibernation. On Monday, women’s fashion group City Chic Collective joined the growing ranks of retailers starting to re-open their stores.
And the nation’s economists and business leaders can start tossing around the question of whether the country should spend some of the $60 billion in stimulus payments we all thought had been already shovelled out the door.
Prime Minister Scott Morrison and Treasurer Josh Frydenberg might be intent on banking their new-found stimulus savings, but the debate around expanding fiscal support is likely to become very intense, very quickly.
Because for all the signs of optimism in the economy, there remains underlying fragility.
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The death taboo and cult of safety make living much harder
The great safety-industrial complex cannot eliminate death. But fear of it still curtails things that make life worth living.
Tanveer Ahmed Contributor
May 24, 2020 – 12.35pm
Reflecting upon death, the early Enlightenment Dutch philosopher Baruch Spinoza pronounced: “A free man thinks of death least of all things, and his wisdom is a meditation not of death but of life.”
Despite being forced to confront mortality in the face of the coronavirus, much of the wealthy, Western world has chosen to play ostrich, collectively burying its head in the sand.
Several decades of a growing death taboo is intermingling with a recent culture of safetyism. When embraced and promoted by a bureaucracy with its own interest, we are in danger of being engulfed by a new safety-industrial complex.
Given the rise in anxiety disorders in Western societies, just as we have enjoyed ever greater prosperity and security, we’ve been living a risk management failure in our personal lives.
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Correctly counting the cost shows Australia's lockdown was a mistake
The future will now be worse because the flawed pandemic health projections didn't correctly calculate their effects on economic welfare.
Gigi Foster Contributor
May 25, 2020 – 2.44pm
Australia’s economic policies in response to the coronavirus threat have been driven in the main by projections of death and infection rates, produced by epidemiological modelling, that since have been proven to be orders of magnitude above what any country anywhere in the world, regardless of policy, has experienced.
Meanwhile, the welfare costs of our economic policy responses have been either overlooked entirely, gestured towards vaguely but not actually calculated, or calculated in ways strikingly out of alignment with international best practice when estimating the welfare costs of different policy alternatives – eg, using full value-of-a-statistical-life (VSL) numbers, rather than age-adjusted VSL or quality-adjusted life years, when valuing lives lost to COVID-19 (which are predominantly the lives of older people with a few years, not an entire life, left to live).
A leading reason for points 1 and 2 is that it’s a lot less work to count bodies and point to scary body-count projections than to think hard about the many and various costs – many invisible and requiring a reasonable counterfactual that is, again, mentally taxing to create; many manifesting only over time – that arise when we take the drastic economic policy actions we have taken.
The costs of what we have done are enormous. These costs will show up most obviously over the next few months in the body counts sacrificed to causes other than COVID-19 – like from famine, preventable diseases and violence in lower income countries; and deaths from despair, isolation, and non-COVID-19 health problems that have lost resourcing in better-off countries such as Australia – but will also stem from sources that don’t have actual deaths of presently living people attached to them.
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The other diseases the coronavirus lockdown stopped in their tracks
By Stuart Layt
May 24, 2020 — 6.04pm
Amid social distancing measures put in place to fight the coronavirus pandemic, case numbers have flatlined for a number of other diseases.
But experts warn with the easing of movement restrictions, people have to keep following social distancing measures to ensure they don’t come back.
Rates of influenza have been squashed flat after initially hinting at another serious year for case numbers.
The numbers went so low Queensland Chief Health Officer Dr Jeannette Young said residents of the state were more likely to get COVID-19 than a flu in 2020.
"If you have respiratory symptoms there's every chance it is more likely due to COVID-19 than it is due to anything else," she said this week.
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Frydenberg moves to shield boards from class action lawsuits
By Nick Bonyhady
May 25, 2020 — 6.43pm
Listed company directors will be relieved from strict obligations to keep investors updated with the performance of their businesses after the Morrison government eased continuous disclosure rules to shield boards from class action lawsuits.
Australia's continuous disclosure laws require ASX-listed companies to disclose market sensitive information to investors, such as changes to financial forecasts or material transactions. But late on Monday Treasurer Josh Frydenberg announced a change to the regime.
Companies and directors will now only be liable if they had “knowledge, recklessness or negligence” that the information they share is wrong.
"The heightened level of uncertainty around companies’ future prospects as a result of the crisis also exposes companies to the threat of opportunistic class actions for allegedly falling foul of their continuous disclosure obligations if their forecasts are found to be inaccurate," Mr Frydenberg said.
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https://www.afr.com/politics/federal/later-market-disclosure-rules-eased-20200525-p54w98
Directors get six-month reprieve on disclosure
May 25, 2020 – 5.09pm
Company directors and executives providing profit guidance to sharemarket investors will be relieved from continuous disclosure rules for the next six months and further insulated from class action law suits, as the government seeks to protect business from the economic uncertainty fuelled by the coronavirus.
Treasurer Josh Frydenberg announced the government will temporarily amend the Corporations Act so that companies and their officers will only be liable for continuous disclosure breaches if there is “knowledge, recklessness or negligence” with respect to updates on price sensitive information.
"Given the impact of the coronavirus crisis and the uncertainty it continues to generate, it has been considerably more difficult for companies to release reliable forward-looking guidance to the market," Mr Frydenberg said on Monday.
"The Morrison government will temporarily amend the continuous disclosure provisions that apply to companies and their officers to enable them to more confidently provide guidance to the market during the coronavirus crisis."
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https://www.afr.com/politics/pm-hits-states-on-skills-urges-union-accord-20200525-p54w1e
Time to take economy out of intensive care: PM
Phillip Coorey Political editor
May 25, 2020 – 10.30pm
Scott Morrison will use $1.5 billion in federal funding as leverage to force nationwide change to the skills sector, and he will call for a new Accord-style relationship with trade unions and business, to help drive an economic recovery he envisages will take between three and five years.
In a speech to the National Press Club on Tuesday, the Prime Minister will also put tax reform, deregulation and lower energy costs on the agenda, saying "at some point you've got to get your economy out of ICU''.
"You've got to get it off the medication before it becomes too accustomed to it,'' he will say of the tens of billions in government assistance, including the JobSeeker and JobKeeper programs, which are due to wind down at the end of September.
"We must enable our businesses to earn our way out of this crisis. That means focusing on the things that can make our businesses go faster.''
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https://www.afr.com/policy/economy/a-longer-jobkeeper-will-keep-people-in-fake-jobs-20200525-p54w4t
A longer JobKeeper will keep people in fake jobs
Lengthening JobKeeper for businesses that can't stand on their own two feet by September, will stop the shift of people out of dead-end illusory jobs that are sadly never returning.
John Kehoe Senior writer
May 25, 2020 – 4.06pm
The $60 billion JobKeeper underspend has the government considering extending the duration of the wage subsidies beyond six months for coronavirus-crippled industries such as tourism and aviation.
But lengthening the support for businesses that cannot afford to stand on their own two feet by late September will impede the necessary shift of people out of dead-end illusory jobs that are sadly never returning. It will consign people to fake jobs for longer.
With international borders to be largely closed into next year for the typical 9 million foreign annual arrivals, tourism, aviation and international education will be weak well into 2021 and their employment levels will be lucky to return to 80 per cent capacity in the next few years.
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Consumers start to spend again on fashion, personal care as lockdowns ease
By Shane Wright
May 26, 2020 — 11.04am
Shoppers are heading back to the nation's malls, with data showing a lift in spending on clothes, beauty products and haircuts in response to the easing of coronavirus lockdowns across the country.
Figures collated by ANZ and Commonwealth Bank from their debit and credit cards show the advent of winter has prompted consumers to get off their lounges and down to the local shops for some retail therapy.
ANZ reported that in the week to May 22, personal spending was in positive territory year-on-year driven by strong growth in the services and grocery sector.
Senior economists Adelaide Timbrell and David Plank said although the figures might be affected by many businesses requiring customers to use cards rather than cash, there was a clear improvement in shopping activity.
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https://www.afr.com/politics/federal/no-model-answers-for-this-crisis-20200526-p54we5
No model answers for this crisis
A forecasting model is an opinion column with more maths. It's purpose is to spark action, not necessarily to be right.
Parnell Palme McGuinness Columnist
May 26, 2020 – 1.35pm
Will we ever trust experts again? The models that predicted the spread of the coronavirus have been under fire for months. Now the economic forecasts that were based on those models have highlighted exactly how out of whack the epidemiological predictions were. What will happen if we lose faith in modelling?
Saving $60 billion should never feel like an anticlimax, but here we are in 2020, supposedly in the middle of a once-in-a-century pandemic, with depression-style dole queues preparing us for a $130 billion economic rescue package, and it turns out that, well, it might not be half so bad.
At a micro-level, the shortfall is due to stressed small business owners making mistakes when they registered their intention to claim JobKeeper. But the reason their cumulative mistakes escaped notice until now is because by some fluke the incorrect numbers more or less matched up to Treasury forecasts.
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https://www.afr.com/politics/federal/plan-to-avoid-housing-valley-of-death-20200526-p54wk6
Billion-dollar plan to escape housing's 'valley of death'
Phillip Coorey and Matthew Cranston
May 26, 2020 – 4.05pm
The federal government is working up a multibillion-dollar scheme to construct residential housing as part of its strategy to stimulate the economy and prop up the building industry as the nation emerges from the coronavirus crisis.
The scheme, confirmed on Tuesday by Prime Minister Scott Morrison, is being developed by Treasurer Josh Frydenberg and Assistant Treasurer Michael Sukkar.
It is understood the scheme aims to ward off a so-called valley of death in residential construction that is looming when the current run of projects expire.
"The industry is facing a valley of death. We are facing a decline in residential construction in 2021 of 30 per cent."
— Denita Wawn. CEO Master Builders Australia
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Super industry shrinks by 7.7% as coronavirus hits global markets
The economic downturn sparked by the coronavirus pandemic has caused Australia’s superannuation industry to contract by almost 8 per cent.
Figures released on Tuesday by the Australian Prudential Regulation Authority revealed total assets held by the near $3 trillion superannuation industry for the March quarter contracted by 7.7 per cent compared to the previous quarter.
APRA reported the fall had been fuelled by significant downturns in global financial markets, which were rattled in March due to COVID-19.
The statistics come just before the federal government’s implementation of the early withdrawal of superannuation scheme, which allows Australian savers to withdraw up to $10,000 both this financial year and in the 2021 financial year.
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https://www.afr.com/property/commercial/shoppers-return-as-stores-reopen-20200526-p54wfl
Shoppers return as stores reopen
Nick Lenaghan Property editor
May 26, 2020 – 6.18pm
Thousands of retail stores have reopened their doors throughout the country's big shopping malls, with foot traffic steadily increasing as pandemic-imposed restrictions are eased.
Well-known shopping destinations controlled by the major retail landlords – Westfield operator Scentre, Vicinity, whose major investor is Rich Lister John Gandel, as well as fund managers GPT and Mirvac – are all experiencing a steady uptick in shoppers.
"While our centres have been significantly impacted by the COVID-19 pandemic, over the past few weeks we’ve seen a consistent increase in customers visiting our centres across Australia," Vicinity's managing director, Grant Kelley, told The Australian Financial Review.
In Sydney's Pitt Street mall on Tuesday shoppers, some wearing face masks, could be seen strolling along with their purchases in hand or making their way into stores and onto escalators.
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Removing corporate trash under the cover of COVID
Elizabeth Knight
Business columnist
May 27, 2020 — 12.00am
This week's debate around the hazards of corporate earnings forecasts is pretty much an academic argument. Large investors have already written off this year's earnings. But this does present an interesting opportunity for many companies to engage in an exercise colloquially called "taking out the trash".
The concept of taking out the trash is more widely recognised as a political strategy to bury bad news so it goes largely unnoticed. In the current corporate setting, the 2020 earnings anomaly created by the pandemic provides companies with an opportunity (or cover) to fix pre-existing issues.
Call it COVID cover.
Underperforming divisions can be shrunk, poor investments sold or written down, staff cuts made, geographies abandoned and inflated asset values dealt with. (It is the same kind of cover that newly-installed chief executives have when they reset earnings and clean up balance sheets left by their predecessors. But on a larger scale.)
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'Honest idiot' disclosure rules will threaten investor confidence, critics warn
By Clancy Yeates and Tammy Mills
May 26, 2020 — 11.44pm
Shareholder advocates have warned the Morrison government's temporary weakening of rules requiring listed companies to keep investors informed threatens to harm market confidence and could blemish the Australian sharemarket's strong reputation for transparency.
Treasurer Josh Frydenberg this week gave listed companies a six-month reprieve from strict rules on continuous disclosure, a regime that requires companies to keep investors constantly updated on issues that could have a material effect on share prices.
Mr Frydenberg said the changes would shield companies from "opportunistic" class action lawsuits which could arise if company forecasts made during the highly uncertain backdrop of the pandemic turned out to be wrong.
While company directors have supported the changes, critics on Tuesday warned the move was unnecessary and said it could raise corporate funding costs by hurting the Australian sharemarket's reputation overseas.
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Big Pharma chief who developed first Ebola shot breaks silence on COVID-19
By Riley Griffin
May 27, 2020 — 7.22am
For nearly six months, US drug giant Merck & Co. led a quiet effort to reach deals and secure federal funding to develop vaccines against the deadly coronavirus.
Top US health leaders hinted that Merck, a drugmaker known for its nearly 130-year legacy of developing vaccines, had something brewing. On Tuesday (US time), chief executive officer Kenneth Frazier broke his silence, revealing a multi-pronged approach to tackling the pandemic.
The 65-year-old lawyer-turned-CEO has built up Merck's oncology franchise while committing capital to less lucrative inoculations and antivirals critical to global public health. In December, he heralded the first-ever Ebola vaccine to be approved by US regulators. Frazier, who has been seeking a successor, now says he aims to see through development of a coronavirus vaccine.
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How to avoid catching COVID-19 if you work in the city
Tom Burton Government editor
May 26, 2020 – 5.36pm
An early return to city office towers remains problematic as research suggests a continued high risk of infection from closed indoor areas with poor air circulation, especially where people are talking or yelling.
The risk of new breakouts, exacerbated by concerns about public transport and crowded food outlets as workers return to CBDs, is behind the Victorian government’s decision to postpone any return to usual workplaces until July.
Premier Dan Andrews broke with other states to declare that people working from home should not plan on returning to the office until at least the end of June.
According to an influential review of early international research about reopenings by US-based Australian academic Erin Bromage, 90 per cent of all transmission events came from either the workplace, public transport, social gatherings, homes or restaurants.
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'Carpetbaggers and snake oil sellers' hike prices on COVID-19 essentials
By Chip Le Grand
May 26, 2020 — 11.59pm
COVID-19 "carpetbaggers" and profiteers have exploited the pandemic to inflate the price of medical supplies needed for the treatment of the coronavirus, placing further pressure on a health system already facing financial disruption.
Pathologists working in COVID-19 testing reported that protective gowns that cost $1.65 before the onset of the virus were now fetching $5.50 and in some cases up to $13.27, while nasal swabs have gone from 50¢ to $3.
At the same time, the price of single-use gloves has tripled, protective mask prices have increased fivefold and the price of a box of alcohol swabs has doubled from $50 to $99, as health practices without access to federal and state government stockpiles compete for globally scarce supplies.
Collaboration between medical technology companies and the federal government has largely shielded public hospitals from the price hikes, with the brunt being felt by pathology labs, aged care facilities, community health centres and primary health services that entered the pandemic without large supply contracts for personal protective equipment.
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Thousands of predicted COVID-19 deaths never eventuated - was it poor modelling or our response?
By Dana McCauley and Jennifer Duke
May 27, 2020 — 10.45pm
Australia's policymakers were in March bracing for up to 150,000 deaths from the coronavirus pandemic as the virus spread globally and health officials warned that hospitals might not be able to cope.
Ten weeks later, with just 103 COVID-19 deaths, some experts say the modelling behind the national cabinet's decisions was flawed and some commentators say the response went too far.
When Prime Minister Scott Morrison announced a ban on mass gatherings of more than 500 people on March 13, Australians seeing widespread lockdowns imposed overseas began to ask for the modelling that lay behind the national cabinet's decisions.
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Why the national cabinet must brace for the jobless wave
An analysis of the JobKeeper numbers shows how complicated a return to higher levels of employment will be.
Laura Tingle Columnist
May 29, 2020 – 5.23pm
It has taken the greatest threat to our health and economic wellbeing to make it happen, but Friday’s decision to make the national cabinet a permanent feature of the way Australia is governed is potentially one of the most significant outcomes of the crisis.
Of course, that national leaders talking sensibly to each other about issues in which they have a mutual interest was ever a problem seems quite bizarre in these times.
But it has been, and was increasingly becoming the biggest roadblock to anything sensible happening by way of innovation in the way government works in Australia.
The non-functional nature of federal-state relations was often mentioned by business groups as standing in the path of "reform".
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Bricks and slaughter as CBDs turn to ghost towns
Investors are wondering if the office REIT sector can ever regain its reputation as a defensive yield play for investors.
Duncan Hughes Reporter
May 30, 2020 – 12.00am
Billions of dollars are up in smoke in the office heartlands of Australia's biggest cities after workers fled to escape the spread of the deadly COVID-19 virus, leaving investors wondering if the sector can ever regain its reputation as a defensive yield play.
At the start of the year, office property looked like a great place to invest. Top office real estate investment trusts (REITs) enjoyed strong demand for prime office space, higher income and a robust pace of capital growth.
Millions of square metres of prime office space attracted near-record high rents as vacancies hovered near record lows in Sydney and Melbourne.
Dexus, GPT and Charter Hall were just some in a sector where deals had just topped a record $22 billion, as offshore buyers drove mega-deals in Melbourne and Sydney. Perth and Brisbane were rebounding from a long downturn.
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35,000 infections: the cost of a one-week delay in COVID clampdown
By Kate Aubusson
May 31, 2020 — 12.00am
Australia’s COVID-19 restrictions came just in time to avert disaster, with new modelling showing waiting just one more week risked infections ballooning to 35,000.
Waiting another to introduce border closures and social distancing measuring could have led to a five-fold increase in Australia’s current infections.
That's the finding of a new paper analysing the pattern of coronavirus infections using a technique dubbed “back projecting”.
Mortality rates, hospitalisations and ICU admissions would rise by the same magnitude, said study author Professor Ian Marschner at the University of Sydney’s Faculty of Medicine and NHMRC Clinical Trials Centre.
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Australia could eliminate COVID-19, but there's a catch
By Dana McCauley
May 30, 2020 — 11.43pm
Stamping out COVID-19 is within Australia's sights as the growth of new cases slows to a trickle, but a leading infectious disease expert says it will take at least a year of living with restrictions before the coronavirus could be declared eliminated.
Professor Raina MacIntyre from the University of NSW Kirby Institute said that although the number of confirmed cases in Australia was now low, the key to eliminating COVID-19 was in stamping out community transmission, where the virus spreads without a known source.
"Elimination means not having sustained domestic transmission," Professor MacIntyre said.
"Australia can achieve this, but it would require a demonstration of a sustained period of low disease incidence - probably a year or more."
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Royal Commissions And The Like.
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There are no entries in this section.
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National Budget Issues.
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https://www.afr.com/politics/federal/how-they-got-the-returns-wrong-20200524-p54vye
How they got the returns wrong
Different errors by the ATO and by Treasury produced the same wrong answers on JobKeeper numbers. Now the Morrison government has to deal with the political fallout.
Jennifer Hewett Columnist
May 24, 2020 – 6.00pm
The alarm bells started ringing in the Australian Taxation Office early last week. The claims from bigger businesses just weren’t arriving in the numbers expected given the looming May 31 deadline for April payments. Why?
So the ATO started looking in more detail at the difference between the original estimates of employees from eligible businesses and actual numbers being paid out once claims for individual employees were filed.
Until then the ATO focus had been on the need to get billions of dollars to businesses as quickly as possible and to ensure its computer systems were working efficiently. That technical process had gone superbly with 97 per cent of the money paid within three to four days of claims starting to be lodged from May 4.
Nor had there been any alarm bells ringing in the previous few weeks. This was because the original estimates of employee numbers provided to the ATO by eligible businesses corresponded neatly with Treasury’s forecasts of late March – around 6 million.
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https://www.afr.com/policy/economy/what-caused-the-60b-jobkeeper-blunder-20200522-p54vou
$60b JobKeeper error caused by pandemic fears
John Kehoe Senior writer
May 25, 2020 – 12.00am
Treasurer Josh Frydenberg was in Melbourne last Thursday night and received a late phone call from Treasury deputy secretary Jenny Wilkinson in Canberra.
The Treasury fiscal group head had urgent news on the government's $130 billion JobKeeper wage subsidy that was rushed out eight weeks earlier in reaction to the coronavirus economic crisis.
About three million people had so far been enrolled by employers, less than half the 6.5 million employees the Australian Taxation Office had counted and which the government had stated publicly.
The discovery alerted Treasury that its March forecast of a potential six million enrolments was wrong and it needed to be significantly revised down.
Treasury now expects the $1500 fortnightly wage subsidies to be taken up by 3.5 million workers at a cost of $70 billion - almost half the original cost.
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'Catalytic impact': end of hardship measures could trigger collapse
By Matt Wade
May 25, 2020 — 12.02am
Hardship assistance given to mortgage holders who have been affected by the coronavirus pandemic has bolstered consumer spending, but the withdrawal of private-sector support to households threatens to hit the economy later this year.
A real-time spending tracker shows discretionary purchases by borrowers who have deferred mortgage repayments during the pandemic have been little different from those who have not deferred payments.
Earlier this month, the Australian Banking Association said 429,900 mortgages had been deferred, totalling $153.5 billion. Hundreds of thousands of households are also receiving relief from rental payments and bills from utilities such as phone and electricity.
Without these provisions, many households financially affected by the pandemic would have been forced to dramatically cut spending in response.
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Treasury: the budget won't ruin us, but will help save us
Ross Gittins
Economics Editor
May 25, 2020 — 12.00am
Something we should be thankful for is that Scott Morrison saw fit to return the leadership of Treasury to another highly respected macro-economist in the months before the arrival of a virus obliged Morrison to hit the economy for six.
The key to our success in suppressing the virus was his willingness to follow his medicrats’ Treasury-like advice to “go early, go hard”. Unfortunately, going hard meant governments closing our borders and ordering a large slab of private enterprise to cease supplying goods and services to their customers.
We’re left with a sudden, unexpected, government-ordered, supply-side “disease-led” shock to the economy that’s without precedent. By mid-April, this had caused 2.7 million Australians to have either lost their jobs or had their hours reduced.
It would have been several million souls worse than that, but for the quick thinking that saw we needed a new measure – the JobKeeper wage subsidy – to preserve the attachment between businesses and their workers, even though there was much less work to be done.
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Universal pension for all: Retirees call for tax and income reform
By Shane Wright
May 25, 2020 — 12.01am
Every retiree would get at least a part pension under a plan being considered by seniors' groups amid concerns the coronavirus pandemic's effect on key income streams is leaving many older Australians cash poor and increasing the number living in poverty.
Seniors organisations are pressing the Morrison government to look at a massive overhaul to the pension system that would also take into account possible changes to tax concessions, such as franking credits, as a way to pay for any reforms.
Retiree groups are pushing for consideration of a universal pension in a bid to end means testing and help those hurt by the current virus shutdown.
The federal government is reviewing the retirement income system although its reporting date has been pushed back to July 24 due to the pandemic's impact on agencies.
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We need a name for the greatest economic crisis in a century
By Enda Curran
May 25, 2020 — 7.03am
The IMF calls it the Great Lockdown. Morgan Stanley says it's the Great COVID-19 Recession, or GCR for short. Ed Yardeni, who coined the term "bond vigilantes" back in the 1980s, has named this the Great Virus Crisis.
There's even a suggestion to call it a Pandession.
As economists around the world search for the right terminology to describe the biggest economic crisis since the Great Depression, it could take years to settle on a name, if history is any guide.
While many in the US now refer to the 2007-2009 slump as the Great Recession, that term is far from universal. In Anglo financial centres like Sydney and London, the term GFC - short for Global Financial Crisis - is more common. Others call it the North Atlantic Financial Crisis, since that's where it hit hardest.
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Coronavirus: Deakin cuts first as universities brace for cull of 21,000 staff
The first wave of COVID-19 job losses has hit universities, with Deakin University announcing that 400 jobs would go, the first of an estimated 21,000 expected to disappear because of falling numbers of international students.
Deakin, like at least 10 other universities, has rejected a National Tertiary Education Union job-saving plan that offers pay cuts for a year in return for more job security, which has heightened fears of Australia’s 130,000 university employees that large job losses are imminent.
Deakin vice-chancellor Iain Martin told staff 100 positions would go by not filling vacancies, leaving 300 jobs to be cut — about a 3 per cent reduction in the university’s workforce. He said the university faced a revenue drop of between $250m and $300m next year, because of the loss of international students and falling investment returns. Deakin’s annual budget is about $1.3bn.
NTEU national president Alison Barnes said the federal government could have saved the Deakin jobs if it used some of the $60bn saved by the error in estimating the cost of JobKeeper to extend the JobKeeper scheme to universities such as Deakin.
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A frightening insight': There's only one way out of this recession
Ross Gittins
Economics Editor
May 26, 2020 — 11.30am
Lying awake in bed last night thinking about our predicament, a frightening insight came to me: the only way out of a recession is to spend your way out. It sounds wrong-headed, but it’s not. It’s just, as economists say, “counter-intuitive”.
Who must do all this spending? In the first instance, the government. And let me tell you, if Scott Morrison lacks the courage to spend as much as is needed – as it seems he may – he’s likely to be kicked out at the next election because we’ll still be languishing in a recession that’s deeper and longer than it needed to be.
The reason spending your way out of trouble strikes us as foolhardy is that we’re used to thinking as individuals. If I and my family tried that solution, we’d soon get ourselves into even deeper trouble. True. But what’s true for the individual isn’t necessarily true for all of us acting together via the government – which we elected to do things on our behalf and to our benefit.
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Construction work falls 1% in March quarter, ABS reports
The value of construction work done fell across Australia by 1 per cent to $49.48bn in the March quarter, figures released by the Australian Bureau of Statistics show.
The latest figures coincide with the hit to the economy from the coronavirus pandemic as businesses and activity ground to a halt from the lockdown.
Market economists had forecast at 1.5 per cent seasonally adjusted fall in construction work done, according to Bloomberg estimates, compared to a 3 per cent fall during the December quarter.
Driving the fall was building work - including major office projects and apartments - which fell 1 per cent to $28.92bn in seasonally adjusted terms during the March quarter, the ABS figures show.
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https://www.afr.com/property/residential/construction-at-lowest-level-since-2010-20200526-p54wfv
Construction at lowest level since 2010
Michael Bleby Senior reporter
May 27, 2020 – 3.34pm
The value of all construction work done fell to its lowest quarterly total in almost a decade in the three months to March, as home-building contracted for a seventh straight quarter, official figures on Wednesday showed.
The 1 per cent quarter-on-quarter decline in total construction pulled the three-monthly total to $49.5 billion, the weakest total since September 2010, when the economy that was then emerging from the GFC picked up to a quarterly total of $49 billion.
Home-building proved the biggest drag, with the 1.6 per cent quarter-on-quarter contraction reflecting the downturn in new housing approvals over 2018 and 2019, even as the monthly totals for commercial and engineering sectors stayed relatively robust.
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Businesses give up office space in Sydney CBD
Ingrid Fuary-Wagner Reporter
May 28, 2020 – 12.05am
The amount of office space in the Sydney CBD available for sublease has hit its highest level since the early 1990s recession and is expected to expand further this year as businesses contract or look for ways to save money as a result of COVID-19.
The large increase in sublease space has so far been mainly attributed to businesses relocating but CBRE expects that demand will deteriorate further as a result of higher unemployment, lower migration and rising incentives.
Falling demand could cause effective rents to drop by 15 to 20 per cent in 2020-21, in turn putting office tower values under pressure.
"Of real concern is that sublease availability is at historic highs and that is before we see the anticipated distressed space hit the market," the CBRE research team said.
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'Dangerously naive': APRA warns the worst is ahead
Michael Roddan Senior companies reporter
May 27, 2020 – 8.30pm
The banking regulator has warned against a “dangerously naive” assumption of an economic snap-back and told banks to delay a rush to rebuild capital buffers as it guards against “substantial” threats to financial stability.
Australian Prudential Regulation Authority chairman Wayne Byres said the watchdog would be pushing its work on governance, culture and remuneration back as it directs its resources to the “areas of greatest risk” as he put the banks on notice that the “real battles for the financial sector remain ahead”.
In a speech delivered overnight to the Board of the International Banking Federation, Mr Byres also urged lenders to give investors and shareholders as much information as possible to maintain investor faith in the banking sector and financial markets.
Treasurer Josh Frydenberg this week temporarily relaxed continuous disclosure laws following campaigns from the Business Council of Australia and the Australian Institute of Company Directors amid a sharp increase in shareholder class actions in recent years, in a move that has been attacked by institutional shareholders.
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RBA governor warns of post-coronavirus 'shadow' over economy
By Shane Wright
May 28, 2020 — 11.30am
Reserve Bank governor Philip Lowe has warned of a post-coronavirus shadow over the economy while predicting further job losses across the country.
Giving evidence to the Senate committee charged with overseeing the coronavirus crisis, Dr Lowe said the past three months had been extraordinary, which had required an unprecedented response.
The central bank has taken official interest rates to a record low 0.25 per cent. It has bought more than $50 billion in state government bonds while extending up to $90 billion to banks to pass on to small and medium-sized businesses.
Dr Lowe said it appeared these elements were all working.
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Lowe can't go lower - Morrison will have to lift the bar
By Shane Wright
May 28, 2020 — 4.11pm
Central bankers are often accused of being obtuse.
Deciphering the speeches or minutes of some central bankers requires the skills of a haruspex, astrologer and water diviner.
But RBA governor Phil Lowe, in evidence to the Senate's committee that is watching over the federal government's response to the coronavirus pandemic, sounded a clarion call that could be heard from Greensborough to Gosnells.
Philip Lowe, Governor of the Reserve Bank of Australia, says JobKeeper may need to continue if the economy doesn't bounce back by September.
The Reserve Bank, with official interest rates at 0.25 per cent, has effectively run its policy race. The economy is going to need more support and that support is going to have to come from government.
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Bean counters believe nation can dodge depression, but no sharp rebound
Ross Gittins
Economics Editor
Although the virus has delayed the budget until October, Treasurer Josh Frydenberg will deliver an update on the budget and – more importantly – the economy, within the next fortnight. But last week the secretary to the Treasury dropped some big hints on what to expect.
In evidence to the Senate committee inquiring into the response to the virus, Dr Steven Kennedy started with the outlook for the labour market. The latest figures from the Australian Bureau of Statistics are for the four weeks up to mid-April.
In round figures, they show that 900,000 people lost their jobs during the period (although 300,000 gained jobs), 1 million people worked fewer hours and three-quarters of a million kept their jobs but worked no hours (most of them protected by the JobKeeper wage subsidy scheme).
So that’s a total of 2.7 million workers – about one worker in five - adversely affected by the snap recession. Total employment fell by 4.6 per cent, but total hours fell by twice that – 9.2 per cent, telling us much of the pain was borne by part-time workers. The rate of under-employment (mainly part-timers working fewer hours than they want to) leapt by almost 5 percentage points to 13.7 per cent.
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Turning off fiscal tap a dilemma for Treasurer
When the government turned on the fiscal tap to support the economy through the COVID-19 crisis, the hard part was always going to be turning it off. Already a conga line has formed, demanding the tap stays on.
The surprise leader of the push is Reserve Bank boss Philip Lowe, who worries about an effective fiscal tightening at the end of September, when the JobSeeker increases and JobKeeper payments stop. The government will provide some support going forward and won’t let the economy simply fall off a cliff.
The hard part is defining which part of the economy really needs help, which is a tricky political issue because the last thing the government wants to do is hand over wages subsidy to a foreign-owned company paying minimal tax.
The list of those that really need support will readily grow and at some point Treasurer Josh Frydenberg will have to say no.
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Health Issues.
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'Act now': AMA urges health education to combat 'growing' anti-vaxxer movement
By Max Koslowski
May 25, 2020 — 6.30pm
Medical experts warn decades of progress on immunisation could be undone unless the federal government urgently pushes a strong pro-vaccine information campaign.
The Australian Medical Association's call came after celebrity chef Pete Evans was allowed to question vaccination science several times unchallenged on KIIS 106.5 radio show Kyle and Jackie O on Monday morning.
The peak medical body's president Tony Bartone said government and media must "act now" to ensure immunisation science is communicated above and beyond conspiracy theories.
"It's growing," Dr Bartone said of the non-vaccination movement. "Anyone who speaks against the science of vaccination needs to expect to be slapped down by scientific sources."
"Anyone who gives a platform to anti-vaxxer messages should similarly expect to be also held to a similar account," he added.
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Painkiller packs cut down to size as opioid crackdown intensifies
By Aisha Dow
May 27, 2020 — 11.55pm
The drugs have become household names in Australia: oxycodone, codeine, morphine and tramadol.
But from next week they will become even harder for people to access, as pack sizes are halved and doctors are told to dispense only to patients whose other treatments have failed.
The crackdown is in response to thousands of deaths linked to prescription opioids - almost 100 each month in Australia.
While doctors and pain experts strongly back the changes, they also warned patients needed to be given support in order to avoid the unintended consequences, such as overdoses, of people turning to illicit or black market alternatives.
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International Issues.
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Hong Kong becomes ground zero for East-West tensions
With the National People’s Congress set to enact a national security law for Hong Kong, the city state is now caught in the middle of a great rivalry.
Grant Wilson Contributor
May 24, 2020 – 2.10pm
In early March we said that COVID-19 would evolve into a Western crisis of Eastern origin, stress-testing markets, economies and strategic alliances.
This violent pivot is well under way.
For those in any doubt, the White House delivered a report this past week that sets out the US’ strategic approach to China, in accordance with the National Defence Authorisation Act. It speaks of a "whole-of-government approach", a "return to principled realism" and a "cleared-eyed assessment" of the Chinese Communist Party’s actions and intentions.
It finds "the CCP’s expanding use of economic, political, and military power to compel acquiescence from nation states harms vital American interests and undermines the sovereignty and dignity of countries and individuals around the world".
By our count, there are four fault lines in play at the moment.
First, the US Senate unanimously supported a bill this past week that will enable the delisting of Chinese companies that fail to comply with applicable US accounting regulations. The House is likely to support a companion bill soon.
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Bill Gates is the world's most interesting man
Stepping up when the Trump administration failed has made the Microsoft co-founder and philanthropist the most trolled person on the planet.
Timothy Egan
May 25, 2020 – 12.00am
"It tires me to talk to rich men," said Teddy Roosevelt, himself a product of wealth. "You expect a man of millions, the head of a great industry, to be a man worth hearing. But as a rule, they don't know anything outside their own businesses."
Had T.R. spent time with Bill Gates, the polymath who predicted the pandemic in a TED Talk, he probably would have made an exception.
Gates is everywhere these days, a lavender-sweatered Mister Rogers for the curious and quarantined. With the United States surrendering in the global war against a disease without borders, Gates has filled the void. The US is isolated, pitied, scorned. Gates, by one measure, is the most admired man in the world.
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The era of US military supremacy has ended
· The Wall Street Journal
Could the US lose a war with China? That alarming possibility was one of the last things I ever discussed in person with my old boss, US senator John McCain.
In late 2017, we had just left a briefing that he had asked me to arrange for his colleagues about China’s growing arsenal of precision-strike missiles, long-range sensors, counter-space capabilities and other advanced weapons. Every senator was invited to the briefing; about a dozen showed up. They got a depressing dose of reality.
One briefer was a senior Pentagon official in the Obama administration named David Ochmanek. Last year, he spoke publicly about the many war games he has conducted for the US Department of Defence.
“When we fight China or Russia,” Ochmanek said, the US military “gets its arse handed to it. We lose a lot of people. We lose a lot of equipment. We usually fail to achieve our objective of preventing aggression by the adversary.”
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Push India towards the Quad to deter China
A four-country bulwark against Beijing's regional dominance is an idea whose time has come. To make it work, New Delhi must be convinced to join in.
Lavina Lee Contributor
May 25, 2020 – 1.59pm
While the world is reeling from the devastation of a virus the Communist Party recklessly unleashed, Beijing is seizing the moment.
As the spread of COVID-19 subsides in China, Beijing has stepped up incursions into Japanese territory in the East China Sea, has sent a People's Liberation Army Navy (PLAN) aircraft carrier group to the waters surrounding Taiwan, impeded the exploitation of resources in the South China Sea by rival claimant states, and is planning to impose national security laws on Hong Kong which would contravene the One Country Two Systems principle, and continues its economic coercion over Australia for calling for an investigation into the origins of COVID-19.
When the world recovers from the effects of the COVID-19 pandemic, these Chinese actions will not be forgotten.
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‘Cold War’: Chinese government issues warning to Australia after trade war threats with US
China has issued a new warning to Australia, flagging “extreme danger” and saying our economy could suffer a “fatal blow”.
news.com.au May 25, 202012:52pm
The Chinese government has warned Australia to “distance” itself from the United States amid growing tensions between the two countries, saying it would be “extremely dangerous” for Canberra to get involved.
China is Australia’s largest trading partner, while the US is one of our key strategic allies. But Beijing says any show of support for the latter will deliver our economy a “fatal blow”.
“If the Trump administration plunges the world into a ‘new Cold War,’ forcing China to take countermeasures against the US and its allies, it would be extremely dangerous for Canberra to become a player in a diplomatic club led by the US, given Australia's high dependence on the Chinese economy,” an article in the Global Times said.
“Once Australia is regarded as a supporter of the US in a ‘new Cold War,’ China-Australia economic ties will inevitably suffer a fatal blow.
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Hong Kong another sideshow in a larger China drama with no final act
Jennifer Hewett Columnist
May 25, 2020 – 4.23pm
Between anti-China tweets, Donald Trump is playing golf again. Pro-democracy demonstrators are back protesting on the streets of Hong Kong. The Morrison government is still insisting Australia’s relationship with its most important trading partner remains strong.
But there’s no return to politics as usual, globally or domestically. Well beyond the economic and social destruction wrought by COVID-19, the tectonic power plates between the US and China have shifted even further and faster over the last few months. No V-shaped or U-shaped recovery from that confrontation is possible, whether or not Trump gets re-elected in November. It’s more how to adapt to the dangerous fissures opening up.
Australia, for all the particular disputes over Huawei, or barley tariffs or Canberra's determination to distance itself from the more erratic US moves, is inevitably enmeshed in that broader, longer struggle for strategic supremacy. This covers all aspects of US-China rivalry – economic, commercial, technological, ideological and cultural as well as shows of military strength.
Gregory Copley, president of the Washington-based The International Strategic Studies Association, says this has become an overt war of a new type where the West has not written the rules of engagement and has only just begun to acknowledge the changed reality it creates.
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Growing pains: China's surge hit by Trump and the pandemic
Stephen Bartholomeusz
Senior business columnist
May 25, 2020 — 11.57am
For the first time in nearly 30 years China has abandoned setting a growth target for its economy. That's not good news for an Australian economy over-exposed to China's fortunes but it is even worse news for China and its global leadership aspirations.
China's Premier, Li Keqiang, in an address to the National People's Congress on Friday, cited the pandemic and the "economic and trade situation" for the absence of a specific target for economic growth.
After claiming growth of 6.1 per cent last year, China experienced a 6.8 per cent plunge in the economy in the March quarter during the worst effects of the virus' outbreak in Wuhan.
While there was a rebound in industrial activity in April as the lockdowns ended – industrial output grew by 3.9 per cent – and coal consumption returned to more normal levels – retail sales remain well below pre-pandemic levels.
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Xi's bullying has backfired so far but there's a good reason why he's trying again
Peter Hartcher
May 26, 2020 — 12.01am
It doesn't seem to make much sense. China's President Xi Jinping tried to get tough with Hong Kong and Taiwan last year. The people in both places responded emphatically. They stood up to his bullying. They rejected his efforts to push them around.
The only thing Xi achieved was to alienate the smartest and freest Chinese populations within Beijing's claimed sphere. Many ordinary middle-class people were so incensed that they turned out to vote and to protest for the first time.
Xi's response? His regime has now made new threats against both Taiwan and Hong Kong. And formalised them in the executive's annual work report to the National People's Congress over the past few days.
"It's sad to hear," says the veteran Hong Kong-based political analyst Willy Lam, "a nation going down the wrong path". It also seems bizarre that Xi should want to persist on such a losing course.
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The global economy is showing signs of life
By Tim Wallace
May 26, 2020 — 10.15am
The world economy is showing signs of flickering back to life as lockdown restrictions are eased, allowing some activity to resume.
Japan ended its state of emergency and reopened some flights, Madrid and Barcelona have begun lifting some restrictions in Spain, and ferries, cafés and restaurants are back in service in Greece. Together with stronger economic data in Germany, these all point to a degree of revival around the world, which could indicate the worst of the economic crunch is now in the past.
German businesses are increasingly confident about their future prospects, raising hopes that the return to a degree of normal life will restore the fortunes of the eurozone's biggest economy.
Sentiment increased this month in the services, manufacturing and export industries, as well as among exporters, according to the influential Ifo survey.
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US is the ‘great tragedy of our lifetime’, says Paul Bassat
Square Peg Capital co-founder Paul Bassat has raised the possibility of the US becoming a dictatorship by the end of the year if COVID-19 prompts President Donald Trump to defer the November presidential election.
Mr Bassat, who is also a commissioner of the Australian Football League and a former director of Wesfarmers, said America had gone through other difficult periods in its history and may “hopefully work this one out (but) they may not”.
“I don’t think there is a guarantee we will have an election in November. There is a possibility the US could become a dictatorship by the end of this year. It is low possibility, but I think it is definitely a possibility. It is unprecedented even to be thinking it,” Mr Bassat told a Thought Leader Series forum with the clients of boutique wealth management firm Hamilton Wealth Partners.
While he said such a prospect had less than a 5 per cent chance, he described the state of the US as “the great tragedy of our lifetime”.
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Bolsonaro’s populism is leading Brazil to disaster
If life were a morality tale, the COVID-19 antics would turn Brazilians against the populist president. But it's not that simple.
Gideon Rachman Columnist
Updated May 26, 2020 – 12.30pm, first published at 9.47am
On a visit to Brazil last year, I had a chat with a prominent financier about the parallels between Donald Trump and Jair Bolsonaro.
“They are very similar, but Bolsonaro is much stupider," she said. This answer took me aback since the US President is not generally regarded as a towering intellect. But my banker friend was insistent.
“Trump has run a major business. Bolsonaro never made it above captain in the army," she said.
The coronavirus pandemic has reminded me of that observation. Brazil’s President has taken an approach that is strikingly similar to that of Trump — but even more irresponsible and dangerous. Both leaders have become obsessed with the supposedly curative properties of the antimalarial drug hydroxychloroquine.
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Significant stimulus needed to rebuild Canada, Poloz says
Theophilos Argitis and Shelly Hagan
May 26, 2020 – 3.06pm
Canada's economy will continue to require significant amounts of stimulus in the rebuilding phase, even with the potential for higher debt levels to fuel financial vulnerabilities, according to the outgoing head of the country's central bank.
Bank of Canada Governor Stephen Poloz, in his final speech before stepping down next week, said the deflationary risks associated with the pandemic and lockdowns are more concerning than the potential build up of inflationary pressures and vulnerabilities due to the extraordinary measures taken by policy makers.
"Although a minority of observers worry that these extreme policies will create inflation someday, our dominant concern was with the downside risk and the possibility that deflation could emerge," Poloz said, according to remarks prepared for a speech to the University of Alberta.
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Why the US hawks are now asking 'who lost Australia?'
Some Washington insiders worry that Australia is now lost to China's orbit. The reality is that any claim is fair game in America's political warfare.
Simon Jackman Contributor
May 27, 2020 – 2.12pm
Australia’s Sunday morning current affairs programs have been making news lately. A few weeks ago it was Australia’s minister for foreign affairs, Marise Payne, proposing an independent, international inquiry into the origins of COVID-19 on the ABC’s Insiders. On Sunday, US Secretary of State Mike Pompeo appeared on Sky News’ Outsiders, an oddity in itself, where he was invited to weigh in on the wisdom of Victoria signing on to China’s Belt and Road Initiative (BRI).
Pompeo made news with his warning that countries with commercial dealings with China, especially Five Eyes partners, need to ensure the security of communications of US citizens and American defence and intelligence agencies. Some BRI projects may be “straight-up commercial transactions”, but Pompeo warned that the United States “will not take any risk”, and that it “will simply disconnect” to preserve trusted networks for “important information”.
The word “disconnect” set social media alight. The US ambassador to Australia quickly pointed out that Pompeo was addressing a hypothetical, that communications projects are federal matters, and that Australia has shown great leadership in securing communications networks.
Let’s put to one side the question as to why on earth the US Secretary of State was talking to Outsiders about the Victorian government’s engagement with the BRI. The episode does reveal some tensions in Australia’s strongest and most important bilateral relationship.
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Pompeo says Hong Kong no longer warrants special US treatment
David Brunnstrom, Humeyra Pamuk and Sarah Wu
Updated May 28, 2020 – 7.41am, first published at 6.55am
Washington | US Secretary of State Mike Pompeo said on Wednesday China had undermined Hong Kong's autonomy so fundamentally that the territory no longer warranted special treatment under US law, a potentially big blow to its status as a major financial hub.
Pompeo's certification to the US Congress follows China's announcement of a plan to impose new national security legislation on Hong Kong, which has triggered fresh unrest in the territory, with police firing tear gas and water cannon.
It now falls to President Donald Trump to decide to end some, all, or none of the US economic privileges which the territory enjoys.
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EU, Japan roll out trillions in coronavirus recovery funds
May 28, 2020 — 10.34am
Brussels: The European Union proposed a €750 billion ($1.2 trillion) recovery fund to help countries weather a painful recession triggered by the coronavirus and sought on Wednesday to bridge divisions over the conditions that should be attached for access to the money.
The proposal came hours after Japan approved a supplementary budget bringing its fiscal support for the economy to over ¥230 trillion yen ($3.2 trillion).
The European fund, to be mostly made up of grants and tied to the common budget of EU's 27 member nations, comes as the world's biggest trading bloc enters its deepest- ever recession, weighed down by the impact of the virus pandemic.
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Coronavirus: Batten down, rocky road ahead with China
Australia’s diplomatic relationship with China has never been this bad — and is poised to get worse with Beijing’s move on Hong Kong.
Richard Maude — until recently one of Australia’s most senior foreign affairs officials — summarises Beijing’s assessment of the problem: it’s Canberra’s fault entirely.
“China’s inflexible position is that all problems in the bilateral relationship are Australia’s fault,” Maude wrote in a recent essay for the Asia Society, of which he is a senior fellow.
The relationship was already fraught at the start of this year: the Chinese government was still smouldering over Australia’s decision to ban Huawei from its 5G network, still annoyed by Australia’s defence of the territorial claims of the various Southeast Asian nations in the South China Sea, still grumpy about Australia’s foreign interference laws that it (correctly) thought were predominantly drafted with China in mind, and still cross that Australia had spoken out about China’s systematic attempts to eradicate Uighur culture, language and religion in its western province of Xinjiang.
Five months on, those look like the good old days.
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China to be 'held accountable' for Hong Kong move
Josh Wingrove
May 29, 2020 – 6.49am
China has made a "huge mistake" in passing a new national security law curbing freedoms in Hong Kong and will be held accountable by the US, President Donald Trump's top economic adviser said.
"Essentially they have robbed Hong Kong of their freedom," Larry Kudlow, the director of the National Economic Council, said in a CNBC interview on Thursday.
"We can't let this go unnoticed and they will be held accountable for that. If need be, Hong Kong may now have to be treated the same way China is treated."
"China has made a huge mistake," he added.
Trump told reporters later that he'll hold a news conference on Friday to discuss China.
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'Does not make any sense': Investment fund that called the last two crashes warns on share rally
By Ambrose Evans-Pritchard
May 27, 2020 — 10.04am
The apostles of "value investing" have called the top of the COVID-19 equity rally. The closely watched GMO fund has been liquidating its holdings on US and European sharemarkets and buying hedges at a breakneck pace over recent days, warning clients that the explosive surge in prices since late March has decoupled from fundamentals and was becoming treacherous.
"The huge reversal does not make any sense," it said.
The group's main fund has turned outright short, taking large negative positions on equity indices through futures contracts.
"It is going to be very difficult to come out of this pandemic unscathed. We have a pretty strong view that with so much extreme uncertainty, equities should be cheap. Quite simply, they are not," Tommy Garvey, GMO's asset strategist, said.
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Alleging bias, Trump signs order aimed at curbing protections for social media giants
May 29, 2020 — 6.26am
Washington: Alleging bias, US President Donald Trump has signed an order aimed at curbing protections for social media giants.
Trump has portrayed the order as an attempt to stamp out political bias on the part of the country’s largest social media platforms.
His directive comes days after Twitter steered viewers of some of the President’s tweets to news articles that fact-checked his claims, a move Trump said was a form of censorship.
"I'm signing an executive order to protect and uphold the free speech rights of the American people," Trump said.
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The global economy is at the 'bottom of the canyon' - now it faces a slow climb
By Rich Miller, Fergal O'Brien and Michelle Jamrisko
May 29, 2020 — 10.53am
Slowly but not surely, the world economy is emerging from its coronavirus-enforced hibernation.
As governments ease lockdowns of businesses and allow consumers to travel and shop again, measures of high-frequency data and confidence increasingly suggest a bottom has been reached in the worst global recession since the Great Depression. A new set of daily activity gauges from Bloomberg Economics finds almost all of the economies it monitors witnessed a pickup in activity since late March and early April, although no country is yet approaching its pre-virus levels. Germany, Japan and France are among those rebounding the fastest, while Spain and the UK remain relatively weak.
A legacy of higher unemployment, bankruptcies and health fears also means recoveries are likely to be slow and sluggish after an initial bounce, with a full rebound unlikely before the discovery of a vaccine. The risk remains that the deadly virus could spike again, forcing constraints to be slapped back on.
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https://www.afr.com/wealth/investing/welcome-to-cold-war-2-0-20200527-p54x0c
Welcome to Cold War 2.0
The burgeoning conflict between China and the United States could escalate into an ideological competition that splits the world, and the latest fracas over Hong Kong's autonomy is a potential tipping point.
Christopher Joye Columnist
May 29, 2020 – 11.20am
Last week I wrote that the only important questions right now revolve around who is China’s President Xi Jinping and how is he going to respond to the prospect of western liberal democracies seeking to decouple from the Middle Kingdom as we enter into a new ideological cold war between capitalism and “socialism with Chinese characteristics”.
If there was any doubt about the gravity of this situation, which could absolutely lead to a full-blown kinetic conflict between the world’s two major superpowers over Taiwan (or via miscalculations in the South China Sea), the White House released a detailed paper outlining changes to the “United States Strategic Approach to the People’s Republic of China”.
And you don’t need to go beyond the first few paragraphs to get a sense of the profound shift in the zeitgeist apropos China, which has coalesced with even greater intensity since the advent of COVID-19.
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https://www.afr.com/world/asia/hong-kong-s-freedom-is-vanishing-in-front-of-us-20200529-p54xqr
Hong Kong's freedom is vanishing in front of us
Malcolm Rifkind Contributor
May 29, 2020 – 2.46pm
In 1996, a year before the return of Hong Kong to China, I was in Beijing meeting the Chinese foreign minister, Qian Qichen. I had stopped off on my way to speak with some of Hong Kong's leading politicians, who requested me to make clear the necessity of the territory continuing to enjoy the rule of law after the handover.
Although Hong Kong, under the British, was a colony, it had always enjoyed independent judges and freedom under the law, as we do in the UK. When I raised this with the Chinese foreign minister he assured me that was no problem. "China, too," he said, "believes in the rule of law." And then he added, "In China, the people must obey the law."
I pointed out to him that the rule of law did not just apply to "the people". The Government, too, must be under the law. He not only did not agree with me, he had not the faintest idea what I was talking about. The idea that a government might be subject to independent courts and judges was unacceptable in China, as it is in all dictatorships.
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https://www.afr.com/world/north-america/i-have-a-dream-of-a-real-leader-20200529-p54xm7
I have a dream of a real leader
David Brooks Contributor
May 29, 2020 – 11.09am
This week I had a conversation that left a mark. It was with Mary Louise Kelly and EJ Dionne on NPR's All Things Considered, and it was about how past presidents had handled moments of national mourning — Lincoln after Gettysburg, Reagan after the Challenger explosion and Obama after the Sandy Hook school shootings.
The conversation left me wondering what America's experience of the pandemic would be like if we had a real leader in the White House.
If we had a real leader, he would have realised that tragedies like 100,000 COVID-19 deaths touch something deeper than politics: They touch our shared vulnerability and our profound and natural sympathy for one another.
In such moments, a real leader steps outside of his political role and reveals himself uncloaked and humbled, as someone who can draw on his own pains and simply be present with others as one sufferer among a common sea of sufferers.
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Trump to terminate US relationship with World Health Organisation over coronavirus
May 30, 2020 — 5.47am
Washington: US President Donald Trump says he is terminating the US relationship with the World Health Organisation over its handling of the coronavirus pandemic, saying the WHO had essentially become a puppet organisation of China.
Appearing in the White House Rose Garden, Trump went ahead with repeated threats to eliminate American funding for the group, which amounts to hundreds of millions of dollars a year.
Trump said the WHO had failed to make reforms to the organisation that the President had demanded earlier this month. He said Chinese officials "ignored their reporting obligations" about the virus to the WHO and pressured the WHO to "mislead the world" when the virus was first discovered by Chinese authorities.
"China has total control over the World Health Organisation despite only paying $US40 million [$60 million] per year compared to what the United States has been paying which is approximately $US450 million a year. We have detailed the reforms that it must make and engaged with them directly but they have refused to act," said Trump.
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Trump’s Hong Kong sanctions: China warns US will pay heavy price
China has reacted quickly after US President Donald Trump announced a raft of new measures against China and Hong Kong.
Staff writers
news.com.au May 30, 202010:22am
China has reacted furiously to US President Donald Trump’s unprecedented measures over Hong Kong.
The President this morning announced a number of retaliatory measures against China as Beijing moves to introduce new national security legislation in Hong Kong.
Mr Trump announced the US would end Hong Kong’s special trade status and suspend visas of Chinese graduate students suspected of conducting research on behalf of their government.
The move escalates tensions with China that have surged during the coronavirus pandemic.
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Home of the hateful, fearful and heavily armed
Coronavirus is threatening to ignite a tinderbox of grievances in the US, where armed militia are agitating. The growing parallels with Iraq, Lebanon and Somalia are real and disturbing.
· From Inquirer
May 30, 2020
The rise of militias and armed protesters across the US is sometimes seen as a fringe right-wing issue, but it is much broader. Armed groups have formed across the political spectrum, worsening divisions the coronavirus has exposed in American society.
As I write, there are 1.7 million coronavirus cases in the US and more than 100,000 deaths. The little county where I live — only a half-million people, in a part-urban, part-wilderness area of the Rocky Mountains — has a death toll higher than Australia and New Zealand combined. And this is one of the safe places, positively benign compared with hot spots such as New York or New Jersey with deaths in the tens of thousands.
Second to its health impact, the economic crisis wrought by government-imposed lockdowns has grabbed the most attention: 40 million Americans were forced on to the dole in the past 10 weeks. The job market, strong until mid-March, has fallen off a cliff. A flood of bankruptcies is sweeping US business; analysts expect a wave of municipal bankruptcies as tax revenue collapses. Congress has committed $US2 trillion ($3 trillion) in crisis spending, even as public debt nears $US30 trillion, or roughly 120 per cent of gross domestic product. If the first wave of the coronavirus tsunami was its health effect, the second — economic devastation — may be worse. But there is a third wave coming: the possibility of armed conflict towards the end of this year, when the combined health and economic impacts of the crisis will peak amid the most violently contested presidential election in memory.
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Grim 100,000 milestone just part of US’s true toll
One hundred thousand people. That is the MCG on grand final day — that wondrous sea of humanity stretching from the Great Southern Stand to the Members Reserve.
It is the entire population of Bundaberg in Queensland or the twin cities of Albury and Wodonga on the NSW-Victoria border. This is what America has lost as it prepares to mark its 100,000th death from coronavirus on Wednesday or Thursday.
No one will know the name of the 100,000th victim. With an average of more than 1300 people still dying each day, almost one for each minute, there is no time to learn the order of America’s dead. Could it be someone notable, like Lila Fenwick, the first black female graduate of Harvard Law school who recently succumbed to the virus? Or will it be a homeless person, like those homeless who died from the virus in New York and were buried in a mass grave?
Or could it be someone like Wogene Debele, a 43-year-old mother of three children who attend a school up the road from our home in Washington DC and who died of COVID-19 complications during childbirth before she could hold her newborn baby. She was the second mother to die at the school.
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https://www.afr.com/world/north-america/national-guard-summoned-as-protests-spread-20200530-p54xzq
National Guard summoned as protests spread
May 30, 2020 – 5.27pm
Atlanta | Georgia's governor declared a state of emergency early Saturday to activate the state National Guard as violence flared in Atlanta and in dozens of cities nationwide following the death in Minnesota of George Floyd after a white officer pressed a knee into his neck while taking him into custody.
Another 500 Guard soldiers were mobilised in Minneapolis and surrounding cities, where Floyd died and an officer faced charges Friday in his death.
The Guard was also on standby in the District of Columbia, where a crowd grew outside the White House and chanted curses at President Donald Trump.
Some protesters tried to push through barriers set up by the U.S. Secret Service along Pennsylvania Avenue, and threw bottles and other objects at officers wearing riot gear, who responded with pepper spray.
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Twitter flags Trump, White House for 'glorifying violence'
Tony Romm and Allyson Chiu
May 30, 2020 – 8.19am
Washington | President Donald Trump took to Twitter early Friday to condemn Minneapolis demonstrators as "THUGS", threaten military intervention and predict local looting could lead to "shooting", prompting the social media company to take the unprecedented step of limiting the public's ability to view and share his tweet.
The label Twitter appended - which the company also added later to a tweet from the White House - marks the second time in a week the tech giant has taken action in response to Trump's controversial remarks.
Trump and his allies again decried the move as censorship, promising to regulate the company a day after he signed an executive order that could open the door for the US government to punish social media sites for their handling of political speech online.
Trump fired off his early morning comment as protests over the death of George Floyd intensified in Minneapolis.
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As America burns, Trump falls short at another crisis
By Matthew Knott
May 30, 2020 — 6.17pm
Washington: No political leader wants to face a crisis. But when one comes along it can present opportunities to shine as well as to fail.
Leaders around the world, including Australian Prime Minister Scott Morrison, have received big boosts to their popularity during the coronavirus pandemic. Even leaders in countries with big death counts such as Italy and the UK saw their approval ratings increase. In times of uncertainty, people tend to rally behind their leaders and forgive their mistakes - as long as they project a sense of authority and empathy.
US President Donald Trump stands out as one of a few global leaders unable to turn the pandemic to his advantage. His approval ratings received a brief initial bump, but soon fell back to earth as Americans tired of his unwieldy and increasingly wacky daily White House briefings. The latest RealClearPolitics polling average shows that 55 per cent of Americans disapprove of his coronavirus response compared to 44 per cent who approve.
When the US passed 100,000 coronavirus deaths - a milestone that had been looming for days - Trump didn't acknowledge it. Other presidents would have tried to comfort the nation with a meaningful speech; Trump waited a day to send out a perfunctory tweet.
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'Absolute chaos': Two dead as violence and fury erupts in dozens of US cities
Updated May 31, 2020 — 4.15amfirst published May 30, 2020 — 10.28pm
Protests have spread to more than 20 US cities as police and the National Guard attempt to quell riots that have escalated since the death of George Floyd.
Floyd, a 46-year-old black man, died on Monday after being pinned down by a white police officer who pressed a knee into his neck while attempting to take him into custody.
Minnesota Governor Tim Walz said on Saturday that he was activating thousands of National Guard troops to subdue demonstrations.
The move by Walz to activate all of the state's available Guard troops - up to 13,200 - comes after protesters defied a newly imposed curfew on Friday night and set a string of businesses on fire, including a bank, a restaurant and a gas station.“Quite candidly, right now, we do not have the numbers,” Mr Walz said. “We cannot arrest people when we’re trying to hold ground because of the sheer size, the dynamics and the wanton violence that’s coming out there.”
Authorities had hoped that charging former police officer Derek Chauvin with murder may have abated riots, but the unrest has continued to escalate.
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Protests erupt across America over the death of George Floyd
US President Donald Trump has warned that his government would stop violent protests “cold,” blaming the extreme left as thousands began to appear on the streets of major US cities and threatened another night of unrest.
“We cannot and must not allow a small group of criminals and vandals to wreck our cities and lay waste to our communities,” Mr Trump said following another night of widespread looting and arson in Minneapolis.
“My administration will stop mob violence. And we’ll stop it cold.”
Mr Trump said rioters were dishonoring the memory of George Floyd, the African American who died on Monday after a Minneapolis police officer knelt on his neck for nearly nine minutes and who has become a fresh symbol of police brutality against blacks.
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https://www.afr.com/world/north-america/trump-vows-to-stop-mob-violence-20200531-p54y1g
Trump vows to stop 'mob violence'
Jordan Fabian and Justin Sink
May 31, 2020 – 8.39am
President Donald Trump vowed his administration would end what he called "mob violence" in US cities following the death of an unarmed black man at the hands of Minnesota police, blaming leftist groups for clashes with police and property damage around the nation.
"The mobs are devastating the life's work of good people and destroying their dreams," Mr Trump said at Cape Canaveral, Florida, in remarks following the first launch of US astronauts into orbit from US soil since 2011.
"There will be no anarchy," Mr Trump said. "Civilisation must be cherished, defended and protected. The voices of law-abiding citizens must be heard, and heard very loudly."
Saturday's successful rocket launch by Elon Musk's SpaceX, which will carry two NASA astronauts to the International Space Station, had served as a chance for Mr Trump to take a victory lap for an electoral promise to re-establish American dominance in space.
It's also a symbolic step; the US is resuming manned spaceflight just as most of the country begins to emerge from lockdowns from the coronavirus pandemic and is in a deep economic downturn. Mr Trump touted the launch as part of his "America First" agenda.
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I look forward to comments on all this!
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David.
