July 22, 2021 Edition
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In Australia we have almost half the country being pretty severely assaulted by the delta variant of COVID19. This is really not looking wonderful at present and it feels like we are in for a long haul to get it all under control.
In the US the delta variant is pushing up both the infection and death rates although it is still better than in the recent past.
In the UK we are starting to see the early impact of totally removing disease restrictions. A ‘courageous’ move! Will be fascinating to see how it all goes!
In Europe we are seeing a slow recovery after once in a 100 year floods in Germany, Belgium etc. last week. Climate change becomes more of a worry month by month.
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Major Issues.
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Afghanistan war over as final Aussie troops withdraw
By Gary Ramage In Kabul
NCA NewsWire
10:41AM July 11, 2021
EXCLUSIVE
The country’s longest war is officially over with the last Australian troops flown out of Afghanistan.
The withdrawal came on June 18 – months earlier than the stated deadline of September 11 – ending Australia’s involvement in a brutal war that left 41 servicemen killed during combat operations.
The US pulled all its combat troops out of Bagram Air Base on Thursday evening but 650 US troops will remain as security for the embassy.
The day of Australia’s withdrawal was like any other in Kabul as the last six Australian soldiers boarded a Royal Australian Air Force C130 aircraft to fly out.
They carried large army trunks to the waiting plane, where RAAF personnel helped them to strap the heavily laden boxes to the aircraft floor.
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APRA tells banks to be ready for negative interest rates
James Eyers Senior Reporter
Jul 12, 2021 – 11.18am
The prudential regulator wants banks to be prepared for zero and negative interest rates, and has called on them to take all “reasonable steps” to ensure their technology systems can deal with extreme monetary policy settings.
The Australian Prudential Regulation Authority said on Monday it wrote to banks seven months ago asking them to tell the regulator if they would have any issues implementing negative interest rates.
The Reserve Bank has said many times that a negative cash rate would be highly unlikely in Australia. Such a setting could support economic activity, by keeping downward pressure on borrowing rates and exchange rates. But negative rates could also make it harder for banks to lend and encourage saving over spending.
Banks’ responses showed they are typically well-placed to deal with negative market interest rates on products managed by their treasury operations, APRA said.
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Equities are the only sensible foundation for private pensions
The massive long-term outperformance of one of the riskiest asset classes came despite world wars, the Depression and the global financial crisis.
Martin Wolf Columnist
Updated Jul 12, 2021 – 12.20pm, first published at 10.44am
“Never make forecasts, especially about the future.” Nobody knows who said this first. The point, however, is that we have to make forecasts, or at least guesses, about the uncertain future.
Of nothing is this truer than long-term investments for delivering security in old age. The problem - inescapable, but fundamental - is that the sensible way to do this is to invest in risky assets. The risks cannot be eliminated. Someone must bear them. The question is, who this should be, and how it should be done?
Pension arrangements in Britain have allowed the older generation to extract all the risk-bearing capacity of private sponsors, so moving the younger generation into permanent insecurity.
The tragedy of British pension arrangements is that the attempt to force safety on private arrangements is forcing them into collapse. Worse, it has allowed the older generation of pensioners to extract all the risk-bearing capacity of private sponsors for their benefit, so moving the younger generation into permanent insecurity.
This is a scandal.
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Visas for Afghan allies would speak volumes about us
The West went to Afghanistan after 9/11 to project its values. They are tarnished if we leave behind those who helped.
John McCarthy Contributor
Jul 12, 2021 – 1.25pm
The current debate about visas for Afghans poses questions about the sort of people we are.
Australia has historically veered between kindness to strangers and insularity tinged with meanness of spirit.
This is the country which, until half a century ago, confined immigration almost wholly to whites; which has a pathological fear of the arrival of boats crowded with refugees; which declined in 1975 to evacuate local employees from its Phnom Penh and Saigon embassies; and which with COVID-19 has been more obsessive than any nation about control of its borders – even those within Australia.
It is also the country that opened up to displaced persons after World War II; which was one of four countries that took the bulk of refugees from Vietnam in the years after 1975; which after the Tiananmen Square massacre in 1989 allowed 42,000 Chinese to remain in Australia; and which gave Indonesia $1 billion when a tsunami bludgeoned it in 2004.
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Lower bond yields are no longer good news for stocks
Markets might be pricing a sharp deterioration in growth prospects due to less strong data in China and the US and concerns about the spread of the delta variant around the world.
Mohamed El-Erian Contributor
Updated Jul 13, 2021 – 9.10am, first published at 9.09am
The sharp drop in yields on US government bonds seen last week is good news for stock investors, or so you would think given recent experience.
But that was not the feeling in markets on Thursday with a broad-based sell-off in equities, leading more people to start asking the key question of whether we could be having too much of a good thing — that is, interest rates that are artificially very low for too long.
The question becomes even more important as investors get ready to digest this week’s news on inflation and US Federal Reserve policy.
Ten-year Treasury yields plummeted from around 1.70 per cent at the end of the first quarter to 1.25 per cent during Thursday’s trading session before recovering somewhat on Friday. Three main explanations have been suggested for this counter-intuitive move given higher growth and inflation outcomes.
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https://www.afr.com/wealth/personal-finance/retail-investor-s-guide-to-ipos-20210709-p588cx
Retail investor’s guide to IPOs
Some ingredients to determine a good business include the level of recurring earnings, debt levels and whether the industry sector has a favourable outlook.
Mark Draper Contributor
Jul 13, 2021 – 12.00am
Every retail investor dreams of doubling their money on day one of a hot initial public offering (IPO). But Myer, Dick Smith and, more recently, Nuix demonstrate that not all IPOs turn out to be profitable. With the likelihood of a flood of IPOs in the second half of the year, it’s time for investors to dust off the IPO playbook.
Hugh Dive, chief investment officer at Atlas Funds Management, believes the most important question for an investor to ask is who the vendor is and why they are selling.
Investors tend to do well when the IPO is a spin-off from a large company exiting a line of business or the vendors are using the proceeds to expand the business. Floats where the owners are looking to exit the business entirely (such as in the 2009 Myer IPO) tend to see poor outcomes for investors.
Investors also need to understand whether the vendor will continue to own any shares after the IPO and “have skin in the game” and for how long. While continued vendor ownership doesn’t guarantee success, it does result in some alignment of interests with new shareholders at least in the short term.
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Unis in uncharted territory of slow-burn crisis
The size of the financial crisis facing Australian universities is not yet known and will take years to work its way through the system.
Julie Hare Education editor
Jul 13, 2021 – 5.33pm
Vicki Thomson was in Paris for a meeting of global research-intensive universities in January 2020 when she was first briefed on COVID-19.
The briefing from Dr Kerry Chant, NSW chief health officer, was immediately followed by a series of email exchanges including with the Chinese embassy, education minister Dan Tehan, chief medical officer Brendan Murphy, and vice-chancellors from Group of Eight.
“When I look back, these emails seem really naive, knowing what we know now. Our vice-chancellors were asking for Chinese students to be allowed to enter the country and for campuses to stay open,” says Thomson, who is chief executive of Group of Eight, a coalition of Australia’s oldest and most prestigious universities.
“The moment it really hit us that this was a financial crisis, as well as a health crisis, came much later.”
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https://www.afr.com/policy/economy/everything-s-in-place-for-interest-rates-to-rise-20210712-p58907
Everything’s in place for interest rates to rise
It takes a little “wonkishness” to understand why it’s unavoidable, but real rates have only one way to go, and that is up.
Adrian Blundell-Wignall Columnist
Jul 13, 2021 – 5.42pm
The future of long-term real interest rates is a critical issue for long-term investors. Unfortunately, behavioural and groupthink biases are dominating views: that global central banks will keep rates low for a long time; inflation is defeated; and (QED) low real rates will prevail for the investment horizon that anyone needs to think about.
Even the Bank of International Settlements put out a piece suggesting real interest rates are a monetary policy phenomenon after all. Ridiculous.
Real rates have only one way to go in the years ahead, and that is up.
Back during the Volcker disinflation, when the real 10-year bond rate peaked at more than 9 per cent, not a single commentator imagined real long rates would fall to zero and below. In the same way, behavioural biases today will be proved wrong about what the next couple of decades will look like.
To explain why, a little “wonkishness” is unavoidable. It goes like this.
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Are retiree investors doing it the wrong way?
8:24PM July 14, 2021
Have retirees got the wrong end of the stick when it comes to looking for income?
Reece Birtles, the chief investment officer at Martin Currie Australia, certainly thinks so, publishing a provocative report that says older investors should replace the “hunt for yield” with the hunt for dollar income.
“In the end it’s the dollar amount you take home that matters,” says Birtles. “The yield is not particularly relevant.”
It’s a timely idea as investors realise that the era of low rates and very low returns from fixed income may continue for a lot longer than anybody expected.
Of course, once investors take on board the central plank of this revisionist thinking, many of the key principles that have guided investing – specifically investing in retirement – need to be reviewed.
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Unemployment hits decade low of 4.9pc
July 15, 2021
Unemployment dropped to 4.9 per cent in June – its lowest level in a decade – as businesses nationally shrugged off renewed Covid-19 outbreaks in a number of states and Melbourne’s two-week lockdown to add 29,000 jobs.
The latest Australian Bureau of Statistics figures confirmed the post-pandemic labour market recovery has steamed ahead, although the statistics came ahead of Sydney’s extended lockdown which threatens to send the economy backwards in the September quarter.
The ABS data showed full-time employment increased by 51,600, offset by a 22,500 decline in part-time employment, on a seasonally-adjusted basis.
This compared with the consensus forecast among bank economists ahead of the release that an additional 20,000 jobs would be created.
ABS head of labour statistics Bjorn Jarvis said “the declining unemployment rate continues to coincide with employers reporting high levels of job vacancies and difficulties in finding suitable people for them”.
The unemployment rate is now at its lowest since June 2011.
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From the Asian Century to Fortress Australia in just over a decade
When Alex Oliver started at the Lowy Institute 14 years ago, Australia was outward looking and pragmatic. As she leaves the think tank this week, it’s a very different story.
Alex Oliver
Jul 16, 2021 – 5.00am
In 2007, after a decade of working as a city lawyer, I began to think about a new career doing something to contribute to policy making in Australia. Fourteen years later, six of them helming the Lowy Institute Poll and three as the institute’s research director, I have learned a lot about Australia and its place in the world. The past year has turned some of that on its head.
When I started at the institute, Australia was part of a dynamic region fast becoming the centre of global power. In 2007, China became Australia’s largest export destination; two years later it became our largest trading partner. We were writing white papers about the Asian Century. For most of the past decade, Australians felt warmly towards China, enhanced by the glow of the increasing prosperity it afforded us. What a difference a decade makes.
That same year – 2007 – Australian sentiments towards our ally, the United States, had hit rock bottom. George W. Bush was still president, and fatigue from Middle East wars was setting in. Fourteen years later, even after the rollercoaster Trump presidency, attitudes towards the alliance are much more positive, and fewer think the United States is in decline.
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https://www.smh.com.au/national/why-the-blame-game-is-an-important-social-tool-20210715-p58a2b.html
Why the blame game is an important social tool
Philosopher
Updated July 16, 2021 — 11.37amfirst published at 5.30am
There’s a lot of blame flying around. Individuals are blaming the NSW government for their lockdown being too strict, or not strict enough. Victoria is blaming NSW for the latest COVID outbreak developing in Melbourne. The NSW government is blaming the federal government for their vaccine rollout. The federal government is blaming the advice it received from health experts. And Twitter, as ever, is blaming everyone all at once.
But what’s the point all of this blame? What are we trying to get at?
It’s tempting to think it’s about identifying who is at fault. But this isn’t enough – otherwise, once we’d done the identifying, there’d be no point to keep blaming. It wouldn’t add anything.
It’s also tempting to think we would all be better off without this blame, and instead focused our attention on working together. But getting rid of blame risks removing a valuable social tool.
Blame, when used correctly, has a few important aims. These are seen in all the above examples, though clearest in the blame towards the government. First, blame tells everyone what our standards are, and that we think someone has neglected them. For example, in blaming, the community is saying they think the federal government is below standard in terms of how many people should have been vaccinated by now, especially compared to other countries.
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Chinese investment plunge to 14-year low
9:10PM July 15, 2021
Chinese investment into Australia is plummeting, having sunk to its lowest level since 2007, with the total funds now falling steadily each year since 2016 and 75 per cent of Chinese investors reporting they are reluctant to invest because of the political climate.
The numbers reveal a sea-change in China’s investment outlook towards Australia. Total investment in 2020 was $2.5bn, a decline of 27 per cent on the 2019 figure of $3.4bn. The number of deals fell away dramatically from 42 in 2019 to 20 in 2020, a decline of about 50 per cent year on year.
“This appears to be a trend with no obvious end in sight,” Doug Ferguson, the report’s co-author and head of Asia and International Markets for KPMG Australia, told The Australian. “Investment has now fallen 83 per cent since 2016.”
These figures come from the latest KPMG/University of Sydney joint report for 2020 titled “Demystifying Chinese Investment in Australia” and cover investments, mergers, acquisitions, joint ventures and greenfield projects but do not include stocks, bonds and private residential purchases.
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https://www.afr.com/policy/foreign-affairs/we-cannot-rebuild-trust-with-china-20210715-p589xy
We cannot rebuild trust with China
Downplaying China’s objectives and underestimating US resolve will not help us navigate the biggest challenge of the 21st century.
Tom Switzer Contributor
Jul 16, 2021 – 10.46am
There is no shortage of analysis of what Australia did wrong to China to cause Beijing’s wrath, and no shortage of advice on how Canberra should set the relationship right. But underlying the criticism is a failure to recognise the nature of the China threat and the US resolve in meeting that threat.
The critics blame the Morrison and Turnbull governments for the decline in relations and assign virtually no agency to the Chinese government of President Xi Jinping. But it is Beijing that is bent on upsetting the regional status quo.
The truth is most great powers are ruthless beasts: they play hard ball at every turn; and the stronger China gets, the more it’s likely to throw its weight around.
It’s not just that China wants to challenge US military power in the region. Nor are Beijing’s goals confined to replacing the US as the leading economic power.
China has embraced “wolf warrior diplomacy,” where it uses its growing economic power to coerce or harm weaker states that pursue policies not to Beijing’s liking.
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Your five-minute super fund health check
Money contributor
July 17, 2021 — 10.30pm
When your annual superannuation statement soon lands in your email inbox, you will see the investment legacy of the past crazy coronavirus year.
From initial extreme sharemarket volatility to recent record highs, it has been a wild ride.
Far from predictions of ongoing investment decimation at the onset of COVID-19, the median super fund likely ended 2020-21 with an astonishing gain of about 17.5 per cent, according to fund researcher SuperRatings. The final figures are due out tomorrow.
It is a perfect moment to conduct a five-minute super fund health check to make sure you are on track for a comfortable retirement.
Assess performance
That 17.5 per cent return is for a super fund with 60-76 per cent invested in growth assets, such as shares and property – likely the case if you did not choose a specific investment option.
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How much super do you really need to retire? Not as much as you think
Senior economics writer
July 17, 2021 — 11.00pm
If I had to guess the dominant emotion many Australians feel when thinking about their superannuation balances, it would have to be fear. White-knuckle fear that what they have squirrelled away just won’t be enough to provide a comfortable retirement.
It’s a fear that has been purposefully placed in people’s minds by both governments, trying to encourage more private savings to take pressure off funding the age pension, and by the super industry itself, which feeds off fees.
The good news for most young Australians, according to the Grattan Institute’s Brendan Coates, is that those fears are largely unfounded.
“People should be a lot less stressed about retirement than they are,” says Coates.
Using the government’s online MoneySmart retirement planner (it’s good – check it out), a 30 year old today with absolutely no super but earning the median income of $60,000 ($50,000 after tax) is on course to draw an income in retirement (after age 67) of $36,804 a year.
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Cancel the order: only nuclear subs can do the job we need
The submarine is arguably the ultimate weapon of choice of the weaker power, but on the $90bn Attack program, Australia must change course now to acquire vessels that will be fit for purpose.
By PAUL GREENFIELD, JON STANFORD
July 17, 2021
Australia’s controversial Attack-class submarine program has been widely criticised. At $90bn in out-turned dollars, it is very expensive. With delivery scheduled between 2035 and 2050, the boats will be in service far too late. Australian industry content will be too low to maintain our sovereign submarine capability.
These criticisms are all valid and provide sufficient grounds to cancel the Attack program now.
As the Auditor-General has pointed out, at around $140m the cancellation cost would be modest at this stage, but it will grow significantly the longer we delay.
The fundamental problem with the Attack-class submarine, however, is that it will not be fit for purpose. It will be unable to deliver a sufficiently large or potent force to deter an adversary from taking military action against Australia. Its vulnerability to detection and counter-attack means it will lack both efficiency and effectiveness in its operations, while its survivability will be increasingly challenged.
Modern conventional submarines are effective where they can maximise their advantage of stealth. For example, the mission objectives of the Japanese Soryu can be achieved with patrols about two weeks long and the submarine remaining dived throughout to minimise the chances of detection.
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Coronavirus And Impacts.
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Risk ‘drastically’ changed: NSW lowers AstraZeneca age
Finbar O'Mallon Reporter
Jul 12, 2021 – 2.39pm
Mass vaccination clinics will start to give the AstraZeneca coronavirus vaccine to anyone aged 40 and older because Sydney’s outbreak has “dramatically” changed the risks, officials said.
The move will raise pressure on other states to consider lowering the age limit for the availability of AstraZeneca at mass vaccination hubs.
The federal and NSW governments are working on a financial support package for locked down Sydneysiders and Premier Gladys Berejiklian said details were “imminent”.
NSW recorded 112 new locally acquired cases in the 24 hours to 8pm on Sunday, with 34 of the infected people out in the community for the entire time they were infectious.
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New modelling from Burnet Institute suggests stronger Sydney measures are needed
New modelling has revealed the only way out of Sydney’s growing Covid outbreak is to implement brutal new restrictions on residents.
Melissa Iaria
NCA NewsWire
July 13, 202110:27am
Tougher stage four restrictions will likely be needed to control the outbreak of the Delta variant in New South Wales, new modelling shows.
The Burnet Institute modelling shows if the state is to control its current Delta variant Covid outbreak, stricter stage four restrictions, similar to those brought in during Victoria’s second wave, will be required.
The modelling also suggests giving up the greater Sydney lockdown would be “catastrophic”, given the urgency of rising cases across the state.
Under Melbourne’s stage four restrictions, there was an 8pm to 5am curfew (with the only reasons to leave home for work, medical care or caregiving), exercise was for a maximum one hour per day and no more than five kilometres from your home, weddings were banned, TAFE and uni study had to be done remotely and face coverings were compulsory outside.
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Lockdown could go for months without tougher restrictions
Michael Read Reporter
Jul 13, 2021 – 12.50pm
Sydney’s lockdown could extend for months, health experts warn, if the NSW government does not impose restrictions on how far individuals can travel and continues to allow non-essential retailers to remain open.
Modelling by the Burnet Institute, released on Monday, projects the state will still record about 40 new COVID-19 cases a day in early September if current restrictions were not tightened.
Premier Gladys Berejiklian has previously said the Greater Sydney lockdown would not end “until we get to zero, or close to zero” cases of community transmission.
The organisation’s modelling suggests “the current restrictions in NSW have not been effective enough to control the outbreak”.
While Sydneysiders face restrictions on how far they can travel for exercise, they retain far more freedom than residents of Melbourne had during the stage four restrictions that were in place from August to September last year.
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Sydney should bite the bullet and go into hard lockdown
Epidemiologist and public health medicine specialist.
July 14, 2021 — 5.30am
Health Minister Brad Hazzard quickly saw off suggestions yesterday that the NSW lockdown as it is being implemented might have to extend many months, telling journalists at the government’s regular briefing that he would rely on the expertise and on-the-ground information being supplied by his NSW Health advisers to determine the state’s next steps. He is right to listen to his people. And I understand his frustration with the free advice he’s been offered from all quarters in the last 18 months. But as someone who has been deeply engaged in modelling how COVID responds to policy options, including for the Victorian government, I feel compelled to lay out the three options before NSW and express my concerns with the NSW “soft lockdown” model.
First, NSW can shrug its shoulders and say, “the virus is here now. Let’s just live with it and get out of lockdown”. This would be a disaster. Even with masking and contact tracing taking the edge off the virus’s spread (and reducing the Delta variant’s reproductive rate from five to, say, two), lifting the NSW lockdown would result in 200 cases a day in about five days, 400 cases a day in 10 days, and 1600 cases a day within three weeks. With large mortality, health service disruption, and the (desperate) need to go back into lock down. Option 1 is not an option.
Second, NSW can continue as it is now, with a soft lockdown. Augmented “a la NSW”, with requests that community members self-assess: self-assess if you are an essential worker, and either go to work or not; try and limit mobility and contacts, but without strict rules on mobility such as a 5 kilometre radius; self-assess whether – if younger than the age of 60 – you would benefit personally and your community by getting AstraZeneca.
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In Britain, the herd immunity experiment the whole world is watching
Boris Johnson promised that mass vaccination would free Britain for summer, but as case numbers soar the ‘new normal’ is proving something short of freedom.
Hans van Leeuwen Europe correspondent
Jul 16, 2021 – 11.33am
As 60,000 fans cheered on the England soccer team at London’s Wembley Stadium during the Euro 2020 final last Sunday night, it didn’t just feel like a great night for English football. There was a deeper sense of jubilant expectation in the air.
In the packed stadium, and in the exuberant pubs and town squares all around the country, people seemed to be fanfaring not only the dream that football was coming home, but also the prospect that COVID-19 had finally taken a decisive beating.
Earlier in the day, the Wimbledon men’s final had thrummed to a packed centre court. Britons were talking of their summer holiday plans, of returning to the office, of going to music festivals.
It was the sort of positive, confident atmosphere that Prime Minister Boris Johnson revels in. Yet the very next day, he held a press conference in anything but party mode.
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Scott Morrison fell victim to his own tribalism
Columnist
July 17, 2021 — 5.30am
For our free coronavirus pandemic coverage, learn more here.
There was a maddening sense of deja vu this week as the Morrison government was forced once again to play financial catch-up with the coronavirus while Australia’s largest city provided the spectacle to highlight an avoidable policy blunder.
The scramble to introduce a new disaster payment to compensate workers and businesses who lose income in a lockdown, and the gridlock of vehicles at a COVID testing hub in Fairfield, in Sydney’s south-west, echoed the chaos and confusion of March last year when the pandemic kept pulling rank on all our leaders.
Back then, the Commonwealth released three support packages in 18 days, each more generous than its predecessor, before it hit on the winning formula of JobKeeper. This week, there were three changes to the so-called COVID-19 Disaster Payment in four days before Scott Morrison could satisfy the non-NSW premiers that he was on their side as well.
The most haunting images of the first national lockdown last year were those long, sullen queues outside Centrelink offices in Sydney’s affluent suburbs. The responsibility at the time belonged with the Morrison government, which didn’t seem to realise that the decisions to close the international border, schools and all non-essential businesses would throw up to 1 million people out of work.
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Climate Change.
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Deadly dengue’s march south threatens large areas of Queensland
By Stuart Layt
July 12, 2021 — 12.01am
An outbreak of dengue fever in Rockhampton in 2019 is a sign that tropical diseases are extending further south and that more must be done to prevent their spread, public health experts warn.
In mid-2019, the central Queensland city recorded an outbreak of the tropical mosquito-borne disease for the first time in 65 years.
An Aedes aegypti mosquito which is capable of transmitting dengue fever and other tropical diseases.
It was eventually brought under control, but not before 21 people were infected with the disease, despite not having travelled to areas where dengue is common.
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100 per cent renewables by 2025: Grid operator pushes clean energy revolution
By Nick Toscano and Mike Foley
July 13, 2021 — 10.00pm
Australia’s energy market operator has set an ambitious target for the country to surge ahead of the rest of the world with an electrical grid ready to handle 100 per cent renewable energy by 2025.
The operator’s new chief executive, Daniel Westerman, will use his first public address to outline the goal for a big increase in investment and collaboration to wean the power market further away from coal and prepare for a clean energy revolution.
Increased output from wind, large-scale and rooftop solar, which cannot generate power unless it’s sunny or windy, is complicating the grid operator’s job of supplying power to consumers, while the loss of the continuous power traditionally provided by coal and gas could pose risks to the reliability of the network.
Mr Westerman said stronger transmission infrastructure, big batteries, pumped hydro and gas plants providing on-demand energy would be vital to ensuring a smooth transition. However, if successful, Mr Westerman says the east-coast electricity grid, which is usually powered 70 per cent by coal, should be able to handle 100 per cent renewable energy at a single moment in time by 2025.
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Europe’s controversial carbon plan could be a global game-changer
July 15, 2021 — 2.10pm
The European Union has unveiled a sweeping plan to slash its carbon emissions by 55 per cent before 2030, potentially reshaping the global trading order by imposing border tariffs on nations – like Australia – that do not have some form of carbon price.
“By acting now we can do things another way... and choose a better, healthier and more prosperous way for the future,” European Commission President Ursula von der Leyen said on Wednesday of the plan.
Along with the border tariff, the EU proposes banning the sale of petrol and diesel powered cars within 20 years and planting billions of trees, hiking the tax on jet fuel and providing financial assistance to make homes more energy efficient.
Australia has already repeated its opposition to the proposed carbon tariff, which could commence as soon as 2023.
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Royal Commissions And The Like.
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No entries in this section.
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National Budget Issues.
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Who’s afraid of inheritance tax? Report shines light on changing attitudes
6:52AM July 14, 2021
As a lightning rod for investor angst, inheritance tax is probably only rivalled by franked dividends. But new academic work suggests we have got our assumptions quite wrong about this most controversial and emotive subject.
The new study suggests Australians now have “a surprisingly high level of support for wealth transfer taxation”. Yes, believe it or not, the “ rigorous individualism” referenced in the report brings forth the startling insight that we have “a near universal lack of any bequest motive”: that’s academic speak for no desire to leave our kids anything at all.
If the paper by Dr Veronica Coram of the University of South Australia – published in the Journal of Political Science – is correct, then it’s a green light for politicians to revive inheritance taxes as a potential salve for looming budget deficits.
“Most participants simply had no objection to wealth transfer taxation: Their support was based less on reasons why these taxes should exist than a lack of reasons why they shouldn't’”, says the report.
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Health Issues.
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A decade on from plain packaging, what is the result?
By Rachel Clun
July 12, 2021 — 5.00am
Cigarettes today are sold in drab olive-brown boxes, replete with yellow warning labels that shout “SMOKING KILLS” next to ugly photographs of gangrenous and rotting toes.
There’s a whole generation of younger people who haven’t seen them sold any other way in Australia.
Australia was the first country to introduce plain packaging rules.
But more than a decade ago, plain packaging was far from reality as tobacco companies and libertarians fought against plans by the Rudd and Gillard governments to introduce it, alongside a hike in tobacco excise, aimed at reducing the number of smokers.
Ten years ago, Mike Daub watched from the public gallery at Parliament House as then-health minister Nicola Roxon introduced the plain packaging legislation.
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International Issues.
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Does China know something the rest of the world doesn’t?
Senior business columnist
July 12, 2021 — 11.58am
Why did China announce a cut to its banks’ reserve requirements last week? What do they know that the rest of the world doesn’t?
The government announced a 50 basis point reduction in its reserve requirement ratio, effective from this Thursday, which should add about 1 trillion yuan ($210 billion) of liquidity to its banking system.
It will be the first cut to the ratio since it was reduced three times during the early phase of the pandemic more than a year ago, allowing China’s banks to lend more and at a lower rate.
What’s unclear is whether the change is directed primarily at the banks or at the broader economy.
Either way, while it’s too modest a change in monetary policy to signal fear, it does indicate concern. China’s economy is slowing as the rest of the world’s dramatic increase in consumption of its goods during the most intense period of the pandemic wanes, even as the authorities have resumed their attempt, frozen in 2020 as they responded to the pandemic, to deleverage an over-leveraged economy.
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South China Sea: US warns China it will fight for the Philippines
By Richard Lloyd Parry
The Times
July 13, 2021
The United States warned that it would defend the Philippines against any attack as Beijing boasted that it had chased away a US warship from islands that it claims in the South China Sea.
Antony Blinken, the US secretary of state, gave the warning on the fifth anniversary of an international court ruling that dismissed Chinese claims to ownership of the South China Sea. It was issued as a naval destroyer, the USS Benfold, sailed close to the Paracel Islands, in a symbolic rejection of Beijing’s claim to sovereignty.
“The People’s Republic of China continues to coerce and intimidate southeast Asian coastal states, threatening freedom of navigation in this critical global throughway,” Blinken said.
“We call on the PRC to abide by its obligations under international law, cease its provocative behaviour and take steps to reassure the international community that it is committed to the rules-based maritime order that respects the rights of all countries, big and small.”
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‘We control 85 per cent of Afghan territory’, says Taliban after seizing border posts
By Tom Parfitt
The Times
9:09AM July 11, 2021
The Taliban claimed to have taken control of 85 per cent of Afghanistan as they seized new territory and more strategic border crossings before the US withdrawal by August 31.
The Islamic group now controls 250 of Afghanistan’s 398 districts, a Taliban representative told a press conference in Moscow hours after it emerged that the group had taken the Torghundi border crossing with Turkmenistan and the Islam Qala crossing to Iran, both in the northwest.
The Afghan government disputed the 85 per cent claim but it indicated the scale of its retreat, 20 years after the US invaded the country to eradicate the al-Qaeda terrorist group.Moscow urged all sides to show restraint.
“We have noted a sharp rise in tension on the Afghan-Tajik border,” Maria Zakharova, the foreign ministry spokeswoman, said.
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Afghanistan: Enter at your peril, and leave in failure
By Ben Macintyre
The Times
9:11AM July 11, 2021
One January afternoon in 1842 a wounded man on a dying pony wove towards Jalalabad fortress in eastern Afghanistan, the sole survivor of a mighty British army that had quit Kabul in ignominious retreat a week earlier.
His name was Dr William Brydon, and a painting of the moment, Remnants of an Army by Elizabeth Thompson, Lady Butler, would become one of the most famous images of the Victorian era: a tale of heroism extracted from what had been an appalling calamity, the single worst disaster to befall the British Empire until the Fall of Singapore.
The British Army of the Indus had marched into Afghanistan in 1839 to impose civilisation on the fractious Afghans, install a puppet ruler and give Britain the upper hand in the “Great Game”, the struggle for dominance in central and southern Asia. The British force comprised 58,000 people, 30,000 camels and a pack of foxhounds. The officers brought their memsahibs. A team of 30 camels was needed just to carry the wine, port and cigars.
Had the organisers of this grand military procession paused to reflect, they might have heeded the words of the local Afghan chief who wondered: “You have brought an army into the country. But how do you propose to take it out again?”
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Afghanistan peace talks ‘just a mirage’ as panic sets in
By Christina Lamb
The Times
8:41AM July 11, 2021
The WhatsApp messages come night and day, including one just as the English football team scored the goal taking it to Sunday’s European Championship final. “So sorry to disturb, but please help me and my family ...”
An Afghan midwife whose maternity hospital was attacked last year with mothers and babies slaughtered, the son of a female judge who was shot dead, a female MP, a radio presenter in Jalalabad, one of the country’s first rappers – all the people I have got to know in 33 years of writing about the country where I started my career. A country that has been as much a part of my life as my homeland.
I wrote about them because they were trying to make a difference, but now the very act of trying to make their country a better place has made them targets.
They send me testimonies, often written by foreigners; I contact embassies, knowing it will go nowhere.
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‘An assault on liberty’: Biden sounds alarm on Republicans’ effort to restrict voting rights
July 14, 2021 — 6.24am
Washington: President Joe Biden says the United States is facing the biggest threat to fair elections in its history because of a wave of Republican-led efforts across the country to make it harder for Americans to vote.
Biden delivered an impassioned speech on voting rights just hours after Democratic legislators from Texas fled their state in a dramatic attempt to block Republicans from tightening voting laws.
Republicans in the Texas House of Representatives voted on Wednesday (AEDT) to send law enforcement officers to the US Capitol to find and return the absent legislators “under warrant of arrest, if necessary”.
Republican-controlled states such as Georgia, Texas and Florida have proposed or passed laws designed to tighten voting rules, including limiting access to postal ballots which proved popular in the 2020 presidential election.
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Japan warns of crisis over Taiwan, holds grave concerns about China’s military build-up
By Eryk Bagshaw and Anthony Galloway
July 13, 2021 — 3.52pm
Singapore: Japan holds grave concerns about China’s military build-up and warns countries in the region must pay urgent attention to the situation in the Taiwan Strait.
For the first time in its annual defence white paper, the Japanese Defence Ministry has made a direct reference to Taiwan after Japan’s cabinet signed off on it on Tuesday morning.
“Stabilising the situation surrounding Taiwan is important for Japan’s security and the stability of the international community,” the white paper said. “Therefore, it is necessary that we pay close attention to the situation with a sense of crisis more than ever before.”
The white paper revealed Japan is falling further behind China in its military capability. China now has 1146 fourth and fifth-generation fighter jets to Japan’s 313. It also has 71 modern navy destroyers and frigates to Japan’s 47 and 52 modern submarines to Japan’s 21.
The ministry also raised concerns about a fleet of machine-gun armed Chinese coast guard vessels threatening the disputed Senkaku islands, which Japan and China claim as their own.
Tokyo has taken a more cautious approach to military rhetoric since its defeat in World War II, particularly in its own region, where it faces a direct territorial threat from Beijing.
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Cuba’s unrest frames world’s big struggle: dictators vs democracies
Gerald F. Seib
The Wall Street Journal
7:18PM July 13, 2021
The world was treated on Sunday (Monday, AEST) to an amazing sight: thousands of Cubans taking to the streets in a wave of demonstrations demanding, among other things, an end to a 62-year-old dictatorship.
Beyond serving as a milestone moment for the island nation, the demonstrations in at least 15 cities marked the latest instalment in the greatest struggle of our times: the contest between democrats and authoritarians.
In recent years, authoritarians often have seemed to hold the upper hand. Yet the Cuban unrest serves to frame the key question: whether authoritarian regimes will prevail in the long term, or are sowing the seeds of their own demise.
The Cubans who took to the streets appeared to have some more immediate concerns on their minds. They were protesting a lack of food and a shortage of Covid-19 vaccines. But their willingness to take their protests to the actual doorstep of Cuba’s Communist Party headquarters showed a deeper dissatisfaction.
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Powell says inflation will likely moderate, even if elevated
Christopher Rugaber
Jul 15, 2021 – 2.19am
Washington DC | Federal Reserve Chair Jerome Powell suggested Wednesday that inflation, which has been surging as the recovery strengthens, “will likely remain elevated in coming months” before “moderating.”
At the same time, Powell signalled no imminent change in the Fed’s ultra-low-interest rate policies.
In written testimony he will deliver later Wednesday to the House Financial Services Committee, Powell reiterated his long-held view that high inflation readings over the past several months have been driven largely by temporary factors, notably supply shortages and rising consumer demand as pandemic-related business restrictions are lifted.
Once such factors normalise, Powell said, inflation should ease. Yet the Fed chair did not repeat in his testimony an assertion he made three weeks ago before another House panel, that inflation would “drop back” to the Fed’s target of 2 per cent.
The Fed has said it will keep its benchmark short-term rate pegged near zero until it believes maximum employment has been reached and annual inflation moderately exceeds 2 per cent for some time. Fed officials have made clear that they are prepared to accept inflation above its target to make up for years of below-average inflation.
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RBNZ prepares to lead big bank rate rises
Alex Gluyas Markets Reporter
Jul 14, 2021 – 5.30pm
The Reserve Bank of New Zealand is tipped to become the first major central bank to hike rates as it seeks to curb an anticipated spike in inflation and red-hot housing market, amid a booming recovery in the country’s economy.
The RBNZ announced on Wednesday it would end its quantitative easing program on Friday next week and economists expect it could begin hiking rates as soon as next month, with the domestic economy unrestrained by the lockdowns and restrictions that have plagued Australia.
“As far as the RBNZ is concerned, the monetary policy cycle has turned, and that implies official cash rate hikes are imminent, unless something changes in the meantime,” said ANZ New Zealand’s chief economist, Sharon Zollner. ANZ is forecasting a 25 basis point hike at the RBNZ’s next meeting.
Westpac kept its first rate hike expectations for the RBNZ to November but said the odds of an increase in August have risen.
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https://www.afr.com/world/europe/the-method-in-boris-johnson-s-madness-20210712-p588x9
The method in Boris Johnson’s madness
The British Prime Minister may be scruffy and impulsive and play the clown, but he knows exactly what he’s doing.
Tom McTague
Jul 15, 2021 – 8.00am
“Nothing can go wrong!” Boris Johnson said, jumping into the driver’s seat of a tram he was about to take for a test ride. “Nothing. Can. Go. Wrong.”
The Prime Minister was visiting a factory outside Birmingham, campaigning on behalf of the local mayor ahead of “Super Thursday” – a spate of elections across England, Scotland, and Wales in early May. These elections would give voters a chance to have their say on Johnson’s two years in office, during which quite a lot did go wrong.
Johnson was, as usual, unkempt and amused, a tornado of bonhomie in a country where politicians tend to be phlegmatic and self-serious, if not dour and awkward. Walking in, he had launched into a limerick about a man named Dan who likes to ride trams. The mayor, Andy Street, looked horrified, tomorrow’s disastrous headlines seeming to flash before his eyes. (The limerick, I’m sorry to say, was not at all filthy.)
Johnson’s aide told me the Prime Minister had been excited about his tram ride all morning. He loves infrastructure, mobile infrastructure especially –planes, trains, bicycles, trams, even bridges to Ireland and airports floating in the sea. And he loves photo ops. There would be no point in displaying action and intent and momentum if no one were present to document it.
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Private jets, ‘fraud’, and the Civil War: lots of smoke but little fire in US voter debate
July 15, 2021 — 8.47am
Washington: It’s a hard task for state politicians to seize the national spotlight in America. But Democratic members of the Texas House of Representatives achieved that this week by fleeing their home state for Washington to avoid voting on proposed changes to electoral laws.
In order to pass a bill, the Texas state House requires a “quorum” of at least 100 members to be present in the 150-person chamber. Because most House Democrats have left the state, an attempt by Texas Republicans to tighten voting laws in the state has now stalled.
The Texas Democrats, who will have to remain out of the state until early August to pull off their gambit, have been greeted as heroes in left-leaning Washington. Vice-President Kamala Harris met with the legislators on Thursday (AEDT) and praised them for their “bold, courageous action”.
Harris said the Texas Democrats were in line with the legacy of anti-slavery crusader Frederick Douglass and “all those folks who shed blood” in efforts to pass the landmark 1965 Voting Rights Act.
This was a big overreach: staying at a plush hotel in the US capital for a month is hardly putting one’s life on the line for democracy. Harris’s comments were just the latest example of the hyperbole that dominates America’s high-pitched debate on voting rights - both on the left and the right.
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Death toll from rioting spirals in South Africa as desperation sets in
By Andrew Meldrum and Mogomotsi Magome
Updated July 14, 2021 — 9.31amfirst published at 8.59am
Johannesburg: South Africans are expected to face major food shortages in the wake of days of violent unrest across two key provinces, as rioters upend supply chains by looting supermarkets and torching goods trucks.
Footage of empty or sparse grocery-store shelves has been a staple of local news reports since the weekend, while many chains closed all their outlets. In parts of Durban, the coastal KwaZulu-Natal city at the centre of the upheaval, long queues formed outside the few open food shops and basics such as bread and milk were in short supply.
The death toll from the rioting climbed to 72 on Tuesday (Wednesday AEST), with many people trampled to death during looting, as police and the military fired stun grenades and rubber bullets to try to halt the unrest set off by the imprisonment of former president Jacob Zuma.
More than 1200 people have been arrested in the lawlessness that has raged in poor areas of Gauteng and KwaZulu-Natal, where a community radio station was ransacked and forced off the air and some COVID-19 vaccination centres were closed, disrupting urgently needed inoculations.
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US military brass feared ‘Reichstag moment’ from Trump
Reis Thebault
Jul 15, 2021 – 3.12pm
Washington | In the waning weeks of Donald Trump’s term, America’s top military leader repeatedly worried about what the president might do to maintain power after losing re-election, comparing his rhetoric to Adolf Hitler’s during the rise of Nazi Germany and asking confidants whether a coup was forthcoming, according to a new book by two Washington Post reporters.
As Mr Trump ceaselessly pushed false claims about the 2020 presidential election, General Mark Milley, chairman of the Joint Chiefs of Staff, grew more and more nervous, telling aides he feared that the president and his acolytes might try to use the military to stay in office, Carol Leonnig and Philip Rucker report in I Alone Can Fix It: Donald J. Trump’s Catastrophic Final Year.
General Milley described “a stomach-churning” feeling as he listened to Mr Trump’s untrue complaints of election fraud, drawing a comparison to the 1933 attack on Germany’s parliament building that Hitler used as a pretext to establish a Nazi dictatorship.
“This is a Reichstag moment,” General Milley told aides, according to the book. “The gospel of the Führer.”
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Three lessons from the South African anarchy
12:00AM July 16, 2021
The outbreak of anarchy in South Africa in the past week has social and political causes of long standing, but it has thrown into high relief three crucial lessons we all need to learn. These lessons are being spelled out before our eyes in South Africa, but they are of universal relevance and we will all benefit if they are taken to heart.
South Africa has what the World Bank deems the highest levels of social inequality in the world and enormous unemployment levels. The black elites have looted the country to the tune of tens of billions of dollars while living high on the hog and staffing their government with ill-educated and opportunistic cronies. This is a shocking indictment of the post-apartheid regime and an utter betrayal of the hopes of Nelson Mandela.
Let me encapsulate the shocking state of affairs by simply reproducing an email yesterday from an elderly woman caught in the midst of it all: “Hi my dear friend. We’re in a war zone here. Hope our retirement centre is unharmed. Stuff going on all around us. Our super shopping mall totally looted and demolished, perhaps torched, as fire engines were screaming in that direction. Police non-existent and we are still waiting for the army. Widespread violence and looting. Was supposed to have my second jab today but venue destroyed and everything closed. Food unavailable too. Hope you are all good … Stay well and much love.”
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US warns of 'growing risks' for business in Hong Kong
AFP
1:19AM July 17, 2021
The United States on Friday warned its business community of growing risks of operating in Hong Kong following a clampdown by China in the major financial hub.
The advisory said there were "growing risks" that "could adversely affect businesses and individuals operating in Hong Kong."
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Zuma’s legacy: the war for the rule of law
By The Economist
6:30PM July 16, 2021
South Africa offers dry kindling for political conflagration.
Unemployment and inequality are preposterously high. Many people lack food, power and running water, while members of the ruling African National Congress gorge on graft.
In the two years before Covid-19 there were more protests than probably at any time in the democratic era. The pandemic, Africa’s worst if official statistics are to be trusted, has killed at least 65,000 people and plunged many more into destitution.
Yet the violence that has engulfed the country in the past week is not a spontaneous protest against such ills. It was incited, and in some cases perhaps instigated, by people close to former president Jacob Zuma.
Their narrow aim is to have him released after his imprisonment on July 7 for contempt of court for refusing to appear before a judge-led inquiry into his corrupt reign of 2009-18. Their broader goal is to make the country ungovernable so as to undermine his successor, Cyril Ramaphosa. For South Africa’s sake, they must not succeed.
Zuma represents the ugly side of the ANC. His supporters either tolerate corruption,
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Biden says situation in Hong Kong deteriorating
By William Mauldin and Alex Leary
5:55PM July 16, 2021
Joe Biden said the situation in Hong Kong was “deteriorating” as the administration prepared to issue an advisory to businesses that he said would lay out what may happen as China furthered its crackdown on the territory.
The US President didn’t give details on the advisory, which officials said may be released this weekend. Asked about the planned advisory during a press conference on Thursday with German Chancellor Angela Merkel, Mr Biden said: “The situation in Hong Kong is deteriorating, and the Chinese government is not keeping its commitment.”
The US advisory is expected to be a warning for businesses rather than sanctions or other actions against China.
After months of anti-government protests in Hong Kong, Beijing moved a year ago to impose a restrictive national security law and arrest and intimidate pro-democracy activists and others critical of China’s rule. The US says those moves violate the treaty ending British rule over the city, whose Western-style rule of law has helped make it an international financial and business hub.
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I look forward to comments on all this!
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David.
