December 21, 2017 Edition.
On the global scene it the Trump Tax Plan (it isn’t reform) will be signed soon after having been passed.
This tweet reflects the informed views on the plan, and I agree…
Kurt Eichenwald Verified account @kurteichenwald
No country in the history of humanity has EVER cut taxes in a relatively strong economy with full employment and massive government debt. EVER. There is NO economic theory that supports doing it. It is madness. THIS is when you raise taxes and cut spending to attack debt problem.
10:34 AM - 16 Dec 2017
As far as Brexit is concerned it seems enough has been done with the preliminaries to more on with the substantive negotiations. At this pace it does not seem much will happen before 2025!
Economically in OZ the Governor of the Reserve Bank thinks the dollar is too high and that Bitcoin is plain dangerous!
Politically all eyes were on the Bennelong Bye-election. The outcome was a convincing win for the Liberals so the Government retained its majority and was mightily relieved…..
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Here are a few other things I have noticed.
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Major Issues.
First-home buyers can now use superannuation to save for deposit
Sophie Elsworth, Personal finance writer, News Corp Australia Network
December 11, 2017 12:00am
ASPIRING first-home savers struggling with soaring property prices have been given a lifeline to use their superannuation fund to save for a house deposit.
The First Home Super Saver Scheme passed through Parliament this month now allows entry-level buyers to stash cash using their super accounts while reaping significant tax benefits.
Announced in the Federal Budget in May, the Turnbull Government said the scheme would help make owning a home become a reality for those squeezed out of the market, particularly in Sydney and Melbourne.
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Opening Up Open Banking
While Australia’s banks may be focussing their attention on an impending royal commission, another potential disruption looms. Open banking promises to set free customer data and invite a host of new financial players into an industry starved of competition.
It’s a system already gaining traction in the UK, Europe and parts of Asia. So exactly what is open banking and can it live up to the hype?
According to an Australian Treasury issues paper on the topic, open banking “refers primarily to giving customers greater access to and control over their own banking data… Open banking enables the customer to direct that they, or third parties chosen by them, be provided with pre-determined parts of their banking data in a secure environment and in a prescribed way.”
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Rescue economics from the folly of neoliberalism
Ross Gittins
Published: December 10 2017 - 9:00PM
There's no swear word in politics today worse than "neoliberalism". It's badly on the nose, and the reaction against it has a long way to run. But what is it, exactly? Where does mainstream economics stop and neoliberalism begin?
The term means different things to different people. Professor Dani Rodrik, of Harvard, says in the Boston Review the term is used as a catchall for anything that smacks of deregulation, liberalisation, privatisation or fiscal (budgetary) austerity.
I've always though of it as a fundamentalist, oversimplified, dogmatic version of conventional economics, one from an elementary textbook, not a third-year text that adds the complications of market power, externalities (costs or benefits not captured in market prices), economies of scale, incomplete and asymmetric (lop-sided) information, and irrational behaviour.
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Sam Dastyari's shame can be Australia's gain
Peter Hartcher
Published: December 12 2017 - 12:05AM
In a perverse way, Labor Senator Sam Dastyari has done Australia a favour. Not that anyone wants to thank him for selling the national interest to a Chinese billionaire with opaque ties to the Communist Party of China. But for providing such a clear-cut case study in how easy and cheap it is for a foreign power to extend its reach covertly into Australia's Parliament.
China's President Xi Jinping calls the party's global foreign influence program one of its "magic weapons" in shaping other countries' politics to suit China.
But there wasn't much magic, just naked greed, in the way Dastyari took Huang Xiangmo's money in return for preaching China's righteousness in taking disputed territory from its neighbours. Australia's policy was wrong, his own party's policy was wrong, and Beijing was right, according to Dastyari.
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Why the record-breaking run of flat interest rates has further to go
Clancy Yeates
Published: December 12 2017 - 11:00AM
In Philip Lowe's time as governor of the Reserve Bank, he's chaired 14 meetings of its high-powered board, and each has had the same result: no change in interest rates.
If you believe the financial markets, Lowe will do more of the same for much of 2018, and perhaps further into the future.
Great news for people with big mortgages, and bad news for those earning interest on their savings, right? Maybe. But if you dig into why this change has occurred, it's a less rosy picture even for those with large debts, because the lack of change in rates is a reflection of very weak wage growth.
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- Updated Dec 13 2017 at 12:00 AM
Malcolm Turnbull needs an economic reality check
by The Australian Financial Review
Business investment is up. Job growth is robust. Unemployment is down. The Coalition and Malcolm Turnbull may languish in the polls in all categories except preferred prime minister. But as Mr Turnbull explained to The Australian Financial Review on Monday, he plans to make the economy a strong point as he enters a possible election year in 2018. He says the improving indicators – to be reinforced next week by a less sickly mid-year budget update – vindicate his ousting of Tony Abbott in 2015. He has restored economic leadership, he says, and economic confidence has returned as a result.
Mr Turnbull has gone a fair way towards finally dealing with Australia's energy crisis. And he is the only political leader to recognise the need for a capital-importing economy to keep the burden of business taxation within global norms. Apart from this, he has mostly failed to construct the credible economic growth narrative he promised two years ago. His innovation rhetoric largely crashed amid the 2016 election that cut his majority to the barest margin. With little political authority, he has struggled to keep his government in place amid the circus of parliament. He was forced to surrender to Labor's big government spending monuments, has swept genuine tax reform off the table and continues to avoid workplace regulation reform.
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Sam Dastyari's fall highlights wider problem of donor influence in big money politics
Sean Nicholls
Published: December 12 2017 - 11:40PM
There is perhaps no greater illustration of the high stakes involved in Australia's big money federal political system than the careers of soon to be ex-Senator Sam Dastyari and his former Labor Party colleague Eric Roozendaal.
Each climbed to the top of the pile to become general secretary of the NSW Labor Party – one of the most powerful political jobs in the country.
Yet while a humiliated Senator Dastyari fell on his sword on Tuesday over his associations with Chinese-Australian businessman Huang Xiangmo, Mr Roozendaal rejoices in the title of CEO of Yuhu Group, Mr Huang's Sydney-based property development company.
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Facebook says it will stop funnelling sales through Ireland and pay local taxes
Molly Schuetz
Published: December 13 2017 - 9:04AM
Facebook is changing its tax structure so that it will pay taxes in 25 countries where sales are made, rather than funnelling its ad sales through its Irish subsidiary.
The company said it will move to a "local selling structure" in countries where it has an office to support sales to local advertisers. Facebook shifted its international business operations to Ireland in 2010.
Facebook has since come under pressure from the US and Europe for its tax practices. Last year, the company said it would stop routing UK sales through Ireland after public outcry over news that Facebook paid only £4327 ($70470) in taxes in 2014. In the US, the company is locked in a battle with the Internal Revenue Service that may cost it more than $US5 billion ($6.3 billion), plus interest and penalties, related to global operations that are reported by the Irish unit.
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Australia's own bitcoin? RBA chief open to idea of electronic Aussie dollar
Published: December 13 2017 - 9:54AM
Reserve Bank of Australia governor Philip Lowe believes an electronic Australian dollar operating on the sort of technology that underpins bitcoin could one day become reality.
Dr Lowe on Wednesday said the central bank could one day issue a so-called eAUD - an electronic form of the dollar not backed by a paper bill - to operate in tandem with the physical banknotes.
"It is possible that the RBA might, in time, issue a new form of digital money - a variation on exchange settlement accounts - perhaps using distributed ledger technology," Dr Lowe said in a speech to the Australian Payment Summit in Sydney.
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Myer reveals horror start to Christmas sales
Patrick Hatch
Published: December 14 2017 - 11:28AM
Myer has suffered a horror start to the all-important Christmas trading period, revealing that sales in the first two weeks of December were down 5 per cent on last year.
In a second-quarter trading update released on Thursday, the department store said November trade had also been worse than expected, despite heavy investment in marketing and measures to increase foot traffic.
Total sales last month were down 2.3 per cent compared with the same period in 2016, and down 1.8 per cent on a same-store basis.
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Mysterious Bennelong letter urges Chinese Australians to 'take down' the Turnbull government
Nick O'Malley and Alex Joske
Published: December 13 2017 - 11:45PM
An angry open letter urging Chinese Australians to "take down the far-right Liberal Party ruling party" by voting against John Alexander in the Bennelong byelection has been shared on social media by a man who allegedly met the Chinese Communist Party's department tasked with overseas influence activities.
The 1700-word letter, attributed to "a group of Chinese who call Australia home", urged people to support Labor's candidate, Kristina Keneally.
"When we look at the Liberal Party we see it's already totally different from before. It's a far-right ruling party and they are privately against China, against Chinese, against ethnic-Chinese migrants and against Chinese international students," it reads in part.
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Bitcoin: a great new digital asset or fool's gold?
James Titcomb
Published: December 14 2017 - 12:15AM
Almost a decade after Bitcoin was invented, the true identity of its creator - the pseudonymous Satoshi Nakamoto - is still unknown. But while its founder may remain a mystery, his or her vision for Bitcoin is not.
Nakamoto's original White Paper, published in 2008, describes Bitcoin as "a peer-to-peer electronic cash system", an "electronic coin" that would replace money transfers currently controlled by the financial system, and which would be almost immune to fraud.
Whoever Satoshi Nakamoto is - indeed, if he, she or they are even alive - the stash of Bitcoins they accumulated in its early days are now worth billions of dollars. But even as Bitcoin continues to break price records on an almost-daily basis, critics say it has strayed far from its original vision. The cryptocurrency (many disagree with the word itself) has proved to have almost no utility as a method of exchange.
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Phil Lowe calls out 'speculative mania' in cryptocurrencies
Clancy Yeates
Published: December 14 2017 - 12:28AM
Reserve Bank governor Philip Lowe says there is a "speculative mania" surrounding cryptocurrencies, as he played down the chances of the central bank issuing a digital Australian dollar.
After the extraordinary surge in bitcoin in recent weeks, Dr Lowe became the latest top central banker to say cryptocurrencies were being driven by a wave of speculation, as he also said such currencies were not about to replace conventional, government-issued money.
Bitcoin has surged by more than 1500 per cent this year to record highs, as mainstream financial houses have increasingly become involved in trading it as an asset.
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The nine political issues that sum up 2017
John Warhurst
Published: December 14 2017 - 12:15AM
Each December for the past decade, I've reflected on the past political year. This task of summing up is a sorting and evaluating exercise, which selects the issues that matter most from the day-to-day business of politics and from the passing storms that erupt and then subside.
This year, I decided there were nine such issues: legalisation of same-sex marriage; dual citizenship of MPs; national energy policy; federal funding of schools; asylum seekers; the Victorian Parliament's legalisation of euthanasia; the Queensland state election; the rejection of Indigenous constitutional recognition as proposed by the Uluru declaration; and the Turnbull government's dogged refusal to countenance a banking and financial services royal commission before it ultimately capitulated.
Politics moves so quickly that, by now, foreign influence on Australian politics should certainly be added. Furthermore, the general characteristic of all these issues is that they are ongoing, not done and dusted.
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Paradise papers: how Australia can halt unfair use of tax havens
Andrew Leigh
Published: December 14 2017 - 12:15AM
We often say that the apple doesn't fall far from the tree. But for some multinational firms, their tax affairs often do.
In May 2013, Apple's chief executive, Tim Cook, was grilled by United States senators about the nature and structure of his company's tax affairs. The senators were scrutinising a complex corporate structure, and how Apple had come to amass over $100 billion of largely untaxed profits offshore.
Cook's retort to the subcommittee was: "We don't depend on tax gimmicks ... We don't stash money on some Caribbean island."
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Beholden to the cargo cult: Australia's political class is letting us down
Peter Hartcher
Published: December 15 2017 - 8:01PM
One remark, in particular, caught Bob Zoellick's attention. America's former trade minister and previous president of the World Bank had been listening to an hour-long discussion about Australia at a conference on the Gold Coast earlier this year. He wanted to make sure he'd heard correctly.
"Did you say that Australia hasn't had a recession in 26 years?" he asked me afterwards. That's right, I assured him. "So what's everyone complaining about?"
It's a timely reminder. The rest of the world would love to have our problems. Most other nations suffer the consequences of acute crises like recessions, violence, poverty or government repression, Australia's biggest problems are the result of complacency.
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Are Australia's business lobby groups past their peak?
Ruth Williams
Published: December 16 2017 - 12:15AM
It was lunchtime on the second day of spring in 1983, and a glittering event was underway in the ballroom of Sydney's Regent Hotel.
As dozens of chauffeured limousines idled on George St outside, hundreds of the nation's top businessmen and politicians were dining on prawns and avocado inside.
It was an occasion equal to the grand ambitions of the body that the newly-elected prime minister, Bob Hawke, was pleased to be launching that day: the Business Council of Australia.
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How big business shares the profit pie
Ross Gittins
Published: December 16 2017 - 12:15AM
Puzzling over the rich economies' poor productivity improvement and weak wage growth (but healthy profits), American economists are pointing the finger at reduced competition between firms. But can this explain Australia's similar story?
Jim Minifie, of the Grattan Institute, set out to answer this in his report, Competition in Australia.
Economists regard strong competition between businesses as essential to ensuring market economies function well, to the benefit of consumers and workers.
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National Budget Issues.
One in three companies pays no tax, here's why...
Jessica Irvine
Published: December 11 2017 - 6:20AM
A few years ago, I accepted an invitation to speak on a lunchtime panel discussion about corporate tax transparency in Australia.
Hosted by one of the big four accountancy firms in its glittering CBD tower, the room was jam-packed with clients of the firm wanting to know how the media – ie. me – would respond if the then Labor government made good on a proposal to publicly release the details of the actual tax their companies paid.
Simple, I said.
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Unemployment rate steady at 5.4%
Published: December 14 2017 - 11:37AM
The unemployment rate was steady at 5.4 per cent in November, matching market expectations.
The total number of people with jobs rose by 61,600 in November, the Australian Bureau of Statistics said, with full-time employment rising by 41,900 and part-time positions rising by 19,700.
Economists had expected the unemployment rate to remain steady at 5.4 per cent.
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The jobs boom is real, and for once, government can take the credit
Peter Martin
Published: December 14 2017 - 6:39PM
The Bureau of Statistics has produced some shockers – wildly inaccurate employment statistics it has had to disown. But not this time.
An apparent employment surge in one month might be a statistical fluke, the result of a dodgy sample or flawed bad seasonal adjustment. But not a near-record surge that goes on for month after month, 14 of them in a row.
Over the past year a near-record 383,300 more Australians have been funnelled into employment, all but 87,700 of them full-time. In the past month (acknowledging the usual caveat) 61,600 were funnelled into work, all but 19,700 of them full-time.
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Health Budget Issues.
'Impossible' to shop around: Patients struggling to get information about costs from surgeons
Esther Han
Published: December 11 2017 - 12:15AM
Consumers are often told to "shop around" to save money, but for privately insured patients, calculating and comparing the out-of-pocket costs for surgeries can be "perplexing and sometimes impossible".
Ahead of a Senate committee delivering a report this week on the value of private health insurance, consumer group Choice is calling on surgeons and health funds to increase transparency and publish the average prices for common surgeries.
It conducted a mystery shop of 60 surgeons' offices around Australia and found more than a third – 22 – refused to provide information about fees, not even a ballpark figure.
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Kogan to sell budget health insurance
- Simone Ziaziaris
- AAP
- 9:32AM December 12, 2017
Online retailer Kogan.com will start selling budget health insurance policies under a new brand dubbed Kogan Health, after signing a deal with private health insurer Medibank Group.
The deal is set out for an initial three-year period and will be administered via Medibank-owned Australian Health Management Group, Kogan said in a statement to the ASX.
The e-commerce platform will be in charge of providing online branding, marketing and customers, and will earn commissions on sales of all insurance policies, while Medibank will provide an underwriting to raise investment capital from investors.
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Youth to be big winners in health insurance reform package
- The Australian
- 5:34PM December 13, 2017
Sean Parnell
The missing piece in the Turnbull government’s health insurance reform package, the minimum standards for new policy categories, will be developed over summer after key advisers noted they had only agreed on “high level principles”.
Health Minister Greg Hunt announced in October that the government would introduce Gold, Silver, Bronze and Basic Bronze categories to help consumers navigate the market. The new categories will not come into effect until April 2019 and it remains to be seen how the government will deal with “junk” policies or those used for tax avoidance purposes.
A few weeks after the announcement, members of Mr Hunt’s Private Health Ministerial Advisory Committee met in Canberra to discuss the package they helped formulate and how to continue their reform work.
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It’s such a delicate operation trying to cover Tasmania’s health care costs
MARTYN GODDARD, Mercury
December 13, 2017 5:56pm
TASMANIA’S public hospitals stand to lose nearly $40 million a year in a federal crackdown on the practice of having patients pay for their treatment through private health insurance.
Official figures show the treatment of more than 21,500 patients admitted to the state’s public hospitals in 2015-16 was paid for by health insurance, not the State Government. The number has been growing rapidly as hospitals, hit by government funding cuts, struggle to raise the money they need.
It has become a key element of State Government policy. Our hospitals are given targets for the numbers of private patients they are expected to enrol. Now the Federal Government wants to call a halt. Almost one public hospital patient in every five is a fee-paying private patient, a fundamental departure from the principle that all Australian public hospitals should be free.
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Medical gaps, out of pocket costs ‘major concern’
- The Australian
- 11:46AM December 15, 2017
Sean Parnell
Unexpected medical gaps and out-of-pocket costs are a major concern, according to research prepared for a federal government reform committee, with doctors in a “powerful and privileged position” to do something about it.
The health insurance reform package announced by Health Minister Greg Hunt in October included measures to help consumers navigate the market and find better-value policies.
However, any action on out-of-pocket costs is at least another year away, with Mr Hunt ordering a new advisory committee, chaired by Chief Medical Officer Brendan Murphy, to investigate the problem.
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International Issues.
In #metoo wake, three senators call on President Donald Trump to resign
David Weigel
Published: December 11 2017 - 12:19PM
Washington: Independent US Senator Bernie Sanders and two of his Democratic colleagues have suggested that President Donald Trump should consider resigning, after a run of sexual harassment scandals that has driven out some members of Congress.
Senator Al Franken "felt it proper for him to resign," Sanders said in an interview with NBC's Meet the Press on Sunday morning, referring to the Democrat from Minnesota.
"Here you have a President who has been accused by many women of assault, who says on a tape that he assaulted women. He might want to think about doing the same."
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End-of-year deal on Indonesia Australia free trade agreement in doubt
Jewel Topsfield
Published: December 11 2017 - 4:58PM
Indonesia and Australia's trade ministers will meet in Argentina this week amid growing doubt the free trade deal between the two countries will meet the end-of-year deadline.
Sources close to the negotiations say it is hoped the deal will be signed at the ASEAN-Australia Special Summit to be held in Sydney in March next year, although some say even this is ambitious.
Negotiators failed to reach a deal in November - despite both ministers buoyantly predicting it would be the last round - with an eleventh round of negotiations held in Jakarta last week.
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'Dishevelled drunk': Republican finger-pointing starts after Alabama defeat
Rachel Olding
Published: December 14 2017 - 4:52AM
The Republican finger-pointing started minutes after candidate Roy Moore lost to a Democrat in deeply-Republican Alabama's Senate race, with nervous party members laying blame at the feet of each other and fearing their majority in Congress may evaporate in 2018 elections.
Several Republicans had called on Moore to drop out of the race due to allegations of child molestation and, in unusual scenes on Thursday, they openly celebrated the shock win by their ideological opponent, Democrat Doug Jones.
The win - in a race that was too close to call when voting booths opened - has left the Republicans with a slim 51-49 majority in the Senate.
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Mutiny in parliament as rebel Tories defeat Theresa May's Brexit push
Steven Swinford and Kate McCann
Published: December 14 2017 - 9:26AM
London: Theresa May suffered a major Conservative mutiny against her Brexit plans on Wednesday night after 11 of her own MPs refused to back the Government and boasted that Parliament had "taken control".
The Prime Minister lost a key vote in the House of Commons despite senior Conservatives pleading with the self-styled "rebel alliance" to back Mrs May or risk a disorderly Brexit.
Following chaotic scenes in Parliament, the rebels defied their party by voting through an amendment to the EU Withdrawal Bill demanding a "meaningful" vote on Brexit.
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After attack threat, China warns Taiwan not to depend on foreigners
Published: December 14 2017 - 5:30AM
Beijing/Taipei: Taiwan will fail to get foreign support for its cause, the Chinese government said on Wednesday after a Chinese diplomat threatened the self-ruled island with attack, while Taiwan said it was committed to peace.
China considers Taiwan to be a wayward province and has never renounced the use of force to bring it under its control. The United States has no formal ties with Taiwan but is bound by law to help it defend itself and is its main source of arms.
Beijing regularly calls Taiwan the most sensitive and important issue between it and the United States. In September, the US Congress passed the National Defence Authorisation Act for the 2018 fiscal year, which authorises mutual visits by navy vessels between Taiwan and the United States.
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Erdogan forges accord to name East Jerusalem as Palestinian capital
Selcan Hacaoglu
Published: December 14 2017 - 3:21AM
The world's largest bloc of Muslim countries declared East Jerusalem the capital of a future Palestinian state at a meeting convened by Turkish President Recep Tayyip Erdogan, solidifying opposition to President Donald Trump's recognition of the city as Israel's capital.
The 57-member Organisation of Islamic Cooperation said in a joint statement on Wednesday that it considered Trump's declaration "null and void legally" and an attack on the rights of the Palestinian people.
The declaration was spearheaded by Erdogan, who urged Muslims around the world to recognise East Jerusalem as the occupied capital of Palestine at a speech during the summit in Istanbul.
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We need to treat China like the superpower it is
Nicholas Stuart
Published: December 13 2017 - 12:15AM
The biggest challenge Australia has ever faced is waiting at the door. Yet we're too busy squabbling to even answer the bell, let alone work out how we're going to greet our Chinese guests.
Malcolm Turnbull seems to both want to slam it shut while passing lumps of coal out the window. Fair enoughbut he shouldn't yell loud obscenities and tell the visitors to go away at the same time. Andrew Robb is struggling to prop the door wide open (having been extremely well tipped for doing so); Alexander Downer is preparing a tea party; and Julie Bishop can't quite seem to work out exactly why she needs to stop receiving all that useful money the nice Chinese gentlemen are giving her. She thought she deserved it, simply because she's so wonderful.
Never too quick on the uptake, she's genuinely shocked to find out people expect something in return.
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US regulators ditch net neutrality rules, legal battles loom
David Shepardson
Published: December 15 2017 - 6:27AM
Washington: The US Federal Communications Commission voted along party lines on Thursday to repeal landmark 2015 rules aimed at ensuring a free and open internet, setting up a court fight over a move that could recast the digital landscape.
The approval of FCC Chairman Ajit Pai's proposal marked a victory for internet service providers like AT&T Inc, Comcast Corp and Verizon Communications Inc and hands them power over what content consumers can access.
Democrats, Hollywood and companies like Google parent Alphabet Inc and Facebook Inc had urged Pai, a Republican appointed by US President Donald Trump, to keep the Obama-era rules barring service providers from blocking, slowing access to or charging more for certain content.
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December 15 2017 - 3:10PM
Beijing works on 'Great Wall of Sand' in South China Sea as US is distracted
Lindsay Murdoch
Bangkok: China has been busy building military infrastructure in the South China Sea while the United States and its key allies, including Australia, have been distracted by the North Korean nuclear crisis.
New satellite images show China's military has built high frequency radar and other facilities on islands it occupies, even as Beijing was signalling its willingness to pursue protracted negotiations on a "code of conduct" with other claimants to the flashpoint waters.
The Washington-based Asia Maritime Transparency Initiative, which closely tracks developments in the South China Sea, said China has been constructing hangers, underground storage bunkers, missile shelters, radar arrays and domes and other facilities that cover 28 hectares.
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Faith of our fathers: WSJ edit page says, "Republicans are poised to enact a tax bill that on the whole makes broad prosperity the priority." But Penn/Wharton model says it will add almost $2 trillion to debt, increase GDP by ~1% total or less through 2040.
1:04 PM - 16 Dec 2017
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I look forward to comments on all this!
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David.
