Wednesday, March 31, 2010

The Henry Review is imminent

My guess is in one of the next two weeks

Here Sennex provides an overview of the main points of Henry (for the government) and Ergas (for the Opposition):

And thank you Sennex for your very kind words.

Treasurer Wayne Swan has provided a hint as to the scale and complexity of the Henry Tax Review telling a business audience the as yet unreleased reports outlines "very difficult trade-offs" that will take a decade to work trough.

"It won’t be long now before the review is released and when it is you’ll see the very difficult trade-offs we face," he told chief executives from the Business Council of Australia in Sydney.

"In a lot of areas we are on the same page"...

The Treasurer promised to release "a considered initial response" at the same time as the report, "so you have some certainty".

"I also want to reiterate the point that you should not expect a legislative package dropped on the table for immediate implementation," he said.

" Instead the release of the report will be another step in the decade-long process of careful, deliberate reform we need in the tax system."

The Treasurer has had the tax report since Christmas...

It recommends a resource rent tax that would push up the headline rate facing coal and iron ore miners from 30 to 40 per cent. In return they would be freed from state royalty payments and would pay no tax until their profits exceeded a "normal" level. The Henry Review sells the idea as profit-sharing, giving Australia a better return from its mineral wealth when times are good and forcing it to share more of the pain when times turn bad.

The review finds against an increase in the 9 per cent superannuation levy but endorses a small extra Medicare-style disability levy on wages, and proposes a rationalisation of Australia's myriad means of taxing saving. The changes would see bank interest taxed more lightly and superannuation earnings taxed more heavily.

Among the less contentious measures are voluntary simple tax returns and government-backed longevity insurance to protect retirees from their super running out.

The Treasurer has promised to release the review before the May Budget and last night revealed that in mid-April he will travel to Washington to meet his G-20 counterparts.

Related Posts

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I reckon the stimulus is falling out...

...of retail sales:

As the Treasurer said it would:

"The stimulus is being unwoundand it will detract a percentage point from growth during calendar year 2010"

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Tuesday, March 30, 2010

Now the People's Governor unwinds for the cameras


And for those who always wondered...

He joked on camera that he was "Sydney's most boring person" but Reserve Bank Governor Glenn Stevens took to breakfast TV like a pro yesterday to deliver two highly targeted messages - real estate investment is dangerous, and interest rates are going up.

His appearance on the Seven Sunrise program was not unprecedented. One of his predecessors Bob Johnston appeared on Nine's Today show in the 1980s to refute allegations that he had held off pushing up rates in the lead-up to an election. But it was groundbreaking in that it enabled him to speak directly to the Australians he wanted to reach.

The latest tax statistics show a record 1 in 7 of us are landlords, rushing in to property at the rate exceeding 113,000 per year and losing a record $8.6 billion per year as we negatively gear in the hope that prices will keep rising and we'll be able to bank a lightly-taxed capital gain.

Asked by host David Koch whether "when you look at things at the moment, there is anything to be concerned about" Stevens replied, "I think it is a mistake to assume that a riskless, easy, guaranteed way to prosperity is just to be leveraged up into property. You know it isn't going to be that easy".

Unstated, but well-known in the circles in which he usually mixes, is that he has the power to make sure that borrowing to buy property is no longer a "riskless, easy, guaranteed way to prosperity" and is thinking of using it. He told the parliament's economics committee in February he was increasingly attracted to the view that where a boom became widespread and was funded by borrowed money he should be prepared to slow it by "leaning into the wind" using all the tools at his disposal, "which would include interest rates but not be limited to that."

One of the tools would be "we have called open-mouth operations" - speaking directly to the public.

The Governor asked his Sunrise audience to "think about property prices as parents".

"I've got kids that within not too many more years are going to want somewhere of their own to live," he said. "You wonder how is that going to be afforded because the prices are getting quite high."

He told a business audience in November he would regard what happened to house prices as a measure of his success saying "if all we end up with is higher prices and not many more dwellings then it will be very disappointing, indeed quite disturbing."

His message on rates to the breakfast audience was blunt. There have been four rate rises and there will be more. "It is not wise to leave interest rates right down at rock bottom any longer than we need," he said. "And you shouldn't assume they'll stay low because that assumption will prove to be, you know, unfortunate."

Within minutes of his words money market traders upped their bets on the likelihood of a rate rise next Tuesday from 50 per cent to more than 60 per cent.

Published in today's SMH and Age

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Monday, March 29, 2010

"This is where it all happens? Now, where does everyone sit?"

Glenn Stevens has become the people's governor, following his unprecedented appearance on Sunrise this morning, jawboning direct to the public.  It's worth watching the full five minutes:

Good for Sunrise, good for the Bank. And an example of what commercial television can still do well.

Full transcript below:

KOCH: Well, he's the bloke charged with safeguarding your wealth and that of the country. Reserve Bank Governor Glenn Stevens is a really bright, unassuming character who really did save this country from the worst of the global financial crisis.

You don't know about him much though, because he's never done an in-depth TV interview before. To mark the 50th birthday of the Reserve Bank he sat down with Sunrise to talk about a whole range of things, including how he sets interest rates and where they're likely to go.

KOCH: The first Tuesday of every month at 9:00 o’clock on the dot the Reserve Bank of Australia Board sits down to talk money and interest rates. It's a big decision with even bigger consequences for all of us.

KOCH: This is where it all happens?

STEVENS: This is where it all happens.

KOCH: The boardroom.

STEVENS: This is the boardroom.

KOCH: Now, where does everyone sit?

STEVENS: Well, I sit here at the uncomfortable spot where tables join and...

KOCH: (laughs)

STEVENS: The Deputy Governor typically sits to my left. We have a couple of senior members of staff who sit to the right.

KOCH: Does it get pretty feisty around here when you're discussing - particularly whether to move interest rates? Or do they generally take your advice?

STEVENS: Feisty isn't the word I'd use to describe the discussion. It's very well-mannered but it's certainly intense. They're not here to be a rubber stamp, they're here to test our arguments and to make sure that we're on the right track.

KOCH: Because I suppose a lot of people, particularly small business people and mums and dads would say - "OK, these are all pretty highfalutin people, you know, they're all in the top corporate world. What would they really know about my experiences?"

STEVENS: The board members are very experienced people, they get out a lot. They're only here one day a month. The rest of the time they're undertaking their regular activities, and a couple of them are actually small - in that sense – business people themselves.

This is...

KOCH: Trading room?


KOCH: Before making its decision the RBA also checks in with 100 small businesses each month to gauge the real economic health of the nation at the coal face.

Because the decisions made here affect so many people. Does that weigh heavily on the decision making?

STEVENS: The thing they're also weighing is if we wait too long, do we end up having to do more than that, and those people would actually end up in a lot more pain.

KOCH: Rates have already jumped a fair bit from the lows, so how much higher are they likely to go?

STEVENS: We cut interest rates to what we call emergency settings when we had an emergency, when we thought we really were going to face a big downturn and we wanted to try to get ahead of that. Once the emergency has passed and things gradually look more normal, then it's not wise to leave interest rates right down at rock bottom any longer than we need. And you shouldn't assume they'll stay low because that assumption will prove to be, you know, unfortunate.

KOCH: So, you're sort of preparing us that interest rates are going to go up?

STEVENS: I think it would be - not doing people any favours to have a prolonged period of very low rates and then hammer them unexpectedly and, of course, the banks that are lending them money should be - and I'm sure are - testing the potential borrower - can you handle some rise in interest rates?

KOCH: When you look at things at the moment, is there anything that we should be thinking about, concerned about?

STEVENS: I think it is a mistake to assume that a, you know, riskless, easy, guaranteed way to prosperity is just to be leveraged up into property. You know, it isn't going to be that easy. And I think if we think about property prices as parents - you're a parent, as am I - I've got kids that within not too many more years are going to want somewhere of their own to live and you wonder, you know, how is that going to be afforded because the prices are getting quite high.

KOCH: Thanks for joining us.

STEVENS: Pleasure. Thank you.

(package ends)

DOYLE: Wow! You even wore your best pin-striped suit for that and a tie.

KOCH: I know I had to put a tie on. I was so nervous with that.

DOYLE: What did you do? Did you get a photo?

KOCH: No I was a bit embarrassed to get a photo.

But just look at what he was saying; Inside the board room, how cool is that?

DOYLE: Very cool.

KOCH: First Tuesday of every month, look at that - where he sits. He sits where the leg is so has the most uncomfortable seat on the table.

DOYLE: That is noble.

KOCH: But saying – be careful, interest rates are going to go up, and be careful about over extending yourself into property. Take the advice, he is the guy that sets it.

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Sunday, March 28, 2010

Work-Life Balance II - Now it's our our "health" minister

In Part I Wayne Swan attacked Tony Abbott for taking part in the Iron Man triathlon:

"I frankly have trouble understanding how he finds the time to do it. Because these jobs are all-consuming, we are dealing with very important issues and particularly in the last few years dealing with a global recession and its impact on our economy. I can't understand how any senior person in the Opposition can find the time to go off surfing all of the time."

Now this morning "Health" Minister Nicola Roxon has backed him up:

"I think Wayne Swan was a little bit wistful, almost jealous that he doesn't have as much time to do some of the things he would like to. That's the reality of the jobs that we have in government.

And it is a lot of time. I think it's a fair question to say: does that amount of time actually have an impact on the lack of policy development that we're seeing from the Opposition?"

Then, perhaps remembering her portfolio, she added:

"I would like to exercise more but then I'd have less time with my young daughter. You know we all make choices about what we do in busy lives. I'm certainly not going to pass any judgment about the choices that Tony Abbott makes. And I do think it's good to have people setting an example."

What are they on?

Will they expect us to take them seriously when it matters?

As Monash University's Stephen King put it today: "To have a federal health minister questioning exercise of a level of 10 hours a week – and intimating it might be too much – is ludicrous."

And unsettling.

At least Kevin Rudd has the right idea.

Here is his tweet from this morning:

Wishing @TonyAbbottMHR all the best today for a very tough race. KRudd

Congratulations Tony. And congratulations Kevin.

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Wayne Swan, on work-life balance

Abbott is today taking part in the Iron Man Triathlon.

Here's Wayne Swan, on RN Breakfast:
"I frankly have trouble understanding how he finds the time to do it. Because these jobs are all-consuming, we are dealing with very important issues and particularly in the last few years dealing with a global recession and its impact on our economy. I can't understand how any senior person in the Opposition can find the time to go off surfing all of the time."

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Saturday, March 27, 2010

"Some people hate the bus. Not me, I can't get enough"

Although I was critical of the frequency of Canberra's bus service when arriving back here, I really do love riding in buses - when they come. To misuse a line of Elvis Costello's, I think of them as "people's limousines". Truly

I am typing this on one now.

Here's indie Rock band Art Brut. They understand.  And I love the song:

HT: Bella Counihan

"She looked like someone's girlfriend
She looked like a dream
She looked as unlikely
As the people's limousine"

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Friday, March 26, 2010

The graphs that tell the story - our financial institutions


You want to pay me for taking my money?

Depositors, long second-class citizens at the hands of the banks, are suddenly in demand.

The Reserve Bank has found that place of grudging service, high fees and low rates depositors are now being offered fierce competition, fee rebates and interest rates so high they suggest a profit margin of less than zero.

The Bank's half-yearly Financial Stability Review finds Australia's major banks are now offering deposit rates up to 2 percentage points above the bank bill rate instead of way below it as had been the case up until the financial crisis.

"Banks also appear to be competing for deposits by cutting fees," the Reserve Bank reports. "The
largest have reduced their penalty fees and a few have introduced deposit accounts that reimburse the fee for withdrawing money from some other banks' teller machines."

Rate tracker Cannex says the competition has become so cutthroat that one bank is actually paying customers 50 cents for each withdrawal they make through eftpos at supermarket checkouts...

"ING Direct doesn't have an ATM network so it reimburses customers the fee for using other bank's ATMs and gives them a 50 cent bonus if they withdraw from a supermarket because that costs it less," says Cannex analyst Peter Arnold.

"The official cash rate is 4 per cent yet the Commonwealth and Westpac are offering 6 per cent for one year deposits and UBank is offering 5.85 per cent at call."

"The banks have changed but not all their customers. Many are so used to getting next to nothing for deposits they haven't bothered to look around."

The Reserve Bank says the banks are competing hard for deposits because previously cheap foreign funds are no longer available. And while early in the crisis bank deposits swelled 25 per cent as customers sought safety that growth has since slowed forcing banks to work hard.

Non-bank lenders are paying 1.40 percentage points above the bank bill rate for their funds instead of 0.15 points before the crisis. As the crisis peaked they were paying 3.80 points above bank bill rates.

The Bank says we are taking out our credit cards again with both transactions and ourstanding balances picking up while still saving, typically putting away 4 per cent of our income compared with nothing before the crisis.

It believes our home borrowing is extraordinary safe with only 2 per cent of mortgage holders meeting the traditional definition of "stress" - payments of more than half of their after-tax income and a loan-to-valuation ratio of 90 per cent or greater. Nationwide just 27,000 are behind three months or more with most mortgage holders actually ahead on repayments.

Businesses are being treated less well by banks with loans to business sliding at an annualised rate of 10 per cent in the six months to January, although the Bank says it sees signs that sidle is coming to an end.

Published in today's SMH and Age

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Thursday, March 25, 2010

It's the Tax Stats - love them, get lost in them, have fun.

I do.

Cash payments of up to $900 appear to have succeeded where years of pleading and threats have not.

They have persuaded Australians to do their tax.

The latest tax statistics show a record 12.6 million individuals filled in returns for the 2007-08 financial year, up 7 per cent or 840,000 on the year before. In no previous year has growth approached 300,000.

Worth between $250 and $900, the tax bonus stimulus payment was available only to Australians who completed their tax returns by February 2009 and earned up to $100,000.

But Australians in the very richest of families do not seem to have been shy about claiming it.

Australia's highest-earning postcode is 2027, taking in Edgecliff, Rushcutters Bay and Point Piper, with an average taxable income of $186,000... Yet about 3000 of its 5000 taxpayers claimed the rebate, according to the Tax Office. They were matched by the second-highest earners in the state, in Mosman and Spit Junction, who took home an average of $156,000 each yet claimed two rebates for every three taxpayers.

Net incomes fell in all but two of the top 10 earning NSW postcodes, largely reflecting a massive 29.5 per cent slide in capital gains.

''The economy was moving towards what we know now was the global financial crisis,'' said the assistant Treasurer, Nick Sherry. ''That was followed by a massive $170 billion in revenue being ripped from the budget by the worst global recession in 70 years.''

Australians continued their rush into the property market, with an extra 113,000 signing up as landlords in 2007-08 and bringing the number of rental property owners to a record 1.7 million - more than one in seven taxpayers.

Spurred on by the prospect of negative gearing, they lost a net $8.6 billion on managing properties - the previous year's loss was $6.4 billion.

Deductions for work-related expenses jumped 13 per cent, the number of claims rose 8 per cent and the size of each claim grew 5 per cent.

An extra 150,000 Australians volunteered to pay the Medicare levy surcharge rather than join a private health fund and the number claiming the private health insurance rebate remained fairly stable, slipping by 4000.

Australians showed more generosity as the financial crisis loomed, claiming $2.3 billion in donations to charities, an increase of 24 per cent.

They showed less inclination to use tax agents - the number lodging electronically climbed to a record 2.2 million or 18 per cent.

The Henry tax review, due for release shortly, recommends measures to encourage an even greater shift to electronic lodgment. It will make simple returns effectively optional, requiring no more than a computer click for taxpayers prepared to accept the Tax Office's view of what they owe.

The Treasury head, Ken Henry, said that Australia had the highest rate of agent use in the developed world.

Published in today's SMH and Age

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Tuesday, March 23, 2010

Wikipedia's universal health care map - they'll have to update it!


Watch, day by day, as China turns off Google:


Watch here.

Margaret Simons writes:

This is huge. Surely the biggest media story in the year, if not the decade. And it is not only a media story. It is also about culture, censorship, dictatorship and, well, the future of the world.

Google has decided to stop censoring search results in China, putting it on a collision course with the Government. Chinese searchers will be routed through the UK and Hong Kong. This follows last December’s announcement that Google (and other companies) had been subjected to cyber-attacks from inside China, and that the Gmail accounts of human rights activists had been accessed.

As Google’s chief legal officer makes clear in this blog post the likely result of Google’s decision is instant blocking of its services in China, and the company has set up this site so the whole world can see what China is blocking.

More in the Crikey email today.

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How can you tell things are getting more better here than there? Our iPods cost more.

What a difference an improving economy makes. Before Christmas heavy discounting made Australia the cheapest place in the world in which to buy iPods.

Now we've slipped to just the 14th cheapest, and have become about the most pricey nation in the English-speaking world, out pricing the US, Canada, and the UK.

All iPods are made in China, and in theory should all be sold at the same price at prevailing exchange rates after taking into account transport costs. But discounting and price gouging can change that.

Like the Economist magazine's Big Mac Index before it the Commonwealth Securities iPod index compares worldwide prices in order to get an idea of which economies are weak enough to need discounting and which are so strong retailers can afford to gouge.

The updated index suggests Australia has moved from weak to neutral territory with retailers in the US, Canada and the UK remaining positively frail.

"Just before Christmas, Myer slashed the price of the top-selling 8 gigabite iPod nano from $199 to $159. When converted to US dollars it meant Australian consumers could buy here $10 cheaper than in the US and $11 cheaper than in Hong Kong," said CommSec economist Craig James. "But right now Australian tourists could save $21 shopping in Singapore, $35 in Hong Kong."

The less-generous approach to discounting reflects improved retail fortunes... The Bureau of Statistics found consumers shunned department stores in the lead-up to Christmas spending an extraordinary 3 per cent less than the December before, the first time in almost two decades one December hadn't improved on another. In January department store sales rebounded a seasonally-adjusted 7 per cent.

Like the Big Mac Index, the iPod index can also be used to indicate whether a currency is over or under valued. With the iPod selling for only US$149 in the United States but US$175 in China, the index suggests the US dollar is 15 per cent undervalued against the Chinese yuan. Put another way, it suggests points to pressure for China to devalue the yuan.

But Australia is one of the countries least out of whack against the yuan. The iPod index suggests we are only 4 per cent overvalued.

"Looking at the index it is hard to conclude that the Aussie dollar is either significantly under or over-valued against China," said Mr James. "We have relatively high interest rates and a strong economy while benefiting from strong Chinese demand for our resources."

Published in today's SMH and Age

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Monday, March 22, 2010

The great health debate - what to expect

ABC TV: 12.30 pm Tuesday in every timezone 

ABC NewsRadio: Live nationwide at 1230 AEDT

These are the rules, just conveyed to me by the Press Club:

"The order of leaders would be decided by the toss of a coin.

The moderator will be Club Director Chris Uhlmann.

Each leader is allocated 5 minutes for opening remarks.

After the leaders have concluded their opening comments, members of the media will pose questions in this order determined by ballot:

Paul Bongiorno - Network 10
Sandra O'Malley - AAP
Sue Dunlevy -The Daily Telegraph
Lyndal Curtis - ABC Radio
Mark Riley – Network Seven
Laura Tingle Financial Review
Matthew Franklin - The Australian
Michelle Grattan - The Age
Jayne Azzopardi Nine Network
Karen Middleton – SBS
Andrew Probyn - West Australian

The leader answering a question put directly to him/her will have a maximum of 2 minutes to reply. The other speaker would have the option to respond to the answer given by the opponent for a maximum of 1 minute.

In the case of a question being put forward to the leaders jointly, each speaker would have 2 minutes to reply.

Leaders will be alerted 30 seconds out from the conclusion of time for opening and closing comments, answers to questions and right of reply periods.

Concluding comments of 2 minutes from each speaker is given in the same order to that of the opening comments."

Game on.

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What Rudd and Gillard are stealing from their state Labor colleagues


Here's how I'm seeing it:

Australia traditionally elects Labor governments at the state level.

This is no accident. The states provide the services we need - schools and hospitals.

Labor actually believes in providing them, deeply, tribally. The other side doesn't, as much. And often says so.

So we elect Labor at the state level (almost all the time) and often elect the Coalition at the federal level safe in the assurance that our hospitals and schools will still be in good hands.

Rudd (with hospitals) and Gillard (with schools) have changed that.

It'll be good for them. A vote for Labor federally will be a vote for hospitals and schools.

And it will be good for the tax take, and (when the time is right) for a higher GST.

We will no longer be able to delude ourselves by voting for a low-tax party federally while voting for a full-service party locally.

Rudd has explicitly tied the GST to hospital funding. Soon enough we'll want an increase.

But back to the states. Rudd and Gillard are making it safe to elect Liberal or Coalition state governments.

We know our hospitals and schools will still be looked after.

Here's Possum: The safer the government seat, the much larger was the swing against the government

And Piping Shrike: By any normal criteria, the Liberals’ campaign was pathetic.

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Here's $42 billion. Spend it quickly.

You can't. Things slip. They have

New official figures show government spending running some $5 billion below forecasts raising the prospect it has been unable to spend stimulus money as fast as it planned.

The Finance Department update has the government spending $192.1 billion in the the seven months to January rather than the forecast the $197.4, a shortfall of $5.3 billion.

By contrast revenue is little changed on the Budget forecast, being just half a billion higher.

"It looks as if they're finding it harder than anticipated to get stimulus spending out the door," said Access Economics Director Chris Richardson.

"If maintained, this will be good for the Budget bottom line... This year's deficit will come in nearer to $50 billion than the forecast deficit of $58 billion."

Finance Minister Lindsay Tanner cautioned in releasing the figures that some of the disparity could be due to changes in the timing of grants.

But Mr Richardson said the $5.3 billion shortfall was significant, and was far too big to be explained solely by lower than expected unemployment payments.

New labour force figures add weight to the theory that the government is finding it hard to spend its stimulus money as quickly planned. In February the number of male labourers working more than 60 hours per week climbed to its highest point in more than seven years.

Late last year education Minister Julia Gillard announced a rescheduling of some schools spending to take account of labour shortages and in February the government suspended its home insulation program and reconfigured its Green Loans program.

Access and forecasters including the ANZ and Commonwealth banks are forecasting a dramatically improved budget position in future years and a swift return to surplus as improved tax revenues start to flow from much higher resource prices.

"But that money isn't flowing yet. The higher resource prices are being negotiated now, but they won't show up in tax for six to nine months," said Mr Richardson.

BHP this month secured a 55 per cent increase in coking coal prices from Japan as well as quarterly pricing, meaning the prices will be renegotiated every three months instead of being set for a year as in the past. The world's biggest iron ore producer, Vale of Brazil, has announced that it too plans to scrap annual negations and is pushing for a 90 per cent increase.

"It's going to deliver a tonne of revenue. It's not going to happen overnight, but it will happen."

Access Economics is tentatively predicting a return to surplus in 2012-13, the Commonwealth Bank a return to surplus in 2013-14, and the ANZ a possible return to surplus as soon as 2010-11.

The government's own budget papers don't predict a return to surplus until 2015, and the Coalition's Treasury spokesman Joe Hockey has claimed "the Rudd government will never deliver a significant surplus."

Treasurer Wayne Swan has poured cold water on talk of an early return to surplus claiming "that particular piece of speculation is most certainly pie in the sky".

Published in today's SMH and Age

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Saturday, March 20, 2010

Election night tonight - go Liberals!

I am allowed to say "Go Liberals" now.

In 2001 when I worked for the ABC the then head of news and current affairs phoned me at home on election eve and ordered me not to hand out how-to-vote cards (for an independent candidate) as I had planned to.

Apparently it would be inappropriate, "given my position" at the ABC.

You know what the ABC is like.

Anyway, I am talking about South Australia, my ancestral home.

My rule of thumb is that if a government has been in office for around 10 years it is time for a change.

Labor has. Colleague Katharine Murphy is on the ground and can't detect a mood for a change.

But I do sense such a mood, and Possum has crunched NewsPoll figures to produce this awesome graph showing how hard it should be for Labor to get the 24 votes it would need to retain a majority:

Yes, the NewsPoll figures suggest there's just an 8 per cent chance of that happening.

Change is good, right? All governments get worse over time. (Including the Tasmanian government.)

ABC NewsRadio will be covering both counts all night for those of us interstate.

And to prove I am from Adelaide, below I post a definition going around on the web:


You meet people at the 'Malls Balls'

You consider 40 degrees to be a bit warm

You drink Farmer's Union Iced Coffee

You drink Coopers

And you know It's the best beer in the world

You've been to the brewery lights's

You've eaten a Balfour's frog cake

You know that a Berliner is something you eat

You like YoYo biscuits

You grew up on Fritz & sauce sangas

You know it's a 'yiros', not a 'kebab'

You can drink SA tap water without noticing any unpleasant flavours

You've been to the Pancake Kitchen (open 24 hours)

You call the corner store a 'deli'

You pronounce graph as 'grarph', plant as 'plarnt' and dance as 'darnce'

You know that Victor Harbor is the only place to be for Schoolies.

You went to school camps as the Red Shield Aquatics Camp in Victor Harbor

You know where 'Porta Gutta' is

You have been to the club formerly known as Heaven at least once (and you were under 18).

You have been to Flashdance at HQ at least once

You've started the night on the East End then drunkly walked through Rundle Mall in the early hours to get to the West End (or vice versa)

You know that there's more than one way to have a good time on Hindley Street

Pints are the big beers

After a big night you've ended up at 'The Cas'

You've been to the museum on 5 different school excursion but never returned as an adult

You've been to the St. Kilda playground

You miss Magic Mountain at the bay

You know that 'the bay' is Glenelg

You would never swim at Glenelg because it's gross

You have been to Glenelg and got extremely sunburnt

You know the state floral and fauna emblem (but just in case it comes up at a quiz night)

You still call AAMI Stadium, ' Footy Park '.

You support the Crows/the Power

And you'd rather give up your first born than see the other team win the flag

You know the South Australians invited the checkside punt

You have a very strong opinion on Lleyton Hewitt

You forgave the Chappells for the 1981 Underarm Incident purely out of South Australian patriotism.

Your 'sports gurus' are KG and Cornesy

You've never watched NRL

You've been to the Christmas pageant as a child and as an adult

You've lined up for more than half an hour to see Santa at the Magic Cave

You've bought something from the pie cart

You know what a pie floater is

You've eaten a pie floater

You can't go out without seeing someone you know

You shop at Foodland

You have a Hills Hoist in your backyard

You know the Hills Hoist was invented in South Australia as was wine casks, penicillin and the retractable seat belt

At least half of your neighbours were born before 1950

You can leave work at 5:15 and miss 'peak hour traffic'

Your definition of 'peak hour' traffic is more than 5 cars at a red light

You're always running late because the public transport system is so old

You know and love the sound the ticket machine makes on public transport

You feel like punching the next person who calls it the City of Churches

You walk past at least 5 churches on your way to work

Seeing a large, Aboriginal man walking around town in a leotard and gum boots in the middle of winter does not surprise you

You know his name is Johnny

You know who Stormy Summers is

You think the 'Tiser has no journalistic integrity whatsoever.... And yet you still read it every day.

You remember John Martin's

You've been on the Pop-Eye

You know the people out on the Torrens are either tourists or rowers. No one else would go near that water.

You know where beehive corner is

You hate the new tram

You think the Festival Centre is a wonder of modern architecture.

You've used the term 'minda' as an insult

A pale/palie is a Coopers Pale Ale

You've saved up your bottles and cans from a big night out, collected the 5c deposit and then used it to buy more beer

You know what a 'stobie pole' is

You say 'heaps good'

One of the first questions you ask a person is where they went to school

You have the same friends from high school

You don't like Victorians

They stole our Grand Prix

Your dads best friend friends next door neighbour knows some one in the Hells Angels that can get stuff.

You acknowledge that, while half of our state is uninhabitable, you know that it's still the greatest.

You console yourself that, despite all our faults, at least South Australia wasn't built by convicts.

You understood and laughed at this list

You live in South Australia

And you'll probably die here too

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Friday, March 19, 2010

How do I get my girlfriend to...


Where we work now - it's not where you think

Forget all this talk about mining and building

We are rapidly transforming ourselves from a nation of shopkeepers to a nation of health workers and aged carers.

The latest quarterly breakdown of the industries in which we work, eagerly awaited for clues as to what's driving our latest spurt of jobs growth contains news of another longer-lasting trend.

Twice in the past year the sector known as "health and social assistance" has pipped "retail" to become Australia's biggest employing industry.

Providing jobs to 1.2 million Australians, compared to retail's 1.18 million, it now employs 1 in every 9 Australians.

Within the sector the fastest-growing type of work is aged care, now employing up a record 205,000 Australians, up from 163,000 just a year before.

"It will keep getting bigger"... says labour market specialist Mark Wooden of the Melbourne Institute.

"The entire sector will one day account for 1 in every 2 workers."

"Go back a century and only 1 in 35 Australians worked in health and aged care. But whereas we have been able to automate other industries, it's hard to automate this one."

Retail employment has grown roughly in line with population, but health and aged care employment has grown far faster, doubling in a little over 20 years.

"There was a time when 1 in 2 of us worked in agriculture," says Professor Wooden. "It's now about 1 in 30 - a tiny amount - yet we are making more food than ever."

"It's a similar story with manufacturing which used to employ 1 in 4 Australians - we have found ways to make things using fewer people. To some extent we will be able to use expensive technologies to do that in health, but in the rest of the caring sector about the only way to provide more is to employ more people."

The Treasury's Intergenerational Report has the proportion of Australians aged over 65 jumping from 13 per cent to 23 per cent in the next four decades. The proportion aged over 85 will jump from 2 per cent to 5 per cent.

"It is driven by demographics, no doubt about that," said Professor Wooden. "But it also driven by increasing wealth. The richer we get the more we are prepared to spend buying good health and aged care. We are prepared to do it both through the welfare state, by paying more tax, and also privately by buying better services."

"Many people think that it is only poor societies that spend big on welfare, it is actually the other way around".

The employment breakdown also confirms that the bulk of the new jobs created in the past three months have been in the construction industry, many resulting from government stimulus measures. Construction provided half of the new full-time jobs in NSW and two-thirds in Victoria.

By occupation, the employment of managers fell 9,000 and professionals 3,000. However the employment of tradespeople grew 33,000; machinery operators 10,000 and labourers 15,000.

The construction-heavy boost to jobs meant that all but 2,000 of the 96,000 net new jobs went to men.

In a sign the sector is now running short of men to do the work the number of male labourers working more than 60 hours per week climbed to its highest point in more than seven years.

Long-term unemployment continued to climb reflecting earlier job losses.

Our New Top Ten

'000 workers

1197.5 Health and social assistance
1182.1 Retail
1002.3 Manufacturing
995.4 Construction
856.0 Professional and scientific
796.1 Education and training
730.3 Accommodation and food
681.4 Public administration & safety
556.6 Transport and postal
432.7 Wholesale
418.5 Financial and insurance

Our lesser employers:

391.9 Administrative support
359.9 Agriculture
208.5 Information and communications
200.5 Arts and recreation
174.5 Mining
164.2 Real Estate and rental
134.0 Electricity, gas, water

ABS 6291.0.55.003

Published in today's SMH and Age

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Thursday, March 18, 2010

"Saving is the new spending" - it's a great new ad:


Does the Reserve Bank think the Consumer Price Index is a joke?

Australia's consumer price index is amongst the worst in the developed world according to a damning critique by the Reserve Bank which has asked an inquiry to recommend an overhaul.

The Bank's submission to the regular review of the CPI, made public on its website, says at times it has been seriously misled by inflation figures "that subsequently proved not to be representative".

It wants the CPI published monthly rather than quarterly, whatever the expense, and notes that Australia and New Zealand are the only developed countries not to do so and that Australia is only G20 nation not to do so.

Countering an objection from the the Bureau of Statistics that the cost of moving to monthly figures would be "considerable" it says the cost would be "small relative to the benefits" of getting its monthly interest rate adjustments right.

It says while much of the data used in the creation of the CPI is already collected monthly, it is "not published until as much as three months later, and then only as part of a quarterly average."

"In recent years there have been a couple of instances of quarterly readings for inflation that subsequently proved not to be representative of the general trend,"... the Bank says. Monthly data would "allow earlier identification" of rogue figures.

Of particular concern to the Bank is the so-called "D&L" component of the CPI which is meant to measure the price of deposit and loan facilities. It says alone in the developed world the Australian Bureau of Statistics includes in it an indirect estimate of interest rate margins, which bizarrely is sometimes negative, "implying a negative price".

As the forth biggest component of the CPI it says the D&L has at times dramatically skewed its outcome.

"For example, the D&L rose 16 per cent over the year to September 2008, adding almost three quarters of a percentage point to CPI inflation," it says. "More recently it fell 15 per cent over 2009, subtracting three quarters of a percentage point."

Enhancing the Bank's frustration at the CPI it has found that the D&L usually moves up whenever it increases interest rates, putting further upward pressure on the CPI and adding to the apparent pressure for it to increase rates further.

It wants the D&L reassessed or "removed from the CPI, or at least the interest margins component removed".

It also wants the CPI seasonally adjusted, pointing to obvious seasonal patterns including an apparent jump in education prices at the start of each year and an apparent drop in pharmaceutical prices at the end of each year associated with the workings of the Pharmaceutical Benefits Scheme.

The Bank is also frustrated by how rarely the basket of goods measured in the CPI is updated, saying the ABS now only updates its assessment of spending patterns every six years, "significantly less frequently than other advanced economies".

The submission includes a graph showing that the official view of how much Australians spend on computing and audiovisual equipment is always seriously out of whack by the time it is adjusted.

It says if the ABS won't survey spending patterns more frequently it could at least use scanner data from shops to make adjustments as it says do other countries.

The Bureau is publishing all submissions to the inquiry on its website in order to foster what it calls "an informed, robust and consultative process".

Published in today's SMH

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Wednesday, March 17, 2010

Wednesday Column: Swan, Rudd and Tanner are stuffing things up big-time

Swan, Rudd and Tanner are their own worst enemies.

Days ahead of releasing a 900-plus page tax review that will demand sober consideration and recommend changes that will make some people worse off as well as others better off they launch an assault against what they're calling "a Whopper - the Big Mac of taxes".

"We've discovered what was under the budgie smugglers - a big new tax," the Treasurer told parliament yesterday. "It should send a chill down the spine of every business in this country."

Multiplying the annual cost of Tony Abbott's paid parental leave plan by enough years to get a double figure ahead of the billion Swan declared it "a $10.8 billion tax which will harm the economy and risk family budgets".

There was no acknowledgement that the billions would be paid into family budgets or of the truism that one man's tax is another woman's benefit.

Labeling the proposed 1.7 per cent levy a risk to investment, growth and jobs "passed on at the supermarket, passed on at the petrol station and passed on at the local bank" Swan called on the Opposition to heed the advice of the OECD that corporate taxes were "the most harmful for growth".

Heaven knows how he expects the Opposition to respond to the Henry Review's endorsement of a Resources Rent Tax that would push up the headline rate facing coal and iron ore miners from 30 to 40 per cent...

The idea has already been put before the Cabinet. In just the last financial year it would have raised an extra $7 billion to $8 billion, about enough to fund Australia's universities.

It has much to recommend it. The switch from royalties to a profit-based tax would give Australia a better return from its mineral wealth when times were good and see it sharing more of the pain when times turn bad.

The broad principle has received cautious approval from the Minerals Council of Australia.

But it'll be murdered if at the election it's labeled a Whopper, a Big Mac, "a risk to investment, growth and jobs passed on at the supermarket, passed on at the petrol station hidden in a budgie smuggler".

Even if the Treasurer calls for a mature debate. Even if he points out - belatedly - that taxes redistribute resources rather than remove them. Even if he points out that you can't change anything about the tax system without making someone somewhat worse off, at least in relative terms and at least in the short term.

The Henry Review also endorses a national disability insurance levy on wages. We'll doubtless be told it's a tax on employment, that it will be "passed on to consumers whether it is through major supermarkets like Woolworths and Coles, petrol stations via Shell and BP or Telstra" - words used by Finance Minister Lindsay Tanner to deride Abbott's proposed parental leave levy.

The review has found that tax breaks for super are a mess. High earners get income tax concessions worth 31.5 percentage points, middle earners 24.5 points and low earners next-to-nothing. It suggests straightening out the mess, but that will create (vocal) losers as well as winners.

Labor will be accused of "flipping and flopping" on super given that it set up the system just as as Kevin Rudd accused Tony Abbott of flipping and flopping on parental leave.

And then there's the recommended consideration of road user charges, or "taxes on driving" as they will be called. We'll be told they'll "harm the economy and risk family budgets," to use the Treasurer's phrase.

Labor's triumvirate has scored quick and dirty points at an indeterminate cost.

Their approach and the imminent election make it likely many of the good ideas in the Henry Review will remain no more that - good ideas.

As it happens Abbott's paid parental leave proposal has a lineage almost as impressive as the government's which was sourced from the Productivity Commission.

It was Option 5 in the Human Rights and Equal Opportunity Commission's 2002 report "Valuing Parenthood".

Employers would pay "a levy based on total salaries paid by the organisation, in
order to avoid disincentives to employ women".

Small businesses "could possibly be exempted from the levy".

The advantages as seen by the Commission were that it would "recognise the benefits to employers of maintaining women's labour force attachment, create direct workforce incentives for women to be employed prior to childbirth and to return to work and reduce disincentives to the employment of women that may arise if employers were required to directly fund paid leave".

The disadvantages were the potential to create an imbalance between those women in and out of the workforce and that it would be "in effect a new tax, paid by all employers".

It wasn't perfect, but no scheme is. The Commission found the type of unfunded scheme proposed by the government would provide "limited recognition of the benefits to employers of maintaining women's labour force attachment" and would mean "increased cost to government".

Both Commissions found there was no easy way for Australia to do what was generally done overseas which was to bolt parental leave on to the system of social security contributions. We don't have such a system.

The Commission shed light too on Kevin Rudd's claim that for 12 years the Coalition "did absolutely nothing" about parental leave.

It said it was Labor that knocked back the maternity leave provision of the United Nations convention on the elimination of of discrimination against women shortly after taking office in July 1983. It remained in office for 13 years.

But there's no point dwelling on the past. We need a sensible discussion about tax and transfer payments now.

What are the chances?

Published in today's SMH and Age

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Suddenly house prices matter...

...for interest rates

The Reserve Bank has revealed that "strongly rising" house prices helped tip its hand when pushing up interest rates this month, saying prices have "gained momentum" and are climbing strongly "for all but the bottom segment of the market".

The unusual discussion of house prices in the section of its board minutes devoted to "considerations for monetary policy" suggests the timing of future rate hikes will depend in part on its view of the strength of real estate prices.

The minutes describe the market for established homes "very buoyant", with auction clearance rates "at high levels, notably in Melbourne".

It says although loan approvals have declined somewhat, as would be expected with higher rates, nationwide prices "continued to grow at a rate of close to 1 per cent per month in December and January".

"The minutes show house prices becoming one of the key indicators watched by the Bank"... said Macquarie Group interest rate strategist Rory Robertson.

"A month or two ago you could have the view that house prices were decelerating. They were coming off double-digit annual growth. But in the lead up to the March meeting it became clear there had been no deceleration. The Reserve seems to be taking the view that if house prices are rising rapidly, rates are too low."

"Some analysts think the Bank is actually targeting house prices but I think it is more that if house prices are rising rapidly it takes it as a sign that the economy is doing well."

"Until recently you couldn't get good house price data. It has improved remarkably in the past few years to the point where the Bank can have confidence in monthly readings."

"In some ways house-price data is now more important than share-price data."

"Seven out of ten houses are owner-occupied. If house prices go up and stay up most households become wealthier. Those seven out of ten households not only feel keener to go out and spend but become more able to go out and spend."

The Bank minutes say the board decided to begin moving rates "closer to normal" in October. That "prompt start" gave it "flexibility in the pace at which to proceed".

"On balance", its members concluded that "the evidence that had become available recently had confirmed that it remained appropriate for interest rates to move gradually towards normal levels".

The Reserve Bank has lifted rates four times since October by a total of 1.00 percentage points, but extra hikes by Westpac and other retail banks bring the typical hike in mortgage rates to close to 1.20 points.

But spread in a range between 6.74 and 7.01 per cent, the bank's standard variable mortgage rates are still well below the peak of 9.60 per cent reached in August 2008 ahead of the financial crisis. Analysis are expecting at least another two rate hikes in the year ahead and probably another four taking mortgage rates up to around 8 per cent with future moves dependent on the state of the economy.

"There are nine more Board meetings this year and it looks to be a 50/50 call at each one," said Commonwealth Bank senior economist Michael Workman.

Published in today's SMH and Age

Graph: RBA Statement on Monetary Policy

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