They'll trash the economy. Yea, sure. Agency gives Australia top billing anyway

Whatever the shape of the next government, Australia remains a magnificent investment proposition.

The credit rating agency Standard & Poor's has reaffirmed Australia's top AAA rating saying there's no point in waiting for an election outcome because it won't make any difference.

However the agency warns of other risks including a collapse in the housing market and a squeeze on one of our banks.

"During the election it was comforting to us that both leaders were trying to almost outdo each other in a race to return to the budget to surplus," said S&P credit analyst Kyran Curry.

"There's been a lot of talk about rising levels of debt, but on a comparative basis Australia's debt remains low. In fact Australia is a stand out, even among AAA rated sovereigns."

Standard & Poor's decided to release the results of its annual reassessment of Australia ahead of the announcement about the new government in order to signal that it didn't matter...

"We've been getting a lot of questions from offshore investors and sidewards glances the longer this goes on, said Mr Curry. "We want to make it clear that no matter what the makeup of the government there is a strong commitment to fiscal conservatism here and a stable, mature and transparent political system you don't see in many other places."

"It is telling for us that the independents sought advice from the Treasury about the true state of the government's fiscal position," said Mr Curry. "Australians live well beyond their means but they expect the governments not to. There's a level of sophistication we don't often see elsewhere."

The agency says the risks to Australia's AAA rating include its dependence on commodity exports and its exposure to a housing market correction.

"Existing house prices have climbed about 50 per cent in five years," said Mr Curry. "The risk of a collapse is more elevated than in previous years. Australia's banks are heavily exposed to the residential property market. If one of the banks blew up we would be taking a look at the sovereign rating."

"This is not what we think is likely. Australia's banks are sound, liquid, well capitalised and we have given them some of the highest ratings in the world."

"What is most likely is a gradual drag on house prices rather than a collapse. We certainly don't see the growth of recent years as sustainable."

Australia has enjoyed the world's top credit rating since 1992 after losing it 1986 at the height of the "banana republic" currency crisis.

It shares the AAA rating with Canada, Germany, Singapore and the United States and also with the United Kingdom, although the agency has just placed the UK on "negative watch".

"We are worried about the commitment of the new UK administration to fiscal consolidation. It is not a worry we have here," said Mr Curry.

Treasurer Wayne Swan said Standard & Poor's had endorsed Labor's management of the crisis, and its plan to get the Budget back to surplus in 2013.

The Reserve Bank board meets in Adelaide today and will later release a statement outlining its view of the Australian economy.

ANZ job advertisement figures released yesterday showed advertised vacancies climbing a further 2.6 per cent in August. The TD Securities inflation index showed prices climbing at an annualised rate of 2.4 per cent.


Top billing

Australia AAA
Canada AAA
Germany AAA
Singapore AAA
United States AAA

United Kinggdom AAA, outlook negative

New Zealand AA+

Ireland AA, outlook negative
Japan AA, outlook negative
Spain AA, outlook negative

China A+

Russia BB+
Greece BB+, outlook negative

Standard & Poor's sovereign ratings

Published in today's SMH and Age


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Parliamentary reform - how it's going to be

The signed-off agreement:

Agreement for Better Parliament


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Costingsgate: "If Andrew Robb and Tony Abbott say that, then it must be true…"

It's come to this

Meet the Press:

HUGH RIMINTON: OK. Very quickly. Tony Abbott and Andrew Robb said your costings have been “carefully modelled by NATSEM” the National Centre for Economic Modelling at Canberra University. Were they carefully modelled by NATSEM?

CHRISTOPHER PYNE: If Andrew Robb and Tony Abbott say that, then it must be true…

HUGH RIMINTON: NATSEM says they never spoke to the Coalition.

CHRISTOPHER PYNE: Well, how else are the accountants that we ask to accost it, they are one of the big ten accounting firms in Australia, they gave it the tick off. Treasury has a difference of opinion. I mean, there are so many economists out there and all of them have different models, different data and different assumptions. The truth is putting all of that to one side, who do the Independents want to form a government - the failed government of the last three years or a new Coalition which has a good record in government for 11.5 years under the Howard prime ministership.

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Gee, the hiatus would mean... employers are hiring

Employers continued to hire at a rapid pace in August regardless of - and in some cases because of - the election, boosting internet job ads 2.8 per cent nationwide.

The Advantage index, made up of advertisements on three leading websites including The Sydney Morning Herald's My MyCareer shows job ads up 1.8 per cent in NSW led by a 9 per cent surge in legal jobs.

"When the economy is performing poorly, law firms can be ruthless in culling numbers," said Advantage director Robert Olivier. "For the most part they retained graduates during the crisis, but operated at leaner senior associate and partner levels. They are now scrambling to hire experienced professionals to fill the gap."

Construction and engineering hiring climbed 9 per cent and 4 per cent during the month with hospitality, education and finance hiring up 3 per cent. Healthcare, clerical and media jobs lost ground.

Economists surveyed by Reuters expect Thursday's employment figures to show an extra 29,000 Australians gained work in August, an acceleration in the rate of job creation to 1000 per day.

The ANZ's Andrew McManus expects even faster job creation saying Thursday's figure is "set to be a whopper" on account of the election itself...

"We know the Australian Electoral Commission aimed to recruit more than 70,000 people to work as polling officials on 21 August. While many would already hold other jobs and thus already be counted in the employment figures there are others such as students and retirees who will be counted," he said.

"We think we could see employment growth of around 50,000 in August, enough to nudge the unemployment rate down from 5.3 to 5.2 per cent. But there will be payback in September as those jobs vanish."

Mr Olivier said the election hiatus had made employers unusually reluctant to hire permanently with advertisements for temporary or part-time positions outnumbering those full-time permanent jobs 2 to 1.

"They are hiring but they're hedging their bets. No doubt they will firm up their recruitment strategies when then there is a definite outcome,” he said.

Nationally mining and engineering are the fastest-growing employers boosting hiring 30 per cent over the past six months.

"Miners certainly haven't been holding back in anticipation of a tax on their profits," said Mr Olivier. "In fact, they have hit the employment button hard. Any suggestion that a mining tax could bring the sector undone when all the indicators confirm it is booming seems a bit self serving."

Western Australia has by far Australia's tightest labour market with job ads up 47 per cent over the year compared to 29 per cent in NSW and 27 per cent in Victoria.

A Bureau of Statistics survey on labour mobility finds workers tended to stay put during the downturn with a lower than usual 9 per cent changing jobs in the twelve months to February. Earlier surveys had recorded job turnover of 12 per cent.

Published in today's SMH and Age

Who's hiring?

NSW job ads, August

Legal + 9%
Construction + 9%
Engineering + 4%
Hospitality + 3%
Education +3%
Finance +3%
Accounting +2%
Trades - 2%
Healthcare - 9%
Clerical -11%
Media - 15%

Total + 1.80%

Monthly change, Advantage internet job advertisement index


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Fit to govern?

Here's an extract from Laura Tingle's forthright piece in Friday's Financial Review.

The whole thing is worth reading. Her arguments are persuasive:


"There are two possible
explanations for how an
opposition presenting itself as
an alternative government could end
up with an $11 billion hole in the
cost of its election commitments.

One is that they are liars, the other
is that they are clunkheads. Actually,
there is a third explanation: they are
liars and clunkheads.

But whatever the combination,
they are not fit to govern.

Going back to the federal election
in 1987, the cost of election promises
has always been hotly disputed.

Labor‘s chance of winning the
2004 election, for example, was
derailed by AMA claims that its
Medicare Gold policy would cost
$2.9 billion more than it said.

But what has occurred in
Canberra this week is in another
sphere altogether.

Treasury and the Department of
Finance, when finally given the
chance to scrutinise the Coalition's
policies, have not just found huge
discrepancies in the costings of
individual policies, but what can
onlybe described as a systematic
exercise in creative accounting.

The picture that emerges from the
econocrats' report is that the
opposition very purposely created a
dodgy set of numbers which were
never expected to withstand any
scrutiny and would require the
intervention of the Australian
Securities and Investments
Commission if it was a company.

The opposition simply hoped it
could bluff its way into office by
refusing to allow the figures to be
scrutinised before polling day...

Continued here, via subscription.


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How's this new parliament going to work?

Pretty well, I reckon.

Here's what is being negotiated right now between independents including Robb Oakeshott and the Labor and the Coalition.

Oakeshott and Windsor won't announce who they will support until both sides have signed up.

Some good bits:

- The Speaker won't vote and will be paired

- The Joint Parliamentary Committee on Public Accounts and Audit will be chaired by someone from the Opposition or an independent

- Question time answers will have to be short and relevant

- All controversial bills to be examined by a committee first

- All committee reports responded to in six months

Draft Parliamentary Reforms


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"Wilkie has said his offer wasn't a trap, but that doesn’t mean it wasn’t a test"

He his, after all, by profession an intelligence officer.

Grog's Gramut:

[The Coalition has no-one] to blame for Wilkie turning them down despite their offering $1b for a new hospital. Wilkie has said his offer was not a trap, but that doesn’t mean it wasn’t a test – one that Abbott failed.

When Wilkie put out his list, it was pretty well regarded by all sensible people as being a list that should not be agreed to. It smacked of ambit claim. And you always lose a bit of respect to people who agree to such claims.

For Joe Hockey to now suggest it was a bit of a double cross is just lame.

Back when I was in Year 6 my class was given test on road laws. Our teacher told us it wouldn’t count towards any grades, and so most of us took it all pretty lightly – I even gave a few incorrect answers just to be funny. And then once we had marked the test as a class (and all laughed at my joke answers), our teacher told us that the person who had scored the highest mark was now in the running to win a BMX. The class howled in protest that we didn’t know that was what the test was for. The teacher told us he had just said it wouldn’t count towards our grades, not that it wouldn’t count. It was our fault for treating the test lightly.

Similarly Abbott and Hockey want to howl in protest that they didn’t realise Wilkie was testing to see who could put forward the most economically responsible offer. Abbott assumed it was an auction. Just because Wilkie never said it wasn’t, didn’t mean it was.

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"Carefully modelled by NATSEM"?

In a further embarrassment for the Coalition over costings the National Centre for Economic Modelling at the University of Canberra distanced itself from claims it had helped model the policies.

"We never spoke to the Coalition," said NATSEM director Alan Duncan. "We did work for the Parliamentary Library that the Coalition may have asked for, but we had no relationship with the Coalition itself."

Tony Abbott and Coalition finance spokesman Andrew Robb had claimed their work had been "carefully modelled by NATSEM".


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Coalition costings: The inexcusable, the inexplicable...

The Coalition made four kinds of mistakes in its costings according to the Treasury; the understandable, the inexcusable, the inexplicable, and those resulting from a failure to comprehend the nature of the process.

Although concealed from the public at the time of the vote, the decision of Andrew Wilkie to go with Labor on the basis of the costings suggests they've come at a price.

The inexcusable:

According to Treasury the Coalition counted the interest to be saved on debt from selling Medibank Private, but not the dividends it would lose as a result of the sale. It's a bit like deciding to selling a rental property without noticing you will no longer be able to collect the rent.

Also inexcusable was double counting savings to be made by increasing the efficiency dividend, effectively double counting savings already factored into the Pharmaceutical Benefits Scheme, measuring the wrong time period when calculating money to be made from the parental leave levy, and failing to update its savings from abandoning the National Broadband Network to reflect the smaller amount actually spent.

All up they're worth $2.7 billion.

The inexplicable:

The Coalition announced spending from the Health and Hospitals Fund, the Education Investment Fund, the Building Australia Fund and the Nation Building Fund without apparently checking that there was enough free money in the funds. Treasury and Finance have examined what had already been allocated and found that adding on the Coalition's promises would more than empty the funds, pushing them $3.3 billion into the red.

The departments acknowledge that it may be possible to cancel or defer projects to make room for the $3.3 billion but says the Coalition provided no such details.

The nature of the process:

The Charter of Budget Honesty sets out guidelines for election costings, in order to make sure they are done on the same basis. One forbids the counting of proceeds from expected "second round effects" such as a saving on the dole from a jobs creation program. The Coalition counted such an effect because it says the National Centre for Economic Modelling told it its program would take 51,000 people off the dole. (NATSEM said yesterday it had in fact had no communication with the Coalition and would have only worked for it indirectly as part of a contract with the Parliamentary Library.)

It's the same with the accounting measure known as the Conservative Bias Allowance. Under the rules changing it doesn't change a thing. The Treasury says such an adjustment would not create "actual budgetary savings".

All up these are worth $3.5 billion.

And the understandable:

The Coalition used an interest rate of 5.5 per cent in calculating savings on debt replayments. Treasury says it should have used 4.9 per cent, the same as was used in the pre-election outlook. But Treasury never actually included the figure the outlook. Without a lot of digging the Coalition wouldn't have found it out.

Unless perhaps it took Treasury into its confidence early, as it might now believe it should have.


Published in today's SMH and Age


Treasury's analysis of the Coalition Costings






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China shuts down half its steel mills for a month and...

A regularly-scheduled shutdown of Chinese steel mills and the import of six Super Hornet aircraft took the edge of Australia's stellar trade performance in July leaving the nation with only the forth-best performance on record.

Australia's trade surplus narrowed from a record high of $3.4 billion to $1.9 billion after a 4.5 per slide in exports and a 1.6 per cent jump in imports.

But nearly all of the slide was brought about by what appears to have been a one-off partial shutdown in China's steel industry, with 40 per cent of mills apparently moved off-line for regular maintenance.

ANZ economist Andrew McManus said he believed that one single decision had caused a 77 per cent drop in hard coking coal exports to China...

"We expect a pick-up in coming months as recent figures suggest China's capacity cranked up in August to more normal levels," he said.

In the year to July Australia's trade surplus with China hit a record high of $11.1 billion. Just over a year earlier it had been zero. The trade surplus with India has also ballooned, more than doubling over two years to $14.4 billion.

At the same time trade with the US hit a new record low of 7.7 per cent. Two-way trade with China hit a fresh record high of 20.6 per cent over the year to July.

"Our result in July was below forecasts, but it should not be dismissed, especially given that even a $1.9 billion surplus is our fourth-biggest," said CommSec economist Savanth Sebastian.

Deutsche Bank economist Adam Boyton agreed, saying "that a $1.9 billion trade surplus can be described as softer than market in our view says more about the remarkable turnaround in Australia's trade balance since April than any sign of a weakening position."

"There have only been four broad phases of material trade surpluses since 1990: the Reserve Bank's gold sales in 1997, the Olympics in 2000 and Mining Boom Mark I and now Mining Boom Mark II."

"We are not alarmed by the relatively large monthly falls in exports of the bulk commodities in July, especially when set against the rises seen since April."

Imports were boosted by the one-off delivery of six Super Hornet aircraft to the Department of Defence, pushing so-called "other merchandise exports" up $477 million.

Consumption goods imports fell in July slipping 1.1 per cent after climbing 0.5 per cent in June.

Published in today's SMH and Age

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Time to ditch the ABC?

Follow the debate here.

And now, here.

Below the fold ABC boss Mark Scott (unintentionally) responds in a typically excellent address delivered in Melbourne Thursday night:

The Quest for Truth: Quality Journalism and a 21st Century ABC

The 2010 election campaign was the journalistic gift that just keeps on giving.

I had intended to draft these remarks once the result was known. But remembering that I was speaking at the Melbourne Writers' Festival rather than Improv Night at the Comedy Festival, I couldn't wait for the white smoke.

This election has changed how we think of „politics as usual‟ in this country. It has also triggered significant debate about the practice of political reporting.

And I can‟t let the opportunity of this speech go by without wading into these murky waters.

So let me make some muddied observations about the campaign and how it was handled by the fourth estate and then make some tentative suggestions about implications for the media and the nature of news coverage.

Then - following the proud traditions of these events - it will be time for questions, where you can tear into me. The toughest Senate Estimates sessions are merely training for encounters like this.

I want to break with the curmudgeons who talked about a boring election campaign, saved only by a thrilling election night and the epic drama that followed.

The long-standing, predictable narrative train of the election, pre-destined when the Government soared twenty points ahead in the polls, was derailed in the dead of a Canberra winter‟s night.

Now, for the first time since 1993, we had two new leaders in the top jobs fighting their first election. The most inexperienced Prime Minister to ever face an election. A dangerously honest Opposition Leader with – to use Annabel Crabb‟s memorable phrase – a truth parrot squawking on his shoulder. Polls in flux, strategies in disarray. An electorate polarised, idiosyncratic, unpredictable.

And important matters in play: the economy, the environment, national infrastructure. A nation at war.

Rare ingredients for journalists and journalism. A remarkable opportunity to use old tools and new tools to bring the story to the Australian people.

A few days into the campaign, the ABC launched its long-awaited 24-hour news channel. While Sky had been on air for 15 years and has increasingly focused on live events and reporting from Canberra, with ABC News 24 we created a news channel that was an option for all Australian homes, not just the 30% with pay-TV.

The mixed model of public and commercial news services has served Australia well for over sixty years – and will serve us well in the age of 24 hour news as well. Competition, despite the protestations of the monopolists, has been to the advantage of both audiences and practitioners. Sky, for example, greeted our arrival by winning more money from its owners and putting that to good use. They had a strong campaign - as did ABC News 24.

Modern campaigns are a political version of The Truman Show. Keep the channel on and you know what I mean.

He's on a bike. She's on a train. He's running with kids. She's eating a cake. He‟s making a speech.

She's holding a doorstop. He‟s looking cranky. She‟s looking tired. Where is he now? Why‟s she wearing that hat? She drinks Guinness. He drinks shandies!

If he had done it in week 2 rather than on the final day, Abbott‟s liking for a shandy made with light beer could have killed him in those Western Sydney marginals.

Campaigns always had these features. But now everyone can see it. Outsiders became insiders. And now we have the truncated news cycle: which advances stories and then responses and then generates further iterations throughout the day, rather than simply setting up the evening news and tomorrow‟s papers.

It exacerbates the phenomenon. The politicians always seem on. And we see now what only the journos once saw: the politicians are scripted – they say the same things over and over again. Less variation in response means fewer choices for journalists to report on something you don‟t want.

The old maxims taught to politicians apply more than ever:

“Just when you are sick of saying it, people are beginning to hear it for the first time”.

“Don‟t answer the question they ask, answer the question you wanted them to ask."

"Don't change the argument, change the audience."
And the journalists are shunted and controlled and frustrated and increasingly sick and tired.

It might be more controlled, there might be more events, things might be more closely scripted – but this is modern campaigning. It is just that we can all see it now, live, around the clock.

Every press conference, every speech, every photo op, and in the background, every nodding local candidate.

It may be refined, but it is not new. There have long been books written about this stuff: pioneered by Teddy White with The Making of the President 1960. But now we can all see how political campaigning is done – and like seeing the law or sausages being made - it‟s not always an edifying experience.

But it is important. The scrutiny, the performance under pressure, the way questions are answered and avoided, unexpected events are dealt with, managing the tiredness, the frustration, the disappointments – this is part of the political crucible our leaders must endure. Attention must be paid to this. There needs to be a bus, journalists need to be on it. Asking questions, waiting for the unexpected, watching it all and reporting back.

This was, after all, one of the great achievements of Tony Abbott in the campaign. The most mercurial of performers, disastrous in 2007, prone to erratic bursts, turning in such a disciplined performance.

After a shaky start, he reminded me of a marathon runner, clocking 5 minute miles, mile after mile. That consistency allowed people the opportunity to rethink him and what he might offer. Just as the lack of consistency from the Prime Minister, the articulated shift from the programmed to the real, caused people to rethink their view of her also.

Another great political classic of the past was The Boys on the Bus by Timothy Crouse – about the journalists covering the 1972 Presidential campaign.

Well now we know all about the 2010 bus. Journalists tweeting their frustrations, snap commentaries, collective fury. Live crosses back and forth – to the news channels, to local radio. The journalists add to the colour of the campaign.

Off the bus, senior journalists sit back, read, watch, review, dig and come to judgement. The field of reference is so limited on the bus it is hard to see the broader field - so many of the big guns simply don‟t climb on board.

What was significant here was how senior journalists would break stories – good old fashioned scoops – that would set another agenda for reporters to follow up on the bus – a different one from the one prepared by the parties for their daily policy announcement.

Chris Uhlmann on the young political staffer sitting in on top level defence meetings. Lenore Taylor and her scoop on Treasury‟s costings of the Coalition‟s proposals. Laurie Oakes on the Prime Minister‟s reluctance to embrace parental leave. Phillip Adams, at ten o‟clock at night on Radio National, getting the former Prime Minister to break his silence. Stories that dominated every press conference for days after – reporters on the road following up the lead that every editor wanted to advance.

And while there has been some discussion over whether there was an over fixation on these issues, I would simply argue that at any time, in any campaign, they are great scoops – delivered the way any great journalist delivers a scoop: authoritatively, mysteriously. A reflection of experience, credibility and contacts cultivated for just this moment.

I will come back to policy discussion shortly, but I want to add that this campaign did feature great, substantive journalism, and genuine investigative energy. Full hours of radio devoted on RN‟s Background Briefing, presciently, to the crisis in rural Australia and the national broadband network. A stunning undercover investigative piece on Four Corners about people-smuggling and then again, a compelling case study on mental health issues based in a regional city.

The detailed stuff was there, where we always had found it in the past – particularly in long-form news and current affairs. And it is not as though policies were not debated – there were numerous occasions – at the Press Club and elsewhere – where Ministers and their shadows, senior campaign spokespeople or candidates had the opportunity to engage around policy differences.

And as has been the case for nearly 15 years now, any candidate who seeks the top office had to endure cross-examination by Kerry O‟Brien. This time, three interviews each – moments when the whole campaign seemed to come to a halt while the questions were placed and answered. And then afterwards – an assessment of the impact.

This campaign offered a depth and richness through online coverage that was never before available.

Certainly at the ABC. We‟ve never had the chance to offer as many different perspectives, as many different policy and political insights, as we were able to through our website, The Drum.

One of the joys of online is that you have space. Space to run details on every candidate in every seat on Antony Green‟s election pages. Pendulums and calculators and demographic analysis. Detailed policy briefings. Press conferences available in full. Debates. Archival material. All there for anyone who is interested, anyone who wants it.

I remember being delighted when Annabel Crabb wrote a story for The Drum trying to explain what it is like following these candidates. A storm erupted about the behaviour of the journalistic pack, now visible for all to see. She wrote a piece, and in it, noted her surprised realisation that she has already passed the 2,500 word mark. Virtually an impossibility in print for a weekday turnaround piece.

More words than half a 30 minute news bulletin. But the space is there online to tell the story properly.

I do think one of the achievements of this campaign was the deconstruction of the political process for all to see. Look at Gruen Nation. Remarkable audiences, being educated about the dark arts of political communication, the construction of crafted messages, the execution of the smear, the dog whistle, the earworm jingle. We laughed and we learned and – by the last week of the campaign when the advertising barrage was remorseless – we were all wiser.

But interestingly, I think all these features, culminating in the most comprehensive and exhaustive campaign coverage ever – do not capture its single most salient aspect – the voices of the public being heard more than ever before.

The first example is through blogs and the Twitter traffic. Half way through the campaign, the ABC Executive met on a Monday morning and discussed the weekend blog by the Canberra public servant, writing under the tag Grog‟s Gamut. It was a lacerating critique of the journalists following the candidates, their obsession with transient matters, the political scandal of the day. He met a chorus of praise and support, triggering a barrage of criticism of campaign coverage.

I think there is quite a bit of beard-stroking on this issue. There will be big political stories and they often have important implications – like how united or divided a party is – or how seriously they treat matters of national security. Leaders must be questioned on these issues.

And often it is hard to ask nuanced questions about a policy that is only delivered in press release form to your hands at the beginning of the press conference, if at all. In fact, often the leaders only want you to ask questions on their policy of the day, on their terms, without allowing you to dig – avoiding the news stories and deflecting other issues for another occasion.

You need both of course. The journalists on the bus firing questions, the team back doing the digging, taking paths away from the mainstream. So that we don't just get more and more about less and less.

One of the questions of this campaign is whether we took advantage of the increased capacity to create and deliver content using digital media to provide the breadth and depth of coverage that was possible. And if we did - whether we really helped interested voters to find it.

There has been some criticism of journalists treating the election as a horse race and treating every poll, every press conference, every wrinkle on a story as a chance to slash odds, fine-tune predictions and call the result.

It reminds me of when, as a newspaper excutive, I met The Sydney Morning Herald's famed rugby analyst, Sprio Zavos, outside the final of the 2003 World Cup. "Who is going to win?," I asked him. "I don't know Mark," he replied. "That's why they're playing the game."

We don't want only horse race journalism. But the result matters. As does the path that was taken to get there. Polls may only be a snapshot in time - a theoretical moment on the way to a real outcome. But polls and campaign ups and downs do have an impact: tactics change, new policies emerge and old ones are dead, buried, cremated because of polls. Polls cost a Prime Minister his job this year.

And the race isn't only held on election day - it is held day in, day out, through the campaign and in the lead up to voting and counting. Like the Tour De France, the final sprint into Paris is not where the race is usually won. It is a multi-week epic, slogging through the hills in the middle stages, going day after day.

And the person who emerges from those mountains, wearing the yellow jersey towards the end, usually takes the prize.
The parallel might break down if you tried to compare the views you have across the French countryside to those within the Rooty Hill RSL, but you get my point.

At the ABC, we identified that the dynamic political news was crowding out proper reporting of policy initiatives in some news bulletins – and that we needed to allocate more time to reporting some of these issues properly. We adjusted our strategy as we listened to critics, our audiences - and critiqued our own coverage. Politics and policy are not binary choices. We need to do both.

The contributions of bloggers – the constant feedback and commentary of thousands though the #ausvotes stream on Twitter – were watched and considered by every mainstream media editor. And we could see – the impact made by some bloggers was every bit as great as that made by other mainstream professional journalists.

And through Twitter, the „people formerly known as the audience‟ - to use Jay Rosen‟s phrase - could become real participants. Firing in questions, challenging journalists, finding facts and delivering them to those on the road. Part of the conversation, not simply observers. As Grog's Gamut wrote last week for The Drum:

"Twitter and the mass of amateur blogs contain many smart people who for some bizarre reason enjoy writing about policy....the media should not scorn these people, they should feed off them for ideas and research (properly acknowledged of course)."

The blogosphere is no place for the faint-hearted. You know that by reading comments on stories – and they are the ones that got through the moderation process. There is no filter on Twitter. And I expect there will now always be savagery in the criticism of much mainstream media performance, just as most weeks there is robust criticism of the professionals who run out onto sporting fields or those who get elected to office.

What is important, though, is to find the signal through the noise. There was some significance in the signal that could be heard from those writing and commentating on campaign coverage over the five weeks.

And of course, we had clearly demonstrated in the campaign that the people formerly known as the audience knew how to ask pretty good questions. Questions that were funny, full of emotion, questions fuelled by rage or fear, uncertainty or contempt.

The audiences flocked to Q&A to see the leaders questioned by real people. The crowds at Rooty Hill and the Broncos showed to many in the media cocoon precisely the issues that drove people to make the decisions they made in the polling booth.

And by getting out to find the voter‟s voice, through a range of people, we got a sense of what was really going on. I thought the work of the AM team, criss-crossing the country, talking to people in their homes and at work – helped us all to understand the country a little better.

Much of AM's time was spent in regional areas. During the campaign, the program addressed issues the whole country was soon to hear much more of, once the empowered Independent Members of Parliament strode in from the bush and grabbed the nation‟s attention.

It was quite a campaign.

Some of the criticism I understand. We would all have liked more detailed policy engagement by the candidates. Have them a little less scripted, offering more unguarded moments of honest engagement around complex, substantive issues. Some issues were under reported. Some important questions were not asked, some were not answered.

I am not going to defend every interview or press conference. But having come from print into broadcasting can I just say there is nothing tougher than a live interview: no second takes, no re-writes, no sub-editors, no time for reflection or collaborative discussion – just the moment and what you can make of it, given what is being presented to you from across the table.

You can only deal with what you have – and there were two main candidates marching to a plan, trying not to be deflected from it. We still need to do better in reporting the campaign and the politics, while not simply dancing to a tune set by party strategists and the pressing story of the moment.

But I do think it was a great campaign, with an amazing result.

What does all this mean for journalism and our quest for truth? And are there implications for the ABC?

A challenge for media organisations is to think about what is compelling in this era of global content, of endless archives and long tails, of generic content and time shifting and the breakdown of appointment viewing.

In this era - live matters. Events matter. Sport. The final of Masterchef. News.

In this election, audiences were huge. On ABC News 24 they were immediately much larger than we expected. Enormous numbers for Gruen and Chaser, for 7pm News and in 7.30 Reportland. Over 35,000 tweets in an hour for Q&A. It was a compelling media product - and that is good news for journalism. When the story matters, the news counts.

Now there are challenges with that - how do you cut through? How do you stand out? Enter Mark Latham.

I look at Nine with amazement. A reported $10,000 for Latham, a million dollars publicity, reasonable ratings – and - Laurie Oakes enhances his reputation by attacking it all as a farce.

That's showbiz.

What isn't so good is how everyone else gave the stunt so much oxygen. The Taylor, Oakes and Uhlmann leaks were real news, Latham was the ultimate pseudo-event and the way every news outlet gave it oxygen was a low point.
There is also evidence that money is not all that matters. The election night ratings were interesting.

The expertise of the ABC, with our investment in research and experience over time attracted a much larger audience than the vast extravaganzas on the commercial networks. The audience can tell the difference between news and showbiz - and they want each in due season.

I read the speeches of Kim Williams and John Hartigan gave at the PANPA newspaper industry conference last week with interest. Both spoke with great enthusiasm about the opportunities of new technology for journalism – and there is much they say with which I am in heated agreement.

But – checking my Kevlar vest – I would like to make one observation about what a current trend might mean for future campaigning and journalism.

I am acutely aware of the pressures facing commercial media organisations in their pursuit of a viable business model. And I have always maintained some media companies can and will be able to devise strategies to deliver targeted, value-added material that audiences are willing to pay for.

A diminution of competition is simply not in the public interest. As I said earlier, Australia‟s mix of commercial and public news services has worked well for over sixty years. We will still need that diversity in the digital age, and we‟ll find a way to ensure it. The way forward is not, however, over the dead bodies of the public broadcasters.

What this election has clearly highlighted and foreshadowed is that some of the proposed charging models bring with them some very big risks.

Tony Abbott‟s words on the live Rooty Hill debate were interesting. He thought it was a great event; he was sorry so few people saw it. The ratings showed fewer than 100,000 people watching – compared to more than 3 million who saw the leaders‟ debate.

Of course, this is because it was behind a pay wall and designed for a pay-TV audience with hours to fill in a schedule. Sky argued at the time it was a television program not a news event, and denied anyone else live access.

Reacting to the criticism, the organisers of the identical format in Brisbane a few days later suddenly decreed it to be a news event, not a television program, and made it available to all.

The lesson was obvious: a pay wall slashes your potential audience.

We can see the impact this has in the field of print.

Laura Tingle is probably the country's finest writer when it comes to sophisticated political analysis. But I would argue that far from dominating the conversation, too often Laura's fine words disappear from view, locked up behind the Fin's expensive and impenetrable pay walls.

It is a classic example of the link economy at work–the value comes from links that enable content to spread through the community. Through its dissemination the work garners comments and power and, in the end, is more highly prized. Unfortunately with Tingle – unless you buy the paper or pay very significant amounts for an online subscription – much of the potential audience misses out.

No links, no tweets, few comments, little blogging response, no emailing the online reference. And as a result, the presence and impact of the work is starkly reduced.

I know the arguments about content needing a price and audiences needing to pay. I don‟t dispute this argument tonight.

I am simply saying that if your model means that your best content is hidden away, rather than spread widely around, you have removed yourself from the conversation - at a time when the media is all about the conversation.

Setting an agenda, driving a response, engaging with your audience leads you to the pay model that showcases your best talent and drives the habit of readership – rather than locking your talent away.

Of course, this is what the New York Times discovered when they made their first attempt at the pay wall. Dowd, Freidman, Krugman – the journalistic all-stars, disappeared. So many people stopped reading them, sharing them, talking about them.

And it was the journalists who demanded the model be changed.

If the miracle happens, and the emergent Government goes full term, it remains to be seen what will happen at the next election. What if The Australian is behind a paywall, or The Sydney Morning Herald or The Age? Will their impact diminish? Does the conversation go on without them?
These things we don‟t know, but they are worth considering and debating.

For the moment though, there is still life in newspapers and an enraged or crusading newspaper editor can still attract a politician‟s attention. But what
if, in future, your journalism is not available to be widely shared and talked about – will that politician still pay attention?

Within half an hour of Tony Abbott saying he wanted another town hall meeting in Brisbane, the ABC had started talking with the parties, booking a hall, collecting an audience. Our real focus was on snaring a final debate, but we were happy to have a town hall meeting as part of it.

In discussion with the campaign directors, it was clear to me that they wanted the reach of free to air television and were happy to use ABC talent to host.

But finally, there was no way either was going to upset a monopoly Murdoch newspaper in the pivotal swing state three days before polling day. The thought of what The Courier-Mail would do to the candidate who didn't show to their sponsored event was chilling to contemplate. The Prime Minister got a taste anyway from The Daily Telegraph on election eve.

It said to me, conclusively, that the system of debates and town hall meetings should not be in the hands of political parties – nor media organisations. The events, the venues, the panels, the hosts, should be set by a totally independent panel and commonly understood, a year before the date of the election.

I agree with John Hartigan’s assessment that newspapers need to evolve to deliver news content 24 hours a day, to audiences in print and on a range of devices. This has been the key to our thinking at the ABC. It has led to a million iPhone and 100,000 iPad ABC apps being downloaded - delivering the best of our websites, the latest news and now live streaming ABC News 24.

And I would tentatively suggest you see some signs of that already in this campaign. I would argue when the race was on, it was a digital event – for all media organisations – broadcasters and publishers.

Breaking news live, instant feedback and response, the power of the visuals – immediately accessible. People were not waiting for tomorrow morning to find out what happened – and nor were they waiting for the evening news.

It places demands on journalists, but it is interesting to note how many of our best are now genuinely cross-platform. Journalists want to be in the midst of the conversation. They are keen to report, appear on radio and television and write and tweet and connect with that audience.

Laurie Oakes‟ tweets, like everything else he does, are masterful. Uhlmann is a wonderful writer. Fran Kelly can talk about her important Malcolm Fraser interview while appearing on The Drum. These cross-platform appearances reinforce brands, cross-promote and build the skills and personal brand of the journalist – all positive things I would argue.

The ABC hosted Jay Rosen for a day while he was recently in Australia. He is always good value on the role of social media and the nature of political
journalism - in some ways quite a contrarian – and full of encouragement about things we could do better.

He had two suggestions for the ABC, which we are exploring and will likely pursue. The first is to provide more background, detail and context for members of our audience who are coming fresh to complex stories: like an ETS, or the NBN, or the operations of a hung parliament. The ABC has a role as a patient explainer of these complexities, to help people catch up with the conversation, understand what is being said and to make a contribution if they wish. It plays nicely to our Charter role to provide an educational service to the community. It makes policy more accessible and can bring important issues into the mainstream.

And Rosen said we should plan more thoroughly and consult more widely around what national issues are at play in an election campaign. Long before the campaign starts, talk with the community, engage with experts, undertake polling, think about national challenges: the immediate and the far-reaching.

And then articulate that agenda – let the political leaders know that we will be doing stories on these things, asking questions, seeking policy responses and political insights to them. And if the politicians will not engage, devote space to these issues anyway, using experts, finding divergent voices, doing real investigations.

It would not be the ABC‟s agenda, it would be an agenda framed by the audiences we engage with – and the voters who fund us – from all around the nation.

Perhaps it would at least be a way of countering tightly scripted politicians, who want policy discussions only on the day and terms they – not the public or the journalists – have set.

And it might help us from reaching the end of a fascinating campaign with such important issues in play and saturation coverage only to find that somehow, a significant number of people were left wanting more. That their questions were left unasked. Issues still avoided. That there was too much noise and not enough light.

But for all that, a remarkable campaign.

And now, a result would be nice.

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Thursday Column: Could Costingsgate widen?

There's more than the outcome of an election hanging on the costing exercise now under way in the Treasury and Finance departments.

There’s also the future of two Perth-based accountants, the reputation of the Institute of Chartered Accountants, the public position of at least one high-profile academic institution, and the future of the entire auditing industry and the consultants who hang off it lending the name of auditors to unaudited and unverified political documents.

Let’s go back 10 days or so before the election when Opposition Leader Tony Abbott started hinting he might not submit his policies for costing by Treasury and Finance in accordance with the Charter of Budget Honesty but might instead have them ‘‘independently and authoritatively costed by a third party’’.

We now know the third party was the Perth office of a chain of independently owned accounting firms that had been quietly working with the Coalition since mid-June, back when Kevin Rudd was prime minister.

WHK Horwath specialises in small and mid-size companies— in the words on its website, those ‘‘on a path of growth’’. As far as is known, it had no experience of modelling economy-wide tax and spending changes, the sort of work done with distinction by Australia’s Treasury and several private firms comprised of former Treasury staff in Canberra.

What it was asked to do was murky at the time and has become more murky since...

Shadow treasurer Joe Hockey believed he had had an audit. ‘‘ We have the fifth-biggest accounting firm in Australia auditing our books and certifying in law that our numbers are accurate,’’ he told ABC TV the morning after the numbers were released. ‘‘ They have certified our numbers, based on all the information we have provided them. They have legal obligations and legal risks.’’

On ABC radio he added: ‘‘ You know what? If the fifth-biggest accounting firm in Australia signs off on our numbers, it is a brave person to start saying there are accounting tricks. I tell you, it is audited. This is an audited statement.’’

That night, opposition finance spokesman Andrew Robb drew the Perth office of WHK Horwath even more tightly in the world of legal responsibility, saying its work was better than Treasury’s because, ‘‘if they make a mistake with the auditing of accounts for companies or prospectuses or mislead, they are at risk of being punished and going to jail, not Treasury’’.

But on the face of it, there seemed to be a difference between what the opposition claimed it was getting and what it actually got. Geoff Kidd and Cyrus Patell had signed a onepage letter merely saying that they had reviewed the Coalition’s costing estimates and that ‘‘based on the assumptions provided’’, they were satisfied they had been accurately prepared and could be funded from the 2010-11 budget.

In other words, it appears that the principals added up the figures rather than checked their accuracy. And there the matter might have rested.

But in an interview with The Age the day after his one-page letter was released, Kidd seemed to add to the ambiguity by passing up the opportunity to confirm whether the work was or was not an audit as Hockey said.

‘‘I’m not responsible for what Mr Hockey says, our report stands alone,’’ was the closest Kidd came to suggesting that his paymaster had been stretching the truth.

After a complaint from Sydney University accountancy professor Bob Walker, the Institute of Chartered Accountants began an investigation.

Its code of ethics requires members to ‘‘make clients, employers or other users of their services aware of limitations inherent in the services’’.

The standard on the compilation of financial reports suggests the inclusion of an explicit statement in reports that ‘‘no audit or review has been performed and accordingly no assurance is expressed’’. WHK Howarth has declined to comment in relation to the investigation.

After the election, Robb drew the firm in tighter, telling the ABC it had ‘‘looked at the veracity of our assumptions’’.

Now that Treasury and Finance are also looking at the veracity of the assumptions (as part of the deal with the independents), the firm looks to have been unwittingly exposed to analysis not contemplated when it took on the assignment.

The plan was that no one outside of WHK Horwath and the Coalition would see the assumptions.

Which is odd when you think about it, because if the Treasury couldn’t see the assumptions and the electorate couldn’t see the assumptions, how could the first be expected to form a view as to whether it could implement the policies and how could the second forma view on whether it should vote for them?

None of this was meant to matter. After the election the policies and the assumptions behind the costings were to be old news, shredded if the Coalition lost, and superseded by events (most probably the discovery of a ‘‘black hole’’) if the Coalition won.

The University of Canberra is exposed to scrutiny as well. Its National Centre for Economic Modelling apparently also modelled some of the more tricky Coalition costings, or at least that’s what Robb says. The centre itself has provided no details and released no documents, not even a Horwath-style one-page letter. Like Horwath, it has allowed its name and reputation to be used by the Coalition without releasing work that would make it accountable.

Published in today's Age

UPDATE: "We never spoke to the Coalition" - NATSEM

Statement from the Institute of Chartered Accountants in Australia

26 August 2010

The Institute of Chartered Accountants in Australia (the Institute) has received a complaint about a matter that involves publicly raised allegations regarding the conduct of two members with accountancy firm, WHK Horwath, Perth.

The Institute has commenced an investigation which involves an opportunity for the members to respond to the allegations.


Professional Conduct Process

As a professional organisation, membership of the Institute is based on meeting the highest standards of professional conduct and performance. The Institute treats matters that bring the profession into disrepute very seriously.

Issues arising from members’ conduct are investigated under the Institute’s By-laws and relevant cases are referred to the Professional Conduct Tribunal for determination.

Based on legal advice, specific commentary cannot be provided while matters are considered for investigation or for the duration of any subsequent Tribunal hearings. All information relating to complaints lodged with the Institute and produced during the investigation process is confidential.

To ensure the privilege of professional membership is upheld the Professional Conduct Tribunal has the power to impose sanctions on individual members who act inappropriately.

The ultimate sanction that can be imposed is exclusion from membership and withdrawal of the right to use the Chartered Accountants designation. Other sanctions include suspension, reprimand, fines or the requirement to undertake additional professional training.

For further information about the Institute's disciplinary process please visit http://www.charteredaccountants.com.au/A116936841

Auditing Standard 804

Section .02: In an engagement to audit prospective financial information, the auditor should obtain sufficient appropriate audit evidence as to whether:

. management's best-estimate assumptions on which the prospective financial information is based are reasonable for the preparation of the prospective financial information;

. the prospective financial information is properly prepared on the basis of the assumptions;

. the prospective financial information is properly presented and all material assumptions are adequately disclosed, including a clear indication as to whether they are best-estimate assumptions or hypothetical assumptions; and

. the prospective financial information is prepared on a consistent basis with historical financial reports, using appropriate accounting principles.

APES 110 Code of Ethics for Professional Accountants

Section 130.6: Where appropriate, a Member should make Clients, employers or other users of their services aware of limitations inherent in the services to avoid the misinterpretation of an expression of opinion as an assertion of fact.



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Meantime the economy seems to be traveling just fine... or is it?

Sydney Morning Herald

See Colebatch, below

The government is claiming vindication after a surprise jump in economic growth delivered Australia one of the strongest growth rates in the developed world, exceeding those in the US, the UK and most of Europe.

At an annual rate of 3.3 per cent, boosted by a 1.2 per cent jump in the June quarter and revisions to earlier quarters Australia's growth rate is back to its long-term average and exceeded among developed economies only by nations such as Canada and Germany that are recovering from recessions.

"Finance ministers elsewhere and prime ministers elsewhere would kill for a set of outcomes such as these," declared Treasurer Wayne Swan. "This is an endorsement of what we've has done to support the economy."

The figures show consumer spending and private construction growing strongly to take the place of government spending which has plateaued after soaring 39 per cent in the past year to fund stimulus building programs.

"Key parts of the Australian economic story now look set in concrete," said Commonwealth Bank economist Michael Blythe. "The income flow from the commodity boom is moving out of forecasts and into the real world... The evidence includes the spike in company profits, rising wages and trade surpluses."

Western Australia leads the states in spending with final demand up an inflation-adjusted 8 per cent in the year to June, a growth rate exceeded only in the Australian Capital Territory where demand climbed 11 per cent.

NSW inflation-adjusted spending climbed 5.7 per cent, a touch below Victoria's 6 per cent. At the bottom of the pack was Queensland where real spending has climbed just 1.2 per cent over the year.

Much of the nationwide boost in spending was on motor vehicles, assisted by the January cut in tariffs and delayed deliveries of cars ordered using the business investment tax break that expired in December. Real spending on cars climbed 22 per cent, real spending on travel 9 per cent and spending on shoes 13 per cent.

"It’s fantistic. The economy is as strong as an ox, said Macquarie Group economist Brian Redican. "It's also well balanced with household consumption much stronger than anyone thought. From here, business investment should pick up the baton and drive growth for the next 12 months."

Business investment slipped 0.2 per cent % in the quarter with spikes in Western Australia and Queensland failing to offset falls elsewhere.

Treasurer Wayne Swan used the decline to argue it would be dangerous to cut short the Building the Education program which was in any event winding down.

"Around 97 per cent of the4 projects are currently under construction. You would be stopping projects which are currently employing people, keeping the doors of small businesses open and providing a pipeline of investment," he said.

"If it hadn't been for the BER we would have seen many more businesses hit the wall and many more people unemployed. Private demand fell off a cliff. We had to replace it with public investment, and now that is gradually being withdrawn."

Opposition Leader Tony Abbott said 5 billion of stimulus money remained to be spent and said it was important to end waste.

"I am not agaisnt spending on school infrastructure," he said. "But it has to be effective spending."

Mining profits were up about two-thirds in the quarter, driving up total profits 11 per cent to close to an all-time high.

Inflation remained subdued with prices climbing 2.7 per cent over the year.

Published in today's SMH and Age

COLEBATCH:

BEWARE of getting what you wish for. The June-quarter GDP figures suggest Australia has entered the mother of all mining booms and, if so, a lot of today's businesses will not be around when it ends.

The 1.2 per cent growth in the June quarter, and 3.3 per cent over the year, sent the dollar back over 90¢ and had economists forecasting rate rises, as the Reserve Bank tries to rein in the rest of the economy to make room for the mining boom.

Wouldn't it make more sense to rein in the mining boom to make room for the rest of the economy? Yes, but we don't do things that way here.

The figures will vindicate the Reserve's confidence that it has read the economy right, and that the danger ahead is inflation. It might wait for more inflation data before moving rates up on Melbourne Cup Day, but the rise could be the first of several.

Growth is good, but what leaps out of these figures is that we have lopsided growth, with many areas hurting.

The big surprise was consumer spending booming in the June quarter, soaring 1.6 per cent, according to the Bureau of Statistics, roughly as much as it grew in 2008-09.

Retail sales are still flat. The bureau said we've been spending on things you don't buy in stores: entertainment and gambling, new cars, financial services, healthcare and transport (plane trips).

These areas make up just a third of consumer spending, yet they generated 84 per cent of spending growth in the quarter. Add in rent, and these six areas made up 90 per cent of spending growth in the year to June. Lopsided growth.

Now take industry. Half the growth in the June quarter was in just three sectors: construction, mining and hiring professional consultants. Lopsided growth.

Look at incomes. You will find corporate profits took an incredible 57 per cent of growth in income over the year to June. Small business took 11 per cent, and wages and salaries just 32 per cent. Workers' share of national income is now the lowest for 45 years. Lopsided growth.

It is not enough for governments to tell us they feel the pain of those doing it hard. They need the courage to change the way our dollars are shared.

A second surprise came from state data. It tells you that in the year to June, quarterly spending grew by $1.16 billion in the ACT but just $953 million in Queensland.

Queensland's population is growing at 2.4 per cent, but spending at 1.6 per cent. These figures suggest that at least until March, its economy was in deep recession.

They help explain why Labor lost nine seats there.

A third surprise. Our savings are shrinking. In 2009-10, national net savings dropped to 5 per cent of GDP, a nine-year low. Even household savings dipped to 1.4 per cent in the June quarter. It's not a good sign for our ability to finance the mining boom ahead.

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5206.0

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Coalition costings - billions of problems

Peter's post:

Coalition Costings



From Abbott just now:

COALITION POLICY COSTINGS

The Coalition maintains that our election policies will deliver a Budget bottom line that is improved by more than $11 billion over the forward estimates.

The Departments of Treasury and Finance have confirmed to the Coalition that, in their view, 95 to 96 per cent of Coalition policy costings were correct.

These costings cover 304 savings and spending measures, totalling more that $90 billion.

Even under the worst case scenario considered by Treasury and Finance, our bottom line will be $7 billion better than Labor’s over the forward estimates.

The Coalition has carefully considered the worst case $4 billion in adjustments identified by Treasury and Finance and we remain confident that we will deliver on our commitments.

The Treasury and Finance assessment of these costings notes that: “There were no significant differences between the costings for the vast majority of policy proposals. Several of the differences in the Coalition’s and Departments’ costings reflect different models and data.”

Of the variations identified by Treasury and Finance, we make the following observations.

In relation to the Coalition’s plan to save $2.5 billion from a reduction in the conservative bias allowance in the contingency reserve, Treasury and Finance have confirmed that this is a decision for government.

Their analysis states that: “Since budget documents are published by authority of the government of the day, it would be open for an incoming government to decide to adjust the Conservative Bias Allowance”.

This is what an incoming Coalition government will do and it can be responsibly achieved through prudent economic management.

The Coalition identified $3.3 billion in expenditure redirected from projects that may well be committed but not contracted from the Health and Hospital Fund, Education Investment Fund and Building Australia Fund.

The secretaries have advised the Coalition that it would be possible to cancel or defer non-contracted projects to make way for the bulk of this spending ($2.8 billion).We are confident that the remaining $500 million can be saved from uncontracted projects in the $30 billion Nation Building/Auslink fund. This is exactly the approach adopted by the incoming Rudd-Gillard Government in 2007.

In relation to the Coalition employment participation programs, Treasury and Finance have assumed that these measures would not create a single new job.

At time of low unemployment, yet strong demand in various sectors, it is unreasonable to assume that the Coalition’s policies, which increase the incentives for the unemployed to find work and employers to take on staff, would have no positive effect on employment.

The fiscal impacts of the Coalition’s participation policies were modelled independently by NATSEM, Australia’s foremost social policy modelling consultant. The NATSEM showed that even on the most conservative assumptions the Coalition’s policies would lead to significant budget savings, far greater than those estimated by the Coalition.

1 September 2010

ALP Costings




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Just out - Our commodity prices have hit an-all time high

From the Reserve Bank, 4.30 pm:

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Okay, so we are being showered in money, but maybe things aren't booming.

Shane Wright in the West Australian:

The last mining boom helped lift the entire WA economy.

But there are signs that mining boom mark II may be different, with a growing threat that key parts of the economy – and the people employed in those sectors – could be left behind.

Since several major elements of the Federal Government’s stimulus program ended with the new year and the Reserve Bank lifted interest rates the WA economy has shown signs of strain.

These are not evident in the mining sector. Even at the height of the mining tax brouhaha, mining investment plans soared to record highs while mining profits reached an all-time record of $25 billion.

But those strains are clearly evident in the rest of the economy.

House prices, after lifting about five percent in second half of 2009, have improved just 0.3 percent since January, while unit prices are down one percent.

New home sales are at a six year low while dwelling approvals have fallen off a cliff, down 25 percent since February.

In the retail sector the story is no better....

Sales of household goods have fallen by 7.1 percent since January, clothing sales are down by 8.6 percent, hardware and garden supplies are off by 15.9 percent and furniture covering purchases have tumbled by 6.6 percent.

Even food sales, which should be rising in line with population growth, have gone nowhere.

If not for all the cash flowing through the mining sector these figures would suggest the WA economy was not travelling well.

The lack of activity outside of mining may be a hangover from the excesses leading up to the global financial crisis and the rise, as RBA governor Glenn Stevens has described, of the new "conservative consumer".

The big mortgage, the personal loans for a 20 foot runabout or a backyard pool, may have caught up to West Australians who are just paying off a few loans.

If not, then there are some problems ahead for WA business, the WA Government and who ever ends up with the keys to the Lodge.

Read more >>

It's raining money - like never, ever before.

Just as well, with the stimulus ending. GDP up 1.2%, 3.3% annual

In the three months to June:

. Record $74 billion export income
. Largest trade surplus since 1970s
. Decade-low current account deficit

In July:

. Spending at cafés & restaurants up 8.5%
. Talk of "MasterChef effect"
. Building approvals up 2.3%
. House prices up 0.4%

RP Data, ABS 5302.0, ABS 8501.0, ABS 8731.0


A record surge of mining revenue has all but eliminated Australia's current account deficit, long regarded as our biggest economic problem.

As high as $16 billion in the March quarter, Australia's current account deficit shrank to $5.6 billion in the June quarter, or just 1.7 per cent of GDP, the third lowest result in 30 years and the lowest in about ten.

A measure of the amount of money leaving the nation each quarter over and above that coming in, it climbed as high as 6 per cent of GDP in the the 1980's prompting the then Treasurer Paul Keating to observe that "the world doesn't owe us a living" and that unless we made changes we would become a "banana republic".

Australia's trade balance has moved from "negative" where spending on imports exceeded income from exports to strongly positive, with a record high $74 billion in export income exceeding imports by $6.5 billion, the widest margin since the 1970s.

Export prices jumped 14 per cent with metal ore and mineral prices up 39 per cent and coal prices up 25 per cent. Export volumes surged 12 per cent...

"This is a much bigger rise in volumes than what we saw during the 2006-08 commodity price boom," said ANZ economist Katie Dean. "Rural exports are also climbing with wheat prices hitting record highs."

Separately released retail figures show consumers further opening their wallets in July, cautiously in most cases with overall spending up a fraction of a per cent, but dramatically at restaurants and cafés where the figures show spending climbing 8.5 per cent.

"It could be a Masterchef effect", said Deutsche Bank economist Adam Boyton. "The jump clear across all states. It is consistent with reports from late July that restaurants had benefited from a surge in interest stemming from the TV program. Media reports suggest that the final of this show drew just under four million viewers, making it Australia’s single most popular non-sport show since ratings began."

"While it is very difficult to isolate the true effect of the show, a positive influence on 'restaurant-quality' dining makes some sense."

Acting Treasurer Wayne Swan said the news showed "despite increased global uncertainty, Australia's economy is strong and continues to benefit from the sound management that saw us fight off recession."

Asked at a Sydney seminar whether a second "double dip" global recession was possible Reserve Bank Assistant Governor Guy Debelle said, "I think it's a risk," adding it was
"a somewhat unquantifiable risk."

Other news released yesterday showed building approvals up for the first time in four months, climbing 2.3 per cnet in July and RP Data measure of house prices relatively flat, increasing by just 0.4 per cent.

Economic growth figures to be released today are expected to show the economy growing strongly by around 1 per cent in the June quarter after analysts lifted their forecasts in response to the trade figures.

Published in today's SMH and Age





Reference: "It's Raining Men" by Paul Jabara and Paul Shaffer, 1979


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