There are more than two Australias: Victoria heads south

A stark divide has opened up in business conditions with Western Australia way out in front, every other state well back, and Victoria at the bottom of the pack.

The February NAB survey shows conditions improving everywhere but Victoria where they slipped to the lowest level on the mainland.

Western Australia now boasts a business conditions index of +13 meaning positive reports from businesses far outweigh negative reports.

In second place, way behind, is NSW with an index of +3, meaning positive responses only just outweigh negative responses. South Australia and Queensland each record near-neutral readings of +1, and Victoria a reading of zero.

The national business conditions index is positive at +3 is positive, but below its long-run average of +6.

Victoria also lags the nation on business confidence, recording a reading of -2.

Western Australia is the leader, with a confidence index of +13, followed by NSW with +5. Every state other than Victoria has confidence in positive territory...

Transport & utilities is the strongest sector with an conditions index of +24, followed by recreation and personal services at +19. Manufacturing and retail are the weakest, at -7 and -14.

The survey finds wage pressure confined to mining with overall wages climbing at a “subdued” 0.9 per cent per quarter while mining wages climb 2.2 per cent.

Price inflation is close to zero with the businesses surveyed reporting price rises of 0.2 per cent per quarter, but purchasing prices are rising strongly climbing 0.7 per cent per quarter.

Employment conditions are improving in transport & utilities and the wholesale sector while deteriorating in retail and construction.

Forward orders are strongest in mining and weakest in retail, manufacturing and construction.

Half of all businesses surveyed said they didn’t need credit, up from 38 per cent a year ago.

Separate January housing finance figures released yesterday confirm a geographical divide. New loans for owner occupation climbed a seasonally adjusted 3.8 per cent in Western Australia and just 0.9 per cent in Victoria.

NSW commitments dived 6.3 per cent in the aftermath of the rush of first home buyers at the end of last year attempting to take advantage of stamp duty concessions before they were wound back on January 1.

The size of the average home loan fell to $291,300, down 2.3 per cent on a year earlier.

The average NSW loan was $324,900, the average Victorian loan $295,800, and the average West Australian loan not too far behind at $268,200.

In today's Sydney Morning Herald



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Brilliant. Annabel Crabb on what's gone wrong

I will never forget March 1, 2001, when John Howard – unpopular, making heavy weather of the GST, and harried beyond belief over rising petrol prices – called a press conference.

His announcement was truly startling. Having explained incessantly over the preceding months how irresponsible it would be for him to make a one-off reduction in petrol excise to help motorists, he proceeded to announce just that – a 1.5c excise cut. But he went further. He abolished the twice-yearly indexation of petrol excise that had been in place for nearly 20 years, with the result that petrol excise – the amount of money from every litre of petrol we buy that goes to the Government – has been frozen at 38.143c ever since.

It was, politically, an astounding moment. And in the intervening decade, that decision has become a budgetary depth charge. Every year, the gap between the revenue the Government would have collected under the old system and the revenue collected under the excise freeze widens. It's now at about $5 billion a year, which means that Wayne Swan is paying heavy compound interest today on the price of springing John Howard from political prison in 2001.

Not that Wayne Swan is entitled to complain too loudly. When John Howard and Peter Costello launched their doomed bid for re-election in 2007 with a staggering $34 billion promise of future tax cuts, Mr Swan and his leader Kevin Rudd matched them with barely a murmur...

It's here, at The Drum.


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So, who's going to "audit" Hockey's completed costings?

There was this ad in the Canberra Times Saturday.

Surely not.

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Hockey has done it, so he says - savings found

Joe Hockey on savings Tues March 13

Remember that $70 billion black hole, or however much it was (accounts differ).

The Coalition had a lot of savings to find to pay for its promises, and it has been working away for weeks.

You can’t remember big Coalition promises? Think about repealing the mining tax, repealing the carbon tax. It needs to find big savings.

Today in the midst of a press conference about something else The Coalition’s Treasury spokesman Joe Hockey let slip that he had done it.

Asked by our economics correspondent Peter Martin whether he had found all the savings he had been looking for Mr Hockey replied: “Yes, we have found the savings we were looking for.”

But he won’t let us in on the cuts.

That’s have to have to wait until the election, but hopefully not until two days before the vote as happened last time.

Who will make sure the numbers add up? Last time it was a pair of Perth accountants who were later disciplined by the Institute of Chartered Accountants for the way they went about the task. Separately the Treasury found reams of mistakes including double-counting, banking income from the sale of an asset without deducting lost dividends and so on.

Mr Hockey also revealed he had sold that problem. The Coalition has picked an organisation to run an eye over the numbers (please don’t mention the word “audit” - that was what the Perth accountants into trouble).

In his words: "You’ll be surprised and you will be happy about it. They will be very credible."

In The Pulse, just now


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Corden on Dutch disease. The MRRT won't help

It’s the most often talked-about fix for manufacturers and other victims of the high dollar - hit the mining industry with a bigger super-profits tax to take pressure off the dollar.

It’s intuitively appealing, and it might very be worthwhile for other reasons, but a pure super-profits tax won’t take pressure off the dollar and so won’t help struggling manufacturers according a new research paper to be released this morning by the Melbourne Institute.

Max Corden is one of Australia’s leading academic economists and a specialist in so-called Dutch disease; the phenomenon by which a resources boom pushes up the currency and harms non-resource exporters and import-competing industries.

He says a mining tax could dent the dollar if it “killed the goose” and harmed mining, but not it if was a true super profits tax of the kind to come before the Senate this week.

By design a super-profits tax doesn’t remove the incentive to mine, it merely eats into excess profits.

Professor Corden quotes a Reserve Bank finding that four fifths of Australia’s mining industry may be foreign-owned. If it is, he says the extra tax will fall on mainly on offshore taxpayers. If it is brought on shore it would push the dollar still higher... If it was kept offshore in a sovereign wealth fund it would leave the dollar unchanged.

He stresses this “surprising result” does not invalidate all of the arguments for the tax, just one of them. Collecting money from foreigners for use by Australians is worthwhile in its own right.

Another proposal for dealing with Dutch disease is almost pointless. So-called piecemeal protection in which a sector such as the car industry is given a leg up would actually harm other import-competing sectors.

“Suppose extra protection is provided for the motorcar industry,” Professor Corden says. “This reduces imports of motorcars as intended. But, given capital inflows and other factors, the lower imports will lead to extra appreciation of the exchange rate.”

“The losers would thus suffer not only from the effects of the mining boom but also from the political success of their industry colleagues in extracting protectionist measures from the government.”

Professor Corden finds the best way to reduce the impact of Dutch disease is to run a budget surplus which the Reserve Bank would offset by cutting interest rates, bringing down the Australian dollar. But the surplus couldn’t be funded by a super tax on miners. It would have to be funded by broader tax increases or spending cuts that would slow economic activity more generally.

In today's Sydney Morning Herald


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Don't you want me baby. We're falling out of love with cash

ATM cash withdrawals down 1.3%
Internet transfers up 7.5%
EFTPOS transactions up 7.5%
Credit card balances up 0.7%
Personal cheques down 5.7%

Year to January. Reserve Bank of Australia


We’re falling out of love with cash. We withdrew cash from ATMs 64.7 million times in January, which sounds a lot but was well down on 65.6 million times the previous January.

December was even worse. We took out cash 71.9 million times compared to 73.6 million the year before.

Mobile phones, EFTPOS, internet transfers and cards that merely need to be waved in front of machines are taking the place of cash, but credit cards aren’t.

Reserve Bank figures released yesterday show the average credit card limit climbed just 0.7 per cent over the year to January, the smallest annual growth on record.

Internet transfers jumped 7.5 per cent. We put through 60 million in January, up from 55 million.

Debt card transactions jumped 12 per cent.

As we used both credit and debt cards more intensively in place of cash the average size of a card transaction fell to just $89.53 - an all-time low...

“People don’t want to carry cash around, welcome to the new age,” said CommSec chief economist Craig James.

“The extent of the slide is staggering. Cash is losing its place as the primary method for making purchases and exchanging value.”

Fees for ATM use appear to be changing behaviour. The proportion ATM withdrawals made from ‘home bank’ rather than ‘foreign’ ATMS has climbed form 52 per cent to 59 per cent over the last five years.

Our growing aversion to using credit cards might be part of the same value-shopping mentality. Although the average credit card limit is $9,100 calculations by Mr James suggest the average debt outstanding debt is just $3200.

“Certainly credit is available if consumers want it, but they much prefer to be in control of their finances,” said Mr James. “The new age of consumer conservatism shows no sign of ending.”

“We’ll soon get a better handle on spending by tracking card transactions than retail data. Cards are replacing cash, services are replacing traditional retail and online stores are replacing bricks and mortar.”

Published in today's Sydney Morning Herald and Age


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Tough budget. Is Swan having us on, or...

I tend to think he is dinkuum

The Australian budget looks healthier than we have been led to believe.

New finance department figures released late Friday confirm Treasurer Wayne Swan’s claim that tax revenue is falling behind. They show revenue of $180.9 billion in the first seven months of the financial year, around $3 billion less than expected.

But they also show government spending down, amounting to $211 billion - some $2 billion less than expected.

Grant and benefit payments, wages and salaries payments and spending on goods and services were all lower than expected.

The net impact on the budget of $1.1 billion is small in relation to the $370 billion total.

The finance department reports the running totals on a so-called underlying cash basis, adjusting for the effect of asset sales. Its raw figures, also published, show the budget $647 million ahead of what was expected at the end of January. The running deficit total is $26.025 billion rather than the expected $26.672 billion

Mr Swan said Wednesday this year’s budget would be “in some ways, the hardest of them all”. Company tax collections were “already down on what we had forecast, of that there is no doubt”.

He said he would need to find further savings in order to deliver the promised 2012-13 surplus.

But the finance department figures suggest spending is already being reigned in and only small further cuts might be needed...

The Treasurer said yesterday company profits had deteriorated since the results that fed the tax revenue reported for the seven months to January.

“The National Accounts showed company profits down 2.7 per cent in the December quarter,” he said. “This will inevitably flow through to the budget bottom line and obviously means we will have to find significant savings in the May Budget.”

The finance department points out that its cumulative totals may not give the full picture as revenues and expenditure vary from month to month.

Commonwealth Securities economist Craig James said the totals would nonetheless “comfort the bean counters that extra efforts aren’t required to achieve the budget forecast”.

“Given that budget forecasts and outcomes can miss by big margins, the current figures are encouraging,” he said.

The update contains bad news for the states.

Goods and services tax revenue - earmarked for the states - climbed just 2.9 per cent in the year to January, failing to match inflation.

Treasury secretary Martin Parkinson said last week both levels of government were likely to have “at best razor-thin” surpluses for years to come without deliberate efforts.

In today's Canberra Times, Sydney Morning Herald and Age


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The New Brisbane Line

Me on ABC Radio National Saturday Extra, March 10, 2012

15 minutes, play or CLICK THEN CLICK AGAIN to download mp3



GERALDINE DOOGUE: The figures show that our economy is in good shape but nearly all the growth is being generated and experienced in two states—WA and Queensland—while the rest of Australia stagnates; or, in the case of Tasmania and South Australia, actually go backwards.

So what is the current social mood about the distribution of wealth in Australia?

How do current perceptions of money and class and opportunity feed in to our sense of identity?

What do we value and want for ourselves and for our communities? How do we balance initiative, reward, and responsibility?"



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Jobs. Flat as a tack with unemployment set to rise

IN THE PAST SIX MONTHS...

Victoria: Down 27,700
NSW: Down 2200
South Australia: Down 1500
Tasmania: Down 1200

Western Australia: Up 22,900
Queensland: Up 7400
Northern Territory: Up 3400
Australian Capital Territory: Up 2700

Trend change in employment since August
ABS 6202.0



Australia's jobs market is as flat as a tack and unemployment is set to rise.

Jobs minister Bill Shorten yesterday predicted “further softness” after news that on a trend basis Australia has been putting into work just 1000 more Australians each month.

The trend has fallen below population growth, meaning Australia’s potential teenage and adult labour force is climbing 18,500 per month while the number employed climbs 1000.

In February the unemployment rate climbed from 5.1 to 5.2 per cent. Treasury predicts 5.5 per cent by June.

Mr Shorten said Australia still compared well to the rest of the world.

“Whilst Japan has slightly lower unemployment, the Germans, the Americans, the English, in fact the whole euro region, has unemployment much higher than Australia,” he said.

“So we are relatively well placed, but we still expect further softness in the unemployment numbers in coming months.”

Businesses were “understandably being more hesitant in their hiring intentions in a more uncertain global environment,” and were preferring to offer more hours rather than hire more workers.

But the Bureau of Statistics figures show the trend in the number of hours worked falling for the past six months.

The May budget forecast of half a million new jobs over two years now looks completely unrealistic. Nine months in to the forecast period only 7000 more Australians have been put into work - a rate of job creation so low it would take decades to meet the budget forecast.

The weak total hides an enormous disparity between the coal, iron ore and gas mining regions and the rest of Australia where the bulk of the population lives... Western Australia is taking on extra workers at the rate of 5500 per month. The rest of Australia is shedding workers at the combined rate of 4500 per month.

Victoria is by far the worst performing state, losing 27,700 workers in six months. By contrast NSW lost 2200, South Australia 1500, and Tasmania 1200.

The mining states took up nearly all the slack, Western Australia gaining 22,900 workers, Queensland 7400, and the Northern Territory 3400. The ACT gained 2700.

The job news mirrors the national accounts which Wednesday showed the Western Australian and Queensland economies soaring at annual rates of 11 and 10 per cent compared to 2 and 1.6 per cent in NSW and Victoria.

Mr Shorten said the disparity underlined the importance of the car industry, suffering at the hands of the high dollar.

Victorian premier Ted Baillieu should be “on the phone to Coaltion leader Tony Abbott saying: we hear what you say about trying to plug a $70 billion black hole in your own finances as the opposition, but please don't do it at the expense of Holden and Ford”.

Greens member of parliament Adam Bandt called on the government to quarantine Australia’s south-east states from cuts in the May budget, saying the cuts needed to come from the mining states.

He said the government should consider a “south-east stimulus package” funded by lifting tax rates on Australia’s most profitable companies or by “a proper mining tax”.

National Australia Bank senior economist Spiros Papadopoulos said by itself the weak employment numbers would not be enough to get the Reserve Bank to cut rates, but they would be “another contributing factor’.

Mr Shorten said the Reserve Bank’s cash rate of 4.25 per cent was high enough to give it plenty of “sea room” to cut.

“We have is a lot of sea room, which frankly other nations would love to have. So I do believe the Reserve Bank - it is independent, of course - it understands that we've got 4.25 points of sea room and I think that's a great advantage in our economy at the moment.”

In today's Canberra Times, Sydney Morning Herald and Age


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One of the most extraordinary jobs graphs I have ever seen

From today's employment numbers.

I reckon there's nothing much doing in the jobs market.

(Although of course some states are doing better than others.)

My quick take here at the National Times.

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Nation divided, revenue weak... so it's a new round of budget cuts

To show we're in good nick

Much weaker than expected company tax collections have forced the government to embark on round of budget cuts, Treasurer Wayne Swan declaring this year’s May budget will be “in some ways the hardest of them all”.

The warning came as Treasury boss Martin Parkinson told a business audience tax collections had fallen four percentage points since the global financial crisis and were not expected to recover “for many years to come”.

“Indeed, for both levels of government surpluses are likely to remain at best razor-thin without deliberate efforts,” he told the Australia-Israel Chamber Of Commerce.

Mining companies were paying much less tax than expected, providing one fifth of all company profits but paying just one-tenth of all company tax, primarily because of depreciation deductions flowing from the investment boom.

Mr Swan yesterday committed himself to announce a budget surplus budget night no matter how weak the revenue, saying a surplus would send a “very clear message to the world that Australia is in good nick”.

Yesterday’s national accounts showed company tax revenue up 4.5 per cent over the first six months of the financial year. The May budget had forecast an increase of 29 per cent over the entire year, revised down in the November to an increase of 21 per cent.

Mr Swan said company tax collections were increasing, but “not consistent with where we expected them to be increasing to”.

"They are already down on what we had forecast, of that there is no doubt” he said.

Losses accumulated during the global financial were being used to cut current taxable revenue “impacting severely on revenues, and more severely than the Treasury had forecast”.

Asked to quantify the spending cuts or tax increases that would be needed to deliver the promised surplus Mr Swan said it was too early to say. He had no doubt state budgets were also weak...

The national accounts show the Western Australia and Queensland economies racing ahead while those of NSW and Victoria barely grow and South Australia and Tasmania go backwards.

State final demand in Western Australia and Queensland grew 11 and 10 per cent in the year to December. Demand in NSW and Victoria grew 2 and 1.6 per cent.

National economic growth of 0.4 per cent in the December quarter and 2.3 per cent over the year to December is well below the most recent Reserve Bank forecast and well below the long-term trend which Mr Swan defined yesterday as 3.25 per cent.

“It certainly does reflect patchiness in our economy and pretty rugged global economic conditions at the end of last year,” he said.

“There's no doubt these numbers will have a detrimental impact on our budget bottom line.”

“Having said all that, there is nothing in these numbers that deters the Government from bringing down a surplus in 2012-13, although obviously this makes that task more difficult. When you consider the very severe turbulence and weak global conditions that marked the final months of last year, the result is pretty solid in the circumstances.”

The government’s expenditure review committee, unofficially known as the “razor gang” has already started looking for cuts. One unknown is the extent of the damage caused by this month’s floods. Parts of NSW and Victoria are still under water.

Mr Parkinson said capital gains tax collections had been “hit hard” in the wake of the financial crisis. GST collections were suffering from more cautious household spending, and non-mining tax collections were suffering at the hands of the high dollar.

“With muted growth in tax receipts projected for much of the next decade, Australia will need significantly greater expenditure restraint in the decade ahead than was seen in the first half of the 2000s,” he said.

By 2050 Australia would have only 2.7 people of working age for every person aged 65 or over, down from 5 people today, making the task of collecting tax and the need for tax much greater.

In today's Sydney Morning Herald


Martin Parkinson Address to Australia-Israel Chamber of Commerce



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Weak. Here's the quick take on the GDP

Economic growth has failed to live up to expectations. Gross domestic product climbed just 0.4 per cent in the December quarter to give Australia annual growth of 2.3 per cent, much weaker than the 2.75 per cent expected by the Reserve Bank.

GDP per person scarcely moved, climbing 0.1 per cent in the quarter to be up 0.9 per cnet over the year. Prices were flat, suggesting zero inflation in the quarter.
Almost all the economic growth was concentrated in Australia’s three mining states. Over the past year demand has climbed 11 per cent in Western Australia, 10 per cent in Queensland, and 6 per cent in the Northern Territory.

In NSW it has climbed just 2 per cent, in Victoria 1.6 per cent and in the ACT 2.6 per cent.
In South Australia and Tasmania demand is shrinking, going backwards 0.6 per cent and 0.7 per cent.

The Australian dollar fell 0.4 of a US cent on the news, slipping from 105.72 to 105.30 US cents amid talk the Reserve Bank might now be more inclined to cut interest rates.
Just yesterday the Bank indicated it had no plans to cut interest rates in the absence of major bad news. It said economic growth was “close to trend overall”. The long term trend is above 3 per cent.

Today’s figures show the economy growing extremely fast in some states and painfully slow in others, failing to make trend overall.

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2004 all over again - rates on hold all year?

That's the new thinking

Official interest rate are set to remain on hold, quite possibly for the rest of the year, baring a major change to the to the economic outlook.

The Reserve Bank's new thinking, crystallised at yesterday's board meeting, is that risks to the global economy are receding and conditions in Australia are improving.

The more relaxed assessment comes as the Bank of Queensland inched up its standard variable home loan rate by 0.10 points, after last month garnering good publicity by setting itself apart form the big banks and keeping rates steady.

Chief executive officer Stuart Grimshaw said the bank had held rates for steady for as long as it could but do so no longer.

The rate rise brings the Bank of Queensland's to 7.46 per cent, in line with Westpac which which has the highest rate among the big four.

‘‘Competition is fierce for local deposits, and to remain competitive we need to provide strong rate returns on our term deposits,’’ Mr Grimshaw said.

The move opens the way for ANZ to hike its home lending rates this Friday when it holds its own interest rate-setting meeting. It lifted its rates by only 0.06 points last month and is charging 7.36 per cent for a variable mortgage, well below Westpac.

Reserve Bank board members were told yesterday that late last year the European outlook was bleak and there were fears financial markets would seize up. Those fears have passed, as has talk of a double-dip recession in the United States...

China's economy appears to be slowing in an orderly manner rather than erratically, as had also been feared.

Commodity prices – a summation of the best guesses about the global outlook – are turning back up.

At home economic growth and inflation are almost exactly where the Reserve Bank would like them to be, and jobs growth – which had been looking worrying at the end of last year, now looks less weak.

Internationally and at home measures of consumer and business confidence are picking up.
While a comfortable inflation outlook gives the Bank the ability to cut rates if it needs to, it does not require a rate cut.

Unless the Australian or international outlook changes dramatically the Bank will leave rates on hold, possibly for the rest of the year.

2004 is the most recent calendar year in which the Reserve Bank left rates unmoved. The Bank lifted rates in November and December 2003 and then left them steady until March 2005.

Bank observers make the point that this did not mean the Bank did nothing. Each month it carefully weighed up evidence on the state of the economy and each month decided that – in aggregate – things were as they should be.

Reserve Bank governor Glenn Stevens yesterday acknowledged that parts of the economy were suffering, referring in his statement to “differences between sectors and considerable structural change”, but he believes those changes are needed to lift productivity and last month told a parliamentary committee he would not stand in their way.

Trade figures released yesterday show exports up 2.2 per cent in the December quarter led by iron ore exports, up 6.1 per cent, coal exports up 5.3 per cent and rural exports up 4.7 per cent as the farm sector continues to benefit from good rain.

In today's Sydney Morning Herald and Age


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Alright for some. The two Australias drift apart

IT DEPENDS WHERE YOU LIVE

Wage growth

South East Australia 5.0%
- NSW 4.6%
- Victoria 5.5%

North West Australia 10.9%
- Queensland 9.2%
- Western Australia 12.8%

Sales growth

South East Australia 2.9%
- NSW 4.3%
- Victoria 1.4%

North West Australia 14.6%
- Queensland 16.9%
- Western Australia 12.4%

Seasonally adjusted, year to December ABS 5676.0

A sharp geographic divide has opened up in business conditions, with the latest Bureau of Statistics report showing sales growth five times as fast in Australia’s north west as the south east and wage growth twice as fast.

The business indicators report, one of the building blocks for the National Accounts to be released tomorrow show sales growth over the year to December of 14.6 per cent in Queensland, the Northern Territory and Western Australia combined compared to just 2.9 per cent in NSW, Victoria, South Australia, the ACT and Tasmania.

Wage growth averages 10.9 per cent in the north west mining states compared to just 5 per cent in the south east.

The divide will be up for discussion at this morning’s Reserve Bank board meeting in Sydney, the first to be attended by Heather Ridout, chief executive of the Australian Industry group who replaced BlueScope Steel chairman Graham Kraehe in February.

Appearing before the parliament’s economics committee last month Reserve Bank governor Glenn Stevens lamented the “very disparate and very powerful forces” at work in the economy and said monetary policy could not make them go away.

“This is a message that does not really gladden too many people's hearts,” he told the committee... “Monetary policy is a national policy. We have one instrument—one currency. We are a currency area and we cannot make the differences go away.”

The board is almost universally expected to leave rates on hold when it announces its decision at 2.30 this afternoon. Even futures pricing, which typically overstates the likelihood of a cut, ascribes just a 15 per cent probability to a cut and an 85 per cent probability to rates staying put.

The ABS says company profits barely grew in 2011, inching ahead just 2.1 per cent; the worst result in more than a decade with the exception of the global financial crisis in 2009 in which profits slid 13.7 per cent.

In the December quarter company profits fell 6.5 per cent, led down by a halving in profits in financial, insurance and other services, a 9 per cent dive in mining profits and a 5 per cent fall in manufacturing profits. Profits in the administrative and support sector climbed 12 per cent and utilities profits climbed 5 per cent.

Wages and salaries climbed just 0.8 per cent in the quarter, largely reflecting higher salaries and employment was little changed.

Inventory levels climbed 1.4 per cent, led by 2.2 per cent increase in mining inventories as sales fell.

The TD Securities gauge climbed just 0.1 per cent in February to be up 2.0 per cent over the year, a weak enough reading to allow the Reserve Bank board to cut rates if it was minded to.

The Australian Industry Group performance of services index slumped 5.3 points in February 46.7 where a reading below 50 points to further contraction. The ANZ job advertisement index is more encouraging, climbing 3.3 per cent in February after rising by 7.5 per cent in January.

Published in today's Sydney Morning Herald and Age

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NewStart. Swan takes the point, but says the surplus matters more

Australia Institute

Hallelujah. It's a start.

Pensioners can look forward to an extra $6.70 per fortnight when payments are adjusted this month; unemployed Australians just $2.90.

Treasurer Wayne Swan yesterday ruled out any immediate attempt to address the disparity between the pension and NewStart which is widening with each half-yearly adjustment.

Once close to the pension, NewStart is now only two thirds of it and is on track to amount to less than half of it by 2040.

The pension is indexed to male wages, typically climbing 4.5 per cent per year. NewStart and student and sole partent allowances increase with the lower consumer price index, typically by 2.5 per cent per year.

Speaking to the National Press Club Mr Swan acknowledged there was “a case about the gap that has opened up,” but said: “How we can deal with that in the longer term is a difficult one given that the fiscal pressures and so on the government is facing”.

Council of Social Service chief Cassandra Goldie said NewStart was now so low at $35 per day, it was hard for people on it to present themselves for jobs.

“There is a growing consensus ranging from business organisations, economists, the union movement, to the broad community and social services sector that the current rate is simply not enough and is hindering their efforts to find paid work,” she said.

Asked whether the disparity would worsen for another ten years Mr Swan said he wouldn’t make predictions and that his priority was getting people into jobs...

He offered no hope to veterans also wanting their military superannuation pensions indexed by male wages rather than the CPI.

“We said we would have an inquiry in 2007 and we did have an inquiry into indexation and that inquiry knocked it back,” he said.

“I say this as the son of a war veteran, who when he died was a totally and permanently incapacitated pensioner. For me this is deeply emotional and the point is our military superannuation, as it is with the public sector superannuation, compared to other schemes around the country, is very - much more generous.”

Opposition leader Tony Abbott promised to boost military pensions if he took office. Mr Swan said the Coalition was not in a position to deliver, needing to fill a $70 billion budget black hole if it took office.

In today's Age


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"It is the mark of an intellectual pygmy to play the man" Palmer plays the man

Oh my. Who's the greatest threat to our democracy? Our democratically-elected Treasurer or...

Mining barons Clive Palmer and Andrew Forrest have taken on Treasurer Wayne Swan labelling him an “intellectual pigmy” who doesn’t understand economics and accusing him of demonising hard-working Australians.

The separate attacks, both published today, follow Mr Swan’s article in The Monthly Friday that named Mr Palmer, Mr Forrest and mining magnate Gina Rinehart in a discussion of threats to democracy.

Within minutes of being anointed a Living National Treasure by the NSW National Trust yesterday Mr Palmer said the Treasurer didn’t “know how the economy works”.

“He knows that. He has to rely on faceless men in the ALP who all live in Melbourne, all send him faxes and texts, tell him what to do; and if he doesn't know he can call his department," Mr Palmer told reporters.

Following up on the opinion page of this morning’s Age Mr Palmer says it is “the mark of an intellectual pigmy” to play the man.

“To classify people by their means, race, class or gender is not a substitute for robust discussion,” the article says.

Mr Swan said Friday politicians had to choose between standing up for workers and “kneeling down at the feet of the Gina Rineharts and the Clive Palmers”.

He will take up the theme at the National Press Club today in an address entitled: “If we don’t grow together we grow apart”. Immediately afterwards he will turn to Twitter for a half-hour forum using the hashtag #FairGo...

Mr Forrest’s Fortescue Metals Group has taken out advertisements in this morning’s papers calling the Treasurter cynical and hypocritical.

“Andrew Forrest and his team created one of the great business success stories in Australian history,” says chairman Herb Elliot in the advertisement. “Andrew epitomises the spirit of what an Australian can do if given a fair go. For a politician to suggest that he has lost sight of this fair go ethic is baffling.”

Mr Swan said Friday that “for every Andrew Forrest who wails about high company taxes and then admits to not paying any, there are a hundred Australian businesspeople who held on to their employees and worked with government to keep the doors of Australian business open during the global financial crisis.”

The Fortescue advertisement concedes the nine-year old mining company has yet to pay company tax but says it will pay over $1 billion in taxes, royalties and other charges this year and over $2 billion next year.

“These amounts do not include estimates for the recently passed carbon and minerals resources rent taxes because the laws have been drafted in such a manner as to be confusing and difficult to interpret,” the advertisement says.

“For Mr Swan to demonise Andrew Forrest is an act of cynical hypocrisy. Mr Swan knows better. Certainly he understands that years of investment and losses precede any taxable income.”

Under Andrew Forrest Fortescue had created thousands of jobs and helped more than one thousand indigenous Australians out of poverty.

“Just last year he and his wife gave over $50 million to support causes such as eliminating the disparity between Aboriginal and Torres Strait Islanders and the rest of Australia, fighting human trafficking, fire and flood relief, the arts, and other benevolent purposes,” the advertisement says. “They have never sought public attention for this generosity.”

The Association of Mining and Exploration Companies said many of its members were small, and could hardly be accused on endangering democracy.

“We have 360 members who have decided democratically to take out advertisements,” said national policy manager Graham Short. “Each member has one vote. They don’t like the minerals tax and they don’t like the carbon tax.”

The advertisement also placed on record a unanimous decision by Mr Forrest’s wife and children to spend their inheritance on “assisting those in desperate need” when he passes on.

Before seeing the advertisement Mr Swan yesterday derided “predictable reactions from the predictable quarters”.

“I could have set my watch by the response,” he said. “When you talk about building a fairer society, you are invariably accused by some of engaging in the politics of envy.”

A spokesman for Mr Swan said the Fortescue advertisement “helps prove the point the deputy prime minister is making”.

“Vested interests can buy media space to get their agenda across - working Australians don't have the same opportunity.”

Mr Swan’s address to the National Press Club will be televised here at 12.30 pm.

In today's Canberra Times, Sydney Morning Herald and Age


Wayne Swan knows nothing about me, or our democracy

By Clive Palmer

ALL Australians have an inherent right to be treated equally under
the law regardless of our race or means or where we live. We are one
nation, with a diverse and rich background.

The heritage of all Australians, rich or poor, and that of our
leaders, elected or not, is something we all must respect. It's the
mark of an intellectual pygmy not to recognise that and to play the
man, not the ball.

To classify people by their means, race, class or gender is not a
substitute for robust discussion about ideas or solutions to pressing
national problems. John F.Kennedy once said words to the effect that
''governments may come and go but ideas go on for ever''.

Yet Treasurer Wayne Swan has done just that. His attack on industry
leaders who have led not by their words but by their courage and
willingness to take action - to preserve the nation's standard of
living, to protect workers and families, to expand our international
trade, to reach out to our future in Asia and the world - is
disappointing. As an elected national leader, the Treasurer needs to
examine who he is, who he really represents, and what is in the best
interest of all Australians.

In his essay in The Monthly attacking so-called ''billionaire
activists'', including me, the Treasurer suggested he is fighting for
workers' rights and to represent the workers in all areas of national
government and policy. But as a member of Parliament and our
Treasurer, he should not just be concerned with the rights of workers
but the rights and needs of all Australians.

The Labor Party has lost respect for the rights and needs of
individual Australians. So it is not surprising to see the Labor
Treasurer singling out our national business leaders for attack. It is
common ALP practice to attack others rather than to examine the
shortcomings of Labor policy or Labor leaders.

It would be far better for the Treasurer to face the truth that he
personally doesn't know how the economy works, that he is just a
puppet of the faceless men who give directions on what to do and say.

In last week's leadership ballot between the two robots, we saw the
robot with the least respect of the Australian people being re-elected
to lead the ALP - a clear demonstration that there is no leadership
in the Labor Party and that it has contempt for the views and wishes
of the people.

That the Treasurer takes instructions from the faceless people and/or
his department, rather than reflecting the will of the people, is
not democracy as I know it. Democracy means respecting the rights of
all. It means respecting the verdict of all members of society and
respecting the results of public polls and the will of the people.

The Treasurer attacks me as being anti-democratic but he hardly knows
me, or who I am. Other than a five-minute encounter at breakfast one
morning, he has never met me.

I would say that, with his limited ideas, he could not make an
impression on a cushion.

If the Treasurer knew me, he would know that I stand ready to protect
the precious democracy we value in this country. If he knew me, he
would know that my family has a strong commitment to this country.

That our family members served and died in the First World War and
four of them served in the Second World War. They served in the
Middle East and elsewhere to protect the democracy we know. Members
of my family still suffer from their service in Vietnam, and my nephew
served in the Australian Air Force at INTERFET headquarters in East
Timor.

If the Treasurer knew me, he would know that I am a director of the
John F.Kennedy library in the United States and one of the main
benefactors of the Profile in Courage Awards that recognise
outstanding government service and leadership. If he knew me, he would
know that I am member of the presidents' council of the Club of Madrid
- a club that includes 57 former presidents, prime ministers and
heads of state and which was set up for the purpose of creating good
governance and democracy around the world. If he knew me, he would
know that I sponsored the last conference of the Club of Madrid in New
York, along with Microsoft and Google. That conference dealt with the
Arab Spring and a shared society.

I truly believe in democracy and accepting the people's will. We have
in this country respect for freedom of speech, the right of
association, the right to vote, the equality of men and women and
tolerance - tolerance towards all those who are different from
ourselves, who come from different countries or races and have
different means and wealth but are the fabric of the society that we
all love.

We need to always respect the right of the public to know. The free
press stands as the last sentry at the gate of freedom, protecting the
public's right to know and the freedoms we all enjoy. What is far more
important than how much money you have or any position you hold is the
content of your character.

We need in our country more love and forgiveness and the spirit of
reconciliation.

I forgive the Treasurer for his mistakes and I remind him that a
mistake doesn't become an error until one refuses to correct it.

Australians, however, will not forgive the Labor Party for destroying
the wealth of this country and robbing our children of their
opportunities.



Recommended Reading

The 0.01 Per Cent: The Rising Influence of Vested Interests in Australia - By Wayne Swan


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Why are all those shops turning into cafes?

We are eating out rather than shopping. The first retail figures for the year show spending at cafes and restaurants up 4.3 per cent in January while spending in the rest of retail stood still.

The Bureau of Statistics says purchases of food from supermarkets and convienence stores were flat in January after slipping a seasonally-adjusted 0.5 per cent in December. Spending in specialty stores lifted 0.2 per cent, spending on household goods fell 1.8 per cent.

“It seems the 0.50 point mortgage rate cut in late 2011 was celebrated by eating out,” said TD Securities economist Annette Beacher. “Consumers are spending, but increasingly on services, not all reflected in the retail figures.”

Commonwealth Securities economist Savanth Sebastian said consumers had had a couple of months to adjust to the interest rate cuts late last year but seemed to prefer services to goods.

“Both consumers and home-buyers are super-cautious and that mood is continuing to constrain activity for retailers and housing-dependent businesses... Anecdotally the drop in interest rates is boosting enquiry levels in the housing market, but it is yet to show up in healthy rise in home buying.”

Reserve Bank figures released yesterday show borrowing for housing weak, with lending up 0.2 per cent in January after growth of 0.3 per cent in December. The annual growth rate of 5.3 per cent is the worst in records going back 35 years.

The Housing Industry Association count shows new home sales slipped a seasonally adjusted 6.4 per cent in January to an 11-year low led down by a 19.6 per cent slide in sales of new detached homes in Victoria.

“Victoria for a long time propped up new home building in Australia and now the reverse is occurring,” said HIA chief economist Harley Dale. “Other large markets are not filling the void.”

Separate Bureau of Statistics figures released yesterday show spending on new homes down 1.5 per cent in the December quarter. Spending on renovations fell 3.1 per cent.

Total construction spending slipped 4.6 per cent after climbing after climbing 11.7 per cent to a new record high the previous quarter.

“Construction is both too hot and too cold,” said Westpac economist Andrew Hanlan. “Infrastructure work in the mining states of Queensland, Western Australia and the Northern Territory is booming. Work in the south-eastern states is declining.”

NSW retail spending slid 0.5 per cent in January. Were it not for extra spending on cafes and restaurants spending would have fallen 1.2 per cent.

In today's Canberra Times, and Age


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Treasury has a problem with women?

Yes. It acknowledges it, and it's making plans

Treasury building 1970s Canberra. National Archives, Creative Commons

Treasury has a problem with women.

Australia’s number one economic department believes it doesn’t value them enough as workers, in part because it doesn’t properly value the skills they have to offer.

The department has an institutional bias toward valuing “conceptual and analytic skills over coordination and people skills,” its boss said yesterday. And it makes “unconscious assumptions about the capacity and credibility of people with commitments”.

Martin Parkinson, head of Treasury since he replaced Ken Henry early last year, is determined to change things. He told a gathering of senior public service executives that although at least half of Treasury staff were women none were near the top of the tree.

He had kept hoping things would gradually change as more new women joined the department, but it “wasn’t happening”.

“We had come up with some ad-hoc responses - encouraging part-time work, facilitating access to childcare and so on.” But they appeared not to have addressed more fundamental problems relating to the department’s culture.

“What the consultations revealed was that some aspects of our culture were the
source of our strength, while other aspects of the same culture were presenting barriers to women’s progress. In particular, there were some unrecognised biases at play.. These included some institutional biases toward a homogenous leadership style, biases toward conceptual and analytic skills over coordination and people skills,” Dr Parkinson said.

Treasury has adopted a long-term target of making 40 per cent of its senior executive service women with a milestone of 35 per cent by 2016. It was “not a quota, but a sincere and realistic attempt to bring about long-term change in the culture”.

Dr Parkinson acknowledged that men with family responsibilities and strengths in people skills skills would also benefit...

He said among the problems facing Australia were the fragmentation of the media associated with the rise of narrowcasting, or “egocasting” where consumers increasingly heard only views that reinforced their own.

There was “a sense of dissatisfaction in the community, which seems incommensurate with what the figures say about our comparative economic and social performance and outlook”.

“Intriguingly, some Australians sound as though they live in Greece,” Dr Parkinson said.

In today's Sydney Morning Herald


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Okay, so who would be in my unity ministry?

I posted this in 2010.

At the time commenter David said it was: a pretty savage demotion of Gillard.

Actually, I would only change one thing. I think I was too hard on Julie Bishop. She looks better now than she did then.

Here we go.

Tim Madden, ABC News Online

My dream team:

Human Services - Brett Mason

Tourism - Warren Truss

Resources - Martin Ferguson

Agriculture - Christine Milne

Attorney General - George Brandis

Arts - Joe Hockey

Water - Nick Xenophon

Climate Change & Environment - Greg Hunt

Innovation & Industry - Kim Carr

Broadband & Communications - Paul Fletcher

Infrastructure & Regional Development - Robert Oakeshott

Finance - Wayne Swan

Housing - Mathias Cormann

Families & Community Services - Craig Emerson

Indigenous Affairs - Peter Garrett

Ageing - Sharman Stone

Sport - John Alexander

Health and Disability - Bill Shorten

Trade - Julia Gillard

Foreign Affairs - Stephen Smith

Industrial Relations - Tony Abbott

Education & Social Inclusion - Andrew Leigh

Veterans Affairs - Julie Bishop

Defence Support - Ian Macfarlane

Defence - Greg Combet

Immigration and Population - Penny Wong

Consumer & Corporate Regulation - Barnaby Joyce

Financial Services - Bernie Ripoll

Treasurer - Kevin Rudd

Cabinet Secretary - Tony Windsor

Prime Minister - Malcolm Turnbull

About right?


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#respillsongs, they're trending on Twitter

Highlights:

Six months in a leaky caucus #respillsongs

Still haven't found who I'm voting for #respillsongs

Rudd on the tracks - Bob Dylan #respillsongs

Tears in Kevin - Eric Clapton #respillsongs

Monday Ruddy Monday #respillsongs

Manic Monday. #respillsongs

"I see Rudd" #respillsongs

Down Among the Dead Men #respillsongs

I can get no (satis)factions #respillsongs

Peter Garrett serenades Caucus with "Short Memory" #respillsongs

You're so vain, you probably think this party's about you, don't you.@latikambourke #respillsongs

No Joy Division here "Rudd will tear us apart..." #respillsongs

"Rudd, Rudd Whine" #respillsongs

Am I ever gonna see you face again #respillsongs

(Tell me why) I don't like Monday's #respillsongs

I will come for you at night time (Washington Time) #respillsongs

The fool on the hill #respillsongs

Julia's got a gun #respillsongs

Murder on the Caucus Floor #respillsongs

Can you Feel the Knives Tonight #respillsongs

Don't Cry For Me Albanese #respillsongs

Dancing Crean #respillsongs

"Do you really want to usurp me?" #respillsongs

Against All Odds #respillsongs

While My Electorate Gently Weeps #respillsongs

"Imagine there's no Kevin" #respillsongs

Apocolypse Now - The full soundtrack #respillsongs

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You've got to hand it to our banks - Stevens on profits

And we do, see below

Australia’s big banks have a friend in Reserve Bank governor Glenn Stevens.

Appearing before the parliament’s economics committee Mr Stevens defended their rights to not fully pass on cuts in the Reserve Bank cash rate and to add on rate rises of their own.

“I do not think there is any question that relative to the cash rate the costs of some term funding in wholesale markets has risen, there is no doubt,” he told the Sydney hearing. “If your costs increase then you want to recover that in the price of your product - any business does.”

Lending rates were “roughly” where they should be even after the unilateral increases imposed by the big banks in February. The Reserve had expected some slippage when it cut rates in December. The governor had been “a little surprised” it had been fully passed on.

“We are still making the calls as to where monetary policy ought to be - there is just a small bit of slippage in part of the transmission mechanism,” he told the committee... “I do not think that is going to really, from our point of view, going to cause us a huge headache at this stage.”

Asked whether Australian banks were making unusually large profits by the standards of other Australian companies and banks overseas Mr Stevens said if he “had to choose between unprofitable ones and profitable ones I would chose the latter.”

“Are they too profitable? Our assessment is that, if you look at the rates of return on equity in our banks over a lengthy period of time - say 20 years - they are good, but they are actually broadly in line with the listed company sector in general in Australia.”

Australian businesses more broadly were either doing very well or very badly.

“There are probably very few sectors who themselves are experiencing average performance,” Mr Stevens said. “Some are quite clearly weak relative to the historical average while others are much stronger. We are acutely conscious history may offer limited guidance in assessing the net impact.”

The Bank had not intervened to bring down the high Australian dollar and did not plan to.

“I am not saying we would never do it, but we have not done so to date,” the governor said. “We do continue to ask ourselves whether what is happening in the currency makes sense. I would observe that the most recent bout of strength is happening at a time when the terms of trade have actually peaked and have started to come down. That is a bit odd, but we will see what happens.”

The “palpable fear” before Christmas that Europe was on the brink had lessened over summer.

“The anxiety has not gone away altogether, but the worst has not happened. Financial markets, while hardly brimming with confidence, have recovered somewhat over the past couple of months,” Mr Stevens said.

In today's Canberra Times, Sydney Morning Herald and Age


From Christopher Joye:

RBA Governor "volunteers" estimate of taxpayer subsidy of banking system

This is just the annual subsidy associated with the retail deposit guarantee.

(You need to multiply several basis points by just under one trillion dollars. If you take, say, 5 basis points, and you multiply by $1 trillion, you get $500 million per annum.)

It does not reflect the fiscal subsidy provided through the RBA's liquidity facilities, which are many and varied, the too-big-to-fail credit rating upgrade the major banks recently received, or the benefit of the Commonwealth's willingness to explicitly guarantee wholesale debts (or funding) during crises. But here is an interesting Q and A...

"Mr BUCHHOLZ: I am fine with profitability, but it is hard to argue that it is okay for us to be about profitability and at the other end of the spectrum try to create the argument of, 'Boo hoo, we're doing it tough; we have to move on a different trajectory of monetary policy.' How does the government bank guarantee work? I probably did not even say that correctly, but how does that guarantee work?

Mr Stevens: There is a guarantee for deposits in effect. Nobody remarked on the fact that the cap was wound back from $1 million to $250,000 only a couple of weeks ago. That passed without comment or drama, which is good.

Mr BUCHHOLZ: There were probably other things on some of the political leaders' minds.

Mr Stevens: There appears to be other news around, yes. As to how it works, it is technically called a financial claims scheme. Should a bank fail, you would get your money very quickly up to that capped amount. The $250,000 covers almost all people, at an individual level. In effect it functions a bit like a guarantee. At a technical level, without going into too much detail, if some institution is put into administration by APRA then the financial claims scheme would come into operation. The banks assets would be recovered in the wind-up to pay out the creditors, but in the interim the scheme would step between the depositors and the wind-up process and say to the depositors, up to the $250,000 cap, 'Here is your money, so you can go and buy your groceries.' You would almost certainly always get your money, but it might take quite a long time. People need it quickly, and the whole point of this was early access up to that cap. That is how it would work. Then the scheme would recover those funds from the wind-up of the institution. It is extremely unlikely that the scheme would fail to be repaid in that process.

Mr BUCHHOLZ: Has the RBA put a value on that for the banks? Do they pay for it?

Mr Stevens: No financial institution that has the financial claims scheme applicable—which is all deposit takers, not just large banks but all ADIs—pays for it. They do not pay a fee for it.

Mr BUCHHOLZ: Has the RBA put a price on it—on the value of that security or insurance?

Mr Stevens: We have worked out what the fee should be, but we have not done a formal calculation of that. I suspect that if you did do a calculation you would end up with a small number of basis points."


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RBA Grilling. What did Stevens say?

Tweeted as the governor spoke:

The palpable fear that Europe was on the edge of some sort of event has lessened over summer #rba #stevenshearing #auspol

“Perhaps a little surprisingly” our Nov and Dec rate cuts were initially fully reflected in retail rates #rba #stevenshearing #ausecon

Words to the effect: The behaviour of the banks does not harm the operation of monetary policy
#rba #stevenshearing #ausecon

“Very few sectors are experiencing average performance” #rba #stevenshearing #ausecon

Stevens being asked the banks’ interest rate question: #rba #stevenshearing #ausecon

Even after the bnaks made their recent adjustments, rates are roughly where we would want them to be. #rba #stevenshearing #ausecon

STEVENS: “I had anticipated banks would not pass on end of year rate cuts.” #rba #stevenshearing #ausecon

STEVENS: If I had to choose between profitable and unprofitable banks I would choose the later. #rba #stevenshearing #ausecon

STEVENS: Over last 20 years banks profits roughly in line with listed companies. #rba #stevenshearing #ausecon

STEVENS: If it is really really profitable here, other players will want to find some way of getting their hands on those profits. #rba #stevenshearing #ausecon

STEVENS: Our 10 per cent saving rate is likley to remain five years into the future. It’s big, but not too big. #rba #stevenshearing #ausecon

STEVENS: 10 per cent shavings rate is the new normal. #rba #stevenshearing #ausecon

STEVENS: Retail was going to suffer anyway - changed shopping pattens. It’s not all the high savings rate. #rba #stevenshearing #ausecon

STEVENS: We can’t fight the global phenomenon that is pushing up the exchange rate and changing our economic structure #rba #stevenshearing #ausecon

STEVENS: I doubt any type of policy can fight what’s happening. #rba #stevenshearing #ausecon

STEVENS: We haven’t intervened to hold dollar down. I am not saying we never would, but we don’t foreshadow it. #rba #stevenshearing #ausecon

STEVENS: Does what’s happening to currency make sense. The most recent strength when commodity prices down does seem odd. #rba #stevenshearing #ausecon

STEVENS: I am not really convinced foreign investors have taken a negative view of Australia’s sovereign risk (when asked) #rba #stevenshearing #ausecon

STEVENS: Mr Argus and others have their own views. But there is not a serious perception of sov risk. High appetites for Aust gov debt. #rba #stevenshearing #ausecon

STEVENS: If people say this in the newspaper one can’t deny that that’s their view. #rba #stevenshearing #ausecon

STEVENS: Playing a dead bat on Coalition questions re productivity, Fair Work Act #rba #stevenshearing #ausecon

STEVENS: Overall wages are okay, we don’t really want them to accelerate from here. #rba #stevenshearing #ausecon

STEVENS: We expect a small lift in productivity, following structural adjustment #rba #stevenshearing #ausecon

STEVENS. Bank rates. Banks want to maintain profits, any business does. #rba #stevenshearing #ausecon

STEVENS: “When people say bank costs have risen, that is true. Every business tries to recover costs. #rba #stevenshearing #ausecon

GUY DEBELLE: Australian banks pay about the same as comparable banks overseas for money. #rba #stevenshearing #ausecon

GUY DEBELLE: But Australian corporates can borrow cheaper than Australian banks, even though lesser credit rated. #rba #stevenshearing #ausecon

PHIL LOWE: Our central forecast has unemployment drifting up to around 5.5%, then drifting down. #rba #stevenshearing #ausecon

PHIL LOWE: Our central forecast has unemployment drifting up to around 5.5%, then drifting down. #rba #stevenshearing #ausecon

PHIL LOWE: It wasn’t long ago IMF talking about ‘1930s moment’ No wonder businesses reticent to hire. #rba #stevenshearing #ausecon

STEVENS: No probelm with @SwannyDPM not attending G20 in Mexico this weekend #rba #stevenshearing #ausecon

STEVENS: We are not what Mervyn King called “inflation nutters” in that we give no account to economic conditions. #rba #stevenshearing #ausecon

STEVENS: When we got to 4% unemployment it was pretty clear the economy was overheating. #rba #stevenshearing #ausecon

STEVENS: Workers are commuting to the West, even from NZ and Indonesia. #rba #stevenshearing #ausecon

GUY DEBELLE: Spreads vs levels.. #rba #stevenshearing #ausecon

STEVENS: We will publish update on banks funding costs in our Bulletin in March. #rba #stevenshearing #ausecon

STEVENS: Re Securency. I unequivocally reject suggests of a cover up. #rba #stevenshearing #ausecon

STEVENS: Securency. The allegations published in the press were “quite surprising”. #rba #stevenshearing #ausecon

STEVENS: There seems to be a view the banks have to do whatever the RBA DOES, THEY DO NOT. #rba #stevenshearing #ausecon

STEVENS: Bank profitability is within the pack. Some industries earn more, some less. #rba #stevenshearing #ausecon

STEVENS: Some years things are tough for banks (Subtext: It’s not a licence to print money.) #rba #stevenshearing #ausecon

STEVENS: I personally suspect smaller institutions do better out of the deposit gurantee than large ones. #rba #stevenshearing #ausecon

PHIL LOWE: In time even businesses that are cautious in their behaviour will want to hire again. #rba #stevenshearing #ausecon

PHIL LOWE: Banks have got used to double digit credit growth, and that’s not going to continue. #rba #stevenshearing #ausecon

PHIL LOWE: The real estate industry also has got used to double digit credit growth, it won’t continue. #rba #stevenshearing #ausecon

STEVENS: Merchant fees have come down. #rba #stevenshearing #ausecon

STEVENS: I am not keen for RBA to be jawboning banks to accept a sub-market rate of return. #rba #stevenshearing #ausecon

STEVENS: (Words to the effect) If we did it banks we might be asked to dictate to other businesses the prices they could charge. #rba #stevenshearing #ausecon

STEVENS: There is a gender imbalance in the study of economics, an interesting phenomenon. #rba #stevenshearing #ausecon

STEVENS: I think we are still making the calls as to where monetary policy should be. There is just “a small bit of slippage in the transmission mechanism”. #rba #stevenshearing #ausecon

STEVENS corrects one of his answers re Securency. #rba #stevenshearing #ausecon

Here's the complete transcript. Thank you Hansard!


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