With only a seventeen-week window remaining in which Prime Minister Scott Morrison can first present an early Budget 2022-23 to the Australian Parliament, then dissolve said Parliament, before going on to call a federal general election and run a formal election campaign; sometime soon Coalition Government MPs and senators will have to begin addressing economic issues when out and about in their electorates.
So perhaps it is time to start looking at projections and forecasts for 2022 made by government departments, financial institutions and industry - before local electioneering hype is raised to such a pitch that facts and considered opinion get lost in the political mêlée.
Here are six aspects of economic activity which always get a mention in the NSW Northern Rivers region at some time in an election cycle.
CONSUMER CONFIDENCE
ABC News, 18 January 2022:
Consumer confidence slumps
The Omicron COVID-19 variant has hit consumer confidence, according to ANZ and Roy Morgan.
Their measure of consumer confidence fell 7.6 per cent last week to 97.9, the lowest level since October 2020, as Omicron surged across Australia and facilities came under immense strain.
That was lower than during last year's lockdowns when the Delta variant surged.
All the survey's subindices fell including current and future financial conditions.
Nearly one in five respondents expected to be worse off by this time next year.
ANZ head of Australian Economics, David Plank, said the index level of 97.9 was the weakest January result since 1992, when the Australian economy was experiencing rising unemployment.
"The result highlights the concerns about COVID have the potential to significantly impact the economy if they linger," he said.
ANZ said spending had continued to fall because of the spread of Omicron, with a drop of 27 per cent over the first half of January, compared to the first half of December.
Spending was also lower on eating out.
Omicron hit to economy
CBA credit and debit card data indicated that spending has dropped sharply on services over the past few weeks.
Commonwealth Bank economist Gareth Aird said the large number of COVID-19 cases is hurting the employment market, with an estimated 1 million people in isolation, and reduced spending on goods and services.
That means many businesses have been forced to close, or reduce capacity and opening hours.
He has slashed his growth forecast for the first quarter of 2022 from 2.3 per cent to just 1 per cent.
"The next few months are without a shred of doubt going to be difficult and testing for the economy," Mr Aird said.
"Our working assumption is that more policy support will be forthcoming, particularly stimulus that is targeted towards businesses most adversely impacted by the surge in COVID cases and isolation requirements."
Mr Aird said he expected the economy to snap back in the second quarter of 2022.
FINANCE
Australian Government General Government Sector Monthly Financial Statements November 2021, 24 December 2021:
KEY POINTS
The Monthly Financial Statements for November 2021 report the budget position against the expected monthly profile for the 2021-22 financial year through to 30 November 2021, based on the 2021-22 Budget estimates published in May 2021.
The 2021-22 Mid-Year Economic and Fiscal Outlook (MYEFO) was released on Thursday, 16 December 2021. Commencing with the December 2021 monthly financial statements, which will be released in January 2022, the budget position will be reported against the expected monthly profile based on the updated estimates outlined in the 2021-22 MYEFO.
The November 2021 year to date results include the impact of the Australian Government’s response to COVID-19.
The underlying cash balance for the 2021-22 financial year to 30 November 2021 was a deficit of $41.8 billion against the Budget profile deficit of $55.9 billion.
The fiscal balance for the 2021-22 financial year to 30 November 2021 was a deficit of $36.0 billion against the Budget profile deficit of $55.2 billion.
Monthly results are generally volatile due to timing differences between revenue and receipts, and expenses and payments. Care needs to be taken when comparing monthly or cumulative data across years and to full-year estimates, as revenue and receipts and expenses and payments vary from month to month.
FISCAL OUTCOMES
Underlying Cash Balance
The underlying cash balance for the financial year to 30 November 2021 was a deficit of $41.8 billion, which is $14.1 billion lower than the 2021-22 Budget profile deficit of $55.9 billion.
Receipts
Total receipts were $34.3 billion higher than the 2021-22 Budget profile.
Payments
Total payments were $20.2 billion higher than the 2021-22 Budget profile.
Net Operating Balance
The net operating balance for the financial year to 30 November 2021 was a deficit of $35.5 billion, which is $17.8 billion lower than the 2021-22 Budget profile deficit of $53.4 billion. The difference results from higher than expected revenue, partially offset by higher than expected expenses.
Fiscal Balance
The fiscal balance for the financial year to 30 November 2021 was a deficit of $36.0 billion, which is $19.3 billion lower than the 2021-22 Budget profile deficit of $55.2 billion. The difference results from higher than expected revenue and lower than expected net capital investment, partially offset by higher expenses.
Assets and Liabilities
As at 30 November 2021:
net worth is negative $743.5 billion;
net debt is $607.3 billion; and
net financial liabilities are $987.2 billion.
MINING SECTOR
Office of the Chief Economist, Resources and Energy Quarterly December 2021, excerpt:
Australia’s resource and energy exports are estimated to reach a record $379 billion in 2021–22, up from $310 billion in 2020–21. In 2022–23, export earnings are then forecast to decline back to $311 billion, as commodity prices settle lower.
The global recovery remains underway, sustained by the ongoing rollout of COVID-19 vaccines and continued fiscal and monetary support across major economies. However, new outbreaks (and variants) of the pandemic across many regions are inhibiting a full global recovery, as are supply chain blockages — including shortages of semi-conductor chips and of shipping containers in some locations.
China’s power shortages have been a dominant influence on global resource and energy commodity prices in recent months. As a major global metal refiner, the power shortages have seen Chinese (base and ferrous) metal output cut back. China’s property sector has slowed noticeably since our last report, cutting metal usage. However, the Chinese authorities now appear to be taking steps to stabilise the sector.
New policy developments are also impacting the global resources and energy sector. In October, China’s government instructed the nation’s coal miners to lift output and imposed a thermal coal price cap, following critical shortages. In November, the US Congress passed a US$1.2 trillion infrastructure program, which will have a stimulatory effect on economic growth domestically and have flow-on effects offshore.
A stronger outlook for base metals and coal is expected to more than offset the impact on export earnings of the downward adjustment we have made to our iron ore price forecasts. Lithium exports are expected to overtake zinc exports in 2022–23 as car makers race to capture the electric vehicle market.
With energy inventories lower than normal, the severity of the remainder of the Northern Hemisphere winter will have a critical influence on energy markets in the short term. The La Niña weather pattern will likely impact on the demand and supply for coal and other energy products.
The risks to the record export earnings forecast for 2021–22 are skewed to the downside. They include a much faster than expected decline in coal prices. There is also potential for a further rise in global inflation and a risk of higher interest rates in response. New, vaccine-resistant strains of the coronavirus, and the risk of delays in the rollout of COVID-19 vaccines to the world’s population, could also pose significant risks.
AGRICULTURE
Dept. of Agriculture, Water and the Environment, Outlook for Crops, excerpt:
Value of crop production to reach record high in 2021–22
The gross value of crop production is forecast to reach a record $43 billion in 2021–22, driven by record winter crop production and high world grain and oilseed prices. Favourable seasonal conditions across all winter cropping regions, particularly in New South Wales and Western Australia (the two biggest winter crop–producing states) are forecast to result in above average to significantly above average yields. A favourable outlook for increased summer crop production is also contributing to the forecast record. The gross value of all major crop commodities is forecast to reach a record level:
wheat – $11.5 billion (record high)
barley – $3.4 billion (record high)
canola – $5.2 billion (record high)
cotton – $3.9 billion (record high)
horticulture – $12.5 billion (second highest on record)
Heavy November rainfall has caused flooding in northern and central west New South Wales resulting in production losses for some producers. Although this is not expected to significantly affect tonnage produced, it will affect the value because of a downgrade in quality. Continued high rainfall in December will cause further damage and more total crop losses if crops cannot be harvested.
In other areas across the eastern states and South Australia, wet conditions during harvest and reduced soil nutrient levels caused by 2 years of high yields could reduce grain and oilseeds quality compared with recent years. The extent of these impacts would differ from paddock-to-paddock, and downgrades of wheat protein levels or improvements in the oil content of canola crops could affect the prices that growers receive.
Despite concerns about a resurgence in mice numbers, increased baiting on farms during winter and spring has reduced mice populations in affected regions, and there have been no reports of significant damage to date. They still remain a risk for summer crops in parts of southern Queensland and northern New South Wales. Farm profits could be reduced by high baiting and cleaning costs if mouse numbers remain elevated during summer.
Figure 1.1 Gross value of crop production, 1971–72 to 2021–22
f ABARES forecast.
Sources: ABARES; Australian Bureau of Statistics
Dept. of Agriculture, Water and the Environment, Economic overview: December quarter 2021, excerpt:
Exchange rate to remain at current levels
In 2021–22, the Australian exchange rate is assumed to average US74 cents – 1 cent lower than the average for 2020–21. Downward pressure on the exchange rate from falling iron ore prices is expected to be balanced by upward pressure from strengthening economic activity and steep increases in coal and natural gas prices.
Overseas interest rates may move higher over 2022, adding to downward pressure on the Australian dollar if current domestic monetary policy settings remain. Stronger than expected inflation overseas could prompt central banks to bring forward planned rate rises. Australian interest rates are not expected to be lifted in 2021–22. The Reserve Bank of Australia has clearly signalled it will not raise rates unless inflation is sustained in the target range (core inflation of 2 to 3%) and wages growth is ‘materially higher’ than it is at present. Wages growth in Australia remains at less than half the average rate recorded between 2000 and 2010, despite relatively low unemployment.
TOURISM
Do not travel to Australia......
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| https://travel.state.gov/content/travel/en/traveladvisories/traveladvisories/australia-travel-advisory.html |
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| https://www.safetravel.govt.nz/australia |
Embassy of the People's Republic of China in the Commonwealth of Australia, 7 January 2022:
Notice on China-bound foreign passengers' application of health code Jan-07-2022）
2022-01-07 16:05
In order to reduce cross-border transmission of Covid-19, especially considering the latest developments of COVID-19 in Australia, the Embassy and Consulate-Generals of China have made major changes on the application procedures. Passengers who travel on and after 17 January, 2022 are kindly required to read and follow instructions below....
Tourism Australia, International Visitor Survey results September 2021:
Key results
Key results for the year ending September 2021 include:
international visitor numbers fell by 98.2% to 155,469
international visitor spend was down 97.1% to $1.3 billion
visitor nights were down 96.2% to 10.4 million.
Australia’s top 5 markets
Australia’s top 5 international visitor markets saw significant losses:
Chinese visitor numbers fell 99.7%. This was a loss of 1.3 million visitors. Spend fell 99.4% or $12.2 billion.
New Zealand visitor numbers fell 93.0%. This was a loss of 1.2 million visitors. Spend fell 88.6% or $2.3 billion. New Zealand saw the smallest losses of all markets, recording 89,000 visitors. This was more than half (57%) of all visitors to Australia for the year ending September 2021. This was due to a trans-Tasman bubble opening between the 2 countries during the June quarter 2021.
United States of America visitor numbers fell 98.9%. This was a loss of 763,000 visitors. Spend fell 96.4% or $3.9 billion.
United Kingdom visitor numbers fell 98.9%. This was a loss of 662,000 visitors. Spend fell 96.3% or $3.2 billion.
Japanese visitor numbers fell 99.7%. This was a loss of 454,000 visitors. Spend fell 99.3% or $2.1 billion.
Tourism losses due to COVID-19
Total international and domestic tourism losses since the start of the pandemic in March 2020 reached $128.3 billion.
International tourism saw losses of $62.5 billion for March 2020 to September 2021. This was due to international border closures caused by the COVID-19 pandemic.
Over the same period, there were further losses of:
$49.8 billion from domestic overnight travel
$16.0 billion from domestic day travel.
Note: The only federal government tourism recovery scenarios are dated 2020 and can be found at Australian Trade and Investment Commission, Tourism Research Australia, Tourism Recovery Scenarios.
CLIMATE
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Australian climate variability & change - Time series graphsAustralian Bureau of Meteorology |
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Australian climate variability & change - Trend maps
Australian Government Dept. of Industry, Science, Energy and Resources, Quarterly Update of Australia’s National Greenhouse Gas Inventory: June 2021, Incorporating emissions from the NEM up to September 2021, excepts:
On a quarterly basis, national emission levels for the June quarter 2021 increased 0.4% or 0.5 Mt CO2-e on the previous quarter in trend terms. The trend result for the June quarter 2021 reflects small increases across all sectors of the inventory with the exception of the electricity sector which was lower by 0.2% on the March quarter 2021….
On an annual basis, the consumption-based inventory increased 0.4% or 1.8 Mt CO2-e to 420.8 Mt CO2-e in the year to June 2021….
National emissions are preliminarily estimated to be 500 Mt CO2-e in the year to September 2021.
Long term sectoral trends
The most important sectoral drivers of Australia’s long-term emissions trend have been:
• Electricity – where emissions have fallen by 22.6% since the year to June 2009 as renewables have displaced coal as a fuel source, reversing the long term increases experienced in earlier
years;
• Stationary energy (excluding electricity) – which has shown the largest growth of any sector in percentage terms since 1990. Emissions have increased 50.3% or 33.3 Mt CO2-e driven, in particular, by recent growth in the export of LNG;
• Transport – where emissions have increased 48.6% or 29.8 Mt CO2-e since 1990, despite recent volatility due to the impacts of the COVID pandemic;
• Fugitives – where emissions have increased 21.3% or 8.6 Mt CO2-e since 1990. Emissions were relatively stable until 2012 but have increased strongly as a result of the growth of the LNG industry;
• Agriculture – where emissions have declined by 18.5% or 17.0 Mt CO2-e since 1990, in line with declining cattle and sheep populations; and,
• Land Use, Land Use Change and Forestry (LULUCF) – where emissions have decreased by the largest margin of any sector since 1990 (112.6% or 218.1 Mt CO2-e) due to reductions in land clearing and native forest harvesting, increases in plantations and native vegetation, and improvements in soil carbon.
