Wednesday 30 March 2016

Australian Federal Election 2016; debt, credit and GDP


So how is Australia’s economy faring under the Abbott-Turnbull Government in the lead-up to the 3 May 2016 federal budget and the following general election?


The underlying cash balance for the 2015-16 financial year to 29 February 2016 was a deficit of $38,719 million.1
The fiscal balance for the 2015-16 financial year to 29 February 2016 was a deficit of $35,292 million…..

Total revenue was $1,223 million lower than the MYEFO profile, primarily due to lower than expected taxation revenue and dividend income.
Total expenses were $2,831 million lower than the MYEFO profile, primarily due to lower than expected supply of goods and services, wages and salaries and grants expenses…..

Net worth is negative $352,423 million;
Net debt is $287,920 million; and
Net financial liabilities are $516,561 million.

Financial Review, 28 March 2016:

Australia is one of seven countries that Forbes magazine says is the "most likely to suffer a debt crisis" within the next three years. 

China, whose economy has faltered in the past two years, comes No. 1 on the list of seven, but Australia is No. 2. Sweden, Hong Kong, South Korea, Canada and Norway complete the list of infamy.

Using data for both private and public debt compiled by Switzerland-based Bank of International Settlements, the magazine looks at the rate of growth of credit compared with gross domestic product, paying particular attention to when credit growth begins to fall……

"The bottom line is that private sector expenditure in an economy can be measured as the sum of GDP plus the change in credit, and crises occur when (a) the ratio of private debt to GDP is large; (b) growing quickly compared to GDP," the magazine says.

When credit growth slips as servicing debt exhausts funds available to finance it, "new borrowers baulk at entry costs to house purchases, and numerous euphoric and Ponzi-based debt-financed schemes fail" leading to a change in available credit.

Australia, like the other six countries on the list, fill the two key prerequisites, a high level of private debt to GDP, and a rapid growth of that ratio in the last few years, the report says.
Economic crises often coincide with private debt exceeding 1.5 times GDP and the level of private debt grows by about 20 per cent over a five-year period.


The Guardian, 15 January 2016:

The results are in: Australian households have more debt compared to the size of the country’s economy than any other in the world.

Research by the Federal Reserve has shown the consolidated household debt to GDP ratio increased the most for Australia between 1960 and 2010 out of a select group of OECD nations. Australia’s household sector has accumulated massive unconsolidated debt compared with other countries. As of the third quarter of 2015, it now has the world’s most indebted household sector relative to GDP, according to LF Economics’ analysis of national statistics……

Australia has around $2 trillion in unconsolidated household debt relative to $1.6 trillion in GDP. Australia’s ratio is 123.08%.....

Australian property investors and homeowners are burdened with massive mortgages, especially new and marginal entrants. Unlike winning a gold medal at the Olympics, having the world’s most indebted household sector is not an achievement the nation should be proud of. This is where Australia’s real debt and deficit problem lies, not in the public sector.

Footnotes

1. Compare with the 2013-14 financial year to 30 September 2013 which covers the last eight months of the former federal Labor government:

The underlying cash balance for the 2013-14 financial year to 30 September 2013 was a deficit of $22,929 million.
The fiscal balance for the 2013-14 financial year to 30 September 2013 was a deficit of $19,659 million…..

Total revenue was $4,580 million lower than the Budget profile primarily due to lower than expected taxation revenue. This reflects lower than expected individuals and other withholding taxation, company tax, superannuation fund tax and resource rent taxes.
Total expenses were $4,636 million lower than the Budget profile primarily due to lower than expected grants and subsidies, suppliers and personal benefits expenditure.  This is in part consistent with reduced expenditure during the election caretaker period and reflecting timing differences, particularly for grants and subsidies…...

The net worth of the General Government sector is a negative net asset position of $220,670 million at 30 September 2013.
The net debt of the General Government sector is $174,557 million at 30 September 2013.

Tuesday 29 March 2016

Australian Federal Election 2016: a picture's worth a thousand words


Financial Review 28 March 2016

And you thought local government amalgamation news couldn't get any worse......


The Sydney Morning Herald, 28 March 2016:

NSW councillors have been told to reapply for their jobs, as the NSW government lays the groundwork to terminate existing councils as early as next month and begin amalgamations.

On Thursday, all councillors received a letter from the Minister for Local Government Paul Toole, telling them he was considering interim arrangements for councils until elections are held after September. He said he was looking at options of a single person acting as administrator of a new merged council, or the continuation in office of some or all of the councillors in the new larger council area.

Councillors have been ordered to  submit an expression of interest by April 15, explaining why they would be suitable for the interim council or why they are qualified to act as an administrator.

General managers and mayors are also required to apply for the jobs in the new larger councils.

This is despite the Boundaries Commission still having to report on the merger proposals, most of which are being resisted by existing councils.

Most public inquiries have finished and the delegates for each council area are preparing their reports. They will then go to the minister and to the boundaries commission. The minister then makes a decision to accept or reject the finding on the merger. But given this is the minister's blueprint, most councils expect him to forge ahead with mergers, possibly as soon at the end of April…..

To date a search of the NSW Boundaries Commission website does not list Tweed Shire Council, Ballina Shire Council, Byron Shire Council, Clarence Valley Council, Lismore City Council, Richmond Valley Council and Kyogle Council (which comprise the NSW Northern Rivers region) as being affected by this round of local government amalgamations.

However, it would be foolish of local communities to ignore the fact that some Northern Rivers mayors and general managers would favour amalgamation - seeing it as the road to increased personal incomes, greater power and wider political influence - and indeed may be quietly indicating to the Baird Government that amalgamation into a larger local government area is their preference.

VALE: The Great Barrier Reef


Of the 520 reefs surveyed only four showed no evidence of bleaching
ABC News, 28 March 2016


Aerial snaphot of coral bleaching, Great Barrie Reef, 2016


Scientist witnesses severe coral bleaching

James Cook University scientists have described scenes of widespread damage as coral bleaching extends its reach in the northern Great Barrier Reef.

Senior Research Fellow, Dr Jodie Rummer from the ARC Centre of Excellence for Coral Reef Studies has just returned from more than a month at Lizard Island Research Station in the Northern Great Barrier Reef, and she is appalled by the extent of the bleaching.

“I witnessed a sight underwater that no marine biologist, and no person with a love and appreciation for the natural world for that matter, wants to see,” she said.

Dr Rummer has been undertaking research on the island since January 2012, one of the most pristine sites in the entire Great Barrier Reef. She has spent the past five weeks underwater, studying the effects of the extreme heat on the physiology of reef fishes.

“The bleaching now is not just restricted to the hard corals. There’s also extensive bleaching in the soft corals, and it is also affecting anemones and giant clams.”
Dr Rummer called the event “catastrophic”. She said fish were still abundant but is worried for the future.

“We know that many of these tropical populations of reef fishes cannot tolerate dramatic increases in temperatures for extended periods of time. So it may be just a matter of time before the fish start feeling the heat as well. We’re watching them closely.” The latest Bureau of Meteorology forecasts suggest that temperatures will remain well above average through the month of March.

Dr Rummer said the heat comes hard on the heels of cyclones that had also had an impact on the northern Reef.

“This year, the combination of El Niño, climate change, and an extended period of hot summer days when the tide was exceptionally low has caused many of the corals that survived last year’s cyclone to lose their symbiotic algae and start bleaching.”

She said aerial surveys planned in the coming days by the National Coral Bleaching Taskforce will systematically measure the extent of the phenomenon.

Note to editors:
Coral bleaching occurs when abnormal environmental conditions, like heightened sea temperatures, cause corals to expel tiny photosynthetic algae, called ‘zooxanthellae’. The loss of these colourful algae causes the corals to turn white, and ‘bleach’. Bleached corals can recover if the temperature drops and zooxanthellae are able to recolonise them, otherwise the coral may die.
The National Coral Bleaching Taskforce was convened in 2015 to co-ordinate research effort among Australia’s marine science community in the event of a mass bleaching event in Australia. The taskforce draws together 10 research institutions across Australia to co-ordinate the efforts of over 300 scientists.
The associated research institutions are, ARC Centre of Excellence for Coral Reef Studies, Australian Institute of Marine Science, CSIRO, Great Barrier Reef Marine Park Authority, James Cook University, NOAA, University of Queensland, University of Sydney, University of Western Australia, WA Department of Parks and Wildlife.

Global warming is claiming the life of The Great Barrier Reef, a World Heritage natural wonder which can be seen from outer space.

Monday 28 March 2016

Japan admits to mass slaughter of pregnant minke whales during Antarctic breeding season



Tokyo: Japan's whaling fleet returned on Thursday from its Antarctic hunt after a year-long suspension with a take of more than 300 whales, including pregnant females.
The International Court of Justice ruled in 2014 that Japan's whaling in the Southern Ocean should stop, prompting it to call off its hunt that season, although it said at the time it intended to resume later.
Japan then amended its plan for the next season to cut the number of minke whales it aimed to take by two-thirds from previous hunts.
Its fleet set out in December despite international criticism, including from important ally the United States.
The final ships of the four-vessel whaling fleet returned to Shimonoseki in southwestern Japan on Thursday, having achieved the goal of 333 minke whales, the Fisheries Agency said.
Of these, 103 were males and 230 were females, with 90 per cent of the mature females pregnant.

National Geographic, 25 March 2016:

Flouting an international ruling, Japan resumed minke whaling for ‘scientific purposes’ during breeding season….

After the international court ruling, Japan halted its whaling activities briefly, but then resolved to begin whaling again in the  2015-2016 season. It revised its program to be more scientific, and it lowered its quota of whales by about two-thirds.

Still, many scientists derided the new plan, and the International Whaling Commission could not reach a consensus on whether it met requirements. And while the quota reduction looked good on paper, it didn’t make much of a difference in practice, according to Astrid Fuchs, the whaling program manager for the nonprofit organization Whale and Dolphin Conservation. In previous years, Japan has killed between 200-400 Antarctic minke whales each year. This year’s 333 isn’t out of the ordinary.

Also part of its plan: targeting females. Japan maintains that it must capture and kill juvenile and adult females in order to determine the age at which minke whales reach sexual maturity. Japan wants to use this data in its quest to demonstrate the minke whale population is healthy enough for regular whaling, Fuchs said.

And because it’s breeding time in the southern seas, 90 percent of the females Japanese whalers killed were pregnant.

The expedition was part of a 12-year plan to kill nearly 4,000 whales in Antarctic waters. The conservation status of Antarctic minke whales is unclear, but some analyses have found a 60 percent reduction when comparing the 1978–91 period and the 1991–2004 period, which would qualify it for endangered status.

Anyone wishing to politely make their views on Japanese whaling in the South Ocean/Antarctica known to the Government of Japan can do so with these contact details:

PRIME MINISTER OF JAPAN

Prime Minister Shinzo Abe
1-6-1 Nagata-cho
Chiyoda-ku, Tokyo 100-8968 JAPAN
Tel: +81-3-5253-2111
E-mail form: https://www.kantei.go.jp/foreign/forms/comment_ssl.html
Website: http://www.kantei.go.jp/foreign/index-e.html
Public Relations Fax: +81-3-3581-3883

MINISTER FOR FOREIGN AFFAIRS

Minister for Foreign Affairs Fumio Kishida
Foreign Affairs online comment page:

MINISTER OF AGRICULTURE, FORESTRY AND FISHERIES

Minister of Agriculture, Forestry And Fisheries Hiroshi Moriyama
1-2-1 Ksumigaseki
Chiyoda-ku, Tokyo 100-8907 JAPAN
Tel:+81-3-3502-8111
Fax: +81-3-3502-0794
E-mail form: https://www.contact.maff.go.jp/maff/form/114e.html
Website: http://www.maff.go.jp/e/index.html

EMBASSY OF JAPAN IN AUSTRALIA

Ambassador Extraordinary and Plenipotentiary to Australia Sumio Kusaka
Embassy of Japan in Australia
112 Empire Circuit, Yarralumla
Canberra A.C.T.2600
 Australia.
Tel:(61-2)6273-3244
Fax:(61-2)6273-1848
http://www.au.emb-japan.go.jp/

Australian Federal Election 2016: is the Liberal Party ripping itself apart in lead-up to polling day?


These days the Liberal Party of Australia is making Labor look like amateurs when it comes to internal party division and dissent.

ABC News, 25 February 2016:

A retired state Liberal MP, Charlie Lynn, who served for almost 20 years and was suspended from the party for speaking out on 7.30, has delivered a stinging rebuke to the state branch of the party, accusing it of acting like the Kremlin.

Charlie Lynn was suspended along with former federal Parliamentary Secretary, Ross Cameron, and branch member, Juris Laucis, by the party's acting State Director, Simon McInnes, for criticising NSW Liberal party pre-selection processes.

The Daily Telegraph, 11 March 2016:

PENRITH councillor Marcus Cornish has been suspended from the Liberal Party for six months after an email he wrote for party members was leaked.
At close of business on Friday, February 19, the conservative councillor — who has sided with the party for about 12 years — received the news by email, claiming he was “bringing the party into disrepute in an election year”.
Cr Cornish said: “All I am trying to do is keep democracy alive … if arguments aren’t heard for and against on things, then the people are not really heard.

The Australian, 20 March 2016:

The Liberal Party has erupted in a furious brawl over the role of ­lobbyists in selecting Senate ­candidates after a “farcical” vote on the weekend that defied Malcolm Turnbull, sought to undermine a federal minister and cost retired general Jim Molan a seat in parliament. In a test of money and power, party officials allowed lobbyists Michael Photios and Nick Campbell to step in at the last minute to help decide the NSW Liberal candidates for the Senate at the next election, sparking claims of “corruption” in the process.

The state executive will meet within days to rectify part of the outcome by confirming the Minister for International Development Concetta Fierravanti-Wells at the top of the ticket, but the party faces a wider challenge over the failure to notify candidates of the late switch to the preselection panel.

“The anger is so wide over this that the challenge could come from anywhere,” one Liberal Party member said yesterday, as those involved in the preselection said the result would have been ­completely different if the state executive had not intervened.

While Tony Abbott decreed two years ago that lobbyists could not hold positions as party officials — forcing Mr Photios off the state executive — the surprise move last Friday saw Mr Photios and Mr Campbell take the place of two members of the state executive in the Senate preselection panel.

The move was approved by the state executive, which is controlled by the moderate wing of the party, and was overseen by state party director Chris Stone, who was the returning officer in the preselection and until three weeks ago was an employee of Premier State Consulting, the lobbying firm run by Mr Photios and Mr Campbell.

The preselection vote on Saturday installed Hollie Hughes as the leading candidate, followed by Senator Fierravanti-Wells and Mr Molan, in defiance of the view from the Prime Minister and others that the Minister for International Development should gain the No 1 spot. Mr Molan was the special envoy of Operation Sov­ereign Borders.

The Australian was told Mr Photios and Mr Campbell ­“cajoled” preselectors and “worked the room” to ensure the outcome, exercising influence that has become a commonplace but contentious aspect of NSW preselections.

Sky News, 21 March 2016:

Former Prime Minister Tony Abbott has taken a swipe at the way Liberal preselections are held in NSW, 'daring' the state executive to suspend his membership for speaking out against the process.

Last month, three liberal members - including Sky News contributor Ross Cameron - were suspended from the party over their calls for direct preselection of candidates via plebiscites.
Tony Abbott, who supports the party's Howard Reforms, told Sky News the men 'were making perfectly reasonable points about the factional stitch up that we've seen again and again in the NSW Liberal Party - they were just saying what needed to be said.'

The former PM also issued a directive to the party in NSW - 'In a sense I dare the state executive to suspend me for saying we need reform in the NSW Liberal Party,' Mr Abbott said.

ABC News, 22 March 2016:

Four sitting West Australian federal Liberal MPs are being challenged for preselection in their seats ahead of this year's election, and a wide range of candidates have nominated for the new seat of Burt.

As previously confirmed, former State Liberal Party Director Ben Morton will try to topple Dennis Jensen in Tangney, where Dr Jensen has twice before lost the support of local members before being endorsed by the party's State Council.

In the seat of Swan, Steve Irons will be challenged by Suncorp Insurance state manager Carl Pallier; Durack MP Melissa Price will battle against geologist David Archibald; and Bunbury local Ben Small will take on Forrest MP Nola Marino.

The Australian, 24 March 2016:

Julie Bishop is in it and so is Arthur Sinodinos. Lucy Turnbull is a foundation member.
Yet the “inner circle” at the top of the federal government does not seem to include Scott Morrison.
Malcolm Turnbull yesterday acknowledged that the Treasurer was not part of the small group told beforehand that the federal budget would be brought forward a week to prepare for a July 2 election.
“I did not call Scott Morrison on Sunday night. No, I did not,” the Prime Minister told the Nine Network’s Lisa Wilkinson yesterday when pressed on the matter. “It was a very small circle,” he added.
The impression is that Morris­on is a mere comet in the Turnbull solar system, circling close to the sun on some occasions while hurtling into the distance on others.
This has observers mystified. How could the Treasurer not be told as soon as possible of the final decision to bring forward the budget — the document that has his name on its title page?

The Australian, 24 March 2016:

Malcolm Turnbull criticised Scott Morrison over his handling of the GST in front of cabinet colleagues during a dinner at The Lodge.
Some of the Treasurer’s colleagues saw the Prime Minister’s remarks at the February 21 dinner­ as a dressing-down.
The Australian understands Mr Turnbull told Mr Morrison his continued hard sell on raising the GST had shown the government in a bad light and was causing it difficulty.
The dinner at The Lodge that Sunday night was not a full meeting of the cabinet, but many ministers attended. The Prime Minister is also understood over the course of that weekend to have asked the Treasurer to pull back on his media commitments, concerned at his poor performance that week at the National Press Club and in a series of talkback radio intervi­ews, where he spoke about “unicorns” and “pixie horses” and was criticised for lacking vision.
The following day, Newspoll in The Australian showed the government had lost its two-party-preferred lead over Labor and was tied at 50-50, which Mr Turnbull is understood to have sheeted home to Mr Morrison’s poor media performance.
It was the first concerning poll for Mr Turnbull, ending his personal honeymoon. Before then, the Coalition had held a two-party-preferred lead of 53 per cent to 47 per cent for three months.
When The Australian put questions to the offices of Mr Morrison and Mr Turnbull about the terse exchange during the dinner, ­neither denied it had occurred.

The Australian, 24 March 2016:

Abbott likes to give the impression he is helping, but he knows full well he is not. He must know that because he is not totally stupid.
It may satisfy his bloodlust, and those egging him on, to see Turnbull lose the election, but the Liberal Party will not thank him, except for that unhinged, ground-zero minority that wants to see the Liberal Party razed under Turnbull and Bill Shorten become prime minister.

UPDATE

The Star, 23 March 2016:

“It’s very easy for me to campaign ... because the Turnbull government is running on the Abbott government’s record,” said Abbot in an interview with Sky News yesterday.
“It’s a very strong record,” he said, citing the hardline immigration policy that deterred the flow of asylum seeker boats, and a string of free trade agreements.
Abbott remains in parliament but had pledged not to interfere after Turnbull’s takeover, promising on his departure there would be “no wrecking, no undermining, no sniping”.
However, he has continued to intervene, to the delight of a hardcore of right-wing lawmakers who reputedly still entertain the thought of returning him to the top job in the near future.
Turnbull, who has lambasted Abbott’s economic management, hit back last Friday against the putdown which could spell trouble ahead of general elections which he has said could come as soon as July.
“He’s not right,” the prime minister said of his predecessor. “The bottom line is there is continuity and there is change.”

The Sydney Morning Herald, 28 March 2016:

Howard government minister Peter Reith has told Tony Abbott to "keep his head down", warning he would endanger his reputation in the Liberal Party if he persisted in undermining Prime Minister Malcolm Turnbull.
Coalition figures are nervous about Mr Abbott's plans to campaign in marginal seats during the upcoming federal election, amid consistent signs the former prime minister is reneging on his promise not to undermine the government……
Mr Abbott's burst of public activity, including newspaper interviews and television appearances, has rattled Coalition figures within and outside the Parliament. Mr Reith warned it had the potential to damage his the former PM's standing within the Liberal Party. "He really does need to keep his head down for his own sake, otherwise he will be trashing his own reputation," he said.