On the subject of...

Australian Economy

10
May
2016

Budget & Economic Plan (Sic)

How to interpret the Budget? My initial reaction was “much ado about nothing”, by which I meant that while there have been reductions in superannuation “concessions” and in tax rates for small businesses offset by increases in tobacco excise, together with a small initiative on youth employment and commitments to fund various types of infrastructure, there was little change over the next two years in estimates of total government spending and revenue relative to the total economy.
11
Apr
2016

Turnbull Visit to China

Rowan Callick, who is now China correspondent for The Australian, has written two interesting articles relevant to Australia/China relations. He seems to have good contacts with both Chinese themselves and with outside experts on the Chinese political situation. The shorter one is of particular interest as it assesses the influence of Xi and argues that he operates as in a sense a “benevolent” despot, but with the benevolence not extending to corrupt senior officials (see Callick on Xi). Xi, who is said by Callick to have drawn all power to himself, is said to be favourably disposed to Australia.
6
Apr
2016

Turnbull Loses Coalition Lead in Newspoll

The latest Newspoll showing a negative TTP of 49/51 for the Coalition (see below) has sent the Turnbull government, and the Liberal Party itself, a clear message to fix the role being played by the current leadership. The poll includes a section indicating only 19% favoured allowing the States to impose an income tax. This does not necessarily rule out such a development in the future. But it confirms that the handling of the issue by Turnbull has been so bad that, as suggested in yesterday’s Commentary, it requires a major change in the role being played by him as PM.
3
Apr
2016

Turnbull’s State Income Tax Still Afloat

When Malcolm Turnbull announced that he would offer the States the opportunity to impose an income tax, he described it as one of the greatest potential reforms to Federation in ‘generations’... “this, we believe, is the only way that we can genuinely reform our Federation... It will give the states real financial autonomy”. But when the States rejected the offer, Turnbull initially described it as being “not there” now. Soon however it reappeared, first in the COAG Communique and then in Turnbull’s explanation (sic) of the reason for the rejection and the implication as he sees it.
1
Apr
2016

Turnbull on Federal State Relations

It is becoming more difficult by the day to guess what rationale is behind the limited policy announcements Malcolm Turnbull is starting to make. One interpretation of Turnbull’s latest announcement is that he reached a personal view that he needed to announce something new. That led to his decision to announce a “new” policy on federal-state relations without providing substantive detail because he thought that there would general agreement that something needed to be done to reduce the vertical fiscal imbalance between the Federal and State governments. And that there would be much discussion of the idea and praise for him for initiating it.
8
Mar
2016

Electoral Position, Defence & Budget Policies

Today’s Australian publishes an unchanged electoral position of the two major parties (TPPs of 50% each) but another reduction in Turnbull’s net satisfaction ratio. He is still well ahead of Shorten in the unchanged Better PM category (55/21). But the uncertainty about Coalition policy in various areas has been allowed by Turnbull to reach the point where an “early” election seems increasingly likely, with policies being unduly determined by electoral “demands” and Turnbull himself having a bigger say as to what is in the policies.
2
Mar
2016

Economic Outlook

At a time when in January the IMF revised down its global GDP forecast for 2016 from 3.6% to 3.4%, and also forecast a fall of 9.5% in non-oil commodity prices (after a fall of 17.4% last year), Treasurer Scott Morrison is justified in repeating his boast that today’s December quarter GDP increase of 0.6% (seasonally adjusted) shows Australia is continuing to grow well above the average in the OECD. In fact, the trend in GDP growth has edged up slightly since 2013.
25
Feb
2016

The Missing Economic Policy

Today’s Newspoll shows the two major parties are now on the same TPP (down from a steady 53/47 for the Coalition). Although Turnbull remains clearly preferred as PM, his indecisiveness over whether to raise the GST/cut income tax and his failure to produce any new substantive economic policy has contributed to the downturn. Turnbull’s general approach of not ruling any policy in or out –and then not deciding on anything – has not helped and his net satisfaction rating is down to 10 compared with 38 in mid-November. As Rowan Dean put it in Saturday’s AFR, “Turnbull: The Force Awakens has lost business to Deadbill”.