Australia PM puts economy at heart of re-election

July 15 (Reuters) – Australian Prime Minister Julia Gillard sought to sell her Labor government’s economic credentials on Thursday, warning that the conservative opposition’s policies could risk a robust economy.

In her first major economic speech since becoming prime minister on June 24, Gillard set out her platform for re-election at polls expected within months, centering on job creation.

“I believe a strong economy is the foundation of everything else that as prime minister I want for this great country of ours,” Gillard told the National Press Club in Canberra.

“As prime minister I will make my economic judgments based on what gives Australians the best opportunity for access to work.”

The government, on course for a narrow election victory according to opinion polls, tweaked its economic forecasts on Wednesday, predicting robust commodity prices due to Chinese demand will ensure the budget returns to surplus in 2012/13, far ahead of most other rich nations.

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It also forecast unemployment would fall to 5 percent in 2010-11 and 4.75 pct in 2011-12.

Gillard said the economy had emerged from the global financial crisis stronger than many other developed nations due in part due to the government’s A$52 billion ($46 billion) stimulus package in 2009.

“I say to the Australian people, now is not the time to take risks with the Australian economy,” said Gillard, Australia’s first female prime minister who appears far more at ease dealing with the media than her predecessor Kevin Rudd.

“It is a time for prudent and careful economic management, not a time to take risks with a Liberal Party that got it wrong on the global financial crisis, that opposed (stimulus) action to support Australian jobs and that would have allowed hundreds of thousands of jobs to be destroyed.”

Gillard said a new mining tax, which is forecast to raise A$10.5 billion in revenue from 2012, would fund a cut in corporate tax and a rise in pensions but would be dumped by conservative leader Tony Abbott if he was elected.

“Remarkably, my opponent would deny Australians these benefits because he is refusing to accept the tax that our biggest mining companies have agreed to pay,” she said.

PM SELLS ECONOMIC CONSERVATISM

Economic management is traditionally a major issue in Australian elections. And while Australia’s healthy economy, in its 17th year of growth, should be a winning ticket for the government, voters still believe the opposition has the edge in economic management, according to opinion polls this week.

The opposition, which ruled for 12 years before Labor was elected in 2007, is also committed to achieving a budget surplus, and has said it would put downward pressure on interest rates, cut debt and cap spending.

But it differs from the government over its opposition to a new mining tax and a planned carbon price to fight climate change.

Despite her left-wing background, Gillard has sold herself as an economic conservative, dismissing concerns her government would be an old-style, big-spending Labor administration.

Gillard said growth in spending would be capped at 2 percent a year once the economy was growing above trend.

She also said Australia could not rely solely on its resource sector for future economic prosperity, warning doing so could create a two-speed economy of haves and have nots.

“Australia today is a great beneficiary of the economic growth in China and the demand for our mineral resources in our region. But if anyone thinks that gives us a free ticket to easy prosperity, they are mistaken,” she said.

She said a re-elected Labor government would push for micro-economic reforms to ensure Australia remained a competitive and modern economy, but also provided social dividends.

“The microeconomic challenges of the future are not a simplistic choice between the market and the state,” said Gillard.

“Simply applying the extreme free-market medicine of liberalisation and privatisation without thought or care is not a solution. Maintaining an instinctive hostility towards the public sector and all it provides is equally wrong.” ($1 = 1.131 Australian Dollar) (Editing by Ed Davies and Sugita Katyal)

Major Australia investors urge quick action on climate

(Reuters) – A group of major investors on Friday urged Australia’s new Prime Minister Julia Gillard to take swift action to fight climate change and cut carbon emissions blamed for heating up the planet.

Green Business | COP15

Gillard should outline her road map on climate change as soon as possible and set priorities for consensus building over the issue, said the Investor Group on Climate Change (IGCC) that represents institutional investors with more than $500 billion under management.

“We consider that climate change presents real risks to the Australian economy, which must be addressed,” the group said in a statement.

Gillard moved to revive a stalled carbon trading scheme on Thursday, within hours of becoming prime minister after incumbent Kevin Rudd stepped down. Opinion polls had shown a slump in support for Rudd and he was also unpopular within his own party.

Gillard pledged more consultation with industry and voters to win support for a price on carbon pollution, an issue that has split the nation.

Rudd had championed the carbon trading scheme but it was rejected by a hostile Senate for a third time in March.

His decision in April to shelve the scheme till 2013 angered voters who wanted action on climate change and was a major reason for the plunge in his popularity in opinion polls.

IGCC said its members would continue to support strong climate change policy action but neither the government or the main opposition party had an adequate policy to address risks to the Australian economy from global climate change.

Australia is the world’s top coal exporter and among the highest per-capita emitters of planet-warming carbon dioxide, with coal used to generate about 80 percent of electricity.

While the government has embraced renewable energy and energy efficiency, analysts say putting a price on carbon emissions is the most effective way for Australia to cut greenhouse gas pollution.

“We see indications of significant policy progress in China, Europe and in many U.S. states and do not accept that stalled international progress is sufficient reason for further policy delay in Australia,” said IGCC chief executive Nathan Fabian in the statement.

U.N. climate talks on a successor to the Kyoto Protocol, whose first phase ends in 2012, have bogged down and agreement on a broader pact covering all of the world’s major greenhouse gas emitters is now thought to be more likely by the end of 2011.

(Reporting by Bruce Hextall; Editing by David Fogarty)

Australian cbank worried by euro zone, upbeat on Asia

June 15 (Reuters) – A top Australian central banker on Tuesday said debt problems in the euro zone were worrying as it was not clear they could be solved anytime soon, though strength in Asia would still support the Australian economy.

Reserve Bank of Australia (RBA) Deputy Governor Ric Battellino said some moderation in growth in China would be no bad thing given how fast the economy had been running and could even help Australia manage its mining boom.

“I think, the challenge for the Australian economy for the next few years is going to be how to accommodate this mining boom that’s going on,” Battellino said in response to questions after giving a speech on debt. (Reporting by Wayne Cole)

Australian economy growing around trend – RBA

SYDNEY, April 12 (Reuters) – The Australian econmy is growing around trend and interest rates are a little below average, a top central banker said on Monday.

Guy Debelle, assistant governor of the Reserve Bank of Australia, was speaking at a Senate inquiry into finance for small business. He also said the central bank took the high Australian dollar into account when setting interest rates.

The central bank has raised rates five times in six policy meetings, taking the cash rate to 4.25 percent.

(Reporting by Cecile Lefort; Editing by Mark Bendeich)

Too much medicine may cost business billions

A leading return to work physician says a trend towards more diagnostic tests and treatment is contributing to the rising cost of workers compensation.

The most recent Federal Government estimate (from Safe Work Australia) is that the direct and indirect cost of work-related injury and illness to the Australian economy was $57.5 billion in 2005-06 – equivalent to 5.9 per cent of gross domestic product.

Dr Mary Wyatt, a specialist occupational physician and the editor of Return to Work Matters (RTW Matters), says the average cost of claims has risen significantly in the last four years.

Figures from a survey of about 2,000 workers compensation claimants from Australia and New Zealand conducted for RTW Matters shows that the average claim cost increased by almost $3,000 over the past four years – from $10,353 in 2005-06 to $13,336 in 2008-09.

Dr Wyatt says those costs affect the individual, businesses and the taxpayer.

“Some years ago there was work done, and it said that the cost is borne equally: one-third by the employee who has the injury, one-third by the employer, and one-third by the community,” she told ABC News Online.

While increased wage rises and inflation account for some of the costs, Dr Wyatt says a significant proportion is being caused by over-treatment.

“We have an increasing focus on the medicine, and we have lots of scans that tell us there are things wrong with our bodies, and then when those scans are done it’s often labelled as a serious problem, and then the worker gets worried and we often go off on a tangent,” she said.

“The rate of increase in scans and the rate of increase in surgery’s gone up dramatically, particularly for some conditions, and that’s also contributing to increased costs as well.”

She says it is often not the fault of the medical professionals, with both patients and the various workers compensation systems often demanding hard evidence of exactly what is wrong.

“If somebody goes to their doctor they’ll often expect a scan, and of course you’ll be well aware of the publicity recently about the problems of CAT scans and the radiation, but we see people who’ve got four or five bags of scans,” Dr Wyatt said.

“In our system we’re making it increasingly complex. So the person has to go to the doctor, which is not inappropriate, but then the doctor has to design the restrictions, and the restrictions get put on a certificate and that certificate gets given to the supervisor who scratches their head because often the restrictions don’t make sense.”

Yet the increase in treatment and costs has not led to improved outcomes, with only 72 per cent of survey respondents back at work six months after their injury – down from 80 per cent when the last survey was done four years ago.

The survey also shows the average number of days off work per case has increased 8 per cent – from 51 to 55 days.

Dr Wyatt says the longer it takes people to return to work, the lower the chances of a successful return to employment.

She adds that creating uniform national rules for workers compensation will not improve outcomes unless there is a greater focus on increasing cooperation between employers, employees and their medical practitioners.

“People, when they’re out of work for a few years, stay off work forever, and harmonising the rules isn’t going to change the outcomes of those people we see day-in day-out.”

She says she has seen cases where employees have felt too afraid to raise work-related injuries with their employers until the problem escalates and requires major treatment.

In particular, many repetitive strain type injuries could be addressed by ergonomic improvements or altering an employee’s duties when mild pain first arises, rather than treating them later on through an expensive chain of scans and rehabilitation.

“But now we’ve got a woman who’s back at work two hours a day after being off work for six weeks, highly medical focus and that claim is going to cost that company a hundred thousand dollars instead of a couple of thousand for what could have been dealt with more effectively.”

If you are a worker, employer, or involved in the workers compensation industry and would like to share your experiences of the system, email abcbiztips@gmail.com

Coalition ‘flip-flopping’ on population

The Federal Government has accused the Opposition of flip-flopping on population after the Coalition’s immigration spokesman revealed that his comments on the issue should not be considered as policy.

Two days ago Scott Morrison signalled a Coalition government would slash overseas migration if it was brought to power.

The issue was not discussed with the party room or shadow cabinet and now, after condemnation by some members of his own team and business groups, he says too much has been read into the comments.

“Others have read a lot of things into this, but it’s just a simple observation as to where we’ve got to under this government and whether that’s sustainable level of growth,” Mr Morrison said.

“Now if there’s an interpretation out there that this is a wholesale policy, it’s not a wholesale policy.”

New Population Minister Tony Burke says the Opposition is in chaos.

“How can you have a population policy when you can’t even govern a population of 20 in your own shadow cabinet?” he said.

“They have flipped and flopped over whether they even have a population policy.”

Mr Morrison’s original comments are damaging not just within the party room, but business has also rallied against the idea of a cut to net migration.

The Business Council will meet the Opposition in the days ahead to express its displeasure.

The Australian Chamber of Commerce and Industry’s Peter Anderson wants clarification too.

“We certainly would like to see the Opposition develop a migration policy that is clear to the Australian community and the business community and one which recognises the very strong contribution that skilled migration has made to the Australian economy and society,” he said.

Big Australia

But the Government is trying again to distance itself from the Treasury estimate that Australia’s population will reach 36 million by 2050.

Last year Prime Minister Kevin Rudd said he would be making no apology for a “Big Australia”.

Mr Burke says that is not a government ambition or policy, and in his new role he will not be coming up with a figure of his own.

“To be able to give a precise projection for 2050 forwards would mean being able to accurately predict every cycle in the national and international economy,” he said.

“I don’t see how any modelling would be capable of providing that level of precision.

“I don’t see how you can determine what the economic needs of the nation will be. You can project forward on current trends, that’s what Treasury projections do, but to be able to say in 40 years’ time this is precisely what the economic needs of the nation in the new global context will be, I think is a pretty long bow.”

The Opposition does not want to commit to a figure either.

“I must say having driven from Brisbane Airport to Coolum on Good Friday and sat in traffic for three hours, I can understand people being riled at the thought that you are looking to increase the population by about 50 per cent,” Opposition treasury spokesman Joe Hockey said.

“I don’t think we should be focused on a number. I think we should be focused on a quality of life and that’s what matters and that’s what we believe as a Coalition.”

Fraser welcomes drop in Qld jobless rate

Queensland’s Treasurer Andrew Fraser has welcomed a drop in the state’s unemployment rate.

The Queensland figure fell from 5.6 to 5.5 per cent last month seasonally adjusted.

Mr Fraser says the Government’s promise to create 100,000 new jobs over three years now stands at 78,200.

“More than 20,000 jobs have been created towards that target,” he said.

“Obviously one year on that means that we are building momentum with the jobs that we’ve been able to generate over the last number of months.”

However, the State Opposition says many of the new jobs created in Queensland are only part-time.

Opposition Leader John-Paul Langbroek says there are now 7,000 fewer people employed full-time compared with a year ago.

Australian figures

Meanwhile, a senior economist says continued growth in full-time employment nationally shows Australia’s labour market is in good shape.

Australian Bureau of Statistic figures show just over 30,000 full-time positions were created in March, keeping the national unemployment rate steady at 5.3 per cent.

There was a fall of 10,000 part-time roles, which means 20,000 jobs were created in total during the month.

RBC Capital economist Su-lin Ong says the results bode well for the Australian economy.

“It’s now full-time jobs that are driving most of the employment creation and I think that’s a confirmation that’s very encouraging and it’s clearly a confirmation of a health labour market,” she said.

Travel industry suffers as Aussies head overseas

Tourism figures show there has been an increase in overseas visitors coming to Australia to travel.

The Australian Bureau of Statistics data shows during the period of January to February there was an almost 5.5 per cent rise in visitors since the same period last year.

But Evan Hall from the Tourism and Transport Forum says the figures also show more Australians are flocking overseas to travel.

Mr Hall says that is hurting the domestic travel industry.

“We’re also seeing a continued explosion in the number of Australians who are heading off overseas for their holiday and that’s up almost 18 per cent on this time last year,” he said.

“This is now becoming a significant problem for the Australian economy as all those tourism dollars go overseas.”

RBA praises Australia’s world-beating economy

A Reserve Bank report has again highlighted how different Australia’s experience of the financial crisis has been from other developed nations.

But while the report’s assessment of the Australian economy is glowing, it also says there are a range of international risks still threatening global financial stability.

The RBA has again highlighted the impact of stimulus – both the Federal Government’s fiscal stimulus and the bank’s own interest rate cuts.

Figures from the bank and Bureau of Statistics show employee wages fell 2.6 per cent in real terms last year as working hours were cut and wage rates stagnated.

However the report shows that government and RBA largesse more than compensated.

“Disposable incomes were boosted by accommodative fiscal and monetary policy settings,” the report noted.

“As a result, total disposable income per household increased by 3.5 per cent in real terms, and 6.6 per cent in nominal terms, over the same period.”

The recovery in the second half of 2009 has had the greatest positive effects on households with high levels of assets.

The RBA report says net worth per household increased by 11 per cent in 2009, driven largely by a 10 per cent increase in house prices which make up around 60 per cent of the nation’s aggregate household assets.

The news is perhaps not so good for younger people who have suffered from the highest rates of unemployment during the financial crisis and tend not to own a house outright.

Younger people have also benefited least from the 30 per cent recovery in share prices last year, which has given the greatest boost to those with the largest superannuation balances.

The Reserve Bank has also acknowledged the negative impact of its historically low interest rates on people with large bank savings, a group comprising many self-funded retirees.

“Lower rates would have put downward pressure on the incomes of those households holding more interest-bearing assets than liabilities,” the report said.

Debt increase

The overall improvement in household finances has also tempted more households into greater debt.

The Reserve Bank figures show growth in borrowing accelerated to an annualised rate of 8.3 per cent in the six months to January 2010 compared with 4.7 per cent in the six months to January 2009.

Most of that increase has been driven by a 10 per cent per annum growth in the amount of home loans, although credit card debt has started to rise again after remaining broadly flat in 2008 and the first half of 2009.

Despite this burgeoning debt, the Reserve Bank says current estimates are of about 27,000 households nationwide more than 90 days in arrears on their home loan repayments, only slightly higher than the estimated 23,000 at the end of 2008.

The corporate sector also recovered in the second half of last year.

The Reserve Bank says the profits of Australia’s 200 largest listed companies were around 20 per cent higher in the second half of last year compared with the first half.

But profits remained 15 per cent below levels seen in the second half of 2008.

Global concerns

Outside Australia, however, the news is not so rosy.

The Reserve Bank says there are still concerns about the level of bad debts in the US.

“The rise in charge-offs for business loans has been similar to recent downturns, but charge-offs for household loans are well above the peaks of the past 20 years,” the RBA’s report noted.

It also notes that business loan write-offs in the UK and Europe increased last year.

Globally, the bank says, the default rate on corporate “speculative-grade” debt rose above recent peaks to the highest level since the Great Depression.

The good news, says the RBA, is that the 40 per cent fall in US and UK commercial property prices appears to have bottomed out. The bad news is that the rate of loan defaults generally remains high for a number of years after the crash in prices.

The situation of US housing finance is no better, with around 8 per cent of American home loans classified as “non-performing”.

The RBA says this high default rate is likely to result in further write-offs for American, British and European banks.

It also says the sovereign debt crisis in Greece and the so-called PIIGS (Portugal, Ireland, Italy, Greece and Spain) countries poses risks to financial stability.

In contrast, the RBA’s main concern with developing economies is the emergence of asset prices bubbles of a similar kind to those that burst in the developed economies over the past three years with disastrous results.

Lending growth in China was running at 27 per cent for the year to February (compare that to what is considered a strong 8.3 per cent in Australia).

The bank says China’s recent moves to tighten lending standards are slowing the rate of loan growth, but it will be hoping the lending is being reined in before too many asset price bubbles have been formed.

40 percent leap in Indian student enrolment in Australia

Melbourne, May 7 (ANI): Overseas students continue to defy economic downturn to come to Australia.

In one of the few bright spots for the Australian economy, universities set another record with a 21.7 per cent growth in new students in March, driven by a 40 per cent leap in enrolments by Indian students and a 19.6 per cent jump among Chinese students.

Australia’s 15.5 billion dollar export education boom continues to defy the global recession, showing record annual growth of 20.8 per cent in the number of international students in universities and vocational colleges for the key March enrolment period, reports The Australian.

However, that does not take away the fact that universities have suffered a calamitous 800 million dollar loss in investment income since world finance markets collapsed last September, with leading institutions the University of Melbourne and the University of NSW yesterday revealing they had been ravaged by the financial crisis.

Universities Australia chief executive Glenn Withers told The Australian yesterday that vice-chancellors had been “worried” that overseas demand would be down as the recession hit the finances of Asian families.

“(But) there is a flight to security through tertiary training in uncertain times — both domestically and globally,” Dr Withers said.

He attributed the strong result to the quality of Australian education, and an even greater priority that Asian families, traditionally great investors in their children’s education, were making in education in uncertain times.

A spokeswoman for Education Minister Julia Gillard said yesterday that the figures were “certainly encouraging for the sector in these difficult economic times and show the strength of the sector”.(ANI)

Indian students are Australia’s third largest export income earner

Melbourne, Apr.3 (ANI): With India projected to be the fifth-largest consumer market by 2025, Australian-trained Indian graduates and skilled workers represent a future trade and investment bonanza as they return home to jobs in the business and government sector.

Indian students now make up almost 18 per cent of Australia’s total foreign student population, the second largest group after China, which represents 23.5 per cent of the total foreign student body.

Foreign students are now Australia’s third-largest export income earner, behind coal and iron ore, contributing 14.1 billion Australian dollars in direct income and an additional 12.6 billion dollars in value-added goods and services, a new Access Economic report has found.

Australia’s business links with Southeast Asia are well established, going as far back as the 1950s.

Indian enrolments in Australian higher education and vocational training courses last year, a massive 54 per cent increase on the almost 63,000 Indian enrolments in 2007, and up from just 11,313 in 2002.

Take the example of 18-year-old Vasha Vankadesh from Tamil Nadu capital Chennai. A student, she contributes over 30,000 dollars annually to the Australian economy as she ploughs her way through an engineering degree at the Australian National University in Canberra.

“You’re now seeing the beginnings of that sort of relationship between India and Australia,” The Daily Telegraph quoted Australia’s High Commissioner to India, John McCarthy, as saying on Thursday.
Vasha says she chose Australia over Britain and the US because it was closer to home and cheaper. (ANI)

Australians talk socks, jocks, polo shirts and protection

Sydney – Australian Prime Minister Kevin Rudd had hoped that when the Group of 20 (G20) met in London in April, he would be among the few representing an economy still growing.

But the billions spent in November’s stimulus package won’t stop a second consecutive quarter of shrinkage that would qualify the Australian economy as being in a technical recession.

“Australia can reduce the impact, cushion the impact of the global economic tide, but we can’t stop it altogether,” Rudd admitted. “There’s no guarantee of success, but we’ll throw everything at this.”

Rudd came to office in December 2007 pledging more healthy surpluses in the national accounts. He’s now resigned to taking the country deeply into debt.

The unions that helped the Labour leader into office now want him to abandon a commitment to free trade, just as he previously gave up on balanced budgets.

In Australia, as elsewhere, the clamour to safeguard jobs in stressed industries like manufacturing is strong. The difficulty for Rudd is that Canberra has always been a haven for free-trade zealots. Bowing to protectionist sentiment would be another backflip.

In the run-up to the G20 meeting, Canberra was quick to rail against the Buy American clause in the latest United States stimulus package.

Nevertheless, families who received cash handouts from Rudd in November were urged to go out and spend their money “on socks, jocks and polo shirts” – the leading local manufacturer of which is Australia’s Pacific Brands Ltd.

That approach backfired when, three months later, Pacific Brands announced it was shutting its factories, with the loss of almost 2,000 jobs, and moving production offshore.

“I think what Pacific Brands has done is frankly, in so many respects, beyond the pale,” Rudd said, noting that the company had received millions in subsidies.

Yet, a lot of this is bluster. Rudd faced down the unions and, speaking in Washington before his first meeting with US President Barack Obama, declared “protectionism helps spread the fire, it doesn’t but the fire out.”

Pacific Brands chief executive Sue Morphett said production would inevitably have shifted offshore – the current cash crisis just hastened that shift.

“It’s a clear competitive disadvantage for us to be carrying on clothing manufacturing in Australia, unfortunately,” Morphett said. “The alternative was to take a little bit here, a little bit over there, but I felt that was the worst way to do it. If there’s going to be change that’s going to impact on people, you need to be upfront and let them know.

What’s true of underwear manufacturing is true of the car industry, says Oliver Hartwich, a research fellow at the Centre for Independent Studies in Sydney. He argues that protection is all that keeps production lines rolling.

“Australians will come to rue the day that Rudd decided to treat the car industry as an issue of systemic significance,” Hartwich said.

Last year, Mitsubishi Motor Corporation closed its plant after taking an astonishing 28 years to build just 1.1 million cars.

“Government assistance to the auto industry will be another example of wasted taxpayer funds,” said Newcastle University economist Michael Costa, who predicted that antiquated notions of national prestige are driving the car industry.

Rudd will have success stories to tell around the G20 table. There hasn’t been a run on an Australian bank. In fact, of the 14 AA-rated banks around the world, four are in Australia.

Less than 1 per cent of mortgage holders are in difficulty with repayments and more than 90 per cent are paying off their loan faster than they need to.

Rudd has already rehearsed his London speech. It’s self- congratulatory and an appeal for other governments to deal with the toxic debt that the lucky country avoided.

“Australians know we are coping with this downturn better than other countries, but our medium-term prospects depend on global efforts to deal with the cause of this emergency,” Rudd said.

“That’s why Australia will press so strongly for a clear plan of action in London,” he said. (dpa)