Wed, 22 Oct 2014  |  

Australia's inflation rate is heading lower. What is interesting is the deceleration in inflation is starting from a position where inflation was within the RBA's target band of 2 to 3 per cent.

In the September quarter, the CPI rose by 0.5 per cent, to be up 2.3 per cent for the year. Taking out the large prices swings and using the RBA underlying measures, inflation was 0.5 per cent for the quarter for an annual rise of just 2.5 per cent. In the first half of 2014, headline inflation was near 3 per cent with underlying inflation around 2.75 per cent.

Inflation is well contained, which ever way you cut it. Indeed, it looks like the quarterly momentum on prices is slowing which will filter into the year on year inflation run rate over the next few quarters. If, for example, underlying inflation is 0.6 per cent in the December quarter, annual underlying inflation, all of a sudden, is down at 2.25 per cent.

Wed, 22 Oct 2014  |  

Within hours of the news that Gough Whitlam had died, age 98, the mantra of 'hopeless economic management' started to flow.

According to those who clearly loathe Whitlam and anything vaguely socially progressive, Fairfax and The Australian had stories where the Tea Party faithful in Australia wrote or were quoted saying, Whitlam was the worst Prime Minister Australia had seen, he was economically damaging, that he set up the culture of entitlement especially for health and university education, that he created the mentality of the dole bludger and so on.

I am sure you get the drift.

Fri, 17 Oct 2014  |  

The global economic slowdown and market turmoil is a cause for concern for Australian policy makers.

The RBA will soon need to consider cutting interest rates based on low inflation, rising unemployment and general economic weakness. For the budget, Treasurer Joe Hockey is facing revenue write-downs from the disinflation funk that is hitting the local economy at the same time the government is ramping up spending. When the Mid Year Economic and Fiscal Outlook is released in December, the budget deficits will be bigger than forecast at Budget time.

The clip below is me talking to Chris Hammer from Fairfax Media on 16 October. 

Wed, 15 Oct 2014  |  

This article was originally published on 30 April 2013 on my old blog,

The background to this article was Mr Abbott taking a significant pay cut after the 2007 election when he went from a Ministerial salary of around $200,000 a year to a Shadow Minister's salary of around $110,000 a year. He and his family clearly maintained their spending levels, did not 'tighten their belts' in any observable way and reverted to debt - a $710,000 mortgage - to cover his expensive lifestyle choices. The article has not been altered to take account of events since April 2013.  


Here's a true story. It's about a man called Tony.

Tony is a hard working Aussie, doing his best to provide for his family. He has a good job, but such is the nature of his work that his income is subject to unpredictable, sharp and sudden changes.

Tony's much loved and wonderful children go to a private school and wow, those fees that he choses to pay are high. He used to have a moderate mortgage, especially given he was doing well with an income well over $200,000 per annum.

Then things on the income side turned sour.

Wed, 15 Oct 2014  |  

Deflation is spreading like the plague throughout Europe to the point where negative interest rates are in play. In the UK, inflation has cascaded to a 5 year low and is set to fall further as the early and encouraging signs of economic recovery in the first half of 2014 are snuffed out. Even in the US inflation is too low and this alone is seeing the market question just when the US Federal Reserve will start to hike interest rates from zero per cent.

This morning the oil price has crashed to below US$82 a barrel (WTI) as a ramp up in supply meets softening demand. The global indices of commodity prices are also plumbing fresh lows.

For Australia, this news is poison.

Tue, 14 Oct 2014  |  

On election night, in September 2013, Tony Abbott claimed that with the election of his government, "From today I declare Australia is under new management and is once more open for business".

Well, 13 months on and the signs are not good for Mr Abbott with the business sector floundering, the stock market flat and under-performing and the unemployment rate rising. At the same time, consumers remain gloomy and the prospects for GDP growth hitting its long run trend at around 3.25 per cent are bleak.

Let's have a look at a few basic facts.

Sun, 05 Oct 2014  |  

The Australian dollar has already fallen a long way – a peak of US$1.10 in late 2011 and 0.95 from four months ago to under 0.87 at the moment.

Some might suggest that this sort of depreciation is sufficient given the still upbeat outlook for growth from the RBA and a bunch of other optimists, and the fact that the world's largest economy, the US, is looking entrenched in its long awaited recovery from the Lesser Depression.

The influences on the Australian dollar at the moment are very ugly.

The oil price (west Texas intermediate) is under US$90 a barrel, iron ore is under US$80 a tonne, gold is floundering around $US1,190 an ounce and copper is under $3.00 a pound.

Wed, 01 Oct 2014  |  

The report in the Australian Financial Review today confirms that the Abbott government's fiscal strategy is in tatters.

Elected on a platform to 'fix the budget' and tackle the 'budget crisis and emergency', the Abbott government is now planning a mini-budget in December to deal with the fact that its policies have resulted in a budget deficit blow out that at this stage, looks to be about as significant as some of the misses of the previous government.

According to the AFR, the Abbott government has capitulated on measures that would have lowered the budget deficit by around $30 billion over four years, which only adds to the frenzied spending by the Abbott government on RBA payments, national security, roads, defence and paid parental leave, among other things. Add to that a negative shock from the fall in commodity prices and the terms of trade, and the budget deficit projections that will be in Mid Year Economic and Fiscal Outlook will dwarf the numbers the Abbott government inherited in Pre-Election Fiscal Outlook.

Fri, 26 Sep 2014  |  

OK – the US economic recovery still seems robust enough to see the US Federal Reserve moving to hike interest rates over the next couple of years. It is not fanciful to suggest that the Fed funds rate will be near 1.5 to 2 per cent some time in 2016. Hardly draconian, but it would be part of the long run process of normalising monetary policy after the Lesser Depression of 2008 to 2011.

In Australia, the free-fall in the terms of trade, fiscal tightening, persistently glum consumer sentiment and the near certainty that house prices will stop rising – they could even fall modestly – suggests that the RBA will be moving to cut interest rates in the not too distant future. Indeed, it is not fanciful to think that the cash rate in Australia will be near 1.5 to 2 per cent some time in 2016.

The divergent economic trends and monetary policy settings will also play into the bond market. US bond yields will rise as the Fed hikes interest rates and the 10 year bond, currently yielding around 2.5 per cent, would likely trade near 3.5 per cent on the back of solid and sustained growth and Fed interest rate hikes.

For Australia, in a disinflationary funk, it would be likely that 10 year yields would fall from current levels around 3.5 per cent.

Tue, 23 Sep 2014  |  

The polls show some quite serious disenchantment with the Abbott government. The general trend shows that Labor is about 6 points ahead of the Coalition, plus or minus a couple of points for sampling variance and margin of error.

If an election was being held in the next few weeks, there is no doubt that Labor would be very short odds to win.

But the election is not a few weeks away. It is two years away and these polls count for nothing. Zip. Zero. Zilch.

They are interesting, to be sure, just like the score at lunch on the second day of a five day test match as they give a read on how some the political themes are unfolding, but they deliver not much more than that.



Wed, 29 Jul 2020



Covid19 has opened a door for Australians to positively accept significant changes that will lead to a shared good. This rare opportunity enables us to achieve sustainable economic and social goals that create a new ‘normal’ as our way of life.

These Ten Steps are presented as non-partisan recommendations to the Australian Parliament in the firm belief that, if they embrace them, the Australian economy and society will be greatly enhanced after the Covid19 pandemic has passed.

*A job for you if you want one.
A significant increase in part time and casual employment can be created that will enable you to enjoy a more creative and peaceful lifestyle and to live longer and better. The traditional age at which you would have been expected to retire will become obsolete as a result. An access age for pension and superannuation will become your choice. This will enable you to remain in paid work for as long as you want to, on a basis that you choose, while boosting the productivity and growth of Australia.

*You will get wage increases that will be greater than your cost of living.
A demand for enhanced innovative skills at all levels of employment will be created as the economy grows in strength, thereby enhancing your stature in the workforce and enabling executive salaries and bonuses to drop to levels that are accepted as justifiable by employees, shareholders and customers.

The misplaced objective of the government of delivering a surplus, come hell or high water, has gone up in smoke

Tue, 07 Jan 2020

This article first appeared on the Yahoo Finance web site at this link:   


The misplaced objective of the government of delivering a surplus, come hell or high water, has gone up in smoke

For many people, the cost of the fires is immeasurable. 

Or irrelevant. 

They have lost loved ones, precious possessions, businesses and dreams and for these people, what lies ahead is bleak.

Life has changed forever.

As the fires continue to ravage through huge tracts of land, destroying yet more houses, more property, incinerating livestock herds, hundreds of millions of wildlife, birds and burning millions of hectares of forests, it is important to think about the plans for what lies ahead.

The rebuilding task will be huge.

Several thousands of houses, commercial buildings and infrastructure will require billions of dollars and thousands of workers to rebuild. Then there are the furniture and fittings for these buildings – carpets, fridges, washing machines, clothes, lounges, dining tables, TVs and the like will be purchased to restock.

Then there are the thousands of cars and other machinery and equipment that will need to be replaced.