Why animals are a crucial part of the Australian economy

Thu, 07 Nov 2019  |  

This article was written on 31 October 2019: It was on the Yahoo Finance website at this link: https://au.finance.yahoo.com/news/animals-crucial-australian-economy-192927904.html 

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Why animals are a crucial part of the Australian economy

Animals are a critical part of the Australian economy, either for food, companionship or entertainment.

But every month, millions of sheep, cattle, pigs, chickens, fish and other animals are bred and then killed. Most of them are killed in what we define as ‘humane’, but no doubt tens of thousands are horribly mistreated, as are a proportion of the animals we keep as pets.

Animals are slaughtered to provide food for human food consumption, to feed other animals (your cats and dogs are carnivorous) and for fertiliser.

The Australian Bureau of Statistics collects a range of data on animal slaughterings and the most recent release of the Livestock and Meat data release included the following facts.

In the year to September 2019, the number of animals slaughtered in Australia were:
• 5,218,000 pigs;
• 9,207,000 sheep;
• 21,826,000 lambs
• 8,286,000 cattle (excluding calves);
• 557,000 calves.

These 45 million or so slaughterings in the past year are generally down on the recent peak levels as the severe drought gripping much of Australia reduces herds and breading numbers, but they are large in a country of 25 million people.

The most recent data also show 65,275,073 chickens were slaughtered in the year to the June quarter 2019. That’s almost 180,000 chickens a day!

Society obviously finds these numbers to be desirable. These animals end up being your hamburger mince, in the election day sausage sizzle, part of the fancy slow cooked leg of lamb at a top restaurant and the Shantung chicken at the local Chinese.

We can only assume that all of these animals are killed in a humane way even though we know that live animals exported for bizarre religious reasons are treated poorly.

A small part of population, around 11 per cent according to a Roy Morgan poll, are vegetarian. For the other 89 per cent of us, we demand these animals to be slaughtered for part of our food intake and to feed our family pets.

Speaking of pets, according to RSCPA data, there are 4.8 million dogs and 3.9 million cats in Australia.

The food we buy our lovely pets has a lot of meat in it.  As you open the tin of dog food for Fido, the slaughtered animals are part of the stinky blend that slops into the dog bowl. Fluffy the cat purrs with delight as the fish ‘treat’ is given to them every now and then, made from fish trawled from the oceans.

Even the RSPCA kill animals. In the last 5 years, it euthanised more than 32,000 dogs, 75,000 cats and 80,000 ‘other’ animals in its care. These animals could not be rehomed and it notes that the reasons for this level of killing was due to infections, behavioural matters, medical and legal issues.  The RSPCA also indicated it investigated more than 57,000 complaints into animal cruelty in 2017-18, which is more than 1,000 a day, confirming that a proportion of all pet and animal owners are inhumane in their neglected of cats, dogs and other animals.

Despite these and other cases of cruelty and horrid mistreatment, animals are an important part of society and a vital part of the economy.

Rules are in place to ensure that all animals are treated humanely, even if we grow them to be for the sole purpose of being killed for our food or to feed our pets or bred for companionship and entertainment.

Such is life.

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The RBA has the tools to fix the economy, but is reluctant to use them

Thu, 05 Dec 2019

This article first appeared on the Yahoo Finance web site at this link: https://au.finance.yahoo.com/news/rba-tools-reluctant-042742904.html

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The RBA has the tools to fix the economy, but is reluctant to use them

The Reserve Bank of Australia has made a range of serious policy errors over the past few years, and the Australian economy is weaker because of those mistakes and misjudgments.

Not only is the RBA on track to miss its inflation target for six years, and perhaps longer, the persistently high unemployment rate in concert with record low wages growth is the result of the RBA’s tardiness in cutting interest rates because of its textbook obsession with house prices and household debt.

It is a mistake that has cost the economy tens of billions of dollars in lost output; employment is many thousands of people below what could have been achieved; and all the while wages growth hovers near record lows undermining the wellbeing of the workforce. What’s worse, the RBA seems to have thrown in the towel on trying to meet its inflation target, even though that target was confirmed a month ago in the recent update of the Conduct of Monetary Policy between the RBA and Treasurer.

In this context, Deputy Governor of the RBA, Guy Debelle, gave a fascinating speech earlier this week on the topic of employment and wages.

Household wealth is booming: What this means

Mon, 25 Nov 2019

This article first appeared on the Yahoo website at this link: https://au.finance.yahoo.com/news/household-wealth-booming-200022930.html 

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Household wealth is booming: What this means

$500,000,000,000.

In other words, half a trillion dollars.

That is approximately the amount Australian household wealth has increased since the start of July 2019, with house prices surging, the Australian stock market moving higher, and savings increasing.

The bulk of the gains have occurred via rising house prices, which according to CoreLogic, are up over 5 per cent in less than five months. This move in house prices has added around $360 billion to the value of housing and is driving the rebound in wealth. At the same time, the level of the ASX has risen by around 2 per cent with a further $40 billion being paid out in dividends. This allows for the recent pull back on prices as new banking scandals are exposed.

In these conditions of rising wealth, the household sector is getting a serious financial reprieve, despite the ongoing weakness in wages and the still very high level of unemployment and underemployment which afflicts almost 14 per cent of the workforce.

The good news is that this wealth creation is likely to spark a rise in household spending growth once the gains are widely acknowledged in the community and then feed into consumer sentiment. This is most likely to show up in the first half of 2020, after the usual lags work their way through the economy. History shows that when we consumers experience growth in our wealth, we are more inclined to lift our spending.

Earlier this year, RBA researchers Diego May, Gabriela Nodari and Daniel Rees found that:

“When wealth increases, Australian households consume more. Spending on durable goods, like motor vehicles, and discretionary goods, such as recreation, appears to be most responsive to changes in household wealth”.

We saw this, in the reverse, in the period from the middle of 2017 to the middle of 2019 when Australia-wide house prices fell by 10 per cent, crunching wealth levels. It was no surprise that during this period, household spending growth slumped. The retail sales component fell to its weakest since the early 1990s recession. Consumer spending and confidence was not helped by the coincident weakness in wages growth and the policy mistake of the RBA which refused to cut official interest rates, even though the economy was mired in a low inflation, low growth and falling wealth climate.

Thankfully, common sense has since prevailed at the RBA and it has cut interest rates three times since June.

Demand for housing has also lifted with shrewd first home buyers taking advantage of favourable affordability and investors also stepping back in after the May election saw the return of the Coalition government and the demise of Labor’s proposal to reform negative gearing tax laws. The current wealth surge unfolding now is occurring at a time when there is also a sharp decline in the debt-servicing burden as interest rates fall. This has the dual effect of freeing up cash flows for some consumers and allows other to accelerate their debt repayment.

For the moment, the labour market remains weak and wages are still stuck in the mud. These will constrain any near term lift in household spending, but the wealth lift will be vital for sparking a pick-up in consumption, probably in the new year when the effect is more widely observed and entrenched.

It adds to the scenario where 2020 is looking like a better year for the economy with bottom line GDP growth set to hit 3 per cent in the second half of the year.  If the wealth effects build further over that time and business investment and infrastructure spending continues to lift, the economy in 2020 just might register its strongest growth rate in a decade.