*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.

*Your education and lifestyle will be enhanced by ever improving science and technology.
Universities will become powerhouses of research and have a TAFE on the campus that becomes a powerhouse of skills. This combined activity will make your community more healthy, wealthy and socially cohesive as highly skilled workers, backed by ground-breaking research, lead us to have higher incomes and a more prosperous nation.

*Your nation will lead the world by making climate change the driver of economic growth and prosperity.
You will partner your government in investing in a low carbon economy that creates ‘green’ jobs, sustains and enhances profits and reduces the pollution that would otherwise have a role in generating more viruses like Covid19.

*You will participate in the regeneration of Inland Australia, especially in its indigenous and remote communities, by investing in land conservation and restoration, clean water and the enhancement of flora, & fauna while creating low cost and efficient transport that which expand your opportunities to trade profitably.
You will reverse decades of underinvestment in Rural Australia and give incentives for people to migrate from Capitals to Regional Cities. Working from home, which happily occurred as a result of Covid19, means you do not have to live in crowded and expensive cities to do your work. You can operate from remote places and still participate in any activity anywhere while helping to ease city congestion.

*You will demand fairer taxation that will ensure that tax cheats pay their dues and your taxes become lower.
Tax on revenue instead of profits will enable you to achieve this.

*Housing will become affordable for your income level.
You can participate in new style housing cooperatives that will create affordable and personalised homes of quality, especially those designed to meet the restricted mobility of ageing. The volume that will be generated will enable prices to remain moderate and help to achieve the aim of zero homelessness.

*Gender equality will enable you to achieve your maximum personal potential on a level playing field.
We know that this reform is decades overdue. It will enable us, and our nation, to achieve maximum creativity and ensure pay rises for sectors dominated by the employment of women, especially in the role of carers.

*Rebuild cities and towns so you can enjoy quality lifestyles in vibrant communities that are cohesive, compassionate and safe.
Our nation will never prosper while we live in clogged cities that are unliveable. This requires us to implement a long-term plan for a new civilisation that must start now.

*Pioneer a new style economic community in our immediate region of the Southern Hemisphere that involves a revolutionary partnership of Australia, New Zealand, Singapore, Indonesia, Papua New Guinea and Pacific Island Nations that creates a high level of prosperity and social values.
We can establish this without copying the overbearing bureaucracy of the European Community and creating prosperity and stability that is not reliant on USA or China or India.

(We have not included specific sections on the important issues of Welfare and Ageing as the implementation of the ten principles will influence the economic and social impact of both.)

STEPHEN KOUKOULAS, Economist.    EVERALD COMPTON, Senior Australian

We will ask federal and state governments to jointly create task forces that will work to ensure that each one of these ten principles is implemented urgently.

They must be given a charter to begin their progressive implementation of these visions within one year.

Each task force must contain more citizens than parliamentarians as we are pioneering a peaceful revolution of the people.

And then there are the things that economists will not include in the financial ‘cost’ of the fires. The trees and scrub lost are one example. While their true value to humanity is huge, there will be no money allocated to the regrowth of these forests. That will just happen over the many years ahead as one day it rains and these trees slowly grow back.

For the things that have to be rebuilt and replaced, money will start to flow from insurance companies and governments. It will also flow from the savings of those impacted.  It sounds crass to mention it, but money will start to flow through the economy over coming months. It is to be hoped, no demanded, that the Federal Government does whatever it takes to help rebuild the decimated areas and it looks at its goal of delivering a budget surplus as a pathetic political objective.

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

Treasurer Josh Frydenberg boasted that the budget is “back in the black and back on track” with the surplus forecast for 2019-20. No sensible economist agreed with the unerring fervor to return to surplus what ever the state of the economy and now, what ever other demands on the government emerge, but now, the catch phrase is obsolete.

It should be recalled – part of that budget surplus has been due to an underfunding of emergency services which at the time looked mean, but now looks as budget austerity gone mad.

And before anyone raises “these are a State government responsibilities”, try telling the millions of people impacted by the fires and drought this pedantic point. People don’t care about those system of government issues – they just want things to work and happen when the need arises.  The Federal and State and Territory governments need to make sure the structure is in place to lessen the impact of these disasters when they do occur and to have them funded properly with equipment and skilled workers ready to act when needed.

This should be one of the urgent issues for the government in 2020.

Get in place the logistics needed for when the next fires, floods or cyclones come along. Make sure the support services have the resources needed to adequately tackle these disasters.

The government needs to embrace the big picture issue to tackle climate change. Fast track the generation of renewable energy – it will boost the economy to have the government invest this way.

Build however many desalination plants around the coast to ensure the bulk of the population have near limitless supply of water, that can be pumped into dams, down rivers and to farmers where possible.

This will be the test of the government in 2020. It will not be whether the Budget in May delivers a surplus or government spending growth is lower now than a decade ago.

That seems irrelevant given the fires, drought and climate catastrophe unfolding across Australia.

This article first appeared on the Yahoo Finance web site

On balance, annual GDP growth is set to pick up to around 2.5 per cent by the middle of 2020 and is forecast to hit 3 per cent by year end. Contributors to the better economic performance include public sector spending, including on infrastructure, a moderate increase in business investment, an upturn in dwelling investment in the second half of the year and a moderate 2.5 per cent lift in household consumption aided by a positive wealth effect (house prices) and savings that are able to be deployed for spending. The risk favours GDP growth exceeding 3 per cent by year end.

Jobs market

The labour market is set to remain problematic in the first half of the year, hindered by the ongoing below trend growth rate and signs in the leading indicators for labour demand which are universally negative. As a result, annual employment growth is set to weaken to around 0.75 per cent in the first half, meaning average monthly job increases of around 10,000 only. The unemployment rate will be nearer 5.5 per cent than 5.0 per cent. As the economy improves through the year, the unemployment rate should start to head lower, perhaps a tick or two under 5 per cent by year end. With the unemployment rate stuck above 8 per cent, an acceleration wages growth will remain elusive through the year.
Only when the unemployment and under employment rates fall below 5 per cent and 7.5 per cent, respectively, is it reasonable to expect wages growth to exceed 2.5 per cent.

Inflation

Inflation will remain low for the bulk of the year, hindered by the soft economy. Only late in the year, if the economy performs as expected, it is likely to hit 2 per cent. Until then, it is set to remains a few ticks around 1.75 per cent in annual terms which of course is below the RBA 2 to 3 per cent target. For inflation to reach or exceed the mid-point of the target, GDP growth needs to exceed 3 per cent, with wages growth above 3.25 per cent for a sustained period.

Monetary policy and bond yields

The economic scenario means the RBA may cut interest rates one final time, early in the year, but even that cut below 0.75 per cent is by no means certain. Perhaps this final rate cut is after another low inflation reading. That said, signs the broader economy is improving will mean the RBA could be reluctant to cut further and by around the June quarter, it will (finally) have its broader view validated by more positive news, particularly in business investment and a bottoming in the dwelling investment cycle. While it would be folly to assume any interest rate hikes from the RBA during 2020 (or would it?), after such a protracted period of low growth, inflation target misses, it would not be surprising to see the market flirt with interest rate tightenings priced into 2021.

The chances of the RBA implementing some form of quantitative easing remain low.

The call on the bond market is more straight forward – yields higher. At the time of writing, the 3 year yield was around 0.85 per cent, with the 10 year at 1.30 per cent. Targets are somewhat meaningless when looking for an enduring market trend to unfold, but it would be no surprise to see the 3 year get near 1.25 per cent, perhaps 1.5 per cent during the year. The 10 year is forecast to approach 2.0 per cent or more.

House prices

The surprising recovery in house prices from the middle of 2019 will likely continue, although the power of the price rises will fade somewhat during the year. A nationwide price rise of 7.5 per cent for 2020 seems a cautious forecast with the bulk of the rises seen in the first part of the year. Of course there will continue to be considerable divergences from city to city, town to town. Perth is poised to register a decent rise, perhaps 10 to 15 per cent as a shortage of dwellings becomes apparent and the mining sector looks to increase its investment spending. Sydney and Melbourne will likely register solid gains for the year of 6 to 8 per cent while Brisbane, Canberra and Adelaide will be more constrained. Hobart, having been a strong market in recent years, is likely to continue to do well – a tight market supply will be a boost for prices. The interesting issue will be nearer year end if there is talk that interest rate increases are in the offing – will that hit confidence in house prices? I suspect the price surge will moderate in any even in late 2020.

US stocks

It’s election year and having had a huge run up in share prices in recent times, a decent pull back is likely. This is forecast to be fundamentally driven by the US Fed close to the end of its interest rate cutting cycle and the prospect of a change in President impacting investor sentiment. If there is a real chance that some of the absurd tax breaks put in by the Trump administration are likely to be reversed, share prices could register meaningful declines of 15 to 20 per cent. At the time of writing, the S&P500 was around 3,240 points – a dip below 3,000 is feasible, with a move towards 2,900 likely in the event of a hawkish Fed and a progressive President.

The ASX

The ASX had a good 2019 and should consolidate in 2020. It will be helped by a solid commodity cycle and much of the ‘bad news’ priced into the market dominant banks. At the time of writing, the ASX 200 was around 6,770 points and it is set to break above 7,000 in the first half of 2020. Any negative lead from the US will filter into the local market which means that little net change is likely over the course of the year as a whole. Year-end target 6,750.

The Australian dollar

The Australian dollar is kicking off 2020 on a more positive tone close to 0.70 cents. Expectations of a lift in global economic growth and improving domestic conditions are positive for the dollar. Throw in a scenario where interest rates will be edging up from current pricing, a huge international trade surplus and ongoing buoyancy in commodity prices and the scene is set for Aussie dollar gains. It is not unreasonable to expect the dollar to trade above 0.7700 during the year, with more upside risks if the economy is sufficiently robust to see the market price in even modest interest rate increases.

Good luck – and may the markets go your way.

They are subject to significant revision depending on the strength of GDP, employment, wages, company profits and commodity prices, as well as potential spending decisions that will be taken over the next few years.

This brings us to the vulnerability of the government and risk that it will not only continue to be presiding over a weak economy with rising unemployment, but it may be doing so with the budget cascading back into deficit. The MYEFO surplus numbers are predicated on the rate of economic growth accelerating from now and staying at that stronger pace over the next four years. As a result, employment growth is forecast to remain buoyant and wages growth are assumed to be moving higher.

There are questions whether this rosy economic outlook will prevail. The RBA has increasing doubts as it highlighted in the Minutes of it December Board meeting. We all hope things pan out for the economy on the strong side. But if there are any downsides to the economy outlook, from any source, the budget could easily slide into deficit.

Here is the government’s problem.

If the economy is weaker and this results in a lower budget surplus, or perhaps even turns them in to budget deficits, Mr Frydenberg will be floundering for reasons why his economic policy strategy is in tatters.

That is clearly a political problem.

Worse, there will be an economic problem and a cost to voters with higher unemployment, weak wages and soggy economic growth all impact on people’s well-being and confidence.

In these circumstances, if Mr Frydenberg tries to hold on to the budget surplus by restricting government spending or further tightening taxes, an already weak economy will be knee-capped by a fiscal policy tightening just when the opposite is needed. Fiscal austerity, in this instance, would be the wrong policy at the wrong time.

But even without that scenario, Mr Frydenberg will be hoping that the economic and market forecasts underpinning the MYEFO numbers are correct. These are essential if his small surpluses are to prevail.

If there is any undershooting of the forecasts, it means that when Mr Frydenberg hands down the 2020-21 Budget on the evening of 12 May 2020, he will present a scenario of deficits and weak economic conditions.

Ouch!

It is the sort of double whammy that would crunch the Coalition’s economic management credentials into the dirt. Worse than that, it would mean the budget surplus obsession of the Coalition will have cost Australia billions of dollars of economic growth, tens of thousands of jobs, decent wages increases and a loss of business investment.

The next few months of the economy will be more interesting than usual. Mr Frydenberg will be hoping people go out and spend. If not, he may well be floundering on budget night when he delivers an economic framework that next to no one will properly endorse.

He made the valid point, which is a truism from basic economic theory that “the surprising strength in labour supply has been one of the factors that has contributed to wages growth being slower that we expected”. Excess supply lowers prices, in this case the price of labour is wages.

But what Debelle failed to address in this talk is the shortfall in demand for labour relative to that unexpected lift in the supply of labour. He suggested that low wages growth is the ‘new norm’ for the Australian economy, in an extraordinary capitulation or admission that the RBA has run out of ideas or is unwilling to implement policies that will unambiguously lead to higher wages growth and higher inflation.

Lowe rules out likelihood of using available tools

A few hours after Debelle’s speech, his boss Governor Philip Lowe, effectively ruled out a range of policies that would make the economy grow faster! Lowe said negative interest rates were not on the RBA’s agenda, that quantitative easing was extremely unlikely, and if QE was to be implemented, the RBA would not be buying private sector debt or assets.

Under Lowe, the RBA will not use some of the policy instruments used by credible central banks such at the US Federal Reserve, the European Central Bank, the Bank of England, the Bank of Japan and others as they engineered stronger economic growth, falls in unemployment and an acceleration in wages, with the policies largely ruled out by Lowe.

In Australia, like in the rest of the world, strong demand for labour will only be generated in an economy that is enjoying a rapid, productivity inspired expansion. Such an expansion can be facilitated by stimulatory monetary policy.

And to be sure, expansionary fiscal policy will help in that task. But with the government signalling to the RBA its political priorities including the rejection of fiscal stimulus, Lowe should do his job and set monetary policy to deliver full employment and get inflation back within the 2 to 3 per cent band. It is likely that this is the context which Deputy Governor Debelle says low wages are the ‘new norm’. If the policy levers are not used, then it will be difficult for economic and wages growth to accelerate.

In countries that embraced expansion monetary policy, there have been massive reductions in unemployment rates and decent increases in real and nominal wages growth.

These tools work overseas

Low wages are not the ‘new norm’ internationally, it would seem. Unless there is something specific to Australia, wages growth can pick up to a decent pace, but only if policy makers take the lead and set monetary, fiscal and structural policies so that they deliver the conditions that allow for stronger growth, rapid job creation and a tightening in the labour market.

While there are signs the Australian economy is passing the low point in the cycle, and that GDP growth will be stronger in 2020 than in 2019, progress in reducing unemployment and triggering higher wages growth appears limited. Easier policy would help lock that in, even if those policies are not in old-fashioned and redundant text books and are considered ‘unconventional’.

With almost 2 million Australians unemployed or underemployed, and another 10 million not getting decent wages growth, their best hope is that the RBA changes its mind on how to deliver a tighter labour market, higher wages growth and, importantly, inflation back near the mid point of the target band.

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.

Sure, the Morrison government’s quest for a budget surplus did not help as spending was cut and tax revenue sucked cash out of the economy, but for month after month, year after year, the RBA felt it better to keep a tight reign on monetary policy as it sought to deflate the growth in household debt and house prices. The RBA continues to drag out academically pure, but practically misguided, excuses about an unanticipated lift in the workforce participation rate as being a problem; or globalisation as a reason for low inflation.

To a point, this is fair enough.

But these are not new things that just popped up overnight. The RBA and other central banks saw these issues emerge years ago but it was the RBA which failed to fully appreciate the effect they would have on growth, wages and inflation. When the rest of the industrialised world was cutting interest rates to towards zero or less and some even embarked on quantitative easing, the RBA held rates steady, at a relatively high level.
It is noteworthy that since the RBA resumed the rate cutting cycle in June 2019, there are clear signs that the economy is poised for a stronger year of growth in 2020 and 2021.

Monetary policy works.

To its credit, the RBA had a rethink of policy a few days after the Federal election (is the RBA politically biased?) and it has cut interest rates three times in five months. There are signs this has worked. Look at house prices, retail spending, capex expectations, the low Aussie dollar and exports, to name a few areas to have benefited for policy stimulus. And the full effect of the interest rate cuts is yet to show up in most data, such are the lags in policy changes.

These lags will mean that the unemployment rate will probably not start to fall until the first half of 2020 which will only then see wage growth move higher and only then, is inflation likely to accelerate from the current record lows.

Inflation is the most lagging of lagging indicators.

Such is the problem with the RBA policy error in recent years – it takes considerable time to turn an economy around and an earlier policy move, when it was obvious the inflation target was being missed, would be yielding benefits now.

That said, the economy appears to be turning and while a further final 25 basis point rate cut might still be needed, the prospects for the inflation rate to reach the mid-point of the RBA target seems limited. Needed are quarterly inflation readings of 0.6 or 0.7 per cent which in turn requires annual GDP growth to exceed 3 per cent and the unemployment rate to track below 4.5 per cent. That scorecard of economic indicators are possible by late 2020, and would get a helping hand if the Morrison government were to use the mid-year budget update in December to ramp up government spending and/or give some tax relief.

Let’s hope they do it.