It's the economy, stupid!

 
  MILW Junior Train Controller

Location: Earth
Meanwhile, insane sales have continued, with a modest 4 bedroom house on a 929 sq m block in Strathfield selling for $5.4M, $800,000 above reserve, in late April. The house is earmarked for demolition although it is unknown whether it will be replaced with a larger house or high density accommodation.
I was looking at realestate.com.au around Chatswood and the prices are astonishing. Why should an average house be $5 million, who is benefiting from those outrageous prices? I don't understand why there are people who are still cheering this insanity on, clearly normal working people cannot afford to actually own property in that place any longer.
don_dunstan

Bubbles like this are proof that traders do not always act in their rational self-interest. Emotion and desires are a big factor.

Ordinary houses on ordinary blocks of land are not special. Everyone needs somewhere to live so they can get out and be productive elsewhere in the economy - generating real wealth. Houses don't produce anything as such; the land on which they are built in theory can be productive, but our society is not very productive in general anymore at any level except for primary industries. The rest of it is just fluff.

The unproductive reality of houses doesn't matter while debt is so cheap. Banks have tightened somewhat but on the whole they are still throwing money at people in low rate mortgages, which fuels demand and keeps that bubble inflated. Cheap debt also allows all manner of unsustainable activity to continue in the economy because the can can always be kicked down the road.



Anna Bligh is a shameless disgrace. To think that the ALP has gone from pushing to nationalize all banks in the late 1940s to fostering this sort of behaviour in 2017. Compromised, infiltrated, undermined, hollowed-out.

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  don_dunstan Minister for Railways

Location: Adelaide proud
Bubbles like this are proof that traders do not always act in their rational self-interest. Emotion and desires are a big factor.
MILW
It's not necessarily entirely of our doing, the exact same thing has been happening in Canada, NZ and the UK. I'd suggest that if you are from a foreign country with no social safety net and no social medicine that these anglophone countries with wonderful social infrastructure are highly desirable. Also we all seem to suffer from non-existent policing of our own foreign property-buying laws (the same as these other countries - especially Vancouver, Toronto and Auckland) so the bubbles have all been replicated in those places too.

There was never any discussion or policy review at a national level about whether it was a good idea to allow these extremely cashed up foreigners to come in and park their money here and as the O'Dwyer enquiry proved - nobody at a federal parliamentary level wants to acknowledge that this stuff is even going on.
Anna Bligh is a shameless disgrace. To think that the ALP has gone from pushing to nationalize all banks in the late 1940s to fostering this sort of behaviour in 2017. Compromised, infiltrated, undermined, hollowed-out.
MILW
Terrible isn't it - why is nobody in the parliamentary ALP prepared to come out and publicly shame her for what she's doing? I think she needs to be called on it.
  Groundrelay Chief Commissioner

Location: Surrounded by Trolls!
Anna Bligh is a shameless disgrace. To think that the ALP has gone from pushing to nationalize all banks in the late 1940s to fostering this sort of behaviour in 2017. Compromised, infiltrated, undermined, hollowed-out.
Terrible isn't it - why is nobody in the parliamentary ALP prepared to come out and publicly shame her for what she's doing? I think she needs to be called on it.
don_dunstan
Brother! What emotional over-the-top crap. Given the Banks are the devil incarnate, no Christians should work for them either Rolling Eyes

Regardless I'm sure she knew what she was in for. Obviously the ABA needed to soften there image so they didn't want an off the rack ex-Lib.

At least the government finally admitted the need to raise revenue to pay for things. Rightly or wrongly the banks are ready source (unlike mining companies which contribute to the party coffers Surprised).  It's likely the bank tax will see interest rates go up a few points which the RBA won't mind at all. However as pointed out on Sunrise this morning, whilst the banks are our biggest corporate tax payers, we have large multi national companies here that pay zilch tax. Perhaps that's where your outrage should be directed.
  1771D Junior Train Controller

Anna Bligh, on previous parliamentary performance alone, IS a disgrace and a sellout.  Privatisation of state owned assets, completely against party platform is just one sorry example.
  don_dunstan Minister for Railways

Location: Adelaide proud
Brother! What emotional over-the-top crap.
Groundrelay
Not at all. You have an ex-Labor Premier going in to bat for the most profitable companies in the nation (by far) while real wages in Australia have been failing to keep pace with inflation since 2009. Where is your lefty outrage against those who are supposedly supporting your interests (but then sold out to the highest and wealthiest bidders?). Or is she somehow a special case because you like her or something?
Regardless I'm sure she knew what she was in for. Obviously the ABA needed to soften there image so they didn't want an off the rack ex-Lib.
Groundrelay
So they got someone ever so slightly softer and more moderate than (say) Peter Reith. Good for them. Poor Anna, I guess someone had to do that dreadfully unpopular job. Just as well she's being handsomely remunerated for selling the case for the very richest paying less.
  don_dunstan Minister for Railways

Location: Adelaide proud
Anna Bligh, on previous parliamentary performance alone, IS a disgrace and a sellout.  Privatisation of state owned assets, completely against party platform is just one sorry example.
1771D
What have any of these Labor Party leading lights of the last 20 or 30 years ever done except make the lives the working class harder? Not that I really blame Anna Bligh for taking the well-worn path from from parliament to corporate riches, they've all been doing it - even Hawkie is a spokesman for some very large Chinese interests in Australia.
  Groundrelay Chief Commissioner

Location: Surrounded by Trolls!
Where is your lefty outrage against those who are supposedly supporting your interests (but then sold out to the highest and wealthiest bidders?). ...
don_dunstan
Well I’m relatively 'progressive' in this company. As for “leftie” Rolling Eyes  Those pesky Reds still under your bed Don Razz

Mostly I’m being pragmatic. You can have all the ideology in the world but it counts for nought if you can’t get elected. Politics is the art of the possible, as this Budget proves!

I’d be more outraged by those multi nationals paying SFA or NIL tax or health funds making proportionally greater profits that put up premiums well above CPI.
  MILW Junior Train Controller

Location: Earth
Anna Bligh, on previous parliamentary performance alone, IS a disgrace and a sellout.  Privatisation of state owned assets, completely against party platform is just one sorry example.
What have any of these Labor Party leading lights of the last 20 or 30 years ever done except make the lives the working class harder? Not that I really blame Anna Bligh for taking the well-worn path from from parliament to corporate riches, they've all been doing it - even Hawkie is a spokesman for some very large Chinese interests in Australia.
don_dunstan

It seems the anti-labour element has been in the Anti-Labour Party for a long time but really took off after the dismissal of Whitlam, which roughly coincided with the beginning of the new wave of globalisation, the debt-based global casino, deregulation and liberalisation of most Western economies but particularly in the Anglosphere. The likes of Hawke, a Rhodes Scholar, lept aboard the Thatcher/Reagan gravy train. Globalisation devastated union membership as the manufacturing base was sold out. As union membership declined, the ALP had to diversify its support base. Businesses and elite interests were only too happy to step in, while the working class was effectively deluding itself into believing it was wealthy and didn't need a political voice. The ALP also seems to have become of hotbed of ethnic mafia-like corrupt activity, particularly in NSW. Anyway, I'd say the ALP is exactly where the elite want it now.

It's not necessarily entirely of our doing, the exact same thing has been happening in Canada, NZ and the UK. I'd suggest that if you are from a foreign country with no social safety net and no social medicine that these anglophone countries with wonderful social infrastructure are highly desirable. Also we all seem to suffer from non-existent policing of our own foreign property-buying laws (the same as these other countries - especially Vancouver, Toronto and Auckland) so the bubbles have all been replicated in those places too. There was never any discussion or policy review at a national level about whether it was a good idea to allow these extremely cashed up foreigners to come in and park their money here and as the O'Dwyer enquiry proved - nobody at a federal parliamentary level wants to acknowledge that this stuff is even going on.
don_dunstan
Agreed, although I still think domestic demand fuelled by historically low interest rates (cheap debt) and lucrative incentives for investors are bigger factors than cashed-up immigrants.
  don_dunstan Minister for Railways

Location: Adelaide proud
It seems the anti-labour element has been in the Anti-Labour Party for a long time but really took off after the dismissal of Whitlam, which roughly coincided with the beginning of the new wave of globalisation, the debt-based global casino, deregulation and liberalisation of most Western economies but particularly in the Anglosphere. The likes of Hawke, a Rhodes Scholar, lept aboard the Thatcher/Reagan gravy train. Globalisation devastated union membership as the manufacturing base was sold out. As union membership declined, the ALP had to diversify its support base. Businesses and elite interests were only too happy to step in, while the working class was effectively deluding itself into believing it was wealthy and didn't need a political voice. The ALP also seems to have become of hotbed of ethnic mafia-like corrupt activity, particularly in NSW. Anyway, I'd say the ALP is exactly where the elite want it now.
MILW
Good synopsis. Really, the Labor Party would be in terrible trouble trying to find its voice if it wasn't for the fact that the Liberals have been so consistently hopeless. I saw an interview with Keating recently where he crowed about the fact that they had completely destroyed the manufacturing base of this nation for the benefit of the working class because their new jobs in the service sector were so much better. Spoken like someone who has no understanding of how much worse those jobs actually are... and I think that's at the core of the problem. These people are all isolated plutocrats, they just govern for the very wealthy and they don't give a damn (or even think) about the great unwashed masses out there.
  don_dunstan Minister for Railways

Location: Adelaide proud
Agreed, although I still think domestic demand fuelled by historically low interest rates (cheap debt) and lucrative incentives for investors are bigger factors than cashed-up immigrants.
MILW
Depends on the location - parts of Melbourne and Sydney have certainly been influenced by cashed up foreigners but places like Perth clearly not as much. It wouldn't be so much of a problem if there weren't so many absent property-holders who live here part-time (if at all). Again, it's an area that's incredibly hard to get reliable information on.

Interest rates crashing to near-zero is always going to result in a domestic bidding war too... it's a perfect storm for those $5 million Chatswood houses I guess.
  Groundrelay Chief Commissioner

Location: Surrounded by Trolls!
...These people are all isolated plutocrats, they just govern for the very wealthy and they don't give a damn (or even think) about the great unwashed masses out there.
don_dunstan
Sorry but I don't buy into that. It's too simplistic.
Politics is the art of the possible. Neither Labor or Liberal would ever hold power for long if they stuck to their ideological base.

Labor had its chance to change the world in the 70’s and got tossed out for bothering. The LNP and their backers would raise the socialist bogey at every opportunity (what’s changed Razz)

The Hawke government learnt that lesson. It needed to be seen as business friendly and the economic rationalist model was becoming the global reality.

Remember the Liberal Party was going through its own catharsis with the drys dominating the wets, supported by some powerful media figures. Of course that lot would never dream of taking this country down the same path let alone implement Thatcherism.

Bottom line Don, most of the lasting socio-economic reforms Australians take for granted would only have been implemented by Labor. That could only happen if it was in power.

However unpalatable, Labor was and remains the lesser of the two weevils for those on the wrong side of the ledger.
  don_dunstan Minister for Railways

Location: Adelaide proud
...

Bottom line Don, most of the lasting socio-economic reforms Australians take for granted would only have been implemented by Labor. That could only happen if it was in power.

However unpalatable, Labor was and remains the lesser of the two weevils for those on the wrong side of the ledger.
Groundrelay
No, Groundrelay, you can't trust the Labor Party to do ANYTHING right, that's the problem with them.

Look at what happened the last time they got into power with Gillard's ridiculously un-affordable and easily rorted VET-FEE-HELP system, hundreds of thousands of Aussies stranded with debts they can never pay to the Commonwealth and over a third of fees incurred deemed forever unrecoverable. That anyone should even think of voting for the Labor Party again is beyond belief, those idiots spent money like there was no tomorrow. And just watch what happens when the largely unreformed NDIS goes into full swing, there will be private sector flight-by-nighters and overcharging rorts everywhere just like with the VET disaster - tens of billions down the toilet yet again on another stupid Labor scheme that is ideologically-driven and adds to the mountains of debt already being incurred for the taxpayers on other Labor-supported stupid ideas like $$$ for unnecessary and unreliable green electricity.

Gillard even allowed KFC and McDonalds to import their own 457's from Nepal (of all places) to fill "skilled" vacancies at those places... truly a party that represents the disadvantaged young looking for their first job aren't they.
  kitchgp Chief Commissioner

........ You have an ex-Labor Premier going in to bat for the most profitable companies in the nation (by far) while real wages in Australia have been failing to keep pace with inflation since 2009......
don_dunstan


1. Microsoft, Google et al hide their profits overseas, making any comparison of company profits in Australia impossible.
2. The LNP has been in power for the last 4 years of the 8 years since 2009 and, obviously from the above statement, done nothing about real wages except attempt to reduce penalty rates.
  don_dunstan Minister for Railways

Location: Adelaide proud
1. Microsoft, Google et al hide their profits overseas, making any comparison of company profits in Australia impossible.
kitchgp
For sure, I don't disagree with Groundrelay's earlier quite valid point about who is not paying the most tax in Australia. Trans-national companies like Apple and Google certainly should be paying more but they also employ ex-politicians to lobby against any potential measures affecting their delicate tax structures... what can you do. Is there any lobby group that represents ordinary people I wonder.
2. The LNP has been in power for the last 4 years of the 8 years since 2009 and, obviously from the above statement, done nothing about real wages except attempt to reduce penalty rates.
kitchgp
Again, no argument from me at all on that - you are right, they've actually accelerated the problem. And yet they don't see the irony of pursuing a low-wage policy while revenue from income tax (the biggest single source of revenue for the Commonwealth) is continuing to flat-line. The sorts of jobs that are being created in Malcolm's flash "new economy" are obviously not ones that pay well?
  don_dunstan Minister for Railways

Location: Adelaide proud
I’d be more outraged by those multi nationals paying SFA or NIL tax or health funds making proportionally greater profits that put up premiums well above CPI.
Groundrelay
There is an article in the Financial Review today about this very problem and the ATO's efforts to get on top of it; there's a myriad of scams but they're tackling the most easily pursued/litigated first (I guess!). Loaning money to subsidiary companies and claiming the interest is a rort they're clamping down on at the moment, let's hope that Turnbull and Morrison actually support the tax office when it tries to claw back money from multinationals.
  don_dunstan Minister for Railways

Location: Adelaide proud
Speaking of wages growth, I didn't realise that the Morrison budget projects the government going back into surplus in four years on the back of some pretty extraordinary figures... namely that wages growth will bounce back from below 2% (where it is now) back to 3.75% p/a, seemingly that's going to happen very soon according to their projections (ABC).
  don_dunstan Minister for Railways

Location: Adelaide proud
Oh dear, the West Australian government goes to the banks to borrow an "emergency" $11 billion just to keep paying public servants (as in The Australian). Not sure of the claim that they were "weeks" away from running out of money but it's a bad sign that they have sought to borrow such a large amount of money only weeks after the election?
  1771D Junior Train Controller

Does it show maybe that Barnett p!ssed the proceeds of the mining boom up against the wall similarly to what happened in QLD under Beattie/Bligh?
  michaelgm Chief Commissioner

Don, in relation to wages growth, my partner, had her review, four weeks ago (we have been together, 27 years today, in fact) According to her boss, pay increases, in their organisation are linked to CPI, and this is @ 0.92% She works for a pretty successful smaller business, they spruke that they are like a family. And in my experience, this is the only time, this has been true. They really, really are. Her increase, was 1.0%.

So, in my view, wage growth at 3.75%, in the budget forecast,is fantasy land stuff.
  Carnot Chief Commissioner

Does it show maybe that Barnett p!ssed the proceeds of the mining boom up against the wall similarly to what happened in QLD under Beattie/Bligh?
1771D
With such resource dependent economies, those states are more likely to follow a big boom then big bust cycle....

As for Vic and NSW, they've become "property dependent" for State revenue.  Good luck when that goes bust.

Incidentally, check out how the Vic Govt have accumulated all this cash from new subdivision developments but have hardly spent any of it!  So incompetent:
http://www.theage.com.au/victoria/fund-to-raise-nearly-a-billion-but-government-planning-to-only-spend-millions-20170515-gw5cix.html
  don_dunstan Minister for Railways

Location: Adelaide proud
Don, in relation to wages growth, my partner, had her review, four weeks ago (we have been together, 27 years today, in fact) According to her boss, pay increases, in their organisation are linked to CPI, and this is @ 0.92% She works for a pretty successful smaller business, they spruke that they are like a family. And in my experience, this is the only time, this has been true. They really, really are. Her increase, was 1.0%.

So, in my view, wage growth at 3.75%, in the budget forecast,is fantasy land stuff.
michaelgm
Thanks for that post, Michael, I've had that line thrown at me before - usually in an effort to keep my from leaving an employer to go to a better-paid job.
Does it show maybe that Barnett p!ssed the proceeds of the mining boom up against the wall similarly to what happened in QLD under Beattie/Bligh?
1771D
In the case of Western Australia, there were a lot of very big-ticket items that were constructed in a very short space of time but also during the mining boom the wages of public servants were increased at rates above the CPI to keep a lid on turnover and attract staff to the (very expensive) West when times were good. It's the reverse of that situation now; therefore I think it's reasonable to expect that the new government will have to cut hard and deep into the budget (where Barnett was too squeamish) to stop these borrowing costs from spiralling out of control.

The fact that they rushed out to borrow an "emergency" $11 billion doesn't inspire confidence.
  don_dunstan Minister for Railways

Location: Adelaide proud
Scott Morrison's 3.75% p/a wages growth is looking more unbelievable all the time. Coates Hire's 900 maintenance employees are told that they must accept lower wages and conditions or they'll be forced to work for minimum wage (Fairfax):

Coates Hire is the latest major Australian employer to flag the option of applying for the Fair Work Commission to terminate an agreement – a tactic that, if successful, reverts workers back to the minimum wages contained in awards...

...Coates Hire and its unionised workforce of fitters, electricians, yard staff and truck drivers have been locked in negotiations over the terms of a new workplace agreement for the past two years.

Management's latest offer contains a $1000 sign-on bonus, two 1.5 per cent pay rises in 2018 and 2019, and improved entitlements for domestic violence leave and paid parental leave.

But the offer, which comes after a two-year pay freeze, includes the introduction of a two-tiered pay system in which new hires will receive 18 per cent less pay, one week less in annual leave and reduced penalty rates, according to the union.

Apparently Coates is making good money as a company - leaving aside the threat to go back to minimum wages: Paying new employees 18% less than ongoing staff is a pretty drastic cost-cutting measure isn't it. I guess it's their right to vary the conditions of their employment... interesting to read that there hasn't been a wage rise at Coates for 2 years prior to the current negotiations.
  don_dunstan Minister for Railways

Location: Adelaide proud
Wages growth at its lowest point since the last recession according to ABS figures released today (ABC):

Wage growth remained at record lows in the first quarter of this year, with workers receiving a pay rise of just 0.5 per cent.

That keeps annual wage growth at just 1.9 per cent, the lowest on Bureau of Statistics figures that go back to the late 1990s, and probably the slowest rate of pay rises since the last recession.

It continues a run of very low pay increases, with the bureau's figures showing that quarterly wage increases have remained stuck between 0.4 and 0.6 per cent for the past three years.

Public sector workers continued to fare better than private sector employees, with annual pay increases averaging 2.4 per cent versus just 1.8 per cent.
  RTT_Rules Oliver Bullied, CME

Location: Dubai UAE
Anna Bligh, on previous parliamentary performance alone, IS a disgrace and a sellout.  Privatisation of state owned assets, completely against party platform is just one sorry example.
1771D
Selling state own assets has been ALP un-official policy or standard practice since the 1980's.

You vote in the a govt, the govt is the Manager of the state, hence the govt is empowered to sell the state assets should they so choose. Bligh and Fraser couldn't balance a seesaw and had no chance with a state budget, hence they needed to sell to pay for all the other things you voted them in to do.
  RTT_Rules Oliver Bullied, CME

Location: Dubai UAE
Wages growth at its lowest point since the last recession according to ABS figures released today (ABC):

Wage growth remained at record lows in the first quarter of this year, with workers receiving a pay rise of just 0.5 per cent.

That keeps annual wage growth at just 1.9 per cent, the lowest on Bureau of Statistics figures that go back to the late 1990s, and probably the slowest rate of pay rises since the last recession.

It continues a run of very low pay increases, with the bureau's figures showing that quarterly wage increases have remained stuck between 0.4 and 0.6 per cent for the past three years.

Public sector workers continued to fare better than private sector employees, with annual pay increases averaging 2.4 per cent versus just 1.8 per cent.
don_dunstan
So who is living in dreamland, the private sector or the govt sector?

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