It's the economy, stupid!

 
  nswtrains Chief Commissioner

The tax office is already known for its toxic culture, and the scandal won't do much for internal morale. If anything it will reinforce the general malaise and tolerance of psychopathic behaviour. Predictably, senior management have been attempting to spin it internally as good news, encouraging minions that 'the system works' and that wrongdoers are brought to justice.

http://www.news.com.au/finance/money/tax/ato-boss-coached-staff-to-say-alleged-fraud-was-mainly-fake-news/news-story/9a0dacb5103f86ecc5612bf4e8d3da10

Mainstream media reports have been remarkably selective and careful with their coverage. Perhaps the pr strategy is still evolving, despite the story linked above.

Meanwhile, heres an alternate take on this distasteful episode in Australian kleptocracy:
https://gumshoenews.com/2017/05/19/australian-critters-dragged-from-the-swamp/#more-12131
locojoe67
The Gumshoe News article on the ATO is exactly as I see it, particularly in regard to not noticing the accumulation of such exotic assets. I notice the whole episode is being watered down by the general press but this is one of the most serious issues to arise lately. It is a disaster for the ATO.

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  don_dunstan Minister for Railways

Location: Adelaide proud
The Gumshoe News article on the ATO is exactly as I see it, particularly in regard to not noticing the accumulation of such exotic assets. I notice the whole episode is being watered down by the general press but this is one of the most serious issues to arise lately. It is a disaster for the ATO.
nswtrains
Strange that they were allowed to build such huge empires of assets out in the open without raising alarm bells earlier - although maybe it did and the police had to wait to build a case. It will be interesting to see what comes out in the trial; they were certainly not making any effort to hide the money they were making.

Speaking of crooks in high places, it was interesting to see that the NSW government has decided Eddie Obeid will finally be stripped of his parliamentary pension - something he's been collecting since being jailed earlier this year (ABC News). Although he's still protesting his innocence and trying to get out of prison but its likely Eddie will remain there at least until he's eligible for parole in a few years... at least they do actually go to jail (sometimes).
  don_dunstan Minister for Railways

Location: Adelaide proud
The Chinese government's credit rating is downgraded by Moody's (ABC News) and the Aussie dollar and stock exchange tick a shade lower as a result. There's a lot of hidden debt in China racked up by local governments and the shadow banking system, it would be interesting to know when that issue will finally get addressed by their national government. It's wonder our own credit rating is still as high as it is with our extremely high reliance on China... and our own inability to get a hold of our debt problem.
  don_dunstan Minister for Railways

Location: Adelaide proud
Newly privatised electricity companies in NSW have the green light to "gold plate" their infrastructure following a victory in the Federal Court against the Australian Energy Regulator (Fairfax):

Wednesday's court decision could add as much as $1.7 billion to Ausgrid's approved spending, industry sources said, which will have to be borne by households... NSW energy minister Don Harwin rejected speculation of price rises, stating the government has guarantees in place to ensure prices charged by the distributors in 2019 are lower than in 2014. However this fails to take into account the decision to "smooth" price rises beyond 2019.

Once it's privatised there's bugger all the NSW government can do to contain costs for consumers; the new owners are going to need $$$ to pay for their acquisition.
  don_dunstan Minister for Railways

Location: Adelaide proud
Businesses in NSW agitating to keep the 457 visa because they claim they can't find "skilled" people to fill their vacancies (Fairfax):

More than half of employers in NSW say they are experiencing skills shortages and nearly two-thirds expect a shortage in the next 12 months, a NSW Business Chamber survey has found.

They then go on to talk about the "shortage" of hospitality staff, particularly in Sydney... I can't imagine how hard it would be trying eek out a low wage existence in Sydney. You would either have to commute in from 40 or 50km out or share house with a dozen other people.
  don_dunstan Minister for Railways

Location: Adelaide proud
Young people moving from Sydney to find "value" in "affordable" Melbourne according to the real estate industry:

A new Melbourne housing lot in the outer suburbs is taking less than 50 days to sell – down from 200 days in 2013 – as demand outstrips supply and prices surge.

The figures, from real estate group Oliver Hume, follow the Urban Development Institute's State of the Land Report finding that there was just one month's worth of trading stock in Melbourne heading into 2017, despite a record 22,700 lots released last year...

...According to Oliver Hume, the median price of land in metropolitan Melbourne reached $262,000 in the first quarter of 2017 up 9.6 per cent (or $23,000) from $239,000 in the last quarter of 2016. Over the same period the median lot size declined from 416 square metres to 410 sq m...

...Oliver Hume director Paul Ciprian said land was attracting a wide variety of buyers including first home buyers, investors and value hunters from Sydney. "Over the last couple of years we have seen an ever-increasing number of people priced out of the Sydney market looking to set up their life in Melbourne. If your job and family is transferable, the decision is pretty simple," Mr Ciprian said.

Having lived in Melbourne there's no way I would consider a block of land on an Oliver Hume estate to be good value; although maybe if you come from Sydney it is? One of Oliver Hume's biggest estates at Point Cook is one example of a large development that has completely swamped existing infrastructure, overcrowding on the Werribee line and on the (newly expanded) Princess Fwy at the peaks. There simply isn't the commensurate spending by the Commonwealth to help the states keep up with the record amounts of overseas and interstate migrants moving there.
  locojoe67 Assistant Commissioner

Location: Gen X purgatory/urban Joh-land
"be interesting to know when that issue will finally get addressed by their national government..."

Kick the can. Its political poison, so avoid it however possible.

Shadow banking provides liquidity to make the impossible possible. Like skirting the Chinese currency controls.... all fun and games until the hot money goes elsewhere. As the Vancouver property marketeers are finding. Or maybe the Melbourne market.

http://www.abc.net.au/news/2017-05-25/chinese-investors-pull-out-of-melbourne-apartment-market/8557182

So the tide goes out and we see who's been swimming naked, as Warren Buffet said.
  locojoe67 Assistant Commissioner

Location: Gen X purgatory/urban Joh-land
More than half of employers in NSW say they are experiencing skills shortages and nearly two-thirds expect a shortage in the next 12 months, a NSW Business Chamber survey has found.
The asset boom has gutted the buying power of wages. All those dollars created by housing loans have to go somewhere. For young people paying rents it means their part time jobs buy less rental house than ever before.
  locojoe67 Assistant Commissioner

Location: Gen X purgatory/urban Joh-land
The Chinese government's credit rating is downgraded by Moody's (ABC News) and the Aussie dollar and stock exchange tick a shade lower as a result.

The stock market is increasingly unreflective of fundamentals, and I'm unconvinced the two are related. Market commentators love to draw the vaguest of cause and effect lines. Much of the day-to-day movement is mere noise.

Thing is, a rational market probably should behave as the quote observes. But the markets left rationality in the mirror a long time ago.
  don_dunstan Minister for Railways

Location: Adelaide proud
Thing is, a rational market probably should behave as the quote observes. But the markets left rationality in the mirror a long time ago.
locojoe67
One of the worst things that Costello ever did was create the Future Fund to flood the ASX with the proceeds of the Telstra sale - all it did was make some (more) funds managers even richer and helped to put an artificial floor in prices. It should have either been put into a perpetual infrastructure fund of some kind or a proper sovereign wealth fund mandated to invest in Australia's ports, roads and rail.
So the tide goes out and we see who's been swimming naked, as Warren Buffet said.
locojoe67
The really interesting thing about the Chinese scenario is that they will never allow any decline to follow any kind of natural market progression because they're fundamentally not capitalists and China does not have a a proper market economy. So for example, we have this banal situation like we do with the Chinese steel industry absolutely flooding the rest of the globe with product at below-cost prices because the Politburo doesn't like the prospect of tens of thousands of unemployed steel mill workers with nothing do to. They liked to ride the capitalist road on the way up but they don't want a bar of any of the possible negative consequences that a slow-down might entail. What will they do? Who knows, but it won't be like Australia where whole industries were allowed to go off-shore without so much as a peep - they will not play by the same rules that got them to where they are.

Like I've been saying for ages, our leadership doesn't fundamentally understand the nature of China - it's not a society with a tradition of human rights and laws like ours and they have already shown the lengths they're prepared to go to in order to protect their illegitimate government.
  locojoe67 Assistant Commissioner

Location: Gen X purgatory/urban Joh-land
Protecting their own is in no way an exclusively Chinese phenomena. And why would they want millions of additional unemployed with time on their hands? That could turn out messy in no time flat.

In regards to democracy, it has been a well pitched marketing effort that I have much less regard for. It's so-called virtues are shallow promises of hope for a minority of the well-connected. In reality it is just a front for crony capitalism, where those with the best paid lobbyists get the most intrusive, competitor-crushing legislation. The rest of us get the scraps via the trickle-down effect.

Hans Herman Hoppe described democracy as a devolution of theocracy with shorter time frames, and he was right. The progressives have taken full advantage by linking democracy with the wealth and lifespan improvements from the industrial revolution and now we think democracy is inseparable from prosperity.

The illusion of rational markets is another furphy that needs a sceptical eye. Markets have been intensively manipulated for decades. They are not places where investors gather, they are viciously competitive arenas with high frequency trading driven by algorithms, front running software,  plunge protection teams, and liquidity injection through bond buying.  The small investor gets fleeced through timed news releases, limited access to company reports and limited liability available to companies that fold. Asset stripping is a sport with the best adherents repeatedly winning gold.

Then there is is theft on a grand scale through suppression of natural interest rates, enabled by collusion between legislators, bankers and insiders. Keep the punch bowl full, they say. Inflation must always be positive.

The markets of today are an organised wealth redistribution scheme, where price discovery is dead and insider trading is normal. The baby boomers will be the last generation able to retire, as the ponzi scheme winds messily down into insolvency. The crisis of jobs that Adelaide faces? Just the rehearsal for what will play out elsewhere.
  don_dunstan Minister for Railways

Location: Adelaide proud
Protecting their own is in no way an exclusively Chinese phenomena. And why would they want millions of additional unemployed with time on their hands? That could turn out messy in no time flat.
locojoe67
They just need to learn to provide the myriad of busy-work schemes that we do here.
In regards to democracy, it has been a well pitched marketing effort that I have much less regard for. It's so-called virtues are shallow promises of hope for a minority of the well-connected. In reality it is just a front for crony capitalism, where those with the best paid lobbyists get the most intrusive, competitor-crushing legislation. The rest of us get the scraps via the trickle-down effect.
locojoe67
I'm inclined to think that the project can still be rescued - we have had takeovers by crony capitalists ever since the Rum Corps, we still seem to recover.

My problem is that the economic gains of the past got shared more evenly across society and across the nation. Now-days we have an economy that appears to be run to solely benefit specific classes of people like property speculators, the construction industry or domestic conglomerates like the banks or the supermarkets. John Hewson (of all people) hit the nail on the head in this recent opinion piece in Fairfax:

Sometimes we seem to forget that in the design and implementation of public policy and reform we are attempting to improve our society, not just our economy.

While we may get the economics effectively right, we often fail to foresee and understand some of the longer-term consequences for our society...

...Our big four banks have been issued a very significant social licence, with the practical protection that "they are too big to fail". They claim, of course to "balance the needs of their clients and shareholders", but conspicuously favour the latter. That is evidenced by the remuneration and bonus structures that incentivise key executives to do so, making almost obscene rewards for themselves in the process, compromising the quality of services to their clients.

Clearly, they are not sufficiently accountable for their privileged position, neither in terms of their financial contribution, nor service provision.

Of course, the problem is that every time the government attempts to even the playing field just a little bit (a 0.06% tax for example) the vested interests - whether they be mining, banking, supermarkets, construction unions - roll out their own forms of pressure onto the politicians to try and stop it. At least we operate in a society where scrutiny of corruption is actually encouraged and shaming of corrupt people in high places (if not jailing) actually occurs.
  locojoe67 Assistant Commissioner

Location: Gen X purgatory/urban Joh-land
Civic virtue just doesn't pay any more. That Fairfax article must have slipped through the censors.
http://www.brisbanetimes.com.au/comment/game-of-mates-how-billionaires-get-rich-at-our-expense-20170526-gwe0dp.html

What incentive is their for younger people to put back into the community when they see the example set by their elders?

"over 80 per cent of the wealthiest Australians have made their fortunes in property, mining, banking, superannuation and finance generally – all heavily regulated industries in which fortunes can be made by getting favourable property rezonings, planning law exemptions, mining concessions, labour law exemptions, money creation powers and mandated markets of many stripes".
(Paul Frijters and Gigi Foster)
  don_dunstan Minister for Railways

Location: Adelaide proud
Civic virtue just doesn't pay any more. That Fairfax article must have slipped through the censors.
http://www.brisbanetimes.com.au/comment/game-of-mates-how-billionaires-get-rich-at-our-expense-20170526-gwe0dp.html

What incentive is their for younger people to put back into the community when they see the example set by their elders?

"over 80 per cent of the wealthiest Australians have made their fortunes in property, mining, banking, superannuation and finance generally – all heavily regulated industries in which fortunes can be made by getting favourable property rezonings, planning law exemptions, mining concessions, labour law exemptions, money creation powers and mandated markets of many stripes".
(Paul Frijters and Gigi Foster)
locojoe67
Capitalism has a lovely way of resetting itself every few decades, shaking out the less efficient and rewarding the people who actually make things. The problem is that the last time it tried to do that in 2008/9 the government decided that they were going to do everything they could to actually stop the natural cycle of money shortage by spending on unwanted and unnecessary projects - and the worst thing of all - actually giving people free money to spend.

The agenda is well and truly captured by the crony capitalists but at some point in the near future our international creditors will realise that we actually don't produce anything except minerals, expensive real estate and financial schemes and they'll pull the rug right out from underneath us. Not a matter of if but when... and the machine will be allowed to properly reset itself.
  MILW Junior Train Controller

Location: Earth
Civic virtue just doesn't pay any more. That Fairfax article must have slipped through the censors.
http://www.brisbanetimes.com.au/comment/game-of-mates-how-billionaires-get-rich-at-our-expense-20170526-gwe0dp.html

What incentive is their for younger people to put back into the community when they see the example set by their elders?

"over 80 per cent of the wealthiest Australians have made their fortunes in property, mining, banking, superannuation and finance generally – all heavily regulated industries in which fortunes can be made by getting favourable property rezonings, planning law exemptions, mining concessions, labour law exemptions, money creation powers and mandated markets of many stripes".
(Paul Frijters and Gigi Foster)
locojoe67

Good article.

Instead most have made money by doing things that could have done by anyone, such as being in the right place at the right time to get a mining licence, or land rezoned for redevelopment. They haven't so much expanded what's possible as been lucky enough to do would have been done anyway.

So in Australia for the most part it's not about real innovation or creativity or achieving success by standing on one's own feet. It's just about expoloiting the bare essentials of land and natural resources. You make connections then jump on the gravy train and watch the money start rolling in with the help of taxpayer funds and protection of the state, then start buying mansions and luxury cars. There are so many unflattering labels that could be applied to these fatcats it's not funny.

Also makes reference to a book Game of Mates which seems like it might be worth a read. https://gameofmates.com/

Game of Mates will convince you that seeking favours, be they planning approvals or the right to build casinos or toll roads, is what makes Australia go round. Certainly it makes Australia's job market go round. Local council planners move into positions with developers, state and Commonwealth government ministers take up positions with companies they used to regulate and former Treasury officials sit on the boards of private banks. The book's appendix on movements in and out of the offices of mining ministers is eye-popping.


Capitalism has a lovely way of resetting itself every few decades, shaking out the less efficient and rewarding the people who actually make things. The problem is that the last time it tried to do that in 2008/9 the government decided that they were going to do everything they could to actually stop the natural cycle of money shortage by spending on unwanted and unnecessary projects - and the worst thing of all - actually giving people free money to spend. The agenda is well and truly captured by the crony capitalists but at some point in the near future our international creditors will realise that we actually don't produce anything except minerals, expensive real estate and financial schemes and they'll pull the rug right out from underneath us. Not a matter of if but when... and the machine will be allowed to properly reset itself.
don_dunstan
But even when Australia's great correction arrives, I have no doubt that the government will do its best to ensure that a proper free market correction does not happen. Protected interests will remain protected so far as is reasonably practicable, naturally with the help of taxpayer funds. And the corrupt, unfree gravy train of rent seekers mentioned above will not be allowed to crash and burn. I hope they fail, but they will try.
  don_dunstan Minister for Railways

Location: Adelaide proud
But even when Australia's great correction arrives, I have no doubt that the government will do its best to ensure that a proper free market correction does not happen. Protected interests will remain protected so far as is reasonably practicable, naturally with the help of taxpayer funds. And the corrupt, unfree gravy train of rent seekers mentioned above will not be allowed to crash and burn. I hope they fail, but they will try.
MILW
So the best thing we can hope for is that the system resets itself in such a way that the game tilts away from the current favoured mates ... probably to yet another cabal but hey that's how revolutions generally work.

Personally I don't understand why people aren't angrier, especially young people starting out whose lives have been made purposely very hard by policy settings... anyway.

Overnight it seems that there's still a wave of business confidence flowing through from the election of President Trump - his abolition of enforceable climate change targets seems to have actually fired the financial sector up.
  DirtyBallast Chief Commissioner

Location: I was here first. You're only visiting.
Businesses in NSW agitating to keep the 457 visa because they claim they can't find "skilled" people to fill their vacancies (Fairfax):

More than half of employers in NSW say they are experiencing skills shortages and nearly two-thirds expect a shortage in the next 12 months, a NSW Business Chamber survey has found.
don_dunstan
This is a pet hate of mine. Employers thinking that it is too hard to train people and preferring to hire someone off the shelf speaks volumes; they see employees as a cost instead of an investment, and see the heavy lifting as someone else's responsibility. Short termism in the extreme.

Such employers are shirking their responsibilities. By refusing to invest in people they have effectively crapped in their own nests. I hope their businesses fail as a result.
  don_dunstan Minister for Railways

Location: Adelaide proud
Interesting article in the West Australian about the stellar career of property investor brothers Ryan and Morgan Crawford. Unfortunately their investments were mostly in residential property in the Pilbara and the ANZ is now seeking to have their empire wound up:

In total, the brothers and former colleague Mark Pages-Oliver borrowed more than $5.5 million from ANZ in four years.
Ryan Crawford, who described himself on social media as “an active entrepreneur” who rose “to the rank’s of the State’s 1 per cent” of personal property investors, at one time claimed to have a portfolio valued at $35 million...

...ANZ claimed in 2013, Morgan Crawford borrowed $920,000 for a $1.25 million three-bedroom, one-bathroom house, again in South Hedland, which sold for $205,000 last year. The bank received $149,400 at settlement, the document alleges, and that he “did not repay the balance of the debt outstanding”. Mr Pages-Oliver and Ryan Crawford borrowed $744,000 for a three-bedroom, two-bathroom luxury apartment in Karratha’s Pelago building for $994,900 in 2011 and sold it for $400,000 in January.

Not saying that the Pilbara has anything in common with anywhere else in the country but those figures after the slump are frightening.
  don_dunstan Minister for Railways

Location: Adelaide proud
Employer groups have been howling behind closed doors to Malcolm Turnbull about the tightening of the 457 visa conditions, so it looks likely that many of the changes will not get through (Financial Review - paywall):

The retail, hospitality and tourism industries have… made a “really strong case” to protect their top international jobs such as retail buyers, merchandise planners, digital operators, hotel managers and chefs, according to private submissions made to the Turnbull government on Friday...

...Australia’s single largest employer, the retail sector, said its survey revealed retail buyers, merchandise planners, merchandise designers and digital commerce were four critical roles required and it had asked the department to reinstate retail buyers to the short term skilled occupation list.

“The recent changes to the 457 visa program have restricted Australian retailers in accessing specific roles required in modern day retailing, further crippling the growth and development of local retail talent,” Australian Retailers Association Russell Zimmerman said…

What a load of rubbish - we need skilled people on visas to do things like "specialised retailing"? I guess we need to keep the finger on the immigration button or the economy might slip into recession as it almost did last year.

Put simply, these employers are looking for people that they can pay less, abuse, force to work unpaid overtime and accept sub-standard conditions. They're not interested that someone earning $40,000 p/a or less can't possibly afford to live anywhere in the Sydney basin, they think those problems are someone else's issue - the last thing they want to do is pay higher wages to attract better staff - that's out of the question.
  don_dunstan Minister for Railways

Location: Adelaide proud
Australia's economy barely escapes recession with a very anaemic 0.3% economic growth registered for the latest quarterly figures... I think it's going to extremely hard for Turnbull and Morrison to avoid a technical recession this year. Even juicing the numbers with record migration figures isn't helping.
  don_dunstan Minister for Railways

Location: Adelaide proud
ON closer reading of the economic figures yesterday it's apparent that the poor performance was due in part to Cyclone Debbie disrupting coal exports - all the same the barely 1% annual economic growth isn't enough to keep unemployment at 6% for much longer. The astonishingly optimistic wages growth of Scott Morrison's budget looks even more remote.
  DirtyBallast Chief Commissioner

Location: I was here first. You're only visiting.
ON closer reading of the economic figures yesterday it's apparent that the poor performance was due in part to Cyclone Debbie disrupting coal exports - all the same the barely 1% annual economic growth isn't enough to keep unemployment at 6% for much longer. The astonishingly optimistic wages growth of Scott Morrison's budget looks even more remote.
don_dunstan
Isn't it funny that the sitting feds were poo-pooed for a bad set of numbers back in 2011 despite the much worse effect of cyclone Yasi, but now with the effect of cyclone Debbie it is a case of poo happens?

Actually, it's not funny at all.

Hypocrites.
  don_dunstan Minister for Railways

Location: Adelaide proud
Isn't it funny that the sitting feds were poo-pooed for a bad set of numbers back in 2011 despite the much worse effect of cyclone Yasi, but now with the effect of cyclone Debbie it is a case of poo happens?

Actually, it's not funny at all.

Hypocrites.
DirtyBallast
The underlying weakness in the economy is more pronounced this time around - I still can't get over the dishonesty in Morrison's forward wage projections. Who is getting wage rises in this economy, I ask you (apart from politicians and public servants!).

Meanwhile the planning disaster that is Sydney continues to lumber along... New Premier Gladys Berejiklian has been hosting some "community forum" type things trying to ascertain what's wrong with Australia's biggest city and she's been copping an earful from residents (News.com.au):

Furious commuters have accused the government of poor planning — citing a severe shortage of car parking spaces at stations along the northwest growth corridor amid a period of unprecedented house-building and development in the area.

And although another 218,000 new homes will spring up in the region­ over the next decade, Transport for NSW will provide a mere 8000 new commuter car parking spaces along the Sydney train network.

Sydney and Melbourne victims of their own success while the rest of Australia skates towards a recession with no jobs and no growth - a two-zone economy?
  don_dunstan Minister for Railways

Location: Adelaide proud
Last year Australia had the third highest prices in the world for domestic electricity (behind Norway and Denmark), but this year we are set to overtake them to have the most expensive electricity in the world (link).

I really don't understand what's happened to our country, we used to be one of the most competitive places in the world to establish and run large scale manufacturing operations, now we're pretty much the most expensive place in the world to try and make something - even basic operations like chemical manufacturing is now becoming impossible due to the extreme cost of energy and labour. The cost of living in Sydney and Melbourne has now overtaken places like Manhattan and Hong Kong... it's insanely difficult to get by on the east coast unless you have one of Joe Hockey's "good jobs".
  bingley hall Minister for Railways

Location: Last train to Skaville
Last year Australia had the third highest prices in the world for domestic electricity (behind Norway and Denmark), but this year we are set to overtake them to have the most expensive electricity in the world (link).

I really don't understand what's happened to our country, we used to be one of the most competitive places in the world to establish and run large scale manufacturing operations, now we're pretty much the most expensive place in the world to try and make something - even basic operations like chemical manufacturing is now becoming impossible due to the extreme cost of energy and labour. The cost of living in Sydney and Melbourne has now overtaken places like Manhattan and Hong Kong... it's insanely difficult to get by on the east coast unless you have one of Joe Hockey's "good jobs".
don_dunstan

RTT_Rules will be along shortly to tell us once again its because of the outrageously high wages we are all receiving Razz

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