NBN paying Optus to destroy infrastructure. In no other industry would the ACCC approve such an agreement not to compete. THE Optus high-speed cable internet network is a national asset. Comprising 25,000 kilometres of coaxial cable strung across 550,000 poles in Sydney, Melbourne and Brisbane supported by 7000 kilometres of fibre, it provided Telstra with its first genuine competition, putting its own wires directly into half a million homes. Telstra fought back with FoxTel, Optus got burnt and has probably never recovered the cost of stringing the cables.
But from an economic point of view, what's important is that the asset exists. Right now it has 496,000 customers. Only a vandal would destroy such an asset. Advertisement NBN Co has asked the Australian Competition and Consumer Commission to let it pay Optus a reported $800 million to shut the network down. In no other industry would the ACCC approve such an agreement not to compete.
Mid last year it approved the Telstra deal. The Telstra coaxial cables won't be. Banking bubble (charts) GE checks non-bank sectors. Lenders insurer in downgrade territory. BUPA service pact with Healthscope. ANZ falls short on Asia target. Capital levels, market power limit disaster impact. The insurance sector recorded massive losses in 2011 due to numerous natural disasters including the Christchurch earthquakes, but 2012 has been relatively calmer.
Photo: AP Shaun Drummond Despite record losses for the insurance sector in 2011 due to catastrophes, the high capital levels of insurers and reinsurers and concentration of the local insurance market should limit the impact, according to analysis by a credit ratings agency. Last year general insurers worldwide experienced one of the highest ever level of losses worldwide of US$105 billion, but Australia and New Zealand took an even bigger hit. “For Oceania, the year 2011 equates to 41 per cent of the total losses over the past 31 years,” said Fitch Rating’s director of financial institutions, John Birch. “While Australia has experienced large losses over a long period, the five years to the end of 2011 really was an extreme period.” This is contingent on there being fewer catastrophes, however. Wesfarmers Insurance goes for brokers. EMAs crucial for Australian jobs: Ferguson.
Resources ‘free lunch’ finished. Boom under threat from higher costs. Louise Dodson, Jamie Freed and Jacob Greber High labour, energy and transport costs have made mining projects in Australia among the most expensive in the world to develop, throwing into doubt mega-projects such as BHP Billiton’s Olympic Dam copper uranium mine expansion. A report by consultants Port Jackson Partners published today for the Minerals Council of Australia shows the loss of competitiveness means Australia lost market share in the decade from 2000 to 2010 in nearly all metals markets, despite a big increase in the volume of exports. The study found that even in iron ore, Australia had lost its competitive advantage for all but established projects in Western Australia’s Pilbara region. Iron ore projects in Australia are up to 75 per cent more expensive to build than in West Africa.
High operating costs once in production make Australian iron ore less competitive in China than iron ore from Brazil despite the much shorter distance from Australia’s mines. China gets serious about growth again. A food stall in Beijing on Monday . . . China appears ready to risk overcapacity to preserve growth. Photo: AFP Lisa Murray and Angus Grigg AFR correspondentsShanghai The Chinese government appears to be refocusing on economic management after months of political tension and there is speculation Beijing may initiate a fresh round of stimulus spending after implementing financial market reforms yesterday. The new stimulus spending could be as high as 2 trillion yuan ($320 billion), said local reports, although it might not be in a single package.
The moves follow a State Council meeting last week in which Premier Wen Jiabao stated “the need for a greater emphasis on growth” indicating the government would act to prevent a sharp slowdown in the world’s second-largest economy. Any stimulus is likely to focus on infrastructure, public housing and subsidies for consumer goods, including new cars. During the global financial crisis, China injected 4 trillion yuan into its economy. Labor’s China food bowl plan. Angus Grigg and Lisa Murray AFR correspondentsShanghai The federal government is seeking billions in Chinese investment to open up land for farming in northern Australia in a plan designed to help feed China’s 1.3 billion citizens, which could reshape the global food market.
Trade and Competitiveness Minister Craig Emerson initiated a joint study with the Chinese Government last May to examine the policy changes needed to facilitate large-scale investment by Chinese agricultural interests in undeveloped land in northern Australia. The Chinese side of the study is being led by the powerful Commerce Minister Chen Deming – a sign of the better relations between the two governments. It is the first time Australia and China have co-operated on such a project. The report is expected to be released mid-year, possibly in conjunction with the white paper policy document on engagement with Asia being prepared by former Treasury secretary Ken Henry. Food security nudges China to new lands. Buttonwood: A contrarian moment. Clifford Chance M&A Toolkit : Global M&A Trends. Investment banking: the year that was (not) Despite market volatility and uncertainty stemming from Europe and a weak US economy, investment bankers were kept busy throughout 2011 and revenue is on par with the year earlier.
Mitra Tabrizian Anthony Macdonald and Brad Hatch As battle-weary investment bank chiefs switch off the office lights and head off for a break over Christmas, they will reflect on a surprisingly busy year – and hold out hope for a better 2012. In 2011, Australia experienced lacklustre equity capital markets volumes, a patchy but ultimately good year in mergers and acquisitions, and a busy time in debt markets. The real story, though, has been offshore. Economic turbulence and regulatory reform has forced banks to scale back risk-taking business units, such as proprietary trading, which traditionally underpinned revenue.
Many bankers are heading off on holiday somewhat shell-shocked and in need of a dose of rest and relaxation. While the stability is surprising, the number itself looks like a decent result. Markets: Australia To Drift For A While. But with signs that Greece will get its risky bond exchange done and dusted Friday night, markets in Europe and the US rose strongly on Thursday night. The chief economist and strategist of AMP Global Investors, Dr Shane Oliver explains: There was plenty of nervousness going into the February profit reporting season in Australia. And for good reason. Domestic demand has been weak, the strong $A is bearing down on trade exposed sectors and resources sector profits were coming off a high base with commodity prices falling in the second half last year.
In the event the results were pretty much as expected. In a word lacklustre. Reporting season wrap up The good news was most companies saw profit growth over the last year with 68% of companies having reported a rise. Against this, only 31% of results beat expectations, down from 37% for the June half 2011 results and well below the norm of 45%. This is the worst result since February 2009, in the midst of the GFC. Key themes Now they are all soft. A betterment levy: a cure to current ills - On Line Opinion - 12/2/2009. Exactly 100 years ago Winston Churchill and Lloyd George introduced a radical budget even by today’s standards. The budget introduced a high land tax, while severely reduced all other taxes. However, it was rejected by the House of Lords (or rather Landlords) for obvious reasons.
I argue that a 100 per cent betterment levy with income, GST, capital gains, superannuation taxes, tariffs, dividends and corporate taxes, all abolished, or at least severely reduced, can simultaneously cure unemployment and budget deficits. This levy, sometimes called a “Mills tax” was formulated by John Stuart Mill, the great liberal philosopher of the 19th century. Arguments in favour A cure to a budget deficit Prime Minister Rudd plans to spend billions on public infrastructure such as transport and school upgrades. Advertisement Question: why tax wages and not windfalls? Only a betterment levy is able to make a profit out of government debt. A cure to unemployment Consider Pittsburgh, PA. 1. Wrong. 2. 3. 4. 5. M&A : TheEconomist - Surf’s up. Uncertain times hobble mergers and acquisitions. Norton Rose Australia - Australian Private M&A trends in a record-breaking year for Australian M&A activity.
Surprises that shift the economic cycle. OVER the many years of taking an interest in investments, I have learned and re-learned three key lessons. First, investment markets and the economy all move in cycles. And there's a common cause: we're human and tend to share the general optimism or pessimism of others. At times, too, governments widen cycles by changing the settings of economic policies "too much and too late". Second, investment markets often "overshoot", that is, they move by more than changes in the fundamental influences would seem to require.
Exchange rates are notorious for this. Third, we need to allow for the X factor: the big influence that had not been generally predicted or allowed for but which comes out of the woodwork and has a marked effect on the economy or investment markets. To be a fan of the X factor, as I am, does not mean copping out of taking a view on where the economy, shares, interest rates and property seem to be heading. Resilience of the Australian economy following both the Asian economic.
Australia GDP Growth Rate. Australian GDP advanced 0.5 percent in the fourth quarter of 2014, rising from upwardly revised 0.4 percent expansion reported in the previous three month period and matching market estimates. Net exports and consumption contributed the most to the growth while changes in inventories dragged the expansion down. Net exports contributed 0.7 percentage points to GDP growth.
Household final consumption expenditure contributed 0.5 percentage points to GDP growth and Total dwelling construction 0.1 percentage points to GDP growth. This was offset by a -0.6 percentage point contribution to GDP growth from Changes in inventories and a -0.1 percentage point contribution from Non-dwelling construction. On the industry side, the main contributors to GDP growth were Construction and Health care and social assistance each contributing 0.1 percentage points to the increase in GDP.
The December quarter saw the Terms of trade decrease 1.7 per cent in seasonally adjusted terms. Recent Releases. Australian National Accounts – I wouldn’t say the economy is great. The on-going rhetoric being used to push the federal budget into surplus is that the Australian economy is growing so fast as a result of the mining boom (record commodity prices) that we are in danger of an inflationary break-out. This is at a time when 12.5 per cent of our labour resources are idle (unemployed or underemployed). Today’s Australian Bureau of Statistics release of the National Accounts data for the December quarter shows that the mining sector is making a zero contribution to real GDP growth.
Overall, the data shows that the Australian economy grew by 0.7 per cent in the December quarter giving an annual growth of 2.7 per cent. This is not enough to eat into the pool of idle labour given that productivity growth is around 1 per cent per annum and labour force growth is around 1.7 per cent. The zero contribution of private investment is the most disappointing feature of today’s data. The press reaction was predictable. I wouldn’t run away and say the economy is great … Downside to global retailers. Online sales down but beat retailers. Key Economic News to Watch This Week: May 28.
Monday, May 28 The African Development Bank begins its annual meetings in Arusha, Tanzania. This year’s theme is ‘Africa and the Emerging Global Landscape: Challenged and Opportunities, where distinguished speakers and thinkers will debate Africa’s growth and political landscape. Indian Prime Minister Manmohan Singh visits Myanmar, the first official visit by an Indian premier since 1987. He is expected to meet with the country’s leaders and develop stronger trade and investment ties. Related Story: International Sanctions May Ruin Myanmar’s Opportunity For Change: Joseph Stiglitz Related News: U.S. Tuesday, May 29 A report, “Golden rules for a golden age of gas”, published by the International Energy Agency, outlining the benefits and risks of shale and other forms of unconventional gas.
Paul Krugman, the Nobel Prize-winning professor of economics at Princeton University, talks about his book ‘End This Depression Now!’ Sudan and South Sudan resume border talks. Wednesday, May 30. Much more than Greece in the mix. What you need to know about the next Greek election. Very bad things ... A screen grab of the Credit Suisse chart giving probabilities for the outcome of the next Greek election. Source: Business Insider A new poll suggests Greece’s anti-bailout Syriza party has taken the lead in the race to form the next Greek government when Greeks head back to the voting booth on June 17. According to the Epikaira magazine poll, Syriza has 30 per cent of the vote, ahead of the pro-bailout New Democracy party on 26.5 per cent.
Syriza’s platform supports continued euro membership for Greece but proposes scrapping the country’s current financial aid program. A move by a new Greek government to dump the country’s hard won bailout support could have dire consequences for Greece, the euro zone and, by extension, the global economy. Credit Suisse has produced a number of charts this month showing where the various players stand and what the implications are for Europe and the rest of the world depending on who wins.
InShare0. Irish referendum: secret polls predict Yes vote despite low turnout. Seeing the wood for the GDP: facts on the stats - The Drum Opinion - Time for the national accounts ... time to dig deep into our GDP. Find More Stories Seeing the wood for the GDP: facts on the stats Greg Jericho This morning at 11:30am the National Accounts will be released by the Australian Bureau of Statistics . The National Accounts are the type of thing that gets economic wonks slightly effervescent.
They give us a chance to step back and look at the big picture of how the nation is travelling. The GDP growth figure is important because it is the best measure we have to examine how the entire economy is fairing. GDP growth is also important because one of the main functions of the Reserve Bank is to use its powers to "best contribute to": the stability of the currency of Australia; the maintenance of full employment in Australia; and the economic prosperity and welfare of the people of Australia.
It is why the end of the statement of the Governor of the RBA announcing the decision on the cash rate will invariably end (as it did yesterday ): So GDP growth is the aim of policy makers and politicians and our central bank. X. Sales take first drop in ten months. Unexpected ... consumers cut spending at department stores and on household goods. Photo: Louie Douvis Jacob Greber Economics correspondent Pressure is increasing on the central bank to extend the most aggressive interest rate cuts since the global financial crisis after reports showed retail sales unexpectedly fell and construction work dropped everywhere except in Western Australia.
In renewed signs that Australia’s two-speed economy is intensifying, retail sales slid 0.2 per cent in April, the first decline in 10 months. The worst state and territory was Victoria, where sales slumped 1.6 per cent, while department stores and household goods retailers were affected by consumers that appeared to have pared back non-essential spending.
JB Hi-Fi chief executive officer Terry Smart told The Australian Financial Review the retail market remained challenging and that rate cuts were unlikely to be a catalyst for any change in consumer behaviour in the near-term. Shares in Spain's Bankia plunge on bailout plan. Spain likely to need bailout. Spanish central banker quits as bailout threat builds. Doom and gloom could go boom. Who Moved My Weekend? Making a call on digital wealth. Facebook Might Have a Smartphone in Its Future. Qantas adds seats to fight air wars. Qantas partners, staff a priority for numbers man. Way off our game. Qantas scours the world for the right allies. Tech core to Suncorp’s $275m program. CBA ‘streets ahead’ of rivals on tech. Analysts challenge CBA to hold tech lead. Just how safe is your superannuation?
Big banks corner advice. ASIC wants SMSFs regularly warned. Why retirees overlook lifetime annuities. Super funds could back cheap homes.