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Aussies and NZers: Four seasons in one protest


karaddin

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Not surprised ScoMo thinks and behaves this way. Not sure what the GG's constitutional duties include but there seems to be a failure to apply checks and balances here - that's more concerning.

 

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I just don't get how the GG seems to have gone along with it willy-nilly without raising it with anybody. Hurley's response of "It's a matter for the PM to communicate these things" just sounds like a bullshit excuse if you ask me.

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Yes, you would have thought the GG should have at least checked with ScoMo that the other ministers concerned knew about it. They are largely a rubber stamp given constitutional convention to follow government advice, but they still have power to delay or at the very least call for a separate legal opinion. I would be interested to know if there was any legal consultation from the GG's office about this, sounds like there wasn't.

Totally indefensible by ScoMo as well. You could have made a case for the Health ministry move, if he had disclosed it publicly in concert with Hunt and explained why he was doing it given the enormous power of the Health minister under the Biosecurity Act. But to do it across all those other ministries without the original ministers knowing is really bizarre and quite alarming. I think he should resign (though he won't). 

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But Howard thinks it's fine and isn't worth the trouble of a by-election so it must be ok. I'm also reliably informed the devil doesn't think people should be concerned about the terms of their contracts with him.

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It is rather remarkable that the whole thing has been been kept under wraps until now, even from his cabinet ministers!

Only media outlet that seems to have known about it was News Corp with the 2 journos who published the book that's revealed the whole thing. News Corp being complicit for the LNP by withholding the revelation till after the election is totally unsurprising though.

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Meh I don't really care about the ScoMo story. 

Far more interested in the NSW stuff (Barilaro affair plus bullying culture), which underscores the sleaze and unprofessionalism that is rampant across NSW politics (not just Labor, as was previously thought). Oh and the Member for Kiama's criminal trial starts next month (he is up for sexual abuse). Still collecting his pay packet as of now. 

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Not to mention the Fair Trading scandal and resignations, and the London agent-general's pay packet. I'm quite surprised nothing has really stuck to Perrottet yet, as it seems there's ample evidence he was somehow connected to all three issues.

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Just on the economic situation in Aus...it's pretty clear now that hiking interest rates to around 2% is not going to cut it. The Fed Chair gave a hawkish speech today from the economic talk-shop at Jackson Hole and it would be a shock if the RBA didn't continue to move more or less in lockstep with the Fed.

The Reserve has already hiked rates from around 0 to 1.75%, but that is still too accommodative with headline inflation running at 6.2% (highest rate in 20 years) and unemployment at historic lows. The whole point of monetary policy is to smooth the business cycle to avoid entrenched inflation. It's likely that central banks around the world will raise to around 3% by the end of '22 before taking a pause to observe the (lagged) effects of the hikes. 

Next RBA decision is 6 Sept. 

ETA: Not financial advice but...if your bank is still paying you next to no interest, you are getting fleeced. You should be earning at least 2% on your savings at the current cash rate. 

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23 hours ago, Paxter said:

ETA: Not financial advice but...if your bank is still paying you next to no interest, you are getting fleeced. You should be earning at least 2% on your savings at the current cash rate. 

Yes, I just moved a bulk of my transitory savings over to a new online account paying me 2.35%. It's somewhat of a novelty having money actually earn interest in the bank account.

I don't think the RBA will be as hawkish as the Fed, though I suspect they will at least be more hawkish than most Australian economists are betting on. Australian inflation is not quite as bad as the rest of the world. The falling housing market will get a lot of news action but unless you're buying and/or selling in the near future that doesn't have as much of a direct economic effect on people as energy and petrol prices, which will continue to be a thorn in our sides for a while yet. Yet even then, energy prices are somewhat mitigated by Australia's high take-up of household solar power.

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32 minutes ago, Jeor said:

Yes, I just moved a bulk of my transitory savings over to a new online account paying me 2.35%. It's somewhat of a novelty having money actually earn interest in the bank account.

I don't think the RBA will be as hawkish as the Fed, though I suspect they will at least be more hawkish than most Australian economists are betting on. Australian inflation is not quite as bad as the rest of the world. The falling housing market will get a lot of news action but unless you're buying and/or selling in the near future that doesn't have as much of a direct economic effect on people as energy and petrol prices, which will continue to be a thorn in our sides for a while yet. Yet even then, energy prices are somewhat mitigated by Australia's high take-up of household solar power.

I dunno. Pretty sure the Fed and RBA will both hike to a similar spot (probably 3% or just below). The risk of higher inflation expectations becoming entrenched is anathema to central bankers; Lowe and co won’t want to take a chance.

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I don't think the RBA will continue to hike as aggressively as they have been. Many of the inflationary factors are international rather than domestic, and because of the way mortgages work here the RBA gets far more bang for their buck than the fed does.

Couple that with softer than expected employment numbers last month, and because of the enterprise bargaining structure there's an extreme lag in wage growth which puts a bit of a lid on an inflationary spiral. I think they'll slow down going forward, but yeah another 1% over the next 6-12months sounds about right. 

Would be surprised if we don't get pushed into recession anyway.

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22 hours ago, Paxter said:

I dunno. Pretty sure the Fed and RBA will both hike to a similar spot (probably 3% or just below). The risk of higher inflation expectations becoming entrenched is anathema to central bankers; Lowe and co won’t want to take a chance.

Inflation expectations are something of a wildcard, but as @Impmk2 points out the high Australian exposure to variable mortgage rates (traditionally much higher than the US) means the RBA has a more effective transmission mechanism with raising rates. I also think wage rises in Australia are slower to come by than in the US, where there seems to be much greater job mobility and the lack of employment safeguards mean it's more of a Wild West (in both up and down job markets).

All that being said, I think there are enough big macro issues that will do the RBA's dirty work for them in terms of slowing the economy down. China is stuttering and that will affect our giant resources sector; the lack of a migration strategy will probably mean anemic GDP growth; geopolitical shocks will continue to drive the stock market and risk sentiment down; and consumer behaviour is likely to moderate with the rate rises.

I'm not in the camp of people who think reserve banks will need to cut rates in 2024, but I do think RBA will raise to a slightly restrictive setting (E.g. 3%) and then hold there for a while yet. I think the Federal Reserve will possibly go up to 4%. Both won't start cutting until inflation drops to the target.

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On 8/28/2022 at 4:34 PM, Jeor said:

All that being said, I think there are enough big macro issues that will do the RBA's dirty work for them in terms of slowing the economy down. China is stuttering and that will affect our giant resources sector; the lack of a migration strategy will probably mean anemic GDP growth; geopolitical shocks will continue to drive the stock market and risk sentiment down; and consumer behaviour is likely to moderate with the rate rises.

China's slower growth and a complete lack of migration in the last couple of years haven't stopped a very fast recovery from the COVID recession and record low unemployment rate. And while geopolitics is shaking the supply side for certain key commodities (e.g. Aus is around the 11th largest importer in the world of petroleum), it isn't really doing much to domestic demand.

All to say that the RBA needed to act yesterday to smooth the business cycle. Let's not forget that the Liberals and the Reserve have been pumping the economy with stimulus and liquidity at virtually full employment for a while now. 

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4 hours ago, Paxter said:

All to say that the RBA needed to act yesterday to smooth the business cycle. Let's not forget that the Liberals and the Reserve have been pumping the economy with stimulus and liquidity at virtually full employment for a while now. 

Well yes, I think we can agree on that. It's a pity Labor promised to keep the Stage 3 tax cuts in; they probably shouldn't go ahead. Although it's still a couple of years until they come into play, and the world will probably look different then. But repealing them and then deciding what to do at the actual time would make more economic sense, though political suicide.

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1 hour ago, Jeor said:

Well yes, I think we can agree on that. It's a pity Labor promised to keep the Stage 3 tax cuts in; they probably shouldn't go ahead. Although it's still a couple of years until they come into play, and the world will probably look different then. But repealing them and then deciding what to do at the actual time would make more economic sense, though political suicide.

Absolutely. Those Turnbull-ScoMo tax cuts were always and remain garbage. Between that and the GST our progressive taxation regime is in tatters. The Guardian was reporting this week that the richest 1% Australians will be receiving a greater absolute benefit than the lowest 65% combined.

How the fuck is this even on the table. A massive failure by Albanese. 

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1 hour ago, Paxter said:

How the fuck is this even on the table. A massive failure by Albanese. 

Well, it's pretty clear that on the Stage 3 tax cuts, Labor sold out their principles in order to get into power. It was obvious that they were frightened about giving the Coalition a line to attack them on. In any other circumstance Labor should have been firmly against tax cuts for the top earners.

The budget deficit really does need to be repaired at some point. I'm afraid we'll go on the American-style politics where no one ever tackles the deficit and it becomes an entrenched feature of fiscal policy, with no party brave enough to deliver a tough budget for the sake of the long-term future. It's clear that the deficit can't be fixed just by cutting waste, so revenues are going to have to rise at some point.

I've said this before but in my view the most equitable way to do it is to raise the GST rate and cut income tax for lower earners (e.g. by increasing the tax-free threshold). The GST is the "best" tax to lean on because it is broad-based and gathers from all consumers (unlike income tax, which is only on the working population, and hence unreliable in the future with an ageing demographic). The drawbacks of the GST are that it is somewhat regressive, as everyone needs to pay for essential goods and services and this is a larger proportion of income for lower earners than others. So if you cut the personal income tax rate for low earners (or increased the tax-free threshold) you could balance it out so they're no worse off, while having increased tax efficiency across the board (while incidentally also saying that you've cut taxes for everyone, because everyone uses the lowest bracket). You may potentially have to give an increase to pensioners to ensure they aren't worse off either.

But I'm sure you could do all those things and still have an incremental increase in the tax base, increasing revenue and the sustainability of the tax system in the future. With the changing demographics and existing inefficiencies with income tax (given things like negative gearing, which seems like it's never going to be touched), we need to shift from reliance on personal income tax to the GST.

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