Left Field

Headline: Stimulus results now clearer

Australian Financial Review, pg 7. John Kerin. 27 April 2009.

The Rudd government has unveiled $66 billion of financial stimulus measures, one third of which will be distributed this year, reports claim. The first hand outs came in December, followed by the increased first home owner’s grants. Car makers and infrastructure builders have also received investments. Prime Minister Kevin Rudd also moved, after the Reserve Bank of Australia cut interest rates in February, to announce a $42 billion package to be spent over the next four years. Economists argue that planned spending on the national broadband network and further business support also equates to stimulus measures. Parliamentary secretary for government service delivery Mark Arbib released an update on the progress of the initial stimulus measures yesterday.

Headline: Labor risk to youth jobs says OECD as PM Kevin Rudd calls recession 'inevitable'

The Australian - online. David Uren. 21 April 2009.

The OECD has warned that the rollback of the Howard government's Work Choices industrial relations laws may result in higher youth unemployment, as Kevin Rudd conceded for the first time that recession in Australia was inevitable.

The Prime Minister's concession came as the OECD called on the Labor Government to return to individual contracts and move away from industry awards if youth unemployment starts to rise. The OECD said young workers would be hardest hit by the downturn, with their jobless rate set to rise twice as fast as that of adult workers.

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Headline: Recession inevitable, says Rudd

Australian Financial Review, pg 1. Adrian Rollins. 21 April 2009.

Prime Minister Kevin Rudd has conceded for the first time that the global downturn will drag Australia into an inevitable’ recession. Mr Rudd said yesterday that 28 of the world’s 30 most developed economies were already in recession, including seven of the nation’s top trading partners. The challenge for the government is to cushion the impact of the recession on businesses and jobs, through the actions we take through our economic stimulus package,’ said Mr Rudd. The International Monetary Fund’s forecast on Thursday is expected to show the global economy shrunk by a minimum of 1 percent this year. The asylum-seeker issue has prompted an increase in budget spending for Defence, Immigration and Border Security. Defence Minister Joel Fitzgibbon has previously announced a $2 billion cost savings plan over 10 years.

Headline: Inflation slows rate cut on cards

Australian Financial Review, pg 6. Adrian Rollins. 20 April 2009.

Despite increased inflation in the March quarter that is forecast to rise by 0.5 percentage points when the consumer price index comes out on Wednesday, the Reserve Bank of Australia is expected to make deeper interest rate cuts. This is due to the economic downturn and rising unemployment. While there is a likely 0.8 percentage point lift in the RBA’s measure of underlying inflation, Australian Bureau of Statistics figures should indicate that the annual inflation rate has continued to ease and return to within the RBA’s 2-3 per cent target area for the first time since late 2007. Close attention will be paid to the speech being delivered in Adelaide tomorrow by RBA governor Glenn Stevens on how the central bank sees global developments and their implications locally.

Headline: Budget forecast to worsen

Australian Financial Review, pg 6. Louise Dodson. 17 April 2009.

The Federal Government is warning that the May budget will downgrade forecasts for economic growth. Treasurer Wayne Swan said yesterday, 'The simple fact is that a global recession, and deep downturns for our key trading partners, make it certain that our own forecasts for growth and revenue in the budget will be substantially worse than in the Updated Economic and Fiscal Outlook (UEFO).' Workplace Relations Minister Julia Gillard announced yesterday awards that would be incentives to employers to take on apprentices and trainees as the downturn continues. However Housing Industry Association chief executive Chris Lamont called on all governments to further promote the jobs and training of apprentices and trainees. Meanwhile,Small Business Minister Craig Emerson met the banking industry association as well as representatives of six banks as part of a consultation process to improve credit for small business.

Headline: Recession lesson in conservatives' defeat

Australian Financial Review, pg 5. Laura Tingle. 23 March 2009.

Prime Minister Kevin Rudd claims that the success of Anna Bligh in the Queensland election is due to her being seen to be serious and diligent in dealing with the recession. Bligh’s win reflects her ability to to exploit Liberal National Party leader Lawrence Springborg’s dismissive approach to the global economic crisis.

Headline: RBA keeping something up its sleeve

Australian Financial Review, pg 12. Allan Mitchell. 18 March 2009.

The market is placing its bet that the Reserve Bank of Australia will reduce interest rates next month instead of keeping them on hold. However, minutes from the March board meeting of the RBA indicates the decision could go either way.

Headline: RBA keeps big rate cuts in reserve

Australian Financial Review, pg 1.Adrian Rollins. 18 March 2009.

The Reserve Bank of Australia (RBA) has signalled it will leave interest rates unchanged at its next scheduled meeting as it waits to assess the impact of the current monetary and fiscal stimulus packages. Notes released yesterday have confirmed that the current rate of 3.25 percent will remain in order to leave adequate flexibility for policy at future meetings.’ An easing in funding pressures for Australian banks has also reduced pressure on the central bank to cut rates, according to analysts.

The March board minutes, for the first time since the minutes were made public, did not disclose whether RBA staff had made a policy recommendation to the board. Deutsche Bank chief economist Tony Meer said it would be compelling if central bank governor Glenn Stevens and his staff did not feel strongly enough about the economic situation to provide a recommendation.

Headline: Doing nothing a strong tonic for morale

Australian Financial Review - online. John Edwards. 4 March 2009.

In some ways, yesterday's decision by the Reserve Bank of Australia to do nothing was one the central bank's boldest moves. It can also be seen as a tonic for Australia's economic morale, showing that the RBA has confidence that the economy is able to survive without a further cut. Australia is probably not currently in recession and its financial system is fine, and although this outlook may worsen, the RBA's decision gives some hope that Australia may do better than expected. John Edwards is the chief economist at HSBC Australia.

Headline: Business rate cuts lag

Australian Financial Review, pg 13. Geoff Winestock. 18 February 2009.

Business customers are still not getting the full benefit of cuts in official interest rates, according to the Reserve Bank of Australia's quarterly Statement on Monetary Policy. Australian Bankers Association chief David Bell says 'business conditions typically deteriorate faster and more deeply for business than for home loans during economic downturns.' Mr Bell says capital required by the Australian Prudential Regulation Authority could be three times higher for small-business loans than for home loans.

The RBA says banks have given business more equal treatment since February's 1 percentage point rate cut. Commonwealth Bank of Australia, Westpac Banking Corp, Australia and New Zealand Banking Group and National Australia Bank have all said they'll pass on to business the full 1 percentage point. Australian Industry Group chief Heather Ridout says she's 'very concerned' about reports from businesses that bank lending had been 'significantly tightened.'