Henry Thornton News & Views No 28
Updated: Aug 7, 2022
AFR, July 30-31, P1, Tom Burton, ‘Worst over’ for omicrom, flu waves’.
‘Australia appears to have avoided a much-feared simultaneous winter bout of COVID-19 and influenza, and experts are increasingly confident that the national omicron wave has peaked.
‘Winter flu and work absenteeism have both clearly topped out and are trending lower.
‘The risk of omicron, raw case numbers and hospitalisation are also tapering across all states, according to the latest reports, apparently driven by individuals taking their own health precautions’.
AFR, July 30-31, P4, John Kehoe, ‘All eyes on RBA’.
‘Rate rises could be followed by sharp cuts as inflation dives’.
‘The RBA could get ‘lucky’ as global inflationary forces recede, if the Bank keeps a lid on inflation’.
AFR, July 30-31, Ayesha de Kretser, ‘Interest rates and cost of living put brakes on mortgage landing’.
‘’As the banks prepare their earnings updates and the Reserve Bank is to once again increase interest rates next month, more evidence of a slowdown in new mortgage lending to owner-occupiers has emerged’.
AFR, July 30-31. P 42, Editorial&Opinion, ‘Labor clubbed by reality on its core economic promise.’
‘Nine weeks after the May 21 election, the Labor governant’s first parliamentary session came amid a deepening and predictable global crisis of war, pandemic and inflation. …
In conclusion: ‘In some ways Labor has made an upright start. But on its core promise of living standards, it has been clubbed by reality. The global inflation has exposed a lack of a genuine economic growth agenda, which would be required to pay for its promised social programs. Unless Dr Chalmers broaches more serious social reform, Mr Albanese’s September job summit risks being a 1983 Bob Hawke tribute show and not an answer to the problems 2022.’
The Aussie, July 30-31, P15, Paul Kelly, ‘Albo’s political and economic conflict’.
‘There goes Anthony Albanese’s first term. Labor has every right to feel robbed by history. The mission of the first Labor government for a decade just got reinvented - Jim Chalmers confronts confronts an inflationary challenge unprecedented for 40 years and the Australian people face a living standards crunch.
‘The Treasurer’s new forecasts this week are optimistic but plausible – but they assume it’s not until 2024 that inflation is back in the box and real wages cross the threshold to growth.
‘This is not what then opposition leader Albanese told the public during the election campaign. The resolution and tolerance of the Australian people will be sorely tested during 2022 and 2023.’
The Aussie, July 30-31, P 15, Chris Kenny, ‘Indigenous Australia wants real solution, not symbolism.’
‘The virtue signallers have created chaos in rugby league, they are undermining voters’ faith in their parliament, and they could well destroy what many regard as a meaningful national reform – an Indigenous voice to parliament. Sanctimony is often the enemy of tangible good works.’ …
In conclusion: ‘It seems to me that a nation losing children, losing whole communities, losing generations cannot think that carrying on without change, without effort, is an acceptable choice’.
Inside. Dennis Shanahan
‘Treasurer used his first ministerial in the parliament to jolt the public out of complacency after years of easy money and debt.’
Tom Dusevic. Labor is now the master of the levers, and we can see an emerging three-stage approach to delivery and budgeting: ditch defuse, distribute.
The Economist. July 16 – 22. P 23-25, ‘Xi Jinping is making China and the world less safe’.
In conclusion: ‘Despite frequent forays by Chinese military aircraft and vessels around the island, there are few signs of imminent danger. But China’s nationalism has turned uglier and the politics of succession in China has always been fraught with intra-party tensions.
‘It is not impossible that opponents of Mr Zi or those looking ahead to the day when he eventually departs from the political scene, may adopt more strident forms of nationalism.
Mr Xi has nurtured a volatile force. He has not always be so able to keep it under control’.
AFR, August 1, P1 and P4, Jacob Greber, ‘Trigger gas export curb, ACCC urges’.
‘The Albanese government will seize upon an Australian Competition and Consumer Commission report to be released today, which warns of a looming economy-damaging shortfall of gas, to force the nation’s biggest exporters to divert supplies into the domestic market.
‘In a scathing report that effectively accuses big gas producers of paying lip service to a ‘gentleman’s agreement’ with the government to ensure sufficient supply, the ACCC warns against allowing exporters to sell all their uncontracted gas overseas in 2023.’
AFR, August 1, P 13, Emma Rapaport, ‘Commodities boom to drive results season’.
‘The ASX’s coal, oil and gas are on the cusp of reporting exceptional results in the annual profit season kicking off this week, drawing a line under a volatile year for the share market as it faces a slowdown in growth.
‘Economists expect the Reserve Bank of Australia will upgrade its inflation forecast and increase Australia’s cash rate by another half a percentage point to 1.85 from 1.35 per cent at tomorrow’s policy meeting.’
The AFR Editorial&Opinion, P 38, ‘Voice details would make for a less divisive debate.’
‘Having not made a lot of it during the election campaign, Anthony Albanese has now made a referendum to enshrine an Indigenous Voice in the Australian Constitution, a first-term priority for the new Labor government.
‘Yet he has balanced the Gough Whitlam-style attempt to crash through as quickly as possible by seeking the bipartisan support that has been an essential precondition for constitutional amendments in the past. Mr Albanese says he will put a simple 'yes' or 'no' question to the electorate. But the Prime Minister is also using the wording of the constitution to reach across the aisle to the Coalition.
The Aussie, Monday August 1, P11, Paul Monk, ‘Albanse’s balances fear with the need for ‘China war’ debate.’
‘Last week, on the ABC’s 7.30 program, the Prime minister was asked weather, like his Deputy, Richard Marles, he was having sleepless nights over the possibility of war with China. That’s a sign of the times.
‘There is a growing risk of conflict because of China’s relentless attempts to reclaim old imperial territories and expert regional hegemony. There is a good deal of concern about this around the Indo-Pacific. How much sleep should we be losing?
‘Albanese responded: ‘We live in an era of strategic competition and a significant change is what is happening in our region. We live in an era of real uncertainty. ‘
Later: ‘We, as a society, have one advantage over China. We can have an open and public debate about what is going on and how it makes most sense to respond. In China, especially under Zi Jinping, there is no means to challenge government strategic policy, militarism, propaganda or preparations for war.
‘That is itself a cause for concern. Our debate is imperfect, but we are having one. And China’s behaviour means we need to press it home.
‘That realisation is now clear right around the Indo-Pacific rim. Here, in the US, in Japan, in South Korea, in India’.
AFR, August 2, P1 and P4, Angela Macdonald-Smith, and Jacob Greber, ‘Watchdog ‘demonises’ gas giants’.
‘Gas producers have lashed out at the competition regulator, accusing it of demonising them in a report that has prompted the Albanese government to move towards toward an unprecedented control of LNG exports to head of an east coast shortage next year.
‘The industry argued that there was no shortage of gas, blaming manufacturers for failing to lock in supply contracts with regulations ... notably onshore gas restrictions in Victoria and NSW.
‘The ACCC report also played down the broader context of the crisis.’
Various debates about who is doing what to who. Read on if you feel the need for more!
AFR, Tuesday August 2, P1 and P5, Ronald Mizen, ‘July inflation gauge hits 20-year record.’
‘The pace of inflation accelerated in July, with the Melbourne Institute prices gauge rising to 1.2 per cent, the fastest rate in two decades, which stemmed in part from higher energy prices flowing to household budgets.’
‘The sharp rise in the [Melbourne Institute] monthly inflation gauge for July means it is all but certain the Reserve Bank will lift rates at least by 50 basis points’; said one guru. The guru was right.
AFR, Tuesday August 2, P39, Warwick McKibbin, ‘RBA must not repeat the mistakes of three decades ago’.
This article is important enough that here is a full presentation, subscribers only. A bonus is Philip Lowe blue, black and pink.
My email is firstname.lastname@example.org
The Aussie, August 2, P1 and P2, Natasha Bita, ‘Radical fix for teacher shortages.’
‘Lawyers, engineers and IT experts would be parachuted into classrooms to address crippling staff shortages under radical reforms that include pay rises of up to 40 per cent for the very best teachers.
‘The plan includes a six to 12-month ‘paid internship’ for career-changes to earn cash while upgrading their credentials with a two-year masters degree in education.’
Education minister Jason Clare and other experts will be the leaders in an ‘emergency workforce summit. Let us hope the work goes well and the new approach find acceptance.
Aussie, AFP, P 10, Kyov, ‘First grain ship since blockade leaves Odesa’.
‘The first shipment of Ukrainian grain left the port of Odesa on Monday.
‘The blockage of deliveries from warring Russia and Ukrainian – two of the world’s biggest grain exporter – has contributed to soaring food prices, hitting the world’s poorest nations especially hard.’
Let us hope there is substantial and widely spread, with no nasty surprises from Moscow.
Aussie, Amanda Hodge, ‘Joint war games ‘send signal’ to China’.
‘Australian defence forces have joined thousands of troops from Indonesia, the US, Singapore, Japan and Japan for 2 weeks old ‘unprecedented’ joint military exercises that will include combined paratrooper drops and amphibious landings on an island near the South China Sea.’
‘US officials have insisted this year’s ‘Super’ Garuda Shield – usually a bilateral exercise with Indonesia – is not aimed at any specific nation but to ‘advance regional co-operation to support a free and open Indo-Pacific, despite heightened tensions over China’s regional assertiveness.’
Aussie. Mrs Pelosi, third most senior American, is off to visit Asian countries. It started slowly but today we saw her leaving her plane to visit Taiwan. China has promised ‘some response’ in this matter which presumably will involve close encounters with planes and boats, perhaps with aluminium ‘stuff’ designed to help planes to crash.
AFR, August 3, P1 and P4, Ronald Mizen, ‘Higher rates tipped to bite’.
· Third monthly 0.5 pc cash rate lift, perhaps 0.25 pc.
· Economic growth downgraded, not so far to recession levels
· House price fall is only a modest down payment on the prospect of much steeper declines ahead.
‘What was of note was the tone of the statement – HSBC chief economist Paul Bloxham said, which highlighted a marked slowdown in economic growth this year and the next, and an upward tick in unemployment’.
AFR, August 3, P1 and P4, John Kehoe, ‘Entrenched inflation big fear for Lowe’.
‘Despite the financial pressure the Reserve Bank of Australia is imposing on Australians, governor Philip Lowe wants to nip inflation in the bud by continuing to increase interest rates.
‘Lowe believes the far worse alternative for living standards would be allowing inflation to run out control and becoming entrenched in people’s expectations.
‘Making these tough trade-off calls is why we have an independent central bank, and pay RBA governor $1 million each year to be unpopular with the public and tabloid media such as The Daily Telegraph, which has led calls to sack Lowe.
(My view is a million is too much, but is tolerable if large mistakes are not made.)
AFR, August 3, P1 and 10, Ronald Mizen, ‘Productivity update reveals five lost years.’
‘The federal government failed to shift the dial on what is most important to long-term living standards despite being handed a blueprint for growth by the Productivity Commission five years ago.
‘A new report titled The key to prosperity showed 2020 topped off the worst decade productivity in more than 50 years, which lowered wages growth and without correction will hold back national income.’
‘Treasurer Jim Calmers said he hoped the interim report would spur a genuine national conversation about how to reverse the poor performance’.
AFR, August 3, P1 and P2, Greg Sheridan, ‘Revealed: overhaul of Defence’.
‘Australia’s Defence force will be reshaped and an ambitious review to be announced by Anthony Albanese and the Defence minister.
‘The review, to be conducted by a former Australian Defence Force chief, Angus Houston, and a former Labor Defence minister, Steven Smith, is the first reassessment of the ADF in 35 years, taking in effect the risk of ‘state-on-state conflict’. It will assess and make recommendations on the ADF’s ‘structure, posture and preparedness’ for 10 years starting in 2023.’
‘The strategic review will be informed by intelligence assessments of the most dangerous threats Australia faces’.
AFR, August 4, P1 to P6,Andrew Tillitt, ‘Worst’ strategic situation in lifetime.’
‘Former military chief Angus Houston prepares it for potential conflict with China within the next decade.
Sir Angus, who was chief of the Defence Force from 2005 and 2011, offered a grim assessment as ‘circumstances have changed dramatically over the recent past … A land war in Europe, all sorts of issues in North-East Asia, particularly around Taiwan, East China Issues in South-East Asia, and issues up on the Himalayan border and northern India.
‘We also have disruptive technologies coming into play. It’s a fast-changing environment. And it’s absolutely imperative that we review the current strategic circumstances which I rate the worst I have ever seen in my career and lifetime.’
Experts all seem to support Sir Angus’ views, and others, including Paul Dibb who conducted a review in 1986, Prime minister Albanese and Defence chief Richard Marles are also involved in supporting the work ahead.
On P 6, Andrew Tillett also headed a separate study as follows: ‘Another inquiry is nice, but real action is needed’.
Mr Tillett cited many bits of poor decisions and a clear need for powerful choice of future best available tools and fast implementation.
On P1, continued on P 11, Is a larger leader, ‘Taiwan braces for China’s fury’.
This is due to the brave visit to Taiwan by senior US official, Nancy Pelosi. Ms Pelosi spoke to many people and did not hold back in her discussion. One example: ‘By travelling to Taiwan, we honour our commitment to democracy; reaffirming that the freedom of Taiwan – and all democracies – must be respected’.
Please see her longer article headed ‘Why I went to Taiwan this week’.
AFR, August 4, P4. ‘Deficit set to rise by billions on low productivity’ says Phillip Coorey and John Kehoe.
‘The medium-term productivity assumptions underpinning the federal budget forecasts have been down-graded from 1.5 per cent to 1.2 per cent, worsening the budget deficit by billions of dollars and potentially adding about $50 billion in the government debt by 2033. (I must express doubt for the figure of 1.2 per cent. 1.0 per cent would be a good result.)
‘In commissioning the 2022 report, then Treasurer Josh Frydenberg asked for a particular focus on the fault lines exposed by the pandemic and how to help governments enhance productivity in the post-pandemic era.’
The Aussie, August 4, P1 and P4, Geoff Chambers and Greg Brown, ‘PM strikes Green deal on climate.’
‘Anthony Albanese has declared that an end to ‘climate wars, is within sight after striking a deal with the Greens and Teal independents to push the government's 43 per cent medium-term emissions reduction target through parliament.
‘The Prime minister claimed an early political victory over the Greens with Adam Bandt abandoning threats to block the climate-change bill after winning minimal concessions’.
Graham Lloyd says ‘Global tomfoolery: Labor’s pact drags party to the left’.
And Dennis Shanahan, ‘The Greens will be watching … to inject themselves back into the climate wars and the Coalition will be alert to any devil in the detail’.
The Aussie, August 4, P10, ‘Review must strengthen defences’.
‘’Opposition defence spokesman Andrew Hastie, an Afghanistan veteran who also served with the Special Air Service Regiment in the Middle East and Indo-Pacific, has been quick to object to the appointment of former Labor defence minister Stephen Smith to lead a major review with former defence force chief Sir Angus Houston.
‘As Mr Hastie pointed out, when Professor Smith was minister, the defence budget was cut to 1.56 per cent of gross domestic product under the Gillard government – its lowest level since 1938’.
‘Before the election, in a speech to the Lowy Institute, Anthony Albanese recognised the need for future defence budgets ‘beyond 2 per cent’ of GDP.
AFR, P 34, Editorial&Opinion, ‘Climate challenge must be matched by energy reality’. ‘
‘After a wasted decade of climate laws, targets of a 43 per cent reduction in emission on by 2030, and zero by 2050 will soon the law of the land. Labor has done well to hold off the Greens’ anti-fossils fuel extremism …
‘But as Climate Change and Energy Minister Chris Bowen says, the real work lies ahead.
Enshrining 2030 and 2050 targets in legislation will help anchor Australia’s transitions to the lower carbon future and provide greater certainty for businesses in decarbonisation.
‘Labor has promised to build new transmission lines to connect new renewables to the grid, and to encourage people to buy electric vehicles’.
AFR, P 34, Simon Johnson, ‘Putin’s looming defeat in Ukraine.’
‘Russia’s assault is now floundering on the ground. And it has sunk into a self-destructive confrontation with its own customers by weaponizing its gas exports.’
‘The noose is tightening around Kherson – entirely the result of Russian aggression and overconfidence.
‘And it is tightening around Russian oil revenues and the Russian economy for the same reason’.
The Aussie, P1 and P6, Patrick Commins, ‘Coal powering Labor’s budget’.
‘Soaring coal and gas exports, turbocharged by the Ukraine war, have driven the largest trade surplus in the nation’s history, filling government coffers and potentially halving the forecast budget deficit for the past financial year.
‘CBA senior economist Belinda Allen described the trade figures as ‘truly extraordinary in the context of where we were in 2016, when we were recording very persistent deficits.
‘Australia exports what the world wants, and that is true in markets disrupted by the Ukraine war, such as grain, coal and gas,’ Ms Allen said.
The Aussie, P1 and P4, Simon Benson, ‘’Labor’s position is to support coal and gas exports.
And the trade figures demonstrate why. These exports are underwriting Chalmers’ budget position.
The Aussie, P1 and P4. Euin Hannan, ‘Ports brace for strike disruption.’
‘The nation’s ports face weeks of disruption as unions highlight aggressive tactics by the country’s tug operator to urge the federal government to wind back the powers to get pay deals ripped up’.
The Aussie, P 10, Hugh Tomlinson, ‘Zelensky calls for direct talks with Xi’.
‘Putin headed for ‘economic oblivion’
‘Ukrainian President Volodymyr has appealed for direct talks with China’s Xi Jinping as he urged Beijing to use its political and economic influence on Russia to help end the war in his country. ‘
‘Sanctions have had a disastrous impact on the Russian economy, with the country headed for ‘economic oblivion’, a study be Yale University has found, despite Moscow’s efforts to downplay the repercussions of the invasion of Ukraine.
Aussie working, P 11, Will Glasgow, ‘Taiwan warns a furious China’.
‘’If you do anything stupid, you’ll pay.
‘Something stupid’ would have ‘calamitous consequences’ for the whole world, as Beijing encircled the peaceful island democracy of Taiwan in an ominous display of its (Beijing’s) rising military strength’.
New report by Will Glasgow: ‘Beijing treatment of Taipei is just awful’.
‘I lived in Beijing in in 2020. Much of the history and politics of the People’s Republic of China, is extremely complicated.
‘But some things are as blunt as the military force Xi has on what he claims are his compatriots. Beijing’s treatment of Taiwan is awful. We should tell them so very clearly.’
with thanks to Mr David Rowe
Fiona Prior parties with a murderer. More here.