News&Views No 23
Updated: Jul 6, 2022
AFR, Editorial & Opinion, 25-26 June, P 42, ‘Australia needs to take a seat at the global table’.
‘Despite a torrid first few weeks in government Anthony Albanese’s visit next week to the NATO summit in Madrid and to President Emmanuel Macron in Paris is not about dispensable diplomatic pleasantries. The prime minister leads a consequential Indo-Pacific country. His appearance alongside the North Atlantic nations underscores both global solidarity with Ukraine in its finest hour as an independent country, and the seriousness of the economic crises accelerated by war.
Australia’s this regions donor of military aid to Ukraine, and after weeks when Europe’s resolve on Ukraine has looked wobbly, it is good that Australia is at these tables stiffening the west’s voice.
And in conclusion: ‘Australia lives in a tense region, too. Recharged diplomatic activism, supporting multilateralism, backing other nations and exacting some solidarity, may pay us back at the right time.’
AFR, P 42, Peter Drysdale and Shiro Armstrong, ‘Find common purpose with China’. ‘Global perspective.'
Australia and China both depend heavily on a multilateral trading system. Strengthening it together is a way of managing their troubled bilateral ties’.
In conclusion: ‘Australia’s neighbours have been crying out for Australian action and leadership in multilateral action – from action on climate change to supporting open trade – that embraces China. Doing so in the months ahead provides a safe and sure path to the restoration of common purpose in our bilateral relationship’.
AFR, P3, John Kehoe, ‘Budget deficit slashed by half to $33b’.
Well, ring the bells. ‘The federal budget deficit bequeathed by the Morrison has been slashed in half to $33b in the first 11 months of the financial year, new Department of Finance figures reveal.
‘Soaring commodity prices fuelled by the war in Ukraine and the low 3.9 per cent unemployment rate underpinned by bumper corporate tax revenue and lower welfare expenses.
An ‘independent budget expert’ threw some cold water on the numbers, but there are wet blankets everywhere. Let’s wait and see!
The Aussie, P 15, Tom Dusevic, ‘Million-dollar man to blame if economy goes down in flames’.
‘Australia is not predestined for a recession, or even the half-light known as stagflation. Either would be the result of bad choices, as they say in redemption stories, as today’s cold facts suggest we have the luck, agency, institutions, and solid foundations for renewal and growth.
‘But there is a budding economic, political, political and social narrative the puts the nation’s prospects firmly in the hands of one man: Philip Lowe.
‘This week the Reserve Bank governor counselled Australians to make sacrifices in his war on inflation. How we endure the pain from coming interest rate increases will be the story of this rambunctious year.’
‘As Peter Costello said: ‘it’s the worse failure in monetary policy since 1990s’.
[I was the man in charge of interest rate policy for most of the interest rate policy in the 1980s, except toward the end when I recommended interest rate increases and the governor recommended cutting rates. The good men of the board supported the boss, unsurprisingly but wrongly.
[Then the new team at the top made the opposite mistake, producing a hefty recession. Later, the then deputy governor apologised, but the damage was done.]
Greg Sheridan, ‘The Battle for America’.
‘Donald Trump and Joe Biden should both be finished as prospective presidential candidates for 2024. Yet Biden swears he’ll run again, while Trump constantly hints he will. The two halves are surely the worst presidential choice ever presented to American voters, have both suffered what should be career ending political damage over the past month.
‘For Trump it is excruciating, uncontradictory testimony of his closest aids and even family members that he attempted to thwart a democratic election that he legitimately lost, and in doing so used and provoked violence.
For Biden, it’s the mess of the US economy, especially inflation and looming recession, and the contribution to this by his policies of massive expenditure and cutting back on US fossil fuel energy production. Not to mention illegal immigration from Mexico.
‘For Biden, another astounding train wreck TV interview, this time with late-night comedian Jimmy Kimmel, brought the public scepticism to a head.’
In conclusion: ‘The question for 2024 is: can America find a decent non-Trump Republican or non-woke Democrat to be president. And can it avoid the breakdown not just its politics but but of its whole society.’
'Sport’. Carlton! came back with a roar. Freo were stunned as the Blues played their best game of their season and if they can keep it up they will still be around in the finals.
Richmond vs Geelong was one of the best games Henry has seen. When the Geelong star ran past the bloke with the ball to take out a Richmond star the game was far closer.
Richmond battled brilliantly and hit the front with 2 minutes to go. Geelong in turn grabbed a goal with seconds to play. Clearly if the Richmond bloke had not been taken out, Richmond would have very likely won. ‘Send such a player off the ground’ would be my view.
Anyway, the bloke has been stopped for playing for 4 games.
AFR, Monday 27 June, P1 and P4, John Kehoe and Hans van Leewen, ‘Wage inflation ‘flashing red’, BIS warns’.
‘If central banks failed to tame inflation and wage claims, interest rates would need to rise sharply, risking ‘large drops in asset prices [that] could trigger a sharp recession and financial stresses’ the Bank for International Settlements said.
The BIS also said rising interest rates could not rely on economic growth to reduce their debt burdens, following a similar U-tern by Treasury from its more relaxed position about budget deficits under the Coalition government.’
‘Treasurer Jim Chalmers warned yesterday that getting spending under control would be necessary in the October 25 budget. He said inflation would be ‘significantly higher, that the previous government and public debt payment costs would rise.
The AFR View, ‘The ALP should back Reserve Bank’s ‘narrow path’.’
‘Ms McManus accuses the RBA board members of being out of touch with the institutional wage-fixing system. But these business members are more likely to be in touch with the ‘individual’ – rather than award or enterprise bargain based – pay rises that are now driving the acceleration in overall wages growth.
‘Amid the tightest job market in half a century, just about every business is paying more to attract or retain valued staff. The average wage rises for private-sector jobs has accelerated to nearly a decade high of 3.4 per cent.
‘The most in-demand jobs are attracting big pay rises as business bids for the near-fixed supply of labor.
‘As this individual wage inflation spreads, Dr Lowe will try to stay on the ‘narrow path’ of taming inflation without giving up Australia’s sub-4 per cent jobless rate. The new government should talk more about this achievement even if it did occur on the last mob’s watch’.
Jim O’ Neill, ‘How to avoid revisiting the 1970s.’
‘Without price stability or productivity improvement; generous wage, fiscal or monetary policies will represent nothing but false promises’.
The Aussie, P1 and P2, Ben Packham, ‘Warning to NATO on China-Russia pact.’
‘The threat Russia and China pose to the global order will be at the top of the agenda when Anthony Albanese joins at least 54 other world leaders in Madrid this week at the largest NATO summit ever held.
‘The Prime minister and the counterparts from New Zealand, Japan and South Korea, will form a special Indo-Pacific delegation, warning Beijing’s ‘no limits’ pact with Moscow means NATO needs to focus on a wider threat than just Russia.’
The Aussie, P 10, ‘Constructive role for older staff’.
This clever idea was suggested by Peter Dutton.
‘In the current employment in which large and small are struggling to fill vacancies, Peter Dutton’s proposal to double the amount aged and veteran service pensioners can earn before their pension payments are cut makes sense.
‘Retirees have a wealth of experience and skills. Allowing them to earn about $600 a fortnight compared instead at a time when living costs are rising, would put more money into their pockets, boost consumption and allow businesses struggling without enough workers.
AFR, Tuesday 28 June, P1 and P4, Phillip Coorey, ‘Albanese says China on notice’.
‘Vladimir Putin invasion of Ukraine has been a strategic failure that has made Russia a global pariah’ something of which China should take note. Prime Minister Anthony Albanese says.
‘In an interview with The Australian en route to the NATO summit in Madrid. Mr Albanese said it was important Australia and other non-NATO Pacific nations attended the summit because no one was isolated from such aggression in a globalised world.
‘With NATO extending its focus to the global threat posed by China, as well as Russia, the leaders of Australia, New Zealand, Japan and South Korea have been invited as the ‘Asia-Pacific Four’.’
In the end: ‘On his way to Spain, Mr Albanese visited the few remaining Australian troops at the Al Minhad desert base outside Dubai, from where the operations in Iraq and Afghanistan were based.
‘He said Russia’s invasion was a reminder of the ‘unsafe worlds we live in’ and that the international rule of law should never be taken for granted’
AFR, Editor&Opinion, P 38, ‘Australia pursues security on home front and far away’.
‘China and Australia have had deep economic engagement which has continued despite the diplomatic problems of the past two years. There are now welcome signs of both sides recognising that this needs to end. But in a region that is both vital as the world’s future and increasingly tense and contested, Australia is right to keep as many outside interests engaged as possible. This week’s meetings in Madrid will help to shore up this objective’.
AFR, P 39, Adrian Blundal-Wignal, ’A bold plan to review productivity growth’.
Blundal-Wignal starts by saying ‘Hawke-Keating style is needed from those great two men. He tells us that trend productivity was 1.8 per cent at the peak in the mid-1990s and now is around 0.3 per cent.
The reasons are caused by no relevant plan, Australia has few global world-beating companies and the usual link with the commodity cycle was broken in the mid 2016s.
Adrian presents seven actions:
· Monetary policy has sustained low interest rates, as have many other countries
· Distortive subsidies need to be eliminated
· The absence of key taxes, including carbon pricing and a resource rent tax
· Education output is crucial for productivity growth and is a declining share of GDP
· Research and development is important but not via small companies that rarely create globally competitive technology innovations.
· It is necessary to envisage retaining and financial support for people transiting between jobs
· Finally, reduce red-tape barriers to domestic and cross-border competition (including mergers and acquisitions) to reduce time and costs.
This is not a definitive list, and the issue is whether it is the best such list. Here is a potentially powerful suggestion. Let us find a number of good economists (including Blundal-Wignal) willing to present, say, five new ideas. Set up a three-day meeting with several old diggers, including Paul Keating, Gary Banks and yours truly deciding the winner, or the five best ideas who decides the winner.
The Aussie, Tuesday June 28, P 25, Greg Ip, ‘The surge in inflation earns monetarism another look’.
‘It was Friedman who made monetarism. In a Monetary History of the United States, 1867 – 1960, he and Anna Schwartz blamed the Great Depression on the Federal Reserve’s failure to keep the money supply from collapsing. In the 1970s and 1980s, Friedman helped inspire the Fed and other central banks to adopt money supply targets to tame double-inflation’.
But afterwards the nice story failed – ‘practical problems have plagued monetarism ever since’. There are various attempts, different definitions of money, testing other relationship and in conclusion, ‘It is worth noting that money supply growth this year has plunged. If the monetarists are right, perhaps that means inflation will too.’
AFR, Wednesday June 29, P1 and P6, Phillip Coorey, ‘PM condemns Russian strike’.
‘Albanese joins NATO leaders’.
‘Australia to reopen embassy in the Urkaine’.
‘Beijing slams ‘Asia Four’.
‘There is a lot going on’ says Peta Credlin, presumably as usual.
Jennifer Hewett, on P2, ‘The shopping mall carnage is another of Putin’s brutal reminders that Western sanctions have done nothing to shorten the war’.
The AFR, Editorial&Opinion, ‘The lucky country will need a bigger Australian ambition.’
‘The 2021census underlines Australia’s democratic destiny as an increasingly diverse migrant and multicultural nation. The census shows that migrants from India have overtaken China as the largest source of ‘new Australians’.’
‘It’s common for politicians including Prime Minister Albanese – with his Italian surname – to celebrate Australia’s multiculturalism. But its rare for our leaders to speak as glowingly about the immigration that makes the multicultural possible.
The Aussie, Wednesday June 29, P 11, Paul Kelly, ‘Albanese’s haste threatens voice.’
‘What is Labor’s proposal? There is none. Albanese is deceiving himself; he talks about momentum for a proposal that Labor has not explained. His 'there’s nothing to fuss about' comment is ignorant, complacent and dangerous.
‘Albanese’s comments imply he thinks the referendum is on a roll and that delay is a problem. This is plain wrong. The proposal for a first Nations voice is contentious and radical.’
In conclusion: ‘The reality is that the core Coalition reservation is about putting a race-based institution sitting adjacent to the house and the Senate.
‘This can be defended but, so far, Albanese hasn’t tried. He needs to treat the Australian public with the respect it deserves one of the most complex and fraught referendum proposals to be put since Federation’.
AFR, Thursday, June 30, P 38, Rory Medcalf, ‘NATO shares in our China risk’.
‘The historic character of the Madrid summit extends to the Indo-Pacific as the alliance identifies authoritarian China as a clear challenge to Europeans interests’.
AFR, P 39, John Kehoe, ‘The RBA should avoid politically correct appointments.’
The most relevant proposal by John Kehoe is the need for a couple of ‘highly qualified monetary economists who have the intellectual rigor, to advise the governor and deputy governor on technical monetary policy issues.’
There is at least one highly qualified economist who rose to the top of the Economics department, equal to John Phillips in status, and when needed, the governors got useful advice, not all of which they wanted. After 17 years in the RBA he left the place to run good businesses for 15 years and then spent another 15 years as a professional director. Economics was relevant throughout the 30 years with serious economic advice, with 11 years writing for the Australian every month.
Anyone wishing to help make the RBA perform better will be provided by the name and achievements.
The Aussie, Thursday 30, P1 and P5, Ben Packham, ‘Albanese vow to help power and feed the world’.
with thanks to Mr Leak
Fiona Prior suggests 'Elvis the Opera', having just seen Baz Luhrmann's show-stopping 'Elvis'. More here.