I caught up with journalist Tarric Brooker for a look back over the year, and what might be up in 2025, including of course some great slides.
We dwelt on housing and Government policy, the structure of the economy and what might be underlying the dire numbers reported recently. How much is spin and how much is real?
You can catch Tarric’s work at https://www.burnouteconomics.com/
The latest slides are here: https://www.burnouteconomics.com/p/dfa-chart-pack-christmas-special
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So we got the Mid Year economic Forecast today from the Treasurer, and there was plenty of spin about necessary uplifts in spending, recent tax cuts and government support, and even that the Government is supporting women more than ever.
They were also keen to compare their own efforts with the previous Governments efforts (through they were including the COVID years), and international comparison which showed Australia’s economy still has more capacity, and is in some respects still the best dirty shirt.
But as I discussed with Leith van Onselen just yesterday in our live show, all is not well with this budget, and there will be consequences.
One notable issue was that federal government has cut company tax receipts for the first time since the pandemic because of weaker profits from the mining sector.
But the treasurer maintained most of the government’s long-run commodity price assumptions from the May budget. Iron ore, coking coal, thermal coal and LNG were unchanged at respectively $US60 a tonne, $US140 a tonne, $US70 a tonne and $US10 a metric million British thermal unit. Are these too conservative, and does it represent a hollow log for more spending – probably.
Then there is the so called off-budget issues. Today’s Mid-Year Economic and Fiscal Outlook (MYEFO), which showed that the federal government will spend a record $90 billion “off-budget” over the next four years, obscuring the true situation facing the budget. This off-budget spending does not show up in the underlying budget deficit or surplus despite it imposing a significant cost on taxpayers.
The underlying budget balance that treasurers prefer to focus on hides a heap of so-called “off-budget” spending, such as taxpayer money for the Clean Energy Finance Corporation, the $12 billion Snowy Hydro 2.0 project, wiping 20 per cent off student debts and the $15 billion National Reconstruction Fund.
Tax and other government revenue are hovering near a sustained record high of 25.5 per cent of the economy thanks to once-in-a-generation windfalls. The unemployment rate is a very low 3.9 per cent and personal income tax is on track for a record $335 billion this year, despite the stage 3 income tax cuts shaving off about $23 billion.
Company tax of $133 billion is just a bit below its all-time high last year, amid elevated commodity export prices.
Total budget revenue is cumulatively higher by about $380 billion over five years compared with Treasury’s forecasts on the eve of the May 2022 election.
Yet, at a time when revenue is booming and the economy is operating around full capacity, the deficit in underlying terms is forecast to be $26.9 billion (1 per cent of gross domestic product), a $1.3 billion improvement since the May budget.
Cumulative underlying deficits over four years are projected to blow out to $144 billion, $21.7 billion worse than expected seven months ago.
Where are the adults in the room because from the budget point of view, they appear to have left years ago, and the result will be more pressure on ordinary households and businesses across the country.
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This is an edit of a live discussion with Economist Leith van Onselen, Co-founder of MacroBusiness, and Chief Economist at Nucleus Wealth. We will pick apart the latest housing disasters, and why things have gone so pear shaped, but also what could be done (with political will) to sort this mess out! It is NOT rocket science…
You can ask a question live!
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https://digitalfinanceanalytics.com/blog/dfa-one-to-one/ for our One to One Service.
As we count down to the end of the year, Edwin and I discuss the idea that Government wants to keep property prices ever higher, look at a disaster of a building survey as a warning for those who trust vendor surveys, and spot areas where prices are well down from 2017 levels, despite all the hype.
Plus we consider the problem of not enough skilled construction workers to meet targets in Australia and the UK, and the underlying reasons why property is largely unaffordable.
Today’s post is brought to you by Ribbon Property Consultants.
If you are buying your home in Sydney’s contentious market, you do not need to stand alone. This is the time you need to have Edwin from Ribbon Property Consultants standing along side you.
Buying property, is both challenging and adversarial. The vendor has a professional on their side.
Emotions run high – price discovery and price transparency are hard to find – then there is the wasted time and financial investment you make.
Edwin understands your needs. So why not engage a licensed professional to stand alongside you. With RPC you know you have: experience, knowledge, and master negotiators, looking after your best interest.
Shoot Ribbon an email on info@ribbonproperty.com.au & use promo code: DFA-WTW/MARTIN to receive your 10% DISCOUNT OFFER.
Australia’s unemployment rate unexpectedly fell in November as the nation’s golden streak of hiring gains extended, underscoring the resilience of the labor market to elevated interest rates and prompting traders to pare back bets of a February cut.
As Alex Joiner from IFM noted “Solid employment Growth in November and a tick down in the participation rate sees the unemployment rate get back down below 4%. It seems the RBA doesn’t particularly need to be in a hurry to cut rates, a February move still has a lot of optionality. It was a big full time number is encouraging and underscores a very solid print”.
Employment grew 0.2 per cent in November 2024, following an average monthly rise of 0.3 per cent since the middle of 2024, in line with recent population growth. “The recent growth in population has boosted the labour supply as employment has kept up with population growth,” the ABS noted.
Compared with Canada, the Eurozone and US, Australia seems stuck with higher inflation, yet the jobs market stays strong. This suggests the labour market continues to be relatively tight,” the ABS said.
Nothing here to suggest the RBA will cut soon. More pressure on households.
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You can smell an election coming soon as Australia’s housing minister has declared that the Anthony Albanese government doesn’t want house prices to fall – despite them being very unaffordable for the young.
Clare O’Neil made the admission on Triple J’s youth-orientated Hack program recently, when she was hit with a barrage of questions about the housing market being ‘stacked against young people’.
‘We want to bring house price growth into something sustainable – so we’re not trying to bring down house prices,’ Ms O’Neil said.
That prompted a surprised host David Marchese to ask: ‘Why don’t you want to be seeing house prices drop? ‘If you’re looking to get into the market, if you’re a young person looking at what’s ahead of you, you definitely want to see house prices come down.’
O’Neil rejected the argument – saying ‘That may be the view of young people – it’s not the view of our government,’ she said.
Data keeps rolling out showing how unsustainable the current housing market policy path is, with the Real Estate Institute of Australia (REIA)’s latest Housing Affordability report for the September quarter showed average loan repayments amounted to 48.6 per cent of the median family income of $2501 a week.
This is the greatest proportion since the REIA began monitoring housing affordability in 1996.
Mind you we saw similar political confusion from the UK Deputy Prime Minister and Housing Minister who in a weekend interview managed to say both there was a housing shortage, and no housing shortage, despite high migration in the same interview. Again it shows the political back-flips polys are prepared to do.
For truth though Kudos to Adrian Orr the New Zealand Reserve Bank Governor, who said last week in an interview that the property market was a real mess. Can you imagine the RBA or Senior Politicians in Australia speaking such truth. No, because politics trumps housing policy rationality. High migration wins over bringing prices back under control. And Boomers win over younger Australians again.
Today’s post is brought to you by Ribbon Property Consultants.
If you are buying your home in Sydney’s contentious market, you do not need to stand alone. This is the time you need to have Edwin from Ribbon Property Consultants standing along side you.
Buying property, is both challenging and adversarial. The vendor has a professional on their side.
Emotions run high – price discovery and price transparency are hard to find – then there is the wasted time and financial investment you make.
Edwin understands your needs. So why not engage a licensed professional to stand alongside you. With RPC you know you have: experience, knowledge, and master negotiators, looking after your best interest.
Shoot Ribbon an email on info@ribbonproperty.com.au & use promo code: DFA-WTW/MARTIN to receive your 10% DISCOUNT OFFER.
The Reserve Bank left its cash rate at 4.35% on Tuesday in a widely anticipated decision, marking more than a year at that level. The rate-setting board said “some of the upside risks to inflation appear to have eased” and scrapped a longstanding line that it wasn’t ruling anything in or out on policy. Australia’s central bank said it’s “gaining some confidence” that inflation is moving sustainably toward target, prompting traders to boost bets on interest-rate cuts starting as early as February.
That said, with the CPI up 16% over 3-years and the real costs much higher to households, this will be seen as a further dampener on household spending and confidence. Other reports recently have been highlighting the pressures on households as I discussed yesterday.
Asked what she had made of the new arrangements in her first full year of press conferences, the governor said it’s been “a bit of a wild ride for me.” Households could rightly say the same!
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It has been another eventful week, for property insider Edwin Almeida and I to get our teeth into. What is the true state of the property market? How stuffed in Australia and Australians? And does crypto offer an alternative? Find out in our latest edition.
Today’s post is brought to you by Ribbon Property Consultants.
If you are buying your home in Sydney’s contentious market, you do not need to stand alone. This is the time you need to have Edwin from Ribbon Property Consultants standing along side you.
Buying property, is both challenging and adversarial. The vendor has a professional on their side.
Emotions run high – price discovery and price transparency are hard to find – then there is the wasted time and financial investment you make.
Edwin understands your needs. So why not engage a licensed professional to stand alongside you. With RPC you know you have: experience, knowledge, and master negotiators, looking after your best interest.
Shoot Ribbon an email on info@ribbonproperty.com.au & use promo code: DFA-WTW/MARTIN to receive your 10% DISCOUNT OFFER.
Once in a while I find an article which really hits home. One such is an article in the AFR by John Kehoe, titled “Australia’s Economic Problems Have Been Brewing For Years”.
Indeed, bad policy from multiple Governments have gotten us to a bad place, and the current mob are making things worse. There are alternatives. But that would require braver leaders, and informed voters! What are the chances?
http://www.martinnorth.com/
Details of our one to one service are here: https://digitalfinanceanalytics.com/blog/dfa-one-to-one/
Go to the Walk The World Universe at https://walktheworld.com.au/
Bitcoin rose as much as 6.1% to $103,801 on Thursday before easing back. The crypto market overall has jumped by roughly $1.3 trillion since Trump’s election victory on Nov. 5 on a platform that includes a tight embrace of the crypto sector. The reason was President-elect Donald Trump’s pick of a crypto proponent to be the next head of the US securities regulator as he selected Paul Atkins to replace outgoing Securities & Exchange Commission Chair Gary Gensler, who cracked down on digital assets after a 2022 market rout exposed fraudulent practices and sparked costly blowups.
Trump has vowed to undo a Biden administration clampdown on digital assets, install friendly regulators and turn the US into the global home of crypto. The Republican even backed the idea of a strategic national Bitcoin reserve, though there are doubts over whether the latter objective is feasible. Trump used to be a crypto skeptic but pivoted as the sector unleashed an election campaign war chest to further its interests.
http://www.martinnorth.com/
Details of our one to one service are here: https://digitalfinanceanalytics.com/blog/dfa-one-to-one/
Go to the Walk The World Universe at https://walktheworld.com.au/
