Politics – Page 12 – Digital Finance Analytics (DFA) Blog

Bankers Lose Over Bank Branch Closures: But Now The Political Games Begin!

The Senate published their Report into Regional Bank Branch Closures late last Friday.

https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Rural_and_Regional_Affairs_and_Transport/BankClosures/Report

I will be discussing this on my live YouTube show on Tuesday with Robbie Barwick. https://youtube.com/live/NJnaqhARu90

But already, the award winning Journalist Dale Webster over at the Regional has written an excellent article:

https://www.theregional.com.au/post/banks-blow-their-chance-to-self-regulate-by-betraying-trust

Over the 13 hearings held across Australia and in more than 600 written submissions the only defence of the banks’ actions came from the banks themselves, but when their executives appeared to give evidence, all they managed to do was convince the senators of just how out of touch they were with their customer heartland.

This arrogance was perfectly summed up by expert witness Andy Schmulow, Associate Professor of Law from the University of Wollongong.

“When it comes to closing branches, Australia is a free for all in which banks are entirely unconstrained: there is no degree to which they are held to account in discharging their obligations to communities which have supported them for generations. This, it is respectfully submitted, is disgraceful and indefensible,” Dr Schmulow said.

The senators agreed. On Friday they handed down an historic report with eight bold recommendations.

But now lets see the actions to protect regional communities and access to cash. I want to see real action now, not just political games, so I will be watching closely.

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/

Peddling The Housing Supply Myth: Again…

Housing is in crisis in Australia, its too expensive and relative to population there is not enough of it. As I discuss with independent Journalist Tarric Brooker last week, though shockingly, we have built more homes per 100,000 people than Canada, The US and the UK. In other words, we have a greater proportion of our economy dedicated already to housing construction, with perhaps 1.35 million people working in the sector. And we also know completion times are blowing out now, thanks to poor supply chains, lack of available labour, and poor-quality construction. In NSW half of high-rise projects have severe defects.

But the Government wants to push the supply-side levers some more, as exemplified in their Attachment to the budget papers: Statement 4, Meeting Australia’s Housing Challenge from the Treasury.

It starts out “Australia has a housing shortage. There are not enough homes being built in the right areas to meet the needs of our communities. This statement focuses on the reasons for the current undersupply of housing, how it affects affordability, and the changes required to more quickly unlock supply to meet the housing needs of all Australians. It also sets out how the Government’s policy responds to these drivers of undersupply”.

This undersupply they say accounts for the increases in rents, mortgage repayments and house prices.

Talk of course is cheap, but will this translate into real actions? And what about the elephant in the room because of course, the focus should be to curtail migration from is very high current levels, and bring demand back closer to long term averages, and over the budget period both sides of politics have to a degree been talking about this, though, as I discussed in my recent show The Migration Question Amplified; But Not Tackled… By Anyone!, it’s a battle of announcables, with numbers being banded about.

But my take is that neither side of politics are really wanting to take this on seriously, despite the direct link to higher inflation. The net result will be higher inflation for longer, requiring higher interest rates than otherwise needed.

New Zealand Rates Held Higher For Longer As Hawks Fly!

The Reserve Bank of New Zealand left the Official Cash Rate at 5.5% on Wednesday, saying that Restrictive monetary policy has reduced capacity pressures in the New Zealand economy and lowered consumer price inflation. Their statement on Monetary Policy had a decidedly hawkish tone, signalling rate cuts will be delayed until around August 2025, which is implying that markets are pricing cuts about 12 months too soon. This is important as we will see, later.

And folks, 5.5% is significantly higher than the weaker 4.35% in Australia, suggesting that we could be facing higher for longer too.

The report said annual consumer price inflation is expected to return to within the Committee’s 1 to 3 percent target range by the end of 2024. That said, in an economic note, ASB says they continue to expect the RBNZ will remain on hold until early 2025, but the risks are tilted to a later start. The RBNZ’s forecasts have inflation holding up higher for longer, with inflation not back to 2% until 2026 (though it is a rounding error from that mark over the second half of 2025).

The RBNZ did discuss the possibility of lifting the OCR at this meeting but didn’t see the need given inflation is still expected to be comfortably back in the target band over the “medium term” i.e. the next couple of years. The clear conclusion, though, was that interest rates need to hold up for longer – as the forecasts showed.

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/

Another Dose Of Sticky Inflation Lands…

Today we got the April inflation read for the UK, (and a election announcement) which was expected to be lower than the previous month thanks to a substantial cut in the costs of energy to households. But in the end, UK inflation slowed by less than economists had predicted thanks to services inflation proving sticky, which prompted traders to pare their bets on when the Bank of England will cut rates. The first reduction isn’t now fully priced in until November, three months later than the prevailing expectation over the past few weeks and all but eliminating the chance of a cut in June that was in play yesterday.

Services inflation — which the BOE is watching carefully for signs of domestic pressures — remained little changed at 5.9% after a 6% reading the month before. It was a much smaller fall than the cooling to 5.5% expected by UK central bank, with strong wage growth keeping services inflation stubbornly high.

The easing in the annual inflation rates in April 2024 principally reflected price changes in the housing and household services – particularly for gas and electricity where a 12% drop in the UK’s energy price cap, a mechanism designed to protect consumers from sharp moves in natural gas and electricity costs came through.

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/

Its Edwin’s Monday Evening Property Rant!

In this weeks Rant Edwin and I discuss the fallout from the budget, the latest developments in non-approved extensions, and trends from the WeChat Chatters and Silent Tigers as Australian property is still used to launder money.

You can also join Edwin and I for a live show on Tuesday 21st May at 8pm Sydney as we discuss how to prepare your property for sale. You can ask a question live: https://youtu.be/38o1E_69o3c

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/

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The Migration Question Amplified; But Not Tackled… By Anyone!

Last week Michele Bullock the RBA Governor was asked a good question about how high migration might impact inflation. But her answer was well, weird, as she tried to trade off pressure on the housing market from higher demand driven rent rises against supplying more workers to meet business demand (and implicitly increasing economic activity).

Treasurer Jim Chalmers, Speaking at the National Press Club on Wednesday explained that Tuesdays Budget forecast of headline CPI inflation falling to 2.75% by the end of Financial Year 2024-25 (not I January as I noted some reporting claimed), was predicated on at least in part the government cutting net overseas migration.

“We’re seeing a substantial moderation in inflation in the forecasts and in the last couple of years as well, and that is largely because of how we’re managing the budget but it will also be increasingly about how we’re managing the population as well”, Chalmers said.

Right, so it must also be true that if lower migration will ease inflation, then high migration will drive inflation higher.

Then we got Opposition Leader Peter Dutton’s policy as part of his budget response. He promised that a Coalition government would drastically slash migration as its main way of freeing up more than 100,000 homes over five years. A Dutton government would reduce Australia’s permanent migration program by a quarter – from 185,000 to 140,000 for the first two years “in recognition of the urgency of this crisis”, Dutton said.

Treasurer Jim Chalmers has described the opposition leader’s budget reply proposing migration cuts as an “unhinged and risky rant”.

But again, it’s a battle of announcables, with numbers being banded about. But my take is that neither side of politics are really wanting to take this on seriously, despite the direct link to higher inflation.

In both cases, this is more of policy announcements to try and win an election than nation building policy reform, which is needed for both migration and the gas market.

The net result will be higher inflation for longer, requiring higher interest rates than otherwise needed.