Social Trends – Page 16 – Digital Finance Analytics (DFA) Blog

Gaslighting By The Gas Producers Exposed As Australians Pay!

Australia is paying way too much for its home-grown gas, as the over-exporting of gas has driven East Coast gas prices 400% higher than historical average prices leading to higher inflation and a stalled energy transition. This is a huge impost on living standards via direct bill shocks and spills over to energy-intensive manufacturing, which includes building materials, making the housing crisis even worse.

Yet there’s more as The Australia Institute, an independent public policy think tank based in Canberra, just published a report titled Australia’s great gas giveaway – How Australia gives gas to multinational corporations for free.

In addition to exposing Australians to the full international price of gas (yes gas produced in Australia and shipped off shore by huge international companies) due to stupid Government policy, the Institute says that Australian governments charge no royalties on 56% of the gas that is exported from Australia. Over the last four years, multinational companies made $149 billion exporting gas they got for free.

If royalties had been charged on this gas, at least $13.3 billion in revenue could have been raised.

Australia exports LNG from 10 installations. Six of these projects—four of the five in Western Australia and both in the Northern Territory—pay no state or federal royalties. Australia exports 56% of its gas through these facilities.

Sure, the industry is subject to taxes – which are distinct from royalties – including income tax and the petroleum resource rent tax levied on profits. But Institute said the oil and gas companies should be paying royalties as well as taxes on profits and a failure to do so consistently meant Australians were missing out on a fair return on their resources.

ACT Senator David Pocock said the gas industry was taking part in “state-sanctioned daylight robbery”. “We are seeing a betrayal of Australians and our future by the major parties. We are seeing state capture by the gas industry,” he said. “They are absolute leeches on this country and this has to end.”

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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.

Inequality Rules (Great For Some; Horrid For Most)!

There is a three-way split across the country as inequality rises with mortgage holders and renters bearing the brunt of poor policy decisions for years, while older property-owning cohorts are doing just fine.

I have been highlighting the growing gulf between households and now the Australian Productivity Commission has released their research paper “A Snapshot of Inequality in Australia” which explores how the distribution of wealth and incomes changed over the COVID-19 period, to assess the state of economic inequality in Australia.

They show that Australian wealth is overwhelmingly tied up in residential property, followed by superannuation. Property (owner-occupier and other) comprises the majority of wealth for middle- and higher-income Australians, i.e., the top 60% of households. They also show that households in the two oldest age groups—55-64 and 65-plus—hold the most wealth and wealth has grown strongest for older Australians aged 65-plus.

Other signals of inequality can see seen in spending patterns. Data from CommBank iQ shows that the cost-of-living crisis and high interest rates are having a disproportionate impact on Australians’ spending habits based on their generation.

Many of these older cohorts are not impacted by rising mortgage rates or rents, because they own their homes outright. And many of these households are also benefitting from increased investment returns. The accounts for about one in three households.

There is a second cohort the rents who are experiencing massive rent rises, one reason why we seen rental stress going through the roof in our surveys, with three quarters of renters in cash flow stress.

The remaining third of households are those burdened with mortgages, where stress is also registering as strongly as I have ever seen it.

Beyond perceptions of inequality, which matter, the overall wellbeing of society can suffer when inequality is high. This is because inequality can lead to uneven access to social opportunities and services such as health and education, waste human capital potential, and increase vulnerabilities to economic shocks and the resources needed to recover from these.

It also can reduce social justice and adversely perpetuate narrowly focused institutional arrangements and decision-making processes.

There are direct economic consequences for the economy, as reports show that higher income inequality is correlated with lower economic growth, at least at current levels of inequality (OECD 2014). The gap between low-income households and the rest of the population appears to be particularly detrimental to growth. Recent analysis also suggests that lower inequality is correlated with faster and more durable growth.

A possible consequence of increasing inequality is that it could harm social cohesion. This could happen when different economic interests lead to social and political conflict. Although this aspect is subjective and hard to quantify, some research suggests that countries with more inequality also have more corruption and political instability.

Economic inequality also determines the opportunities of the next generation – that is, the more unequal a society is, the more likely that children will have the same economic situation as their parents. Intergenerational inequality and mobility are linked.

These are important and uncomfortable concepts, which boil down to a question, what type of society do we want? I for one do not think the current setting are right, and social cohesion is coming unglued. Bad policy leads to bad society, as we are seeing.

http://www.martinnorth.com/

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

The Bulls Are Running Again; For Now…

This is our weekly market update. After recent wobbles on concerns of higher rates for longer, the Bulls have been stomping through the markets this week. Data dependency is a marvellous thing because each shiny new data point has the potential to swing the market violently. Some might well be detecting signs of weakness below the surface, suggesting further reversals ahead.

The blue-chip Dow Jones Industrial Average passed the 40,000 level for the first time ever earlier in the week, and record highs have also been seen by major indices in Europe and Asia as investors took advantage of expectations of lower interest rates globally. These markets have remained relatively resilient even as U.S. macro data have shown signs of softening, with the PMI and ISM surveys declining in April, labour-market data worsening, consumer confidence dropping and the housing market deteriorating again.

The bulls of the ASX are running again this week in a classic “bad news is good news” rally. Lingering concerns that sticky inflation could force the Federal Reserve or the Reserve Bank to raise rates have suddenly been extinguished. For all that worry about higher-for-longer rates exposing cracks in the local economy – the weakening consumer spending we’re seeing, the rising corporate insolvencies, weakening consumer and business sentiment – the ASX 200 has quietly added 4 per cent within two weeks, and is now up 3.3 per cent this year. Since October 2022, it has gained 22 per cent.

Never mind that valuations look stretched and equity risk premiums on both sides of the Pacific (the difference between the equity market’s earnings yield and the 10-year bond yields) are almost non-existent. Local investors continue to plough into their market darlings in the firm belief that rate cuts are coming.

The latest edition of our finance and property news digest with a distinctively Australian flavour.

http://www.martinnorth.com/

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