We look at the latest ABS Retail Turnover data. It was stronger than expected, thanks to Black Friday sales, but the overall state of retail is still weak.
From The Conversation. As someone who has studied Australian climate policy and politics closely, this summer’s bushfire crisis have been both heartbreaking and bewildering. The grave warnings politicians ignored for so long have now come to pass.
The fires may be without precedent, but
these dark weeks have also brought an overwhelming sense of déjà vu.
It’s hard to believe, but the Morrison government’s fumbling response to
the fires and the broader climate crisis is in many ways history
repeating.
From the disastrous optics of Prime
Minister Scott Morrison’s trip to Hawaii to blaming conservationists for
the fires, our politicians keep making the same blunders and rolling
out the same failed strategies.
Here are five recurring themes in Australian politics when it comes to climate change and bushfires:
1. Blaming ‘greenies’
As the fire season ramped up in November last year, New South Wales Nationals leader John Barilaro accused the Greens of preventing governments from conducting hazard reduction burning, implying the party should shoulder blame for the fires.
“We’ve got to do better and I know that we
don’t do enough hazard reduction […] because of the ideological
position from the Greens,” he said.
Such sentiment, which has been thoroughly debunked, regularly surfaces when bushfires rage.
Following the 2003 Canberra fires and 2009 Victorian fires, the forest industry said conservationists were preventing state governments from conducting hazard reduction burns.
After Victoria’s fires, former West Australian MP Wilson Tuckey also blamed the Greens, and parties seeking their preferences, for preventing controlled burns and causing the crisis.
McCormack continues a long tradition of
those opposed to strong climate action claiming only inner-city dwellers
care about the issue.
It began in the late 1980s, when the the
“greenhouse effect” first became a public issue. Some politicians
derided it as just another greenies scare campaign, including
frontbencher in the Hawke Labor government, Peter Walsh.
Walsh, contemptuous of the Greens movement, continued to rail against climate action after leaving politics. He reportedly described the science around global warming as “highly speculative” and as late as 2008 claimed action on climate “would land us in Middle Ages.”.
3. Experts ignored by politicians
Since April last year,
former fire chiefs have implored the Morrison government to act on
climate change and better prepare the nation for extreme fire seasons
ahead. The government would not meet the experts to hear the advice, let
alone implement it.
Successive governments have form when it
comes to ignoring experts on climate matters. In September 1994 the
CSIRO’s then top climate scientist, Graeme Pearman, briefed the Labor government’s cabinet
about the likely impacts of climate change, as a debate over whether to
institute a carbon tax heated up. Despite the warning, no tax was
implemented.
Morrison’s decision to take a family holiday in Hawaii as the bushfire crisis grew lost him serious political skin.
Some argue, rightly, that symbolism is less important than substance, and so Morrison’s trip is itself irrelevant. But symbolism creates or destroys both morale, and the possibility of stronger political action.
In 1992 newly minted Labor prime minister Paul Keating sent environment minister Ros Kelly to the Rio Earth Summit, prompting one journalist to observe
he was “preoccupied with winning the upcoming election (and) said he
wasn’t going all the way to Rio to give a six-minute speech”.
It made Australia the only OECD nation not represented by its head of state, and sent the message that Australia was not taking a serious approach to the discussions.
5. ‘Jobs, jobs, jobs’ mantra
The Bureau of Meteorology this week confirmed
this season’s horror bushfire crisis is linked to climate change.
Planetary warming is clearly a threat to the nation’s economic
well-being.
However Australian governments have
routinely created a false dichotomy between environmental protection and
jobs. Most recently, we’ve seen it in the Coalition government’s
support for the Adani coal mine in central Queensland, and its repeated
mantra of “jobs jobs jobs”.
The strategy has been used before. After
the Franklin Dam fight in 1983, concern over environmental issues
entered the political mainstream. But as former Labor science minister Barry Jones said later, that changed in 1991 when economic recession hit.
“Jobs, jobs, jobs became the priority and
in some quarters there was a cynical reaction suggesting that
environmental issues were luxuries which characterised affluent times
[…] This is a criminally short-sighted view,” he said.
What to do?
Only sustained citizen pressure will
prevent a repeat of the past 30 years of political failures on climate
change. The public must stay informed and demand better from our elected
representatives.
Politicians can, when pressed, make better decisions. In April last year, the New Zealand government banned offshore oil and gas exploration after years of public pressure. And the following month, the UK Parliament declared a climate emergency after months of protests by activist group Extinction Rebellion.
It’s often said those who fail to learn from history are doomed to repeat it. But the world must act radically in the next decade to avoid catastrophic global warming. We cannot afford another 30 years of the same old mistakes.
Author: Marc Hudson, Researcher on sociomaterial transformations, social movements, Keele University
Fitch Ratings forecasts subdued home price growth around the globe over the next couple of years due to a combination of stretched affordability, more challenging macro-economic conditions and macro-prudential measures restricting mortgage eligibility. This is despite falling or very low mortgage rates, insufficient supply in major cities and stable or improved employment levels in most countries.
Political
risks and their impact on economic growth and policy decisions are also
affecting our housing outlooks with lingering US-China trade
uncertainty, despite the recent easing in tensions, and China’s
de-risking drive, Brexit, and developments around mortgage and housing
policy beginning to take a toll.
The US-China trade dispute and
China’s de-risking drive are weighing on global and national growth
prospects, not only for the US and China, but also for their closest
trading partners (such as Australia and Canada) and areas like the EU
that are exposed to global trade.
“Weaker economic growth is a
key driver of more modest home price growth forecasts. UK home price
growth will continue to be affected by lingering trade ‘cliff edge’
risks until the new UK-EU relationship is negotiated. Although the newly
elected Conservative government is expected to pursue a formal exit
next month, there is more uncertainty about its ability to negotiate a
UK-EU Free Trade Agreement by the end of 2020,” said Suzanne Albers,
Senior Director of Structured Finance at Fitch.
In some
countries, there is also uncertainty around mortgage and housing policy.
The US and Canada are reducing the government’s role in mortgage
funding while in Mexico and Colombia new national housing plans may
increase government participation.
Of the 24 countries covered
in the report we expect a nominal price fall only in Italy and Japan,
due to Italy’s sluggish economy and Japan’s post-Olympics hangover and a
decline in real prices in Brazil, Canada, China and the UK. We also
forecast accelerating growth in Australia and Sweden, where prices are
recovering from recent falls, as well as in New Zealand and Colombia.
We
forecast low arrears levels for most countries covered in the report in
light of flat or falling policy rates. However, we also have concerns
about long-term low rates. Under a market stress, the limited scope for
further policy rate cuts would mean that home prices would not benefit
from substantial rate cuts as per recent downturns.
In this low
interest-rate environment, lenders are also struggling to originate the
volumes needed to defend profits, which has resulted in higher
loan-to-values (LTVs) and longer maturities being offered in several
European countries. Household debt levels remain the highest in
Australia, Canada, Denmark, the Netherlands and Norway, making their
economies more exposed to shocks and borrowers more vulnerable to
downturns.
Longer-term, the push towards ESG investments may change housing investment and mortgage funding.
“Fitch
expects climate change will permanently affect housing demand in areas
that are already or could become more exposed to natural disasters, if
they fail to attract new buyers or affordable insurance. Population
redistribution to cities will continue, which will support cities’
higher price dynamism, but conversely ageing populations and
developments in remote working and self-driving vehicles are likely to
also drive regional prices,” adds Albers.
We are releasing the results of our rolling household surveys, which were completed before the latest round of bushfires started raging. Nevertheless, the results are a concern because the total number of households registering as financially stressed rose again, to 32.7% of borrowing households. This represent 1.1 million households across the country and a predicted default count of 83,220, despite lower cash rates, and some deeply discounted mortgages.
Stress is assessed in cash-flow terms, and when money in is not sufficient to cover the costs of the mortgage and other regular outgoings, the household is flagged as stressed. Granted they may have the capability to tap into deposits, pull down on credit cards, or even sell property, but on a regular basis they are in strife. We find a significant gap between those we assess as at risk, and those who believe they do have financial difficulty. Many adopt the head in the sand approach and hope things will improve, but given the current economic outlook, we think that is a courageous stance to take.
The RBA reported their E2 Selected Household ratios to September just before Christmas and weirdly, the entire debt to income ratio series was restated lower, not just the current quarter, but back through the series. As a result the average debt to income ratio dropped from 191 to a still high 186.5. We always have a issue with this series because it includes small business and households without borrowings, but the downshift in the series is quite significant, and unexplained. I have written to the RBA asking for an explanation. Note this is not the first time the series has been revised down, yet they do not include any explanation in the dataset.
Across the states, NT, SA and TAS recorded the highest proportion of households in difficulty, though WA has the highest default probability risk over the next 12 months at 4.2%, whereas the three most populous states, VIC, NSW and QLD sat at 2.2%. Victoria proportionally to New South Wales has a higher mortgage stress reading.
Among the DFA household segments, 57% of young growing households are in mortgage stress, and within this group there is a large cohort of first time buyers. 2.5% of these households risk default in the next 12 months.
47.5% of battling urban households are also in mortgage stress, and 1.7% risk default ahead. Many of these households occupy properties in the urban fringe, often on newish high density estates. The largest cohort is the disadvantaged fringe group, with 300,000 households in stress and 13,00 risking default. Stress continues to build in our more affluent segments too, with young affluent households at 11.3%, or 4,400 households and exclusive professionals at 21.5% in stress and 3.4% risking default. Losses from this exclusive group are expected to be as high as $1 billion dollars, and is the most value exposed group from a lender perspective.
Across the regions, the Central West of Queensland has 75% of households in stress, but only 300 households, followed by Alice Springs at 65% with around 2,000 households exposed.
In the larger urban centres Adelaide has 35.9% of households exposed, which equates to 75,000 households, followed by Brisbane and Moreton Bay at 29.2% or 148,000 household, Melbourne at 28.9% or 213,000 households and Sydney at 26.9% with 178,000 households under stress.
And across the top post codes, Toowoomba 4350, is the highest count at 7,300 households, or 48%, followed by Liverpool 2170 at 49% or 7,080 households, Fountain Gate and Narre Warren 3805 with 6,918 households or 59% and in WA Hocking, Tapping and Wanneroo with 45% of households equating to 6,732.
Given the current economic settings we expect stress to continue to rise. And shortly we will be looking at the latest household financial confidence index from DFA, which continues to highlight challenging times for more and more households.
But in closing, as I often say, households would do well to draw up a cash flow, to identify money in and money out, determine which spending is essential and prioritise accordingly. And remember, if you are in financial difficulty banks have an obligation to assist, so go talk to them, early. Avoid the head in the sand posture, as it leaves other parts horribly exposed!!
Economist John Adams and Analyst Martin North discuss the Cash Restriction Bill with Emilie Dye, Policy Director, Australian Taxpayers’ Alliance.
In powerful testimony before the Senate, Emilie highlighted the risks of being trapped in the banking system as a result of this legislation, and the real risks of being “de-banked”. People should not be forced to use banking services.
The Bureau of Meteorology’s annual climate statement just released confirms 2019 was the nation’s warmest and driest year on record. It’s the first time since overlapping records began that Australia experienced both its lowest rainfall and highest temperatures in the same year. Via The Conversation.
The national rainfall total was 37mm, or
11.7%, below the 314.5 mm recorded in the previous driest year in 1902.
The national average temperature was nearly 0.2°C above the previous
warmest year in 2013.
Globally, 2019 is likely to be the
second-warmest year, with global temperatures about 0.8 °C above the
1961–1990 average. It has been the warmest year without the influence of
El Niño.
Across the year, Australia experienced
many extreme events including flooding in Queensland and large hail in
New South Wales. However, due to prolonged heat and drought, the year
began and ended with fires burning across the Australian landscape.
The effect of the long dry
Bushfire activity for the 2018–19 season
began in late November 2018, when fires burned along a 600km stretch of
the central Queensland coast. Widespread fires later followed across
Victoria and Tasmania throughout the summer.
Persistent drought and record temperatures
were a major driver of the fire activity, and the context for 2019 lies
in the past three years of drought.
The dry conditions steadily worsened over
2019, resulting in Australia’s driest year on record, with area-average
rainfall of just 277.6mm (the 1961–1990 average is 465.2 mm).
Almost the entire continent experienced rainfall in the lowest 10th percentile over the year.
Record low rainfall affected the central
and southern inland regions of the continent and the north-eastern
Murray–Darling Basin straddling the NSW and Queensland border. Many
weather stations over central parts of Australia received less than 30mm
of rainfall for the year.
Every capital city recorded below average
annual rainfall. For the first time, national rainfall was below average
in every month.
Record heat dominates the nation
2019 was Australia’s warmest year on
record, with the annual mean temperature 1.52°C above the 1961–1990
average, surpassing the previous record of 1.33°C above average in 2013.
January, February, March, April, July,
October, November, and December were all amongst the ten warmest on
record for Australian mean temperature for their respective months, with
January and December exceeding their previous records by 0.98°C and
1.08°C respectively.
Maximum temperatures recorded an even
larger departure from average of +2.09°C for the year. This is the first
time the nation has seen an anomaly of more than 2 °C, and about half a
degree warmer than the previous record in 2013.
The year brought the nation’s six hottest
days on record peaking at 41.9°C
(December 18), the hottest week 40.5 °C (week ending December 24),
hottest month 38.6 °C (December 2019), and hottest season 36.9 °C
(summer 2018–19).
The highest temperature for the year was
49.9 °C at Nullarbor (a new national December record) on December 19 and
the coldest temperature was –12.0°C at Perisher Valley on June 20.
Keith West in southeast South Australia
recorded a maximum 49.2°C on December 20, while Dover in far southern
Tasmania saw 40.1°C on March 2, the furthest south such high
temperatures have been observed in Australia.
Accumulating fire danger over 2019
The combination of prolonged record heat
and drought led to record fire weather over large areas throughout the
year, with destructive bushfires affecting all states, and multiple
states at once in the final week of the year.
Many fires were difficult to contain in
regions where drought has been severe, such as northern NSW and
southeast Queensland, or where below average rainfall has been
persistent, such as southeast Australia.
The Forest Fire Danger Index, a measure of
fire weather severity, accumulated over the month of December was the
highest on record for that month, and the highest for any month when
averaged over the whole of Australia.
Record-high daily index values for
December were recorded at the very end of December around Adelaide and
the Yorke Peninsula in South Australia, East Gippsland in Victoria and
the Monaro in NSW. These regions which experienced significant fire
activity.
Don’t forget the floods
Amidst the dry, 2019 also included significant flooding across Queensland and the eastern Top End.
Heavy rain fell from January into early
February, with damaging floods around Townsville and parts of the
western Peninsula and Gulf Country.
Tropical cyclone Trevor brought further
heavy rainfall in April in the eastern Northern Territory and
Queensland. Floodwaters eventually reached Lake Eyre/Kati Thanda which,
amidst severe local rainfall deficiencies in South Australia,
experienced its most significant filling since 2010–11.
There was a notable absence of rainfall on
Australia’s snow fields during winter and spring which meant less snow
melt. Snow cover was generous, particularly at higher elevations.
What role did climate change play in 2019?
The climate each year reflects random
variations in weather, slowly evolving natural climate drivers such as
El Niño , and long-term trends through the influence of climate change.
A strong and long-lived positive Indian
Ocean Dipole – another natural climate driver – affected Australia from
May until the end of the year, and played a major role in suppressing
rainfall and raising temperatures for much of the year.
Spring brought an unusual breakdown of the
southern polar vortex which allowed westerly winds to affect mainland
Australia. This reduced rainfall, raising temperature and contributing
to the increased fire risk.
Climate change continues to cause long-term changes to Australia’s climate. Conditions in 2019 were consistent with trends of declining rainfall in parts of the south, worsening fire seasons and rising temperatures.
Authors: David Jones, Climate Scientist, Australian Bureau of Meteorology; Karl Braganza, Climate Scientist, Australian Bureau of Meteorology; Skie Tobin, Climatologist, Australian Bureau of Meteorology