Digital Finance Analytics (DFA) Blog
"Intelligent Insight"
More from our Property Insider, Edwin Almeida, as we look at the latest property news, and also discuss dummy bidding, and how changes in China are impacting property here.
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Today’s post is brought to you by Ribbon Property Consultants.
Buy Now Pay Later loans are finally being finally recognised and regulated as a form of credit, despite the industry saying they do not provide credit. But as I have said before, if it quacks like a duck and swims like a duck – it’s a duck.
Given that up to one third of households have used some form of Buy Now Pay Later in the past year, these reforms are long overdue, not least because we see a high correlation between financial stress and the use of these facilities, and a proliferation of BNPL being used for everyday expenses, energy bills and other essentials, as well as for bigger items like solar panels.
And more than 20% of users end up paying late payment and other fees, and many also can hold multiple BNPL debts at the same time, meantime their finances are not under control. The regulations have come about after concerns that the unregulated nature of BNPL was resulting in lenders charging excessive late payment fees and engaging in unaffordable lending practices that led some customers to experience financial hardship and stress.
So now the government has announced its plans to regulate the buy now pay later (BNPL) sector and consumers could see some big differences to the fees they pay, how they apply for credit and the impact on their credit rating and is now consulting on its plans until mid-April before finalising the legislation, which will probably be introduced into parliament in the second half of this year. The new laws will take effect six months later.
I think the arrangements for small loans of 2000 and below are still too weak, because we see households holding multiple loans at the same time, so the regulations should be higher here. On the other hand given the current tight financial conditions it is important not to cut desperate people off from some financial options other than going to unregulated loan sharks, which do still operate in some more deprived areas.
The underlying issues are the fact that use of credit has now become normalised by society and the financial services industry, when for some households this just creates problems, which ultimately put them in a worse financial position, and of course high inflation costs and low wages growth are a catalyst for financial distress. This is not nanny state intervention, but rather a further small but critical steps to help people make better financial decisions.
However, a bigger emphasis on financial education in schools and a more cautionary approach to debt would ultimately improve the lot of so many Australians. But at least this particular duck is now being recognised for what it is.
http://www.martinnorth.com/
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You have been hit by large rises in grocery, energy, transport, child and aged care prices, only adding to other cost of living pressures, according to a bombshell report. But the report argues the ongoing cost of living crisis is largely due to corporations unduly increasing prices.
As the Conversation reported, while extreme weather and supply delays have contributed to the increases, an inquiry into what’s causing the hikes has confirmed what commentators and consumers suspected – many sectors are resorting to dodgy price practices and confusing pricing.
Headed by the former Australian Consumer and Competition Commission (ACCC) boss, Allan Fels, on behalf of the ACTU, the inquiry found inflation, questionable pricing practices, a lack of price transparency and regulations, a lack of market competition, supply chain problems and unrestricted price setting by retailers are to blame for fuelling the increases.
The inquiry, which released its final report on Wednesday, is one of four examining price rises. The other three are being undertaken by a Senate committee, the Queensland government and the ACCC, which has been given extra powers by the government.
The official inflation rate in Australia peaked at 7.8% in December 2022 and has been gradually dropping since then.
While the inquiry found higher prices contributed to inflation, it reported that businesses claimed it was inflation that caused price rises – making it a chicken-or-egg kind of problem.
However, many businesses made enormous profits in 2022-23, which the inquiry said contributed to rising prices and inflation. In most cases, post-pandemic profit margins were much higher than before the pandemic.
The current pricing practices for all business sectors must improve for greater transparency and to protect Australian consumers from unfair pricing.
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The Australian Government has directed the ACCC to conduct an inquiry into Australia’s supermarket sector, including the pricing practices of the supermarkets and the relationship between wholesale, including farmgate, and retail prices.
The year-long inquiry will also examine competition in the supermarket sector and how it has changed since the ACCC’s last inquiry in 2008.
“We know grocery prices have become a major concern for the millions of Australians experiencing cost of living pressures,” ACCC Chair Gina Cass-Gottlieb said.
“When it comes to fresh produce, we understand that many farmers are concerned about weak correlation between the price they receive for their produce and the price consumers pay at the checkout.”
“We will use our full range of legal powers to conduct a detailed examination of the supermarket sector, and where we identify problems or opportunities for improvement, we will carefully consider what recommendations we can make to Government,” Ms Cass-Gottlieb said.
Like London buses, you wait a long time, then they come in bunches – this is the fourth inquiry currently underway across the sector. As well as price gouging, shrinkflation, supplier management and competition need to be addressed.
In a year, we will know if it was worth the wait!
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
The latest forward view of Australian Wholesale Energy Prices out to 2027 show prices for East Coast consumption will remain at nose-bleed levels out as far as 2027, according to data from the Australian Energy market.
There is a reason for this, in that marginal wholesale power prices are remarkably set based on the cost of gas, via LNG in the international markets. This will pressure get worse as coal fired generation is retired across Australia.
Governments of various flavours have messed up here from a policy perspective, in that a small number of international operators are the Australian gas cartel of Santos, Woodside, Origin, Shell, Exxon and friends.
The Governments latest solution to the high price of power, was to set a policy price cap of $12 a gigajoule in the domestic market that is unless cartel members meet certain exemptions such as investing in new gas projects.
That $12 cap was set after receiving warnings from Treasury that energy prices were set to soar by about 50 per cent over 2023 and the first half of 2024. As a result of the intervention, power prices were reduced, by an estimated $230 dollars a year, which is mere chicken feed, given the massive run up in price. Estimates are the average household bill will rise by $700 by mid-2024 compared to June 2022, based on Treasury figures. And In practice the $12 cap is behaving as a floor, as the cartel ships more gas offshore.
All of this means that China who can often on-sells the gas to Europe at a healthy profit, is still seeing cheaper gas prices than in Australia!
The solution of course is for the Government to increase the local reservation and reduce the price cap (floor). But that would bring them up against the political and economic powers of the gas cartel.
So the bottom line is that Australian East Coast households are being taken to the cleaners, one reason why costs of living are so high, while local manufacturers are being priced out, and reducing the capacity for local production.
Which begs the question is this simple stupidity, or something much worse. Who really are pulling the economic strings in the country? Game of Mates anyone?
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
The latest forward view of Australian Wholesale Energy Prices out to 2027 show prices for East Coast consumption will remain at nose-bleed levels out as far as 2027, according to data from the Australian Energy market.
There is a reason for this, in that marginal wholesale power prices are remarkably set based on the cost of gas, via LNG in the international markets. This will pressure get worse as coal fired generation is retired across Australia.
Governments of various flavours have messed up here from a policy perspective, in that a small number of international operators are the Australian gas cartel of Santos, Woodside, Origin, Shell, Exxon and friends.
The Governments latest solution to the high price of power, was to set a policy price cap of $12 a gigajoule in the domestic market that is unless cartel members meet certain exemptions such as investing in new gas projects.
That $12 cap was set after receiving warnings from Treasury that energy prices were set to soar by about 50 per cent over 2023 and the first half of 2024. As a result of the intervention, power prices were reduced, by an estimated $230 dollars a year, which is mere chicken feed, given the massive run up in price. Estimates are the average household bill will rise by $700 by mid-2024 compared to June 2022, based on Treasury figures. And In practice the $12 cap is behaving as a floor, as the cartel ships more gas offshore.
All of this means that China who can often on-sells the gas to Europe at a healthy profit, is still seeing cheaper gas prices than in Australia!
The solution of course is for the Government to increase the local reservation and reduce the price cap (floor). But that would bring them up against the political and economic powers of the gas cartel.
So the bottom line is that Australian East Coast households are being taken to the cleaners, one reason why costs of living are so high, while local manufacturers are being priced out, and reducing the capacity for local production.
Which begs the question is this simple stupidity, or something much worse. Who really are pulling the economic strings in the country? Game of Mates anyone?
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
Well, finally, the problems in Australian high-rise construction are getting airtime, but many households are caught up with these rolling disasters, as estimates suggest well more than half of recently built apartments are defective.
It frankly remains a game of “Russian roulette” when buying off-the-plan apartments and consumers could be forgiven for asking themselves if it is safe to buy an apartment off the plan with issues frequently emerging in Sydney’s building developments. The current legislation is not effective, and of course the question is who would foot the bill for repairs.? Yet the industry keeps making empty promises, and is claiming things are now fixed. No surprise there.
Lets look back at some of the issues so far in NSW. In recent years building developments such as Opal Towers and two buildings owned by Toplace have hit the headlines for all the wrong reasons, leaving some owners and occupiers out of pocket and traumatised. Last year NSW regulators issued work rectification orders across building sites, including The Laneways Rosebery, which has serious structural defects, and Toplace’s Vicinity complex in Canterbury over “potential serious defects”.
At Mascot Towers in Sydney’s inner-south, residents were offered a settlement at the start of January after being forced to evacuate their defect-ridden apartment building years prior.
Less than a fortnight later, NSW Building Commissioner David Chandler has moved to reassure residents there was no immediate threat to an apartment and retail development in Macquarie Park after concerns about concrete were identified in the building’s basement and ground floor.
“What we have done so far is we’ve told the developer, ‘You are responsible and you are going to fix this under the powers of the NSW [Residential Apartment Buildings] Act’,” Mr Chandler said last Thursday.
But Lachlan’s Line is just one of many, with building work rectification orders “issued all the time” by Building Commission NSW. “We’re probably issuing four or five orders a week at the moment,” Mr Chandler said.
The ABC writes, In December, the NSW Building Commission was given extra powers to order fixes during construction, aimed at boosting public confidence in buying homes off the plan.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
Well, finally, the problems in Australian high-rise construction are getting airtime, but many households are caught up with these rolling disasters, as estimates suggest well more than half of recently built apartments are defective.
It frankly remains a game of “Russian roulette” when buying off-the-plan apartments and consumers could be forgiven for asking themselves if it is safe to buy an apartment off the plan with issues frequently emerging in Sydney’s building developments. The current legislation is not effective, and of course the question is who would foot the bill for repairs.? Yet the industry keeps making empty promises, and is claiming things are now fixed. No surprise there.
Lets look back at some of the issues so far in NSW. In recent years building developments such as Opal Towers and two buildings owned by Toplace have hit the headlines for all the wrong reasons, leaving some owners and occupiers out of pocket and traumatised. Last year NSW regulators issued work rectification orders across building sites, including The Laneways Rosebery, which has serious structural defects, and Toplace’s Vicinity complex in Canterbury over “potential serious defects”.
At Mascot Towers in Sydney’s inner-south, residents were offered a settlement at the start of January after being forced to evacuate their defect-ridden apartment building years prior.
Less than a fortnight later, NSW Building Commissioner David Chandler has moved to reassure residents there was no immediate threat to an apartment and retail development in Macquarie Park after concerns about concrete were identified in the building’s basement and ground floor.
“What we have done so far is we’ve told the developer, ‘You are responsible and you are going to fix this under the powers of the NSW [Residential Apartment Buildings] Act’,” Mr Chandler said last Thursday.
But Lachlan’s Line is just one of many, with building work rectification orders “issued all the time” by Building Commission NSW. “We’re probably issuing four or five orders a week at the moment,” Mr Chandler said.
The ABC writes, In December, the NSW Building Commission was given extra powers to order fixes during construction, aimed at boosting public confidence in buying homes off the plan.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
The Securities and Exchange Commission has for the first time approved exchange-traded funds that invest directly in Bitcoin, a move heralded as a landmark event for the roughly $1.7 trillion digital-asset sector that will broaden access to the largest cryptocurrency on Wall Street and beyond.
Now much is resting on the concept that the futures market has already brought crypto assets sufficiently into the financial mainstream.
The SEC was frankly bounced into this decision in response to the loss of some critical legal cases, and puts Bitcoin ever closer to existing financial services players. This does not necessarily mitigate risk.
SEC Chair Gary Gensler said “While we approved the listing and trading of certain spot Bitcoin ETP shares today, we did not approve or endorse Bitcoin,”. “Investors should remain cautious about the myriad risks associated with Bitcoin and products whose value is tied to crypto.”
Crypto zealots have for years argued that a so-called spot fund that invests directly in Bitcoin would be beneficial to investors and would help bring the industry closer to the more highly regulated world of traditional finance. It also suggests a sort of milestone of maturity for the relatively nascent industry, where skirmishes with regulators came to a climax after the collapse of Sam Bankman-Fried’s FTX empire highlighted risks lurking in the industry.
But of course, by definition, the mainstream approval this represents cuts right across the original ideology of Bitcoin already compromised by the significant use of derivatives, and becoming ever more controlled by large financial institutions and regulators.
Even after Gensler went to such lengths to say that the SEC wasn’t giving any seal of approval to Bitcoin, the odds remain that this will expose many more people to crypto’s risks and opportunities. So Caveat Emptor! Let The Buyer Beware!
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
Bloomberg reported yesterday that the US has become the world’s biggest exporter of liquefied natural gas for the first time, with 2023 shipments overtaking leading suppliers Australia and Qatar.
The US exported 91.2 million metric tons of LNG in 2023, a record for the country, according to data through Dec. 31 compiled by Bloomberg. The expanded output was due to last year’s restart of Freeport LNG in Texas, which had been shuttered for months following a June 2022 fire and explosion. Qatar, the top LNG supplier in 2022, saw its volumes shrink for the first time since at least 2016, with a 1.9% decline dropping the nation into third spot for shipments of the super-chilled fuel. Australia ranked second, with exports that were little changed from 2022.
Unlike East Coast Australia, the US has a domestic gas reservation scheme in place, which has mostly succeeded in keeping domestic gas prices low.
And the mooted A$80 Billion Deal between Woodside Energy and Santos could also put more upward pressure on Australian domestic gas prices.
“Both Santos and Woodside are material domestic gas producers, which may create market concentration concerns,” RBC Capital Markets analyst Gordon Ramsay said in a note.
It makes no sense to give any member of the gas export cartel – Origin, Woodside, Santos, EXXON or Shell – greater control of gas import volumes. Remember East Coast Electricity prices are driven by the marginal cost of LNG.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
