The lights are on – and politicians still not home!

The lights are on – and politicians still not home!


A warning for Gillard and Labor that the main reason for the shock loss in last weekend’s Victorian election was overwhelmingly the cost of living which then transformed to the cost of politics when  you do nothing – sound familiar? It happens in businesses everywhere although for some strange reason politicians thought that they were on a protected species list. True in the sense that more than a few have now become extinct Labor facing disaster in three states as support for Tasmania government collapses. Less than one hundred days until NSW heads to the voting booths and Fort Crumble is already resigned to the fact that they too will follow Labor Victoria. When Queensland goes to the polls in 2012 Labor has been in power for 21 out of the last 23 years and they too  look a very strong possibility of being deposed as their satisfaction levels continue to plummet. It was not that long ago that Labor held office federally and in every state and territory across Australia.

Will 2011 be another year of the political back – flip? Gillard goes for it, declaring 2011 her year of action promising to implement health reforms, roll out the broadband network, reach a decision on climate change, and lure more people into the workforce. Health reform is now looking terminally ill and on life support given Western Australia, Victoria and the soon – to – be elected Liberal NSW government declaring that they won’t support it. Broadband will go ahead – although there remain strong concerns that it is still to be properly costed and highly unlikely that it will hit the break even cost target of 8,000,000 Australian subscribers. Climate change will be interesting given ALP, Greens split on carbon which will seriously threaten September’s power alliance. The government’s target is a cut of 5 per cent below 2000 levels by 2020 and the Greens want carbon cuts of 25 – 40 per cent below 2000 levels by 2020 – good luck. As for getting more people into the workforce even better luck. Rumours remain rife Chris Bowen rejects Mark Latham column on NSW Right ‘plot’ to dumb Julia Gillard we all know that back – flips can quickly shorten political careers.



Industry wants fast moves from Baillieu and no surprises to see what they want actioned: infrastructure, stamp duty and planning. Mirror that for  NSW and Queensland. This was echoed by Wayne Swan “what people want the Government to be doing is to be focusing very much on their living standards and the opportunities for their families into the future.” NSW and Victoria just completed expensive desalination plants and the NBN could also end up on the useless pieces of infrastructure list as Labor downplays critical NBN report.



Paul Keating warns Labor has forgotten lessons of ‘recession we had to have’ – low inflation and wages restraint – could be lost given that inflation genie is starting to grow. No better example than Under pressure: RBA casts doubt over federal finance “In an extraordinary brave testimony to the House of Representatives’ Economics Committee last Friday, Australia’s most respected and independent economist, the Governor of the Reserve Bank of Australia (RBA) Glenn Stevens, has cast doubt over the Gillard Government’s economic credentials.” If you have not read this – I suggest you do – in summary:

  • There is no place for a National Broadband Network (NBN) in his summary of national infrastructure priorities;
  • If taxpayers are to be forced to underwrite 100 per cent of the $27 billion of equity risk capital associated with the NBN, then “of course, a proper cost – benefit analysis” should be carried out before committing to such an extraordinarily large investment;
  • Had the Rudd/Gillard Government’s fiscal stimulus, which was the third highest in the OECD, been substantially smaller the RBA would have cut interest rates and lifted them back to normal levels more slowly. As a consequence, businesses and household would likely be paying lower interest rates today while taxpayers would have substantially less government debt to service;
  • The RBA’s liaison with industry has revealed mounting concerns about the effects of the new labour market rigidities introduced by the Rudd – Gillard Government’s workplace relations laws, which risk stimulating inflation pressures and thus higher interest rates;
  • As Joe Hockey has argued, there are “huge moral hazards” in Australia’s financial systems that need to be addressed, and which have been created by the unprecedented application of taxpayer guarantees;
  • Banks are not like normal private sector businesses, and even smaller banks are likely going to be ‘too big to fail’;
  • The circa $1 trillion worth of taxpayer guarantees have created a ‘contingent liability’ that exposes taxpayers to risk, despite the asinine arguments by banking lobbyists to the contrary;
  • As leading economists like Christopher Joye have posited, the RBA has evolved the way it sets monetary policy and become increasingly forward – looking in its approach.

OUCH! The NBN will make the brand new desalination plants in NSW and Victoria look like a stroke of genius by simple comparison. The NBN, health reform and climate change were all Kevin Rudd’s reforms and he was sacked because federal Labor believed he had “lost his way” – go figure?

Just not sure which part we all missed in that political rhetoric spin? Weak data puts negative growth on the agenda with our September quarter recording just 0.2 per cent growth. Wayne Swan activated his usual robotic rhetoric response “in a sea of global uncertainty the Australian economy remains resilient.” “Australia has lost its mantle as a world – beating economy after a sharp drop in economic growth returned us to the middle of the international pack, cast doubt on the Reserve Bank’s decision to lift interest rates, and raised questions about our reluctance to spend as economy moves into slow lane given consumers save as economy stumbles.

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All year I have raised concerns that our residential building industry remains on a sharp decline due mainly to our builders spending too much time playing in the sand pits created by the Building Education Revolution. With interest I read this week a report compiled by Macquarie Research.

  • Residential building approvals rose by 9.3% MoM in October. While obviously a positive outcome, it was underpinned by the volatile medium – density component, which is likely to reverse next month. And of course, it does not reflect the impact of the November interest rate rise.
  • At the same time, non – residential building approvals continue to weaken. They fell a further 3.8% MoM in October. And as builders steadily work through the pipeline of education projects, it seems inevitable that non – residential building activity will fall sharply in 2011.
  • Now, in recent years, we have seen how a lack of government investment in infrastructure resulted in bottlenecks and large price rises for utilities. But the same logic should apply to private investment as well. Thus we should expect to see large rental price increases in some of these sectors down the track, as supply fails to keep pace with demand. Of course, that too will be inflationary. This reflects another cost of the RBA’s current policy of squeezing the domestic economy to make room for the mining investment boom.

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Swan plans to create a ‘fifth bank’ which staggers believe given previously he merged the previous fifth and sixth banks.

I can see it now Bank Rupt!

Next week will be our final edition for 2010 where we will review the year that was and the year that lies ahead. Also, a Tim Mooney Christmas edition photo and….. (drum roll)…. our RWM Christmas video which is currently being edited. I will leave a clue: we sent one staff member to a recording studio to sing a Christmas carol and let me add that he is in fine voice!

Many thanks to the brilliant team at Visual Domain who shot and produced the video – we won’t be giving up our day jobs either as you will see next week.

Until then – cheers ^__^

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