O75 Public Administration

Stimulus package a big mistake, says Abbott’s former economist

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Original article by Adam Creighton
The Australian – Page: 6 : 23-Apr-20

The necessity of the federal government’s $194bn coronavirus stimulus package has been questioned by Andrew Stone, the chief economist of former prime minister Tony Abbott. Stone argues that the stimulus package – and the national lockdown – should be progressively wound back, given that the virus outbreak has not been as severe in Australia as had been feared. He has also criticised economists who have signed an open letter cautioning the federal government against easing lockdown restrictions too soon.

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Tax system doesn’t support recovery

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Original article by John Kehoe, Patrick Durkin
The Australian Financial Review – Page: 6 : 23-Apr-20

Former Treasury secretary Ken Henry has backed calls by Reserve Bank of Australia governor Philip Lowe for an overhaul of the tax system when the pandemic is contained. Henry led a review of the tax system in 2010, and he contends that its findings and recommendations are still relevant. Amongst other things, Henry advocates replacing the GST, payroll taxes and some state-based taxes with a new tax on business cash flow. He has also proposed phasing out stamp duties in favour of a land tax system.

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RESERVE BANK OF AUSTRALIA, AUSTRALIA. DEPT OF THE TREASURY

Air travel could struggle to take off again

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Original article by Hans van Leeuwen
The Australian Financial Review – Page: 11 : 23-Apr-20

The International Air Transport Association has warned that Australia’s aviation industry could take some time to recover when coronavirus restrictions are eased. The IATA notes that a rebound in business confidence after the number of new infections declined in late February saw domestic air travel in China quickly return to about 45 per cent of its previous level. The IATA’s chief economist Brian Pearce notes that in contrast, Australia’s domestic flights have not yet resumed despite the fact that the nation’s rate of infection has slowed considerably.

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INTERNATIONAL AIR TRANSPORT ASSOCIATION

Panic buying could put GDP in positive territory for March

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Original article by Matthew Cranston, Simon Evans
The Australian Financial Review – Page: 7 : 23-Apr-20

Data from the Australian Bureau of Statistics shows that retail turnover increased by 8.2 per cent in March, driven by panic buying in response to the coronavirus. Sales of canned food, medicinal products and cleaning goods were particularly strong in March, with turnover rising by 50 per cent month-on-month. Josh Williamson of Citigroup warns that retail turnover is likely to fall sharply in April, due to the impact of lockdowns and social distancing rules. David Plank of the ANZ Bank says the sales boost in March could potentially result positive GDP growth for the first quarter of 2020.

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AUSTRALIAN BUREAU OF AGRICULTURAL AND RESOURCE ECONOMICS AND SCIENCES, CITIGROUP PTY LTD, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ

Company tax rate back on table

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Original article by Phillip Coorey
The Australian Financial Review – Page: 1 & 4 : 23-Apr-20

Deregulation, tax reform and changes to the industrial relations system are expected to be the federal government’s priorities when the coronavirus pandemic abates. The Coalition is of the view that the economy will need reforms of a similar magnitude to those implemented by the Hawke-Keating Labor government three decades ago. Treasurer Josh Frydenberg notes that Australia’s company tax rate remains high by global standards, although he has ruled out any changes to the GST at present. The government has also signalled its intention to revive the Ensuring Integrity Bill.

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AUSTRALIA. DEPT OF THE TREASURY

Buyers queue, Virgin could sell in two months

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Original article by Robyn Ironside
The Australian – Page: 1 & 4 : 22-Apr-20

Virgin Australia CEO Paul Scurrah says the embattled airline is not expecting to receive a federal government bail-out following its descent into voluntary administration. He adds that the government has rejected nine requests from Virgin for financial assistance, while Treasurer Josh Frydenberg notes that Virgin is controlled by five large foreign shareholders that have "deep pockets". Vaughan Strawbridge of Deloitte, who has been appointed as administrator of Virgin, believes that the carrier could be sold within 2-3 months. More than 10 potential buyers are said to have expressed interest in buying Virgin, including a number of overseas investors.

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VIRGIN AUSTRALIA HOLDINGS LIMITED – ASX VAH, AUSTRALIA. DEPT OF THE TREASURY, DELOITTE TOUCHE TOHMATSU LIMITED

Inflation expectations down significantly in mid-April

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Original article by Roy Morgan
Market Research Update – Page: Online : 22-Apr-20

In mid-April there was a jolt to Australian Inflation Expectations, with a steep fall in the weekly index on April 18/19 to a record low of only 3.1%, down from 3.8% the week before and significantly below the 2020 weekly average of 4%. The weekly fall was caused by fewer Australians expecting prices to increase over the next two years, down to 69.4% (down 1.4% on a week ago) and more expecting prices to either decrease (up 1% to 10.8%) or ‘Stay the same’ (up 0.4% to 19.8%). Roy Morgan CEO Michele Levine says the steep drop in Inflation Expectations in mid-April comes as the impact of the COVID-19 pandemic begins to hit key pricing metrics in the economy.

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ROY MORGAN LIMITED

Tax reform cure for virus fever

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Original article by Patrick Commins
The Australian – Page: 1 & 6 : 22-Apr-20

Reserve Bank of Australia governor Philip Lowe has warned that the nation’s GDP growth will fall by around six per cent in 2020 due to the coronavirus pandemic. However, he says the economy should begin to recover in September, with GDP growth of 6-7 per cent expected in 2021. Lowe also says the unemployment rate could peak at 10 per cent in coming months, and it is likely to remain above six per cent for several years. Lowe adds that total hours worked in Australia are forecast to fall by 20 per cent in the first half of 2020. Lowe has also used a speech in Sydney to argue that industrial relations and tax reform should be considered in the wake of the pandemic.

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RESERVE BANK OF AUSTRALIA

ANZ-Roy Morgan Consumer Confidence increases to 84.2

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Original article by Roy Morgan
Market Research Update – Page: Online : 22-Apr-20

ANZ-Roy Morgan Australian Consumer Confidence rose 7.7% to 84.2 in the week to 19 April. Now 20% (down 1ppt) of Australians say their families are ‘better off’ financially than this time last year, while 41% (up 1ppt) say their families are ‘worse off’ financially. Meanwhile, 36% (up 4ppts) of Australians expect their family to be ‘better off’ financially this time next year, and 24% (down 3ppts) expect to be ‘worse off’ financially. However, just 5% (unchanged) expect ‘good times’ for the Australian economy over the next 12 months, while 54% (down 4ppts) expect ‘bad times’. In addition, 28% (up 8ppts) of Australians say now is a ‘good time to buy’ major household items, while 47% (down 7ppts) say now is a ‘bad time to buy’. The four-week moving average for ‘inflation expectations’ fell 0.2ppt to 3.8%. The weekly reading dipped to 3.1% from 3.8%.

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ROY MORGAN LIMITED, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ

China rejects call for probe of virus origins

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Original article by Andrew Tillett, Michael Smith
The Australian Financial Review – Page: 11 : 21-Apr-20

China’s Foreign Ministry claims that it has "serious concerns" about Foreign Minister Marise Payne’s call for an independent inquiry into the origins of COVID-19. A spokesperson for the Ministry has suggested that Australia should not "blindly follow other countries", and should instead focus on improving epidemic control and on improving its relationship with China. Australia-China Relations Institute director James Laurenceson says he does not think China would agree to such an inquiry; he notes that the global financial crisis began in the US, but that the US "did not open up its books" to show what happened.

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AUSTRALIA. DEPT OF FOREIGN AFFAIRS AND TRADE, CHINA. MINISTRY OF COMMERCE. DEPT OF FOREIGN ECONOMIC AND TRADE POLICY, AUSTRALIA-CHINA RELATIONS INSTITUTE