It's the economy, stupid!

 
  Groundrelay Chief Commissioner

Location: Surrounded by Trolls!
I have said it before; I would like somebody to show me just one benefit that I personally have received as a result of privatisation.
Valvegear
Most privatisation assumes there is plenty of fat to be trimmed but you can only cut so much before you need revenue to be generating the profits.

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  Valvegear Dr Beeching

Location: Norda Fittazroy
Most privatisation assumes there is plenty of fat to be trimmed but you can only cut so much before you need revenue to be generating the profits.
"Groundrelay"
Exactly. When the utilities were in government ownership there was no demand for profits, and that's where we've suffered.
The other factor is that State Electricity Commission, Victorian Railways, Gas and Fuel Corporation, Melbourne and Metropolitan Board of Works, Melbourne and Metropolitan Tramways Board et al took in large numbers of apprentices every year. That doesn't happen now.
  don_dunstan Minister for Railways

Location: Adelaide proud
As opposed to your black-wash, continually overstating the actual impact of renewables on energy prices.

"The ACCC’s preliminary findings are that, on average across the NEM, a 2015-16 residential bill was $1,524 (excluding GST). This average residential bill was made up of:

   - network costs (48 per cent)
   - wholesale costs (22 per cent)
   - environmental costs (7 per cent)
   - retail and other costs (16 per cent)
   - retail margins (8 per cent)."

http://www.accc.gov.au/media-release/electricity-report-details-affordability-competition-issues
Groundrelay
And as I have said before, if you are a struggling pensioner living a hand-to-mouth existence then seven percent of your energy bill to directly fund this unproven rubbish is seven percent more than you should be paying. It goes on top of the most expensive domestic electricity in the world by far. Explain to me why the very poorest members of the community should be paying for the rush towards the scientifically invalid, unreliable and expensive provision of so-called green energy when our electricity prices are already the highest in the world - and about to go up by another 15% on top of that? Greens just think that everyone lives in Northcote in million dollar houses with safe six-figure government jobs and therefore can easily pay for that increase - either that or they get the solar panels that are being heavily subsided by those that can't afford them.

Its terrible policy and manifestly unfair and yet another transfer of wealth from those who have the least to those who already have everything.
  don_dunstan Minister for Railways

Location: Adelaide proud
I have said it before; I would like somebody to show me just one benefit that I personally have received as a result of privatisation.
Valvegear
This is a point I can certainly agree with you on - here in SA John Olsen sold ETSA not long after Jeff chopped up the SECV and the result was the same - who actually benefited from these sales apart from the conga line of consultants, financial advisors and (often) foreign owners of these utilities who have been screwing us for the last 20 years? As a consumer I certainly did not benefit, not in the slightest.
  BrentonGolding Chief Commissioner

Location: Maldon Junction
Another dimension to the argument from the ABC

http://www.abc.net.au/news/science/2017-11-19/offgrid-may-not-be-as-green-as-it-seems/9154266

BG
  BrentonGolding Chief Commissioner

Location: Maldon Junction
"The ACCC’s preliminary findings are that, on average across the NEM, a 2015-16 residential bill was $1,524 (excluding GST). This average residential bill was made up of:

   - network costs (48 per cent)
   - wholesale costs (22 per cent)
   - environmental costs (7 per cent)
   - retail and other costs (16 per cent)
   - retail margins (8 per cent)."

http://www.accc.gov.au/media-release/electricity-report-details-affordability-competition-issues
Groundrelay
While not disagreeing with your sentiment Groundrelay delving a little deeper into that report;

Whilst the total cost of the average residential bill in 2015/16 included just 7% environmental cost (whatever that means) the increases in prices in the 10 years to 2016/17 have been

43.7% increase for residential users of which 16% was the "green" componant
52.5% increase for commercial and industrial users of which 23% was the "green" componant

The use of different terms "environmental" and "green" within the same report is confusing and possibly designed to confuse.

And what does "environmental" even mean? Theoretically this could represent a levy for the building of new parks and gardens while the subsidies for Green power could be hidden in the Network costs.

The report should have been more transparent IMO.

The big increases to Commercial and Industrial users is putting huge pressures on Australian business' trying to compete with imports. Even for those not competing with imports it increases the prices that we all pay for goods and services.

BG
  don_dunstan Minister for Railways

Location: Adelaide proud
Retail has been doing it very tough since July with spending falling every month since then - I guess because of the huge increases in electricity prices. The latest victim is the Speciality Fashion Group (Katies, Rivers, Millers) who announced today that they would be closing some 300 shops out of their portfolio of 1,000 - as on News.com.au. This comes on top of other profit warnings from consumer-dependent businesses such as Coles and the Pental Group that turnover and profit is falling; again, you'd have to conclude that people just don't have any more money to spend - especially seeing as electricity is going to accelerate even further in the New Year.

Bill Evans, Chief Economist at Westpac, released an analysis of the RBA's minutes today and says that the outlook is getting rather gloomy with the Reserve still hoping that inflation will accelerate next year and increase the need for interest rates to go up - but probably not until 2019 or even 2020. The business community and self-funded retirees will be extremely unhappy to hear this, there has been lots of agitation from business to normalise rates in the belief this will stimulate the economy but at the moment the Reserve's view is the opposite. If anything the sudden falls in Sydney real estate may even prompt them to cut further?
  Valvegear Dr Beeching

Location: Norda Fittazroy
Ah! Economics - up there with Astrology as one of the world's great pseudosciences. Every month without fail, the news tells us that such and such numbers were much lower/higher (tick one) than "analysts predicted."
Interest rates? As Don has just posted, nobody has clue what to do, so I expect the RBA will take the coward's way out and do nothing.
  DirtyBallast Chief Commissioner

Location: I was here first. You're only visiting.

Bill Evans, Chief Economist at Westpac, released an analysis of the RBA's minutes today and says that the outlook is getting rather gloomy with the Reserve still hoping that inflation will accelerate next year and increase the need for interest rates to go up - but probably not until 2019 or even 2020. The business community and self-funded retirees will be extremely unhappy to hear this, there has been lots of agitation from business to normalise rates in the belief this will stimulate the economy but at the moment the Reserve's view is the opposite. If anything the sudden falls in Sydney real estate may even prompt them to cut further?
don_dunstan
There was an article in the FinReview today (sorry, unable to provide a link from this device) which suggested that stagnant wage growth, and by implication inflation, could partially be blamed on the high amount of university graduations nowadays. The reasoning was that there are too many overqualified people in the job market nowadays which drives the cost of labour down; employers have the luxury of picking only the most qualified applicants and the rest, even with honours degrees, are forced to serve fries. Too often, the article stated, too much focus is placed on labour demand and not supply. At the moment the labour market is oversupplied, and people are underemployed.

It used to be assumed that an unemployment rate falling to the low to mid 5's would be the tipping point regarding labour demand/wage growth. Now, that figure could be as low as 4%.

It's going to be a long ride.
  don_dunstan Minister for Railways

Location: Adelaide proud
There was an article in the FinReview today (sorry, unable to provide a link from this device) which suggested that stagnant wage growth, and by implication inflation, could partially be blamed on the high amount of university graduations nowadays. The reasoning was that there are too many overqualified people in the job market nowadays which drives the cost of labour down; employers have the luxury of picking only the most qualified applicants and the rest, even with honours degrees, are forced to serve fries. Too often, the article stated, too much focus is placed on labour demand and not supply. At the moment the labour market is oversupplied, and people are underemployed.

It used to be assumed that an unemployment rate falling to the low to mid 5's would be the tipping point regarding labour demand/wage growth. Now, that figure could be as low as 4%.

It's going to be a long ride.
DirtyBallast
Well I have read lots of contradictory stuff but I think its certainly true that a degree simply isn't worth what it was ten or twenty years ago because everyone has one - even MA's are getting too common depending on the field. It was the worst thing Gillard could have done to un-cap the number of degree places - all it did was make degrees incredibly common. My friend the civil engineer said they were looking for someone to do CAD drafting in their office - something you don't even need to be engineer-qualified to do - and that he got inundated with applications from Australia and overseas with MA qualified people who were looking to try and get a foot in the door. He said in the end they didn't even look at people who had less than straight distinctions on their transcripts and that many people they interviewed had been unable to get even the most basic engineering related jobs since graduation; the market is well and truly saturated there.

Also raises the moral issue of: What are we doing training all these people and loading them up with HECS debts only for them to not find work in their field of training; the Productivity Commission recently estimated that up to a third of HECS debts will never, ever be paid back because the participants don't ever get any sort of work that will take them over the HECS threshold. To me it is completely immoral of the universities to take a young person's (government subsidised) fees and not actually give them anything useful in exchange - we don't need degree-qualified people wiping bums or making lattes if that's what the growth industries are. And its a complete furphy that STEM (Science, Technology, Engineering & Mathematics) degrees are the ones we need as a nation - these degrees actually have some of the poorest vocational outcomes of them all, especially since we aren't really a manufacturing nation any longer.
Interest rates? As Don has just posted, nobody has clue what to do, so I expect the RBA will take the coward's way out and do nothing.
Valvegear
I think part of the problem is that the current situation doesn't fit any standard textbook definition of what should be happening - low interest rates and relatively low unemployment should be creating demand for labour and credit but it isn't doing either of these things. So the RBA has no idea of what to do other than to keep trying to avoid a housing/banking crash at the expense of everything else, which I think has been the unofficial mantra since Howard. In order to do that they'll probably consider cutting rates even more - possibly below 1% next year?
  don_dunstan Minister for Railways

Location: Adelaide proud
In completely shocking news Morgan Stanley releases a report that says interest-only mortgage holders tend to be the worst savers, the most marginal borrowers and the first to sell when prices are tanking (Domain);

Risks relating to interest-only borrowers are twofold. First, rather than dipping into savings or cutting back on living costs, interest-only borrowers are more likely than others to sell their property if rates rise. “This gap is particularly large among owner-occupiers, where [around] 20 per cent of interest-only loan holders would consider selling versus around 5 per cent of principal and interest (P+I) borrowers, suggesting that being on interest-only is a risk flag,” said Morgan Stanley analysts led by Richard Wiles and Andrei Stadnik.

And second, a 53 per cent majority of interest-only borrowers are likely to use credit cards or consumer finance to manage higher costs compared with 29 per cent of principal and interest borrowers. This is the case despite interest-only borrowers’ mortgage payments being around 40 per cent lower than principal and interest on average, according to the report... [This report comes] just over two months after UBS researchers said $500 billion worth of Australian mortgages are built on not-completely-accurate applications.

The “liar loans” suggest 26 years of unbroken GDP growth has led to a “large level of complacency within the economy”, UBS economist Jonathan Mott said in September.
  don_dunstan Minister for Railways

Location: Adelaide proud
Has anyone been following this situation with Adani's coal mine in Queensland? Because the QLD government has now pulled the finance from the project Adani has now been pursuing Chinese finance from a (you guessed it) Chinese-government majority owned company (ABC):

Chinese enterprises and export credit agencies invariably require that materials for key infrastructure are sourced from China, effectively shifting work out of Australia and undermining Adani's claims its project will create many thousands of additional jobs for Queensland... At the recent international climate change talks in Bonn, China has been keen to present itself as a global leader on efforts to limit carbon dioxide emissions to keep global temperature rises to less than 2 degrees above pre-industrial levels.

I'm neither for nor against the mine but the fact is that if China is allowed to import all the materials and all the workers onto the project there will be absolutely no benefit for the people of Queensland whatsoever; all the materials, equipment and workers will be on-shored from China. And all this will be completely legal under the recently-signed ChAFTA; thanks alot Andrew Robb. And breathtaking hypocrisy from China itself - pretending to care about carbon emissions while financing the export of coal from Australia to India - it's going to end up in the exact same atmosphere, people! Why not burn it here and create jobs and cheap electricity in Australia - or does that make too much sense?
  don_dunstan Minister for Railways

Location: Adelaide proud
Bloomberg write Chris Bourke calls Australia's long housing boom over (agreeing with a UBS report recently) with key indicators saying it can't possibly get any larger (Bloomberg);

After five years of surging prices, the market value of the nation’s homes has ballooned to A$7.3 trillion ($5.6 trillion) -- or more than four times gross domestic product. Not even the U.S. and U.K. markets achieved such heights at their peaks a decade ago before prices spiraled lower and dragged their economies with them...

He also names the problems that no politician generally wants to mention:
  • Banks that are the most exposed in the world to their domestic housing market
  • Australian households among the most indebted in the world but no pay rises coming in to support the debt
  • Young people unable to afford housing in big cities because they're among the most expensive relative to income in the world; Sydney is more expensive than New York or Hong Kong for a first homeowner.
  • Record amounts of construction still happening.
A crash could possibly be good for us if its managed properly; other sectors of the economy might actually get a chance to prosper.
  don_dunstan Minister for Railways

Location: Adelaide proud
Interesting speculation on the internet about Elon Musk and his Tesla car company - and that they could in fact be in severe financial difficulty with signs that the company is actually preparing a new float on the American stock exchange in order to suck in more money. Could be similar to other stellar floats that we have seen on the ASX in the last few years such as Slater & Gordon (now worthless) and McGrath Real Estate (worth a quarter of the float price)? There's been a flurry of announcements from Telsa in the last few weeks that has financial markets speculating a new float is in the wings.

Tesla's newest offering - an electric truck - seems to have performance standards that are not possible with current technologies - as discussed further in this Financial Times article; especially dubious is the claim that the truck can be fully charged for a day's work in half an hour. There's also no indication from Tesla about when or where the truck will actually be built which is a worry given the problems they're having building their existing cars at their Freemont California plant with customers still waiting for their Model 3 vehicles months after they were forced to pay in full for them (where did the money go?). The retail market also doesn't seem to believe the claims being made about the Tesla Truck either with forward orders almost non-existent because they simply don't believe the claims being made about its performance or efficiency (Alpha).

And now Elon Musk launches yet another product this week - the Tesla Roadster - which he's continued to make some quite extraordinary claims about but still with no details as to when and where it will be manufactured all the while insisting that people who are interested need to pay enormous amounts of money up front to "reserve their place" - as they show you themselves right here:

Founders Series Roadster reservations require an initial $7,000 credit card payment, plus a $319,000 wire transfer payment due in 10 days. Reservations are not final until the wire transfer payment is received.

I mean come on - you've got to pay in full for a car that has some quite sketchy details about its technical capacity and as with the truck there's still no indication as to when and where it will be manufactured and what the final product will actually look like? Does anyone else think this whole Tesla thing sounds dodgy?
  BrentonGolding Chief Commissioner

Location: Maldon Junction
Founders Series Roadster reservations require an initial $7,000 credit card payment, plus a $319,000 wire transfer payment due in 10 days. Reservations are not final until the wire transfer payment is received.

I mean come on - you've got to pay in full for a car that has some quite sketchy details about its technical capacity and as with the truck there's still no indication as to when and where it will be manufactured and what the final product will actually look like? Does anyone else think this whole Tesla thing sounds dodgy?
don_dunstan
Agreed it all sounds pretty sketchy however the payment up front idea sounds very familiar to someone like me who works in the Motorcycle industry.

So called limited edition models with hefty price tags and up front payments were all the rage in the bike trade before the GFC. Benelli with their 3 cylinder Tornado, MV Agusta, Ducati and Aprilia all spring straight to mind.

Aprilia was a great example of how you fund tooling up for a new model when you don't have any $$$ - the Tuono R was sold as a Hand Made limited edition (200) run of a Naked (stripped back) variant of the RSVR sports bike. They even had the cheek to say that they would only ever make the first run. They sold out pretty much instantly, Aprilia used to $$$ to tool up, made the bikes and then lo and behold a production version was announced for a fraction of the price a few months later. The company sighted "unprecedented customer demand" for the change of plan which pissed off the 200 "exclusive" buyers but who cares, 10 or so years later the bike is still around (new model) and they have sold tens of thousands of them!

BG
  Carnot Chief Commissioner

Tesla sounds like it might become "Tech Wreck Mk2".

Someone needs to give Elon Musk a reality check.
  don_dunstan Minister for Railways

Location: Adelaide proud
Tesla sounds like it might become "Tech Wreck Mk2".

Someone needs to give Elon Musk a reality check.
Carnot
I'm still astonished that things like Facebook are worth as much as they are - what do they produce apart from ad revenues?

Anyway the troubles at Tesla kind of confirms my suspicion that Musk is really just PT Barnum for the 21st century, an excellent promoter but with a lack of capacity to deliver. The truck which was launched with incredible fanfare only a few weeks ago has a few prominent organisations (such as WalMart) ordering some token numbers perhaps so they can be seen to be associated with the Tesla 'success story' but otherwise nobody in the trucking industry wants to touch it until it at least comes out and is able to perform in the ways that are claimed; it seems they don't believe the claims Tesla makes about it.

And as BrentonGolding says above, paying in advance is normal practice for things that are strictly limited production runs but generally speaking someone like Ford or Toyota will not expect you to pay months or years in advance the full purchase price for a model of vehicle that is still being developed - Tesla is sucking in capital to keep it going but will the people who pay in full for their cars ever actually see them?
  Carnot Chief Commissioner

Image is everything these days.

That said, I have seen some reviews of the Tesla Model 3 and it's a rather impressive car. Elon is mainly targeting "early adopters", but the funny thing is that he's not making a profit on them.  Lots of wishful thinking and big plans, but he's burning thru US$480000 per hour!
  don_dunstan Minister for Railways

Location: Adelaide proud
Wasn't sure where else to post this but very interesting - the NT Government is posting paramilitary soldiers equipped with assault rifles and night-vision in order to reduce youth crime in Darwin and Alice Springs (ABC);

The Territory Response Group (TRG) is part of the Australian Government's national counter-terrorism taskforce.

[Police] Commissioner Reece Kershaw said deploying the TRG was necessary to allay community concerns during the Christmas period, when crime was known to spike. He said youth offenders were responsible for around 50 per cent of property break-ins, and the TRG would have equipment, such as night vision goggles, to monitor people "acting suspiciously".

"We've had information around Alice Springs of kids jumping onto roofs of hotels and stealing people's wallets and all sorts of things," Mr Kershaw said.

"[The TRG] will be there to act as surveillance, and what we call the night-time assessment team".

I knew that burglary was a persistent problem in the NT but I think its a bit of an odd choice to deploy paramilitary soldiers to combat it -
  don_dunstan Minister for Railways

Location: Adelaide proud
Increasing signs that the AU$ is about to tank - the Australian 2-year bond yield has reached parity with the US 2-year bond yield @ 1.76%. If it falls any lower then it's very likely that the AU$ will take a big tumble - this will in turn put more pressure on the RBA to raise rates instead of lowering them (in case they were confused about what to do!).

Also... A story about an interesting improvised use of a Faraday Cage (ABC):

The Fair Work Commission last week ruled a Perth electrician was fairly sacked from his job for playing golf instead of being at work, allegedly on more than 140 different occasions over two years.

But how did he get away with playing hooky for so long?

It turned out the man had concealed his whereabouts during office hours by storing his personal digital assistant, a phone-like device that has a GPS inside, in an empty Twisties packet.

Didn't know that an empty chip packet could also be a Faraday Cage - must try that and see if it works?
  don_dunstan Minister for Railways

Location: Adelaide proud
The ASX has sunk on news that the Royal Commission into Banking is a go-ahead... I don't know why they're worried, there's no way it will be of any substance if Truffles has his way.

Also interesting to read that Oroton is in trouble going into voluntary administration, another luxury goods retailer hit by the tough times in retail. You have to wonder with all these retailers in trouble if our wonderful economy is really that good? My money is on Myer being the next causality - nothing like a recession to clear out the dead wood.
  Carnot Chief Commissioner

Also interesting to read that Oroton is in trouble going into voluntary administration, another luxury goods retailer hit by the tough times in retail. You have to wonder with all these retailers in trouble if our wonderful economy is really that good? My money is on Myer being the next causality - nothing like a recession to clear out the dead wood.
don_dunstan
If a slack economy doesn't kill them, then Amazon will.

It costs a fortune to maintain retail space these days.  Many of the clothing shops will survive given that online shopping for that kind of thing doesn't work since it normally requires you to make sure the clothes 'fit'.  Accessories etc are another matter most of the time.

Our downtown retail area is a disaster zone.  Heaps of empty shops, and the local Myer store is so tired and third rate in appearance that it's not funny anymore.  It's been over 20 years since anything was done to it...  (and Bendigo was where Myer started, but would head office care these days?)
  rxclass Junior Train Controller

Location: On the manual turntable at Marino turning an exquisite Rx class steam locomotive.
The ASX has sunk on news that the Royal Commission into Banking is a go-ahead... I don't know why they're worried, there's no way it will be of any substance if Truffles has his way.

Also interesting to read that Oroton is in trouble going into voluntary administration, another luxury goods retailer hit by the tough times in retail. You have to wonder with all these retailers in trouble if our wonderful economy is really that good? My money is on Myer being the next causality - nothing like a recession to clear out the dead wood.
don_dunstan
G'day all,

Saw the announcement by truffles with a very sour looking Morrision at his side. Oh well, there goes his cushy $500,000+ a year joint in the banking industry after he leaves politics to add to his taxpayer funded pension. He did not look one little bit happy.

Regards,
  don_dunstan Minister for Railways

Location: Adelaide proud
Chinese hacker run rings around Australia's confidential commercial and industrial information, regularly hacking law firms and accountants to find out what's going on so they have the upper hand in negotiations (ABC);

The Chinese espionage group known as the Codoso team or APT-19 has been causing havoc internationally but is turning its attention to Australia. The Australian Crime Commission's former cyber security manager, Tim Wellsmore, said any information obtained would likely be passed to Chinese companies.

Law firms hold confidential information that could give the companies inside knowledge ahead of business negotiations, mergers and acquisitions.

Meanwhile Four Corners has been again sued by the participants of a story about Chinese soft power in Australia, with one of the people interviewed (Lupin Lu) alleging that she was lured to participate in the program without being told about the true nature of the interview. She has also repeatedly denied that the Chinese Consulate has sponsored and organised protests in Australia despite hard evidence to the contrary.

You have to wonder what's really going on in Australia's university campuses when this sort of thing goes on apparently without any sort of challenge either from the universities themselves or our political leadership. Really, it's a threat to our traditional open society and traditions of free speech when we allow this sort of thing to happen.
  HardWorkingMan Chief Commissioner

Location: Echuca
the unfortunate reality is that our universities rely on full-fee paying overseas students to survive as the government's contribution doesn't cover the cost of local students.  This means that even if external pressure is not applied directly to the institution they may be loathe to be seen to be doing something that risks lowering their reputation in the countries providing those students.

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