RBA's Philip Lowe tells crowd "I'm dying up here", mops his brow
The resumption of normal trading conditions for parliament can't come soon enough for the Reserve Bank's Dr Philip Lowe. He's the Dutch boy with his finger in the dyke right now, at least until parliament resumes and the ScoMo4Life dance crew can take up some of the heavy lifting on economic stimulus.
Dr Lowe warned yesterday that interest rate cuts won't be enough to reduce unemployment and kick-start employment and inflation. Rather than focus on unemployment however, Dr Lowe warned a gathering in Adelaide that the real issue in Australia is underemployment, which is currently sitting at 8.1 per cent. He's saying the job market has capacity to improve - and with it, economic conditions in Australia - but that it's going to take more than a reduction of the official cash rate for that to happen.
Cue spotlight on Canberra. The Morrison government's immediate economic stimulus is intended to come from its three-stage tax cut package, which Labor is in hot debate over. Shadow cabinet is divided over whether the opposition should support the full package as-is; critically, shadow treasurer Jim Chalmers says no, but is looking increasing isolated the longer Labor leader Anthony Albanese keeps the question open. An extraordinary meeting of shadow cabinet has been tabled for next Monday to sort out the party's position.
Meanwhile, treasurer Josh Frydenberg has been in New York this week. Hope has been expressed in the Fin today that time spent with predecessor, Joe Hockey may lead to some of the latter's fondness for asset recycling will rub off on JoFry, as a further means of economic stimulus.
Speaking of the federal government: anyone following the Victorian CFMEU secretary, John Setka saga will be aware of the deeply political rift building between Labor and the union movement right now. It all kicked up a gear yesterday with industrial relations minister, Christian Porter going on record for the first time to say that the government's revived Ensuring Integrity Bill will be fast-tracked with the intention of deregistering the CFMEU. According to Mr Porter, Australian construction projects are 30 per cent more expensive compared to the US because of the unlawful behaviour of the CFMEU.
Westpac gets a "whoa, Nellie!" from APRA
Westpac took it upon itself to jump the gun on APRA's stated intention of cutting the mortgage serviceability rate, and removed it from some home lending products - which would effectively allow a customer to borrow up to 10 per cent more with the click of a pen. A few hours later, they put it back, caving in to a more-than-irate response from the regulator.
Seems that while APRA has every intention of removing the buffer, Westpac had pre-empted the banking regulator's consultation process on exactly how to manage the serviceability floor on assessing home loan applicants. It's good to see the bank is keen, but it'll be acutely aware it's not exactly mustard in APRA's eyes right now.
Mascot residents need to dig deep
Residents of Mascot Towers voted last night to fund repairs to their damaged apartment building, with strata management advising them to prepare to invest up to $50,000 per residence to get the building back to a standard suitable for resale.
Many of the apartments are at least four weeks away from being habitable. Spare a thought for Mascot Towers apartment investors, whose vacating tenants as a result of last Friday's evacuation have meant they're paying off an asset with no immediate prospects of returns, and are having to stump up extra just to get the building up to snuff.
In other news...
There's an excellent Investment-101 piece on ABC News online this morning, aimed at people in their 20s and 30s, breaking down different ways to start investing. It looks at the pros and cons of (for example) buying a house, investing in shares, topping up super, starting a side hustle and even buying crypto.
Moelis Australia has purchased 54 new apartments in one line in the Kirrawee "South Village" project from Payce for $30 million. It secured a 20 to 25 per cent discount on the tranche.