Australian Economic News

http://www.valuebuddies.com/thread-4912-...#pid100568

I think we should continue the discussion of Australian economics here.

Personally, I am only a watcher of economics on a globally basis. economics is a social science and there is no absolute right and wrong. However, it is a good observation of social science and human response to social issues. Its a never ending subject and to me its a never ending PHD subject.

I personally don't share BlueKelah's negative view on aussie economy. Actually, on a global basis, no economy is on an absolute recovery mode. QE has distorted the real picture and only those who have access to the credit infusion and made good use reap benefits.

Having said all that, the wealth effect will eventually filter through to the entire society.

I do not want to dwell on the debate as it is endless but economics being a balance will even out extreme with human interventions via various policies.

Will keep monitoring developments but as it is Australia is a wonderful country that emphasis freedom of speech and human rights. In fact, animal rights appear to be bigger than that of human at times. I stand on my all end in "Nothing" conclusion when we are dwelling with Aussie policies - otherwise how can Aussies be so laid back notwithstanding being a country with British colonial legal framework.

Stay Positive
The World Needs Positive Folks
GG

^^^ ???

(17-11-2014, 02:48 PM)greengiraffe Wrote: O&G sector as a whole will face a long overdue perfect storm.

The replacement cycle has gone on for too long and with the downturn of oil & gas prices, it could always result in over-supply given that forecasts by experts and existing players may be on the optimistic side after so many good years.

What goes up must come down and vice versa... noone can defy the laws of mother nature.

If u referring to that posting...

Lagi no worries, low prices just leave it in the ground for future generations...

Low prices, no $ to hunt for more and simply allow demand to keep up with supplies, then price will be adjusted over time...

economics buddy - a fine balance...

No need to panick
GG

(17-11-2014, 08:38 PM)specuvestor Wrote: ^^^ ???

(17-11-2014, 02:48 PM)greengiraffe Wrote: O&G sector as a whole will face a long overdue perfect storm.

The replacement cycle has gone on for too long and with the downturn of oil & gas prices, it could always result in over-supply given that forecasts by experts and existing players may be on the optimistic side after so many good years.

What goes up must come down and vice versa... noone can defy the laws of mother nature.

Australia, China deepen ties with landmark free trade deal

By Matt Siegel

CANBERRA Mon Nov 17, 2014

(Reuters) - China and Australia on Monday sealed a landmark free trade agreement more than a decade in the making, significantly expanding ties between the world's second largest economy and one of Washington's closest allies in Asia.

The deal, which Australia called the best ever between Beijing and a Western country, will open up Chinese markets to Australian farm exporters and the services sector while easing curbs on Chinese investment in resource-rich Australia.......................................

http://www.reuters.com/article/2014/11/1...0C20141117

Australia will have what China wants - quality products that can't be produced without peace of mind in a polluted and filthy China while China can supply what Australia is hard up for - $.

Middle Class Chinese can then make way to Australia provided they got a way out of Middle Kingdom...

Like that lucky country can stay luck and defy skeptics...

GG

(17-11-2014, 09:22 PM)Boon Wrote: Australia, China deepen ties with landmark free trade deal

By Matt Siegel

CANBERRA Mon Nov 17, 2014

(Reuters) - China and Australia on Monday sealed a landmark free trade agreement more than a decade in the making, significantly expanding ties between the world's second largest economy and one of Washington's closest allies in Asia.

The deal, which Australia called the best ever between Beijing and a Western country, will open up Chinese markets to Australian farm exporters and the services sector while easing curbs on Chinese investment in resource-rich Australia.......................................

http://www.reuters.com/article/2014/11/1...0C20141117

17 Nov 2014

China trade opened up by currency hub

An Australian trading hub for China's currency is being hailed as a major development for co-operation between the two countries.
.
The creation of a Sydney hub to trade China's currency will further open up the world's largest economy to Australian businesses, bankers say.

The Reserve Bank and the People's Bank of China have agreed to establish official renminbi (RMB) clearing arrangements in Australia, allowing more direct trading with Chinese entities.

This will further support the economic and financial links between Australia and China, and strengthen financial cooperation, the RBA said.

ANZ chief executive Mike Smith said the creation of a trading hub was a significant achievement.

"The Renminbi is expected to dominate Asian trade and could become a genuine rival to the US dollar as a global reserve currency," he said.

Westpac will be one of the first local banks to connect with the RMB hub, and its chief executive Gail Kelly said it would create greater opportunities for the bank's customers.

"The ability to settle transactions in RMB in real time through Sydney will make it faster and easier for customers to trade and transact in RMB," she said.

Rob Whitfield, the head of Westpac's institutional bank, also said it would encourage a build of Australian deposits of RMB and stimulate activity in RMB-denominated financial products.

Treasurer Joe Hockey said Chinese authorities would shortly announce the designated clearing bank, which will support Australian importers and exporters in their cross-border RMB transactions.

Meanwhile, Australian-based financial institutions will also be given unprecedented direct investment access to China's previously restricted equity and bond markets.

"Today's announcements will help ensure Australia is prepared to benefit from RMB-related trade and investment opportunities that emerge as China continues to deepen its integration into the global economy," Mr Hockey said.

http://www.sbs.com.au/news/article/2014/...rrency-hub

Dairy, beef, wine break through China’s barrier
THE AUSTRALIAN NOVEMBER 18, 2014 12:00AM

The dairy deal with China will eventually close the tariff advantage enjoyed by New Zealand producers. Picture: Zoe Phillips Source: News Corp Australia
THE beef, dairy and wine industries are the big winners from an Australian free-trade agreement with China which dramatically cuts tariffs across a range of food exports.

But China has refused to budge on exports of rice, sugar, wheat, cotton and oil seeds.

China also kept its import quota on wool but gave Australia a country-specific allocation.

Details of the FTA released yesterday show dramatic tariff reductions across the $9 billion in agricultural products Australia ­exports to China.

Former Australian ambassador to China Geoff Raby predicted the deal would spark a surge in investment by Chinese interests in the agricultural sector and increase the price of farms and vineyards.

Trade expert Alan Oxley said Australia should welcome the investment because Chinese partners would provide the links to a market that was highly regionalised, fragmented and difficult to break into.

Mr Oxley said he was surprised at how quickly China had opened up its agricultural sector. But China had a huge growing middle-class and it could not provide them with enough food.

Trade Minister Andrew Robb said the Chinese position on rice, sugar, wheat, cotton and oil seeds would be revisited in three years when the deal would be reviewed.

But he said many of these industries already provided significant exports to China. For example the sugar industry exported more to China than to the US.

He said China had not provided liberalisation across rice, sugar, wheat, cotton and oil seeds, to any other country as these were considered “sensitive’’ staples.

The government argues the free-trade deal will provide Australian producers with an advantage over their international competitors including the US, Canada, and the European Union.

It also claims it removes the ­advantage Chile and New Zealand enjoy through their FTAs reached with China last decade.

The dairy deal will, over time, close the tariff advantage enjoyed by New Zealand producers, who have an FTA with China, and Australian producers.

But the government argues its deal with China is better than New Zealand’s because it removes ­restrictive safeguard mechanisms on a wide range of dairy products including liquid milk, cheese, butter and all milk powders. Under the safeguard mechanisms China raises the tariff where imports ­exceed a specified level.

The deal eliminates the 15 per cent tariff on infant formula within four years. But the 15 per cent tariff on liquid milk will be eliminated over nine years and the tariff on milk powders will be eliminated over 11 years.

Under the deal, wine, which faces a tariff of 14 to 20 per cent, will become tariff free after four years. Tariffs on dairy products will be eliminated in four to 11 years. Tariffs on beef of 12 to 15 per cent will be phased out over nine years.

Live animal exports will be ­tariff-free within four years. China is already Australia’s second largest market for live animals worth $142m last year. Sheepmeat exports, which are subject to a tariff of 12 to 23 per cent, will be tariff-free within eight years. Sheepmeat exports to China doubled between 2012 and last year.

The deal removes tariffs across seafood, processed foods, hides skins and leather.

(17-11-2014, 09:22 PM)Boon Wrote: Australia, China deepen ties with landmark free trade deal

By Matt Siegel

CANBERRA Mon Nov 17, 2014

(Reuters) - China and Australia on Monday sealed a landmark free trade agreement more than a decade in the making, significantly expanding ties between the world's second largest economy and one of Washington's closest allies in Asia.

The deal, which Australia called the best ever between Beijing and a Western country, will open up Chinese markets to Australian farm exporters and the services sector while easing curbs on Chinese investment in resource-rich Australia.......................................

http://www.reuters.com/article/2014/11/1...0C20141117

China FTA to lead to closer ties in dairy, beef sectors
THE AUSTRALIAN NOVEMBER 18, 2014 12:00AM

Rowan Callick

Asia Pacific Editor
Melbourne


China FTA: What it means
Closer ties in food sector on the menuChina’s President Xi Jinping and Prime Minister Tony Abbott leave the House of Representatives at Parliament House in Canberra yesterday. Source: AFP
China FTA: What it meansCloser ties in food sector on the menu

THE chief executive of one of China’s top dairy companies said yesterday that what Chinese consumers wanted above everything is safe food.

Xi Gang, chief executive of privately owned New Hope Dairy, told the Australia China Economic and Trade Forum in Canberra yesterday that they wanted to know “the true origins” of what they were eating.

He said New Hope, China’s fourth-largest and fastest-growing dairy corporation, looked now — especially following the liberalisation driven by the free-trade agreement — to boost its involvements in Australia, through “cooperation — I don’t like the word acquisition”.

INTERACTIVE: Australia's bilateral FTA agreements

“We wish to make full use of our Australian partners,” he said. “They have the land ownership and the technology and know the relevant rules and regulations.

“Our comparative advantage is in knowing how to sell high-quality goods, we know the consumers, and we have efficient distribution channels” in more than half China’s provinces.

He said that with the FTA, agriculture and food would become as important as resources and energy in the relationship between the countries.

Simon Talbot, chief executive of the National Farmers Federation, said “the only way to increase farm good prices is to increase demand”.

He thus applauded the China deal, and said it would take a further decade to reap its full benefits.

FTA: The key industries affected

Andrew Gill, an agribusiness specialist at Minter Ellison, said the FTA “plays to our strengths — it’s not about propping up our weaknesses. It sets the priorities where the effort should go.”

Patrick Vizzone, National Australia Bank’s Hong Kong-based Asia head of agribusiness and food, said “Australia is well placed as a niche provider for high-end foodstuffs, but has lacked a fundamental understanding of how China consumes”.

Mr Talbot said the FTA was “slightly better than we expected”. It would substantially advance Australia’s push to become not the food bowl but the “deli of Asia”.

Now, he said, Australian farmers needed to stop looking inwards and fighting each other. It was also important, he said, to “work on Brand Australia as a mandatory requirement”.

And additional investment was needed, he said, “or we will never realise our dream”. He did not expect much help in this from Australia’s superannuation fund industry.

The principal alternative, Chinese and other foreign investment, needed above all transparency and registration, he said. “And no closed systems” that would take the benefits beyond Australian sovereignty.

Yin Jianzhong, chief executive of Shanghai Zhongfu Group, which is developing the largest farming project yet in the Ord River scheme in Western Australia, said that after 18 months, the project was firmly on track — and praised the Australian staff there for their commitment and energy.

Even so, Australian cattle exporter Elders was cautiously optimistic, arguing that there was a long way to go before it could see any benefit from the free trade agreement.

The FTA should mean higher sales of feeder and slaughter cattle to China, but clarity was needed on the protocols governing live cattle shipments, capacity and sourcing, Elders chief Mark Allison said.

“The outlook is more positive — I don’t think there is any doubt of that.” Mr Allison said Elders’ approach to China’s potential market would be measured, methodical and based on capital return imperatives.

Industry expert Lin Rongquan said while Australian beef made up just 10 per cent of China’s total consumption, demand for the product was growing. “Australia is the biggest beef exporter to China and if the tariff for beef is sharply reduced then the price is going to fall and that will put pressure on Chinese producers,” he said.

“The demand for beef, especially high-quality beef, is increasing very quickly. The Chinese industry is attempting to improve the quality of its beef but it is moving very slowly. I think this is a good chance for domestic producers to improve their production and competition is going to help encourage their development in terms of price and quality.”

Additional reporting: Scott Murdoch

The investors and management of the business will worry ie oil and gas sector

I reckon stakeholders of Gorgon project are worrying that oil price remains low

OTOH I'm sure Aussie real estate prices will be higher than now in a century's time. But i doubt it will be comfort to those that will go through the coming correction and are highly leveraged. Nothing new under the sun as it happened to countries the size of Australia but newcomers will have to learn the cycle over again.

(17-11-2014, 08:48 PM)greengiraffe Wrote: If u referring to that posting...

Lagi no worries, low prices just leave it in the ground for future generations...

Low prices, no $ to hunt for more and simply allow demand to keep up with supplies, then price will be adjusted over time...

economics buddy - a fine balance...

No need to panick
GG

(17-11-2014, 08:38 PM)specuvestor Wrote: ^^^ ???

(17-11-2014, 02:48 PM)greengiraffe Wrote: O&G sector as a whole will face a long overdue perfect storm.

The replacement cycle has gone on for too long and with the downturn of oil & gas prices, it could always result in over-supply given that forecasts by experts and existing players may be on the optimistic side after so many good years.

What goes up must come down and vice versa... noone can defy the laws of mother nature.

(18-11-2014, 08:47 AM)specuvestor Wrote: The investors and management of the business will worry ie oil and gas sector

I reckon stakeholders of Gorgon project are worrying that oil price remains low

OTOH I'm sure Aussie real estate prices will be higher than now in a century's time. But i doubt it will be comfort to those that will go through the coming correction and are highly leveraged. Nothing new under the sun as it happened to countries the size of Australia but newcomers will have to learn the cycle over again.

(17-11-2014, 08:48 PM)greengiraffe Wrote: If u referring to that posting...

Lagi no worries, low prices just leave it in the ground for future generations...

Low prices, no $ to hunt for more and simply allow demand to keep up with supplies, then price will be adjusted over time...

economics buddy - a fine balance...

No need to panick
GG

(17-11-2014, 08:38 PM)specuvestor Wrote: ^^^ ???

(17-11-2014, 02:48 PM)greengiraffe Wrote: O&G sector as a whole will face a long overdue perfect storm.

The replacement cycle has gone on for too long and with the downturn of oil & gas prices, it could always result in over-supply given that forecasts by experts and existing players may be on the optimistic side after so many good years.

What goes up must come down and vice versa... noone can defy the laws of mother nature.

Good discussion so far and very valid points.
Australia's past economic mover - mining would come under heavy scrutiny during this correction for any heavily leveraged companies, likewise for their O&G industry
The FTA from China to Australia is going to bring a lot of good to both countries economies. It could a life buoy for Australia's future.