Monthly Archives: September 2012

Alan Jones

It is wrong to say that Alan Jones has very little impact on the electorate and election outcomes because his radio program appeals to rusted on Liberal voters and he is merely reinforcing the views of his audience.

While not as important as appealing to the swinging voters, Jones’ ability make sure his audience stays with the Liberal Party is very valuable to it.

It is not impossible to imagine a regular Jones listener and one normally glued to Jones’ views seeing some national and even self interest in the current policy climate and perhaps, in a moment of weakness, switching their vote from the Liberal Party.

Who knows, but maybe 1% or 2% or 3% of his audience who when looking at the pension increases in place, considering the education of their children and grandchildren, hearing the news of strong economy with rising employment, might vote Labor.  So too with the disability insurance scheme, with the national interest in retaining the triple-A credit rating, returning the Budget to surplus or the new dental scheme which will fix the teeth of thousands of people – these are good bits of news that could sway a few votes.

Jones’ ability to dismiss these policy issues, or never even refer to them, and make sure that none of his audience considers the value of the policy agenda matters in terms of votes and potentially the election outcome.

His influence cannot and should not be underestimated on the grounds that he only preaches to the converted.

If even 2% of his audience of more than 200,000 people in Sydney alone don’t change their vote away from the Liberal Party because they listen to Jones prejudiced and ill-founded views (that 2% is merely for illustration), that’s 4,000 precious votes retained for the Liberal Party. His radio program is of course syndicated throughout Australia so his reach and influence is every greater than that.

Don’t be fooled into thinking Jones has only limited influence on the electorate. You just have to look at the last election to see how important a couple of thousand votes can be.

Three months of the carbon tax and guess what?

Tomorrow, the carbon tax will have been in place for three months and, guess what? Things are pretty good. Here are a few facts and observations.

• The ASX200 has risen 7.1% over that time, adding around $80 billion to the market capitalisation of the index.

• House prices have risen by 2.0%, adding a further $80 billion to the value of private sector houses.

• Australia has retained its triple-A credit rating from all three rating agencies.

• The unemployment rate is 5.1% down from 5.3% in June.

• Foreign investment flows into Australia have been so strong, that the Australian dollar is up 1.9%.

• 10 year government bonds yields are 5 basis points lower over the three months which again reflects investor confidence in Australia and an ongoing low inflation environment.

• The Reserve Bank of Australia held interest rates steady at near record lows of 3.5% in July, August and September, although the market is pricing in more interest rate cuts in the months ahead.

• There has been a smattering of monthly economic data, most of it consistent with on-going steady economic growth in the September quarter.

• Retail sales have eased off after a spike in May and June.

• Consumer sentiment has risen 2.7% in the three months since June.

• The TD-MI inflation gauges has risen by 0.8% in the last two months, a rate consistent with the overall 0.7% impact on prices from the carbon tax.

• According to the NAB survey, both business conditions and business confidence have improved marginally.

• There is some negative news – the ANZ job ads series has trended lower in the last few months, and housing credit growth has slowed to a record low as consumers it appears, continue to pay off debt at a rapid pace.

Overall, it looks like the economy and financial markets have continued to roll along at a nice healthy pace even with carbon now having a price.

The real reasons behind Labor’s poll recovery

There has been a lot of information ignored when it comes to assessing the recent poll improvement for the Prime Minister Julia Gillard and the Labor Party.

Money, wealth and jobs are important factors for any government and here are a few items along those lines that might be working towards lifting the rating of the Government.

• Interest rates are lower than average. Mortgage interest rates are around 100bps lower over the past year and have fallen by around 60bps since May.

• Unemployment remains low having been a few ticks around 5.25% for the past year.

• After 18 months of weakness, house prices have risen more than 2% from the May lows. Don’t under-estimate the link between housing and the people’s perception of wealth and well-being and their assessment of the government.

• Share prices are rising to be up 10% from the June lows. That superannuation portfolio is looking a little better.

• The low inflation rate is helping to boost real wages and living standards. It is good to buy such cheap clothes, electronic goods, petrol and the like.

• The government’s announcements on the disability insurance scheme, education funding and health care are all strongly positive for the government, particularly when the Opposition seems to be reluctant to support them.

Of course, there are other factors at play when it comes to voting intentions, but these seem important issues that don’t always get a lot of attention.

Julia Gillard moves to 17

Today is Julia Gillard’s 807^th day as Prime Minister. This marks Ms Gillard moving to number 17 in terms of Australia’s longest serving Prime Minister, overtaking Labor’s Great Depression Prime Minister James Scullin. Since Federation, Australia has has 27 Prime Ministers.

In addition to Scullin, Ms Gillard has been Prime Minister longer than Holt, McMahon, Cook, Reid, Watson, Fadden, McEwen, Page and Forde.

Immediately ahead of Ms Gillard are Kevin Rudd, Edmund Barton, Gough Whitlam and John Gorton all of whom will be over taken (taking Ms Gillard to number 13), if as seems almost certain the Federal election is held after 24 August 2013.

To move into the Top 12, Ms Gillard needs to win the next election and if she does, she has a trifecta of Labor heros immediately ahead of her – Curtin, Keating and Chifley.

The do nothing RBA

Since the start of 1990, there have been 250 meetings of the RBA Board.

On 186 occasions, including today, they have left the cash rate unchanged.  That’s 74% of all meetings or 3 out of every 4 they leave rates steady.

And given that interest rate cycles are like cockroaches, there is always more than one, after a couple of quick moves (May/June 2012) maybe it was always obvious the RBA would not move.

The default forecast should always be that, for the next meeting, the RBA will be on hold. You will be right 74% of the time.  And that will give you bragging rights like the clowns today who are crowing at the all too obvious conclusion that the RBA will be on hold.

But that’s like a weather forecaster saying there is no cyclone tomorrow.  They will normally be right, but bloody useless when the cyclone comes.

Inflation ticks up after a few ticks down… yawn!

The TD-MI monthly inflation gauge rose a strong 0.6% in August following a 0.2% rise in July and a 0.2% fall in June, bringing the annual inflation rate, on this measure, to 2.2%.

The rise was dominated by a rise in prices for fruit and vegetables, petrol and tobacco and alcohol, none of which are driven by domestic demand.

With the bulk of the data now in for the September quarter, it now looks like the official consumer price index (not released until the end of October) will show a headline rise of around 1.1%, a result driven by the sharp lift in electricity and utility prices as the carbon price and kicked in.  A quick look at the data suggests that about 0.4 percentage points of the 1.1% expected rise will be carbon price related.

While a 0.6% rise for August and 1.1% for the September quarter is certainly high, the monthly data are inevitably volatile and there’s needs to be a few more monthly rises averaging 0.3% or more before there is any need to be concerned.

Interestingly, the average rise in the Gauge in the last 3 months is 0.2% – even with the August result.  And that with the carbon price starting two months ago.