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GUEST OBSERVATION
The federal budget balance is expected to deteriorate.
The reasons are numerous but, in a lengthy statement, the government sums it up in terms of two key factors. These are: the softer economic outlook; and unresolved issues inherited from the former government.
The economy is going through a transition. A decline in resources investment will be offset by a recovery in the non-resources sector. It seems the decline in resources investment may be sharper than previously forecast while the recovery in the non-resources sector may be more gradual.
Thus, with real gross domestic product growing at a slower rate, hence “a softer economic outlook”, revenue from taxation will also be less. The result is a higher budget deficit.
The previous Labor government can apparently be blamed for many “legacy” items, but one is rather curious. Our central bank, the Reserve Bank of Australia, has to receive A$8.8 billion to compensate it for losses incurred to its foreign currency reserves during the period when the Australian dollar appreciated.
The choices faced by the government
Given the deficit prospect, the government faces three choices:
<ol>
<li>Run a bigger deficit,</li>
<li>Raise taxes, or </li>
<li>Cut government spending.</li>
</ol>
The government has already embraced choice three – cut spending. With regard to choice two, it abolished the carbon tax and the minerals resource rent tax, and thus moved in the wrong direction.
Perhaps the government will cut public spending further in areas it finds attractive. After cutting funding to the CSIRO, ABC and SBS, the staff of the federal public service, and funds available to the states for health, education and transport, not to speak of the universities, there are surely more possibilities.
Incidentally, over 20 non-statutory bodies have been abolished or rationalised. The underlying (or even explicit) philosophy is to reduce the size and responsibilities of government. This is in tune with United States conservative attitudes.
What the government should consider is raising taxes rather than further spending cuts. This is a very serious proposal. Yet, compared with the US approach, it may be more in tune with traditional Australian attitudes, which expect a great deal from governments.
Why the federal government should raise taxes
To understand the argument behind the need to raise taxes, it is important to understand what can be described as Howard’s Gift.
Under the Howard government, beginning around 2003, there was a boom in the form of rising export prices of iron ore and coal. As a result, revenue from corporation tax increased sharply.
This led the Howard government to cut personal income taxes on no less than five occasions. Also, superannuation concessions were extended. The details can be found in <a href="https://www.lowyinstitute.org/publications/beyond-the-boom" target="_blank">John Edwards’ Beyond the Boom</a>.
This was John Howard’s gift to the taxpaying middle and upper classes. It was clearly a response – perhaps understandable – to the export boom.
The trouble was it had the effect of increasing budget deficits in later years when tax revenues declined. In particular, budget deficits in the Labor (Gillard) years were increased by Howard’s Gift. Even now it has an adverse effect on the government’s budget balance.
However, as the mineral export boom in the Howard years turned out to be temporary, the income tax cuts that were motivated by the boom should also be temporary. In other words, they should now be reversed.
Personal income tax rates should be increased to where they were before the boom. Usually opposition parties oppose tax increases. Prime Minister Tony Abbott ran a very effective campaign against the carbon tax when in opposition.
So this proposed tax increase needs to have bipartisan support. If Labor gets into government later, they will be glad to have a decent revenue base for their budgets.
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Reform required for our tax system
At the same time some other improvements should be made to the income tax system. These ideas all come from the famous <a href="https://taxreview.treasury.gov.au/content/Content.aspx?doc=html/home.htm">Henry Report</a> on the Australian tax system.
The aim would be to simplify the system and, above all, to remove special concessions and deductions that principally benefit the better-off. These are the favourable concessions that affect the superannuation earnings of people on high incomes.
All remuneration should be measured as wages. Capital gains tax rate concessions and various concessions available to primary producers should also be removed.
In addition to increasing income tax rates to their earlier levels, more revenue needs to be obtained from the GST. This tax has to rise if sufficients funds are to be generated for the states’ vital functions.
There is no doubt the GST is a relatively efficient tax, but it would be more efficient and easier to collect if goods and services of all kinds faced the same GST rate. Exemptions should be avoided and, probably, the rate increased closer to comparable international rates.
However, the real problem with broadening the GST or raising the rate has to do with equity. This tax is a bigger burden for persons with low incomes than for the well-off. But equity within society is more effectively achieved with a progressive income tax and social security system than through exemptions from the GST. This means that some of the GST revenue gain should be returned to households in the form of increased social security payments and a more progressive personal income tax schedule.
It is clear that Australia’s entire taxation system needs major improvements. This is clearly shown in the Henry Report, which is a valuable guide for reform.
No doubt these matters will be discussed in the government’s prospective white paper on taxation. The government needs to raise more revenue while making limited improvements to income tax and the GST. The basic aim, above all, should be to avoid further damaging government spending cuts.
And what about a recession?
The government believes there is a “softer economic outlook”, which means we might face a recession. It is impossible to predict at this time whether this will happen. However, if there is any possibility of a recession, then it is not the time to cut government spending nor to raise taxes.
However, the government does need to implement long-term structural reform of the tax system and expand its revenue base. In the face of a recession, the RBA will need to lower interest rates and stimulate the economy and also depreciate the Australian dollar. Such stimulus would, as a by-product, partly reduce the budget deficit.
Max Corden is professorial fellow in the department of economics at University of Melbourne.
This article was originally published on <a href="https://theconversation.com">The Conversation</a>.
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Australia needs higher taxes, not spending cuts

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GUEST OBSERVATION
Treasurer Joe Hockey <a href="https://www.theaustralian.com.au/national-affairs/politics-news/joe-hockey-pleads-with-consumers-not-to-let-santa-down/story-fn59nqld-1227141876441">called on shoppers</a> this week to “not let Santa down” and asked them to spend up big at the stores this Christmas. Unfortunately, the latest retail and consumer confidence data indicate his calls are falling on deaf ears.
Westpac’s <a href="https://www.westpac.com.au/about-westpac/media/reports/australian-economic-reports/">Consumer Confidence Index</a> shows pessimists outnumber optimists. This has been the case for the last nine months. The index was up 1.9% in November, but still well below its level a year ago.
The last time consumer sentiment was in negative territory prior to Christmas was 2011. Shoppers are more focused on saving and continuing to pay down debt while interest rates remain low.
The latest Westpac/Melbourne Institute survey also recorded <a href="https://www.theaustralian.com.au/business/economics/consumer-sentiment-still-in-doldrums/story-e6frg926-1227120284756">nine consecutive months</a> of net negative consumer sentiment.
While Hockey disputed the findings of this survey and instead referred to credit reporting firm Dun and Bradstreet as the “authoritative data on consumer confidence”, it would appear he wasn’t comparing apples with apples. The Westpac-Melbourne Institute Consumer Sentiment Survey reports consumer confidence and Dun and Bradstreet surveys <a href="https://dnb.com.au/Header/News/Business_Expectations_Survey_Sentiment_outstrips_results/indexdl_11088.aspx">business sentiment</a>. While the two surveys are inevitably entwined, each measures different points of view.
Yet even the Dun and Bradstreet survey released this week points to a potentially difficult time for Australian businesses this Christmas. The report highlights businesses are failing to meet their own projected earnings due to slower economic growth. The number of businesses reporting an increase in sales fell from 43% to 38% in the third quarter. The number of businesses reporting reduced sales was also 11% higher than expected.
Why is spending and consumer confidence important?
Consumer confidence indicates the optimism shoppers feel about the overall state of the economy and importantly their personal finances. If consumers are confident, they are more likely to spend on household items, buy a new car, even upgrade to a new home. In contrast, if confidence is lower, shoppers will save more, pay down debt and spend less.
In principle, Hockey’s request to spend up big this Christmas makes sense. Manufacturers, banks and governments use consumer confidence indices for planning purposes.
Manufacturers and retailers who anticipate shoppers will spend more will increase their inventories, put on more staff and invest in new projects. Banks will prepare for increased lending activities and credit card use. Builders will plan for a rise in home construction and put on apprentices. Hockey is also hoping for improved tax revenues based on this increased spending.
All of the pleas to spend more assume shoppers will spend here and not via online overseas retailers. If they choose the latter option there will be no net benefit to the Australian economy. The <a href="https://business.nab.com.au/online-retail-sales-index-in-depth-report-october-2014-8955/">NAB Online Retail Sales Index</a> released this week shows online spending grew by 12% over the past year. However, out of the $16 billion Australian shoppers spent online during this period, over three-quarters of purchases were actually from Australian retailers.
Are Australians likely to take Hockey’s advice and spend?
The Westpac-Melbourne Institute Consumer Sentiment Survey asks shoppers to indicate their projected Christmas spending each November. Alarmingly, <a href="https://www.smh.com.au/business/the-economy/consumer-pessimism-heralds-disturbing-christmas-sales-westpac-survey-shows-20141112-11ktug">38% of shoppers</a> say they plan to spend less on gifts this Christmas.
This should have alarm bells ringing in retail corporate head offices everywhere. The results also indicate that 50% of shoppers will spend about the same as last year, and only 12% plan to spend more. So where might they be shopping this Christmas?
Retail winners and losers this Christmas
According to the <a href="https://www.abs.gov.au/ausstats/abs@.nsf/Latestproducts/8501.0Main%20Features3Sep%202014?opendocument&amp;tabname=Summary&amp;prodno=8501.0&amp;issue=Sep%202014&amp;num=&amp;view=">Australian Bureau of Statistics</a>, there will be a split retail market of winners and losers this Christmas.
Australians are buying more alcohol and are eating out more. So cafes, restaurants, fast-food operators and liquor stores will again be big winners this festive season.
Supermarkets remain reasonably strong <a href="https://www.news.com.au/national/nielsen-research-shows-supermarket-prices-are-down-but-our-grocery-bills-are-up/story-fncynjr2-1226810733558">despite strong price discounting and a deflationary market</a>. Price discounting on key lines this festive period is likely to continue as the supermarkets battle for market share. <a href="https://www.news.com.au/finance/business/coles-flybuys-program-lures-online-shopping-giants-including-ebay-and-apple/story-fnkgdftz-1227138750739">Loyalty programs</a> will also be changed and relaunched to capture more shopping data this season.
Discretionary spending remains tight and clothing stores are unlikely to see an increase in sales. Newsagencies and book stores are feeling the heat from online channels and downloads. There may be an eReader under the Christmas tree this year but probably not a book or magazine subscription. United Kingdom retailer WH Smith may, however, breathe some life into the sector as the company <a href="https://www.opi.net/news/wh-smith-to-acquire-supanews">increases its local presence</a>.
Australians are also spending more on hardware and gardening. Bunnings and Masters will do well, as will consumer electronic goods retailers like Harvey Norman and JB Hi-Fi. However, the Myer and David Jones department stores will struggle as a majority of their sales are tied to footwear and clothing. Shoppers should expect to see the big post-Christmas sales event pulled forward and more discounting throughout December.
While retailers around Australian will applaud Hockey’s pleas for shoppers to spend up big this Christmas, most consumers still appear cautious about handing over their credit cards this season.
<img src="https://counter.theconversation.edu.au/content/34961/count.gif" alt="The Conversation" width="1" height="1">Gary Mortimer is senior lecturer at QUT Business School at Queensland University of Technology.
This article was originally published on <a href="https://theconversation.com" target="_blank">The Conversation</a>.
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Sorry Joe, consumer spending will disappoint Santa this Christmas

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GUEST OBSERVATION
“At present, we are stealing the future, selling it in the present, and calling it GDP.” — Paul Hawken
Imagine if a corporation used Gross Domestic Product (GDP) accounting to do its books: it would be adding all its income and expenses together to get a final number. Nobody would think that’s a very good indication of how well that business was doing. Herman Daly, a former senior economist at the World Bank, said that, “the current national accounting system treats the earth as a business in liquidation.” He also noted that we are now in a period of “uneconomic growth”; where GDP is growing but societal welfare is not.
The good news is that there are several alternatives to GDP being actively developed, discussed, and used. One of these is the <a href="https://genuineprogress.net/genuine-progress-indicator/" target="_blank">Genuine Progress Indicator</a> (GPI).
GPI starts with personal consumption expenditures — a major component of GDP — and adjusts it using 25 components. These adjustments include incorporating the negative effects of income inequality on welfare; adding positive elements not considered in GDP, such as the benefits of household work, volunteer work, and higher education; and subtracting environmental costs and social costs like the costs of crime, unemployment, and pollution. In doing so, it paints a more accurate picture of how far we’ve come over the last three decades.
Regional level
In the United States, the states of Maryland and Vermont officially report their GPI annually. In 2010, Maryland was the first state to officially adopt the GPI as an alternative to GDP. The state’s goal was “to measure whether or not economic progress results in sustainable prosperity”.
Since its beginning, Maryland governor Martin O'Malley has <a href="https://www.dnr.maryland.gov/mdgpi/" target="_blank">actively implemented policies to encourage the increase of GPI</a>. The media has also taken up the challenge of shedding light on the true picture of societal welfare, with media coverage now regularly reporting on changes in GPI.
In 2012, the state of Vermont passed legislation mandating the calculation of GPI. Since then, GPI has been estimated for other states including Colorado, Hawaii, Massachusetts, Michigan, Ohio, Oregon, and Utah, while 10 others have expressed interest in developing their own studies.
This movement towards GPI is part of an international trend, and GPI has been calculated in around 20 countries worldwide. The international research community has begun to develop what is being called “GPI 2.0”. GPI 2.0 seeks to improve standardization and robustness of the current GPI.
National level
GPI is not the only new measure of societal welfare being adopted around the world. The Kingdom of Bhutan began using <a href="https://www.grossnationalhappiness.com/" target="_blank">Gross National Happiness</a> (GNH) as an alternative to GDP in 1972 after fourth King, Jigme Singye Wangchuck, stated that “Gross National Happiness is more important than Gross National Product.”
GNH is estimated using a survey that takes approximately seven hours per person. In 2013, it was taken by more than 10% of the Bhutanese population. The Bhutanese government also established the GNH Commission to assess all new policies for their impact on the “happiness” or well-being of the population.
The Australian Bureau of Statistics also began moving in this direction with the <a href="https://www.propertyobserver.com.au/https://www.abs.gov.au/ausstats/abs@.nsf/mf/1370.0" target="_blank">Measures of Australia’s Progress</a> (MAP) initiative. MAP was established to address the question, “Is life in Australia getting better?” MAP provides Australians with 26 indicators related to society, economy, environment, and governance. Unlike the GPI, it does not aggregate the indicators into one overall measure, but allows viewers to make their own assessment regarding the well-being of the Australian population based on the individual indicators. However, funding was discontinued for MAP in early 2014.
<h2>Global effort</h2>
Currently, no global consensus exists regarding alternatives to GDP. However, there is growing agreement that the continued use of GDP as a proxy for overall well-being is not appropriate. A range of national indicators exist and are being used around the world
<a href="https://62e528761d0685343e1c-f3d1b99a743ffa4142d9d7f1978d9686.ssl.cf2.rackcdn.com/files/65809/area14mp/image-20141128-9764-1kqiz3c.png"><img src="https://62e528761d0685343e1c-f3d1b99a743ffa4142d9d7f1978d9686.ssl.cf2.rackcdn.com/files/65809/width668/image-20141128-9764-1kqiz3c.png" alt=""></a>
The <a href="https://www.un.org/millenniumgoals/" target="_blank">Millennium Development Goals</a>, which are ending in 2015, look primarily at health, poverty, and education. To replace them, a UN-led initiative has developed a set of 17 <a href="https://sustainabledevelopment.un.org/focussdgs" target="_blank">Sustainable Development Goals (SDGs)</a>. These new goals have a broader agenda that includes the environment, inequality, and sustainable and equitable economic growth, amongst other aspects.
Although metrics are being developed for each of the 17 goals and their sub-goals, as of yet, no overall indicator has been developed to assess the overall success of the SDGs.
Robert F. Kennedy once said that a country’s GDP measures “everything except that which makes life worthwhile”. The only way to dethrone GDP from its current role, is to start measuring all those things that do “make life worthwhile”.
Ida Kubiszewski is senior lecturer at Crawford School of Public Policy at Australian National University.
This article was originally published on <a href="https://theconversation.com" target="_blank">The Conversation</a>.
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Beyond GDP: are there better ways to measure well-being?

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<h3>GUEST OBSERVATION</h3>
Labor’s state election victory in Victoria has fatally undermined Melbourne’s most controversial tunnel, the now-doomed <a href="https://www.linkingmelbourne.vic.gov.au/east-west-link" target="_blank">East-West Link</a>, with new Premier Daniel Andrews pledging to rip up the contracts for the project.
His decision is a victory for anyone who values 21st-century urban thinking over the outdated car-first mentality.
It’s also a financial relief, because – as the project’s back story shows – the East-West Link was always more about politics than economics.
<h3>Courting cars</h3>
For many years, the only groups calling for a tunnel to link Melbourne’s Eastern and Citylink freeways were the <a href="https://www.racv.com.au/wps/wcm/connect/racv/Internet/Primary/home" target="_blank">RAC of Victoria</a> and <a href="https://www.vicroads.vic.gov.au/" target="_blank">VicRoads</a>. The problem was that the tunnel never made economic sense when it was just a freight project, yet most attention in the transport planning system was on public transport, where demand was growing rapidly. The East-West tunnel needed a large dose of cars to justify it.
Enter Tony Abbott, who <a href="https://www.smh.com.au/federal-politics/federal-election-2013/tollfree-eastwest-link-preferable-tony-abbott-20130902-2t0ff" target="_blank">pledged A$1.5 billion</a> before last year’s <a href="https://theconversation.com/au/topics/federal-election-2013">federal election</a> for the East-West plan, arguing that Australians love their cars and public transport was not in his federal knitting.
The East-West project grew in concept and soon became a massive capital cost, with the price tag for the whole plan, including the western extension to Melbourne’s port, threatening to <a href="https://www.theage.com.au/victoria/state-budget-2014-major-road-and-rail-projects-worth-24b-to-transform-melbourne-20140506-zr5mj">hit A$10 billion</a> and swamp the transport budget.
Meanwhile, in the waning days of the first <a href="https://www.infrastructureaustralia.gov.au" target="_blank">Infrastructure Australia</a> (on which I was privileged to serve for four years), it became obvious that the East-West tunnel and Sydney’s <a href="https://www.westconnex.com.au" target="_blank">WestConnex</a> would never be subject to the scrutiny of our process. They were to be seen as purely political projects and the case for their going ahead would depend on their popularity, not on value for money.
<h3>Why tunnelling Melbourne was a bad idea</h3>
The old shibboleth that building roads is vital for improving the economy is no longer true. Economic growth has divorced itself from car dependence (my new book with <a href="https://theconversation.com/profiles/jeff-kenworthy-15708" target="_blank">Jeff Kenworthy</a>, <a href="https://www.bibliovault.org/BV.book.epl?ISBN=9781610914635" target="_blank">The End of Automobile Dependence</a>, traces the fall of the empire of car-based planning).
Growth in the Victorian and Australian economies now depends on the growth in “knowledge economy” jobs. These jobs at the creative, productive, innovative edge of our economy are now firmly enmeshed in the dense centres of our cities.
As the US urban economists Ed Glaeser and Richard Florida have <a href="https://blog.ted.com/2012/02/29/cities-ed-glaeser-at-ted2012" target="_blank">shown</a>, the knowledge economy depends on close interactions between creative people and those who can deliver projects. This work requires intensive spaces in cities, which in turn need intensive modes of transport to enable them. This means that rail, cycling and walking are critical to the knowledge economy. Although heavily into digital communications, knowledge economy workers need face-to-face contact and are now shifting back into central and inner city locations to optimise this process.
In contrast, cars and trucks are dispersive modes of transport, and are needed for the consumption economy. These jobs are important too, but are essentially based in the dispersed spaces of the suburbs. These jobs are not the ones we are seeking as much as those in the knowledge economy, because they do not drive productivity growth as effectively.
It is no wonder that around the world, we are seeing <a href="https://www.scirp.org/journal/PaperInformation.aspx?PaperID=38472#.VH1FI2SUdgA" target="_parent">declining car use per capita and growing public transport use</a>, as well as a widespread return to formerly neglected inner cities.
The six most walkable US cities have <a href="https://urbanful.org/2014/06/20/walkable-cities/" target="_blank">38% higher gross domestic product than the national average</a>. Cities now compete on new measures such as <a href="https://www.nytimes.com/2012/05/27/opinion/sunday/now-coveted-a-walkable-convenient-place?_r=0" target="_blank">walkability</a> and <a href="https://www.livablecities.org/blog/value-rankings-and-meaning-livability" target="_blank">livability</a>. Governments everywhere are aiming to build quality rail projects and make city centres more human in scale. Even <a href="https://www.canberratimes.com.au/act-news/canberras-780m-light-rail-line-gets-final-go-ahead-business-case-to-be-released-20140915-10gzr3">Canberra</a> and <a href="https://www.parracity.nsw.gov.au/work/business_in_parramatta/strategy/solving_transport_problems/light_rail_for_western_sydney">Paramatta</a> are joining in, as they work out how to build light rail.
Melbourne has one of the most attractive city centres in the world for knowledge economy jobs. It needs to ensure that this is not lost by tipping more cars into its walkable centre. Instead it needs to encourage commuting by rail, bike and on foot.
<h3>Change in the air</h3>
Victoria’s people have now spoken. The East-West Link will be scrapped, and should be replaced by more sensible transport planning. Melbourne does need to improve east-west access for people and freight, but it should not be beyond us to find some solutions that do not break the bank.
Clearly there are plans for upgrading rail access through several proposed rail projects, including the <a href="https://www.propertyobserver.com.au/https://www.abc.net.au/news/2014-11-19/melbourne-rail-a-better-deal-than-east-west-toll-planners-say/5902268" target="_blank">original Melbourne Metro plan</a>, and the <a href="https://ptv.vic.gov.au/assets/PTV/PTV%20docs/Melbourne-Airport/Melbourne-Airport-Rail-Link-Study-Overview.pdf" target="_parent">Airport Rail Link</a>. <a href="https://ptv.vic.gov.au/projects/rail-projects/doncaster-rail-study" target="_blank">Doncaster Rail</a> should remain on the table, hopefully not for another 100 years, as it is a simple and direct way to move passengers east-west.
The freight system seems to be amenable to much simpler concepts than the East-West Tunnel, like those <a href="https://habitattrustmelbourne.org.au" target="_blank">presented by the Habitat Trust</a>, using several inland rail interchange facilities.
The <a href="https://www.propertyobserver.com.au/https://www.thefifthestate.com.au/spinifex/bays-precinct-five-principles-emerge-from-summit/69895">same principles</a> should lead New South Wales to modify the Connex West project, especially where it spills traffic into Sydney’s central and inner areas. Such traffic “solutions” actually harm the economy of inner urban areas, burying investment opportunities under bitumen for parking and road-widening, and congesting areas that already have too many cars.
The public can sense that we have to update the way we travel and how we build cities so they are not car-dependent. The road-building brigade needs to take a deep breath and see that their plans are old-fashioned. Perhaps the legacy of the East-West Tunnel will be that such projects will never again be foisted on the Australian public.
<img src="https://counter.theconversation.edu.au/content/34914/count.gif" alt="The Conversation" width="1" height="1">Peter Newman is professor of sustainability at Curtin University.
This article was originally published on <a href="https://theconversation.com" target="_blank">The Conversation</a>.
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The East-West Link is dead – a victory for 21st-century thinking

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Growth in the global economy is continuing at a moderate pace.
China's growth has generally been in line with policymakers' objectives. While weakening property markets present a challenge in the near term, economic policies have been responding in a way that should support growth. The US economy continues to strengthen, but the euro area and Japan have both seen weakness recently. Some key commodity prices have declined significantly in recent months, reflecting somewhat softer demand and, more importantly, increased supply.
Global financial conditions remain very accommodative and long-term interest rates and risk spreads remain very low. Differences in monetary policies across the large jurisdictions are affecting markets, particularly exchange rates.
In Australia, most data are consistent with moderate growth in the economy. Resources sector investment spending is starting to decline significantly, while some other areas of private demand are seeing expansion, at varying rates. Public spending is scheduled to be subdued. Overall, the Bank still expects growth to be a little below trend for the next several quarters.
Inflation is running between 2 and 3 per cent, as expected, with recent data confirming subdued rises in labour costs. Although some forward indicators of employment have been firming this year, the unemployment rate has edged higher. The labour market has a degree of spare capacity and it will probably be some time yet before unemployment declines consistently. Hence, growth in wages is expected to remain relatively modest over the period ahead, which should keep inflation consistent with the target even with lower levels of the exchange rate.
Monetary policy remains accommodative. Interest rates are very low and have continued to edge lower over the past year or so as competition to lend has increased. Investors continue to look for higher returns in response to low rates on safe instruments. Credit growth is moderate overall, but with a further pick-up in recent months in lending to investors in housing assets. Dwelling prices have continued to rise.
The exchange rate has traded at lower levels recently, in large part reflecting the strengthening US dollar. But the Australian dollar remains above most estimates of its fundamental value, particularly given the significant declines in key commodity prices in recent months. A lower exchange rate is likely to be needed to achieve balanced growth in the economy.
Looking ahead, continued accommodative monetary policy should provide support to demand and help growth to strengthen over time. Inflation is expected to be consistent with the 2–3 per cent target over the next two years.
In the Board's judgement, monetary policy is appropriately configured to foster sustainable growth in demand and inflation outcomes consistent with the target. On present indications, the most prudent course is likely to be a period of stability in interest rates.
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Further pick up in investment lending noted: RBA Governor Glenn Stevens

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GUEST OBSERVATION
A home will be sold to the highest bidder, simple as that. But there are ways you can tactically prepare to be at the end with the last bid. 
As a prospective buyer, you will see a lot of places before you find 'The One' but even after you find what may be the perfect place for you, you need to put together a strategy to ensure you are successful on auction day, or at least give yourself the best chance of succeeding.
An auction can be a very nerve racking thing, and not having a strategy can result in you just missing out on your dream home, or even overpaying drastically for a home, that whilst you wanted it, has been sold to you for a price that is way out of your budget. 
To avoid that happening you can put in some very simple strategies to make sure you stick to budget and follow a plan when the emotion kicks in. Here's how. 
<ol>
<li>
Establish what is most essential It's really easy on auction day to get caught up in some things about a property that aren't specifically catered to what you want. Before you go to any auction, have some certainties about how many bedrooms you want, bathrooms, parking spots, etc. Once you have these fundamentals sorted that should match to the figure you want to spend. If the property has some further benefits but starts to go out of your price range, try and pull back. You didn't come to the home because of it's sauna, or jacuzzi, and trying to justify an extra $50,000 or $100,000 for features that you didn't say were essential can cause you to regret your purchase. Make sure you only focus on the essentials and don't spend more for things you don't require.  
</li>
<li>
Practice, Research, Practise, Research When you have decided on a property that may be for you, you will likely have a few weeks before the auction. This can give you time to go and watch similar homes up for sale around the area. Whilst they may not be exactly the same, try and go along and see how your bidding strategy would go on the day in that circumstance. Also notice how other people bid, and both take a note on how you would respond if they acted like that on the day of the auction you want to buy, also try and envisage how your bidding strategy would go on the day. Because you aren't emotionally attached, focus on dropping out when your budget has gone. This will help you on the day to know when to pull the pin if it has gone over budget. 
</li>
<li>
Engage two agents There are two agents you should have on side come auction day. The first is the selling agent, who should know your interest by engaging with them through the campaign. Explain your budget to them and why you are interested, once they understand why you are buying it and the needs you have, they will know how to keep you engaged on the day. Secondly, you should engage an agent that isn't involved in that selling process. Try and find a friend that works in the industry, explain your motivations for buying the home and what you want, also see how they suggest you act. You can also call a competing agent, explain that you are interested and ask them for an honest valuation. They will be likely to help you because they will want to engage active buyers, and if you don't buy that property, you may be interested in one of theirs. 
</li>
<li>
Dress to impress "Dressing to impress can create the impression that you have an endless budget and can intimidate others so they stop bidding earlier," says Frank Valentic, a buyer's agent and director of Advantage Property Consulting. Something as simple as appearance can knock people's confidence right out of the park. Turning up to the auction in a nice suit can make people wonder if you are bidding for yourself, or for someone else. This can play on their mind and sometimes make them relent because they don't feel they stand a chance. People will respect you purely based on your appearance, so it's something to keep in mind.  
</li>
<li>
Bid with supreme confidence Part of an auction is guesswork. How much money does the other person have and should I stop because I don't stand a chance. A lot of people will be keen to keep bidding if they feel you are on your last bid, or every bid is a tough decision to make because you are close to your max. They will want to break you over your budget. On the other hand, if you bid supremely confident up until your max, you may have them second guessing their chance to buy the home, as your pockets will seem much deeper than they really are. If you are bidding for a home valued at $700,000 - $850,000 and you're happy to spend $850,000 when the bidding is at $720,000 go for a bid that gets it to $750,000 - this is really only maybe one or two bids advanced from where the auction is currently at, and the agent will most likely take $10,000 rises, but by placing that bid, you show the competition you are serious and could psyche them out from bidding further. You need to approach this with confidence and determination you will win the home. 
</li>
</ol>
These tips will help you approach your day at auction. By putting this in to place, you give yourself the chance to succeed. And if you don't win the home on the day, don't be despondent.
Be proud of yourself that you stuck to your strategy and really persisted, and have confidence in the fact that the right thing will come up for you soon. 
ROCKY BARTOLOTTO is the national sales director for <a href="https://homely.com.au/" target="_blank" data-cke-saved-href="https://homely.com.au/">Homely.com.au</a> and a Sydney auctioneers, with over 4000 auctions performed through his business <a href="https://auctionservices.net.au/" target="_blank">Auction Services</a>.
TODD SCHULBERG handles all things marketing for <a href="https://homely.com.au/" target="_blank">Homely.com.au</a>.
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Five tactics that give you the best chance of winning on auction day

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GUEST OBSERVATION
How does one come to understand China? Many wish to do so, especially in light of China’s growing global influence.
For some, language is the key that opens the door. With Chinese language, one is able to enter a people and their culture, opening up communication, literature, philosophy, belief and much more. Engaging and studying in translation always presents a barrier to understanding, but language is not enough.
For others, the Chinese classics provide the way to understand the place. You may focus on the traditional <a href="https://www.princeton.edu/~achaney/tmve/wiki100k/docs/Chinese_classic_texts" target="_blank">“four books and five classics”</a> (四书五经), from before the unification under the Qin dynasty (221 BCE), or on the many texts gathered until the end of the last dynasty, the Qing, in 1912. Again, there is merit in this approach, especially in light of the way the classics are restudied and reinterpreted at every important turn in Chinese history – as is the case now.
For others, <a href="https://www.britannica.com/EBchecked/topic/132184/Confucius" target="_blank">Confucius</a> provides the way into China, if not each country deeply influenced by Confucianism. The “four books and five classics” are themselves from this tradition. Once again, such study is important, but does not provide the key to modern China.
Yet more possibilities are proposed, whether <a href="https://www.britannica.com/EBchecked/topic/582972/Daoism" target="_blank">Daoism</a>, or some mystical notion of the “East”, or kinship, or the metaphysics of <a href="https://www.britannica.com/EBchecked/topic/653297/yinyang" target="_blank">yin-yang</a> (阴-阳), which found its way into nearly every tradition or school of Chinese thought.
On a different note, some eschew language, culture, philosophy or belief and focus on economics. In this case, the <a href="https://en.wikipedia.org/wiki/Four_Asian_Tigers" target="_blank">“Asian Tigers”</a> – Hong Kong, Singapore, Taiwan and South Korea – provide the template for China. Here, export-focused economies, industrialisation and state intervention led to rapid growth, high incomes and now economic specialisation.
Or perhaps Japan provides the model, with its rise to economic pre-eminence under American patronage. This is perhaps the least persuasive option.
Socialism still makes China tick
The missing element in all this is Marxism. China remains a socialist country, with the Communist Party effectively operating a one-party state with <a href="https://www.reuters.com/article/2014/08/30/us-china-media-idUSKBN0GU05I20140830" target="_blank">Marxist values</a>.
Many continue to dismiss Marxism in China, whether in terms of a repressive and inadequate ideology or as empty words in which no one “believes” any longer. This is a great mistake and risks neglecting what is arguably one of the most important factors for understanding China.
Mao Zedong is the point at which one should begin, although it helps to understand Marx, Engels and Lenin, let alone the history of successful socialist revolutions from Russia onwards. Mao’s thought remains the focus of intense study and debate in China – so much so that President Xi Jinping frequently <a href="https://articles.economictimes.indiatimes.com/2013-06-30/news/40286860_1_president-xi-jinping-gdp-numbers-cpc" target="_blank">quotes Mao</a> in national and international contexts.
Xi has a PhD in Marxism and has directed even more resources to the study and <a href="https://marxistupdate.blogspot.com.au/2011/05/marxist-education-in-china" target="_blank">fostering of the Marxist tradition</a> and the work of Mao Zedong. Marxism is now a distinct discipline in China.
Mao’s legacy is not dead and buried
More controversially, Mao’s acts as a leader are also vital for understanding China. Most debate turns around the role of the <a href="https://www.history.com/topics/cultural-revolution" target="_blank">Cultural Revolution</a> (1966-1976), which he fostered over the last decade of his life. Was it an aberration, an outburst of revolutionary enthusiasm, or perhaps an effort to restore his sliding power?
The semi-official narrative is that the Cultural Revolution set China back in terms of economics, politics and society. The aberration was thus corrected after Mao’s death, when the path of reform was undertaken.
However, another and persuasive argument, made by <a href="https://www.amazon.com/The-Battle-Chinas-Past-Revolution/dp/074532780X" target="_blank">Mobo Gao</a>, is that it was precisely the Cultural Revolution that set China on its current path. Thoroughly shaking up vested interests in society, from top to bottom, it cleared the ground for China’s rapid rise to becoming the leading global power. This was the shake-up needed to unsettle centuries, if not millennia, of social assumptions and cultural norms.
Against the orthodoxy that the economy came to a standstill during the Cultural Revolution, it has become clear that the economy actually forged ahead as though released from its shackles.
Unfortunately, I have yet to find a “mainstream” foreign commentator who is even partly aware of the nature of Chinese Marxism. Obviously it entails careful study and a feel for the subject matter. It requires some sense of the meaning of <a href="https://www.propertyobserver.com.au/https://english.people.com.cn/90002/92169/92211/6275043" target="_blank">“socialism with Chinese characteristics”</a> in all its complexity and apparent paradoxes. And it needs to be understood that in China a “Marxist entrepreneur” is not a contradiction in terms.
Languages, the classics, Confucius: these and more are obviously important for understanding China. But to rely on these is to neglect the crucial factor of Marxism. Many may aspire to becoming a <a href="https://en.wikipedia.org/wiki/China_Hands" target="_blank">Zhongguotong</a> (中国通) – one who understands and senses at a much deeper level how China ticks.
Without Marxism, such an aspiration is mere pretence.
Roland Boer is associate professor, religion, Marxism and secularism, faculty of education and arts at <a href="https://www.newcastle.edu.au/" target="_blank">University of Newcastle</a>.
This article was originally published on <a href="https://theconversation.com" target="_blank">The Conversation</a>.
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To make sense of modern China, you simply can’t ignore Marxism

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GUEST OBSERVATION
When you look out of your window in the morning, how many trees do you see? Your answer might depend on <a href="https://202020vision.com.au/media/7145/where_are_all_the_trees.pdf" target="_blank">what suburb you live in</a>.
As you go further from the city centre, the amount of tree cover in a suburb decreases, while the amount of green space, such as lawns and parks, increases.
In Melbourne, for every 10 kilometres you travel from the city centre, the tree cover drops by more than 2%. That means Melbourne’s inner suburbs might have more than 15% cover, but an outer suburb could have less than 10%.
A 5% fall in urban tree cover can lead to a 1-2C rise in air temperature, leaving these communities <a href="https://sfrc.ufl.edu/urbanforestry/Resources/PDF%20downloads/mcpherson_1993.pdf" target="_blank">more exposed to extreme heat</a>. This really matters for community health and well-being, especially for the vulnerable among us – the elderly, young children and those with existing health issues.
There’s also mounting evidence that exposure to greenery and nature <a href="https://theconversation.com/hug-a-tree-the-evidence-shows-it-really-will-make-you-feel-better-21924" target="_blank">improves community mental health and well-being</a>.
So, what is driving this suburb tree cover inequality?
<h3>No single answer</h3>
This is not about a lack of green space, nature strips or roads to plant into. These trees are simply missing from our outer suburbs.
They are missing from backyards — partly because <a href="https://theconversation.com/what-has-happened-to-the-great-aussie-backyard-4506" target="_blank">newer houses in the outer suburbs take up more space</a> — and they are missing from the streets.
The recent property boom has also brought with it a gradual <a href="https://theconversation.com/what-has-happened-to-the-great-aussie-backyard-4506" target="_blank">“thinning out” of tree cover</a> in established suburbs, as residential plots are sub-divided.
But does it matter where these trees are planted in our cities? Well, yes it does if we want the benefits that tree cover provides including cooler temperatures.
It also matters for our weekly household budget, for the lucky among us that have an air-conditioner. This in turn, affects the <a href="https://www.sciencedirect.com/science/article/pii/S0360132313002060" target="_blank">electricity demand of the city</a> as a whole.
Disturbingly, but perhaps not unexpectedly, suburbs with the least tree cover are the most socially disadvantaged and have the lowest levels of tertiary education.
In Melbourne, suburbs with a higher proportion of tertiary educated residents have more trees shading paved roads and walkways. This could be driven by residents with a higher level of education lobbying their local council more for trees to be planted – but not likely.
The relationships between education, household income, property values, council rates and suburb tree cover are complex and don’t necessarily indicate causality. But tree canopy inequity does exist in our cities, and we need to first identify where this inequity intersects with social and economic disadvantage.
Once we know this, our tree planting efforts can be better targeted to increase the resilience of our most vulnerable communities.
<h3>Taking steps to grow tree cover</h3>
Cities that set targets to increase their tree cover might be swimming against the tide, unless the removal of trees from private and public space during development is regulated. This can be done, and has been done overseas in several cities such as in <a href="https://www.seattle.gov/dpd/cityplanning/completeprojectslist/greenfactor/whatwhy/" target="_blank">Seattle</a>, <a href="https://www.stadtentwicklung.berlin.de/umwelt/landschaftsplanung/bff/index_en.shtml" target="_blank">Berlin</a>, <a href="https://www1.toronto.ca/wps/portal/contentonly?vgnextoid=f85552cc66061410VgnVCM10000071d60f89RCRD" target="_blank">Toronto</a> and Singapore.
Despite the availability of more and more satellite data on tree cover, there have been no published studies of tree cover change over time in Australian cities.
Still, chasing a percentage increase in overall tree canopy cover within a city may not necessarily address the huge inequality in tree cover distribution. We need to identify which neighbourhoods within a city have the least tree canopy cover and target those as a first priority.
We also need to engage with residents of those neighbourhoods to achieve acceptance and ultimately ownership of any tree planting efforts. Assessments of tree cover and community engagement at a whole of city level won’t achieve this. We need to assess tree cover, and engage with communities, in a more targeted way.
Neighbourhoods with the fewest trees shading roads and pavements should also be targeted, because they will get the greatest cooling benefit from planting more trees.
There is huge variation in tree canopy cover within our cities. Tree cover in the suburbs of one city can range from <a href="https://202020vision.com.au/media/7145/where_are_all_the_trees.pdf" target="_blank">less than 10% cover to more than 50%</a>.
Cities across Australia are now setting ambitious targets to increase their urban tree canopy cover.
The <a href="https://www.melbourne.vic.gov.au/Sustainability/UrbanForest/Pages/About.aspx" target="_blank">City of Melbourne</a> aims to increase tree cover by 75% before 2040, the <a href="https://www.cityofsydney.nsw.gov.au/live/trees/urban-forest/tree-policies" target="_blank">City of Sydney</a> by 50% before 2030, and the <a href="https://www.brisbane.qld.gov.au/environment-waste/natural-environment/plants-trees-gardens/brisbanes-trees/brisbanes-urban-forest" target="_blank">City of Brisbane</a> is targeting tree cover for bike and foot paths.
The federal government is also aiming to <a href="https://www.environment.gov.au/land/20-million-trees" target="_blank">plant 20 Million Trees by 2020</a>. So, it’s clear that there is going to be a lot of tree planting in our cities over the coming years.
Addressing tree cover inequality in Australian cities is not only an issue for local governments. It’s an issue that should involve the local community itself, as well as state and national governments. As one of the world’s most urbanised nations, we need to ensure that everyone is resilient to the mental pressures of urban living and the hazards of heat waves.
Stephen Livesley is senior lecturer in urban biogeochemistry at <a href="https://www.unimelb.edu.au/" target="_blank">University of Melbourne</a>. <img src="https://counter.theconversation.edu.au/content/33299/count.gif" alt="The Conversation" width="1" height="1" style="line-height: 1.3em;">tephen receives funding from The Australian Research Council, Melbourne Water, City of Melbourne, City of Monash, City West Water and the Nursery and Garden Industry Australia.
 Melanie Davern is research fellow and director community indicators Victoria at <a href="https://www.unimelb.edu.au/" target="_blank">University of Melbourne</a>. Melanie receives funding from Victorian Health Promotion Foundation.
Lachie Alexander, Mohamed Nizam and Kate Denver-Stevenson, students of Stephen Livesley at The University of Melbourne, also contributed to this article.
This article was originally published on <a href="https://theconversation.com" target="_blank">The Conversation</a>.
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Fewer trees leave the outer suburbs out in the heat

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Around two thirds of Australians aren't in a truly competitive home loan, according to founder and director of <a href="https://www.ipac.com.au/" target="_blank">ipac</a>, Paul Clitheroe.
"Right now there are loans out there for a bout 4.55-4.6%. Most Australians are still  paying 5.2-5.3%," Clitheroe says.
"I just don't get it."
In this video he explains how you can save thousands of dollars by shopping around for your home loan.
{qtube vid:=xbnzMQ7pGXY}
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Video: Save by shopping around on your home loan

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GUEST OBSERVATION
The announcement yesterday by the Northern Territory government that it is selling the Territory Insurance Office’s insurance assets to Allianz Australia for A$236 million has many <a href="https://au.news.yahoo.com/a/25594850/northern-territory-government-confirms-sale-of-tio-for-424m-after-months-of-speculation-protests-and-petitions/" target="_blank">worried</a> their premiums will increase. Some of this concern is no doubt a result of significant premium increases in North Queensland following cyclones Larry and Yasi. But is all this concern justified?
Looking first at the increases in North Queensland, the exposure in that region is to highly intense cyclones and large catastrophic insurance losses have followed. North Queensland has a very long east-facing coastline all exposed to cyclone. This part of northern Australia is home to numerous cities and towns, which means the risk there is much larger for insurers. Cyclones Yasi and Larry each cost insurers in excess of A$1 billion in claims paid.
While the Territory’s economy is growing, it just does not have the same level of infrastructure, in resorts, large hotels, high rises, factories, warehouses and residential housing. As a result, the risk of such occurrences is considered significantly lower in the Northern Territory than in North Queensland.
Since Cyclone Tracey (coming up to its 40-year anniversary), building codes in Darwin and the Northern Territory in general have been improved and are the toughest in Australia. This has reduced the damage caused when cyclones do hit. For example, with a combination of lower intensity and buildings built to a higher code, 2011’s Cyclone Carlos caused relatively minor property damage in Darwin.
Over the past 10 years, the majority of Australian insurers have moved from community rating to risk rating due to improvements in technology. In the case of homes and other buildings this is through geospatial technology. It allows the overlay of cyclone, flood and other maps onto street maps and satellite images of addresses.
In motor insurance we will see more use of telematics to reward good driving behaviour. Poorer drivers will pay more for the additional risk they create.
<h3>Individual premiums</h3>
The same goes with home or business insurance. Premiums are highly individualised in terms of price because no two houses are the same when it comes to construction, value, location or risk. Premiums reflect the price of a home owner transferring the financial risk, from an insured peril, from themselves and their family to the insurer.
The reality is that while the Northern Territory set up and owned TIO, it is run on a completely commercial basis. Its pricing is not set by government and it is not subsidised in any way. From my research, in areas such as cyclone cover, TIO has not been the cheapest; its prices have sat at the middle of the market.
With flood insurance, the same applies. Regardless of who owns TIO, pricing for flood is moving from community rating to the risk address.
If you do not live in a flood-prone area, this is good news for you. If you are in a flood zone, then your premiums are likely to increase due to the flood risk of your property.
Flood is a concern right across Australia and governments at all levels are, or should be, looking at this. One of the positives coming from the sale of TIO is that the Territory government has pledged A$50 million in flood mitigation for Rapid Creek, Katherine and the Darwin Rural Area. Whether this is enough is yet to be seen. From my observations, I would like to have seen funding go to Alice Springs as well, as I foresee significant flood losses in that town in the future.
In summary, I see no difference in increase in pricing due to the sale of TIO to Allianz. Over time, the cost of insurance may well be reduced, as there will be some economies of scale with TIO not having to stand alone as a relatively small insurer. Allianz, one of the world’s largest insurers, has greater capacity to hold risk itself and greater buying power when it comes to re-insurance.
While the TIO was originally established due to insurers being reluctant to offer workers’ compensation cover in the Territory, today it is serviced by 12 insurers. All offer cyclone cover and only one does not provide flood cover.
All other states have sold their general insurance companies. As the Territory matures and its economy grows, it does seem right for the government to move out of this area and concentrate on other areas where government is the most appropriate supplier of the service. In my view, the government achieved a very good price on the sale for the benefit for all Territorians.
Allan Manning is adjunct professor at <a href="https://www.vu.edu.au/" target="_blank">Victoria University</a> and is managing director of LMI Group. 
This article was originally published on <a href="https://theconversation.com" target="_blank">The Conversation</a>.
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Will the Territory Insurance Office sale push up premiums?

National Australia Bank (NAB) will fund <a href="https://www.apartments.com.au/new-apartments/palmera-residences-gold-coast-18-garfield-terrace-surfers-paradise-qld-4217">Palmera</a>, a $1 billion, 52-level luxury residential tower being developed by Central Equity in one of the Gold Coast’s most tightly held coastal locations at Northcliffe.

The project, launched recently by <a href="https://www.apartments.com.au/developers/central-equity">Central Equity</a>, one of Victoria’s largest private residential developers, comes at a time when construction funding for large residential developments has become increasingly competitive as lenders tighten exposure to the sector.

Multiplex has been appointed the builder, and construction is now underway.

[smartcode_project:default project_id=108274 project_image_fid=365784]

Since its first project, Central Equity has delivered more than 85 residential developments with a combined end value exceeding $8 billion.

Palmera reflects Central Equity’s growing focus on the Gold Coast luxury apartment market and continues a relationship between Central Equity and NAB that dates back to the late 1980s, when the bank funded one of Melbourne’s earliest inner-city residential towers at a time when high-rise apartment living in the CBD was largely unproven.

“NAB’s funding of Central Equity’s $36 million CBD development in the late 1980’s to the financing of the billion-dollar tower today highlights the long-term relationship between the two organisations in delivering major residential projects” said Central Equity Founder and Chairman Eddie Kutner.

He said NAB’s early support was instrumental in helping establish the company’s development model.

“When we commenced our first residential tower in the late 1980s the concept of funding off-the-plan apartments was still largely untested in Australia,” Kutner said.

“NAB recognised the opportunity early and supported the project when others were uncertain. That relationship has now continued for more than 37 years across many developments.”

[smartcode_project:default project_id=108274 project_image_fid=365771]

Central Equity was established in 1987 when Melbourne’s CBD and Southbank precinct were still dominated by warehouses and commercial buildings. Fewer than 100 residents lived in Southbank at the time, and large-scale residential development in the inner city was not widely considered.

Recognising changing demographics and lifestyle preferences, the company began developing high-rise residential projects designed to bring permanent residents into the city centre.

Central Equity has provided accommodation for approximately 40,000 residents across Melbourne’s CBD and Southbank, while also incorporating supporting infrastructure including essential lifestyle facilities like retail spaces, childcare facilities and neighbourhood activity centres.

Central Equity has spent many years assembling the Palmera development site on the corner of Garfield Terrace and Frederick Street in Northcliffe, creating a supersite of around 3,300 sqm.

The developer said the Palmera apartment tower reflects its long-term view of the Gold Coast as a growing and increasingly diversified economy.

[smartcode_project:default project_id=108274 project_image_fid=365768]

Supported by infrastructure including the light rail network, major road upgrades expanded education, hospital and medical facilities and continued expansion at the Gold Coast Airport with more internation and domestic flights.

Positioned in the tightly held Northcliffe precinct, the 52-level tower will deliver 347 apartments, targeting buyers seeking a high-end coastal lifestyle, from downsizers to interstate investors.

Designed by Marchese Partners with interiors by DBI, Palmera has been conceived as a next-generation residential offering, featuring a collection of oversized apartments, with premium three-bedroom residences offering sweeping northern views stretching from Surfers Paradise through to Burleigh Heads.

[smartcode_project_cta:default project_id=108274]

Joel Robinson

NAB funds $1 billion Surfers Paradise apartment development, Palmera

Two years after completing one of the newest developments in North Sydney, developer <a href="https://www.apartments.com.au/developers/aqualand-australia">Aqualand</a> is turning its attention to the rapidly evolving St Leonards apartment market.

The developer, which completed AURA by Aqualand on North Sydney's Walker Street, has lodged plans for a 5,918 sqm site at <a href="https://www.apartments.com.au/new-apartments/33-37-herbert-street-st-leonards-nsw-2065">33-37 Herbert Street, St Leonards,</a> seeking approval for a pair of residential towers rising above a shared podium opposite Royal North Shore Hospital.

The proposal forms part of the broader transformation underway across the St Leonards-Crows Nest precinct, where former industrial and commercial sites are increasingly being redeveloped into high-density mixed-use projects tied to major transport infrastructure.

<img alt="Aqualand" data-entity-type="file" data-entity-uuid="2cc428cf-fe70-4cac-9cd5-264ad53af62c" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%209.51.56%E2%80%AFAM.png?VersionId=otKSnHtbjAvAddOnovyXQMgcAwE6DMe1" />

According to the planning documents, the site sits “within the St Leonards–Crows Nest Strategic Centre, identified by the NSW Government as a key area for accommodating future jobs and housing across Sydney.”

The proposal has been designed by fjcstudio, formerly FJMT Studio, and is being progressed through the State Significant Development pathway due to its scale and affordable housing provision.

The scheme would comprise 413 apartments, including 46 affordable housing units, alongside retail and commercial uses fronting Herbert Street. The project would also include communal open space, landscaping, a swimming pool, gymnasium, children’s play areas and podium-level resident amenities.

Planning documents show the development would consist of a part-13, part-39 storey tower form positioned above a four-storey podium.

“The development comprises a unified podium that activates the street interface, and two setback towers to accommodate new housing supply while maintaining an appropriate human scale at ground level,” fjcstudio noted in its Design Report.

The northern and southern towers have been shaped to respond to the surrounding skyline while also limiting overshadowing impacts to nearby public open space, particularly Talus Reserve.

The design report said the differing tower heights were intended to “contribute to a varied skyline while responding to the surrounding built form context and solar access considerations.”

<img alt="Aqualand" data-entity-type="file" data-entity-uuid="36da62dc-ff9e-41f2-a7e3-7be38373751c" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%209.51.45%E2%80%AFAM_0.png?VersionId=Mo6Rp2r.XRLTzIfg_PEEpw8NepDH8UBs" />

The site sits directly opposite Royal North Shore Hospital and within walking distance of both St Leonards Station and the new Crows Nest Metro station.

While the site itself sits just outside the formal Crows Nest Transport Oriented Development boundary, the planning documents repeatedly reference its alignment with the broader TOD objectives reshaping the Lower North Shore.

“The site is located adjacent to St Leonards Station and in close proximity to Crows Nest Metro which is within the Crows Nest Transit Orientated Development Accelerated Precinct which has been identified by the NSW Government to support housing delivery,” the Design Verification Statement noted.

According to fjcstudio, the project has been designed to respond to the broader transition occurring across St Leonards, where increasing residential density is being concentrated around transport infrastructure and employment hubs.

“The broader precinct is undergoing significant change, with a mix of existing mid-rise buildings and newer high-density developments,” the report stated.

“Recent and approved projects indicate a consistent shift toward taller built form, typically organised as tower-and-podium typologies with more active ground levels.”

The proposal includes close to 6,000 sqm of retail and commercial space across the ground floor and podium levels, designed to create a more activated street edge along Herbert Street.

Aqualand’s plans would also introduce a landscaped podium shared between the two towers, with communal open space in the form of a podium rooftop designed to support resident interaction and improve urban greening outcomes. The scheme would also introduce pocket parks at the northern and southern ends of the site, including a landscaped area at the corner of Herbert and Ella streets designed to improve pedestrian amenity and soften the streetscape.

&nbsp;

The proposal is being progressed through the NSW Government’s Housing Delivery Authority pathway, which was introduced to accelerate housing supply across the state. The application was declared State Significant Development in April 2025 following an expression of interest process.

<img alt="Aqualand" data-entity-type="file" data-entity-uuid="faf6d97d-2671-454f-b85a-fe1c6a7be608" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%209.51.49%E2%80%AFAM.png?VersionId=diVd28OBVr5.YV.7prrOz.uAanwwwm7a" />

St Leonards has been particularly active with new developments in recent weeks. Developer SP Setia’s <a href="https://www.apartments.com.au/news/nsw/first-look-sp-setia-targets-st-leonards-skyline-with-40-storey-tod-tower">plans for a new 42-storey tower</a> recently went on exhibition through the same pathway, while <a href="https://www.apartments.com.au/news/nsw/first-look-stockland-plans-52-storey-538-apartment-st-leonards-tower">Stockland’s 52-storey tower proposal</a> was also recently unveiled.

Aside from the St Leonards project, which is expected to take around nine months to move through the approvals process ahead of a potential 2027 launch, Aqualand is also preparing to launch Boronia, a new apartment project in Roseville comprising around 111 apartments on Larkin Street.

The developer also has approvals in place for the next stage of the Barangaroo precinct, which will feature new residential, retail, hospitality and community uses, alongside a new metro entry across the five-hectare site.

More than 50 new retail destinations are planned for Central Barangaroo, alongside a 270-metre-long boulevard connecting Hickson Park to Nawi Cove. Together with Harbour Park, more than 50 per cent of the precinct will comprise public open space and parkland.

First look: Aqualand joins St Leonards apartment party

<section data-scroll-anchor="false" data-testid="conversation-turn-5" data-turn="user" data-turn-id="e65dbe94-e3b6-47f7-b62a-9cbb30c9bf79" data-turn-id-container="e65dbe94-e3b6-47f7-b62a-9cbb30c9bf79" dir="auto">Time &amp; Place’s plans to transform the former David Jones factory building in Surry Hills into a mixed-use residential precinct have gone on exhibition through the NSW Government’s In-fill Affordable Housing pathway.</section>

<section data-scroll-anchor="false" data-testid="conversation-turn-6" data-turn="assistant" data-turn-id="request-WEB:f4d533b7-64a5-413d-86fd-5c99649c2b73-2" data-turn-id-container="request-WEB:f4d533b7-64a5-413d-86fd-5c99649c2b73-2" dir="auto">
The Marlborough House proposal, lodged for the <a href="https://www.apartments.com.au/new-apartments/marlborough-house-47-97-marlborough-street-surry-hills-nsw-2010">47-97 Marlborough Street</a> site, would see the adaptive reuse of the heritage-listed warehouse building alongside the construction of new residential additions and a separate apartment building on the northern portion of the site.

The proposal seeks approval for 172 apartments across three buildings, including 15 per cent affordable housing managed by a community housing provider for at least 15 years from occupation.

<img alt="Marlborough" data-entity-type="file" data-entity-uuid="5d1d3c2a-bf13-47d6-a335-7c01102cdee1" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%209.29.36%E2%80%AFAM.png?VersionId=cjMYrbR.BLUlWH4dar0RVDDo0bG.u2YT" />

Interior view from the Northern Building Penthouse overlooking the park

&nbsp;

The redevelopment is planned for the prominent 3,413 sqm site bounded by Marlborough Street, Goodlet Street and Lansdowne Street, directly opposite Eddie Ward Park and around 200 metres from the Surry Hills light rail stop.

Time &amp; Place acquired the former David Jones building in 2024, marking the first time the property had changed hands in around 50 years.

Designed by Wardle, the proposal centres around the adaptive reuse of the former David Jones factory, originally constructed between 1913 and 1935 in the Inter-War Chicagoesque architectural style.

Wardle noted in its Architectural Design Report that the building “occupies a significant place in the industrial and cultural history of Surry Hills” and at its peak was “the largest department store manufacturing facility in Australia, employing over 800 people and fuelling the growth of Sydney’s fashion and retail industries.”

The practice said the project positions itself “not as an isolated intervention, but as a contributor to the civic, social, and architectural grain of the precinct.”

The proposal would deliver 75 apartments within the retained southern heritage building, 59 apartments within the central addition, and a further 38 apartments within the new northern building fronting Lansdowne Street.

Planning documents show the scheme would comprise a mix of heritage apartments, new-build apartments, townhouses and penthouses.

<img alt="Marlborough" data-entity-type="file" data-entity-uuid="57758518-40a3-4b83-958c-d06e96a2cffa" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%209.29.42%E2%80%AFAM.png?VersionId=VerlX9ST5xgBi8.1_YRsqdWTJeT6ygjs" />Interior View of the Heritage Building Apartment

The development would also include a ground-floor retail tenancy on the corner of Marlborough and Lansdowne streets, rooftop communal open space, a landscaped pedestrian link along the western edge of the site, and basement parking accessed from Lansdowne Street via a car stacker system.

&nbsp;

The scheme emerged from a competitive design process run by Urbis, with Wardle ultimately selected as the winning architect ahead of FJC Studio, TZG, Architectus and Wilkinson Eyre.

The Design Integrity Panel later described several aspects of the Wardle scheme as fundamental to the project, including “the stepped character of the new addition to the north of the site”, the landscaped western pedestrian link, and the “garden arrival” experience separating the original Marlborough House from the heritage addition.

Wardle’s design heavily references the site’s industrial and heritage history, while also responding to the surrounding Surry Hills streetscape.

The Architectural Design Report describes Surry Hills as “a finely grained neighbourhood with beautiful and expressive brickworks throughout the suburb,” with the proposal introducing a material palette intended to sit comfortably alongside the existing warehouse fabric and neighbouring terraces.

The report also outlines the project’s relationship with Eddie Ward Park and the broader landscape context of the area.

“Marlborough House occupies a site of deep cultural memory and the neighbouring Eddie Ward Park is of local ecological significance, where natural systems, topography, and stories have long shaped human experience,” Wardle noted in the report.

The architects said the proposal sought to “rebind built form to Country” through landscape, materiality and the adaptive reuse of the heritage structure.

<img alt="Marlborough House" data-entity-type="file" data-entity-uuid="9ae3f2f9-c85f-477a-a6f8-b43f6cb97c41" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%209.29.53%E2%80%AFAM.png?VersionId=B.qUCLqRvJOR.n9CvYcTpaknIX9LuqKZ" />

The project is also being progressed under the NSW Government’s in-fill affordable housing provisions, allowing developments that include affordable housing to access additional height and floor space incentives.

Under the plans, 2,593 sqm of the project’s floor space would be dedicated to affordable housing, slightly exceeding the required 15 per cent threshold.

In its Design Excellence Strategy, Urbis said the project aimed to “sensitively adapt and enhance the heritage-listed building on site through alterations and additions that preserve its historical significance” while delivering “high-quality market and infill affordable housing development in Surry Hills.”

Time &amp; Place has been one of the most active developers nationally in the last 12 to 24 months. Late last year they completed&nbsp;The Queensbridge in&nbsp;<a href="https://www.apartments.com.au/developments/southbank-vic-3006">Southbank</a>, a mixed-use tower with 353 apartments and a hotel. They are currently selling Park Modern, 246 apartments near the famous Botanic Gardens in&nbsp;<a href="https://www.apartments.com.au/developments/south-melbourne-vic-3205">South Melbourne</a>, and have future projects, <a href="https://www.apartments.com.au/new-apartments/the-wilmot-173-burke-road-28-hope-street-glen-iris-vic-3146">The Wilmot</a>&nbsp;in&nbsp;<a href="https://www.apartments.com.au/new-apartments/glen-iris-vic-3146">Glen Iris</a>, the redevelopment of the Northcote Plaza, and another tower in South Melbourne.

The developer broke into Sydney just a few years ago with Two Tides in Manly. They have another project nearby, which is at the ultra-luxury end of the market on&nbsp;<a href="https://www.apartments.com.au/buildings/shoreline-manly-beach-89-90-north-steyne-manly">North Steyne</a>, fronting the beach.

It is also continuing to work through the <a href="https://www.apartments.com.au/news/nsw/first-look-time-place-settles-on-design-for-the-chimes-potts-point-redevelopment">redevelopment of The Chimes building</a> on Macleay Street in&nbsp;<a href="https://www.apartments.com.au/developments/potts-point-nsw-2011">Potts Point</a>, as well as a project on <a href="https://www.apartments.com.au/news/nsw/time-place-to-take-on-mosman-apartment-market">Mosman's Redan Street</a>.
</section>

First look: Time & Place unveils Marlborough House redevelopment designs for former David Jones warehouse in Surry Hills

The residential transformation of St Kilda Road is set to continue into with more new apartment plans for the sought-after boulevard.

Wing Tai Asia has lodged plans for a major residential tower at 464-466 St Kilda Road, replacing the former VACC House with an 18-storey mixed-use development designed around a retained heritage podium and a sculpted contemporary tower.

The proposal, prepared under Victoria’s Significant Residential Development with Affordable Housing pathway, would deliver 325 apartments and ground-floor retail across the prominent 4,653 sqm boulevard site in Melbourne’s St Kilda Road North Precinct.

The project centres on the adaptive reuse of the site’s heritage-listed VACC Building, an eight-storey office designed by Bernard Evans that has occupied the address for decades. Planning documents state the development would involve “carefully dismantling and conserving off-site the original metal fabric of the podium visible from St Kilda Road,” before reinstating it as the defining frontage of the new scheme.

Above the restored podium, Wing Tai is proposing a curvilinear residential tower. The scheme includes 172 one-bedroom apartments, 63 two-bedroom apartments, 66 three-bedroom apartments, and 24 four-bedroom apartments, alongside two ground-floor food and beverage tenancies fronting St Kilda Road.

The tower has been designed with substantial articulation and variable setbacks to minimise perceived bulk and maintain view corridors along the boulevard. Urbis, which prepared the planning report, said the design “has been significantly articulated through a curvilinear design” with “an interplay with materials, façade expression and depth” to create visual separation and visual interest.

The proposal also includes 254 basement car spaces, landscaped pedestrian links connecting St Kilda Road and Queens Lane, and a biophilic landscape strategy featuring canopy trees, raised planters, cascading greenery and a glass oculus pool overlooking the eastern frontage.

Planning documents confirm the $270.1 million development will contribute 3 per cent of project costs to the Social Housing Growth Fund as part of the application process.

Wing Tai acquired the St Kilda Road property in 2018 alongside Abacus Property Group for $95.38 million, before later consolidating ownership of the site. The property previously served as the Victorian Automobile Chamber of Commerce headquarters for around 60 years.

The transformation of the St Kilda Rd boulevard is already beginning to materialise, with a number of high-profile projects recently completed, launched, or approaching launch as developers continue to back the long-term appeal of the precinct.

Among the most notable recent completions is Louise by Samuel Property Group, just off the strip on Queens Lane, the same pocket Hirsch &amp; Faigen recently launched The Queensbury. Mirvac is too on the same street with The Albertine, which is approaching completion.

Dexus recently secured approval for its slice of St Kilda Road, while Gurner also has approved plans for the precinct.

Wing Tai unveils 325-apartment St Kilda Road tower on former VACC House site

Malaysian developer <a href="https://www.apartments.com.au/developers/s-p-setia">SP Setia</a> is the latest to jump into St Leonards booming Transport Oriented Development precinct.

The developer, which has previously delivered Sapphire by the Gardens apartment development in Melbourne, identified the Atchison Street site in 2023. It filed a Scoping Report around 12 months ago, and now has revealed the designs for the new&nbsp;40-storey mixed-use tower.

The State Significant Development Application covers <a href="https://next-portal.urban.com.au/projects/14650/summary">20-22 Atchison Street</a>, a 1,374 sqm site positioned between St Leonards Station and the new Crows Nest Metro station.

Designed by <a href="https://www.apartments.com.au/architects/cox-architecture">COX Architecture</a>, the project would deliver 181 apartments, above a four-storey commercial podium, five basement levels, and new public domain works along Mitchell Street. The apartment mix comprises 35 one-bedroom apartments, 39 one-bedroom-plus-study apartments, 85 two-bedroom apartments, and 22 three-bedroom residences.

The proposal has been lodged as a shop-top housing development under the NSW Government’s TOD planning pathway, which allows increased density around key transport infrastructure. The site sits within the recently rezoned Crows Nest Accelerated TOD Precinct.

<img alt="First look: SP Setia targets St Leonards skyline with 40-storey TOD tower" data-entity-type="file" data-entity-uuid="b799673d-48e2-46b0-801a-0e33a9330100" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/atchinson%20site.png?VersionId=dPh0UfwfaHpbFL1R7H1cbZNbIW0CHbCC" />

SP Setia acquired the Atchison Street site as part of its continued expansion into the Australian apartment market. In comments made to City &amp; Country (The Edge Malaysia) in 2023, SP Setia President and CEO Datuk Choong Kai Wai described the acquisition as “a strategic move” aligned with the group’s post-pandemic market recovery strategy.

“Our target for this exceptional development is local and overseas buyers, including first-home buyers, downsizers and investors,” Choong said.

The tower has been designed as a slender vertical form rising from a mixed-use podium, with COX Architecture positioning the development as a response to the evolving St Leonards and Crows Nest skyline.

“The purpose of the project is to facilitate the delivery of high-quality housing at a strategically located site and deliver a built tower outcome that is consistent with the desired future character of St Leonards and aligns with the TOD controls,” the design report stated.

<img alt="First look: SP Setia targets St Leonards skyline with 40-storey TOD tower" data-entity-type="file" data-entity-uuid="b1a85eee-76f7-436c-a6da-73ba827b9b13" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/atchinson%20entry.png?VersionId=dA9jHGPMcm.dDbwk4QfxqWiY5bfh3UVt" />

The podium would incorporate retail uses fronting Atchison Street, commercial tenancies, landscaped communal areas, and pedestrian improvements along Mitchell Street. Vehicle access and loading would be consolidated via Atchison Lane.

Residents would have access to more than 665 sqm of communal indoor and outdoor spaces, while the development proposes 96 parking spaces across five basement levels.

The proposal also includes a commitment for 10 per cent of residential floor space to be allocated toward affordable housing through a monetary contribution.

COX said the tower form responds directly to the emerging high-density character of the precinct while seeking to maximise solar access, cross ventilation, and outlook from apartments.

<img alt="First look: SP Setia targets St Leonards skyline with 40-storey TOD tower" data-entity-type="file" data-entity-uuid="2163f85c-f63b-4be3-aafa-f8763976cec5" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Article%20Feature%20Image%20%28Grid%29_5.png?VersionId=WiAmtIKJ6.ZQ41EtYEQ1fol7AeorKBlL" />

“The building is orientated towards north,” the Apartment Design Guide compliance report noted, adding that the tower’s slim form was driven by the constrained inner-urban site dimensions.

The design also incorporates landscaped setbacks and communal open space at podium level, intended to soften the interface with surrounding streets and improve pedestrian amenity.

The project adds to a growing wave of redevelopment proposals reshaping St Leonards and Crows Nest following the opening of the Sydney Metro City line and the NSW Government’s push for higher-density housing around major transport nodes.

Last week Stockland filed plans just down the road. They want to build a <a href="https://www.apartments.com.au/new-apartments/601-pacific-highway-st-leonards-nsw-2065">52-storey tower on Pacific Highway</a>.

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/first-look-stockland-plans-52-storey-538-apartment-st-leonards-tower">First look: Stockland plans 52-storey, 538-apartment St Leonards tower&nbsp;</a>

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