A collection of just 25 large-format apartments and penthouses overlooking Goodwin Park is entering the Coolangatta market, with <a href="https://www.apartments.com.au/new-apartments/marea-residences-coolangatta-27-27a-dixon-street-coolangatta-qld-4225">Maréa Residences</a> combining a low-density, residential-only approach with uninterrupted park and Pacific Ocean outlooks.

Located at 27 Dixon Street, Maréa comprises three and four-bedroom residences alongside a limited number of dual-level penthouses, with the project positioned between Goodwin Park and <a href="https://www.apartments.com.au/developments/coolangatta-qld-4225">Coolangatta</a>’s coastal precinct.

Construction has commenced, with completion currently estimated for late 2027. Three-bedroom residences are priced from $1.8 million.

[smartcode_project:default project_id=150999 project_image_fid=374005]

The project has been designed around its northern outlook across the park, with the building’s architecture, landscaping and material palette intended to establish a connection with the neighbouring green space. The residences have been configured to maximise natural light and views across Goodwin Park towards the ocean.

Inside, the material palette incorporates timber, stone and brushed brass, complemented by curved detailing and ambient lighting. Kitchens and bathrooms carry the same natural material approach, while residences also include basement parking, storage and lift access.

Maréa’s penthouses are arranged over two levels and include private pools, adding another layer to the project’s focus on larger-format apartment living. Across the development, residences are configured with three or four bedrooms rather than the broader mix of smaller apartment types commonly found in larger projects.

[smartcode_project:default project_id=150999 project_image_fid=374010]

Resident amenity is concentrated at rooftop level, where landscaped entertaining terraces and pools take advantage of elevated views across Coolangatta and the Pacific Ocean.

The project has so far been particularly well received by local owner-occupiers and downsizers, according to Urban Activation Property Sales and Marketing Director Matt George, with the residential-only format, construction quality and northern park outlook among the features resonating with purchasers.

“The uninterrupted northern aspect overlooking Goodwin Park has been a key point of difference, with buyers attracted to the sense of serenity and open space the park provides, while still enjoying easy access to the ocean and being within walking distance of the lifestyle and amenities Coolangatta has to offer,” George said.

[smartcode_project:default project_id=150999 project_image_fid=374002]

“The combination of high-quality construction, a residential-only building, park outlook and proximity to the beach has resonated strongly with the local downsizer market.”

The Dixon Street address is within walking distance of Coolangatta Beach and the broader southern Gold Coast coastline, including the surf breaks at Snapper Rocks and Kirra. Coolangatta’s cafés, restaurants and retail are nearby, while Gold Coast Airport is also within close proximity.

[smartcode_project_cta:default project_id=150999]

Joel Robinson

Maréa Residences brings parkside apartments to Coolangatta

Melbourne developer PDG has secured Victorian Government approval for its $1.5 billion Southbank development <a href="https://www.apartments.com.au/new-apartments/the-one-1-queens-bridge-street-southbank-vic-3006">The One</a>, clearing the way for the long-dormant riverfront site opposite Crown to finally be developed.

The Minister for Planning has approved the project at 1-29 Queens Bridge Street, with the Department of Transport and Planning issuing the planning permit following its assessment.

The approval will allow PDG to develop the prominent 5,059 sqm site with a major mixed-use tower comprising premium apartments, including branded residences, a luxury hotel and boutique office space.

PDG acquired the site in late 2024, with its position directly opposite Crown's main entrance and near Melbourne's Arts Precinct making it one of Southbank's most significant remaining development opportunities.

<img alt="PDG" data-entity-type="file" data-entity-uuid="3933013e-6332-4386-b9be-089df05caf17" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-27%20at%209.29.22%E2%80%AFAM.png?VersionId=sITIgBqDL0N3VNSMwWEmF5UA.uvcsRyu" />

Designed by COX in collaboration with ODO and PDG, the tower's architecture draws on the movement of the Yarra River, with six vertical pleats running the height of the sculpted facade.

The project will also see the heritage-listed Queens Bridge Hotel restored and incorporated into the development&nbsp;with new hospitality and public uses, including a rooftop venue.

A significant component of The One will be its residential amenity.

More than 5,000 sqm of resident facilities will be delivered across a single level, making it one of the largest consolidated residential amenity offerings proposed in an Australian apartment development.

The planning approval also incorporates a major upgrade of Queensbridge Square, which PDG will deliver in partnership with the City of Melbourne.

<img alt="PDG" data-entity-type="file" data-entity-uuid="73167fcd-1031-4b6f-a408-a064cfe45ed1" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-27%20at%209.29.17%E2%80%AFAM.png?VersionId=Pf1AEWxw6SNmBqR0zQW5lyEze.MtxgFp" />

The existing square will be revitalised as a new civic and pedestrian space along the Yarra River, strengthening the connection between the project, Southbank and the riverfront.

PDG Founder and Managing Director Vince Giuliano said the approval represented a major milestone for a site which has remained largely underutilised for more than 15 years.

“This is the most significant Planning Permit approval Melbourne has seen in recent years,” Giuliano said.

“For more than 15 years, this site has remained underutilised. This approval enables us to deliver a project that will contribute meaningfully to the revitalisation of Southbank, restore and reactivate an important heritage building, and create a new civic and hospitality destination for Melbourne.”

The latest approval follows an earlier planning permit issued by the City of Melbourne covering demolition works across part of the site at 9-29 Queens Bridge Street. Those demolition and early works are already underway.

PDG has also started generating early interest in the residential component from owner-occupiers ahead of a planned public launch in early 2027.

PDG secures approval for $1.5bn Southbank apartment development, The One

Local developer Harridan is seeking to turn its Woolloongabba apartment project into the first stage of a broader transformation of Burke Street, using a new 16-storey mixed-use building to establish a greener pedestrian connection toward the rapidly evolving Boggo Road transport and knowledge precinct.

The South East Queensland developer has filed plans for 154 apartments on the <a href="https://www.apartments.com.au/new-apartments/4-burke-street-woolloongabba-qld-4102">southern side of Burke Street</a>, where its proposal has been designed alongside a wider vision by LatStudios for the street.

That vision positions the southern side of Burke Street for buildings of 15 storeys and above, while envisaging lower-rise development of up to five storeys on the northern side to transition into Woolloongabba's existing character housing. It also proposes wider pedestrian verges, deep planting, new street trees and upgrades to the pedestrian approach to Boggo Road Station.

The Harridan development itself has been designed by Brisbane-based Arqus Design and will comprise 154 apartments across 16 storeys. The mix is weighted heavily toward two-bedroom apartments, with 121 proposed alongside 10 one-bedroom and 23 three-bedroom residences. There will typically be around 14 units per floor.

A lower-ground car park and three podium levels will accommodate 156 resident parking spaces, along with visitor and commercial parking. There will also be 154 resident bicycle spaces and 40 visitor bicycle parks.

&nbsp;

Harridan is a family-owned developer and part of the Holmwood Highgate Group, with more than three decades of development activity across South East Queensland. Its portfolio spans residential, commercial and industrial property, with current residential projects including Riverbank on Byron in Bulimba, Esperance Residences in Carina and The Precinct at Kinross Road in Thornlands.

Wooloongabba has been popular for apartment developers, particularly since the announcement of the 2032 Summer Olympics games in Brisbane.

While there have been a lot of development applications, it has failed to materialize into real supply.&nbsp;

Sarazin has been the major player in the area. They are under construction at Murcia Residences, on the fringe of East Brisbane and Woolloongabba. They have just launched <a href="https://www.apartments.com.au/new-apartments/the-stanley-residences-woolloongabba-8-trafalgar-street-woolloongabba-qld-4102">The Stanley Residences</a>, in Woolloongabba on Trafalagar Street. They also have Nuage coming soon on the nearby <a href="https://www.apartments.com.au/new-apartments/nuage-woolloongabba-14-wellington-road-woolloongabba-qld-4102">Wellington Road</a>.

First look: Harridan plans Burke Street transformation beside Boggo Road transport hub

IN BRIEF

<ul>
	<li>
	Just three double-storey Sky Homes sit at the top of The Waterline, each with its own private marina berth and rooftop terrace.
	</li>
	<li>
	Construction on The Waterline is complete, with the first residents expected to move in from mid-October.
	</li>
	<li>
	Sky Homes range from 282 sqm to 367 sqm and are priced from $3.65 million.
	</li>
</ul>

<hr />
Lewis Land has opened the first completed sky home for inspection at Harbour Shores, giving buyers their first opportunity to step inside one of just three double-storey residences crowning The Waterline.

Each sky home comes with its own private marina berth, rooftop terrace and Broadwater views, combining the scale of a larger home with direct access to the boating lifestyle that underpins the wider <a href="https://www.apartments.com.au/new-apartments/harbour-shores-biggera-waters-564-oxley-drive-biggera-waters-qld-4216">Harbour Shores</a> masterplan.

[smartcode_project:default project_id=113271 project_image_fid=366708]

Lewis Land Head of Development Michael Long said the inclusion of a berth with every Sky Home had become increasingly valuable as marina access across the Gold Coast tightened.

“Marina berths are becoming increasingly difficult to secure across the Gold Coast, so including one with every Sky Home makes this a genuinely rare offering,” Long said.

“The private 70-berth marina will accommodate boats up to 12 metres in length and is positioned just 2.5 kilometres from the Broadwater, placing the open ocean only 15 minutes away.

“Being able to step out of your home onto your boat is a rare luxury, and it’s something residents here can look forward to when it opens later this year.”

[smartcode_project:default project_id=113271 project_image_fid=366709]

The display opening comes as construction completes on The Waterline, with the first residents expected to move in from mid-October.

The three Sky Homes range from 282 sqm to 367 sqm and each feature three bedrooms, three bathrooms, multiple living zones, expansive kitchens with butler's pantries and large balconies taking in the Broadwater outlook.

Each residence also has three secure basement car spaces and additional storage.

“This is the first opportunity the Gold Coast has had to step into Harbour Shores and see, touch and feel what we’re bringing to life here,” Long said.

“There are only three Sky Homes within The Waterline, ranging in size from 282sqm to 367sqm, with each residence featuring three large bedrooms, three bathrooms, multiple living zones, expansive custom-built kitchens with butler’s pantry, and large balconies capturing Broadwater views.”

<img alt="Harbour Shores" data-entity-type="file" data-entity-uuid="bab65e10-4fab-45e1-92d8-fc56e2ab98ff" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-25%20at%202.00.16%E2%80%AFPM.png?VersionId=XT8q76LsPkw3cYTsvN3JfFDaPLud90PN" />

Residents of The Waterline will have access to a private pool, along with Harbour Shores' wider collection of amenity including a lagoon pool, social clubhouse, tennis court, gym, yoga facilities and sauna.

Lewis Land partnered with Studio Collective to furnish the completed display, with the interiors designed to demonstrate how the residences could function as permanent homes rather than simply as show apartments.

Studio Collective Director Melissa Park said the surrounding waterways informed the interiors, but in a more restrained way than a traditional coastal scheme.

“We drew inspiration from the canals and coastal surrounds, but our approach was to interpret that subtly through layered materials and a grounded palette of earthy tones, rather than literal coastal references,” Park said.

“We introduced hero moments of green and teal to reference the surrounding waterways, while mirrored elements help reflect natural light.

“The result is a residence that feels elevated yet comfortable, somewhere buyers can genuinely imagine themselves living, entertaining and unwinding.”

Sky Homes are priced from $3.65 million.

Lewis Land is also offering private marina berths with The Residences, its limited collection of three and four-bedroom villas positioned directly along the Harbour Shores waterfront boardwalk.

Three-bedroom villas are priced from $2.99 million, while four-bedroom residences start from $3.19 million.

Harbour Shores is being marketed by Colliers International.

[smartcode_project_cta:default project_id=113271]

Lewis Land opens sky home display as The Waterline completes at Harbour Shores

St Vincent de Paul Society Housing Australia has filed plans for a major mixed-use housing precinct on the southern edge of the North Sydney CBD, adding another significant proposal to a pocket around North Sydn​ey Station that is quickly becoming one of the LGA's busiest development zones.

The State Significant Development Application covers a 5,990 sqm site at <a href="https://www.apartments.com.au/new-apartments/1-19-mackenzie-street-lavender-bay-nsw-2060">1-19 MacKenzie Street and 211 Blues Point Road in Lavender Bay</a>, immediately south of Nor​th Sydney Station and between the commercial core and the lower-rise Lavender Bay Heritage Conservation Area.

Designed by Wardle, the proposal would deliver a new residential tower comprising 88 build-to-sell apartments and 19 affordable apartments, alongside a separate co-living building with 57 rooms and a building manager's studio.

It would also see the significant restoration and upgrade of St Francis Xavier Catholic Church, the adaptive reuse of the former school building, new parish facilities, retail, a new public square and around 1,000 sqm of publicly accessible open space.

<img alt="Vinnies North Sydney" data-entity-type="file" data-entity-uuid="d5dd7f87-a617-463e-b577-17541e01f0e9" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-26%20at%209.10.13%E2%80%AFAM.png?VersionId=4R8TsFN3P_LrrXO2HswTOIrx2blil8lh" />

The project is seeking a concurrent rezoning of the site to R4 High Density Residential and an increase in the maximum building height to allow a tower reaching RL120, or up to 20 storeys. The proposal was progressed through the NSW Government's Housing Delivery Authority pathway.

The build-to-sell component will be weighted toward larger apartments, with just six one-bedroom apartments compared with 31 two-beds, 43 three-beds and eight four-bedroom residences.

The 19 affordable apartments will comprise two studios, 15 one-bedroom apartments and two two-bedroom apartments, taking the total apartment component to 107 residences before the 58 co-living rooms are included.

<img alt="Vnnies" data-entity-type="file" data-entity-uuid="7d568ca5-cb90-4e18-96c6-d9795dba0c56" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-26%20at%209.10.05%E2%80%AFAM.png?VersionId=GY2R5M9VtQh0EKy1vajaea19PSLOPuRD" />

Wardle's design for the Vinnies site has sought to negotiate that emerging high-rise context while retaining the lower-scale character of MacKenzie Street and the adjoining heritage conservation area.

The main building adopts a three-storey podium and tower arrangement, with the podium aligned to the ridgeline and front setback of St Francis Xavier Church.&nbsp;Wardle has designed the podium with colonnades, seating, recessed entries and active ground-floor frontages, with sandstone-toned precast concrete and face brick referencing the materiality of the existing church.

The tower then steps back eight metres to the south and six metres to the north before rising in a sculpted form comprising four interlocking quadrants. Wardle has also introduced rounded forms and chamfered corners to reduce the tower's perceived bulk and improve view sharing with neighbouring development sites.

Resident facilities and outdoor areas are planned at the separation between the podium and tower at Level 3, oriented toward Sydney Harbour and the CBD skyline.

The tower itself will feature a glass reinforced concrete facade, with recessed balconies and deep reveals used both to provide shading and privacy and frame views toward the harbour and city. The lower levels take a different architectural approach, using brick and sandstone-toned finishes intended to establish a stronger relationship with St Francis Xavier Church. The Church itself will be conserved and upgraded for its continued use, while the former school building will be adaptively reused as part of the co-living component.

<img alt="Lavendar Bay" data-entity-type="file" data-entity-uuid="2d4418ad-90aa-4d49-af93-c80b140aea80" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-26%20at%209.09.47%E2%80%AFAM.png?VersionId=Kv4gzbsACaGvZSRuaqcfGC54jEJRXIDJ" />

&nbsp;

The proposal adds to an increasingly concentrated pipeline of residential development around Blue Street, MacKenzie Street and Lavender Bay.

Just west of the site, Central Element lodged plans earlier this year for one of the most significant residential developments proposed in Lavender Bay in recent years.

Central Element's SJB-designed scheme at 64-66 Lavender Street and 3-7 Middlemiss Street would deliver 163 apartments across two towers rising 23 and 32 storeys, replacing five existing apartment buildings containing 32 homes. The project also forms part of the Housing Delivery Authority pathway.

<a href="https://www.apartments.com.au/news/nsw/first-look-central-element-reveals-lavender-bay-apartment-plans?utm_source=chatgpt.com" rel="noopener" target="_blank">First look: Central Element reveals Lavender Bay apartment plans</a>

Immediately around North Sy​dney Station, another two significant proposals have emerged at 5 and 15 Blue Street.

Zurich Australian Insurance Properties is seeking to adaptively reuse its longstanding commercial building at 5 Blue Street, directly above North Sydney Station, rather than demolishing the structure.

Its SSDA proposes converting the building into a 14-storey mixed-use development with 62 apartments and 86 co-living rooms, together with ground-floor retail and a major refurbishment of Blue Street Plaza. The application is currently at the Response to Submissions stage.

<a href="https://www.apartments.com.au/news/nsw/first-look-zurich-targets-north-sydney-office-conversion-with-148-unit-proposal-above-metro-station">First look: Zurich targets North Sydney office conversion with 148-unit proposal above Metro station</a>

&nbsp;

First look: Vinnies files for 20-storey Lavender Bay apartment tower as North Sydney housing pocket heats up

Australian Economy

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EXPERT OBSERVER
2017 was a great year for well diversified investors – returns were solid (balanced super funds returned around 10%) and volatility was low.
So optimism was high going into 2018 but it turned out to be anything but great for investors who saw poor returns (average balanced super funds look to have lost around 1-2%) and volatile markets.
As a result, and in contrast to a year ago, there is much trepidation about the year ahead.
Having just written lists for Christmas presents and New Year resolutions, I was again motivated to provide a summary of key insights and views on the investment outlook in simple point form.
Five key things that went wrong in 2018 In 2018 global growth was good, profits were up, inflation was benign and monetary conditions were relatively easy. It should have been good for markets.
There were five reasons it wasn’t: 
• Fear of the Fed – the Fed didn’t really surprise but investors became increasingly concerned that it would overtighten. This reached a crescendo in late December.
• US dollar strength – a rising US dollar is a defacto global monetary tightening and this weighed particularly on emerging countries and US earnings expectations.
• Geopolitics – President Trump’s trade war hit confidence from March and morphed into fears of a broader Cold War with China. Other worries around Trump (with ongoing turmoil in his team, fears of impeachment as the Mueller inquiry progresses and a return to divided government) along with the populist government in Italy also weighed.
• Global desynchronisation – US growth was strong, but it slowed everywhere else.
• In Australia, tightening credit conditions (with fears of a credit crunch due to the Royal Commission) and falling house prices weighed on banks &amp; growth expectations.
 Five lessons from 2018:
• Global growth remains fragile with post GFC caution lingering. This and technological change are helping to keep inflation down. Trade war fears didn’t help. Amongst other things this means central banks need to tread carefully in normalising monetary policy.
• Investors continue to find it easy to fear the worst – this has been evident in three major circa 20% sharemarket declines since the GFC – in 2011, 2015-16 and now 2018. • Geopolitics remains a significant driver of markets and economic conditions.
• Government bonds remain a great diversifier – they rallied when shares plunged.
• Stuff happens – history tells us markets have periodic setbacks. 2018 was just another example.
 Five big picture themes for 2019:
• Policy pause and stimulus – the turmoil in markets and threat to global growth is likely to drive a policy response early this year with the Fed pausing, China providing more stimulus and the ECB providing cheap bank financing. There may also be some fiscal easing in Europe.
• While global growth is likely to weaken a bit further in the coming months, it’s likely to stabilise and resynchronise as the year progresses helped by policy stimulus, an easing in the $US and by the late 2018 plunge in energy costs.
• Global inflation is likely to remain benign helped by the 2018 growth slowdown and fall in energy costs. In this sense the malaise of 2018 by forestalling inflation and hence monetary tightening has arguably helped extend the economic cycle. The US remains most at risk on the inflation front though given its still tight labour market.
• But expect volatility to remain high given the lower level of spare capacity in the US and ongoing political risk.
• Australian growth is expected to be sub-par as the housing downturn detracts 1-1.5 percentage points or so off growth.
 Key views on markets for 2019:
• Global shares could still make new lows early in 2019 (much as occurred in 2016) and volatility is likely to remain high but valuations are now improved and reasonable growth and profits should see a recovery through 2019 helped by more policy stimulus.
• Emerging markets are likely to outperform if the $US is more constrained as we expect.
• After a low early in the year, Australian shares are likely to do okay, recovering to around 6000 or so by year end.
• Low yields are likely to see low returns from bonds, but they continue to provide an excellent portfolio diversifier.
• Unlisted commercial property and infrastructure are likely to see slower returns over the year ahead. This is likely to be particularly the case for Australian retail property.  
• National capital city house prices are likely to fall roughly 5% led again by 10% or so price falls in Sydney and Melbourne off the back of tight credit, rising supply, reduced foreign demand &amp; possible tax changes under a Labor Governmen
• Cash and bank deposits are likely to provide poor returns as the RBA cuts the official cash rate to 1% by end 2019.
• Beyond any near-term bounce as the Fed moves towards a pause on rate hikes next year, the $A is likely to fall into the $US0.60s as the gap between the RBA’s cash rate and the US Fed Funds rate will still likely push further into negative territory as the RBA moves to cut rates.
Six things to watch:
• The US trade war – while it may now be on hold thanks to negotiations with China, Europe and Japan these could go wrong and see it flare up again. US/China tensions generally pose a significant risk for markets.
• US inflation and the Fed – our base case is that US inflation remains around 2% enabling the Fed to pause/go slower, but if it accelerates then it will mean more aggressive tightening, a sharp rebound in bond yields and a much stronger $US which would be bad for emerging markets.
• Global growth indicators – if we are to be right, growth indicators need to stabilise in the next six months.
• Chinese growth – a continued slowing in China would be a major concern for global growth and commodity prices.
• Politics – political risks abound in the US with the Mueller inquiry getting ever closer to President Trump and a return to divided government leading to risks around raising the debt ceiling and Trump adopting more populist policies. In Europe the main risks are around Brexit, Italy and the EU parliamentary elections in May. Australia’s election risks are more interventionist government policy and tax changes.
• The property price downturn in Australia – how deep it gets and whether non-mining investment, infrastructure spending and export earnings are able to offset the drag from housing construction and consumer spending.
Three reasons why global growth is likely to be okay Global growth indicators are likely to weaken further in the next few months but then stabilise, resulting in okay global growth of around 3.5% this year:
• Global monetary conditions are still easy. While the flattening US yield curve is a concern all other measures of monetary policy show it to be easy – particularly globally.
• Market volatility and associated uncertainty are likely to drive a policy response with the Fed pausing, other central banks easing and possible fiscal stimulus in Europe.
• We still have not seen the excesses – massive debt growth, overinvestment, capacity constraints or excessive inflation – that normally precede recessions.
Three reasons why Chinese growth won’t slow much:
• The Chinese Government’s tolerance for a sharp slowing in growth is low given the risk of social instability it may bring.
• Monetary and fiscal policy is being eased.
• In the absence of much lower savings (the main driver of debt growth), rapid deleveraging would be dangerous, and the Chinese Government knows this.
Four reasons Australia still won't have a recession:
• A downturn in the housing cycle and its flow on to consumer spending will detract around 1 to 1.5 percentage points from growth, and growth is likely to be constrained to around 2.5-3%, but recession is still unlikely
• The growth drag from falling mining investment (which was up to 2 percentage points) has faded.
• Non-mining investment &amp; infrastructure spending are rising. • Interest rates can still fall further, and the RBA is expected to cut the cash rate to 1%.
• The $A will likely fall further providing a support to growth.
Three reasons why the RBA will cut rates this year:
• The housing downturn will constrain growth to at or below potential.
• This will keep underemployment high, wages growth weak and inflation lower for longer.
• The RBA may ultimately want to prevent the decline in house prices getting so deep it threatens financial instability. Three reasons why a grizzly bear market is unlikely Shares could still fall further in the short term given various uncertainties resulting in a brief (“gummy”) bear market before recovering. But a deep (or “grizzly”) bear (where shares fall 20% and a year after are a lot lower again) is unlikely:
• A recession is unlikely. Most deep grizzly bear markets are associated with recession.
• Measures of investor sentiment suggest investors are cautious, which is positive from a contrarian perspective.
• The liquidity backdrop for shares is still positive. For example, bank term deposit rates in Australia are around 2% (and likely to fall) compared to a grossed-up dividend yield of around 6% making shares relatively attractive.
Seven things investors should allow for in rough times:
Times like the present are stressful for investors. No one likes to see their wealth fall and uncertainty seems very high. I don’t have a perfect crystal ball, so from the point of sensible longterm investing the following points are worth bearing in mind.
• First, periodic sharp setbacks in share markets are healthy and normal. Shares literally climb a wall of worry over many years with periodic setbacks, but with the long-term trend providing higher returns than more stable assets. The setbacks are the price we pay for the higher long-term return from shares.
• Second, selling shares or switching to a more conservative strategy after a major fall just locks in a loss. The best way to guard against selling on the basis of emotion is to adopt a well thought out, long-term investment strategy.
• Third, when growth assets fall they are cheaper and offer higher long-term return prospects. So, the key is to look for opportunities that pullbacks provide.
• Fourth, while shares may have fallen in value, the dividends from the market haven’t. The income flow you are receiving from a diversified portfolio of shares remains attractive.
• Fifth, shares often bottom at the point of maximum bearishness. So, when everyone is negative and cautious it’s often time to buy.
• Sixth, turn down the noise on financial news. In periods of market turmoil, the flow of negative news reaches fever pitch, which makes it very hard to stick to a well-considered, long-term strategy let alone see the opportunities.
• Finally, accept that it’s a low nominal return world – low nominal growth and low bond yields and earnings yields mean lower long-term returns. This means that periods of relative high returns like in 2017 are often followed by weaker years.
DR SHANE OLIVER is the Head of Investment Strategy and Chief Economist for AMP Capital
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soliver-smf6LQXgW9

Four reasons Australia still won't have a recession in 2019: Shane Oliver

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GUEST OBSERVATION
For the past half-decade Australian wages have barely moved after adjusting for inflation.
In the United States the picture is far bleaker — the real wages of average workers have changed little <a href="http://www.pewresearch.org/fact-tank/2018/08/07/for-most-us-workers-real-wages-have-barely-budged-for-decades/" target="_blank">in 40 years</a>.
Not so for US chief executives.
In 1965 the heads of America’s 350 biggest companies earned 20 times what the average worker did. By 2017 they earned <a href="https://www.epi.org/files/pdf/152123.pdf" target="_blank">312 times as much</a>.
As is often the case, things aren’t quite as extreme in Australia, but the pattern is similar. In 2017 the heads of the 100 biggest ASX-listed companies earned an average of <a href="https://www.acsi.org.au/images/stories/ACSIDocuments/generalresearchpublic/CEO-Pay-in-ASX200-Companies-2017.Jul18.pdf" target="_blank">A$4.75 million</a> – roughly 78 times as much as the average worker.
They get the bulk of their income not from their salaries, but from stock options or payments tied to the share price of the companies they run.
It at least raises the possibility than one way to get pay to rise for average workers is to structure their pay a little more like that of chief executives.
There are upsides to paying workers in shares…
Paying workers in the stock of the company would not affect the day-to-day profitability of the company. It would just mean the shareholders owned a bit less of the company.
That might not sound like an important distinction, but the everyday costs —- of which wages and salaries can be a big part -— help determine how competitive a firm is compared to its rivals. Paying workers in stock could give firms a strategic advantage.
It could also better align their interests with those of senior management and shareholders. It could reduce intra-firm conflict about wages, benefits and employment terms.
One manifestation occurs when executives receive large payouts from stock options while “ordinary workers” are facing redundancies or pay cuts.
Giving workers a slice of the same type —- if not the same level -— of compensation could help reduce this conflict.
…and downsides
If the idea was perfect, we would go to the extreme and pay workers exclusively in stock.
We wouldn’t, in part because equity-based compensation imposes risk on workers, as workers employed by firms whose share price is falling know well.
A basic principle of contract theory – the field that gave rise to the 2016 Nobel Prize in Economic Sciences for its creators Oliver Hart and Bengt Holmstrom – is that if a compensation contract imposes more risk on an employee than wages, it’ll need to be larger than wages on average to make up for the additional risk. It would cost the firm more.
And it would encourage workers to put most of their investment eggs in one basket (the same basket that employs them), which is always a bad idea.
Despite appearances, for many or even most, it woudln’t link their efforts to their compensation. Stock price movements often have little to do with the efforts of paper-shufflers or cleaners. Another key principle of contract theory is that it is suboptimal to reward workers for luck.
Shadow equity might be better
New developments in blockchain technology offer a way to link the efforts of employees to an equity-like security —- or what one might call “shadow equity”.
<a href="https://bitcoin.com.au/understanding-token-sales-initial-coin-offerings-part-1/" target="_blank">Initial Coin Offerings</a> are used in the US as an alternative to venture capital. They involve creating a digital currency that is linked to performance but not to share price.
They can be used to invest in or bet on specific components of a company. Take the pharmaceutical giant Pfizer. It has a whole portfolio of drugs. Buying stock in Pfizer is a bet on its entire portfolio. But suppose Pfizer issues, say, 1 million Xtandi tokens to help it develop the colon cancer drug Xtandi. Suppose it also agrees that all future purchases of Xtandi will have to be done with those tokens. That would link the aggregate value of those tokens to the value of revenue from the drug.
An investor who bought those tokens would be betting on a specific part of Pfizer’s portfolio.
The idea could be extended to traded securities tied to a granular level of performance within an organisation. It wouldn’t mean it was possible to have securities in the impact of single worker (expect perhaps for superstars such as actors or recording artists) – but it would be conceivable to have such securities for divisions of companies, or even teams within divisions.
How could it work?
It will take time for these technological developments to play out, but there are steps we could take to hasten it. One would be increased tax deductibility for equity-based compensation.
We are not suggesting workers’ pay be cut to allow equity-based compensation, or that it not rise to keep up with the cost of living. But as extra pay rises happen from time to time, they could be offered in the form of shadow equity.
It would mean workers would be paid (at least in part) the same way as executives. And it might start to reverse the trend of rising executive to worker pay ratios.
<hr>
The <a href="https://www.assa.edu.au" target="_blank">Academy of the Social Sciences in Australia</a> is one of Australia’s four learned academies. The ASSA coordinates the promotion of research, teaching and advice in the social sciences, promotes scholarly cooperation across disciplines, comments on national needs and priorities in the social sciences, and provides advice to government on issues of national importance.<img src="https://counter.theconversation.com/content/113362/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important;">
Rosalind Dixon, Professor of Law, UNSW
Richard Holden, Professor of Economics, UNSW
This article is republished from <a href="http://theconversation.com" target="_blank">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/introducing-shadow-equity-a-fresh-idea-to-escape-the-low-wage-trap-113362" target="_blank">original article</a>.
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j.ballantyne1990-6AQqhLzZaK

Introducing shadow equity: a fresh idea to escape the low wage trap

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GUEST OBSERVATION
Australia’s nearly three decades of uninterrupted economic growth won’t last forever.
Sooner or later policymakers will need to respond to a downturn that could come from any number of sources. A severe downturn in our main trading partner, China, a collapse of the local property market, global financial turmoil, or an unfortunate confluence of multiple factors are all possible triggers.
The real question is not whether or even when a recession will come, but how well positioned we will be to respond.
And, unfortunately, the answer right now is “not very”.
To understand what will be required to battle the next Australian recession it’s useful to distinguish between two broad types of economic trouble.
Two types of threat
The first is what one might call a “run-of-the-mill business cycle downturn”. Think Australia, 1990. In this scenario interest rates are raised to ward off inflation but eventually choke off business investment and private spending. Unemployment rises and GDP falls.
The central bank responds by cutting interest rates, and the federal government responds with “Keynesian” economic stimulus (extra government spending and/or tax cuts).
The second type of trouble is different, what might be called “mass financial panic”.
Think the United States in 2008. In this scenario an event (such as massive mortgage defaults) causes financial institutions to fail. If those financial institutions are connected to others then the entire financial system seizes up because everyone stops lending money to each other at once. It’s like a car going from 100km/h to 5km/h in half a second. It hurts.
The Keynesian response is completely insufficient in these circumstances. What’s needed is to get credit moving again.
And this requires people not only believing that they should lend money, but also believing that others will lend money, keeping the economy afloat and making the exercise worthwhile. Coordinating what economists refer to as “<a href="http://personal.lse.ac.uk/dasgupt2/hob_main" target="_blank">higher-order beliefs</a>” requires overwhelming financial force. It’s a kind of <a href="https://www.propertyobserver.com.au/https://www.carnegiecouncil.org/education/008/expertclips/005" target="_blank">Powell doctrine</a> in which the US went in with far more troops than it needed after Iraq’s invasion of Kuwait in the early 1990s in order to overwhelm the enemy.
It was the thinking behind then US Treasury Under Secretary Larry Summers’ <a href="https://www.newyorker.com/magazine/2009/10/12/inside-the-crisis" target="_blank">US$50 billion rescue package to head off the Mexican peso crisis in 1994</a>, and what then US Federal Reserve Chairman Ben Bernanke and US Treasury Secretary Hank Paulson did to avoid a repeat of the Great Depression in 2008.
The Reserve Bank is less than prepared
How well is Australia prepared to respond quickly in either of these scenarios?
Scenario 1 requires the Reserve Bank to cut interest rates and the government to spend money fast. With interest rates already at an historically low 1.50% – and perhaps lower by the time trouble arises – there’s little room left to cut further.
Unorthodox measures might be necessary, like so-called “quantitative easing”. This involves large purchases of long-term bonds to flood markets with money. While there is now experience from the US and Europe about how to do this, in Australia the Reserve Bank would be breaking new ground. Getting into such a program is not simple, and getting out might be very complicated.
But of course jacking up interest rates now to give the bank room to cut later isn’t a solution. That could trigger a recession itself. The bank has to grapple with how to respond to even a standard recession in the new age <a href="http://larrysummers.com/category/secular-stagnation/" target="_blank">of permanently low real interest rates</a>.
We’ve money to spend, but not the means
The government’s fiscal response requires having the capacity to run large budget deficits, which means being able to borrow. Australia’s capacity to borrow is currently good, with <a href="https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/BriefingBook45p/DebtPosition" target="_blank">net debt as a proportion of gross domestic product at around 19.2%</a>.
This is low by both international and historical standards. A former chair of President Obama’s Council of Economic Advisers, Christina Romer, and one of the world’s leading macroeconomists, David Romer, have <a href="https://eml.berkeley.edu/%7Edromer/papers/Romer&amp;RomerCrisesandPolicyRevised.pdf" target="_blank">persuasively documented</a> how vital such “fiscal capacity” is. Australia gets an A on that count.
But a cash splash needs to be spent, and fast. That means having “shovel-ready projects” lined up ahead of a recession hitting. Sending cheques to households is easy, but is often used to pay down debt or offset other expenditures rather than on spending.
We need to prepare ahead
A proposal being pursued by the <a href="http://www.grandchallenges.unsw.edu.au/" target="_blank">New Economic Equality Initiative</a> at the University of NSW is to prepare in advance of a recession a “green stimulus” plan. It would be a list of significant environmental expenditures — from tree planting to waterway cleanups, to cycle-path construction to dune repair — that would be documented and ready to implement immediately.
These would be projects that would stimulate demand but also have a high social return. To do them right would take planning ahead of time. It can’t be done well on the fly when a recession has already hit. Otherwise, well, think pink batts.
Preparing for a financial crisis as opposed to a mere recession is harder. Having the budget capacity to provide massive guarantees of bank deposits and other financial obligations is a must.
Last time, we got lucky
Equally important, though, is having regulatory agencies that can see trouble ahead and act swiftly. The Reserve Bank did an outstanding job a decade ago, but next time it won’t have then Treasury Secretary Ken Henry on the board and Kevin Rudd in the prime minister’s chair.
The Australian Securities and Investments Commission has shown itself to be functionally incompetent over an extended period, as the Hayne Royal Commission highlighted all too clearly. Capacity-building is a prerequisite for an effective response to a future crisis.
Regulators need to understand the interconnectedness of different financial institutions, the types of risk they are exposed to, where their funding is coming from and more. To some extent they need to know what they don’t know. It’s a big ask, but it is vital.
In many ways Australia got lucky in 2008. The Reserve Bank had a lot of room to slash interest rates and did it aggressively. The government had close to zero net debt and could spend fast. Ken Henry’s aphorism, “go early, go hard, go households” was heeded by an unusually intellectually curious and adept prime minister. China – our biggest trading partner – enacted an aggressive stimulus plan of its own.
The US Federal Reserve Chair just happened to be the world’s leading expert on the 1929 Great Depression, and the US Treasury Secretary was the former head of Goldman Sachs, an eminence of the banking world. Our response at home was matched by a near-perfect response abroad.
We won’t be that lucky again. Now is the time to plan how to fight the next recession.
Richard Holden, Professor of Economics, UNSW
This article is republished from <a href="http://theconversation.com" target="_blank">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/now-is-the-time-to-plan-how-to-fight-the-next-recession-111497" target="_blank">original article</a>.
This is part of a major series called Advancing Australia, in which leading academics examine the key issues facing Australia in the lead-up to the 2019 federal election and beyond. Read the other pieces in the series <a href="https://theconversation.com/au/topics/advancing-australia-66135" target="_blank">here</a>.
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Now is the time to plan how to fight the next recession: Richard Holden

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EXPERT OBSERVER
2019 is likely to be an interesting year for the Australian economy.
Some of the big drags of recent years are receding but housing is turning down, uncertainty is high around the global outlook and it’s an election year, which will add to uncertainty.
Australian growth has slowed again September quarter GDP growth was just 0.3% quarter on quarter or 2.8% year on year and was well below expectations
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This was concerning for two reasons.
Firstly, it suggests that the pickup in growth seen in the first half of the year was an aberration.
And secondly it highlighted that the fears around consumer spending as housing slows may be starting to be realised as consumer spending was the big downside surprise.
Housing downturn… For years we have felt that the combination of surging household debt and surging house prices was Australia’s Achilles heel in that it posed the greatest domestic threat to Australian growth should it all unravel.
But we also felt that in the absence of a trigger it was hard to see it causing a major problem.
However, over the last year a combination of factors have come together to turn the housing cycle down and create a perfect storm for house prices in Sydney and Melbourne.
These include: poor affordability; tight credit conditions; a surge in the supply of units; a collapse in foreign demand; borrowers switching from interest only to principle and interest loans; fears by investors now that changes to negative gearing and capital gains tax if there is a change of government (assuming Labor can get it through the Senate) will reduce future demand for their property investment; all of this is seeing the positive feedback loop of recent years (of rising prices &gt; rising demand &gt; rising prices etc) give way to a negative feedback loop (of falling prices &gt; falling demand &gt; falling prices etc).
This could all be made worse if immigration levels are cut sharply.
Auction clearance rates have fallen to record lows – which for Sydney and Melbourne are consistent with further price falls running around 8-10% pa - and housing credit continues to slow.
Click here to enlarge.
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House prices in Sydney and Melbourne will likely have a top to bottom fall of around 20% (10% in 2019) and national average prices will likely have a top to bottom fall of around 10%.
While not on the scale of the property crashes seen during the Global Financial Crisis (GFC) in the US and parts of Europe, the Australian property downturn will have a significant negative economic impact.
The main impacts are expected to be:
1. A direct detraction from growth as the housing construction cycle turns down. This is likely to amount to around 0.4 percentage points per annum (which was what it added on average during the construction boom).
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<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/12/17/G3.jpg" alt="">
2. Reduced demand for household equipment retail sales as dwelling completions top out and decline.
3. A negative wealth effect on consumer spending of around 1% pa. Rising housing wealth helped drive decent growth in consumer spending in NSW and Victoria as households reduced the amount they saved as their housing wealth rose. This is now likely to go in reverse detracting around 0.6 percentage points from GDP growth. 
4. There could also be a feedback loop into further bank credit tightening if non-performing loans and defaults rise.
Taken together these could detract 1-1.2 percentage points from growth over the next year.
Clearly a deeper slump in national property prices - say a 25% top to bottom fall rather than the 10% we are expecting - would cause severe economic damage but in the absence of much higher interest rates or unemployment causing mass defaults this is unlikely.
Australia hasn’t seen the sort of deterioration in lending standards seen in the US prior to the GFC that saw people with “no income, no job, no assets (NINJA’s)” get loans and where the Fed raised rates 17 times over two years! And unlike in the US, Australian mortgages are full recourse loans so there is no “jingle mail”.
So, a US GFC style surge in defaults adding to downwards pressure on prices is unlikely.
Barring a deeper property slump, a recession is unlikely.
The drag on growth from slumping mining investment (which was averaging around 1.5 percentage points per annum) is fading as mining investment is getting close to the bottom. 
Surveys point to a recovery in non-mining investment.
Business investment plans for this financial year are pointing to a 4% gain and 7% for non-mining investment.
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<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/12/17/G4.jpg" alt="">
Public infrastructure spending is rising and has further to go.
Net exports are likely to continue adding to growth, although the US/China trade war is a threat here.
And there are even a couple of positives for consumer spending in the form of lower petrol prices (saving around $10 a week for a typical household) and likely pre-election tax cuts or handouts although these may not kick in until July 2019.
Under a Labor Government this looks likely to be more skewed to low and middle income earners with high income earners facing tax hikes.
Given the cross currents, our assessment is that growth is likely to be around 2.5-3% going forward.
This is not the recession some fear but it’s well down from the 3.5% pace the RBA expects.
Inflation to stay lower for longer Growth around 2.5-3% won’t be enough to further eat into spare labour market capacity so the decline in unemployment is likely to stall (job vacancies appear to be slowing) and underemployment is likely to remain high at 8.3%.
This in turn points to wages growth remaining weak.
Meanwhile, it’s hard to see much uptick in other sources of inflationary pressure.
Competition and pressure for price discounting remains intense and commodity prices have fallen this year with the oil price falling over 30% from its recent high feeding through to lower petrol prices and the link between moves in the $A and inflation has been weak for years now.
The latest Melbourne Institute Inflation Gauge points to a further fall in inflation into this quarter with its trimmed mean measure of underlying inflation up just 1.3% year on year in November.
Click here to enlarge.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/12/17/G5.jpg" alt="">
Against the backdrop of falling house prices, tight credit conditions and constrained growth, which will keep wages growth weak and inflation below target for longer we see the next move by the RBA being a rate cut.
However, it will take a while to change the RBA’s thinking, so we don’t see rates being cut until second half next year but won’t rule out an earlier move if things are weaker earlier than we are expecting.
By end 2019 the cash rate is likely to have fallen to 1%.
Rate cuts won’t be aimed at reinflating the property market but supporting households with a mortgage to offset the negative wealth impact on spending.
A 0.25% rate cut roughly saves a household with a $400,000 mortgage $1000 a year in interest costs.
And banks will likely have no choice to pass the cuts on given the bad publicity not passing them on will generate.
There are several implications for Australian investors.
First, bank deposits rates will remain poor.
Second, with the RBA likely to cut rates and the Fed hiking (albeit slowing) the $A is likely to fall into the high $US0.60s.
Third, Australian bonds are likely to outperform global bonds.
Finally, while Australian shares are still great for income, global shares are likely to remain outperformers for capital growth. The housing downturn will weigh on retailers, retail property, banks and building material stocks. 
DR SHANE OLIVER is the Head of Investment Strategy and Chief Economist at AMP Capital
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The Australian economy in 2019 - house prices, growth and interest rates: Shane Oliver

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House price growth is typically regarded as a good thing. It creates a feel good wealth effect which triggers spending across the Sydney economy.
But over the past few weeks, ANZ, Moody's Analytics, BIS Oxford, Macquarie Securities, HSBC, Citi, JP Morgan and UBS have all adjusted their price forecasts downwards for the Sydney residential market outlook. 
Most of these economists are saying prices will fall by somewhere up to 10% from peak to trough.
For most property owners who are happy where they are, its not something that is going to directly affect their bottom line. They might just think they are not as wealthy.
The reduced values could certainly affect existing homeowners refinancing mortgage loans in what is already a tougher post-royal commission lending landscape.
The sellers this spring who have owned their home for an extended time are on the whole likely to come up a little short of the stellar price that their new neighbour paid last year.
But with huge 75% gains made during the five year long post-2012 boom, they will be fine.
This downturn, if it stays moderately quarantined, will only truly impact those who bought in the past two years, paying over the odds, and now wanting to sell.
These resales are actually few and far between, although I spotted one in Surry Hills.
The ninth floor, one bedder sold for $753,000 having sold in early 2017 at $770,000.
All up when the $20,000 loss is added to costs, the seller would be down by $70,000.
But at least there was activity arising from the listing which highlights home buying is more affordable for buyers.
There were three bidders for the apartment, so two are still looking.
The NSW Treasury actually anticipates a slowdown in sales activity, which could limit the price falls, but will unquestionably affect many more players in the property market.
Treasury expect just 183,000 annual sales, as property transactions are put on hold.
This figure is down on the prior 210,000 annual sales tally.
That means 27,000 fewer agency commissions and solicitor contracts.
Less bank or mortgage broker loans.
Fewer tradies tasked to fix up those long overdue unhelpful selling issues like the leaking gutters.
No need for those fresh flowers for the Saturday open for inspections. 
Maybe no need for 54,000 bottles of champagne - one for every seller and buyer.
It is this ripple effect which affects the wider economy and potentially triggers a recession.
The Reserve Bank of Australia governor Philip Lowe recently suggested the current decline was "manageable".
Australia had gone through "plenty of periods" in the last two decades where prices have declined," Dr Lowe said.
"That's what happens in the housing market – we have these big run-ups, prices stabilise, sometimes they might fall, stabilise and then they'll rise again.
“We are watching it carefully.
"As long as it's not a very large decline – it's manageable."
Of course, full time secure jobs have traditionally been the key to owning and holding the family home.
So it is to be hoped the 8,000 layoffs announced this month by Telstra don't become endemic.
This article first appeared in The Daily Telegraph. 
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jchancellor-FAypfDUnLy

Sydney property price falls could have rippled effect across economy

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GUEST OBSERVATIONS
What is economics all about? Ask a person in the street and the most likely answer will be along the lines of “economics is about money, earning money, something similar to business and finance”. But economics is more than just the study of money – there is a whole other side of economics that many people have never thought of. It is time we spread this message to attract more students, especially women and those from minority backgrounds, into economics.
A lack of diversity among economists has serious consequences for society. A survey of US economists found that the gender mix of economists could affect the nature of policy advice they provide.
In Australia, more than half of university economics students are in the top quarter of socio-economic status, with only about 10% in the bottom quarter. The low proportion of women, minorities and students from low socioeconomic backgrounds in the field of economics affects social problems we should all care about.
Economics can help patients find the right kidney donors or match foster children with the most suitable parents. When you do a Google search or use wireless internet, have you ever thought of the integral part that auction theory, a subfield of economics, plays in today’s digital age?
What about the most important issues facing humanity today? Media articles portray an inaccurate picture when they say that young people care more about social issues and the environment than about the economy. Without economics, none of these social and environmental issues can be tackled effectively.
Various specialisations of economics (including public, political, environmental, health, labour, cultural, social welfare, gender and development economics) analyse social issues and design testable solutions and policies for major problems of our times. This includes issues such as climate change, inequality, poverty and immigration.
Society has evolved into an economy. This means we need economic literacy to remain politically and socially informed. The problem begins with getting students into the economics pipeline.
How does an image problem affect the pipeline?
The widespread misconception that economics is essentially business and commerce creates a major hurdle to attracting students into economics. Since high schools introduced business studies in 1991, enrolments in Year 12 economics have fallen by almost 70%.
The lack of female participation in high school economics is equally stark. A 2016 study for the Reserve Bank found only about one-third of Year 12 economics students were female in 2016, down from around half 25 years ago. At Australian universities, women account for between 25% and 45% of undergraduate economics students.
Low female participation in economics at school flows on to a lack of women in economics, especially in academia. Less than 10% of economics professors at Group of Eight universities are women.
Too few high schools teach economics. Even when it is taught, its importance in solving social issues is neglected. Most high school students don’t get to know what an economist actually does and what the potential of economics can truly be.
Moreover, economics is offered mostly in private and boys’ schools. That helps explain why mostly students from a certain gender and socioeconomic background choose it as their career. This contributes to the lack of diversity in economic leadership and the related consequences for public policy and business decisions.
<a href="https://images.theconversation.com/files/222915/original/file-20180613-153668-9emvuo.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img src="https://images.theconversation.com/files/222915/original/file-20180613-153668-9emvuo.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt=""></a>
Old-school economics: President George W. Bush meets in January 2003 with economists whose lack of diversity is striking. <a class="source" href="https://georgewbush-whitehouse.archives.gov/news/releases/2003/01/20030121-1" target="_blank">Paul Morse/White House Archives</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/" target="_blank">CC BY</a>
Another misconception about economics is that it is a difficult and mathematical subject, which women cannot succeed in or would not enjoy studying. In any case, there is no evidence that women are worse than men in mathematical subjects, including economics. On the contrary, several studies document the stereotype threat to the performance of women in these subjects.
Finally, the ambiguity of career paths for economics graduates is an important factor in the pipeline problem. If you study law, you become a lawyer. If you study medicine, you become a doctor. What occupation do you get as a graduate of economics?
Most young people are not able to answer this question. Having a clear idea of job prospects is crucial for students, especially those from certain demographic groups, when choosing a university degree.
<a href="https://images.theconversation.com/files/222917/original/file-20180613-153660-dobd7t.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img src="https://images.theconversation.com/files/222917/original/file-20180613-153660-dobd7t.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt=""></a>
 Author provided
How can we fix economics’ image problem?
Unlike declining enrolments in STEM subjects (science, technology, engineering, maths), the decline in economics enrolments, especially by women, has received little public attention. The remedy probably starts with expanding the number of high schools that teach economics. The curriculum also needs to be redesigned to highlight the relevance of economics to our daily lives and, more broadly, for resolving social problems.
Universities can also do a lot more. Initiatives that can help include organising high school events where speakers talk about social issues through an economics lens, choosing female speakers for these events, and preparing career guides that explain the wide range of paths that economists can follow.
Recently, steps have been taken to increase women’s participation in economics both at universities, such as the Women in Economics program at the University of Adelaide and Women in Economics Hackathon at the University of Queensland, and nationwide (Women in Economics Network). These initiatives promise the start of a new era for the pipeline problem of women in economics in Australia.
Yet a lot remains to be done to resolve the image problem of economics. Portraying a more accurate and inclusive image of economics in the media would be an effective step in this direction.
Duygu Yengin, Associate Professor of Economics, University of Adelaide
This article was originally published on <a href="http://theconversation.com" target="_blank">The Conversation</a>. Read the <a href="https://theconversation.com/secret-mens-business-why-the-public-image-of-economics-is-bad-news-for-all-of-us-98145" target="_blank">original article</a>.
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Why the public image of economics is bad news for all of us

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GUEST OBSERVATION
Large fish species are rapidly declining around Australia, according to the first continental diver census of shallow reef fish. Contrary to years of sustainability reports, our study indicates that excessive fishing pressure is contributing to decline of many Australian fish species.
In areas open to fishing, we found that exploited populations fell by an average of 33% between 2005 and 2015. This rate closely matches the 32% downward trend in total Australian fishery catches through the same period.
In contrast, in marine parks where fishing is prohibited, the same species increased by an average of 25%. Other species not targeted by fishers showed a small downward trend (11% decline in fished zones; 16% decline in no-take marine reserves), indicating that recent marine heatwaves off southeastern and southwestern Australia have probably adversely affected marine life over a wide area.
Citizen science
Our audit of 531 study sites was made possible by combining data from 50-metre long transects repeatedly surveyed by Australian Institute of Marine Science and University of Tasmania research divers, and by highly trained volunteers participating in the citizen science Reef Life Survey program.
After the collapse of some high-profile fisheries in the 1990s, such as gemfish, orange roughy and southern bluefin tuna, federal and state agencies took a more conservative approach to fish capture. Australian fisheries are now regarded as among the most sustainable worldwide.
Regardless, the prevalence of downward population trends in our investigation indicates that a reduction in fishing pressure and additional caution is needed. Otherwise, more Australian fisheries may not be economically viable if this trend continues.
Our analysis identified a variety of issues that affect fishery management practices, many of which are also evident overseas, including:
<ul>
<li>little relevant data for decision-making related to ecological issues</li>
<li>a lack of no-fishing reference areas to scientifically assess impacts of fishing</li>
<li>poorly documented stock assessments with limited public accessibility</li>
<li>management decisions made by committees dominated by industry-aligned members</li>
<li>short-term catch maximisation prioritised over precaution</li>
<li>fishery models that rarely consider species interactions or climate impacts</li>
<li>wider effects of fishing on ecosystems and their resilience to multiple pressures are overlooked</li>
</ul>
No-fishing reserves work
Our study indicates that a highly effective but underused tool in the manager’s toolbox is expanded rollout of no-fishing “marine reserves”. Despite receiving wide public support, most Australian marine reserves are small and located in areas with few fishery resources. They consequently house few mature, egg-producing females and do little to assist in the rebuilding of overfished stocks. Nor are they likely to help much in the recovery of important ecosystem functions, as needed for fished-species populations to rebound after climate shocks and other pressures.
The July rollout of Australian Marine Parks, in particular, represents a lost opportunity that may prove a significant problem for fishers. Although covering 2.76 million square kilometres – the largest marine park in the world – it is of limited conservation value.
Through three rounds of public submissions, each largely aimed at minimising any remaining overlap with current fishing activities, the final zoning plans affect very few stakeholders. The outcome is neither an efficient nor effective solution to the actual problem of protecting the oceans.
For example, the Temperate East Zone covering waters from the Victorian border to southern Queensland includes no new “no-take” reserves shallower than 1,000m depth, although these waters are where virtually all fishing impacts occur in this region.
The widespread declaration of marine parks that allow current fishing to continue is perhaps useful when harmful fishing practices for ecosystems are excluded. However, our study indicates that this basic assumption does not apply to Australian Marine Parks.
<img src="https://counter.theconversation.com/content/97689/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1">The environmental and economic debt for future generations is both huge and unfair.
Graham Edgar, Senior Marine Ecologist, Institute for Marine and Antarctic Studies, University of Tasmania
Trevor J Ward, Adjunct professor, University of Technology Sydney
This article was originally published on <a href="http://theconversation.com" target="_blank">The Conversation</a>. Read the <a href="https://theconversation.com/australian-commercial-fish-populations-drop-by-a-third-over-ten-years-97689" target="_blank">original article</a>.
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Australian fished populations drop by a third over 10 years, study finds

Economic outlook in 2018 and 2019 expected to be better than 2017: RBA

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GUEST OBSERVER
Most recent estimates show the Higher Education Loan Program (HELP) debt owing is nearly A$52 billion in 2017-18. It’s forecast to increase to A$75 billion by 2020-21 and up to 25% of those loans are unlikely to be paid.
Legislation to lower the initial HELP repayment threshold from A$55,000 to A$45,000 (with a rate of 1%) is likely to pass the senate after passing the lower house on March 27th. This legislation includes linking indexing to inflation instead of average weekly earnings, which will slightly increase the rate of debt accumulated (20 year average for inflation is around 2.6%, compared to 1.8% for average weekly earnings).
Increasing repayments on HELP debt by lowering the initial threshold is an easy target. Why? Because people who owe money don’t pay much attention to their HELP balances, let alone the parameters that determine repayment and accumulation.
Since the ATO stopped posting statements in 2013, people owing HELP debt are left to their own devices and to check their balances on the ATO site. General financial advice points to giving HELP debts low levels of attention and paying down high-interest loans first.
Proposed changes, like replacing the annual average weekly earnings indexation with the 10-year government bond rate, abolishing the deceased-estate write-off for estates exceeding A$100,000, and lowering the initial threshold to A$42,000 have drawn media attention over the years, but have not been met with outrage by those potentially most affected.
But there are softer tactics that could nudge debtors into increasingly making repayments voluntarily.
Students need a financial toolkit
First, equip students with a financial toolkit. It would involve legislating education providers to deliver financial literacy programs that include information about the HELP scheme and their obligation.
Such a program should include making students aware of the parameters, repayment projections under various scenarios, and potential changes to the scheme as proposed by political parties or commentators. If the provider (university or vocational educator) offers HELP then surely they have a moral obligation to provide this service.
Offering financial literacy programs through tertiary education providers also fills a gap in the National Financial Literacy Strategy. ASIC’s MoneySmart would be an ideal curriculum consultant.
Such programs are already implemented in the US. Due to the large scale of privatised student debt issues, 53% of universities offer financial education program to students.
Studies on the efficacy of these programs demonstrate increased financial knowledge, reductions in financial at-risk behaviours (like delinquencies, excessive credit and over-spending), and increases in responsible behaviours (including improving regular savings and planning).
While the settings in the US differ to Australia (commercial interest rates, not extinguished by death), privatisation has been previously explored.
Australian debtors don’t “default” like US debtors because most student loans are like a commercial loan in the US. In Australia, graduates only do not pay if they don’t reach the repayment threshold, or die.
Bring back discounts
Second, bring back discounts on voluntary payments over A$500, abolished by the Liberal government in 2017 . Previously, discounts were 15% up until 2005, then 10% until 2014, then 5%. What, then, incentivises people to pay lump sums?
Communication is everything
Third, the ATO needs to communicate with HELP debtors on a regular basis to overcome laziness and put HELP debts as first priority in personal financial decisions.
Text messaging is effective in influencing behaviour. Text messages prior to indexation have encouraged balance checks and lump sum payments (particularly at tax rebate time) and may be effective in increasing voluntary repayments. These strategies work by subtly reframing the way messages are conveyed, and regular presentation of messages, to positively impact behaviour.
A positive aspect of the legislation under consideration is that lowering the initial repayment threshold means HELP debt repayments will appear on payslips. Because of this, early on in a debtor’s working life they will be able to increase their awareness of HELP debt owing.
The threshold reduction needs to be compatible with the original intention of the income contingent loan scheme to provide equitable access. Lowering the initial repayment threshold will put increased financial pressure on relatively low paid workers, many of whom are women. Under the new changes, a person earning A$46,000 will repay nearly A$9 a week. While this doesn’t sound like much, a single mother may strongly disagree.
<img src="https://counter.theconversation.com/content/94910/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1">The government should consider pursuing other, more gentle and effective behavioural tactics to reduce the national HECS debt in the lead-up to the budget, rather than one that has the potential to hurt low paid workers.
Tracey West, Lecturer in Behavioural Finance, Griffith University
This article was originally published on <a href="http://theconversation.com" target="_blank">The Conversation</a>. Read the <a href="https://theconversation.com/lowering-the-help-repayment-threshold-is-an-easy-target-but-not-the-one-we-should-aim-for-94910" target="_blank">original article</a>.
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Lowering the HELP repayment threshold is an easy target, but not the one we should aim for: Tracey West

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GUEST OBSERVER
This is an edited extract from RBA Governor Philip Lowe's speech at the recent A50 Dinner.
For a while now we have been expecting the Australian economy to grow more strongly in 2018 and 2019 than it did, on average, over recent years. There are a number of reasons for this. We are all but through the decline in mining investment to more normal levels, there is a large pipeline of urban infrastructure work to be done, the global economy is experiencing a solid upswing, commodity prices are up and financial conditions remain accommodative. All this is helping.
The RBA will be releasing our latest economic forecasts tomorrow in the <cite>Statement on Monetary Policy</cite>. These forecasts will be largely unchanged from the previous set of forecasts. The RBA's central scenario remains for the Australian economy to grow at an average rate of a bit above 3% over the next couple of years. This outlook has not been affected by the volatility in the stock market over recent days. Indeed, it is worth keeping in mind that the catalyst for this volatility was a reassessment in financial markets of the implications of strong growth for inflation in the United States. For some time, many investors had been working under the assumptions that unusually low inflation and unusually low volatility in asset prices would persist, even with above-trend growth at a time of low unemployment. A reassessment of these assumptions now appears to be taking place against the backdrop of strong economic conditions globally.
Looking beyond these financial events, the data we have received on the real economy over the summer have been consistent with our assessment that GDP growth will pick up over 2018. Taken together, the recent domestic and global data on the real economy suggest that 2018 has started on a more positive note than did recent years.
Particularly noteworthy has been the labour market, with employment increasing by 3¼% over the past year. This strong performance has been accompanied by a large number of people joining the workforce, so that the participation rate has returned to around the level reached at the peak of the mining investment boom. There have been noticeable increases in the participation rates of both women and older Australians. At the same time, the unemployment rate has declined to around 5½% and a further gradual decline is expected over the next couple of years.
Business conditions are around their highest level since before the global financial crisis and there has also been an improvement in business confidence. Non-mining business investment has been stronger than we had expected a year ago and the investment outlook has brightened. One ongoing area of uncertainty, though, is consumer spending. Household incomes are growing slowly and debt levels are high. I will return to these issues in a moment.
On the prices front, we continue to experience subdued outcomes, although inflation is higher than it was a year ago. Over 2017, inflation was a bit under 2%, in both headline and underlying terms. Last week's data provided further confirmation of trends we have been witnessing for some time. Increased competition in retailing is contributing to price declines for many consumer durables. And subdued wage increases are contributing to low rates of inflation for a range of market services. The rate of rent inflation also remains low.
The immediate outlook is for a continuation of these broad trends, but for inflation to pick up gradually as the economy and labour market strengthen. We are expecting CPI inflation to be in the 2 to 2½% range over the next couple of years. Underlying inflation, which is less affected by the scheduled increases in tobacco excise, is expected to be a bit lower than CPI inflation.
I would now like to touch on a couple of issues that we are paying close attention to and that could have a significant bearing on the outlook for growth and inflation over the next couple of years.
The first of these is wage growth. Not only are most workers experiencing low wage increases, but following the resources boom some people have moved out of highly paid jobs. The result is that after many years of Australians experiencing strong growth in real incomes, growth in average nominal and real incomes has been much slower over recent times.
The effects of low real wage growth on the economy work in different directions. On the one hand, the restrained growth in labour costs is one of the factors that has boosted employment. But, on the other hand, the slow growth in incomes has weighed on spending, including by making it harder for some households to pay down their debts.
On balance, though, in the current environment, some pick-up in wage growth would be a welcome development. Ideally, this would be on the back of stronger productivity growth. But even if productivity growth were to be around the average of recent years, a faster rate of wage increase should be possible. Indeed, a lift in wage growth is likely to be necessary for inflation to average around the midpoint of the 2–3% medium-term inflation target. Stronger growth in real wages would also boost household incomes and create a stronger sense of shared prosperity.
Our central scenario is for this pick-up in wage growth to occur as the economy strengthens, but to do so only gradually. Through our liaison with business we hear some reports of wage pressures emerging in pockets where labour markets are tight. We expect that over time we will hear more such reports. After all, the laws of supply and demand still work.
I have spoken previously about the factors affecting wages, and they have a global dimension. Globalisation and advances in technology have increased competition, and greater competition means less pricing power. Given the strength and pervasiveness of these forces, it is unlikely that they are going to disappear quickly, so the pick-up in wage growth is likely to be fairly gradual.
A second factor shaping the outlook is the level of household debt. Indeed, the high level of household debt in Australia is remarked upon by international investors almost as often as the fact of 26 years of growth.
A while back we had become quite concerned about some of the trends in household borrowing, including very fast growth in lending to investors and the high share of loans being made that did not require regular repayment of principal. Our concern was not that developments in household balance sheets posed a risk to the stability of the banking system. Rather, it was more that they posed a broader macro stability risk – that is, the day might come, when faced with bad economic news, households feel they have borrowed too much and respond by cutting their spending sharply, damaging the overall economy.
We have worked closely with APRA, including through the Council of Financial Regulators, to address these issues. This work, together with other steps taken by APRA, has helped improve the quality of lending in Australia. In the housing market, there has also been a change. National measures of housing prices are up by only around 3% over the past year, a marked change from the situation a couple of years ago. This change is most pronounced in Sydney, where prices are no longer rising and conditions have also cooled in Melbourne. These changes in the housing market have reduced the incentive to borrow at low interest rates to invest in an asset whose price is increasing quickly.
On balance then, from a macro stability perspective, the situation looks less risky than it was a while ago. We do, however, continue to watch household balance sheets carefully as there are still risks here.
Challenges
I would now like to move to the second question that I get asked frequently. Beyond the short term, what are the challenges facing the Australian economy?
When I spoke at this forum last year I talked about four challenges:
<ul>
<li>the need to reinvigorate productivity growth</li>
<li>finding ways of capitalising on the opportunities in Asia</li>
<li>providing the infrastructure needed for a growing population and to support productivity</li>
<li>making sure that our public finances were on the right track and that our tax system was internationally competitive.</li>
</ul>
This is by no means a complete list; at a minimum, you could add some of the issues I have just spoken about. But it remains a reasonable list and I thought it useful to offer an update.
Improving our productivity remains the key to further improvement in our living standards. Average growth in labour productivity has been a bit higher since the peak in the mining boom than it was in the preceding five years, although capital deepening has been an important part of the story here. Late last year the Productivity Commission provided some guidance about how we might lift our performance with the release of the first of its five-yearly reports – the <cite>Shifting the Dial</cite> report. This is another example of Australian policy institutions tackling important issues through serious and systematic reviews. A central theme of the report is the importance of services and cities. Most Australians now work in the service sector and live in cities, so how we deliver services and how our cities function have a major influence on our future living standards. This is yet another area where we will benefit from a strong innovation mindset.
On building our links with Asia, we continue to see progress. New trade agreements are opening up new opportunities for Australian business in the region and the share of Australia's exports going to Asia continues to rise. Last year, the value of Australia's merchandise exports increased by more than 15% to each of China, Japan, Korea, Taiwan, Indonesia and the Philippines. Exports of resources have been an important part of the story, but it is broader than that, with strong growth in exports of services too. Person to person links also continue to deepen, with half of all international visitors to Australia last year coming from Asia.
On infrastructure, the story is also a positive one. Increased public investment in infrastructure in our largest states is currently providing a boost to the economy and it is also building productive capacity for the future. With our population continuing to grow at a relatively fast rate for an advanced economy – around 1½% a year – this is an area for us to continue to focus on. As we do this, we need to pay close attention to the governance of decisions around project selection, the control of construction costs, usage pricing and the allocation of risk between the public and private sectors. Good governance is important in these areas to support sound decision-making and to retain public trust and confidence in governments' spending plans.
Finally, on the fiscal side, the latest estimates are that things are on track to meet the Australian Government's projection of returning the budget to balance by 2020/21. Australia's record of careful management of public finances meant that when the financial crisis hit a decade ago, fiscal policy was able to play a role stabilising the economy. Ensuring that our public finances are on a sustainable footing is important to ensuring that we have similar flexibility in the future. The issue of how the tax system affects the competitiveness of Australia as a destination for investment is one of ongoing political debate. There have been some cuts in company tax and parliament is considering further changes.
Reduction of Monetary Stimulus Globally
I would now like to turn to the final question that I often get asked: as other central banks raise interest rates, won't the RBA have to, too?
It is understandable that this question is asked. Over time, there is a common element to movements in interest rates around the world. The level of interest rates in all countries is influenced by movements in the neutral global real interest rate. During the financial crisis, the neutral global rate fell and this has had an important influence on the setting of interest rates in all countries, including here in Australia. If we had not lowered our interest rates as global rates fell, the Australian economy would have grown by less and inflation would have been even lower than it turned out to be.
The fact that there is a common element in interest rates, however, does not mean that interest rates need to move in lock-step with one another. Countries with a floating exchange rate, like Australia, still retain considerable flexibility to set interest rates based on their domestic considerations. We did not lower our interest rates to the extraordinarily low levels seen elsewhere after the financial crisis. Our circumstances were different: we didn't have a meltdown in the financial system and we experienced a very large cycle in commodity prices and mining investment.
Just as we did not move in lock-step on the way down, we don't need to do so in the other direction. It's understandable that some other central banks are raising rates. They lowered their rates by more than us and, in a number of countries, the unemployment rate is now below conventional estimates of full employment at a time when above-trend growth is expected.
Our circumstances are a little different. We are still some way from what could be considered full employment and our central scenario for inflation is for it to remain below the midpoint of the medium-term target range for the next couple of years.
We expect, though, to make further progress in reducing unemployment and having inflation return to the midpoint of the target range. If we do make that progress, at some point it will be appropriate for interest rates in Australia to also start moving up. So, given recent developments in Australia and overseas, it is likely that the next move in interest rates in Australia will be up, not down. If this is how things play out, the likely timing will depend upon the extent and pace of the progress that we make. As I have discussed, while we do expect steady progress, that progress is likely to be only gradual. Given this, the Reserve Bank Board does not see a strong case for a near-term adjustment in monetary policy. It will of course keep that judgement under review at future meetings.
I hope that these remarks this evening have helped you understand the Australian economy, our opportunities and some of the challenges we face. I look forward to answering your questions.
Philip Lowe is Governor of the Reserve Bank of Australia.
Read the full <a href="https://www.rba.gov.au/speeches/2018/sp-gov-2018-02-08" target="_blank">speech to A50 dinner</a>.
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