Melbourne developer Spacious Group has completed Voyage Altona, one of the closest new apartment developments to Altona Beach.

Off the plan purchasers have started moving into the 49-apartment project on Pier Street, with the remaining move-in-ready one-, two- and three-bedroom apartments starting from just over $500,000.

Display apartments have now been fitted out, allowing prospective buyers to inspect the completed residences by appointment.

[smartcode_project:default project_id=112195 project_image_fid=372638]

The completed apartments feature open-plan living and dining areas which extend onto private balconies and terraces, while full-height glazing maximises natural light throughout the interiors.&nbsp;

Hybrid timber-look flooring, stone benchtops, Miele appliances, porcelain-tiled bathrooms and generous storage feature throughout the building which also features landscaped communal areas, expansive shared terraces, lift access and secure on-grade parking.

Drawing inspiration from its bayside setting, Voyage adopts a restrained palette of warm neutral tones and textured finishes. Many of the apartments take advantage of views across Port Phillip Bay, while the indoor-outdoor living spaces have been designed to make the most of the coastal outlook.

[smartcode_project:default project_id=112195 project_image_fid=3286]

Voyage was developed to address what Spacious Group identified as an undersupply of higher-quality apartment product in Altona, with a focus on owner-occupiers looking to remain within the bayside community.

"Voyage responds to very strong local buyer demand for quality, owner-occupier-focused product," says Barry Plant Projects Director Jarrod Farey, who has handled sales since the project's launch.

"The project delivers an elevated lifestyle proposition, with its design and quality of finish far exceeding anything previously produced in the area, as well as its proximity to Pier Street Village and the beach."

The majority of purchasers have been local downsizers and owner-occupiers looking to stay within the Altona community but who previously had limited opportunities to buy a brand-new apartment.

[smartcode_project_cta:default project_id=112195]

Joel Robinson

Spacious Group completes Voyage Altona in Altona's beachside precinct

Homecorp has secured approval for a $360 million apartment development at Budds Beach, paving the way for one of the Gold Coast's most amenity-rich residential projects to launch later this year.

Gold Coast City Council has approved Lýon Residences, a 32-level tower that will deliver 178 two and three-bedroom apartments across a prominent corner site at 8-10 Acacia Avenue and 25-27 Oak Avenue.

The approval comes as developers continue to invest in premium lifestyle-driven apartment projects on the Gold Coast, where owner occupiers are increasingly prioritising amenity as much as apartment size and location.

<a href="https://www.apartments.com.au/new-apartments/l-on-residences-25-27-oak-avenue-surfers-paradise-qld-4217">Lýon Residences</a> has been designed around a resort-style wellness offering, headlined by a Moroccan-inspired spa precinct featuring treatment rooms, a Nordic sauna and steam room, hot and cold plunge pools, a soaking pool and a residents-only juice bar.

The rooftop will include a heated infinity pool and spa, residents' lounge with private kitchen and bar, gymnasium, yoga and Pilates studio, outdoor entertaining areas and barbecue facilities overlooking the Surfers Paradise skyline.

<img alt="Lyon" data-entity-type="file" data-entity-uuid="2d3e29af-8793-486e-a684-52cef862241f" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-07-15%20at%204.32.26%E2%80%AFPM.png?VersionId=ayG2zpLf3SS6Zy8XmKDcQods4kVWb0gm" />

Homecorp Founder and CEO Ron Bakir said Budds Beach provided the ideal location for the company's latest luxury apartment project.

"Budds Beach represents one of the most unique and sought-after pockets of the Gold Coast, and Lýon Residences has been designed to reflect that sense of rarity and refinement," Bakir said.

The project arrives as wellness continues to become a defining feature of new residential developments both in Australia and internationally.

The latest Global Wellness Institute figures show wellness real estate remains the fastest-growing segment of the global wellness economy and is forecast to exceed $1.8 trillion by 2030. Australia continues to rank among the world's 15 largest wellness real estate markets, with developers increasingly integrating health, recreation and community facilities into apartment projects.

Queensland is also experiencing strong population growth, with the Gold Coast continuing to outperform many other Australian cities as demand for new housing remains elevated ahead of the 2032 Olympic and Paralympic Games.

Bakir said the project had been designed to respond to that shift in buyer expectations.

"Strong population growth and sustained demand across the Gold Coast continue to highlight the need for well-designed new housing supply. Lýon Residences responds directly to this demand while setting a new benchmark for residential living," he said.

Each apartment has been designed to maximise views across the coastline, the Nerang River and the Gold Coast hinterland.

Located just minutes from Surfers Paradise beach and the Broadwater, the development also offers easy access to the light rail network, Broadbeach and Burleigh Heads.

Early site works are underway, with construction expected to commence later this year.

Homecorp approved for Budds Beach apartment tower, Lýon Residences

New apartment developments with uninterrupted, north-facing views over Perth's Swan River are exceptionally rare.

Recognising just how limited those opportunities are, <a href="https://www.apartments.com.au/developers/edge-visionary-living">Edge Visionary Living</a>, one of Perth's most respected builder-developers, targeted <a href="https://www.apartments.com.au/developments/applecross-wa-6153">Applecross</a>, assembling an unrepeatable 6,342 sqm riverfront site on the corner of Moreau Mews and Canning Beach Road to create one of Perth's only new north-facing apartment developments directly overlooking the Swan River.

Today, <a href="https://www.apartments.com.au/buildings/riviere-residences-applecross-59-canning-beach-road-applecross-wa-6153">Rivière Residences</a> offers buyers a unique opportunity to choose between completed residences ready to move into now and off-the-plan homes in the final stage, Rivière West.

[smartcode_project:default project_id=28384 project_image_fid=3823]

Across the completed East and Central buildings, residents are already enjoying the development's luxury amenity, while two of the precinct's hospitality venues are now open.

The completed component of the development gives buyers the advantage of experiencing the finished product firsthand, including its uninterrupted river views, while still having the opportunity to secure a residence in the final stage.

"People are wowed by the view and the quality of the apartments,"&nbsp;Edge Visionary Living Sales Executive, Holly McSweeney, says.

"They're looking for the convenience of lock-and-leave living, but they're not looking to downsize on quality."

[smartcode_project:default project_id=28384 project_image_fid=3826]

The rarity of the development hasn't been lost on prospective buyers, McSweeney says.

For McSweeney, it all comes back to a location that is becoming increasingly difficult to replicate.

"Location, location, location," she says. "We are nestled right on the front of the Swan River. You can never get built out, so wherever you are in Rivière Residences, you've got views of the river forever."

The unique waterfront position has resonated particularly strongly with local downsizers. McSweeney says many buyers are long-time Applecross residents looking to transition from large family homes into a luxury apartment without sacrificing space, quality or the lifestyle they've enjoyed for decades.

<iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="315" referrerpolicy="strict-origin-when-cross-origin" src="https://www.youtube.com/embed/N_FowNW0wu8?si=vb25XFq1wZ-iufAW" title="YouTube video player" width="560"></iframe>

A major focus for Edge in recent years has been resident amenity. Across its apartment portfolio, from beachfront developments in Scarborough to luxury towers in South Perth, the developer has increasingly invested in the spaces beyond the apartment itself.

The strategy has largely been shaped by downsizer demand. Many buyers are moving from large family homes with swimming pools and established gardens. While they're looking to leave the maintenance behind, they don't want to compromise on lifestyle.

At Rivière, <a href="https://www.apartments.com.au/architects/hillam-architects">Hillam Architects</a> designed the resident facilities as an extension of each apartment. A 25-metre heated swimming pool takes advantage of the north-facing river outlook, complemented by a large gym, sauna and steam rooms, private dining spaces, residents' lounges, a cinema, games room, and dedicated wine and whisky rooms.

[smartcode_project:default project_id=28384 project_image_fid=372542]

The waterfront location has also proved to be a major drawcard. Residents are within walking distance of the Raffles Hotel, South of Perth Yacht Club, the Heathcote Cultural Precinct and the cafés, restaurants and boutiques along Ardross Street.

Beyond the location and amenity, McSweeney says many buyers take confidence from Edge's fully integrated development model.

Having delivered apartments across Perth for decades, Edge now designs, develops and constructs its projects in-house, giving the company greater control over quality, delivery and the finished product.

"What I love is when people walk through their apartment for the first time and say, 'This is better than what we imagined,'" McSweeney says. "We hear that all the time."

Completed apartments in the East and Central buildings are now available to inspect by appointment, while Rivière West, the final stage of the precinct, is expected to be completed in the first quarter of 2027.

[smartcode_project_cta:default project_id=28384]

North-facing Swan River views drive demand at Rivière Residences in Applecross

Nearly 60 per cent of apartments at McNab Group's $220 million The Tannery development in Brisbane's West End have sold ahead of the project's public launch, including a suburb-record $2.57 million sale for a two-bedroom apartment.

The early sales campaign has secured buyers for 50 of the project's 87 apartments, highlighting continued demand for larger owner-occupier apartments that combine generous floorplans with premium lifestyle amenities in one of Brisbane's most tightly held inner-city suburbs.

[smartcode_project:default project_id=143337 project_image_fid=374768]

McNab Group Executive Chairman Michael McNab said selling more than half the project before launch reflected changing buyer expectations.

"Selling more than half the project before public sales open tells us buyers are actively seeking apartments that offer something genuinely different," McNab said.

"Today's buyers are looking beyond four walls. They want homes that genuinely enhance the way they live, with spaces that support health, connection and everyday wellbeing."

[smartcode_project:default project_id=143337 project_image_fid=374767]

A key point of difference for the project is the adaptive reuse of the heritage-listed Dixon's Tannery building, which will become The Retreat, a residents-only wellness precinct rather than being redeveloped into additional apartments.

The Retreat will feature a sauna and steam room, hot and cold plunge pools, a commercial-grade gym, Pilates studio, cinema, library, co-working spaces and private dining room. Rooftop amenities will include a swimming pool, landscaped gardens, outdoor entertaining areas and dog-friendly spaces.

[smartcode_project:default project_id=143337 project_image_fid=374760]

Designed by Cottee Parker Architects with interiors by Tom Mark Henry and landscape architecture by Aspect Studios, The Tannery comprises 87 two, three and four-bedroom apartments across 11 levels overlooking the Brisbane River.

Cottee Parker principal Dee Passenger said preserving the original tannery building had been central to the project's design.

"The easy option would have been to maximise the site's development potential with additional apartments. Instead, McNab has chosen to preserve the original tannery as a shared wellness retreat, ensuring this important piece of Brisbane's history remains at the heart of the community."

Passenger said sustainability also played a key role in the design, with materials from the original industrial site salvaged and repurposed throughout the development.

[smartcode_project:default project_id=143337 project_image_fid=374761]

Motiv CEO Carly Cottam said buyers had responded strongly to the combination of larger apartments, wellness facilities and the West End lifestyle.

"We are seeing more buyers looking for homes in the sky that provide the space and functionality of a traditional home, while benefiting from the convenience and lifestyle that apartment living brings," Cottam said.

She said purchasers included both owner occupiers and investors, with demand coming from local buyers as well as interstate purchasers.

Coinciding with the public launch, McNab also announced a partnership with Queensland Ballet, whose neighbouring Thomas Dixon Centre shares historical ties with the original Dixon family.

Located on a 4,465 sqm site at 439 Montague Road, The Tannery overlooks the Brisbane River and is around 10 minutes from the CBD.

Construction is underway, with completion expected in the second half of 2027.

[smartcode_project_cta:default project_id=143337]

More than half of residences sold before public sales as McNab announces significant partnership with Queensland Ballet

McNab's The Tannery nears 60 per cent sold before public release, sets two-bedroom West End record

Iwan Sunito's vision for a landmark mixed-use precinct in Sydney's Inner West has taken a major step forward, with approval granted for the $1.9 billion Five Dock development first unveiled earlier this year.

The approved scheme by <a href="https://www.apartments.com.au/developers/one-global-capital">One Global Capital</a> will deliver an 80,500 sqm mixed-use precinct comprising 840 apartments, integrated hotel accommodation, commercial and retail space, alongside publicly accessible open space designed to create a new destination for the growing suburb.

"This is a significant milestone for One Global Capital and for the future of housing delivery in Sydney," Sunito said.

"The Housing Delivery Authority was established to identify major housing projects capable of delivering meaningful supply more efficiently, and we are delighted that Spencer Street has been recognised as one of those projects.”

He said the declaration reflected the rapid progress achieved since acquiring control of the site.

"In less than seven months we have progressed from taking control of the site to securing entry into one of the NSW Government's most important planning pathways. It reflects the experience of our team, the strength of our consultant group led by Urbis, and our long-term commitment to delivering transformational projects that contribute to Sydney's future."

When the project was revealed earlier this year, Sunito described the opportunity as one of the strongest development sites he had worked on.

"I probably hadn't appreciated the uniqueness of the site until more recently when putting together the concept plans," Sunito said.

"The proximity to the water, and the golf course opposite, is unlike any other part of Parramatta Road. We have a unique position and view corridors over the water that makes this one of the best sites I've worked on."

The development has evolved since its initial announcement, with the approved plans increasing the residential component from the originally proposed 750 apartments to 840 homes while retaining the project's focus on creating an integrated neighbourhood rather than a standalone residential development.

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/a-city-within-a-city-iwan-sunito-flags-1-5-billion-mixed-use-precinct-in-five-dock">"A city within a city": Iwan Sunito flags $1.5 billion mixed-use precinct in Five Dock</a>

The precinct will combine apartments with hotel accommodation, commercial workplaces, retail offerings and public spaces, creating a mixed-use environment intended to serve both residents and the broader Five Dock community. The proposal also continues the collaboration between One Global Capital and internationally recognised architect <a href="https://www.apartments.com.au/architects/koichi-takada-architects">Koichi Takada</a>, whose previous work with Sunito includes Infinity, Arc and Skye North Sydney.

Takada previously said the design was driven by a philosophy of integrating nature into the built environment.

"The concept for this development is born from our design approach to naturalising architecture," Takada said.

"The public realm benefits from biophilic design that integrates generous landscaping, and the development is optimised for natural daylight, airflow and water views to foster wellbeing, sustainability and spaces that foster community interaction."

Sunito has consistently described the project as a "city within a city", with a strong emphasis on creating a destination that extends beyond housing.

"We want to create a development that's not only to be seen, but to be experienced by the whole local community," he said.

The approval comes as Five Dock continues its transformation ahead of the opening of the Sydney Metro West line, with the new Five Dock station set to significantly improve connections between the Inner West, Parramatta and the Sydney CBD.&nbsp;

The precinct will also benefit from its proximity to the Parramatta Road corridor, nearby waterfront parklands and established retail and dining offerings that have made Five Dock one of Sydney's most tightly held Inner West suburbs.

Iwan Sunito secures approval for $1.9 billion Five Dock mixed-use precinct

Economic Growth

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EXPERT OBSERVER 
Prospects for the Australian Economy; Markets; and Global Risks
As we contemplate the remainder of 2018 and 2019 there are a number of key themes that we believe will dominate economic and market developments. Our advice to customers throughout 2017 has been to expect Australia’s growth rate to likely be anchored below trend in both 2018 (2.7%) and slowing to 2.5% in 2019. That has contrasted with official forecasts (Reserve Bank and Treasury) which anticipate growth picking up to 3.25% in both 2018 and 2019.
We have recognised a solid ongoing boost to growth from non–residential construction; government investment (especially at the state level) and exports. However we are much more cautious than official forecasts on the consumer; residential construction and equipment investment.
Slowing household incomes
Signals from the December quarter national accounts are more encouraging for the official view. Household spending has been revised up from an expected 2.1% to 2.9% following the release of the December quarter national accounts. This picture of households has changed from “lacklustre” to “slightly below trend”. However this was associated with a weak savings rate of 2.7% despite a boost in nominal labour income growth to 4.8% for the year largely due to an extraordinary lift in hours worked of 3.5%. With hours worked increasing so rapidly, labour income growth should have been boosted further but was constrained by wages growth and a drift to lower paid jobs – non-farm compensation per employee remained flat in the December quarter to be up an insipid 1.8% for the year.
Labour productivity fell over the year with GDP per hours worked falling by 1% over the year and unit labour costs growth lifting to 2%. This adverse development in labour productivity is tempering the recent strong demand for labour we experienced in 2017. In the year to April the annualised employment growth rate has slowed to 1.3%. There will clearly be a slowdown in the 2017 break neck pace of growth in hours worked over the course of 2018 and into 2019. Weak wages growth and the drift to lower income jobs looks set to continue putting downward pressure on growth in labour incomes. With the savings rate now probably at its lows, another year of below trend consumer spending growth can be expected.
Business investment
New business investment lifted by 5.8% over the past year, a sharp turnaround from a 6.2% decline over 2016. Over the year, infrastructure work fell 1.2%; non-residential building advanced 12.3% and equipment investment spending increased by 8.4%.
Mining equipment investment lifted by 31% over the year, reflecting the final fit out of three major projects. It is more encouraging that non-mining equipment investment lifted by 6.2% over the year following a slowdown in 2016 partly associated with the uncertainty around the 2016 election. With another Federal Election due by May 2019 and even greater uncertainty associated with that election (conservative government was expected to win the 2016 election whereas the Labour opposition is ahead in the current opinion polls), we may start to see equipment investment run into some headwinds from that political uncertainty from the second half of 2018. A less upbeat outlook for consumer spending in 2018 and 2019 is also likely to discourage equipment investment.
Housing downturn
Dwelling investment contracted in 2017 by 5.8%. Based on the downturn in the trend in high rise approvals and a flat outlook for detached housing, we expect this downturn has further to run with the contraction accelerating into 2019. Oversupply and a marked slowdown in sales to foreigners are weighing on the outlook for residential building. House prices are now falling. On a six month annualised basis, prices are now falling in Sydney (–7.3%); Melbourne (–1.2%); Perth (–0.4%) and Brisbane (–0.1%).
The regulator’s macro prudential policies are restricting interest only loans and tighter guidelines for all new loans are slowing house prices and credit growth. In previous cycles the authorities have relied on raising interest rates to slow the highly cyclical housing market. This time, the same effect has been achieved by the regulator as banks have independently raised loan rates; foreign demand has slowed; and regulations have significantly squeezed the availability of credit. This process will continue for the foreseeable future and the supply of credit is expected to tighten markedly.
On the demand side the attractiveness of investment properties has diminished. Land taxes and lacklustre rental growth have tightened rental yields. Prospects of adverse tax changes in the event of a change of government are also impacting investor confidence. All major banks (with the exception of Westpac) are predicting rate increases out to end 2019. New lending to investors tumbled by 9% in April to be down 26% over the course of the last year.
The current fall in investor loans is comparable to the all in 2015/2016. That subsequently reversed in the aftermath of the May and August rate cuts – prospects for a repeat of rate cuts seem unlikely.
We expect an extended period of falling house prices (up to 10% over the course of the next two years) with weakness particularly centred on the Sydney and Melbourne markets. This will represent a considerable change in the “atmospherics” around housing wealth and may weigh further on prospects for consumer spending. While the wealth effect was modest in the period of rising house prices it is reasonable that there will be a more marked effect through the downswing.
Inflation below target
Inflation is also likely to remain benign holding a little below the bottom of the Reserve Bank’s 2–3% target band. In this regard we are in broad agreement with the Reserve Bank which is forecasting that underlying inflation will hold at around 2.0% in 2018 and 2019. Note that underlying inflation has held below the 2–3% target band in 2015; 2016 and 2017.
With underlying inflation likely to therefore register five consecutive years at or below the bottom of the target range it is reasonable to argue that Australia is experiencing a structural fall in inflation. Arguably, without the risk of overheating the housing market (as would have been a concern through 2016 and 2017), interest rates would have been even lower in Australia in recognition of this structural fall and the disappointing progress in restoring inflation to the target range.
Interest rate outlook
Throughout 2017 and 2018 we have been of the view that the official cash rate will remain on hold in both 2018 and 2019. With rates on hold in Australia and the US Federal Reserve continuing to raise rates, Australia’s cash rate has now fallen below the Federal funds rate. By end 2018, it is set to be 63 basis points below the Federal Funds Rate, and by end 2019, 112 basis points below the Federal Funds Rate.
Sustained period of negative Aus–US rate spreads
The US economy is operating with much less ‘slack’ in its labour market (unemployment rate of 3.9% compared to an estimated full employment rate of 4.5%) than Australia (unemployment rate of 5.6% compared to a full employment rate of 5.0%) but, to date, wage pressures have only recently emerged (six month annualised pace for the wages component of the ECI has lifted to 2.9%).
Of most concern to markets has been the planned lift in government spending ($300 billion over 18 months) and the Tax Cuts ($1.5 trillion over 10 years) in the US. These policies are likely to boost the Budget deficit by around 2% of GDP providing a solid boost to demand when the economy is already operating at full capacity in the labour market.
We expect two 25 basis point hikes in June and September from the FED. That would see the USD/AUD yield differential in the overnight market contract to minus 63 basis points – a situation we have not seen since early 2000. Two further FED hikes are expected in the first half of 2019.
AUD/USD Bond Spread
Back in July 2017 Westpac was forecasting that the RBA cash rate would end 2018 at 38 basis points below the FEDERAL FUNDS rate. Markets were priced for the RBA cash rate to be 35 basis points ABOVE the FEDERAL FUNDS rate. We expected that if our pricing proved to be right the 10 year bond spread would fall from 60 basis points to zero. Today markets are broadly in line with Westpac’s view with both expecting the RBA cash rate to be 60 basis points below the FEDERAL FUNDS rate by end 2018. However Westpac expects that marguin to increase to 112 basis points by mid-2019 whereas the market is pricing in a more cautious 80 basis points. The bond spread has already moved to minus 20 basis points and Westpac expects it to reach minus 40 basis points by mid- 2019.
Commodity Prices; China; and the Australian Dollar
Recent general euphoria around the global economic outlook has changed to caution. Uncertainty around trade; falling PMI’s in Europe; Japan and Korea and rising bond rates in the US all signal caution. Growth in the Chinese economy is expected to slow as consumption and net exports are unable to compensate for the ongoing slowdown in investment. However, the big uncertainties and risks centre around the Chinese financial system.
China realises that it must move away from its growth model based on credit fuelled exports and investment. In particular the role of the financial sector must change from channelling high savings at low cost to strategic sectors, to facilitating China’s economic transformation to a more sustainable model based on services and consumption. But the “old" model has resulted in financial assets growing from 260% of GDP in 2011 to 470% in 2016 (IMF, 2017). The excessive growth (around 30% per annum over the last 10 years) has been in the largely unregulated non–bank sector.
President Xi has nominated poverty; pollution and financial leverage as his key “challenges”. The “shadow banking sector” particularly funds property development and speculation; local governments (which explain 80% of infrastructure investment); and commodity speculators. All these users of funds expect excessive returns and can service higher loan payments . The sector is beginning to be squeezed.
We are already seeing some evidence of this squeeze on the non–bank sector. Banks are no longer allowed to guarantee wealth management products; entrusted loans (corporates borrowing to lend to other corporates with banks operating as agents) have been banned; rapid growth in short term interbank funding has been slowed; and general funding for wealth management products is being restricted. Growth in the non- bank sector is severely lagging the pace of 2017.
These forces are likely to weigh on iron ore and coking coal prices. Some lift in supply from Australian producers is also expected to lower prices. These atmospherics for commodity prices along with the widening interest rate differential; and more appetite for the USD in an uncertain world are eventually expected to weigh on the AUD. We target AUD at USD 0.74 by end 2018 and 0.70 by 2019.
BILL EVANS is chief economist of <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>. 
 
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jrobinson-rf4aSBido9

Expect Australia's growth to be below trend: Bill Evans 2018 and 2019 outlook

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Expert observer.
Unfortunately for the RBA, the health of the economy is not measured on the Geologic Time Scale
This week: Interest rates remain on hold as the RBA talks up employment growth, green shoots remain in manufacturing, and China strikes back in the Trump-led trade war.
<hr>
<img src="https://images.theconversation.com/files/213330/original/file-20180405-189824-p0txhe.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt="">
On Tuesday, the RBA left official interest rates unchanged at 1.50% for the 18th consecutive meeting, tying their all-time record. They will break that record next month when they do the same thing.
And the <a href="https://www.rba.gov.au/media-releases/2018/mr-18-07" target="_blank">official statement</a> by governor Philip Lowe sounded like it came from a guy who had gone from crossing his fingers to crossing his toes as well. For example:
“The Australian economy grew by 2.4 per cent over 2017. The Bank’s central forecast remains for faster growth in 2018.”
Um, why? The same macro model that got 2017 wrong is now going to get 2018 right?
Or this one:
“The unemployment rate has declined over the past year, but has been steady at around 5½ per cent over the past six months. The various forward-looking indicators continue to point to solid growth in employment in the period ahead, with a further gradual reduction in the unemployment rate expected.”
But a few months ago, those same forward-looking indicators were saying the plateau in the unemployment rate wouldn’t happen.
And finally (but only because I have space constraints):
“Notwithstanding the improving labour market, wages growth remains low. This is likely to continue for a while yet, although the stronger economy should see some lift in wages growth over time.”
If “over time” is read analogous to “life in the Mesazoic Era evolved over time” then I suppose that may be right.
Unfortunately for the RBA, the health of the economy is not measured on the Geologic Time Scale. Stubbornly low inflation, persistently hopeless wage growth, and with the <a href="https://www.propertyobserver.com.au/http://www.abs.gov.au/AUSSTATS/abs@.nsf/mf/3101.0" target="_blank">Australian population growing at 1.6% p.a.</a>, that 2.4% GDP growth number looks pretty weak. The real question is whether the RBA is not cutting rates because it thinks monetary policy is ineffective at this level, or because it’s scared of fuelling (further fuelling?) a (the?) housing price bubble.
<a href="http://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/8731.0Main+Features1Feb%202018?OpenDocument" target="_blank">ABS data</a> released Wednesday showed a drop in building approvals in February. Total dwelling approvals were down 6.2%, driven by a 16.4% drop in apartments, compared to a 1.9% rise in houses. For the 12 months to February 2018, that puts the total down 3.1%, again driven by a large (14.8%) drop in apartments and a rise (6.1%) in houses.
This is all evidence that demand – often from offshore – has dried up in one important sector of the market: apartments. It is still too early to know what the fallout will be, but this is exactly the kind of pattern one sees in property markets when the music has stopped.
The Australian Industry Group’s <a href="https://www.aigroup.com.au/policy-and-research/economics/economicindicators/" target="_blank">Performance of Manufacturing Index</a>, released this week, hit a record high of 63.1 index points for March. Perhaps more importantly, the survey indicated that capacity utilisation was at a record high of 81.2%. This matters because it suggests stronger employment and wage growth in the sector.
On the other hand, manufacturing is about 6.5% of GDP, so even strong growth in the sector has a relatively modest overall effect. But, as they say in baseball, you can’t boo a home run.
US jobs figures continued to impress, with payroll processor ADP releasing figures Thursday Australian time that the economy added 241,000 jobs in March. The official figures from the BEA come out Friday US time, with market expectations at an addition of 185,000. So if the official figures line up with ADP, this will be further evidence of strong employment growth.
<h2>Trump trade war update</h2>
This week, China struck back, again. The Trump administration recently instituted roughly US$50 billion worth of tariffs on steel, cars, automotive and aircraft parts, consumer products like televisions, and other goods. Almost immediately, China responded with tariffs of a similar value on 106 types of American goods.
Those 106 types of goods include soybeans and others produced in the Trump heartland. This was a cleverly designed, targeted measure, designed to hurt Trump politically.
His response:
That reveals his mercantilist view of trade: that it’s a zero-sum game rather than something that increases the size of the economic pie and makes both countries better off. But hey, maybe he has a big reading backlog and isn’t up to 1817, when David Ricardo pointed this out with his theory of <a href="https://www.investopedia.com/terms/c/comparativeadvantage.asp" target="_blank">“comparative advantage”</a>.
<img src="https://counter.theconversation.com/content/94405/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1">Let’s hope it does, and President Trump gets the message that he needs to knock this off. All he is doing is making America poorer. And the game theory of it is worse. Tariffs beget tariffs.
<a href="https://theconversation.com/profiles/richard-holden-118107" target="_blank">Richard Holden</a>, Professor of Economics and PLuS Alliance Fellow, <a href="http://theconversation.com/institutions/unsw-1414" target="_blank">UNSW</a>
This article was originally published on <a href="http://theconversation.com" target="_blank">The Conversation</a>. Read the <a href="https://theconversation.com/vital-signs-australias-stubborn-growth-problems-are-moving-at-a-geologic-pace-94405" target="_blank">original article</a>.
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j.ballantyne1990-6AQqhLzZaK

Australia’s stubborn growth problems are moving at a geologic pace: Richard Holden

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GUEST OBSERVER
Growth bounces back (again)
After another (weather related) soft patch in the March quarter, Australian economic growth bounced back in the June quarter with quarterly growth of 0.8%, up from 0.3%. However, annual growth is still subdued at 1.8% year on year, which is well below potential of around 2.75%.
In the quarter, growth was helped by a pick-up in consumer spending and business investment, strong public investment and a contribution from net exports after a detraction in the March quarter. 
<a href="https://www.propertyobserver.com.au/images/2017/09/07/Screen%20Shot%202017-09-07%20at%208.35.03%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/09/07/Screen%20Shot%202017-09-07%20at%208.35.03%20AM.png" alt="">
Australia continues to defy the doomsters’ endless recession calls. Against this, economic and underlying profit growth is lagging that seen in major economies. However, there are some positives pointing to a pick-up in growth.
Threats, risks and worries 
<a href="https://www.propertyobserver.com.au/images/2017/09/07/Screen%20Shot%202017-09-07%20at%208.36.39%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/09/07/Screen%20Shot%202017-09-07%20at%208.36.39%20AM.png" alt="">
Putting global threats aside, Australia’s worry list is well known:
Housing construction is starting to slow with falling approvals pointing to a further slowing (see next chart). 
Related to this, there is the risk of a house price crash “as seen” on Four Corners. However, there have been endless property crash calls since around 2004. In the absence of a stronger supply surge, the Reserve Bank of Australia (RBA) making a mistake and raising rates too high and/or unemployment surging, our view is that a slowdown in Sydney and Melbourne is likely, but not a crash.
Consumer spending is constrained by record low wages growth and high levels of underemployment. While consumer spending has been running faster than income growth, as rising wealth has allowed consumers to run down household savings (to now just 4.6%) this is unlikely to continue as the wealth effects flowing from property price gains in Sydney and Melbourne slow. Rapid power cost increases and high debt are also not helping. All of which is driving low consumer confidence.
Mining investment is still falling with business investment intentions pointing to another 22% fall this financial year.
The Australian dollar is up 16% from last year’s low and at around $US0.80 (and threatening to go higher) it is at risk of slowing growth (and investment) in trade-exposed sectors like tourism, agriculture and manufacturing.
Underlying inflation is too low and risks staying below target for longer due to record low wages growth, a rising $A, competitive pressures &amp; weak rents as new supply hits.
Our political leaders seem collectively unable to undertake productivity-enhancing economic reforms and take decisive action (eg, on energy policy). With the citizenship crisis threatening an early election, it’s unlikely we will see an improvement any time soon. 
Five reasons to expect growth to improve
These worries are well known and despite them we remain of the view that recession will be avoided and growth will pick up over the year ahead 
First, the growth drag from falling mining investment is nearly over. Mining investment peaked at nearly 7% of GDP four years ago and has since been falling at around 25% per annum (pa), knocking around 1.5% pa from GDP growth. At around 2% of GDP now, its weight in the economy has collapsed reducing its growth drag to around 0.4% this year and it’s near the bottom (see next chart). 
<a href="https://www.propertyobserver.com.au/images/2017/09/07/Screen%20Shot%202017-09-07%20at%208.37.45%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/09/07/Screen%20Shot%202017-09-07%20at%208.37.45%20AM.png" alt="">
Second, non-mining investment is likely to rise this year. Comparing corporate investment plans for this financial year with those made a year ago points to a decline in business investment this year of around 3.5% (see next chart). But this is the best it’s been since 2013 and once mining investment is excluded this turns into an 8% gain for non-mining investment.
Third, public investment is rising strongly, up 14.7% over the last year, reflecting state infrastructure spending.
<a href="https://www.propertyobserver.com.au/images/2017/09/07/Screen%20Shot%202017-09-07%20at%208.39.22%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/09/07/Screen%20Shot%202017-09-07%20at%208.39.22%20AM.png" alt="">
Fourthly, net exports are likely to continue adding to growth as the completion of resources projects boosts mining and energy export volumes and services sectors like tourism and higher education remain strong.
Finally, profits for listed companies are rising again after two years of falls. This is a positive for investment and the flow of dividends helps household incomes.
<a href="https://www.propertyobserver.com.au/images/2017/09/07/Screen%20Shot%202017-09-07%20at%208.40.33%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/09/07/Screen%20Shot%202017-09-07%20at%208.40.33%20AM.png" alt="">
These considerations should ensure that the Australian economy continues to avoid recession and that growth should pick up to around a 2.5% to 3% pace over the year ahead. This should be enough to head off further cuts in the cash rate. But with growth still a bit below RBA forecasts, wages growth likely to pick up only slowly, inflation likely to remain subdued abstracting from higher electricity prices, and the RBA likely wanting to avoid pushing the $A higher, our view remains that the RBA will keep the cash rate unchanged at 1.5% out to the December quarter 2018 at least before starting to raise rates.
Implications for investors
There are several implications for Australian based investors. First, a return to reasonable growth is positive for growth assets. Australian shares are vulnerable to a short term US-led share market correction – given North Korean and Trump risks – but we remain of the view that it will be higher by year end.
Second, bank deposits are likely to provide poor returns for investors for a while yet, highlighting the case for yield-focussed investors to continue to look for superior sources of yield. The yield gap between Australian shares and bank deposits remains wide, driving a strong source of demand for shares. After Telstra cut its dividend, just make sure you get a well-diversified portfolio of stocks paying decent dividends though. 
<a href="https://www.propertyobserver.com.au/images/2017/09/07/Screen%20Shot%202017-09-07%20at%208.41.38%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/09/07/Screen%20Shot%202017-09-07%20at%208.41.38%20AM.png" alt="">
Third, while Australian shares are great for income, global shares are likely to remain outperformers for capital growth. In fact, global shares have been outperforming Australian shares since October 2009. This reflects relatively tighter monetary policy in Australia, the commodity slump, the lagged impact of the rise in the $A above parity in 2010, and a mean reversion of the 2000 to 2009 outperformance by Australian shares.
<a href="https://www.propertyobserver.com.au/images/2017/09/07/Screen%20Shot%202017-09-07%20at%208.42.39%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/09/07/Screen%20Shot%202017-09-07%20at%208.42.39%20AM.png" alt="">
 
And of course, abstracting from volatile resource company earnings, underlying profit growth at around 5-6% in Australia is well below that in the US (at around 11%) and Europe and Japan (at around 20-30%) so the underperformance of Australian shares may have a while to go yet. Which all argues for a continuing decent exposure to global shares relative to Australian shares. 
<a href="https://www.propertyobserver.com.au/https://plus.google.com/110172465327488162875?rel=author">SHANE OLIVER</a> is head of investment strategy and economics and chief economist at <a href="https://www.ampcapital.com.au/home">AMP Capital</a> and is responsible for AMP Capital's diversified investment funds.
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soliver-smf6LQXgW9

Five reasons why some further pick up is likely and implications for investors: Shane Oliver

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Australians and businesses overwhelmingly think our country is a great place to live and have a business.
However, Australian consumers and businesses are anxious about what the future holds.
National Australia Bank (NAB) today released a new report which asks consumers and businesses to explore life, work and running a business in Australia – now and in the future.
“Nine in 10 Australians told us our country’s open spaces, people and lifestyle and access to affordable and quality healthcare are the biggest contributors to liveability and their choice to call Australia home,” NAB Chief Economist Alan Oster said.
“There are some clear differences between states. Consumers in SA/NT are much more positive in relation to travel time, living costs and housing – and in Victoria, a love of sport means entertainment options feature more prominently for liveability than any other state.”
Businesses too are optimistic, with 8 in 10 (82%) surveyed viewing Australia as a great place to have a business.
“Australian business people see the economy, our close proximity and strong connections to Asia and the growing population as some of Australia’s key strengths,” Mr Oster said.
“Making the most of these strengths is vitally important for Australia, to support more growth opportunities for businesses and the millions of Australians they employ.”
But despite their current optimism, the report found only 1 in 2 people and 60% of businesses think Australia will be a great place to live and have a business in 10 years’ time.
“There is a clear message of anxiety in the future coming from Australian consumers and businesses,” Mr Oster said.
“Australians identified access to social welfare, living costs, tax levels, jobs and housing affordability as the key factors they expect will deteriorate the most in the next 10 years.
Consumers are saying they expect very little progress in the areas already holding Australia back now.
“While a person’s income didn’t affect current perceptions of liveability, there was a large future disconnect between high income earners (earning over $100,000) and those earning under $35,000 a year.”
Businesses are slightly more optimistic.
“Australian businesses expect the things that make our country great now to continue to make us great in the future – this includes our population, proximity to Asia and our innovative and entrepreneurial economy.”
“These insights on how Australians feel about our country may be able to help businesses and governments discover what we’re concerned about, and prompt discussion on how to tackle some of the big issues,” Mr Oster said
About 2,300 consumers and 500 businesses took part in the survey, and full findings can be viewed at news.nab.com.au
NAB Chairman Dr Ken Henry will be speaking about the research today in his address to the Centre for Economic Development.
You can find a full version of his speech at <a href="https://www.news.nab.com.au" target="_blank">news.nab.com.au</a>.
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Life in the lucky country: What makes Australia great?

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<img src="https://counter.theconversation.edu.au/content/69775/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
Australia’s global cities are a very large part of the nation’s economic success, but they are also generating significantly unequal incomes. 
Our recent research found that as Australian cities have grown, their income inequality has increased.
Cities provide many social and cultural opportunities and allow large numbers of people to stay connected. But bigger is better only if we can make it better for everyone.
We propose a solution: rather than concentrate activity around a single city centre, we need to develop multiple centres of activity – polycentric cities.
How are city size and incomes related?
Large cities, particularly global cities, are great sources of wealth and income generation. Their impacts on inequality, though, are less positive.
Much recent research has focused on measuring the relationship between city size and income and wealth generation. Various studies show that as cities increase in size, income and wealth grow “superlinearly”. This means that if the city size grows by 10 percent, income and wealth generation grow by more than 10%.
The benefits of large cities to the economy overall are well recognised. The most significant economic engines of many countries are one or two of the largest cities – think New York for the US, London for the UK, Sydney and Melbourne for Australia.
Large cities may be where growth and wealth are concentrated. And, by inference, average quality of life is improved. But the uneven distribution of wealth among residents is of concern.
A reasonable question might be whether cities, which many regard as humankind’s greatest invention, are machines for concentrating wealth inequitably. Is there any relationship between city size and income distribution?
We investigated this relationship across the entire spectrum of Australian cities. Using income distribution data from the 2011 Census across all the 101 significant urban areas, or “cities”, we did find a superlinear relationship. That is, overall, as city populations increased, total income did increase by more than the rate of population growth.
Bigger is better for the rich
We also analysed the proportion of households in different income bands. This analysis showed that while income growth increased as Australian cities got larger, this was concentrated in the upper income categories.
The Australian Bureau of Statistics defines ten income categories, ranging from lowest to highest incomes per capita, with people counts in each category. We found that incomes of poor and middle-income categories grow in proportion with city size, or more slowly. Those of the higher-income categories grow disproportionately faster.
Every citizen should be concerned about this trend. If total incomes and the incomes of top earners grow faster than city size, but not those of lower income earners, then most of the income that makes bigger cities richer is only going to the top earners.
Why do cities concentrate wealth?
This is probably not a surprising finding. Large cities attract many economic activities, particularly those in financial services, that can generate very large incomes. However, it highlights an issue that has received increasing attention in recent years – the significant increases in inequality in many Western economies.
While our research was largely a data-driven exercise, it does help us think about what might be some of the sources of inequality in our cities and the geography of that inequality. What policy response might help to counter this characteristic of increased city size?
The agglomeration and spillover effects of clustering related businesses, particularly finance and business service and “knowledge workers”, is well recognised, but these beneficial effects are indeed highly concentrated. An extensive global review of agglomeration in 2014 noted that “agglomeration economies do not spill over much space”.
How do we spread the benefits?
As big cities like Sydney and Melbourne expand, it will be very important to establish and support clusters of activity away from the principal city centre. Polycentric cities are more likely to achieve more equitable access to higher-paying jobs.
Additionally, it will be important to establish spatial policies that support a mix of higher, middle and lower-income jobs in business districts to prevent the agglomeration of the super-rich in pockets of the city.
This has implications for establishing housing market stability (encouraging a good spatial mix of all housing types in the vicinity) and efficient commuting (middle-income or poorer people not needing to travel long distances for work).
This has been a strategic planning objective for decades. Yet only now, in Sydney’s case, does the city’s economic geography have the potential to be significantly rebalanced. One example would be the development of a new airport in western Sydney.
Proximity to the airport is likely to stimulate investment in other economic activities. Population demand itself combined with the development of the “second city” of Parramatta, which is now capitalising on its geographic centrality, and will become more pronounced as the west develops.
The development of a “third city” centred on the airport, but building on a network of existing centres, has the potential to significantly change the distribution, accessibility and types of employment across the city.
Housing policy has a critical role to play
If we want to tackle inequality in our cities, housing is a very good place to start.
As city housing markets become more expensive, households on lower and moderate incomes spend an increasing proportion of their incomes on housing. The number of locations where they can live in the city becomes smaller, especially when certain pockets show agglomerations of super-rich.
The costs of housing mean the amount of spare income those on moderate and low incomes can invest in themselves and their children to improve their employment prospects (what economists call investing in human capital) becomes smaller. The educational outcomes for their children are often poor. Also, because of rising transport costs, the number of potential jobs they can access gets smaller.
This is why developing polycentricity is so critical.
To reduce inequalities in cities, it is also important that we spread affordable housing out across the city. Proposed inclusionary zoning provisions in the new Sydney District Plans, while modest, are a good first step.
Whether such measures will be sufficient to counter the inherent tendency for income inequality to increase non-linearly as city size grows remains to be seen.
Economic processes will take their own course: generally the larger the agglomeration, the higher the probability of further growth. However, recognising and reducing spatial inequality and changing the economic geography of the city should be planning’s role.
And finally, there is the question of city size distributions, and focusing on the growth of regional and smaller cities, instead of putting every cent of focus on our biggest cities. These are, clearly, very long-term goals in the current environment.
 
<a href="https://theconversation.com/profiles/somwrita-sarkar-320241" target="_blank"></a>
<a href="https://theconversation.com/profiles/somwrita-sarkar-320241" target="_blank">SOMWRITA SARKAR </a>is senior lecturer in Design and Computation, University of Sydney  
<a href="https://theconversation.com/profiles/somwrita-sarkar-320241" target="_blank"></a>
<a href="https://donate.theconversation.com/au?utm_source=theconversation.com&amp;utm_medium=website&amp;utm_campaign=friend_of_the_conversation_badge" target="_blank">PETER PHIBBS </a>is chair of Urban Planning and Policy, University of Sydney.
<a href="https://theconversation.com/profiles/somwrita-sarkar-320241" target="_blank"></a>
<a href="https://theconversation.com/profiles/roderick-simpson-320302" target="_blank">RODERICK SIMPSON</a> is associate professor of Urban Design, University of Sydney.
<a href="https://theconversation.com/profiles/somwrita-sarkar-320241" target="_blank"></a>
All are authors for The Conversation.
<a href="https://theconversation.com/profiles/somwrita-sarkar-320241" target="_blank"> </a>
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jchancellor-FAypfDUnLy

Our big cities are engines of inequality, so how do we fix that?

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<div class="section">GUEST OBSERVER</div>
<div class="section"> </div>
<div class="section">The Westpac Melbourne Institute Index of Consumer Sentiment fell by 1.1 percent in November from 102.4 in October to 101.3 in November. <div class="layoutArea">
<div class="column">
The Index continues to hold in a very tight band. Over the last six months the Index has held within the range of 99.1 to 102.4. 
However if you compare the average level during this period with the average over the comparable six month period in 2015 there has been a clear lift in the Index of 4.7 percent. Most of that improvement has been in the components of the Index that measure expectations which are up by an average of 7.3 percent on last year, whereas the components which measure current conditions have increased by only 1.2 percent. 
Developments of note over the month have included weakness in the share market as investors dealt with the uncertainties around the US election (ASX down by 4.4 percent since the October survey); a spectacular surge in coking coal prices (spot prices are up around 150 percent since August); a disappointing jobs report (annual employment growth slowing to 1.4 percent); and an unchanged rate decision from the Reserve Bank. 
Markets had been giving a decent chance to a November rate cut in earlier months so the fall in confidence amongst respondents holding a mortgage of 3.1 percent was somewhat understandable.
<a href="https://www.propertyobserver.com.au/images/2017/01/18/Screen%20Shot%202017-01-18%20at%2011.29.47%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/01/18/Screen%20Shot%202017-01-18%20at%2011.29.47%20AM.png" alt="">
Although down 3.4 percent in the latest month the lift in confidence in Queensland – the ‘Sunshine and Coal’ state – over the year has been spectacular. The Queensland index has lifted by 15.9 percent since last November compared to falls in the other major states – NSW (–2.6 percent); Victoria (–5.4 percent) and WA (–7.2 percent).
Disappointment in the jobs market has been signalled in the Westpac Melbourne Institute Index of Unemployment Expectations. The Index rose by 1.4 percent from 138.2 to 140.2. It is now up by 2.9 percent over the last six months and slightly above the level a year ago. Recall that higher reads mean more consumers expect unemployment to rise over the next 12 months and hence mark a deterioration.
Four of the five components of the Index fell slightly in the month. Both measures of family finances were down a little – the sub- index tracking views on ‘family finances compared to year ago’ fell by 1.3 percent while the sub-index tracking expectations for finances over the next 12 months fell by 0.8 percent. ‘Economic conditions over the next 12 months’ increased by 0.6 percent but ‘economic conditions over the next 5 years’ fell by 1.4 percent.
In a slight disappointment for the outlook for Xmas spending there was a 2.4 percent fall in the ‘time to buy a major household item’ sub-index.
In November we traditionally gauge respondents’ Christmas spending intentions. The question is “Do you think that you will spend less, about the same, or more on Christmas gifts compared to last year?” Last year we recorded a net balance – the proportion expecting to spend more minus the proportion expecting to spend less – of minus 13 percent. This year the net balance has declined to minus 20.1 percent. That is around the average since we started asking the question in 2009. That is a disappointing result given the promising improvement in spending plans in 2015.
Confidence in housing has also deteriorated. The ‘time to buy a dwelling’ index fell by 5.1 percent from 105.7 in October to 100.3 in November. We saw significant falls in NSW; Victoria; and Queensland.
Despite confidence in housing deteriorating house price expectations continue to rise. The Westpac Melbourne Institute Index of House Price Expectations increased by 1.3 percent to be up 23 percent on a year ago and reach its highest level since July 2015.
The Reserve Bank Board next meets on December 6. There is little chance of any change in rates at this meeting. The key issue is whether the Bank decides to further cut rates in 2017. Whereas lower than expected inflation was the driver of the two cuts in 2016 the decisions in 2017 will be determined by developments in housing and labour markets.
Westpac is expecting economic growth and employment growth to lift in 2017 boosted by higher commodity prices; ongoing strong residential construction; and booming exports. While the pace of house price appreciation can be expected to slow the case for lower rates under those circumstances does not seem to be strong.
We expect rates to remain on hold in 2017. 
 
BILL EVANS is chief economist of <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.
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bevans-rYk9SxEa4r

Consumer sentiment dips a little, Christmas spending plans disappoint: Bill Evans

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<img src="https://counter.theconversation.edu.au/content/57114/count.gif" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
"We’ve had 25 years of continuous economic growth, the only country in the world with a period of growth that long. – Trade minister Steven Ciobo, speaking on Q&amp;A, May 31, 2016."
Economic management is shaping up as a key election battleground, and the Coalition has been especially keen to keep the focus on the economy.
Trade minister Steven Ciobo told Q&amp;A viewers that Australia has had 25 years of continuous economic growth, and is the only country in the world with a period of growth that long.
Is that right?
<h2>Checking the source</h2>
A spokesman for Steven Ciobo told The Conversation that Ciobo misspoke on Q&amp;A. The spokesman said by email that:
Mr Ciobo omitted the world developed, he meant to say “developed country”.
That clarification does improve the accuracy of his statement quite considerably. Let’s test his two statements separately.
<h2>25 years of continuous economic growth?</h2>
Australia entered a period of low and sometimes negative economic growth in 1989. The last period where growth was negative was June 1991 (for the quarter-over-quarter growth), and December 1991 (for the year-over-year growth).
I would argue that the weak growth through 1991 means that you can’t say that the economy recovered and was growing until 1992.
So on that definition, we have had about 24.5 continuous growth – which is close enough to the Ciobo’s figure of 25 years.
It is true we are in our 25th year of consecutive economic growth. That’s how it was phrased in Austrade’s 2016 Why Australia Benchmark Report, which noted that:
Australia is not only entering its 25th year of consecutive growth, the country is expected to realise annual real GDP growth of 2.9% between 2016 and 2020 – the fastest of any major advanced economy in the world.
<h2>The only country in the world?</h2>
As the minister’s spokesman said, Ciobo accidentally omitted the word “developed” from his statement.
It is true that all of the other 33 member countries in the Organisation for Economic Co-operation and Development (OECD) have had a period of negative GDP growth since 1991, with most going into recession during the Global Financial Crisis.
It is notable that the dip in growth during the GFC was smaller for the Group of 20 (G20) major economies than for the OECD, and the reason for this is that many emerging markets did not go into recession.
It is not true to say, as the minister accidentally did, that Australia is the only country in the world with a period of growth that long. The chart below shows Australia’s growth next to the G20, OECD, India and China.
<a href="/images/2016/06/06/image-20160531-13810-hgnto5.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/06/06/image-20160531-13810-hgnto5.png" alt="">
<h4>Author provided. Source: OECD Main Economic Indicators and Emerging Markets database in DX database.</h4>
The chart shows that China and India, the two most important emerging economies, also have had positive growth in GDP in the past 25 years. It is now more than 25 years since both countries began their economic reform programs, and both countries have enjoyed very strong economic growth over this period.
<h2>Verdict</h2>
The statement that Australia has had 25 years of continuous economic growth is mostly correct.
The statement that Australia is the only country in the world to have had such a period of unbroken growth is incorrect. But it’s true Australia is the only one out of 34 OECD member countries to have had positive economic growth since 1991.  
Mark Crosby is associate professor of Economics, Melbourne Business School and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/mark-crosby-444" target="_blank">here</a>.
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Has Australia had 25 years of continuous economic growth?

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<img src="https://counter.theconversation.edu.au/content/57114/count.gif" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
The Property Council heralded the federal government’s proposal to introduce UK-style City Deals as part of a new Smart Cities Plan as:
"a real innovation in policy [that will] break down the barriers between federal, state and local government – and make all of them partners in economic growth."
Our evidence from the UK experience suggests there are pros and cons in both City Deals and Devolution Deals.
<h2>The pros and cons</h2>
These deals have emerged as the preferred methods of formulating public policy and resource allocation in UK decentralisation. This kind of explicitly “informal governance” is novel and innovative.
“Deal-making” is good at providing a channel for local authorities to talk to central government. It empowers local actors, encourages strategic thinking, promotes innovation and stimulates governance reform.
But the process is marked by problems. These include:
<ul>
<li>
uneven information and power between central and local actors;
</li>
<li>
the ambiguous role of the centre as supporter and appraiser of the plans of local actors;
</li>
<li>
capacity nationally and centrally limited by budget austerity;
</li>
<li>
lack of transparency;
</li>
<li>
highly uneven resource allocation;
</li>
<li>
slippage from announcement to implementation; and
</li>
<li>
limited evaluation of progress to date.
</li>
</ul>
As the process has matured with each new round of deal-making, common elements have emerged alongside more bespoke and particular dimensions. But participants are fatigued by the centrally orchestrated deal-making process and episodic timetable, are unclear about the criteria for assessing proposals and uncertain about where it is heading next – and to what ends.
Those negotiating the deals have experienced the paradox that central government is dominating this chapter of decentralisation.
<h2>What Australia might expect</h2>
Unpacking some of these issues may help us understand the rationale behind Australia’s interest in City Deals.
First, against a background of rising public debt, City Deals are said to represent an attempt by the federal government to introduce a new approach to investing in urban infrastructure. However, Australia’s net debt-to-GDP ratio (19 percent) remains a fraction of the UK’s, which is nearly 83 percent.
Clues as to what is expected of City Deals were evident in the press release launching the Smart Cities Plan. The government said the plan will:
"draw on the Commonwealth’s co-ordination capacity and the strength of its balance sheet at a time of historically low interest rates, to get the best infrastructure projects off the ground."
The government’s fiscal position can be used in various ways – either through direct borrowing or de-risking private investment. The City Deal approach’s logic suggests that, in return for “drawing upon” federal capacity, states and local government will be asked to agree mechanisms that ensure local areas prioritise infrastructure projects that deliver growth.
Despite the rhetoric surrounding innovative funding and financing, such concepts have proved difficult to implement in the UK. Instead, emasculated local authorities, facing continued budgetary pressures, have sought long-term (up to 30 years) grant funding from the national government.
For its part, the UK government has also found grants easier to manage than complex earn-back arrangements of the kind devised initially in the Greater Manchester City Deal.
Second, if City Deals are introduced in Australia, then individual agreements will be negotiated between three tiers of government. The experience of the newer City Deals in Scotland (Glasgow, Aberdeen and Inverness) and Wales (Cardiff) – involving UK government, devolved administrations and local authorities more akin to a federal-type situation – may be more instructive for Australian policymakers.
Like the UK, Australia’s national government is proposing to incentivise actions and accountabilities at the sub-national level.
The UK government has dangled the carrot of long-term grant funding to “encourage” local authorities to establish statutory governance partnerships across city regions.
City Deals in Australia may be part of a similar drive for local government reform. This reflects arguments that direct funding of local government by federal government creates efficiencies, and that new investment in local infrastructure requires effective cross-border local government collaboration.
Finally, statements that the City Deals have been instrumental in the “renaissance of Greater Manchester and Glasgow” should be treated with great caution. UK City Deals and Devolution Deals are still at an early stage. Monitoring and evaluation of their impact remains in its infancy.
Ultimately, City Deals may prove successful in Australia and the UK. But, at this initial stage, adopting the model without careful scrutiny and analysis feels more like taking a punt than backing a certainty.
Peter O'Brien is research associate, Centre for Urban and Regional Development Studies (CURDS), Newcastle University and can be contacted <a href="https://theconversation.com/profiles/peter-obrien-97345" target="_blank">here</a>.
Andy Pike is professor of Local and Regional Development, Newcastle University and can be contacted <a href="https://theconversation.com/profiles/andy-pike-130682" target="_blank">here</a>.
John Tomaney is professor of Urban and Regional Planning, UCL and can be contacted <a href="https://theconversation.com/profiles/john-tomaney-148821" target="_blank">here</a>.
All are authors for The Conversation.
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Deal or no deal: are UK-style City Deals a good bet for Australia?

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GUEST OBSERVER
The Reserve Bank Board minutes make it clear that policymakers are waiting on more timely economic data to gauge how the economy is tracking. 
However the minutes have also set the scene for next week inflation data and the subsequent May 3 Board meeting – highlighting potential triggers for an interest rate cut.
What makes the prospect of another rate cut a possibility in coming months is the discussion on the Australian dollar. Board members noted that the rising Australian dollar might “complicate ” the economic recovery –essentially hamper the rebalancing efforts “towards non-mining sectors of the economy ”.
A super low inflation result would pave the way for the Reserve Bank to cut rates again. However it would need to feel confident that a rate cut would have the desired impact in driving the Aussie dollar lower. Most central banks that have eased monetary policy in the past few months have seen their currency continue to strength. In addition it is difficult to justify another rate cut in light of unemployment falling to a 2ó-year low. No doubt if a slowdown due to the Federal election took place it could just tip the balance towards a rate cut.
<a href="/images/2016/04/19/Screen%20Shot%202016-04-19%20at%204.03.00%20PM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/04/19/Screen%20Shot%202016-04-19%20at%204.03.00%20PM.png" alt="">
Consumer confidence rose for the first time in five weeks. The Aussie dollar is holding near US77 cents; interest rates are stable; and petrol prices are low. However the deciding factor for the decent lift in confidence last week would have to be the upbeat employment data last week and the rally in sharemarkets.
Unemployment fell to a 2ó-year low, while the ASX 200 index rose by 4.5 per cent – marking the strongest weekly rally since October last year.
The good news for retailers is that consumers are seemingly looking forward to the next year with a healthy level of optimism.
Consumers continue to believe it is a good time to buy a car, fridge, washing machine or television. The estimate of whether it was a good time to buy a major household item was at the best levels in since early January. Certainly retailers don’t seem to be  in a rush to lift prices, so affordability is good.
It may be that the looming discussion of a potential July 3 Federal election will dampen confidence levels in the next few months. In fact Qantas announced that the upcoming Federal election had resulted in “some softness in demand”. However the fundamentals are still sound.
What do the figures show?
Consumer confidence
The weekly ANZ/Roy Morgan consumer confidence rating  rose by 3.8 points (3.4 per cent) to 115.8 in the week to April 17. Confidence is up 6.4 per cent over the year and above the average of 112.1 since 2014. Four of the five components of the index rose in the latest week:
The estimate of family finances compared with a year ago was up  from +3 to +7;
The estimate of family finances over the next year was down  from +29 to +26;
Economic conditions over the next 12 months was up  from -6 to +1;
Economic conditions over the next 5 years was up  from +3 to +9;
The measure of whether it was a good time to buy a major household item was up  from +31 points to +36 points.
The key quotes from the Board minutes:
International conditions: “Indicators of global economic activity had eased a little over recent months, but were still consistent with growth in Australia's major trading partners remaining at a slightly below-average pace in the March quarter.” … “Members observed that these measures had been particularly weak for the Asian region.”
Domestic economy: “More recent data had suggested that the Australian economy had continued to grow at a moderate pace in early 2016 and that activity had continued to rebalance towards the non-mining sectors of the economy.”
Australian dollar:  “The Australian dollar had appreciated by almost 7 per cent against the US dollar over the past month. It had appreciated by 4 per cent on a trade-weighted basis, reflecting stronger domestic economic data, the rise in commodity prices and the fact that the renminbi (which has the highest weight in the trade-weighted basket) had depreciated by only slightly less against the Australian dollar than had the US dollar. At the time of the meeting, the Australian dollar was around its highest level since mid 2015.”...
“Members noted that an appreciating exchange rate could complicate progress in activity rebalancing towards the non-mining sectors of the economy”.
Monetary policy:  “Members judged that there were reasonable prospects for continued growth in the economy, with inflation close to target. The Board therefore decided that the current setting of monetary policy remained appropriate. New information would allow the Board to reassess the outlook for inflation and decide whether the improvement in labour market conditions evident last year was continuing. Continued low inflation would provide scope to ease monetary policy further, should that be appropriate to lend support to demand.”
What is the importance of the economic data?
The ANZ/Roy Morgan weekly survey of consumer confidence closely tracks the monthly Westpac/Melbourne Institute consumer sentiment index but the former measure is a timelier assessment of consumer attitudes and is now closely tracked by the Reserve Bank.
<a href="/images/2016/04/19/Screen%20Shot%202016-04-19%20at%204.08.27%20PM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/04/19/Screen%20Shot%202016-04-19%20at%204.08.27%20PM.png" alt="">
The Reserve Bank releases minutes of its monthly Board meeting a fortnight after the event. The minutes give a guide to Reserve Bank thinking on interest rate settings. What are the implications for interest rates and investors?
CommSec doesn’t expect any change in the cash rate for the foreseeable future. Underlying inflation remains at the bottom of the 2-3 percent target band but should lift over 2016.
Savanth Sebastian is an economist for <a href="https://www.commsec.com.au/" target="_blank">CommSec</a>
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RBA concerned by rising Aussie dollar: CBA's Savanth Sebastian

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India was the flavour at this year’s edition of the World Economic Forum, says JLL India’s head Anuj Puri in his JLL blog.
“In the play of global expectations unfolding on a stage staggering with actors who may just be guessing at their lines, India has a very complicated role to play,” he says.
The tone was set on Day 1 of the meet, with the Indian Finance Minister Arun Jaitley saying India’s GDP could potentially grow to 9%, provided the country gets a facilitating global economic environment to operate. 
 “A clear takeaway is that we are the fastest growing amongst the emerging markets – as a consequence, the ‘I’ in BRICS now signifies hope for the world,” he writes.
There was general affirmation that there is no risk of a repeat of ‘2008’; however, there is no ignoring the economic and financial challenges currently in the global ecosystem. There was a lot of rumbling about the inherent risk from China, and the repercussions of a hard landing.
The US market is still a mixed bag – given the general impression that it is back on a growth curve, he says. Then there are geopolitical risks arising from the Middle East which threaten to derail.
On the brighter side, lower oil and commodity prices has been a boon, so to say. “The current low oil prices are good for the seven billion people that our blue planet supports,” he writes.
The IMF estimates that the world economy’s GDP growth is 3.1% in 2015, 3.4% in 2016 and 3.6% in 2017. It’s growth nevertheless.
Among the others, India is the flavour of today and will likely see 7.5% growth, provided its politicians roll out ground-altering reforms at the expected pace, he adds. Russia and Brazil have lost out in the popularity sweepstakes because of their domestic issues.
Puri says there is a consensus that India’s exciting entrepreneurial ecosystem is expanding, leading to more entrepreneurs and tech start-ups, but that India will miss the bus again if it does not harness this entrepreneurial energy.
He dispels rumours of the Great Indian Start-up Boom beginning to lose some of its decibels, saying it is normal churn, even citing Professor Nouriel Roubini of New York University.
Roubini said that if there was any place in the world where he would prefer to gestate a start-up, India comes a close second after Silicon Valley.
Puri also addresses the larger question about the implications of a fourth industrial revolution on emerging markets? Will it bridge the gap between developed and developing countries? Will India’s demographics be able to adapt to increased automation, and how will its manufacturing evolve?
He cites Colin Dyer’s words that technology will make strong and established businesses even stronger, as we embrace the change. We are just at the cusp of the ‘E-evolution’, he says. 
“I hope it’s only for the better, but we hold a massive and unpredictable tiger by its digital tail,” Puri writes.
In the Indian context, all its industries, including the semi-opaque real estate, will mature into more transparent ones with cutting-edge technology.
In imagining India as the world’s next growth engine, Puri draws parallels with the Gauls, immortalized by Goscinny and Uderzo in the Asterix comics. 
“The village druid Getafix had a magic potion which could instantly infuse superhuman strength. The magic potion India needs today is the Goods and Services Tax (GST) Bill. Will this magic fix be served up in the upcoming Union Budget? I certainly hope so.”
Also, the change in the constitution of the Upper House will help the government to implement other important bills too, such as the Real Estate (Regulation and Development) Bill and the Land Acquisition, Rehabilitation and Resettlement Act.
Puri says the overall mood was upbeat, but it could have more to do with “humankind’s undying pursuit of optimism”. 
The first three weeks of 2016 have been a pretty miserable start: the US is slowing down, and the chase to the White House this year may slow them down even more; stock markets are currently overreacting to China, even though we may be headed for a softer landing than expected. But China will need to transition from industrial to services and exports to consumption if it is to reclaim its former glory.
The European Union remains a major area of concern, and JLL’s Christian Ulbrich leaves with a few more furrows to his brow, he writes. The EU definitely has its hands full with the challenges of Brexit and the refugee crisis. George Osborne’s remark that ‘UK wants to be in EU but not run by it’ may be a sign of things to come. 
India, however, remains a bright spot, according to the IMF. It has achieved escape velocity from the BRICs bloc and is off on its own growth trajectory, he concludes.
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