Repeat buyers are one of the strongest measures of confidence in any apartment development.

At <a href="https://www.apartments.com.au/new-apartments/era-newcastle-west-124-126-bull-street-newcastle-west-nsw-2302">ERA</a> in Newcastle West, some purchasers are returning to <a href="https://www.apartments.com.au/developers/gwh">GWH</a> after living at the developer's One Apartments. Their decision to purchase again was driven by the quality of life they found after moving into their first GWH home.

Keith Wilton had spent years living in a house in East Maitland before deciding it was time for a change. Apartment living had always been on his radar, but he was selective about what he wanted.

<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/FH_1EzB-1vs?si=XScVlP1ERsTDJoME" title="YouTube video player" width="560"></iframe>

"I had some boxes I wanted to tick," he says.

Keith points to the open-plan design, generous outdoor areas and considered inclusions as key reasons One Apartments worked for him.

“One of those things was a nice indoor open plan area, but also I wanted a nice outdoor open area that I could entertain on in summer or Christmases or birthdays,” he says.

He also found value in the smaller details, from integrated appliances to shared resident spaces including the pool, cinema and rooftop areas.

[smartcode_project:default project_id=135096 project_image_fid=356818]

After comparing several developments, he chose One Apartments because of GWH's longstanding local reputation and his own experience working with the developer on a commercial project more than a decade earlier.

"I knew that they were local, that the quality of the build was going to be up there. I'd looked at other apartment complexes around and close by, and I just knew that here was a better decision location wise."

Today, Keith says the move has completely changed how he experiences Newcastle.

"I enjoy living in this location because it's more of a lifestyle change. That Newcastle city living where you can walk to restaurants and bars and even beaches and parks and even shopping across the road."

[smartcode_project:default project_id=135096 project_image_fid=356828]

Beyond the location, he says it's the sense of community that has surprised him most.

"Everyone loves living here because they chose to live here, but everyone looks out for each other. It's a real great community feel here."

For Aimee and Lyle Goodman, the journey started almost by chance.

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The couple happened to be having coffee in Newcastle when they noticed the site where One Apartments was about to begin construction.

"We were aware GWH was planning a development," Aimee says. "We made one phone call and things moved pretty quickly after that."

As busy business owners, they initially thought apartment living would simply reduce the maintenance that came with larger homes. Instead, it fundamentally changed how they spent time together.

"We actually catch up more as a family now," Aimee says.

"We've had homes with big yards and lots of space, but everyone ended up in different rooms. Here we'll have dinner together, the kids can play, and we spend far more quality time together."

[smartcode_project:default project_id=135096 project_image_fid=356829]

Lyle says their confidence came from GWH's reputation within Newcastle's building industry.

"I know people who've worked across different apartment projects, and whenever GWH came up the feedback was always the same. They're rock solid. They're quality."

That confidence only grew throughout the buying process.

"One of the things that really impressed us with GWH was the whole process, was the communication," Lyle says. "It was consistent, it was regular, there was no problem if we had some weird questions, there was no problems in getting answers."

[smartcode_project:default project_id=135096 project_image_fid=351104]

Aimee says one moment stood out.

"The project actually finished on time. We realised we needed to hurry up and sell our house because everything was happening exactly when they said it would."

The positive experience at One Apartments ultimately gave all three buyers the confidence to purchase again with GWH, this time at ERA.

Their confidence reflects what many buyers are seeking in today's apartment market. Location remains important, but so too does certainty around delivery, quality and long-term liveability.

[smartcode_project:default project_id=135096 project_image_fid=356822]

ERA builds on those foundations with 280 one, two and three-bedroom apartments across two landmark towers in <a href="https://www.apartments.com.au/developments/newcastle-west-nsw-2302">Newcastle West</a>.&nbsp;

Designed by <a href="https://www.apartments.com.au/architects/fk-australia">Fender Katsalidis</a>, the project will include more than 2,000 square metres of resident amenities, including a resort-style pool, gym, sauna, private cinema and rooftop entertaining spaces overlooking the harbour and coastline.&nbsp;

The development is also within walking distance of the Newcastle Interchange, Honeysuckle, Darby Street, the harbour foreshore, restaurants, retail and the city’s beaches, continuing the walkable lifestyle that existing GWH buyers say has transformed how they live.

[smartcode_project:default project_id=135096 project_image_fid=356826]

For Keith, the appeal remains straightforward.

"You feel at home even before you've moved into your home."

For Aimee, the change is measured in time.

“I just felt like I had more time,” she says.

[smartcode_project:default project_id=135096 project_image_fid=351102]

Construction at ERA is now underway, with more than half of the residences already sold and limited two and three-bedroom apartments remaining in the East Tower release. Priced from $980,000 for two-bedroom residences and $1.46 million for three-bedroom residences, buyers can secure an apartment with a 10 per cent deposit, with premium homes offering ocean views from Level 8 and harbour views from Level 10.

ERA is also backed by Resilience Insurance's 10-year Latent Defects Insurance policy, providing protection against structural or waterproofing defects for 10 years after completion. The project is anticipated to be completed in early 2028.

[smartcode_project_cta:default project_id=135096]

Joel Robinson

From ONE to ERA: Why buyers are choosing GWH again in Newcastle West

Virgate Property Group is preparing to commence construction of Verdé, its new apartment development in Melbourne's Arts Precinct at Southbank, following a strong run of sales that has seen more than half of the project's 173 apartments secured.

Verdé has attracted a broad mix of first home buyers, owner-occupiers upgrading from nearby inner-city suburbs and investors, with younger owner-occupier couples aged between 28 and 45 accounting for the strongest enquiry. Many are already living in Southbank, South Melbourne, Albert Park, Port Melbourne, South Yarra and the CBD.

"Verdé is located in one of the most desirable pockets of southern Melbourne," Blair Property Group Director Darren Blair, who is managing sales at Verdé, said.

"It's within walking distance of the Arts Centre, Royal Botanic Gardens, Albert Park Lake, and Southbank's restaurants and retail. It's a great lifestyle location with strong amenity and liveability, which made it a very attractive choice for the project."

[smartcode_project:default project_id=4661 project_image_fid=372549]

Virgate was already familiar with the precinct, having previously delivered the successful Domain House development in neighbouring South Melbourne. That experience gave the developer confidence to acquire the Coventry Street site and continue expanding its presence in Melbourne's inner south.

"We had been keeping an eye on the site and the broader precinct for a few months before deciding to move forward with the acquisition," Virgate said.

The project was ultimately secured in 2020 following feasibility studies, planning assessments and due diligence, with the brief centred on delivering "a high-quality, considered design that feels both refined and fit for purpose."

[smartcode_project:default project_id=4661 project_image_fid=314259]

Designed by <a href="https://www.apartments.com.au/architects/bruce-henderson-architects">Bruce Henderson Architects</a>, Verdé comprises 173 one, two and three-bedroom apartments priced from $599,000. The architecture is distinguished by a faceted glass façade that responds to both the site's outlook and Melbourne's changing light conditions.

According to Bruce Henderson Architects, the coloured glazing gives the building a distinctive identity while also providing privacy and solar shading, with residences oriented to capture views across the bay, city skyline and surrounding parklands.

Inside, <a href="https://www.apartments.com.au/interior-designers/designoffice">DesignOffice</a> has created interiors focused on natural light, efficient planning and enduring materials. Apartments feature engineered oak flooring, natural stone benchtops, floor-to-ceiling glazing and SMEG appliances, while a restrained material palette aims to complement the expansive outlooks rather than compete with them.

[smartcode_project:default project_id=4661 project_image_fid=372550]

Resident amenity has also been designed around everyday functionality rather than occasional use. Facilities include a concierge-serviced lobby, residents' lounge with fireplace, library and co-working space, gym, terrace garden with barbecue facilities, ground-floor café, and package delivery management.

The project's location continues to be one of its strongest drawcards. Positioned on Coventry Street, Verdé sits within walking distance of the National Gallery of Victoria, Arts Centre Melbourne, Royal Botanic Gardens and Albert Park Lake, while Southbank's dining precinct, Sturt Street trams and the new ANZAC Station are all nearby. The surrounding education catchment also includes Melbourne Grammar, Melbourne Girls Grammar, Mac.Robertson Girls' High School and several major university campuses.

The sales team says buyers have responded particularly well to the combination of location, design quality and long-term liveability.

"They're responding really positively to the quality of the design, premium resident amenities and the uninterrupted views. Many also appreciate the location and how connected it is to everything they need."

The ability to secure stamp duty savings before completion has also been a key factor for purchasers, alongside the opportunity to personalise finishes ahead of settlement.

With construction set to commence soon and more than half the apartments already sold, Verdé enters its next phase as one of the Arts Precinct's more established apartment developments, offering remaining buyers an opportunity to secure a residence before construction advances further. Expected completion is scheduled for late 2027.

[smartcode_project_cta:default project_id=4661]

Virgate's Verdé Southbank moves toward construction as sales fly past halfway stage

Downsizer-focused apartment development Kooyongkoot in Hawthorn has been recognised at the 2026 Better Future Melbourne Design Awards, taking home Gold and Silver awards in two categories.

<a href="https://www.apartments.com.au/new-apartments/kooyongkoot-hawthorn-1-kooyongkoot-road-hawthorn-vic-3122">Kooyongkoot</a>, currently being delivered by developer PQD and designed by Cera Stribley, received Gold in the Interior Design – Proposed category and Silver in the Architecture – Proposed category.

The dual recognition reflects the design approach behind the boutique development on prestigious Kooyongkoot Road, where the focus has been on creating homes for downsizers seeking the space, quality and functionality of a detached house within a low-rise apartment building.

Rather than maximising apartment numbers, <a href="https://www.apartments.com.au/developers/pqd">PQD</a> and <a href="https://www.apartments.com.au/architects/cera-stribley-architects">Cera Stribley</a> limited the development to just 18 residences, allowing for larger floorplans, greater privacy, generous landscaping and expansive communal spaces.&nbsp;The majority of the apartments also benefit from corner aspects, allowing for dual sources of natural light.

Now around 70 per cent complete and on track for completion in November 2026, Kooyongkoot will comprise a mix of garden residences, ter​race apartments, sub-penthouses, and is crowned by two half-floor penthouses with direct lift access and private rooftop terraces.

[smartcode_project:default project_id=102717 project_image_fid=355297]

The Silver Award for Architecture recognised the way the building responds to its prominent corner position at the ent​rance to Hawthorn's Scotch Hill precinct, one of Melbourne's most established residential neighbourhoods.

Rather than competing with the grand homes that line Kooyongkoot Road, the architectural approach focused on restraint and longevity, using curved brickwork, generous landscaping and carefully considered proportions to integrate with the existing streetscape.

"The form feels fluid and timeless, as though shaped by the landscape itself – architecture that belongs, rather than competes," said Chris Stribley, Co-Founder and Managing Principal of Cera Stribley.

The judging submission also highlighted practical innovations throughout the building, including lift cores servicing only nine homes each, a central landscaped lightcourt designed to bring daylight and ventilation into the building, and fully enclosed private storage rooms with lighting, power and shelving to better accommodate residents transitioning from larger family homes.

[smartcode_project:default project_id=102717 project_image_fid=355293]

The Gold Award for Interior Design recognised the project's focus on long-term liveability rather than display-home aesthetics.

According to the awards submission, the interiors were designed from the inside out, prioritising how homes would function over decades of daily use through generous proportions, practical storage, durable natural materials and flexible layouts.

The specification includes natural stone throughout, upgraded acoustic glazing, V-ZUG appliances and fully enclosed storage rooms, alongside an amenity offering focused on wellness, entertainment and everyday convenience.&nbsp;

Residents will have access to a gym and yoga studio, a wellness centre featuring traditional and infrared saunas, a cold therapy shower and treatment room, as well as a residents' lounge and golf simulator/cinema room for entertainment.&nbsp;Kooyongkoot has also considered the everyday convenience of its residents by offering a private carwash and pet wash facilities on site as well as dedicated parcel lockers and oversized fully enclosed storage rooms.&nbsp;

[smartcode_project:default project_id=102717 project_image_fid=355303]

The project's attention to detail has already resonated with buyers. Earlier this year, Kooyongkoot recorded one of Boroondara's highest apartment sales when an $8 million penthouse was purchased by a Melbourne CEO downsizing from a nearby family home.

"Every detail feels deliberate, from the overall design down to the smallest touches," the purchaser said.

"The level of quality and refinement is exceptional, but what really sold it was how liveable it felt... It felt like a place where everything had been considered, not just a luxury building."

[smartcode_project:default project_id=102717 project_image_fid=355304]

Sustainability also formed a key part of both award submissions. Kooyongkoot is targeting a minimum 7.5-star NatHERS rating across all residences, supported by passive design principles, high-performance glazing, EV charging infrastructure, water reuse systems and a wellness model focused on lower-energy dry facilities rather than pools and large wet areas.

Located within walking distance of Scotch College, Methodist Ladies' College, Koo​yong Lawn Tennis Club, Aubur​n Village and Camberwell Junction, Kooyongkoot continues to target owner-occupiers looking to remain in Melbourne's inner east without compromising on space or quality. A limited selection of two, three and four-bedroom residences remains available, with prices starting from $1.9 million.

[smartcode_project_cta:default project_id=102717]

Kooyongkoot wins Gold and Silver at Better Future Melbourne Design Awards

New apartment supply has become increasingly constrained across <a href="https://www.apartments.com.au/developments/parramatta-nsw-2150">Parramatta</a> in recent years, with fewer projects progressing through to completion as development conditions have become more challenging.

It makes <a href="https://www.apartments.com.au/developers/novm">NOVM</a>'s 2021-completed <a href="https://www.apartments.com.au/buildings/the-lennox-parramatta-12-phillip-street-parramatta-nsw-2150">The Lennox</a> one of the most recently completed residential towers on the Parramatta River, and among the newest apartment developments in Sydney's second CBD.

With the project largely completed before the sharp escalation in construction costs and inflation following the pandemic, The Lennox is now offering pricing that would be difficult to replicate in a comparable new development in Parramatta today, or across much of Western Sydney.

The majority of the 413 apartments at The Lennox sold before and shortly after completion. A limited release of the remaining apartments has recently been brought to market by capital partner <a href="https://www.apartments.com.au/project-marketer/equitifund-group">Equitifund</a>, with entry-level pricing from $700,000 and two-bedroom apartments available from under $1 million.

Rising above the Parramatta River at 12 Phillip Street, The Lennox comprises one, two, three and four-bedroom apartments, appealing to first home buyers, young professionals, families, downsizers and interstate investors seeking a completed apartment in one of Australia's fastest-growing economic centres.

[smartcode_project:default project_id=5743 project_image_fid=372394]

Rather than positioning Parramatta as an alternative to Sydney's CBD, Equitifund believes the city has reached a point where it stands on its own merits.

"Parramatta is no longer simply an alternative to Sydney CBD, it's becoming a destination in its own right," Equitifund Executive Chairman Greg Huxley said.

"The Lennox captures that evolution with a level of quality and amenity that's difficult to match at its price point."

[smartcode_project:default project_id=5743 project_image_fid=953]

Designed by <a href="https://www.apartments.com.au/architects/marchese-partners">Marchese Partners</a>, the tower responds directly to its riverfront setting through expansive glazing and open-plan layouts that maximise views across the Parramatta River and city skyline. Interiors feature engineered timber flooring, stone benchtops, stainless steel appliances and floor-to-ceiling glazing, while generous balconies extend the living spaces outdoors.

Marchese Partners says the project was conceived to balance high-quality apartment living with practical, long-term functionality, pairing larger, efficient floorplans with amenities more commonly associated with five-star hotels.

That emphasis continues through the resident facilities, which include a 20-metre rooftop swimming pool, fully equipped gym and wellness spaces, full-time concierge, a residents' lounge, function room, private lifts, secure basement parking and rooftop communal areas overlooking the Parramatta River. Ground-floor boardwalk retail and dining further activate the riverfront and integrate the building into the surrounding public realm.

[smartcode_project:default project_id=5743 project_image_fid=925]

Australian housing and finance group Equitifund has secured the remaining apartments, believing there are few completed apartment opportunities in Parramatta that offer the same combination of location, amenity and pricing.

Equitifund National Sales Director Ben Hamblett says buyers are increasingly recognising that premium apartment living no longer needs to come with Sydney CBD pricing.

"The Lennox is where aspirational living becomes attainable," Hamblett said.

"Wake to river and mountain views, step into Sydney's Second CBD, and arrive home to resort-calibre amenities, all without the harbour price tag."

Hamblett says owner-occupiers are also attracted by the convenience of having Westfield Parramatta, Church Street's dining precinct, Parramatta Park, Riverside Theatres, Western Sydney University and major transport connections all within walking distance.

"At The Lennox, lifestyle is not an afterthought, it is the foundation."

[smartcode_project:default project_id=5743 project_image_fid=5374]

The Lennox places residents within walking distance of Parramatta Square, Westfield Parramatta, Church Street Eat Street, Parramatta Station, the ferry wharf, Light Rail, the future Sydney Metro West, Parramatta Park and CommBank Stadium, reinforcing Parramatta's position as one of Australia's most connected metropolitan centres outside Sydney's CBD.

Equitifund says buyers visiting the display suite consistently comment on the quality of the finishes, generous floorplans, river and skyline views, and the walkability of the location. The project has attracted a broad mix of local professionals, upsizers, downsizers, buyers relocating from Sydney's inner suburbs and interstate investors seeking long-term growth opportunities.

That demand aligns with Parramatta's continued evolution as an economic powerhouse. Equitifund Research and Market Insights specialist John Bekiaris says sustained population growth, infrastructure investment and expanding employment opportunities continue to support long-term housing demand across the city.

"Parramatta has evolved from a satellite city into one of Australia's most important economic centres. Population growth, infrastructure investment and employment are all supporting sustained long-term housing demand."

[smartcode_project_cta:default project_id=5743]

The apartment price gap drawing Sydney buyers west

A luxury beachfront apartment at Rainbow Bay has more than doubled in value since it sold off the plan six years ago, setting a new local apartment record in the process.

The three-bedroom apartment in the Flow development on Petrie Street, the first of four new projects locally by Paul Gedoun's S&amp;S Projects, has sold for $7.4 million, after originally selling for $3.27 million when the project launched in 2020.

The seventh-floor apartment, comprising 187 sqm of internal living space and a 54 sqm balcony overlooking Froggies Beach and Snapper Rocks, was purchased by a local family.

The transaction was negotiated by Pezet Matheson director Kerry Pezet and equates to more than $30,000 per sqm.

Pezet said the sale reflected the limited opportunities to buy into the boutique beachfront development.

"The sale highlights the rarity of opportunities within the boutique beachfront development, where residences seldom become available," Pezet said.

"Flow is one of the Gold Coast's most tightly held buildings. Buyers from our database move quickly when residences become available, and achieving an off-market sale at $7.4 million demonstrates the depth of demand for property of this calibre."

<img alt="Flow" data-entity-type="file" data-entity-uuid="c585b206-2130-4eee-a50c-3f27c51a7c70" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-07-06%20at%208.33.25%E2%80%AFPM.png?VersionId=m3pHRDV62Y3fvN.XQuQHq.52ilTWpRLf" />

Flow was the first of four luxury apartment developments delivered by Paul Gedoun's S&amp;S Projects at Rainbow Bay and was completed in 2023.

Positioned on the beachfront overlooking Snapper Rocks, the residence includes three bedrooms, three bathrooms, a powder room and views stretching north along the coastline towards Surfers Paradise.

Pezet Matheson Residential principal Mitchell Lambert said buyers continued to prioritise quality beachfront apartments in tightly held locations.

"Flow Residences offers a rare combination of elevated beachfront positioning, architectural excellence, comprehensive resident amenity and premium finishes, which is exactly what discerning purchasers are seeking," Lambert said.

"The transaction further reinforces Rainbow Bay's reputation as one of Australia's premier coastal lifestyle destinations, where limited supply and growing demand continue to support strong market performance."

Pezet Matheson originally marketed and sold out Flow off the plan, making the latest transaction a return to one of the project's original buyers.

Paul Gedoun is selling his third project, <a href="https://www.apartments.com.au/new-apartments/radia-rainbow-bay-271-boundary-street-coolangatta-qld-4225">Radia Rainbow Bay</a>, after recently completing, and selling out, <a href="https://www.apartments.com.au/buildings/esprit-217-227-boundary-street-coolangatta-qld-4225">Esprit</a>. He has plans for a <a href="https://www.apartments.com.au/news/qld/first-look-s-s-projects-proposes-88-apartment-wellness-tower-at-coolangattas-boundary-street">fourth building</a>, 88 apartments on <a href="https://www.apartments.com.au/new-apartments/209-213-boundary-street-coolangatta-qld-4225">Boundary Street</a>.

Rainbow Bay apartment doubles in price since off the plan sale during pandemic

Economy

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GUEST OBSERVER
RISQ Group is currently working in and around the property services industry and has been very active in developing a service provider verification tool.
The new tool will enable consumers to immediately trust that a given provider has all requisite certifications. 
The tool is called KNOWN and it is in advanced trials across several digital platforms. 
While to date, we are focused on service providers such as tradespeople (e.g. plumbers and electricians), our business expertise stretches from national security vetting to education to finance, and we often work with established industry bodies to provide verification services to members, as well as to create efficient screening work flows. 
For this reason, we think we believe we are positioned to add an additional dimension to some questions.
 Rather than address each individually, we would like to offer a general perspective built around a single basic principle. That basic principle is that screening and verification must be considered as part of the life-cycle that operates relating to training and education, and which forms the basis of the improvements that you are currently contemplating. 
Australia is in the midst of an employment shift, particularly as the resource sector continues to decelerate. This shift will see a substantial enlargement of the paraprofessional employee cohort. This group will increasingly be consumer facing, especially as digital platforms grow to connect providers directly with consumers. 
As a result of this shift, the question of how qualifications and certifications are quickly, accurately and truthfully conveyed as part of the provider-consumer transaction will be paramount. As the consulting paper acknowledges, there is already "little apparent consistency" regarding educational requirements for property agents across jurisdictions. It is not a stretch to say the same lack of consistency applies to publicising education credentials. 
It is critical that as educational standards are improved and clarified, that an efficient and transparent way of transmitting individual verifications to the marketplace is also found, or the credibility of the property management industry will suffer and consumers will not benefit from an improvement of standards. In fact, to quote from the consultation paper, "The primary reason governments prescribe educational standards is to address a consumer detriment or risk." For this reason, we believe that it is imperative to consider how these educational standards will ultimately be transmitted and perceived in the marketplace lest consumer detriment persist or even worsen because of poor verification processes even in the face of higher education standards.
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Given how important competition principles are in balancing government overreach, after-the-fact screening and verification, consistently applied throughout the employment life cycle, will serve to prevent marketplace abuses (such as credential misrepresentation) that may prompt even greater future regulatory action. 
We would also suggest that the application/accreditation processes itself should be reviewed for potential streamlining. According to industry sources, while training can be completed in as little as two days, it often takes six weeks for the OFT to process the application. The adoption of improved screening tools can reduce this lag time and get people into gainful employment faster, benefitting providers, consumers and the wider economy. 
We are happy to speak at greater length on this subject and/or present the screening and technological context relevant to the current discussion. 
 
 Nick Roberts is chief executive officer, RISQ Group and can be contacted <a href="https://%20www.risqgroup.com%20" target="_blank">here</a>. This is his submission to NSW Fair Trading on the Review of property industry training standards.
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jchancellor-FAypfDUnLy

Government overreach and preventing marketplace abuses: Nick Roberts 

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<div class="page" title="Page 1">GUEST OBSERVER</div>
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<div class="page" title="Page 1">Employment rose by 17,900 in May after rising by just 900 people in April (previously reported as a rise in jobs of 10,800). Full-time jobs were unchanged while part-time jobs rose by 17,900. Economists had tipped a 15,000 increase in jobs.</div>
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 Hours worked rose by 1.7 per cent in May – best gain 16 months. Hours worked are up by 1.4 per cent on the year.</div>
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<div class="page" title="Page 1">Jobless rate: The unemployment rate held steady near a 3-year low of 5.7 per cent in May (lowest since September 2013). The trend unemployment rate was steady at a 31-month low of 5.7 per cent. The participation rate was steady at 64.8 per cent.</div>
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<div class="page" title="Page 1">Unemployment across states in May: NSW 5.2 per cent (April 5.3 per cent); Victoria 5.8 per cent (5.6 per cent); Queensland 6.4 per cent (6.5 per cent); South Australia 6.9 per cent (6.8 per cent); Western Australia 5.7 per cent (5.6 per cent); Tasmania 6.5 per cent (6.3 per cent). In trend terms unemployment in the Northern Territory fell from 4.2 per cent to 4.1 per cent; ACT unemployment fell from 3.9 per cent to 3.8 per cent.</div>
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 Domestic air traffic: In the year to April, 58.1 million passengers were carried on domestic air routes, up 1.4 per cent over the year and the strongest growth in 25 months.  A raft of companies is affected by the employment data but especially those dependent on consumer spending. Amongst stocks affected are Fairfax, West Australian Newspapers, Seek Limited, McMillan Shakespeare and Skilled Group.  </div>
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<div class="page" title="Page 1">What does it all mean?</div>
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<div class="page" title="Page 1">There is no pleasing some people. The economy is growing at a 3.1 per cent annual pace – best for 31⁄2 years – and people don’t believe it. Similarly, the jobless rate remains at a near 3-year low of 5.7 per cent and people don’t believe it. Still, trend data shows that the unemployment rate has been consistently improving over the past year and stands at 5.7 per cent, in line with the  seasonally adjusted result. So it is no fluke – economic growth has picked up, and the jobless rate has come down.</div>
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<div class="page" title="Page 1"><a href="/images/2016/06/17/Screen%20Shot%202016-06-17%20at%209.18.55%20AM.png" target="_blank">Click to enlarge</a></div>
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<div class="page" title="Page 1">While job creation is concentrated in part-time positions, this is to be expected with an election underway. Businesses want to see the election outcome before they commit to taking on more workers. And encouragingly the number of hours worked posted the strongest gain in 16 months suggesting that the work is there. Businesses are just meeting the extra demand by hiring temps and getting existing employees to work more hours.</div>
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<div class="page" title="Page 1">So no surprises in the jobs data. And that suggests the Reserve Bank will stay on the interest rate sidelines until August at which point it will have digested the latest inflation data.</div>
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<div class="column">Arguably the NSW, ACT and Northern Territory job markets are at or near “full employment”. The $64 question is at what point wage pressures emerge, potentially injecting some inflation into the economy. If wage pressures emerge, they are more likely to emerge in construction markets.</div>
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<div class="column">Employment by industry jobs data is released next Thursday. The lift in the number of passengers flying domestic air routes – especially the key Sydney-Melbourne route – adds further weight to the argument that the economy is doing well. The lift in the growth rate of passengers on the Sydney-Melbourne route (third busiest in the world) lines up with the improvement in the job market over the past year.
What do the figures show?
Labour force:
Employment rose by 17,900 in May after rising by just 900 people in April (previously reported as a rise in jobs of 10,800). Full-time jobs were unchanged while part-time jobs rose by 17,900. Economists had tipped a 15,000 increase in jobs.
Hours worked rose by 1.7 per cent in May – best gain 16 months. Hours worked are up by 1.4 per cent on the year.</div>
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 The unemployment rate held steady near a 3-year low of 5.7 per cent in May (lowest since September 2013). The trend unemployment rate was steady at a 31-month low of 5.7 per cent.</div>
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<div class="column">In trend terms the jobless rate for 15-24 year persons was steady at 12.2 per cent.</div>
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<div class="column">The underemployment rate was steady at 8.4 per cent in May. The underutilisation rate rose from 14.1 percent to 14.2 per cent. </div>
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<div class="column">The participation rate was steady at 64.8 per cent.</div>
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<div class="column">A total of 224,700 jobs were added over the year to May. The annual growth rate eased from 2.0 per cent to 1.9 per cent. In trend terms, employment has risen for 30 consecutive months although the jobs growth of 3,700 in May was the weakest in 20 months.</div>
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 The working age population rose by 21,700 in May. The working age population rose by 287,900 over the past year – the strongest gain in two years. The working age population is up 1.5 per cent over the past year – strongest growth in 17 months.</div>
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<div class="column">Unemployment across states in May: NSW 5.2 per cent (April 5.3 per cent); Victoria 5.8 per cent (5.6 per cent); Queensland 6.4 per cent (6.5 per cent); South Australia 6.9 per cent (6.8 per cent); Western Australia 5.7 per cent (5.6 per cent); Tasmania 6.5 per cent (6.3 per cent). In trend terms unemployment in the Northern Territory fell from 4.2 per cent to 4.1 per cent; ACT unemployment fell from 3.9 per cent to 3.8 per cent. Jobs across states and territories in May: NSW +5,200; Victoria +1,100; Queensland -4,200; South Australia - 3,700; Western Australia +2.500; Tasmania -200. Trend terms: Northern Territory +300; ACT -300
Sydney-Melbourne air traffic:
The Sydney-Melbourne route is the third busiest air route in the world. The Sydney-Melbourne route is also a key measure of business activity. In the year to April 2016, the number of flights between Sydney and Melbourne eased from a record high of 60,155 (February 2016) to 59,926.
The annual growth rate of the number of Sydney- Melbourne flights eased further from the 33-month high of 7.3 per cent in December to 3.9 per cent in April, just below the decade average growth of 4.2 per cent.
Late last year the increase in the number of flights between Sydney and Melbourne led to an easing in the moving annual load factor to 81.15 per cent in October – a 28-month low. But the average load factor has since lifted in the following six months to an 11-month high of 81.9 per cent in April in line with the slower growth in the number of flights and a continued lift in passenger numbers.
In April, the number of passengers on the Sydney- Melbourne route was up by 5.2 per cent on a year ago to 724,216. In the year to April a record 8.74 million passengers were carried between Sydney and Melbourne. Smoothed annual growth in passenger numbers rose from 3.6 per cent to 3.8 per cent.
All domestic air routes
Across all domestic air routes (not just Sydney-Melbourne) the rolling average load factor (proportion of seats occupied by passengers) held steady at a 29-month high of 76.7 per cent in April.
In the year to April, 58.1 million passengers were carried on domestic air routes, up 1.4 per cent over the year and the strongest growth in 25 months.
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<div class="column">Why is the data important?</div>
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<div class="column">The Labour Force estimates are derived from a monthly survey conducted by the Bureau of Statistics. The population survey is based on a multi-stage area sample of private dwellings (currently about 22,800 houses, flats, etc.) and a sample of non-private dwellings (hotels, motels, etc.). The survey covers about 0.24 per cent of the population of Australia and includes all people over 15 years of age, except defence personnel.</div>
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<div class="column">If more people are employed, then there is greater spending power in the economy. But at the same time companies may adjust the work hours of employees. If employees work less hours, and therefore get paid less, then spending power in the economy is reduced.</div>
<div class="column"> </div>
<div class="column">The Bureau of Infrastructure, Transport and Regional Economics (BITRE) releases regular aviation data. The BITRE releases the Australian Domestic Airline Activity publication each month as well as the Domestic Air Fares publication. The data provides insights on airline activity as well as trends in the broader Australian economy. If more people are flying, then it suggests businesses are more active and/or consumers are more confident.</div>
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<div class="column"><a href="/images/2016/06/17/Screen%20Shot%202016-06-17%20at%209.20.12%20AM.png" target="_blank">Click to enlarge</a></div>
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<div class="column">What are the implications?</div>
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<div class="column">While the modest lift in job numbers adds to spending power, probably more important is job security. Those with jobs will be heartened at the low jobless rate, giving them confidence to spend.</div>
<div class="column">
 The lift in domestic airline passengers is encouraging for the airlines as well as related services.</div>
<div class="column">
 Craig James is the chief economist at <a href="https://www.comsec.com.au/default.aspx" target="_blank">CommSec</a>. <img src="file:///page3image19560" alt="page3image19560" width="107.820000" height="1.080000">
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Jobless rate holds near 3-year low: CommSec's Craig James

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GUEST OBSERVER
There was never going to be any surprises in Federal Treasury’s assessment of the economy given the Federal Budget was released just over a fortnight ago. It wouldn’t have been a good look if there was significant discrepancies in key economic assumptions and Federal budget projections in such a short period.
To recap, Federal Treasury is tipping growth of around 2½ per cent in both 2015/16 and 2016/17. Employment growth is expected to remain “solid”  with the unemployment rate forecast to fall to 5½ per cent in the June quarter of 2017.
When it comes to nominal economic growth, once again it is expected to remain weak at just 2½ percent this year before lifting to 4¼ percent in 2016/17. However given the downside risks to inflation Federal Treasury has concede an interesting point when it comes to nominal growth outcomes.
 “If inflation outcomes were consistent with the lower bound of the range presented in the RBA May 2016 Statement on Monetary Policy in the forecast period from 2015-16 to 2017-18, nominal GDP could be around 1. per cent lower by 2017-18”.  Overall a lower nominal GDP result would mean an even more prolonged period of budget deficits.
Interestingly not all the figures in the PEFO document were the same as the May Budget. The PEFO projects an underlying cash balance deficit of $40 billion in 2015/16 and the Federal Budget shows a deficit of $39.1 billion - essentially splitting hairs. But Federal Treasury goes on to explain that “parameter and other variations have resulted in a negative impact on the underlying cash balance of $103 million in 2015-16, reflecting a reduction in expected receipts from Unclaimed Superannuation Monies”.  
The deficit for 2016/17 was forecast to remain at $37.1 billion.
Overall the budget deficit and debt levels are low on a global scale but arguably could be lower. In fact the Reserve Bank has weighed into the debate on deficits. Reserve Bank Board member John Edwards has commented that the Government should seek “more plausible”  measures of deficit reduction.
<a href="/images/2016/05/20/Screen%20Shot%202016-05-20%20at%203.04.23%20PM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/05/20/Screen%20Shot%202016-05-20%20at%203.04.23%20PM.png" alt="">
 In a wide ranging discussion with the Wall St Journal, Edwards suggests that a return to a balanced budget in two years should have been the government’s goal and that the government is at the risk of trying the patience of ratings agencies.
The $64 question is how businesses are feeling, an Election has been called and interest rates have been cut. There has been a modest slowdown in economic activity in the past few months. The bottom line is that Aussie businesses will only start to look at investing when the election is out of the road.
The PEFO highlights the challenges that lie ahead for the next Government. The hope would be that once the election is out of the way the Government would focus on changing the tax framework including discussions on the GST.
What do the figures show?
Pre-Election Economic &amp; Fiscal Outlook (PEFO):
The budget deficit for 2015/16 is now estimated at $40 billion or 2.4 per cent of GDP, up from the earlier Federal Budget estimate of $39.9 billion. The 2016/17 budget deficit is tipped at $37.1 billion (2.2 per cent of GDP).
Looking further out: the 2017/18 budget deficit is forecast at $26.1 billion (1.4 per cent of GDP); the 2018/19 budget deficit $15.4 billion (0.8 per cent of GDP); 2019/20 budget deficit $5.9 billion (0.3 per cent of GDP).
Federal Treasury tips 2½ per cent economic growth in current year, in line with the May budget forecast.
The jobless rate is seen to fall to 5½ per cent by June 2017, in line with the May budget.
Nominal GDP expected to grow by 2½ per cent this year, before rising to 4¼ per cent in 2016/17.
Consumer price index to average 1¼ per cent this year, before rising to 2 per cent in 2016/17.
Net debt is expected to peak as a proportion of GDP in 2017/18 at 19.2 per cent ($347.1 billion) and fall to 17.8 per cent in 2019/20 ($355.4 billion).
Why is the data important?
The Pre-Election Economic &amp; Fiscal Outlook  document is released by Federal Treasury after an election is called. It contains the latest economic assumptions and Budget projections.
What are the implications?
The PEFO document has no major implications for financial markets. The economy is locked in a holding pattern until the election is held.
The PEFO highlights the fact that all sources of government revenue should be up for review after the election.
No matter what party takes Government, there is a revenue problem to be addressed. And no option should be ruled out. Any responsible Government needs to assess all taxation measures and that includes the GST
<a href="/images/2016/05/20/Screen%20Shot%202016-05-20%20at%203.06.29%20PM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/05/20/Screen%20Shot%202016-05-20%20at%203.06.29%20PM.png" alt="" width="1277" height="520">
Savanth Sebastian is an economist for <a href="https://www.commsec.com.au/" target="_blank">CommSec</a>
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RBA weighs in on deficit debate: CommSec's Savanth Sebastian

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<img src="https://counter.theconversation.edu.au/content/57114/count.gif" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
A long-term plan to cut the company tax rate from 30 percent to 25 percent is the centrepiece of the Coalition’s economic plan for jobs and growth.
The Coalition maintains the change will boost GDP by more than 1 percent in the long-term, at a budgetary cost of $48.2 billion over the next 10 years.
But the very Treasury research papers relied on by the Coalition tell a more modest story than the headlines. Using these papers, we show that the net benefit to Australians in the real world will be only about half of the headline benefit, and it will be a long time before we are any better off at all.
<h2>The short story</h2>
The Government has made two claims about the economic impacts of its plan to cut the company tax rate.
On Budget night Treasurer Scott Morrison said that the tax cuts would:
“… mean higher living standards for Australians and an expected permanent increase in the size of the economy of just over one percent in the long term.”
Later last week, Prime Minister Malcolm Turnbull said:
“The Treasury estimated last year…that for every dollar of company tax cut, there was four dollars of additional value created in the overall economy.”
<h2>Sound in theory, but there’s a back story</h2>
In theory, cutting the company tax rate boosts the economy in the long term. All taxes distort choices, and thereby drag on economic activity. Taxes on capital often have especially large economic costs because they discourage investment, which is mobile across borders. By some estimates, roughly half of the economic costs of Australian company tax ultimately fall on workers, as lower company profitability leads to lower investment, and therefore lower wages and higher unemployment.
But while the theoretical argument for company tax cuts is straightforward, the real story is more complicated.
<h2>The twist: a tax cut for foreign investors</h2>
The twist in the tale comes from Australia’s system of dividend imputation, or franking credits. The effect of this system is to make the company tax rate for Australian resident shareholders effectively close to zero. In nearly every other country, company profits are taxed twice: companies pay tax, and then individuals also pay income tax on the dividends, albeit often at a discount to full rates of personal income tax.
But in Australia, the shares of Australian residents in company profits are effectively only taxed once. Investors get franking credits for whatever tax a company has paid, and these credits reduce their personal income tax. Consequently, for Australian investors, the company tax rate doesn’t matter much: they effectively pay tax on corporate profits at their personal rate of income tax.
As a result, although Australia has a relatively high headline corporate tax rate compared to our peers, in practice the comparable tax rate is lower – at least for local investors. As a result, many of the international studies about the impact of cutting corporate tax rates are not readily applicable to Australia.
Local shareholders do get one small benefit from cutting corporate tax rates. If companies pay less tax, then they have more to reinvest, so long as the profits are not paid out to shareholders. Yet in practice, most profits are paid out. Therefore a company tax cut will generate little change in domestic investment.
By contrast, foreign investors do not benefit from franking credits. They pay tax on corporate profits twice: first at the company tax rate, and then as income tax on the dividends. This means that a cut to the company tax rate provides big benefits to them.
This week The Australia Institute pointed out that foreign investors from the United States and other countries that have tax treaties with Australia may not benefit from the company tax cut, because their home governments will collect the gains from any cut to Australia company tax as additional company tax. Yet this would only occur when foreign firms repatriate profits earned in Australia to the home country.
The big reductions in net tax revenue – and therefore the large benefits to companies – are expected when the corporate tax rate is cut from 30% to 25% between 2022 and 2027 for larger companies, including the bulk of businesses that are foreign-owned.
The headline from the Treasury modelling for the 2016-17 Budget is that this cut will ultimately increase GDP by up to 1.2% meaning larger foreign companies are attracted to invest more in Australia. The finding is based on work contained in a Treasury research paper that modelled the long-term impact of a company tax cut.
<h2>Activity is not income</h2>
However, it is a mistake to assume that all the increase in economic activity will make Australians better off. We often use Gross Domestic Product – the sum of all economic activity – as a short-hand measure for prosperity. But when the benefits disproportionately flow to non-residents, GDP can be misleading. It’s much better to look at Gross National Income (GNI), which measures the increase in the resources available to resident Australians.
Treasury expects that cutting corporate tax rates to 25% will only increase the incomes of Australians – GNI – by 0.8%. In other words, about a third of the increase in GDP flows out of the country to foreigners as they pay less tax in Australia. And because most of the additional economic activity is financed by foreigners, the profits on much of the additional activity will also tend to flow out of Australia.
<h2>You don’t get something for nothing</h2>
Yet even this increase in GNI of 0.8% is not the best estimate of the improvement in living standards Australians can expect from the Government’s company tax plan. If company taxes are lower, other taxes have to be higher, all other things being equal. In the modelling discussed so far, Treasury first assumes that these revenues can be collected by a fantasy tax that imposes no costs on the economy.
But that’s not what happens in the real world. So the Treasury research paper also models the scenario in which personal income taxes rise to offset the reduced company tax revenue. On this more realistic assumption, Treasury estimates that GNI will increase by just 0.6% in the long term, or roughly $10 billion a year in today’s dollars.
<a href="https://62e528761d0685343e1c-f3d1b99a743ffa4142d9d7f1978d9686.ssl.cf2.rackcdn.com/files/122984/width754/image-20160518-13455-yxfw6e.jpg" target="_blank">Click to enlarge</a>
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<h2>Other wrinkles in the story</h2>
Even this more modest Treasury figure may well over-estimate the long-term boost to GNI. In the real world, progressive income taxes impose higher costs than the hike to a hypothetical flat-rate personal income tax that Treasury modelled. Companies may also not increase investment as much as Treasury expects, and those firms that are part of oligopolies in Australia may not increase wages by as much as Treasury assumes.
While these are reasons to expect that the Treasury modelling overestimates the economic benefits of a company tax cut, they are offset by some more conservative assumptions. Treasury believes that tax cuts modestly change how much firms shift profits overseas; it may overstate how much tax cuts flow into additional profits rather than higher wages in those industries that it does recognise as oligopolies; and it may discount the benefits of investors making less distorted choices between debt and equity funding.
<h2>The verdict on the first claim</h2>
The bottom line is that, on Treasury’s own modelling, a corporate tax cut will increase Australian incomes in the long term by up to 0.6%. The Treasury research paper doesn’t commit itself to a timeframe, but it cites other work that expects the economic benefits of company tax cuts to take 20 years to bear fruit, with half the benefit in 10 years. Given that the important (and expensive) part of the corporate tax cuts only starts to take effect from 2022, Australia will be waiting 25 years for a 0.6% increase in incomes.
This economic benefit needs to be seen in context. If Australian per capita GDP and GNI increase at 1.5% a year (as the budget papers routinely assume), then over 25 years, incomes will rise by 45.1%. Corporate tax cuts mean that instead, incomes will rise by 45.7% – or perhaps a bit less. It may still be worth doing, but it’s not a plot twist that dramatically changes Australia’s story.
Others claim that in the past, company tax cuts have had no measurable effect on the economy. This is disputed – there may well be a link between corporate tax cuts and economic growth. But it’s inevitably hard to see in practice because on Treasury’s own modelling the economic effect of company tax cuts is small relative to other changes.
<h2>Not four-to-one, more like dollar for dollar</h2>
This brings us to the Government’s second claim. Late last week, Mr. Turnbull said that each dollar in company tax revenue cut would deliver an extra four dollars in GDP.
His claim appears to be drawn from an earlier 2015 Treasury research paper that modelled the economic impact of major Australian taxes, including company tax. The more <a href="https://www.treasury.gov.au/PublicationsAndMedia/Publications/2016/working-paper-2016-02">recent</a> Treasury working paper, released in Budget week, implies a slightly larger $4.30 increase to GDP from each $1 in revenue cut.
But again this misses a big part of the story.
First, this claim is about GDP, and therefore includes the disproportionate increase in the income of foreigners. Our analysis of the Treasury modelling shows that the increase to Australian incomes, or GNI, is only $2.80 per dollar of revenue lost from a corporate tax cut.
Second, when corporate tax is replaced by a still hypothetical but marginally more realistic flat rate income tax – rather than a complete fantasy tax that has no impact on the economy – the increase to Australian incomes is less again: only $1.80 per dollar of revenue lost.
Third, the Prime Minister has framed the boost to the economy in terms of the long-term increase to GDP per dollar of company tax cut. Treasury calculates the revenue “dollar” lost after considering the additional tax revenue that the government hopes to collect from all taxes in twenty years time as incomes rise because of greater investment.
<a href="https://www.theaustralian.com.au/federal-election-2016/federal-election-2016-pm-bolstered-by-160bn-reform-promise/news-story/e5fe769c97a196959b6e34e14bcc273d?nk=21bd5293c6c9bf91e73e578611f79538-1463363505&amp;login=1">Many people</a> would interpret the Prime Minister’s statement to compare the ultimate benefit per dollar of tax revenue given up in the shorter term. On this basis, the increase to Australian incomes in the long term is only $1.20 for every dollar given up in the short term as a result of corporate tax cuts.
This story ends the same way. Corporate tax cuts may be worth doing, but the outcome is unlikely to set pulses racing.
<a href="https://62e528761d0685343e1c-f3d1b99a743ffa4142d9d7f1978d9686.ssl.cf2.rackcdn.com/files/122985/width754/image-20160518-13481-1ugr3e5.jpg" target="_blank">Click to enlarge</a>
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<h2>The journey matters</h2>
So far, as the Treasury research paper does, we’ve focused on the long-term economic boost from a company tax cut once the economy has fully adjusted. But the journey to get there also matters.
For a decade, a cut to corporate taxes will reduce national income. Foreigners will pay less tax on the profits from their existing investments in Australia, reducing Australian incomes. Foreigners own about 20% of all capital in the economy, so it’s a big windfall gain for them. We estimate that when a 5 percentage point tax cut for big business is first implemented, national incomes will be reduced by about 0.5%, as a result of the immediate loss in company tax revenues formerly paid by foreign investors.
The benefits to Australians from a corporate tax cut only accumulate slowly as foreigners make additional investments. Treasury cites a paper that estimates that the benefits of corporate tax cuts take 20 years to flow through. Assuming that these benefits increase at a constant rate, Australian income will only be larger than otherwise after about 10 years.
Of course, the upfront costs of a company tax cut over the first decade must be offset against the long-term gains. On our estimates, the loss of income incurred over the first decade will only be offset by higher incomes after about 19 years. If Australians want the modest economic benefits of a corporate tax cut, they will be waiting a long time.
<h2>The moral of the story</h2>
Company tax cuts are not a knight in shining armour to save the Australian economy. On the basis of the modelling that the government uses to support its case, corporate tax cuts can make a modest contribution, and then over the very long term. That story won’t sell as many copies. Truth, on this occasion, is duller than fiction.
John Daley<a href="https://theconversation.com/profiles/john-daley-1870" rel="author" style="line-height: 1.3em;"> </a>is chief executive officer, Grattan Institute and can be contacted <a href="https://theconversation.com/profiles/john-daley-1870" target="_blank">here</a>.
Brendan Coates is fellow, Grattan Institute and can be contacted <a href="https://theconversation.com/profiles/brendan-coates-154644" target="_blank">here</a>.
Both are authors for The Conversation
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The full story on company tax cuts and your hip pocket

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GUEST OBSERVER
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The Index has now been in negative territory for the last 12 months and continues to point to below trend growth in the economy throughout 2016. 
With trend growth generally assessed as 2.75percent for Australia the Index is sending a more negative signal than both Westpac and official forecasts.
The Reserve Bank recently released its revised growth forecasts for 2016 and 2017 and retained the forecasts from its February Statement on Monetary Policy at 3percent for through the year growth in both 2016 and 2017. On the other hand, the Government was a little more circumspect , broadly consistent with the signals from the Leading Index and forecasting year average growth in both 2015/16 and 2016/17 at 2.5 percent. 
Arguably, the recent sharp deterioration in the growth rate of the Leading Index (five consecutive months where the growth rate is more than 1 percentage point below trend) is likely to be pointing to a more serious below trend growth performance in 2016/17 than indicated even by the government.
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<img src="/images/2016/05/18/Screen%20Shot%202016-05-18%20at%202.40.03%20PM.png" alt="">
Westpac is more optimistic than the Government with forecasts of 2.9percent (2015/16) and 2.7percent (2016/17) although slightly less optimistic than the Reserve Bank with forecast growth rates of 2.8percent (through the year) in both 2016 and 2017.
To test what is driving the Leading Index to produce a more downbeat outlook than the official forecasters and Westpac it is helpful to consider the contributions to the growth rate from the various components of the Leading Index. International factors dominate with US industrial production (–0.46 percentage points) and Commodity Prices (RBA Index) (–0.31 percentage points) contributing 0.77 percentage points of the 1.08 percentage point deviation below trend.
Perhaps the official forecasters and Westpac are underestimating the importance of these international influences on Australia’s growth prospects.
Another “test” of the signals from the Index is to track the contribution to the growth rate of the Index from its components over the course of the last six months. Over that period the growth rate of the Index fell from 0.5 percentage points below trend to 1.08 percentage points below trend.
The main contributors to the fall in the growth rate were: aggregate monthly hours worked (–0.37 percentage points) Westpac MI Unemployment Expectations Index (–0.10 percentage points); Westpac MI Consumer Sentiment Expectations Index
(–0.12 percentage points); US Industrial Production (–0.19 percentage points); yield spread (–0.7 percentage points); RBA commodity prices Index (–0.06 percentage points); and dwelling approvals (–0.04 percentage points). Partially offsetting this fall was a less negative contribution of 0.36 percentage points from the ASX 200.
An overall conclusion from this analysis is that international factors have generally been the source of the underperformance of the Index but in recent months a deterioration in components associated with the labour market have contributed to further weakness.
The Reserve Bank Board next meets on June 7. We were surprised that the Board decided to cut the cash rate by 0.25percent at its meeting in May. We underestimated the degree to which the staff lowered its inflation forecasts in the wake of the March quarter Inflation Report. On the basis of that Report the Bank lowered its underlying inflation forecasts for 2016 and 2017 from 2.5percent and 2.5percent respectively to 1.5percent and 2.0percent even after allowing for the rate cut. Presented with those forecast changes the Board would have had little choice but to take some action.
We expect that further action will be required at the August meeting once more information about the inflation outlook is available following the release of the June quarter Inflation Report. Indeed the Bank’s current forecasts for inflation take into account the May rate cut and market pricing which, at the time, assumed a further cut. With the 2017 forecast for underlying inflation barely reaching the bottom of the target zone (2–3percent) it is likely that a follow up move will be required.
However we do not expect that move as early as June. It will be prudent to test the current forecasts with the benefit of the June Inflation Report which will not be available until late July.
BILL EVANS is chief economist of <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.
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Leading Index still weak: Westpac's Bill Evans

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Mark Steinert, chief executive of Australia's largest residential property developer, Stockland, believes Labor's housing policy has "the potential to destabilise the entire economy" – to the extent of "risking a recession".
"At the end of the day, house prices are unlikely to adjust so much that it would really change that affordability equation anyway," Steinert told the Australian Financial Review.
"And if they do, believe me it won't be a recession. It will be a depression."
Steinert told columnist Jennifer Hewitt property is such a major force driving Australian growth and activity, that even a small change in the market and in sentiment flows through the entire economy. 
"Housing represents $6.5 trillion of the Australian people's wealth," he tells The Australian Financial Review. 
"It is so big and so many people are involved that even when that order of magnitude of change is obviously small compared to the stock market…its affects people.
"It becomes the new dinner party conversation.
"People feel poorer. 
"They buy less in the shops and people employ less and people are less willing to borrow money to start a business and suddenly that goes on.
"That is how markets work.
"The only way you deal with affordability in my view is first and foremost about supply…in a structural way.
"You cannot deal with affordability in a manageable way by de-stabilising the largest asset in the country."
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Labor negative gearing policy could cause recession or depression

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GUEST OBSERVER
Employment rose by 26,100 in March after rising by 700 in February (previously reported as a rise in jobs of 300). Full-time jobs fell by 8,800 while part-time jobs rose by 34,900. Economists had tipped a 17,000 increase in jobs.
Hours worked fell by 1.1 per cent in March. Hours worked are up by 0.7 per cent over the year.
Jobless rate: The unemployment rate fell from 5.8 per cent to a 2ó-year low of 5.7 per cent in March (lowest since September 2013). The trend unemployment rate held steady at 5.8 per cent – a 27-month low.
The participation rate was steady at 64.9 per cent.
Unemployment across states in March: NSW 5.3 per cent (February 5.3 per cent); Victoria 5.7 per cent (6.0 per cent); Queensland 6.1 per cent (5.6 per cent); South Australia 7.2 per cent (7.7 per cent); Western Australia 5.5 per cent (6.0 per cent); Tasmania 6.8 per cent (6.9 per cent). In trend terms unemployment in the Northern Territory rose from 4.4 per cent to 4.5 per cent; ACT unemployment fell from 4.5 per cent to 4.3 per cent.
In smoothed terms, discount fares fell by 3.6 per cent over the year to April. But business class airfares rose at a smoothed 7.4 per cent annual rate with “restricted economy” fares up by 3.6 per cent.
A raft of companies is affected by the employment data but especially those dependent on consumer spending. Amongst stocks affected are Fairfax, West Australian Newspapers, Seek Limited, McMillan Shakespeare and Skilled Group.
<a href="/images/2016/04/14/Screen%20Shot%202016-04-14%20at%203.16.48%20PM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/04/14/Screen%20Shot%202016-04-14%20at%203.16.48%20PM.png" alt="">
What does it all mean?
The latest employment result was just what households and businesses ordered. After a couple of months of consolidation, employment has recorded a sizeable rebound. And while the pessimists may focus on the fact that hours worked fell in the March, the slide in the unemployment rate to 5.7 per cent - the lowest levels in 2ó years – will provide a big boost to confidence amongst Aussie consumers. And as we saw over the latter part of 2015, job security plays a big part in household consumption.
Labour market conditions have certainly improved over the past year; business conditions are healthier; profitability has improved; and more importantly the housing sector is providing significant support to an array of industries.
After racking up almost 300,000 new jobs in 2015, there was likely to be inevitable period of consolidation. And the volatility in financial markets in the early part of 2016 was unlikely to see businesses commit to significant hiring. The employment growth in March is a positive shift in momentum, however while we expect employment to strengthen over 2016, it is likely that employers will be more circumspect in hiring given the uncertainty around the timing of the Federal Election.
The Reserve Bank will be comforted by the latest job market figures. No doubt it would like to see a lift in productivity but that will take time as the significant new job hires over 2015 get settled into their new working environments. In addition policymakers will take the latest figures with a degree of caution given the seasonality issues with the early timing of Easter and even the extra day in February (leap year). The key will be the inflation data, due on April 27. A super low inflation result would allow the Reserve Bank to contemplate another rate cut – in effect asking the question whether the economy could run at a faster pace without creating asset bubbles. We expect rates to remain on hold over the next couple of months.
The Reserve Bank will also be heartened that the youth jobless rate (15-24 year olds) fell from 12.2 per cent to a near 3-year low of 12 per cent.
It pays to shop around. That is common advice but it certainly is the case with airfares. In smoothed terms, discount airfares are almost 4 per cent lower than a year ago but business and full fare economy fares are up on a year ago – over 7 per cent higher in the case of business fares. With plenty of people travelling – especially businesspeople – airlines aren’t keen to trim fares.
<a href="/images/2016/04/14/Screen%20Shot%202016-04-14%20at%203.18.40%20PM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/04/14/Screen%20Shot%202016-04-14%20at%203.18.40%20PM.png" alt="">
What do the figures show?
Labour force:
Employment rose by 26,100 in March after rising by 700 in February (previously reported as a rise in jobs of 300). Full-time jobs fell by 8,800 while part-time jobs rose by 34,900. Economists had tipped a 17,000 increase in jobs.
Hours worked fell by 1.1 per cent in March. Hours worked are up by 0.7 per cent over the year.
The unemployment rate  fell from 5.8 per cent to a 2ó-year low of 5.7 per cent in March (lowest since September 2013). The trend unemployment rate held steady at 5.8 per cent – a 27-month low.
The participation rate  was steady at 64.9 per cent.
A total of 235,300 jobs were added over the year to March . The annual growth rate eased from 2.1 per cent to 2 per cent. In trend terms, employment has risen for 28 consecutive months.
The working age population  rose by 30,900 in March. The working age population rose by 285,600 over the past year. The working age population is up 1.49 per cent over the past year.
Unemployment across states in March: NSW 5.3 per cent (February 5.3 per cent); Victoria 5.7 per cent (6.0 per cent); Queensland 6.1 per cent (5.6 per cent); South Australia 7.2 per cent (7.7 per cent); Western Australia 5.5 per cent (6.0 per cent); Tasmania 6.8 per cent (6.9 per cent). In trend terms unemployment in the Northern Territory rose from 4.4 per cent to 4.5 per cent; ACT unemployment fell from 4.5 per cent to 4.3 per cent.
Jobs across states and territories in March:  NSW +4,800; Victoria +10,600; Queensland -15,400; South Australia +4,600; Western Australia +16,600; Tasmania +800. Trend terms: Northern Territory -600; ACT unchanged.
 Airfares
The Bureau of Infrastructure, Transport and Regional Economics (BITRE) reports that business class airfares fell by 0.2 per cent in April to stand 6.2 per cent higher than a year ago. Earlier in February airfares were up 8.2 per cent on a year ago – the strongest growth in 10 months. In smoothed terms, business class airfares are up 7.4 per cent on the year, the fastest growth pace in 13 months.
“Restricted economy” airfares also fell by 0.2 per cent in April after rising by 0.1 per cent in March. Restricted economy airfares are up 3.6 per cent on a year ago. In smoothed terms restricted economy fares were also up 3.6 per cent over the year. Airfares have been rising at a 6.5 per cent average annual pace for the past three years.
Discount airfares remain volatile. Discount fares rose by 6.4 per cent in April after falling by 6.6 per cent in March and rising by 7.5 per cent in February. Discount fares are 9.9 per cent higher than a year ago after being down 13 per cent on a year ago in March. In smoothed terms, discount airfares are down 3.6 per cent on a year ago.
In real terms however, discount airfares are only 6.0 per cent above the lowest levels recorded (March 2011).
Why is the data important?
The Labour Force estimates are derived from a monthly survey conducted by the Bureau of Statistics. The population survey is based on a multi-stage area sample of private dwellings (currently about 22,800 houses, flats, etc.) and a sample of non-private dwellings (hotels, motels, etc.). The survey covers about 0.24 per cent of the population of Australia and includes all people over 15 years of age, except defence personnel.
If more people are employed, then there is greater spending power in the economy. But at the same time companies may adjust the work hours of employees. If employees work less hours, and therefore get paid less, then spending power in the economy is reduced.
<a href="/images/2016/04/14/Screen%20Shot%202016-04-14%20at%203.20.12%20PM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/04/14/Screen%20Shot%202016-04-14%20at%203.20.12%20PM.png" alt="">
The Bureau of Infrastructure, Transport and Regional Economics (BITRE) releases regular aviation data. The BITRE releases  Airport Traffic data and the  Australian Domestic Airline Activity publication each month as well as the  Domestic Air Fares publication. The data provides insights on airline activity as well as trends in the broader Australian economy. If more people are flying, then it suggests businesses are more active and/or consumers are more confident
What are the implications?
Interest rates remain on hold. The Reserve Bank will want to assess a lot more data before deciding the next move on rates.
The Bureau of Statistics has estimated that the number of people in the working age population. Rather than rising by 22,300 a month, the increase in the past three months averaged almost 31,000 – the biggest increase in almost two years. If this assumption is correct and retained, it may make it more difficult for the jobless rate to ease further in the next few months.
Savanth Sebastian is an economist for <a href="https://www.commsec.com.au/" target="_blank">CommSec</a>
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Jobless rate falls to 2½-year low: CommSec's Savanth Sebastian

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GUEST OBSERVER
The Department of Finance released the February monthly financial statements on March 24, just prior to the Easter holiday period. This note examines the latest data.
Budget improves: In the twelve months to February 2016, the budget deficit stood at $36.1 billion (around 2.2 percent of GDP), down from $44.7 billion in the year to January and the lowest rolling annual deficit in almost two years (since April 2014).
Lower-than-expected spending: The Department of Finance says the underlying deficit for February was $743 million lower than the ‘profile’ forecast and “primarily relates to lower than expected cash payments and net future fund earnings, partially offset by lower than expected cash receipts.”
The monthly Budget figures can provide insights on the broader economy and policy settings. If fiscal settings are tight, the Reserve Bank may allow easier monetary settings.
What does it all mean?
While figures can bounce around from month to month, all analytics suggest that the Federal Budget is on track to meet Government forecasts. Not only are rolling annual aggregates showing improvement, so are the so-called ‘profile’ positions estimated by the Department of Finance.
Revenue remains hard to come by with annual growth rates hovering around 2 percent. Meanwhile growth of expenses or spending is well contained, with expenses barely growing over the year. The Government was projecting a budget deficit near $37 billion and that expectation remains on target.
Looking ahead, if nominal annual growth of the economy continues to hold around 2-3 percent, then the current Government – and the next Government later this year – will find it increasingly difficult to keep spending static and thus chip away at the budget deficit. Aussies want spending maintained on schools, hospitals, defence and public services but at the same time aren’t keen to pay any more in tax. Same for all levels of Government. The hard decisions on tax will become increasingly more difficult the longer that the major parties put off reaching some form of agreement.
GST revenues continue to lift, but for state governments the difficulty – as it is for all businesses – is the absence of inflation to drive revenues.
What do the figures show?
The underlying budget deficit for the twelve months to February 2016 stood at $36.1 billion, down from $44.4 billion in the year to January. This was the lowest rolling annual deficit since April 2014.
Smoothed revenues (twelve months to December) were up 5.9 percent on a year ago, above the average growth of 2.6 percent over the past year. Expenses rose by 0.3 percent over the same period, down on the 1.7 percent growth over the past year.
<a href="/images/2016/04/6/Screen%20Shot%202016-04-06%20at%202.56.24%20PM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/04/6/Screen%20Shot%202016-04-06%20at%202.56.24%20PM.png" alt="" width="726" height="555">
The Department of Finance noted: “The underlying cash balance for the year to 29 February 2016 was a deficit of $38,719 million, compared to the 2015-16 Mid-Year Economic and Fiscal Outlook (MYEFO) profile deficit of $39,462 million. The difference of $743 million primarily relates to lower than expected cash payments and net future fund earnings, partially offset by lower than expected cash receipts.”
<a href="/images/2016/04/6/Screen%20Shot%202016-04-06%20at%203.03.04%20PM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/04/6/Screen%20Shot%202016-04-06%20at%203.03.04%20PM.png" alt="">
In terms of the fiscal balance, the Department of Finance noted: “The fiscal balance for the year to 29 February 2016 was a deficit of $35,292 million, compared to the MYEFO profile deficit of $36,719 million. The difference of $1,427 million primarily relates to lower than expected expenses, partially offset by lower than expected revenue.”
“Revenues: Total revenue was $1,223 million lower than the MYEFO profile, primarily due to lower than expected taxation revenue and dividend income.
Expenses: Total expenses were $2,831 million lower than the MYEFO profile, primarily due to lower than expected supply of goods and services, wages and salaries and grants expenses.”
The Government currently expects an underlying deficit of $37.4 billion for 2015/16 (around 2.3 percent of GDP).
Receipts from the Goods and Services Tax stood at $59.6 billion in the twelve months to February, up 7.0 percent on a year ago but affected by the one extra day in the month. The Government has forecast GST receipts of $59.79 billion for the entire 2015/16 year.
Actual GST receipts for the eight months to February stood at $41.367 billion, above the Budget ‘profile’ of $40.734 billion.
What is the importance of the economic data?
The Department of Finance releases the Government Financial Statements (Niemeyer Statement) almost every month. The statement allows investors to track the current budget position and provides insights into the  effectiveness of fiscal policy.
What are the implications for interest rates and investors?
The Federal Budget is on track to meet forecasts. Spending restraint including low public service wage growth (similar trend in private sector) is driving the improvement. The Federal Government and Opposition parties will eventually have to agree on tax reform to address medium term challenges for the economy.
The Government is showing restraint on spending at present, but this is actually constraining stimulus to the economy.
<a href="/images/2016/04/6/Screen%20Shot%202016-04-06%20at%203.04.17%20PM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/04/6/Screen%20Shot%202016-04-06%20at%203.04.17%20PM.png" alt="" width="731" height="535">
 
Craig James is the chief economist at <a href="https://www.comsec.com.au/default.aspx" target="_blank">CommSec</a>.
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Federal Budget is on track to meet forecasts: CommSec's Craig James 

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The number of home owners in Australia falling behind on their mortgage repayments is expected to rise in 2016 though will still remain at low levels as slow economic growth takes a toll, according to credit rating firm Moody's.
Only 1.2 per cent of a sample of 506,000 residential mortgage loans in November are more than 30 days in arrears but that could rise by the end of the year due to below-trend economic growth and a slower pace of house price growth in some cities, writes Su-Lin Tan in the Australian Financial Review.
Mortgage repayment arrears will be highest in states whose economies are resources-driven.
NSW, however, should be the exception as strong economic conditions should nullify the impact of the cooling housing market on delinquencies, says the article.
Sydney dominates the list of areas with the lowest delinquencies. "We also expect that Australia's GDP growth will likely be towards the upper end of our 1.5 to 2.5 per cent forecast range for 2016, but this will be below the long-term average of 3.5 per cent," Moody's assistant vice-president Alena Chen said.
"We expect the Australia-wide delinquency rate for mortgages showing more than 30 days in arrears to increase in 2016, but remain at a low level." When housing prices rise, a homeowner has greater incentive to keep a mortgage loan current. When the value of a housing asset falls, borrowers become less motivated to keep up their repayments.
STATES AFFECTED
Mining-dependant states such as Western Australia, Northern Territory, and Queensland will have more home buyers defaulting on their loans. "Strong house price growth was a supportive backdrop for mortgages borrowers in 2015, helping to keep nationwide delinquencies steady at low levels.
"We expect the pace of house price growth to slow in 2016, leading to the increase in mortgage delinquencies," the report said.
The current rate of 1.2 per cent is flat compared with last year's rate of 1.19 per cent.
Western Australia had the highest delinquency rate out of all the states and territories with the rate up by 0.48 percentage points over the year to 1.71 per cent, During 2015, six of the 10 worst performing regions in Australia were in Western Australia and Queensland.
These six regions are exposed to industries directly or indirectly related to mining and resources.
The best performers were NSW and the ACT at 0.85 and 0.82 per cent respectively.
Eight of the 10 best performing regions and 14 of the 22 best performing postcodes in Australia, were in Sydney, where house prices have boomed.
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jonathanchancellor-7SQnKwU6yx

Mortgage delinquencies to rise in 2016 due to slower economic growth, says Moody's

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GUEST OBSERVER
Once upon a time, chicken was a luxury few could regularly afford. It was a rare meal reserved for special occasions.
Yet since 1965 the per-capita annual consumption of chicken meat in Australia has increased ten-fold from 4.6 kilograms per person in 1965 to 44.6 kilograms in 2012.
The retail price of chicken per kilogram has decreased steadily in real terms from around A$9.67 in 1986 to A$5.67 in 2009. The arrival of Kentucky Fried Chicken in Australia in 1968 coincided with rapid increases in consumption. Today, Australians consume more than 600 million chickens per year.
The vast majority is produced in intensive “broiler” farms. How does chicken production and consumption on such a scale affect the foodbowls on the outskirts of our cities?
Intensive chicken farms need to be within about one hour of processing sites. Farms also need to be close to feed supplies and hatcheries, as they are run as highly integrated systems.
Partly because of this, the chicken meat industry in Victoria is concentrated within about 200 kilometres of Melbourne. Similar patterns occur in other Australian regions.
As the industry has sought efficiencies of scale, the size of farms has increased. Whereas farms of the 1970s might have housed 10,000 chickens, they now routinely hold 80,000 to more than one million chickens, producing five batches of chickens per year. Yet as producers have grown, the numbers of suitable urban fringe spaces – close enough to processing plants, but far enough from neighbours and sensitive land uses – are dwindling.
One reason is the growth in popularity of peri-urban areas to live in. “Counter-urbanisation” or “tree-changing” has been underway since the 1970s. Whether in Germany, the US or the Netherlands, it seems rural and peri-urban residents have little desire to live near a “monster chicken factory”.
In a recent paper we analysed 59 planning appeals related to broiler farms in Victoria between 1969 and 2013. Concerns about the farms have included odour, noise, dust, vermin, truck traffic, impacts on tourism, and water use and pollution.
<a href="/images/2016/03/14/image-20160224-16425-1lijx2i.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/03/14/image-20160224-16425-1lijx2i.jpg" alt="">
Broiler farm planning disputes appear to channel more intractable issues than odour control. It is possible that, on some level, having one million chickens not smell is unsettling in its own way.
As more chicken meat is produced, and in ever more technologically intensive ways, conflicts over farm applications inevitably unlock community disquiet about factory farming. The allowable forum for legitimate opposition, however, is narrow.
Intensive farming is often simply inconsistent with community expectations. The “unknowns” of industrialised agriculture are normally hidden from view in bucolic images on food packaging, and in the marketing of rural real estate as a “lifestyle” choice. Responses to the reality of broiler proposals – however technically well planned – sometimes seem rooted in the loss of this comforting, romanticised view.
In Victoria, the solution has been to regulate away the noise, smell and dust of a farm, mandate separation distances and even set aside areas with clear “rights to farm” and those with rights to “the good life”. The recent announcement of an inquiry in Victoria into the industry has a strong focus on resolving conflicts through siting and separation.
Yet the use of such an approach in Victoria has raised concerns about creating “sterilised” regions where no uses but industrial farms are permitted. Opponents to industrial farms also express concerns that proponents exploit loopholes and that a codified buffer distance privileges intensive farms rather than resolving conflicting land use issues.
On the other hand, less control arguably generates more conflict, as in parts of Canada and Texas. There, industrial, corporate-run farming operations dominate vast, generally lower socioeconomic areas. But as farms expand, divisive neighbourhood battles are still fought out.
Our research indicates that the use of buffer spaces around farms, guidelines and rights can achieve only so much. Despite the presence of clear guidelines, a recent proposal for a 1.2 million-bird farm in Baringhup, near Castlemaine, has led to more than two years of planning dispute and may result in Supreme Court action.
Conflicts between opponents and proponents of intensive farming will continue in rural areas. Fanning the flames is the growing demand for low-priced chicken (and an ongoing chicken nugget price “war”).
Local governments and decision-makers in Australia remain under-resourced to deal with opposition to the increasing scale of broiler farms. By advocating for a new understanding of what a rural and an urban area “means”, planning is at the coal face for negotiating politically acceptable outcomes to such conflicts. Yet a look at the images used to market farm products reveals what an uphill struggle this is.
 
Elizabeth Taylor is vice chancellor's Post-Doctoral Research Fellow, RMIT University and can be contacted <a href="https://theconversation.com/profiles/elizabeth-taylor-97922" target="_blank">here</a>.
Andrew Butt is senior lecturer in Community Planning and Development, La Trobe University and can be contacted <a href="https://theconversation.com/profiles/andrew-butt-229215" target="_blank">here</a>.
Marco Amati is associate professor of International Planning, Centre for Urban Research, RMIT University and can be contacted <a href="https://theconversation.com/profiles/marco-amati-209638" target="_blank">here</a>.
All are authors for The Conversation
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