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

Joel Robinson

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

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

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

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

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

When the opportunity arose for South Australian developer Palumbo to return to Kent Town, where it had previously delivered East Park Apartments and the East 
Rundle Apartments, it wasn't one the longstanding developer-builder was going to pass up.

The decision was quickly vindicated, with more than 30 apartments sold within the first month of launching <a href="https://www.apartments.com.au/new-apartments/royal-apartments-kent-town-2-8-north-terrace-kent-town-sa-5067">Royal Apartments</a> to the market.

The 206-apartment development, which will bring significant new supply to Adelaide's tightly held eastern city fringe, also gives <a href="https://www.apartments.com.au/developers/palumbo">Palumbo</a> the opportunity to bring new life to one of Kent Town's most recognisable watering holes.

[smartcode_project:default project_id=6109 project_image_fid=376073]

Royal Apartments incorporates the historic Royal Hotel, a venue Palumbo Managing Director Daniel Palumbo said has a longstanding connection with the local community.

"Everyone in the area has history with the Royal Hotel," Palumbo told Apartments.com.au.

"It was quite an active pub and social gathering place for locals. We want to bring it back to its former glory."

[smartcode_project:default project_id=6109 project_image_fid=376072]

The wider development will comprise two residential towers alongside the restored hotel, sitting on North Terrace opposite the Adelaide Park Lands.

For Palumbo, the project also marks a return to familiar territory.

The developer completed East Park Apartments next door more than a decade ago and jumped at the opportunity to develop in Kent Town again when the Royal Hotel site became available.

"The opportunity emerged, and we moved to secure the site," Palumbo said.

"We were approached by the previous landowner, who said they had extensive commitments in Sydney and weren't in a position to deliver the project.

"We took over the site and within six months recut the design scheme to be more in keeping with the type of development we want to bring to Adelaide.

"Now we're on the market and those changes have really resonated with local buyers."

That has translated into a strong start to sales, with 33 apartments transacting in the project's first 35 days.

Palumbo said the early purchaser profile had been consistent with the group's traditional focus on owner-occupiers rather than investor-led apartment stock.

"Local owner-occupiers have always been our market," he said.

"There are always some investors, but we've never developed what would be called traditional development stock. Owner-occupiers are very much our market."

[smartcode_project:default project_id=6109 project_image_fid=376068]

The buyer mix has been diverse so far, with downsizers and younger professionals both accounting for a significant portion of early sales.

South Australia's current stamp duty settings, which allow&nbsp;eligible homeowners in South Australia aged 60 savings of up to $103,830 on stamp duty when they downsize to a new property valued at up to $2 million,&nbsp;have helped encourage downsizer activity, while younger buyers in their late 20s and early 30s have been attracted to the opportunity to live immediately outside the CBD while still being able to walk into the city.



Location has been a major part of the proposition for both buyer cohorts.

[smartcode_project:default project_id=6109 project_image_fid=376075]

Royal Apartments sits on North Terrace directly opposite the Adelaide Park Lands, with residents able to walk through the parklands toward the East End, Rundle Street and Rundle Mall.

Apartments have been positioned to capture views across the parklands, Adelaide skyline, Botanic Gardens and Adelaide Hills.

Palumbo believes the scarcity of developable land along this section of the Park Lands makes the site particularly difficult to replicate.

"There's very few allotments on that side that can be developed," he said.

"If this location was in New York and you were sitting on Central Park, you'd be talking about a $60 million apartments."

Royal Apartments will offer a broad mix of residences, ranging from one-bedroom apartments through to four-bedroom sub-penthouses and penthouses.

Current listings include one-bedroom apartments from $680,000, while larger three and four-bedroom residences are priced around $2.5 million.

Residents will have access to a swimming pool, gym, barbecue and recreation areas, residents' lounge and dining space, and a communal deck.

[smartcode_project:default project_id=6109 project_image_fid=376067]

The apartments will feature generous balconies, while secure parking, bicycle storage and storage cages will also be provided.

A porte-cochère-style arrival and drop-off area has also resonated with buyers, particularly those attracted to being able to walk into the CBD during the day while retaining secure vehicle access at home.

Palumbo is acting as developer, architect and builder on Royal Apartments, continuing the vertically integrated model it has used across its South Australian portfolio.

The group was also behind the $150 million Sofitel Adelaide, the 251-room five-star hotel and residential tower which opened in 2021.

Palumbo said Royal's launch had come at an interesting time for the broader Adelaide apartment market.

Buyer confidence had initially been impacted by uncertainty surrounding the Federal Budget and broader economic conditions, but Palumbo believes sentiment is beginning to improve against a backdrop of significant investment flowing into South Australia.

He pointed to increased activity across defence and resources, including Olympic Dam, as potential long-term drivers of the state's economy and housing market.

"Money is starting to flow into Adeliade, significant amounts as Adelaide bucks the trend of the rest of the country.," Palumbo said.

"There's a lot of activity in the economy over the next decade. I think more investment will come into this market."

Early works on Royal Apartments are expected to commence this year, with major construction activity and cranes anticipated on site from early next year.

[smartcode_project_cta:default project_id=6109]

Palumbo's return to Kent Town strikes early chord with buyers

Go-to builder-developer <a href="https://www.apartments.com.au/developers/graya">GRAYA</a> is continuing to bulk out its already impressive and diverse apartment portfolio across South East Queensland. Their latest milestone is securing development approval for Silk, its boutique riverfront apartment development in St Lucia.

The approval clears&nbsp;the way for the team to begin construction planning for the 22-residence project.

<a href="https://www.apartments.com.au/new-apartments/silk-st-lucia-16-18-sandford-street-st-lucia-qld-4067">Silk</a> will rise 15 levels from an 810 sqm site at 16-18 Sandford Street, occupying a prominent bend of the Brisbane River with a prized northern aspect across Orleigh Park toward the Brisbane CBD.

The approved scheme will comprise 16 split-floor and six full-floor residences, continuing GRAYA's move into larger-format apartment developments targeting Brisbane's prestige owner-occupier market.

The project has been designed around the site's broad river frontage and dual-direction views, with GRAYA prioritising larger residences, privacy and outlook over apartment yield.

<img alt="Silk St Lucia" data-entity-type="file" data-entity-uuid="aa5c2349-f96c-4914-a812-1f2cd6827af8" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-26%20at%208.25.44%E2%80%AFAM.png?VersionId=WY0vEU_7vYjeRJKQHiCwFdMxu8PvFh52" />

GRAYA Co-founder and Chief Executive Officer Rob Gray said the project had been shaped around local homeowners wanting to remain in St Lucia without maintaining a traditional family home.

"St Lucia is one of those suburbs people do not want to leave," Gray said.

"They know the river, the trees, UQ, the golf course, Toowong and Indooroopilly, and that familiarity is hard to replace.

"True riverfront opportunities here are exceptionally scarce. What we have designed at Silk is a way to stay in the suburb people love, with the scale and privacy of a private home and far less to maintain.

"This is not typical apartment product. It is a proper home on the river, and that is exactly what this market has been missing."

The approval comes as new apartment development continues to increase across the St Lucia and neighbouring Toowong corridor, although direct riverfront sites remain considerably more tightly held.

GRAYA Co-founder and Managing Director Andrew Gray said securing the approval had removed a significant element of development risk from Silk.

"Genuine riverfront sites of this quality in St Lucia are not something that comes up regularly," Gray said.

"The approval removes a substantial layer of execution risk, and the location underwrites demand in a way very few inner-city sites can.

"The fundamentals here are as strong as anything we have assessed in Brisbane."

<img alt="Silk St Lucia" data-entity-type="file" data-entity-uuid="d0f3d734-65e1-48e8-8ed3-2e0715ffcdd9" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-26%20at%208.25.56%E2%80%AFAM.png?VersionId=sOLSs_jdHkXLWbBKzRyayf5BfTb2vPsD" />

Silk will see GRAYA return to a stretch of the Brisbane River where it already has recent construction experience. The vertically integrated group recently completed ARC in neighbouring Toowong as builder for developer Spyre, delivering the riverfront project on a constrained site.

GRAYA will take a different role at Silk, controlling the project from design and development through construction and aftercare under its vertically integrated model.

The development will include a gym and resident leisure areas at ground level, integrated with the river's edge.

Silk joins a growing pipeline for GRAYA across Brisbane and the Gold Coast, which includes Enclave, The Gallery, Coral and Ripple.

The developer-builder has also recently lodged plans for its largest project to date, <a href="https://www.apartments.com.au/new-apartments/the-silo-19-chester-street-newstead-qld-4006">The Silo</a>, a proposed <a href="https://www.apartments.com.au/news/qld/graya-buys-frasers-newstead-site-plans-the-silo-between-james-street-and-gasworks-precincts">$700 million mixed-use development</a> in Brisbane's James Street precinct.

Silk is expected to predominantly target local owner-occupiers and prestige buyers seeking a permanent riverfront home in Brisbane's inner west.

Registrations of interest are now open, with further details on the project and construction program to be released as it progresses.

<hr />
<h2>SILK PROJECT FACTS</h2>

Developer-builder: GRAYA

Project: Silk

Location: 16-18 Sandford Street, St Lucia

Apartments: 22

Built form: 15 levels

Site: 810 sqm riverfront holding

Mix: 16 split-floor and six full-floor residences

Status: Development approved

Next step: Construction planning underway

[smartcode_project_cta:default project_id=152168]

GRAYA greenlit for riverfront St Lucia apartment development, Silk

Economy

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<h3 class="post-title entry-title"> </h3>
It's sometimes under-appreciated how Australia's free floating dollar, monetary policy autonomy, flexible labour force, and comparatively low government debt have allowed the economy to adjust through a seriously tumultuous period.
At the peak of the resources construction boom in the third quarter of calendar year 2012 engineering construction activity peaked at $34.8 billion, yet by the end of 2016 had dropped by some 43.3 per cent to under $20 billion. 
This is what some people termed the "mining cliff", essentially the period through which resources projects transitioned from the construction phase through to production. 
And through all of that we never really did get all that close to a recession, though admittedly rising private debt levels did help to grease the wheels a bit.
Rebound
More than four years on, and engineering construction actually began to rise again in early 2017.
Some of this was to do with infrastructure projects - rail, road, and highways - and some was related to ongoing resources investment in existing projects. 
Activity rose quite strongly by +2.8 per cent to $20.3 billion in the first quarter.
Engineering work in the public sector was +10.2 per cent higher over the year, while the quarterly rebound was also helped by a +3 per cent rise in private sector activity in Q1. 
<a href="https://www.propertyobserver.com.au/images/2017/07/03/B2.jpg" target="_blank">Click to enlarge</a>
<div id="post-body-8977417442327794616" class="post-body entry-content">
<div class="separator"><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/07/03/B2.jpg" alt=""></div>
 <div>State versus state</div>
<div> </div>
<div>Queensland took most of its medicine back in 2014 as a number of major LNG projects approached the production phase, but the worst has now passed and annual construction activity levels in the Sunshine State have now been rising for four quarters consecutively.</div>
<div> </div>
<div>Annual construction activity has also been rising steadily in New South Wales and Victoria since 2015. </div>
<div> </div>
<div>At least as importantly, Western Australia is now at last getting pretty close to the nadir, meaning that WA is no longer suffering the chronic declines that have characterised that past three years. </div>
 <div class="separator"><a href="https://www.propertyobserver.com.au/images/2017/07/03/B1.jpg" target="_blank">Click to enlarge</a></div>
<div class="separator"><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/07/03/B1.jpg" alt=""></div>
 <div>No boom on the horizon, then, but arithmetically speaking this is positive news for the economy, simply because engineering construction is no longer acting as a drag.</div>
<div> </div>
<div>The next pressing challenge will be whether construction employment can remain at today's elevated levels through a combination of residential building and infrastructure projects. </div>
 
PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank">blogger</a>.
His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank">Four Green Houses and a Red Hotel</a>.
</div>
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pwargent-M4siyDbqQY

Engineering construction no longer an economic drag

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<div>In Britain the topical political and media talk is of whether an "Australian-style" points based immigration system should be introduced, without any real clarity about what that would mean in practice.</div>
<div> </div>
<div>Back Down Under it's often said that Australia's population growth must slow if the economy isn't creating enough jobs. This is essentially true for 457 visas, but does overlook the potential underlying demand for other visa classes.</div>
<div> </div>
<div>I previously looked at the newly relaxed international student visa rules which were made effective from 1 July, easing the rules for parents and guardians of primary school age students in Australia. The recent election campaign also led to some potentially interesting shifts via proposed policies for...</div>
<div> </div>
<div>Parent visa rules</div>
In 2016, the percentage of Australians born overseas hit its highest level in 120 years at a massive 28 per cent. 
<div>
Immigration policies understandably prefer immigrants to be of the young, working (or creating jobs through business), and tax-paying demographic. Thus over the 2015/16 Migration Programme year, parent visa places were capped as follows:
</div>
<ul>
<li>1,500 places allocated to Parent (non-contributory) visas </li>
<li>
7,175 places allocated to Contributory Parent visas </li>
</ul>
<div>This means that your best chance of getting a parent visa in the last financial year was likely <a href="https://www.border.gov.au/Trav/Visa/Fees" target="_blank">to pay</a> the prohibitive A$47,000 for a contributory visa - about A$100,000 for a couple! - while successful sponsorship for standard parent visas was extremely hard to come by. </div>
<div> </div>
<div>The unattractive alternative for parents wanting to join their families in Australia was to come in on a one year visitor visa, then leave the country for six months on each occasion. It would be a sore test of anyone's resolve to repeat this process over any meaningful period of time! </div>
<div> </div>
<div>
With some 6.8 million Australians having been born overseas the potential demand for parent visas is massive and growing, particularly from China and India.  I wouldn't believe anything a politician told me these days, but Google trends activity shows that there has been an explosion of interest in parent visas since the last full Census in 2011.
</div>
<div> </div>
<div>
<a href="/images/2016/09/06/PArents.jpg" target="_blank">Click to enlarge</a> <div class="separator">
<img src="/images/2016/09/06/PArents.jpg" alt=""> </div>
<div class="separator"> </div>
</div>
<div>
It's worth noting that previous rules weren't favourable to Chinese families, due to China's one child policy meaning that most parents naturally had only one child in Australia, which was an obvious mathematical hindrance in proving that the balance of your family lived here.  As at 30 June 2016 due to the caps there were 38,770 persons in the queue for standard parent visas (up 59 percent from last year), and another 5,160 persons for aged parent visas (up 28 percent). 
</div>
<div> </div>
<div><a href="/images/2016/09/06/Parent.jpg" target="_blank">Click to enlarge</a></div>
<div><img src="/images/2016/09/06/Parent.jpg" alt=""></div>
 
<div>With standard parent visas presently capped at 1,500 per year, a queue of this size at 30 June equated to a ridiculous 25.8 year average wait time for an application to be processed. </div>
<div> </div>
<div>Election pledges</div>
<div> </div>
<div>During a keenly contested election campaign the Australian Labor Party (ALP) announced plans to extend visitor visas to parents out to a far more palatable three years - with parents only being required to leave the country for four weeks at the end of each visa term and paying a $5,000 bond to ensure cover for medical and social services. Surely a potential vote-winner for the ALP in the rapidly growing migrant communities, particularly in an era where so many young families also strive to be dual-income households. </div>
<div> </div>
<div>As tends to be the way of these things, the Coalition's knee-jerk response was to announce a new parent visa plan itself, especially aimed at Chinese and Indian visitors (provided that new arrivals pay for health insurance and don't rely on the welfare state for health care, shamelessly piggybacking from the ALP proposals!) and allowing for continuous five year visitor visas. </div>
<div> </div>
<div>Given that the number of overseas born Aussies is soon to pass 7 million, such a policy could potentially lead to hundreds of thousands of applicants for visitor visas from parents sponsored by Australian citizens, largely from ageing, non-English speakers hailing from Asia (which is not really the ideal target demographic for policy makers). For this reason the Coalition's proposed policy denotes that parents of Australian citizens and permanent residents who have lodged a permanent parental visa application "may" be issued a five year visa "on a case-by-case basis". </div>
<div> </div>
<div>In other words, this is an 'out'. Minister Dutton has the discretion to limit the number of visas issued and retains the right for policy to change course henceforth. </div>
<div> </div>
<div>The wrap</div>
<div> </div>
<div>At this juncture there appears to be very little clarity surrounding what will happen with respect to parent visas.</div>
<div> </div>
<div>The Coalition probably doesn't know the answer itself, election pledges doubtless being dreamed up on the hoof in response to the ALP's evidently popular proposal. </div>
<div> </div>
<div>A point here relevant to the property markets is that if Australia does end up with an oversupply of thousands of apartments as many have forecast, there are levers that can be pulled to loosen immigration policies.</div>
<div> </div>
<div>After all, a sceptic would say that if there's a policy that's always guaranteed to garner support from governing parties of either persuasion, it's one aimed at propping up ailing capital city housing markets. </div>
<div>
PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>. 
His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>.
</div>
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Immigration levers and the apartment oversupply scenario: Pete Wargent

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EXPERT OBSERVER
The success of vaccine tests; Australia’s current strong growth story; and pivots around monetary policy are highly relevant to the market outlook.
The approach to monetary policy in Australia is changing.
In his speech last Monday, the Governor neatly set out the four aspects of current policy.
The nature of forward guidance – “we have now moved to place much more weight on actual outcomes rather than forecast outcomes". A reasonable interpretation here is that particularly due to the combination of globalisation and technology the functioning of labour markets has changed and the need to be pre-emptive with policy has dissipated.
It is now appropriate to wait to see inflation firmly within the 2–3% band AND high wages growth, requiring a return to a tight labour market. Arguably he is making the “tight labour market” a necessary condition so, if for example a spike in inflation resulted from a supply shock then that would be an insufficient condition to raise rates.
Consistent with the above view he emphasises the RBA’s mandate – price stability; full employment; and economic welfare. He confirms the sentiment in 1) by emphasising the need to reduce spare capacity in the labour market – jobs are the central focus and success with jobs will lead to progress on the inflation front.
He discusses “the gravitational pull of low global interest rates” – if that pull, which reflects the global excess of savings over investment, is overlooked developments around the exchange rate and the economy would be adverse.
However, in the Q&amp;A he again describes negative rates as “extraordinarily unlikely” since they make it “harder for banks to lend” although he does accept that the gravitational pull represented by any future decision of the US Federal Reserve to go negative would cause a rethink.
BILL EVANS is the Chief Economist at Westpac
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Mid-2021 economy likely to experience a “soft patch”: Bill Evans

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EXPERT OBSERVER
This week for Australia was all about economic policy.
Beginning first with monetary policy. The RBA’s October decision and communications were as expected. There was no change in policy on 6 October, but a more dovish tone in the Governor’s statement signals the likelihood of an imminent move.
As detailed by Chief Economist Bill Evans, of greatest significance is the clear message the RBA Governor’s statement ended on: the “Board continues to consider how additional monetary easing could support jobs as the economy opens up further”.
The pricing in of additional easing by market participants was also recognised in the decision statement: “3-year yields have fallen to around 18 basis points as markets price in some probability of further monetary policy easing”. And open-ended concern over the labour market and activity was on display: “Unemployment and underemployment are likely to remain high for an extended period”; and “it will be some time before the level of output returns to its end 2019 level”.
It is worth adding that risks remain skewed downward: globally given a rising incidence of COVID-19 in a number of economies such as the UK, US, and Europe; and domestically as a result of the underlying weakness seen in Australia’s economy ahead of this pandemic.
We continue to expect the RBA will cut the cash rate; 3-year bond yield target; and TFF rate from 0.25% to 0.10% in November and will also announce additional government bond purchases for maturities between 5 and 10 years at that meeting.
Just a few hours after the RBA’s October meeting concluded, Federal Budget 2020-21 was handed down by Federal Treasurer Frydenberg.
At $213.7bn, the 2020-21 deficit is the largest ever by a considerable margin. Even relative to the size of the economy, this deficit is almost three time the size of that recorded in the aftermath of the GFC and the 1990’s recession.
Very clearly, spending on this scale is justified by the circumstances. Over the first six months of 2020, Australian GDP contracted by over 7% under the weight of the restrictions required to suppress COVID-19. The unemployment rate has since risen from around 5% to near 7%, we believe on its way to almost 8%.
Having already introduced policies to get through the recession, in Budget 2020 the Federal Government is seeking to shift households’ and businesses’ focus from the immediate to the medium-term, and in so doing lay a strong foundation for recovery.
The best example of this is found in the Budget 2020’s job initiatives. JobKeeper and JobSeeker have not been extended past their respective current March 2021 and December 2020 end dates. The focus has instead been shifted to new job creation through the introduction of the JobMaker and JobTrainer which incentivise business to create new jobs and apprenticeships, particularly for young Australians.
To support household confidence and incomes more broadly, the Government has also elected to bring forward the stage two tax cuts to 1 July 2020, raising the 32.5 and 37 cent thresholds to $45,000 and $120,000 respectively. An additional benefit will also be provided to those who earn up to $90,000 through the low and middle income offset in 2020-21.
Investment is also being encouraged. Businesses with turnover of up to $5bn will be able to deduct the full cost of eligible depreciable assets of any value in the year installed, to June 2022. Cash flow support is also being offered via a temporary loss carry-back arrangement which allows businesses to claim current losses against tax paid on prior profits, potentially generating a refund. Business and the economy more broadly will also benefit from additional infrastructure investment in coming years.
The Government is optimistic on the success of these measures, anticipating a GDP gain of 4.75% in 2021-2022 after 2020-21’s 1.5% forecast contraction. That said, on the Government’s forecasts, the unemployment rate remains materially above the full employment level in mid-2024, circa 5.5%. Our own expectations for the unemployment rate over the entire period are higher still, highlighting that a complete recovery from recession will be hard won and that risks will remain skewed to the downside. Additional significant policy initiatives will likely prove necessary in coming years.
Quickly turning to offshore developments. In both the United States and Europe, the most recent central bank meeting minutes again emphasised the risks clouding their respective outlooks as well as these monetary authorities’ willingness to do more. Progress towards additional fiscal support in the US, in contrast, remains absent, even as existing measures continue to roll off and the new case count rises again. Momentum in the US and Europe is robust for now, but the degree of slack is pervasive and the northern hemisphere is heading towards winter.
ELLIOT CLARKE is a senior economist at Westpac 
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A budget of unparalleled significance: Elliot Clarke

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EXPERT OBSERVER
The reopening of cafes has been one of the highlights of relaxed COVID-19 restrictions for many Australians. During lockdowns, <a href="https://www.escape.com.au/destinations/australia/victoria/during-coronavirus-aussies-turn-to-takeaway-coffee-for-comfort/news-story/dd84dc1b513ac6f5748f011fab01efa3" target="_blank">long queues for takeaway coffee</a> were testimony to caffeine’s relevance to our lives.
Yet the <a href="https://theconversation.com/coronavirus-puts-casual-workers-at-risk-of-homelessness-unless-they-get-more-support-133782" target="_blank">precarious employment</a> of so many hospitality workers meant hundreds of thousands of casual café workers and café owners <a href="https://www.hospitalitymagazine.com.au/accommodation-food-services-hardest-hit-by-job-losses/" target="_blank">lost work</a>. Rents and mortgages were suspended or lost, upturning countless lives. At the other end of the coffee supply chain, many coffee farmers in poorer countries, who were already struggling to make a living, are doing it even tougher.
The pandemic has exposed the widening wealth gap in our global economy, and nowhere is this better illustrated than by our daily coffee fix. The multi-billion-dollar global coffee industry relies on vulnerable workers at both ends of the supply chain: the café worker serving your coffee and the struggling farmer who grew your coffee beans.
It’s an industry <a href="https://archive.nytimes.com/www.nytimes.com/books/first/p/pendergrast-grounds" target="_blank">steeped in its colonial past</a>, whose massive profits were <a href="https://perfectdailygrind.com/2019/03/slavery-specialty-discussing-coffees-black-history/" target="_blank">built on the back of African slave labour</a>.
<h2>An unequal business</h2>
Coffee is big business, mostly for coffee merchants in affluent countries. It’s among the world’s most-traded commodities and we consume nearly <a href="https://www.statista.com/statistics/292595/global-coffee-consumption/" target="_blank">10 million tons of coffee a year</a>. That’s about <a href="https://www.sbs.com.au/language/english/the-world-s-top-coffee-consuming-nations-and-how-they-take-their-cup" target="_blank">2.25 billion cups a day</a> worldwide. Since 2000 global consumption has <a href="https://icocoffeeorg.tumblr.com/post/83000404043/global-coffee-consumption-has-increased-by-25" target="_blank">increased by 38%</a>.
Over 80% of the world’s coffee comes from <a href="https://www.fairtrade.org.uk/Farmers-and-Workers/Coffee/" target="_blank">25 million small-scale farmers</a> and <a href="https://carto.com/blog/enveritas-coffee-poverty-visualization/" target="_blank">60% is produced by farmers on less than 5 hectares</a>. Many of them struggle to make a decent living.
Coffee’s production and consumption echo its <a href="https://books.google.com.au/books/about/Uncommon_Grounds?id=TUo981rkwkoC&amp;redir_esc=y" target="_blank">18th-century origins as a global industry</a>. It’s mostly consumed by people in affluent countries and produced by agricultural workers in the poorer global south.
The coffee industry’s business model is based on a type of neo-colonialism, dominated by a handful of transnational coffee merchants whose profits are bountiful. Plantation economies in developing countries were established by colonial empires whose use of slavery spearheaded the rapid growth of the industry.
The Spanish introduced the use of slaves from Africa in the Caribbean and Latin America. They were quickly followed by the Portuguese in Brazil, then British and French colonialists in the West Indies. African slaves were considered “<a href="https://books.google.com.au/books?id=Z7-zAAAAIAAJ&amp;newbks=1&amp;newbks_redir=0&amp;printsec=frontcover&amp;dq=%E2%80%9Crobust,+disease+resistant+and+productive%22&amp;q=%E2%80%9Crobust,+disease+resistant+and+productive%22&amp;hl=en&amp;redir_esc=y" target="_blank">robust, disease resistant and productive</a>” – physically superior to the local indigenous populations of the Americas, many of whom died from diseases such as cholera and smallpox.
<h2>Producers live with poverty and hunger</h2>
While the type of slavery that launched the coffee industry no longer exists, other inequities remain. Coffee producers are among the most vulnerable members of the supply chain. When we buy our coffee, most of us are unaware of the bean’s provenance and the arduous labour of workers in small-scale plantations.
It’s estimated almost half of the world’s smallholder coffee producers live in poverty. <a href="https://carto.com/blog/enveritas-coffee-poverty-visualization/" target="_blank">Most of them are in East Africa</a>, but others are in Latin America and Asia.
Many coffee farmers suffer chronic seasonal hunger. Unlike famine, this occurs between harvest seasons, when the previous year’s food stocks have dwindled, food prices are high and income is scarce.
The COVID-19 pandemic has <a href="https://perfectdailygrind.com/2020/06/why-food-security-is-a-coffee-industry-issue/" target="_blank">increased the scarcity of food supplies</a> that were already sporadic. The closure of national borders has further reduced access.
<h2>Trying to make the coffee trade fairer</h2>
In response to the industry’s inequities, many initiatives are seeking fairer and sustainable outcomes for coffee farmers and for the environment. Some have been in place for decades. Of the programs established by NGOs, governments, multinational companies and other organisations, <a href="https://fairtradeanz.org/for-consumers/what-is-fairtrade" target="_blank">Fair Trade</a> and <a href="https://en.wikipedia.org/wiki/Direct_trade" target="_blank">Direct Trade</a> are among the better-known ones.
More recently, the 2007 <a href="http://www.ico.org/ica2007.asp#:%7E:text=The%20International%20Coffee%20Agreement%202007,definitive%20ly%20on%202%20February%202011" target="_blank">International Coffee Agreement</a> is designed to promote a more equitable coffee trade to support smallholder farmers throughout the world. To overcome problems such as very low wages, poor housing and gender inequality, to name a few, these schemes are by necessity site-specific. Despite some success stories, the complexity of the industry and the wide variety of contexts presents barriers to consistent equitable outcomes and <a href="https://www.mdpi.com/2079-9276/6/2/17/htm" target="_blank">results are mixed</a>.
 
Another approach in the growing speciality coffee sector – independent cafes serving high-quality coffee – is upending traditional business models. An increasing number of entrepreneurs in affluent countries are forming direct partnerships with coffee farmers. The aim here is both ethical and business-focused: to ensure consistent bean quality and provide a fairer income for coffee producers through direct trade.
The supply chain of coffee and cafes is a complex network of producers, distributors and services. Like all industries affected by the pandemic, some operators will survive and others will go to the wall.
While the pandemic’s impact is an unfolding story, it has brought into sharper focus inequalities in a thriving industry. Fault lines are evident across both producing and consuming nations, with many of those who work in the plantations and in our cafes on the wrong side of the divide.
It might give us something to think about as we enjoy our next coffee from our local café.<img src="https://counter.theconversation.com/content/143274/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important;">
<a href="https://theconversation.com/profiles/emma-felton-143029" target="_blank">Emma Felton</a>, Honorary Senior Lecturer, Creative Industries Faculty, <a href="https://theconversation.com/institutions/queensland-university-of-technology-847" target="_blank">Queensland University of Technology</a>
This article is republished from <a href="https://theconversation.com" target="_blank">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/a-dark-brew-coffee-covid-and-colonialism-have-left-millions-struggling-to-make-a-living-143274" target="_blank">original article</a>.
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A dark brew: coffee, COVID and colonialism have left millions struggling to make a living

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EXPERT OBSERVATION
I have never seen a more uncertain economic outlook than we currently face both domestically and globally.
Nevertheless it is important to try to set out a framework for assessing the outlook. In this note we take the unusual approach of looking at the prospects of the states and build the national picture up from the individual states.
Victoria has entered Stage 4 lockdown which is likely to continue until mid-September.
Developments in Victoria have been rapid. When the government released its economic forecasts on July 23 the underlying assumption was that Stage 3 lockdown in Victoria would ease from mid-August.
That assumption was in line with our original figuring where we assumed that activity in Victoria had lifted by 1.5% with the gradual reopening of the economy between early June and the renewed lock down in early July. We expected that the renewed lock down would "lose" that 1.5% through July and August.
Using the same underlying assumption as the government, which assumed a reopening by mid-August we expected growth to lift in the second half of the quarter by 1.5% for a flat growth result for Victoria.
Hours worked data subsequently indicated that, both in Victoria and nationally, the recovery in June was indeed faster than that 1.5% estimate – nearer 4%.
Hours worked had collapsed by 12% in April/May highlighting the impact of the original lock downs across the country.
The introduction of Stage 4 restrictions in Melbourne and regional Victoria (Stage 3) can be expected to see activity fall below the April/May levels ("only" Stage 3 across the whole state) losing that 4% gain in July plus a further 5% through the September quarter (this forecast is based on the official guidance that jobs affected over that six week period will total around 250,000 – or around 10% of the existing workforce).
In total we now expect the Victorian economy to contract by 9% in the September quarter.
Note that the base fall of 12% in April/May represents the extreme initial response to a shutdown from "normal" activity levels.
This forecast is consistent with activity in the Victorian economy contracting by 16% over the June and September quarters. (7% in the June quarter and 9% in the September quarter) taking activity below that low point in April/May.
With the Stage 4 restrictions now likely to stay in place for most of September Victoria's recovery will be delayed until the December quarter when we expect the 9% loss in the September quarter to be partially reversed (growth of 6%) as the state moves from Stage 4 through to Stage 2.
Bill Evans is Westpac's economic spokesman and the head of economic research
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Global and domestic economic outlook never been more uncertain: Bill Evans

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EXPERT OBSERVATION 
As the Australian government looks to respond to the current global financial uncertainty and identify appropriate policies and stimulus measures to enact, the residential building industry should be one of the most supported. 
The residential building industry has a strong track record of underpinning Australia’s economic growth and stability.
Australia is emerging from a residential building downturn and in the face of the coronavirus shock, stability and clear direction to ensure the housing market does not take a backwards step is essential. 
The construction industry employs over 1.1 million people, with residential building work generating over $105 billion for the Australian economy in 2018 and accounting for 5.8 per cent of expenditure in the Australian economy. 
HIA encourages the state and federal governments to work together in this difficult time to provide policies that will stimulate the residential building sector. 
Residential building stimulus was a key element in the response to the 2009 global financial crisis and the results then were very positive. 
Residential building activity also supports a range of other industries important to our economy, like building product manufacturing, to remain stable. 
Trade skills and training has been suffering from a pronounced gap in funding and government support for some time. It is vital that apprentices are supported. Uncertain times can make it difficult for apprentices to find work or to continue their training. It is important to avoid creating a gap in industry training. 
Maintaining a strong residential building workforce must be a goal. Any stimulus aimed at the residential building sector should focus on ensuring the current workforce remain on task and ensuring young people see the opportunity to move into a career in building and take up new apprenticeships. 
Supporting stable residential building activity over the next few years as circumstances change can help underpin both industry confidence and consumer confidence.
 
KRISTIN BROOKFIELD is the Chief Executive Industry Policy at HIA
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Industry stability a key to riding economic waves; Kristin Brookfield 

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EXPERT OBSERVER
Employment rose by a record 210,800 in June after falling by 264,100 in May (previously reported as 227,700 decline). Full-time jobs fell by 38,100 and part-time jobs rose by 249,000.
The unemployment rate rose from 7.1 per cent to 7.4 per cent in June. It was the highest jobless rate in 21½ years (since November 1998).
Hours worked rose by 4.0 per cent in June after falling by 0.7 per cent in May. Hours worked are down by 5.7 per cent over the year.
Participation rate: The participation rate rose from a 19½-year low of 62.9 per cent in May to 64.0 per cent in June.
Spare capacity: In June, the underutilisation rate fell from 20.1 per cent to 19.1 per cent. The underemployment rate decreased from 13.1 per cent to 11.7 per cent.
Unemployment across states in June: NSW 6.9 per cent (May 6.4 per cent); Victoria 7.5 per cent (6.9 per cent); Queensland 7.7 per cent (7.8 per cent); South Australia 8.8 per cent (7.9 per cent); Western Australia 8.7 per cent (8.1 per cent); Tasmania 6.9 per cent (6.3 per cent); Northern Territory 5.7 per cent (7.4 per cent); ACT 5.1 per cent (4.1 per cent). Biggest job gains occurred in New South Wales (80,800); Queensland (52.900) and Victoria (29,500).
A raft of companies is affected by the employment data but especially those dependent on consumer spending.
What does it all mean?
The healing process is beginning – but no one said it was going to be easy. In fact health authorities warned about virus outbreaks and ‘hot spots’ as state and territory economies re-opened. The aim is to keep the virus suppressed rather than aim for elimination as there always is a balance of health and economics.
The lift in jobs in June reflects the re-opening of businesses as they move out of hibernation. It will be important to keep the virus suppressed (contained) so that more workplaces can re-open, more people get work, and there is a progression to relative normalcy.
We shouldn’t get too hung up on historical job market comparisons. The current situation is different to past recessions, being a health emergency rather than an economic emergency. The quick recovery of economies is dependent on a vaccine being found rather than a central bank rate cut or government tax or spending measure. Understandably the published unemployment rate may understate the ‘true’ rate but that is why JobKeeper was devised – to ensure people remain connected to their workplace.
Australia has done well in suppressing the virus and in responding to outbreaks. Vigilance is required. But we can be comforted in the fact that federal; state and territory governments as well as the Reserve Bank are doing all that it takes to support and stimulate the economy.
As well as today’s data on jobs, SEEK reported that job advertisements lifted 41.5 per cent in June. And the Federal Government is unveiling a $2 billion JobTrainer skills package to assist job seekers in returning to the workforce.
We continue to expect the jobless rate to peak around 8 per cent, well short of the generational high of 11.2 per cent set in December 1992. We expect the JobKeeper package to be amended and extended to ensure that the job market and broader economy continue to heal. The hope is that job seekers find employment relatively quickly to ensure they are not ‘locked out’ of the job market. It took 7½ years for the jobless rate from 11.2 per cent to 6.0 per cent in the 1990s/early noughties.
CRAIG JAMES is the Chief Economist at CommSec
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Record lift in jobs as economy reopens: CommSec's Craig James

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EXPERT OBSERVATION
The thought of various government support measures expiring in the months ahead, causing some sort of fiscal cliff over which economies and share markets will plunge, has caused much consternation. But as with the original fiscal cliff of December 31, 2012 in the US, it’s likely to be tapered into a fiscal slope. Particularly with so called “second waves” of coronavirus reaping havoc with the economic outlook. Of course, this will add to the public sector’s debt burden associated with the coronavirus shock, in turn adding to concern about some sort of fiscal day of reckoning down the track.
This note looks at the key issues around fiscal support and the budget in Australia ahead of the Treasurer’s Economic Statement (due 23rd July) which is expected to provide new economic forecasts, an estimate of the budget cost of support measures so far and outline plans for future support measures.
Fiscal stimulus to be extended
It made sense for many of the coronavirus government support measures to expire at the end of September as it avoided a permanent/hard to reverse lift in public spending, and to borrow from the analogy likening the support measures to a bridge across a chasm, once the coronavirus chasm has been crossed there is no longer the need for the bridge. However, its increasingly clear that support will be needed for longer:
First, the second wave of coronavirus cases in Australia has seen the Victorian Government return Melbourne to a “stay at home” six-week lockdown which will slow the recovery. While we estimate the direct impact on the Australian economy to be around $5bn which will knock around 1% off GDP this quarter, there is a high risk that it impacts confidence in other states (as people “self-isolate”) and that other states may also return to a lockdown if cases spread, with NSW most at risk. This already appears to be impacting economic activity, with our Australian Economic Activity Tracker which combines timely weekly data faltering over the last two weeks, after ten consecutive weeks of recovery.
Second, the easy gains from the initial reopening including the unleashing of pent up demand may have mostly been seen but distancing requirements and travel restrictions mean that it will take much longer for some industries - travel, events, culture, accommodation, restaurants and housing construction - to get back to normal.
Third, the coronavirus shock has accelerated the shift to a digital world, such that job losses associated with automation are now likely occurring faster than new jobs are being created. Three examples of this are a faster take up of online retailing meaning less jobs in retailing, more working from home meaning less office demand and less jobs in public transport and less business travel in favour of virtual meetings meaning less use of airlines and hotels.
The last two mean that “spare capacity” will linger well into the future and this is likely to show up in a long tail of high unemployment. Without the JobKeeper wage subsidy and changes to JobSeeker, “effective unemployment” would have risen to 14.8% in April and would still be around 13.6% now.
The initial spike in “effective unemployment” may be reversed quickly taking it down to say 9% by year end, but getting it back to 5% as seen early this year could take years as some sectors take a long time to recover and accelerated structural change impacts. This suggests both a short-term and a long-term challenge for government which will likely be met at least in the short term by more fiscal stimulus.
Will it be enough?
By extending programs like JobKeeper beyond September and announcing additional stimulus including the likely bring forward of tax cuts, the Government will effectively taper the fiscal cliff and turn it into more of a slope. This helps solve the short-term reality that a lot of jobs won’t have come back by October. However, it remains to be seen whether this will be enough given the long tail of unemployment flowing from the coronavirus shock discussed earlier. The Government’s focus looks likely to shift to economic reforms in the October budget and this makes sense, but more fiscal support may ultimately be needed to soak up the likely long tail of unemployment.
Can we afford the surge in the deficit and debt?
Our assessment remains that it is affordable. First, were it not for the support measures the economic hit would be far greater, ultimately resulting in an even bigger public debt blowout.
Second, as Keynes showed, it makes sense for the public sector to borrow from households and businesses at a time when they have cut their spending, and to give the borrowed funds to help those businesses and individuals that need help.
Third, the support programs won’t cause a permanent step jump higher in public spending.
Fourth, Australia’s starting point for net public debt was low at 23% of GDP compared with other advanced countries averaging 83%. See the next chart. And even with projected budget deficits it will remain relatively s
mall.
The hit to the economy will mean a hit to government revenue and this is shown in the line called “parameter changes”. Budget data released for the period to May suggests that this has been running at just over $10bn a month since March.
The Government has already announced significant policy support and this is shown in the line “stimulus so far”. We have allowed for the three policy support packages in March, the health package and industry support packages. These are dominated by JobKeeper now estimated to cost $70bn.
However, the need for additional support for the economy has also been recognised by the Government. As a result, in its 23 July economic statement we are likely to see:
An extension of JobKeeper – although it’s likely to be revamped with a monthly eligibility test and different pay rates and companies are likely to be discouraged from accessing it for jobs that won’t be revived;
The doubled JobSeeker payment is likely to be pared back;
Income tax cuts due from 2022 may be brought forward;
Additional investment incentives; and More industry support packages.
The Government will partly fund extra support by taking JobKeeper from those who no longer need it, but the bulk will likely come from the $60bn saving already seen on JobKeeper, which we expect to be fully spent and then some (see “new stimulus”) although it may not all be announce next week.
As a result of the Government’s fiscal response and the hit to public revenue from the economic downturn, the budget deficit is expected to blow out from around $95bn for the past financial year to around $223bn this financial year before improving from 2021-22, as support programs phase down and the economy recovers. This would see the budget deficit as a share of GDP peak at around 11% of GDP in 2020-21, which would be its highest since World War 2. Spread over several years, this will add nearly 20% of GDP to Australia’s public debt. This raises two questions though: will it be enough? And can we afford it?
budget deficits it will remain relatively small.
Australian Federal budget deficit
Fifth, borrowing to finance the budget deficit is in Australian dollars and, with a current account balance, we are not dependent on foreign creditors risking a foreign currency crisis.
Sixth, the cost of Government borrowing is very low at less than 1% for ten years. This is partly being facilitated by the RBA buying bonds, but bond rates would be low anyway.
Finally, consider what would happen if “shock horror” the Government and the RBA agreed to cancel the bonds that the RBA owns? Apart from a lot of grinding teeth from some commentators the answer would be very little – the Government’s loss on its “investment” in the RBA would be offset by a reduction in liabilities. In other words, it’s not necessarily the case that all public debt has to be paid back if it’s owned by the central bank. For the technically minded, the limit to this would be if all the extra money that the central bank printed to buy the bonds causes inflation – but as Japan has seen, if there is lots of spare capacity, inflation is not an issue.
Concluding comment
With the private sector spending hit by coronavirus it makes sense for the Government to continue to help fill the breach and support the economy. The best approach to getting debt back down is to grow the economy aided by a reinvigorated economic reform agenda, but for a while government fiscal support will continue to be needed.
Dr Shane Oliver is head of investment strategy and chief economist at AMP Capital
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The fiscal cliff is more likely to be a fiscal slope: Shane Oliver

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The latest quarterly auction results released by CoreLogic come as no surprise, with the nation facing some of its greatest disruptions to business during this period.
These restrictions resulted in the banning of on-site auctions and inspections, forcing real estate agents to pivot to online solutions or convert to private treaty methods of sale in a bid to maintain business as usual.
However, online solutions weren't enough to maintain the usual levels of activity seen, and large proportions of homes that were scheduled for auction prior to the bans started being withdrawn from the market.
Equally, the number of homes scheduled for auction each week remained at lower than usual levels throughout May.
The June 2020 quarter saw 13,783 auctions held, down 27 per cent when compared to the March quarter (18,902), and 24 per cent lower than the June quarter last year (18,104).
Of the 11,956 auction results collected over the latest quarter, 31 per cent reported a withdrawn result, which was significantly higher than the 6.1 per cent withdrawn over the March quarter.
The first six weeks of the quarter saw withdrawal rates as high as 56 per cent as vendors looked to alternative methods of sale or chose to postpone until conditions improved.
By mid-May withdrawal rates started to normalise as the flow of pre-scheduled auctions eased.
The month of May saw weekly auction numbers remain below 1,000 across the combined capital cities, reaching as low as 417 over the week ending 17th May.
CoreLogic's Head of research, Eliza Owen, noted the decline in auction volumes could be attributed to market conditions, as well as physical bans on onsite auctions.
"The initial market response to COVID-19 was a severe drop in sales and listings across both auction and private treaty sales methods. Many vendors who did not have to sell were initially unwilling to take their property to market in a time of high uncertainty," she said.
"This contributed to a fall in sales volumes of -32.4% over April. However, following this initial shock, transaction activity has steadily recovered as social distancing measures eased, and consumer confidence levels experienced a strong recovery in May and June."
June saw auction volumes increase as restrictions were eased, with 1,485 auctions held across the combined capitals over the week ending 28th June.
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