<a href="https://www.apartments.com.au/developers/damgar-group">Damgar Group</a> has delivered Rosella, its boutique Murrumbeena apartment project, several months ahead of its anticipated completion.

Designed by <a href="https://www.apartments.com.au/architects/cera-stribley-architects">Cera Stribley</a>, the seven-storey building delivers 70 one, two, and three-bedroom residences, marking the first significant new apartment offering in the suburb in years.&nbsp;

With construction now complete and move-ins underway, <a href="https://www.apartments.com.au/buildings/rosella-murrumbeena-50-rosella-street-murrumbeena-vic-3163">Rosella</a> brings together design, practicality, and strong connectivity in one of Melbourne’s most tightly held pockets.

[smartcode_project:default project_id=142221 project_image_fid=353183]

Damgar partnered with <a href="https://www.apartments.com.au/developers/progressio-developments">Progressio</a> and the acclaimed team at Cera Stribley to create a design that both stands out and belongs, with its curved concrete façade and warm copper detailing nodding to the nearby Hughesdale Station underpasses.&nbsp;

Inside, these soft architectural curves continue through interior walls, a feature rarely seen at this scale and price point.&nbsp;

James Gray of Progresio, Rosella’s development partner, said the project set out to create “something Murrumbeena simply hasn’t seen before,” combining design ambition with everyday livability.

“We brought in the renowned team from Cera Stribley Architects who created something instantly recognisable,” said Gray.

[smartcode_project:default project_id=142221 project_image_fid=352270]

Each apartment balances function and aesthetics, with interiors curated around natural light, warmth and material quality. Kitchens are appointed with Miele appliances, stone benchtops and gunmetal tapware, complemented by Cera Stribley’s signature joinery and bespoke detailing. Open-plan living zones open onto generous terraces designed for entertaining.

Residents also enjoy access to a landscaped rooftop terrace and residents’ lounge with panoramic views over Melbourne’s skyline, a rare amenity in Murrumbeena’s low-rise neighbourhood context.&nbsp;

[smartcode_project:default project_id=142221 project_image_fid=352267]

Rosella sits directly opposite Hughesdale Station and Hughesdale Village, placing cafés, wine bars and everyday retail within walking distance. Chadstone Shopping Centre - Australia’s largest retail destination - is just minutes away, while the CBD is a short 15-minute train ride. It’s a level of connectivity that continues to drive buyer interest from professionals and downsizers seeking long-term value in established suburbs.

Final residences at Rosella start from $680,000, offering one of the few opportunities to buy brand-new in <a href="https://www.apartments.com.au/developments/murrumbeena-vic-3163">Murrumbeena</a>. Damgar Group is also offering generous stamp duty contributions toward purchases for a limited time.

[smartcode_project_cta:default project_id=142221]

Staff Writer

"Something Murrumbeena simply hasn’t seen before": Rosella redefines apartment living in Melbourne’s south-east suburb

<a href="https://www.apartments.com.au/developers/billbergia">Billbergia</a> and Metrics Credit Partners are teaming up once again, this time in Concord, where they're taking Concord Central,&nbsp; an eight-building, 1400-dwelling precinct, to the NSW Government.

The State Significant Development Application (SSDA) for the 3.14-hectare site at <a href="https://www.apartments.com.au/new-apartments/1-king-street-concord-1-king-street-concord-west-nsw-2137">1 King Street</a>, adjacent to Concord West train station, also includes plans for a new civic plaza featuring retail and commercial spaces.

Concord Central marks another major collaboration between Billbergia and Metrics, following their joint venture in the Sydney CBD, a <a href="https://www.apartments.com.au/news/nsw/billbergia-metrics-propose-two-80-level-towers-in-sydneys-cbd">two-tower development</a> that will see both towers rise 80 storeys, ranking among the tallest buildings in the city.

<img alt="Bilbergia" data-entity-type="file" data-entity-uuid="03ecc392-ba98-437a-bf3b-a944c42e1812" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-10-21%20at%204.53.25%E2%80%AFPM.png?VersionId=VaW78cYWuwRjWfU0GdgNQrRWTxU7u5xY" />

At Concord, the initial proposal in 2024 was for 700 apartments across 10 towers.&nbsp;The tower heights now range from six to 37 storeys.

&nbsp;

&nbsp;

According to the Scoping Report prepared by Ethos Urban, the project aims to “incorporate a mixed-use approach and use urban design principles to integrate commercial, retail and residential land uses” while improving connectivity and public access to transport infrastructure.

<a href="https://www.apartments.com.au/architects/group-gsa">GroupGSA</a> has led the urban design and masterplanning, alongside architectural input from Fitzpatrick Partners, Lachlan Seegers, and Carter Williamson. The indicative masterplan shows a layout that prioritises open space, view corridors, and pedestrian permeability, with over 5000 sqm of public realm, including a central park and active street frontages.

The project’s proximity to Concord West Station and future Sydney Metro connections at North Strathfield supports the broader vision for a transport-oriented development. The Scoping Design Report notes that the masterplan “seeks to re-integrate the site into the suburb, providing residential activation with public through-site links, civic spaces and play areas”.

<img alt="Billbergia" data-entity-type="file" data-entity-uuid="0e724b4a-5eac-4725-b8a6-e8f217fd753e" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-10-21%20at%204.53.57%E2%80%AFPM.png?VersionId=Mpa8ojMn.XDFd73mOzXCA2EI1WarS4tE" />

Retail space has been reduced slightly in the latest version to 5,100 sqm, but with a sharper focus on local activation and daily needs. A childcare centre and community facilities are also included, alongside infrastructure upgrades valued at over $100 million.

The project has been declared State Significant and is undergoing assessment by the NSW Department of Planning, Housing and Infrastructure. According to the submitted documents, construction could begin as early as late 2026, with completion anticipated by 2029.

This project continues Billbergia’s focus on large-scale urban renewal precincts, with similar activity underway in Rhodes and Chatswood in partnership with Metrics.

Joel Robinson

Billbergia and Metrics unveils Concord Central scheme with 1400 homes near Concord West Station

Three years after submitting its initial development application for a new apartment building in Bilinga, local developer Lacey Group has decided now is the right time to start progressing with the project.

Lacey Group, which has been behind the likes of Del Ray in Kirra and The Monroe in Palm Beach, has filed fresh plans for an 11-level building with 27 apartments. The 1,009 sqm block at <a href="https://www.apartments.com.au/new-apartments/66-pacific-parade-bilinga-qld-4225">66 Pacific Parade</a>, on the corner of Archer Avenue facing Joe Doniger Park and the beach, is currently home to a walk-up block of original flats known as Serene.

Plus Studio has tweaked its own plans. The density mix isn't much different to the&nbsp;10-level, 28-unit <a href="https://www.apartments.com.au/news/qld/first-look-lacey-group-set-for-next-gold-coast-apartment-development">application they made in 2022</a>.

There will still be nine two-bedroom apartments and 16 three-bedroom apartments. The three two-level penthouses have been scrapped, in favour of a large three-bedroom and four-bedroom apartment on the ninth level. There will be just three apartments per floor throughout the building.

&nbsp;

<img alt="Lacey" data-entity-type="file" data-entity-uuid="170901f8-c4e9-481d-8d2a-5c7d20b1d785" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-10-21%20at%206.01.24%E2%80%AFPM.png?VersionId=lGJGCx9qskwB8qu6Xlur4i0K0boXR5Do" />

Plus Studio, led locally by Danny Juric, says 66 Pacific Parade will be&nbsp;a "timeless addition to Bilinga, facilitating a lifestyle defined by relaxed sophistication — barefoot luxury at its finest."

"Located just moments from the beach, 66 Pacific Parade is designed to embrace the Bilinga lifestyle and enhance the neighbourhood’s character," the submission to the Gold Coast City Council noted.

They called the apartments "beach homes", which will be "enveloped by sweeping curves that create a seamless integration between the architecture and its coastal context."

"These soft forms enhance panoramic view experiences for residents, while layered landscaping along the Pacific Parade and Archer Street frontages blends the ocean into the residents’ private recreation deck, pool, and lounges."

<img alt="Lacey" data-entity-type="file" data-entity-uuid="18aebcd9-4d68-47d2-86b9-92eda1779103" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-10-21%20at%206.01.47%E2%80%AFPM.png?VersionId=xtOSgbusBKaWiXhyhjO_0ctVkllaPg_0" />

&nbsp;

According to the Town Planning Report by Urban Planning Services, the new application “demonstrates a more refined architectural expression, with particular emphasis on coastal character, visual interest, and improved amenity outcomes”.

The design adopts lighter tones and tiered landscaping, with articulated balconies and screening elements to soften the façade and improve privacy.

Bilinga has become a popular spot for developers in recent years. SIERA recently completed <a href="https://www.apartments.com.au/buildings/pipis-bilinga-303-golden-four-drive-bilinga-qld-4225">PIPIS</a>, just 19 luxury apartments on Golden Four Drive, while <a href="https://www.apartments.com.au/new-apartments/bilinga-house-107-golden-four-drive-bilinga-qld-4225">Bilinga House</a>, a more dense, more price-pointed development, recently launched.

First look: Lacey Group advances Bilinga apartment plans

A fresh high-rise tower is being proposed on what is becoming Surfers Paradise most popular street for development.

Sunset Boulevard, just outside of the centre of Surfers Paradise on the Nerang River, has been a hotbed for developers in the last 12 months, with the likes of SEYAH, Macquarie York, and&nbsp;YHY Group filing plans for new apartments.

The latest comes from Sinclair Projects, a company associated with Sinclair Projects, a company associated with&nbsp;Highgrove Bathrooms Founder Lindsay Sinclair. They've sought to develop <a href="https://www.apartments.com.au/new-apartments/cointreau-25-27-sunset-boulevard-surfers-paradise-qld-4217">Cointreau</a>, 51 apartments across a 16-level building that will sit on a 1,012 sqm corner site at 25-27&nbsp;Sunset Boulevard, on the corner of Alberta Place. It is currently occupied by two low-rise dwellings.

The tower, by&nbsp;<a href="https://www.apartments.com.au/architects/studio-workshop">Studio Workshop</a>,&nbsp;will include a mix of 37 two-bedroom and 14 three-bedroom apartments, with all residences located above a three-level podium which will home a communal recreation level, featuring landscaped terraces and a pool, and the majority of the 69 resident parking spaces.

Studio Workshop says in the submitted plans to the Gold Coast City Council that Sunset Blvd is emerging as a "vibrant new urban community that blends lifestyle, culture, and convenience in a central locale."

"The development embraces the Gold Coast’s unique connection to the outdoors, highlighted by Cointreau’s podium pool and wellness spaces that encourage residents to live and relax in the open air."

<img alt="Gold Coast" data-entity-type="file" data-entity-uuid="94bc6fc7-651a-4c6c-aa4a-ea033971a943" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-10-21%20at%205.27.47%E2%80%AFPM.png?VersionId=JUOpBzV3BSNah6QLyeCIT6QVuK.3Hy_3" />

They said its central location reinforces its identity as a connected precinct, with key views to HOTA, access to the Broadwater, and walkability to both the beach and the heart of Surfers Paradise — placing dining, retail, entertainment, and lifestyle at residents’ fingertips.

"This thoughtful integration of design, amenity, and location ensures Sunset Blvd is more than just a place to live — it is a thriving community that captures the essence of coastal urban living while fostering a strong connection to both nature and culture."

The first development likely to launch on Sunset Boulevard among a backdrop of several approvals is SEYAH's&nbsp;Cavella, just 18 large-scale apartments on the river.

Read more:&nbsp;<a href="https://www.apartments.com.au/news/qld/first-look-seyah-to-launch-cavella-in-emerging-sunrise-boulevard-surfers-paradise-pocket-following-density-rethink">First look: SEYAH to launch Cavella in emerging Sunrise Boulevard, Surfers Paradise pocket following density rethink</a>

The first developer to identify Sunset Boulevard was Roy Skaf's Macquarie York. He has approval for 43 apartments, although that density may change in the coming months.

YHY Group has approval for a 33-level tower with 74 apartments, with the penthouse proposed to be the <a href="https://www.apartments.com.au/news/qld/first-look-the-gold-coasts-largest-penthouse-pitched-for-new-surfers-paradise-tower">largest penthouse ever</a> produced on the Gold Coast.

Sydney-based P&amp;N Sleiman Group secured approval for&nbsp;<a href="https://www.apartments.com.au/new-apartments/52-sunset-boulevard-surfers-paradise-qld-4217">52 Sunset Boulevard</a>, but has recently listed the site for sale.

First look: Sunset Boulevard shines as Surfers’ next hotspot for apartment development

A prominent eastern gateway site to Bondi Junction could soon host a new eight-storey apartment project combining market and affordable housing, under new plans lodged with Waverley Council.

The proposal covers a 1,631 sqm amalgamated site across five properties at 2–6 Bondi Road and 75–77 Old South Head Road, including the corner of Ben Eden Street.&nbsp;

According to the Design Verification Statement by <a href="https://www.apartments.com.au/architects/tony-owen-partners">Tony Owen Partners</a>, the development will deliver a total of 56 apartments, incorporating 10 affordable dwellings. The project takes advantage of the NSW Government’s Housing SEPP, which provides a 30 per cent uplift in height and floor space ratio in exchange for the inclusion of affordable housing.

<img alt="Bondi Road, Bondi" data-entity-type="file" data-entity-uuid="64226782-681d-430f-a08b-31d007ba40e0" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Bondi%20Road%20Bondi%20site.png?VersionId=gCt8XpeE4jXEoao0FnG.Ij9mUr73CB68" />

The mix of apartments spans one-, two-, and three-bedroom configurations, with a layout designed to optimise amenity and environmental performance.&nbsp;88.5 per cent of units achieve natural cross ventilation, Tony Owen Partners notes in the statement, attributing the result to the site’s configuration and a high proportion of corner apartments.

The design also responds to the site’s transitional context, on the periphery of the high-rise Bondi Junction commercial core and adjoining the lower-scale Bellevue Hill precinct.&nbsp;

“The siting, scale, bulk, and massing of the proposed development is consistent with that anticipated for the area,” the statement reads, with the building’s height capped at 28.6 metres in line with the LEP controls including bonuses.

<img alt="Bondi Road building" data-entity-type="file" data-entity-uuid="083fb63f-8a64-4c21-9c09-83e379f1cedd" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Bondi%20bldg.png?VersionId=aQMby6eh5kCepC_rlXkobUpV0M6IsYns" />

Located near the intersection of Bondi Road, Oxford Street, and Old South Head Road, the site occupies a pivotal position at the entry to Bondi Junction from the east. The site is currently occupied by four detached two-storey dwellings.

Bondi Junction seldom sees new apartment development. Stargate is currently developing <a href="https://www.apartments.com.au/new-apartments/the-centennial-collection-east-sydney-2-nelson-street-bondi-junction-nsw-2022">The Centennial Collection</a>, on the edge of Woollahra and Centennial Park, and are soon to launch <a href="https://www.apartments.com.au/new-apartments/signature-by-stargate-362-384-oxford-street-bondi-junction-nsw-2022">Signature by Stargate</a>, just down Oxford Street.

First look: Eight-storey apartment block pitched for key Bondi Junction gateway site

Policymaking

The recently unveiled Federal Budget is expected to support home ownership aspirations for thousands of households, according to Housing Industry Association (HIA) managing director, Graham Wolfe.

&ldquo;This budget will make a difference in the lives of thousands of Australians,&rdquo; he said.

A majority of the housing schemes are targeted to help first home buyers bridge the deposit gap and bring the aspiration of home ownership within reach of a broader range of Australians.

[smartcode_project:default project_id=8082 project_image_fid=59642]

Under new measures, budding first home buyers will now be able to access up to $50,000 of their own concessional and non-concessional contributions that they can put towards a first home deposit.

This presents an expansion of $20,000 on the previous $30,000 limit that could be released under the First Home Super Saver Scheme, which has been welcomed by the property industry.

The changes &ldquo;provide greater incentive and motivation for tens of thousands of young, aspirational Australians to save a deposit for their first home through a tax effective scheme&rdquo;, said Wolfe.

CEO of Master Builders Australia, Denita Wawn, said: &ldquo;Harnessing the power of compound interest in superannuation to save a deposit makes sense.&rdquo;

The Government has also committed to an extra 10,000 places for the First Home Loan Deposit Scheme, helping first home buyers secure a property with a five per cent deposit.

<h2>A win for single parents</h2>

<img alt="" height="667" src="https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/shutterstock_1156208419.jpg" width="1000" />

The Budget also expands on the success of the First Home Loan Deposit Scheme with the new Family Home Guarantee, which will assist single custodial parents buy a home with a deposit as low as 2 per cent.

&ldquo;These measures build off the economy-saving success of the HomeBuilder scheme by providing more focused support where it is most needed,&rdquo; Property Council chief executive Ken Morrison said.

This new scheme will deliver single parents, the overwhelming majority of whom are women, a step up to gaining the security that comes with home ownership.

&ldquo;Matching the 10,000 places still to open under the Deposit Scheme from July with a new allocation of 10,000 places under the New Home Guarantee will help ensure first home buyers can choose to buy either a new home or an existing home&rdquo;, Wolfe said.

Single custodial parents will need to wait until next week for a fact sheet with further information on eligibility criteria.

<h2>Other measures</h2>

[smartcode_project:default project_id=22584 project_image_fid=71763]

Other measures revealed by Treasurer Josh Frydenberg also help support workers, downsizers and broader communities.

The budget has committed to lowering the minimum age for downsizer contribution from 65 to 60, allowing a one-off post-tax contribution of up to $300,000 per person when they sell their home.

The Federal Government has also announced additional funding under the National Housing and Homelessness Agreement.

&ldquo;A further $124.7 million to assist states and territories to meet their social and community housing requirements will help meet growing demand for housing support&rdquo;, said Morrison.

Master Builders also announced they were pleased to see the Federal Government stepping up to assist the states and territories with their role to provide community and social housing, following calls for boosted social housing investments.

[smartcode_project:default project_id=3233 project_image_fid=160015]

Other measures also include an extension of the Boosting Apprentice Commencement wage subsidy which has helped restore confidence in job training to grow the next generation of homebuilders.

The government has also continued its 10-year, $110 billion spend on infrastructure, which includes $15.2 billion over the next ten years for new rail and road infrastructure projects, helping build communities.

&ldquo;All up, this is a budget for all Australians. It is very welcome and is strongly supported&rdquo;, Urban Taskforce chief executive Tom Forrest said.

The recently unveiled Federal Budget is expected to support home ownership aspirations for thousands of households

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Are first home buyers the winners of the 2021 federal budget?

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RBA SPEECH
The Reserve Bank Board met yesterday and decided on a comprehensive package to help support jobs, incomes and businesses as the Australian economy deals with the coronavirus. I would like to use this opportunity to explain this package and to answer your questions.
We are clearly living in extraordinary and challenging times. The coronavirus is first and foremost a very major public health problem. But it has also become a major economic problem, which is having deep ramifications for financial systems around the world. The closure of borders and social distancing measures are affecting us all and they are changing the way we live. Understandably, our communities and our financial markets are both having trouble dealing with a rapidly unfolding situation that they have not seen before.
As our country manages this difficult situation, it is important that we do not lose sight of the fact that we will come through this.
At some point, the virus will be contained and our economy and our financial markets will recover.
Undeniably, what we are facing today is a very serious situation, but it is something that is temporary. As we deal with it as best we can, we also need to look to the other side when things will recover. When we do get to that other side, all those fundamentals that have made Australia such a successful and prosperous country will still be there. We need to remember that.
To help us get to the other side, though, we need a bridge. Without that bridge, there will be more damage, some of which will be permanent, to the economy and to people's lives.
Building that bridge requires a concerted team effort, with us all pulling together in the country's interest. On the economic front, there is very close policy coordination between the Australian Government, the Australian Treasury, the Reserve Bank and Australia's financial regulators. We are all in close contact with one another and are working constructively together and we will continue to do so. This coordination is evident in the various policy statements today.
Governments across Australia are playing their important role in building that bridge to the recovery, with the various fiscal initiatives from the Australian and state governments providing very welcome support. Rightly, the focus is on supporting businesses and households who will suffer a major hit to their incomes. It is increasingly clear that further help will be required on this front and the Australian Government has indicated that additional policy measures will be announced shortly. Australian public finances are in good shape and the country's history of prudent fiscal management gives us the capacity to respond now.
The banks too have an important role to play in building that bridge to the recovery by supporting their customers. Without this support, it will be harder for us all to get to the other side in reasonable shape.
Australia has a strong financial system, which is well placed to provide the needed support to businesses and households. The system has strong capital and liquidity positions and our financial institutions have invested heavily in resilience. As APRA confirmed this afternoon in a public statement, the current large buffers of capital and liquidity are able to be used to support ongoing lending to the economy.
The financial regulators have also confirmed that they are examining how the timing of various regulatory initiatives might be adjusted to allow financial institutions to concentrate on their businesses and work with their customers. APRA and ASIC both stand ready to assist institutions work through regulatory issues arising from the virus. The Council of Financial Regulators is meeting again tomorrow and will also meet with the largest lenders to discuss how they can support their customers and whether there are any regulatory impediments in the way.
The Reserve Bank itself is also playing a role in building that bridge to the recovery. I will now turn to that.
Our major focus is to support jobs, incomes and businesses, so that when the health crisis recedes the country is well placed to recover strongly. Supporting small business over coming months is a particular priority.
Prior to today's announcement, we had already taken several steps over recent days to support the Australian economy.
Over the past week or so we have been injecting substantial extra liquidity into the financial system through our daily market operations. As part of this effort, we will be conducting one-month and three-month repo operations each day. We will also conduct repo operations of six-month maturity or longer at least weekly, as long as market conditions warrant. As a result of these liquidity operations, Exchange Settlement balances have increased from around $2.5 billion a month ago to over $20 billion today.
The Reserve Bank also stands ready to purchase Australian government bonds in the secondary market to support its smooth functioning. The government bond market is a key market for the Australian financial system, because government bonds provide the pricing benchmark for many financial assets. Our approach here is similar in concept to our longstanding approach to the foreign exchange market, where we have been prepared to support smooth market functioning when liquidity conditions are highly stressed. We now stand ready to do the same in the bond market and we are working in close cooperation on this with the Australian Office of Financial Management (AOFM).
In addition to these previously announced measures, today's package has four elements. They are: a reduction in the cash rate to 0.25 per cent; a target of 0.25 per cent for the yield on 3-year government bonds; a term funding facility to support credit to businesses, particularly small and medium-sized businesses; and an adjustment to the interest rate on accounts that financial institutions hold at the RBA.
I will discuss each of these in turn.
<h2 id="1-a-further-reduction-in-the-cash-rate-to-per-cent">1. A Further Reduction in the Cash Rate to ¼ Per Cent</h2>
This brings the cumulative decline over the past year to 1¼ percentage points. This is a substantial easing of monetary policy, which is boosting the cash flow of businesses and the household sector as a whole. It is also helping our trade-exposed industries through the exchange rate channel. At the same time, though, low interest rates do have negative consequences for some people, especially those relying on interest income. The Reserve Bank Board has discussed these consequences extensively, but the evidence is that lower interest rates do benefit the community as a whole, although I acknowledge that the effects are uneven.
With this decision today, the policy rates set by the Reserve Bank of Australia, the United States Federal Reserve, the Bank of England and the Reserve Bank of New Zealand are all effectively at ¼ per cent. Each of us are using all the scope we have with interest rates to support our economies through a very challenging period.
At its meeting yesterday, the Board also agreed that we would not increase the cash rate from its current level until progress was made towards full employment and that we were confident that inflation will be sustainably within the 2–3 per cent range. This means that we are likely to be at this level of interest rates for an extended period.
Before the coronavirus hit, we were expecting to make progress towards full employment and the inflation target, although that progress was expected to be only very gradual. Recent events have obviously changed the situation and we are now likely to remain short of those objectives for somewhat longer.
I am not able to provide you with an updated set of economic forecasts. The situation is just too fluid. But we are expecting a major hit to economic activity and incomes in Australia that will last for a number of months. We are also expecting significant job losses. The scale of these losses will depend on the ability of businesses to keep workers on during this difficult period. We saw during the global financial crisis how flexibility in working arrangements limited job losses and this benefited the entire community. I hope the same is true in the months ahead.
It is also important to repeat that we are expecting a recovery once the virus is contained. The timing and strength of that recovery will depend in part upon how successful we are, as a nation, in building that bridge to the other side. When that recovery does come, it will be supported by the low level of interest rates. We will maintain the current setting of interest rates until a strong recovery is in place and the achievement of our objectives is clearly in sight.
<h2 id="2-a-target-yield-on-3-year-australian-government-bonds">2. A Target Yield on 3-year Australian Government Bonds</h2>
Over recent decades, the Reserve Bank's practice has been to target the cash rate, which forms the anchor point for the risk-free term structure. We are now extending and complementing this by also targeting a risk-free interest rate further out along the yield curve.
In particular, we are targeting the yield on 3-year Australian Government Securities (AGS) and we have set this target at around 0.25 per cent, the same as the cash rate. Over recent weeks, the yield on 3-year AGS has averaged 0.45 per cent, so this represents a material reduction.
We have chosen the three-year horizon as it influences funding rates across much of the Australian economy and is an important rate in financial markets. It is also consistent with the Board's expectation that the cash rate will remain at its current level for some years, but not forever.
To achieve this yield target, we will be conducting regular auctions in the bond market. We published some technical details earlier today and we will keep the market informed of our operations. Our first auction will be tomorrow. As part of this program, our intention is to purchase bonds of different maturities given the high level of substitutability between bonds. We are also prepared to buy semi-government securities to achieve the target and to help facilitate the smooth functioning of Australia's bond market.
I want to make it clear that our purchases will be in the secondary market and we will not be purchasing bonds directly from the Government.
I would also like to emphasise that we are not seeking to have the three-year yield identically at 25 basis points each and every day. There will be some natural variation, and it does not make sense to counter that. It may also take some time for yields to fall from their current level to 25 basis points.
I understand why many people will view this as quantitative easing – or QE. This is because there is a quantitative aspect to what we are doing – achieving this target will involve the Reserve Bank buying bonds and an expansion of our balance sheet.
But our emphasis is not on the quantities – we are not setting objectives for the quantity and timing of bonds that we will buy, as some other central banks have done. How much we need to purchase, and when we need to enter the market, will depend upon market conditions and prices.
Rather than quantities or the size of our balance sheet, our focus is very much on the price of money and credit. Our objective here is to provide support for low funding costs across the entire economy. By lowering this important benchmark interest rate, we will add to the downward pressure on borrowing costs for financial institutions, households and businesses. We are prepared to transact in whatever quantities are necessary to achieve this objective.
We expect to maintain the target for three-year yields until progress is being made towards our goals of full employment and the inflation target. Our expectation, though, is that the yield target will be removed before the cash rate is increased.
<h2 id="3-a-term-funding-facility-for-the-banking-system-with-support-for-business-credit-especially-to-small-and-medium-sized-businesses">3. A Term Funding Facility for the Banking System with Support for Business Credit, Especially to Small and Medium-sized Businesses</h2>
The scheme has two broad objectives.
The first is to lower funding costs for the entire banking system so that the cost of credit to households and businesses is low. In this regard, it will complement the target for the three-year yield on AGS.
The second objective is to provide an incentive for lenders to support credit to businesses, especially small and medium-sized businesses. This is a priority area for us. Many small businesses are going to find the coming months very difficult as their sales dry up and they support their staff. Assisting small businesses through this period will help us make that bridge to the other side when the recovery takes place. If Australia has lost lots of otherwise viable businesses through this period, making that recovery will be harder and we will all pay the price for that. So it is important that we address this.
Under this new facility, authorised deposit-taking institutions (ADIs) in total will have access to at least $90 billion in funding. ADIs will be able to borrow from the Reserve Bank an amount equivalent to 3 per cent of their existing outstanding credit to Australian businesses and households. ADIs will be able to draw on these funds up until the end of September this year.
Lenders will also be able to borrow additional funds from the Reserve Bank if they increase credit to business this year. For every extra dollar lent to large business, lenders will have access to an additional dollar of funding from the Reserve Bank. For every extra dollar of loans to small and medium-sized businesses they will have access to an additional five dollars. These funds can be drawn upon up until the end of March next year. There is no extra borrowing allowance for additional housing loans.
The funding from the Reserve Bank will be for three years at a fixed interest rate of 0.25 per cent, which is substantially below lenders' current funding costs. Institutions accessing this scheme will need to provide the usual collateral to the Reserve Bank, with haircuts applying. The first drawings under this facility will be possible no later than four weeks from today.
This scheme is similar to that introduced by the Bank of England. Unlike the Bank of England's scheme, though, the interest rate is fixed for the term of the funding. This is consistent with our view that the cash rate is likely to stay at its current level for some time. Another difference with the Bank of England's scheme is that we have not included a higher interest rate if credit contracts. While a decline in credit would be undesirable, including a penalty may act as a disincentive for institutions to take part in the scheme.
We are encouraging all ADIs to use the term funding facility to help support their customers. I welcome APRA's confirmation this afternoon that it also supports ADIs using this scheme. I also welcome the Australian Government's announcement that it will support the markets for asset-backed securities through the AOFM. This support is important as it will help non-bank financial institutions and small lenders to continue to provide credit to Australian households and businesses.
<h2 id="4-an-adjustment-to-the-interest-rate-on-exchange-settlement-balances">4. An Adjustment to the Interest Rate on Exchange Settlement Balances</h2>
Under our longstanding framework, the RBA operates a corridor system around the cash rate. Under that system, the balances that banks hold with the RBA overnight in Exchange Settlement accounts earn an interest rate 25 basis points below the cash rate. And on the other side of the corridor, in the event that a bank needed to borrow from the RBA overnight, it would be charged 25 basis points above the cash rate.
Under this arrangement and with the cash rate now at 25 basis points, the interest rate on Exchange Settlement balances would have been zero. We have decided to increase this to 10 basis points. We are not making any change to the arrangements for the top of the corridor.
This adjustment to the corridor reflects the fact that there will be a significant increase in the balances held in Exchange Settlement accounts due to the combined effect of the Bank's enhanced liquidity operations, bond purchases and term funding program. Maintaining a zero interest rate on these balances would increase the costs to the banking system. In the current environment, this would be unhelpful.
The increase in settlement balances is also expected to change the way that the cash market operates. In other countries, where there have been large increases in balances at the central bank, the cash rate equivalent has drifted below the target and transaction volumes in the cash market have declined. It is likely that we will see the same outcome in Australia. The Reserve Bank will continue to monitor the cash market closely and is prepared to adjust arrangements if the situation requires.
So these are the four measures announced earlier this afternoon. Together, they represent a comprehensive package to lower funding costs in Australia and support the supply of credit. Complementary initiatives by APRA and the AOFM are also working towards those same objectives.
The term funding scheme and the three-year yield target are both significant policy developments that would not have been under consideration in normal times. They both carry financial and other risks for the Reserve Bank and they both represent significant interventions by the Bank in Australia's financial markets.
The Reserve Bank Board did not take these decisions lightly. But in the context of extraordinary times and consistent with our broad mandate to promote the economic welfare of the people of Australia, we are seeking to play our full role in building that bridge to the time when the recovery takes place. By doing all that we can to lower funding costs in Australia and support the supply of credit to business, we will help our economy and financial system get through this difficult period.
PHILIP LOWE is the Governor of the RBA
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Monetary policy decisions: RBA Governor Philip Lowe

Insights into RBA thinking February 2020: RBA Minutes

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EXPERT OBSERVER
The minutes of the November monetary policy meeting of the Reserve Bank Board give us no significant reason to change our view that the next rate cut will occur in February.
While some forecasters have been promoting the idea of a move in December, the minutes provided the flavour of a Board that is in no hurry to make the next cut. The minutes conclude that “the Board would continue to monitor developments”. It also referred to “having already delivered a substantial monetary stimulus in recent months, there was a case to wait and assess the effects of this stimulus, especially given the long and variable lags”.
Nevertheless, the minutes do not want to leave the reader in any doubt that the Board continues to have a clear easing bias. The minutes concluded that the Board “was prepared to ease monetary policy further if needed” and also noted that “members reviewed the case for a further reduction at the present meeting”.
Some commentaries interpreted the latter remark as indicating that the Board was close to cutting rates at the meeting. However, my view is that it was used to emphasise a strong easing bias, particularly aimed at containing any upward drift in the AUD rather than any serious risk of an unexpected move in November.
The second important issue around the policy outlook is the “effective lower bound” (ELB) of the cash rate. Westpac has argued since July that the ELB will prove to be 0.50% and will be reached in February 2020. One factor that has been important to our thinking has been the response of the Westpac-MI Consumer Sentiment index to the rate cuts that began in June 2019. The index has been on a clear downward trend ( see Figure 1) since that first cut and the Board has recognised that by noting that “a further reduction in interest rates could have a different effect on confidence than in the past”. Put another way, the Board “recognised the negative effects of lower interest rates on savers and confidence”.
There are two elements to this downward pressure on confidence through these recent cuts; firstly the impact on consumers of the explanation behind very low rates and, secondly, the media coverage around the banks’ responses to ultra-low rates.
In that regard, the Board was informed that it appears that banks still have adequate scope to pass on future rate cuts. The minutes noted that “while close to a quarter of deposits were estimated to be earning interest at rates between 0-50bps, most deposits earned interest at rates over 1%”. The RBA reports that banks’ response to the cumulative 75bp reduction in the cash rate was to lower interest on at-call retail deposits by an average of 60-70bps.
As noted above, this reduction in deposit rates is affecting the confidence of savers, whereas the data also showed that borrowers had been repaying existing loans at a faster pace. This observation puts one of the most important channels of monetary policy, a boost to spending from the increased cash flows of borrowers, at some risk.
<a href="https://www.rba.gov.au/monetary-policy/rba-board-minutes/2019/2019-11-05" target="_blank">Read full report </a><a href="https://westpaciq.westpac.com.au/wibiqauthoring/_uploads/file/Australia/2019/November/er20191122BullRBADecemberOnHold.pdf" target="_blank">'RBA December on hold' (PDF 129kb)</a><a href="https://www.rba.gov.au/monetary-policy/rba-board-minutes/2019/2019-11-05" target="_blank"> </a>
<div>
BILL EVANS is Chief Economist for Westpac
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Ideas for unconventional monetary policy: Bill Evans

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EXPERT OBSERVER 
In last week’s note we opined that the Effective Lower Bound (ELB) for the RBA’s cash rate is 0.5% which we expected to be reached in February next year.
After that point we argued that the RBA would assess that the benefits to the currency and household cash flows from further cuts were likely to be offset by unintended consequences such as a negative impact on confidence of very low rates, financial instability, and a lowering of inflationary expectations as agents associated ultra-low rates with falling inflation.
We pointed out that our forecasts indicate that by that time, it seemed unlikely that the RBA would be satisfied that the economy was moving towards full employment, its potential growth rate, and inflation within the 2–3% band.
The RBA would also be concerned that with inflation still stuck below 2% and acknowledging that no further monetary policy action would be forthcoming, this would also encourage falling inflationary expectations as agents would sense that the RBA had run out of options.
Another risk in these circumstances might be that traders would also choose to bid up the AUD in the context of a dormant central bank.
Such a time might be appropriate for the Bank to consider unconventional monetary policies.
The Governor has publicly dismissed negative interest rates as an option but has indicated that, were the RBA to embark on a course of unconventional monetary policy, an asset purchase program would be the most likely policy option.
These programs have been used in other jurisdictions over the period 2008 to 2017.
Between 2008 and 2012 the programs were aimed at addressing disruptions in liquidity in the financial markets. They covered intervention in public sector bonds, commercial paper, agency debt, agency Mortgage Backed Securities, corporate bonds, and bank covered bonds.
From that point on, programs were aimed explicitly at monetary accommodation (with the Fed’s 2019 purchase plan to address overnight funding market issues).
In Australia’s current circumstances, given that Australian banks are flush with liquidity, any action from the RBA would be directed at monetary accommodation.
Read the full report: <a href="https://westpaciq.westpac.com.au/wibiqauthoring/_uploads/file/Australia/2019/October/er20191025BullQEStrategy.pdf" target="_blank">'RBA options for QE Strategy' (PDF 144kb)</a>
BILL EVANS is the Chief Economist at Westpac
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Options for effective Quantitative Easing strategy for the RBA: Bill Evans

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GUEST OBSERVATION
The bipartisan parliamentary vote to transform the A$3.9 billion Building Australia Fund into a pot of cash to drought-proof Australia, the <a href="https://www.farmonline.com.au/story/6287475/future-drought-fund-to-pass-final-hurdle-in-parliament/" target="_blank">Future Drought Fund</a>, should not be taken as universal endorsement.
Labor opposed the idea before caving in, saying it did not “<a href="https://www.canberratimes.com.au/story/6288761/drought-proofing-fund-to-pass-parliament/?cs=14231" target="_blank">want to be painted as a party that opposes support for farmers</a>”.
Rather, it simply shows that Australian politicians coalesce on some things: few miss the opportunity to be photographed with an affectionate child, and even fewer are willing to be critical of public funds being handed to drought-stricken farmers.
But support for something (or feeling too scared not to oppose something), doesn’t necessarily make it the right policy.
Australian governments have sought to drought-proof parts of inland Australia through publicly funded irrigation schemes for much of the past century.
Whenever dryland farmers experienced drought, they were viewed as having experienced a natural disaster, even though the variability of dryland rains was well understood.
Then, from the 1960s, things changed.
First there was a growing realisation that public monies spent on irrigation were not the best means of dealing with a variable climate.
We’ve moved away from thinking about drought as disaster
Second, governments started to describe drought differently, culminating in a 1992 National Drought Policy that required farmers to be more self-reliant and absorb the impacts of drought as something to be expected.
The decades that followed continued this trend with all states and the Commonwealth agreeing on national principles in 2013. Concessional loans and a farm management deposit scheme with taxation advantages were available to help farmers, but would only be useful to those that were viable in the long term.
A <a href="https://www.humanservices.gov.au/individuals/services/centrelink/farm-household-allowance/how-much-you-can-get" target="_blank">Farm Household Allowance</a>, set at the level of Newstart and available for up to four years in return for setting out a plan to improve the farmer’s financial circumstances, was also introduced in 2015 and refined in 2018.
Part of the thinking was that climate change is expected to make droughts more common and severe, although there are good reasons for encouraging adaptation to the existing climate in any case.
However, getting the balance right between “supporting” farm businesses and encouraging them to adapt and be self-reliant isn’t straightforward, especially when the climate and political cycles coincide.
It’s hard to imagine politicians being fiscally prudent when they know they have access to a drought slush fund and are heading into an election during a drying phase.
So, what’s wrong with the new drought fund?
First, there is mounting evidence that farm businesses can actually benefit from drought in the longer term. This seems to occur because businesses that go through a drought develop coping strategies that when invoked in good years produce much greater profits.
That is not to say that droughts are financially a good thing – but it does mean that shielding farm businesses from drought runs the risk that they will not adapt.
Second, an obsession with drought undoes much of the good work done in reclassifying it as something to be expected rather than a natural disaster. Nearly all of the natural disaster payments made in the decade leading up to 2012-13 – one of the driest on record – were spent on rebuilding after floods and storms rather than droughts.
Third, while repurposing the Building Australia Fund as the Future Drought Fund is designed to appeal to rural and regional voters, it is unlikely to help them. Agriculture simply does not generate the jobs that it once did and public pronouncements about drought-proofing will not change the underlying economics of farm businesses and regional communities.
Farming is generally helped by scale, and that means bigger farms with bigger machines displacing smaller farms. The upshot is fewer jobs and the shutdown of small towns, allowing only the larger regional centres to survive. Finding ways to manage this social phenomenon should be the priority rather than shielding farms from drought.
But it’s hard to be optimistic. Politicians love handing cheques to farmers as much as they love photographs with adoring children.<img src="https://counter.theconversation.com/content/121744/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;">
Lin Crase, Professor of Economics and Head of School, University of South Australia.
This article is republished from <a href="http://theconversation.com" target="_blank">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/just-because-both-sides-support-drought-relief-doesnt-mean-its-right-121744" target="_blank">original article</a>.
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Just because both sides support drought relief, doesn’t mean it’s right: Lin Crase

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EXPERT OBSERVER
The minutes of the Reserve Bank Board meeting for August have provided one significant surprise.
In both the Governor's decision statement following the meeting and the Statement on Monetary Policy( similar version), the conclusion included "the Board would continue to monitor developments in the labour market closely and adjust monetary policy if needed to support sustainable growth in the economy and the achievement of the inflation target over time".
In these minutes, the emphasis has changed to the following "the Board judged it appropriate to assess developments in the global and domestic economies before considering further change in the setting of monetary policy. Members would consider a further easing of monetary policy if the accumulation of additional evidence suggests this was needed to support sustainable growth in the economy and the achievement of the inflation target over time".
So the message here is that policy could be eased in response to an unexpected deterioration in the global economy without the labour market providing an adequate justification for a rate cut.
Clearly, the Board has become more concerned about the global outlook: "trade and technology disputes had increased the downside risks to the global outlook", "uncertainty around trade policy had already had a negative effect on investment in many economies", and "a number of central banks had reduced interest rates this year and further monetary easing was widely expected".
This is not to say that concerns around the labour market have eased. As we observed with the increase in the RBA's unemployment forecasts and the downward revision to wage growth forecasts, the Board has noted: "there appeared to have been more spare capacity in the labour market than previously appreciated", and there is "a more subdued outlook for wages than three months earlier".
There appears to be a somewhat positive spin on the outlook for the real economy: "Although, the outlook for consumption remained uncertain, the risks around the outlook were more balanced than they had been for some time", "evidence that conditions in housing markets were showing signs of a turnaround had strengthened in July", and "signs of a turnaround in housing markets suggested there were some upside risks to dwelling investment later in the forecast period".
This commentary is consistent with the growth forecasts which anticipate GDP growth lifting from 2½ per cent in 2019 to 2¾ per cent in 2020. Westpac's forecasts are for 2.25% in 2019 and 2.5% in 2020. However, Westpac sees the clear downside risks to these forecasts coming from global developments, and it appears that the RBA Board is harbouring similar concerns.
As we saw in the Governor's testimony to the parliamentary economic committee, the Board has been briefed on unconventional monetary policy measures. The minutes cover the various measures that have been adopted overseas, but correctly qualify the assessment since "full evaluation could not been undertaken as many of these measures were yet to be unwound". It also noted that "effectiveness depended upon the specific circumstances and the nature of the financial system".
As we saw in the Governor's testimony, at this stage the Board seems to favour purchasing government bonds which were expected to flow through to lower interest rates for private borrowers. It also noted that "a package of measures tended to be more effective than measures implemented in isolation".
Conclusion
We do not think that after emphasising the labour market as the key factor for policy in the May, June and July minutes, the importance of the labour is in any way diluted. However, as a small open economy, a responsible central bank could not be seen to dissociate policy from global developments given the alarming signals around the world economy.
It is also important to be clear that the forecasts in the Statement on Monetary Policy, on which these minutes are based, assume market pricing for the cash rate path. At the time of the forecasts, the market pricing discounted two further rate cuts — one by the "end of this year", and a second in the "first half of 2020".
Despite this rate path, the forecasts indicate a lower profile for wages growth (reaching only 2.4% in 2021), an increase in the unemployment rate forecast (from 5% to 5.2% in December 2020), and the trimmed inflation rate forecast now below 2% by end 2020 (at 1.9%). These forecasts indicate that despite two more rate cuts, the RBA still does not expect the unemployment rate to go remotely close to its stated desired 4.5% over the forecast horizon, or reach the 2-3% target band for inflation before 2021.
Consequently, we remain comfortable with our forecast that the RBA will next cut the cash rate in October by 25bps and wait until early 2020 (February) for the second cut of 25bps.
BILL EVANS is Westpac's Chief Economist
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Reserve Bank Board highlights global risks for policy: Bill Evans

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EXPERT OBSERVER
Some might be forgiven for thinking the wheels have fallen off Australian politics over the past decade with the same number of PM changes as Italy, a fractured Senate and “minority government” at times making sensible visionary long-term policy making hard.
With the May 18 Federal Election offering a starker than normal choice political uncertainty may see another leg up. Polls give Labor a clear lead, albeit it’s narrowed a bit.
There is anecdotal evidence that uncertainty around elections causes households and businesses to put some spending decisions on hold - the longer the campaign the greater the risk.
Fortunately, this time around it’s a relatively short campaign at five weeks. However, hard evidence regarding the impact of elections on economic indicators is mixed and there is no clear evidence that election uncertainty effects economic growth in election years as a whole.
In fact, since 1980 economic growth through election years averaged 3.6% which is greater than average growth of 3.1% over the period as a whole. In terms of the share market, there is some evidence of it tracking sideways in the run up to elections, which may be because investors don’t like the uncertainty associated with the prospect of a change in policies.
The next chart shows Australian share prices from one year prior to six months after federal elections since 1983.
This is shown as an average for all elections (but excludes the 1987 and 2007 elections given the global share crash in late 1987 and the start of the global financial crisis (GFC) in 2007), and the periods around the 1983 and 2007 elections, which saw a change of government to Labor, and the 1996 and 2013 elections, which saw a change of government to the Coalition.
The chart suggests some evidence of a period of flat lining in the run up to elections, possibly reflecting investor uncertainty, followed by a relief rally.
IMG
However, the elections resulting in a change of government have seen a mixed picture. Shares rose sharply after the 1983 Labor victory but fell sharply after the 2007 Labor win, with global developments playing a role in both.
After the 1996 and 2013 Coalition victories shares were flat to down.
So based on historical experience it’s not obvious that a victory by any one party is best for shares in the immediate aftermath, and historically the impact of swings in global shares arguably played a bigger role than the outcomes of federal elections.
The next table shows that 9 out of the 13 elections since 1983 saw shares up 3 months later with an average gain of 4.8%.
IMG
The next chart shows the same analysis for the Australian dollar. In the six months prior to Federal elections there is some evidence the $A experiences a period of softness and choppiness, which is consistent with policy uncertainty, but the magnitude of change is small. On average, the $A has drifted sideways to down slightly after elections
IMG
Political parties and shares
Over the post-war period shares have returned 12.7% pa under Coalition governments and 10.7% pa under Labor governments. It may be argued that the Labor governments led by Whitlam in the 1970s and Rudd and Gillard more recently had the misfortune of severe global bear markets and, if these periods are excluded, the Labor average obviously rises to 15.8% pa, although that may be taking things a bit too far.
But certainly, the Hawke/Keating government defied conventional perceptions that conservative governments are always better for shares. Over the Hawke/Keating period from 1983 to 1996 Australian shares returned 17.3% pa, the strongest pace for any post-war Australian government.
Once in government, political parties are usually forced to adopt sensible macro-economic policies if they wish to ensure rising living standards and arguably there has been broad consensus on both sides of politics in recent decades regarding key macroeconomic fundamentals – eg, low inflation and free markets.
Policy differences starker than since the 1970s However, after narrowing in the 80s and 90s with the rationalist reform oriented agenda kicked off by Hawke and Keating, in recent years the policy differences between the Coalition and Labor have been intensifying again to the point that they are now arguably starker than they have been since the 1970s (when there used to be more of a focus around “class warfare”).
In part this is consistent with rising interest in populist policies globally which in turn reflects angst over low wages growth, widening inequality, globalisation and automation. Each side of politics is now offering very different visions on the role and size of government. And so the policy uncertainty around this election is greater than usual.
The Coalition is focused on containing government spending and encouraging economic growth via infrastructure spending, significant personal tax cuts (to return bracket creep and cap taxation revenue at its long term high of around 24% of GDP) and mild economic reforms.
By contrast Labor is focused on spending more on health and education and in the process allowing the size of the public sector to increase.
This is proposed to be funded by “tax increases” including: 
<ul>
<li>cancelling the Coalition’s middle and upper income personal tax cuts scheduled for next decade and reimposing the 2% Deficit Repair Levy on incomes above $180,000;</li>
<li>restricting negative gearing to new residential property (and no other assets) and halving the capital gains tax discount from January 1 2020; </li>
<li>stopping cash refunds for excess franking credits; and </li>
<li>a 30% tax rate on distributions from discretionary trusts; It’s not proposing to spend all the extra revenue this will raise with some earmarked for higher budget surpluses (ie paying down public debt).</li>
</ul>
It’s also promising a sharp lift in the minimum wage towards being a “living wage”, some labour market re-regulation, far more aggressive climate policy (with a 45% reduction in emissions on 2005 levels by 2030, which is almost double the Coalition’s policy) and in relation to superannuation key changes are likely to include a resumption of the increase in the Super Guarantee, lower non-concessional contributions and a lower income threshold for the application of the 30% tax rate on super contributions.
Intervention in the economy is likely to be higher under a Labor government. Perceptions that a more left leaning Labor government will mean bigger government, more regulation and higher taxes and hence act as a drag on productivity and be less business friendly may contribute to more nervousness in shares and the $A than usual around this election.
More specifically there are a number of risks:
<ul>
<li>There is a danger that relying on tax hikes on the “top end of town” will dampen incentive in that Australia’s top marginal tax rate of 47% is already high – particularly compared to our neighbours: 33% in NZ; 20% in Singapore; and 15% in HK. Australia’s income tax system is already highly progressive: 1% of taxpayers pay 17% of the total personal income tax take (with an average tax rate of 42%) &amp; the top 10% pay 45% of tax compared to the bottom 50% who pay around 12% (with an average tax rate around 11%). </li>
<li>The proposed changes to franking credits even though they only impact around 8% of taxpayers are potentially a negative for stocks with high-franked dividends. </li>
<li>The proposed changes to capital gains tax and negative gearing have been estimated to cause a 5 to 12% decline in home prices &amp; a boost to rents of 7 to 12%. This is risky as the property market is already weak. This could further impact construction/property stocks, banks &amp; retail shares.</li>
<li>Higher minimum wages and some labour market reregulation risk higher unemployment, a less flexible labour market and are a negative for hospitality and retail stocks. </li>
<li>The focus on economic reform needed to boost productivity looks to have fallen by the wayside in the face of populism – eg, why aren’t we considering injecting more competition into the health sector along with spending more on it?</li>
</ul>
That said there are some offsets in relation to ALP policies that investors need to allow for: 
<ul>
<li>Some ALP policies may not pass the Senate, including those around negative gearing and repealing the middle &amp; upper income tax cuts that have already passed into law.</li>
<li>Labor is planning bigger budget surpluses which is positive.</li>
<li>Labor policies encouraging “build to rent/affordable housing” are positive, but it’s unclear how much impact they will have.</li>
<li>Labor policies focussed on greater spending and tax cuts more targeted to lower saving low income earners may provide more of a short-term boost to economic growth.</li>
<li>Labor has a track record of taking sensible advice &amp; responding quickly to help the economy in a crisis (think 1983 and in the GFC). In the short term, this could include a First Home Buyer grant to mute the property downturn.</li>
</ul>
Concluding comment:
The now wider left right divide in Australian politics suggests greater uncertainty going into this election potentially affecting all asset Australian classes. But the bigger concern is the dwindling prospects for productivity enhancing reform, which could be an ongoing dampener on growth in living standards.
DR SHANE OLIVER is the Head of Investment Strategy and Chief Economist for AMP Capital
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The 2019 Australian Federal election and investors: Shane Oliver

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GUEST OBSERVATION
Rural and regional Australia is a big place – too big to be contained in one rural policy or represented by a single political party.
Several features of contemporary rural and regional Australia stand out, though, as deserving of serious policy attention.
The Indigenous estate
Indigenous peoples are among rural and regional Australia’s largest landholders. <a href="http://www.nntt.gov.au/Maps/Determinations_map.pdf" target="_blank">Native title rights are recognised</a> on more than 37% of the Australian landmass. Exclusive possession native title applies to around 13%. Both these numbers will grow.
The cultural and social significance of the Indigenous estate is immense. So too is its economic significance. Aboriginal and Torres Strait Islander enterprises are active in agriculture, mining, infrastructure development, land and water management, and protected area management.
Governments have taken some positive steps to assist Indigenous enterprise. Changing procurement policy to encourage local suppliers is an excellent example. This must be seen in the context, however, of the missteps of the <a href="https://www.anao.gov.au/work/performance-audit/indigenous-advancement-strategy" target="_blank">Indigenous Advancement Strategy</a> and failure to engage with the <a href="https://www.1voiceuluru.org/what-happened-next/" target="_blank">Uluru Statement from the Heart</a>.
Respecting Aboriginal and Torres Strait Islander aspirations for sovereignty and “closing the gap” on health, safety, education and employment are not mutually exclusive. Indeed, finance, insurance and business models that are relevant to the collective and enduring nature of native title rights will go a long way towards realising the economic potential of the Indigenous estate.
<a href="https://images.theconversation.com/files/258446/original/file-20190212-174857-qdk0nc.PNG?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img src="https://images.theconversation.com/files/258446/original/file-20190212-174857-qdk0nc.PNG?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt=""></a>
Native Title determinations as at December 31 2018. Native Title exists in green areas (darker green denotes exclusive title) and does not exist in brown areas (lighter brown denotes title extinguished). <a class="source" href="http://www.nntt.gov.au/Maps/Determinations_map.pdf" target="_blank">National Native Title Tribunal</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/" target="_blank">CC BY</a>
New labour markets
Agriculture, mining and other resources industries contribute mightily to Australia’s GDP. Yet their contribution to employment is comparatively small.
In 2016, agriculture, forestry and fishing accounted for 215,601 <a href="https://profile.id.com.au/australia/industries?EndYear=2006&amp;DataType=UR&amp;WebID=245" target="_blank">jobs in regional Australia</a>. Mining provided 102,639 jobs. By contrast, health care and social assistance provided 445,087 jobs, retail 341,190, construction 292,279, education and training 291,902 and accommodation and food services 253,501.
Health care and social assistance and education and training contributed more new regional jobs over the last decade than any other industry.
This is not about commodity price cycles and their short-term impact on labour demand. It is about the relentless substitution of labour with technology as business owners strive to lift productivity and lower costs. Advances in automation and telecommunications will accelerate this trend.
The policy imperative is not to ignore resource industries or the workers who depend on them, but to face up to structural change in the labour market.
It is not unreasonable for regions hit by job losses following mine or plant closures to look for new projects to fill the void. But it is important to recognise that fewer jobs will be on offer in the resources industries. And these jobs will require higher levels of skills and training.
Maintaining high employment across non-metropolitan regions will depend, ultimately, on continued growth in other industries.
Climate action
In the land of drought and flooding rain, climate variability is a given.
Managing for that variability is something we need to do better, even before taking climate change into account. The South Australian <a href="https://www.mdbrc.sa.gov.au/sites/default/files/murray-darling-basin-royal-commission-report.pdf?v=1548898371" target="_blank">Murray-Darling Basin Royal Commission into water use</a> shows that political commitment to cross-border cooperation and the maintenance of environmental flows is fragile.
What evidence we do have on rural and regional Australians’ beliefs about climate change suggests uncertainty and lack of trust in government are <a href="https://doi.org/10.1080/08941920.2012.686650" target="_blank">more prevalent than outright denial</a>. A <a href="https://www.propertyobserver.com.au/https://journals.sagepub.com/doi/pdf/10.1177/0963662512449948" target="_blank">precautionary approach</a> to climate is favoured over business as usual.
Why a precautionary approach? Because <a href="https://acola.org.au/wp/PDF/SAF07/social%20and%20political%20context.pdf" target="_blank">failure to act on climate presents a number of risks</a>. These include:
<ul>
<li>reduced market access for regions and industry sectors not seen to be reducing emissions</li>
<li>failure to develop cost-effective and industry-specific technologies for reducing greenhouse gas emissions</li>
<li>lost opportunities to develop markets in carbon sequestration</li>
<li>escalating economic and social impacts on rural and regional communities as climate variability increases.</li>
</ul>
Importantly, only the last of these risks is actually contingent on climate change.
Transition planning
The sustainability challenges facing rural and regional Australia are not solely environmental.
In the 21st century, industries require stable, high-speed telecommunications infrastructure. That’s no less true of agriculture and mining than it is of tech start-ups and e-retailers. Unfortunately, the <a href="https://theconversation.com/will-australias-digital-divide-fast-for-the-city-slow-in-the-country-ever-be-bridged-60635" target="_blank">digital divide</a> between urban and rural Australia is a significant constraint on innovation.
The industries of the 21st century also require stable and responsive institutional and governance infrastructure.
The rural politics we see reported in the media looks every bit as polarised and resistant to change as anywhere. Yet Australia’s best rural policies have always been the result of collaborative approaches to planning and innovation.
Landcare and regional natural resource management programs stand out for the positive relationships they have built across the agriculture, conservation, industry and Indigenous sectors.
While federal and state infrastructure funding is critical for the regions, so too is support for integrated and collaborative planning. <a href="https://www.cleangrowthchoices.org/" target="_blank">Place-based approaches</a> are not a panacea but it is always in specific places, and specific communities, that business, services, natural resource management, energy, transport and telecommunications infrastructure, and so on, come together.
Electoral diversity
Social conservatism, support for traditional rural industries and scepticism about climate change are all highly visible in rural politics today.
I have outlined some of the risks arising from climate scepticism, but contemporary social conservatism carries political risks too.
Most obvious is the alienation of voters who do not share these views. They include:
<ul>
<li>
<a href="https://www.farmersforclimateaction.org.au/" target="_blank">farmers</a> who want meaningful action on climate</li>
<li>lifestyle migrants with no historical loyalty to the National Party</li>
<li>young people with more socially progressive attitudes.</li>
</ul>
It is worth remembering that in the plebiscite on marriage equality <a href="http://www.abs.gov.au/ausstats/abs@.nsf/Lookup/by%20Subject/1800.0%7E2017%7EMain%20Features%7EResponse%20map%7E17" target="_blank">most rural and regional electorates took the progressive option and voted yes</a>.
Aboriginal and Torres Strait Islander voters warrant extra attention. <a href="https://www.themonthly.com.au/issue/2012/october/1349327287/marcia-langton/comment-it-s-knockout" target="_blank">Indigenous voters have swung elections in the Northern Territory</a> with their preference for candidates who respect local leadership and priorities over traditional party allegiances and ideologies. Candidates for any seat with a large Indigenous population ignore these voters at their peril. As the <a href="https://aec.gov.au/Indigenous/" target="_blank">Australia Electoral Commission</a> works to lift the Indigenous vote, this influence will grow.
In sum, the issues that matter to rural and regional Australians are far more diverse than those discussed here. Many will disagree with how I have represented one or other issue. That, really, is the point.<img src="https://counter.theconversation.com/content/110971/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;">
Stewart Lockie, Director, The Cairns Institute, James Cook University
This article is republished from <a href="http://theconversation.com" target="_blank">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/people-and-issues-outside-our-big-cities-are-diverse-but-these-priorities-stand-out-110971" target="_blank">original article</a>.
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People and issues outside our big cities are diverse, but these priorities stand out: Stewart Lockie

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EXPERT OBSERVER
Taking a blanket approach when implementing major policies unfairly undermines already weak property markets.
Western Australian Treasurer Ben Wyatt complained to the Australian Prudential Regulation Authority (APRA) that lending restrictions introduced across Australia by commercial banks were hurting the Perth property market and wider economy.
The restrictions were introduced to tighten investor lending in Sydney and Melbourne, but the effect has been felt Australia-wide, particularly in the weaker economic states, and Perth prices, which had stabilised, are once again falling.
The WA Treasurer’s complaints were “very unsurprising” but “expected when you apply a blanket approach to reforms across Australia”.
And this will also be one of the unintended consequences of Labor’s proposed changes to negative gearing and capital gains tax which they will introduce if they are elected into power at the upcoming federal election, which is very likely.
Overall the Perth property market had experienced continued weakness in recent years due to poor economic growth following the end of mining boom, a soft job market creating very slow population growth and, in some areas, oversupply of units.
Click here <a href="https://www.propertyobserver.com.au/images/2018/12/19/Perth1.jpg" target="_blank">to enlarge</a>.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/12/19/Perth1.jpg" alt="">
This weakness in the market has been reflected in negative growth for both houses and units over the past five years.
Click here <a href="https://www.propertyobserver.com.au/images/2018/12/19/Perth2.jpg" target="_blank">to enlarge</a>.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/12/19/Perth2.jpg" alt="">
People have been hoping for a few years that the market would reach the bottom but unfortunately this has not been the case.
Its economic growth has only been 0.9 per cent which means, relative to the other states, WA's overall economy is the weakest in Australia.
It was clear that applying a blanket approach across Australia when it came to the implementation of major policies did not work.
RiskWise and WargentAdvisory’s report in June into the Impact Analysis: Negative Gearing, CGT &amp; Australia’s Residential Property Markets clearly demonstrated the impact the proposed changes would have on weaker economies, Perth being one of them.
Every time there is a major policy or strategy introduced the potential consequences of it need to be assessed at the capital city level as well as the regional level (i.e. at the Statistical Area Level 4, or SA4 level), otherwise there will be unintended consequences, as you can’t expect not to have a major impact on weak areas.
The drop in property prices in Perth due to the credit restrictions is a very clear warning sign of what will happen in that property market and other weaker markets (outside Sydney and Melbourne) if a blanket approach for changes to negative gearing and capital gains tax is implemented.
In such cases the government needs to consider measures to boost demand. We identified these in our report and they include such things as further concessions for first home buyers and lifting restrictions for foreign investors in those areas. 
Government at both the state and federal level need to support these weaker markets by devising incentives for them such as increasing infrastructure to boost the economy and job creation and, therefore, population growth.
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