PM UPBEAT ON ECONOMY; RATES HOLD
PM Morrison buoyant on national economy
Prime Minister Scott Morrison has opened the 2022 election year on an optimistic note, predicting the lowest unemployment rate for almost 50 years. In an address to the National Press Club in Canberra, the PM said the Government was seeking to reduce the jobless rate to less than four per cent by the end of the year. He said future consumer spending would be boosted by an estimated $245 billion in additional savings on Australian household balance sheets since the start of Covid-19.
RBA moves to quell interest rate fears
Meanwhile, Reserve Bank Governor Philip Lowe has stood his ground on prospects of a rise in interest rates, repeating that the RBA Board would not raise the cash rate until inflation was sustainably within the 2-3 per cent range. In a National Press Club address in Sydney, Dr Lowe said that a 32 per cent increase in petrol prices and a 7.5 per cent increase in house construction costs had contributed to a headline CPI inflation rate in Australia of 3.5 per cent. But he expected underlying inflation to be around 2.75 per cent over 2022 and 2023.
$2.2 billion for university commercialisation plan
The Federal Government is to invest $2.2 billion to promote university research commercial projects aligned with national manufacturing priorities. Acting Education and Youth Minister Stuart Robert and Industry Minister Angus Taylor said the package included $1.6 billion in competitive funding to help universities bridge funding gaps along the path to commercialisation. Almost $300 million would be allocated over 10 years towards 1,800 industry PhDs and more than 800 Fellows.
New incentive to attract working holiday makers
In a bid to alleviate worker shortages, the Federal Government is stepping up its campaign to attract working holiday makers and international students. Trade Minister Dan Tehan and Immigration Minister Alex Hawke said the Government would refund the visa application charge for certain working holiday visa holders who arrived between January 19 and April 19, 2022. Fully-vaccinated international students who arrived over the same period could also have their $630 visa application fee rebated. The two ministers said the changes would help to ease worker shortages confronting businesses in tourism, hospitality and other sectors.
Retail trade stumbles in December
A late-year resurgence in Covid-19 case numbers has tripped up consumer expenditure, with retail turnover falling 4.4 per cent month-on-month, seasonally adjusted, in December. Figures from the Australian Bureau of Statistics show the reversal in retail trade followed three months of growth in spring, including 7.3 per cent growth in November. Department stores suffered the biggest fall in turnover, down 21 per cent, with only food retailing recording growth. All states and territories apart from Northern Territory experienced falls in retail turnover, led by Victoria, reversing by 8.4 per cent for December.
Budget deficit falling
Finance Minister Senator Simon Birmingham has reported further improvements in the Budget bottom line for the first half of 2021-22. Figures released by the Department of Finance show the underlying cash balance (deficit) at -$37.3 billion, an $8.5 billion improvement on the half-year estimate provided in the Government’s official mid-year update in December. On this basis, the final year budget deficit will fall well below the $106 billion deficit projected in the May 2021 Budget. Half-year receipts were tracking $6.6 billion ahead of projections, while payments were down by $1.9 billion.
Imports recovering as trade surplus falls
Australia’s trade surplus fell $1.4 billion to $8.3 billion in December, driven by a rise in importation of non-industrial transport equipment. Australian Bureau of Statistics figures show that while exports rose one per cent, driven by a jump in mineral exports, imports rose five per cent. Consumption goods imports rose by eight per cent, while importation of services (such as in transport) continued to rise steadily, after plunging at the outbreak of coronavirus in March 2020.