Greens Strike Deal With Abbott Government To Abolish Debt Ceiling

With just days to spare before the debt limit needed to be increased, the Australian Greens have struck a deal with the government to abolish the ceiling.

Once labelled “economic fringe-dwellers” by the Coalition, the Greens have stolen a march on the ALP by negotiating a deal that reshapes the debt debate and sidelines the Opposition.

Greens leader Senator Christine Milne told a media conference that the agreement allows for increased parliamentary scrutiny of government debt. An automatic ministerial statement and parliamentary debate will take place whenever a $50 billion increase in debt is undertaken. There is no provision for the parliament to disallow a debt increase. [Read more…]


Greens And Palmer Back GrainCorp Decision; ALP Says Hockey Acts In The Nationals Interest

Treasurer Joe Hockey’s decision to block the ADM takeover of GrainCorp has met with approval from the Greens and Clive Palmer but has been criticised by the ALP as an attack on foreign investment and a capitulation to The Nationals.

Shadow Treasurer Chris Bowen said Hockey had failed his first big test of credibility as Treasurer. He said Hockey had acted not in the national interest but in the interests of The Nationals. “Hockey can be bullied afterall,” Bowen said. [Read more…]


Treasurer Joe Hockey Blocks ADM Takeover Of GrainCorp

The Treasurer, Joe Hockey, has blocked the takeover of GrainCorp by the American company Archer Daniels Midland.

Hockey

Hockey used the power given to him alone as Treasurer to reject the foreign investment application. ADM was seeking to increase its current shareholding of 19.85% to 100%. Hockey said he would permit ADM to hold 24.9%. [Read more…]


The Task Ahead: Joe Hockey Speech To Centre For Independent Studies

The Treasurer, Joe Hockey, has addressed the Centre for Independent Studies on the economic challenges ahead of the new Coalition government.

“We are cleaning up the mess we inherited,” Hockey told his audience.

Hockey [Read more…]


Treasurer And Reserve Bank Issue Statement On Monetary Policy

The Treasurer, Joe Hockey, has issued a joint statement with the Reserve Bank of Australia on monetary policy.

AustraliaHockey said the statement “records our agreed understanding of Australia’s monetary and central banking policy framework.” It reiterates the core place of monetary policy, the importance of the inflation target and the government’s commitment to the independence of the bank.

According to Hockey, the statement recognises “for the first time that the financial strength of the Reserve Bank is important for the credibility of its monetary and banking policy operations, and outlines the Treasurer’s role in ensuring the maintenance of a strong Reserve Bank balance sheet”.

Statement from the Treasurer, Joe Hockey.

Today I am releasing, with the Governor of the Reserve Bank of Australia, a joint Statement on the Conduct of Monetary Policy (the Statement).

The Statement records our agreed understanding of Australia’s monetary and central banking policy framework.

The Statement recognises that monetary policy is one of Australia’s core macroeconomic policy tools and its effective conduct is critical to our economic performance and prospects. [Read more…]


Government Increases Debt Limit, Announces Commission Of Audit

The Abbott government has increased the debt limit from $300 billion to $500 billion and announced a Commission of Audit.

At a press conference in Canberra today, Treasurer Joe Hockey said that Commonwealth Government Securities on issue would reach $379 billion by 2015-16 and that peak debt will now exceed $400 billion.

He said advice from the Australian Office of Financial Management is that “it is prudent to maintain a buffer of $40-60 billion”. The government will legislate to increase the Commonwealth Government debt limit to $500 billion. [Read more…]


Reserve Bank Leaves Interest Rates Unchanged

The Reserve Bank of Australia has left interest rates unchanged after its monthly board meeting today.

The cash rate stays at 2.5%.

It is the first decision on interest rates under the Abbott government.

Statement from Glenn Stevens, Governor of the Reserve Bank of Australia.

At its meeting today, the Board decided to leave the cash rate unchanged at 2.5 per cent.

Recent information is consistent with global growth running a bit below average this year, with reasonable prospects of a pick-up next year. Commodity prices have declined from their peaks, but generally remain at high levels by historical standards. Inflation in most countries remains well contained.

Overall, global financial conditions remain very accommodative. Changes in the outlook for US monetary policy have increased volatility in financial markets, but long-term interest rates remain very low and there is ample funding available for creditworthy borrowers.

In Australia, the economy has been growing a bit below trend over the past year. This is expected to continue in the near term as the economy adjusts to lower levels of mining investment. The unemployment rate has edged higher. There has been an improvement in indicators of household and business sentiment recently, though it is too soon to judge how persistent this will be. Inflation has been consistent with the medium-term target. With growth in labour costs moderating, this is expected to remain the case over the next one to two years, even with the effects of the lower exchange rate.

The easing in monetary policy since late 2011 has supported interest-sensitive spending and asset values. The full effects of these decisions are still coming through, and will be for a while yet. The pace of borrowing has remained relatively subdued to date, though recently there have been signs of increased demand for finance by households. There is also continuing evidence of a shift in savers’ behaviour in response to declining returns on low-risk assets.

The Australian dollar rose recently, but is still about 10 per cent below its level in April. A lower level of the currency than seen at present would assist in rebalancing growth in the economy.

At today’s meeting, the Board judged that the setting of monetary policy remained appropriate. The Board will continue to assess the outlook and adjust policy as needed to foster sustainable growth in demand and inflation outcomes consistent with the target.