2019 May Newsletter

May is here, and as the weather begins to cool the political climate is heating up. The federal election this weekend bookends a busy period on the national political and economic front which began with the Budget on April 2.

Australian financial markets were surprised by an unexpected fall in inflation. The Consumer Price Index, Australia’s main inflation measure, fell from an annual rate of 1.8 percent to a record low of 1.3 percent in the March quarter. This is well below the Reserve Bank’s 2-3% target and leaves the door open to a cut in official interest rates to stimulate economic growth. The cash rate has been unchanged at a record low of 1.5 percent since August 2016. Australia’s 10-year bond rate is at 10-year lows of 1.78 percent, indicating the market expects slower economic growth.

The Australian dollar fell half a cent on the inflation news and speculation about a rate cut, finishing the month at around 70.5 US cents. But Australian shares jumped to an 11-year high in line with Wall Street where shares hit a record high in response to better-than-expected company profit reports. The news from China was also positive, with economic growth steady at 6.4 percent in the year to March.

The good news is that inflation is now well below average wages growth of 2.3 percent. Australian consumers remain positive on the back of lower prices and a strong jobs market. Unemployment held steady at 5 percent in March, near decade lows, while the ANZ-Roy Morgan consumer confidence index rose to a four-month high in April, before dipping slightly in the final week.

Policy Guide to the 2019 Australian Election

This link from the Guardian provides a quick summary of the Coalition and Labor Parties’ policies around tax, climate change, industrial relations, education, health, immigration, and foreign affairs. We have highlighted below a few items noted in this article.

Tax – One of the key dividing lines between the two main parties, with clear policy differences that affect low- and middle-income earners, housing investors and retirees

Industrial Relations – Most of the policy debate will be about union priorities such as the minimum wage, whether for or against, with less attention on the increasingly casualised workforce and the gig economy.

Liberal 

• Stop employees who were misclassified as casuals from being back-paid entitlements, preventing them “double-dipping” and accessing both the casual loading and entitlements of permanent workers.
• Create a right for casual workers to request permanent full-time or part-time work
• Give the Federal Court power to deregister unions or disqualify officials for repeated or serious breaches of law and introduce a public interest test for union amalgamations
• Prevent enterprise agreements mandating which fund to pay workers’ superannuation into

Labor

• Change the rules the Fair Work Commission uses to set the minimum wage, reverse Sunday and public penalty rate cuts for retail and hospitality workers and prevent labour hire undercutting wages
• Introduce a new gender pay equity objective and lower the bar for making an equal pay order to boost women’s pay
• Amend laws to “improve access to collective bargaining, including where appropriate through multi-employer collective bargaining”
• Abolish specialist union regulators, the Registered Organisations Commission, and the Australian Building and Construction Commission.
• Reintroduce road safety body to set pay and conditions for truck drivers, including owner-driver independent contractors

Education – Any prospect of a bipartisan, long-term approach to school funding has gone, with a return to competing for ad hoc agreements on public, Catholic and independent schools.

Liberal 

• A $4.6bn package for Catholic and independent schools, to come on top of the $23.5bn committed over 10 years by the Turnbull government to provide private schools with 80% of the schools resourcing standard and public schools with 20%.
• A two-year freeze on the growth of funding for a commonwealth supported places in university to save $2bn, with reviews in train about freedom of speech on Australian campuses and performance funding for universities.
• Extend taxpayer funding for 15 hours preschool for four-year-olds until 2021, at a cost of $453m.
• A $525m skills package – of which only $55m is new money in the 2019 budget – including a target of 80,000 new apprenticeships in areas with skills shortages through doubling employer incentive payments and a $2,000 payment to new apprentices.

Labor

• Abandon the funding formula adopted by the Turnbull government which provides non-government schools with 80% of the schools resourcing standard and public schools with 20%.
• Deliver an additional $14bn over 10 years to public schools, with $3.3bn spent in the first three school years of a Labor government, and a further $250m in the first two years to Catholic schools.
• Universal preschool access for three and four-year-olds, with 15 hours a week taxpayer-funded early childhood education at the cost of $1.7bn.
• Increase university places by 200,000 by reversing the freeze on Commonwealth grants.
• A $1bn package for Tafe and vocational education including $200m for facilities, $380m to create 100,000 fee-free places, and $330m to deliver 150,000 apprenticeship subsidies in areas with skills shortages.

Health – Labor’s centrepiece promise of huge investment in cancer treatments has overshadowed all other policy offerings

Liberal 

• A range of new drugs for kidney, bladder, liver and skin cancer will be subsidised by the government. This includes $81.5m for cutting the cost of one drug from $155,000 a year to $40 for each script and breast cancer will be cut from $55,000 a year to $40 a script.
• Additional $461m for a youth mental health and suicide prevention strategy, including $111.3m for another 30 Headspace services, bringing the total number to 145 by 2021, and $152m to reduce wait times across the network.
• Another $5.5m over four years will provide extra mental health services for people in Tasmania, Victoria and Queensland who have been affected by natural disasters.
• $5m over four years to implement suicide prevention initiatives targeted at Aboriginal and Torres Strait Islander people, funded separately from the department of prime minister and cabinet.
• $496m package for medical facilities in Victoria for cancer treatment, hospital infrastructure, mental health services and medical research.
• Indexation of Medicare rebates for about 90% of all diagnostic imaging from July 2020.

Labor

• $2.3bn Medicare cancer plan, including $600m for out of pocket costs on diagnostic imaging and up to 6m free cancer scans funded through Medicare, $433m to fund 3m free consultations with oncologists and surgeons.
• An expected $1bn in future announcements made during the campaign relating to cancer treatment.
• A promise that every drug recommended by experts to be listed on the Pharmaceutical Benefits Scheme will be funded out of general revenue.
• $2.8bn for hospitals, which includes $1bn for emergency departments and new wards and $1.8bn to restore the federal component back to 50-50% with the states, as opposed to the Coalition-imposed current ratio of 45-55%.
• Set up a permanent policy-making body called the Australian HealthReform Commission, similar to the Productivity Commission, with commissioners appointed for five years working with the Council of Australian Governments.
• Restore indexation for Medicare rebates in the first 50 days of a Labor government.
• Cap private health insurance increases to 2% for two years prior to further reforms, as opposed to the current rates of on average 4-5% a year.

Reference: https://www.theguardian.com/australia-news/ng-interactive/2019/apr/15/who-should-i-vote-for-policy-guide-to-the-2019-australian-election

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