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Welcome to QETA Newsletter 7 2016.
Every economy exists, no matter what the level of democracy, has elements of crony capitalism. It's given human nature and given the democratic structures, which we all, I assume, adhere to, that is an
inevitable consequence. - Alan Greenspan
The most insidious thing about trickle-down economics is not the claim that if the rich get richer, everyone
is better off. It is the claim made by those who oppose any increase in the minimum wage that if the poor
get richer, that will be bad for the economy. This is nonsense. - Nick Hanauer
QETA 2016 CALENDAR OF EVENTS
31 March
11 April
21 May
11 July
14 July
22 July
25-29 July
25-29 July
12 September
3 October
12 October
Final date for discounted memberships
Econopak 1 Published
QETA Conference – Brisbane Girls Grammar School
Econopak 2 Published
UQ Student Day
QUT Student Day
UQ Student Economics Competition
Economics Week
UQ Student Economics Competition Presentation of Prizes
Econopak 3 Published
AGM
QETA NEWS
1. QETA CONFERENCE
Later today you will receive the Conference Flyer with speaker details, how to register and all other
necessary details. It promises to be a very good Conference and essential for Economics teachers as it will
see the release of the draft Economics syllabus that is currently being written to cater for External
Assessment in Economics, and the opportunity to give feedback as well via a workshop. Our keynote
speaker will be Peter Munckton, Senior Economic Analyst for the Bank of Queensland. We will also have
Sam Bool from Uber and Sam Clark from The Bog Issue as speakers as well, along with some teachers of
Economics in Queensland.
Conference is 21st May, so start planning to attend now if you haven’t already done so! We already have a
number of registrations and we hope for many more yet. To register, go to www.qeta.com.au and follow
the steps from the home page!
2. QETA CONFERENCE TRAVEL AWARD
Congratulations to Michelle Binney from Whitsunday Anglican School in Mackay for gaining a Travel Award
to enable her to attend the State Conference. The Award covers airfare and accommodation and assists
our rural and regional members to attend Conference.
PROFESSIONAL LEARNING
QUEDREX
Over the past eight years, thousands of education professionals have attended the QUEDREX event in
Brisbane. If you have not had a chance to visit yet, make sure you come this year and check it out!
QUEDREX is a unique event in Queensland giving visitors access to  The latest resources, products and services in the Education sector
 Free seminar and workshop program




Chance to claim CPD hours
Get your Certificate of attendance at the event
Special offers and discounts ONLY available to QUEDREX visitors
Chance to win prizes including an iPad Air
It’s free!
https://register.eventarc.com/32671/queensland-education-resources-expo-quedrex-2016
RESOURCES
1. FROM THE FEDERAL TREASURY
National Innovation and Science Agenda – Increasing access to company losses
As part of its National Innovation and Science Agenda, the Government has developed draft legislation to
implement a measure that will allow businesses that have changed ownership to access past year tax
losses if they satisfy a similar business test. Under the current law, businesses that have changed
ownership must satisfy the same business test to access past year tax losses. The Government is now
seeking comments on the proposed legislation and the accompanying explanatory memorandum.
Closing date for submissions: Friday, 22 April 2016
Read more
2. FROM THE ABS
5368.0 International Trade in Goods and Services, Australia, Feb 2016
http://www.abs.gov.au/ausstats/[email protected]/mf/5368.0?OpenDocument
3. FROM THE IMF
Decisive Action to Secure Durable Growth; Lecture by Christine Lagarde, IMF Managing Director, at
an event hosted by Bundesbak and Goethe University, Frankfurt, Germany, April 5, 2016
http://www.imf.org/external/np/speeches/2016/040516.htm
IMF Survey : Structural Reforms in Advanced Economies: Pressing Ahead and Doing them Right
With sluggish growth in many advanced economies, now is a good time to make a big push for additional
product and labor market reforms to boost jobs and growth, according to new IMF research.
http://www.imf.org/external/pubs/ft/survey/so/2016/res040616a.htm
4. FROM THE ECONOMIST
America turns against trade
Politicians are not just afraid to champion free trade, they argue against it. In reality, even if the losers
deserve more help, the case for trade is overwhelming
READ MORE >
5. FROM THE RBA
The Reserve Bank of Australia issued the Index of Commodity Prices for March 2016. You can view this
statistical release at:
http://www.rba.gov.au/statistics/frequency/commodity-prices/2016/icp-0316.html
For your information the Reserve Bank of Australia issued the Financial Aggregates for February 2016.
You can view this statistical release at:
www.rba.gov.au/statistics/frequency/fin-agg/2016/fin-agg-0216.html
A speech delivered by Christopher Kent, to the Economic Society of Australia at the University of
Tasmania in Hobart, is available on the Reserve Bank website.
http://www.rba.gov.au/speeches/2016/sp-ag-2016-04-06.html
The Reserve Bank of Australia has released the April 2016 issue of the Chart Pack.You can view the
Chart Pack at:
http://www.rba.gov.au/chart-pack/
6. FROM THE BUSINESS SPECTATOR
Sadly this will be the last Newsletter highlighting some resources from Business Spectator.
This has now become part of The Australian organisation, and access is by subscription only. If
you have found this section useful, you will need to take out a subscription to this site. Go to
http://www.theaustralian.com.au/subscribe/news/1/index.html
29 Mar | 2:40 PM | East Asia Forum
China wants to join the high-income club but that’s inevitably going to involve huge reforms at home and
a major disruption of the existing global system.
Businesses more gloomy: D&B
5 Apr 2016 | 2:37 AM | AAP
Firms are the most pessimistic they have been for two years, signalling slower economic growth
Calculating the true cost of lowering emissions
4 Apr 2016 | 11:08 AM | Keith Orchison
Australia should continue to pursue greenhouse gas abatement, but we need to recognise that it's tougher
for some industries to reduce emissions than others.
Oil prices and the global economy: it’s complicated
1 Apr | 5:00 PM | Obstfeld & Gian Maria Milesi-Ferretti & Rabah Arezki
Abnormally low interest rates in much of the developed world are complicating the relationship between oil
prices and economic growth.
Trade deficit blows out in Feb
5 Apr 2016 | 2:18 PM | John Conroy
Deficit widens to $3.4bn in February after narrowing in previous month, official data shows.
Job vacancies highest in three years
31 Mar 2016 | 2:27 PM | Michael Roddan
Job vacancies in February quarter increase 2.7 per cent, seasonally adjusted.
New home sales slump in Feb
31 Mar 2016 | 1:32 PM | John Conroy
NSW drives decline in detached houses sales in February, HIA survey finds.
ACTU urges higher minimum wage
31 Mar 2016 | 5:43 AM | AAP
Unions to ask Fair Work Commission for pay rise for 1.86 million workers.
Asian economy to grow 5.7%: ADB
30 Mar 2016 | 1:01 PM | Wendy Pugh
Developing Asia’s economic growth forecast to slow to 5.7 per cent in 2016.
Aust dollar drops sharply
8 Apr 2016 | 2:10 PM | AAP
Local currency loses almost one US cent amid concerns over declining construction.
Building activity slips to 13-month low
7 Apr 2016 | 9:38 AM | AAP
AiGroup performance of construction index slumps deeper into contraction territory in March
7. FROM ECONOMY WATCH
IMF Suggests Ways for Australia to Make 80-Fold Return on Its Investment
The International Monetary Fund (IMF) has an enticing suggestion for Australia. If it wants a solid way to
make an 80-fold return on its investment, it needs to invest $1 billion a year on tax breaks for corporate
research and development (R&D). This suggestion was part of a study recently conducted by the IMF.
Read More
U.S. Economy Surges on Higher Incomes, Manufacturing Data
Both incomes and manufacturing activity are growing in America, leading to hopes that the economic
recovery is finally here. Wage growth surged in March as 215,000 new jobs were created in the month,
according to the Bureau of Labor Statistics. While the unemployment rate unexpectedly rose to 5%, jobs
were gained "in retail trade, construction, and health care.”
Read More
World Bank Warns Russia’s Poverty Levels Will Spike This Year
The World Bank has warned that poverty rates in Russia will return to the rates they reached in 2007 as
the nation’s economy continues to contract, inflation rises, and individual purchasing power diminishes.
These conditions underscore the belief, common in the former Soviet nation, that the ordinary people in
Russia are once again bearing the brunt of the nation’s poor economic climate.
Read More
8. FROM TUTOR2U
Challenges of China's economic transition
This China clip from BBC news looks at how China is adapting to the prospect of rebalancing, and the
costs of the process for the...
http://tutor2u.cmail20.com/t/ViewEmail/j/83B9DC7BA95044E2/DBB4D903609C5F7D2438807772DD75D1
China's housing market headache
China’s housing market has been making the news lately and this article in The Economist makes for some
interesting reading. There are a number of issues with the Chinese...
http://tutor2u.cmail20.com/t/ViewEmail/j/83B9DC7BA95044E2/DBB4D903609C5F7D2438807772DD75D1
Japan: Ageing Population Provides a Silver Lining
A great little story here looking at how Japan is starting to make better use of its ageing workforce, with
some of the elderly going back to work. Given the...
http://tutor2u.cmail20.com/t/ViewEmail/j/6626EA39F5700F32/DBB4D903609C5F7D2438807772DD75D1
Economics Development Economics Study Notes
Study notes
Here is a complete listing of the new study notes that we've created to support A Level & IB Economics
students who cover Development Economics in their studies.
http://tutor2u.cmail20.com/t/ViewEmail/j/9B34373F1E7418D3/DBB4D903609C5F7D2438807772DD75D1
Human Development Index (HDI)
Study presentations
This is an updated revision presentation on the Human Development Index
http://tutor2u.cmail20.com/t/ViewEmail/j/C8934E501F8B70F3/DBB4D903609C5F7D2438807772DD75D1
Nokia and the Multiplier Effect
A good piece for students studying the multiplier effect and who wish to look at the way businesses
respond to the competitive environment. We read how Nokia succeeded against Motorola,...
http://tutor2u.cmail20.com/t/ViewEmail/j/4134A0BFD0E9B811/DBB4D903609C5F7D2438807772DD75D1
Inequality breeds protectionism argues Lagarde
In a speech in Germany this week, the Head of the IMF Christine Lagarde has argued that persistently
slow growth and rising inequality are factors encouraging protectionist sentiment. She wants...
http://tutor2u.cmail20.com/t/ViewEmail/j/62041D381E6AA3D9/DBB4D903609C5F7D2438807772DD75D1
Predatory Pricing and Limit Pricing
Study notes
What are the differences between Predatory Pricing and Limit Pricing?
http://tutor2u.cmail20.com/t/ViewEmail/j/62041D381E6AA3D9/DBB4D903609C5F7D2438807772DD75D1
Foreign Direct Investment and Economic Development
Study presentations
Inward FDI flows to developing economies in 2014 reached their highest level at $681 billion with a 2 per
cent rise. Developing economies thus extended their lead in global inflows. China became the...
http://tutor2u.cmail20.com/t/ViewEmail/j/62041D381E6AA3D9/DBB4D903609C5F7D2438807772DD75D1
Migrant Remittances and Economic Development
Study presentations
Remittances are monies sent by people living and working overseas back to their country of origin –
usually sent back to their families. To what extent are remittance inflows an important /...
http://tutor2u.cmail20.com/t/ViewEmail/j/62041D381E6AA3D9/DBB4D903609C5F7D2438807772DD75D1
The Economic Cost of Water Scarcity
A new report from WaterAid highlights the many millions of people who live without access to safe water
and also the disproportionate cost for the poorest communities of paying for...
http://tutor2u.cmail20.com/t/ViewEmail/j/62041D381E6AA3D9/DBB4D903609C5F7D2438807772DD75D1
Barriers to Economic Growth and Development
Study presentations
What are some of the main barriers to economic growth and development?This is a revision presentation
covering examples of barriers ti economic growth and development in emerging and developing...
http://tutor2u.cmail20.com/t/ViewEmail/j/E890FEDEEBDA3AE4/DBB4D903609C5F7D2438807772DD75D1
What is Capital Flight?
Study notes
Capital flight is the uncertain and rapid movement of large sums of money out of a country. The UK
Overseas Development Institute (ODI) defines capital flight as "the outflow of...
http://tutor2u.cmail20.com/t/ViewEmail/j/E890FEDEEBDA3AE4/DBB4D903609C5F7D2438807772DD75D1
Competitiveness and Innovation
Study notes
Why is the rate of innovation important in determining competitiveness?There is a clear causal connection
between the pace of product and process innovation within an economy and (over time)...
http://tutor2u.cmail20.com/t/ViewEmail/j/BC24E8D069A8EF6A/DBB4D903609C5F7D2438807772DD75D1
Competitiveness and Human Capital
Study notes
Why is the quality of human capital so important in determining the competitiveness of an
economy?According to a 2015 IMF report, "returns to research and development and subsequent
innovation depend...
http://tutor2u.cmail20.com/t/ViewEmail/j/BC24E8D069A8EF6A/DBB4D903609C5F7D2438807772DD75D1
Calculation worksheet for Indirect tax and subsidies
Here's a 5 minute worksheet asking students to calculate various elements based upon figures shown in
diagrams for an indirect tax and a subsidy for two normal goods. This would be...
http://tutor2u.cmail20.com/t/ViewEmail/j/BC24E8D069A8EF6A/DBB4D903609C5F7D2438807772DD75D1
Revision Presentation: Competitiveness in the Global Economy
Study presentations
This is a revision presentation covering some of the key factors that affect competitiveness of countries in
the global economy and also an assessment of demand and supply-side policies that...
http://tutor2u.cmail20.com/t/ViewEmail/j/BC24E8D069A8EF6A/DBB4D903609C5F7D2438807772DD75D1
9. FROM TED
"I want you to reimagine how life is organized on earth," says global strategist Parag Khanna. As our
expanding cities grow more connected through communications networks, we are evolving past our
tradirional geographical boundaries. Khanna asks us to embrace a new maxim for the future:
"Connectivity is destiny." Watch »
10. FROM FED BAMK OF ST. LOUIS
Stock Market Strategies: Are You an Active or Passive Investor?
Stock market mutual funds offer investors diversified stock market portfolios, but there are several types.
Actively managed funds attempt to "beat" the market by using research, forecasts, and judgment to pick
stocks with the best growth prospects. Passively managed funds attempt to replicate the market by
buying a representative sample of the stocks on a specific stock market index. Which to choose? The April
issue of Page One Economics explains the efficient market hypothesis and how it might influence your
investment decisions.
11. FROM ASIC MONEYSMART
Australia's unclaimed millions
There's $1.2 billion in lost bank accounts, shares and life insurance. Use our unclaimed money search to
find out if any of it is yours.
Credit report repair
How to check and correct a wrong listing on your credit report.
Mortgage stress
If your home loan repayments are giving you sleepless nights here's what you can do.
Making every cent count
Our top tips on how to manage on a low income.
12. FROM THE WORLD BANK
Jim Yong Kim: Development in a Time of Global Interdependence
The World Bank Group president said the world’s powers need to pay far greater attention to boosting
developing economies and creating jobs in the most fragile countries. Speaking from Berlin, Kim noted
that inclusive economic growth and reducing extreme poverty are critical to helping avoid an even greater
refugee crisis in the coming years. Read More »
Replay Webcast | Speech
13. FROM AUSTRALIA INDUSTRY GROUP
AUSTRALIAN ECONOMIC DEVELOPMENTS
This week the Ai Group Australian Performance of Manufacturing Index (Australian PMI®) for March 2016
moved to 58.1 points, its highest level since 2004. This indicates a stronger recovery is occurring in parts
of manufacturing. Elsewhere in the industrial sectors however, engineering construction activity continues
to shrink, as major resources-related construction projects reach completion. General investment in
housing and in businesses continues at a modest pace, as indicated by steady growth in housing credit
and stronger business credit growth in February.
MANUFACTURING RECOVERY GATHERS PACE, EXPORTS SURGE AHEAD
The Australian Industry Group’s Australian Performance of Manufacturing Index (Australian PMI®) surged
to 58.1 points in March, its highest level since April 2004 and a ninth straight month of expansion. This
was the longest run of expansion for the Australian PMI® since 2006.
Growth in production, sales, employment, exports and new orders boosted manufacturing in March.
Export volumes were up, especially in the large food and beverages sub-sector. Conditions were mixed
across other manufacturing sub-sectors however, with weak demand and long-term headwinds still
evident in the printing, machinery & equipment and metals sub-sectors. The automotive assembly
industry is still on track to exit from Australia in 2017 and lower levels of mining investment are
dampening demand for some types of equipment. Some manufacturers noted increasing cost pressures
from imported inputs and electricity prices.
Exports have been a primary driver behind the strong performance of the Australian PMI® over the past
six to twelve months. The exports sub-index climbed 3.5 points to 57.2 points in March and remained
firmly positive. The sub-index expanded for a seventh month in a row and has averaged 53.0 points over
the past twelve months.
This strong export performance is mainly due to the boost from the lower Australian dollar. The dollar has
appreciated quite strongly since mid-January, but it is still about 30% lower against the US dollar than it
was three years ago. The Trade Weighted Index (TWI) is also relatively low, despite some gains in early
2016. In February, the TWI was 4.2% lower than a year earlier and 22.4% lower than its peak in March
2013 (see Chart 1). The exports sub-index of the Australian PMI® indicates that manufacturing exports
are responding well to this drop in the dollar.
Although the lower dollar is a positive trend for most manufacturers, the elevated input prices subindex
and numerous comments from Australian PMI® participants underscore the two-edged nature of the lower
dollar, as higher prices for imported inputs place extra pressure on margins.
The export-driven recovery is especially evident at present in the food, beverages & tobacco sector, which
continued to accelerate strongly March. Its sub-index jumped a further 9.3 points to a record 71.0 points.
Food and beverages respondents in the Australian PMI® flagged growth in export volumes, plus improved
cost competitiveness against imports within the Australian market, as key sources of sales growth in
2016. Exports from this sector will likely grow further, as businesses respond to enhanced access to new
markets (as new FTA's come into effect) and growing demand for processed foods from Asia and the
Middle East.
ENGINEERING CONSTRUCTION SHRINKS FURTHER IN Q4 2015
The total value of work done by the engineering construction sector (mining and infrastructure related
projects) fell by 8.9% q/q (-14.4% p.a.) to $23.5 billion in the December quarter of 2015. This is 30.2%
below the peak in the December 2012 quarter of $33.7 billion.
Private sector engineering construction activity fell by 13.4% q/q in the December quarter (-20.7% p.a.),
primarily due to the completion of resources (mining and LNG) projects. Public sector work done increased
by 5.1% q/q (+7.2% p.a.) due to new infrastructure projects, but this was not enough to offset the fall in
private sector activity.
This result aligns with the Ai Group Australian PCI®, with the engineering construction sector remaining in
contraction for the past several months (43.9 points in February) and falling new orders in line with
shrinking mining related work and project completions. Declines in Engineering Construction are likely to
continue through 2016, as current mining and LNG construction projects reach completion. Major public
infrastructure projects will fill some but not all of this hole in engineering activity in some locations.
HOUSING AND BUSINESS CREDIT EXPAND MODESTLY IN FEBRUARY
Credit growth in February accelerated slightly to 6.6% p.a. Within this total, housing credit grew at a
moderating rate (+7.3% p.a.) while business credit growth accelerated to 6.5% p.a. and personal credit
continued to shrink (-0.3% p.a.). This suggests housing investment is cooling, while business credit for
investment may be finally picking up, from an exceedingly low base.
MELBOURNE POPULATION GROWING STRONGLY The latest Regional Population Growth estimates for
the 2014-15 financial year confirm that Greater Melbourne is leading the nation’s population growth, at
2.1% p.a. for the year. Of the major capitals, Greater Sydney had the next fastest growth (1.7% p.a.),
followed by Greater Brisbane and Greater Perth (both 1.6% p.a.), with Greater Adelaide growing slowly
(0.9% p.a.). Four of Melbourne’s outer suburbs were among the fastest growing locations across the
nation in 2014-15, with Cranbourne East growing fastest (+32.0% p.a.), followed by South Morang
(+7.6% p.a.), Epping (+9.3% p.a.) and then Point Cook (+7.3% p.a.).
KPMG GLOBAL BUSINESS COSTS SURVEY RANKS AUSTRALIA IN MIDDLE KPMG’s biannual
Competitive Alternatives report (2016) examined relative business costs in 10 countries in which KPMG
operates. It ranked Australia as 5th among this group of 10 countries, well up from 8th best for business
costs in 2014. This improvement was mainly due to the lower Australian dollar in 2016, relative to 2014.
Ranked from lowest to highest average business costs, the countries assessed by KPMG were
1. Mexico (2014 = 1) 2. Canada (2014 = 2) 3. Netherlands (2014 = 3) 4. Italy (2014 = 6) 5. Australia
(2014 = 8) 6. France (2014 = 5) 7. UK (2014 = 4) 8. Germany (2014 = 10) 9. Japan (2014 = 7) 10. US
(2014 = 9)
Of the specific business cost indicators examined by KPMG in 2016, Australia ranked:
 5th best (i.e. lowest cost) for labour costs, just ahead of the UK;
 8 th best for the cost of industrial facilities;
 7 th best for the cost of inner city offices;
 5 th best for construction costs;
 6 th best for transportation costs; and
 6 th and 4th best for electricity and gas costs respectively.
AUSTRALIAN ECONOMIC DEVELOPMENTS 8TH APRIL 2016
As widely expected, the RBA Board left the official cash rate at 2.00% this week. The Board was
reasonably positive about growth prospects for the domestic economy, noting that “the available
information suggests that the economy is continuing to rebalance following the mining investment boom”.
The Board judged that the “the current setting of monetary policy remained appropriate”, although it
reiterated that “continued low inflation would provide scope for easier policy, should that be appropriate to
lend support to demand”.
Ai Group monthly activity indicators indicate that the improvement in non-mining business conditions has
remained generally intact in the first quarter of 2016. The manufacturing sector, in particular, is exhibiting
encouraging strength. The expansionary run since the middle of 2015 in the Australian PMI® is in large
part, due to the boost provided by the lower Australian dollar. However, the more recent lift in the value
of the Australian dollar will test some manufacturers and, if maintained, can be expected to slow the pace
of recovery over the months ahead. The RBA Board commented on this development, pointing to the
possibility of the dollar’s appreciation complicating the economy’s transition to non-mining growth.
Outside of manufacturing, more subdued conditions were apparent in the services sector in March after a
strong recovery in February. Apartment building remains the strongest performing construction sector,
although its growth is below the solid rates of increase seen over the much of the second half of 2015.
SERVICES INDUSTRIES STABLE IN MARCH
After rebounding in February, the services sector appears to have softened somewhat in March. The
Australian Industry Group Australian Performance of Services Index (Australian PSI®) dropped by 2.3
points to 49.5 points in March, signalling a broadly stable month for the services industries.
Of the five of activity sub-indexes in the Australian PSI® new orders expanded in March (51.9 points),
albeit at a slower pace. However, all other indicators were below 50 points, indicating stable conditions or
net contraction. Sales went from a strong result (55.7 points) in February to stable (49.4 points) in March,
deliveries softened but remained broadly stable (49.3 points), while stocks (48.3 points) and employment
contracted (47.8 points).
A common theme among services businesses is continued strength in households services and weaker
conditions in goods distribution (retail, wholesale and transport services) and in business services. Six of
the nine services sub-sectors in the Australian PSI® expanded in March (three month moving averages),
improving from three in February. Finance & insurance (54.2 points), health & community services (58.4
points) and personal & recreation services (53.1 points) all continued their positive run. Wholesale trade
(50.5), hospitality (50.9 points) and communications services (51.0 points) all went from contractionary
conditions to stable. In contrast, transport & storage (45.2 points), property and business services (48.8
points) and retail (47.3 points) all remained in contraction in March.
Indeed, retail trade data for February showed that consumers remain cautious with nominal retail sales
flat in February (0.0%) and just 3.3% higher over the year (seasonally adjusted). This indicates that retail
sales have lost some momentum in early 2016 with financial market volatility and weak wages growth
appearing to have muted consumer spending activity. Retail spending rose at a relatively firm rate in
household goods (+0.4%) and department stores (+0.4%), but was subdued or negative in clothing and
footwear (+0.1%), food (0.0%), cafés restaurants and takeaway food retailing (-0.2%) and other retailing
(-0.1%). Across states, annual retail sales growth was strongest in the non-mining states of NSW
(+4.6%) and Victoria (+4.8%) followed by Tasmania (+3.4%) and South Australia (+3.0%). In contrast,
annual sales growth was soft In Queensland (+1.3%) and contracted in Western Australia (-0.2%).
CONSTRUCTION CONTINUES TO STRUGGLE In the building industry, a cooling in the residential
market is stemming the flow of new housing and apartment projects while subdued conditions persist in
the engineering and commercial construction sectors.
The Australian Industry Group/Housing Industry Association Australian Performance of Construction Index
(Australian PCI®) fell at a slightly steeper pace in March, declining by 0.9 points to 45.2 points. This was
a 13-month month low (readings below 50 indicate a contraction in the industry with the distance from 50
indicative of the strength of the decline).
In a pointer to a slowing in residential construction, apartment building activity experienced a significant
loss of momentum with its rate of growth well below the solid rates of increase seen over the much of the
second half of 2015. In addition, house building activity contracted for a second consecutive month in
March, and at its sharpest rate in 14 months. Major project activity continued to exhibit weakness. Activity
in the commercial construction sector was close to stabilisation in March while engineering construction fell
more sharply consistent with the ongoing decline in mining and heavy industrial construction activity.
The likelihood of softer conditions ahead was apparent in the new orders sub-index in the Australian PCI®
which contracted for a fifth consecutive month, while employment fell at its most pronounced rate in 15
months. Respondents operating in the residential sector generally linked this weakening to a reduction in
customer enquiries and a more cautious approach by prospective purchasers. Local council planning
delays and tighter lending conditions for investors were other factors seen as constraining residential
market conditions.
In other data related to the construction sector, the latest signals for housing construction (from building
approvals and credit applications data) also suggest that residential construction is softening, albeit from a
high level.
For instance, the volume of housing loans to owner occupiers fell by 3.9% in January, although in annual
terms it still lifted by a relatively healthy 7.3% p.a. The trend towards softer investor lending was also
confirmed in recent RBA credit data. This showed that investor lending rose by 0.6% in February with
annual growth slipping to 7.6% p.a., well down on the 11% annual rates reached in mid-2015. The
introduction of tighter lending guidelines on investor-related lending has curtailed loans growth to
investors.
This week’s ABS data showed the total number of dwelling units approved for construction decreased by
0.5% m/m in February 2016, to be 10.5% lower over the year (trend data). The number of new dwelling
approvals at 18,025 (trend) was the lowest monthly number since October 2014. Nevertheless, approvals
remain elevated with these recent declines coming after historically high levels through 2015. The value of
non-residential building approvals, which include commercial, industrial and other public buildings (e.g.
hospitals, schools and community facilities), decreased by 1.2% in February (trend), to be 2.0% p.a.
higher over the year to February.
In other data released this week, the total number of job advertisements counted in the ANZ Job Ads
series increased by 0.2% m/m in March to be 10.0% p.a. higher (seasonally adjusted). This suggests
some easing in hiring intentions which could partly reflect increased caution by businesses due to
heightened financial markets volatility and uncertainty about the global economic outlook.
International trade data showed that Australia’s trade balance widened by $254mn to $3.4 billion
(seasonally adjusted) in February 2016, the deficit having now exceeded $3 billion for five consecutive
months. Lower commodity prices weighed on export values, with exports of goods and services down by
1% in the month to be 8.5% p.a. lower over the year to February. Imports of goods and services fell
slightly by 0.2% in February with lower oil prices weighing on imports of fuels & lubricants (-20.0%) while
machinery and industrial equipment imports declined by 23% following a strong rise in the previous
month. Imports are 4% lower over the year to February, with declines in imports of capital and
intermediate goods.
14. FROM WORLD ECONOMIC FORUM
Ten Steps to build the Cities of the Future
 The World Economic Forum has released a new report, Inspiring Future Cities & Urban Services
 The report highlights the emerging technologies and business models that are changing the way
urban services are delivered and proposes a 10-step action plan to enable cities to navigate the
journey of urban transformation
 The report proposes a “city maturity” model that highlights the various stages of urban
development
 The full report is available here
Geneva, 6 April 2016 – The “business of running cities” is changing rapidly due to the emergence of new
business models and technologies, which cover a wide range of urban services, such as mobility,
infrastructure, energy, water, waste management, health, safety, security, welfare, the environment,
knowledge, skills and culture. It also requires the involvement of a large number of stakeholders in the
planning and administrative process, including governments, citizens, the private sector and NGOs.
The World Economic Forum’s new report, Inspiring Future Cities & Urban Services, identifies the way in
which emerging technologies and new business models are transforming how cities plan and operate. The
report, written in collaboration with PwC, identifies how innovative business models – such as the sharing
and circular economy, digital integration of services, public asset revitalization, innovative outsourcing –
will unleash excess capacities in the urban realm and enable cities to do more with less. The report
chronicles technology innovations such as the internet of things, mobile-based sensing, location and
condition sensing, data analytics and open data, which will enable cities to tackle a myriad of urban
challenges.
As cities try to embrace innovation in an effort to address major urban challenges, they are overwhelmed
with issues such as budget constraints, flawed governance structure, lack of leadership commitment and
talent, lack of trust among stakeholders (citizens, government and private sector), and external issues
such as migration and demographic changes. The World Economic Forum recommends that city
governments:
 Usher in regulatory reforms to attract capital and human resources in an increasingly competitive
landscape
 Develop agile, transparent and city-scale governments to rapidly respond to an ever-changing
global environment
 Develop institutional capacity by investing in people and processes
 Empower city leaders to change the default position of being risk-averse and take calculated risks
 Involve citizens, NGOs, the private sector and academics in decision-making to improve legitimacy
and build trust
 Achieve the right balance to allow for organic growth while adhering to master plans
 Leverage standards and promote reuse to reduce cost and promote interoperability
Gregory Hodkinson, Chairman, Arup Group, said: “Today, 54% of our global population live in cities and
by 2050 it is estimated to reach 66%, which is an increase of 2.5 billion in the urban population. While our
cities face many challenges, such as climate change, social segregation, economic development and
resource constraints, new business models and emerging technologies have disrupted the way urban
services are being delivered and resulted in excess capacity within cities being efficiently utilized.
However, technology does not provide a silver-bullet solution to urban problems and instead a holistic
approach is required that will transform planning, governance and regulatory aspects.”
“In the Fourth Industrial Revolution we are likely to see the biggest industrial shifts in a generation,
changing the way we work and live in the urban environment. Innovations such as 3D printing, artificial
intelligence and next-generation robotics will shift models of work and production in ways that are
impossible to predict. Cities and businesses need to be adaptive. Public-private collaboration will be
required to enable cities to navigate the path of this urban transformation,” said Alice Charles, Lead,
Urban Development, World Economic Forum.
The report recommends that the private sector should be made an equal stakeholder across the entire
urban development value chain, with the public sector driving phases such as policy-making, planning and
monitoring, and the private sector taking a lead in design, implementation, operations and management,
and financing. The risks associated with entering into public-private partnerships are different across the
developing world (risks are more fundamental pertaining to business environment and apply to most
project phases) and the developed world (risks are centred around project phases such as planning,
construction and termination). The report recommends that government initiate actions, such as creating
a stable regulatory environment, introducing administrative reforms and developing reliable dispute
resolution mechanisms to address the risks. It also recommends that the private sector further engage
with government and the local population to develop trust.
Hazem Galal, Global Leader, Cities and Local Government Network, PwC, added: “Cities will have to
ensure that their DNA (fundamental social and economic characteristics) is retained while they make the
journey towards urban transformation. Cities should be willing to experiment and at the same time learn
from other cities while they develop unique city-specific solutions that leverage an accepted standard.
Cities will have to create a balanced strategy which gives due considerations to social, economic,
environmental dimensions.”
The report provides a framework for cities to classify various urban dimensions across levels of maturity
ranging from rudimentary (for example, a city which is addressing demand supply gaps across various
urban services) to scalable (for example, a city that can adapt to changing needs), and suggests a 10-step
action plan for cities planning to navigate the urban transformation journey.
In 2016, the World Economic Forum’s infrastructure and urban development industry partners will identify
ways in which the private sector can enable cities to meet the new global priorities and targets, as set out
in the Sendai Framework, Sustainable Development Goals and COP21, as well as implement the new 20year urban agenda being set out in Habitat III. The Forum will also undertake a deep dive on migration
and cities, exploring the types, causes and patterns of migration to cities and identify ways to enhance
public-private cooperation to respond to this growing challenge, and assess how cities can leverage the
opportunity presented by the circular and sharing economy to do more with less.
The World Economic Forum’s Shaping Future of Urban Development and Services Initiative serves as a
partner in transformation to cities around the world as they seek to address major urban challenges and
transition towards smarter, more sustainable cities in this rapidly urbanizing world. Directed by a Steering
Board and guided by an Advisory Board, the Future of Urban Development and Services Initiative works in
collaboration with local partners.
WEBSITE
1. Trading Economics
http://www.tradingeconomics.com/australia/indicators for Australian Economics Indicators
2. NAB
Global & Australian Forecasts – April 2016
http://business.nab.com.au/global-australian-forecasts-april-2016-16201/
The world on two pages – April 2016
http://business.nab.com.au/the-world-on-two-pages-april-2016-16235/
How Australian business views the sharing economy
http://business.nab.com.au/how-australian-business-views-the-sharing-economy-16246/
3. FROM THE CBA
Economics perspectives
https://www.commbank.com.au/content/dam/commbank/corporate/research/publications/economics/aust
ralian-economic-perspective/2016/080416-Eco_Persp.pdf
4. FROM ST. GEORGE BANK
Quarterly Economic Outlook April 2016
https://webapps.stgeorge.com.au/market-reports/economic-outlook/resources/downloads/April_2016.pdf
5. FROM WESTPAC
A review of the week's important data and events as well as key information affecting the Australian
market - prepared by Westpac Economics.
11/04/16 Australia & NZ weekly (PDF 358kb)
Westpac Consumer Sentiment
http://www.westpac.com.au/docs/pdf/aw/economics-research/er20160413BullConsumerSentiment.pdf
Doug Cave
QETA Secretary/Treasurer
[email protected]
http://www.qeta.com.au
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