Ridesharing company says test flights of Uber Air’s helicopter-like ‘flying car’ will begin next year
Melbourne will be the first city outside the US to host trials of Uber Air, a service the company describes as “aerial ridesharing” that will shuttle people from rooftop to rooftop for the price of an UberX.
The company has flagged test flights will begin next year, with commercial operations to start in 2023.
Passengers will travel in “electric vertical take-off” contraptions.
The service will operate using the Uber app, allowing passengers to travel across a network of landing pads called “Skyports”.
Uber spokesman Eric Allison said the concept had the potential to reduce traffic congestion which costs the Australian economy an estimated $16.5bn a year.
“The 19km journey from the CBD to Melbourne airport can take anywhere from 25 minutes to around an hour by car in peak hour, but with Uber Air this will take around 10 minutes,” Allison said.
Dallas and Los Angeles in the US will also be pilot cities. Melbourne beat cities in Brazil, France, India and Japan.
The Victorian treasurer, Tim Pallas, said the announcement was testament to Melbourne’s record of innovation.
“Victorians have a can-do attitude and we hope Uber Air will give us the altitude to match it,” he told reporters in Melbourne on Wednesday.
Pallas said there had been no request from Uber for financing.
He said he wanted to put his hand up as the first customer.
“I’m Uber excited,” he joked.
RMIT University aerospace engineer expert Matthew Marino said the concept would potentially be safer than driverless cars.
“While a driverless car would be faced with obstacles on the road like pedestrians on their mobile phones or other vehicles like trams and buses, aerial autonomous vehicles don’t have these obstructions,” he said.
“We need to prove to people that this technology can be as safe as helicopters, which regularly fly in our cities. More research and development are needed in this area.”
Centre for Urban Research expert Chris De Gruyter was sceptical about whether Uber Air can can solve transport problems.
“These vehicles are very low capacity – similar to what a car could carry – while there are also questions about if these vehicles will create visual clutter in the sky and how environmentally friendly they are,” he said.
“Another risk is empty running, where there are no passengers, but the vehicle has to travel to pick people up from another location.”
The FT’s Australia correspondent Jamie Smyth visits Snowy Hydro, site of a $5bn project doubling the country’s hydroelectric capacity with its 27km of tunnels to support the switch to a renewable power grid
Australia and Singapore announced Tuesday that they would ground all new Boeing 737 MAX airliners after a second deadly crash involving one of the passenger jets killed 157 people.
Reuters reported that aviation officials in Australia and Singapore joined their counterparts in China, Indonesia and other nations in halting flights of the aircraft in the wake of a fatal Ethiopian Airlines crash Sunday.ADVERTISEMENT
The U.S. has refused to join the list of countries so far, with the Federal Aviation Administration (FAA) reportedly issuing a “continued airworthiness notification” on the aircraft that detailed Boeing’s response to a previous crash in Indonesia, which took place in October and resulted in 189 deaths.
Canada’s transportation minister, Marc Garneau, meanwhile warned that his country would take action once cause of Sunday’s crash was known.
The latest accident, which occurred on a flight between Addis Ababa, Ethiopia, to Nairobi, Kenya, occurred shortly after takeoff and is still under investigation.
“There are no survivors onboard the flight, which carried passengers from 33 countries,” an Ethiopian state news service reported.
“My prayers go to all the families and associates of those on board,” Kenya’s President Uhuru Kenyatta said in a statement Sunday.
A former FAA accident investigator told Reuters that it was premature for officials in other countries to ground the Boeing 737 based on the two fatal crashes.
“To me it’s almost surreal how quickly some of the regulators are just grounding the aircraft without any factual information yet as a result of the investigation,” Mike Daniel told the news service.
Mr Morrison entered the race after Mr Turnbull lost key backers. After a majority of MPs called for a leadership “spill”, Mr Turnbull agreed to step down.
To further complicate matters, Mr Turnbull has signalled he would resign from parliament, which would force a by-election and potentially put the government’s one-seat majority at risk and force the new premier to call early elections.
However, Mr Morrison, who was sworn in on Friday, told reporters there were no plans to do this any time soon.
His government, he said, would be in place by next week.
Who is Morrison?
Mr Morrison, a former Tourism Australia official, entered parliament in 2007 and has since held three key ministerial portfolios.
A social conservative who appeals to the moderate elements of the Liberal party
Rose to national prominence as immigration minister in Tony Abbott’s government
Built a reputation as a tough operator in enforcing Australia’s hardline “stop the boats” policy
Mr Dutton said: “My course from here is to provide absolute loyalty to Scott Morrison, and make sure we win the election.”
Foreign Minister Julie Bishop was also in the running for the leadership, but did not make it to the final round.
Now the battle for forgiveness
Hywel Griffith, BBC News in Canberra
So Australia has its 30th prime minister, but how long before the 31st?
Scott Morrison faces an enormous task not just in healing the wounds within his party, but in winning the forgiveness of the public.
Many Australians have watched on exasperated, as normal government business was suspended to settle a political feud.
Given that an election must be called by May, Mr Morrison’s biggest challenge will be convincing the electorate that he should stay in power.
If he doesn’t succeed, expect yet another PM by June.
Why is Australian politics so turbulent?
The past decade has been marked by a series of leadership coups, with three other sitting prime ministers deposed by party rivals.
Not a single leader in recent times has succeeded in serving a full term as prime minister, partly because elections come around so often – every three years – two years less than in the UK.
So in recent years, prime ministers unpopular in the polls – or with their colleagues – have been swiftly sacrificed from within.
Dave Sharma, a former Australian diplomat, says “an election is always just around the corner, meaning members of parliament are forever focused on their electoral survival – and less so on the national interest”.
(Reuters)bAustralia is preparing criminal cartel charges against the country’s third-biggest bank and underwriters Deutsche Bank and Citigroup over a $2.3 billion share issue, in an unprecedented move with potential implications for global capital markets.
The pending charges, which can carry hefty fines and 10-year prison terms, threaten to change the way institutional capital raisings are handled, and do further damage to the reputation of Australian lenders already mired in scandal.
The Australian Competition and Consumer Commission (ACCC) said federal prosecutors would charge Australia and New Zealand Banking Group Ltd (ANZ.AX), its Treasurer Rick Moscati, the two investment banks and several more unnamed individuals over the 2015 stock placement.
All three banks denied wrongdoing and vowed to defend the charges, with Citigroup saying the regulator was effectively criminalizing practices long seen as the norm in the financial industry.
“The charges will involve alleged cartel arrangements relating to trading in ANZ shares following an ANZ institutional share placement in August 2015,” ACCC Chairman Rod Sims said in a statement.
“It will be alleged that ANZ and the individuals were knowingly concerned in some or all of the conduct.”
The third underwriter, JP Morgan, was not named by the regulator as a target and declined to comment.
Australia has some of the toughest anti-cartel laws in the world, however the decision to pursue criminal charges surprised experts given they are harder to prosecute than civil charges.
The move was “almost unique” in Australian corporate history and indicated prosecutors had a high level of confidence in their case, said Andrew Grant, a banking expert at the University of Sydney Business School.
ANZ shares were 2 percent lower on Friday afternoon, while other banks were down less than 1 percent. The broader market was down 0.2 percent.
Rating agency Moody’s said on Friday the charges were “credit negative” for ANZ.
THE CAPITAL RAISING
In 2015, Australian banks were under pressure to meet new capital requirements, prompting ANZ and larger rival Commonwealth Bank of Australia (CBA.AX) to raise a combined A$8 billion in a single week.
The lead managers did not disclose they kept about 25.5 million shares of the 80.8 million shares issued, ANZ said on Friday, a fact that is being investigated separately by the corporate regulator.
The Australian Shareholders’ Association said the pending charges should trigger reforms to capital raising procedures to ensure greater transparency and prevent investment banks profiting from share sales while retail investors have their holdings diluted.
As new bank equity flooded the market, ANZ shares closed 7.5 percent lower on Aug. 7, 2015, when the Melbourne-based lender announced it had completed the institutional component of the raising, according to a Reuters analysis.
ANZ shares took over a year to recover to their pre-raising value of A$32.58.
The joint underwriters allegedly reached an understanding on the disposal of shares, prompting the cartel criminal charges, Citigroup (C.N) said on Friday.
“Underwriting syndicates exist to provide the capacity to assume risk and to underwrite large capital raisings, and have operated successfully in Australia in this manner for decades,” the New York-headquartered investment bank said.
Criminal charges for share underwriters had never been considered by an Australian court and had never been addressed in guidance notes published by regulators, it added.
“If the ACCC believes there are matters to address, these should be clarified by law or regulation or consultation,” it said.
Deutsche Bank (DBKGn.DE) said it was cooperating with investigators and took its responsibilities “extremely seriously”.
Caron Beaton-Wells, a professor of competition law at University of Melbourne, said the ACCC and the prosecutor would only bring criminal charges if they were satisfied they would be proven.
“The ACCC has long said … that the most potent deterrent for cartel conduct is a potential jail term,” Beaton-Wells said.
“I don’t think it’s a sudden decision to ramp up, just that it’s taken a long time to find conduct for proceeding criminally.”
The development compounds a publicity nightmare for Australia’s biggest financial firms as they grapple with almost daily allegations of wrongdoing at a public inquiry which is scheduled to run to the end of the year.
Barristers for the inquiry have raised the prospect of criminal charges against the country’s top wealth manager, AMP Ltd (AMP.AX), over allegations it misled the corporate regulator.
No. 1 lender Commonwealth Bank is also facing a separate civil lawsuit alleging thousands of breaches of anti-money laundering protocols.
The allegations against some of Australia’s biggest companies and most-traded stocks have sparked several class action law suits designed to compensate investors who lost out as a result of poor banking and fund manager practices.
THE last time Australia suffered a recession the web browser had just been invented and Bryan Adams topped the charts. Figures released today will show that its economy has racked up the longest stretch of growth in modern history: 104 quarters. The Netherlands, the previous title-holder, dipped into recession—defined as two consecutive quarters of contraction—after 103. In these 26 years, Australia has navigated the Asian financial crisis, the collapse of the dotcom bubble and the Great Recession, largely without scars. Its once-in-a-generation mining boom ended in 2014. Yet it has managed to avoid a bust. How did it break the record for economic growth?
Its success was built on the structural reforms of the 1980s and ’90s, when trade barriers crumbled and foreign-exchange controls were removed. A floating dollar cushioned the economy against external aches; inflation stabilised around a target band of 2-3%; and government finances greatly improved. By the time the global financial crisis hit, Australia had enjoyed over a decade of budget surpluses and net debt had been eliminated. It helped that China’s demand for commodities was fuelling a mining boom that created jobs and pushed up wages. Australia’s terms of trade soared as it churned out coal and iron ore to feed its neighbour’s factories. By 2013 household incomes were about 13% higher than they would have been without the bonanza.
History suggested that the rush would be followed by a bust. As prices and investment fell, debt and unemployment rose in resource-dependent parts of the country like Queensland and Western Australia. But the Reserve Bank responded by slashing cash rates to lows of 1.5%, where they have remained for the past year, allowing the diverse economies of Victoria and New South Wales to pick up the slack. A weaker currency boosted agricultural exports and drew students and tourists in growing numbers. Cheap loans and rapid population growth prompted an explosion in demand for housing. Last year Australia’s population swelled by 1.6%, over double the average of the OECD, a group of mostly rich countries. To accommodate its intake of foreign migrants, Australia must build a city roughly the size of Britain’s Birmingham every five years.
The luck seems set to continue. The central bank predicts that GDP growth will pick up to about 3% in the next couple of years. But families have reason to feel less optimistic. Unemployment rates have flat-lined above their equivalents in America, Britain and Japan. Underemployment (the number of people who would like more work) is close to record highs. Rising national income is not trickling down to workers: wage growth has fallen to about 1.9%, its slowest pace since the last recession. This is all the more uncomfortable because household debt has ballooned. Its ratio to GDP is close to 190%, one of the highest in the world. If the central bank raises interest rates, many families will have difficulties repaying their mortgages. For now, it is likely to do nothing—and the growth will go on.
(Reuters) Australia said on Thursday it would strengthen its money laundering laws, including bringing bitcoin providers under the government’s financial intelligence unit, days after a fresh scandal at one of the country’s biggest banks.
The government said a coming bill would be the first stage of reforms to strengthen the country’s Anti-Money Laundering And Counter Terrorism Financing Act.
“The threat of serious financial crime is constantly evolving, as new technologies emerge and criminals seek to nefariously exploit them. These measures ensure there is nowhere for criminals to hide,” Minister of Justice Michael Keenan said, without specifying when the legislation would be introduced.
The bill will also aim to bolster the investigative and enforcement powers of the financial intelligence agency AUSTRAC.
The announcement comes just days after the agency accused the Commonwealth Bank of Australia (CBA.AX) of “serious and systemic” breaches of money laundering laws.
But the move is more than two years after global watchdog Financial Action Task Force (FATF) found significant deficiencies in Australia’s anti-money laundering framework.
The next and more challenging phase of legislative reforms in Australia will be to extend the rules to lawyers, accountants, real estate agents and dealers in high-value goods.
Under Australian regulations, one can pay millions in cash for precious stones or a prime property without having to identify themselves or the source of their funds.
Australia had agreed in 2003 to extend strict controls to these sectors, but has yet to act on those promises.
“Stopping the movement of money to criminals and terrorists is a vital part of our national security defenses and we expect regulated businesses in Australia to comply with our comprehensive regime,” Keenan said.
The digital currency exchange sector, which includes bitcoin, will be regulated for the first time, Keenan added.
The Australian Digital Currency & Commerce Association welcomed the reform, saying it will increase safeguards and provide regulatory certainty to digital currency businesses.
Earlier this year, Australia launched a world-first private-public partnership called ‘Fintel Alliance’ to encourage banks and other financial institutions to provide intelligence to regulators.
However, allegations against CBA that it failed to provide more than 53,000 transaction alerts to AUSTRAC on time has put a question mark over those efforts.
On Thursday, Keenan said that the private sector was an essential partner in ensuring Australian businesses are not exploited by criminals. He did not say whether the bill was in response to the CBA case.
“Australia was seen as a place where there was a real cooperation between regulatory authorities, law enforcement and financial institutions,” said Kieran Beer, New York-based chief analyst at the Association of Certified Anti-Money Laundering Specialists.
“This kind of cooperation is getting institutionalized and gathering momentum in the U.K. But there will be a backlash against the perceived failures, if proven, in the CBA case and some will argue that Fintel-like alliances may be an illusion.”
Trump, who has been engaged in an escalating war of words with Pyongyang this week, doubled down on threats to North Korea on Thursday. After North Korea reacted to new U.N. sanctions by threatening to retaliate against the U.S. “thousands of times,” Trump said on Aug. 8 he would send “fire and fury like the world has never seen.”
These comments caused many to fear the president was threatening nuclear war, and led Secretary of State Rex Tillerson to reassure Americans they did not have to worry. But then on Thursday, Trump said perhaps his threat “wasn’t tough enough,” telling reporters that “North Korea better get their act together or they are going to be in trouble like few nations have ever been in trouble.”
“If North Korea does anything in terms of even thinking about attack — of anybody that we love or we represent, or our allies or us, they can be very, very nervous,” Trump said, according to NBC News.
Australia’s quick defense of the U.S. comes after Turnbull and Trump have had a tough year. It started with a tense phone call in January, shortly after Trump took office, when the two heads of state clashed over taking in refugees and Trump’s travel ban. While that call was reported at the time, the WashingtonPost published a full transcript of the call last week.
Turnbull was also caught mocking Trump in June when audio of a speech he gave in Australia’s capital city of Canberra leaked. But for now, it looks like Turnbull is taking the situation with North Korea seriously and not letting past disagreements with the U.S. alter his strategy.
(Reuters) Australia, Japan and the United States on Monday urged Southeast Asia and China to ensure that a South China Sea code of conduct they have committed to draw up will be legally binding and said they strongly opposed “coercive unilateral actions”.
The Association of South East Asian Nations (ASEAN) and China should establish a set of rules that were “legally binding, meaningful, effective, and consistent with international law,” the foreign ministers of the three countries said in a statement following a meeting in Manila.
Foreign ministers of ASEAN and China on Sunday adopted a negotiating framework for a code of conduct, a move they hailed as progress but seen by critics as a tactic to buy China time to consolidate its maritime power.
Australia, Japan and the United States also “voiced their strong opposition to coercive unilateral actions that could alter the status quo and increase tensions”.
They also urged claimants to refrain from land reclamation, construction of outposts and militarization of disputed features, in a veiled reference to China’s expansion of its defence capability on Mischief, Fiery Cross and Subi reefs in the Spratly archipelago.
The three countries are not claimants but have long been vocal on the issue, arguing their interest is in ensuring freedom of navigation and overflight.
They urged China and the Philippines to abide by last year’s international arbitration ruling, which invalidated China’s claim to almost the entire South China Sea, where more than $3 trillion worth of sea-borne goods pass every year.
Brunei, Malaysia, the Philippines, Taiwan and Vietnam also have competing claims there.
The code framework is an outline for what China and ASEAN call “consultations” on a formal agreement, which could start later this year. China’s foreign minister, Wang Yi, on Sunday said that hinged on whether the situation was stable, and if there was no “major interference” from outsiders.
Several ASEAN countries want the code to be legally binding, enforceable and have a dispute resolution mechanism, but experts say China will not allow that, and ASEAN may end up acquiescing to what amounts to a gentlemen’s agreement.
Singapore’s foreign minister Vivian Balakrishnan said it was still premature to conclude the outcome of the negotiations for the code of conduct, which will be done by lawyers.
“One key issue is the question of legally binding,” he told reporters late on Sunday. “Surely when we move into the COC, it has got to have some additional or significant legal effect.”
Philippine Foreign Secretary Alan Peter Cayetano said he preferred a legally-binding agreement, which other countries, like Vietnam, supported.
Jay Batongbacal, an expert on the South China Sea at the University of the Philippines, told news channel ANC the adoption of the framework gave China “the absolute upper hand” in terms of strategy, because it will be able to decide when the negotiating process can start.
(BBG) Australia is close to seizing the global crown for the longest streak of economic growth thanks to a mixture of policy guile and outrageous fortune. But the nation is creaking under the weight of its own success.
While growth is being underpinned by population gains and resource exports to China, failure to spur productivity has meant stagnant living standards and electoral discontent; a property bubble fueled by record-low interest rates has driven household debt to levels that threaten financial stability; and a timid government facing political gridlock could lose the nation’s prized AAA rating as early as May because of spiraling budget deficits.
Australia’s last recession — defined locally as two straight quarters of contraction — occurred in 1991 and was a devastating conclusion to eight years of reform designed to create an open, flexible and competitive economy. But it also proved cathartic, paving the way for a low-inflation, productivity-driven expansion.
As momentum started waning, China’s re-emergence as a pre-eminent global economic power sent demand for Australian resources skyrocketing, helping shield the nation from the worst of the global financial crisis. But the post-crisis return of the boom proved ephemeral, failing to boost government coffers and pushing the local currency higher, eroding competitiveness and driving another nail into the coffin of a fading manufacturing sector.
“There’s no country on Earth that’s derived more benefit from the rapid growth
and industrialization of China over the last 30-odd years than Australia,” said Saul Eslake, an independent economist who’s covered Australia for over three decades. “After the end of the mining-investment boom, high immigration is helping us avoid a statistical recession, but it’s also contributing to other problems” like soaring property prices and household debt.
Outside post-war Japan, the modern economic growth record is held by the Netherlands, stretching from 1980 to 2008 and fueled by the discovery of North Sea oil. Ian Harper, an economist who sits on the board of the Reserve Bank of Australia, says the nation’s two key drivers are best summed up by how it coped following the collapse of Lehman Brothers Inc. — the crisis that saw the Netherlands finally succumb to recession.
“We benefited from the Chinese stimulus, we benefited from the exchange rate being allowed to depreciate, we benefited from direct intervention in the financial markets, we benefited from government spending,” said Harper. “That’s good management and good luck.”
Australia also didn’t have a huge jobless spike — as in 1991 — that would’ve precipitated housing foreclosures and threatened the banks. “Had housing prices collapsed we would’ve been in much deeper doo-doo,” said Harper.
It was very different almost 30 years ago. Australia was a basket case, with Singapore Prime Minister Lee Kuan Yew warning it risked becoming “the poor white trash of Asia.”
A 17-year stretch of reform driven by Labor titans Bob Hawke and Paul Keating ensued. Starting with the currency’s free float in 1983, it included financial deregulation, tax reform, slashing tariffs, ending centralized wage fixing and creating a private pension system. When Labor lost office in 1996, Liberal leader John Howard took up the cudgels, making the RBA officially independent, returning the budget to surplus and liberalizing labor laws. The introduction of a goods and services tax in 2000 was the last major successful reform.
From then on, Howard would turn fiscally flippant as cash rained from the China-driven spike in commodity prices, allowing him to spend hard while keeping the budget in surplus.
The Labor government that succeeded Howard in late 2007 was widely hailed for its response to the global financial crisis a year later, steered by Treasury officials whose anti-crisis program was forged in the fires of 1991: get cash directly to households to spend and maintain confidence. Yet from that success, Labor would stumble on climate policy and then vacate the policy field altogether.
The current Liberal government has followed suit: avoiding tough decisions for fear of electoral backlash, then being pilloried for failing to tackle problems like a budget deficit that both sides have promised to fix since 2010. As a result, ratings agencies are now circling Australia’s top credit score ahead of the treasurer’s next budget in May.
The nation has seen five changes of prime minister since 2010 — compared with just three from 1983 to 2007 — raising questions about whether its politics can still produce reformist administrations. But this has happened before. Australia had five leaders between 1966 and 1972 after just three between 1941 and 1966. Simply put, following periods of dominant leadership, the system takes some time to rebalance.
In the economy, time is less forgiving. A record-low 1.5 percent cash rate designed to steer Australia from mining investment back toward services is creating problems of its own. Sydney house prices have more than doubled since 2009 and Melbourne’s have also soared, sending private debt to a record 187 percent of income. The RBA frets that anemic wage growth will force heavily indebted households to slash consumption, which could prove disastrous given their spending accounts for more than half of gross domestic product.
Australia’s banking regulator further tightened lending curbs Friday to try to cool investor demand for residential property that’s helped drive up prices. Data released hours later showed investor lending increased 6.7 percent in February from a year earlier, the fastest growth in 12 months.
While China’s demand for resources should keep Australia’s growth ticking over for many years yet, much of the spoils are going to overseas investors now that the mining boom’s investment phase is done. As iron ore prices surged from 2004 in response to Chinese steel demand, cash poured into new Western Australian mines and, together with associated industries, mining employed about 10 percent of the workforce.
Australia has since become the developed world’s most dependent economy on China, which buys a third of its exports, compared with just 2 percent back in 1991. But iron ore prices have more than halved since 2011, when the local dollar hit a post-float record of $1.10. The Aussie would hover at or above parity with the greenback for the next two years.
The currency’s strength then saw off the car industry: two of the three manufacturers in 2013 said they were quitting Australia, with the last following suit the next year. While the currency would eventually retreat to the 70s, the damage had been done. Worse still, the trillion-dollar windfall from the boom had been spent, not saved, leaving no cash to plug yawning budget deficits or build much-needed infrastructure for an expanding population that would also support growth.
So while Australia’s ability to avoid recession is lauded, it’s also been argued it missed the cleansing fires of a slump to shake out areas of excess such as housing. Serious casualties of 2008 such as the U.S. and U.K. are now at or near full employment and growing robustly having cleared out their dead wood.
RBA’s Harper disagrees. Economists, at least since John Maynard Keynes, have been “raised on a steady diet of stabilization policy” because its alternative is “extremely destructive” due to the indiscriminate nature of recessions, he says.
“Central banks have published data — well look at Andy Haldane’s work at the Bank of England — just estimating the economic cost of downturns, particularly financial market collapses relative to the cost of intervention,” he said. “And you pretty soon see that this is a good bargain, being stabilized.”
There’s also debate on consecutive quarters of contraction as a definition of recession. Eslake says his preferred measure is whether unemployment has risen by 1.5 percentage points or more in 18 months or less. “It doesn’t really give any false signals,” he says of his measure, which occurred in Australia during the financial crisis.
In truth, Australia pretty much has a healthy starting point of 2.5 percent expansion each year: about 1.5 percent from population growth and 1 percent from increased resource-export volumes due to the mining investment.
Australia’s then-Treasury Secretary Martin Parkinson highlighted the approaching growth record in a 2014 speech, when he put the Netherlands’ expansion at 26.5 years. That’s one year away from where Australia stands now. However, OECD data shows the Dutch grew from the fourth quarter of 1980 through the second quarter of 2008, or 27 and 3/4 years.
Eslake has crunched his own numbers and found that once OECD data is taken to two decimal points, the Netherlands had a technical recession in 2003 and so is already behind Australia. His analysis also has the Dutch tying with Austria, and includes Taiwan.
As for Australia’s recession risk, slumps have traditionally come from the RBA slamming on the brakes to try to rein in inflation — as before 1991 when interest rates hit 18 percent. Given low wage growth and weak inflation, that seems less likely now.
Bob Gregory, a professor at Australian National University in Canberra who specializes in the labor market and has studied the economy for almost half a century, shares Eslake’s skepticism about two negative quarters to define recession. He instead focuses on full-time employment as a share of population, a measure which has been sliding markedly.
“What’s happening in Australia now is a long, drawn out, sort of slow recession,” said Gregory, who was on the RBA board from 1985 to 1995. “Nothing dramatic is happening, but each year it’s not quite so good as it was the year before.”
(HB) The German carmaker has agreed to pay back millions of dollars to more than 15,000 Australian customers it misled into buying cars between 2011 and 2016.
The Australian financial regulator has fined BMW $57 million over illegal loans it made to customers, according to German news agency DPA.
Buyers who could not afford a new car were misled into receiving loans they evidently could not pay back, the Australian Securities and Investment Commission said on Tuesday.
As a result of the ruling, the car maker has agreed to pay a sum of 77 million Australian dollars, or $57 million, to compensate for the unauthorized loans sold by BMW Australia Finance, a car loan subsidiary of the German firm.
This includes $10.9 million in direct remediation to customers, $5.6 million in cuts to interest rates of current loans, and $37 million in loan write-offs.
Australian Prime Minister Malcolm Turnbull said on Monday he wants to negotiate a “very strong” free trade agreement with Britain after it leaves the European Union.
Britain’s June decision to leave the 28-country EU sent financial markets into shock in anticipation of a recession as Britain enters a years-long process of tearing itself away from its biggest trading partner and forging a new global economic role.
Britain’s economy will suffer as a result of the decision despite signs in recent data that the impact has not been as severe as some predicted, Prime Minister Theresa May said on Sunday on her way to the G20 summit in the eastern Chinese city of Hangzhou.
Turnbull told reporters that May told the Australians she “remains very grateful for the assistance we are providing, both legislative and in terms of other resources”.
“And of course, from our point of view, getting in to deal with the British early and making sure we can negotiate a very strong, very open free trade agreement once they are actually out of the European Union.”
(BBC) Australia has called for a free trade deal with Britain following its exit from the European Union.
Theresa May described the move as “very encouraging” and insisted it showed Brexit could work for Britain.
In a phone call to the new PM, her Australian counterpart Malcolm Turnbull said he urgently wanted to open up trading between the two countries.
Liam Fox, the new international trade secretary, said he was already “scoping about a dozen free trade deals”.
But the UK cannot sign any deals while it is still an EU member – and experts warned trade deals take a long time to negotiate.
Mrs May said: “I have been very clear that this government will make a success of our exit from the European Union.
“One of the ways we will do this is by embracing the opportunities to strike free trade deals with our partners across the globe. It is very encouraging that one of our closest international partners is already seeking to establish just such a deal.”
“This shows that we can make Brexit work for Britain,” she added.
Economist Howard Archer told the BBC News Website that post-Brexit the UK would be looking to trade with other parts of the world outside of the EU.
“That is something that the Leave campaign was pushing for, so that we would be open to other deals with other countries and regions,” he said.
He said trade deals “take a very long time” to be drawn up, and that while there might be a desire for the UK to seek out as many agreements as possible, there should be a focus on the most important trading partners.
Equally important, the UK should also look for major deals that can be quickly concluded and not drag on for years, said Mr Archer, chief UK and Europe economist at IHS Global Insight.
“There has been a focus recently on how few trade negotiators we actually have got in the UK at the moment,” he added.
“So a trade negotiator working on a deal with Australia would not then be available to work on a trade deal with China. It means decisions have be taken about which deals to really focus on, such as China.”
Mr Archer said that although the UK cannot sign trade deals while it is an EU member, there will be numerous informal discussions taking place leading up to the Brexit date, which could be in late 2018 or early 2019.
According to Australian government trade figures, in 2014 Australia exported A$8.3bn (£4.5bn) to the UK in 2014 and imported A$12.4bn (£6.5bn).
But that is a fraction of the A$100bn (£55bn) exported that year by Australia to China, and the A$54bn it imported from the Asian giant.
And according to the latest data from the UK’s HM Revenue and Customs for May 2016, Australia was 21st on the list of Britain’s export markets, and 20th on the list of import providers.
BBC correspondent Phil Mercer, in Sydney
Britain is Australia’s seventh largest trading partner, and is second only to the United States when it comes to direct foreign investment down under.
Australian Prime Minister Malcolm Turnbull said a free trade agreement with the UK was a priority, although such treaties are complicated and can be time-consuming.
Australia’s recent trade deal with China, for example, took a decade to negotiate.
Mr Turnbull has said Canberra could also team up with New Zealand to strike new commercial and immigration accords with the UK following its decision to leave the EU.
It comes amid reports he is preparing to fly to the United States next week for talks.
In April, President Barack Obama warned the UK it would go to the “back of the queue” for trade deals with the US if it voted to leave the EU.
Following the referendum, he said the UK’s decision to leave raised “longer-term concerns about global growth”.
Mr Fox told the Sunday Times: “We’ve already had a number of countries saying, ‘We’d love to do a trade deal with the world’s fifth biggest economy without having to deal with the other 27 members of the EU.'”
(BBB) A backlash against mainstream politics has left Australia without a conclusive election result and raises the prospect that Prime Minister Malcolm Turnbull will be forced to work with a handful of disparate independent lawmakers in order to stay in power.
Ballot counting doesn’t resume until Tuesday, and for now neither Turnbull’s Liberal-National coalition nor the opposition Labor Party can form government. In a nation where voters are tired of years of political discord in the major parties and leaning toward populist, potentially-disruptive fringe groups, the risk is Australia enters a period of drift when the commodities-driven economy can least afford it.
Former banker Turnbull needs 76 lower-house seats to form a majority government. His coalition leads in 66 seats, against Bill Shorten-led Labor’s 72, according to theAustralian Electoral Commission. Postal votes may decide as many as 12 unclear seats.
While the populist winds of Western Europe and the U.S. have been felt less in Australia, the two main parties garnered their lowest primary vote since 1943, a rebuff of policies that have seen them bunched in the center on economic and social issues. Lacking a strong mandate, whoever leads Australia could be hamstrung in efforts to revitalize the world’s 12th-largest economy, and forced to negotiate with individual Senators in the upper house.
“We’ve been in a holding pattern since September with Turnbull hoping to consolidate and strengthen his position and then implement proper economic reforms,” said Shane Oliver, head of investment strategy at Sydney-based AMP Capital Investors Ltd., which oversees about $120 billion. “The prospect of that now seems very bleak. Businesses and share markets don’t like policy uncertainty and this election has delivered that in spades.”
The Australian dollar traded at 74.75 U.S. cents as of 10:52 a.m. in Sydney on Monday, down from 74.98 cents on Friday. Australian bond prices fell even after the U.S. market rallied on Friday, pushing the yield on the benchmark 10-year note up 2 basis points to 1.98 percent. The benchmark equity index slipped 0.1 percent.
Still, the election uncertainty may not mean a lot, according to Jonathan Barratt, chief investment officer at Ayers Alliance Securities in Sydney, “Think of how many prime ministers we’ve had over so much time,” he said by phone. “We’re used to this instability.”
The central bank, which has cut rates to a record low and meets again on Tuesday, is seeking to shield a local economy already struggling with a decline in capital spending and disinflationary pressures, while the mounting deficit is putting the nation’s AAA credit rating under pressure.
Australia, the world’s most China-dependent developed economy, is seeking growth drivers after prices for its iron ore and coal exports plunged, cutting government revenue. While annual growth has accelerated toward its 30-year average of 3.2 percent and unemployment has fallen to 5.7 percent, Australians don’t feel richer.
“This election result is the worst possible outcome for Australia,” John Brogden, managing director of the Australian Institute of Company Directors, said on Sunday in a statement. “We need certainty and an environment for long-term policy making.”
The government expected a swing against it as punishment for policy inertia and internal squabbling, after Turnbull, 61, seized power in a September party-room vote, and opinion polls had pointed to a tight outcome. But the magnitude of the voter rebellion surprised pundits and lawmakers alike. Australia has already churned through six leaders in eight years, amid infighting and leadership coups in both major parties.
Turnbull enjoyed a brief honeymoon after disposing of the unpopular Tony Abbott, claiming Australians wanted economic leadership “that respects the people’s intelligence.” That goodwill faded amid policy dithering as planned tax reforms were mooted and then shelved and he failed to act on policies like same-sex marriage, hamstrung by social conservatives within the coalition.
Turnbull campaigned on a promise of stability in the wake of the market turmoil sparked by the U.K. vote to leave the European Union. But he struggled to convince Australians his coalition could move beyond the years of internal discord that have wracked both sides of politics. That discontent diverted votes to smaller parties.
A new party formed by South Australian Senator Nick Xenophon looks set to get several seats, and anti-Muslim immigration campaigner Pauline Hanson may snare a Senate spot. The Australian Broadcasting Corp. predicted five lower house seats would go to independents.
Since 2013 a group of independents and micro-parties have held the balance of power in the Senate, blocking A$13 billion ($9.7 billion) of budget savings and complicating government efforts to rein in a deficit forecast to reach A$37.1 billion next year.
“Turnbull may struggle to form a government with any sense of stability,” said Stephen Stockwell, an analyst at Griffith University and author of “Political Campaign Strategy.” “The effective campaigns of the minor parties undercut the Liberals’ campaign for economic and constitutional stability. In a lot of ways, it’s Brexit all over again.”
Turnbull told reporters on Sunday he’s confident the coalition will form a majority government this week. “Australians have an appetite for a step up in political culture, they expect us to have a workable and effective parliament so we can get done what needs to be done.”
Still, Turnbull’s leadership is tarnished, Shorten said. “What I’m very sure of is that while we don’t know who the winner was, there is clearly one loser: Malcolm Turnbull’s agenda for Australia,” Shorten, 49, told reporters on Sunday.
While Shorten led a disciplined campaign, Labor’s share of the primary vote has fallen to the lowest level since the 1930s in the past two elections. The union-backed party flipped through a series of leaders during tumultuous years in power between 2007 and 2013.
“Both major parties are on the nose, there’s no doubt about it,” said John Hewson, who led the Liberals in the early 1990s. Turnbull missed the chance to call an election earlier and capitalize on his initial popularity, he said. “He’s drifted down, he’s disappointed people, he’s now got to deliver.”
As Australia’s largest banks report results this week, bearish wagers are on the rise. The level of short selling has surged an average 41 percent since the start of the year, Markit Ltd. data compiled by Bloomberg show. The strategy may backfire if upcoming results and forecasts from the so-called Big Four lenders exceed expectations, according to analysts at the wealth management unit of Macquarie Group Ltd. Commonwealth Bank of Australia, National Australia Bank Ltd., Westpac Banking Corp. and Australia & New Zealand Banking Group Ltd. release results in May.
(FT) DCNS of France has beaten competitors from Japan and Germany to win a A$50bn contract to build a new fleet of 12 submarines for the Australian navy.
Tuesday’s announcement deals a blow to Shinzo Abe, Japan’s prime minister, who lobbied hard for a contract that would have boosted defence ties with Canberra and bolstered plans to build an arms export industry.
Insiders in the bidding process believe Japan’s bid failed mainly due to concerns over the ability of Mitsubishi Heavy Industries and Kawasaki Heavy Industries to transfer technology to Australia, where the submarines will be built, and its inexperience in delivering big defence export projects.
Gen Nakatani, Japan’s defence minister, said he would seek explanations for why Japan lost out.
“We are very disappointed that [Japan] was not chosen this time,” he said.
Malcolm Turnbull, Australia’s prime minister, said the project with DCNS represented “a momentous national endeavour”.
“The recommendation of our competitive evaluation process … was unequivocal that the French offer represented the capabilities best able to meet Australia’s unique needs,” he added.
The French presidency, meanwhile, described the contract as “historic”.
“France is grateful for the confidence that Australia has shown in it, and is proud of the technological excellence of which its companies have proved themselves,” it said.
Mr Turnbull said the submarines would be built in Adelaide in a move that would sustain about 2,800 jobs — a welcome political boost to the federal government in South Australia, a key state for the Liberal party ahead of a July 2 general election.
Australia’s replacement of its submarine fleet comes amid an Asia-Pacific arms race led by China. Defence spending in Asia in 2014 was A$439bn (US$338bn), surpassing that of Europe, according to Australia’s defence white paper released this year. Canberra says the Indo-Pacific region will account for half the world’s submarines and at least half of advanced combat aircraft within two decades.
Under the winning bid, DCNS will build 12 Shortfin Barracuda submarines for the Australian navy and help maintain them over half a century.
The vessel, a conventional submarine using a pump-jet propulsion system, draws on the design of France’s existing Barracuda-class nuclear submarine. It is the first time Paris will share this stealth technology, which is quieter than a traditional propeller, with another country, said DCNS.
The deal follows an unprecedented lobbying campaign involving the bidding companies and the political leaders of all three countries. Mr Turnbull telephoned François Hollande on Monday night to inform him of DCNS’s success.
On Tuesday he thanked Germany’s ThyssenKrupp Marine Systems and the government of Japan for their bids and stressed that both he and Mr Abe remained committed a special strategic partnership.
Japan had been in pole position to win the contract before Tony Abbott was oustedas prime minister by Malcolm Turnbull in September. Mr Abbott had envisaged Australia buying Japan’s Soryu-class submarine.
The proposal won the backing of Mr Abe, who overturned Japan’s decades-long ban on arms exports in 2014 as part of a loosening of military restrictions put in place after the second world war. It was also supported by some in the US defence establishment. But it proved politically toxic in Australia, where members of Mr Abbott’s own party favoured building submarines in Australia to save local jobs.
“It will take a fair amount of effort for Australia to soothe some unhappiness on Japan’s side on this,” said Peter Jennings, executive director of the Australian Strategic Policy Institute.
It will take a fair amount of effort for Australia to soothe some unhappiness on Japan’s side on this
People close to Japan’s bid said failure would be a source of “considerable personal embarrassment” to Prime Minister Shinzo Abe, and that Tokyo and the companies involved would now enter a period of “blame and recrimination” as each party sought to evade culpability.
The Australian government has called on Washington to “help manage the Japanese reaction” to losing the bid, according to people close to the situation.
People on both the Australian and Japanese sides of the bidding process told the Financial Times that Japan’s proposal had been the weakest in commercial terms, with the country’s inexperience obvious throughout.
The Japanese did not establish until well into the bidding process that Mitsubishi Heavy Industries would take the lead, the documents were presented in a way that caused the Australians to demand substantial revisions, and the teams that travelled to Canberra were an unwieldy mix of bureaucrats and business executives who had not worked together before.
The loss of the Australian contract leaves a deep dent in Mr Abe’s ambitions of propelling Japan from non-participant to major contractor in the arms export trade. On the naval side, where Japan’s products are potentially most competitive, there are no big international contracts coming up for at least three years.
A decision between Lockheed Martin and Raytheon on who will build the submarines’ weapons system has yet to be announced.fvtyonswe
(BBG) Australia snubbed a bid from Japan to award one of the world’s biggest defense deals to France’s DCNS Group, opting for a contract that will generate jobs in Australia and minimize a backlash from its major trading partner China.
The French offer for the A$50 billion ($39 billion) contract to build 12 submarines trumped those by Japan’s Mitsubishi Heavy Industries Ltd., Kawasaki Heavy Industries Ltd., and Thyssenkrupp AG of Germany. DCNS will build the fleet in Adelaide and the project should create about 2,800 jobs, a point Prime Minister Malcolm Turnbull made in announcing the winner Tuesday ahead of an election expected in July.
The outcome is a double loss for Japan, which saw the contract as a step toward opening up its defense industry two years after the government lifted a decades-old ban on arms exports. Prime Minister Shinzo Abe has also sought to boost ties with Australia, a fellow U.S. ally, as China asserts its military ambitions in the region.
“The geopolitical advantages of strengthening the relationship with Japan were not sufficient to overcome whatever commercial and technical advantages the French bid had,” said Mark Thomson, a defense economics analyst at the Australian Strategic Policy Institute in Canberra. Australia must now “find some way of preserving a constructive, strategic relationship with Japan.”
As a military ally of the U.S. but an economic partner of China, Australia has walked a line between the two countries. Tensions in the western Pacific are increasing as China asserts its claim to more than 80 percent of the South China Sea, where it has built artificial islands and runways. China also has territorial tensions over islands in the East China Sea claimed by Japan.
The frictions over territory are contributing to an arms build up in Asia, with an Australian Defense White Paper in February estimating that half the world’s submarines will be based in the Indo-Pacific region by 2035. In the paper Australia affirmed its commitment to build 12 new submarines, which will likely enter service in the early 2030s.
“The French offer represented the capabilities best able to meet Australia’s unique needs,” Prime Minister Malcolm Turnbull told reporters in Adelaide. “The project will see Australian workers building Australian submarines with Australian steel.”
France pulled out all the stops to win the contract, with Defense Minister Jean-Yves Le Drian spending nearly a week in February touring Australia and President Francois Hollande set to host a state dinner for the nation’s governor-general Tuesday night. Defense is one of France’s biggest industries, providing about 165,000 jobs.
The Shortfin Barracuda submarine designed by state-controlled DCNS will replace Australia’s aging Collins Class vessels and will be diesel-electric powered.
“They are going to dump jobs into Adelaide as hard as hell and that is really going to drive up the price,” said Richard Bitzinger, a senior fellow at the S. Rajaratnam School of International Studies in Singapore. “The French must have come up with a really good way of helping the Australians build the submarines.”
The French bid “included superior sensor performance and stealth characteristics, as well as range and endurance similar to the Collins Class submarine,” Australian Defence Minister Marise Payne said.
The head of Japan’s Acquisition, Technology and Logistics Agency, Hideaki Watanabe, told reporters the outcome was “extremely regrettable.” Mitsubishi Heavy Industries said it was a shame that Japan’s proposal “had not been fully understood.”
Shares in the company were down 3.6 percent in Tokyo, while Kawasaki Heavy Industries dropped 2 percent. ThyssenKrupp, based in Essen, Germany, fell as much 5.1 percent and was down 2 percent as of 9:49 a.m. in Frankfurt.
“We are naturally disappointed but we stand ready to provide support for Australia’s future submarines project with our unrivaled experience, leading technology and track record in building submarines in the customer’s own country,” Thyssenkrupp Marine Systems Australia chairman John White said in a statement.