Firstly, The Australian’s economics editor, David Uren, reflects on how curious it is that certain sectors of the economy that received an enormous boost during the worst of the GFC are now such tepid contributors to the economy and, by extension, the budget bottom line.
"It is striking that many of the parts of the economy that are suffering at present were those that received the greatest boost from the stimulus spending. The cash handouts gave retailers the best Christmas in 2008, when the rest of the world's retailers were in despair. But during the past year the volume of goods crossing retailer counters has risen by only 0.5 per cent, a fraction of the long-term growth rate of just under 4 per cent and worse than during the 1991-92 recession. The boost to the first-home buyers' grant had a dramatic effect on the housing market. The share of new home loans going to first-home buyers soared from 17 per cent to more than 30 per cent and the slide in Australian home prices, which had been gathering pace during the previous year, was arrested. By the end of 2009, house prices were again soaring across the country, Melbourne prices rocketing by as much as 30 per cent. But during the past 18 months prices have resumed their fall. Weak house prices, along with languishing share prices, are eroding household confidence.”
And of course the sector that is working, mining, is going to need to keep firing for that surplus to have chance of coming in. The Age’s Adele Ferguson takes us behind the scenes at BHP Billiton, where the mammoth miner is evaluating its expansion programs.
"A committee is believed to be sizing up the cost of these projects as well as market conditions before they are presented to the board for final approval later in the year. If the talk is right and Olympic Dam is $30 billion, then it would not surprise if BHP tried to find a generous Chinese partner to help bankroll the project. There is already talk that BHP is looking at pushing out the Olympic Dam expansion timetable given the mounting pressure from investors not to spend too much capital on projects that have become increasingly expensive. One contractor currently doing work for BHP said he had heard from people on the ground to expect extensions to his company's contracts. This suggests BHP could slow down the speed of the open-cut expansion.”
And while many business commentators think the surplus promise will be fanciful, The Sydney Morning Herald’s Ross Gittins has some harsh words for media reporting that cast recent Reserve Bank forecasts – crucial for budget estimates – as a downgrade.
"It's certainly true the Reserve lowered many of its growth forecasts relative to those in its February statement. In general it cut each of its year-ended forecasts by 0.5 percentage points. But note this: when it came to its year-average forecasts – those most relevant to the budgeting task – the one for 2012-13 was unchanged at 3 to 3.5 per cent and the one for 2013-14 was unchanged at 3 to 4 per cent. Here's the point: the news the media didn't think worth passing on is that, notwithstanding its downward revisions, the Reserve is still forecasting that growth will accelerate from now on.”
Meanwhile, the big news story to come out of Friday was the jostling between Australia’s two major airlines as Virgin tries to snare a larger chunk of the domestic business travel market. The Australian’s John Durie says a simple glance at Qantas’ numbers explains the argy-bargy, while The Australian Financial Review’s Matthew Stevens explains how we now have two proper domestic carriers for the first time since the collapse of Ansett.
In other news, The Sydney Morning Herald’s Ian Verrender reflects on the James Hardie ruling, as does The Australian Financial Review’s Chanticleer columnist Tony Boyd. The Age’s Malcolm Maiden says Australian banks are still a long way away from becoming completely independent of overseas funding, while colleague Michael West has found a truly ridiculous Freedom of Information request that has been playing out over nine years.
And finally, The Australian’s Robin Bromby wonders what might happen to the notoriously wild silver price, with China ready to start trading silver contracts.