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Business News Releases

When is the next tipping point for the Sydney and Melbourne housing markets?

WITH THE PROPERTY markets in Sydney and Melbourne projected to reach new peaks by the end of 2020, it’s back to ‘square one’ for housing affordability. There is also likely to be a new tipping point as well as potential for the reintroduction of macroprudential measures by APRA.

According to RiskWise’s latest Risks & Opportunities Report, Sydney and Melbourne were highly likely to be the top performing markets in Australia next year, well ahead of any others.

However, RiskWise Property Research CEO Doron Peleg said it also meant both Sydney and Melbourne would be back to ‘square one’ when it came to housing affordability and undersupply of family-suitable properties relative to demand driven by population increases, “the biggest (recurrent) issue in the Australian property market since mid-last decade”.

And it could spark the reintroduction of macroprudential measures by APRA if ‘speculation’ by investors rises and increases the risk to the financial stability.

“New peaks are expected in Sydney and Melbourne with additional peaks reached thereafter more frequently until the market reaches a new tipping point,” Mr Peleg said.

“This is the point where consumer confidence in relation to house price materially decreases, houses are severely unaffordable for owner-occupiers and investors’ out-of-pocket expenses will mean they are beyond their tolerance point especially with low rental returns.

“Obviously the key question is when the new tipping point will be. We’re not expecting one in 2020 but without regulatory intervention there will be one.”

He said RiskWise projected strong price increases across a large number of areas in Sydney and Melbourne in the short term, and particularly the long term, thanks to a good (while a somewhat deteriorating) employment market and strong population growth, particularly in Melbourne.

“The RBA’s interest rate cuts (the most recent one in October 2019 with the possibility of a further one in the first half of 2020), some loosening of credit restrictions, significant improvement in buyer confidence and increased auction clearance rates provide very strong indications regarding these markets,” he said.

“Buyer sentiment in relation to housing measures has noticeably improved and the Westpac-Melbourne Institute’s House Price Expectations and Time to Buy a Dwelling Indices show a consistent trend. Auction clearance rates have also recovered and are largely above 70 percent in Sydney and Melbourne.

“As we predicted immediately after the election and in our previous Risks & Opportunities Reports, the market has materially improved with affordable areas that have shown resilience recovering well. Other areas, including lucrative ones that experienced strong price reductions, are now leading the way to this recovery.”

However, he said a significant reduction in dwelling commencements would continue to create a problem of undersupply of family-suitable properties in high-demand areas, while there was also a high level of supply of rental properties in some areas.

September ABS dwelling approvals showed a 32.6 percent drop in Sydney and a 30.3 percent in Melbourne.

“These imbalances are a major issue with a very material impact on dwelling prices particularly those unsuitable for families,” he said.

In addition, a sustained period of ultra-low interest rates and, consequently, a significant increase in housing finance, is highly likely to see a rise in investor activity. Sydney and Melbourne have the largest concentration of investors and an increase in their activity will have a major impact on dwelling prices.

However, he said it was possible APRA would consider the reintroduction of macroprudential measures if increased investor activity contributed to double digit growth.

“A new tipping point is reached when properties become very unaffordable for owner-occupiers and the out-of-pocket costs for investors become so high, they cease investing. Banks will also become more risk aware and apply additional rules and requirements to ensure serviceability,” Mr Peleg said.

“Obviously, if APRA reintroduces tighter lending restrictions, this is highly likely to have a negative impact on price increases, potentially not only in Sydney and Melbourne but also other areas of the country.

“Interest rate reductions have significantly improved serviceability of both owner-occupiers and investors. However, with low economic growth and effective unemployment above the ‘full employment’ target, it is possible that without a material change to the fiscal policy, the RBA will cut interest rates again during 2020 to 0.5 percent.”

Since moving through a trough in May, the value of new owner-occupier home loan commitments has increased by 17.3 percent through to the end of September and the value of investor loan commitments is up 8.4 percent.

Population growth continues to be strong in Sydney at 1.8 percent, and unemployment sits at 4.3 percent. In Melbourne population growth is 2.5 percent (the highest in the country), and unemployment 4.8 percent.

The latest ABS data on new housing credit also shows a sharp rise in the value of home loan commitments, driven by a surge in owner-occupier lending as well as a smaller rise in investment lending.  

“APRA is watching the housing market closely, particularly given record-low interest rates, high household debt and signs of some revival in borrowing for speculative purposes,” Mr Peleg said.

“It should be noted that strong investor activity is perceived by the RBA as ‘speculation’ that increases the risk to the financial stability. Consequently, a major increase in investor activity is likely to trigger the reintroduction of macroprudential measures by APRA.”

RiskWise is now working on specific modelling to estimate the tipping point.

www.riskwiseproperty.com.au

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GSMA: WRC-19 opens door to exciting new 5G services

THE GSMA has welcomed the international spectrum treaty adopted by the World Radiocommunication Conference 2019 (WRC-19), which will unlock the potential for game-changing 5G services around the world.

The conference, which has just concluded in Sharm el-Sheikh, Egypt, has identified much-needed spectrum for a broad range of new ultra-high-speed and ultra-low latency consumer, business and government services.

Innovative 5G services that rely on the almost instantaneous delivery of large amounts of data are now possible through the identification of millimetre wave frequencies in the 26 GHz, 40 GHz and 66 GHz ranges. These include virtual and augmented reality applications, remote control of industrial robots, autonomous vehicles, as well as entertainment services, such as downloading 4K movies in seconds.

International coordination supported by the International Telecommunication Union (ITU) at WRCs is essential to achieving widespread spectrum harmonisation for mobile services. The global identification of mmWave frequencies will help unlock economies of scale needed to accelerate the delivery of innovative and affordable 5G services around the world. A wide range of industries – including manufacturing, transport, healthcare and education – are set to benefit.

“WRC-19 has brought the mobile industry a step closer to making the full power of 5G something everyone can experience,” said Mats Granryd, GSMA director general.. “Countries struck the right balance in opening up groundbreaking possibilities for 5G while protecting existing radio services worldwide.

"The mobile industry’s goal going into WRC-19 was to identify enough 5G spectrum to deliver long-lasting socio-economic benefits. WRC-19 delivered on this goal, and also secured a pathway to 5G’s future success in the agenda for WRC-23.”

As mobile continues to evolve, so do the spectrum requirements. WRC-19 recognised this by setting an agenda for the next WRC in 2023 that will consider identification of additional mid- and low-frequency bands.

Mid-frequency spectrum in the 3 GHz range (from 3.3-4.2 GHz) is already being used for commercial 5G services, providing a good balance of coverage and capacity. Increasing the amount of globally harmonised spectrum in this frequency range at WRC-23 would boost 5G network performance, bring down deployment costs and drive significant economic benefits.

To help spread the benefits of 5G to rural areas and accelerate the Internet of Things (IoT) revolution, the GSMA is also supporting efforts to identify more spectrum below 1 GHz at WRC-23 to improve 5G coverage.

“We want the benefits of 5G to be available to everyone. With more than 5 billion mobile subscribers globally, previous generations of mobile technology have connected more people more quickly than any technology in history,” Mr Granryd said. “WRC plays an essential role in driving the global economies of scale that allow mobile services to transform people’s lives and national economies.”

About the GSMA

The GSMA represents the interests of mobile operators worldwide, uniting more than 750 operators and nearly 400 companies in the broader mobile ecosystem, including handset and device makers, software companies, equipment providers and internet companies, as well as organisations in adjacent industry sectors. The GSMA also produces the industry-leading MWC events held annually in Barcelona, Los Angeles and Shanghai, as well as the Mobile 360 Series of regional conferences. www.gsma.com. Twitter: @GSMA.

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Lots to celebrate about the seafood on your plate on World Fisheries Day

SEAFOOD Industry Australia (SIA), the national peak-body representing Australia’s commercial fishing industry, used World Fisheries Day on Friday to encourage all Australians to celebrate.

“We really are the lucky country when it comes to seafood, and we have a lot to be proud of,” SIA CEO Jane Lovell said. “To celebrate, why not tuck into some great Aussie seafood brought to you by the 41,000 peoplei in this country who work hard to supply the best quality seafood all year-round.

“We should also celebrate the fact the Australian seafood industry continues to be a world leader when it comes to sustainability and innovation.
“For the sixth consecutive year, the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) has given our solely Commonwealth-managed fisheries a positive report card.

“This is unprecedented internationally and highlights the quality of Australia’s Commonwealth fisheries management and commitment to providing Australians with sustainable seafood," Ms Lovell said. “An example of home-grown innovation is the world-first prawn traceability program which verifies provenance to a forensic standard, protecting the integrity and origin of Australian prawns.

“In another milestone, SIA recently launched Our Pledge. This is our commitment to the community, and to each other, that we will do the right thing to ensure a vibrant future for the Australian seafood industry.

“World Fisheries Day gives us the opportunity not only to celebrate these milestones, but to highlight the importance of healthy oceans and environments.
“Actively caring for our ocean and environment is a key part of Our Pledge.

“Australians love their premium quality seafood, and the Australian seafood industry is committed to putting great local seafood on tables locally and across the world for generations to come.”

www.seafoodindustryaustralia.com.au

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Groundwater Conference highlights aquifers' key role in building resilience in our resource management systems

WAHAT DO Australia’s climate change, finite water resources, resource management and energy-future challenges have in common? The 2019 Australian Groundwater Conference will outline an important commonality: they all require Australia’s groundwater experts to implement innovative groundwater solutions to meet Australia’s resilience aims.

The Brisbane event will host more than 500 of Australasia’s groundwater experts, with international speakers, to reveal the latest research into groundwater science and management.

The three day conference canvasses topics as diverse as mapping water trends across Australia, drinking water security in Asia and the Pacific, risks associated with fracking, and the conservation and management of groundwater with Indigenous stakeholders.

Speakers will highlight:

  • The role that groundwater storage (‘managed aquifer recharge’) has in improving drought resilience and minimising water losses from surface water evaporation.
  • How improvements in groundwater modelling science have increased our understanding of interactions between energy systems (onshore gas; geosequestation; geothermal) and groundwater systems.
  • The latest in PFAS contamination research and solutions.
  • The role that next-generation ‘water fingerprinting’ (groundwater isotope studies) has in determining the age and providence of our groundwater resources.
  • The role Indigenous groundwater research can play in modern groundwater practices.
  • New techniques for characterising and managing groundwater dependent ecosystems.

Conference chair, Professor Jim Underschultz said with the theme of 'Groundwater in a Changing World', AGC2019 is the preeminent gathering a water resource professionals in the Southern Hemisphere that happens once every two years 

 “Groundwater is increasingly recognised as a vital element in world water resource management and an important contributor to global health, economies, and social and environmental wellbeing," Prof. Underschultz said.

“Academic, government, consulting and industry members of the International Association of Hydrogeologists from the Australasian region will explore recent advancements in hydrogeology and water resources management, the implications of climate change and the impacts on agricultural, resource and infrastructure industries.”

Jointly hosted by the International Association of Hydrogeologists Australia (IAH) and the National Centre for Groundwater Research and Training (NCGRT) at Flinders University, the groundwater conference will be held at the Brisbane Convention and Expo Centre.

To be opened by Queensland's chief scientist, Prof. Paul Bertsch, the conference will  feature six plenary presentations, 295 oral presentations, 90 poster presentations, and five panel sessions bringing together a mix of industry leaders, policy makers and scientists.

The event will also host the 2019 IAH Groundwater Industry Awards at the Queensland Museum on Monday November 25.

 

Australasian Groundwater Conference 2019

24-27 November 2019
Brisbane Convention and Expo Centre
Brisbane Southbank, Queensland
https://www.groundwaterconference.com.au/

 

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PFAS Health Study continues

ON MONDAY November 25, the PFAS Sub-committee of the Joint Standing Committee on Foreign Affairs, Defence and Trade (JSCFADT) will hold the first public hearing for its inquiry into the Department of Defence’s remediation of per-and poly-fluoroalkyl substance (PFAS) contamination on defence bases.

The chair of the PFAS Sub-committee the John McVeigh MP said the National Centre for Epidemiology and Population Health at the Australian National University (ANU) has been invited to report on work being advanced under its PFAS Health Study.

“The ANU’s PFAS Health Study was commissioned by the Department of Health to examine the potential health effects of PFAS exposure on people who have lived or worked in the areas surrounding RAAF Base Williamtown, the Army Aviation Centre Oakey and the RAAF Base Tindal,” Dr McVeigh said.

Dr McVeigh explained that the epidemiological study utilises blood samples gathered by the government in a free blood testing program for people who had possible exposure to PFAS at/or near these sites. The PFAS research team will use this source for comparison and analysis and release a sequence of assessments over 2020.

“Phase two of the study, now underway, will establish whether rates of diseases, including cancers, can be associated with higher PFAS exposure among people who have lived in the investigation areas, compared to the general population”, Dr McVeigh said.

“The PFAS Health Study is doing essential work to provide up-to-date results based on local information to affected communities, as international research continues.”

The PFAS Sub-committee’s scrutiny follows on from recommendations made to Government last parliament that the Department of Health should review its advice in relation to the human health effects of PFAS and its potential links to certain medical conditions.

The inquiry report, tabled in December 2018, made nine recommendations to address Government’s management and coordination of PFAS remediation and related concerns.

Public hearing details: 

Date: Monday 25 November 2019
Time: Approximately 4:10pm to 5pm
Location: Committee Room IR4, Parliament House, Canberra.

This hearing will be audio streamed live at www.aph.gov.au/live.

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A $25b capital expenditure program for Australian assets to protect and grow retirement savings

THE long-term stewards of major Australian infrastructure assets will make a $25 billion capital expenditure investment to upgrade and expand their assets over the decade to 2030.

The expenditure will build the value of these investments for millions of industry super fund members by ensuring they continue to deliver the services the community expect for many decades to come.  The expenditure is expected to generate more than 50,000 new jobs over the next decade.

The assets include iconic Australian household names like electricity distributor Ausgrid and the international airports for the cities of Brisbane, Melbourne, Darwin and Adelaide, as well as major seaports such as the Port of Brisbane, Port Botany and Port Kembla.

The new investment aligns with a recent exhortation from Australian Treasurer Josh Frydenberg, who in August called for such measures in preference to share buybacks and special dividends.

IFM Investors CEO Brett Himbury said the investment would drive strong and stable returns for 7 million working Australians invested in the assets through their industry super funds, as well as giving the whole nation a productivity and jobs boost.

“This ongoing capital expenditure is a result of the alignment between the long term time horizon of superannuation money and major critical Australian infrastructure," Mr Himbury said.

"The responsible stewardship of these assets by industry super funds and their partners protects and grows the retirement savings of members. These investments are an investment in the future value of these assets and will increase the productive capacity of the entire country.”

The $25 billion in capital expenditure will fund numerous new projects, including a rail upgrade at Port Botany to continue the shift of freight from road onto rail, new solar generation at Darwin Airport that will support reductions in carbon emissions and reduce energy costs, a new international cruise ship terminal at the Port of Brisbane, and several airport terminal and aviation capacity upgrades across Australia’s growing international city airports.

The additional investment will average over $2 billion per annum through the next decade, exceeding $2.6 billion per annum in 2020, 2021 and 2028.

Over the last eight years, IFM Investors and its partners have supported $8.7 billion in capital expenditure at its major Australian infrastructure assets, including $1.3 billion on the new second runway at Brisbane Airport, at the time the largest private expenditure into airport infrastructure, globally.  

Major new terminals were also built in recent years at Darwin, Adelaide and Melbourne airports and a $110 million road upgrade delivered at Port of Brisbane.

www.ifminvestors.com

 

About IFM Investors:

IFM Investors is an investor-owned global fund manager with A$152 billion under management as of September 30, 2019. Established more than 20 years ago and owned by 27 major pension funds, IFM Investors’ interests are deeply aligned with those of its investors. Investment teams in Europe, North America, Australia and Asia manage institutional strategies across infrastructure (equity and debt), debt investments, listed equities and private capital. IFM Investors is committed to the United Nations supported Principles for Responsible Investment and has been a signatory since 2008. IFM Investors has offices in nine locations; Melbourne, Sydney, New York, London, Berlin, Tokyo, Hong Kong, Seoul and Zurich. 

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PJCIS - press freedom inquiry reporting timeframe

THE Parliamentary Joint Committee on Intelligence and Security (PJCIS) is busy finalising its consideration of the Inquiry into the impact of the exercise of law enforcement and intelligence powers on the freedom of the press.

The chair, Andrew Hastie MP, said, "The Committee has received considerable evidence from submitters and witnesses regarding the media and their ability to operate effectively within Australia’s democratic society. All members are endeavouring to achieve a bipartisan report, which delivers tangible areas for reform and consideration. This will not be possible by the end of November."

The deputy chair, Anthony Byrne MP, said. "As this inquiry has progressed, the complexity and nuances of the issues raised have become acutely emphasised to the Committee. The ability for the Committee to make targeted recommendations is reliant on time, and the Committee would rather report later to ensure that occurs."

The Committee has written to the Attorney-General informing him of the later reporting requirement, with the undertaking to present a report in the week before Christmas at the latest.

Further information on the inquiry can be obtained from the Committee’s website.

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Deregulation Agenda to reduce burden on small business: Ombudsman

THE Australian Small Business and Family Enterprise Ombudsman, Kate Carnell has welcomed the Federal Government’s new measures announced as part of its Deregulation Agenda and looks forward to working closely with the taskforce on its key priorities.  

“The next wave of deregulation reform, announced by Prime Minister Scott Morrison, is a step in the right direction to make it easier for small businesses to employ staff and invest in growth,” Ms Carnell said.

“A new online checklist providing small business employers with a guide to employing their first worker, along with a commitment to developing a new prototype ‘regtech’ platform, is encouraging. While this may assist small businesses in hiring a staff member, the industrial award system itself remains highly complex and fluid for small business owners to navigate.

“Small and family businesses are crying out for a simplified system, so they can get on with the job of growing their business," she said.

“That’s why my office is calling on the government to develop an algorithm to be integrated into accounting software to make it easier for small and family businesses to pay wages and entitlements correctly and on time.

“The next logical move would be to clarify the Small Business Fair Dismissal Code, to give small and family businesses the confidence they need to employ more Australians.

“We’ve provided the government with our Review of the Small Business Fair Dismissal Code, which recommends a suite of changes to help small business employers meet their obligations," Ms Carnell said.

“It’s also critical the government consults widely as part of the deregulation process, which my office is ready to play an active role in, so the small business community is part of these important discussions that affect them directly.

“Of particular interest is the government’s plan to deal with the degree of regulatory complexity, the length of time for approvals and duplication across levels of government. This has the potential to be a game-changer for Australia’s 2.3 million small businesses and family enterprises.

“We will continue to work with the government to achieve the best possible outcomes for the small business sector.”

www.asbfeo.gov.au

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Ombudsman calls for better protections of employee wages

THE Australian Small Business and Family Enterprise Ombudsman Kate Carnell is calling on the Federal Government to make it easier for hard-working Australians’ wages and entitlements to be calculated correctly and paid on time.

“We want Australian workers to be paid what they are owed, at the right time,” Ms Carnell said.

“While the vast majority of small businesses fulfil their obligations to their employees, the award system itself is overly complicated and fluid, which can sometimes lead to the employer making honest mistakes.

“Of course employers who deliberately flout the law should be punished, but any new penalties for incorrect payments should take the complexity of the system into account," she said.

“It is critical small businesses be given the chance to rectify payment errors, when it’s clear the mistake was unintentional, rather than being automatically penalised. When penalties do apply, they should be proportionate to the nature of the breach. A fine that a large corporation could absorb, could devastate a small business.

“Small businesses are often run by a single person who does everything from management, to IT and payroll. That makes it difficult for them stay on top of award changes within the elaborate industrial relations system.

“Recent media stories of very large and high-profile Australian businesses who employ skilled and experienced HR teams, underpaying staff highlights the complexity of the award system. That’s why my office is calling for simplification of numerous industry awards, to help reduce payment errors and administration costs," Ms Carnell said.

"The rollout of single touch payroll provides an opportunity to calculate award wages and entitlements through an algorithm integrated into accounting software such as Xero, MYOB, Quicken and other software systems. This payment algorithm could be owned and updated by the Fair Work Commission to ensure correct wages and entitlements are correct and up-to-date.

“Finally, small and family businesses should not have to carry any additional administrative burden prompted by new proposals, particularly when they act quickly to resolve any errors that have been brought to their attention.”

www.asbfeo.gov.au

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Tasmanian renewable hydrogen action plan

ENERGY NETWORKS Australia has welcomed the release by the Tasmanian Government of the Tasmanian Renewable Hydrogen Action Plan.

Chief executive officer of Energy Networks Australia, Andrew Dillon, said hydrogen would play an important role in the sustainable energy future.

"Hydrogen can be produced from excess renewable power, providing clean energy that can be stored for when the sun doesn’t shine and the wind isn’t blowing,” Mr Dillon said. “As the energy sector continues to decarbonise and intermittent renewable generation increases, this storage capacity means hydrogen can play an important role in stabilising our energy system.

“Hydrogen technology is already being embraced around the world for domestic and commercial use in gas networks and to fuel passenger and freight trains.”

Mr Dillon said trials of hydrogen production, hydrogen blending into existing networks or exports were underway in every Australian state, with Tasmania’s strategy the latest addition.

“Energy networks are using renewable gases such as hydrogen made from solar and wind power to decarbonise our gas networks,” Mr Dillon said.

A recent update to Gas Vision 2050, released by Energy Networks Australia and the Australian Pipelines and Gas Association, showed that more than $180 million of funding had been committed nationally for hydrogen infrastructure projects.

Energy Networks Australia has previously released research confirming that the injection of hydrogen into Australian gas distribution networks can be done under current gas legislation.

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Queensland Government’s critical minerals funding package – “we dig it”: QRC

THE Queensland Resources Council (QRC) has welcomed a $13.8 million five-year Queensland Government package to encourage new discoveries of critical minerals to attract more overseas investment, drive more international trade and create more local jobs and economic prosperity.

QRC chief executive Ian Macfarlane, who is in Washington DC as part of a delegation led by Federal Resources Minister Matt Canavan to further develop the US-Australia trading partnership on critical minerals, said the package announced by Premier Annastacia Palaszczuk was based on consultation with the industry and would hit the right mark at the right time.

“Queensland has globally-significant reserves of copper, nickel, zinc,  graphite, and molybdenum and major deposits of cobalt, rhenium, scandium, tantalum, niobium, lithium, rare earths and vanadium,” he said.

Mr Macfarlane said the funding would including $9 million to unearth more and better geological information to help the industry identify new products and $4.8 million to re-examine old mine tailing and core samples for these minerals.

“These are the key areas QRC and the Queensland Exploration Council urged the Government to focus on and they have delivered.  We thank the Premier, the Deputy Premier, State Development Minister Cameron Dick and Mines Minister Anthony Lynham for the commitment of confidence into this growing sector,” he said.

“We also acknowledge the strong representations from the Australian Workers’ Union to encourage additional investment in exploration.  The AWU, like QRC, knows the investment in exploration delivers the new discoveries and the new jobs,” Mr Macfarlane said.

“Mount Isa itself owes its existence to the discoveries of the lone prospector John Campbell Miles in 1923.  It would be fitting if, through this funding, Queenslanders could welcome major new discoveries to celebrate the centenary of those original discoveries.

Mr Macfarlane said the package followed the government’s earlier commitment to upgrade the Townsville to Mount Isa rail line and commit $80 million to subsidise commercial freight users on the Mount Isa line over four years.

www.qrc.org.au

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