By ARON LEWIN
New PM gives business a boost
Malcolm Turnbull’s leadership challenge speech was centred on providing strong economic leadership, and within hours of the 29th Prime Minister starting his reign, business confidence began to boom.
“It is not the fault of individual ministers – ultimately, the prime minister has not been capable of providing the economic leadership our nation needs, he has not been able to provide economic confidence our nation needs.”
“The only way we can ensure that we remain a high-wage, generous social welfare society, is if we have outstanding economic leadership, and strong business confidence.”
Read the full transcript of Malcolm Turnbull’s speech
AFR journalist Michael Smith reported that senior executives and directors were “ecstatic” about the idea of Prime Minister Turnbull and they woke up “feeling confident about the country's economic direction for the first time in years”.
The Australian dollar also hit a two-week high of US71c on Tuesday morning. But a fall in the Chinese sharemarket and uncertainty over a rise in the interest rate in the US saw the Australian stock market tumble by the end of Tuesday.
Sources close to Mr Turnbull said he guaranteed that under his leadership there would be no change to the Liberal Party’s Direct Action policy and the plebiscite on gay marriage, The Australian reported.
RBC Capital Markets head of economics Su Lin Ong also expected business confidence to pick up.
"We expect a boost to business confidence, which remains below its long-run trend and has struggled to maintain any momentum in recent years," Ms Ong said.
Street smarts: a study has found refugees boost economy
On Wednesday, the Federal Government announced it would take an additional 12,000 of the most vulnerable Syrian refugees.
In addition, it is spending about $44 million on humanitarian aid to provide food, water, blankets and cash to 240,000 refugees in the Middle East, and the RAAF is extending airstrikes on ISIS targets to Syria.
According to an ABC explainer, the refugee intake is expected to cost about $700 million.
In response, far-Right Queensland Liberal MP George Christensen expressed concerns refugees could take jobs from locals.
But columnist Tim Dunlop wrote for ABC’s The Drum that accepting refugees would strengthen Australia’s struggling economy and “a generous immigration policy is likely to be the most economically sound immigration policy”.
He uses the example of 160 Karen refugees – an ethnic group from Burma – who were settled in the northeast Victorian town of Nhill in 2010.
When many were employed by food processing company Luv-a-Duck, they reinvigorated the town’s economy, contributing about $41 million to the area's gross regional product (the market value of all goods and services produced).
Dunlop quoted Hindmarsh council CEO Tony Doyle: “The social impact of the Karen settlement is extraordinary. Nhill has embraced and opened their minds and hearts to the Karen. This has made Nhill a better place to live.”
Dunlop also refers to an Australian Bureau of Statistics (ABS) study that found humanitarian migrants often contributed significantly to the economy.
“Humanitarian migrants displayed greater entrepreneurial qualities and reported a higher proportion of income from their own unincorporated businesses and this income increased sharply after five years of residency,” the ABS reported.
Alan Kohler also wrote for The Australian that a weakening global economy and collapse in world trade had created political instability internationally, leading to a drop in living standards in developing countries.
“It is no coincidence that the greatest movement of refugees since the aftermath of World War II has occurred at the same time as a new bout of turmoil on financial markets,” he said.
But the Saturday Paper’s chief political correspondent Sophie Morris wrote the Syrian refugee intake wouldn’t change the “harshest elements of the Coalition’s border security regime”.
In press conference after he was voted Prime Minister, Mr Turnbull voiced his support for the increased intake of Syrian refugees.
“Of course, restoring the security on our borders has been an extraordinarily important step, enabling us, for example, to offer the increased and generous arrangements for Syrian refugees last week,” Mr Turnbull said.
Living standard levels for the average Joe
In The Guardian, Greg Jericho used ABS data to show income growth for households in the top 20 per cent income bracket grew at a rate of 3.5 per cent per annum from 2011 to 2014, while median income household incomes have grown at just 1.3 per cent.
In addition, two decades ago median households earned around 2.23 times more than the poorest 20 per cent, and the richest 20 per cent earned 2.13 times that of median households.
The disparity between the median and lowest 20 per cent has remained largely similar, but the richest 20 per cent now earns 2.42 times more than median households.
Jericho wrote: “Effectively, Australia is now as unequal as it ever has been. The drive in inequality is not so much the rich getting richer while the poor get poorer, as it is the rich getting richer while everyone else stagnates.”
Can Turnbull turn around recession fears?
Multi-national investment banking firm Goldman Sachs is predicting that Australia faces a one in three chance of a recession.
“A recession is not some remote possibility, it currently stands as the greatest probability since the financial crisis,” a Goldman Sachs Australian economics team reported.
“Slower population growth, weak wage growth amid high levels of under-utilised labour and low yields on investment income have combined with a sharp decline in financial wealth and fragile levels of confidence.”
But with the new change in leadership and a likely change to the treasury portfolio, it was unlikely Mr Hockey’s opinion would hold much weight in the public debate.
AFR journalist Jacob Greber echoed Goldman Sachs views, saying the “Reserve Bank of Australia would be forced to cut the official cash rate to 1.75 per cent in November, down from the existing 2 per cent”.
But with the change in leadership, there might be changes to predictions of a recession.