Thursday 12 April 2012

The 'Lucky Country' - a Wave of Gloom


In Australia coal exports are threatened because of the floods and strikes; while a 'wave of gloom'  descends over the rest of the economy.

Coal mine closure 'presents $1b export threat'
The Queensland Resources Council warns about $1 billion of coal exports are under threat because of BHP-Billiton Mitsubishi Alliance's (BMA) decision to halt production at one of its mines


12 April, 2012

BMA will stop operations at its Norwich Park mine near Dysart in central Queensland next month, affecting about 1,300 workers.

The company says last year's floods, cost increases, lower coal prices and recent industrial action are to blame.

Queensland Resources Council chief executive Michael Roche says the decision will have a severe impact on the industry.

"Well, 4 million tonnes of coking coal is a significant amount of money that'll be lost to our coal exports," he said.

"So at current coal prices you're talking about the best part of $1 billion of exports that won't occur if this mine was to be closed for an entire year.

"This is clearly bad news for the affected workers, their families and of course the Dysart community."

BMA says the widespread belief in an Australian mining industry boom is misplaced.

BMA asset president Stephen Dumble says the company's other mines remain profitable.

"Norwich Park, unfortunately for a range of circumstances, was the most exposed to some of those commercial pressures and in that sense is somewhat of an isolated case," he said.

The shutdown comes amid a long-running enterprise bargaining dispute between BHP and workers at seven central Queensland mines.

A Fair Work Australia hearing addressed the matter yesterday and will sit again next week.

The Construction, Forestry, Mining and Energy Union (CFMEU) says it does not believe industrial action played a major part in the decision to halt operations at the mine.

The CFMEU's Steve Smyth says the union will not change its tactics.

"No we won't ... at the end of the day, we're stuck into a full-on dispute in relation to a replacement agreement but our main focus with Norwich Park is ensuring that none of our members are left high and dry and ensure that whatever decision they make ... that they are happy with it and get all the assistance and help that we can [provide]," he said.

'No big shock'

Minelife senior resource analyst Gavin Wendt says the closure of the mine is "no big shock".

He says coal miners have been struggling.

"To think it's just easy money out there for the miners is probably a misnomer," he said.

"Commodity prices have come off significantly over the last 12 months and that straight away has impact [on] companies' bottom lines.

"At the same time there are rising cost pressures."

Mr Wendt says the BMA mine was struggling to remain profitable.

"Operations like Norwich Park - older operations - are very much exposed to the vagaries of the market," he said.

"And it's these older operations that BHP and other companies like them would be looking at closing down, at least temporarily until things can improve."

'Worry'

The Mayor of the Isaac Regional Council, Cedric Marshall, says people knew there were problems with the mine but did not expect it to close.

"Well I think it would be a shock around town," he said.

"Unfortunately some families [are] away on holidays with their children because of school holidays, so it will be a shock to them.

"It's not good news for the community. I wouldn't say it's unexpected, there have been rumblings for quite some time now that they might restructure Norwich Park but as far as closing it ... it's come as a bit of a shock."

Jason Moffatt, who owns the Dysart Bakery, says people are trying to work out what the closure will mean for them and their families.

"I think the worry for a lot of people is that it's going to have a detrimental effect on sporting clubs and so forth if people decide to move away," he said.

"The reaction that we're getting here is that BMA are going to shift their workers into Saraji and Peak Downs but whether that's true or not I don't know.

"But you take one of the mines out and it has an effect on every business in town."


Gloomy outlook prompts calls for interest rate cuts
A WAVE of gloom is descending over households and businesses in the economy's slow lanes, threatening to undermine activity outside the booming mining sector.

12 April, 2012

The Westpac Melbourne Institute reported yesterday consumer confidence fell 1.6 per cent to an eight-month low amid growing fears about job security and household finances, increasing pressure on the Reserve Bank to cut interest rates next month.

In what economists called a ''disturbing'' development, the survey said 48.5 per cent of households thought their financial position had worsened in the last year, while only 13.5 per cent thought they were better off today.

The chief economist at Westpac, Bill Evans, said consumers had not been this despondent since July 2008, when many were gripped by fears of a global recession.

''The results of this survey should be sending a very clear message to the Reserve Bank that Australia needs lower interest rates,'' he said.

The figures came as the sharemarket fell by more than 1 per cent, with investor confidence also dragged down by a drop in new home loans and Europe's debt woes.

The pessimism is expected to weigh on consumer spending, and a senior banker at NAB also warned morale in some industries was so weak that companies were hoarding cash, and considering holding back on their investment plans.

The NAB's executive in charge of business banking, Joseph Healy, said there was a growing risk businesses outside the booming resources sector could ''sit on their hands'' and postpone investments as they waited for confidence to return.

Any such delays threatened to worsen the economy's productivity woes because it would prevent businesses from making crucial adjustments, he said.

''My concern is that the decision by many businesses to hold back on investment and to sit on cash may have longer term consequences to profitability, productivity and efficiency,'' Mr Healy said.

''By choosing to sit on their cash rather than invest, business could inadvertently exacerbate the problems they are trying to wait out.''

Economists said the surprise fall in consumer spirit was probably caused by the Reserve Bank keeping official interest rates on hold at 4.25 per cent this month, despite pleading from business groups.

The slump is expected to weigh on spending decisions, in another blow to the retail industry. Households also appear increasingly reluctant to take on new debt, a trend underlined by a 2.5 per cent drop in new home loan commitments in February. It is the second monthly fall in a row, and comes despite cuts to interest rates from the Reserve Bank in November and December.

Business groups and unions say a recent run of weak economic figures, which also include poor business confidence, prove the economy is weakening and a cut in interest rates is warranted.

The chief executive of the Australian Chamber of Commerce and Industry, Peter Anderson, called on the Reserve to cut by 0.5 percentage points, arguing a smaller move would be too timid.

''We should not be waiting for the world economy to fall around us before we act with the levers we have to strengthen our own economy,'' Mr Anderson said.



"NATO and the United States should change their policy because the time when they dictate their conditions to the world has passed," Ahmadinejad said in a speech in Dushanbe, capital of the Central Asian republic of Tajikistan

Mounting credit card bills drive bankruptcy boom in western suburbs
Mount Druitt, Campbelltown and Liverpool have emerged as Sydney's bankruptcy hot spots as families succumb to mounting credit card debt and chronic unemployment.


11 April, 2012

The three suburbs topped a list compiled by the federal agency Insolvency and Trustee Service Australia, which revealed the NSW postcodes most vulnerable to bankruptcy last financial year.

The 2770 postcode - Mount Druitt, Minchinbury and surrounds - was the worst affected, with 163 bankruptcy declarations.

In the Campbelltown area postcode of 2560, 146 debtors slipped into the red, closely followed by 144 in the Liverpool-Casula postcode 2170.

The central coast postcodes of 2259, 2250 and 2261, which centre on Lake Munmorah, Gosford and The Entrance, rounded out the top six with 100 or more bankruptcies each.

It is the first time ITSA has published personal insolvency activity by postcode. The data is not adjusted for the variation in population between postcodes.

Sydney's well-heeled suburbs were not immune to financial distress. In the wealthy 2088 postcode, which includes Mosman and Spit Junction, 22 debtors filed for bankruptcy. It was closely followed by 19 in the 2030 postcode of Dover Heights and Vaucluse.

The Mount Druitt MP, Richard Amery, said high unemployment, coupled with a large number of single-parent families, meant residents in his low-income electorate were financially vulnerable.

"Whilst it's an area where real estate values are moderate, you can still overcommit yourself and … [many] people see bankruptcy as the only way out of the debt spiral," he said. Poor financial education was also to blame, he said. "A lot of people leave school unequipped to handle finance, they [don't know] the implications of buying all your furniture on an 18 per cent credit card or a 25 per cent department store credit arrangement."

Rachael Witton, a director of the financial services company Debt Rescue, said bankruptcy statistics captured only a small proportion of those in debt stress.

"[They] are just the ones who are taking action. A far greater number of people are in denial," she said. "We are meeting people who haven't opened mail for 12 months - it's just too much to get their head around, they don't know where to start."

Relationship breakdown and unemployment were the common thread in many bankruptcies, but this summer's natural disasters would prove too much for others, Ms Witton said.

"In the Riverina … we'll find inquiries will peak for another month or two yet. People are struggling day-to-day, then something else just tips them over the edge," she said.

And, on the same day, a similar story from Melbourne.


MELBOURNE’S south-east has the highest tally of bankruptcies in Victoria, according to  figures that have for the first time provided a breakdown of where financial stress is greatest in the state.





High fuel prices hampering cotton harvest


Global oil prices have risen again as Iran stops exporting oil to Germany after halting crude exports to a number of European countries.


11 April, 2012

A Queensland bulk fuel supplier says it's unfortunate high prices have coincided with one of the busiest times of the year for cotton farmers.

Glenmar Fuels director Glenn Hentschel says wholesale fuel prices are at their highest level in three months, just in time for cotton picking to start.

According to the RACQ, diesel prices at Queensland bowsers range between 149.9 cents per litre at Ipswich, in the south-east, to 174.6 cents at Cloncurry in the north-west.

While Mr Hentschel won't divuldge his current wholesale pricing scheme, he does say he hopes it won't go any higher.

"At the moment, it seems like the prices have peaked fairly well. I'd like to think they should taper out in the short term anyway," he said.

"In the long term, it's anyone's guess, it's a hard game to guess."

Fueltrac's Geoff Trotter says wholesale fuel prices in Australia are linked to the price of Tapis crude oil in Singapore.

Mr Trotter says recent increases in oil prices are related to speculation about nuclear testing in North Korea and Iran.

He says oil prices peaked mid-March, and the flow-on effect will come this week.

"The pressure on upward movement, which we will see this week, should start to fall next week."

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