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Australia keeps key rate unchanged

      

Australia left its key interest rate unchanged as a weaker currency relieves competitive pressure on companies and the central bank awaits the impact of two rate cuts in the first half of the year. 

PHOTO: BLOOMBERG

JUN 2, 20151:15 PM

[SYDNEY] Australia left its key interest rate unchanged as a weaker currency relieves competitive pressure on companies and the central bank awaits the impact of two rate cuts in the first half of the year.

Central bank Governor Glenn Stevens and his board left the cash rate at a record-low 2 per cent in Sydney on Tuesday, as predicted by markets and economists. They're relying on an extension of the Australian dollar's 3.3 per cent drop in May as anticipation mounts the Federal Reserve will raise US rates.

Australia has so far had little success in stimulating industries as a decade-long mining investment boom winds down. Businesses plan to cut investment in the next 12 months by the most on record as firms decide they can meet demand with existing capacity amid weak wage growth.

"The currency will depreciate over the next nine months as the Australian economy faces the headwinds from a mining investment downturn," Commonwealth Bank of Australia Chief Economist Michael Blythe said ahead of the decision. "The Reserve Bank of Australia will remain on an easing bias during this period and the risk remains another interest-rate cut." Traders are pricing in one more rate cut in the next 12 months as the nation, an engine room of the decade-long global commodity boom, forecasts a 90 per cent plunge in spending on mining projects, calling time on its biggest resources bonanza since the 1850s gold rush.

The nation's economic growth probably cooled to 2 per cent in the first quarter from a year earlier, the slowest pace since 2013, economists predicted ahead of data tomorrow. Yet the labor market has remained relatively resilient, aided by weaker wages, with unemployment hovering around 6.2 per cent.

Cheap borrowing costs have also boosted the property market: prices in Sydney rose 15 per cent in May from a year earlier and Australia's major banks have said they will curb growth in home loans to investors. Australia's most-senior economic bureaucrat this week issued one of the strongest warnings yet by a government official.

"When you look at the housing price bubble evidence, it's unequivocally the case in Sydney - unequivocally," Treasury Secretary John Fraser said in testimony before a parliamentary committee in Canberra on Monday. "Frankly, whatever the data says, just casual observation would tell you that's the case."

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With Peter MacKay gone, the Conservatives are truly Harper’s party-CAMPBELL CLARK

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CAMPBELL CLARK

With Peter MacKay gone, the Conservatives are truly Harper’s party

CAMPBELL CLARK

OTTAWA — The Globe and Mail

Published Friday, May. 29 2015, 11:28 AM EDT

Last updated Friday, May. 29 2015, 9:10 PM EDT

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It was a full-circle return when Peter MacKay went to the Museum of Industry in Stellarton, N.S., to announce, with Prime Minister Stephen Harper at his side, that he’s not running for re-election. This was the place where Mr. MacKay announced his 2003 bid for the leadership of the old Progressive Conservative party.

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That party is gone, merged with the Canadian Alliance into the new Conservatives, in a pact between Mr. MacKay, the last leader of the PCs, and Mr. Harper. Mr. MacKay is going. Mr. Harper remains.

The departure marked something like the end of an era, and the Prime Minister was careful to bring a message of unity. He came with overflowing praise and called Mr. MacKay “a historic figure.” Mr. MacKay is still a symbol of the PCs, and of the Conservatives’ soft supporters, who are crucial in an election year.

In his riding of Central Nova, Mr. MacKay is an institution. He’s held the seat since 1997. His father, Elmer MacKay, held it before him, even longer. It really was a crowd of MacKay family friends and long-time political aides and volunteers who attended his announcement. “It’s a close group,” said Jim Ryan, a high-school principal in Pictou, who is a friend and brother-in-law of Mr. MacKay’s former chief of staff. And the riding has Progressive Conservative history: It’s the safe seat where new leader Brian Mulroney won entry to the Commons in 1983.

Now it’s an embattled bastion. Polls show the Conservatives badly trailing the Liberals in Atlantic Canada. With Mr. MacKay not running in October, Central Nova might now be up for grabs in an election where the three other Conservative seats in Nova Scotia were already in play.

One of Mr. MacKay’s central political tasks was as ward-heeler for Atlantic Canada, but the party and Mr. Harper are now unpopular, and the region, a strength for the old PCs, is now a weak spot for the Conservatives.

For Mr. MacKay, the exits have been beckoning for a while. He was given key cabinet posts, in Foreign Affairs, on Defence during Canadian mission in Afghanistan, and now the former prosecutor is Justice Minister. But he was never one of Mr. Harper’s few cabinet confidantes, or an architect for its policies. In a decade, he’d had all the good jobs he’d get in Mr. Harper’s cabinet. He married in 2012, has a young son, and a daughter on the way. There was no doubting his assertion that he was leaving politics for family life, and his heartwarming explanation that he loved politics “but I love my family more.”

Mr. Harper’s tribute was also noticeably warm, and filled with praise, but it was obviously political, too.

There’s no doubt that the Conservatives long ago became Mr. Harper’s party, and the merger is long past. But he has to appeal beyond the party’s core base to a broader group of soft potential supporters, and they tend be more like the PCs and to dislike Mr. Harper’s harder edges, and the idea that it’sjust Mr. Harper’s party.

The Prime Minister spoke extensively about Mr. MacKay’s role in the party merger, about how there were two signatures on the agreement, “my own and Peter’s.” It changed the course of Canadian politics, he noted, at a time when a Paul Martin landslide was a foregone conclusion. “It took a spirit of humility, and it took a willingness to compromise,” he said.

Those are the kinds of characteristics Mr. Harper is often accused of lacking, of course, and that’s what turns off some of those soft supporters. The PM went to Nova Scotia to speak about Mr. MacKay, and his speech was about a broad party.

Mr. MacKay, too, expressed gratitude to Mr. Harper, and insisted that he’s still on the team and will campaign for the party this fall. “I’m not jumping ship,” he told reporters who asked if was bailing because of the party’s poor fortunes in Atlantic Canada.

On the scale of his accomplishments, he said he placed the Conservative merger behind things he’d done for Nova Scotia, though he said “reuniting the Conservative family” was a “point of pride.” Then he noted that he had negotiated for internal voting rules like the old PC party had – at pains to insist, years later, that he got a good deal for his former partisans.

It’s Mr. Harper, however, who really wanted to mark the moment by stressing unity. His cohort, the prominent politicians in the cabinet when he came to power, are mostly gone, and the last leader of the PCs is gone, and Mr. Harper remains. But he wanted to send a message to soft supporters that the Conservative Party is still a big tent.

 

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Western premiers talking diversification in light of low oil prices

REGINA — The Canadian Press

Published Monday, Jun. 01 2015, 6:48 PM EDT

Last updated Monday, Jun. 01 2015, 6:50 PM EDT

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Canada’s western premiers discussed ways to diversify their economies in light of plunging oil prices during a teleconference call Monday.

Saskatchewan Premier Brad Wall was host on the call that was a substitute for the annual western premiers meeting to save time and money.

Both he and British Columbia Premier Christy Clark noted that their provinces are heavily reliant on resource revenue, but have had to find other ways to bring in cash with the downturn in energy prices.

“We’re talking about oil obviously. It’s gone up and down, and I remember in 2009 it touched under $40 at the time and the province continued to grow. We’re pretty fortunate in Saskatchewan. We’ve been lucky to have a more diversified economy in terms of other resources,” Wall said in the call.

“We need to make sure that with respect to falling commodity prices that other parts of the economy are functioning well, that we can access other markets.”

Clark said other markets has been a boon for B.C., which is seeing significant growth in the Pacific Rim and especially China.

She suggested that isn’t anything new since western provinces have been at the whim of fluctuating commodity prices for years.

“It’s lessons learned. Not just in the wake of the oil price crash,0 which had less impact on British Columbia, but in the wake of some of the other changes that we’ve seen in the natural gas market.

“By now I think most Canadians know that we do need to have diversified economies to protect against it.”

Wall said agriculture and potash are helping to pay the bills in his province, while Clark said forestry and liquefied natural gas will help make ends meet in B.C.

The provincial and territorial leaders also expressed strong support for federal efforts to encourage the United States to act on a recent World Trade Organization ruling to bring an end to country-of-origin labelling of meat products.

Wall said the call was attended by everyone except Alberta’s new Premier Rachel Notley, who miscalculated how long it would take for the swearing-in of her new government in Edmonton.

“We had Alberta officials certainly on the call and I understand what’s happening in Alberta is some significant change,” said Wall.

“We had arranged for the time to accommodate everybody, but apparently the swearing-in ceremony was going to be a little bit later than they thought.”

There was also a detailed discussion on aboriginal children in care, as well as on missing and murdered indigenous women and girls.

“We’re very much interested in learning from other jurisdictions ... as to what they’re doing and sometime the benefits of these kind of conferences — and the conversation that flows from them — is the chance to share best practices and bring them to our own jurisdiction.”