RBA HOUSEHOLD DEBT WARNING

Reserve Bank governor Philip Lowe has taken aim at interest=only loans and made a small reference to negative gearing at the Reserve Bank board dinner in Melbourne last night. In the speech, Lowe warned about the risks of lending to households who might not be able to pay down their debt, saying: “Too many loans are still made where the borrower has the skinniest of income buffers after interest payments. In some cases, lenders are assuming that people can live more frugally than in practice they can, leaving little buffer if things go wrong.”

Comments about interest-only loans come after announcements from the banking regulator APRA and corporate watchdog ASIC that they would be cracking down on interest-only loans, changes Lowe welcomed. In remarks characterised as “interven[ing]” in the tax debate before the budget by Fairfax’s Peter Martin, Lowe also made a quick reference to negative gearing, saying: “A second factor is the taxation arrangements that apply to investment in residential property in Australia.”

It wasn’t all about lending and tax, though. Lowe said that addressing issues of demand was also important for arresting price hikes and levels of debt in Australian households. The Australian called the comments “part of a co-ordinated campaign by the Council of Financial Regulators, which he chairs, to restrain the surge of property investment in the two major capital cities”.

ONE NATION FALLOUT

The fallout from the Four Corners report on the backroom issues of Pauline Hanson‘s One Nation has resulted in accusations being thrown in all directions, and the Australian Electoral Commission is also set to investigate the party over the ownership of the light aircraft used to ferry Hanson around to regional Australian towns. In The Australian, Senator Brian Burston has hit back at former party treasurer Ian Nelson, who spoke to the ABC, saying he owes the party money. Meanwhile preference whisperer Glenn Druery has told the ABC he has been directing preferences away from the party since 1999 in reaction to immigration policies he labels “racist”.

COMPANY TAX CUTS MODELLING AND PUB TEST

Preliminary analysis by the Grattan Institute shows the government’s $24 billion company tax cut will only grow the economy by 0.2%, despite the government’s claim the impact would mean substantial growth. Treasurer Scott Morrison wasn’t happy with reporters who insisted on asking about modelling of the benefits of the tax cuts, which have been a major pillar of the government’s economic policy. 

“I tell you what, if you go down the pub and you talk to small business people, they’re not talking about econometric models. What they’re talking about is how they’re going to grow their businesses,” the Treasurer said. One reporter took him up on the idea.

WHAT’S ON TODAY

Latrobe, Tasmania: The prime minister is in the Apple Isle today and is expected to visit the Mersey Community Hospital in the north-west of the state.

Canberra: The High Court, sitting as the Court of Disputed Returns, will hand down its judgment on the eligibility of former Family First Senator Bob Day. Day resigned from the Senate in October after his business went into liquidation, but the court will rule on whether or not his election was valid in the first place. If the court decides his election was valid, it looks likely Day could be replaced by his former chief of staff Rikki Lambert, who is now working for independent Senator Cory Bernardi.

COMMENTARIAT

Melbourne holds the answer to the housing crisis — Paul Bloxham (Australian Financial Review $): “This contrast between Melbourne houses and apartments helps to answer the bubble question. The root cause of the rise in housing prices is that demand has outstripped supply.”

Beware of politicians selling empty promises of jobs and growth (Sydney Morning Herald): “Our uncritical obsession with jobs – any jobs – leaves us open to manipulation by business people and politicians with their own barrows to push.”

University sexual assault project will see results for students — Kate Jenkins (The Age): “The fact that universities have asked the commission to independently investigate the issue of sexual assault and sexual harassment, by conducting both a national survey and an open call for submissions, shows that they intend to take the report seriously.”

If you don’t wear this ring, you’re a bigot. What? — Miranda Devine (The Daily Telegraph $): “The last thing we should be importing is the “Arab Street” culture of intimidating those whose views are deemed unIslamic.”

THE WORLD

The Syrian government has again been accused of using chemical weapons. A bombing raid of Khan Sheikhun on Tuesday resulted in about 60 deaths, with reports indicating victims presented symptoms associated with serious toxins. Whitehouse spokesperson Sean Spicer condemned the attack as “reprehensible”, blaming the Syrian leadership as well as former president Barack Obama. The Syrian government has denied responsibility for the attack. — The Guardian

The person accused of blowing himself up on the St Petersburg metro has been named as Akbarzhon Jalilov, a Kyrgyzstan-born man who had taken up residence in the Russian city. Russian officials said Jalilov had radical Islamist links although no group has claimed responsibility for the blast. — Reuters

Pressure is mounting on South African President Jacob Zuma after he was abandoned by a key union body. The African National Congress leader recently sacked Finance Minister Pravin Gordhan, a move that was followed by a downgrading of South Africa’s credit rating to junk status. Adding to Zuma’s problems, the Congress of South African Trade Unions has now called for his resignation before the completion of his second five-year term in 2019. — BBC

WHAT WE’RE READING NOW

Melinda Gates: Foreign aid cuts to contraceptives in Trump’s budget hurt millions of women (USA Today): Many people don’t realize the role contraceptives play in building a more stable and prosperous world. For most of my life, I certainly didn’t. But after [Bill Gates] and I started our foundation and I began spending time in developing countries, women kept telling me about their unmet need for family planning and asking what I could do to help. When I started looking at the data, I learned that contraceptives are actually one of the greatest anti-poverty innovations the world has ever seen.”

Fox serves up a fetid reminder that when you’re a star, you can still do anything (Washington Post): “If the accusations of dozens of women over two decades are correct — and it is hard to dismiss the women, as the accused have done, as unbalanced, dishonest or disgruntled — then Fox News is the focus of hypocrisy in the modern world.

S-Town is a stunning podcast. It shouldn’t have been made (Vox): “The latest project from the Serial team is a brilliant, complex, and incredibly invasive deep dive into one man’s life.”

How Uber uses psychological tricks to push its drivers’ buttons (New York Times): “Employing hundreds of social scientists and data scientists, Uber has experimented with video game techniques, graphics and noncash rewards of little value that can prod drivers into working longer and harder — and sometimes at hours and locations that are less lucrative for them.”

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Peter Fray

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