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Articles by David Plank
BUDGET HILIGHTS: What to expect
The Australian Government has delivered its 2022-2023 Federal Budget, focusing on “reprioritisation” and a start to budget repair in a difficult economic environment. With household spending slowing and cost of living on the rise, relief comes in the form of childcare subsidies, disaster-related spending, amended medication subsidies and more. You can see all the details in our easy-to-read infographic below.
The cash rate’s balancing act
As to how the RBA gets to a restrictive setting, continued 50 basis point moves until November seem most likely. The RBA will want confirmation it is not moving well beyond neutral so will take advantage of its more frequent meetings by not jumping too far at any one time. But ANZ Research does think moves of more than 50 basis points in August or September are a very real possibility although not the central case.
Aus economy: strong spending at sales, cinemas
It is likely consumers will cut back on discretionary items if they choose to limit spending. So ANZ Research - and the Reserve Bank of Australia - will be watching this aspect closely over coming weeks. Madeline Dunk is an Economist and David Plank is Head of Australian Economics at ANZ
Budget 2022-23: at a glance
Improvement The underlying cash balance for 2022-23 is expected to be a deficit of $A78 billion. From there, it is forecast to improve further with the deficit narrowing to $A43.1 billion (1.6 per cent of GDP) by 2025-26. This is better than ANZ Research had expected – and it all comes from a stronger economic outlook. Offsetting this partially is the new spending. The primary focus of this is around infrastructure and policies to ease cost-of-living pressures.
Budget 2022-23: in pictures
Head of Australian Economics at ANZ The Australian Federal Government has announced almost $A40 billion of new spending across the five years from 2021-22, comfortably beating ANZ Research expectations. Something went wrong, please refresh and try again. This email is already subscribed to the list. Invalid email address, please try again. Importantly, more than half is set to occur in the current financial year and 2022-23. This adds to demand at a time when the economy is already strong.
What the European conflict means for business
The crisis in Ukraine is a tragedy and the human cost innumerable. But for business in the Asia-Pacific region, at least for now, the first-order impacts of the crisis are unlikely to be substantial. The two nations involved in the crisis - Russia and Ukraine - are large in population but not in economic terms. Sanctions put in place so far have been designed not to significantly damage the West economically, including exceptions to restrictions on the SWIFT financial messaging system.
Budget 2022-23: economic outlook continues to improve
Driving Further improvement to the economic outlook, particularly the labour market, is expected to drive deficits lower across the government’s forward estimates. Relative to the Mid-Year Economic and Fiscal Outlook (MYEFO) in December, ANZ Research expects the deficit to be about $A80 billion lower over the five years from 2021-22. An expected lift in discretionary policy spending will only partially offset the strong improvement.
Retail remains resilient amid re-emerging crisis
Economist & Head of Aus Economics, ANZ The extended Sydney lockdown, Melbourne and Adelaide’s July lockdowns, and the August Melbourne, Sydney and Brisbane lockdowns are likely to weaken September quarter retail spending substantially. Click image to zoom Tap image to zoom Pinch to zoom However, ANZ data suggest once lockdowns are over the impacts on spending and consumer confidence also end. This is a good sign for fourth quarter retail - if the various lockdowns end by then.
Outlook splits across the ditch
At 24 months (August 2021 versus August 2023, respectively), the current lag between the first moves of each central bank would be the longest since 2000 (noting the RBNZ only shifted to using a formal cash rate in early 1999). Of course, the fact the timing gap is expected to be the longest ever doesn’t mean the forecasts are wrong.
All lockdowns are not created equal
The combination of the longer shutdown in Sydney and restrictions in other states suggests gross domestic product (GDP) will take a bigger hit than initially anticipated. ANZ Research now expects GDP to fall 1.3 per cent in the third quarter compared with the previous estimate of +0.4 per cent and a pre-Sydney lockdown estimate of +1.1 per cent. This decline is based on the assumption most restrictions in Sydney will continue until the end of September with a gradual easing through October.
State of origin: spending rocked by lockdown
Economist & Head of Aus Economics, ANZ Victoria’s latest lockdown has pushed state-wide weekend spending down 40 per cent while the spending impact of Sydney’s lockdown was around 30 per cent for the weekends - before new lockdown rules on 19 July. Click image to zoom Tap image to zoom Pinch to zoom Sydney spending will likely slow further as intensified and ongoing lockdown conditions hit the data.
IN CHARTS: salaries survive subsidy cliff
Economists & Head of Australian Economics, ANZ Average salary deposits rose in April after a weak March, signalling some strength in the labour market despite the end of the government’s JobKeeper wage subsidy. Click image to zoom Tap image to zoom Pinch to zoom Monthly growth of average salary deposits in April was the strongest monthly result in the ANZ deposits data so far.
IN CHARTS: spending stable so far in post-JobKeeper economy
While the share of spending going to retail is nowhere near lockdown levels, the share of total spending devoted to retail for the week to 2 May 2021 was 53 per cent – 6 percentage points higher than the comparable period in 2018 and 2019. Entertainment, services and travel spending have still not recovered to pre-pandemic levels but most other retail categories have.
Australian Federal Budget: what to expect
This spending though will be dwarfed by improvements in the economic outlook providing an expected improvement of about $A170 billion over the same time. One meaningful policy decision is likely to be the extension of the low-and middle-income tax offset which is currently set to expire in 2020-21. There will also be important spending announcements in areas such as aged care.
Spending heats up over Summer break
Economist & Head of Aus Economics, ANZ National ANZ-observed spending was up 5 per cent year-on-year for the week to 17 January. But, within this national total, spending in some areas was weaker as a consequence of COVID-19 restrictions. For instance, spending in Sydney was down 11 per cent year-on-year in this week.
Spending survives fiscal cliff. For now…
Economist & Head of Aus Economics, ANZ National ANZ-observed spending growth was +4.3 per cent year-on-year for the week to October 10, including −16 per cent year-on-year in Victoria and +9 per cent year-on-year average elsewhere. Click image to zoom Tap image to zoom Pinch to zoom There isn’t any evidence from the data the reductions in JobKeeper and JobSeeker are hitting spending - yet. This is the key risk to spending in the short term.
FEDERAL BUDGET IN PICTURES: 2020 vision
Head of Australian Economics at ANZ The 2020-2021 Australian Federal Budget has been unveiled and the post-COVID recovery is at its centre. Assistance for households, employment and investment in technology headline a host of measures looking to help the economy take the extra step on the road to recovery. You can see all the key details in our easy-to-read and easy-to-share infographic below.
Budget 2020: finally
ANZ Research expects the Australian government to announce an underlying cash deficit of about $A250 billion for the 2020-21 financial year when the Federal Budget is unveiled on October 6. Smaller but still large deficits will follow in later years.
Tracking a COVID-recovery
One is that most economic activity loss was due to necessary social distancing related restrictions. This caused a rapid deterioration in economic activity, as seen in the record decline in Q2 gross domestic product (GDP). It could also mean, though, economic recovery may be more rapid than usual as restrictions ease.
New stimulus drives strong recovery
ANZ Research expects GDP to have expanded at a modest pace in the September quarter with the opening up of businesses and easing of restrictions outside Melbourne more than offsetting another fall in activity in Victoria. Performance across the states has diverged sharply over the quarter with Western Australia picking up sharply while New South Wales looks to be languishing alongside its south-eastern neighbour.
Lockdown 2.0 slows spending gains
Economist & Head of Aus Economics, ANZ Melbourne’s return to stage 3 lockdown and the closure of the New South Wales-Victoria border has seen spending take a hit across the state. Click image to zoom Tap image to zoom Pinch to zoom ANZ-observed spending in Melbourne fell 11.6 per cent year-on-year for the week to 18 July, while in Victoria it fell 7.1 per cent year-on-year.
COVID-19: less interesting than the weather
Economist & Head of Australian Economics, ANZ The internet searching behaviour of Australians suggests fear of and interest in COVID-19 has subsided considerably. Click image to zoom Tap image to zoom Pinch to zoom During the peak in infections there was a lot of searching for symptoms of the virus, terms like “sore throat” and “fever”.
Charting an easing of restrictions
Economist & Head of Aus Economics, ANZ Retail spending* is still elevated, up 15.3 per cent year-on-year for the week to 15 May, according to ANZ-observed data. But the excitement of freer movement (particularly in Western Australia, Queensland and NSW) seems to be already wavering.
Off the beaten path to track sentiment via Google searches, foot traffic
Economist & Head of Australian Economics, ANZ As Australia moves through the next phase of the COVID-19 pandemic, ANZ Research is looking to alternative data sources to provide a timely snapshot of sentiment and economic activity. Click image to zoom Tap image to zoom Pinch to zoom Australia appears to be on the brink of controlling the spread of the virus, with the number of new daily cases in mid-April averaging just 14.
House-buying related searches plummet during pandemic
These frictions imposed on the housing market, combined with the likely sharp rise in the number of unemployed (and underemployed), make it hard to see how house prices, which were up 10 per cent from the low in June 2019, can rise from here. "If this fall eventuates, it would be the sharpest decline in house prices, across a four-month period, since at least 1980.” The ANZ Housing Search Index (HSI) combines internet search numbers for house-buying related terms.
IN PICTURES: Aus spending declines
Economist & Head of Aus Economics, ANZ Click image to zoom Tap image to zoom Pinch to zoom Total ANZ-observed retail spending1 has been below last year’s spending since Easter, for the first time since the Australian bushfire season.
Social spending drops in isolation
Economist & Head of Aus Economics, ANZ Household consumption in Australia has entered a new paradigm as people adjust to lockdown measures. Most people in Australia are either working or studying from home, caring for others, or social-distancing while unemployed. Click image to zoom Tap image to zoom Pinch to zoom The most direct effect of lockdown is on categories related to socialising.
Waking up to a different world
The package is estimated to cost $A130 billion over six months on the basis it will be used to subsidise the wages of six million workers. That this equates to almost half the work-force demonstrates the enormous scale of the package and the challenge facing the economy.
Aus retail: stockpiling peaks
Economist & Head of Aus Economics, ANZ Spending on groceries, toiletries and pharmacy products seems to have peaked in the week ending 20 March, with all categories together having grown 80 per cent year-on-year. Click image to zoom Tap image to zoom Pinch to zoom Since then, a slowing of year-on-year growth in groceries and toiletries suggests the average household is either stocked up already or becoming less concerned about supply chain issues for the essentials.
Quantifying quantitive easing
ANZ Research doesn’t think the RBA will follow an April official cash rate (OCR) cut with a move to QE as early as May. Fiscal stimulus will shortly add to rate cuts in trying to offset the impact of COVID-19, with the Government announcing its package on 12 March. Additional fiscal stimulus may also be delivered in the Federal Budget announced in May. Depending on its extent and impact and the spread of the virus, a move to QE may be delayed or avoided.
Coronavirus grounds airport spend
Economist & Head of Aus Economics, ANZ Airport spending dropped steeply in February, reflecting coronavirus-related travel bans and lower appetite for international travel, according to internal ANZ data. Spending in small airports with mostly domestic flights did not fall. Click image to zoom Tap image to zoom Pinch to zoom Spending in major airports (Brisbane, Melbourne, Perth, Sydney) dropped 27 per cent from the week ending 21 January to the week ending 8 February.
Confidence and wellbeing: on different paths
To develop the Indicator, ANZ and Roy Morgan replicated the results of key questions from ANZ’s 2017 survey into the Roy Morgan Single Source survey which canvasses approximately 50,000 Australians annually. In addition to yielding an overall financial wellbeing score (out of 100), the questions are designed to measure three components of financial wellbeing – meeting everyday commitments, feeling comfortable and resilience for the future.
Australian bushfires: impacting GDP
The brunt Three of the most significant natural disasters – the 2010/11 Queensland floods, Black Saturday and Ash Wednesday – saw employment drop over the following two months in directly impacted states. Regional workers and communities are likely to bear the brunt in 2020, particularly in industries such as tourism.
Aus Christmas retail: bah humbug
Economist & Head of Aus Economics, ANZ As the 25th of December looms nearer and nearer, shoppers have started flocking to shopping centres and online stores to try make a start on their Christmas lists. Click image to zoom Tap image to zoom Pinch to zoom However, a challenging year for the Australian economy has meant shoppers are warier of spending big – and it’s having an impact on retail sales numbers.
Kyuuka wo tanoshinde ne!
Economist & Head of Australian Economics, ANZ The number of Japanese travellers to Australia has surged. But it turns out this trend is not unique to Australia. Click image to zoom Tap image to zoom Pinch to zoom Around the globe, Japanese traveller numbers are up almost 24 per cent since 2015, compared to almost no growth in the previous 15 years.
The Changing Role of County Offices of Education: Survey Results
Authors: David N. Plank, Daniel C. Humphrey, Jennifer O'Day Year of publication: In this brief we summarize findings from three surveys that sought to learn how county offices of education (COEs) are changing in response to the implementation of the Local Control Funding Formula (LCFF) and the Statewide System of Support (SSS).
Aus house prices lift. Déjà vu again?
Sydney’s auction clearance rate and prices suggest it can sometimes take a few months for house prices to catch up with the move in the auction clearance rate. This was the case in the last big upturn in 2016. So ANZ Research doesn’t necessarily take the lag in house price growth versus auction clearance rate as evidence there won’t be a dramatic acceleration in prices over coming months. Yet ANZ Research are expecting this cycle to play out differently than in the past.
International education in Australia: more than just China
Economists and Head of Australian Economics, ANZ The trade war will weigh on the flow of overseas students into Australia in the short term but growth in living standards in emerging nations should prove fruitful for the education-as-a-service sector. Click image to zoom Tap image to zoom Pinch to zoom Tourism and education are the primary drivers of service exports in Australia and China is the strongest contributor – at least up until 2019.
Credit where due with property confidence
In particular, the marked improvement in credit availability was especially encouraging given ANZ Research’s view that restricted credit has been the key factor behind the downturn. Confidence improved broadly across the country, with New South Wales, Victoria, Queensland, Western Australia and South Australia all posting gains, suggesting to ANZ Research the worst of the house price falls are probably behind us.
Trade dispute: heading down under
If the global outlook worsens sharply from the trade war, a swift policy response including fiscal stimulus measures would seem appropriate. Furthermore, if conditions worsen, moves from the Reserve Bank of Australia could play an important role. With the official cash rate already closing on its lower boundaries, quantitative easing looms as a legitimate response.
Making Early Education a Priority: Evidence from the 2019 PACE/USC Rossier Voter Poll
Year of publication: Publication: Policy Analysis for California Education Governor Gavin Newsom campaigned on a “cradle to career” education strategy that identified childcare and early education as key priorities. The Governor’s 2019 Budget Proposal follows through with the inclusion of several initiatives aimed at increasing support for children five and younger.
Household budget pressures: it’s a long way to the shop
Economist & Head of Aus Economics, ANZ Australian households are moving their spending away from retail. Click image to zoom Tap image to zoom Pinch to zoom The latest ABS data shows nominal household expenditure grew by 3.7 per cent in the year to December 2018 while nominal retail expenditure grew by just 3.0 per cent year-on-year in the same period.
FEDERAL BUDGET 2019: Labor’s alternative
In part, ANZ Research thinks this reflects a focus on only those tax cuts announced on the night, rather than taking into account the cuts announced last year and in the Mid-Year Economic and Fiscal Outlook (MYEFO) - which households have not yet received because of the delivery mechanism (i.e. a refund payable after 1 July).
FEDERAL BUDGET 2019: the graphic truth
Head of Australian Economics at ANZ The Australian government delivered a sober, pre-election budget with few surprises. Here are the key elements: Click image to zoom Tap image to zoom Pinch to zoom Click image to zoom Tap image to zoom Pinch to zoom You can read bluenotes’ full coverage of #Budget2019 HERE. David Plank is Head of Australian Economics at ANZ The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.
ANZ jobs ads: continue to trend lower
ANZ’s head of Australian Economics, David Plank, commented: “The labour market has been a key source of strength for the Australian economy over the past year, with the strong gain in jobs and declining unemployment rate providing a material offset to the impact of lower house prices. The year ahead looks to be more challenging on the employment front, with ANZ’s Australian Job Ads series declining for the fourth month in a row.
ANZ Job ads: Gloomy start to 2019
ANZ Job Ads fell 1.7% m/m in January and were 3.7% below the January 2018 level. This is the first annual decline since April 2015. In trend terms, job ads fell by 0.5% m/m, the eighth consecutive month of trend declines. The trend declined 0.7% on a yearly basis; the first such decline since August 2014. “ANZ Australian Job Ads slipped into negative annual territory in January for the first time since March-April 2015.
Californians and Public Education: Views from the 2019 PACE/USC Rossier Poll
Authors: Morgan S. Polikoff, Heather Hough, Julie A. Marsh, David N. Plank Year of publication: Publication: Policy Analysis for California Education With a new Governor, State Superintendent, and Legislators in Sacramento and a diminished federal role in education, there is an opportunity for California’s leaders to take stock of recent educational reforms and make necessary improvements.
Consumer confidence: A down-up-down start to 2019
ANZ-Roy Morgan Australian Consumer Confidence was down 0.9% last week, giving back much of the prior week’s gain. The overall index is still above its starting point for 2019, though it is almost 5% lower than its average for January 2018. Financial conditions declined, with current and future financial conditions falling by 0.3% and 2.4% respectively. Both indices are around the levels seen this time last year and above long-run averages.
Aus residential property: little sign of optimism
One of the most important indicators in the survey relates to finance availability. This is particularly relevant in the current environment where macroprudential policies and tighter bank lending conditions triggered the initial slowdown in the housing sector. In the latest survey, firms expected finance availability to worsen further over the next 12 months from what was already the worst level on record.
Consumer confidence: soft start to the year
ANZ-Roy Morgan Australian Consumer confidence has started 2019 with a fall of 2.2%. Current financial conditions fell by 4.3%, the third consecutive fall, while future financial conditions bucked the overall trend and rose 1.1%. Economic conditions declined, with current and future economic conditions falling by 4.2% and 3.1% respectively. The ‘time to buy a household item’ fell 1.1%. Four-week moving average inflation expectations were stable at 4.3%.
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