Australian politics live: economy grows 3.3% in September quarter, national accounts reveal

Philip Lowe is accompanied at today’s hearing by Guy Debelle, a deputy RBA governor. Debelle has just shown Lowe the growth number in the national accounts.

The governor is pleased. It’s very good, he says. (Lowe was hoping for more than 2% in today’s numbers. The growth number is 3.3%).

Household spending rebounded in the September quarter, rising 7.9%, after a big fall of 12.5% in the June quarter, the ABS said.

However, it said spending remained weak, down 6.5% through the year.

“Reductions in Covid-19 case numbers led to the relaxing of social distancing measures and other restrictions, encouraging spending on services which rose 9.8%. Hotels, cafes and restaurants, recreation and culture and transport services rebounded. Spending on health services recovered as deferred elective surgeries and visits to medical practitioners resumed.”

The ABS added that spending on goods increased 5.2% this quarter and was up 3.5% through the year.

However the Melbourne lockdown was cited as a factor in constricting Victoria’s economy during the period.

“Victoria’s state final demand fell 1.0%, the only state to record a fall, driven by declines in household spending and investment. More stringent restrictions associated with the second lockdown resulted in a 9.8% fall through the year. Household spending declined 1.2% in September quarter, driven by clothing and footwear, furnishings and recreation and culture. Spending on food rose 6.6%, partly offsetting the fall, as households prepared for the second lockdown.”

The economics committee has moved on to infrastructure. Should we be spending more to pump prime the economy?

Philip Lowe says if the economy “disappoints” next year “this is a lever that could be pulled”.

He says there is limited capacity for big projects in cities like Sydney, but there could be maintenance programs and smaller scale interventions, like repairs.

“The country should be looking for other levers and this is one potentially we could pull,” Lowe says.

The Labor MP Peta Murphy is trying to work out whose responsibility that would be in the federation.

Again Lowe doesn’t want to transgress. This is an idea for all governments, the RBA governor says.

He says it would be a combination of governments preparing these kinds of programs, and this is something they could be planning now.

Murphy has now moved on to think tanks and the RBA’s relationship with them.

Are you sponsoring the Centre for Independent Studies and the Sydney Institute, Murphy asks, citing a reference in the RBA annual report?

Lowe says the bank circulates with various think tanks and gets their reports.

Murphy wonders if the bank only circulates with right wing think tanks.

Why not Per Capita? Or the Grattan Institute?

Lowe says the bank’s objective is even handedness. He says he’ll come back to Murphy in writing.

The ABS says the growth of 3.3% in the September quarter – following the record 7% decline the previous quarter – came as Covid-19-related restrictions eased across most states and territories.

In its statement accompanying the results, the ABS says household consumption contributed 4.0 percentage points to GDP growth, as restrictions lifted for households and businesses. Public demand contributed a further 0.3 points.

But the ABS makes clear the economy isn’t out of the woods yet:

“While there was an improvement in GDP this quarter, the level of activity in the economy remains lower than prior to the pandemic, reflected in a 3.8% decline through the year.”

The Australian economy rose 3.3% in the September quarter, the latest national accounts reveal.

The national accounts, released by the Australian Bureau of Statistics just now, shows that rise in seasonally adjusted chain volume measures, after a 7% fall in the June quarter.

That 7% fall was the biggest fall ever seen since records began in 1959 in Australia.

Through the year, the ABS said, GDP fell 3.8%.

It also said terms of trade rose 0.7%, and the household saving ratio decreased slightly.

The high court has allowed appeals from four full federal court judgments, a setback for home affairs minister Peter Dutton, who had attempted to prevent the federal court hearing asylum seekers’ claims Australia had breached a duty of care towards them.

The asylum seekers all brought federal court cases while they were in regional processing, claiming they had not been provided adequate medical treatment in Nauru. The commonwealth argued the federal court did not have jurisdiction, because the Migration Act says that certain proceedings including those relating to people transiting through Australia for medical treatment “may not be instituted or continued in any court”.

The high court unanimously held that section does not take away the jurisdiction of courts and does not limit the authority of the relevant courts to decide claims.

However, it does provide the commonwealth with a defence, and some of those defences did apply to the four asylum seekers.

So – the general principle that the commonwealth is answerable to courts has been re-asserted, but it won’t necessarily mean every claimant will win.

The Liberal MP Celia Hammond wants to draw Philip Lowe out on his wishlist for structural reform.

Lowe, for obvious reasons, is a reluctant dance partner.

“This is not my job, thankfully the politicians of Australia don’t advise me on monetary policy so I won’t advise them on structural reform.”

Lowe says it is not his job to advocate specific policies, but he cites a bunch of reports pointing to problems with the tax system, a lack of energy policy, regulatory issues holding back entrepreneurship and innovation.

Hammond wants to know whether it’s important for companies to be profitable.

Lowe obviously thinks this question is a full toss (as of course it is).

Of course corporate profitability is important, but he says profits come from good ideas, not from low tax rates.

Lowe says that’s the crux of the issue: building a culture of good ideas that generate profits and employment prospects for Australians.

There is an update on the concerns for Parliament House’s water supply reported yesterday, after legionella was detected in at least nine bathrooms across the Canberra building.

The Department of Parliamentary Services has clarified that the traces of legionella (the bacteria which causes Legionnaires’ disease) detected pose no risk to human health, and do not meet the threshold for mandatory reporting by the Department of Health.

A DPS spokeswoman told Guardian Australia:

DPS manages regular routine testing of water quality across Parliament House which is conducted by an independent laboratory. This is a common practice for large buildings.

A level of 10 to 100 colony forming units per millilitre (CFU/mL) is commonly found in water cooling systems. Legionella testing conducted in late November identified a small number of samples in specific areas with low-level traces of legionella.

Legionella pneumophila, which is the common cause of Legionnaires’ disease was present at less than 10 CFU/mL in the identified locations…The Australian Standard AS 3666, Air-handling and water systems of buildings – Microbial control state an acceptable limit of less than 10 CFU/mL.

DPS was advised of these results (on Tuesday) and immediately responded by commencing a standard process of high temperature flushing of water pipes in reported areas. The locations will be re-tested again to confirm that the flushing process has addressed the issue.

On Tuesday, Guardian Australia reported that maintenance workers were sent into nine bathrooms to resample the water supply, after recent tests across the building returned “a stack of positive” results for legionella bacteria in water drawn from showers and hand basins.

Not content with throwing 50 Shades of QE into the mix, Andrew Leigh is keeping it feisty.

He wants to know if the RBA is in danger of becoming a closed shop because the culture of the bank is to promote people from within the organisation.

Leigh notes a closed shop insufficiently open to new ideas. (Like negative interest rates – for example – is implied not stated).

Lowe has a placid demeanour and he is unruffled by this affront.

“It’s a risk and one we discuss internally quite a lot,” the governor says. He says the bank has made appointments from outside, and there is a robust culture of internal debate.

Lowe says colleagues have no difficulty in telling him he’s wrong about something.

Leigh wonders if the public would benefit if the governor had more press conferences where he could take more questions. Lowe isn’t interested in that.

The governor says he makes a lot of speeches. In terms of press conferences, Lowe says:

“I will speak when I’ve got something important to say”. Like an oracle.

(To be clear, the governor did not describe himself as a oracle. That’s me, describing him as an oracle).

Andrew Leigh, Labor’s deputy chair of the economics committee, and an economics professor, is deep now in negative interest rates territory.

Just for context, the central bank doesn’t like negative interest rates.

Philip Lowe still doesn’t like them. (The simplest way to describe negative interest rates is banks paying people to borrow).

Leigh would like the bank to be thinking harder about negative rates as an option.

Lowe says the consensus among central banks in the English-speaking world is negative rates cause more problems than it solves.

Leigh is now referencing a paper called 50 Shades of QE.

I think my head just exploded. Full disclosure.