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RBA rate cut could inflate housing bubble: QUT economist

AN INTEREST RATE cut by the Reserve Bank of Australia tomorrow (Tuesday) would risk stoking the real estate fire a QUT economist has warned

QUT financial economist Dr David Willis said the RBA should not move on interest rates while inflation and the Australian dollar were at reasonable levels.

The RBA has kept the cash rate at 2.5 per cent for the past 18 months.

"The risk of lowering interest rates is that the market may assume the RBA will continue to cut further and the currency will fall below its preferred level," Dr Willis said.

"Last year the RBA made it quite clear that it would like to see the Australian dollar at about 75 US cents so with it currently sitting at 78 cents it is close to their preferred level.

"In addition the RBA doesn't want to risk stoking the real estate fire and potentially creating an artificial bubble in the housing market.

"So I cannot see any hard and fast reason why the RBA should move."

Dr Willis said he expected growth in the Australian economy would be below the long term average but the chances of a recession were "close to nil".

"With inflation still in the middle of its preferred range, there is no really compelling reason to lower rates as the economy is not in danger of deflation, as it is in Europe and Japan, and is in no danger of recession," he said.

"The AUD will fall over this year but it will be a slow decline which the economy can adjust to as it falls.

"The Australian economy is still under structural change from mining to consumption-led growth. But with low interest rates already and low petrol prices, there is enough stimulus in the economy and plenty for the consumer to either spend, save or pay debt down."

Dr Willis said the rate of unemployment was the main issue for the RBA.

"But dealing with this may be more a need for fiscal stimulus than anything the RBA can do as monetary policy is already quite accommodating," he said.

www.qut.edu.au

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Job seekers to benefit from new vocational education measures

THE Australian Retailers Association (ARA) today welcomed the re-elected Baird Government’s announcement of new vocational education and apprenticeship measures – making it easier for at least 240,000 young people to gain employment.

The plan is to make it free for 200,000 disadvantaged young people to go to TAFE and other vocational education and training providers.

ARA Executive Director Russell Zimmerman said the program will fit perfectly into the work retailers are already doing to skill staff into jobs.

“The ARA has been running a number of programs to assist job seekers with the assistance of the NSW and Federal Governments, with today's announcement an fitting addition to help young job seekers into known retail developments and new career pathways.

“Premier Baird is continuing to support retail in NSW as a corner stone of the state's growing economy and this initiative will see benefits for job seekers and employers alike,” Mr Zimmerman said.

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Since 1903, the Australian Retailers Association (ARA) has been the peak industry body representing Australia’s $265 billion retail sector, which employs over 1.2 million people. The ARA ensures retail success by informing, protecting, advocating, educating and saving money for its 5,000 independent and national retail members throughout Australia.

Visit www.retail.org.au or call 1300 368 041.

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DCA welcomes backtrack on Paid Parental Leave Scheme

DIVERSITY Council Australia welcomes the Prime Minister’s announcement that the Government would shelve the expanded Paid Parental Leave scheme in favour of reforms focusing on improving access to and affordability of childcare.

Lisa Annese, DCA’s CEO, said one of the biggest factors affecting the participation of female employees in organisations is childcare.

“In a survey of our employer member organisations in 2014, nearly 95% of employers said access to and availability of affordable childcare presented difficulties for their employees," Ms Annese said.

"There is no doubt that this is a major disincentive to women participating more fully in the workforce.”

Paid Parental Leave (PPL) is important but childcare is a bigger issue for employers, according to Ms Annese.

“The existing government funded PPL scheme provides a very important safety net for new parents," she said.

"However, as suggested by the Productivity Commission and in line with feedback from our members, we support the Government’s plan to direct funds allocated for the expanded PPL scheme towards improving accessibility and affordability of childcare as this is likely to have a greater positive impact on the workforce participation of women,” said Ms Annese.

Access to flexible working and careers is also critical to women’s workforce participation, added Ms Annese.

“DCA encourages the Government to ensure that an emphasis on workplace flexibility is promoted and supported as a critical part of maintaining progress on workplace gender equity and supporting parents – especially those with younger children – to remain in paid work. Clearly, more needs to be done to support the cultural shift in Australian business necessary to mainstream flexibility to the benefit of Australian parents."

www.dca.org.au

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Brisbane secures leading national cultural festival

QUEENSLAND will stage Australia’s only Baroque festival under a new three-year agreement, reinforcing the state’s reputation as a cultural mecca.

Tourism and Events Queensland (TEQ) CEO, Leanne Coddington, said the popular festival, previously hosted in Hobart, would see a series of exclusive cultural events staged in Brisbane in April.

“The nine-day Brisbane Baroque, artistically directed by art impresario Leo Schofield AM, is the only one of its kind dedicated to this art form in Australia,” Ms Coddington said.

“Cultural tourism is a significant contributor to the economy and vibrant events such as Brisbane Baroque are an important lure in attracting more visitors to Queensland. 

“We anticipate that this event will generate more than 36,000 visitor nights and $9 million in visitor spending through until 2017. 

Brisbane Baroque is a cultural celebration of late 17th and early 18th century music, which will be staged at venues such as the Queensland Performing Arts Centre (QPAC), Brisbane City Hall, the Queensland Conservatorium Theatre, and select churches throughout Brisbane.

Brisbane Baroque will feature an exclusive Australian-first production of Faramondo, a rare opera by George Frideric Handel, one of the most prolific composers of the Baroque era.  

“With continued growth, TEQ expects the event to compete globally with other major international Baroque festivals such as the Valletta International Baroque in Malta, the Boston Early Music Festival in the USA, and the Göttingen International Handel Festival in Germany,” Ms Coddington said.

Brisbane Baroque will be promoted as part of It’s Live! In Queensland, an initiative which highlights the perfect union of world-class events and destinations.” 

Brisbane Baroque Artistic Director, Leo Schofield, said he was delighted the event was making its way to Queensland’s capital city in 2015.

“This city aspires to be the cultural capital of Australia and in recent years has made huge strides towards that goal,” said Mr Schofield.

“Queenslanders certainly understand the value of cultural tourism which is why a unique festival of early music has such appeal.” 

Executive Director, Jarrod Carland, said Brisbane provides the perfect backdrop for locals and visitors to experience unique cultural offerings.

“Not only will Brisbane Baroque feature leading overseas artists, it will also provide an opportunity to showcase the talents of young Australian and Queensland musicians,” Mr Carland said.  

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Low inflation and fuel costs to boost retail spending

THE Australian Retailers Association (ARA) said the Consumer Price Index (CPI) released today showed inflation of 0.2 percent in the 2014 December quarter which followed a rise of 0.5 percent in the September quarter providing explanation of reduced pricing during the 2014 Christmas period.

The CPI rose 1.7 percent in the year to the December quarter compared with a rise of 2.3 percent in the September quarter showing a slow yet steady pace in the lead up to Christmas 2014 sales.

ARA Executive Director Russell Zimmerman said retailers kept prices low through discounting over the Christmas period and the ARA was hopeful competition in the supermarket sector would also continue to put pressure on prices.

“Competition on everyday prices in the supermarket sector has shown benefits in the latest CPI figures and the ARA calls for the government to increase that competition in its current competition review process.

“There is no doubt lower fuel costs will flow through the supply chain which will further reduce costs, leaving more cash in consumer pockets to drive retail sales,” Mr Zimmerman said.

While there has been some pressure from the higher Australian dollar on imports, all indications show lower fuel costs and fierce competition to drive costs lower.

The Australian Retailers Association now looks towards the release of the December retail trade figures to confirm its pre-Christmas predictions of $45 billion which is expected to be an influence of today’s CPI December quarter figures.

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Since 1903, the Australian Retailers Association (ARA) has been the peak industry body representing Australia’s $265 billion retail sector, which employs over 1.2 million people. The ARA ensures retail success by informing, protecting, advocating, educating and saving money for its 5,000 independent and national retail members throughout Australia.

Visit www.retail.org.au or call 1300 368 041.

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