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By: David Hastie

Source: Sunday Herald Sun February 28, 2010 12:00AM  A PLAN to move the Australian Formula 1 Grand Prix to a purpose-built, $200 million race circuit at Avalon is being considered in an attempt to keep the event in Victoria.  

The Sunday Herald Sun has seen documents that pave the way for a new permanent venue after the contract to host the race at Albert Park expires in 2015.  The Confederation of Australian Motor Sport has been granted funding to conduct a feasibility study to build the state-of-the-art complex near Avalon Airport.  

The move would improve Victoria’s chance of retaining the Grand Prix beyond the current contract as well as providing a facility that would enable the state to run the race under lights.  The proposed motorsport complex would be built on some of the 1821ha of land owned by trucking heavyweight Linfox. Linfox director Andrew Fox told the Sunday Herald Sun his family was prepared to foot the $200 million to build the circuit, meaning taxpayers would not be left to shoulder the cost.  A move to a permanent track would save taxpayers the estimated $32 million each year it costs to assemble and dismantle Albert Park’s temporary circuit.  

CAMS chief executive Graham Fountain said his organisation was given about $130,000 last year by the FIA to complete a facility master plan.  He confirmed CAMS was working in partnership with Linfox.  ”We, as part of the feasibility study, will be looking at a whole range of options and opportunities for a potential venue at Avalon,” Mr Fountain said.  “Whether or not Avalon will or will not be an international grade circuit remains to be seen. But certainly it is one of many considerations as part of the master plan process.” The study will be carried out by industry experts from the UK and could begin within months.  While the Government is aware of and supports the study, Sports Minister James Merlino, who met with Mr Fountain earlier this month, said: “A decision to relocate the race is ultimately up to Government, regardless of CAMS’s findings.” GLinfox last year completed its own feasibility study to build a motorsport complex on the land.  Mr Fox said his wish was for Government to utilise the motorsport facility as a driver education centre for young drivers when not in use for competitive racing. 

“You can build a permanent facility that beyond doing a three-day event can also house driver training where the Government should be putting funds for trying to eliminate accidents of P-platers and L-platers on Victorian roads because that is money well spent,” Mr Fox said.  “I’m happy to put the capital up on behalf of the family at Avalon and build a world-class standard.  “We’re building a start-of-the-art facility for the soccer and that’s unchartered waters yet we’ve had the Grand Prix here for so many years.  “Yes, you’ll never be able to replace the views of Albert Park, but you can still build one of the best race tracks in the world.”  

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By Terry McCrann

From: Herald Sun  February 25, 2010 12:00AM
THE Reserve Bank will almost certainly lift the official interest rate by 25 points next Tuesday.
Both the governor Glenn Stevens and his deputy Ric Battellino have ‘told us so.’

Not, obviously, in specific words. Indeed they haven’t even yet ‘told’ their fellow board members. The management’s recommendation will be finalised and sent to board members today.

Further, any prediction of what might emerge from Tuesday’s meeting has to carry one big and one small asterisk.

The big one, is that some cataclysmic event doesn’t come out of left field. Like another, heavens forbid, 9/11, a Greek default, or even just a big - very big - fall on Wall St.

The small asterisk is that the actual decision really is made by the board; it doesn’t just rubber stamp what RBA management - Stevens - puts before it. So why only a ’small asterisk?’ Does that deny my very point?

No, it’s only a tiny risk, because the board has clearly signed on to both the overall strategy of lifting rates; and in doing so will, indeed has to, leave the tactical month-to-month (pause or lift) decision to management.

Yesterday’s benign wages - and so, potential future inflation - numbers are essentially irrelevant.
Because the RBA is not lifting rates to target an immediate emerging inflation threat.

Thus for the immediate future any inflation data impacts asymmetrically on the RBA’s tactical rate decisions. Bad data would tend to lock in a rate rise. Good data would be neutral; ‘other’ factors would drive the decision.

This in a sense is what Stevens ‘told us’ last Friday at his public appearance, what Battellino ‘told us’ in his second recent seminal (as in, telling us) speech; and what the whole RBA has ‘told us’ in its latest analysis of the economy a couple of weeks ago.

Simply, broadly, that in this crazy mixed-up world, the RBA has signed on to the China thesis not the Greek one.

That there’s more chance (risk?) of China continuing to boom than Greece causing some sort of financial and then perhaps economic implosion.
If not necessarily something as bad as GFC Mk II. The RBA forecasts in the latest analysis had our growth strengthening to more than 3 per cent through the year and then kicking a little higher next year. And doing so despite the higher interest rates the RBA would deliver.The critical thing to understand is that the RBA believes it has to move rates back to neutral through the course of this year. Indeed, Stevens said that explicitly on Friday.

But also very importantly, it’s doing so not to fight emerging inflation. Again the RBA expects inflation to keep falling back into its 2-3 per cent target ban and stay there through 2011, although edging close to the limit by the end of that year.

So yesterday’s news of benign wages would merely reinforce the RBA confidence. But not divert it from its desire to lift the official rate by between 50 and 100 points. That’s importantly two to four moves.

Why important? Because it goes to the timing.  How many ‘in-a-rows’ increases we could get; how many pauses and of how many months at a time.

Stevens and Co are fully mindful of the uncertainties both ways. China could ‘peter out’ - that probably means growing at ‘only’ 6 per cent rather than 10 per cent. Or the developed world could pick up some pace, backstopping if you like a booming China.

The first would tend to see the RBA only delivering two more rises, if that; with an extended pause after Tuesday’s increase.

The second would tend to see the RBA deliver four rises and do so pretty quickly.

As it would want to get back to a ‘low neutral’ fairly quickly, by say June, and perhaps an ‘upper neutral’ by July-August.

Politics and the budget will also have to be factored in, more to the timing of moves than the aggregate.

The other critical thing to understand about both timing and quantum is that if inflation does start to rear its head, Stevens will want to go above neutral.

In those circumstances, he would end up wanting to deliver, say, six increases over the year. Passing next Tuesday would leave a lot of ground to make up. In those, it needs to be stressed, unexpected circumstances.

Passing next Tuesday would also mean we would go (at least) four months without an official increase.

From the last one in December, to the next (possible) one in April.

That is too long a gap in the context of what the RBA believes is likely to develop over the year and where the official rate is. In three words: still too low.

The RBA wanted time to assess the impact of the initial increases and also the mix of global developments. It has had that time, and the statements all show very clearly how it has decided the balance of risks.

There’s an interesting coincidence around the word ‘four’ and an interesting comment on the psychology of the economentariat.

Three weeks ago, the economentariat unanimously believed the RBA would do ‘four-in-a-row.’ After in December being all-but united in declaiming it wouldn’t possibly contemplate ‘three-in-a-row.’

Not there’s a significant sanguinity that the RBA would sit on its hands for ‘four months.’ It won’t.

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By Anthony Keane 

HOMEBUYERS and investors have nearly doubled their borrowings over the past five years, figures show.       

 

Latest Reserve Bank of Australia figures show total housing debt hit $910.1 billion in December, up 17 per cent over 12 months and up 92 per cent since December 2004.   

Total housing debt is set to reach $1 trillion within a year. The figure itself is not a worry, but there is concern the pace of borrowing is exceeding household income growth. 

AMP Capital Investors chief economist Shane Oliver says the rapid growth of housing debt could be Australia’s “achilles heel” amid any sharp rise in interest rates or unemployment, although neither is expected in the short term. 

Oliver says factors driving the borrowing boom include government first-home buyer incentives in recent years, generational lows in interest rates and rising house prices as demand outstrips land releases.  “Last year we started building 135,000 houses but the underlying demand was (for) 180,000-190, 000,” he says. “This year we should start building about 155,000 houses but the underlying demand is close to 200,000.”  “It’s a worry that we have such a high level of household debt.

Over the past 20 years we have gone from the low end of comparable countries to the high end,” Oliver says.  Reserve Bank figures show our housing debt is currently 135 per cent of disposable household income.

Ten years ago, it was 75 per cent and 20 years ago it was 45 per cent.  “The RBA has to be careful raising interest rates because, if they go too far, they can end up tipping the economy over the edge,” Oliver says. Investors represent about 31 per cent of total property debt, down from 34 per cent five years ago.

In 2003, it was 50-50, amid concerns about a property investment bubble that did not eventuate.  Real Estate Institute of Australia president David Airey says the sector “cruised past” the global financial crisis, with younger buyers not afraid of high debt levels. 

“In the first part of 2009 real estate agents were quite depressed. In the second half, auctions took off and that shows people are competitively bidding against each other, in many cases, pushing prices up,” he says. 

“This year’s looking to be a very strong year for property and that will have an upward effect on prices.”      

 

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Article from: Sunday Herald Sun
* byJames Campbell
August 10, 2008 12:00am