Vital Signs: Australia’s mining boom transition is on shaky ground


Richard Holden, UNSW

Vital Signs is a weekly economic wrap from UNSW economics professor and Harvard PhD Richard Holden (@profholden). Vital Signs aims to contextualise weekly economic events and cut through the noise of the data affecting global economies.

This week: Australia continues to grow jobs, but wages aren’t keeping up and policymakers are running out of options.


Let’s begin with an economy that is doing relatively well.

In the US, the data were both predictable and moderately positive.

Consumer prices (as measured by the CPI) were up only 0.1% in October, but this was in line with expectations. Recall that two major hurricanes drove up gasoline prices in September, and those increases rolled off (they were up 13.1% in September and fell 2.4% in October). The year-on-year CPI increase was 2.0% – again, in line with expectations.


Read more: Trump’s ‘America first’ trade policy ignores key lesson from Great Depression


The Producer Price Index (PPI) rose by a healthy 2.6% on a year-on-year basis – despite a drop in gasoline prices for producers of 4.6% (note the difference between wholesale and retail price changes). Perhaps most importantly, there were relatively strong increases in elements of the index that the US Federal Reserve cares most about (as they are less cyclical than, say, energy prices), like healthcare costs.

Less expected, but happy news, was the 0.2% rise in retail sales. That puts retail sales up 4.6% on an annual basis. This is further evidence of the solid rebound in the US economy.

And now to Australia.

On the plus side, a fair number of jobs are being created. As Treasurer Scott Morrison was eager to point out on Thursday, 296,400 jobs have been created this year; 236,000 of them full-time.

But the continued depressing news is about wages. The wage-price index was up 0.5% for the third quarter, below market expectations of 0.7%. That puts annual wages growth at 2.0%. With inflation running at 1.8%, that means real wages growth is effectively zero. And it has been like that for a long time.

This is causing enormous problems for Australian households and policymakers.

Recall that Australian households are among the most highly leveraged in the world – with debts at around 190% of GDP. So what is going to reduce that debt?

There are two possibilities: more inflation or more income. Inflation helps reduce the debt in real terms, and income helps for obvious reasons. Right now, both avenues look shaky.

On the former, the Melbourne Institute reported on Thursday that inflation expectations fell this month, providing further evidence that future inflation is likely to be low.

On the latter, there has been a continued run of low wages growth. This is an experience being felt in advanced economies around the world. That suggests it is something to do with technology, or global economic conditions, and therefore not all that amenable to policy.


Read more: Is faster profit growth essential for a pick-up in wages growth?


That leaves us with heavily indebted households, with no obvious way out. This, of course, puts a strain on consumer spending, which in turn affects business investment and employment, and the whole (vicious) cycle loops back on itself.

What is the cut-through for policymakers?

The RBA could drop interest rates from their current 1.50% level – and increasingly some economists are suggesting that. The worry is that a rate cut might further fuel housing prices, making the problem worse, not better.

Federal income tax cuts would be another avenue, but with the budget in structural deficit, and with an economically illiterate crossbench, that looks unlikely.

The government could embark on a major infrastructure spending plan, which could rejuvenate regional employment in areas hit by the forces of globalisation. With interest rates at very low levels, for very long maturities, this seems like a good idea, as long as the projects are assessed on a rational basis.

The concern in this regard is politics. Both major parties have their predilections and bases to pander to. A bad outcome would be, for example, a big coal mine investment by the Coalition, and some uneconomic green-energy boondoggle by the opposition.

The ConversationAs I have said before in this column, the US seems to be navigating the post-2008 economic world relatively well, although caution is certainly warranted. Australia is doing much less well. And the narrative that we have “successfully transitioned from the mining boom” seems a lot more like wishful thinking than hard evidence.

Richard Holden, Professor of Economics and PLuS Alliance Fellow, UNSW

This article was originally published on The Conversation. Read the original article.

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Prospects Dim for Religious Freedom in Nepal


Right to share faith could harm Nepal’s Hindu identity, lawmakers believe.

KATHMANDU, Nepal, March 29 (CDN) — A new constitution that Nepal’s parliament is scheduled to put into effect before May 28 may not include the right to propagate one’s faith.

The draft constitution, aimed at completing the country’s transition from a Hindu monarchy to a secular democracy, contains provisions in its “religious freedom” section that prohibit anyone from converting others from one religion to another.

Most political leaders in the Himalayan country seemed unaware of how this prohibition would curb religious freedom.

“Nepal will be a secular state – there is no other way,” said Sushil Koirala, president of the Nepali Congress, Nepal’s “Grand Old Party,” but he added that he was not aware of the proposal to restrict the right to evangelism.

“Forcible conversions cannot be allowed, but the members of the Constituent Assembly [acting parliament] should be made aware of [the evangelism ban’s] implications,” Koirala, a veteran and one of the most influential politicians of the country, told Compass.

Gagan Thapa, another leader of the Nepali Congress, admitted that banning all evangelistic activities could lead to undue restrictions.

“Perhaps, the words, ‘force, inducement and coercion’ should be inserted to prevent only unlawful conversions,” he told Compass.

Man Bahadur Bishwakarma, also from the Nepali Congress, said that of all the faith communities in Nepal, Christians were most active in converting others, sometimes unethically.

“There are problems in Hinduism, such as the caste hierarchy, but that doesn’t mean you should convert out of it,” he said. “I believe in reforming one’s religion.”

Asked if the restriction on converting others violated the International Covenant on Civil and Political Rights (ICCPR), Akal Bahadur of the Unified Communist Party of Nepal (Maoist) said, “It may, but there was a general consensus on it [the prohibition]. Besides, it is still a draft, not the final constitution.”

Nepal signed the ICCPR on May 14, 1991. Article 18 of the ICCPR includes the right to manifest one’s religion, which U.N. officials have interpreted as the right to evangelistic and missionary activities.

Akal Bahadur and Thapa are members of the Committee on Fundamental Rights and Directive Principles, which was tasked to propose the scope of religious freedom and other rights in the draft constitution. This committee, one of 11 thematic panels, last year submitted a preliminary draft to the Assembly suggesting that a person should be allowed to decide whether to convert from one religion to another, but that no one should convert anyone else.

Binda Pandey, chairperson of the fundamental rights committee and member of the Communist Party of Nepal (Unified Marxist Leninist), told Compass that it was now up to the Assembly to decide whether this provision violates religious freedom.

The Constitution Committee is condensing the preliminary drafts by all the committees as one draft constitution. At least 288 contentious issues arose out of the 11 committees, and the Constitution Committee has resolved 175 of them, Raju Shakya of the Kathmandu-based Centre for Constitutional Dialogue (CCD) told Compass.

The “religious freedom” provision with its ban on evangelism did not raise an eyebrow, however, as it is among the issues listed under the “Area of Agreement” on the CCD Web site.

Once compiled, the draft constitution will be subject to a public consultation, after which another draft will be prepared for discussion of clauses in the Constitutional Assembly; provisions will be implemented on a two-thirds majority, Shakya said.

 

Hindu Identity

Thapa of the fundamental rights committee indicated that religious conversion could become a contentious issue if the proposed restriction is removed. Even the notion of a secular state is not wholly accepted in the country.

“If you hold a referendum on whether Nepal should become a secular state, the majority will vote against it,” Thapa said.

Most Hindus see their religion as an essential part of the country’s identity that they want to preserve, he added.

Dr. K.B. Rokaya, the only Christian member of Nepal’s National Commission for Human Rights, said Nepal’s former kings created and imposed a Hindu identity for around 240 years because it suited them; under the Hindu ethos, a king should be revered as a god. Most of the numerous Hindu temples of Nepal were built under the patronage of the kings.

Rokaya added that Christians needed to be more politically active. The Assembly does not have even one Christian member.

According to the 2001 census, over 80 percent of Nepal’s 30 million people are Hindu. Christians are officially .5 percent, but their actual number is believed to be much higher.

Nepal was the world’s only Hindu kingdom until 2006, when a people’s movement led by former Maoist guerrillas and supported by political parties, including the Nepali Congress and the Unified Marxist Leninist, ousted King Gyanendra.

An interim constitution was enacted in 2007, and the Constituent Assembly was elected through Nepal’s first fully democratic election a year later. The Assembly was supposed to promulgate a new constitution by May 28, 2010, but its term was extended by one year.

It is still uncertain, however, whether the approaching deadline will be met due to persistent disagreements among parties. The Maoist party has 220 members, the Nepali Congress 110, and the Unified Marxist Leninist 103 in the 575-member Assembly.

Rokaya, a member of the newly formed United Christians Alliance of Nepal, comprising a majority of Christian denominations, said Christians would continue to ask for full religious freedom. The use of inducement or force for conversions is deplorable, but the right to preach the tenets of one’s religion is a fundamental freedom, he added.

Report from Compass Direct News
http://www.compassdirect.org

WELCOMING 2009


With the passing of the year 2008 and the beginning of 2009, I am looking forward to what I hope is a much better year than the one just finished. It would be very easy for me to simply look on 2008 as a year to forget (if I could), given the many difficulties that I had to pass through during the year.

Among the most difficult events of the year was my near fatal car accident in February 2008. I have been recovering from that accident for the entire year and still have a way to travel until I can again be confident that I am as fully fit as I can expect to be. Yet even here, I can be thankful that I wasn’t killed and that I have been able to return to work, am approaching a condition in which I should not be affected to greatly in the long term as a result of the accident, etc.

My greatest loss in 2008 was that of my dear friend Rebecca in June. She was my dearest friend whom I loved greatly. I have missed her every day since she died and will never forget her. This was the tragedy of 2008 for me, far surpassing the car accident and anything else that happened. Her death left me shattered and it is a blow from which I will never fully recover. Yet it was a tremendous privilege to have been given the opportunity to know her at all and to count her as my dearest friend for as long as I was able to do so is something I will forever be thankful for. Thank you Rebecca for giving me a place in your heart and in your life – I was blessed for knowing you.

There have been financial difficulties also from which I am beginning to emerge and I think this has been for the good, even through the immediate hardships that resulted. They will be for my good for the rest of my life and I look forward to the continuing recovery ahead.

2009 has the promise of a rebuilt life and that of continuing personal reformation which excites me as much as it will challenge me. When I left my previous employment in 2007 I thought the rest of my life was about to begin and a second chance presented itself. However, 2008 has been a continuance of that transition period and 2009 may well be the beginning of my second chance at life – so to speak.

I know I ended 2007 feeling very relaxed and contented with where I was at that exact moment and the ride ahead is something I look forward to. I have an agenda of personal reform, life changes and interests to pursue throughout 2009 – I now go ahead seeking to fulfil them as best I can.

Unlike New Years’ resolutions, I can have the confidence that progress can be made in these areas without the fear of simply failing to achieve what I have set out to do. With the Spirit of God operational in my life I have a living force that is more powerful than any of the obstacles that I can foresee and that I will in time confront. By the grace of God I can go on. Praise be to Him – I know my Redeemer lives!!!