Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

The Deal Is Simple. Australia Gets Money, China Gets Australia

businessweek.com

Post reply on HN
Print view View original

31–40 of 85 posts

Re: The Deal Is Simple. Australia Gets Money, China Gets Australia

#31

Post by jamesbritt »

nl wrote: post #19
teyc wrote: post #16

Earlier quoted context omitted.

some drill rigs are semiautonomous, with GPS. The control systems were priced around $120k the last time I looked about 10 years ago. Any HN'ers want to disrupt this? I know some drillers out this way.

They have similar technology for farming, too. If you wanted to disrupt this, I suspect you don't want to make it cheaper (the mining companies have plenty of money), but to do a better job somehow. (Where are you?)

What's the insurance liability for somewhere like that?

Re: The Deal Is Simple. Australia Gets Money, China Gets Australia

#33

Post by ShardPhoenix »

megablast wrote: post #26
nl wrote: post #17

Earlier quoted context omitted.

There were other factors at work with Rudd's removal. The mining tax was the last act in a long play of dropping promises, reneging on commitments and policy backflips. I agree with this The mining tax was a disaster and, in it's original form, was reverse nationalism by stealth. The government was going to tax profits above 6% with a 40% 'super tax' - terminology straight from a Marxist script. They were then going…

The tax was a great idea, and only hated by mining companies and people who happened to believe everything they see on TV. Most other big mining countries (Canada, Brazil, etc...) are also thinking about bringing in a mining tax like this. All Australians deserve returns from the investment, not just the tiny number of miners, who earn ridiculous sums of money.

If more people were willing to do those mining jobs, they wouldn't make so much money.

Re: The Deal Is Simple. Australia Gets Money, China Gets Australia

#34

Post by nl »

ShardPhoenix wrote: post #33
megablast wrote: post #26

Earlier quoted context omitted.

The tax was a great idea, and only hated by mining companies and people who happened to believe everything they see on TV. Most other big mining countries (Canada, Brazil, etc...) are also thinking about bringing in a mining tax like this. All Australians deserve returns from the investment, not just the tiny number of miners, who earn ridiculous sums of money.

If more people were willing to do those mining jobs, they wouldn't make so much money.

I think he meant the tiny number of mining companies which make all the money - not the small number of employees who make good but not outrageous money.

Re: The Deal Is Simple. Australia Gets Money, China Gets Australia

#35

Post by scn »

nl wrote: post #28
scn wrote: post #22

"A 20-year-old off the street can come up to the Pilbara and earn A$92,000 a year," says Boxy. The median household income in Australia is A$67,000. Talk about inflationary pressures.

Those jobs are well paid for a reason. They are in the middle of nowhere (unless you've been there you have no idea how isolated the Pilbara is), and the climate is less than ideal: The climate of the Pilbara is semi-arid and arid, with high temperatures and low irregular rainfall that follows the summer cyclones. During the summer months, maximum temperatures exceed 32°C (90°F) almost every day, and temperatures in…

I'm not saying they're easy jobs but two weeks on one off with no expenses for the two weeks on makes for a lot of disposable income even without those salaries.

Inflation remains a steady 3% with a cash rate of 4.5% way above comparable economies, with a high chance of further raises. People not in the mining industry can't expect to compete with the salaries they're earning and the high interest rates and Australian dollar are hurting households and other exports.

Housing prices in Perth: http://reiwa.com.au/res/res-salesgraph-display.cfm Does that look sustainable?

Re: The Deal Is Simple. Australia Gets Money, China Gets Australia

#36

Post by nl »

wisty wrote: post #27
nl wrote: post #24

Earlier quoted context omitted.

Do you realistically expect the US, Japan, or Korea to somehow fill the gap if China suddenly drops its demand for Australian commodities? Probably not, but it depends. If you think the "China bubble" is because of Chinese domestic demand (ie, construction in China) then it will be hard to replace. If you think it is because of Chinese exports then it's possible another country could substitute. Personally I reject t…

Yeah, but if the average Australian owes 1.6 times their annual salary, and house prices are 6X income, and they also have 2 years income locked into superannuation for their retirement (go boomers!), then things could go bad. Ask an American, English, Irish, Greek, Icelandic, or Japanese poster.

I don't understand what you are saying, but it seems to me you are confusing cause and effect.

Yeah, but if the average Australian owes 1.6 times their annual salary, and house prices are 6X income, and they also have 2 years income locked into superannuation for their retirement (go boomers!), then things could go bad

Yes, if you have a high level of debt and things go wrong then it's not a great place to be. But there needs to be something else to make things "go bad", and for it to be a significant problem it needs to happen quickly, before people can adjust their debt levels based on economic signals like an increasing unemployment rate.

A very sudden collapse in commodity demand from China could cause a crisis like that, but a sudden drop like that seems unlikely to me. (If you disagree, explain what you think happens in China to cause such a rapid change)

A more likely scenario seems to be a slow decrease in demand, occurring over many years. A slow slowdown in demand allows people to change their debt levels, and while individuals may have problems it is unlikely to cause a huge crisis beyond a higher unemployment rate.

Given Australia got through the biggest financial crisis since the 1920's in pretty good shape I think automatic pessimism is unfounded.

Re: The Deal Is Simple. Australia Gets Money, China Gets Australia

#37

Post by scn »

nl wrote: post #28
scn wrote: post #22

"A 20-year-old off the street can come up to the Pilbara and earn A$92,000 a year," says Boxy. The median household income in Australia is A$67,000. Talk about inflationary pressures.

Those jobs are well paid for a reason. They are in the middle of nowhere (unless you've been there you have no idea how isolated the Pilbara is), and the climate is less than ideal: The climate of the Pilbara is semi-arid and arid, with high temperatures and low irregular rainfall that follows the summer cyclones. During the summer months, maximum temperatures exceed 32°C (90°F) almost every day, and temperatures in…

Between the start of the mining boom to the onset of the global financial crisis: annual price inflation in Perth averaged 4.0 per cent, compared to the national annual average of 3.3 per cent; Perth rents increased by two-thirds more than the national average; and Perth house prices grew by 14 per cent a year, almost triple the national average growth rate. http://www.pm.gov.au/node/6884

Re: The Deal Is Simple. Australia Gets Money, China Gets Australia

#38

Post by nl »

scn wrote: post #35
nl wrote: post #28

Earlier quoted context omitted.

Those jobs are well paid for a reason. They are in the middle of nowhere (unless you've been there you have no idea how isolated the Pilbara is), and the climate is less than ideal: The climate of the Pilbara is semi-arid and arid, with high temperatures and low irregular rainfall that follows the summer cyclones. During the summer months, maximum temperatures exceed 32°C (90°F) almost every day, and temperatures in…

I'm not saying they're easy jobs but two weeks on one off with no expenses for the two weeks on makes for a lot of disposable income even without those salaries. Inflation remains a steady 3% with a cash rate of 4.5% way above comparable economies, with a high chance of further raises. People not in the mining industry can't expect to compete with the salaries they're earning and the high interest rates and Australia…

Our rates aren't high by Australian historical standards: http://www.loansense.com.au/historical-rates.html

Regarding the house price graph, I think you are being misled slightly by the scale.

If you magnified the 1978-1993 graph it would look very similar - a HUGE ramp up in the prices in the late 1980's, and then stagnant in the early 1990's.

Compare that to how the current graph looks: HUGE ramp up in 2003-2007, and then stagnant.

I agree with what you are saying about the inequalities of mining salaries and the problems with the crowding out effect. I think that contributes more to the stratification of society rather than inflation, though.

Re: The Deal Is Simple. Australia Gets Money, China Gets Australia

#39

Post by caf »

jakarta wrote: post #18
nl wrote: post #8

Earlier quoted context omitted.

If China is indeed a bubble (at least in the medium-term) Australia is going to experience a world of hurt. Yes, but... Australian is a commodity exporter. If China is a bubble, then yes, Australia will be hurt unless another country (US/India/Japan/Korea) picks up demand. Also, it's not a property bubble when there are less houses than people who want them. Because the population growth rate in Australia is (compara…

Do you realistically expect the US, Japan, or Korea to somehow fill the gap if China suddenly drops its demand for Australian commodities? India might pick up some of the slack, but I would bet against it. Household debt / disposable income in Australia is 157% versus 133% for the US shortly before the financial crisis. That level of debt combined with ever increasing home prices should create a pretty volatile situa…

The debt ratios aren't directly comparable, because there are significant differences in the way housing finance is conducted in the two countries.

Unlike the US, Australian house loans are never non-recourse. This means that borrowers tend to continue to pay them off even if the notional value of the asset drops below that of the outstanding debt - they can't just mail the keys back to the bank and get out of the loan.

Most housing finance in Australia is provided through one of the "big 4" very large and heavily regulated banks - small regional banks are not a significant portion of the Australian market. Australian housing loans also tend to be variable-rate, as opposed to the fixed-rate that's the norm in the US.

Re: The Deal Is Simple. Australia Gets Money, China Gets Australia

#40

Post by zmmmmm »

brc wrote: post #13

I'm not sure of what the point this article is trying to raise? Is it that Australia is not in recession? Is it some sort of suggestion of xenophobia on the part of Australians? Australians have all seen this before in the 1980's when the Japanese were buying real estate, companies and generally splashing cash around. I think this time around most people are more relaxed about it, and a feeling of 'make hay while the…

> make hay while the sun shines

If only we were actually making some hay, or put some of what we do make in the barn instead of gorging on it. I think a better analogy is "let's party while the champagne is flowing".

Instead of long term investments in permanent infrastructure and educating our citizens we are largely just padding out the middle class with spurious welfare benefits. That's almost worse than just throwing the money away because it is creating an enormous future liability and false expectation among average folks.

Post reply on HN