Melbourne's population explosion

MELBOURNE'S outer suburbs are growing faster than any other area in Australia, part of a record-breaking trend that has seen Melbourne's population closing the gap on Sydney.

The city's outer suburbs are leaving coastal Queensland and Western Australia's mining towns in their dust, as more than 1000 people a week pour into Melbourne's fringe.

New figures from the Bureau of Statistics show that while the boom in overseas immigration cooled off all over Australia in 2009-10, Melbourne was again the centre of Australia's population growth.

. In the year to June 2010, Melbourne is estimated to have grown by 79,000 people, or more than 1500 a week. For the ninth consecutive year, Melbourne had the biggest growth of any city in Australia.

. Since 2001, Melbourne has gained 605,000 new residents, up 17 per cent, rapidly pushing out the urban boundary in every growth corridor. That is far ahead of growth of 447,000 in Sydney, 380,000 in Brisbane, and 303,000 in Perth.

. For the first time in almost 30 years, Melbourne's population is within 500,000 of Sydney's, and gaining. If the growth rates of 2001-10 continued, Melbourne would overtake Sydney in 2028, when each city would have roughly 5.6 million people. At June 30 last year Sydney had 4.575 million people to Melbourne's 4.077 million.

. No other city in Australia has ever recorded growth of this size. It has strained the city's infrastructure and services, adding to congestion on the roads, delays, overcrowding on public transport and waiting times in hospital emergency wards. Some believe it was a key factor in Labor's unexpected loss at the 2010 state election.

. The four fastest-growing municipalities in Australia in 2009-10 were all on Melbourne's fringe. Wyndham (which includes Werribee), Melton, Whittlesea (South Morang) and Cardinia (Cranbourne) left behind all the boom areas of other states, with their combined populations growing by 33,216 or 7 per cent.

Wyndham alone added 12,600 people last year, matching Victoria's entire population growth at one point during the Kennett government. Since 2001 it has added almost 70,000 people, roughly equal to adding a city the size of Bundaberg to Melbourne's south-west fringe.

Last year its growth in absolute numbers almost matched that of the Gold Coast. It puts pressure on the Baillieu government to press on with the new train line begun by the Brumby government, one of the many big-ticket projects under review.

The fall in arrivals of overseas students cut Melbourne's population growth sharply in 2009-10, from 96,000 a year earlier. But the bureau estimates that growth shrank overwhelmingly in the middle and inner suburbs, where most students live. Growth on the outer fringe barely lost a beat.

In 2009-10, based on the bureau estimates, roughly 68 per cent of the city's new people settled more than 20 kilometres from the GPO. That was a sharp rise from 58 per cent over the previous three years.

The NIMBY (not-in-my-back-yard) syndrome continues to limit redevelopment in inner and middle areas. The blockage of supply has seen house and unit prices soar in inner areas, giving lower-income buyers no choice but to live far out.

Over the nine years since Melbourne replaced Sydney as Australia's growth centre, five in every eight new residents has had to settle more than 20 kilometres from the GPO. Of Melbourne's 4,077,000 people at June 30 last year, roughly 1,814,000, or almost half, lived more than 20 kilometres out.

But the inner circle population has also grown sharply, rising by 74,000 or 30 per cent.

The pace of inner urban growth has slowed in recent years, but with a forest of new apartment towers approved over recent months, it appears set to rebound rapidly.

Victoria's growth dropped to 99,000 in 2009-10, down from a record 120,000 a year earlier. Nearly all that decline was in Melbourne, with regional Victoria accounting for a quarter of the state's population growth.

Planning Minister Matthew Guy said the Baillieu government was acutely aware of infrastructure and housing shortages, and promised strategies early in this term to address the problems.


605,411

This is how much Melbourne has grown by in the past 9 years

THAT EQUALS ROUGHLY:

1.5 CANBERRAS

1 GOLD COAST

0.5 AN ADELAIDE

6 BALLARATS

3 HOBARTS

Read more >>

Remembering the Australian Open

THESE days we call it the Australian Open, and celebrate it as one of the great tournaments of the world. But it wasn't always the Australian Open, and let's be honest it wasn't always a great tournament.

I remember; I was there. Fifty years ago, I strode the turf of Kooyong in what we then called the Australian championships, in the blazing hot summer of January 1961.

You don't remember Colebatch the tennis player? You're right: I was a ballboy. One of the dozens of little boys in white tennis shirts, shorts, socks and white-scrubbed sandshoes who were paid 10 bob a day (that's $1) to fetch the balls, pour the drinks, and work the scoreboards for our national tennis championships.

No one in January 1961 thought the Australian championships the equal of Wimbledon or the US titles. To us in Melbourne, they weren't even the equal of the Victorian championships, which were played in November, in the final lead-up to the real climax of the tennis year: the Davis Cup finals held each December.

The state championships were where the leading men of Australia and the final three challenging nations staked their claims for places in the Davis Cup teams. Each championship ran over 10 days, with everyone playing singles, doubles and often mixed doubles, in best-of-five-set matches.

The Australian titles seemed an afterthought, almost a nuisance. They came in late January, long after the main action was over. The other Davis Cup teams had gone home. They always ran at a loss, so to spread the losses, the championships were rotated around the four main cities in turn (Perth was then too small to count).

In 1961 it was Kooyong's turn. There was no prizemoney, no ATP or WTA points, no sponsorship. But in a daring move after squashing another bid to introduce open tennis the Lawn Tennis Association of Australia accepted an offer by Nestles to provide 3000 for players' expenses. In return, we ballboys handed out free green Milo sunshades to spectators.

There were no courtesy cars, no luxury hotels. Players from interstate and overseas were billeted out to stay in the homes of tennis lovers. The top foreign seed, Mike Sangster of Britain, found himself put up at the Eastern Hill fire station.

Today the Australian Open feels like Wimbledon. Back then it felt like a big country tournament. There were as many events as they could fit on Kooyong's courts: mixed doubles, juniors, seniors, even junior mixed doubles. Everyone wore white, with Fred Perry tennis shirts and Dunlop Volley sandshoes.

Only a handful of overseas players were there. The US and Italian Davis Cup teams had come to Australia in November to challenge for the cup, and played the NSW and Victorian titles. But American stars Barry Mackay and "Butch" Buchholz turned pro after losing to Italy's Nicola Pietrangeli and Orlando Sirola, who also went home after being routed by Neale Fraser, Rod Laver and Roy Emerson. As for the women, overseas players came to Australia only when invited and that summer, none were.

But there was more concern when a knee injury forced out our No. 1 player: Neale Fraser, the reigning Wimbledon and US champion. His only appearance in January was to open Melbourne's first tenpin bowling alley.

I shared the organisers' dismay: I wanted to ballboy for my hero. Instead, the best I got to throw balls to were the double-handed teenager Jan Lehane, and a tall lanky young bloke from Sydney called Fred Stolle.

With Fraser out, Laver, 22, was the top seed, and Emerson, 24, second. Then came the other member of our Davis Cup team, the burly, intimidating Bob Mark, and the temperamental Bob Hewitt, just 21.

Only three foreigners were seeded: Sangster, Britain's rising star with a massive serve, Christian Kuhnke from Germany, and Italy's No. 3 Sergio Tacchini, who later showed his real talent was for designing tennis gear, not playing in it.

Women's tennis in Australia was then dominated by three teenagers. Margaret Smith (later Margaret Court), 18, had stunned the tennis world a year earlier by downing Wimbledon champion Maria Bueno to win her first Australian title. But at 17 she was thought too young to go abroad, so she had spent the winter in Melbourne working out in the gym and playing pennant tennis. Her great rival Lehane (later Jan O'Neill), 19, was the second seed, with future French champion Lesley Turner (Bowrey), 18, third.

There were hardly any spectators: only 300 on the first Saturday, and 2000 for the final on Australia Day. Officials blamed this on the novelty of TV coverage with channels Seven and Two both covering the event. But there was a second reason: the heat.

It was awfully hot. Lesley Turner fainted during a doubles match and had to be carried to the dressing rooms by her opponents. Ken Fletcher tossed in his quarter-final against Laver when the temperature on court passed 120 degrees Fahrenheit (49degrees Celsius). As a ballboy, I drenched my white floppy hat and tied a wet hankie round my neck before going out onto the court.

Bob Mark added to the casual atmosphere by getting married in Albury midway through the tournament and quitting the singles. He stayed long enough to win the doubles with Laver for the third year in a row, then sailed with his bride for South Africa, never to return.

(But Bob still had one more big title ahead. In September 1961, he teamed up with another Albury kid, Margaret Smith, to win the US mixed doubles title the only grand slam doubles title ever won by an Albury pair).

Bob Hewitt had bigger problems. He was hauled over the coals after his first round win over John "Doc" Fraser, Neale's kid brother. Spectators complained that Bob had not only sworn on court, but spelt it out letter by letter. Davis Cup captain Harry Hopman banned Hewitt from the team, and he, too, eventually migrated to South Africa, while winning 16 grand slam doubles titles.

Young men with attitude were a problem then as now. In Perth, the US Davis Cup team smashed up their dressing room with beer bottles after losing to Italy. At Kooyong, a Queensland junior was reprimanded after belting a ball over the railway line into Toorak.

While the players were going out in the early rounds, we ballboys worried about our own elimination rounds. Only half of us would be needed after the first four days. How would our finalists be selected? Was someone watching to see who threw the balls most accurately, who was least obtrusive on court, who was quickest on the new electronic scoreboards?

We needn't have worried. Those who were kept on were those who had chatted up the bloke in charge. Those of us who missed out instead won a valuable insight into adult life.

In the quarter-finals Fletcher forfeited to Laver, young South Australian Barry Phillips-Moore beat Kuhnke, Stolle defeated the sporting Sangster ("Too good!", he exclaimed as Stolle's drives ripped past), while Emerson thrashed unseeded John Pearce. Laver then beat Phillips-Moore, and Emerson outpointed Stolle to set up the final we all wanted.

After the obligatory rest day on Sunday the big upset came in Monday's final. Emerson used to wind up into his service like an eccentric corkscrew, but he would race around the court like an Olympic sprinter, and that day he wore down Laver over four sets to take his first Australian title 1-6, 6-3, 7-5, 6-4.

The women's championship was treated like a sideshow, attracting little coverage or centre court time. With Turner out, Smith and Lehane met in the final as usual and as usual, Smith won, 6-1, 6-4. Writing in The Age, Davis Cup great Adrian Quist hailed her as "a future world champion ... She played the first set as well as any woman player I have ever seen".

Amid all the action, no one paid any attention to the junior championships being played on the back courts. Had I been more prescient, I would have noticed a 16-year-old from Sydney who scattered his older opponents to win the boys' singles and doubles alike. But the name J. Newcombe meant nothing then, and without the moustache he did not stand out from all the other boys in white.

Read more >>

Secrets to ageing gainfully - Boomers turn 65

IN THE 21st century, few issues will matter more to us than the implications of living longer. Our lifespans are increasing dramatically, and it is still unclear whether the gains will outweigh the pain. German-based demographer James Vaupel estimates that the average baby girl born now in Western societies will live to 100. Many of today's baby boys, he says, will also live to 100.

But what will be the quality of life for these older Australians? Will we expand our years of good health, employment and active living? Or will it be a future that condemns us to years in nursing homes, living with disability and senility, and draining the incomes of governments and younger taxpayers? It is hard to imagine a more important issue for our future. It is happening now, at an increasing pace, raising the need for urgent decisions that our politicians are refusing to take.

The fact that we are living longer is in itself clearly a good thing. A hundred years ago, baby boys in Australia had a life expectancy of 55, and baby girls 58. These days, the Australian Bureau of Statistics estimates, baby boys have a life expectancy of 79 and baby girls of 83. Most of that gain is due to the spectacular decline of infant mortality during the 20th century. But increasingly, it reflects better medical care and healthier living.

In 1908, when the Deakin government introduced an old-age pension of 10 shillings a week for Australians 65 and over, there were fewer than 200,000 Australians of that age. Men at 65 could then expect only another 11 years of life, and women only another 12. It wasn't too much different by 1968. But since then, our post-retirement lifespans have increased dramatically. The ABS estimates that there are now almost 3 million Australians aged 65 and over, and close to 4 million baby boomers set to join them in the next 15 years.

Their lifespans are rising fast. On 2007-09 data, the ABS says a man of 65 can expect another 18 years of life, and a woman, another 21 years. And those are understatements, because the bureau uses a conservative methodology that does not allow for future advances in medicine or community health. It won't be long before 65-year-olds can expect to live to 90.

Isn't that great? Yes . . . but who is going to pay for their retirement?

In 2006, there were 14 million Australians aged 15 to 64 conventionally defined as "working age" and 2.7 million over 65. The ratio of workers to retirees was 5.2 to one. By 2056, on conservative assumptions, the bureau projects that those of working age will grow by half, to 21.5 million, but the number of us 65 and over will treble to 8.1 million. The ratio of workers to retirees would then be 2.6 to one. How could tomorrow's workers be expected to finance so many retirees? Especially when those aged 85 and over, with the most chronic needs for care, are projected to increase from 322,000 to 1.72 million?

Treasury is obsessed with the costs of an ageing society. It has been the theme of its three Intergenerational Reports over the past decade. That they all came up with very different numbers shouldn't obscure their conclusion: that our ageing will cost future workers a fortune.

First, there are hospital and medical bills. About half the beds in our public hospitals are occupied by people over 65, who make up barely an eighth of the population. People aged 75 to 84 run up pharmaceutical bills five times larger than those aged 45 to 54, and 10 times larger than those aged 25 to 44. They visit the doctor three times as often as those aged 45 to 54. The more older people we have, the more our health system will cost.

Treasury projects that in the next 40 years, health spending per head will rise threefold, from $2290 now to $7210 (in today's money) in 2050. And that is because, it projects, real health spending on the over 65s will increase to eight times today's levels. Most of the growth in health spending will be driven by us growing old. Treasury estimates the Commonwealth's health spending alone will swell from 4 per cent of gross domestic product now to 7.1 per cent by 2050. Add the state government's hospital bills, and we are looking at big tax increases to pay for that.

Second, there is aged care. By 2050, assuming no change in the rates of severe disability, about half a million of us will be living in nursing homes. The cost of aged care is projected to quadruple, from $460 a head now to $1840 in 2050. Taxpayers' share of that would shoot up from 0.8 per cent of GDP now to 1.8 per cent.

Third, there are pensions. Australia's pension system is relatively cheap, because we pay our pensioners less than Europe does, and exclude the well off. But even with superannuation balances set to swell, Treasury projects that in 2050, almost 80 per cent of retirees will be on the pension in some form, lifting pension costs from 2.4 per cent of GDP now to 3.9 per cent.

Fourth, there are all those concessions for older Australians. Without reforms, these will impose growing costs on state governments and business, and hence on future workers.

Fifth, there is tax-free super. In 2006, to win votes, the Howard government decided to allow people over 60 to take their superannuation payouts without paying any tax (other than the 15 per cent their super fund pays on income earned). At a stroke, it gave away hundreds of billions of dollars of future government revenue, and created a big new tax loophole for retirees again, paid for by those still working.

At the Australian National University last month, Access Economics director Chris Richardson used his speech during a graduation ceremony to warn the new graduates that this tax break would make it even harder for them to finance the older generation in retirement. "You can't have a maximum 15 per cent tax on a big, growing chunk of the population without massive cost," Richardson said. "Eventually that policy will cost us a fortune, and will be recognised for the mistake it was. Eventually some government will get the courage to abolish it and then will lose the next election."

Treasury estimated that, even with offsets in other areas of spending, ageing and health pressures would lift Commonwealth spending by 4.7 per cent of GDP by 2050. To finance that would require tax rises equivalent to $60 billion a year in today's Australia. How could future taxpayers pay for that? But Treasury derives these projections by assuming that we do not change the way we behave. And fortunately, the way we behave is changing dramatically.

EVERYTHING happens to us later now. We spend much longer in education: 40 per cent of Australians aged 20 to 24 are still studying, mostly full-time. We find our partners later (if at all), and marry later (if at all). We have our children later: in Victoria in 2009, 60 per cent of mothers giving birth were aged 30 and over, and 5 per cent were 40 and over. And we buy our homes much later (if at all).

A generation ago, most men aged 50 to 65 were candidates for early retirement. They had begun working young, they married young, and now their children had grown up, their houses were paid off, and their bodies were worn out from physical work. Most women that age had retired from the paid workforce when they married, and those who kept working retired by 60. Even if people wanted to keep working, a recession came every decade or so, and employers coped by targeting older workers: in the recessions of the '70s, '80s and early '90s, hundreds of thousands of workers were pushed into early retirement.

It is a different world now. Many men and women over 50 find themselves embracing, shall we say, a new paradigm. They have careers. They began working later than their parents did, and will go on much longer. Many still have dependent children at home, or semi-dependent adults. If they own their home and more and more don't they still have a mortgage to feed. Most jobs today don't wear out their bodies, and most workers don't have enough savings to retire on.

Their choice is simple: they keep working. The speed of the shift is dramatic. Even a decade ago, most women had retired by their late 50s, and only one in five went on working past 60. Now, almost two-thirds of women in their late 50s are still working, as are 43 per cent of women in their early 60s, and 17 per cent in their late 60s. And this revolution is rolling on rapidly.

But it is not only women staying at work in record numbers. By last year, 80 per cent of men were still working in their late 50s, 62 per cent in their early 60s, and almost one in three were working on into their late 60s. Even past the age of 70, 7.5 per cent of men are still working. The ABS surveys of our retirement plans show the new paradigm is rapidly taking hold. Between 2005 and 2009, the number of workers over 45 planning to retire by 60 dropped from 22 per cent to 13 per cent. Those planning to retire at 65 or later rose from 47 per cent to 58 per cent.

But the number who plan never to retire shot up from 384,000 to 575,000. It's a new world out there, and this revolution has a long way to run. Australia is still far behind the world leaders. In 2009, when a record 59 per cent of Australians aged 55 to 64 were in work, Iceland had 81 per cent of people of that age in work. And Iceland by then was in deep recession.

The potential economic gains from this cultural shift are enormous, particularly if the government were to remove the incentives to early retirement in time to influence the retirement plans of those 4 million baby boomers. Suppose the government moved fast enough so that by 2020, we matched Iceland's employment rates for older workers.That would increase our 2020 workforce by about 1 million workers. The sheer momentum of the revolution now under way will take us halfway there, but removing bad policies would accelerate that and could pay for the costs of our ageing society. The potential gains are even bigger if the over 65s keep working until they are 70, or even longer. There is no biological reason to retire at 65. If baby boomers on average will live to 90, as seems possible, then 65 is early retirement. And with the prospect of 5 million Australians over 65 by 2025, early retirement is a luxury we can no longer afford. So, what can we afford?

ALL over the Western world, governments are risking their lives to implement reforms to stop ageing populations driving their countries bankrupt. In Paris, President Nicolas Sarkozy withstood weeks of street protests to lift the qualifying age for a full pension from 65 to 67. Germany's previous Social Democrat/Greens government lost power partly because it delivered hard-headed reforms in which future pensions will be cut if there is not enough money in the pension fund to pay them.

But voters resent losing future benefits. So Australian governments have alternated between timid reforms (Keating, Rudd) and making the problem worse by adding new entitlements rather than trimming existing ones (Howard). The Keating government in 1992 decided to lift the age at which we can access our superannuation payouts from 55 to 60 between 2014 and 2024. A year later it decided to increase the female pension age from 60 to 65 between 1996 and 2013. The Howard government dodged the tough decisions, leaving it to the Rudd government to decide to raise the pension age from 65 to 67 between 2017 and 2023.

But the crunch is now. The first baby boomers turn 65 this year; 4 million of them will hit retirement age over the next 15 years. If we want to influence the choices they make, we don't have 15 years to wait. What's the point of introducing reforms so slowly that they take effect only after the baby boomers have retired?

As the OECD has pointed out, Australia is lagging badly on reform where it is most needed. Treasury and the Reserve Bank warn we are facing a shortage of workers. Yet as the first baby boomers turn 65, that is still our pension age for men, the same as 100 years ago. Women can take the pension at 64. We can take our super payouts tax-free at 60, or with low taxes at 55.

Where is the sense of urgency? Why is Canberra allowing the wave of baby boomers to pass into retirement before it takes action? Why not make 2011, the 65th birthday of the baby boom, our year of reform, so we make the changes we need to make, in the time we need to make them?

Reforms work best when they are done across the board. They need to remove the incentives to early retirement, and promote the shift to a new culture of working to 70 or beyond. They need to give high-care nursing homes a reliable source of funding, and invest in tackling the biggest ageing cost of all. Six issues stand out:

End the anachronism by which Australians living to 90 or 100 can access their retirement nest eggs from 55. Start lifting that age immediately, not in 2014, so it reaches 60 by 2020, and 65 by 2030.

Roll back the age at which people can take their super tax-free to 65 as soon as possible, and then raise it in line with the pension age.

Speed up the move to a higher pension age, by lifting it by six months each year from 2015, to reach 67 by 2018, and then to 70 by 2024.

Promote a culture in which working to 70 and beyond is seen as normal. Tackle the ageism of corporate HR managers.

Give high-care nursing homes a secure financial base by allowing them to charge accommodation bonds, as low-care homes already can, and as was proposed in 2004 by the Hogan report.

Increase public investment in research into Alzheimer's disease and other causes of disability in old age, so Australians can live long lives without losing quality of life.

Labor says it is a government of reform, focused on creating jobs and caring for those in need. What better way to prove it?

Read more >>

Houdini act couldn't save Victorian Labor

LABOR performed a Houdini act in the state election, winning eight of the 10 closest seats to keep the new Baillieu government to a majority of just two.

The final election results show the outcome was closer in seats than in votes. The Coalition harvested more than 1.4 million primary votes, 270,000 more than Labor, but in most of the close seats, Labor got votes where it mattered.

After preferences, 1.633 million Victorians, or 51.6 per cent, voted for a Baillieu government, while 1.533 million, or 48.4 per cent voted to re-elect the Brumby government.

Labor won 14 or a third of its 43 seats with margins of less than 3 per cent, eight by less than 2 per cent, and 19, or almost half its seats, by less than 5 per cent. By contrast, the Coalition won 36 of its 45 seats by more than 5 per cent, and 43 by more than 2 per cent.

Of the 13 seats it gained, only two were really close: Bentleigh, the closest contest, which the Liberals won by 0.75 per cent, and Seymour, won by 1.2 per cent.

But Greens preferences gave Labor seat after seat by narrow margins: Eltham (0.8 per cent), Ballarat West (1.1), Macedon (1.3), Bellarine (1.4), Ballarat East (1.5), Ivanhoe (1.7), Cranbourne (1.9), Monbulk (1.9), Albert Park (2.0) and Geelong (2.1).

All this will change before Victoria goes to the polls again in 2014. A redistribution in 2012 could create two new seats in the outer northern and western suburbs. That means northern Victoria, the eastern suburbs and the south-eastern suburbs are all at risk of losing a seat.

One of the biggest swings was in Essendon, where former planning minister Justin Madden's plan to parachute into the lower house almost failed, with the Liberals gaining a swing of 9.3 per cent and the preferences of one in three Greens voters.

In truth, there were big swings against Labor in most of the western suburbs: 12.4 per cent in Steve Bracks's old seat of Williamstown, 10.9 per cent in Thomastown and John Brumby's seat of Broadmeadows, 10 per cent in Derrimut, and outsize swings in Keilor (9.1 per cent), Footscray (8.4) and Altona (8.3). But only in Essendon was the result close.

Overall, the two-party swing against Labor was 6 per cent. The median swing was higher still, because in most of the Nationals' heartland, there was little or no swing and in two seats, a swing to Labor.

In Mildura, first-term Nationals MP Peter Crisp suffered a massive 7.9 per cent swing to Labor. In Murray Valley, where veteran Nationals MP Ken Jasper retired, Labor's vote rose 2.7 per cent, while in the Wimmera seat of Lowan, there was no swing at all.

By contrast, Gippsland saw the biggest swing to the Coalition. In Gippsland East, the Nationals unseated independent Craig Ingram with a swing of 20.5 per cent against him.

With some exceptions, the swing against Labor was smaller in the country than in Melbourne. But overall the swing in its marginal seats was no more than the swing statewide. The bush held, but the city fell.


COALITION % LABOR %

MARGIN MARGIN

Bentleigh* 0.8 Eltham 0.8

Ballarat West 1.1

Seymour* 1.2 Macedon 1.3

Bellarine 1.4

Ballarat East 1.5

Ivanhoe 1.7

Cranbourne 1.9

Monbulk 1.9

Carrum* 2.0 Albert Park 2.0

Mordialloc* 2.1 Geelong 2.1

Frankston* 2.1 Essendon 2.4

Mitcham* 2.8 Ripon 2.7

Bendigo West 2.9

Narre Wn Nth 3.0

Forest Hill* 3.2 Brunswick (#G) 3.3

South Barwon* 3.9 Bendigo East 3.8

Albert Park (#G) 3.9

Prahran* 4.3 Yan Yean 4.1

Oakleigh 4.7

Plus 36 seats with Plus 24 seats with

majorities over 5% majorities over 5%

* LIBERAL GAIN AT ELECTION.

# LABOR MARGIN OVER GREENS.


THE FINAL VOTE

VOTES SWING SEATS GAIN/

% % (88) LOSS

Liberals 38.0 3.6 35 12

Nationals 6.8 1.6 10 1

Coalition 44.8 5.2 45 13

Labor 36.3 6.8 43 12

Greens 11.2 1.2 0 -

Others 7.8 0.5 0 1


TWO-PARTY PREFERRED

Coalition 51.6 6.0

Labor 48.4 6.0


THE BIGGEST SWINGS

TWO-PARTY SWING TO COALITION %

Morwell 14.2

Williamstown 12.4

Ferntree Gully 12.0

Gippsland East 11.5*

Broadmeadows 10.9

Thomastown 10.9

Evelyn 10.7

Kilsyth 10.1

Derrimut 10.0


WHERE THE COALITION WON

Burwood 9.6*

Carrum 8.7*

Seymour 7.9*

Mount Waverley 7.8*

Prahran 7.8*

Gembrook 7.4*

Bentleigh 7.0*

South Barwon 6.2*

Mordialloc 5.6*

Frankston 4.8*

Mitcham 4.7*

Forest Hill 4.0*


THE SMALL SWINGS

Melton 0.8

Shepparton 1.3

Mill Park 1.3

Tarneit 1.3

Rodney 1.4

Bendigo East 1.5

Ripon 1.6


SWINGS TO LABOR

Mildura 7.9

Murray Valley 2.7

Lowan 0


* SEATS THAT CHANGED HANDS.

SOURCE: VICTORIAN ELECTORAL COMMISSION.

Read more >>

Battling the big banks

THE public response to Treasurer Wayne Swan's banking reforms seems to be a growl of disappointment. Australians are fed up with being ripped off by bank bosses who are paid several hundred times more than them. They are angry that banks are able to charge us what they like, and get away with it. They want tough action to hit banks where it hurts and these reforms don't do it.

They're right. These reforms won't lower your mortgage rate. They won't stop the big banks jacking it up even higher if they can get away with it. And so long as we ask them for three out of every four home loans we borrow, they will get away with it.

But why didn't Swan go further? Were there tougher reforms that he and his colleagues were just chicken to take on? Or was it that there is no simple way to reduce the market power of the banking cartel and that some of the solutions proposed could end up being worse than the problem?

Let's start by looking at where we are, and how we got here. And we'll start with the positives, because they are big positives.

First, unlike most in the West, Australia's banking system did not collapse in the global financial crisis. That's partly because the Australian Prudential Regulation Authority did an outstanding job as our watchdog before the crisis. It's partly because the government moved in the heart of the crisis to guarantee the banks' debts and deposits. But it's also because our banks were prudent and sensible lenders, when their overseas counterparts were not.

That matters for us, because the banks emerged in good shape to finance the recovery. Mortgage lending alone has grown by $162 billion in the past two years. The banks are greedy, yes, but they're good at their job and that's good for us.

Second, interest rates and bank margins have soared over the past year, but with mortgage rates now typically 7.15 per cent after discounts, it's not crippling. If we're in trouble with rates at that level, then we've borrowed too much.

But there is also a big negative. The banks' margins were driven down in the 1990s and early 2000s by competition from new lenders, who derived much of their funding from securitisation: selling bundles of our mortgages to investors, and reinvesting the proceeds in new loans.

The global financial crisis began when this market was poisoned by American banks filling their securitised bundles with bad mortgages. As they went bad, the market for securitisation collapsed even for Australian lenders, whose bundles remain good. And as it collapsed, so did the new lenders.

The big banks swooped, bought up their weakened rivals, and regained their lost market power. The four big banks now hold 80 per cent of all loans. The other banks have 17 per cent, and all credit unions and building societies, just 3 per cent. They're to be our fifth pillar? This will be a long wait.

We got here partly because the GFC wiped out securitisation and the new lenders, but also because in good times and bad, governments and competition regulators have allowed the big banks to gobble up their rivals.

Consider this list: since 1990, the competition watchdogs have allowed the Commonwealth Bank to take over the State Bank of Victoria, the State Bank of NSW, BankWest, Colonial State Bank and Wizard Home Loans. They allowed Westpac to take over Bank of Melbourne, RAMS home loans and St George (in addition to its earlier acquisitions: the Challenge Bank, Advance Bank and Bank SA).

Three times, the regulators allowed one of the big four to swallow up the next biggest bank: first, the State Bank of Victoria, then the Bank of Melbourne, then St George. The result is a cartel that, by and large, does not compete on price.

What could the government do? The most effective way to boost competition would be to set up its own bank, using the post offices as retail outlets. But that would need to be a big venture, with outlays rivalling the national broadband network. It's not surprising Swan turned that down.

It could require the banks to offer loans with margins fixed over the Reserve Bank's cash rate. University of Melbourne finance guru Kevin Davis points out that Australia's variable loans are unusual in requiring borrowers to bear all the risk of rising interest costs. But wouldn't it be better to try to fire up the competitive pressures that will bring those margins down?

That's essentially what Swan's reforms aim to do. One stream of changes would make it easier for us to change lenders by banning exit fees on new loans, and possibly by giving us portable account numbers and thus put pressure on all lenders to compete on price.

A second stream aims to widen the funding sources for potential competitors: by continuing and publicising heavily the government guarantee of their deposits, which was due to expire next October, and by the government buying up another $4 billion of mortgage securities.

The third stream of reforms is aimed at a separate problem: stemming the foreign debt. It will allow banks and credit unions to issue covered bonds a variant of securitisation in which the risks lie with the institution rather than the investor to attract the super funds to invest at home. And the government will try to set up an Australian bond market, to increase options for investors and lenders.

None of this will reduce your mortgage rate next year. But bit by bit, it will build competition, and that will lower rates.

If you're paying too much for your mortgage, you'd better find your own solution: tightening your belt to pay down your debt, refinancing with a credit union, whatever. Best of luck.

Read more >>

Treasurer's sensible attempt to drive change

WAYNE Swan's banking reform package is a persuasive read. But what difference will it really make to borrowers' ability to get a better deal?

We might have to be patient. Most of these reforms are sensible and small-scale: giving consumers more information, giving lenders more funding options. But there are two things on Swan's list that, in time, could make a difference.

The first is his plan to ban exit fees for new mortgage loans from July 1 next year. It will apply only to new loans. It won't cover almost $1 trillion we owe already on existing mortgages. Nor will it apply to small business loans .

Is that a copout? No. Think ahead.

Including refinancing, we take out 600,000 mortgages a year. Two of the four big banks have scrapped exit fees already; the rest will follow.

That might not make us better off. There are real costs to banks when customers break off loans early and banks have ways to get that money from us.

But in future, they won't be able to do it by locking us in to a lousy rate when the credit union over the road offers cheaper deals. We will be free to move.

The second potentially significant reform is the review by Bernie Fraser of the feasibility of giving each of us a personal account number that we take with us if we change our bank.

It's subtle, and it's not certain to happen. But if it does and it probably will that too would slightly shift the balance of power between the bank and you in your favour.

I can't believe the Australian Competition and Consumer Commission will ever succeed in prosecuting a bank for "anti-competitive price signalling", but it won't hurt to give it that power.

And when so many vulnerable people get into serious strife over credit card debt, Swan's changes to tighten the rules are reforms that matter.

But where will the competition come from? New Zealand's Labour government set up Postbank in its post offices. Swan prefers to help credit unions and building societies become a "fifth pillar" to challenge the banking cartel.

It's a big ask. Swan's package would widen their sources of funding. But his biggest step is to pledge that the government's guarantee of deposits will continue in some form after it is due to expire next October.

And as the guarantee will apply equally to credit unions and building societies, they will be free to advertise "government-protected deposits".

These are changes at the margin. They won't put banks at risk. If they work, it will be over time. But they are a serious bid to drive change.

Read more >>

20 Labor seats courtesy of Victorian Greens

LABOR relied on Greens preferences to win 20 of its 43 seats in the new Legislative Assembly raising real doubts about whether it could afford to follow the Coalition in putting the Greens last.

Final election results suggest rather that Labor and the Greens may be doomed to live in a love-hate relationship competing fiercely for a widening circle of inner-suburban seats, yet teaming up against the Coalition elsewhere.

While the Coalition rode the protest vote to power, the battle between Labor and the Greens widened to a second arc of seats from Williamstown to Ivanhoe, and south to Albert Park. Despite that, Greens voters came to Labor's rescue in seat after seat. Across the state, 75 per cent of Greens preferences went to Labor, just 25 per cent to the Coalition. And in 11 of the state's 88 seats, they swung the result Labor's way.

Before Greens preferences, the Coalition was leading in 56 seats, and Labor in just 32. But Greens preferences changed that to a 45-43 result, lifting Labor above the Coalition to snatch narrow victories in seat after seat two seats in Ballarat, two in Geelong, in Macedon, and in six city seats, from Essendon to Monbulk.

Former education minister Bronwyn Pike this week called for Labor to consider putting the Greens last. But while the Greens were her enemy in Melbourne, half her colleagues in the caucus room owe their seats at least partly to Greens voters and might not want a fight.

The final results show that:

While Coalition preferences gave Labor all four seats in the inner north Brunswick, Melbourne, Northcote and Richmond the voters rebelled, delivering a landslide swing against Labor to the Greens and Liberals.

On average, at the three-party stage, the swing against Labor in the four seats was a massive 8.5 per cent, with 5 per cent going to the Greens, and 3.5 per cent to the Liberals. In Brunswick, Greens candidate Cyndi Dawes held an 18-vote lead over Labor until Liberal preferences swung the seat back.

Liberal voters staged a different kind of rebellion. One in three Liberal voters in the four seats defied their party's how-to-vote cards, and directed their preferences to the Greens ahead of Labor.

The Greens also made big gains from Labor in the next ring of seats further out. At the three-party stage, the Greens polled 25 per cent in Albert Park, 21 per cent in Williamstown, 27 per cent in Footscray and 20 per cent in Essendon, Preston and Ivanhoe.

This suggests the next Labor v Greens battle will be over a much wider field.

In the outer suburbs and regional Victoria, by contrast, the Greens went backwards from their high-water mark at the federal election, when they won 12.6 per cent of the vote in Victoria. This time they won just 11.2 per cent of votes, up from 10 per cent in 2006, but well short of their hopes.

Greens how-to-vote cards appeared to have no influence on the way their voters voted. In city seats where they directed preferences to Labor, 75 per cent of Greens voters did so. Yet in three seats where they issued an open ticket, 76 per cent of their voters gave preferences to Labor.

But in two seats, many Greens voters also rebelled against directives to give preferences to the Liberals. In Cranbourne, 41 per cent gave their second vote to former Hawthorn star Geoff Ablett. And in Essendon, 35 per cent preferred the Liberals to former planning minister Justin Madden.


OUR 88 MPs HOW THEY WON

Coalition (45) Labor (43)

Absolute majority 31 13

On preferences

after leading 14 19

after trailing - 11

Greens preferences reversed the outcome in:

Albert Park, Ballarat East, Ballarat West, Bellarine, Eltham, Essendon, Geelong, Ivanhoe, Macedon, Monbulk, Oakleigh.

Greens preferences helped Labor over the line in: Bendigo East, Bendigo West, Bundoora, Cranbourne, Footscray, Narre Warren North, Ripon, Williamstown, Yan Yean.

Victorian Electoral Commission

Read more >>

All power to Baillieu as upper house win looms

THE Baillieu government appears set to control both houses of Parliament, after a late surge in voting for the Greens knocked maverick independent Stephen Mayne out of the race in the Northern Metro region.

With almost all votes counted, the Liberals appear set to squeeze home in all three of the close races for the new Legislative Council. This would give the Coalition a bare majority of 21 seats in the 40-member chamber a gain of four seats from the 17 it held in the old Council.

Labor looks set to end up with just 16 seats, down from 19 in the old chamber.

The Greens have retained their three seats in the Council but lost the balance of power. And the Democratic Labor Party (DLP) has lost its one seat, that of its leader, Peter Kavanagh.

The final result will be known for certain on Monday, when the Victorian Electoral Commission will feed all 3.2 million votes to its computer to allocate the preferences.

But there is now only an outside chance of an upset.

Ironically, a massive late surge in the Greens' vote has ended their hopes of retaining the balance of power.

Big gains in counting of absentee and postal votes lifted the Greens' vote to 12 per cent statewide, and 19.1 per cent in Northern Metro.

That not only re-elected their de facto leader Greg Barber, but lifted his running mate Alex Bhathal well above Mr Mayne, who polled just 1 per cent, knocking him out of the race.

The Liberals' Craig Ondarchie will end with the final seat, held by retired Labor minister Theo Theophanous.

Sex Party leader Fiona Patten also fell short of sneaking an upset win in the same race.

The late surge to the Greens also saw their Member of the Legislative Council, Colleen Hartland, win her battle with the President of the Council, Labor's Bob Smith, for the final seat in Western Metro.

Mr Smith, most famous for taking 10 overseas trips in his four years as Council President, will be replaced by Andrew Elsbury of the Liberals.

The closest race of all is in the vast electorate of Northern Victoria, where Liberal MLC Donna Petrovich has narrowly rolled back a strong challenge by Steve Threlfall of the Country Alliance.

The Country Alliance polled 20 per cent of the vote in Shepparton, where they beat Labor into third place, but ran out of puff in the Mallee.

David O'Brien of the Nationals took the final seat in Western Victoria from DLP leader Peter Kavanagh, the first seat the Nationals have won in the west for 40 years.

And in Southern Metro, the Liberals' Georgie Crozier unseated Labor MLC Jennifer Huppert.

Mr Mayne's loss maintains his record as Australia's most unsuccessful candidate for Parliament and the boards of top 100 companies a record blemished only by him win-ning election to Manningham Council.


LEGISLATIVE COUNCIL

LIB/NAT ALP GREENS

METRO

Eastern 3 2 No change

Northern 2 2 1 Libs gain from ALP

South Eastern 2 3 No change

Southern 3 1 1 Libs gain from ALP

Western 2 2 1 Libs gain from ALP

VICTORIA

Eastern 3 2 No change

Northern 3 2 No change

Western 3 2 Nat gain from DLP

TOTAL 21 16 3

Read more >>

Power bills a shocker. Why?

N THE three years to September, the price of electricity for the typical Melbourne home rose 54 per cent. The price of water rose 62 per cent, the price of gas rose 28 per cent. It was one of the key reasons the Brumby government lost office.

The Bureau of Statistics reports that over the three years, these price rises were the highest of any capital city. In just two years, the St Vincent de Paul Society estimates, "Victorian households' annual energy costs have typically increased by more than $300".

But why? We all know why water prices have risen: the desalination plant, which the Auditor-General says will cost $5.7 billion to build and operate until 2040, plus Melbourne residents paying for a pipeline they will not be allowed to use, except in emergencies. For rising water bills, blame the government.

Electricity is another matter. Victoria's electricity market is the most open and competitive in Australia. Since it was privatised by the Kennett government, the state owns none of it, and now has little control over it. State policies had a part in our rising power bills, but only a part.

Our generators are all privately owned, and free to charge what they like. The transmission network, as in other states, is owned by the government in our case, the government of Singapore. So are three of our five electricity distributors, in whole or part, while the other two are owned by a Hong Kong company.

The state government used to regulate the prices of transmission (the high-voltage lines) and distribution (the poles and wires taking electricity to your home and workplace). But now they are controlled by the Commonwealth, through the Australian Energy Regulator. And the 13 electricity retailers who handle your accounts are no longer regulated by anyone, after the Brumby government decided in 2008 to end price control.

All have played a role in pushing up your power bills as have policies to lift use of renewable energy, especially solar, and the Brumby government's decision to require every home to have a smart meter.

Start with the generators. A decade ago, Australia had a glut of power, so their prices were cheap. Not now. Generation prices have risen a lot: in part, because demand has caught up with supply, and in part because our new plants run on gas or wind, and that costs more than coal.

Transmission prices jumped in 2008 to pay for old high-voltage lines to be replaced by new ones. And distribution prices have risen sharply, and are set to keep rising.

In October, the Australian Energy Regulator gave the five distributors a green light to raise prices on average by 34 per cent over the next five years. While it told us this would raise future retail prices by just 3 per cent a year from 2012 to 2015, that's because distributors' charges make up just 40 per cent of your power bill.

The regulator estimates by 2015, these price rises will increase the typical household's annual bill by $220. If generators and retailers lift their charges at the same rate, the typical household will be paying $550 more by 2015.

Why? Even after the regulator cut $1 billion off the distributors' bids, they will increase investment by 45 per cent over the five years, to cope with rapid population growth, to replace old poles and wires, to meet new post-bushfire standards and to pay for smart meters.

The Department of Primary Industries concedes that the rollout has added $68 to the typical household's power bill this year, but says this will be outweighed over time by the benefits. Maybe, for some, but right now the costs seem more certain than benefits.

Then there's the retailers. Origin has just flagged a 6.8 per cent rise next year for customers on its standard offer that is, those who don't threaten to switch retailers. Most homes by now, however, are on contracts, paying prices called market offers.

The state requires each retailer to publish its market offers on the YourChoice website (www.yourchoice.vic.gov.au). But there's a big catch: there is no law that requires them to offer you the price on that website.

A review for the commission in October 2009, by the Wallis consulting group, found 11 of the (then) 14 retailers quoted households higher peak and off-peak charges than those published on the website. The average peak rate on the website was 16 per kilowatt hour, but most quoted customers at least 17, and some more than 20.

For small business, the gap was even worse. And retailers often refused to provide written confirmation of a quoted price, even if the law requires it.

OK, Ted, we have a problem. What do we do about it?

The Baillieu government has pledged to pay 17.5 per cent of the power bills of pensioners and others on concession cards. It will also consider suspending the rollout of smart meters, pending a new cost-benefit analysis and a separate review by Treasury, aiming to make it better value for money.

St Vincent de Paul policy manager and electricity watchdog Gavin Dufty applauds the Coalition for its "well-targeted" subsidy to concession card holders, and for seeking a pause on smart meters.

But he argues for wider reforms to reduce energy bills by reducing energy use: charging higher tariffs as energy use rises, redesigning renewable energy schemes to minimise costs to the poor, and weatherproofing low-income rental housing.

But retail price monitoring needs to be re-thought, and resourced properly. Retailers should be required to offer customers the prices they advertise. And prices should be monitored more often, more publicly, and in more user-friendly ways. Then the price hikes might slow.

Read more >>

Sex Party close to winning first seat

SEX industry lobbyist Fiona Patten could be catapulted into the Legislative Council to share the balance of power with the Greens, after a surprise twist in the re-check of votes put her within a breath of taking the final Northern Metro region seat.

With a third of votes re-checked, the Greens were polling almost 20 per cent in the seat, well over a quota. If sustained, this would knock out independent Stephen Mayne, but open the door for Ms Patten, leader of the Sex Party.

She now trails Labor by just 0.1 per cent at the point where one or other must be eliminated. If she can overtake Labor, she will defeat the Liberals on Labor preferences.

The re-check has put the Country Alliance back on track to win in Northern Victoria from the Coalition, although it is still too close to call, while Greens MLC Colleen Hartland looks likely to narrowly lose her Western Metro seat in a three-way contest with the Liberals and Labor.

The Coalition is on track to win 20 seats in the 40-member council, Labor 17, the Greens two and the Country Alliance one. If Ms Patten wins, the Coalition will drop to 19.

Read more >>

Reserve rises may have missed the point

If yesterday’s GDP figures are right, then the Reserve Bank has misread the economy, and given us interest rate rises we don’t read.

If the figures are wrong — and their startling revisions to 2009-10 data don’t inspire confidence — then they are just a bit of static we can disregard. But don’t assume it.

For once, Wayne Swan did not come out yesterday with graphs showing how Australia is leaving the ‘‘major advanced economies’’ for dead. And no wonder. All except France and Italy are now growing faster than we are.

With growth of 2.7 per cent, we are now being left for dead by Germany (3.9 per cent), Japan (4.1) and Korea (4.5).

But The real bottom line is growth in GDP per head. The Bureau of Statistics estimates it rose just 0.8 per cent in the year to September. It is still below 2008 levels.

How can that be when we’ve seen so much growth in jobs, our mineral exports are booming, and even after yesterday’s revisions, the Bureau of Statistics estimates that real national income grew 7.2 per cent in the past year?

Surely that makes us richer? Which means we spend more?

Well, some of us. The key to the puzzle lies near the back of the book, where the Bureau examines the sources of household income.

Over the past two years of crisis and rebound, it estimates, total wage income grew by just 7 per cent - including inflation, including all those 400,000 extra jobs.

Average income per employee grew just 3.6 per cent. Inflation grew 4.1 per cent. That means that on average, households depending on wage income are now marginally worse off.

Household income is growing: but the part of it that is really growing is the income of households who invest. Our income from profits, dividends, rent and interest shot up 16 per cent in the same two years. So households with significant investment income are much better off.

But investor households are more likely to reinvest their windfalls than spend them. That’s reflected in the Bureau’s stunning revision of its story on what happened in the last year. It has cut its estimate of household spending in 2009-10 by a cool $27 billion, and trebled its estimate of household saving from $23 billion to $68 billion.

Its picture of Australia’s growth now is extremely patchy. In the past year, almost half of all non-farm growth was in mining, mineral processing and construction. Most of the rest was in the finance sector and professional services (lawyers, accountants etc). The other two-thirds of the economy is growing little, if at all.

Many economists, inside government and outside, don’t believe this. They point to the stunning jobs growth of the past year, to the Bureau’s record of revising up past data, and dismiss yesterday’s figures as at most a ‘‘speed bump’’ on our road to the boom the Reserve predicts.

They may be right. But in my mind, these figures add to concerns that, as in early 2008, the Reserve may have misread the game. It has focussed on the needs of one industry in one state — mining in WA — when its job is to set interest rates for the entire economy. There is a risk that it has done too much, too soon.

Read more >>