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Building materials dive signals end of Oz property and population 'boom'

For those who follow the stock exchange, building materials share values are the key to the boom and bust cycle of Australian (and similar systems) property, infrastructure and construction booms. When building materials values go down we know that overall market demand decline has settled in. It means that the developers and engineers have reduced their forward orders for bricks and mortar. At the same time Australian state governments have been told to reduce their own little-known immigrant-sponsorship programs.

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ALP Investments

Are business forecasts another key to Julia Gillard's apparent sea-change in population policy and Rudd's disappearance?
The ALP doesn't rely on mere donations from developers; it has its own huge investments in finance, insurance, mining, development and property, which act as a barometer for the benefits of growth. Could ALP investments and other big business now be warning the Labor Government that construction will no longer be able to soak up immigrants? Sure, pumping up population pumps up demand, but only if there is money to invest. Problem is that the money seems to be drying up.

Boral pulling up sticks

Building materials giant, Boral, long a veteran investor in Australian population growth and an early vocal member of the 20th century Australian population growth lobby, is downsizing some of its Australian and US operations and heading north, presumably scavenging the last inertias of scale in the post-colonial malignant growth of China, India and South East Asian regions.[1]

The Australian Financial Review reported that Boral made a $49 million loss before interest and taxation in the first half of 2010.[1]

The most tasteless era of ostentatious spending on multi-management layers wining and dining big projects and buyers since the one preceding the Great Depression may be on its last legs. The US housing market has gone phutt. The Australian market will follow.

And Boral shares, running at around $10 in 2006, are now about half that.

"Deutsche Bank believes that although Boral's Australian construction materials arm has been one of its strongest-performing divisions, with earnings before interest and taxation up 12 per cent to $107 million in the first half, it could easily cut some $14 million in costs by eliminating several layers of management." [1]

This will be a relief for less exalted workers and managers in the sector. Survival is possible in such industries if they follow the post 1970s oil-shock European model of maintaining infrastructure and housing stock instead of investing in population and construction growth. However, there won't be room for wedding-cake management tiers.

States told to cut their 'secret' immigration programs

Another sign of terminal decline in bricks and mortar bubbles is the new Federal Government's request to the states to cut back their semi-secret immigration programs, including the 176 visas.[2] The states control land and derive income from its sale, notably through stamp duty. To generate land and housing sales they have been engineering population growth, in tandem with property developers and financiers. The associated state-sponsored immigration programs seem to have started in Victoria and are the most excessive there. Introduced by the Kennett government, one of their ploys was to make a low profile category of 'regional immigration' (once designed to assist low-population rural areas by facilitating skilled immigration and loosening definitions of family reunion) into one that applied everywhere, designating dense urban areas as in need of immigration. Long and short-term immigration in numbers previously unimagined has generated a demand for housing and jobs in construction. The same immigration probably supplies many of those non-English speaking construction-workers one sees moving like ants on roadways and tragically moon-scaped once green patches in Australian suburbs, carrying out orders at which most locals would bawk, if in control of the process.

State government spokespeople, including growth-corridor spruikers, have repeatedly claimed that immigration numbers were outside of their control, yet the states advertised aggressively for immigrants. See these articles, for instance: "Premier Bligh pretends Queenslanders cannot cap population growth although 60% want to" and "Melbourne 2008, Life in a destruction zone" and "Julianne Bell delivers resolutions to Planning Minister Madden in late impromptu meeting."

Yet the State Premiers continue to try to mislead the public on this, even subsequent to Gillard's new policies:

"We can't control who comes over our state borders, but the federal government can control who comes into Australia," (Anna Bligh) [3]

Tragically and wastefully the tendency of state governments to deny reality may see green wedges rezoned and destroyed even at this stage of construction detumescence by parliamentary rogues. See for instance, http://candobetter.org/node/2058 and http://candobetter.org/node/2067 Yet it may all be for nothing; those wedges might be sold at a financial loss in the end.

Women in power

We may gauge the panic of big business to the idea of a real debate on population through its mainstream media mouthpieces' hopeful perseveration with tying that rusty and irrelevant old racist can to the idea of sustainable population and Julia Gillard, reflected for instance, in this glowing chestnut where Gillard's red hair provides a cliched motif:

"Who can forget the last redhead to talk tough on immigration and protecting Australian values?

and "This isn't just about talking to voters in western Sydney but also in Queensland, which gave rise to Hansonism. Maintaining seats there is shaping as a major challenge in the federal election."[4]

The comments above evoke the medieval European stigmatisation of red-heads, not to mention witch-hunting. Starting with the new Primeminister, women in Australia may be in for an interesting time as the boys start fighting over the scraps, in the property sector and government.

Notes

[1] Jeremy Wiggins, "Boral set to offload dead wood," Australian Financial Review, 28 June, 2010, page 1.
[2] Sophie Morris, "States' visas blunt skills thrust: Migration," Australian Financial Review, 28 June, 2010, page 8.
[3] Marcus Priest, "Values, being sustainable are the keys: Population,"Australian Financial Review, 28 June, 2010, page 8.
[4]Marcus Priest, "Lurching to the right on boat people: Comment," Australian Financial Review, page 8.

Comments

Michael Stutchbury, Economics editor at the Australian wrote on June 28, 2010 that "JULIA Gillard's rejection of Kevin Rudd's "Big Australia" goes dangerously close to cornering her into a low-growth economy." He argues that 'the strongest po population growth since the 1960s was one of the chief reasons Australia sailed through the global financial crisis" and that "Australia has plenty of room for 40 million people if we manage it properly, whatever the new Prime Minister says." (!) [Really persuasive, hey.] He disparages Gillard as "driven by the politics of rising traffic congestion in Sydney and our other big cities, the pressure for higher urban housing density and double-digit price inflation for household electricity, gas and water."

Well, um, yes. We would hope so. Doesn't Stutchbury have to pay for water and electricity? Doesn't he have to pay for housing? What ivory castle does this so-called Economics Editor live in? What planet does he dwell on? Stutchbury's comments show just how out of touch and ridiculously unrepresentative and untrue to real news the mainstream Murdoch Press is.

Stuff you Michael Stutchbury! On-ya Julia G.! It takes a woman to see reality.

Re: Comment above from 'Friend of Julia G' 3rd July 2010 'Ivory tower newspaper economists should take hike'...

Gillard's down playing of Rudd's 'Big Australia' threat needs to be met with actions, else its just Labor Right-inspired rhetoric to claw back Australia's political centre, as a hollow gesture to outwit Abbot's Coalition ahead of a looming election. [Read: 'Gillard moves to annex the centre', 3rd July 2010 in The Australian].

Yes, 'growth economists' - those who advocate 'growth is good', 'growth can only be good' and 'population growth is good because it grows the economy', blinkeredly ignore the cause and effects outside their narrow economic mindset.

Growth economists conveniently leave the social and environmental consequences out of their modelling. They ideologically reject the balanced scorecard principle of Triple Bottom Line which receives little airing these days - the tests of economic, social and environmental sustainability.

Growth economists are anti-social. They ignore the social consequences of excessive growth - higher demand, scarcer goods and services, higher costs of living, increased congestion, housing unaffordability, urban sprawl, social problems, etc. They don't care and so what they advocate is one-sided and destructive and so menacing.

Growth economists are anti-environmental. They ignore the environmental consequences of excessive growth - higher pollution emissions, urban sprawl, increased use of natural resources, increased waste, increased threats on flora a fauna. They don't care and so what they advocate is one-sided and destructive and so menacing.

The quote by The Australian newspaper economics editor, Michael Stutchbury (28th June 2010) that "Australia has plenty of room for 40 million people if we manage it properly, whatever the new Prime Minister says" is growthist extremism.
Stutchbury needs to get out more. He needs to spend time in overcrowded Shanghai living on an average Shanghai wage and commuting like the locals for say 3 months. Then return to Australia and to try to convince Australians to live like Chinese in Shanghai!

I refer to you my previous article on CanDoBetter highlighting the effects of a big Australia, 'Rudd's 'Big Australia' driving up costs of living and creating poorer Australians'

If Gilliard does no more than rhetoric on Australia's population/immigration growth, on political credibility Gillard risks becoming a 'Rudd in drag'.

The proposed large-scale expansion of Melbourne's urban growth boundary would destroy significant areas of endangered native grasslands.

The State Government will try to persuade Parliament to approve Planning Amendment VC 67 to take 43,600 ha out of Melbourne’s green wedges and surround the new urban growth zones with a freeway that will not be needed in a post-carbon economy.

If ratified by Parliament these planning amendments will mean that our green wedges irrevocably replaced by more concrete, bitumen, and suburban sprawl.

5000 ha of environmentally significant Western Basalt Plains grasslands, the grassy woodlands of the Maribynong and Merri Creek catchments, including giant red gums and 4000 ha of the South East food-bowl, would be destroyed.

This area has highly productive market gardens using recycled water and doubles as Southern Brown Bandicoot habitat. It will also mean high rise developments along tram, bus and light rail routes as well as around stations.

Grasslands continue to be one of the most heavily cleared and endangered ecosystems in Victoria.

The Brumby government feel they have the right to by-pass environmental consideration and the public of Victoria. "Planning" to cater for sustainable population growth is a polite term for more McMansions, MegaStores, freeways, infrastructure, water demands, energy consumption and associated soaring costs.

The "nimby" tag is another useful political tool to manipulate the public into silence while our fertile plains, native grasslands, fauna habitat, heritage areas and our State's integrity is being bulldozed to serve solely the interests of the housing industry and land developers.

We should take an example from Haiti - where population growth has endangered the nation through consumption of flora and fauna, and thus vulnerable to Nature's extremities.

I think the observation at the end of the above post,

"We should take an example from Haiti - where population growth has endangered the nation through consumption of flora and fauna, and thus vulnerable to Nature's extremities,"

is unintentionally ironic.

Sadly it would seem that the Victorian Colonial Raj does take its example from Haiti. I really do not believe that they intend to stop before there is nothing left. Victoria and Australia could easily become like Haiti within ten years at the rate of immigration that is being forced on us. No water, no housing, huge unemployment, and very low wages. Forests chopped down, schools and universities too expensive for the poor, and foreign ownership of most land and resources.