Innovative Diagnostic Technology

Brisbane company, Panbio Ltd, has been offered one of the first grants under the Australian Government’s new $1 billion Commercial Ready program to develop leading-edge diagnostic technology to test for a range of infectious diseases.

The $3.5 million grant will further R&D on “Forced Enzyme Complementation” technology, the next generation of diagnostic tools used for the testing and identification of specific diseases, particularly high infectious ones.

Panbio Ltd has developed more than 90 diagnostic tests which are used in clinical laboratories to check for about 30 diseases like Ross River, Dengue or glandular fever and whooping cough. Last year the company produced kit tests to assist in the diagnosis and treatment of more than four million people in Australia, New Zealand, Asia, the Americas, Europe, the Middle East and Africa.

The company expects the new technology to generate significant national and export income as it replaces current testing methods.

For information on this article, or on any other aspect of the Australian economy or business opportunities available, please email me.

David
david.taylor@agarcarlyon.com

A$ Continues to Rise

The Australian dollar hit a 12 month high in relation to the greenback overnight. With US oil prices rising and a lack lustre day on the US stock market, the US$ weakened, leaving the A$ to rise above US79 cents.

The rising A$ has put more pressure on the Australian economy as exporters continue to find it hard to compete in overseas markets and imports become more competitive – leaving greater likelihood of a worsening trade deficit.

To check the A$ v US$ market at any time go to FutureSource at www.futuresource.com

For information on this article, or on any other aspect of the Australian economy or business opportunities available, please email me.

David
editor@agarcarlyon.com

Interesting Political Days Ahead

The Australian political scene is to see its first major change in over 20 years from July 1 this year. Even though federal governments of different political persuasions have been in office over the years, none have had control of both Houses of Parliament – the House of Representatives and the Senate since the early 1980’s. At the last federal election, in October 2004, the Howard Government (now into its fourth term, having been in office since March 1996) won control of both Houses. Because of the timing of the replacement of Senators, the Government’s control of both Houses doesn’t come into effect until July 1 2005.

The impact of this significant change to the political landscape should be a raft of legislation designed to wind back years of industrial relations legislation that employers see as severely restricting growth and changes to welfare legislation to ensure that only genuine and deserving individuals receive full benefits. Both of these measures will raise the ire of the union movement – but to no avail. The unions have for years been able to exert pressure on the Senate to have it vote down, or water down government legislation – often defeating legislation that was a part of the elected government’s clear policy mandate.

The changes to industrial relations and social welfare policies and legislation over the next 3 years should be of on-going interest.

As always – we live in interesting times.

For information on this article, or on any other aspect of the Australian economy or business opportunities available, please email me.

David
editor@agarcarlyon.com

New Australia/Asia Free Trade Agreement Talks Begin

With the US/Australia free trade agreement now firmly in place (it came into operation on January 1st this year), Australia is this week commencing negotiations with the 10 countries of South-East Asia (known as the ASEAN countries) and New Zealand on a free trade deal.

It is anticipated that the talks will outline a two year agenda for the 12 countries to reach agreement. The FTA will encompass a free trade deal covering goods, services and investment. The final agreement is planned to operate for 10 years to 2017.

The potential for more trade between Australia and the ASEAN countries is significant. At present these countries take 12% of Australia's goods exports and 15% of services exports. The combined population of the ASEAN region is around 545 million.

For information on this article, or on any other aspect of the Australian economy or business opportunities available, please email me.

David
mailto:david.taylor@agarcarlyon.com

Australia Leads in Innovation

Australia’s reputation as a ‘clever country’ has been confirmed with the release of an innovation survey which shows Australia has recorded a higher involvement in business innovation than almost all EU countries including the United Kingdom.

According to the ABS Innovation in Australian Business 2003 survey, more than one-third of all Australian businesses engaged in innovation over the three years to 2003, spending $20 billion on innovation activity.

The main findings from the survey are:
• Australia ranks 7th against European countries for the proportion of businesses innovating – ahead of countries including the United Kingdom, France, Italy and Sweden;
• 35% of Australian businesses were engaged in innovation activities during the three years ending December 2003;
• 61% of businesses employing 100 people or more were innovating businesses;
• On a sectoral level, the industries with the most innovative businesses are communication services, electricity, gas and water supply and manufacturing;
• Australian businesses spent around $20 billion in 2002-03 on innovation activities. Of this, around $7 billion was spent on research and development (R&D) and $13 billion on non-R&D innovation.

For information on this article, or on any other aspect of the Australian economy or business opportunities available, please email me.

David
mailto:david.taylor@agarcarlyon.com

Millions of Dollars Being Spent on Oil and Gas Exploration

Petroleum companies will invest almost $220 million in oil and gas exploration following the grant of new exploration permits in waters off Western Australia and Tasmania. This maintains the Australian Government’s ongoing program of releasing offshore acreage for petroleum exploration.

Eight of the permits are located in the commercially proven Carnarvon Basin, which hosts world-class reserves of natural gas, as well as significant volumes of oil. The new permits are close to previous discoveries and existing infrastructure which suggests there’s a good chance of new discoveries.

The remaining three permits are adjacent to the Yolla gas field in the Bass Basin off northern Tasmania, close to the major gas markets of south-eastern Australia.
Maps and full descriptions of the areas can be found at www.industry.gov.au/petexp

Under the work program bidding system for the award of exploration permits in Australia’s offshore areas, applicants are required to nominate a guaranteed minimum 'dry hole' exploration program for each of the first three years of the permit term and a 'secondary' program for the remaining three years. Each component of the program must be completed in the designated year or earlier. Permits are granted for an initial term of six years.

For information on this article, or on any other aspect of the Australian economy or business opportunities available, please email me.

David
editor@agarcarlyon.com

Possible Open Skies Policy Generates Angst

We reported earlier this week that Singapore Airlines and the Australian Government were meeting to discuss Singapore Airlines' gaining greater access to the Australian market, including access to the Sydney - Los Angeles route. The meetings have generated considerable angst with some government politicians already urging the Transport Minister (and deputy Prime Minister) not to water down the duopoly that Qantas shares with United Airlines on the lucrative Pacific route. The clamor has been significant and flies in the face of reality - that greater competition (and 3 airlines rather than 2 is hardly significant competition or even choice) should be of benefit to the flying public if the airlines concerned all strive to gain market share and retain loyal customers.

The situation at present is ludicrous, with Qantas moving hundreds of jobs off-shore, yet claiming that entry by Singapore Airlines will reduce their employee numbers. So too the argument that Singapore Airlines is not a discounter. If that is the case, then the other 2 airlines would surely be able to gain and retain market share with ease.

A decision will not be made quickly and will require the support of the entire Cabinet. However, there is little doubt that the current restrictive arrangements can not remain. As always - we live in interesting times.

For information on this article, or on any other aspect of the Australian economy or business opportunities available, please email me.

David
editor@agarcarlyon.com

Australian Dollar Continues to Strengthen

The Australian dollar has continued to strengthen overnight on the back of continuing speculation that there will soon be an increase in official interest rates in Australia.

At 8.00am on 15 February the A$ was US78.81cents. The expectation of many analysts is that the A$ will hit $80cents by the end of the week.

As reported in previous articles, the rising A$ is continuing bad news for Australian exporters who are being impacted by the strength of the local currency. The expectation of interest rate rises - which will further broaden the gap between Australian and US official interest rates - is something they would rather do without. Most exporters believe the A$ should sit somewhere around US70cents.

For information on this article, or on any other aspect of the Australian economy or business opportunities available, please email me.

David
editor@agarcarlyon.com

More Flights Across the Pacific a Possibility

For those who fly the Pacific route between the US west coast and Australia and have been thwarted in obtaining a ticket because all flights are full – some relief might soon eventuate. At present only United Airlines and Qantas fly the Pacific route. This situation has been in place for many years, despite a desire by Singapore Airlines to also fly between the east coast of Australia and the west coast of the US.

Singapore Airlines is currently prevented from participating on the Pacific route as the Australian government wants to protect Qantas – even though the airline no longer has any government ownership. The Pacific route is one of Qantas’s most profitable, with flights nearly always at maximum capacity. Qantas argues that increased competition would impact on its profitability and therefore levels of staffing. The Australian tourism sector however, argues that the restricted flight numbers at present have prevented an increase in US tourism to Australia – to the benefit of competing destinations.

This week the Singapore Transport Minister is meeting with his Australian counterpart to argue the case for Singapore Airlines (a government owned entity) to be entitled to a full “open skies” policy. This would expand on the 2003 agreement that gave Qantas unrestricted rights to Singapore as a base for its global operations.

For information on this article, or on any other aspect of the Australian economy or business opportunities available, please email me.

David
editor@agarcarlyon.com

A$ strong. More Pressure on Interest Rates

The A$ has risen significantly overnight against the US$ reaching US78.39cents – a high for 2005 for the A$. The rise has come about as a result of continuing strong employment numbers and an improvement in Australia’s trade deficit.

Unemployment in Australia remains at near 30 year lows of 5.1% and has the possibility to improve even further. The deficit, criticised by all commentators in December has dropped back to $56.4billion from $59billion.

These figures, couple with a slight deterioration in the global position of the $US has led to a strengthening of the $A.

But what does this mean for Australian interest rates? As reported over the last week – there is a growing likelihood that the Reserve Bank of Australia will soon increase interest rates – possibly by an initial 0.25% and a similar amount the following month. Home lending figures that show another 1.2% increase last December, coupled with the improving trade deficit, good employment and an emerging new round of pay rises from the union movement – all appear to make an interest rate rise inevitable.

The problem this will then create is the differential between the Australian and US short term interest rates. The attractiveness of Australian rates will pull in more foreign capital, which will in turn keep the A$ high v the US$ which in turn makes it harder for Australian exporters, yet makes imports cheaper which in turn will worsen the trade deficit – and we are away again on the vicious circle of how to manage a strong vibrant economy.

We live in interesting times.

For information on this article, or on any other aspect of the Australian economy or business opportunities available, please email me.

David
editor@agarcarlyon.com

Interest Rate Rise Likely

In a carefully worded statement issued on 7 February, the Reserve Bank of Australia (RBA) made it clear that there is every likelihood that interest rates will rise in the near future. It is expected that rates will rise by mid-year, possibly only by 0.25%, but this will be the first increase in rates for 14 months.

There is growing concern at the level of personal debt being incurred and at the underlying inflation rate that could reach 3% by the end of 2006, if interest rates remain unchanged.

The strong Australian economy over the past 14 years, now coupled with an historically low unemployment rate has triggered an increase in consumer (debt funded) spending.

At the same time, the just released 2004 Economic Survey of Australia by the Organisation for Economic Co-operation and Development (OECD) provides a strong endorsement of Australia's economic performance.

The OECD Survey notes that “in the last decade of the 20th century, Australia became a model for other OECD countries” in relation to structural reform and its adoption of medium term macroeconomic frameworks. The OECD points out that these reforms have “conferred an enviable degree of resilience and flexibility on the Australian economy”, resulting in a prolonged period of good economic performance that saw the Australian economy shrug off crises in its main trading partners, as well as a devastating drought at home.

Looking forward, the OECD expects a continuation of strong economic growth over the next two years, underpinned by strong productivity growth and accompanied by low inflation and an unemployment rate around current levels. The OECD forecasts the Australian economy to grow by 3.8 % in 2005 and 3.6 % in 2006. The OECD mentions some risks to the outlook, including around the price of oil, exchange rate volatility and adjustment in the housing sector.

For information on this article, or on any other aspect of the Australian economy or business opportunities available, please email me.

David
editor@agarcarlyon.com

Importance of Tourism to Australia

Tourism is a key economic driver for the Australian economy. It employs almost 10 per cent of the workforce (directly and indirectly), contributes $71 billion in expenditure per annum and is worth more than 11 per cent of total exports.

More than 90 per cent of tourism-related businesses employ fewer than 20 staff, including substantial numbers of young people and people from non-English speaking backgrounds. With 47 cents in every tourism dollar spent in regional Australia, tourism offers an alternative to many regions at a time when some traditional rural industries are facing structural adjustments.

For information on any article on this site, or in the Report, or on any other aspect of the Australian economy or business opportunities available, please email me.

David
editor@agarcarlyon.com

Leading Government Minister's Comments on Australian Economy

In a recent speech to a Forbes dinner in Beverly Hills, California, Australia’s Minister for Industry, Tourism and Resources, The Hon Ian Macfarlane talked about the strength of the Australian economy and potential into the future.

“Australia is one of the contemporary business bases of choice in the fast growing Asia Pacific region”, he said. “We are now in our 14th year of uninterrupted growth. The World Competitiveness Yearbook has judged us the most resilient economy in the world for the third straight year. Our strong economic growth rates continue to outrank most other major OECD economies, and is expected to continue with forecast growth of 3.8% in 2005 and 3.6% in 2006. This growth hasn’t been accidental.”

The Minister went on to say that the growth has been “built on sound economic management and reform, including tax reform, workplace reform and reducing trade barriers. We have a particularly strong resource sector but that’s only part of a diverse, sophisticated and modern economy. Service industries now account for almost 80% of our GDP. We have internationally acknowledged strengths in new technology sectors such as biotechnology, information technology and nanotechnology. While Australia’s pool of investment fund assets is now the fourth largest in the world, valued at US$532 billion.”

“Australia now has more people employed in the finance sector than Singapore and Hong Kong combined. And we have the most multilingual workforce in the Asia-Pacific region. In fact they say there are only 3 cities in which all Asian languages are spoken – they are Brisbane, Sydney and Melbourne. The Australian education system is ranked third in the world when it comes to meeting the needs of a competitive economy. And last year the World Bank rated Australia as the easiest place in the world to start a business.”

For information on any article on this site, or in the Report, or on any other aspect of the Australian economy or business opportunities available, please email me.

David
editor@agarcarlyon.com

February Newsletter Now Being Circulted

The February 2005 edition of "The Agar Carlyon Report" - a succinct summary of Australian economic and business news is now being circulted.

Please click here to read it.

For information on any article on this site, or in the Report, or on any other aspect of the Australian economy or business opportunities available, please email me.

David
editor@agarcarlyon.com

Interest Rates

On 2 February both the Reserve Bank of Australia (RBA) and the US Federal Reserve announced their latest interest rate decisions.

In Australia the RBA decided to leave the cash rate unchanged at 5.25%. Analysts expects a slight rise, probably just 0.25% within coming months.

On the other hand, the US Federal Reserve has raised interest rates for the 6th straight time to 2.25%. Analysts expect the US rates to move gradually up to around 4%.

For information on this article, or on any other aspect of the Australian economy or business opportunities available, please email me.

David
editor@agarcarlyon.com

Australia ranked one of the ten most economically free economies

Australia is one of the ten most economically free economies in the world, according to a report from the The Heritage Foundation and The Wall Street Journal highlighted in a statement issued by the State of Victoria, Australia.

The Index of Economic Freedom is an annual ranking of countries worldwide with ratings that reflect analysis of 50 different economic variables grouped into 10 categories: banking and finance; capital flows and foreign investment; monetary policy; fiscal burden of government; trade policy; wages and prices; government intervention in the economy; property rights; regulation; and informal (or black) market activity.

Countries are rated one to five in each category, one being the best and five the worst. These ratings are then averaged to produce the overall Index score. Overall, the scores of 17 countries in the Asia-Pacific improved while the scores of ten countries in the region declined. Hong Kong and Singapore remain the freest economies, with Australia and New Zealand are also in the top ten.

For the first time in the Index's eleven year history, the United States does not rank among the world's 10 freest economies despite its score remaining unchanged from the previous year. Improvements in the economies of Australia, Chile and Iceland enabled these countries to surpass the United States. According to the report, Australia was recently given accolades as one of the world's most entrepreneurial countries and one of the best destinations for a rich and relaxed lifestyle.

For information on this article, or on any other aspect of the Australian economy or business opportunities available, please email me.

David
editor@agarcarlyon.com