Australia news live updates: energy crisis not about supply but ‘dysfunctional’ market, Daniel Andrews says; jobless rate steady at 3.9%

Western Australia has recorded 6,249 new Covid cases and 14 deaths, which includes some that date back to previous days and weeks but were reported to WA Health yesterday:

Christopher Knaus

Aged care sector says more than 60% of providers are making a loss

The aged care sector is warning that more than 60% of providers are running at a loss as they grapple with rising prices across the economy.

On Wednesday, the Fair Work Commission granted a 5.2% increase to the minimum wage, a decision that will help many aged care workers. The sector has welcomed the ruling, but is concerned at how the struggling sector will afford it without changes to government funding.

Paul Sadler, the Aged & Community Care Providers Association interim chief executive, told the Guardian that more than 60% of aged care providers are currently making a loss. That’s up from 50% in December 2020. He said:

Importantly, federal subsidies are not keeping pace with the cost of providing care, additional measures and protections for dealing with Covid and proposed increases in staff wages.

The fact that 60% of aged care homes are in deficit makes it imperative the government funds 100% of the wage increase approved [Wednesday] by the Fair Work Commission, in accordance with the royal commission recommendation to change the method of indexing subsidies that was rejected by the previous government.

What does the jobs data mean for rates?

With the jobs data looking quite bullish, the interpretation of such figures quickly becomes about interest rates. Specifically, do they increase the likelihood that the Reserve Bank of Australia will lift its cash rate when it meets on 5 July?

Or rather, given almost everyone expects another rise, will the increase be larger now that these numbers from the ABS have landed?

Here’s how things looked yesterday:

Now some economists, such as those at ANZ ,were expecting 3.8% to be the jobless rate for May, rather than 3.9%, but that’s really a hair-split. More interesting will probably be the fact the economy added more than 60,000 jobs for May, compared with the market consensus of reportedly about half that total.

More jobs are usually a good sign but with the share of the population at work now at record levels, all things being equal, that suggests employers are going to need to lift wages higher to attract or retain staff. (Yesterday’s 5.2% minimum wage award, though, might dim some of that hiring enthusiasm.)

Sean Langcake, head of macroeconomic forecasting for BIS Oxford Economics, concurs that the jobs figures “will add to wage pressures that have been emerging over the past few months”.

“The RBA have already signalled they are convinced wage growth will pick up this year [to cut the jobless rate to 3.7%], despite somewhat disappointing official [GDP] data in Q1,” Langcake says.

These data confirm the strength in the labour market persists, and we expect the RBA will lift the cash rate by 50 basis points in July, with more hikes to come after that.

Separately, an ANZ report has just landed suggesting households will keep spending even with RBA rate rises, helped by the confidence they have in staying employed.
“Strong wage growth (4% year-on-year through 2023), continued very low unemployment rates and the large savings buffers built up in 2020 and 2021 will delay and reduce the negative impacts of higher interest rates and prices on real household consumption in 2022,” ANZ says.

Though there will be a pullback in consumption as rates rise, we expect consumption to outperform GDP from now until 2024.

Earlier this morning, Victorian premier Daniel Andrews spoke to the media about the state childcare reform, but was asked about the energy crisis gripping the east coast, and did not hold back.

He first welcomed that Chris Bowen was the one dealing with this, as someone who “actually believes that climate change is real, can spell science and can follow it”, before blasting the former Coalition federal government:

Is it any wonder the industry struggled to make these changes? Is there any wonder there’s uncertainty in this energy market when really we just haven’t had a coherent, clear energy policy out of Canberra for a long, long time?

Hopefully that’s going to change; in fact, I’m very confident it will. On the issue of what the market operator has done – they have switched off the market because the market is not working. That’s the market operator, the regulator doing what they should do.

I should also make the point that the briefings I’ve received on this – this is not so much about supply, this is about the way the market, and distortions within that market, could have potentially impacted everybody getting what they need. There’s enough energy there. It’s just about how it’s bought and sold, how it’s shared and spread across our nation. It’s an unprecedented step but it’s not about supply as such. It’s about how the market was functioning or to put it another way, half the market was dysfunctional.

Andrews was also asked about a potential gas shortage the state could face in 2023, for which he makes a case for reserving supply:

Our gas for our businesses, for our households – reserve what we need for us and then sell what we don’t need to the world. It is just wrong, it makes no sense to me that households and businesses are competing against the world for something that’s ours.

There’s a thing called critical needs. A domestic gas reserve is really good policy. It makes sense, and will have a direct impact. Now there’ll be a number of very big companies who probably don’t see it that way. But, again, are we about their interests or are we about everyone’s interests, public interest?

More on the jobs data, which graphically looked like this:

As you may recall, the release of the 3.9% jobless rate for April with a clear 3 in front of it was the main bit of good economic news to land for the Morrison government during the official campaign.

Of course, the surprising jump in March quarter consumer price inflation to 5.1% at an annual rate, and the subsequent first interest rate rise by the Reserve Bank a week or so later, put then treasurer Josh Frydenberg (remember him?) on the defensive over economic management.

No doubt we’ll hear from new treasurer Jim Chalmers shortly. My guess he will take some heart from what look to be generally good figures, although it’s clear that Covid continues to cut into the amount of time people want to work. That causes various disruptions including nudging inflation higher.

Still, there’s some positive momentum, including a continued drop in the underemployment rate by 0.4 percentage points to 5.7%, for instance.

Across the states, WA gets the bragging points with the lowest jobless rate of 3.1%, ahead of the ACT’s 3.3%, with SA taking up the rear at 4.6%.

Western Australia police say they are investigating a fatal incident at the Yongah Hill immigration detention centre last night.

In a short statement, police say that about 11.45pm, a 32-year-old man was found in the centre with “serious injuries.”

The man was taken to Northam hospital, where he later died.

Police say two people are currently assisting them with inquiries.

Economy added 61,000 new jobs in May but more people were looking for work

The jobless rate for May was unchanged but there are interesting numbers within a stable result. So the economy added 61,000 jobs for the month, much more than the 4,000 in April.

The reason the jobless rate remained steady – at its lowest since 1974 – was that more people went looking for work.

The employment to population ratio increased to 64.1% in May, an all-time high and 1.6 percentage points higher than March 2020, the ABS said.

Seasonally adjusted hours worked increased by 0.9% in May, following a 1.3% increase in April.

You may recall the jobless rate was one of the numbers the then opposition leader Anthony Albanese fluffed in the first week of the official election campaign.

There’s a fair chance he’ll remember 3.9%, but then again, he might just ask reporters to do a Bandt and “Google it, mate!”.