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ACT economy gets thumbs up from big banks

By David Tuckwell - 24 February 2017 6

ANZ building in Civic. Photo: iStock

The ACT had the top performing economy of any state or territory in Australia at the end of 2016, an ANZ study has found.

The ANZ research team found that while the Australian economy was underperforming overall, the ACT and Victoria were the tallest dwarves.

Every state and territory economy was growing below its historical average with the exception of the ACT and Victoria.

The report concluded that while the ACT had the top performing economy at the end of 2016, its growth was weakening.

“The loss of momentum has been driven by some weakening in labour market conditions. However, the household sector seems to be picking up,” the report stated.

The study, called the “Stateometer”, is published quarterly. It measures the performance of each state’s economy based on a variety of indicators, such as the housing, jobs, inflation and growth. Successive Stateometers have ranked the ACT as a top performer.

Other big four banks publish similar analyses and have come to similar conclusions. Last month, the Commonwealth Bank’s quarterly report found that “effectively we have a two tier economy: NSW, VIC and the ACT are at the top tier of the economy, then there is little to separate the other economies across the nation.”

Late last year, Westpac-owned St. George released a report which painted the ACT economy in a positive light. The report cited the new international airport and rising house prices as driving the ACT’s growth.

The positive reading of the ACT economy supplied by the big banks comes as experts warn of pending collapse nationally. Steve Keen, an economics professor at Kingston University who became famous for correctly predicting the GFC, has warned that Australia will enter a recession this year due to household debts rising faster than salaries.

“Our debt level according to the Bank of International Settlements, private debt level, has gone from 150 per cent of GDP to 210 per cent of GDP,” Professor Keen said.

“Ireland did the same thing when they called themselves the Celtic Tiger and they don’t call themselves that anymore”

Professor Keen’s apocalyptic warnings are not shared by any major financial institution in Australia and have been repudiated by the RBA. But they are shared by some other independent economists.

The next Stateometer is due out in April.

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6 Responses to
ACT economy gets thumbs up from big banks
wildturkeycanoe 8:49 pm 20 Mar 17

Another thing that is worrying about what has been said here is the statement about “the new international airport and rising house prices as driving the ACT’s growth.”
If the rest of Australia’s economy tanks and interest rates take an upward climb, there will be a substantial increase in mortgage defaults. That will put more houses on the market, lowering the price of housing across the board. Lower house prices and higher interest rates will put people behind even further in their mortgages, losing equity and being under more financial stress. What of the economy then? The conditions that have been “great” for our economy are only setting us up to fall, big time. I just hope that we have made a decent dent in our home loan before the hard times hit, so that we won’t be part of the defaulters who will abandon Canberra for cheaper housing in N.S.W.
What will the banks do when all this happens? I doubt there will be any sympathy or assistance towards those who borrowed from them and now have their family homes sold off, leaving them with nothing to show for all the years of making their payments on time.

dungfungus 5:19 pm 20 Mar 17

The St George branch at Erindale closed last Friday. They even decommissioned one of the two ATMs.

Today, the windows are all covered and the St George signage is down but in the process the sign behind the St George sign is revealed and it is “Advance Bank”.

I recall this was what the Canberra Building Society morphed into about 1987. It was later absorbed by St George Bank which started out as a building society (NSW Building Society, I think) in Kogarah. Some of us remember the then NSW Premier Neville Wran outside the Kogarah building trying to stop a run on deposits. When everything goes electronic runs will be easier to manage.

bj_ACT 10:05 am 01 Mar 17

The big banks might give the ACT economy a thumbs up, but as noted by respondents above, there are outer suburban parts of Canberra being left behind due to government funding, development and investment policies. Tuggeranong and West Belconnen in particular.

If Canberra is economically so good according to the Big Banks, then why do these banks have Kambah residents on a 40 postcode Australia wide loan approval watchlist? This makes it harder and more expensive for people from Kambah to get loans based on their location, not on their income or individual financial situation.

The ACT Government should be asking themselves why was Kambah announced as the most Mortgage Stressed Suburb in Australia and why they have done nothing to address this issue? You would think that Andrew Barr wouldn’t want these type of issues to have started on his watch, but concern for residents in the Suburbs that don’t win or lose him elections has never been high on his agenda.

wildturkeycanoe 6:42 am 01 Mar 17

Dick Larkey said :

This year, St George Bank is closing another branch in Canberra (Erindale) in three weeks time.

All customers have been instructed to use the Tuggeranong branch where better services will be available for business customers (accessible by a long drive, paid parking and then a long queue).

Also, the Leeton branch recently closed its doors and my sister tells me the one in Tumut is going to close as well. How does a bank in rural areas expect to keep its customers when they would likely be older retirees who don’t use the internet for banking. My mother only recently began using Eftpos services as she was used to getting cash from the bank for her grocery shopping, just like many other folks do. These people will switch to whatever bank is still offering face to face service, as that is how the country lifestyle works. They aren’t running around a hundred miles an hour like city dwellers, they want a chat and some gossip when they go to town.
The Kippax branch is the only bank left in the entire west Belconnen area since the other banks that used to be there closed up. It can’t be due to lack of customers because every time I go there I am faced with a queue and a fifteen minute wait to be served by the one single teller that is serving. The CPS credit union also shut branches around Canberra some years ago and if my home loan wasn’t stuck with them, I’d have switched provider so it isn’t necessary to travel over 10km to talk to a human being in person.

Dick Larkey 5:33 pm 26 Feb 17

“Late last year, Westpac-owned St. George Bank released a report which painted the ACT economy in a positive light. The report cited the new international airport and rising house prices as driving the ACT’s growth.”

This year, St George Bank is closing another branch in Canberra (Erindale) in three weeks time.

All customers have been instructed to use the Tuggeranong branch where better services will be available for business customers (accessible by a long drive, paid parking and then a long queue).

On 5 July 2011 the then CEO of St George Bank (Rob Chapman) boasted in The Australia that “he would open up another 100 new branches in the next three years at $1 million a pop….”.

Yeah, right!

It is only a matter of time until the remaining St George branches are closed down and their customers transferred to Westpac.

One thing is certain though and that is all the major banks endorsed rising house prices in the ACT as “positive”. I think that when the house building industry (which makes up 90% of GDP) is hailed by the banks then I think Steve Keen is on a winner with his latest prediction.

It is difficult to see what else contributes to the ACT economy; we don’t have factories or mines so where is the real wealth coming from?

wildturkeycanoe 2:57 pm 24 Feb 17

Of course the banks are cheering, with average mortgages around half a miilion and interest rates well above the RBA, what’s not to be happy about?

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