Chinese trade agreement.

I have been reading about this from here in cold wet England

www.theguardian.com/australia-news/2014/nov/17/china-drops-barriers-on-australian-dairy-wine-and-beef-in-free-trade-deal

I got the impression when I was last in Aus that these free trade agreements between Aus and China just end up hitting the average Australian in the pocket as farmers just end up exporting more of their produce to China. This in turn then causes the domestic price of these goods to rise.

Is this a correct assessment of the situation?

I do get the impression that the political elite in Aus are prepared to pretty much do anything to drive growth. Even if the decisions made now will have negative consequences in the future.


Chinese owned and staffed farms in Aus. That does sound somewhat controversial. I don't envisage that will go down very well with the average Australian?

No, it's not.

Do Hyundai's cost more in Korea because they export them?

The opening up of new markets means Australia can produce and export MORE and this means one thing above all else; JOBS. It's great news.

How can anyone be cynical about this?

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Gestalt said..
China it's an awesome outcome. the gov has also signed trade agreements for japan and korea.

those 3 countries together form a large part of south east asia.

Singapore and Thailand agreement was arranged by previous liberal governments.

Pff the Thai agreement is a joke! they were talking about it on the ABC it works in favour of the Thai's, example a Ford Territory exported over there after tariffs etc ends up costing $100,000 aus

This will create jobs.

Like negative gearing reduced rents, and privatisation lowered utility prices. LMFAO

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Loftywinds said..

whippingboy said..
This will create jobs.

Like negative gearing reduced rents, and privatisation lowered utility prices. LMFAO

Laugh at yourself. Without negative gearing I can assure you rents would be a lot, LOT higher.

Oh, has negative gearing caused the addition of a lot of new builds to the housing stock, then?

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Loftywinds said..

whippingboy said..
This will create jobs.

Like negative gearing reduced rents, and privatisation lowered utility prices. LMFAO

Laugh at yourself. Without negative gearing I can assure you rents would be a lot, LOT higher.

Yes,.. a lot LOT higher IF you can even find a house to rent.

Most people don't remember that this has been tried before with disastrous consequences for those who were trying to find a house to rent.
Back some time in the 80's, we heard the same argument as we are hearing now, and they acted on it.
The 'House for Rent' columns in the saturday papers went from about 6 full pages prior to the change down to around half a page or less, 12 months after the change.
I had a few houses to rent back then and whenever I advertised a house for rent, the phone started ringing at 10pm friday night, when the saturday paper first came out. People camped outside the newspaper office to be the first ones to get the papers. They were desperate, and of course, the rents went through the roof.
The result was, people willing to pay much more than the asking price got the house and those who couldn't afford it got nothing.
It was not a good situation and was soon recognized as a disaster by the idiots in government.
It was reversed within a year, and it took a long time for investors to get confidence in the market to start investing again.

High house prices are NOT entirely driven by investor buying. They are mostly driven by the cost of building a new house.
And the cost of building a new house is mostly driven by the ridiculously high prices australian labor costs.
From the labor costs, you would think you were hiring brain surgeons to do the most simple jobs.
Nobody is going to spend a million dollars building a new house to sell it for half that when they want or need to move on.
If you build a house for a million dollars, you expect to get a million dollars plus for it when it's finished.

If this policy is again tried, it will only work IF the government is willing to spend billions in buying or building houses for people to rent at a reasonable price. When they do the maths, they will soon realise it is better to take the loss on the negative gearing rather than spend billions every year building houses which they will then have to manage and maintain.

I can tell you , managing and maintaining rental houses is not a nice way to spend you holidays and weekends, and people who do this will simply bail out of the market if they don't get some return on it.

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pweedas said..

Loftywinds said..

whippingboy said..
This will create jobs.

Like negative gearing reduced rents, and privatisation lowered utility prices. LMFAO

Laugh at yourself. Without negative gearing I can assure you rents would be a lot, LOT higher.

Yes,.. a lot LOT higher IF you can even find a house to rent.

Most people don't remember that this has been tried before with disastrous consequences for those who were trying to find a house to rent.
Back some time in the 80's, we heard the same argument as we are hearing now, and they acted on it.
The 'House for Rent' columns in the saturday papers went from about 6 full pages prior to the change down to around half a page or less, 12 months after the change.
I had a few houses to rent back then and whenever I advertised a house for rent, the phone started ringing at 10pm friday night, when the saturday paper first came out. People camped outside the newspaper office to be the first ones to get the papers. They were desperate, and of course, the rents went through the roof.
The result was, people willing to pay much more than the asking price got the house and those who couldn't afford it got nothing.
It was not a good situation and was soon recognized as a disaster by the idiots in government.
It was reversed within a year, and it took a long time for investors to get confidence in the market to start investing again.

High house prices are NOT entirely driven by investor buying. They are mostly driven by the cost of building a new house.
And the cost of building a new house is mostly driven by the ridiculously high prices australian labor costs.
From the labor costs, you would think you were hiring brain surgeons to do the most simple jobs.
Nobody is going to spend a million dollars building a new house to sell it for half that when they want or need to move on.
If you build a house for a million dollars, you expect to get a million dollars plus for it when it's finished.

If this policy is again tried, it will only work IF the government is willing to spend billions in buying or building houses for people to rent at a reasonable price. When they do the maths, they will soon realise it is better to take the loss on the negative gearing rather than spend billions every year building houses which they will then have to manage and maintain.

I can tell you , managing and maintaining rental houses is not a nice way to spend you holidays and weekends, and people who do this will simply bail out of the market if they don't get some return on it.

That's a load of rubbish. I was renting properties back in the mid 1980s and I never had a problem finding a place to move to despite not being a particularly model tenant and this was always in the inner west of Sydney. Rents were certainly rising but they weren't going up precipitously. There was a property price boom soon after Keating tried abolishing negative gearing, but I don't think that the 2 were related.
I haven't had a look at the prices of standard houses lately, but the idea that just because you build one means that it will suddenly be worth more than it cost is just senseless. Or do you think that property is the only asset that does not depreciate over time?

But I thought that this thread, from the title, was going to be talking about the China free trade deal.

It is of course wonderful! We will no longer be tarriffied of them, nor they of us.

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pweedas said..

Loftywinds said..

whippingboy said..
This will create jobs.

Like negative gearing reduced rents, and privatisation lowered utility prices. LMFAO

Laugh at yourself. Without negative gearing I can assure you rents would be a lot, LOT higher.

Yes,.. a lot LOT higher IF you can even find a house to rent.

Most people don't remember that this has been tried before with disastrous consequences for those who were trying to find a house to rent.
Back some time in the 80's, we heard the same argument as we are hearing now, and they acted on it.
<snip>

This has been debunked a few times, but the wrong impression keeps on going on. From my rusty memory, it was only Perth and Sydney that showed an increase in rents over that period and it was from other factors. Not from negative gearing. It did not affect the supply of housing at all in that limited time, and therefore it couldn't really have any serious effect on rent rises apart from some overly keen landlords milking it.

I don't think is really an issue these days. Most governments would be too scared to change it and would get punished at the polls. Even though it distorts the market, anyone changing it will be roasted alive.


The argument that removing negative gearing would increase rents doesn't hold water when you think about house prices rising because of negative gearing. If it weren't for negative gearing a lot of people wouldn't be able to hold properties that are running at a loss for a long time, and as a result the prices would not go up anywhere near as much as it has. The media suggests that a lot of the buyers for property now are investors, and even those wanting somewhere to live find it better to negative gear somewhere else.

I think they need to tackle the problem from a different angle and offer tax deductions to owner occupiers similar to investors. It might be guilty of distorting the market, but at least it will distort the market across the board.

Even though I use negative gearing myself I am surprised at how many people are heavily geared in it. I suggested the idea of removing negative gearing to a colleague at a work function and he just about had a heart attack after he stopped frothing at the mouth. I guess he would be exposed if it were removed. From his reaction, a lot.

There will definitely be a price increase in the cost of locally grown food and except to see more 2nds on the shelves that doesn't meet export quality

Why would anyone make anything here when it could be manufactured in china for a fraction of the cost? That doesn't make any sense at all.
Also under the agreement any Chinese investors in australia can bring in their own Chinese workers. So I guess that is creating more jobs, but for who?
And if china pays a higher price for food, what will that do to our prices locally?

Just thought of an interesting side note. If the farmers are getting reamed by Coles and woollies due to the duopoly. I wonder what will happen when the Chinese market is blown wide open for them. Would be interesting if they stopped selling to Coles and woolies and sent all the Australian produce to china.............

the chineese are much smarter business men than us

what the hell!

nothing like backing yourself hey.