Serious jump in unemployment

[Ed Barton]

Don't forget there's a lot of people who are 'unemployed' but who are on other things like disability pensions etc.

There's a strong motivation for someone on the dole to move to the
DSP (Disability Support Pension) for the higher payments and benefits.

The system encourages those to move to the DSP, in the move they convince themselves that they can't work.

My brother is a classic example. He's mildly disabled, can work maybe half the year. But swapped from the dole to DSP, maybe 5 years ago. In the process he has convinced centrelink, and himself that he can never work again.

 

[Ausprop]

I disagree.

They're not coming to Australia to buy cheap imports.

They're coming to Australia to experience Australia - the people (who are paid in AUD), the food (locally produced), the experiences (which aren't imported from China).

Marketing slogans aside it's niave to think that a high dollar doesn't hurt the domestic tourism industry (and other exporters).

Tourists, like the rest of us, will cut their cloth so suit.

I'm talking about the residual income of aussie residents. we don;t need as much income because our standard of living is so vastly improved now that the AUD is back to fair value

 

[tom32]

The exchange rate is possible the last thing I consider when travelling.

I was in Europe in mid 08, just before the GFC and was paying double what I would pay now.

It was a brilliant holiday and I never really thought about the exchange rate.

It has an impact on purchasing from overseas. But not travel.

Maybe for you but certainly what you are saying flies in the face of supply and demand mechanics.

High price >> lower qty demanded.

It does not mean 0 qty demanded and some like yourself do not factor price into their decisions, but plenty including myself do.

For example my family are taking more overseas holidays while the dollar is strong rather than domestic ones.

Easy to say, I should pay true blue etc, but ultimately while you have the chance to experience something different you might as well go to europe or the US. Go to Broome again when the dollar is lower.

 

[tom32]

There's a strong motivation for someone on the dole to move to the
DSP (Disability Support Pension) for the higher payments and benefits.

The system encourages those to move to the DSP, in the move they convince themselves that they can't work.

My brother is a classic example. He's mildly disabled, can work maybe half the year. But swapped from the dole to DSP, maybe 5 years ago. In the process he has convinced centrelink, and himself that he can never work again.

On the flip side when this single mother regulation changes next year expect the participation rate to increase and the unemployment rate to increase with it.

Indeed it is possible this increase to participation rate in this months figures is some of the single mothers resigning themselves to having to find work now and starting to look / find work before the changes are in place.

 

[Ausprop]

Maybe for you but certainly what you are saying flies in the face of supply and demand mechanics.

High price >> lower qty demanded.

It does not mean 0 qty demanded and some like yourself do not factor price into their decisions, but plenty including myself do.

For example my family are taking more overseas holidays while the dollar is strong rather than domestic ones.

Easy to say, I should pay true blue etc, but ultimately while you have the chance to experience something different you might as well go to europe or the US. Go to Broome again when the dollar is lower.

it's not a perfect market tho so it's not a simple D&S curve. I would agree that exchange rates have little to do with major destination selection (other than the quick escape to bali to dodge some bombs and drink some dodgy beers)

personally the thought of sitting on an airplane for a day with 2 young kids sounds like something I should be paid for

 

[willair]

There's a strong motivation for someone on the dole to move to the
DSP (Disability Support Pension) for the higher payments and benefits.

The system encourages those to move to the DSP, in the move they convince themselves that they can't work.

My brother is a classic example. He's mildly disabled, can work maybe half the year. But swapped from the dole to DSP, maybe 5 years ago. In the process he has convinced centrelink, and himself that he can never work again.

I was over on one of the Bay Island during the week looking at a property that the "Bank" is about too take back..every third house has a for sale sign on the front fence,most not all that i talked too that day were on the "DSP",or some form of sitdown money and did cash work,the rest were walking around with a tallie in a brown paper bag,makes you think when the ATO sends the bill,who is smater..

 

[tom32]

it's not a perfect market tho so it's not a simple D&S curve.

I cannot think of why it would not be?

It is only the shape that is diffcult to work out and perhaps there are relationships with certain currencies not necessarily best represented by the AUD against all currencies. i.e. we still may get plenty of Japenese tourists even if the US dollar has tanked etc and our currency looks very strong. In general terms though I still think the higher the AUD the less tourists come. I suspect the high end is less elastic on the demand side, which is likely why Crown wants to invest pretty heavily going forward in spite of the dollar.

Price is of course only one factor but it is a pretty important one. I understand you can say Australia may be better quality than say Bali but this does not mean we have an inelastic demand curve in our tourism and people will come here no matter the price? Does it?

Who makes a decision on where to holiday based only on the location without taking into account price at all? Clearly plenty here do from the looks, but of those people I associate myself with, most have at least one eye on the price including me, so whether we are a unique group in the world is I suppose up for debate but certainly some people take price into account when selecting a destination?

 

[MarkB]

I cannot think of why it would not be [a perfect market]?

Though I disagreed (and still disagree, btw) with a lot of AusProp has said re: implied demand curve elasticity - on this point I do happen to agree with him.

A perfect market can only exist where there is (among other things) a homogenous product.

As such tourism markets can never be "perfect" as the destinations and experiences on offer are anything but homogenous.

 

[Ausprop]

I accept it may be an issue for some people, however if you want to see the Statue of Liberty there is no point going to bali.

As an aside - met a tourist a few years back - could not get their head around the concept of an exchage rate. Tried to tell them (at the time) that things were effectively half price for them, but they couldn't relate to it and just saw it as a dollar! was a shame when things wer ebeing sold for half price and th ebuyer didn't even know!

 

[Ausprop]

Though I disagreed (and still disagree, btw) with a lot of AusProp has said re: implied demand curve elasticity - on this point I do happen to agree with him.

A perfect market can only exist where there is (among other things) a homogenous product.

As such tourism markets can never be "perfect" as the destinations and experiences on offer are anything but homogenous.

yep, that's what i was trying to say

 

[tom32]

Though I disagreed (and still disagree, btw) with a lot of AusProp has said re: implied demand curve elasticity - on this point I do happen to agree with him.

A perfect market can only exist where there is (among other things) a homogenous product.

As such tourism markets can never be "perfect" as the destinations and experiences on offer are anything but homogenous.

Fair enough.

perfect market; perfect information, homogenous product, perfect supply side with many small players none with dominance, many small buyers none with dominance etc etc etc.

Agree it cannot be that, and with brand's for everything from a bar of soap to a piece of steel there are no perfect markets out there at all, commodities would be close but then you have supply and demand side dominating players; i.e. BHP v Chinese steel mills.

That said it is still a market, so when price is high qty demanded will be lower than when price is low. i.e. a demand and supply curve will be relevant just not easy to determine and of course if at the same time price becomes low the country in question also has a nuclear melt down expect this to be in play too.

I did indeed make a mistake in saying the above, and capturing both the perfect market and supply and demand curve!

 

[BayView]

it's really time to get over it and accept the AUD as normal now. if the only reason a tourist will go somewhere is because they get an extra 10 or 20 cents on their dollar conversion then it doesn't say much for that place as a destination

Depends on your income level I suppose.

 

[tom32]

As an aside - met a tourist a few years back - could not get their head around the concept of an exchage rate. Tried to tell them (at the time) that things were effectively half price for them, but they couldn't relate to it and just saw it as a dollar! was a shame when things wer ebeing sold for half price and th ebuyer didn't even know!

and this is why even in the backstreets of Bangkok people will still approach you and say 20pounds for this suit or etc*.

Hoping said tourist has not got their head around 20 quid being the same price as every other vendor selling suits for some ungodly amount of Baht. Wow thats great value!


* I decided to use the word etc rather than list the other services offered in the backstreets of Bangkok.

 

[tom32]

A good thing may of just come of this:

A friend and I are going to Europe middle of next year and I was going to say we considered Monaco too expensive to visit to give an example of price having an impact on travel plans.

I just looked it up and it appears that its reputation is worse than the reality! It aint that bad. $200.00 AUD a night seems to get you out of trouble, albeit you are on the border rather than staying within Monaco itself!

http://www.wotif.com/hotel/View?hotel=O303

 

[Aaron Sice]

All smoke and mirrors Spludgey - higher participation rate ie more looking, a few more jobs on offer - reflective of govt policy pushing mothers back into the workforce once kids go to school (it is preschool time for those who have dropped a bundle about 5 yrs ago thanks to the baby bonus).

more like the govt have changed the definition of what includes an "active job seeker" or "job"....