China rolls out green carpet for California on climate

Since Trump’s decision to pull the United States out of the Paris climate deal, China has repeatedly vowed to uphold the accord and work with American states that share its determination.

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Giving a warm welcome to California Governor Jerry Brown, an opposition Democrat and self-described “envoy for humanity”, while cold shouldering US Energy Secretary Rick Perry signalled Beijing was happy to bypass Washington to make that happen.

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“I think the message is that irrespective of the decision of Donald Trump, China is willing to work with individual states and cities in the United States,” said Willy Lam, an expert on politics at the Chinese University of Hong Kong.

‘Losing ground’

Brown and Perry arrived in Beijing for a ministerial-level clean energy meeting just days after Trump’s shock announcement. 

While Perry maintained a relatively low profile during his visit, Brown, who had described Trump’s move as “insane”, went on a public relations offensive as he sought to fill the vacuum left by the US leader in the climate change fight.  

“We are losing ground. We are not moving at the pace needed to prevent catastrophe,” Brown warned Thursday on the sidelines of the gathering. 

Brown used several public appearances in Beijing to drum up Chinese support for California’s aggressive efforts to curb climate-warming carbon emissions, including face-to-face talks with Xi in the Great Hall of the People, a venue normally reserved for meetings with visiting heads of state. 

His efforts yielded results.

By the end of a week-long tour Brown said he had secured several preliminary agreements relating to clean energy and the establishment of a China-California climate institute at Tsinghua University in Beijing. 

China is a “major economic engine that is investing in the low-carbon economy and California is doing things that are similar, on a smaller level of course,” Brown told AFP.

Chinese officials have made it clear they want to work with the American state and beyond.  

California has “a lot of experience that is beneficial to the rest of us”, Xie Zhenhua, China’s top climate negotiator, told a forum attended by Brown on Thursday.

“We will not only continue to strengthen cooperation with California, but also strengthen concrete cooperation with other US states, cities, enterprises and scientific research institutions in fields including clean energy.”

WATCH: What is the Paris Climate Agreement?

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Perry snubbed?

Trump’s backsliding on the Paris deal is viewed as handing China the mantle in the battle against global warming – an opportunity Beijing welcomes as it seeks to become a world leader on everything from globalisation to the environment.

But it also fits with China’s domestic political agenda of being seen to do more to clean up its polluted air and rivers and find new ways of spurring economic growth.

Perry called for Sino-US cooperation on clean energy, noting America was still keen to work with China despite Trump’s decision to exit the global climate agreement.

“We have extraordinary opportunities to be partners to work on clean energy issues,” said Perry, who was granted a reception with China’s number seven, Zhang Gaoli, in the central leadership compound.

While Perry’s meeting with Zhang could be interpreted as a diplomatic snub to the US official, analysts said it may also mean that China has not given up on Washington. 

“It’s probably trying to send some signal that China is still trying to cooperate,” said Tom Rafferty, China regional manager for the Economist Intelligence Unit.

 

No gas without GST change: WA premier

West Australian Premier Mark McGowan is threatening not to connect a gas pipeline to the east coast until his state gets a fairer share of GST revenue.

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The WA Labor leader made the threat sitting next to Prime Minister Malcolm Turnbull and other premiers at the Council of Australian Governments meeting in Hobart on Friday.

The COAG meeting ended with no resolution on changing the GST revenue sharing system.

Tasmanian Premier Will Hodgman, who hosted the meeting, said he was delighted there had been no agreement on changing the formula, as the current system was based on the notion of a “fair go for all Australians no matter where they live”.

But Mr McGowan told reporters his state, which gets back 34 cents in the dollar from the GST, had been “comprehensively dudded”.

“WA is a major gas producer in the nation but we would expect action on GST before such time as we approve a gas pipeline across WA to connect to the eastern states,” he said.

“We are prepared to take tough measures and take the issue up forcefully.”

Mr McGowan proposed to the meeting that a proportion of state mining royalties be excluded when calculating a state’s capacity to raise revenue.

“If you exclude 25 per cent of mining royalties from the GST distribution, the states that have a mining industry and encourage it will be rewarded for doing so,” he said.

He also suggested counting gambling revenues in the formula, which would also work as an incentive to reduce the number of poker machines – which WA does not allow.

“You get more GST if you have less gambling,” he said.

Mr McGowan reiterated his support for a floor in the GST, which the prime minister has previously backed but indicated would need to wait until it could be guaranteed no state loses out.

ANZ shifts rates mix against interest-only

ANZ is raising variable rates on its interest-only mortgages by another 0.

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3 percentage points as it reins in riskier lending in response to regulatory changes.

And the lender further increased incentives for customers to shift away from interest-only mortgages by announcing it will cut variable rates on principal and interest home loans by 0.05 percentage points and scrap fees for switching.

The moves announced Friday apply to both residential and investor mortgages from June 16.

“While we know those only paying interest on their loans will be disappointed, we need to manage our regulatory obligations and we are now required to hold additional capital against our home loans,” ANZ group executive Australia Fred Ohlsson said.

In March, the Australian Prudential Regulation Authority told banks to limit higher risk interest-only loans to 30 per cent of new residential mortgages.

That prompted the big lenders to hike those rates to make loans less attractive in comparison to principal and interest loans, while increasing the amount of capital they generate.

The move appears to have worked, with a drop in investor lending driving a total 1.9 per cent seasonally adjusted fall in housing-related lending for April.

“This is no surprise given the combination of out of cycle rate hike largely aimed at investors and the introduction of additional macro prudential regulation by APRA in late March,” ANZ senior economist Jo Masters said.

“The data suggest those measures have had an immediate impact.”

ANZ already lifted its interest-only variable rate by 0.25 percentage points in March, and the following month hiked some of its fixed rates for interest-only borrowers by 0.4 percentage points.

ANZ said that more than 80 per cent of owner-occupier borrowers would benefit as its standard variable rate for owner occupiers comes down to 5.20 per cent.

APRA curbs weigh on home loan approvals

Home loan volumes fell by more than expected in April in another sign that tighter lending conditions are starting to cool the runaway property market that has worried regulators.

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The number of home loan approvals fell 1.9 per cent during the month – compared to a 1.0 per cent dip forecast by economists – for a third straight monthly decline.

The value of mortgages declined by a seasonally adjusted 1.6 per cent to $32.4 billion, according to data released on Friday by the Australian Bureau of Statistics.

“Today’s numbers capture the early impact of APRA’s latest rule changes, which limit new interest-only lending,” CBA economist Kristina Clifton said.

“However it is likely to take a number of months before the full impact of these changes can be assessed.”

The Australian Prudential Regulation Authority capped interest-only mortgage lending on March 31, telling lenders to limit higher risk interest-only loans to 30 per cent of new residential mortgages.

That set off a fresh round of rate increases by the major lenders, with banks repricing their loan book to make interest-only and investor loans more expensive.

The decline in April was driven by a 2.3 per cent fall in the value of loans for investment housing, while the value of loans approved for owner-occupied housing fell 1.1 per cent.

JP Morgan economist Henry St John said it was still too early to assess the efficacy of macro-prudential policy, but noted that lenders have continued to tighten rates in recent weeks.

“Moreover, there is evidence the Sydney and Melbourne property markets are cooling, which supports the view that these revamped macro-prudential measures are having the desired effect,” he said in a note.

On Friday, ANZ announced it is raising variable rates on its interest-only mortgages by another 0.3 percentage points.

The lender further increased incentives to shift away from interest-only mortgages by announcing it will cut variable rates on principal and interest home loans by 0.05 percentage points and scrap fees for switching.

The Reserve Bank of Australia this week kept the cash rate at 1.50 per cent despite weak economic growth, because of fears of further fuelling risks in the Sydney and Melbourne housing markets.

Economists expect further slowing in the investor segment in coming months and a broad cooling in the housing market.

What the states said about COAG

WHAT THE STATE PREMIERS SAID ABOUT THEIR COAG MEETING WITH THE PRIME MINISTER

WESTERN AUSTRALIA

Mark McGowan ramped up Western Australia’s attack against the GST distribution, threatening to withhold the state’s gas resources from needy eastern states if action isn’t taken.

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“WA is a major gas producer in the nation but we would expect action on GST before such time as we approve a gas pipeline across WA to connect to the eastern states. We are prepared to take tough measures and take the issue up forcefully.”

VICTORIA

Daniel Andrews was happy about a special COAG meeting on terrorism but insists it must result in concrete steps to keep Australians safe. “I think we are at a point in our nation’s history where we have to give very serious consideration to giving law enforcement some tools and powers that they don’t enjoy today.”

QUEENSLAND

Annastacia Palaszczuk welcomed the Finkel review, insisting that while her state was already playing its part on national energy supply it was prepared to do more. “We have opened up over 400 square kilometres of gas exploration, solely used for domestic supply. We are happy to continue that.”

SOUTH AUSTRALIA

Jay Weatherill wasn’t happy about schools funding, insisting his state still misses out on $265 million under Gonski 2.0. “It is a long way short of what we agreed. We are going to continue to press that.”

NSW

Gladys Berejiklian acknowledged the federal government’s adoption of needs-based funding for schools but maintained it fell short of the original Gonski agreement.

ACT

Andrew Barr said the federal government’s national rail program needed to fix the 19th century rail service between Sydney and Canberra.”One that is befitting of the national capital and Sydney as Australia’s international city being properly connected by a rail service that doesn’t travel at a speed that someone could run faster next to the train.”

NORTHERN TERRITORY

Michael Gunner said a COAG agreement to develop northern Australia needed to be done in full partnership with Aboriginal Australians. “The first people are 30 per cent of our population. They own 80 per cent of our coastline and 50 per cent of our land. We have to work with them.”