Subsidy Cut Halts Solar Expansion

A SOLAR panel supplier has axed its plans to expand into Queensland after the government revealed it would slash the benefit for supplying power back into the grid - from 44¢ per kilowatt hour to 8¢.

Madison Australia's rethink came as industry lobby group Clean Energy Council argued the policy change could put thousands of jobs at risk, saying householders would reconsider the benefits of installing solar panels given the time taken to recoup their investment.

But Energy Minister Mark McArdle described the solar industry as viable, saying the scheme needed to be changed because all energy users were paying extra on their power bills to subsidise the feed-in tariff for solar panel owners.

Mr McArdle announced yesterday the feed-in tariff for providing power back to the grid would be cut to 8¢ per kilowatt hour, but anyone already in the Solar Bonus Scheme as of July 9 would continue to receive the 44¢ benefit.

Madison Australia director Yorath Briscoe said his Melbourne-based solar installation and retailing company was about to sign contracts in coming weeks to expand into the Gold Coast market.

He said the company had been planning to directly employ six staff in Queensland and contract up to 18 tradespeople, but the cut to the feed-in tariff would hit demand.

“There's going to be massive demand the next 10 days but after that there will be nothing,” he said, adding the company would no longer pursue the Queensland expansion plans.

“It's quite shocking that a government would pull the plug like this.”

The Clean Energy Council said under the current Queensland system, an average householder would break even on the initial investment after 4.5 years.

The average payback period would jump to about 10 years under one scenario modelled in research commissioned by the Clean Energy Council before yesterday's announcement.

But the cost of buying and installing solar panels was expected to progressively decrease in coming years so the break-even point could be less than 10 years for future customers, a council spokesman said.

Online Orders Surge As Retailers Lag - Online Shopping Australia

The number of online orders to Australian businesses increased by almost a third during the 2010-11 financial year.

The Australian Bureau of Statistics research released on Tuesday showed that local businesses received online orders worth $189 billion in the 12 months to June 30, 2011, an increase of $46 billion, or 32 per cent, on the previous corresponding period.

However, the data also showed that only 28 per cent of business said they had received orders via the internet, a mere 13 per cent increase on the previous year.

In contrast, more than half of businesses in Australia, 51 per cent, reported placing orders for goods and services on the internet in last financial year, up nine per cent in the previous year, ABS data showed.

In another troubling sign, just below 40 per cent of business reported ‘‘some form of innovative activity’’ in 2010-11, the ABS said, with 66 per cent of large businesses reporting activities to boost efficiency and lower costs. Only 30 per cent of companies with four employees or less reported the same, the ABS said.

The gap between businesses receiving orders online and those placing them highlighted the demand for changes by local industries and the constraints that many businesses in Australia work under. The slow pace of innovation in Australia has held back the nation’s overall productivity, an area of concern for the central bank and economists.

RBA forecasts of economic growth routinely factor in improvements in productivity to achieve the expansion, yet productivity in Australia has lagged in recent years.

RBA governor Glenn Stevens recently urged politicians to follow the suggestions of the productivity commission in order to boost the the efficiencies and lower the cost in the economy.

Australia’s economy, while expanding by 1.3 per cent in the first quarter, has been riven by disparities in performance between mining and non-mining states and industries.

Macquarie senior economist Brian Radican said that internet usage in Australia is lower than in the comparable economies of the US or UK.

Yet, the distances in Australia suggest that the internet usage for commerce could have a larger benefit locally.

“A deeper embrace of its use by Australian business could arguably have a bigger benefit here than it would in other regions,” he said.

Across all sectors 40 to 43 per cent of businesses had a website.

But while 97 per cent of large business had a website, only a third of small businesses reported having one.

“If firms can drive some of the costs out of businesses, they can produce more for less,” he said.
However, Mr Radican cautioned that Australia’s weaker productivity was also driven by industrial relations challenges and other factors.

Sydney's Housing Market to Continue to Grow

Sydney is Australia's most populous city and its housing sector offers investors unique opportunities with the security that comes with investing in a large and rapidly expanding market.

Property prices in Sydney have increased 25 per cent in the last four years, during which many other housing markets around the world have stagnated or even gone backwards.

The reason that Sydney's housing prices have continued to rise is simple - more people want to live there. Famous for its landmark Harbour Bridge and Opera House, Sydney is the business and financial capital of Australia, with an ideal climate and a relaxed yet cosmopolitan lifestyle.

Sydney has nearly five million residents and its annual population growth rate of 1.6 per cent is higher than the Australian average. It is also higher than that of any major western city outside Australia, yet less than half of this increase comes from births.

Most new Sydneysiders are overseas arrivals who come to Australia to start a new or better life, seeking employment or education opportunities for themselves or their children. They have created a steady demand for around 30,000 more dwellings each year, pushing up prices and making Sydney the most expensive city in Australia to buy a house.

The median price of a Sydney house is now around A$620,000 (S$786,740) and it is rising. Landed properties can be purchased on the outskirts of Sydney for around half this amount, but they are located far from the city centre. Sydney's idyllic harbour side location brings problems, as much of the land is locked away in parks or reserves and there is less available for housing. The urban footprint has spread as far south, north and west as there is land available.

It is almost impossible for overseas arrivals to buy a home until they settle and establish themselves, which can take many years. This has led to a rise in Sydney's rents, which are higher than any other major city in Australia.

High rents and prices have changed Sydney's landscape. They have led to the abandonment of the dream of a landed home for many young Sydneysiders and led to a boom in apartment living. Over half of Sydney's dwellings are apartments or "home units" as the locals call them.

The new medium and high-rise apartment blocks contain gymnasiums, swimming pools and garden barbecue areas. The units are fitted out to attract renters, while their design lowers maintenance costs for investors. Many of the suburbs where this transformation is occurring - such as Pyrmont, Ultimo, Camperdown, Double Bay and Broadway - are located close to the central business district and in the urban centre itself.

What makes these dwellings ideal for investors is that prices for home units are still less than 70 per cent of those of similar sized houses.

The Sydney inner urban market is unique because there are fewer development projects in the pipeline than there are in other cities such as Melbourne even as the rental demand is far higher. Rents in these areas are escalating as a result and housing investors from Singapore can buy off-the-plan units with confidence, knowing that both the rental yield and the value of their investment are likely to rise in the coming years.