A day of doubt on financial markets

Australia’s share markets will open today without a current lead from Wall Street.

That’s because July 4 – Independence Day – was a national holiday in the United States.

Europe’s Stoxx index won’t be much help, either.  It rose by just 1.31 points.

The Federal government remains upbeat, though, about its stimulatory plans.

In an assessment released yesterday, the Employment Participation Minister, Mark Arbib, said 4,000 jobs would be created in just one part of those plans, the Energy Efficient Homes Package, which was launched last week.

“The Insulation Council of Australia and New Zealand has estimated sthat 4,000 jobs will be created directly from this part of the Stimulus,” Senator Arbib said.

He said it would also cut energy bills and carbon emissions.

Under the plan, families will be able to have ceiling insulation installed, with the Federal government picking up the bills.

The Treasurer, Wayne Swan, also the start of the new financial year had also marked the start of  new tax relief measures.

He said these measures include a significant increase in the low income tax offset.

“The new financial year also brought with it indexation increases in the child care benefit, the child care rebate and the baby bonus,” Mr Swan said.

The Reserve Bank board is expected to keep Australia’s interest rates on hold when it meets tomorrow, although a small cut is possible.

There will also be new housing finance and consumer sentiment figures this week.

However Australians will have to wait till Thursday next week, to see the Statistician’s unemployment figures for June.

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Bring out your old light bulbs, fridges and air conditioners

Kevin Rudd has your light bulbs in his sights.

Believe it or not, the old style incandescent light bulb is to be banned from November this year.

That’s a small, but  important, part of the Federal government’s new national strategy on energy efficiency.

The Prime Minister, who announced this new strategy in Darwin yesterday, described it as an ambitious roadmap to accelerate action on energy efficiency.

It’s meant to assist Australia’s transition to a low carbon economy.

Mr Rudd says it will help Australian families and businesses to cut their energy and fuel bills while reducing their carbon footprints.

It won’t all be down to the humble light bulb, of course.

The government also has plans to improve the energy efficiency of Australia’s refrigerators and air conditioners.

The plan is ambitious.

Mr Rudd says those two measures, alone, are expected to reduce Australia’s carbon pollution by 19.5 million tonnes a year by 2020.

He says that’s the equivalent of taking  some 4.8 million cars off  the nation’s roads.

All this will be done through a national effort, adopted by Australia’s Federal, State and Territory leaders, at a meeting of the Council of Australian Governments, in Darwin yesterday.

It will be comprehensive,

Mr Rudd also said there will be a concentrated national effort to phase out inefficient electric hot water systems.

That will start in 2010 and is expected to reduce emissions by another 30 million tonnes of carbon, over the coming decade.

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New worries appear in the Australian economy

Although retail sales rose in May, the global economic crisis is now making its presence felt in Australia.

Other data, released yesterday, showed building approvals plunging 12.5 per cent in May and manufacturing activity continuing to weaken.

The Roy Morgan organisation, though, produced the most disturbing figures.  These showed Australia’s unemployment rising  by 37,000 in June, to 862,000.

It said, also, that another 967,00 Australians are currently underemployed.

The Treasurer, Wayne Swan, though, described the retail sales figures as “very encouraging.”

“Retail sales in May are up 1 per cent,” Mr Swan told reporters in the Brisbane suburb of Nundah.

“They’re  up something like 5.9 per cent since last November.”

However  big questions remain.

How much of this is due to government stimulation measures and how long can all that last?

The latest round of tax cuts, which went into effect yesterday, might not be all that much help, in the government’s pursuit of economic recovery.

A radio interviewer, Mike Carlton, asked why rich people, like himself and Mr Swan, would be getting cuts of $41 a week, while ordinary wage earners would have to make do with just $2.88 a week.

That’s an important question.  As economists say, the rich have a lower propensity to spend than the rest of us.

So they are likely to save  big slices of their tax cuts, taking that money out of the economy, at least for the time being.

As always, Mr Swan had a ready answer.

He said the new financial year’s tax cuts must be assessed along  with others granted last year.

The two, combined, added up to very substantial tax cuts for Australians on lower incomes, Mr Swan said.

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New tax cuts from today

New tax relief, that becomes effective today, will boost incentives for hard work, according to the Federal government.

The Federal Treasurer, Wayne Swan, who made the announcement,  with his assistant, Nick Sherry, said the new tax cuts would also help boost the Australian economy, which has been hit hard by the global economic crisis.

They said it is being directed, particularly, to people on low and middle incomes.

“This will  help stimulate economic activity, supporting Australian business and jobs, in the face of the worst global recession in 75 years,” the two ministers said.

So what relief, precisely, is the government offering?

Well, the government says there will be substantial increases in the low income tax offset.

This will rise from $1,200 to $1,350.

• So the effective tax free threshold,  for people who are  eligible for the full offset, will rise from $14,000 to $15,000.
• The 30 per cent marginal tax rate threshold will rise from $34,001 to $35,001 and
• The 40 per cent marginal tax rate will be reduced to 38 per cent.
• The amount someone eligible for the senior Australian tax offset can earn, before needing to pay tax, will also rise.
• For singles, it will increase from$28,867 to $29,867 and
• For each member of a couple, it will rise from $24,680 to $24,680

The two minister said :-

• A person earning $20,000 will get a 56 per cent tax cut
• Another on $50,000 will get a cut of about 18 per cent and
• Someone earning $80,000 will get an 8 per cent cut.

There will also be increases in education allowances, the baby bonus and child care benefits.

See the full statement on www.treasurer,gov.au

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