by Alan Thornhill
Australia is edging closer to a carbon tax.
Repeated questions and answers in Federal parliament made that clear.
Tony Abbott opened the batting, on the first full working day of the new session, asking Julia Gillard how a carbon tax of $40 a tonne would impact on the living costs of an average Australian family.
The Prime Minister didn’t offer a figure, but told Mr Abbott that if he was “genuinely interested” in the matter, he could send representatives to join the multi-party committee the government is setting up, to study issues like this.
The opposition then pressed the issue, by asking why Ms Gillard is permitting debate on such a tax, when she had promised, before the recent election, that there would not be one.
Ms Gillard replied saying she had seen how Australians had voted in that election and received “the message” they had sent.
The Greens, who want a carbon tax, won a big increase in their vote, at that poll.
BHP-Billiton chief, Marius Kloppers, also gave the debate a big push, saying Australia should prepare for a carbon tax.
It was the Climate Change Minister, Greg Combet, though who set the seal on the issue, saying:”A carbon price is now mainstream economic thinking.
Mr Combet, who was also speaking at question time, said this had been illustrated by an editorial in The Australian Financial Review, which favoured such a tax.
Labor also responded aggressively to opposition questions on the economy in parliament.
The Federal Treasurer, Wayne Swan, said Australia had emerged from the greatest financial crisis in 75 years with one of the strongest economies in the Western world.
Employment had grown, the nation had seen 3.3 per cent economic growth, and there had been a 24 per cent increase in planned business investment.
However the speaker, Harry Jenkins, chided Mr Swan for taking five and a half minutes to deliver his answer, when the parliament had decided, earlier in the day, that replies should be kept to four minutes.
Mr Jenkins also rebuked the Manager of Opposition Business, Christopher Pyne, for interrupting question time, saying Pyne had acted as “if he were above” other MPs.
by Alan Thornhill
Tony Abbott is setting out to destabilise the Gillard government.
This became clear yesterday when he briefly refused “a pair” for Simon Crean, who is scheduled to address the National Press Club in Canberra today, on the government’s plans for rural Australia.
Mr Abbott had told reporters earlier in the day that “the first duty of all Members, including the Prime Minister, is to the Parliament.”
He had said, though, that the Coalition would not be “unreasonable” in granting pairs.
However, his decision to refuse Mr Crean a pair, for that engagement, was far from reasonable.
Mr Crean, who is Regional Affairs minister, was after all, planning to explain the new government’s plans, for people who live in rural or outback Australia.
These are – certainly - issues of great interest to those who live outside Australia’s capital cities.
Such speeches are quite ordinary – day to day – government business, particularly for new governments.
A pair is a traditional arrangement, under which an MP, who has business outside Parliament, is guaranteed that one member of the opposite party won’t vote, while he or she is away.
This preserves the balance of power established at elections
Mr Crean responded to Mr Abbott’s initial refusal of a pair by accusing him of “wrecking.”
That accusation was hard to duck. Mr Abbott’s advisers told him that – and he quickly changed his mind.
So Mr Crean’s speech will go ahead, after all.
The first signal that Mr Abbott gave, though, remains significant.
At the very least, it shows that he intends to play hardball in future.
In short, all bets are off.
Talk of a gentler, more co-operative parliament, in the minority government’s new term, has been exposed for what it is. Talk.
In another significant development yesterday, a Liberal backbencher, Peter Slipper, was chosen as Deputy Speaker in the lower house, winning 78 votes, against his rival, the National’s Bruce Scott, with 71.
Mr Slipper had been supported by the government, while Mr Scott was backed by the Coalition.
The government had wanted Mr Slipper to promise that wouldn’t support no confidence motions, or block supply.
But Mr Slipper said, after the vote, that he had not given “any commitments.”
Labor emerged from the recent election with a two vote majority, after a Green and four independents decided how they would vote in the new Parliament.
by Alan Thornhill
Is the Federal government overlooiking a significant fact, when it does its budget sums?
Access Economics thinks so.
This matters, because Access economists are, mainly, former Treasury officials, who have moved to the private sector.
They have plenty of know-how, when it comes to putting Federal budgets together.
This is not just another dry argument about economics.
If the Access economists are right, Wayne Swan might not be able to deliver what Labor has promised.
One way or another, that would affect every Australian man, woman and child. Taxes, social security and government spending would all be hit.
What, then, is the argument all about? And who is right?
In a paper just released, Access admits that Australia’s recovery is “well advanced” and that there is “further growth” ahead.
But it also warns that there are “important headwinds.”
The doubts that Access raises are based firmly on its belief that not enough attention is being paid to the fact that the price of commodities, like iron ore and coal, can go down as well as up. Traditionally, they say, markets fluctuate.
“We wouldn’t be doing our job as fiscal forecasters if we didn’t warn that relying on permanently higher commodity prices to fund the Australian budget in the longer term is an approach covered with caveats,” Access said.
“We need to stress this point – Australia’s fiscal finances, both short and long term, are hostage to the fate of commodity prices, and hence to China’s strength,” its economists added.
They said they see the present black ink, in Australia’s trade books, turning to red within three to four years.
In terms of national financial stability, that’s not a particularly long time.
Access said China’s prosperity has already financed big tax cuts and spending increases in Australia.
Of course, tax cuts or extra spending will always make Treasury officials, past and present, very nervous.
So has that already compromised Australia’s budget calculations?
“To be honest,” Access says, “no-one really knows how healthy our budget is, or isn’t.”
That’s not a particularly comforting thought.
And it is not one that appeals to the Federal Treasurer.
As recently as last Sunday, Mr Swan boasted that Australia’s budgetary position is very strong, indeed, by current international standards.
And he expects that to continue.
by Alan Thornhill
Some important changes are coming soon to shopping centres near you, whether you live in Sydney, Broome or anywhere else in Australia.
They will be meant to clarify your rights, if a dispute arises, over, say, an arguably harsh clause in the guarantee that came with your new fridge, washer or computer.
Your rights – and obligations – will be spelt out in new national consumer protection laws, which are scheduled to go into effect on January 1 next year.
The Federal government has already launched a consumer law website and draft regulations for the new laws, which will replace State and Territory consumer legislation, with a standard, uniform approach.
The new law is not quite finalised yet.
If you are worried – or excited – about it – or just interested – you can study the proposed changes by going to www.consumerlaw.gov.au.
However if there is anything there that you think is wrong, you had better speak up quickly.
David Bradbury, a Parliamentary Secretary to the Treasurer, says the new website will help shoppers and shopkeepers find their way through Australia’s first single set of national consumer laws.
But the deadline – for submissions – is October 13.
“We are keen to ensure that businesses and consumers have the opportunity to comment on the ACL Regulations and Guides and I encourage people to get involved.
“It is important that businesses know about the new rules and that consumers are aware of their rights.” Mr Bradbury said.
“Under the ACL, businesses and consumers will be subject to the same set of laws right across the country whether they be in Adelaide or Alice Springs, or Bondi or Broome,” he added.
Mr Bradbury said the website would become an important public forum, in the months ahead.
He added a warning, though, saying:”Comments on the draft ACL Regulations are due by Wednesday, 13 October 2010.”
However, Mr Bradbury had some advice, too.
” For more information about how to make a submission on the draft ACL Regulations and the draft ACL guides, please visit the Public Consultations page on www.consumerlaw.gov.au,” he said.
by Alan Thornhill
The Federal Treasurer Wayne Swan reported today that the government ended last financial year with a $54.8 billion deficit.
He was releasing the final budget outcome for the 2009-10 financial year.
Despite the large shortfall, Mr Swan said Australia’s budget is in far better condition than the budgets of other comparable nations,
He said this put the government in a strong position to deliver a surplus in 2012-13.
“The outcome for 2009-10 shows a small fiscal improvement from the estimate at the May Budget, but also highlights the fiscal consequences of the global recession,” Mr Swan said.
“The Budget felt the full force of the global financial crisis in 2009-10, with revenues downgraded by almost $50 billion from its pre-crisis level, a loss of almost one-sixth of forecast tax receipts,” he added.
“While Australia avoided recession and the large-scale job losses and business closures that occurred elsewhere in the world, the sharp falls in global commodity prices and business profits that accompanied the global recession had a big impact on revenues and the fiscal position,” Mr Swan said.
“The Australian Government general government sector recorded an underlying cash deficit of $54.8 billion (4.2 per cent of GDP) for 2009-10.
“This is an improvement of $2.3 billion compared to the estimate at the time of the 2010-11 Budget,” he added.
Mr Swan said total cash payments had been $2.6 billion lower than estimated at Budget, with cash receipts (excluding Future Fund earnings) also lower than expected by $249 million.
“Total taxation receipts were $14 million higher than the estimate in the Budget,” he added.
Lower spending reflected in part, underspends across a range of demand-driven programs, the finalisation of some agreements with the States and Territories and reduced interest costs on borrowing.
Australian Government net debt was $42.3 billion or 3.3 per cent of GDP in 2009-10.
This is dramatically lower than the net debt position for the major advanced economies, which averaged a collective 70 per cent of GDP in 2009,Mr Swan said.
The Government remains committed to its strict spending limits and fiscal strategy, which will see us return the budget to surplus in 2012-13, comfortably ahead of any major advanced economy, he added.
by Alan Thornhill
The global financial crisis had a big impact on the superannuation savings of thousands of Australians.
And the aftershocks aren’t over yet.
SuperRatings, for example, notes that the Median Balanced Superannuation fund recorded a 0.39% decline in August on the back of a 1.99% drop in the ASX 200.
But there are things you can – and should – do to protect your ultimate superannuation payout.
One is to think about switching to an industry fund.
Their fees can be a lot lower, than those of traditional funds. That can make a very significant difference to your ultimate payout.
Industry funds are union based, so ringing your union might be a good place to start looking for one.
What, though, is the broader picture for superannuation performance in Australia?
SuperRatings has something to say about that, too.
The agency notes that the latest set back contrasts to fund performance a year ago, when markets were in the midst of a strong rally.
It says “…returns are currently stuck in a holding pattern until we see a sustained trend in positive economic data.
“The median return for the first quarter of Financial Year 09/10 of 9.27% accounted for a large proportion of the strong full year return of 9.79%,” it adds.
“However, as these returns are cycled out and replaced by the returns of a flat market, it is anticipated that 1 year returns will remain subdued,” SuperRatings warns.
Superannuation, though, is ultimately a long term investment? So how does it look, in that light? SuperRatings has produced figures illustrating that, too.
They are set out below.
The month of August 2010 ……………… – 0.39%
Financial year to 30 August 2010 …… + 1.67%
Rolling 1 year return to 30 August 2010 .. – 4.31% pa
Rolling 3 year return to 30 August 2010 .. – 3.09% pa
Rolling 5 year return to 30 August 2010 .. + 3.08% pa
Rolling 7 year return to 30 August 2010 .. + 6.18% pa
Rolling 10 year return to 30 August 2010.. + 4.62% pa
by Alan Thornhill
The Reserve Bank is warning that it might act to head off future house price booms.
It also claimed credit for the relative stability of house prices in Australia over the past five years.
Three Reserve Bank economists, led by Paul Bloxham, said lending curbs – jawboning – and tighter lending standards – could be used – as well as interest rate rises – to curb incipient booms.
Carefully graduated warnings, given by financial authorities like the Reserve Bank, are commonly known in financial circles as jawboning.
The bank also warned, very bluntly, that house – and other asset prices – can fall as well as rise.
In their discussion paper, the economists said the global financial crisis had provided “a stark reminder” of the fact that large falls in asset prices could “severely damage” entire economies.
House prices in the United States fell by 25-30 per cent between 2007 and 2009.
That, ultimately, had led to “the largest decline in economic activity in over 60 years.”
House prices had also fallen in the United Kingdom, Ireland and Spain.
The economists said the debate on associated issues had shifted from whether the authorities should intervene, when dangers like these arise, to how they should do so.
“The global financial crisis has clearly demonstrated that a policy of ‘cleaning up the mess’ after a collapse in asset prices is problematic…’” the three economists said.
This was especially so if significant financial institutions are damaged as that happens.
“This strengthens the case for taking earlier action in order to avoid a damaging correction later on,” they said.
They noted that house prices had been rising rapidly in Australia between 2002 and 2004.
That had been accompanied by a rapid expansion in home lending.
The economists recalled that the Reserve Bank had then increased interest rates.
“The boom ended in late 2003, with national housing prices broadly flat over the subsequent 18 months..” the economists said.
They noted that prices had actually fallen in that time in Sydney and Melbourne.
The economists said investor demand had also “eased significantly” at that time.
Since then, house prices had broadly kept pace with increases in disposable incomes, they said.
The economists conceded that the entire issue is still contentious.
However the debate had moved on.
“An idea that appears to be gaining wider acceptance is that there is a case for policy to focus on financial imbalances more generally, rather than asset prices in particular,” the economists said.
by Alan Thornhill
Still waiting for that tax refund cheque that you expected months ago?
You are certainly not alone.
But this time, at least, the Tax Office might not be at fault.
Many people who used one of two companies, offering to do your tax returns on line, are among the disappointed.
Their money is also at risk.
The Australian Securities and Investments Commission reports that it has appointed liquidators to handle the affairs of the two companies, which have not met their obligations.
They are Tax Returns Australia Dot Com Pty Ltd (TRADC) and Online Returns Pty Ltd (Online Returns).
The Commission took the two companies to court.
And in a statement just released, it said:ASIC has obtained orders in the Federal Court in Melbourne appointing liquidators to the two companies.
This followed an ASIC investigation.
ASIC also said Ross Blakeley and Quentin Olde of Taylor Woodings have been appointed to the two companies.
The Commission also said clients of both companies had complained that they had not received tax refunds or stimulus payments that they had expected.
The twi companies operated a website which allowed taxpayers could submit a tax return.
ASIC described the appointment of provisional liquidators was as an interim step, meant to preserve assets of the two companies.
“In appointing provisional liquidators, Justice Dodds-Streeton of the Federal Court of Australia ruled that there was sufficient evidence to suggest that both companies had failed to pay clients substantial amounts of money received as tax refunds on their behalf from the ATO,” ASIC said.
The Commisison also said the judge had found that the companies may have allowed tax refunds received on behalf of clients to be applied, without justification, to the purchase of a holiday property in Port Douglas, Queensland.
As a result of ASIC’s investigation and the provisional liquidators report, ASIC sought orders to have TRADC and Online Returns wound up. The liquidators will be responsible for identifying and securing the assets of both companies.
ASIC’s investigation is continuing.
Alan Thornhill is a parliamentary press gallery journalist.
Private Briefing is updated daily with Australian personal finance news, analysis, and commentary.
Saturday December 7
The Dow Jones index rose 198.69 points to 16,020.20
Nelson Mandela dies
Australia’s first same sex marriages have taken place in Canberra, the first just after midnight
ACCC puts a cap on the fuel shopper dockets offered by Coles and Woolworths.
Qantas shares placed in trading halt
|Aud To Usd||0.9102||N/A||N/A|
|Bhp Blt Fpo||36.750||-0.030||-0.08%|
|Rio Tinto Fpo||66.410||+0.410||+0.62%|
|Bramb Ltd Fpo||9.380||-0.040||-0.42%|
|Anz Bank Fpo||30.990||-0.200||-0.64%|
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