by Alan Thornhill
Australia’s farmers want the nation’s manufacturers to succeed, the way they did.
The President of the National Farmers’ Federation, Jock Laurie, says his members had to learn how to compete internationally, without protection.
He said farmers now want the government to help secure the future of manufacturing in Australia, the same way.
“It is in the interests of farmers to see a strong and vibrant manufacturing industry in Australia, particularly food manufacturing.”
But he said this must not compromise Australia’s long established rejection of protectionist policies.
Mr Laurie admitted, though, that there will be difficulties.
He said Australian farmers now export around two-thirds of of what they produce.
“…we do so competitively in the most distorted area of international goods trade,” he said.
He admitted, though, that getting there had not been easy.
“Achieving this was a long and difficult process for Australian farmers,” Mr Laurie said.
But ultimately that shows what can be achieved in other trade exposed sectors, like manufacturing, he added,
Mr Laurie conceded, though, that there are difficulties, including the high $A.
“Of course, the high Australian dollar and the multi-speed economy are placing considerable pressures on our local manufacturing sector, just as they are for farmers,” he said.
Mr Laurie said the NFF still supports a floating dollar.
However he was critical of the way the Reserve Bank sets interest rates.
Mr Laurie said the bank:”…pays little regard to the impact of monetary policy on the Australian dollar in setting interest rates.”
That means, in effect, that it also pays:”little regard to the fortunes of Australia’s trade exposed industries”.
Mr Laurie said these include both agriculture and manufacturing.
by Alan Thornhill
Julia Gillard warned today that Tony Abbott’s policies would leave working Australians without enough to live on in retirement.
The Prime Minister reminded finance industry leaders in Sydney that the Opposition Leader opposed two key government policies.
These are the proposed minerals resource rent tax (MRRT) and gradually increasing compulsory superannuation contributions to 12 per cent, by 2020.
Ms Gillard said these policies are linked.
“We can only get to 12 per cent by 2020 if we use part of the proceeds of the Minerals Resource Rent Tax to mitigate the lost revenue incurred by taxing super at concessional rates,” she warned.
“Neither the goal of increasing universal super contributions from 9 to 12 percent, nor the MRRT itself, are supported by our opponents,” the Prime Minister added.
She described that as:”A risk for every Australian heading towards retirement – for every Australian under 65.”
Ms Gillard also said Mr Abbott’s policies are also a risk to Australia’s future economic stability.
“And a risk to jobs,” she added.
Ms Gillard said the $1.4 trillion now in superannuation accounts will play a key role in providing the investment Australia needs to become – and stay – more competitive.
Hacking into the retirement savings of generations to come would be an act of social and economic vandalism that we cannot allow,” Ms Gillard said.
“Superannuation has helped ensure Australia spends one of the lowest amounts on age pensions as a percentage of GDP of any advanced economy,” she added.
“Latest Treasury estimates are that 12 per cent super will mean $10 billion saved each year on pension outlays in 2030,” Ms Gillard said.
“Our superannuation savings pool, standing at an incredible $1.4 trillion, has doubled in just seven years.
“That wealth is held in retail and corporate funds, industry and government funds and self-managed funds.
“No model has a majority.
“Each model has its benefits.
“What unites us all is the understanding that universal superannuation is here to stay.
“Medicare, it is now a fundamental part of Australia’s social compact.
“A glittering economic achievement which has created jobs and opportunity for millions of Australians,” M Gillard said.
So far, Mr Abbott has not replied.
by Alan Thornhill
We are less enterprising than we were before the crash.
And family incomes have stagnated in Australia over recent years.
These developments, exposed in the results of a new survey conducted by the Australian Bureau of Statistics, may well throw fresh light on the state of the national economy.
People, who have become used to steadily rising real incomes, for example, might well curb their shopping, when income growth stops.
Especially when other – already recognised – factors such as worries about high interest rates – and the weak global economy – are also at work.
The bureau said the results of its survey of household income and income distribution for 2009-10 showed that there had been no significant change in average family incomes in Australia since the previous survey in 2007-08.
That is after adjustment for inflation.
However the survey did show that there have been structural changes in the economy.
One was “a decline in the number of households whose main source of income is unincorporated business income.”
We are simply not as willing now as we once were to try our luck in small business.
The bureau also reported that there has also been an increase in the number of families whose main source of income is government pensions and allowances.
The survey showed, too, that the so called “fat cats” in the Federal public service have also lived up to expectations.
Along with working families in Western Australia, they chalked up some of the highest average household incomes in the nation.
South Australian and Tasmanian families, though, had “below average” family incomes.
Predictably, too, the bureau also confirmed that Australia’s wealthiest families are still getting along very nicely.
It said:”The wealthiest 20 per cent of households in 2009-10 had captured 62 per cent of total household wealth.”
Their average net worth was $2.2 million.
What, though, of the poor?
The bureau says they have just 1 per cent of total net household worth, at an average of just $32,000 each.
by Alan Thornhill
Three million Australians are paying – regularly – for financial advice they haven’t asked for – and don’t get.
They are also finding that their superannuation savings are not accumulating as fast as they should.
Australians are great savers, through superannuation.
They have already put $1.3 trillion in the national superannuation pot.
That’s one of the biggest funds, anywhere in the world.
However systemic faults, which restrict the accumulation of retirement savings, are serious.
They have to be corrected quickly, if decent, hard working Australians – who will soon be seeing 12 per cent of their pay going into compulsory super – are not to be caught short in retirement.
That is exactly what the Federal government is planning.
So what has been happening?
And what is being done about it?
For years, financial advisers, selling superannuation, have been able to deduct commissions regularly – often over decades – from the payments their clients make into their super funds.
These payments are known in the industry as “trailing” commissions.
They are an important – though not necessarily a particularly respectable – source of income for Australia’s financial planners.
David Whitely, the chief executive of the union based Industry Superannuation Network is critical.
“The deduction of advice fees and commissions from Australian’s super savings – where no advice is provided – is an unconscionable and unsustainable feature of our compulsory super system,” he says.
Draft laws, that the Federal superannuation minister, Bill Shorten, has just published, would put a stop to that, in future.
Mr Shorten says that if a financial adviser is to charge a new client an on-going fee, he will be required to provide his client with an “opt in” notice, every two years.
If the client does not renew the adviser’s services by ‘opting in’ to the renewal notice, they are assumed to have opted out and an ongoing advice fee can no longer be charged,” he says.
” The client is also entitled to recoup any ongoing fees that are charged in the event that the adviser fails to send either a fee disclosure or renewal notice,” he adds.
This new rule, which would apply from July 1 next year, is a key part of reforms that the Federal government is introducing to Australia’s financial planning industry.
It isn’t wildly popular with financial planners.
Their suggestion of an “opt out” clause, instead, was rejected.
What, though, if you are one of the 3 million, who presently pays “trailing fees” on your super?
The new law won’t help you, because it is prospective.
That is, it will only apply to new accounts, after July next year.
So what can you do?
You should seek relief, either by getting fresh advice, or switching to a new fund.
One that doesn’t come with trailing commissions.
An industry fund might be a good choice.
The government’s reforms would also exclude people who are not of good reputation from the financial planning industry.
That is people who “are likely to contravene” the rules.
That is a tighter than the present standard.
Mr Shorten says the current threshold requires the supervising authority, the Australian Securities and Investments Commission, only to cancel or suspend the licence of an adviser who “will not comply” with the rules.
The industry has never been short of its Arthur Daleys, as thousands of Australians have discovered, very expensively.
by Alan Thornhill
We should know more about Australia’s multi-speed economy by the end of this week.
That’s because the Bureau of Statistics is planning to release new measures of the nation’s building industry on Tuesday and retail sales on Thursday.
These are two of the weak sectors of the economy.
We can, however, be sure that there will be no interest rate cuts in the months immediately ahead.
Several economists, including Westpac’s Bill Evans, have said that cuts might be necessary, to spur the economy.
However the Reserve Bank Governor, Glenn Stevens, made it quite clear last Friday that he is not impressed by these arguments.
Mr Stevens recalled then that the bank had been talking, earlier this year, of raising rates.
However he added:”In the intervening period, the international situation has become more clouded and evidence of caution at home has, if anything, intensified.
“Asset prices have declined, credit growth has moderated further and the exchange rate remains very high.
“While each of these is affected by factors other than monetary policy, together they suggest a fair degree of restraint is being exerted by financial conditions.
“Under the circumstances, the Board judged the most prudent course was to sit still through this period, in spite of inflation data that, on their face, continue to be concerning.”
Mr Stevens does tend to mumble when he speaks – and he did that – once again – when he addressed the House of Representatives Economics Committee in Melbourne – late last week.
Despite that, Mr Stevens made his intentions as clear as Reserve Bank Governors ever do, in that statement.
Rate cuts are not on the Reserve Bank’s agenda.
That’s hardly surprising.
At 3.6 per cent, Australia’s headline inflation rate is already above the 2-3 per cent range, that the Reserve Bank targets.
Mr Stevens, though, made it clear that his board, which meets on Tuesday next week to review rates, won’t be taking that figure too literally.
It does, after all, reflect the explosion in the price of bananas, after floods, earlier this year, wiped out crops of Australia’s favourite fruit.
The bank – traditionally – discounts exceptional factors like that.
It won’t be raising rates next week, either.
That would be a very bad look, so soon after heavy job cuts in Australia’s steel industry, especially as another 1,000 jobs are to go, in the planned restructure of Australia’s flag carrying airline, Qantas.
The Treasurer, Wayne Swan, said the Australian economy is experiencing “enormous structural pressures,” at present.
In a television interview, Mr Swan said this reflects:”The consequences of the movement of economic power from the West to the East.
“With that comes a resources boom, with that comes an elevated terms of trade, with that comes a higher dollar.
“And that does put pressure on trade-exposed industries, such as the steel industry, such as our educational industry, such as our tourism industries.”
Mr Swan said the government had prepared for these developments.
“…in this year’s Budget we talked very specifically about spreading the opportunities of the mining boom…” he said.
The Reserve Bank board, though, will still be looking – apprehensively – next week at the huge build up of resource project investment, now in the national pipeline.
In short inflation is still a worry, even if Mr Stevens is confident enough to say – as he did last week – “…we can keep it under control.”
by Alan Thornhill
The unemployed, sole parents and students will not be fairly compensated under the Federal government’s carbon tax scheme, according to a new report.
The report, by the Australian Council of Social Service, also finds that those who depend on welfare organisations, like Meals on Wheels, might well suffer.
The ACOSS report accepts, though, that overall, the scheme will have only a “modest impact” on family living costs.
It accepts, too, that pensioners would be fairly treated.
“The increases in social security payments and tax cuts are also fair in the sense that they are mainly directed to households on lower incomes, who will be disproportionately affected by the carbon price and have the least ability to improve energy use-efficiency,” the report says.
But it adds a caution.
“….it is inequitable that the package does not offer the same level of assistance to unemployed people, sole parents and students on income support…”
The report explains that:”This inequity stems from the current underlying inequities in the current social security payment system.”
The report says this needs urgent attention.
It says that could be done” either through the climate change package….or by extending the Utilities Allowance to those social security recipients who are presently ineligible.”
The report says, though, that:”The proposed tax cuts are progressive and welcome.
“They would deliver a higher increase in disposable incomes, relatively, for people on low incomes than for high income earners.”
It says: “This is appropriate given that the carbon price disproportionately increases prices for those on low incomes.”
The report adds: “The tax cuts would also improve the financial work incentives for unemployed people and carers returning to low paid employment and simplify income tax arrangements for the more than one million individuals who would no longer need to file a tax return.”
However, it warns that there is a gap in the carbon tax compensation package.
“ACOSS is concerned that the package does not explicitly recognise or address the likely impacts of a carbon price on the capacity of community sector organisations to deliver essential services,” it says.
It says:”Many welfare service providers spend disproportionately on essential goods and services likely to be impacted by a carbon price, notably energy and food.
So cost increases, that come with the new scheme, might well lead to cuts in the level or quality of services these organisations provide.
by Alan Thornhill
Gambling on the internet can be addictive.
So if you – or someone in your family – has been hooked in this way, you might want to have something to say about that.
Now you can.
The Federal government has just announced a review of interactive gambling.
It wants to hear from you.
The Minister for Broadband, Stephen Conroy, is asking Australians to “contribute to the review.”
Want more information?
It’s just one click away.
The discussion paper, published there, tells you how to make your voice heard.
Senator Conroy said:”Responses to the paper will be used to assess the policy objectives of the Interactive Gambling Act.”
That act is now 10 years old.
Much has happened in the digital world since it was written.
The Senator said the paper briefly discusses the key issues that need to be resolved.
He said it also:”…includes a number of broad questions relevant to these issues.”
However, it’s your say that’s wanted.
So Senator Conroy was careful to point out that these questions are meant only as a broad guide.
They do not need to be “addressed directly” in your response, he said.
by Alan Thornhill
The mining boom has spurred Australia’s construction industry, despite a downturn in building work.
Figures just released by the Bureau of Statistics show that the downturn in building was more than offset by a rise in engineering construction over the past year.
The bureau reported that the value of engineering construction in Australia, in the year to the end of June, rose by 21.2 per cent, on preliminary, seasonally adjusted figures.
This included a rise of 5.9 per cent in the June quarter, itself.
The value of building work done fell by 14.6 per cent, over the year, on the same basis.
This included a 4.9 per cent fall in the June quarter.
The bureau reported that the overall value of construction work done, over recent months, rose strongly in the resource rich States of Queensland and Western Australia.
Australia’s two speed economy is worrying both political and financial leaders.
Although even more hefty investments are still planned in the mining industry, Australia’s retail, manufacturing and aviation industries have all struck trouble.
BlueScope, OneSteel and Qantas have each announced major retrenchment programs and Westpac is making no secret of the fact that it, too, is planning lay-offs, in the face of what its chief executive, Gail Kelly, calls a slowing economy.
Alan Thornhill is a parliamentary press gallery journalist.
Private Briefing is updated daily with Australian personal finance news, analysis, and commentary.
Sunday May 19
The Dow Jones Index rose 121.18 points Friday,New York time) to 15,354.40
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