by Alan Thornhill
The Prime Minister, Tony Abbott, announced today that Australia has reached agreement on a free trade negotiations with the Republic of Korea.
He told Parliament that this is good news for Australia’s exporters and farmers and that new agreement will boost jobs and the economy.
The Opposition Leader, Bill Shorten, welcomed the announcement.
In a statement later, Mr Abbott said independent modelling had shown that the Agreement would be worth $5 billion between 2015 and 2030 and boost the economy by around $650 million annually after 15 years.
“As a result of the Agreement, tariffs will be eliminated on Australia’s major exports to Korea and there will be significant new market openings in services and investment,” the Prime Minister said.
“The FTA translates to higher economic growth and more jobs for Australians,” he added.
“As part of the FTA, tariffs of up to 300 per cent will be eliminated on key Australian agricultural exports such as beef, wheat, sugar, dairy, wine, horticulture and seafood, as well as resources, energy and manufactured goods,” Mr Abbott said.
“The FTA will also provide new market opportunities in Korea for Australian services in education, telecommunications and a range of professional services including financial, accounting and legal services,” he added.
Australian farmers welcomed the announcement.
The National Farmers’ Federation said the agreement would provide millions of dollars in export value to Australian farmers, including those in the red meat, grains, dairy, sugar, pork and horticulture sectors.
NFF President Brent Finlay said the deal recognises agriculture as one of the nation’s export strengths and will open opportunities for the sector in Korea.
Business also welcomed the new deal.
Director of Trade and International Affairs at the Australian Chamber of Commerce and Industry, Bryan Clark, said: “The announcement will provide a substantial boost to the two way trade and investment opportunity between Australia and Korea.
“The deal is comprehensive in its coverage with very few exclusions and a substantial benefit to Australia’s important sectors, particularly manufacturing, agriculture, food and service sectors like professional services. We particularly welcome and support the government’s flexibility in investor state dispute settlement and a pragmatic approach to foreign investment review board thresholds,” Mr Clark added.
by Alan Thornhill
Tony Abbott says he wants “Qantas to remain an Australia icon.”
The Prime Minister was speaking shortly after his Treasurer called for a public debate on more foreign ownership of the airline.
Mr Abbott said: “I want Qantas to be as successful as it can be in domestic and international markets.
“And I know that the management of Qantas is concerned that in some respects it is competing with one hand tied behind its back, so to speak.
“So, let’s see what the management of Qantas think is the appropriate way forward,” Mr Abbott said
The Prime Minister said he would be “happy to look at a range of measures” but added that he is “not being prescriptive” at this time.
Mr Hockey had said that Australians need to consider whether Qantas should have more foreign ownership.
Responding to reporter’s questions in Sydney, the Treasurer said: “This is an issue that Australians need to consider carefully.”
Qantas is arguing that it needs a higher level of foreign ownership to compete, effectively, with rivals like Virgin.
Under the Qantas Sale Act, the airline must be at least 51 per cent Australian-owned.
Qantas is furious that Virgin Australia is receiving a $350 million injection from its foreign owners Etihad, Air New Zealand and Singapore Airlines.
The Qantas chief, Alan Joyce, has welcomed renewed public debate on the issue.
However he also admits that he does not expect any changes to foreign ownership rules during the current parliament.
In a letter to Qantas staff, Mr Joyce says Mr Hockey’s comments show that the Federal Government acknowledges there is no longer a “level playing field” in the industry.
by Alan Thornhill
The Australian economy grew by 0.6 per cent in the June quarter and 2.6 per cent over the 12 months to the end of June.
These seasonally adjusted figures, just released by the Bureau of Statistics, show the nation’s growth to be well below its long term average of some 3.5 per cent.
Growth now is also well below the 4 per cent level required to absorb the young people who will want to enter Australia’s work force this year.
The present rate of growth, though, is quite substantial, against those being chalked up by other comparable countries, in the lingering wake of the global economic crisis.
The Bureau said growth in the June quarter was driven by two developments.
These were a 0.2 per cent contribution from household final consumption and a 0.2 per cent contribution from changes in inventories.
It said, too, that the industries driving growth in the June quarter had included finance, mining and construction.
It reported, also, that Australia’s terms of trade had rose by 0.1 per cent, in the quarter, but fell by 4.9 per cent over the year.
Also on seasonally adjusted figures:-
*….Consumption rose 0.5 per cent in the quarter and 1.5 per cent over the year.
*….Capital formation fell by 0.1 per cent in the quarter and 1.6 per cent over the year.
*….Real net disposable income rose by 0.4 per cent in the quarter and 0.7 per cent over the year.
by Alan Thornhill
Business believes Australia’s long awaited economic recovery may not occur this year.
This is indicated in the latest Dun and Bradstreet survey of business expectations, which produced flat results, for the final quarter of the year.
The firm said this suggests that businesses do not view the conclusion of this month’s federal election as a potential springboard for the economy.
Businesses also appear to consider the Reserve Bank’s June rate cut as reason for continued caution, rather than investment, D&B said.
“The year-end outlook for businesses is not particularly cheery,” Gareth Jones, CEO of credit information bureau Dun & Bradstreet, said.
“We are seeing something of a holding pattern develop when it comes to business expectations, with little movement up or down in the survey’s series of forward-looking indices.”
“It’s been a trying year for many companies, with concerns about cash flow, operating costs and weak demand emerging as constant themes. As a consequence we’ve been seeing companies focusing on paying down their debt, managing expenses and focusing on core operations, to the detriment of investment and employment.”
“It may be that we need to wait until the Christmas and New Year period before businesses begin to leverage the currently low borrowing costs, begin investing and hiring again,” Mr Jones added.
The main results of the survey were:-
•….The employment expectations index has increased slightly, but remains in negative territory at -2.8 points.
•….The sales index has fallen marginally to 3.5 points, from 4.9 in the previous quarter.
•….Profit expectations for the next three months have lifted, with the index increasing from 13.2 points to 13.8.
•….Plans for capital investment have increased slightly compared to the previous quarter, easing up to an index of -1.3.
•….After rising during the previous quarter, the selling prices index has edged downwards from 9.4 points to 8.3.
The issues expected to influence operations in the December quarter 2013 were:-
•….64 per cent of businesses expect cash flow to be an issue for their operations in the quarter ahead, with 17 per cent expecting it will have a ‘significant negative’ impact.
•….57 per cent of businesses expect ‘no impact’ from the level of the Australian dollar, while 12 per cent expect a small positive impact.
•….59 per cent of businesses do not intend to seek finance or new credit in the quarter ahead to help their business grow.
•….Utilities and operational costs were identified as the biggest barrier to growth (45 per cent), followed by a slow growth in demand for products (25 per cent).
•….25 per cent of businesses intend to delay significant business decisions or investments until after the federal election, while 36 per cent do not.
The actual results for the June quarter 2013 were:-
•….Actual employment levels decreased from -4.8 points in Q1 to -7.6 points, the fifth consecutive quarter that the index has been in negative territory.
•….Sales activity declined steeply, with the index dropping to -10.7 points, its lowest point in four years.
•….Profits stabilised in the June quarter following a fall in the previous quarter, with the index lifting from 8.5 points to 8.8.
•….Capital investment also stabilised, remaining relatively flat at -5.6 points compared to -6.0 points in the previous quarter.
•….Selling prices increased during the June quarter, rising from 4.8 points to 8.5.
by Alan Thornhill
Profits are trending upwards.
And signs of improvement in the building sector are firming.
Australians are spending more, too, at least on line.
But we will have to wait until tomorrow (Tuesday) to find out if we are spending more in the nation’s shops, as well.
That’s when the Bureau of Statistics will release its latest retail sales figures.
The Reserve Bank board is also meeting tomorrow, to decide whether it will, once again, cut interest rates.
Although the Prime Minister, Kevin Rudd, would be delighted if it did, in the final week of the election campaign, most economists expect that it won’t.
The bank is expected to keep rates on hold, instead.
Meanwhile, the Bureau reported today that company profits rose by 1.6 per cent, on trend figures, in the June quarter, to a level 1.2 per cent higher than that seen 12 months earlier.
On seasonally adjusted figures, though, profits fell by 0.8 per cent in the June quarter, to a level 0.4 per cent below those of the same quarter last year.
The Bureau also reported that Private sector house approvals continue to strengthen in July.
It said that the total number of private sector house approvals rose 1.1 per cent in trend terms during the month.
This contributed to the 0.9 per cent increase in the total number of dwelling units approved.
Dwelling approvals increased in July in the Australian Capital Territory (12.6 per cent), Northern Territory (4.0 per cent), Western Australia (3.1 per cent), Tasmania (1.6 per cent), South Australia (1.5 per cent), New South Wales (0.6 per cent) and Queensland (0.1 per cent) but decreased in Victoria (-1.2 per cent) in trend terms.
Meanwhile the National Australia Bank’s latest Online Retail Sales Index showed that despite a slow start, Australia’s online spending increased to $14.1 billion in the first seven months of the year.
The bank’s Chief Economist Alan Oster said that online spending had accelerated over the past three months, and there had been a strong up-tick in July.
by Alan Thornhill
Consumer confidence has risen again, according to a new study.
It was the third straight rise recorded in the weekly Roy Morgan Consumer Confidence Rating.
The rating rose 3 points, to 119.4.
The study showed that 44 per cent of Australians now expect to be ‘better off’ financially this time next year.
This level – which was up 2 per cent – was the highest seen since late February this year.
Garry Morgan said: “The rise in Consumer Confidence comes as Liberal Party Leader Tony Abbott appears increasingly likely to become Australia’s next Prime Minister in two weeks’ time.”
by Alan Thornhill
Tony Abbott declared today that his plan to cut company tax by 1.5 per centage points from July 1, 2015 will strengthen the Australian economy.
The Opposition Leader was speaking in Adelaide, where he launched the plan, which will be the central plank in his bid to become Australia’s Prime Minister in the September 7 elections.
Mr Abbott said: “The new company tax rate of 28.5 per cent will encourage investment in Australian businesses and jobs during a time of economic uncertainty.
“Lowering the company tax rate is part of our Plan to build a strong, prosperous economy with more investment and more jobs.
“This is a tax cut that will boost jobs and strengthen the economy,” Mr Abbott said.
He noted, too, that the Henry report on tax reform had supported a company tax cut saying it would not only produce higher growth but was also likely to result in higher wages.
A recent scoping study, by the Federal Treasury, also concluded that Australia relies more heavily on company tax, in its revenue raising, than most comparable countries.
But the costs of Mr Abbott’s proposed company tax cut would be high, at $2.5 billion a year.
And it would cut $5 billion from Federal revenue over the next four financial years.
However, Mr Abbott said: “This is a tax cut that will boost jobs and strengthen the economy.
“Our company tax cut is part of our Real Solutions Plan to create one million new jobs within five years,” Mr Abbott said.
“ Along with our company tax cut, the Coalition will, if elected, scrap the carbon tax, scrap the mining tax, cut $1 billion in red tape costs, establish a one-stop-shop for environmental approvals, restore the ABCC, and not proceed with Labor’s $1.8 billion FBT hit on cars.”
At a more basic political level, though, this cut may also ease at least some of the unease that business now feels, at being expected to pay for the Coalition’s paid parental leave scheme.
Mr Abbott has not yet explained how the cut will be funded.
The Treasurer, Chris Bowen, said voters deserved an explanation.
Mr Bowen said the plan was based on “magic pudding economics.”
“It is not on,” the Treasurer said.
However the plan was welcomed by industry.
Peter Anderson, the Chief Executive of the Australian Chamber of Commerce and Industry predicted that it would “boost business confidence.”
Mr Abbott also committed himself to:-
* abolishing Labor’s carbon tax, which, on the Government’s own figures, will cost the average family more than $550 in 2014-15
* keeping the current tax thresholds and fortnightly pension and benefit increases, introduced as part of the carbon tax package, so that these become genuine tax cuts and cost of-living relief rather than partial compensation for a damaging tax
* scrapping Labor’s failed mining tax, which added to sovereign risk and to the costs of many mining companies, especially smaller miners, while raising only a tiny fraction of the promised revenue and
* reversing Labor’s damaging and ill-considered change to fringe benefit tax on motor vehicles, announced in July this year without consultation and which caused chaos and job losses across the industry.
by Alan Thornhill
The Prime Minister, Kevin Rudd, launched his election campaign with a declaration.
Speaking to reporters in Canberra he said: “This election will be about who the Australian people trust to be the best to lead them through the challenges that lie ahead.
“Managing the economic transition that lies ahead will be difficult,” Mr Rudd said.
“But it is definitely do-able.”
“On the economy, with the end of the China boom, we can no longer afford to have all of our eggs in the one basket,” Mr Rudd said.
He said Tony Abbott’s talk of a debt and deficit crisis in Australia is based on a false premise.
In fact, Australia was one of only eight countries to have a triple A credit rating, from all three major ratings agencies.
However, Mr Rudd said he would be the underdog in the coming campaign.
He said his advisers had told him that if the election had been held yesterday his opponent, Tony Abbott, would have been Prime Minister today.
Mr Rudd also noted that the Sky New television channel had offered to hold a leader’s debate, between himself and Mr Abbott.
“I’m up for it,” Mr Rudd declared, suggesting other networks should set time on Sundays aside, for similar events.
He challenged Mr Abbott to debate him.
“Mr Abbott, you can run, but you can’t hide,” Mr Rudd declared.
He said the Coalition would vastly outspend Labor in the campaign, with much money coming “appallingly” from the tobacco industry.
And Mr Rudd, once again, accused the Coalition of “negativity” and relying on “three word slogans.”
‘Well, negativity does not create a single job,” he said.
The Prime Minister said the Opposition’s plan is to slash and burn health, education and other services, as it tries to cover a $70 billion hole in its account.
“If you don’t believe that, just look at what has happened with Campbell Newman’s government in Queensland,” Mr Rudd said.
Alan Thornhill is a parliamentary press gallery journalist.
Private Briefing is updated daily with Australian personal finance news, analysis, and commentary.
Friday December 6
The Dow Jones index fell 68.26 points to 15,821.50
Nelson Mandela dies
ACCC puts a cap on the fuel shopper dockets offered by Coles and Woolworths.
Qantas shares placed in trading halt
|Aud To Usd||0.9088||N/A||N/A|
|Bhp Blt Fpo||36.750||-0.030||-0.08%|
|Qbe Insur. Fpo||15.450||0.000||+0.00%|
|Nat. Bank Fpo||33.470||-0.190||-0.56%|
|Macq Group Fpo||51.850||-0.750||-1.43%|
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