Extra help for flood victims

The Federal government is offering extra help to communities hit by floods in and Queensland and New South Wales.

The Prime Minister Julia Gillard said clean-up and recovery grants of up to $25,000 would be provided to communities in Queensland.

Similar grants, of up to $15,000, are being offered in New South Wales.

In Queensland primary producers, small businesses and not-for-profit organisations in the local government areas (LGAs) of Balonne, Barcaldine, Blackall-Tambo, Maranoa, Murweh and Paroo will be eligible.

In New South Wales, Ms Gillard the said the local government areas of  Moree, Narrabri and Gwydir would qualify.

Full details

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Help for Melbourne’s storm victims

Many families hit by violent storms in Melbourne on Christmas Day will be offered financial assistance.

The Federal Minister for Emergency Management, Robert McClelland, made the announcement.

He said assistance would be provided through the joint Commonwealth and state funded Natural Disaster Relief and Recovery Arrangements.

Those living in  the worst hit areas of western and northern suburbs of Melbourne would be eligible.

“These storms impacted a widespread area across Melbourne and have caused extensive damage to personal property,”  Mr McClelland said.

“They could not have come at a worse time, striking just when many households were looking forward to relaxing on Christmas Day with family and friends,”

Mr McClelland said  the Commonwealth and Victorian governments are committed to helping those hit by the storms.

He said   personal hardship and distress assistance is available, under the joint Commonwealth and State arrangements.

It would include:-

* Emergency Relief Assistance of up to $1,200 to cover emergency shelter, food, clothing, personal items or specific transport needs, and

* Emergency Re-establishment Assistance of up to $30,000 to help eligible households with tasks such as clean-up, emergency accommodation, repairs, rebuilding and replacing some damaged contents.

Mr McClelland said people who had suffered personal hardship and distress should contact their local Victorian Department of Human Services branch or visit www.dhs.vic.gov.au  for further information about assistance.

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Wild weather hits Australia

Wild weather over much of Australia yesterday raised uncomfortable memories of Cyclone Yasi and severe floods some 12 months earlier.

Tropical Cyclone Grant, which is due to hit the Northern Territory coast this morning, caused local flooding but, at last report, is likely to miss Darwin.

Authorities estimated that two tornados, and fierce hailstorms, which hit Melbourne, caused damage estimated to be worth at least $1 billion.

And another cyclone, off the Queensland coast, closed Sunshine and Gold Coast beaches, which were hit with four metre swells.

The tornados hit two outer suburban areas, in Melbourne’s west, during the afternoon.

The weather bureau briefly forecast of a tornado for Melbourne, itself, but later downgraded its warning to that of a severe storm.

Wild winds overturned cars, in the Western suburbs, and hailstones the size of golf balls, hit homes.

An estimated 2,500 Melbourne home owners made urgent telephone calls for help.

Fiskville, near Bacchus Marsh, was hit by one of the tornadoes.

Several flights, due to leave Melbourne airport were delayed and others, due to land there, were diverted to Sydney.

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Rate cut closer

Interest rates may fall soon.

The Reserve Bank is admitting that it is not as worried about inflation now, as it was a few months ago.

Slower than expected near term growth is also adding to pressure for an early rate cut.

These developments were revealed in the minutes of the Bank’s last board meeting, which have just been released.

The bank did not hedge its bets, this time.

It discussed technical aspects of recent inflation data, then revealed how board members had responded to it.

The minutes said:”Members believed that an improved inflation outlook, if confirmed by further data, would increase the scope for monetary policy to provide some support to demand, should that prove necessary.”

Then the minutes added: “Members noted that financial conditions had already eased somewhat, with interest rates for some housing and business loans declining slightly because of increased competition and the fall in funding costs in financial markets.

“The exchange rate had also declined somewhat from the very high levels of a few months ago,” the bank said.

For the Reserve bank, this is unusually straight talk.

The minutes also noted that board members had been briefed on recent revisions to the data the Australian Bureau of Statistics produces on so-called “underlying inflation.”

“These revised measures showed recent outcomes for underlying inflation lower than those previously published,” the bank said.

” An example was the trimmed mean measure of underlying inflation for the June quarter, which was lowered from 0.9 per cent to 0.7 per cent, bringing the year-ended rate down from 2.7 per cent to 2.5 per cent,” it added.

The bank also noted, though, that underlying inflation looked slightly higher in history.

The Reserve Bank studies underlying inflation rates, when it is assessing where interest rates should be.

It does not use headline Consumer Price Index, which now puts Australia’s inflation rate at 3.6 per cent, in its calculations.

Thar’s because it wants to exclude one off factors, like high banana prices, after a flood.

The bank aims to keep Australia’s underlying inflation rate between 2 and 3 per cent, over the course off a business cycle.

It also noted, in its minutes, that there are still good reasons to expect strong growth in Australia, over the medium term.

However the bank did admit that near term growth is “unlikely to be as strong as earlier expected.

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Big rate cuts expected:RBA

The Reserve Bank admitted today that financial markets now expect big cuts in interest rates, by the end of the year.

But it warned that this expectation might be mistaken.

Its admission was contained in the minutes of the bank’s board meeting, earlier this month.

The minutes, which have just been released, said board:”members were informed that, in Australia, market pricing prima facie pointed to expectations of large cuts in the cash rate by the end of the year.

However the minutes also noted:”… but a range of technical factors meant that market pricing might not be giving an accurate reading of expectations in the current circumstances.”

Although the bank, once again, kept interest rates on hold, at that meeting, the minutes also noted that the global markets are unstable.

“The international outlook had become significantly more clouded since the previous Board meeting,” the minutes said.

” Conditions in global financial markets had been very unsettled as participants had confronted uncertainty about both the resolution of sovereign debt problems and the prospects for economic growth in Europe and the United States.

“There was little evidence available to help gauge the effects of the European and US problems on other regions. However, prices for key Australian commodities had remained very high, with growth in China continuing to be solid.”

The Bank’s Governor, Glenn Stevens, has declared, though, that he does not expect to see rates cut, in the months ahead.

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Abbott would “hack into” your retirement:PM

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.

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Prices:worse than we thought

Age pensioners have faced stiff price pressures over the past year.

The prices they pay rose by 4.4 per cent, in the 12 months to the end of June.

Things have been even tougher for families with at least one breadwinner employed.

Their prices rose by an average price rise of 4.5 per cent, over the same time.

These figures, calculated by the Australian Bureau of Statistics, are surprising.

In both cases, these increases are well above the 3.6 per cent rise that the Bureau,itself, chalked up on its broadest price indicator – the Consumer Price Index – for the same period.

So what is going on here?

The Bureau’s latest figures show how various groups, in the Australian community, have been affected by price rises over the past year.

The groups covered were employee households, age pensioner households, others on government welfare and self funded retiree households.

Sadly, the bureau did not publish figures for other groups, such as young, carefree singles, or adult students.

Its figures, though, suggest that groups like these must have escaped price pressures relatively lightly.

Some people certainly did.

After all, self funded retirees faced a 4 per cent price rise, over the past year, on the Bureau’s calculations.

And those other welfare recipients were hit hardest of all, with 4.6 per cent rise in their prices.

The expenses each group faces does, of course, differ according to different needs.

Age pensioners, for example, often have higher health costs than other Australians.

Working families suffer most when interest rates rise.

These differences, though, are not the whole story.

The Bureau also gave notice of some technical changes it plans to make to the its Consumer Price Index.

These will start, later this year, with the September quarter figures.

Meanwhile, in its latest paper, the Bureau “re-referenced” its June quarter CPI figures, raising the June quarter rise from 0.9 to 1 per cent and the annual rise from 3.6 to 3.7 per cent.

There were exceptional factors, too, in all cases.

Cyclone Yasi, which wiped out most of Australia’s banana crop this year, sent banana prices into orbit.

Floods, too, pushed up other food prices, for young and older Australians alike.

The latest figures are not expected to influence Australia’s interest rates, though.

These are set are set by the Reserve Bank, which aims to keep Australia’s inflation in a 2-3 per cent range, over the course of a business cycle.

However, the bank looks at a “trimmed” figure – currently 2.7 per cent – to measure inflation, when it assesses possible changes to Australia’s interest rates.

The bank is less hawkish on rates now, than it was earlier in the year.

It has noted that several sectors in the economy – including retail sales and the building industry – have been subdued, over recent months.

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National disability insurance scheme coming

The Federal government says it will start work immediately on building a new National Disability Insurance Scheme.

This follows a recommendation by the Productivity Commission, which said such a scheme should be a core responsibility of government, like Medicare.

The Prime Minister, Julia Gillard, said her government would work with the States and Territories to build the foundations for such a scheme.

But she noted that the Commission, itself, had estimated that it would take seven years to get such a scheme going.

The Commission noted in its report that there are some financial risks that most Australians cannot prepare for adequately.

One is that you – or someone in your family – will be struck by a disability.

The Federal government asked the Commission to investigate this issue.

Its report, which has just been published, the Commission says the costs of lifetime care – when disability strikes – can be so substantial that the risks and costs need to be pooled.

It warns the current disability support system is underfunded, unfair, fragmented, and inefficient, and gives people with a disability little choice and no certainty of access to appropriate supports.

It says, too, that the stresses on the system are growing, with rising costs for all governments.

The Commission says there should be a new national scheme which provides insurance cover for all Australians in the event of significant disability.

“Funding of the scheme should be a core function of government, just like Medicare,” the Commission says.

It says the main function of the NDIS would be to fund long-term high quality care and support for people with significant disabilities

It would not offer income support.

However everyone would be insured and around 410 000 people would receive funding for high quality care.

The Commission said the NDIS would also have other roles.

It would aim to better link the community and people with disabilities, including by using not-for-profit organisations.

It would also provide information to people, help break down stereotypes, and ensure quality assurance and diffusion of best practice among providers.

The Commission said the benefits of the scheme would significantly outweigh the costs.

People would know that, if they or a member of their family acquired a significant disability, there would be a properly financed, comprehensive, cohesive system to support them.

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