by Alan Thornhill
The Federal government and opposition differed sharply today, after a major ratings agency, Standard and Poors, put Australia’s prized triple A status on negative watch.
It did so citing both the still unresolved Federal election result and high levels of both household and external debt.
The Treasurer, Scott Morrison, said the agency’s move, “reaffirmed the government’s fiscal direction and the need to “stick to the plan” the Coalition set out in its last budget.”
However the shadow treasurer, Chris Bowen, said it underlined the government’s “fiscal failure” and cast further doubt on its budget projections.
The agency’s warning means that Australia’s AAA credit rating might be slashed in future if there is no improvement in its budgetary performance.
This could increase government borrowing costs and weaken international investment.
Mr Bowen said S&P statement is “sombre reading.”
He said the agency “…calls out the Government on three years of fiscal failure, based on unrealistic Budget revenue forecasts and savings measures that will never pass the Parliament.
“S&P makes it clear that it doesn’t have much faith in the Government’s Budget revenue forecasts – a point Labor has consistently made since the Budget in May,” Mr Bowen added.
However Mr Morrison took a different view.
He said the agency’s warning reinforces the government’s message that Australia must “live within its means”.
He said S&P were clearly concerned about the outcome of the election and that “the pace of fiscal consolidation may be postponed”.
Mr Morrison said it would be irresponsible to increase the deficit over the next few years, because “that increases the debt and you can’t get that money back”.
by Alan Thornhill
Many Medibank customers will have to wait longer than usual for their annual tax statements.
The health fund’s chief, Craig Drummond, said the delay followed a major technology upgrade.
He said the fund is : “….. experiencing a reporting issue which will likely prevent it from providing annual tax statements to a majority of customers by July 15.
Mr Drummond also said the situation is: “is result of customer data migration and acknowledged that it is unacceptable for customers.
He said: ““I sincerely apologise to our customers for this disruption.
“It is important for customers to know their personal data has not been compromised.
“Our team is working around the clock to resolve this issue, and I want to assure customers that our focus is on minimising the impact this will have on them,” Mr Drummond said.
Customers wishing to find out more information can go to the website www.medibank.com.au he added.
by Alan Thornhill
Australia has had great success in attracting visitors over the past year, particularly from South Korea and Japan.
The Bureau of Statistics reported today that, in trend terms, the number of visitors arriving from South Korea increased by 30.8 per cent, in the 12 months to the end of May, while arrivals from Japan rose by 30.6 per cent.
Overall, too, the number of arrivals also rose strongly in this time, chalking up a 10.9 per cent increase.
Visitor numbers from the United States rose by 18.4 per cent.
Relatively new markets are also rapidly gaining strength, too, in Australia.
On trend figures, for example, 99,400 visitors arrived in this country from China, during May this year.
That number was 18.6 per cent higher than that seen 12 months earlier.
The Statistician also reported that the number of Australians travelling overseas, as short term visitors rose by 3.4 per cent, over the 12 months to the end of May this year.
by Alan Thornhill
The Reserve bank left interest rates on hold today, but hinted that there could be another rate cut soon.
After a meeting of the bank’s board today, its Governor Glenn Stevens noted that Australia’s inflation is low – at 1.3 per cent – and likely to remain so.
Then he added: “Over the period ahead, further information should allow the Board to refine its assessment of the outlook for growth and inflation and to make any adjustment to the stance of policy that may be appropriate.”
Mr Stevens also said: “Several advanced economies have recorded improved conditions over the past year.”
However he added: “but conditions have become more difficult for a number of emerging market economies.
He said: “China’s growth rate has moderated further, though recent actions by Chinese policymakers are supporting the near-term outlook.”
The bank last cut its marker interest rate from 2 per cent, to a new record low of 1.75 per cent, in May.
Mr Stevens said: “Commodity prices are above recent lows, but this follows very substantial declines over the past couple of years.”
“Australia’s terms of trade remain much lower than they had been in recent years.”
He also noted the impact of Britain’s Brexit decision to leave the European Union but said nothing about Australia’s cliffhanger election, last Saturday.
Mr Stevens said global financial markets had been “volatile recently as investors have re-priced assets after the UK referendum.
“But most markets have continued to function effectively,” Mr Stevens added.
“Funding costs for high-quality borrowers remain low and, globally, monetary policy remains remarkably accommodative.
“Any effects of the referendum outcome on global economic activity remain to be seen and, outside the effects on the UK economy itself, may be hard to discern,” he concluded.
by Alan Thornhill
Australia’s trade deficit rose $433 million in May to $2,218 million.
This is shown in figures published by the Bureau of Statistics today.
The bureau also reported that Australia’s retail sales rose by 0.2 per cent in that month.
The bureau said that, on seasonally adjusted figures, Australia’s exports had been worth $26,170 million in May.
But imports had been worth $28,387 million.
So our trade deficit that month was 24 per cent bigger than that of the previous month.
Why did that happen?
Our exports rose by 1 per cent in May.
However our imports rose by 2 per cent in the month, on seasonally adjusted figures.
The Statistician also reports that we spent more in food stores and in Australia’s cafes and restaurants in May than we did in April.
But trade in Department stores was flat and we spent less on shoes and clothes in May than we had in April.
by Alan Thornhill
Business confidence in Australia was weak before two recent shocks.
A survey, by Dun and Bradsreet, showed that expectations for sales and selling prices, in the three months to the end of September, had hit their lowest levels since 2014.
Stephen Koukoulas, an economic adviser to the firm, said this result should be treated with caution, as the survey was conducted before both the British vote to leave the EU and the inconclusive result of last Saturday’s Federal elections.
However Mr Koukoulas added: “the slide in business expectations over the past year appears to have been arrested in the most recent survey.”
And he added: ““there were some mildly encouraging signs, with expectations for capital expenditure edging up from the recent low point.”
But he said: “there were, worryingly, signs of further weakness in expected sales and selling prices…”
The Business Expectations Index is an aggregate of the survey’s measures of sales, profits expected sales and selling prices.
He said the low price expectations confirmed by the survey, “points to ongoing low inflation.”
The survey also showed that: “profits, Employment and Selling Prices” in Australia’s construction industry, have all been “plunging into negative territory.”
It also revealed that: “the Retail industry fared poorly for the first three months of the year, with its Actual Sales and Actual Employment indices falling to -3.9 points and -4.3 points respectively
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by Alan Thornhill
Australia’s political leaders will be hitting their phones this week, trying to scrape together enough support to give the country stable government for the next three years.
The main rivals, Prime Minister, Malcolm Turnbull, who heads a conservative coalition and Bill Shorten, who leads the Labor party both found themselves short of the 76 seats they would need, in the House of Representatives, to govern in their own right, at the end of the initial, but still incomplete, count.
Late yesterday, Labor had 67 seats, the Coalition 65, others 5 and 13 were still in doubt.
The Australian Electoral Commission had counted 78.2 per cent of the votes cast, at that point.
It will not resume the count until Tuesday, and the final result, for the House, will probably not be known until some time next week.
Mr Turnbull had made much of the need he saw for stability, during the late stages of the eight week election campaign, particularly after Britain’s vote to leave the EU.
However the swing to Labor, evident in Saturday’s election, showed that voters were more impressed with Mr Shorten’s warning that only Labor could be trusted to protect Australia’s health insurance system, Medicare.
Mr Turnbull had sought support for a plan centred on tax cuts for big companies and high income earners.
He had warned that a big spending Labor government could not be trusted to manage Australia’s economy responsibly.
And, at a news conference today, he welcomed a question from a reporter who asked him if the election result could threaten Australia’s TripleA credit rating.
He thanked the reporter and said: “This is why it is very important … for me to explain what is happening at the moment.”
“We are simply going through a process of completing a count,” Mr Turnbull said.
The Prime Minister also said that he could still form a new government, for the next three years.
However Bill Shorten greeted the initial count with a triumphal declaration.
He conceded that the public might not know the outcome of Saturday’s election : “…for some days to come.”
“But there is one thing for sure – the Labor Party is back.” he said.
But which of these two men is likely to be Australia’s Prime Minister over the next three years?
The answer to that question will depend, very much, on their relative telephone skills.
by Alan Thornhill
“…The Labor party is back,” its leader, Bill Shorten declared triumphantly, after the result of the first night’s count in yesterday’s Federal election was known.
However his conservative rival, the Prime Minister, Malcolm Turnbull was insisting that he could still form a government.
Independent observers, though, were saying that the results, so far, are so close that voters may still have to wait days to find out which of these two men will be Australia’s Prime Minister for the next three years.
One thing is already certain, though.
Malcolm Turnbull has lost the gamble he took, when he called a double dissolution election, months early, in the hope of winning clear control of the Senate.
He did that in the hope of restoring peace in the building and construction industry, by reviving the Australian Building and Construction Commission.
The final outcome in the Senate will take even longer to decide than that in the House of Representatives.
However one thing is already clear.
The new Senate will be peppered with independents and others who may well prove troublesome to the incoming Prime Minister.
Weathercoast by Alan Thornhill
A novel on the murder of seven young Anglican Christian Brothers in the Solomon Islands.
Available now on the iTunes store.
Alan Thornhill is a parliamentary press gallery journalist.
Private Briefing is updated daily with Australian personal finance news, analysis, and commentary.
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