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Thursday 7th July 2016 - 6:13 pm
Comments Off on Politicians squabble over Triple A warning

Politicians squabble over Triple A warning

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”.

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Tuesday 5th July 2016 - 1:51 pm
Comments Off on Trade deficit blows out:ABS

Trade deficit blows out:ABS

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.

 

 

Monday 4th July 2016 - 8:46 am
Comments Off on Australia’s next PM? The one who is better on the blower

Australia’s next PM? The one who is better on the blower

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.

Thursday 30th June 2016 - 1:49 pm
Comments Off on Our wealth: the $13.2 billion hit

Our wealth: the $13.2 billion hit

by Alan Thornhill

Australians have suffered their first fall in household net wealth since the September quarter of 2011.

 

This is shown in figures that the Australian Bureau of Statistics published today.

 

The Bureau said that during the quarter, household net worth fell by $13.2b.

 

“During the quarter, household net worth decreased by $13.2b, its first decrease since September quarter 2011,” the Bureau said.

 

It said the fall was  driven by “holding gains (real and neutral)  -of -$44.1b.”

 

Holding losses on financial assets, like shares, in the quarter were $46.5b.

 

These were driven by valuation decreases in the listed equities market ($17.8b) and insurance technical reserves (driven by superannuation assets) of $37.3b.

 

Households recorded holding losses of $2.2b on land and dwellings during March quarter.

 

This was their second consecutive quarterly loss, following holding losses of $8.0b in December quarter.

 

The Bureau put our household net worth at $8,640.6b at the end of the March quarter.

 

It said this was made  up mainly of $5,904.7b of land and dwelling assets and $4,305.2b of financial assets.

 

But they were set against $2,234.9b of household liabilities.

 

The Bureau  also said transactions in net worth were driven by net capital formation of $11.9b, of which net acquisitions of land and dwellings were $10.9b while other non-financial assets amounted to $1.0b.

 

It said net financial transactions were $11.3b, of which net acquisition of financial assets were $38.5b and net incurrence of liabilities were $27.2b.

 

The major contributors to financial assets transactions were net equity in reserves of pension funds ($17.7b) and deposits ($12.8b).

 

Households incurred liabilities predominately through long term loan borrowings ($26.3b).

The Bureau said holding losses on financial assets in the quarter were $46.5b.

 

These were driven by valuation decreases in the listed equities market ($17.8b) and insurance technical reserves (driven by superannuation assets) of $37.3b.

 

Households recorded holding losses of $2.2b on land and dwellings during March quarter 2016, their second consecutive quarterly loss, following holding losses of $8.0b in December quarter 2015.

Tuesday 28th June 2016 - 7:25 pm
Comments Off on Bill Shorten sets his “markers”

Bill Shorten sets his “markers”

by Alan Thornhill

The Opposition Leader, Bill Shorten, set out his objectives for a Labor government after July 2, in his final speech of the current campaign to the National Press Club in Canberra today.

 

He said:   “We are setting our markers for the Australia of 2030.”

 

These were:-

 

  • Strong, universal, affordable Medicare
  • A school system back in the top 5 in the world
  • 50 per cent renewable energy
  • A first-rate, fibre NBN, putting us at the centre of the Asian Century
  • Revitalising advanced manufacturing and apprenticeships
  • Building the nation building, productive infrastructure unclogging our cities and joining our economic operations
  • 3 per cent of our GDP dedicated to science, research and technology
  • 300,000 more women in work
  • Halving the national suicide rate, and
  • Reducing the rates of ovarian cancer.

 

He said all  of this would be  matched with an economic and fiscal plan for the next decade, ” to fully-fund our investments in the future.”

 

This would mean: “Delivering the needed structural savings and tax reforms that will bring the budget back to balance in the same year as our opponents forecast, and build stronger, more sustainable surpluses in the years that follow.

 

“Achieving these goals over the next decade means starting work next week.

 

“My team and I have a clear set of priorities for our first 100 days.
“A new Labor government will hit the ground running:

–    Offering certainty to Arrium in South Australia – and protecting jobs in Laverton, Rooty Hill and Acacia Ridge

–    Setting up our transition fund to support 200,000 automotive supply chain jobs

–    Developing the Financing Mandate for our new $10 billion Concrete Bank, so we can get private investment flowing into public infrastructure

–    Drawing up the terms of reference and appointing a Royal Commissioner to investigate the rip-offs, scams and credit card interest rate rorts in the banking sector

–    And convening a National Crisis Summit on Family Violence, an assembly of the frontline: counsellors, law enforcement, community legal centres, state governments and – most importantly – survivors.

 

 

These are the  people who know, better than anyone, what is wrong with our system and what we need to do to end family violence.

 

“Underpinning all of this – our long-term objectives and our immediate plans for action – will be an old-fashioned focus on good public policy.

 

“A careful and considered approach – recognising that government is a most serious business, a long-term policy institution.

 

He said a Labor government would be “Dealing honestly with the challenges we face and being upfront about our plans.”

 

 

Tuesday 28th June 2016 - 6:10 pm
Comments Off on Government plans a $1.1 billion crackdown on welfare

Government plans a $1.1 billion crackdown on welfare

by Alan Thornhill

The Federal government is aiming to save $1.1 billion a year, by targeting  “leakage, waste and abuse” in the welfare system.

 

However the Treasurer, Scott Morrison, who announced this crackdown today, said people who are entitled to welfare payments would continue to get them.

 

He was announcing the Coalition’s financial targets, for the three years following the July 2 election.

 

However the Greens ridiculed Mr Morrison’s statement, saying he was urging that Australia’s social security system be automated and upgraded even though its staff cannot even answer their  phone  calls.

 

Senator Rachel Siewert – the Greens spokesperson on Community Services – said Mr Morrison is   advocating that Australia’s social security system be “automated and upgraded” when his staff cannot even answer their phones.

 

“After 22 million missed calls last year amongst other issues, there are many Australian’s accessing income support of some form, be it Family Tax Benefit, Paid Parental Leave, Disability Support Pension, Youth Allowance, Newstart, Carers Allowance, who feel extremely frustrated,” Senator Siewert said.

 

“The missed calls are just the tip of the iceberg,” she added.

Tuesday 28th June 2016 - 1:59 pm
Comments Off on Australian tax revenue “going up in smoke” – report

Australian tax revenue “going up in smoke” – report

by Alan Thornhill

A new report says big miners  – and  tobacco companies –   would be among the main winners from the Federal government’s proposed tax cuts.

 

The report, funded by the Get Up organisation, concluded that shareholders in the USA, UK and Japan would collect 15 per cent of the offshore benefits.

 

The authors described these as the “most significant” gains produced by the proposed scheme, which they described as the “centerpiece” of the Turnbull government’s economic plan.

 

It was produced in consultation with corporate tax experts, including  Associate Professor Roman Lanis, Dr Brett Govendir and Mr Ross McClure from the University of Technology Sydney, with help from to Mikhail Shashnov.

 

The government has yet to comment on the report.

 

Its authors reviewed the 250 largest payers of corporate tax in 2013-14 – the most recent year for which Tax office data was available.

 

It was used to identify the percentage of overseas-based shareholders and calculate the proportion of the corporate tax cut that would flow to them in the form of increased dividend payments.

 

 

A detailed analysis of the top 20 corporations was then undertaken.

 

The results were then assessed to determine who the main beneficiaries of the corporate tax cut were.

 

This had shown that if the corporate tax rate was cut to 25 per cent, in the planned five year period,  those companies would get a total tax benefit of $5.526 billion per annum.

 

The report also said: “an astonishing 40 per cent – at least $2.176 billion – would be lost to offshore investors in dividend payments.”

 

It said too, that:- : “corporations operating in the finance and materials sectors receive the lion’s share of total tax benefits at 38 per cent and and 30 per cent respectively.

 

“This includes banks, insurance, and mining companies.

 

“Seven of the top 20 corporations are mining and energy corporations.

 

“They receive a $1.56 billion windfall, of which 63 per cent would flow offshore.

 

“This is on top of the $7.7 billion the industry receives each year in taxpayer-funded fossil fuel subsidies.

 

It also said two  of the top 20 beneficiaries are Big Tobacco companies – British American Tobacco and Philip Morris.”

 

The report said these companies  stand to receive a combined benefit of $88.5 million, of which 100 per cent would flow offshore.

Monday 27th June 2016 - 9:17 am
Comments Off on PM’s speech: the lustre and bluster

PM’s speech: the lustre and bluster

by Alan Thornhill

Anlysis

 

 

 

Malcolm Turnbull’s policy speech yesterday was a polished performance.

 

He managed to suggest, for example, that something very like the Brexit disaster could well sink Australia, too, if we don’t vote the right way on July 2.

 

Without actually saying so.

 

So is there a danger, in his message that might not be immediately apparent?

 

Arguably.

 

Is the lustre, of his carefully crafted message, for example, brighter than its bluster?

 

The Prime Minister assured voters, constantly, throughout his speech, that his Coalition has a plan to deal with all eventualities, that might arise over the next three years.

 

Without saying, too specifically, what it was

 

He also boasted that some 300,000 new jobs had been created, on his government’s watch.

 

Without mentioning that most of them are part time positions, with pay rates that don’t cover grocery bills

 

This has left many Australians, particularly the young and the old, without a place in Australia’s modern work-force

 

So it might well be worth looking again at just what the Turnbull forces are planning to do, as well as what Mr Turnbull, himself, is actually saying.

 

Tax cuts, both for Australians on high incomes – and the big corporates – are at the heart of his plan.

 

It may well be worth remembering, at this point, that much of the vote for Britain’s exit, from the EU, came from poor areas, in Britain’s north.

 

That is  from the very people who have suffered most, over the years, from the austerity that came with Thatcherism, and its successors.

 

Eminent economists, like America’s Paul Krugman are not impressed by arguments that rising wealth for the rich will produce more jobs for the poor.

 

Krugman says that’s like relying on “the austerity fairy” to overcome unemployment.

 

However that argument still appeals, even if its strongest appeal is to those who benefit most from it.

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Alan Thornhill is a parliamentary press gallery journalist.
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