by Alan Thornhill
Deeming accounts are not always what they are deemed to be.
That advice comes – very bluntly – from Australia’s corporate watchdog, the Australian Securities and Investments Commission.
The Commission has some tough observations to make about some Australian banks and other deposit taking institutions.
It said they are: “…using the term ‘deeming account’ to promote a basic savings account to pension recipients.
“These accounts have been marketed as having a connection with the Government’s ‘deeming rules’, which form part of the Government’s social security income test.”
However the Commission said the way these accounts are advertised “could mislead consumers.”
“These accounts have been marketed as having a connection with the Government’s ‘deeming rules’, which form part of the Government’s social security income test,” the Commission said.
But it warned: “In most cases, the savings accounts offer lower interest rates than the deeming rates, particularly for lower account balances.”
ASIC did not name either the banks or the other deposit taking institutions that it said are misleading their depositors in this way.
But it said ASIC is particularly concerned the name of the account could mislead consumers into believing the interest rates on offer would be the same as the deeming rates.
“ASIC was also concerned about consumers being unable to clearly identify the interest rates that apply to different account balances, known as ‘banded’ or ‘tiered’ interest rates,” the Commission said in a statement.
Its Deputy Chairman Peter Kell said that when offering financial products to consumers, it is important that they are true to label.
‘Special care should be taken when using terms which will have a particular connotation to consumers, to ensure that the product characteristics are consistent with the representations inherent in the product name,’ Mr Kell said.
The Commission said it has been working with the industry to address these concerns.
And progress had been made
Following discussions with the Australian Bankers’ Association (ABA) and the Customer Owned Banking Association (COBA), industry has agreed that members offering these products will work to ensure:
• the word ‘deeming’ is not used in a savings account name where that might mislead consumers about the interest rates being offered
• features of these accounts are not described as being ‘comparable to’, ‘compatible with’, ‘guided by’, ‘reflective of’ the Commonwealth Government deeming rates where this is not the case, and
• where ‘banded’ interest rates are offered, this is clearly disclosed, and information about different bands and applicable rate made easily accessible to consumers.
ASIC said it will continue to work with the ABA and COBA to ensure these measures are implemented.
by Alan Thornhill
Australia’s economic problems can’t be solved by a series of small, incremental changes, one of the nation’s leading economists says.
Professor Ross Garnaut, who has been described as our “most prophetic economist” sounded the warning, when he launched his new book “Dog Days, Australia After the Boom” at the National Press Club inn Canberra today.
He said the adjustments required would be uncomfortable for all Australians.
Professor Garnaut says Australia’s “dog days” are coming.
He said the $A had appreciated by 70 per cent, between 1983 and 2011.
“That’s a tremendous loss of competitiveness,” Professor Garnuat said.
The results had included a weakening national job market.
“Australians have just lived through a period of exceptional prosperity, but are we ready for the challenges we face after the boom?” he asked.
Professor Garnaut recalled that, back in 2005, Australians had been enjoying “the longest economic expansion – and the largest rise in incomes over a short period – that a developed country had ever known.”
Yet he had warned, even then, that those “salad days” would be followed by “dog days.”
So what is Professor Garnaut suggesting?
He said that if the Coalition used the majority it had won in the recent elections to “occupy the centre ground” in Australian political life, it could conserve most of the gains the nation had made, and “entrench itself in power” for a long period.
The Federal Communications Minister, Malcolm Turnbull, who launched the book said: “While we can quibble about precise numbers, it has become increasingly clear that the last government not only spent the vast majority of our receipts from the boom – but also entrenched levels of spending that were barely sustainable in periods of record terms of trade.”
Need to know more?
The book is called “Dog Days Australia After the Boom”
It’s available from Black Inc publishers at www.blackincbooks.com for $19.99
Need to know
by Alan Thornhill
The Australian Financial Review is the only major Australian newspaper to have increased its circulation over the past year.
The Roy Morgan organisation reports that the Fin Review’s daily circulation, for its weekday editions, rose by 10,000 to 239,000 in the 12 months to September this year.
Two Murdoch papers, the Sydney Daily Telegraph and The Australian, suffered big losses in that time.
The Telegraph, for example, saw its daily circulation fall by 36,000 to 763,000, while the circulation of The Australian fell by 48,000 to 363,000.
The Sydney Morning Herald also suffered badly, with its daily circulation falling by 84,000 to 545,000.
The West Australian saw its daily circulation fall by 4,000 to 504,000.
by Alan Thornhill
The National Australia Bank has declared a statutory net profit of $5.45 billion for 2013.
That was an increase of $1.4 billion or 33.6 per cent on the September 2012 year.
In a statement to the Stock Exchange, the bank also said its cash earnings were $5.94 billion, an increase of $503 million or 9.3 per cent on the September 2012 full year.
It said this was due to higher earnings from all banking businesses.
The bank said the difference between net profit attributable to owners of the Company and cash earnings was primarily due to fair value and hedge ineffectiveness, the effects of adjusting for treasury shares and a $163 million (post-tax) provision raised for costs associated with
UK payment protection insurance.
The bank’s CEO, Cameron Clyne, said: “The Group’s full year results show an improved performance across most business units, combined with solid progress against our simplification and digitisation agenda.”
Mr Cameron also said: “Some improvement in the UK operating environment and initiatives to reduce the Australian risk profile have supported a lower charge for bad and doubtful debts.
“Costs, excluding Australian restructuring and UK conduct-related costs, have been well contained, reflecting our ongoing focus on efficiency gains.
“Enhancing the Australian franchise remains a strategic priority, with further progress made during the year.
“Personal Banking again produced a strong result on the back of good momentum in housing lending and increased customer deposits,” Mr Cameron said.
by Alan Thornhill
Talk of privatising Centrelink services has alarmed Australia’s unions and the opposition.
The Treasurer, Joe Hockey, has spoken of consolidating the delivery of pension and other social security payments.
And he has asked the Government’s newly formed Commission of Audit to look for ways in which this might be done.
The Financial Review is reporting that this might mean closing Centrelink’s service centres.
The Shadow Minister for Human Services, Senator Doug Cameron, said the government is thinking of selling off Centrelink’s frontline services to Australia Post – which he said is also slated for privatisation.
He said millions of Australians rely on those services, which the government had now “put on the chopping block.”
However Mr Hockey’s office called for a calm debate.
His spokesman said there are no recommendations before Government yet.
And nothing would be considered from the Commission of Audit before the budget process begins.
But Senator Cameron said the government needs to stop hiding behind its “Commission of Cuts.”
“It should be upfront with Australians about where the axe will fall,” he added.
“How many jobs will go?
“What payments and services will they cut?”
Meanwhile the President of the Australian Council of Trade Unions, Ged Kearney, described the change, now being considered, as “enormous.”
“…there are services here that will impact on many, many Australians.
“Australians have a right to be consulted about this process,” Mr Kearney said.
He said the processes the government is pursuing lack transparency and accountability.
The Commission of Audit is due to deliver an initial report by the end of January and give its final recommendations by the end of March.
by Alan Thornhill
The chairman of the corporate watchdog, the Australian Securities and Investments Commission, today rejected allegations that that the Commission is tardy, declaring instead that it acts swiftly and solidly.
Addressing an AmCham business leaders’ lunch, Greg Medcraft, staunchly defended ASIC against critics who have not only accused it of being slow to act , but have also said it is timid in sensitive cases.
However the critics were not silenced.
The Deputy Leader of the Greens, Adam Bandt, for example, said Mr Medcraft’s speech “should ring loud alarm bells.”
The Greens MP said Mr Medcraft had raised doubts about the enforcement of the law in cases involving the public institutions – and reinforced the need for an inquiry.
Mr Bandt also accused Mr Medcraft of hand-passing issues involving the Reserve Bank and Leightons to the Federal police.
“To excuse its inaction, ASIC asserts that it is right for it to focus on publicly listed companies with many shareholders, an argument that has profound consequences for Australian democracy and corporate governance,” Mr Bandt said.
“ASIC is saying that because the RBA’s corporate arms weren’t publicly listed – and had no broader market impact – ASIC will treat them the same as a $2 shelf company that runs the local shop.”
“As Australia’s central economic institution, the RBA ought operate to the highest standards of conduct and ASIC should be ruthless in policing the directors of RBA’s corporate arms,” the Greens MP said.
Note printing subsidiaries, owned by the RBA, have been accused of offering bribes to foreign officials, to win lucrative note-printing contracts.
In his speech, Mr Medcraft said a lot had been written about ASIC and much of that reporting had been misinformed.
“The recent media coverage has centred on ASIC and its supposed slowness to act,” he said.
“Against this background it’s worth discussing how ASIC selects the cases we pursue – and why it takes the time it does.”
Mr Medcraft said the Commission considered “thousands of matters” and chose the ones it would pursue after considering:-
* The extent of harm
* Cost vs regulatory benefit and
* Available Evidence.
“Our cases have to stand up in court,” Mr Medcraft said.
“In fact, last financial year ASIC conducted more than 2,150 high -intensity surveillances,” he said.
“More broadly, ASIC ’s record on punishing wrongdoers is solid,” Mr Medcraft declared.
by Alan Thornhill
Many Tasmanians, who were told that they would get very high speed broadband, even if the Coalition won the September 7 elections, may now miss out.
They would not be alone, if that happens.
Others, too, will miss out.
The slower, less expensive broadband, that the Federal government is planning, will be delayed, too.
All this became clear today, when the new Communications Minister, Malcolm Turnbull, explained his plans.
Mr Turnbull also confirmed that the resignations of members of previous NBN board had not been voluntary.
He said he had asked for them to give the Government complete flexibility in remaking the board in light of its new policy agenda.
But the Opposition said the new directions, just announced, broke promises the Coalition had made before the elections.
The Shadow Minister for Broadband, Anthony Albanese, said: “the Coalition has today broken its promise to roll out fibre broadband where work is already underway.”
He said this had been revealed with the release of the Government’s interim statement of expectations for NBN Co.
“This includes people living in Tasmania, who were assured before the election that the Coalition would complete the full fibre rollout in that state,” Mr Albanese said.
“This is a betrayal of Tasmania and all Australians who thought they would be getting fibre to the home under the Coalition,” he added.
Explaining the likely delay, with the roll out of the government’s broadband service, Mr Turnbull said the Federal government had put an NBN commitment to begin connecting around 900,000 premises to high-speed internet access within a year on hold.
This had been done “ pending a strategic review of the network.”
Mr Turnbull says the government wants to deliver its NBN “sooner, more affordably for consumers and at less cost to taxpayers”.
But he added: “In the short-term, the interim statement will see the NBN Co meet its contractual obligations by continuing to roll out fibre to the premises.”
He said this would be done while the company conducts the strategic review of the project
However Mr Turnbull also revealed that the NBN Co is proposing to revise down its rollout target for June 30 next year “by almost half.”
That is from forecasts made just four months ago.
But he said connecting 66,000 premises passed by the fibre network but unable to connect will be the “key priority”.
“This includes the majority of apartments, schools and businesses in areas where the fibre network has been rolled out.”
Mr Turnbull said construction is also set to go ahead in close to another million premises where contracts have either been signed or detailed design work is underway.
However, the future of another 900,000 premises where “only preliminary design work is underway” is now in question.
“Decisions about actual construction in these areas will be taken after the reviews into the NBN rollout are completed,” Mr Turnbull said.
He said Federal Cabinet would shortly consider a submission for both a strategic review, to be conducted by the NBN Co, and a cost-benefit analysis into the project.
“We expect this period of review will lead to revisions to the timing of the rollout and to updated forecasts,” Mr Turnbull said.
“It’s important to bear in mind however that the NBN rollout has to date repeatedly missed its targets.
by Alan Thornhill
Kevin Rudd said tonight that if Australians want broadband better schools and hospitals and a clean energy future they should vote for the government.
He warned that the Coalition would cut spending in all of these areas.
The Prime Minister noted that the Coalition had said that it would not cut – and would in fact increase – its spending on education and health.
However the Opposition Leader, Tony Abbot, had also said that he would welcome a Commission of Audit, that would investigate all programs.
Mr Rudd said there would be “massive cuts” under a Coalition government
In an interview on the ABC’s 7.30 report, Mr Rudd also said that, despite the release of Coalition costings earlier in the day, “the entire nation is still comprehensively in the dark on where those cuts will be.”
“I think if you look carefully at the statement today, it is very plain that we have no comprehensive list at all of their massive cuts to jobs, schools and hospitals,” the Prime Minister said.
Mr Rudd said the government had committed $10 billion to its better schools program, which would continue until 2019.
But the Opposition had committed “a bare $2 billion” to the plan.
“That is effectively an $8 billion cut in education, Mr Rudd said.
“That is a fact.”
Scrapping the Schoolkids’ Bonus, as the opposition is planning to do, is also an education cut, the Prime Minister said.
Invited to say what Labor would do, if it was returned on Saturday, Mr Rudd declared: “”Our plan is to build the economy and the future by diversifying and by not having all our eggs in the one basket.”
Mr Rudd said: “if you want broadband in the future, better schools and hospitals in future and clean energy, you should vote for the government.”
He declared, too, that if voters had any doubts about Mr Abbott, they should not vote for him.
Alan Thornhill is a parliamentary press gallery journalist.
Private Briefing is updated daily with Australian personal finance news, analysis, and commentary.
Wednesday December 11
The Dow Jones index fell 53 points to 15,973
Acting PM Warren Truss writes to Mike Devereux seeking “a clear statement” on Holden’s future
The Federal Treasurer, Joe Hockey, says the Mid-Year Economic and Fiscal Outlook will be released next Tuesday, at the National Press Club.
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|Macq Group Fpo||52.180||+0.630||+1.22%|
|Nat. Bank Fpo||33.170||0.000||+0.00%|
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