I’m still optimistic:Swan

Wayne Swan says he’s still an optimist.

And he says the Federal budget will recover much more quickly, after the global economic crisis than it did after previous recessions, in 1980 and 1990.

Addressing business leaders in Sydney, the Treasurer, said none of this would even be realistic, if it had not been for the stimulus the government applied to the Australian economy, after the crisis struck.

“We kept the economy growing,” Mr Swan said.

“Which means we are now building from a position of strength.

“We’re not wading through the rubble of a recession.”

Mr Swan said the budget he brought into parliament earlier this month is highly “disciplined.”

He was speaking shortly after a new study was released, showing that consumer confidence fell sharply this month, after a string of interest rate rises.

The Treasurer said his budget would deliver the fastest fiscal consolidation Australia has seen since the 1960s.

As a result, the Federal budget would return to surplus three years earlier than the government had previously predicted.

“As the global economy slowly climbs out of recession and gravitates towards Asia, we can expect that Australia will become one of the biggest winners, if not the biggest,” Mr Swan said.

“This makes me an optimist about the future of our economy,” he added.

However Mr Swan also warned that Australians can’t afford to be complacent.

“We have to work together to get the settings right and make the most of our unique position on Asia’s doorstep,” Mr Swan said.

He said that, too, must be translated into what he called “balanced growth.”

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Budget prospects brighter:Access

The budget realities, against which the Federal  government’s tax changes are being made, will be better than expected.

That’s the latest assessment from the forecaster, Access Economics.

These private  economists, who came mainly from the Federal  Treasury, say the current minerals boom will produce a river of gold, for the Federal government.

They warn, though,  that there will be delays, with most of the fresh tax flows arriving in the new financial year, rather than the present one.

However they added:”…our wealth still took a battering in the crisis.”

Yet Access also  said:”There is nothing more central to Budget outcomes than what the world pays us.”

“Australia’s economy is shifting sharply upwards once more,” Access said.

That is happening as “a turbo charged China” underpins big increases in world prices for our key exports.

Coking coal prices had risen by 55 per cent.

Thermal coal prices are up 40 per cent.

And iron ore prices had almost doubled.

“That’s big bucks,” Access said.

“Not quite in the league of the price hikes of 2008, but close.”

“That matters,” Access said.

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Imminent election sobers government’s tax reforms

Facing an election later this year, the Rudd government has decided that it cannot afford to be as bold as the Henry Committee, when it comes to tax reform.

But Kevin Rudd, himself, insists that it has made a good start.

And Heather Ridout, who heads the Australian Industry group agrees, admitting that she sees getting the tax reform Australia needs as a decade long project.

That’s an insider’s view, as Ms Ridout was also a member of the committee, headed by the Treasury Secretary Ken Henry, which also recommended a similar approach..

Mitch Hooke, who heads the Mining Industry council, has emerged as the  toughest critic of the government’s reforms, so far.

He insists that the super profits tax, that the government is planning to impose on Australia’s miners, will stop valuable projects going ahead,  with consequent job losses in the industry.

The Henry Committee made 138 recommendations, urging the government, in particular, to: abolish several existing taxes over time.

These included:-

• insurance taxes
• payroll taxes
• property transfer taxes
• resource royalties, saying these should be replaced by the rent tax
• the luxury car tax
• the tax on superannuation contributions, while they are in the fund
• income taxes on all government pensions and benefits and
• fuel and registration taxes.

So far, the government has not made a start on any of these areas.

But it will:-

• gradually raise the compulsory superannuation  contributions rate from 9 to 12 per cent.
• lower the company tax rate, first to 29 per cent and then to 28 per cent and
• introduce a super profits tax for miners

The Prime Minister said a typical 30 year old Australian worker should retire with an extra $108,000 in superannuation as a result of the latest changes.

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Feds take tough line on executive pay

Executives, who pad their company’s books, will soon face loss of any bonuses they might get as a result.

The Federal government made this clear today, in a statement three ministers made, in response to the Productivity Commission’s report on executive pay.

The Treasurer, Wayne Swan, Corporate Law Minister Chris Bowen and Assistant Treasurer Nick Sherry said, in a joint statement, that
the Government supports nearly all of the commission’s recommendations.

The said this includes the so-called “two strikes” proposal.

They warned, too, that the government would further strengthen several of the recommendations by expanding their scope and enforceability.

“The Government will also consider an additional proposal, not identified by the PC,” the three ministers said.

That is  to clawback bonuses paid to directors and executives in the event of what they called “a material misstatement in the company’s financial statements.”

The government ordered the commission’s inquiry in March last year, in the wake of public anger over events associated with the global financial crisis.

The commission’s final report was released in January.

“The Government commends the PC for its comprehensive report and the thorough and consultative approach used in the review process,” the government said.

The three ministers said they understand public anger and concern over excessive  executive pay.

They said the government also recognises the importance of promoting transparent, accountable and responsible executive pay practices.

“That is why the Rudd Government has taken, and will continue to take, tougher action on the regulation of executive pay than any previous government,” they said.

“Legislation giving effect to the reforms will be introduced this year, following public consultation on an exposure draft,” they added.

The three ministers said:”These are important reforms that will improve Australia’s remuneration framework by encouraging shareholder engagement, tackling conflicts of interests, improving disclosure requirements and improving the design of remuneration policies.

” These reforms will also ensure that Australia’s regulation of director and executive remuneration remains at the forefront of international best practice,” they added.

Full details of the government’s decision are available at www.treasury.gov.au

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Australians to hit the shops soon:Access Economics

We’ll all  be out shopping again soon – this time with our own money.

The economists at  Access Economics, who have just published new retail forecasts, are confident about that.

Naturally they admit that our spending has been boosted over the past year by stimulus measures, such as tax breaks,  subsidies and low interest rates, which left extra money in many budgets.

However they say those times are now rapidly  passing , to be replaced by new growth, based on a stronger job market.

“Ultimately,” they say,”spending growth is regulated by income growth.”

Th Access economists say, too, that job growth is the “bedrock” of consumer spending.

Access noted that almost 200,000 jobs had been created in the five months to January.

It said, too, that about half of those new jobs had been full time.

“A greater sense of security makes for a more confident consumer,” Access said.

Its work is backed by other economic research.

The National Australia Bank, for example, is reporting that business confidence has returned to the surprisingly strong levels of last November.

That means business confidence is now back at levels not previously seen since May 2002.

And the ANZ bank said the number of job ads, appearing in Australia, had leapt by 19.2 per cent in February.

The ANZ said the nation is now “enjoying solid employment growth and reduced unemployment.”

However it warned that “a record 30.2 per cent” of all Australian jobs are now part time or casual.

The bank’s chief economist, Warren Hogan, said this represents “a significant degree of spare capacity or underemployment.”

Access has reservations, too.

It says, for example, that there are still “plenty of factors which will stop retail sales from being spectacular.”

These would include further interest rate rises, which would slow growth in house prices and ultimately affect consumer confidence.

These rate rises would eat directly into shoppers’ incomes, Access said.

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Parties bid for new mother’s votes

Women’s votes have never been more important to Australia’s political parties than they will be in the Federal elections due later this year.

And the Federal Opposition Leader, Tony
Abbott, has put in a high bid for them, with a six month paid parental leave scheme, which he has just announced.

It would see parents paid the equivalent of their current salary, up to an annual rate of $150,000, for a period of six months.

The new scheme, which would be funded by a 1.7 per cent levy on big business, leaves Labor’s rival scheme in the shade.

Labor is merely offering  women 18 weeks’ pay at minimum wage levels.

This means parents could get up to $75,000, under the Coalition’s scheme, against just $9,800 under the government’s plan, which still has to go to the Senate.

Mr Abbott estimates his tax on Australia’s 3,200 firms earning more than $5 million a year would net $2.7 billion.

He said he did not expect big business would be pleased with his plan.

“I don’t expect anyone to cheer about having to pay more but I expect that even people who operate in big business think of themselves as citizens as well as business people,” Mr Abbott told reporters.

He was right about that.

Several business leaders including Peter Anderson, chief executiveChamber of Commerce and Industry attacked his idea.

“Imposing additional costs like these on the business community is not fair because the benefits to business are uneven and are far less significant than the benefits to the mums and dads who are going to be taking the maternity-paternity leave,” Mr Anderson said.

Two government ministers, Jenny Macklin and Tanya Plibersek, ridiculed Mr Abbott’s announcement, dismissing it as “a thought bubble.”

“His sham policy has no detail, no costings and no timeline,” the two ministers said.

“Australian families need certainty on paid parental leave to plan for the future,” they added.

“This is yet another backflip on parental leave from Mr Abbott,” the two ministers said.

“As a minister in the Howard government he campaigned for years against paid parental leave, saying it would be introduced ‘over his dead body.’”

Mr Abbott’s announcement was timed to coincide with International Women’s Day.

Despite real progress, over recent decades, the long held goal of equal pay, for Australian women, remains as elusive as ever.

The latest figures, from the Australian Bureau of Statistics, show the average weekly earnings of the nation’s women are still barely two thirds those of its male workers.

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The words they chose

The self-deprecatory remarks that politicians  occasionally make are worth watching as they can be revealing.

Especially in election years, when voters have big choices to make.

Take Tony Abbott, for example. What are we to make of a man who is prepared to say, publicly, that his daughter, Frances, regards him as:”a lame, gay, churchy loser.”

Or of Kevin Rudd, who admits that he had been described, by a colleague, as:”a first class policy wonk.”

“I think it’s also fair to say – in terms of one of the other criticisms that’s made of yours truly – is that I’m probably not the world’s best communicator,” Rudd added, in his reply to a reporter who had questioned him at the weekend.

That tortured sentence, in itself,  illustrates his point.

Perhaps that’s why he also promised, at the weekend, that Australia’s schools would be stressing grammar, in future.  He, certainly, missed out on the clear speaking lessons,  all those years ago.

There was an echo of something deeper, too, in Rudd’s words at the weekend.

Just a few days earlier, he had described Peter Garrett as “a first class minister.”

But, on Friday, he finally demoted Garrett, over the home insulation disaster.

Rudd’s use of the words “first class” to describe himself, just one day later, invites reflection.

Gough Whitlam stormed to power on the two word slogan “It’s time.” That captured his political message, back in the early 1970s, perfectly.

Paul Keating’s words were also powerful, even though he sometimes damaged himself, by speaking recklessly.  “This is the recession we had to have was, of course, the prime example.

Back, though, to the challenger, Tony Abbott. He is quite comfortable with the nickname, “the mad monk,”  which he inevitably acquired, in the corridors of Parliament house.

His revelation, of his daughter’s biting word, certainly reflects a man of some  charm – and good humour. It also speaks, though, of a man who is not entirely sure that he is in tune with the tempo of the times.

That’s not an entirely unattractive picture, a fact reflected by the Opposition Leader’s advancement, over recent weeks, in the polls.

At this stage, though,  the coming choice appears, at least superficially, to be between a man who can’t speak clearly and a glib rival who hasn’t, so far, had all that much to say about what he would do, as Prime Minister.

Both could do better.

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Barnaby Joyce:Abbott’s grim choice

Describing global financial markets now as “nervous” is a clear understatement.

The risk of Greece defaulting on its debts is worrying investors everywhere.

At times like these, prudence is essential.

But prudence is not Barnaby Joyce’s strong point.

He has told  reporters that Australia is approaching the point at which it might not be able to repay its debts, either.

“We are getting to the point where we can’t repay it,” Mr Joyce said.

That brought a flat denial from the Federal Treasurer Wayne Swan, who said Australia’s relatively low level of foreign debt is the envy of advanced countries throughout the world.

The Prime Minister, Kevin Rudd, Mr Swan and Finance Minister Lindsay Tanner all called on the Federal Opposition Leader, Tony Abbott, to sack Mr Joyce from his position of  shadow finance minister.

Tanner said that while Mr Joyce is regarded as “an amusing sideshow” in Australia, foreign investors might well take him seriously, when he is quoted in global news services.

This was not Mr Joyce’s first slip.

He has previously cast doubt on the ability of both the United States,  and Australia’s States to repay their debts. The rural politician has also warned that Australia, itself, might face an “economic armaggedon.”

Mr Abbott has, so far, defended Mr Joyce, comparing him to a highly effective rural politician of a previous generation, “Black Jack” McEwen.

Mr Abbott, though, has also been forced to repudiate Mr Joyce’s suggestion that an incoming Conservative government would save money, by sacking public servants and cutting foreign aid.

Mr Rudd told parliament that Mr Abbott’s support for Mr Joyce showed just what a “risk” a Conservative government, under Mr Abbott, would be.

Australia’s next Federal elections are due before the end of the year.

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