Help:come back Kev!

The fortress Australia spectre returns

MPs operate on your hip pocket nerve

The great debate:what they didn’t tell us

News to use

House prices may be approaching a peak

Who’s hot in super?

Rate rise risk recedes

We’re still spending cautiously

RBA chief  looks to the long term impact of the crisis

An extra $200 million for regional cities

The wonders of Federal finances

Swan cuts growth forecasts

Home building still slow

Job surge boosts family finances

How babies hit family bndgets

Sweeping changes urged for super

What sends us shopping

The latest

The Dow Jones index fell 1.22 points Friday (New York time)  to 10,465.94

Wayne Swan claims break through for home buyers on banking rules

Election snippets

Small miners urge government to scrap the proposed mining tax

Tony Abbott promises a 1.5 per cent  company tax rate cut from July 1, 2013

Julia Gillard promises a better deal for the parents of disabled children

The major parties compete on public safety issues

Many more stories See individual categories ———————————->

Leaders of both major parties suspended electioneering yesterday, to attend a  funeral in Murwillumbah for  the seventeenth Australian soldier to be killed in Afghanistan.

The Coalition Leader, Tony Abbott, is now facing an uphill battle to become Prime Minister.

A new poll, conducted by the Roy Morgan organisation, shows Julia Gillard widening her lead her him as preferred Prime Minister.

However an ABC report, alleging that her predecessor, Kevin Rudd, was lax in his attendance of the critically important National Security Committee of Cabinet, might give the opposition some ammunition.

Mr Abbott is sure to ask Ms Gillard whether she counselled Mr Rudd on this matter, while she was Deputy Prime Minister.

The opposition is also likely to press the government on an apparent softening of economic data, evident in a business survey that the National Australia Bank released yesterday.

Meanwhile, voters’ patience is likely to be tested by two new television advertising campaigns.

Australia’s smaller miners are considering launching new ads, to oppose the proposed new mining tax, altogether.

And the ACTU is planning its own campaign, to oppose any changes to Labor’s Fair Work laws.

They spent much of their time yesterday quarreling over minutia.

Labor declared triumphantly that its lawyer had said it would not be possible  for a Coalition government to save money on union elections,  as Tony Abbott has promised to do, without changing present industrial laws.

Tony Abbott , of course, is making much of his promise that he won’t do that.

Hey! Come on!

This is not what Australians talk about over breakfast.

They are, of course, interested in Mr Abbott’ promise to e an extra $760 million  on the table to  expand the present education tax debates.

They may well be less interested. though. in Labor’s declaration that it would cost at least twice that amount, to finance those concessions.

There has been very little excitement in this campaign, so far.  It’s time to liven it up, at least a little.

As a result, the government’s super profits tax proposal will be withdrawn and replaced by a new minerals resource rent tax.

The agreement, on which the  miners’ victory is based, will clear the decks for Ms Gillard to call an early election.

She could name the date as early as this weekend.

The new deal will reduced Federal revenue by $1.5 billion dollars.

Much of that cost will be met by Australia’s small business operators.

The government had been planning to gradually cut their company tax rate from 30 to 28 per cent.

They will still get a cut, but only to 29 per cent.

However, although it is not yet absolutely clear, it appears that the Federal government will proceed with its plan to gradually raise the compulsory superannuation levy from its present 9 per cent to 12 per cent.

A few minutes ago, the Prime Minister, Julia Gillard, was still meeting reporters in Canberra to explain the changes.

Shortly before her press conference began, she issued a joint statement with her Deputy, Treasurer Wayne Swan, to explain the changes.

It read:-

“The Federal government has replaced its proposed super profits tax on the mining industry with a minerals resource rent tax.

The decision, announced jointly by Prime Minister Julia Gillard and her deputy Wayne Swan is a clear victory for miners, who bitterly opposed the proposed tax.

Ms Gillard will meet reporters in Canberra shortly, to explain the decision.

Meanwhile she and Mr Swan have issued a joint statement, which reads:-

“Today the Gillard Government is proud to announce a breakthrough agreement on improved resource tax arrangements that addresses the concerns of the resource industry.

The new tax arrangements will underpin major economic reforms that will strengthen our economy so we can move forward together with confidence.

These arrangements will fund an historic boost to superannuation, new and better infrastructure, and business tax cuts including an up-front tax break and less red tape for small businesses to help them grow and thrive.

This agreement provides certainty to the resources industry, to mining communities right around the country, and to the broader Australian economy.

It sends a very clear message to the world that the Australian resources sector is strong and its future is secure.

The breakthrough agreement keeps faith with our central goal from day one: to deliver a better return for the Australian people for the resources they own and which can only be dug up once. It is the result of intense consultation and negotiation with the resources industry.

The improved resource taxation reforms focus on the most profitable resources, raise the uplift factor for tax losses, remove refundability and offer generous depreciation arrangements to promote new investment.  They are more generous to industry in some respects, while industry has given ground in other areas. The improved profits-based taxation reforms will apply from 1 July 2012.

The improved resource tax reforms involve:

* a new Minerals Resource Rent Tax (MRRT) regime applying to iron ore and coal in Australia; and
* extending the current Petroleum Resource Rent Tax (PRRT) regime to all Australian onshore and offshore oil and gas projects, including the North West Shelf.  This will provide certainty for oil and gas projects and ensure all oil and gas projects are treated equitably.

The Government will focus the resource tax reforms on our biggest and most profitable commodities: iron ore, coal, oil and gas. These represent three-quarters of the value of our exports and resource operating profits and account for an even greater share of resource rents in the mining industry. They also represent the vast bulk of growth in the sector over the coming decades.

Since the beginning of the mining boom, prices for iron ore have increased by over 400 per cent and prices for black coal have increased over 200 per cent.

Other commodities will not be included, which reduces the number of affected companies from 2,500 to around 320. These commodities were not expected to pay significant amounts of resource rent tax, and excluding them will allow many companies to remain in their existing taxation regimes.

The agreement also provides certainty for projects in the emerging industry of converting coal seam gas to LNG, by including all Australian onshore and offshore oil and gas projects, including the North West Shelf, in the PRRT.

Including all oil and gas projects in the one regime will ensure equitable tax treatment between competing projects.

To ensure the smooth implementation of the new arrangements the Government is establishing a Policy Transition Group (PTG) led by Resources Minister Martin Ferguson AM and Mr Don Argus AC to consult with industry and advise the Government on the implementation of the new MRRT and PRRT arrangements.”

The two ministers also said:-

“The improved resource tax reforms are estimated to reduce revenue by $1.5 billion over the forward estimates. As the Government has always said, all elements of the tax reform package are dependent on the package being balanced by the revenues from resource taxation.

The reduced revenue makes necessary the following revisions to the associated reforms:

* The company tax rate will continue to be cut to 29 per cent from 2013-14 but will not be further reduced under current fiscal conditions. Small companies will benefit from an early cut to the company tax rate to 29 per cent from 2012-13.
* The resource exploration rebate will not be pursued.  Resource exploration costs will continue to be deductible in the normal way and the PTG will consider the best way to promote future exploration and ensure a pipeline of resource projects for future generations.

We believe these improved reforms offer the best chance of delivering for hard-working families and small businesses around Australia while protecting and growing our great mining industry.

All along, our objective has been to deliver Australians a better return for the resources they own, which can only be extracted once, and this plan will deliver on that commitment.

We came together as a nation to stare down the worst of the global recession and now we come together to reform our economy, improve our tax system, and move forward with confidence.”

However, just weeks before the new financial year starts, the Australian Bureau of Statistics reported that the nation’s unemployment rate had fallen to just 5.2 per cent.

What’s more, a graph produced by the Bureau also shows that Australia’s critically important unemployment rate has now been trending sharply downwards for several months.

On any measure, the Treasurer’s prediction has been shown to be spectacularly wrong.

As the old joke has it, economic forecasting was invented only to make astrology look good.

However  Mr Swan’s forecast, in May last year, was no light matter.

Indeed, it was part of the budget he brought into Federal parliament at that time.

So we can safely assume that it was made on the advice of the best and brightest economists Australia has, in the Federal Treasury.

That forecast was, of course, made just months after the global economic crisis struck, with the collapse of Lehman Brothers in late 2008.

So what happened?  Why did Mr Swan’s forecast prove to be so spectacularly wrong?

The short answer to these questions is that the Federal government’s energetic stimulus packages worked.

Certainly, there were problems.  Big ones at that.

The house fires – and deaths – that occurred because ceiling insulation was badly installed was, undoubtedly, the worst of them.

There were, of course, others as well, including the construction of many school libraries that may still prove to be white elephants, in the information age.

Despite all that, though, the fact remains that the stimulus packages have been spectacularly successful in achieving their main aim, that of keeping Australia out of recession.

So much so, in fact, that Mr Swan is now talking credibly of returning Federal budgets to surplus, within three years.

That is particularly difficult to do, when tax revenues fall, as unemployment rises sharply.

So even the deficit fetishists should be happy, especially as the Reserve Bank Governor, Glenn Stevens, can say that Australia has no problems with public debt.

What, though, of Mr Swan himself?

Did he have the grace to be  severely embarrassed, at getting his prediction so wrong?

Not a bit of it.

Indeed he has been boasting,  saying he had come closer to the mark, in his most recent budget,  the one he delivered in May this year.

Mr Swan  told a radio interviewer:”…this is a very encouraging figure for Australia.

“Something like 280,000 additional jobs in the year through to May.

” It’s a strong figure but I think it’s consistent with the outlook the Government put forward in our recent budget …”

There has been no sign, though, that Mr Swan will put astrologers out of business, any time soon.

So far, though, little has happened about that.

However the Financial Services Minister, Chris Bowen, is determined to fix this sad situation.

He admits that our exports and imports of financial services are low, by international standards.

Mr Bowen also notes that while Australian based investment managers take care of no less than $1.1 trillion, in domestic superannuation savings, they source only about $53 billion from overseas.

Funds management is now a major industry in the United States, accounting for a significant slice of that country’s gross domestic product.

That, of course, has had its drawbacks, as anyone who has followed the global economic crisis will know.

Jobs, though, are still precious.  And the regional city of Wollongong shows that the finance industry has real promise, in job creation

ING opened a new superannuation and investments centre in the Illawarra this week. This will support
an extra 250 jobs in the next three years, taking total employment there to 600.

Mr Bowen says Australia’s financial services industry is already “one of the most sophisticated and stable in the world.”

Surprisingly, perhaps, it is also Australia’s largest industry, contributing 10.8 per cent to national growth and employing some 400,000 people.

The industry, though, is still very much domestically focussed.

So what is Mr Bowen planning to do about that?

Well, last September, the government set up an expert panel, to recommend what might be done.

That led to the Johnson report, which the government largely accepted, in last month’s  budget.

These recommendations, though, have been largely overshadowed, by the angry row that has arisen, over the government’s plan to introduce a resource super profits tax on the mining industry.

They are worth studying in detail.  They are spelt out in a speech called Australia as a Financial Services Centre, which Mr Bowen has just given. Full details are available at www.treasury.gov.au.

And that could cost you quite a lot of money.

You can protect yourself against these potential losses.

But you must act now, to succeed.

Perhaps, though, we are getting a little ahead of ourselves here.

So let’s take a step or two back, so that we can see the danger.

As you would know, the government is presently involved in a big row with the nation’s miners, over its plans to introduce a super profits tax in the mining industry.

And, whether you like it or not, that will affect you, directly.

The Prime Minister is planning to use the revenue he raises in that way, for several purposes.

These include gradually reducing Australia’s company tax rate from its present 30 per cent to just 28 per cent.

The so-called super  profits tax would also be used to help  gradually raise the present compulsory superannuation levy from 9 to 12 per cent of wages.

The government estimates that  this will put an extra $108,000 into the ultimate superannuation payout of a worker now aged 30.

However it also warns that the higher levy won’t proceed, if the super profits tax is killed.

That could happen.

The government does not have the numbers it would need in the Senate, to guarantee that the proposed measures will become law.

The opposition has declared that it will oppose the new tax.

So that higher levy is very much at risk.

So, too, is that extra $100,000 or so, that you might have expected, on retirement, if you are 30 now.

The miners’  campaign against the government’s plan was entirely predictable.

Kevin Rudd should have seen it coming.

He should have recognised, also, that the government’s position was weak, because it will  be facing a Federal election, very soon.

That is the raw political reality.

Mr Rudd should have seen ithe present trouble coming.  In better times, he probably would have.

But fighting the effects of a global economic crisis can be exhausting.

What, though, can you do to protect yourself, financially, in a situation like this?

Typing out a short note to your pay office, or accountant, perhaps might be a worthwhile step.

Tell the appropriate person that you want to increase your superannuation contributions from the present 9 per cent of your income, to 12 per cent.

Think seriously, too, about putting those payments into a self managed superannuation fund.

That way, you can  also protect yourself against  the expensive effects of stock market crashes later
in your working life.

A self managed fund has other advantages, too.  It can free you from expensive fees, that can also reduce your ultimate payout, when you hit your sixties.

Politicians come and go.  So do their policies and tricks.  Self reliance, though, certainly has its  value, in matters like these.

Are poor language or numeracy skills holding you back?

A new survey shows that is quite likely.

In fact, the survey, conducted by the Australian Industry Group, shows that many Australians are trapped in low paid labouring and process work, because their language and numeracy skills are low.

Migrants, from non-English speaking backgrounds, are particularly likely to be caught in this trap.

So what can you do about it?

Where can you go for help?

Surprisingly, perhaps, your boss might be willing to help.

More than 75 per cent of the businesses that responded to the survey reported that their operations were being held back, by low literacy and numeracy levels among their workers.

And the AIG’s chief executive , Heather Ridout, said that, collectively, these low skill sets are holding Australia back, too, particularly in a time of rapid technological change.

The employers who responded to the survey were adamant about one thing.

The survey’s findings put that bluntly.

“…all employees – regardless of their educational attainment, qualifications or employment skill level – need to build their existing set of literacy and numeracy skills.”

Why?

“To acquire new capabilities and adapt to workplace change,” the AIG declares.

O.K. So these findings  do apply to middle managers and professionals as well as process workers and labourers.  So, wherever and however you work, all this does affect  you, personally.

Once again, surprisingly, the survey suggests that your boss would prefer your retraining to be conducted at work.

However, that is not always practical.

Small businesses, in particular,  often don’t have the facilities to support in house retraining.

You should, however, discuss your plans with your boss, though, before you set out to upgrade your skills.

Your local TAFE college might well be able to help.

That will, at least, be a good place to seek advice.

Don’t hold yourself back, though,  by doing nothing,

The Bureau of Statistics said both saw their turnover fall  by 3.9 per cent during the month, on seasonally adjusted figures.

That was more than twice the overall fall – of 1.4 per cent – in Australia’s overall retail trade in February.

However this followed a rise of 1.1 per cent in January.

That result was boosted by the traditional post Christmas sales.

Cafes, restaurants and take away food stores fared better in February, increasing their sales by an average of 1.8 per cent.

These figures, too, are seasonally adjusted.

On raw figures, the sales of chain stores and other large retailers plunged by 15.1 per cent in February.

Smaller retailers saw their sales sink by 6.2 per cent during the month, on the same basis

The gradual withdrawal of the Federal government’s stimulus measures contributed to the set back many Australian retailers experienced in February.

The Bureau also reported that home building approvals fell by 3.3 per cent in February, on seasonally adjusted estimates.

However they remained 34.2 per cent above those of February 2009.