April 28 Edition
The macroeconomic stresses seem to have eased a little more with markets rising or stable around the world.
With Budget Night now May 3 we won’t have long to wait to see what is happening. The Budget now seems to now be very minimalist with any major reform seemingly off the table. It seems there is going to be some exciting political times until we get there!
Given it is only 1-2 weeks away I guess we just wait and watch. Is seems sin-taxes are also back on the agenda!
Interestingly we are now seeing any changes to Negative Gearing being ruled out and a new Dental Funding Scheme being announced. We also saw a lot of news related to the Big Banks with things becoming rather more political than makes sense.
You can expect many more leaks over the next week or so - and it is probable we will know most of the details well before the actual Budget Speech!
The biggest thing last week was a speech from Glenn Stevens - where he made it clear we are not out of the woods - just yet,
The Reserve Bank governor Glenn Stevens has warned that today's world of ultra-low interest rates is putting increasing pressure on returns for superannuation funds.
Mr Stevens said record low interest rates are "a big problem" for savers and that many stand to be "disappointed" about the direction of their retirement nest eggs.
Speaking in New York, Mr Stevens told a conference that low yields for investors pose a problem for both defined benefits and accumulation funds, with the "whole set of assumptions" for retirement income plans is being called into question.
"Increasingly we are hearing commentary about the difficulty or impossibility of defined benefit pension plans making good on their promises with long term rates of return being so low," Mr Stevens said.
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Here is a summary of interesting things up until the end of last week:
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General Budget Issues.
Date April 18, 2016 - 6:58AM
Senior Writer
In a quiet courtyard of Parliament House, close to the Press Gallery, grows a magnificent maple tree that erupts annually in fiery autumnal splendour in the lead-up to the federal budget.
It's been nicknamed the "budget tree", and your scribe has been admiring it for more than a decade now on my annual pilgrimage to the federal budget lock-up.
But this year, my spies tell me, the budget tree is still green. Nary a tinge of colour, as this column went to print.
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Date April 18, 2016 - 12:15AM
EDITORIAL
Scott Morrison has a regrettable tendency to resort to loud bluster and swollen rhetoric when he is questioned about the government's economic strategy. That makes it doubly difficult for those whose sorry task it is to disentangle the government's important intentions from Mr Morrison's near-incessant polemic.
Moody's Investors Service is one organisation that is trying to do just that, and it does not like what it is hearing. On Thursday, Moody's warned that unless the Turnbull government came up with measures to raise revenue in the budget, then government debt would continue to rise and that would put the nation's AAA credit rating at risk.
The ratings agency contends that unless the government lifts taxes, or other forms of revenue, it will miss its self-imposed deadline of 2020-21 for balancing the budget.
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- The Australian
- April 18, 2016 7:49AM
Treasurer Scott Morrison laid out the government’s budget strategy the other day.
Morrison was a resounding success as immigration minister through the unusual, for a politician, tactic of saying nothing. As Treasurer, he feels the other extreme is the way to go.
In the midst of a frenzied, convoluted attempt to turn Moody’s criticism of Australia’s feeble budget efforts in recent years into an attack on Labor, Morrison explained his plan and gave a preview of the May budget.
“Revenue will rise to the long-run average of 24.1 per cent. On the current estimates, revenue is forecast to rise over the next three or four years. … our plan is to see revenue rises through growth and ensuring a better targeted tax system. So our revenue measures that we announce in the Budget and the redeployment of that revenue to easing the tax burden where you can foster investment is the way we believe that you can drive growth and jobs in this economy.”
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The upcoming Australian budget will risk Australia’s credit ratings if it fails to raise taxes and shore up revenue, warned rating agency Moody’s. The agency predicts that the credit rating will nosedive if the budget lacks substance. It called for concrete revenue-raising steps, including new taxation plans.
Moody’s said Malcolm Turnbull government is yet to show up tangible measures in revenue-yielding plans and warned that the government would be caught in a debt trap. The current Triple A (AAA) credit rating of the country will be put at risk.
Prior to Moody’s caution, the Commonwealth Bank, NAB and J.P. Morgan also raised similar concerns, reports The Age.
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19 Apr 2016 - 8:44am
The federal opposition has criticised leaked advertising showing the government's budget will include changes to super and multinational tax.
Source: AAP
19 Apr 2016 - 8:44 AM UPDATED 25 MINS AGO
Labor has seized on leaked advertising highlighting changes to superannuation tax concessions and multinational tax arrangements due to be aired after the federal budget.
Sky News says it's seen the key statements of a script for the government's taxpayer-funded television and radio advertisements, which have already been filmed.
The statements include $16 billion in savings over the four years under changes to super and multinational tax.
Opposition finance spokesman Tony Burke says the post-budget ads are part of the coalition's re-election strategy because none of the measures will have been implemented before parliament is dissolved.
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The Government is refusing to comment on what Labor is calling a "humiliating" leak of core budget details.
Sky News last night revealed purported key points of a script for a radio and television ad campaign to be rolled out after the May 3 budget.
Presenter Paul Murray told viewers the ads would boast of $16 billion worth of budget savings over four years, including crackdowns on superannuation tax concessions and multinational tax avoidance.
"The Government doesn't respond to speculative reports," a spokesman for Treasurer Scott Morrison told the ABC.
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Date April 19, 2016 - 8:56AM
National political reporter
Turnbull's winter election gamble
The ABCC legislation didn't pass the Senate so we're going to the polls on July 2 - that's a 75 day election campaign.
The Turnbull government will reportedly spruik $16 billion in savings over four years in the federal budget, as it prepares for an all-but-certain double dissolution election on July 2.
Sky News reported on Monday night that the government would pursue changes to superannuation concessions and multinational tax avoidance to reach the savings figure.
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Date April 20, 2016 - 5:04AM
Peter Martin
The Coalition is set to reveal on budget night, a superannuation tax plan that will rake in more money than Labor's will.
The Turnbull government is preparing to trump Labor in the budget by cracking down harder on high-income superannuation tax concessions to raise four times as much as the opposition's policy.
Labor has promised to cut the income threshold for more heavily taxing contributions from $300,000 to $250,000. The Coalition now plans to cut it to $180,000.
The change, to be unveiled on budget night, will tax more highly the super contributions of an extra 244,000 Australians and will net $2 billion a year, compared with Labor's $500 million a year.
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Date April 20, 2016 - 12:15AM
Markets reporter
Government's big super plan
The Coalition is set to reveal on budget night, a superannuation tax plan that will rake in more money than Labor's will.
But it won't necessarily stop them pouring money into super, some analysts say.
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Date April 19, 2016 - 11:04PM
Chief political reporter
Turnbull confirms he wants July 2nd poll
There will be a double-dissolution election, says Malcolm Turnbull, and he intends holding it on July 2nd. Courtesy ABC News 24.
Treasurer Scott Morrison will announce at least $120 million in additional funding for corporate regulator ASIC as part of a suite of measures to be unveiled on Wednesday, after he and Prime Minister Malcolm Turnbull were challenged by the Coalition backbench on the need to crack down on bank behaviour.
The announcement will come a day after Mr Turnbull confirmed Australians will go to the polls in a double dissolution election to be held on July 2 and is designed to blunt the political impact of Labor's push for a banks royal commission.
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April 20, 2016 8:16am
Turnbull superannuation overhaul plan exposed
THE Turnbull government is ready to outdo Labor and will reportedly crack down harder on high-income superannuation tax concessions.
Superannuation has been a hot topic of debate with experts suggesting that loopholes in the system cost the Federal Budget about $30 billion a year in lost revenue.
“There’s a very clear problem at the moment: tax concessions go disproportionately to rich the wealthy. We could fix that and save the Budget a lot of money,” Mr Denniss said.
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Date April 19, 2016 - 10:58PM
The Sydney Morning Herald's Economics Editor
The Federal Opposition tries to turn up the heat on the Government to hold a banking royal commission.
Is there any justification for a royal commission into the conduct of the banks? Is it just a political stunt? All royal commissions are called for political reasons and many are stunts, in the sense that their primary objective is just to bring particular issues into the public spotlight.
To me, the best justification for an inquiry into the banks is that they still don't seem to have got the message. They've been caught treating their customers badly, but so far they've shown little sign of contrition - sorry about the few bad apples, but I didn't know - and little willingness to make amends.
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- The Australian
- April 22, 2016 12:00AM
The budget will have to find savings to cover more than $10 billion of fresh spending since Malcolm Turnbull gained power last September, before being able to fund any election promises or new budget commitments.
Although Scott Morrison has declared that his main goal in the lead-up to the May 3 budget is stopping new spending, the government has made as many new commitments in the seven months since the change of leadership as were contained in last year’s budget.
The Treasurer has made a target of reducing government spending from the 25.9 per cent of GDP reported in the mid-year budget update and has promised to cover the cost of new spending with fresh savings measures.
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by Richard Holden
Policies in the federal budget, to be handed down on May 3, will affect the personal finances of households around the country. It will also set the scene for much of the upcoming election battle.
Amid a sea of statistics, slogans, and spin, what are the key takeaways for you? Here's what to look for on May 3.
Forecasts
Both government revenue and expenditure going forward depend on macroeconomic factors. Expenditures depend importantly on inflation, since many welfare and other benefits, as well as payments to government employees, are inflation indexed. On the revenue side, tax receipts depend on nominal gross domestic product growth, and the composition of it, which determines who is in which tax bracket.
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Date April 20, 2016 - 1:56PM
Economics Editor, The Age
Another leak for team Turnbull?
If the leak is genuine, the post-budget advertisement says the government will save the budget $16 billion over four years. Vision Sky News & ABC 24.
Never before has a budget advertisement been prepared ahead of the budget itself. In fact, rarely before has a budget needed an advertisement.
The leaked script read on Sky News is a bit like something for Seinfeld in that it is a script about nothing. All previous budget advertising campaigns have been about something specific, such as small-business tax breaks.
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April 22, 2016 9:24pm
PERSONAL income tax cuts will be included in the Federal Budget, with middle-income wage earners winning tax relief.
The Herald Sun can reveal those earning slightly more than $80,000 will get a tax cut, as the Turnbull Government tries to relieve the burden of bracket creep on middle-income earners.
The beneficiaries will be those paying 37c in the dollar tax because they are earning more than $80,000 a year, or who are due to go up into that tax bracket.
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April 24, 2016 4:30am
THE Turnbull government has officially placed negative gearing reforms off-limits in the Budget, which will make home ownership the key election battleground.
Prime Minister Malcolm Turnbull will announce the Budget policy today in response to Labor proposals to remove negative gearing on existing properties from 2017.
Warning a Labor election victory would drive up rents and reduce home values, Mr Turnbull said families face a clear choice at the election.
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Health Budget Issues.
Federal Health Minister Sussan Ley says she will not give into a "scare campaign" against a policy to scrap bulk billing incentives for pathologists — even if the plan is due to come into effect the day before the July 2 election.
The Opposition and pathologists are fighting against the Federal Government's policy to cut bonus payments it offers for pathology services to bulk bill.
But Ms Ley looks set to push on with the changes, despite them being flagged to kick in on July 1.
"The Government's made announcements and we'll stick with those announcements," Ms Ley said.
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April 23, 2016 12:00am
EXCLUSIVE
Every Australian child will get government-subsidised dental care including braces under a major revamp of dental policy to be announced in Malcolm Turnbull’s first budget.
The current means tested Child Dental Scheme (CDBS) which provided care to three million kids will be axed and replaced by a scheme providing dental cover for every child — 5.3 million kids.
The current $1,000 cap on government funded dental care will be scrapped under the new Child and Adult Public Dental Scheme (caPDS) scheme that will even pay for braces, crowns and implants if they are clinically necessary rather than cosmetic.
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- The Australian
- April 23, 2016 12:00AM
Australians are forking out at least $20 billion a year in higher taxes and insurance premiums to cover entrenched waste and anti-competitive practices in the healthcare sector — equivalent to extending the GST to fresh food, health and education.
As the government and Labor debate proposals to increase tax to plug the $38bn budget deficit, health insurance chiefs and the head of the government’s Health Safety and Quality Commission, Debora Picone, have told The Australian improving health efficiency could knock 15 per cent off the $150bn national health bill.
“Falling-off-a-log type reforms could save that amount every year with no reduction in actual outcomes,” said Australian Unity chief executive Rohan Mead, pointing to overservicing and lack of competition among hospitals and doctors.
Health insurer NIB chief Mark Fitzgibbon said attacking the “low hanging fruit” of waste in the system — ensuring prices for devices on the prostheses list is the same for private and public hospitals — would mean up to a 4.5 per cent drop in insurance premiums.
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- The Australian
- April 23, 2016 12:00AM
The Turnbull government is preparing to blunt Labor’s pitch to ordinary workers by preparing superannuation reforms in the May 3 budget that help those on low incomes at the expense of those earning more than $180,000 a year.
Malcolm Turnbull and Scott Morrison are turning their sights on the barriers facing the “battlers”, as part of a package that will ensure there are winners as well as losers from the super tax overhaul.
The move comes as a new report from Industry Super Australia highlights the impact on average workers from the existing super rules, which give wealthier Australians more than six times the tax breaks on their retirement savings.
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22nd Apr 2016 4:52 PM
Caroline Hutchinson
IS IT just me or is everyone looking for a good excuse to avoid a pap smear?
I was a kid when Medicare was introduced so it is the only system I have ever known.
Being the robust country girl I am, I haven’t been a great burden on the health system but I’ve been the grateful recipient of three healthy babies and the very relieved young wife of a cancer survivor.
The times I have needed the system most were the times I could afford it least.
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Health Insurance Issues.
- The Australian
- April 18, 2016 12:00AM
Health funds would have more say over the specialists members are referred to as well as the hospitals to which they are admitted under a proposal from a former insurance industry regulator concerned at unrestrained doctors’ bills.
Shaun Gath, who was chief executive of the Private Health Insurance Administration Council for seven years, believes competition has failed to keep costs down and that the Constitution prevents governments dealing with the “real villain” of doctors’ fees and charges.
“In the 1946 referendum, we gave the parliament power to make a range of social security payments, including hospital and medical benefits,” Mr Gath writes in The Australian today.
“But the section also stops the parliament from controlling what doctors charge. So one step in that direction and it’s off to the High Court.”
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- Shaun Gath
- The Australian
- April 18, 2016 12:00AM
The three day moral panic that passes for serious debate around our private health insurance system has come and gone again. Premium increases can do that to you. And obviously getting hit up for an extra 5, 6, or 7 per cent is nobody’s idea of fun.
Most of the media advice, by design, has a short shelf life. The issue will be back next year and the same games will play all over again.
So, here’s a crazy idea … what if we actually did something to try and fix the problem?
But before rushing off, let’s at least give private health insurance its due. It’s been a pillar of our health system for over 150 years. Over that time lot of people in real need have been helped. That remains true today.
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- Apr 21 2016 at 12:15 AM
- Updated Apr 21 2016 at 12:15 AM
If Medibank's loyalists and share price are to be believed, one of Craig Drummond's first acts as chief executive at Medibank Private will be an earnings upgrade.
Medibank said at the time that its targets "anticipate that the second operating half profit will be lower than the first half due to increased marketing and brand investment, and some moderation of the recent slowdown in the growth of hospital utilisation rates".
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April 24, 20167:29am
Sue Dunlevy News Corp Australia Network
EXCLUSIVE.
Australia’s fourth largest health fund NIB pays doctors so little a surgeon is urging his patients to switch their cover because he can no longer afford to take part in its gap cover scheme.
NIB pays just $2,014 for knee replacement surgery, 40 per cent less than the AMA fee of $3,600.
Dr Hardeep Salaria has written to his patients warning them NIB is “paying significantly less to doctors under the Gap Cover arrangements than almost all other funds”.
And he is urging them to choose another health fund which is not for profit such as HCF or one of the AHSA funds.
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Health is also clearly still under review as far as its budget is concerned with still a few reviews underway and some changes in key strategic directions. Lots to keep up with here with all the various pre-budget kites are still being flown - although narrowing it seems to be largely focussed on Super! Enjoy. Less than two weeks to the Budget!
David.
