June 16 Edition
The big discussion of the week has been trying to figure out which of the major parties can do the better job balancing our national budget. Hard to say who is winning.
I also note concerns on economic growth, the changes to superannuation as well as continuing cuts in other areas. It will be a while yet before it is clear just what the final outcomes of policy in both parties will be - maybe in the next week or two.
Lots this week on aged care and health insurance!
More worryingly, globally there seems to be increasing worry about the global economy.
Date June 10, 2016
John Gittelsohn
"Global yields lowest in 500 years of recorded history," Gross, 72, wrote this week on the Janus Capital Group Twitter site. "$US10 trillion of neg. rate bonds. This is a supernova that will explode one day."
A supernova is a star at the end of its life that suddenly increases greatly in brightness because of a catastrophic explosion that ejects most of its mass.
Gross, who manages the $US1.4 billion ($1.9 billion) Janus Global Unconstrained Bond Fund, has argued for some time that the economy is at the end of a decades-long cycle of expanding credit that has culminated in negative interest rates, a situation he said is unsustainable.
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Not sounding all that good…..
General Budget Issues.
- Updated Jun 7 2016 at 11:45 PM
Labor will all but confirm on Wednesday that it will allow the budget deficit to worsen over the next four years when it presents its policy agenda as a 10-year economic growth plan that is fairer than the Coalition's.
In a concession sure to be leapt upon by the government, Labor leader Bill Shorten and shadow treasurer Chris Bowen will rationalise leapfrogging the four-year budget cycle by arguing that "fiscal repair should be achieved over the medium term and backloaded so as not to hurt our economy".
They will recommit to releasing figures before the election, reconciling their spending and taxing measures over four and 10 years, and an estimate of when they would return the budget to balance. They will only commit to "have more saving than spending over a decade".
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June 8, 2016 12:00am
BILL Shorten will chart a 10-year course for Australia’s economy that relies on education, renewable energy, a gold-plated NBN and a revival of manufacturing industries to generate the country’s long-term growth.
But the Labor leader is still refusing to reveal how he or taxpayers would fund his plan in government.
Mr Shorten will today release Labor’s 10-year economic blueprint as he seeks to blunt the Coalition’s election campaign attacks on his economic and budget credentials.
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Date June 8, 2016 - 12:00AM
Chief Political Reporter
Bill Shorten will shift Labor's focus to the economy with the launch of a "Ten-Year Plan for Australia's Economy", in a move to neutralise the Coalition's concerted attack over economic management.
The 32-page "Ten-Year Plan" booklet contains no new policies and amounts to a summary of the opposition's promises to date, while the ALP's final election costings are still weeks away, leaving it open to further government attacks over their economic program and a so-called funding "black hole".
Treasurer Scott Morrison will return fire with new modelling prepared by Independent Economics' Chris Murphy to claim that keeping the company tax rate at 30 per cent will act as a drag on economic growth and hurt consumers.
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- The Australian
- 12:00AM June 9, 2016
Labor will go to the election promising deeper budget deficits throughout the first term of a Shorten government in a high-risk political play that asks voters to accept bigger commonwealth debt in the hope of a brighter outlook over 10 years.
Bill Shorten was battling to justify the decision last night as economists rejected his claim that the higher spending was needed to spur demand and shore-up growth, turning his budget plan into a key test on economic management.
The government seized on the move to declare that Labor “could not be trusted” to balance the budget amid warnings from economists that growing debt and deficit would threaten the nation’s valuable AAA credit rating. In a sign of the political danger around his decision, Mr Shorten described the new stance as a delay to a “fiscal contraction” rather than stating directly that the deficits would be bigger under Labor.
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June 9, 201612:32pm
Colin Brinsden, AAP Economics Correspondent AAP
The world's major credit rating agencies didn't cover themselves in glory during the global financial crisis.
Anyone who has seen "The Big Short" was reminded how their actions prompted overly-zealous investors to throw money at debt instruments that ended up being worthless.
But agencies like Standard & Poor's, Moody's Investors Service and Fitch Ratings still wield huge power and their analyses decide whether a country is the top dollar or an also-ran.
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June 11 2016
Michael Gordon
Bill Shorten took his big target strategy to win government to a new level this week, injecting a mix of relief and relish into a Malcolm Turnbull campaign that has so far struggled to capture the attention, much less the imagination, of the electorate.
Having warned that the Coalition's projected deficits over the next four years represent a threat to Australia's AAA credit ratings, Shorten and shadow treasurer Chris Bowen announced that their numbers would be even higher over the very same period.
Predictably, Treasurer Scott Morrison dubbed it a "recipe for fiscal chaos", declaring: "If you vote Labor, you are voting for higher deficits and you are voting for higher debt, a higher debt burden on future generations."
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June 12, 2016 12:00am
THE very first words in Bill Shorten and Chris Bowen’s economic policy document are “We’ll put people first”.
Well, you are certainly not doing that if your whole policy framework is built around reckless spending which could condemn them ultimately to a “Greece future” — or worse, a Venezuelan one.
The bottom line of the “four years of bigger budget deficits”, which Shorten and Bowen announced midweek — to borrow a phrase from the treasurer in the Rudd and Gillard governments, Wayne Swan — is that it would turn the likelihood of Australia losing its Triple-A credit rating into a rolled-gold certainty.
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Health Budget Issues.
Date June 5, 2016 - 5:43PM
Jane Lee
Patients could pay less for diagnostic scans such as mammograms and ultrasounds, with radiologists abandoning their public campaign against the Turnbull government's planned cuts to bulk-billing incentives at the last minute in exchange for a review of the sector.
The Australian Diagnostic Imaging Association planned to launch a public campaign on Saturday, warning that thousands of Australians with cancer would avoid getting tested if the cuts went ahead, because scans would become more expensive.
Radiologists were going to ask patients to sign a petition opposing the cuts in the final weeks of the federal election campaign, similar to the pathology sector's own campaign against the cuts, which are expected to save $650 million in total over four years.
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Sector agrees to Coalition’s $650m cut over four years, but up to $50m more will be spent after review of Medicare rebate
The Coalition has agreed to review the freeze on the rebate for diagnostic imaging, and the sector wants Labor to do the same. Photograph: Alamy Stock Photo
Monday 6 June 2016 15.16 AEST
The diagnostic imaging sector has accepted a cut to bulk-billing incentives in return for a review expected to increase the Medicare rebate and a promise the rebate will be unfrozen in future.
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- Doron Samuell
- The Australian
- 12:00AM June 7, 2016
Australia spends around $150bn a year on healthcare.
Although there are some differences between the major parties on health policy, all sides embrace the concept of universal healthcare.
But beyond the simpler slogans that dominate the public debate, very few of us who deal with the system are happy with the way it’s working.
In reality, it is riddled with lopsided and illogical arrangements that benefit a small number of vested interests, and militate against the interests of the great majority of the population.
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- The Australian
- 12:00AM June 8, 2016
Michael Gannon hopes the AMA could play a positive role in future funding talks.
The new Australian Medical Association president Michael Gannon believes he has to be mindful of the budget deficits and not ask for “more, more, more” funding for public hospitals.
But the Perth obstetrician, who took over from Brian Owler last month, is focusing his efforts on ending the Medicare freeze, which the Turnbull government extended in the budget to save another $1 billion.
Dr Gannon said yesterday the freeze on GP rebates, in particular, was the “number one issue” for the AMA. He expressed concern GPs would be forced to charge vulnerable patients or move to areas where patients could afford to pay.
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- Patrick Mcgorry
- The Australian
- 12:00AM June 10, 2016
Is it time to question the dogma that mental health care should be fully integrated and unprotected within mainstream healthcare?
At a recent mental health forum, I heard a story that crystallised the issue for me. A father described how his 17-year-old daughter — let’s call her Lily — gradually had become withdrawn and taken to her bed. She became anxious and depressed.
She was taken to GPs, emergency departments and a range of other professionals and, though she had been functioning extremely well before becoming ill, was responded to negatively by health professionals, even given a label of personality disorder. Her parents were confused and overwhelmed and got no support.
Then Lily had a seizure. This was investigated and, after a lumbar puncture and brain scans, viral encephalitis was diagnosed. The fact she now had a “medical” (genuine) illness rather than a psychiatric one transformed not only her treatment but also the attitude of health professionals. She was now a “deserving” patient.
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Health Insurance Issues.
- Jun 8 2016 at 11:45 PM
- Updated Jun 8 2016 at 11:45 PM
by Ben Potter
A new way of calculating health insurance premiums that could limit increases to 2.5 per cent a year and an official website to grade health policies from "junk" to "platinum" are being pushed by Graeme Samuel, an adviser to the government's private health insurance review until a few months ago.
Mr Samuel will call for wholesale deregulation of government-dictated rebates for medical implants or "prostheses" in a speech on Thursday.
Health insurers estimate they are overcharged by about $800 million a year by medical implant makers and Mr Samuel will argue that the best way to impose competitive discipline on the healthcare market is by "empowering consumers to make informed decisions".
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Samantha Maiden, national political editor, Herald Sun
June 12, 2016 12:00am
PRIVATE health insurers will be forced to offer patients a single bill listing all out-of-pocket charges to avoid bill shock under government reforms to rank cover as gold, silver and bronze.
Health Minister Sussan Ley will announce the changes today also confirming that plans to charge smokers and the overweight more for health insurance have been shelved.
The announcement follows consultation with the public over how to fix “junk” health cover after families complained of feeling ripped off and confused by private health insurance.
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June 12, 2016
THE Coalition Government has pledged to simplify private health insurance by creating three categories of health policies consumers can easily understand.
The government will establish gold, silver and bronze health policy categories if re-elected on July 2 and set minimum standards for the 40,000 private health insurance products on the market. Patients will also retain the current private health insurance rebate.
The coalition said on Sunday that it conducted surveys in which 70 per cent of its 40,000 respondents said they struggled to make changes to their private health insurance policy.
Two-thirds of respondents also said they were not getting value for money from their plans.
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Aged Care Issues.
- The Australian
- 12:00AM June 8, 2016
Estia Health has been forced to allay market concerns about the possibility it will come under increasing federal government scrutiny, a day after The Australian revealed health bureaucrats were eyeing the rapid growth in the company’s patient funding.
In a statement to the Australian Securities Exchange, Estia said it was “regularly audited” but had “materially more accurate claims than the industry average ... over the last two years”.
Estia shares fell nearly 11 per cent yesterday following reports of a government move to clamp down on funding.
The company attracted the attention of short-selling hedge funds, with Sydney-based VGI Partners confirming it was one hedge fund involved.
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- The Australian
- 12:00AM June 9, 2016
The head of a not-for-profit aged-care provider has warned that many in the sector are “maxing out” on the federal government’s funding system, amid confusion over warnings about over-claiming in the sector.
Stephen Judd, chief executive of HammondCare, said while he was not defending providers that over-claimed, he thought those accused of the practice were not “rorting” but maxing out on a system the government had given them. Dr Judd said the aged-care funding model rewarded providers for keeping residents frail, rather than promoting wellness.
“I don’t think ... there is any fraud going on, but I do believe people are maxing out on a system they have been given by the Australian government,” he said.
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- Updated Jun 11 2016 at 8:08 AM
The collapse in the share price of Australia's biggest aged care provider, Estia Health, over the past fortnight has raised serious questions about how profitable and realistic growth prospects are for a sector so reliant on the country's aging population and government funding.
The demand for aged care led to the completion of $1.5 billion worth of new construction in 2014 – an increase of 69 per cent on the previous year, according to the Department of Health. Net assets in the sector were up 10 per cent on the previous year to $11.2 billion and revenues have also grown to $14.8 billion a year. Some analysts estimate that close to $22.5 billion worth of aged-care facilities will need to be built before 2031 to accommodate the growing demand.
The big listed providers Estia Health, Japara Healthcare and Regis Healthcare have all floated on the stock market in recent years, enjoying plenty of investment support and government funding.
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- The Australian
- 12:00AM June 11, 2016
It took Quadrant Private Equity less than a week after the federal budget to get out of the aged-care business.
Quadrant had formed the Estia Health business barely five months before it floated on the stockmarket in December 2014 and had been entitled to sell the rest of its shares, which came out of escrow in November last year.
But such was the performance of the stock — it reached almost $8 a year later — and so rosy the outlook for a largely government- funded industry serving an ageing population that Quadrant, one of the sharpest operators in the local venture capital market, held on.
Last month’s budget, however, appears to have changed its view.
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Superannuation Issues.
- Updated Jun 6 2016 at 8:18 PM
Liberal and Labor both plan to restart taxing wealthy retirees' superannuation.
Analysis by actuarial consulting firm Rice Warner shows that voters with $2 million or more in super savings will be better off under Labor's policy in years when investment market returns are 6 per cent or less, but could pay more than three times as much tax when returns are more than 8 per cent.
The research also shows that under Labor, retirees with super balances of about $1 million could be hit with a tax on their earnings in years when their investment returns were 8 per cent or higher.
However, Labor's approach to taxing big super balances in retirement also provides more flexibility for self-funded retirees to rebuild their pension balance if markets tank, Rice Warner head of superannuation research Nathan Bonarius said.
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- Will Hamilton
- The Australian
- 12:00AM June 7, 2016
The proposed changes around superannuation and the ensuing erosion of faith in the savings system have led to discussion about alternatives to superannuation. With this comes consideration of the increased use of family and discretionary trusts as a vehicle through which to hold and accumulate wealth.
Many advisers are witnessing increasing demand from clients seeking advice about investment strategies that are effective alternatives to superannuation — or that may sit beside a superannuation investment strategy — one of which is indeed trusts.
Another is property investment, which can be approached as a direct investment that might be negatively geared or through investment in a real estate investment trust (REIT). Whatever the approach, there are alternatives to superannuation that can enable investors to build and manage wealth.
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- The Australian
- 12:00AM June 8, 2016
Leading Melbourne QC Jack Hammond is expected to launch a lobby group today to campaign against the Coalition government’s proposed superannuation law changes.
Mr Hammond will speak at a Melbourne meeting of lawyers and judges tonight and is expected to announce the formation of a group called Save Our Super which will call on the government to “grandfather” the impact of proposed superannuation changes on existing superannuation account holders.
The changes announced on budget night include imposition of a $1.6 million cap on the amount of money that can be moved into a tax-free super account, an immediate lifetime cap of $500,000 for post-tax contributions to superannuation, cutbacks in the attractiveness of transition to retirement schemes, higher taxes on super contributions for people earning more than $250,000 and higher taxes on payouts under defined benefit superannuation schemes above $100,000 a year.
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- The Australian
- 12:00AM June 10, 2016
Kelly O'Dwyer has called on the Greens to announce the full details of their superannuation policy.
The federal government would look at situations where people had entered into binding legal contracts who might be hit by the proposed superannuation changes when it was drafting the legislation, Assistant Treasurer Kelly O’Dwyer said yesterday.
“We will have a period of consultation to make sure there are no unintended consequences from the legislative changes,” she said.
“If someone has made a binding legal agreement before budget night, the government will look at that situation in the design of the legislation.’’
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Pharmacy Issues.
Prime Minister Malcolm Turnbull has expressed his support for community pharmacy in a letter to the Pharmacy Guild, saying a returned Coalition government would ensure funds allocated under the Pharmacy Trial Program and 6CPA will deliver the best health outcomes.
The PM says the Coalition supports the current model of pharmacy ownership, and supports reforms that will allow pharmacists to take on a greater role in allied health.
Mr Turnbull says that the Coalition is “proud Australia’s community pharmacy sector is considered world-leading.
“It is a truly public-private partnership that is underwritten by the capital investments made by small business pharmacy owners around Australia and the commitment and hard work of their staff.
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Senator Nick Xenophon has condemned the $1 PBS co-payment as "flawed" and future co-payments as "damaging and unnecessary".
In a letter to pharmacists, addressed to the Pharmacy Guild, the South Australian independent says the $1 discount, introduced in January, misleads pensioners and concession card holders into thinking they're getting cheaper medicine when in reality they’re having their access to the safety net delayed.
This comes at the expense of their local pharmacy, he says, adding that it also breaches the universality of subsidised medicine, with rural and regional pharmacies unable to pass on the discount.
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I look forward to comments on all this!
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David.
