AUSTRALIA – ECONOMIC POLICY

Tax system doesn’t support recovery

roymorgansocial Leave a comment

Original article by John Kehoe, Patrick Durkin
The Australian Financial Review – Page: 6 : 23-Apr-20

Former Treasury secretary Ken Henry has backed calls by Reserve Bank of Australia governor Philip Lowe for an overhaul of the tax system when the pandemic is contained. Henry led a review of the tax system in 2010, and he contends that its findings and recommendations are still relevant. Amongst other things, Henry advocates replacing the GST, payroll taxes and some state-based taxes with a new tax on business cash flow. He has also proposed phasing out stamp duties in favour of a land tax system.

CORPORATES
RESERVE BANK OF AUSTRALIA, AUSTRALIA. DEPT OF THE TREASURY

Company tax rate back on table

roymorgansocial Leave a comment

Original article by Phillip Coorey
The Australian Financial Review – Page: 1 & 4 : 23-Apr-20

Deregulation, tax reform and changes to the industrial relations system are expected to be the federal government’s priorities when the coronavirus pandemic abates. The Coalition is of the view that the economy will need reforms of a similar magnitude to those implemented by the Hawke-Keating Labor government three decades ago. Treasurer Josh Frydenberg notes that Australia’s company tax rate remains high by global standards, although he has ruled out any changes to the GST at present. The government has also signalled its intention to revive the Ensuring Integrity Bill.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY

Tax reform cure for virus fever

roymorgansocial Leave a comment

Original article by Patrick Commins
The Australian – Page: 1 & 6 : 22-Apr-20

Reserve Bank of Australia governor Philip Lowe has warned that the nation’s GDP growth will fall by around six per cent in 2020 due to the coronavirus pandemic. However, he says the economy should begin to recover in September, with GDP growth of 6-7 per cent expected in 2021. Lowe also says the unemployment rate could peak at 10 per cent in coming months, and it is likely to remain above six per cent for several years. Lowe adds that total hours worked in Australia are forecast to fall by 20 per cent in the first half of 2020. Lowe has also used a speech in Sydney to argue that industrial relations and tax reform should be considered in the wake of the pandemic.

CORPORATES
RESERVE BANK OF AUSTRALIA

Lowe: Business needs reforms to recover

roymorgansocial Leave a comment

Original article by Matthew Cranston
The Australian Financial Review – Page: 1 & 2 : 21-Apr-20

Reserve Bank of Australia governor Philip Lowe has warned that the nation is facing a "very significant economic contraction" due to the coronavirus pandemic. He is expected to use a speech on 21 April to call for further policy reform, amid growing concern that business investment will not rebound when the crisis abates. Some economists are also of the view that economic reform will be necessary, arguing that fiscal and monetary stimulus will not be sufficient to boost business investment.

CORPORATES
RESERVE BANK OF AUSTRALIA

BCA plan aims to accelerate recovery

roymorgansocial Leave a comment

Original article by Tom McIlroy
The Australian Financial Review – Page: 4 : 20-Apr-20

The Business Council of Australia has developed a three-tier plan for restarting the domestic economy when coronavirus lockdown restrictions start to be eased. Amongst other things, the discussion paper proposes a gradual resumption of office-based work, with appropriate health and safety measures to protect workers. The BCA has also called for regulatory and industrial relations reforms to boost economic activity, while it says the focus of government assistance should shift to accelerating the economy rather than keeping it on ‘life support’.

CORPORATES
BUSINESS COUNCIL OF AUSTRALIA

PM flags business growth plan

roymorgansocial Leave a comment

Original article by Phillip Coorey
The Australian Financial Review – Page: 1 & 6 : 17-Apr-20

Prime Minister Scott Morrison has told a meeting of the national cabinet that pro-growth economic policy measures will be required in the post-coronavirus environment. He has stressed that business rather than government will lead the economic recovery, so there will be a need for policies that encourage employers to invest in their business and to hire people. Morrison has also raised the prospect that some of the policies that the Coalition took to the May 2019 election might need to be shelved. Business Council of Australia CEO Jennifer Westacott has expressed support for Morrison’s pro-business focus.

CORPORATES
AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET, BUSINESS COUNCIL OF AUSTRALIA

Jobless rise to hit 10pc: Treasury

roymorgansocial Leave a comment

Original article by Phillip Coorey, James Fernyhough
The Australian Financial Review – Page: 1 & 6 : 14-Apr-20

The Treasury estimates that the coronavirus pandemic will see unemployment peak at 10 per cent in the June quarter, compared with an official jobless rate of just 5.1 per cent in February. It would be the first time Australia has recorded double-digit unemployment since April 1994. The Treasury’s analysis also concludes that unemployment would have risen to around 15 per cent without the federal government’s JobKeeper scheme. Former AMP CEO Andrew Mohl is among the business leaders who have called for lockdown measures to be progressively wound back, noting that the restrictions are costing the economy some $550m per day in lost GDP.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY, AMP LIMITED – ASX AMP

We may be over-reacting to an unremarkable virus

roymorgansocial Leave a comment

Original article by Adam Creighton
The Australian – Page: 10 : 14-Apr-20

Australia’s low death toll from the coronavirus and the nation’s comparatively low infection rate suggests that the lockdown measures may have been an over-reaction. Dire forecasts of hospitals being swamped with patients needing ventilators have not materialised, while government debt and the unemployment rate will rise sharply due to the coronavirus response. Indeed, a Roy Morgan survey for March found that the jobless rate is likely to double. Maintaining the lockdown for six months is unsustainable, and attention must soon turn to restarting the economy.

CORPORATES
ROY MORGAN LIMITED

Wage subsidies not enough for small business

roymorgansocial Leave a comment

Original article by John Kehoe
The Australian Financial Review – Page: 8 : 25-Mar-20

Former Treasury official Steven Hamilton has urged the federal government to increase the wage subsidies for small and medium enterprises in response to the pandemic. He warns that the SME sector will be "completely wiped out" if the government does not act, while the nation will face a long and deep recession. Andrew Boak of Goldman Sachs agrees that the government’s existing wage subsidy measures will not be sufficient to avert large-scale job losses.

CORPORATES
GOLDMAN SACHS AUSTRALIA GROUP HOLDINGS PTY LTD, GEORGE WASHINGTON UNIVERSITY

Brace for a record fall in GDP

roymorgansocial Leave a comment

Original article by Patrick Commins
The Australian – Page: 4 : 25-Mar-20

JPMorgan economist Ben Jarman expects GDP to fall by 10 per cent in the June quarter due to the coronavirus lockdown measures. The previous largest quarterly decline in GDP was just two per cent in 1974. Jarman also forecasts that the unemployment rate will rise to 11 per cent during the quarter, a view shared by Bill Evans of Westpac. However, Evans expects GDP to fall by just 3.5 per cent in the quarter. Westpac economists have also forecast a Budget deficit of $90bn in 2019-20 due to the federal government’s stimulus measures, and a deficit of $160bn in 2020-21.

CORPORATES
JP MORGAN AUSTRALIA LIMITED, WESTPAC BANKING CORPORATION – ASX WBC