BUDGET – AUSTRALIA

There’s little future in not debating funds use

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Original article by Judith Sloan
The Australian – Page: 4 : 23-Dec-16

The Mid-year Economic and Fiscal Outlook (MYEFO), issued on 20 December 2016, contains information that Future Fund’s net earnings will be included in MYEFO’s projections. Therefore, the projected surplus for 2020-21 of $A1 billion will be achieved by the inclusion of the planned withdrawals from the Future Fund in the national accounts. The matter deserves to be publically discussed.

CORPORATES
AUSTRALIA. FUTURE FUND MANAGEMENT AGENCY

Future Fund accounting switch saves AAA rating

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Original article by David Uren
The Australian – Page: 4 : 23-Dec-16

From 2020-21, profits generated by the Future Fund will be included in Australia’s budgets. Thus, a small surplus in that year will be achieved only because of a change in the fund’s accounting methodology. The Future Fund’s projected earnings of $A3.9 billion for 2019-20 are forecast to ensure a budget surplus of about $A1.1 billion in 2020-21.

CORPORATES
AUSTRALIA. FUTURE FUND MANAGEMENT AGENCY, DELOITTE ACCESS ECONOMICS PTY LTD

Treasurer won’t pledge to a surplus

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Original article by Jacob Greber
The Australian Financial Review – Page: 1 & 4 : 21-Dec-16

The expected Budget surplus of $A1.087bn in 2020-21 equates to about 0.05 per cent of GDP. Ratings agencies have warned that the Federal Government must achieve a surplus by 2020-21 in order to retain its triple-A credit rating, but Treasurer Scott Morrison claims that he has never committed to that target date. He says the Government will seek to balance the Budget as quickly and responsibly as possible, and stressed that this will require the support of Parliament.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY, MOODY’S INVESTORS SERVICE INCORPORATED, S&P GLOBAL RATINGS, KPMG AUSTRALIA PTY LTD, SEEK LIMITED – ASX SEK, MYOB GROUP LIMITED – ASX MYO, WESFARMERS LIMITED – ASX WES

Blocked $13.2bn in savings to secure AAA: Morrison

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Original article by David Uren, Rosie Lewis
The Australian – Page: 1 & 2 : 21-Dec-16

Treasurer Scott Morrison argues that delivering on savings measures that have been blocked by the Senate would enable the Federal Government to achieve a modest Budget surplus in 2020-21. He has ruled any budget cuts in addition to those that have already been put to Parliament and blocked. Many of these measures were announced in the Coalition’s first Budget in 2014, and it still appears to be unlikely that some will be passed by the upper house.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIAN LABOR PARTY, NICK XENOPHON TEAM, AUSTRALIAN GREENS, LIBERAL DEMOCRATIC PARTY, ONE NATION PARTY, S&P GLOBAL RATINGS

AAA could go at any time

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Original article by Phillip Coorey
The Australian Financial Review – Page: 1 & 6 : 15-Dec-16

Moody’s Investors Service and S&P Global Ratings have signalled that Australia’s triple-A credit rating could potentially be downgraded on 19 December 2016, following the release of the mid-year budget update. Both credit rating agencies have previously warned that the triple-A rating could be at risk if the Government fails to meet its target of 2020-21 for returning the Budget to surplus. Meanwhile, Adam Boynton of Deutsche Bank has forecast that nominal GDP growth will be 3.25 per cent in 2017-18, compared with the May Budget forecast of five per cent.

CORPORATES
MOODY’S INVESTORS SERVICE INCORPORATED, S&P GLOBAL RATINGS, DEUTSCHE BANK AG, CITIGROUP PTY LTD, AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIAN LABOR PARTY

Morrison on notice as debt soars

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Original article by David Uren
The Australian – Page: 1 & 4 : 13-Dec-16

Ratings agency Moody’s has forecast that the combined debt of Australia’s federal and state governments will rise to about $A690bn by mid-2017, compared with $A642bn in June 2016. Treasurer Scott Morrison will release the mid-year economic and fiscal outlook on 19 December, and Marie Diron of Moody’s says the Government is likely to reduce the deficit but at a slower pace than forecast in the May 2016 Budget. Moody’s is not expecting to downgrade Australia’s triple-A credit rating, although rival S&P Global Ratings put it on "negative watch" earlier in 2016.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY, MOODY’S INVESTORS SERVICE INCORPORATED, S&P GLOBAL RATINGS, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, DELOITTE TOUCHE TOHMATSU LIMITED, AUSTRALIAN LABOR PARTY, AUSTRALIA. DEPT OF EDUCATION AND TRAINING

Budgets too crucial to leave to MPs

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Original article by Joanna Mather
The Australian Financial Review – Page: 4 : 5-Dec-16

Chartered Accountants Australia & New Zealand argues that the Parliamentary Budget Office should be given responsibility for monitoring the federal budget. It also calls for politicians to cease using the size of government as a criteria in assessing the nation’s financial health, while the impact of major policy decisions should be projected over a decade. CAANZ has also criticised the fiscal policies of the Howard and Rudd governments.

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CHARTERED ACCOUNTANTS AUSTRALIA AND NEW ZEALAND, AUSTRALIA. PARLIAMENTARY BUDGET OFFICE, INSTITUTE FOR FISCAL STUDIES, GERMANY. COUNCIL OF ECONOMIC EXPERTS

Losing triple-A rating inevitable: Hewson

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Original article by Simon King
The Australian – Page: 4 : 5-Dec-16

The former leader of the Liberal Party of Australia, John Hewson, believes that it is a matter of when rather than if the nation’s "AAA" credit rating is downgraded. Hewson adds that it will be a challenge for the Federal Government to achieve a Budget surplus by the end of the decade, and argues that neither of the major political parties have policies that will achieve this outcome.

CORPORATES
LIBERAL PARTY OF AUSTRALIA, AUSTRALIA. DEPT OF THE TREASURY, STANDARD AND POOR’S FINANCIAL SERVICES LLC, AUSTRALIAN LABOR PARTY

Markets expect cool response to downgrade

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Original article by David Uren
The Australian – Page: 6 : 21-Oct-16

Borrowing costs for Australian banks and the state and federal governments have not increased as a result of S&P Global Ratings’ downgrading of the nation’s credit rating outlook to negative earlier in 2016. The loss of Australia’s "AAA" credit rating would also be unlikely to have an impact on borrowing costs, according to some financial market watchers. Treasurer Scott Morrison maintains that the Federal Government’s budget repair strategy is crucial to retaining the coveted triple-A credit rating. Australia also has a triple-A rating from Moody’s Investor Services and Fitch Ratings.

CORPORATES
S&P GLOBAL RATINGS, AUSTRALIA. DEPT OF THE TREASURY, MOODY’S INVESTORS SERVICE INCORPORATED, FITCH RATINGS LIMITED, WESTPAC BANKING CORPORATION – ASX WBC, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, DEUTSCHE BANK AG, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ

Fear grows AAA rating to be lost

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Original article by David Uren
The Australian – Page: 1 & 5 : 20-Oct-16

Treasury secretary John Fraser has warned that every Australian would be affected by a downgrade of the nation’s "AAA" credit rating. The Federal Government is hopeful that the mid-year budget update will feature a modest decline in the deficit, although there are concerns that this may not be sufficient to avert a rating downgrade. Craig Michaels of S&P Global Ratings has reiterated the need for the Government to implement budget savings measures. Meanwhile, Treasury is not expected to take into account the recent rise in coal prices when preparing economic forecasts for the mid-year update.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY, S&P GLOBAL RATINGS, AUSTRALIAN LABOR PARTY, NICK XENOPHON TEAM