BUDGET – AUSTRALIA

AAA: Six months to get budget under control

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Original article by Jacob Greber, Phillip Coorey
The Australian Financial Review – Page: 1 & 6 : 8-Jul-16

Treasurer Scott Morrison says the Federal Government will still aim to achieve a Budget surplus in 2020-21, in order to avert the loss of Australia’s coveted triple-A credit rating. Standard & Poor’s has downgraded the nation’s credit rating outlook to "negative" and warned that it will closely monitor the government’s fiscal performance over the next 6-12 months. The ratings agency also indicated that Australia’s "AAA" rating may be at risk due to the nation’s rising foreign debt.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY, STANDARD AND POOR’S CORPORATION, AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET, LIBERAL PARTY OF AUSTRALIA, NATIONAL PARTY OF AUSTRALIA, AUSTRALIAN LABOR PARTY, AUSTRALIAN BUILDING AND CONSTRUCTION COMMISSION, AUSTRALIAN CHAMBER OF COMMERCE AND INDUSTRY, WESTERN AUSTRALIA. DEPT OF THE PREMIER AND CABINET

Hung parliament lifts risk of credit downgrade

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Original article by David Uren
The Australian – Page: 1 & 4 : 5-Jul-16

Standard & Poor’s is tipped to review Australia’s "AAA" credit rating in the wake of the federal election. S&P has indicated that the nation’s credit rating may be downgraded unless the next government can implement measures to reduce the Budget deficit. Fitch Ratings has also warned of the potential for a downgrade if a hung parliament results in policies that further increase the deficit. However, Moody’s notes that Australia’s government debt remains much lower than the majority of developed economies.

CORPORATES
STANDARD AND POOR’S CORPORATION, FITCH RATINGS LIMITED, MOODY’S INVESTORS SERVICE INCORPORATED, LIBERAL PARTY OF AUSTRALIA, NATIONAL PARTY OF AUSTRALIA, RESERVE BANK OF AUSTRALIA

Stop digging, we’re deep enough in this fiscal hole

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Original article by Judith Sloan
The Weekend Australian – Page: 24 : 21-May-16

The Australian Government’s policies means the nation faces cumulative budget deficits of $A85bn over the next four years, although this is based on GDP and revenue projections that are unlikely to be realised. The May 2016 Budget papers also show that the deficit will blow out to $A584bn in 2019-20, compared with $A499bn in 2016-17. Australia is almost certain to lose its triple-A credit rating long before 2025-26, when the deficit will top $A647bn. However, the Australian Labor Party’s election policies would ensure that the Budget is even worse off than under a Coalition government.

CORPORATES
AUSTRALIAN LABOR PARTY, LIBERAL PARTY OF AUSTRALIA, NATIONAL PARTY OF AUSTRALIA, AUSTRALIAN GREENS, AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET, AUSTRALIA. DEPT OF THE TREASURY, COUNCIL OF AUSTRALIAN GOVERNMENTS

Low wage growth sparks bleak outlook

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Original article by David Uren
The Australian – Page: 7 : 19-May-16

The Department of the Treasury will release its pre-election economic and fiscal outlook on 20 May 2016. It is not expected to make any significant changes to the forecasts in the May 2016 Budget, although the outlook report is likely to highlight the risks to the Budget if the forecasts are not met. Slowing wages growth is looming as a key risk for the Budget, which has forecast wages growth of 2.25 per cent in 2015-16 and 2.5 per cent in 2016-17. Wages grew by just 2.1 per cent over the last year.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY, AMP LIMITED – ASX AMP, JP MORGAN AUSTRALIA LIMITED, AUSTRALIAN LABOR PARTY

Coalition sells policy changes as ‘fair’

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Original article by Dennis Shanahan
The Australian – Page: 6 : 13-May-16

The Australian Government has defended its May 2106 Budget measures on the taxation of superannuation, with Cabinet Secretary Arthur Sinodinos and ex-prime minister Tony Abbott stressing that the changes are not retrospective. Sinodinos says the fact that some wealthy people are concerned about the changes demonstrates that the proposed reforms are fair. Abbott describes the reforms as a "gutsy call" by the Government and the right course of action.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIAN LABOR PARTY, INSTITUTE OF PUBLIC AFFAIRS LIMITED

Iron ore blows hole in budget

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Original article by David Uren
The Australian – Page: 6 : 11-May-16

Revenue forecasts in the Australian Government’s May 2016 Budget are based on expectations that the iron ore price will average $US55 over the next two years. The price of the steel input is currently trading at around this level, but futures market quotes in Singapore suggest that it could fall to about $US50. Meanwhile, Justin Smirk of Westpac warns that the iron ore price could potentially fall below $US40, before stabilising at about $US42.

CORPORATES
WESTPAC BANKING CORPORATION – ASX WBC, AUSTRALIA. DEPT OF THE TREASURY, BHP BILLITON LIMITED – ASX BHP, RIO TINTO LIMITED – ASX RIO, FORTESCUE METALS GROUP LIMITED – ASX FMG

ANZ-Roy Morgan Australian Consumer Confidence unchanged at 113.9 after RBA rate cut and Federal Budget

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Original article by Roy Morgan Research
Market Research Update – Page: Online : 10-May-16

The ANZ-Roy Morgan Consumer Confidence rating for Australia remained unchanged at 113.9 in the week ended 8 May 2016. While the Reserve Bank’s cut to the official cash rate is likely to have been well received, any positive impact looks to have been somewhat offset by consumers’ reaction to the Commonwealth Budget. Consumers’ views towards their current personal finances fell 0.8 per cent, and consumers’ views toward the economic conditions in the next 12 months fell 1.2 per cent.

CORPORATES
ROY MORGAN RESEARCH LIMITED, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, RESERVE BANK OF AUSTRALIA

Labor to revive 12 per cent super guarantee

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Original article by Phillip Coorey
The Australian Financial Review – Page: 4 : 11-May-16

Shadow treasurer Chris Bowen has told the National Press Club that the Australian Labor Party will act quickly to release a mini-Budget if it wins the federal election on 2 July 2016. He also indicated that Labor will reinstate plans to lift the employer superannuation contribution to 12 per cent. The Australian Government put this policy on hold after abolishing the mining tax. The super guarantee has been increased from nine per cent to 9.5 per cent, but at present it is not slated to rise to 12 per cent until 2025.

CORPORATES
AUSTRALIAN LABOR PARTY, NATIONAL PRESS CLUB (AUSTRALIA)

Tables turn: Now Labor promises to protect AAA rating

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Original article by Phillip Coorey
The Australian Financial Review – Page: 1 & 4 : 10-May-16

Shadow treasurer Chris Bowen will address the National Press Club on 10 May 2016, where he will deliver his reply to the Australian Government’s Budget. Bowen will indicate that if the Opposition wins the federal election it will release the mid-year budget update by October, rather than in December. He will stress the need to reduce the Budget deficit in order to ensure that Australia retains its coveted triple-A credit rating. He will also question the merits of the Government’s proposal to progressively reduce the corporate tax rate.

CORPORATES
AUSTRALIAN LABOR PARTY, NATIONAL PRESS CLUB (AUSTRALIA), AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET, AUSTRALIA. DEPT OF THE TREASURY, MOODY’S INVESTORS SERVICE INCORPORATED, STANDARD AND POOR’S CORPORATION, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, RESERVE BANK OF AUSTRALIA

Tax crackdown will be far reaching

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Original article by Joanna Mather
The Australian Financial Review – Page: 17 : 5-May-16

The Corporate Tax Association’s Michelle de Niese says the diverted profits tax outlined in the Australian Government’s May 2016 Budget may prove to be broader in scope than a similar tax in the UK. Companies found to have engaged in profit-shifting will face a tax rate of 40 per cent on such profits, compared with the corporate tax rate of 30 per cent. Mark Konza of the Australian Taxation Office adds that the new tax may affect more taxpayers than the multinational anti-avoidance law, which was introduced in 2015.

CORPORATES
CORPORATE TAX ASSOCIATION, AUSTRALIAN TAXATION OFFICE, AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET, AUSTRALIAN LABOR PARTY, RSM PTY LTD, ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT, NETFLIX INCORPORATED