BUDGET – AUSTRALIA

Spending and taxing failures risk AAA: Moody’s

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Original article by Jacob Greber
The Australian Financial Review – Page: 1 & 6 : 15-Apr-16

Ratings agency Moody’s expects Australia’s debt to rise to about 38 per cent of GDP, compared with 35 per cent at present. Moody’s analyst Marie Diron notes that this has risen from just 11.6 per cent over the last decade, while the debt of other countries with a triple-A credit rating has averaged 41 per cent over this period. Diron adds that the Federal Government is unlikely to return the Budget to surplus by 2021 unless there is an increase in taxes.

CORPORATES
MOODY’S INVESTORS SERVICE INCORPORATED, AUSTRALIAN LABOR PARTY

Doubts over iron ore boost to budget

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Original article by David Uren
The Australian – Page: 4 : 14-Apr-16

The Treasury has estimated that each $US10 rise or fall in the iron ore price has a $A6.5bn impact on government revenue over two years. The spot price of iron ore is trading at close to $US60/per tonne. The Budget bottom-line would be bolstered by around $A14.3bn over two years if the recent price gains are sustained. Justin Smirk of Westpac warns this is not certain, noting that global supply will be boosted by new mines, while some mothballed mines may resume production.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY, WESTPAC BANKING CORPORATION – ASX WBC

Budget cuts needed for AAA: JPMorgan

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Original article by Jacob Greber
The Australian Financial Review – Page: 1 & 2 : 14-Apr-16

Australia’s credit rating has not been downgraded since 1986, but Sally Auld of JP Morgan warns that the nation’s Budget deficit, national debt and current account deficit are now at similar or higher levels. She says Australia’s coveted triple-A credit rating may be at risk unless the May 2016 Budget includes additional reductions in government expenditure. Meanwhile, the International Monetary Fund says export-focused countries must reduce government spending in anticipation that commodity prices will remain low for some time.

CORPORATES
JP MORGAN AUSTRALIA LIMITED, INTERNATIONAL MONETARY FUND, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, WESTPAC BANKING CORPORATION – ASX WBC

AAA credit rating at risk from rising public debt

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Original article by David Uren
The Australian – Page: 2 : 12-Apr-16

Australia’s credit rating has not been downgraded since 1989, but Peter Jolly of National Australia Bank has warned that the nation’s public debt may put the coveted triple-A rating at risk. Jolly says public debt is now higher than the level which prompted the ratings downgrades in 1986 and 1989, and he stresses that the Federal Government’s May 2016 Budget must rein in spending. Treasurer Scott Morrison says spending constraint will be a feature of the Budget.

CORPORATES
NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIAN LABOR PARTY, STANDARD AND POOR’S CORPORATION

Seven ‘fantasy’ promises carry $400bn bill

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Original article by David Crowe, David Uren
The Australian – Page: 1 & 2 : 8-Apr-16

Some $A400bn worth of big-ticket spending initiatives over the next decade will present a challenge for the Australian Government in achieving its goal of returning the Budget to surplus. These include the $A111.4bn in net new spending on the National Disability Insurance Scheme and $A57bn in compensation payments for the now-repealed carbon tax. It is estimated that the Budget would be in surplus by 2019 without the seven spending commitments, which also include defence, education and pension funding. Australia’s debt is also expected to keep rising over coming years.

CORPORATES
AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET, AUSTRALIAN LABOR PARTY, AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIA. PARLIAMENTARY BUDGET OFFICE, AUSTRALIA. DEPT OF SOCIAL SERVICES

TV licence fee cuts could fall short of networks’ hopes

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Original article by Dominic White
The Australian Financial Review – Page: 29 : 4-Apr-16

The Australian Government has not made a final decision on whether to include a reduction in TV broadcasting licence fees in the May 2016 Budget. The fees are currently set at 4.5 per cent of broadcasters’ revenue, and TV networks want them to be scrapped or reduced to just one per cent of revenue. Credit Suisse’s Fraser McLeish expects a progressive reduction in fees to about 2.5 per cent over several years. Communications Minister Mitch Fifield recently agreed that the licence fees are high compared with the networks’ overseas peers.

CORPORATES
CREDIT SUISSE (AUSTRALIA) LIMITED, AUSTRALIA. DEPT OF COMMUNICATIONS AND THE ARTS, GOOGLE INCORPORATED, NETFLIX INCORPORATED, MELBOURNE PRESS CLUB, AUSTRALIAN LABOR PARTY, AUSTRALIAN SUBSCRIPTION TELEVISION AND RADIO ASSOCIATION (ASTRA) INCORPORATED, SEVEN WEST MEDIA LIMITED – ASX SWM

‘We must live within our means’

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Original article by David Crowe
The Australian – Page: 1 & 4 : 4-Apr-16

Prime Minister Malcolm Turnbull has signalled that the May 2016 Budget will not include significant government spending measures. He says Budget finances mean the Government cannot afford the expenditure on services such as health and education that was promised by the Australian Labor Party prior to the 2013 election. The Coalition announced an $A80m reduction in spending on health and education in May 2014.

CORPORATES
AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET, AUSTRALIAN LABOR PARTY, AUSTRALIAN BUILDING AND CONSTRUCTION COMMISSION, SKY NEWS, WESTERN AUSTRALIA. DEPT OF THE PREMIER AND CABINET

Tax bracket creep to hit poorer half the hardest

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Original article by David Uren
The Australian – Page: 6 : 30-Mar-16

Economic modelling suggests that by 2020 so-called "bracket creep" is likely to wipe out Australian households’ gains from a series of tax cuts since 2004. The Australian Nat­ional University’s modelling indicates that unless the Federal Government’s May 2016 Budget includes income tax cuts, Australians on the lowest incomes may face the largest increase in their tax burden in the next four years. Treasurer Scott Morrison has ruled out personal income tax cuts.

CORPORATES
AUSTRALIAN NATIONAL UNIVERSITY. CENTRE FOR SOCIAL RESEARCH, AUSTRALIA. DEPT OF THE TREASURY

Mining sector backs 20pc company rate

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Original article by Phillip Coorey
The Australian Financial Review – Page: 4 : 29-Mar-16

A report produced by Canadian academic Jack Mintz has concluded that Australia’s corporate tax rate is uncompetitive, and proposes a progressive reduction from 30 per cent to just 20 per cent. The report was commissioned by the Minerals Council of Australia. The Federal Government’s May 2016 Budget is widely tipped to include a reduction in the company tax rate.

CORPORATES
MINERALS COUNCIL OF AUSTRALIA, ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT

Scott says ABC must tackle ‘too narrow’ editorial focus

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Original article by Gina Rushton
The Australian – Page: 2 : 29-Mar-16

ABC MD Mark Scott says any cut in funding for the public broadcaster in the Australian Government’s May 2016 Budget could result in job losses and a reduction in content. He adds that a funding cut would result in a 10 per cent reduction in the ABC’s news budget. Scott, who will shortly step down after a decade in the role, also says the ABC has "strong editorial standards" but must ensure that it provides sufficiently broad editorial coverage.

CORPORATES
AUSTRALIAN BROADCASTING CORPORATION