FISCAL POLICY – AUSTRALIA

Brace ‘for another $129b’ in deficits

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Original article by Jacob Greber
The Australian Financial Review – Page: 4 : 26-Apr-16

Chris Richardson of Deloitte Access Economics expects the Australian Government to announce a 2016 Budget deficit of $A41.7bn, compared with $A37.9bn in 2015. It would also be $A4.3bn higher than the Government had forecast in the mid-year Budget update. Richardson downplays the impact of the recent rally in the iron ore price on the deficit, arguing that slowing growth in wages will have a bigger effect on government revenue.

CORPORATES
DELOITTE ACCESS ECONOMICS PTY LTD, AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIA. DEPT OF FINANCE, AUSTRALIAN LABOR PARTY

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

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

‘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

Lower taxes to wait for spending cuts

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Original article by Phillip Coorey
The Australian Financial Review – Page: 1 & 5 : 16-Mar-16

Treasurer Scott Morrison has indicated that the Australian Government’s May 2016 Budget will include a reduction in superannuation tax concessions. However, he has warned that this measure will not be sufficient to finance a significant income tax cut. Morrison says a reduction in government spending rather than increasing other taxes is the best strategy in both the short- and long-term for reducing taxes.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIAN LABOR PARTY

PM ‘won’t blow’ iron ore bonus

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Original article by Phillip Coorey
The Australian Financial Review – Page: 1 & 4 : 11-Mar-16

The benchmark iron ore price has fallen below $US60 per tonne, although it remains significantly above the forecast of just $US39/tonne in the Australian Government’s mid-year Budget update. A sustained upturn in the price of the steel input could potentially boost government revenue by up to $A15bn over four years. However, government sources have indicated that the additional revenue will be used to reduce the deficit instead of financing larger tax cuts than the modest reduction that the Government is planning.

CORPORATES
AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET, AUSTRALIAN LABOR PARTY, RESERVE BANK OF NEW ZEALAND, EUROPEAN CENTRAL BANK, STANDARD AND POOR’S ASX 200 INDEX, BHP BILLITON LIMITED – ASX BHP, RIO TINTO LIMITED – ASX RIO, AUSTRALIA. DEPT OF IMMIGRATION AND BORDER PROTECTION

Resources surge offers PM hope of budget boost

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Original article by David Uren
The Australian – Page: 1 & 2 : 9-Mar-16

The Australian Government’s Budget bottom line is expected to be boosted by the rebound in commodity prices. Iron ore and crude oil prices have rallied in recent weeks, which may help to offset the $A7bn in forgone government revenue due to the sharp downturn in commodity prices in 2015. The iron ore price has risen above $US60 per tonne in early March, compared with the Government’s revised forecast of just $US39/tonne in its mid-year Budget update in December.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET, WESTPAC BANKING CORPORATION – ASX WBC, INTERNATIONAL MONETARY FUND, STANDARD AND POOR’S ASX 200 INDEX, BHP BILLITON LIMITED – ASX BHP, RIO TINTO LIMITED – ASX RIO, FORTESCUE METALS GROUP LIMITED – ASX FMG, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ

Early budget talk, election options narrow

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Original article by Phillip Coorey
The Australian Financial Review – Page: 5 : 8-Mar-16

The Australian Government is considering moving the Budget forward one week to 3 May 2016. Should it opt to call a double-dissolution election, it must do so no later than 11 May in order to hold such an election on its preferred date of 2 July. A half-Senate election in August is also being considered. The bill to reinstate the Australian Building & Construction Commission remains a potential trigger for a double-dissolution election.

CORPORATES
AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET, AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIAN BUILDING AND CONSTRUCTION COMMISSION, AUSTRALIA. ATTORNEY-GENERAL’S DEPT, LIBERAL PARTY OF NEW SOUTH WALES