FISCAL POLICY – AUSTRALIA

Iron ore rally could mean budget windfall

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Original article by Mark Mulligan, Gareth Hutchens
The Australian Financial Review – Page: 7 : 22-Feb-16

The iron ore price has rallied to its highest level in three months, and it is now higher than the price that was forecast in the Australian Government’s 2015 mid-year Budget update. Chris Richardson of Deloitte Access Economics estimates that Government revenue could be boosted by about $A1.2bn if the iron ore price remains at around its current level until the mid-year update in November 2016. Paul Bloxham of HSBC adds that the LNG price will also be a significant factor for the Budget update.

CORPORATES
DELOITTE ACCESS ECONOMICS PTY LTD, HSBC AUSTRALIA HOLDINGS PTY LTD, AUSTRALIA. DEPT OF THE TREASURY, CITIGROUP PTY LTD, RESERVE BANK OF AUSTRALIA, RIO TINTO LIMITED – ASX RIO, BHP BILLITON LIMITED – ASX BHP

Spending spree hits tax cuts

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Original article by Phillip Coorey
The Australian Financial Review – Page: 1 & 4 : 18-Feb-16

Treasurer Scott Morrison says that fiscal prudence will only allow for "modest" income tax cuts in the May 2016 Budget. The tax-free threshold of $A18,200 is unlikely to be raised. Only those earning more than $A80,000 a year could count on some tax relief.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIA. DEPT OF FINANCE

Ministers told: stop spending

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Original article by Dennis Shanahan
The Australian – Page: 1 & 4 : 17-Feb-16

Treasurer Scott Morrison will use a National Press Club speech on 17 February 2016 to stress the need to ensure that government spending does not exceed revenue. He will argue that increased taxation should not be used to lift revenue above expenditure, and caution against justifying new spending measures by offsetting them against savings achieved elsewhere. Meanwhile, Prime Minister Malcolm Turnbull has officially ruled out an increase in the GST but says action must be taken on the issue of income tax "bracket creep".

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET, NATIONAL PRESS CLUB (AUSTRALIA), AUSTRALIAN LABOR PARTY

Coalition gives up on surplus

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Original article by Phillip Coorey
The Australian Financial Review – Page: 1 & 4 : 16-Dec-15

The Australian Government’s Mid-Year Economic and Fiscal Outlook forecasts that the 2015-16 Budget deficit will blow out to $A37.4bn, compared with expectations of $A35.1bn in May. The deficit will also be higher than expected in the following three fiscal years, while GDP growth forecasts have been reduced for both 2015 and 2016. Meanwhile, the worsening Budget deficit may prompt ratings agencies to review Australia’s triple-A credit rating, although Stephen Walters of JP Morgan says this is unlikely in the near-term.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY, JP MORGAN AUSTRALIA LIMITED, STANDARD AND POOR’S CORPORATION, AUSTRALIAN LABOR PARTY, RESERVE BANK OF AUSTRALIA

Budget deficit blown to $38b

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Original article by Jacob Greber
The Australian Financial Review – Page: 4 : 14-Dec-15

The Australian Government’s Mid-Year Economic and Fiscal Outlook will include a significant reduction in Budget forecasts for the price of iron ore in 2015-16. The downturn in the price of the steel input will contribute to the deficit blowing out to around $A38bn. Meanwhile, government spending will rise to 26.2 per cent of GDP in 2015-16, compared with expectations of just 25.9 per cent in the May 2015 Budget. The Government is also tipped to significantly reduce its projections for longer-term economic growth.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET, AUSTRALIA. DEPT OF FINANCE

Iron ore price plunge to blow $15bn hole in budget

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Original article by David Uren
The Australian – Page: 2 : 10-Dec-15

The Australian Government’s Mid-Year Economic and Fiscal Outlook will need to contend with the sharp decline in the iron ore price since the May 2015 Budget. Revenue projections in the Budget were based on an average iron ore price of $US48 per tonne, but the price of the steel input has since fallen below $US40/tonne. The downturn in the iron ore price could reduce the Budget bottom line by around $A15bn over the next four years.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY, DELOITTE ACCESS ECONOMICS PTY LTD, WESTPAC BANKING CORPORATION – ASX WBC

Iron ore extends losing run to five

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Original article by Daniel Palmer
The Australian – Page: Online : 4-Dec-15

The price of benchmark iron ore for immediate delivery to the port of Tianjin in China has fallen by 0.7 per cent to $US40.30 per tonne. The price of the steel input has fallen in 35 out of the last 39 trading sessions and Daniel Hynes of the ANZ Bank says it is high likely to fall below $US40/tonne. The Australian Government’s 2015 Budget forecasts were based on an average iron ore price of $US48/tonne, but this is expected to be scaled back to about $US40/tonne in the mid-year Budget update.

CORPORATES
PORT OF TIANJIN, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, BHP BILLITON LIMITED – ASX BHP, RIO TINTO LIMITED – ASX RIO, ROY HILL IRON ORE PTY LTD, VALE SA, MINE LIFE PTY LTD

Iron ore hit undermines budget

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Original article by Phillip Coorey, Stephen Cauchi
The Australian Financial Review – Page: 1 & 4 : 2-Dec-15

The Australian Government’s May 2015 Budget was based on expectations that the spot price of iron ore price would average $A48 per tonne for the calendar year. However, its average price in the year to date has been less than $US47 per tonne, and ore with 62 per cent iron content delivered to China’s port of Qingdao recently fell to $US42.97 per tonne. The downturn in the iron ore price will affect revenue forecasts in the upcoming Mid-Year Economic and Fiscal Outlook, as well as the Government’s timeframe for achieving a Budget surplus.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, AUSTRALIAN LABOR PARTY, ROY HILL IRON ORE PTY LTD

Fed, China fears hit iron ore, copper

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Original article by Jacob Greber, Stephen Cauchi
The Australian Financial Review – Page: 1 & 13 : 19-Nov-15

The latest downturn in the iron ore price will put pressure on Australia’s terms of trade as Treasurer Scott Morrison prepares to release a Budget update in late 2015. Budget forecasts in May were based on an average iron ore price of $US48 per tonne in 2015-16. Although the price of the steel input rebounded to around $US60 in July, it has fallen to $US45.58 in mid-November. Slower growth in wages will also impact on government revenue.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY, RESERVE BANK OF AUSTRALIA, AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET, DELOITTE ACCESS ECONOMICS PTY LTD, AUSTRALIAN BUREAU OF STATISTICS, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, RIO TINTO LIMITED – ASX RIO, UNITED STATES. FEDERAL RESERVE BOARD, BLOOMBERG LP

Budget bottom line to take $5b hit

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Original article by Laura Tingle
The Australian Financial Review – Page: 4 : 2-Nov-15

The Australian Government’s mid-year Budget review is expected to include lost revenue and spending costs of about $A5bn over the next four years. Some informed sources have suggested that this figure could even be within the range of $A6bn to $A8bn. Much of the cost blowout is expected to be included in the 2015-16 Budget.

CORPORATES
AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET, DELOITTE ACCESS ECONOMICS PTY LTD, RESERVE BANK OF AUSTRALIA, AUSTRALIA. DEPT OF EDUCATION AND TRAINING