FISCAL POLICY – AUSTRALIA

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

Super win sparks stoush

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Original article by Phillip Coorey, Joanna Mather
The Australian Financial Review – Page: 1 & 8 : 24-Nov-16

Federal Treasurer Scott Morrison has ruled out further changes to superannuation after the Senate passed tax reforms that had been announced in the May 2016 Budget. The changes that take effect on 1 July 2017 include restricting annual concessional contributions to no more than $A25,000 and imposing a $A1.6m cap on super retirement accounts. The reforms are expected to generate total savings of $A3bn over four years. However, the Government has stressed the need for a further $A20bn of Budget repair measures if the nation is to retain its "AAA" credit rating.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIAN LABOR PARTY, AUSTRALIAN BUILDING AND CONSTRUCTION COMMISSION, S&P GLOBAL RATINGS

S&P warns deficit must not blow out

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Original article by Jacob Greber
The Australian Financial Review – Page: 1 & 4 : 23-Nov-16

Craig Michaels of S&P Global Ratings says the Federal Government must return the Budget to surplus by 2020-21 if Australia is to retain its triple-A credit rating. He warns that a rating downgrade is possible if a return to surplus is further delayed, noting that a surplus had been forecast by the former Australian Labor Party government for 2012-13. Michaels also notes the domestic economy’s high reliance on foreign lenders continuing to finance the structural current account deficit.

CORPORATES
S&P GLOBAL RATINGS, AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIAN LABOR PARTY, DELOITTE ACCESS ECONOMICS PTY LTD, McKINSEY AND COMPANY, GREAT BRITAIN. OFFICE OF THE PRIME MINISTER, RESERVE BANK OF AUSTRALIA

Coal, iron ore budget windfall

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Original article by Matt Chambers
The Australian – Page: 19 & 32 : 3-Nov-16

The rally in the price of iron ore, coking coal and thermal coal is expected to boost the 2016-17 revenue of the Federal Government and mining states. It is estimated that tax revenue and mining royalties could be around $A12bn higher than the Federal Government and its counterparts in Western Australia, New South Wales and Queensland had forecast. However, this will depend on whether the prices of Australia’s key export commodities remain at around current levels. Macquarie Group expects coal prices to eventually fall, but stresses that the timing of this will depend on Chinese Government policy.

CORPORATES
MACQUARIE GROUP LIMITED – ASX MQG, HSBC AUSTRALIA HOLDINGS PTY LTD, STANDARD AND POOR’S CORPORATION, DEUTSCHE BANK AG, RESERVE BANK OF AUSTRALIA, GLENCORE PLC

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

Foreign debt levels ‘extreme’

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Original article by Adam Creighton
The Australian – Page: 1 & 5 : 10-Oct-16

John Chambers, who heads the sovereign ratings committee of Standard & Poor’s, has warned that Australia’s "AAA" credit rating may be at risk. He has expressed concern about the nation’s rising net foreign debt, noting that it is among the worst of the 130 sovereign nations that the firm rates. S&P downgraded Australia’s credit rating outlook to "negative" in July 2016. Rival rating agencies have also previously expressed concern about Australia’s fiscal position.

CORPORATES
STANDARD AND POOR’S CORPORATION, AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET, AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIAN LABOR PARTY, RESERVE BANK OF AUSTRALIA, MOODY’S INVESTORS SERVICE INCORPORATED, FITCH RATINGS LIMITED, AUSTRALIAN BUREAU OF STATISTICS, AUSTRALIA. PARLIAMENTARY BUDGET OFFICE, AUSTRALIA. DEPT OF FINANCE, AUSTRALIAN GREENS, WORLD BANK, INTERNATIONAL MONETARY FUND

No more rate cuts: Morrison

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Original article by John Kehoe
The Australian Financial Review – Page: 1 & 6 : 10-Oct-16

Federal Treasurer Scott Morrison believes that the Reserve Bank of Australia should cease reducing the cash rate, arguing that monetary policy has reached the limit of its effectiveness in stimulating the economy. He says the focus should now shift to fiscal policy. The central bank has reduced the cash rate twice in 2016 but left it on hold at 1.5 per cent in October. Morrison notes that the heads of other central banks have acknowledged the declining effectiveness of monetary policy.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY, RESERVE BANK OF AUSTRALIA, BANK OF ENGLAND, GREAT BRITAIN. OFFICE OF THE PRIME MINISTER, GROUP OF TWENTY (G-20), INTERNATIONAL MONETARY FUND, PEOPLE’S BANK OF CHINA, UNITED STATES. FEDERAL RESERVE BOARD

Families to wear cost of budget savings deal

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Original article by David Crowe
The Australian – Page: 1 & 4 : 14-Sep-16

The Australian Government will press ahead with $A6.3bn worth of savings measures after the Opposition agreed to support its proposed changes to family tax benefits. The Australian Labor Party will support 20 of the 24 savings initiatives that were included in the Government’s "omnibus" bill, with both sides of politics agreeing to some concessions. The Government has backed down on measures such as abolition of the clean energy supplement for welfare recipients.

CORPORATES
AUSTRALIAN LABOR PARTY, AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET, AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIA. DEPT OF FINANCE, AUSTRALIAN RENEWABLE ENERGY AGENCY

Dole compromise to win budget deal

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Original article by Phillip Coorey
The Australian Financial Review – Page: 1 & 4 : 13-Sep-16

The Australian Government has backed down on a key measure in its "omnibus bill" to secure the Opposition’s support for the majority of its cost-saving initiatives. The Government is believed to have agreed to abandon its proposal to cease compensating welfare recipients for the impact of the carbon tax. Some Family Tax Benefit payments are also expected to be reduced as part of the compromise deal. Meanwhile, Prime Minister Malcolm Turnbull has noted in Parliament that the unemployed rate has fallen from 6.3 per cent to 5.7 per cent in the 12 months since he ousted Tony Abbott.

CORPORATES
AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET, AUSTRALIAN LABOR PARTY, AUSTRALIA. DEPT OF FINANCE, AUSTRALIA. DEPT OF THE TREASURY, LIBERAL PARTY OF AUSTRALIA, RESERVE BANK OF AUSTRALIA, BUSINESS COUNCIL OF AUSTRALIA, GROUP OF TWENTY (G-20)