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Wednesday, 30 May 2012 13:10

Update on Debt Crisis in Europe

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There has been increasing sharemarket volatility in recent weeks following the inconclusive election results in Greece.

What will happen next?
We believe that policymakers in Europe will be keenly aware of the lessons learnt from the financial crisis of 2008. Because of this, we do not necessarily believe that a disorderly Greek exit is a foregone conclusion.

Elections in Europe demonstrate that budget cuts or austerity will only ever be plausible so long as they have the support of the public. Voters in France, Italy and Greece have all unequivocally rejected the austerity at all costs approach so far in managing the crisis.

The French election has shifted the pendulum towards the possibility of a more lasting solution to the crisis - one that balances long-term structural reform, pro-growth policies and balanced budgets.

Greek exit not a foregone conclusion
While the last election in Greece saw voters resoundingly reject austerity, they equally rejected an exit from the Euro. A disorderly exit may be prevented by political will and the need to contain adverse outcomes for Europe and the rest of the world.

And, make no mistake, policymakers in the US and Asia will be tapping the shoulders of their European counterparts for an immediate and lasting solution. This may see Europe agreeing to fund Greece or a preplanned, orderly exit from the Euro.

What is the impact of the European crisis to the rest of the world?
The relative importance of Europe to Australia is small and declining – less than 10% of our exports go to the region. Asia is much more important and this dominance will only grow on record amounts of investment in the energy and resource sector.

The impact on China is also expected to be manageable. While Europe is China’s biggest customer for its exports, the recent slowdown in China has been driven primarily by higher interest rates to curb uncomfortably high inflation.

The US recovery is also continuing, and for Europe, Greece represents less than 3% of the European economy, implying that the crisis can be managed.

Given the potential escalation to Italy and Spain there is a common interest amongst all to put brinksmanship aside and implement a workable and lasting solution.

Interest rates and the AUD - twin support measures for Australia
If the European situation were to deteriorate Australian policymakers can rely on lower interest rates and a depreciating currency.

The RBA recently cut rates by 50 basis points, which is expected to support the non-resource economy, including retail sales and housing.

The Australian dollar will also track European concerns but the pace of depreciation has so far been much less than during the financial crisis in 2008.

The Federal Government also has scope to provide stimulus to the economy should there be a need to do so.

Things to consider
In periods of uncertainty many turn to cash or other strategies perceived to be safe. It is during these periods that investors all too often make decisions that are contrary to their long-term objectives.

While equity markets may well fall if Greece were to exit the Euro, it is important to also recognise that the global economy is still growing and global companies are making profits, paying back their debt and providing dividends to investors.

At the same time, the return on cash investments will decline on interest rate cuts. Bond markets look fully valued with yields near, or at, record lows for many developed economies.

During uncertain times long-term opportunities are most likely to emerge while equity markets remain below long-term valuations and policymakers may surprise markets, which could lead to a sharp turnaround in the price of equities.

Remember that frequent and undisciplined changes to your portfolio may lead to poor results. History has shown that missing just a few of the best months in equity markets may substantially reduce your overall return.

Note: Advice contained in this article is general in nature and does not consider your personal situation or needs. Please do not act on this advice until its appropriateness has been determined by a qualified adviser.  While the taxation implications of this strategy have been considered, we are not, nor do we purport to be registered tax agents. We strongly recommend you seek detailed tax advice from an appropriately qualified tax agent before proceeding.  The information provided is current as at May 2012.

Monday, 28 May 2012 11:25

Age Care Reforms Announced

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On 20 April 2012, the Prime Minister and the Minister for Social Inclusion and Minister for Mental Health and Ageing, announced the ‘Living Longer Living Better’ plan, a 10-year plan beginning on 1 July 2012.

To make it easier for older Australians to stay in their home while they receive care, the Government will:

  • Increase the number of Home Care Packages- from 59,876 to almost 100,000     (99,669).
  • Provide tailored care packages to people receiving home care, and new funding for dementia care.
  • Cap costs, so that full pensioners pay no more than the basic fee.

To make sure more people get to keep their family home, and to prevent anyone being forced to sell their home in an emergency fire sale, the Government will:

  • Provide more choice about how to pay for care. Instead of a bond which can cost up to $2.6 million and bears no resemblance to the actual cost of accommodation, people will be able to pay through a lump sum or a periodic payment, or a combination of both.
  • Give families time to make a decision about how to pay, by introducing a cooling-off period.
  • Cap care costs, with nobody paying more than $25,000 a year and no more than $60,000 over a lifetime. This measure will not affect people already in the system.

To ensure immeditate improvements, the Government will also:

  • Increase residential aged care places from 191,522 to 221,103
  • Fund $1.2 billion to improve the aged care workforce through a Workforce Compact.
  • Provide more funding for dementia care in aged care, and more support for services.
  • Establish a single gateway to all aged care services, to make them easier to access and navigate.
  • Set stricter standards, with greater oversight of aged care.

Implementation of the reforms will be overseen by a new Aged Care Reform Implementation Council. The new reform package will be implemented in stages to enable providers and consumers to gain early benefits of key changes and have time to adapt and plan for further reform over the 10 years.

Home care

  • Home Care packages will increase from 59,876 to 99,669 over the next 5 years
  • Under new means-testing arrangements for Home Care packages, which will start from 1 July 2014, a consistent income test will be introduced. This will ensure that people of similar means pay similar fees – regardless of where they live – with safeguards for those who can least afford to pay.
  • The means test will not include the family home, which remains exempt.
  • People currently receiving a Home Care package will not be subject to the new arrangements while their current care continues.
  • In addition, to protect care recipients with higher than average care needs, an indexed annual cap of $5,000 for single people on income less than $43,000, and on a sliding scale of up to $10,000 for self-funded retirees, will apply to care fees. A lifetime care fee cap of $60,000 will be introduced.

Residential care

  • From 1 July 2014, the maximum accommodation supplement that the Government pays to aged care providers when people are unable to meet the cost of their accommodation will be increased from $32.58 to around $52.84 per day. As a result, the Government expect aged care places to increase from 191,522 to 221,103.
  • There will be more choice about how to pay for their care. Residents can pay for their accommodation in a lump sum, periodically, or a combination of both. A new cooling off period will mean that residents will not need to decide how they are going to pay until they have actually entered care.
  • From 1 July 2014, residential care means testing will be strengthened and improved. The treatment of the family home will not change from current arrangements.
  • An annual cap of $25,000 and a lifetime cap of $60,000 will apply to care fees.

Source: Hon Julia Gillard, Prime Minister & Hon Mark Butler, Minister for Social Inclusion & Minister for Mental Health & Ageing, Media Release.

 

Friday, 27 January 2012 13:17

Global Economy - A Little Less Scary

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Introduction

The past few weeks have been interesting. Sovereign rating downgrades in Europe have intensified. The World Bank and now the International Monetary Fund (IMF) have slashed their growth forecasts for this year and warned of the risk of a global downturn worse than that associated with the global financial crisis. Yet share markets and other  risk trades  have almost said “ho-hum”. So what’s going on? Our take is the markets are telling us that a lot of the bad news has already been factored in. The ratings downgrades were flagged back in early December and the World Bank/IMF growth forecasts downgrades have only just caught up to private sector economists.1

This is not to say we are out of the woods, or that volatility will disappear. But it does seem the risk of a global financial meltdown has receded  somewhat and that the global economic  recovery appears to be continuing.

Europe – reduced risk of a financial blow-up Europe is on track for a mild recession  but the risk of a financial blow-up resulting in a deep recession  seems  to have receded  a bit. The provision of cheap US dollar funding by the US Federal Reserve and very cheap euro funding for three years by the ECB under  its long-term refinancing operations appears to have substantially reduced the risk of a liquidity crisis causing banking  collapses. It has also reduced pressure  on European banks to sell bonds in troubled countries.

We would have preferred the ECB to have directly stepped up its buying of bonds in troubled countries, but its back door approach has nevertheless seen a sharp expansion in the ECB’s balance sheet. In other  words, it appears to have embarked on quantitative easing, albeit it wouldn’t admit  it.

Reflecting this, bond yields in Spain, Italy and France and spreads to Germany – which were surging towards the end last year – have settled down. Similarly, European  bank stock prices appear to have stabilised.

This is not to say Europe is no longer a source of risk. It still is – it’s doubtful that even with the proposed debt restructuring Greece’s public debt is on a sustainable path, fiscal austerity is still bearing  down on growth across Europe, more ratings downgrades are likely and monetary conditions are still too tight. But the risk of a meltdown appears to have receded. What’s more European business conditions indicators have picked up in the last two months.

In November, we referred to three scenarios  for Europe:

1.  Muddle through – i.e. a continuation of the last few years of occasional  crises temporarily settled by last minute bare minimum policy responses.

2.  Blow up – in which a financial crisis and deep recession  see a break-up of the euro.

3.  Aggressive ECB monetisation – with quantitative easing  heading off economic calamity, albeit not quickly enough to prevent a mild recession.

Recent action by the ECB appears to have reduced the chance of the ‘Blow up’ scenario (probably to around 25%). The costs of leaving the euro for countries like Greece (which would include a likely banking  crisis as Greek citizens rushed to secure their current bank deposits,  which are all in euros, and default on its public debt anyway) still exceed the likely benefits, so it still looks like the euro will hang together. Overall, the most likely scenario  appears to be some combination of ‘Muddle through’ but with more aggressive ECB action preventing it from spiralling into a ‘Blow up’.

 

The US – no double dip (again)

During the September quarter a big concern was that the US economy would ‘double dip’ back into recession. This, along with escalating worries about Europe and the loss of America’s AAA sovereign rating, combined to produce sharp falls in share markets.  Since then, US economic data has turned around and surprised on the upside:

>   Retail sales growth has hung in around 7% year-on-year despite a sharp fall in consumer confidence

>   Jobs growth has picked up

>   Housing-related indicators have stabilised and in some cases started to improve, and

>   Gross domestic product (GDP) growth has picked up pace again after a mid-year softening.

Earlier concerns about a 1.5% to 2% of GDP fiscal contraction in 2012 dragging growth down have faded as Congress has agreed to extend payroll tax cuts and expanded unemployment benefits for another two months, with a good chance they will be extended for the full year.

More fundamentally, the US appears to be starting to enjoy somewhat of a manufacturing renaissance (in stark contrast to Australia!).  there are numberous anecdotes of global companies moving manufacturning to the US including Electrolux, Siemens, Maserati and Honda (which chose to build a new ‘super car’ in Ohio rather than in Japan). Furthermore, General Motors is now the world’s top selling car maker again. Could a decade-long fall in the US dollar and very strong productivity growth be sowing the seeds of a long-term turnaround in America’s fortunes?

 

China – so far so good

Chinese economic growth has slowed to 8.9%, but there is no sign of a hard landing. Export growth has slowed sharply but so too has import growth and in any case net exports have not been a contributor to growth in recent years. Moreover, retail sales growth has held up well and fixed asset investment has slowed only slightly.

Furthermore, falling inflation (from 6.5% in July to 4.1% in December) and a cooling property market, evident by falling prices in 52 of 70 major cities in December, and falls in sales and dwelling starts  provide authorities with the ability to ease the economic policy brakes. And there is plenty of scope to ease.   Large banks are currently required to keep a record high 21% of their assets in reserve, the key one-year lending rate is at 6.6%, the budget deficit was just 1.1% of GDP last year and net public debt is around zero once foreign exchange reserves of US$3 trillion and other assets are allowed for.

After doubling between October 2008 and August 2009 on global financial crisis related stimulus and a growth recovery, Chinese shares fell 38% to the low early this month as investors feared tightening policy would result in a hard landing.  With Chinese price to earnings multiples having fallen back to bear market lows and policy starting to ease again, decent gains are in prospect over the next few years.

 

Global growth

The next chart highlights the improvement recently in global economic indicators. Manufacturing conditions in most  major countries were in decline into the September quarter, but in recent months have either stabilised or started to improve.

What does this mean for investors?

None of this is to say it will be smooth sailing going forward. Europe’s problems are a long way from being solved, uncertainty remains regarding fiscal policy in the US, Chinese authorities will need to ease soon to ensure a soft landing and the Reserve Bank in Australia also needs to cut more. On top of this, after a solid start to the year shares are getting a bit short-term overbought, some short- term sentiment measures are a bit elevated and the hot and cold pattern of US data releases warns we may soon see a cold patch. So shares are vulnerable to a short-term setback (with February often a soft month in contrast to the seasonal strength seen in January).

However the improved global economic outlook and reduced tail risks regarding Europe suggests 2012 should be a better year for shares and other risk assets.  This is also supported by the fact that shares are starting the year well below year ago levels.

Signposts investors should watch  include: the size of any share market  setback  in the seasonally weak month of February; bond yields in Italy, Spain and France; the US ISM manufacturing conditions index; and Chinese money supply growth.

Dr Shane Oliver, Head of Investment Strategy and Chief Economist

AMP Capital Investors

 

 

PLEASE LEAVE A COMMENT/QUESTION BELOW

 

1 Our global growth forecast for 2012 is 3%, which compares to the IMF’s new forecast of 3.25% and the World Bank’s new forecast of 3.4% (if purchasing power parity weights are used to combine  countries).

 

Note: Advice contained in this articler is general in nature and does not consider your personal situation or needs. Please do not act on this advice until its appropriateness has been determined by a qualified adviser.  While the taxation implications of this strategy have been considered, we are not, nor do we purport to be registered tax agents. We strongly recommend you seek detailed tax advice from an appropriately qualified tax agent before proceeding.  The information provided is current as at January 2012.

 

 

 

 

Tuesday, 29 November 2011 15:56

Protect Your Biggest Assest: Your Ability To Earn

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Protect your biggest asset: your ability to earn

If your lifestyle is dependent on your ability to work, an extended period of absence through illness or injury could be devastating to you and those who are dependent on you.

Income protection insurance replaces your income up to the insured benefit amount of the policy. Most commonly the maximum cover is 75% of earnings (after business expenses, but before tax)

The waiting period can vary; it can be as short as 14 days or as long as two years or more. It is important to remember that benefit payments usually do not start immediately; a waiting period will apply during which no benefit is payable.

The maximum period of time that payments continue is called the benefit period. A range of benefit periods are available — some as short as one year, with the longest continuing through to age 65. Once benefits start, payments are usually made monthly in arrears.

Tax effectiveness - Premiums for income protection policies have the benefit of being fully tax deductible – a good way to protect yourself and reduce tax.

What are the alternatives? - Is this the insurance you have to have? It’s up to you of course, but consider some of the alternatives……….

Family assistance - You could rely on family or friends to help you but they’re likely to have their own financial obligations, and this may needlessly strain your relationship.

Savings - You could use savings in the short term to support yourself, but problems arise if your savings are not readily accessible or your incapacity is long term. You are also spending money that you’ve worked hard to save over an extended period of time.
Employer - You may be a valuable employee but your employer is unlikely to be able to continue paying you and find, train and pay your replacement.

Benefits - Workers’ compensation may help if your injury or illness is work related. Or social security may be available, if you meet the means tested eligibility criteria. In both cases, the benefit levels are unlikely to meet your needs.

 

Note: Advice contained in this flyer is general in nature and does not consider your particular situation or needs. If information contained is not appropriate to you at this stage please pass on to family and friends who may benefit. Please do not act on this advice until its appropriateness has been determined by a qualified adviser.

For more information on Income Protection Insurance or to arrange a no-cost, no-obligation first consultation, please contact: GEM Capital on Ph:8273 3222

What are the chances of being prevented from working as a result of a sickness or injury? More than 60% of Australians will be disabled for more than 1 month during their working life. More than 15% will be disabled for more than 3 months during their working life. Source: Institute of Actuaries Table IAD 1989-93 and ALT 90-92

What are Essential Fatty Acids and why are they so important in our diet?

Essential Fatty acids (EFAs) are the “good fats” and are necessary fats that humans cannot synthesize, and must be obtained through diet. There are 2 families of EFAs: Omega 3 and Omega 6.

Western diets are deficient in omega-3 fatty acids, and have excessive amounts of omega-6 fatty acids compared with the diet on which human beings evolved and their genetic patterns were established.

Good fats compete with “bad fats”, so it’s important to minimize the intake of cholesterol (animal fat) while consuming enough good fats. Also good fats raise your HDL or “good cholesterol” one of the jobs of your good cholesterol is to grab your “bad cholesterol” (LDL), and escort it to the liver where it is broken down and excreted. In other words these good fats attack some of the damage done by the bad fats. This is very important in an age when so many people in the Western world are struggling to get their cholesterol down, and fight heart disease and obesity.

EFAs support the cardiovascular, reproductive, immune, and nervous systems. The human body needs EFAs to manufacture and repair cell membranes, enabling the cells to obtain optimum nutrition and expel harmful waste products. A primary function of EFAs is the production of prostaglandins, which regulate body functions such as heart rate, blood pressure, blood clotting, fertility, conception, and play a role in immune function by regulating inflammation and encouraging the body to fight infection EFA deficiency and Omega 6/3 imbalance is linked with serious health conditions such as heart attacks cancer, insulin resistance, asthma, lupus, schizophrenia, depression, accelerated aging, stroke, diabetes, arthritis, ADHD, and alzheimer’s disease, among others.

What foods provide omega-3 fatty acids?

Salmon, flax seeds and walnuts are excellent sources of omega-3 fatty acids. Very good sources include scallops, chia seeds, cauliflower, spinach, pumpkin seeds, brazil nuts, avocado, cabbage, cloves and mustard seeds. Good sources include halibut, shrimp, cod, tuna, soybeans, tofu, kale, collard greens, and Brussels sprouts.

It is important to note the EFAs are perishable, they deteriorate rapidly when exposed to light, air and heat so freshness is important.

There are many EFA supplements available including fish oil, flaxseed oil, cod liver oil etc, for more information consult your health professional.

This information is for general educational purposes only and does not replace individualized diagnosis and care.
Donald Rudin, MD, and Clara Felix. Omega-3 Oils; A practical Guide. US: Avery, 1996.
Andrew L. Stoll, MD. The Omega-3 Connection. New York: Fireside, 2001.

Sunday, 16 October 2011 12:38

Tribute to Peter Ruehl (who passed away on 11th April 2011)

Written by

Understanding Gillard is a Little Taxing (from the book Men are Stupid, Women are Crazy) – published on 1st March 2011 in the Aust Financial Review

When ‘s a tax not a tax? When Julia Gillard says it isn’t. At least that’s what she says about the carbon tax, you know, the one she said, just before the last election, that she would not bring in. So it’s not really a tax. It’s really just a little something Hallmark will be sending out to you to remind you to have a nice day and, by the way, give the government a bunch of your money.

I don’t know what you think about global warming, not having made up my mind about it myself. I mean, I know things are heating up in some parts of the world but I don’t know whether it’s my fault or whether it was going to happen anyway, sort of like the latest Charlie Sheen meltdown. But let’s say global warming is our fault. Well, not ours. It was our parents’ fault. They were the ones who were driving around in those big cars with leaded fuel. They were eating all that red meat from cows that broke wind all over the place and killed the ozone layer. But we should fix it up, right?

So we do it with a carbon tax. Gillard, by the way, has since recanted a little bit, or depending on your view, a whole lot of a real little bit. She now admits she said before the election that there wouldn’t be a carbon tax (nice to know she believes in videotape), but if I’m following her through this, she thinks the situation has changed. What’s changed? Have the polar ice floes reached Sydney? Are you starting to feel a little scammed here?

It reminds me of the time George H W Bush said “Read my lips: no new taxes. You can dress up and disguise a new tax any way you want, but people can spot one the minute you put it out there. Bush tried that trick. He was also a one-term president. Too bad, in a way, because overall he was a better president than his fruitcake son, who lasted two terms.

Gillard will probably get the tax through because it has the backing of the Greens and independents. The Greens never met an environmental tax they didn’t like, and the independents know they’d better go along because it wouldn’t take much to change governments and they’ve got enough trouble just showing up for work as it is. But that’s the high price you pay for having two of the loonier elements in politics propping up your government.

This must have been really comforting to Gillard: Kristina Keneally backed her stand on the carbon tax. Getting an endorsement from anybody in New South Wales Labor on anything is like having Lindsey Lohan appear as a character witness, but Kristina wanted everybody to know she thought it was a hot idea. Great. Any time that anybody from the New South Wales ALP comes up with a hot idea, about five people have to quit their jobs.

Keneally said that households should be compensated for the carbon tax. This is a great governmental solution to any problem that comes up (and that is, as is more often the case than not, a problem caused by the government). When in doubt, compensate. In other words, you’ve just proposed something a lot of people can’t pay for so you have to use your money to pay them to pay you. Makes perfect sense. After all, who’s going to be paying the wacky carbon tax; we’re also going to be helping the people who can’t pony up (and like the rest of us, shouldn’t have to anyway)

Fuel and electricity prices are going up. Retailers all over the country are singing the blues because they’re not hearing enough ka-ching, ka-ching. Now I not the time to be coming up with a new tax most people don’t completely understand to begin with. (Every time I think I’ve got a grip on it, somebody comes along, changes the subject and I have to start all over again.)

The 1st July 2011 marks a significant change in the formation of the Senate in Australian politics.  The balance of power in this house of Government now shifts to the Greens.

Leading Australian businessmen have voiced their concerns that the current Government is anti-business and that they are being dictated to by minority parties (including the Greens).  This sentiment is best captured by John Symonds, the founder of Aussie Home Loans who recently said “We’ve got a Government in limbo, dictated to by minor factions”.  Gerry Harvey from Harvey Norman called for a fresh election suggesting that the current state of the Government is contributing to poor consumer sentiment.

Usually investors do not have to concern themselves over politics, however given the circumstances Australia now finds itself in politically, we argue that investors must pay attention to this issue as it has the potential to influence investment outcomes.

Given that the Greens now arguably have greater influence over Federal politics, we thought it appropriate to examine some of what they stand for.

We have produced a table that outlines 10 of the Greens policy ideas, and included some of the risks to the Australian economy that each policy idea represents.

 

Policy Idea Potential Risk to Australian Economy

Limit Australian Banks ability to move interest rates for housing loans so that they can only move in line with official Reserve Bank rate movements (bill presented to parliament last year, supported by some of the Independants) During times when Banks have to pay more to buy funds to lend out to consumers like we have recently seen, would lead to housing lending becoming unattractive for banks.

 

This could lead to banks making less credit available for the housing sector, which in turn would most probably lead to severe stress in housing prices (but at least this would achieve one of the other policy agendas for the Greens which is affordable housing).

 

Consumer spending is also heavily influenced by state of the housing market.

 

There was an excellent article written on this issue at Greens Banking Bill article

 

Ensure all employees, including casual, fixed term and probationary workers, and employees of small business have the same rights to challenge termination of employment where it is unfair, with reinstatement to be the remedy except in exceptional circumstances.  (source www.greens.org.au)

 

Likely to provide disincentive for small business to hire staff.

 

Small business employ the majority of the workforce in Australia.

 

This could contribute to heightening unemployment in Australia.

Repeal any independent contractors legislation that strips employment rights from individuals (source www.greens.org.au)

 

Use of contractors is widely used in construction industry.

 

Employees rather than contractors makes a workforce less flexible, and arguably more expensive for business.

 

Probable result is increase in construction costs for housing, NBN, and other constructions.

 

Seems at odds with the Greens affordable housing idea.

 

Article on Contractors under attack

 

Legislatively protect the right to strike, as recognised in International Labour Organization conventions No. 87 and No. 98, as a fundamental right of workers to promote and defend their economic and social interests. (source www.greens.org.au)

 

Likely to lead to increased industrial action, which could result in businesses opting to run their operations from other countries.

 

Likely result is to increase costs for Australian business which could lead to business looking to locate more of their operations offshore

 

Limit the tax deductibility of any executive salaries to 25 times the minimum full-time adult wage (source www.greens.org.au)

 

Arguably one of the reasons the standard of our political leaders is relatively poor, is that they are poorly paid when compared to leadership positions in the private sector.

 

This could lead to Australia’s top business leaders being enticed away from Australia and Australian business being run by poorer quality management.  This in turn could lead to lower returns for investors from Australian companies.

 

 

Abolishing the 30% Private Health Insurance Rebate in order to increase funding for public hospitals (source www.greens.gov.au)

 

Private system is already overstretched.

 

 

Removing the concessional arrangements for Capital Gains Tax (source www.greens.org.au)

 

Disincentive for people to invest in assets that grow in value such as shares, property and businesses.

 

Asset values could fall, fewer people start businesses as incentive removed to build assets.

 

 

Oppose any increase or extension to the GST (source www.greens.org.au)

 

One of the benefits of GST is that all those who consume goods or services, pay tax.  Even those who operate in the cash economy end up paying tax when they spend money.

 

It has broadened the tax base for Australia and while we are not necessarily supporting an increase in GST, we would question the wisdom of removing this as an option to increase Government revenue in a broad way if required in the future.

 

Could lead to further complexity in the tax system as new taxes are introduced to bolster revenue.

 

Increase the Company Tax Rate to 33%

(source www.greens.org.au)

 

Reduces company profits, which reduces shareholder returns (virtually all Australians own shares directly or through their super funds).

 

Conduct a full review of the superannuation system with the aim of reducing its complexity and establishing progressive rates of superannuation taxation. (source www.greens.org.au)

 

Peter Costello removed much of the complexity from the superannuation system in 2006.

 

Is this code for increasing taxation on superannuation savings, particularly for those who would be considered as self funded and considered “well off”.

 

 

It would seem apparent that several of the Greens policy ideas are already influencing the current Government’s policy positions.

The Greens until now have not really had to stand up to scrutiny over their policies as they have never been in a real position of power.  That has now changed and it is appropriate that the Australian public pays close attention to the effects of what some of the outcomes are likely from what this political party stands for.

There is concern that there are many unintended consequences of the policies being promoted by the Greens, that could not only effect investors, but all Australians.  The purpose of this article is to put the spotlight on some of these policies so that informed choices can be made for the good of Australia.

As One Nation discovered, it was relatively easy to be anti policies of the day, but they did not stand the test of scrutiny when they began to develop policies of their own.  We are about to see how the Greens fare now that they are in a position where they too have to develop policies that reach well beyond the environment.

This article has been written by Mark Draper, and do not reflect views of the dealer group.

 

Note: Advice contained in this articler is general in nature and does not consider your personal situation or needs. Please do not act on this advice until its appropriateness has been determined by a qualified adviser.  While the taxation implications of this strategy have been considered, we are not, nor do we purport to be registered tax agents. We strongly recommend you seek detailed tax advice from an appropriately qualified tax agent before proceeding.  The information provided is current as at June 2011.

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