Left Field

Headline: RBA nurtures 'green shoots'

Australian Financial Review, pg 11. Robert Guy. 6 May 2009.

Ronald Reagan’s axiom trust but verify’ appears to have been taken up by Glenn Stevens, governor of the Reserve Bank of Australia, as the RBA made no changes to interest rates at this week’s meeting. To try and maintain full employment and price stability there is still the option of further cuts in the future. The release of the federal budget next week gives the RBA a breathing space within which it can monitor signals from the economy, such as the level of unemployment, and determine its next steps.

Headline: Defence industry in budget firing line

Australian Financial Review, pg 1. John Kerin. 6 May 2009.

The Federal Government has signalled it will seek around $20 billion in savings over ten years from the Defence Department, as it seeks to offset the $100 billion in new weapons spending. According to a defence white paper, the Government is looking to implement Defence Department cuts in areas including administration, maintenance and logistics. I expect Defence to challenge the orthodoxies regarding demand and consumption policy,’ Defence Minister Joel Fitzgibbon said yesterday.

Headline: Confident RBA leaves rates on hold

Australian Financial Review, pg 1. Adrian Rollins. 6 May 2009.

The Reserve Bank of Australia (RBA) has kept the official interest rate on hold at 3 percent, claiming that the effect of recent monetary policy was yet to be observed. RBA governor Glenn Stevens said yesterday that global financial conditions were generally on a path of gradual improvement’. However, Mr Stevens conceded there was scope for further modest rate reductions in the future, with the International Monetary Fund forecasting the global economy to shrink by 1.3 percent in 2009. It came as Treasurer Wayne Swan claimed Government stimulus measures had saved jobs. But he agreed most of the overall outcomes from stimulus measures were yet to be observed. Further light will be shed on any recovery for the economy when United States regulators reveal the results of stress tests on the country’s major banks later this week.

Headline: Brumby charts road to recovery

Australian Financial Review, pg 1. Matthew Dunckley. 6 May 2009.

Victorian Treasurer John Lenders yesterday unveiled the state’s budget which included a $20 billion investment in infrastructure over the next four years. Mr Lenders forecast a $165 million operating surplus for fiscal 2010, aided by a $3 billion increase in Federal Government funding. However, Mr Lenders also flagged a rise in borrowing to $31.3 billion by 2013. Premier John Brumby described it as the most difficult budget to frame since we have been in office.’ Meanwhile, Standard & Poor's reaffirmed the state's AAA credit rating. Deutsche Bank questioned the government's decision not to use the federal government debt guarantee unless if offered best value. Shadow treasurer Kim Wells said there was something 'seriously wrong' about debt levels. Businesses would be disappointed at the lack of tax relief, according to the Victorian Employers Chamber of Commerce and Industry.

Headline: Australian dollar rises above US74c as risk returns

The Australian - online. Paul Evans. 5 May 2009.

Economic data and continued gains for stock and commodity prices kept global risk appetites elevated, resulting in more losses for the US dollar against a broad range of currencies.

Late in the New York session, the Australian dollar was just shy of its daily high at US74.10 cents to trade at US74.06c, while the Canadian dollar made a late extension of its gains to new 2009 highs. By late in the session, the US dollar was buying $C1.1726.

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Headline: Brumby decides to go it alone

Australian Financial Review, pg 5. Matthew Dunckley. 5 May 2009.

The Victorian government is to introduce online planning applications to reduce delays and holding costs to development approvals, following a $10.4 million commitment in the upcoming Victorian state budget. The move comes after a trial by six Victorian councils that resulted in a 30 percent cut to development processing times. Victorian Treasurer John Lenders said the online planning approvals will fast-track private-sector investment, cut red tape and bring jobs into Victoria sooner. Governments in New South Wales, Queensland and South Australia are also looking at streamlining the development approvals. Victorian Planning Minister Justin Madden announced on Friday that the government would approve $862 million of new projects, mostly for Melbourne. The projects include the 20-hectare Kodak site being developed by Urbex; a $300 million redevelopment of Chirnside Park golf course; and Ubertas’s $150 million St Kilda Road apartment project.

Headline: Henry puts state taxes on the table

Australian Financial Review, pg 1. John Kehoe and Annabel Hepworth. 5 May 2009.

The Henry tax review is looking at a broad range of business taxation reforms aimed at lifting investment and cutting tax system complexity. The Business Coalition for Tax Reform (BCTR) proposed several new tax collection proposals to the federal Government that would compensate the states for cutting between $10 billion and $20 billion in state taxes. New research launched by the BCTR showed that the proposals could raise gross domestic product by up to 1.7 percent in the longer-term. Coalition chairman John Stanhope, the chief financial officer of Telstra, said state tax reform would give business the ability to reinvest or bring prices down’, and cut inefficient taxes that jeopardise jobs and hurt industry competitiveness. The chair of the tax review panel, Treasury Secretary Ken Henry, showed support for state reform based on a new federal resources tax that would replace state royalties, plus the scaling back of payroll tax concessions.

Headline: How Timbercorp insiders enjoyed a rails run

Australian Financial Review, pg 1. Angus Grigg and Scott Elliott. 5 May 2009.

Creditors of the failed agribusiness group Timbercorp will meet in Melbourne this morning to begin the process of assessing the company’s $903 million of debt. Of particular interest are two transactions to chairman Rodney Fitzroy, an $11.44 million cash payment and 3 million shares for his stake in Almonds Australia, and a $2 million consulting agreement over five-years that was later terminated and converted into a lump sum payment of $744,000 (just three months before Deloitte said there was 'material uncertainty' over Timbercorp remaining a going concern.) Mr Fitzroy, also chairman of the Victoria Racing club, presides over the Melbourne Cup Carnival. Mr Fitzroy is also the founder of Melbourne property firm Fitzroy's and despite the failure of the company, which owes over $400 million to Australia and New Zealand Banking Group, he has profited from transactions around his board tenure.

Headline: Total borrowing to hit $200bn

Australian Financial Review, pg 6. Andrew Burrell. 4 April 2009.

High levels of infrastructure spending will cause borrowing among Australian states to rise to $20 billion within three years, reports claim. It could lead to more states following the lead of Queensland and having their credit ratings downgraded. Queensland is predicted to have the highest level of debt, followed by New South Wales and Victoria. NSW and Western Australia and most at danger of having their credit ratings downgraded, experts claim. Anna Hughes, from credit rating firm Standard & Poor’s said she expected big increases in borrowing among the states. Colonial First State’s Stephen Halmarick said states borrowing to fund day to day spending would not be viewed favourably while Australia and New Zealand Banking Group’s Katie Dean said the weaker economy meant all states are likely to slip into deficit.

Headline: Millionaires toys keep marine auctioneers bussy

Australian Financial Review, pg 3. Mark Ludlow and Michelle Singer . 4 April 2009.

Auctions of repossessed boats have become more common in recent months, said Marine Auction managing director Adrian Seiffert. Six luxury Sunseeker cruisers were auctioned on Saturday in Brisbane, with four selling for a total of $3.5 million, 40 percent under market value. The luxury cruisers were auctioned as result of boat company Style Yachts, trading as Sunseeker East Coast Australia, going into receivership last year. Clive Palmer paid $385,500 for the 14.6 metre Sunseeker Superhawk 48. Auctions R Us general manager Ken Gargan said liquidation sales had increased to one every fortnight. Queensland-based caravan company, Oakhurst International Caravans, will be auctioned next week after the company was liquidated last month.