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AMP Federal budget 2016

Friday, May 06, 2016

 2016-17 Federal Budget- Client Briefing     


4th May 2016                                                                    


Federal Treasurer Scott Morrison put forward a number of proposed changes, mainly around contributions to superannuation and taxation, in his budget speech last night. Here’s a brief roundup of what the proposals could mean for you—whether you’re starting out in your career, taking care of family, on the cusp of retirement or enjoying life after work. Remember, proposals are not set in stone and could change as legislation passes through parliament.




1. Lifetime cap for non-concessional superannuation contributions

Proposed effective date: 7.30pm (AEST) 3 May 2016


Currently, the non-concessional contributions cap is $180,000 per person, per financial year. If you are under age 65 at any time in the financial year, you can make a non-concessional contribution of up to $540,000 under the bring-forward provisions. The government proposes to replace the current contributions cap with a $500,000-lifetime non-concessional contributions cap. This lifetime cap is proposed to commence at 7.30pm (AEST) on 3 May 2016. The cap will be indexed to average weekly ordinary time earnings (AWOTE). The lifetime cap will take into account all non-concessional contributions made on or after 1 July 2007. Contributions made between 1 July 2007 and 3 May 2016 will be counted towards this lifetime cap. However, contributions made before the commencement of this measure, that is 7.30pm (AEST) on 3 May 2016, will not result in an excess. Excess contributions made after commencement will need to be removed or be subject to penalty tax.


2. Reduction of the concessional contributions cap

Proposed effective date: 1 July 2017


Currently, the standard concessional contribution (CC) cap is $30,000 per financial year. A higher temporary concessional contributions cap of $35,000 (unindexed) applies if you are aged 49 years or over on 30 June of the previous financial year. The government is proposing to reduce the annual cap on concessional superannuation contributions to $25,000 for everyone, irrespective of their age.


3. Reduction to Division 293 tax threshold

Proposed effective date: 1 July 2017


From 1 July 2017, the government has proposed to lower the Division 293 threshold (the point at which high-income earners pay an additional 15 per cent tax on contributions) from $300,000 to $250,000.


4. Allowing catch up concessional contributions

Proposed effective date: 1 July 2017


Currently, the concessional contributions cap is applied on a ‘use it or lose it’ basis. That is, the unused amount of the concessional cap cannot be carried forward. From 1 July 2017, the government will allow eligible individuals to make additional concessional contributions where they have not reached their concessional contributions cap in previous years. This option will only be available to those individuals with a superannuation balance less than $500,000. It is proposed that the unused amounts will be carried forward on a rolling basis for a period of five consecutive years with only unused amounts that accrue after 1 July 2017 being eligible. The proposed measure will also apply to members of defined benefit schemes.


5. Removal of the work test to contribute to superannuation

Proposed effective date: 1 July 2017


Currently, individuals aged 65 to 75 who want to make voluntary superannuation contributions need to meet the work test. People aged 70 or over are also currently unable to receive contributions from their spouses. The government will remove these restrictions for all individuals aged less than 75, from 1 July 2017.


6. Making it easier to claim tax deductions for personal super contributions

Proposed effective date: 1 July 2017


Currently, if you are engaged in employment activities during a financial year, a deduction for personal superannuation contributions can only be claimed where the ‘less than 10% rule’ is satisfied. This rule broadly requires that the income attributable to employment activities does not exceed 10% of income from all sources. 2016–17 Federal Budget – client briefing 4 May 2016 The government is proposing to abolish this test, allowing all individuals up to age 75 to claim an income tax deduction for personal superannuation contributions. If legislated, this will effectively allow all individuals, regardless of their employment circumstances, to make concessional superannuation contributions up to the concessional cap. Observations: –– This measure assists those whose employer may not provide the ability to make salary sacrifice contributions to super. It will also assist those who are partially self-employed and partially wage and salary earners.


7. Introducing the Low-Income Super Tax Offset (LISTO)

Proposed effective date: 1 July 2017


From 1 July 2012, individuals with an income of up to $37,000 automatically received a government contribution of up to $500 paid directly into their super. However, this Low Income Superannuation Contribution (LISC) will not be available in respect of concessional contributions made after 1 July 2017. From 1 July 2017, the government is proposing to introduce a replacement – the Low Income Superannuation Tax Offset (LISTO). The LISTO will provide a non-refundable tax offset to superannuation funds, based on the tax paid on concessional contributions made on behalf of low-income earners, up to an annual cap of $500. The LISTO will apply to members with adjusted taxable income up to $37,000 who have had a concessional contribution made on their behalf.


8. Making spouse contributions more attractive

Proposed effective date: 1 July 2017


Currently, if you make contributions into your spouse’s account you are entitled to a tax offset of up to $540 if certain requirements are met. One of the requirements to qualify for the maximum offset is that the receiving spouse’s assessable income, reportable employer superannuation contributions, and reportable fringe benefits in the financial year must be less than $10,800. To be eligible to receive the contribution, the receiving spouse must currently be: –– under age 65, or –– aged between 65 and 70 and has met the work test for the financial year in which the contribution is made. The government proposes to: –– remove the work test restrictions for all individuals aged up to 75, and –– increase access to the spouse superannuation tax offset by raising the lower income threshold for the receiving spouse to $37,000 (cutting out at $40,000).


9. Changes to the taxation of Transition to Retirement (TTR) income streams

Proposed effective date: 1 July 2017


The internal earnings within a superannuation account on the amount used to purchase a pension are currently tax-free. This will no longer apply to transition to retirement income streams from 1 July 2017 should the proposal go ahead. This means that earnings on fund assets supporting a transition to retirement income stream after this date would be subject to the same maximum 15 per cent tax rate applicable to an accumulation fund.


10. The introduction of a $1.6 million superannuation transfer balance cap

Proposed effective date: 1 July 2017


From 1 July 2017, the government is proposing to introduce a $1.6 million transfer balance cap. This cap will limit the total amount of accumulated superannuation benefits that an individual will be able to transfer into the retirement income phase. Subsequent earnings on pension balances will not form part of this cap. If you have superannuation amounts in excess of $1.6 million, you will be able to maintain this excess amount in a superannuation accumulation account (where earnings will be taxed at the concessional rate of 15 per cent). A tax on amounts that are transferred in excess of the $1.6 million cap (including earnings on these excess transferred amounts) will be applied, similar to the tax treatment that currently applies to excess non-concessional contributions. Fund members who are already in the retirement income phase with balances above $1.6 million will be required to reduce their retirement balance to $1.6 million by 1 July 2017 should the proposal go ahead. These excess balance amounts may be converted to a superannuation accumulation account.


Taxation – general


11. Changes to marginal tax rates

As speculated, a tax cut has been proposed at the current $80,000 taxable income threshold. As a result, marginal tax rates for resident taxpayers are proposed to change as follows:

                 2015–16                                                               2016–17

Income ($)              Marginal tax rate (%)                        Income ($)           Marginal tax rate(%)


 0-18,200                                           0                           0-18,200                                      0

18,201-37,000                                  19                           18,201-37,000                             19

37,001-80,000                                32.5                          37,001-87,000                           32.5       

80,001-180,000                                37                           87,001-180,000                            37

>180,000                                         47                           >180,000                                    47


Notes: Medicare levy may also apply, 47% tax rate includes Temporary Budget Repair Levy (TBRL, additional 2%). The TBRL is due to expire from 30 June 2017 and has not been extended in this budget. 


–– The Low Income Tax Offset (LITO) remains unchanged which gives resident taxpayers an effective tax-free threshold of $20,542 in 2016–17.

–– Indicative tax cuts: If you earn $87,000 or more per year, you would get a maximum tax cut of $315 under this measure. If you earned less than $80,000 there will be no change to your tax      calculation.


Taxation – small business


12. Increase in small business entity turnover thresholds

Proposed effective date: 1 July 2016


Starting from 1 July 2016, the government proposes to increase the small business annual aggregated turnover threshold from $2 million to $10 million for certain small business concessions. From 1 July 2016 these small business concessions include:

–– the lowering of the small business corporate tax rate (see below)

–– for all businesses with annual aggregated turnover of less than $10 million simplified asset depreciation rules, including immediate tax deductibility for asset purchases costing less than $20,000 until 30 June 2017, and

–– other tax concessions such as the extension of the FBT exemption for work-related portable electronic devices and the immediate deduction of professional expenses.


–– The current $2 million turnover threshold, or alternative $6 million net asset value test, will be retained for access to the small business Capital Gains Tax concessions.


13. Lowering the company tax rate to 25 per cent

Proposed effective date: 1 July 2016


The government proposes to reduce the company tax rate to 25 per cent by 2026–27. Initially, the tax rate for companies with an annual aggregated turnover of less than $10 million will be reduced to 27.5 per cent from 1 July 2016.


14. Unincorporated small business tax discount

Proposed effective date: 1 July 2016


For small businesses, that are not companies, the government proposes to extend the unincorporated small business tax discount. From 2016–17, the discount will be available to business with aggregated annual turnover of less than $5 million, up from the current threshold of $2 million. The discount on tax payable on business income will be increased to 8 per cent, up from the current 5 per cent, but the maximum discount available will remain at $1,000 per annum. Over the next decade it is proposed to further expand the discount in phases to a final discount of 16 per cent, with the existing $1,000 maximum discount per individual for each income year to remain.


Families and social security


15. Deferral of reforms to childcare payments

Proposed effective date: 1 July 2018


As part of the May 2015 Federal Budget it was proposed that a new single Child Care Subsidy (CCS) would replace the Child Care Benefit, the Child Care Rebate and the Jobs, Education and Training Child Care Fee Assistance from 1 July 2017. This measure has not yet been legislated and the proposed start date will now be deferred until 1 July 2018.






What you need to know

Any advice in this document is general in nature and is provided by AMP Life Limited ABN 84 079 300 379 (AMP Life). The advice does not take into account your personal objectives, financial situation or needs. Therefore, before acting on this advice, you should consider the appropriateness of this advice having regard to those matters and consider the product disclosure statement before making a decision about the product. AMP Life is part of the AMP group and can be contacted on 131 267. If you decide to purchase or vary a financial product, AMP Life and/or other companies within the AMP group will receive fees and other benefits, which will be a dollar amount or a percentage of either the premium you pay or the value of your investments. You can ask us for more details.

Stuart Westhoff from WFS comments

Tuesday, February 16, 2016

If you think “those” types of things only happen to other people, be warned.

In late 2007 the All Ordinaries index was over 6,500 points, my youngest daughter was only a few weeks and life could not have been better.

Two things were about to happen that had a devastating effect on my financial and personal life.

The first event some of you may have already guessed. The Global Financial Crisis hit. By mid-2008 the All Ordinaries had dropped 25% to about 5,000 points. There was more pain to come for the stockmarket but at that time the second event hit me. My wife was diagnosed with breast cancer.

Now in 2016 the stockmarket is hovering around 5,000 points again. It has recovered from its GFC low of around 3,300. My wife and I have not recovered. We are not together and I am still trying to re-build financially.

Financial stress places enormous strain on any relationship, be it personal or business.

Losses such as those experienced during the GFC are magnified by gearing, which is using borrowed funds. Financial losses from a traumatic illness add another layer of pain and when it happens during the GFC well…. as one client put it to me, “You’ve just gone through the perfect storm.”

These circumstances are not planned but do happen and it’s important to discuss the “what if’s” when putting any financial plans together. The things that can go wrong are not comfortable to talk about and that’s why it’s often easier to outsource these things to professionals who can talk through and plan for contingencies.

Please do not hesitate to review all your plans and contact us if you would like help.             

WFS In the News

Wednesday, February 03, 2016

Catherine Smith from Wholistic Financial Solutions comments on the Canberra Property Market

Stuart Westhoff From Wholistic comments on the current state of the market

Wednesday, February 03, 2016

Is there any reason to be positive on stocks?

Right now there’s apprehension over the economic growth of China, the US and the world economy. If everyone was positive on these economies’ outlooks, commodity prices would be higher and groups, such as OPEC, would actually cut supply, knowing that businesses and consumers of the world can take higher energy prices. Instead, we have a lower growth expectation for these economies. Until that view changes, stocks will have a tendency to fall rather than rise.

Some recent rallies needed to be followed up by good news but instead oil slipped under the psychologically important $US30 a barrel level. The Beige Book put out by the Federal Reserve — America’s central bank — found that in nine of its 12 economic districts surveyed there was only modest growth. If it was spectacular growth, then Wall Street would be up and would keep going up!

The same goes for China — it needs to show that its transition to a more service-oriented economy will still produce good economic growth rates.

It’s funny that we’re focusing on Chinese manufacturing data and how its reduction has hurt iron ore and oil prices and the shares of BHP, Rio, Santos, etc. However, there are changes, such as the tourist numbers out of China to Australia, which this week were 1,013,700 in the year to November. This is the first time annual tourist numbers from the country have breached one million.

This shows us the work of a lower dollar that will help Australia’s economic growth. There are changes like this happening all around the world but markets often concentrate on old rules of thumb that maybe less relevant nowadays.

One big issue being ignored is the fact that one of the world’s most important business costs — energy — is falling and that has to be helping the bottom lines of businesses.

CommSec’s Craig James points out that for many families, the weekly petrol bill is their biggest outlay so the price of petrol has to be a plus for the economy, which (along with the dollar and low interest rates) should ensure our growth rate this year is good, which has to help job creation.

The Yanks have the challenge of a rising greenback but that’s because their economy is doing well. So the big hope for the next month — the time for the earnings show-and-tell — is that US companies, which have been employing large numbers over the past year, will actually come out with better-than-expected profit numbers.

It would help if China’s economic numbers start to look better too but that could be asking for too much in the short-term.

One final point. With interest rates so low and dividends still much higher, shares are still viable and the likes of fund manager, Kerr Neilson of Platinum Asset Management, aren’t worried about a cataclysmic China slowdown that has been spooking stocks this week.

Content sourced from:

It’s Time To Switch!

Monday, November 16, 2015

GUEST POST BY Tim Slarke - Mortgage Broker and Credit Licensee at Wholistic Financial Solutions

Have you taken the time to take a look at your latest mortgage statement from your bank lately? Most people just accept it as a piece of nuisance mail and may not even open the envelope. But if you take the time to have a closer look at it, and you’re with a big bank, you may be in for a surprise, and not a pleasant one.

It’s an unwritten fact that unless as a consumer you say something, or express dissatisfaction with something, nothing will happen. And the Big 4 are no different to any other major organisation in that they will not give you as a customer anything of benefit to you willingly, even if you are entitled to it.

So borrowers should take control and actively seek out the exceptional deals that are available now in the mortgage lending market. There are an enormous number of smaller lenders that are offering exceptionally low interest rates and other incentives for new clients to join them. In the past 20 years there has never been time to look beyond the obvious and really consider your borrowing options.

At WFS we have over 50 years combined of finding the best loans for our clients. Not only finding the best deal available, but also using our vast taxation experience to structure loans to maximise the tax effectiveness of our clients’ borrowings to improve their wealth and therefore their lives.

At WFS we have over 25 lenders on our panel, all looking for new clients. Combined with WFS’s experience and professionalism, the best possible result is guaranteed for the home owner and investor who is prepared to allow WFS to find the best loan for them.

Whats really going on with the Banks and Property Market?

Friday, October 30, 2015

So what’s really going on with the banks and the housing market?  It’s complicated to explain but when banks assess loans they use what they call a ‘servicing interest rate’.  So even if the loan is at 3.99% the banks use a different rate to assess the loan and the banks are being ridiculous and using rates like 9.5%.  This is no reflection of reality – as in the banks don’t think rates will go this high.  What they are doing is playing a chess game on behalf of the government with us borrowers as the pawns.


The Government is concerned about the ‘property boom’ happening and are trying to slow it down.  This in itself is ridiculous as the so called ‘property boom’ is limited to Sydney and Melbourne.  As we in Canberra know, it hasn’t happened here, that’s for sure.  And similarly Brisbane has only just started on the incline.


So…. Governments normally raise interest rates to combat property booms but they can’t do that this time because fundamentally the Australian economy like the rest of the world is not looking so healthy.  If they raise rates – they could sink Australia.  So instead of sitting back and letting the markets do what they should do, as in correct themselves, they are using borrowers as pawns and putting pressure on banks to make borrowing much more difficult. 


They are also putting pressure on Valuers and valuations are coming back ridiculous.  I just had a property value come in $140,000 under value as to what the purchaser was willing to pay.  I have never in my life seen this happen as a value is ‘what the property will sell for on the open market’ so if a purchaser is willing to pay the purchase price – then that’s the value.  But no, once again the banks are using Valuers as Pawns too and requesting them to value as low as possible so that borrowers can borrow less.


This is all temporary and could turn around next month once the Government wake up to the fact that their intervention could do far more harm than good but in the meantime we can only work with the rules the banks set.


I have been told I should go into politics but no bloody way.  I couldn’t handle working with the peacocks.


I hope that makes some sense.  Probably not as it seems a crazy way to run a country.

Positive Thinking in a harsh reality

Wednesday, October 21, 2015

It can be really hard to maintain ‘positive thinking’ and belief in ‘whatever is meant to be’ when bad things keep happening. As you probably know my middle Son broke his face in four places 6 weeks ago requiring major surgery. Now my oldest Son made the Raiders squad only to find out he has damaged 4 discs in his lower back an may not be able to play.  This week we find out that a friends beautiful Alaskan Malamute best friends were shot dead by a famer in an act of senseless cruelty and yesterday I find out a good friend is having surgery due to self-harm she caused herself.  That’s just my small circle in turmoil.  Let alone what’s happening out there in the rest of the world.

So for those of you that need a reminder of how to apply ‘The Secret’ repeat after me:

                I promise myself

                To be so strong that nothing can disturb my peace of mind.

                To talk health, happiness, and prosperity to every person I meet.

                To make all my friends feel that there is something worthwhile in them.

                To look at the sunny side of everything and make my optimism come true.

                To think only of the best, to work for only the best, and to expect only the best.

                To be just as enthusiastic about the success of others as I am about my own.

                To forget the mistakes of the past and press on to greater achievements of the future.

To wear a cheerful expression at all times and give a smile to every living creature I meet.

To give so much time to improving myself that I have no time to criticize others.

To be too large for worry, too noble for anger, too strong for fear and too happy to permit the presence of trouble.

To think well of myself and to proclaim this fact to the world not in loud words, but in great deeds.

To live in faith that the whole world is on my side, so long as I am true to the best that is in me.

(Christian D Larson)

The Realistic Money Mindset

Wednesday, October 07, 2015

By now I am sure most of you have heard about the power of ‘The Secret’.  According to Dr Joe Vitale ‘You can have, do, or be anything you want’.  According to the contributors to the best-selling book and movie ‘The Secret’ we can all have as much wealth as we want....(click here to read more)


we just need to ‘attract’ it into our lives by believing that we can. Many spiritual advisors, authors, songwriters, etc have picked up on this theme and the literature is abound as to how to make the ‘Law of Attraction’ work for you.  It is said that you just have to visualise your dream, over and over, and most of all you have to ‘believe’ in your dream.  They also say that if you do visualise your dream over and over again and it doesn’t come true then it is just because you didn’t really ‘believe’ it would happen.  Believe harder and it will all be Ok. 

Is this really true or is it just new age mumbo jumbo.  Can I ask you all – have you applied the power of the ‘secret’?  Did it work for you?  If not, why do you think it didn’t work?

The Benefits of a Mortgage Broker when Purchasing Property

Monday, July 28, 2014

The Benefits of a Mortgage Broker when Purchasing Property


property investment advice 


“How to be confident that you have found the right loan and structure so that you can meet long-term financial goals and avoid serious costs – potentially saving 1000’s of dollars in long-term exit fees and interest rates”

Property Investment Advice

“Finding the right loan to meet your needs can be a very daunting task. With so many lenders to choose from and so many products within each lender, it is almost impossible for the average person or investor to sort between the products (including all the fine print). It is important that you are sure the finance you are choosing is the best one for your circumstances.’


Property Investment Advice | Example


For this bit of property investment advice we would like to use the example of buying a car.


If you walk into a Ford car yard and describe all of the features you want in a car and the salesperson thinks to themselves, “Gee, the latest Holden Statesmen would be the best,”– will he tell you that? No! He will convince you that the latest Ford something-or-other meets your needs. It’s the same with the banks. If you walk into a bank, any bank, you will only be sold that bank’s products.


We would recommend that everyone who wants to take out a mortgage should use the valuable services of a mortgage broker. Whether you are buying your first home or investment property or whether you are building a huge investment portfolio you should consult a mortgage broker. The advantages of using a broker are twofold. Firstly, it is free – the bank pays the broker the commission – and secondly, the broker is aligned to scores of banks and will find the best for you. It is in the broker’s interest to find the best product because they want your continued business.


Brokers have access to over 30 banks and lending institutions, including all of the majors (CBA, St George, NAB, Westpac, etc) and many popular smaller and non-bank lenders (ING, Bankwest, Rams, Suncorp, etc). Mortgage brokers will help you find your way through the complex maze of product choices and help you decide the best one for you. Everyone’s situation is different and different products suit different circumstances.


Mortgage brokers also assist you with all of the paperwork, submit the loan, handle all the bank’s annoying questions, co-ordinate the process with your solicitor and real estate agent and basically take all the stress and pressure from you. They’ll ‘hold your hand’ the whole way through and deal with any complications that may arise.Mortgage brokers are one of your main sources for property investment advice.



  • May save you time in shopping for loans.
  • May save money if fully independent.
  • Usually free.
  • Sometimes, given the broker-lender relationship, a bank will accept a loan application that they would otherwise have rejected.


  • You may pay more for your loan than necessary if the broker is not independent.
  • They may charge excessive fees or undisclosed commissions.
  • You may be persuaded to borrow more than you need, as this will boost their commission.

The cons can be easily overcome by using a broker who can correctly answer the questions above.


Check out the video below for more advice on investment properties


Sahremarket improving

Friday, January 04, 2013

4th January 2013



Global equity markets continued to rally in the first few weeks of December with sentiment boosted by solid Chinese and US economic data and the eventual confirmation of additional stimulatory measures by the US Federal Reserve.


European shares lifted to 18-month highs in early December, although the ongoing US budget discussions did temper gains towards the later part of the month.


On December 12 the US Federal Reserve extended previous stimulus measures, while vowing to keep interest rates near zero until the unemployment rate falls to 6.5 per cent, as long as inflation is projected to be no more than 2.5 per cent one or two years ahead with inflation expectations contained. The extension of purchases of “additional agency mortgage-backed securities at a pace of $40 billion per month” supported the bid for growth assets like equities and helped to offset the ongoing US budgetary concerns.


The Dow Jones gained over 300 points or 2.5 per cent from the start of December until December 18. Similarly the UK FTSE gained just over 1.5 per cent over the same period while the S&P ASX 200 rose almost 2 per cent.

The US economic data continued to be positive. US non-farm payrolls (employment) rose by 146,000 in November, well above expectations for a gain of 93,000. The unemployment rate fell from 7.9 per cent to 7.7 per cent. US existing home sales climbed by 5.9 per cent to the fastest pace in three years and suggested that the recovery in housing was advancing at a healthy pace.


In addition the Chinese economic data suggested that the China slowdown had bottomed out. Chinese production was up 10.1 per cent in the year to November with retail sales up 14.9 per cent (both ahead of forecasts). Investment rose 20.7 per cent in the first 11 months, just shy of 20.8 per cent forecasts. Chinese inflation also remained subdued.


For the month, the ASX 200 rose by 3.2 per cent, confirming the “Santa Claus” effect. The US Dow Jones rose by 0.6 per cent, in Europe the German Dax lifted 2.8 per cent and the London FTSE rose by 0.5 per cent. And in Asia the Japanese Nikkei rose by 10.0 per cent.


For the year, the ASX 200 index rose by 14.6 per cent and finished 34th of 73 global equity markets. The US Dow Jones lifted 7.3 per cent but the broader S&P 500 index gained 13.4 per cent with the Nasdaq up 15.9 per cent. In Europe the German Dax lifted 29.1 per cent and the London FTSE rose 5.8 per cent. And in Asia the Japanese Nikkei rose 22.9 per cent.



Australian Market


Onward & upward Australia

National accounts

  • Another quarter of growth: The record-breaking economic expansion has notched up another quarter of growth. The Australian economy grew by 0.5 per cent in the September quarter to stand 3.1 per cent higher than a year ago.
  • Contribution to growth: The biggest contributions to growth came from business equipment spending (+0.4 percentage points), followed by inventories (+0.3pp), household consumption (+0.2pp), and net exports (+0.2pp). The biggest drag on growth was by public investment (-0.4pp), the statistical discrepancy (-0.2pp) and government consumption (-0.1pp).
  • States & territories: The best description of the performance of States and Territory economies is state final demand plus net exports. The Northern Territory had the fastest annual growth in the September quarter (up a staggering 60.2 per cent), followed by Western Australia (up 10.3 per cent), ACT (up 5.6 per cent), NSW (up 3.8 per cent), Victoria (up 2.5 per cent), South Australia (up 1.5 per cent), Queensland (up 1.1 per cent) and Tasmania (down 5.3 per cent).
  • Industry sectors: Just seven of the 19 industry sectors contracted in the September quarter. Mining contributed 0.4 percentage points to economic growth with Manufacturing and Health care & social assistance both contributing 0.1pp. Biggest drags were by Agriculture, Transport and Professional services (each taking around 0.1pp from growth).
  • Productivity: Gross value added per hours worked in the market sector rose by 0.4 per cent in the September quarter. Annual productivity growth is a respectable 2.5 per cent.
  • Household spending: Eight of the 17 sectors recorded weaker spending in the quarter. Household spending rose 0.3 per cent in the September quarter.
  • Other measures: The Household saving ratio eased from 10.9 per cent to 10.6 per cent; a measure of inflation – the household spending implicit price deflator - rose by 2.3 per cent over the year; real unit labour costs fell by 0.6 per cent in the quarter.


Investors switch to property; Record car loans

Consumer confidence; Lending Finance; Resources forecasts

  • Consumer sentiment falls: The Westpac/Melbourne Institute index of consumer confidence fell from 19-month highs in December, down 4.3 points or 4.1 per cent to 100.0. The data is in line with yesterday’s weekly reading on consumer confidence by Roy Morgan.
  • Confidence was mixed across states: Consumer confidence rose sharply in Western Australia and South Australia, fell sharply in NSW and Victoria and was little changed in Queensland.
  • Property in vogue: The reading on whether it was a good time to buy a home lifted 11.5 per cent over the December quarter to a 3-year high of 142.2. And 24 per cent of people said real estate was the “wisest place for new savings”, up 4.1 per cent over the quarter and near the highest reading in seven years.
  • Lending lifts again. Total lending finance rose by 2.6 per cent in October after surging 5.8 per cent in October. Lending is still down 6.1 per cent on a year ago.
  • Record car loans: Loans to buy new or used cars hit a record $1.23 billion in October. And loans to buy blocks of land rose by 17.5 per cent over the past year – the strongest growth in three years.
  • Resources forecasts: Earnings from mining and energy products are tipped to fall 4 per cent this year from record highs after lifting 7.5 per cent the previous year.


Trade deficit widens as businesses ramp up imports

International Trade

  • Multiple trade deficits. Australia recorded a trade deficit of $2,088 million in October, following a downwardly revised $1,420 million (previously $1,456 million) deficit in September.
  • Businesses take advantage of the stronger Aussie: Imports of capital goods rose by 12.7 per cent in October - marking the strongest monthly growth in almost 5 years.
  • Imports outpace exports: Exports of goods rose by 0.4 per cent in October while imports of goods rose by 3 per cent.
  • The net services deficit narrowed by $8 million to $968 million in October.
  • Rural exports rose by 5.4 per cent in October while non-rural exports fell by 1 per cent.


Resilient Job Market

Labour force

  • Employment gains: Employment rose by 13,900 in November after a revised gain of 10,100 jobs in October (previously +10,700). Economists had expected a flat result.
  • Mixed job outcomes: In November, full-time jobs fell by 4,200 after rising by 17,600 in October. Part-time jobs rose by 18,100 after falling by 7,400 in October. Full-time jobs have only fallen once in the past five months.
  • Unemployment rate: The unemployment rate decreased from 5.4 per cent to 5.2 per cent in November. The participation rate fell from 65.2 per cent to 65.1 per cent – near six year lows.
  • More hours worked: The number of hours worked rose by 0.1 per cent in November after falling by 0.3 per cent in October and now stands 0.3 per cent higher than a year ago.
  • Unemployment across states and territories: NSW 5.1 per cent (5.2 per cent in October); Victoria 5.5 per cent (5.4 per cent); Queensland 6.0 per cent (6.1 per cent); South Australia 5.3 per cent (5.6 per cent); Western Australia 4.1 per cent (4.6 per cent); Tasmania 6.7 per cent (6.7 per cent); Northern Territory 3.8 per cent (3.9 per cent); ACT 4.1 per cent (4.0 per cent).


Chinese economy on recovery path

Chinese economic data

  • Monthly economic indicators. Retail sales in November were up 14.9 per cent on a year ago – the fastest rate in eight months (consensus 14.6 per cent); industrial production was up 10.1 per cent (consensus 9.8 per cent); and fixed asset investment over the first 11 months of 2012 was up by 20.7 per cent (consensus 20.8 per cent).
  • Inflation stabilises. China’s annual inflation rate lifted from a near 3-year low of 1.7 per cent in October to 2.0 per cent in November (forecast +2.1 per cent). Over the month inflation rose by 0.1 per cent. Food prices are 3.0 per cent higher than a year ago while non-food prices are up by 1.6 per cent.
  • Business deflation. Producer prices fell by 0.1pct in November after rising by 0.2 per cent in October. Producer prices are 2.2 per cent lower than a year ago (forecast, 2.0 per cent decline).
  • The data confirms that the Chinese economy is lifting from an engineered slowdown.


Source: CommSec Economic Insights

Market Snapshot


Major monthly movers in the S&P ASX 100

Top 5 Increases



Last Price

% Movement


Atlas Iron Limited




Fortescue Metals Grp




Arrium Ltd




Whitehaven Coal




Rio Tinto Ltd




Top 5 Decreases



Last Price

% Movement


Treasury Wine Estate




Newcrest Mining




Goodman Group




Duet Group




Perseus Mining





Source: Iress Market Technology.


December Flashnotes

BHP Billiton Limited: BHP Billiton to Sell Interest in Browse JVs (BHP)

BHP Billiton advised that it has signed a definitive agreement with PetroChina International Investment (Australia) to sell its 8.33% interest in the East Browse JV and 20% interest in the West Browse JV, located offshore WA, for a cash consideration of US$1.63bn. The transaction is subject to regulatory approval and other customary conditions. Completion is expected in the first half of calendar year 2013. The Browse JV participants hold a right to offer to match the transaction with respect to the company's interests in the East and West Browse JVs and have a customary period to consider whether to make an offer to match.


Leighton Holdings Limited: Leighton Holdings Announces John Holland Awarded Two Major Contracts by Sydney Water (LEI)

Leighton Holdings reported John Holland has been awarded two contracts for water infrastructure services on behalf of Sydney Water. John Holland will provide the project management services associated with Sydney Water's Networks and Facilities Renewal Program, as part of a JV with Lend Lease. The Project Management Service Provider JV, will manage Sydney Water's projects through their lifecycle, from conception to commissioning and handover. John Holland was also awarded a third contract extension for the Priority Sewerage Program to deliver additional sewerage works to six communities in environmentally sensitive areas around Sydney.


Metcash Limited: Metcash Reports NPAT Down 13.1% to $82m for the Half Year to 31 October 2012 (MTS)

Metcash reported NPAT down 13.1% to $82.0m for the half-year ended 31 October 2012. Revenues from ordinary activities were $6.34bn, up 3.5% from the same period last year. EBITA lifted 1.2% from $203.7m for 1H12 to $206.2m for 1H13. Diluted EPS was 9.75 cents compared to 12.24 cents last year. Net operating cash flow was $144.7m compared to $252.4m last year. The interim dividend declared was 11.5 cents compared with 11.5 cents last year. The company reported that it has revised its full year underlying EPS guidance to -2% to -6%.


Rio Tinto Limited: Rio Tinto Agrees Sale of Shareholding in Palabora (RIO)

Rio Tinto advised that it has reached a binding agreement to sell its 57.7% effective interest in Palabora Mining Company for US$373m. The purchaser is a consortium comprising South African and Chinese entities led by the Industrial Development Corporation of South Africa and Hebei Iron & Steel Group, who are committed to the ongoing sustainable management of Palabora. The sale is subject to customary regulatory approvals in South Africa and China which are expected to take four to six months. The purchase price is subject to customary adjustments upon closing.


Woodside Petroleum Limited: Woodside Petroleum Enters Major Gas Discovery Offshore Israel (WPL)

Woodside Petroleum reported it has reached an agreement in principle to acquire a participating interest in one of the largest recent gas discoveries worldwide. The agreement involves an initial upfront payment of US$696m. The Leviathan JV participants, Noble Energy Mediterranean, Delek Drilling, Avner Oil and Ratio Oil, have reached agreement with Woodside on the key commercial terms under which Woodside will acquire a participating interest in each of the 349/Rachel and 350/Amit petroleum licences which contain the Leviathan field in Israel. Under the agreement the Company will acquire a 30% interest in the Leviathan field, which is estimated to contain about 17 trillion cubic feet of recoverable natural gas. The agreement will also allow Woodside to participate in further exploration opportunities in the Leviathan licences.



Source: Morningstar Research

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