Latest news with #DianaMousina
Sky News AU
3 days ago
- Business
- Sky News AU
Labor's super tax includes option to avoid asset sales by allowing option to pay tax from super fund, Sky News reveals
Sky News can reveal the Albanese government's tax on superannuation balances above $3 million will allow people to pay the charge directly from their super funds. The move is designed to counter concerns that individuals will be forced to sell assets such as farms or investment properties to meet the cost of the tax. The option mirrors existing provisions under Division 293 of the tax code, the extra tax on people earning more than $250,000 a year. Under Labor's plan, the same mechanism will be available, enabling individuals to use their super balance to pay the tax, even though it will apply to unrealised capital gains. Treasurer Jim Chalmers believes the fact that people can pay the tax out of their super should negate the argument people will have to offload assets to pay the tax. The proposed tax—an extra 15 per cent on earnings for balances over $3 million—has drawn heavy criticism for including unrealised capital gains. Critics have warned that taxing unrealised gains could unfairly impact superannuants whose wealth is tied up in volatile or illiquid assets like property or businesses. Adding to concerns has been the government's decision not to index the $3 million threshold to inflation. AMP Deputy Chief Economist Diana Mousina conducted modelling that showed the average 22-year-old will be hit by the tax by the time they retire. The government has said the measure is modest, fiscally responsible, and affects only a small proportion of high-balance accounts. The Coalition has confirmed it will oppose the super tax 'every step of the way' after speculation about possible negotiation on the indexation and unrealised gains. Shadow treasurer Ted O'Brien has slammed the proposal as 'grossly unfair' and said it 'flies in the face' of Coalition values. 'To think a person can make a theoretical profit—no money in their bank—and get taxed on it every year, that's not fair,' Mr O'Brien told Sky News on Thursday. The government is expected to rely on support from the Greens to pass the legislation in the Senate. The minor party has indicated in-principle support but has floated two possible amendments - lowering the threshold to $2 million and ensuring it is indexed to inflation. Some politicians under the generous defined benefit pension schemes will not have to pay the tax until after they retire. Sky News Sunday Agenda also revealed recently that state officials on the old pension schemes will be exempted from the tax due to constitutional protections.
The Age
5 days ago
- Business
- The Age
Reserve Bank could deliver shoppers plenty of pre-Christmas cheer
The turnaround in market expectations on future rate cuts was driven in part by the Reserve Bank's most recent board minutes, which showed at its May meeting it seriously considered a half percentage point rate reduction, and the soggy national accounts for the March quarter. Loading The economy expanded by a less-than-expected 0.2 per cent through the first three months. Household spending, which accounts for half of all economic activity, increased by 0.4 per cent through the quarter. But those figures confirmed the struggle facing many consumers, especially those facing higher mortgage repayments. Over the past 12 months, consumer spending has increased by just 0.7 per cent. Spending on clothing and footwear grew the fastest, up by 3.2 per cent, closely followed by insurance and financial services, growing by 3.1 per cent. However, consumers spent twice as much on insurance and financial services, at $26 billion, in the March quarter than on clothing. Households sliced spending on new cars and driving those vehicles, expenditure on food grew by just 0.4 per cent, while eating out at restaurants or takeaways lifted by a modest 0.3 per cent. AMP deputy chief economist Diana Mousina said the figures, on top of the general economic outlook, meant the Reserve Bank would have to consider more rate relief. 'This gloomy growth outlook argues for more interest rate relief from the RBA, as the economy is travelling slower than expected. We had been expecting another 0.25 percentage point rate cut at the August, November and February board meetings, but now expect another 0.25 percentage point cut in July,' she said. One concern about further interest rate cuts is that they may drive up property prices in a country with some of the least affordable housing in the developed world. But Westpac's head of Australian macro-forecasting, Matthew Hassan, said existing high prices would prove an ongoing headwind for the market. He said the February and May rate cuts, on top of expected further rate relief, were providing some impetus to prices. 'However, the reaction remains measured to date, consistent with our view that the nature of the easing and the high starting point for prices would see a fairly muted affordability-constrained response,' he said. 'All up, where a lift is evident, markets appear to be tracking a slow, shallow turn. That may change. We are wary of housing's famous interest rate sensitivity. There is also evidence of substantial 'pent-up' or delayed activity.' Not everyone is convinced the bank will deliver another cut in July. ANZ's head of Australian economics, Adam Boyton, noted that the national accounts showed household finances were now improving rapidly, which meant the RBA could hold fire on further interest rate relief. Loading 'Household incomes are now showing robust growth, with the level of real income having returned to the pre-COVID trend. Given the strength in income growth, we don't think it will take much more on the interest rate front to make households confident enough to spend more,' he said. TD Securities, which had expected just a single rate cut this year in August, now thinks the RBA will move again in November.
Sydney Morning Herald
5 days ago
- Business
- Sydney Morning Herald
Reserve Bank could deliver shoppers plenty of pre-Christmas cheer
The turnaround in market expectations on future rate cuts was driven in part by the Reserve Bank's most recent board minutes, which showed at its May meeting it seriously considered a half percentage point rate reduction, and the soggy national accounts for the March quarter. Loading The economy expanded by a less-than-expected 0.2 per cent through the first three months. Household spending, which accounts for half of all economic activity, increased by 0.4 per cent through the quarter. But those figures confirmed the struggle facing many consumers, especially those facing higher mortgage repayments. Over the past 12 months, consumer spending has increased by just 0.7 per cent. Spending on clothing and footwear grew the fastest, up by 3.2 per cent, closely followed by insurance and financial services, growing by 3.1 per cent. However, consumers spent twice as much on insurance and financial services, at $26 billion, in the March quarter than on clothing. Households sliced spending on new cars and driving those vehicles, expenditure on food grew by just 0.4 per cent, while eating out at restaurants or takeaways lifted by a modest 0.3 per cent. AMP deputy chief economist Diana Mousina said the figures, on top of the general economic outlook, meant the Reserve Bank would have to consider more rate relief. 'This gloomy growth outlook argues for more interest rate relief from the RBA, as the economy is travelling slower than expected. We had been expecting another 0.25 percentage point rate cut at the August, November and February board meetings, but now expect another 0.25 percentage point cut in July,' she said. One concern about further interest rate cuts is that they may drive up property prices in a country with some of the least affordable housing in the developed world. But Westpac's head of Australian macro-forecasting, Matthew Hassan, said existing high prices would prove an ongoing headwind for the market. He said the February and May rate cuts, on top of expected further rate relief, were providing some impetus to prices. 'However, the reaction remains measured to date, consistent with our view that the nature of the easing and the high starting point for prices would see a fairly muted affordability-constrained response,' he said. 'All up, where a lift is evident, markets appear to be tracking a slow, shallow turn. That may change. We are wary of housing's famous interest rate sensitivity. There is also evidence of substantial 'pent-up' or delayed activity.' Not everyone is convinced the bank will deliver another cut in July. ANZ's head of Australian economics, Adam Boyton, noted that the national accounts showed household finances were now improving rapidly, which meant the RBA could hold fire on further interest rate relief. Loading 'Household incomes are now showing robust growth, with the level of real income having returned to the pre-COVID trend. Given the strength in income growth, we don't think it will take much more on the interest rate front to make households confident enough to spend more,' he said. TD Securities, which had expected just a single rate cut this year in August, now thinks the RBA will move again in November.
Yahoo
7 days ago
- Business
- Yahoo
Sign RBA could deliver three interest rate cuts this year: 'Sooner'
The Reserve Bank of Australia (RBA) may be pressured to cut interest rates again in July after economic growth was weaker than expected. The Australian economy grew just 0.2 per cent in the March quarter, down from 0.6 per cent in the December quarter. The latest national accounts published by the Australian Bureau of Statistics (ABS) found economic activity increased by just 1.3 per cent over the year to March. The RBA had forecast annual GDP growth of 1.8 per cent by the end of the June quarter. Per capita, GDP went backwards again and was down 0.2 per cent in the quarter and 0.4 per cent for the year. RELATED Commonwealth Bank announces huge interest rate cut following RBA decision: 'Stampede' Centrelink warning after Aussie mum's $15,000 payment was denied: 'Common mistake' Centrelink cash boost over 400,000 Aussies have weeks left to confirm Some economists have pulled forward their rate cut predictions following the 'gloomy' growth outlook and think the RBA could deliver a back-to-back rate cut in July. AMP deputy chief economist Diana Mousina had previously been expecting another 0.25 per cent cut in August, November and February, but has now added another 0.25 per cent cut in July. 'This means that the cash rate is likely to end up around 2.85 per cent at the end of the rate cutting cycle,' she said. Commonwealth Bank senior economist Stephen Wu said the bank's base case remained for another 0.25 per cent cut in August, but an earlier July cut remained a possibility with labour market and inflation data likely to be in the RBA's sights. 'July very much remains a live meeting and today's data has further shifted the balance of probabilities towards a cut,' he said. 'Market pricing for July has lifted and the May Board Minutes did little to push back at this.' Oxford Economics Australia lead economist Ben Udy said the RBA would be watching closely for further signs of the March quarter weakness extending to the June quarter. "If that evidence continues to rack up, the RBA may opt to cut rates again in July, a little sooner than our current forecasts suggest,' he said. IFM Economist Alex Joiner said the GDP data 'only added to the case that the Bank will ease in July rather than wait until August'. Goldman Sachs Australia chief economist Andrew Boak said there could be three more interest rate cuts this year. 'We see a strong case for the RBA to cut again in July, particularly given inflation has returned to target and a 50 basis points reduction was considered in May," he said. 'Further ahead, our base case is for cuts in August-November to a terminal rate of 3.1 per cent, but we see the risks as skewed firmly to the downside.' The RBA cut interest rates at its June meeting by 0.25 per cent, but governor Michele Bullock said the board did consider the possibility of a larger 0.50 per cent cut. Economist and Yahoo Finance contributor Stephen Koukoulas said a supersized interest cut was justified at the upcoming July meeting, branding the 0.2 per cent growth as "pathetically weak". 'The bottom line is we need to see a 50 point rate cut from the RBA at the July meeting. The longer it takes to get the cash rate to a neutral, let alone accommodative level, the worse the economy will be. 'That neutral level is somewhere in the low 3 per cent, we are currently at 3.85 per cent, so we are 75 points away from the cash rate being neutral, that's not even accommodative.' One additional 0.25 per cent interest cut would see the average borrower's repayments drop by $90, based on a $600,000 loan with 25 years remaining. The RBA board will meet again on July 7 and 8.
Yahoo
7 days ago
- Business
- Yahoo
Silver lining as nation slides into ‘recession'
Australia is officially back in a per capita recession, but there could be a silver lining for struggling mortgage holders. According to the latest ABS figures, GDP rose in the March quarter by 0.2 per cent and 1.3 per cent year-on-year. But that anaemic growth was not enough to keep Australia out of a per capita recession, with the nation going backwards by 0.2 per cent per person. AMP deputy chief economist Diana Mousina said the gloomy outlook means Australians with a mortgage should get rate relief sooner than previously forecasted. 'We had been expecting another 0.25 per cent rate cut at the August, November and February board meetings but now expect another 0.25 per cent cut in July,' she said. 'This means that the cash rate is likely to end up around 2.85 per cent at the end of the rate cutting cycle.' Betashare chief economist David Bassanese said Wednesday's soft GDP results added to the case for back-to-back rate cuts but did not compel the RBA to move on rates. 'After all, underlying inflation remains at the top-end of the target band and the economy continues to operate at a relatively high level of capacity (as evident from the low unemployment rate),' he said. 'An easing in global growth concerns and financial market volatility also reduces the urgency in cutting rates. 'Instead, my base case remains the RBA will wait for confirmation of a further easing in underlying inflation in the June quarter CPI report in late July before cutting interest rates again in August.' Treasurer Jim Chalmers acknowledged the March GDP figures were 'subdued', but said any growth in the current uncertain world was a decent outcome. 'No major advanced economy has achieved what we have, with unemployment in the low 4s, inflation below 2.5 per cent and continuous growth for three years,' he said. 'Public demand has played a role in keeping the economy from going backwards over the past two years, but we know strong and sustainable economic growth is driven by the private sector.' Shadow Treasurer Ted O'Brien said Mr Chalmers' comments that 'any growth is a good outcome' was 'hardly inspiring'. 'It's hardly inspiring to international capital markets, let alone Australian industry. I encourage the treasurer to be more ambitious for growth in Australia,' Mr O'Brien said. Mr O'Brien also noted that household spending only increased by 0.4 per cent, in a 'large part' due to people paying more on energy bills, while real net disposable income was down 6.3 per cent. According to the Australian Bureau of Statistics, the falls follow no growth in government spending. ABS head of national accounts Katherine Keenan said economic growth was soft for the quarter. 'Public spending recorded the largest detraction from growth since the September quarter 2017,' she said. 'Extreme weather events reduced domestic final demand and exports. Weather impacts were particularly evident in mining, tourism and shipping.' A host of state and territory infrastructure projects also finished up in the prior quarter slashing 2 per cent off public investment, after it had soared more than 10 per cent over the previous two quarters. Households remain under pressure, with spending rising by 0.4 per cent in the March quarter, followed by a revised 0.7 per cent for the three months until December 31. Much of the rise came in spending for essentials including food and rents which continue to be the highest contributors to household spending growth. Households are also spent more on electricity, gas and fuel as a combination of warmer weather and a decline in electricity rebates resulted in a rise in consumption. 'Growth was relatively slow across most household spending categories following stronger than usual spending during the December quarter's retail sales events,' Ms Keenan said. Sign in to access your portfolio
