Revenue, not cuts key to reducing deficit

The federal government will bank on economic growth improving revenue rather than deep spending cuts to rein in the budget deficit, economists and ratings agencies say.

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The median forecast for the deficit is $28 billion in 2017/18 and a return to surplus by 2020/2021, according to an AAP survey of 10 economists.

Moody’s Investors Service associate managing director Marie Diron told AAP fiscal consolidation has been repeatedly postponed or been slower-than-expected in recent years due to constraints to cutting expenditure and raising revenue.

She says about 60 per cent of day-to-day spending growth is in areas like health, education and social security, which are hard to cut, and there’s few other areas the government can make cuts.

Ms Diron is looking for fresh proposals to balance the budget, but also assuming the timeframe for cutting the deficit will be extended past the turn of the decade.

“Typically when there are really significant measures they are announced in advance and we haven’t seen much of that,” Ms Diron said.

“So we do not expect any radical changes in either the direction of revenue or expenditure.”

National Australia Bank economists noted Treasurer Scott Morrison’s optimism about economic growth on the back of non-mining business investment and household consumption growth in a speech last week.

They said this indicated he would assume government revenues would gradually improve and avoid heavy cuts.

“Apart from the political challenge in placing the budget on a more sustainable footing, the government has also faced the economic challenge of not cutting too aggressively in the short-term and hence impacting the recovery of the economy,” the NAB economists said in a report.

The NAB economists said the government would instead continue to seek and forecast a gradual improvement in the budget situation, based on revenue improved, to maintain Australia’s triple-A credit rating.

“The latter seems likely, given the economic backdrop at this time,” they added.

The other development flagged by Mr Morrison is to frame money borrowed to fund income-generating infrastructure, such as roads and railways as “good debt”, while money borrowed to fund expenses such as health and social security as “bad debt”.

However, Ms Diron said ratings agencies already look at the operating balance and the composition of overall government debt in their assessments of Australia’s triple-A credit rating.

“What matters most is the government’s ability to honour its financial obligations,” she added.

Ban on TV gambling ads during live sport part of wide ranging media reforms

If you’re watching live sport, gambling commercials are likely a familiar sight.

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But in a move to limit youth exposure to betting culture, they soon won’t air before 8:30pm at night.

It’s move Prime Minister Malcolm Turnbull says is a huge win for the community.

“Parents around, all around Australia will be delighted when they know that during football matches and cricket matches, live sporting events, before 8:30 there will be no gambling ads. There are no gambling ads allowed before 8.30 generally but there’s been an exception for a long time of live sporting events. “

Former Labor Senator Stephen Conroy now heads the newly formed Responsible Wagering Australia.

He welcomes the move.

“If you ask a kid who’s going to win today you don’t want the odds quoted to you. You want ‘well I think you know Lockett’s going to kick six goals. I think that Bunny will kick five.’ Now that’s the conversation you want to see between parents and their kids around watching footie – not ‘ah, Richmond are 3-1 on to win their match today.”

But not everyone else is on board.

A-F-L and N-R-L executives have been lobbying against the ad restrictions which they say would cost the codes lucrative sponsorship deals.

Federal Communications Minister Mitch Fifield says the sporting codes should wear the cost for the greater good of their fans.

“They recognise there is a need for change and the sporting codes, I think they are responsible and I think that they will accept what we are putting forward.”

To sweeten the deal for broadcasters and compensate for lost advertising revenue, the government is scrapping notoriously high broadcast license fees.

Currently networks pay around $130 million for their broadcast licences.

In its place will be a spectrum fee, estimated to raise around $40 million.

The announcement, made in the same week Network Ten announced a half yearly loss in the hundreds of millions.

Harold Mitchell, chairman of Free TV, which represents free-to-air media, says all major outlets are in support of the reforms package.

“These reforms will put big sums of money into the television industry, it’s long overdue, it’s a real fillip for the industry.”

Another controversial change is lifting limits on media ownership.

Until now, one company couldn’t own a TV, radio and newspaper outlet in one market – something Mr Fifield says limited profitability of Australian media companies.

“It is a package unabashedly in support of Australian media. We want an Australian media that will survive and prosper. While we might not always like what you write, what you print, broadcast or what you stream, what you do is an important underpinning for the diversity and health of Australian democracy.”

Independent Senator, Nick Xenophon, and the Greens say they want to see tougher restrictions.

Greens Leader Richard Di Natale says it is a step in the right direction.

“These changes don’t go anywhere near far enough. What we need when it comes to gambling advertising is no more gambling ads on the telly, restrictions on sponsorships and promotions.”

The Government’s package needs parliamentary support to pass the reforms.

Deputy Labor Leader Tanya Plibersek says without much more information and detail behind the announcement, the Government should not bet on theirs.

“When it comes to media reforms and gambling reforms, there is a very good chance that once again, Malcolm Turnbull will deliver less than people expect.”

 

 

 

Fostering community spirit as Victoria’s mosques open their doors

At Dandenong Mosque in Melbourne’s south east, dozens of worshippers faced Mecca, knelt and prayed.

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But as part of Victoria’s inaugural Mosque Open Day, intrigued non-Muslims watched on.

Mohamed Mohideen from the Islamic Council of Victoria says the day provides a rare opportunity to dispel myths around issues like Sharia Law, Halal and more.

“One of the key things that people say is that we are training terrorists – we are not. Jihad in it’s real sense is not holy war Jihad is striving to achieve the best.”

Deanna McKeown had never entered an Australian Mosque, and viewed the day as an opportunity to learn.

Volunteers even helped her try-on a Hijab and explained it’s significance – which certainly wasn’t wasted on Ms McKeown.

“They are chosing to do this so I think that if it’s pure choice then it’s liberating to do what you wish to do.”

At nearby Hallam Mosque, volunteer Inaz Janif escorted several groups through a range of Islamic information booths and stalls.

She says opening the places-of-worship and offering accurate, informed cross- cultural and religious information is extremely important.

“I think it’s a good way of showing that here we are – we’re not going anywhere we’re open come and learn what we’re about .”

Ms Inaz, a local school teacher, says she’s witnessed how misunderstanding and anti-Muslim rhetoric is damaging her community

“I’ve seen with my own eyes the impact of Islamophobia on them where I’ve even seen teenagers attacked over hate and fear of Muslims.”

So highlighting similarities, not difference became a theme of the day – especially for volunteer Zarqa Nur who says she too learned plenty from her discussion with Jewish visitor Keren Harel-Gordan.

“I’ve known that Judaism it’s one of the Abrahamic faiths so I know the similarities are there but just to speak about the daily way we live it – and how similar it is, it’s really nice.”

And the sentiment was shared by Ms Harel-Gordan.

“Prayers – ok so in Islam it would be 5-times a day and Judaism 3-times a day but again it’s very similar.”

It’s intended for the Victorian Mosque Open Day to become an annual event.

 

 

 

 

Origin offloads Vic windfarm for $110m

Origin Energy has agreed to sell its under-development Stockyard Hill wind farm project in Victoria to Chinese wind power developer Goldwind for $110 million.

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The sale is part of Origin’s asset sale program announced in 2015, which has targeted raising $800 million through divestment of non-core assets by June 2017. The proceeds will be used to reduce debt, the company says.

The energy producer and retailer will, however, sign a long-term power purchase agreement with Goldwind to buy all the power from the 530 megawatts project and associated renewable energy certificates once operations start in 2019 and until 2030.

That will boost its renewables capacity further, taking new commitments to 1200 MW in the past 12 months.

Earlier in May, Origin sold its under-development 110 MW Darling Downs solar farm in Queensland to gas pipelines operator APA Group, but agreed to buy all the electricity generated by the project until 2030.

That followed an agreement in April to buy all the generated power from the 220 MW Bungala solar plant in South Australia.

When completed, the Stockyard Hill project is slated to be Australia’s largest wind farm with power generated from 149 wind turbines.

On Monday, Origin said it had signed up to buy the wind farm’s power for a market leading price of below $60/MWh.

“Today’s announcement is important as it indicates just how fast the transition is occurring in Australia’s energy market,” Origin chief executive Frank Calabria said.

“Not only is renewable energy being rolled out rapidly, the costs have fallen at a very fast rate.”

RBC Capital Markets analyst Ben Wilson backed the assessment, calling the agreed rate “surprisingly low” in the context of current wholesale pricing of more than $80/MWh for renewable contracts.

“While we broadly see downward pressure on wholesale power pricing, we think Origin should generate good margins on the Stockyard deal,” he said.

By 1214 AEST, Origin Shares were trading three per cent higher at $7.56 each in a strong Australian market.

Rates to stay on hold with RBA optimistic

The Reserve Bank of Australia thinks the economy is on track for solid growth, but the central bank’s optimism has been met with a note of caution from some economists.

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The RBA’s quarterly Statement on Monetary Policy forecasts gross domestic product (GDP) to rise between 2.75 per cent to 3.75 per cent in 2018, up from 2.5 per cent to 3.5 per cent previously.

“GDP is forecast to increase by 2.5-3.5 per cent over 2017, with growth expected to remain a bit above potential throughout the rest of the forecast period,” the statement said on Friday.

The Reserve Bank also indicated it had no plan to shift the cash rate from a record low of 1.5 per cent for the rest of 2017.

“The cash rate is assumed to move broadly in line with market pricing,” the RBA said in the statement on Friday.

Royal Bank of Canada chief economist Su-lin Ong said the RBA had “erred on the side of optimism” and may be forced to rethink rates sooner than expected.

She noted official figures released on Thursday indicated trade would weigh on rather than add to growth in the March quarter.

The RBA also said in its statement that household consumption spending growth likely eased in the March quarter and commodity prices have been easing recently.

Ms Ong added that Cyclone Debbie was likely to have disrupted coal export volumes in the June quarter, so there were already some clear risks to the RBA’s growth forecasts.

“The RBA may well tolerate a weaker first half and persistent sub target inflation while housing dynamics and financial stability remain top of its watch list but may find it more difficult to do so further into 2017 as these concerns begin to abate,” she said in a note.

Commonwealth Bank economists Gareth Aird and Kristina Clifton said if the RBA’s growth forecasts hold despite the hits from trade in the first half of the year, rates will be on hold into 2018.

“It sounds like a broken record now, but rate cuts are off the table unless the housing market falters or the unemployment rate materially rises,” they said in a note.

“The risk, however, lies with another cut given weak wages growth, below target core inflation and an expected further downturn in hard commodity prices.”