After a somewhat unpredictable period in federal politics, with the election now done and dusted and new policies in place, it’s timely to reflect and review on what recent changes mean to your financial situation.
Growth and Budget Measures
After the Morrison government finally got their tax package through parliament, millions of Australian workers rushed to receive their tax returns in early July. The government hoped this measure would stimulate the economy and lift consumer confidence both in the short term and longer term as the next stages of the tax package come into effect in coming years.
So there was a lot of focus on release of the GDP figures on 4 September to see if that had eventuated. While many pundits were predicting the worst figures in 20 years and a recession looming, the actual scenario was more promising. With .5% growth for the quarter and 1.4% annual growth 2018-19, the results are comparative with 2009 during the GFC.
This growth is being driven primarily by exports and government spending, particularly on infrastructure, rather than consuming spending and business investment.
While the RBA Governor and the opposition is calling for greater stimulus measures, the Government says it is waiting for the impacts of its May budget measures to kick-in, including the tax rebates, which should be better reflected in the next quarterly figures.
Wages take the Spotlight
Apart from the tax cuts, wages are under the microscope for a number of other reasons. Wage growth remains slow across the economy and the government appears to be adopting a policy of jobs creation to reduce unemployment which in turn should increase wages. But many pundits disagree and no doubt debate will continue on this issue for some time.
In the wake of a number of high profile cases of businesses underpaying workers, both employees and employers should be vigilant. Employees should be closely checking their payment summaries and if in doubt that they are being paid correctly, should go through the channels to report the situation or at least investigate.
Employers should be checking their software is up to date and operating correctly to avoid any errors occurring when paying workers. From 1 July 2019, businesses with 1-15 employees now have to report employees’ tax and superannuation payments through Single Touch Payroll. For larger businesses, including Commercial Heavy Vehicle & Truck Loans, this requirement came into effect last year. This allows employees to see their year-to-date in their ATO online account.
Following changes to insurance policies linked to superannuation funds, super continues to be ‘in the conversation’ with some pushing to review the proposed increase to 12% by 2025 and others suggesting lower paid workers should be allowed to opt-out of super. No doubt this debate will continue so watch this space.
Investing with Interest
While the ASX saw record highs in late July, interest rates are at record lows and with the possibility the Reserve Bank will reduce the rate even lower, investors are in a quandary as to where to invest. Self-funded retirees are particularly effected but fortunately for pensioners, the government is reviewing deeming rates.
The slump in housing prices combined with low interest rates presents a good scenario for property investors. However, low purchase prices need to be considered relevant to the rental market which is slow in some regions. While Sydney and Melbourne housing markets have started to pick-up, other areas remain sluggish.
Juggling the Costs of Living
Cost of living pressures remain a concern for many households and especially in drought-affected areas. Changes to energy pricing with the default pricing system will give a reprieve to some and governments at all levels are working hard on policies to reduce energy costs. Efforts which will be appreciated by both businesses and households.
Australia may be an island but we’re certainly not isolated from the impacts of international events on our economy. Australia is experiencing better growth figures than the UK and Europe, while the US is showing strong growth.
Under newly elected PM, Boris Johnson, the Brexit chaos in the UK has unfortunately not improved and all eyes are focussed to see how this will play out before the 31 October deadline, and how the outcome will effect Australian trade channels.
Closer to our region, the US-China tariff scenario is creating uncertainty across the global trade scene with possible impacts expected on Australia – positive or negative – depending on how the situation plays out.
In future issues we’ll cover off on what is happening both here and abroad, so stay tuned to your inbox or contact a Jade Truck Loans consultant. Whatever your financial situation, if you’re considering purchasing a home, car, boat, caravan, motor bike or investing in business equipment, your Jade Finance Consultant can be your first call for an initial discussion. Our consultants are across the financial markets and well-qualified to assist you.
DISCLAIMER: THE INFORMATION PROVIDED IN THIS PUBLICATION IS INTENDED AS AN OPINION AND A GUIDE ONLY. IT IS NOT INTENDED AS FINANCIAL ADVICE. CONTACT YOUR FINANCIAL ADVISOR FOR PROFESSIONAL ADVICE ON YOUR SITUATION.