15 May - Chamber of Commerce and Industry

Trendline
Your weekly update of the latest economic trends
15 May 2015
State Budget surprises with
assets sales
The record deficit announced in today’s State Budget puts into
sharp focus the need for dramatic public sector reform to return
Western Australia to surplus by the end of the decade.
Positive news for small business
in this year’s Federal Budget
Treasury has forecast an operating deficit of $1.3 billion in
2014-15 increasing to $2.7 billion in 2015-16, with total net
debt peaking at 30 June 2018 to reach $36.3 billion. The soaring
levels of debt have largely been attributed to revenue estimates,
as a result of falling iron ore and oil prices, being revised down
by $10.2 billion over the forward estimates.
The Federal Budget was handed down Tuesday night by the
Treasure. In a media released by CCI following the Budget,
CCI welcomed the focus on small business and workforce
participation in the Federal Government’s budget.
To combat this, the State Government has introduced a welcome
second tranche of new asset sales. With the most notable
proposed asset sales being, the privatisation of Fremantle Port
Authority and the sale TAB.
CCI welcomed a program of asset sales but said the business
community would be deeply disappointed the Government had
again chosen to increase land tax as a way to address its short
term budget challenges. Land tax receipts are projects to increase
by more than 25 per cent next financial year, which comes on top
of a cumulative increase of 25 per cent in the previous two years.
The State Government also failed to deliver on the proposed
microeconomic reform agenda, with no mention of further
deregulation in retail trading hours, and no reform in the WA
Taxi industry.
Treasury, Joe Hockey, announced a $5.5 billion package for small
business, including a 1.5 per cent tax rate cut for some small
businesses and a five per cent tax discount for unincorporated
small businesses. However, the $2 million turnover test had been
set too low to enable many small businesses to benefit from the
suite of benefits in the Small Business package, and the $20,000
instant asset write-off will provide a genuine incentive for those
that qualify to invest in their small business – with some flow-on
benefits for the broader economy.
Changes to the 457 visa system and measures to encourage
workforce participation included $18.3 million to support unpaid
work experience. In addition, the measures focusing on youth
employment and childcare will help boost workforce participation
and create a more skilled workforce capable of meeting
Australia’s long-term needs.
Additional Budget announcements saw tax changes to include:
However, a positive Budget announcement for small businesses
was the state government commitment to increase the payroll tax
exemption threshold to $850,000 from 1 July 2016, in line with
their previous election promise.
„
GST to be applied to cross border supplies of digital products
and services;
„
To see CCI’s full State Budget analysis, please click here.
„
General Government NOB v
Public
Sector Cash Balance, $bn
WA Government Total
Financial
Performance
$2.0bn
Cash Balance (Total Public Sector)
$4.0bn
$2.0bn
$0.0bn
$0.0bn
-$2.0bn
-$2.0bn
-$4.0bn
-$4.0bn
-$6.0bn
2004-05
2011-12
Source: CCIWA & Consectuive State Budgets, 2014-15 = Estimated Actual
-$6.0bn
2018-19
Thousands
Thousands
General Government NOB v Total Public Sector Cash Balance, $bn
Net Operating Balance
$499.1 million in funding for WA to spend on roads and
$5.5 billion for a Northern Australia Infrastructure Facility as
part of a $33.3 billion package; and
WA Government Financial Performance
$4.0bn
a $100 million cap on full R&D expenditure claims and
the fight against red tape continues, with $130.9 million
to improve interactions with the Australian Taxation Office
and $254.7 million to improve the efficiency of interactions
with Government.
To view CCI’s full Federal Budget analysis, please click here.
Data wrap-up
12/05/15
13/05/15
13/05/15
13/05/15
Housing finance data released by the ABS on Tuesday showed that
the total number of approvals in Western Australia increased by
13.6 per cent, to stand at 4,820 approvals in March. However, total
approvals are down 8.4 per cent on the year, and now stand some
22.3 per cent lower than a recent high of 6,203 approvals in May 2013.
Nationally, total building approvals increased by 0.3 per cent on the
month. This follows two consecutive monthly declines, which saw the
total monthly number of approvals fall by roughly 7,620 (2.2 per cent)
between December and February. Despite increases nationally this
month, approvals remain down three per cent on the year.
The Western Australian Wage Price Index (WPI) fell to 2.1 per cent in
the March quarter of 2015 – the lowest rate of growth in the history
of the indicator. The industries that saw the largest growth in WA were
public administration and safety (3.2 per cent) and manufacturing and
health that both saw growth of 3.1 per cent. Meanwhile, growth in the
construction (one per cent) and administration and support service
(0.8 per cent) industries dragged on growth. Only one other state or
territory reported slower growth than WA, growth of 1.8 per cent was
reported by the ACT, while NSW also reported growth of 2.1 per cent.
Nationally, the index grew by 2.3 per cent and was driven by growth of
2.6 per cent in VIC and 2.5 per cent growth in SA.
Euro area growth figures for the first quarter of 2015 were released by
Eurostat on Wednesday and revealed annual growth of one per cent.
This was from 0.9 per cent growth recorded in the final quarter of 2014,
however, down from the consensus of 1.1 per cent growth. Stronger
than expected growth figures from France and Italy (0.7 per cent and
zero per cent growth, respectively) where the main driver behind
figures this quarter, as German figures (1.1 per cent) came in below
last quarters figures and this quarters consensus (1.6 per cent and
1.2 per cent, respectively). The euro area was reported to receive a
boost from recent falls in the oil prices and an increase to confidence
following the European Central Bank’s stimulus.
Housing Finance Approvals
WA
& Australia,
000s, Excl. Refinancing
Housing
Finance
Approvals
WA & Australia, 000s, Excl. Refinancing
8.0k
50k
WA (LHS)
Australia (RHS)
7.0k
45k
6.0k
40k
5.0k
35k
4.0k
30k
3.0k
Mar 05
Mar 07
Mar 09
Source: ABS Cat. 5609.0
Mar 11
25k
Mar 15
Mar 13
Wage Price Index
Annual Growth, Australia Vs Western Australia
Wage Price Index
Annual Growth, Australia Vs Western Australia
5%
Aust
5%
WA
4%
4%
3%
3%
2%
2%
Mar-10
Mar-11
Mar-12
Mar-13
Mar-14
Mar-15
Source: ABS Cat. 6345.0
Euro Zone GDP
Euro Zone
GDP
Quarterly
& Annual Percentage Change
Quarterly & Annual Percentage Change
4%
4%
2%
2%
0%
0%
-2%
-2%
-4%
-6%
Mar 05
Source: Bloomberg
Quarterly Growth
Annual Growth
Mar 07
Mar 09
Mar 11
Mar 13
-4%
-6%
Mar 15
Retail figures from the world’s largest economy, the United States, were
Retail Turnover
unchanged in April, reporting zero per cent growth from March. This
United
States,
Current
Prices, Percentage Changes
Retail Turnover
was down from 1.1 per cent growth in March and the consensus for
10%
10%
April of 0.2 per cent growth. Bloomberg reported consumers held onto
5%
5%
savings from lower petrol prices and a stronger labour market, instead of
0%
0%
spending the windfall. Weak retail figure in April have followed a handful
-5%
-5%
Monthly Growth
of weaker than expected economic releases throughout the first quarter
-10%
-10%
Annual Growth
of 2015, and have many economists pushing back September’s estimated -15%
-15%
Apr 05
Apr 07
Apr 09
Apr 11
Apr 13
Apr 15
interest rate tightening. The Federal Reserve will need convincing growth Source: Bloomberg
in US economy is gaining momentum and leaving the weakness of first
quarter figures behind before interest rates are tightened.
United States, Current Prices, Percentage Changes
The week ahead
18/05/15
The start of the week is kicked off with the ABS releasing data on April’s new motor vehicle sales.
19/05/15
Tuesday sees the RBA release its meeting minutes from May’s interest rate decision and the ABS will release international
merchandise import figures for April. Internationally, the euro area will release CPI and trade figures for April, while the US
will release housing starts and building permit figures for April.
20/05/15
Wednesday is a quiet day for domestic releases. However internationally, Japan will release its growth figures for the first
quarter of 2015. The market is estimating growth of 0.9 per cent for the world’s third largest economy in 2015.
21/05/15
Further housing stats for the US are slated for release on Thursday with existing home sales data for April.
22/05/15
To round out the week, German growth figures for the first quarter of 2015 will be released. The CPI for the US
will also be released in the US for the month of April.
Produced by CCI Economics The Chamber of Commerce and Industry of Western Australia (Inc)
180 Hay Street, East Perth WA 6004 Telephone (08) 9365 7555 Facsimile (08) 9365 7550 Email: [email protected]