Post Budget Presentations with Strategic Insights.

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Hello All,

Please find a summary of the Budget below as outlined by the Bank Manager at NAB.

Attached presentation slides from NAB’s Budget Breakfast Review.

Peter Jolly NAB PresentationPhil Ruthven (IBIS World)

I encourage you to read both Peter Jolly’s presentation (NAB) first, and Phil Ruthven’s presentation (IBIS world) second.

This is not your typical post budget download, value is in the strategic insights on Australia’s future direction. So best read on a quiet evening with a glass of wine, scotch or beverage of choice to stimulate creative thinking and forward planning.

The doom and gloom coming from Canberra is not what it is, the economy is expected to be at this level until Canberra gets its act together however, there are opportunities ahead.

Some key takeaways I noted;

  • Northern Territory will commence spending on the back of the $5bn infrastructure package.
  • S&P AAA budget deficit threshold is 30%, Australia is currently at 26%. Beyond 30% rating will downgrade to AA+.
  • $10 movement in iron ore price is worth $6bn in government revenue.
  • Australia has had 400,000 pa population growth in each of the last two years, fastest in the developed world.
  • A$ fair value is $0.80, likely to fall further if the US Fed hikes rates.
  • World growth is c.3.0%, average deficits 2.7%, factor inflation and real global growth is flat.
  • India’s growth rate of 7.6% has overtaken China, 6.9%, for the first time.
  • Asia Pacific growth rate is 5.1%, 2/3 of immigrants and tourist now come from the Asia Pacific.
  • unemployment rate is expected to remain at 6.5% for some time, above the long term average of 5.0%
  • The weather bureau has formally forecast an El Nino weather event this will have an impact on agriculture jobs.
  • Australia has the lowest tax in the OECD at 26% of GDP, OECD average is 32%.
    • The budget issue is not one of overspending, it’s one of under collecting
    • Australia’s GST of 10% is among the lowest in the world, average 17.5%.
    • Budget issues can be fixed with minor tweaks to the GST, c. 12.5% over 5 years.

A thank you to Shamin de Lanerolle the senior Business Banking Manager at the National Australia Bank.

Ed Chan
Founder & Non Executive Chairman Chan & Naylor Accountants
www.chan-naylor.com.au

Ed Chan

Disclaimer: This article contains general information. Before you make any financial or investment decision you should seek professional advice to take into account your individual objectives, financial situation and individual needs.

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