This presentation discusses government policies including taxation, housing, banking, trade, income inequality, etc.

1. Economy and Government
Policies –Australia– June 2016
By: Paul Young, CPA, CGA

2. Disclaimer
• This presentation discuss government and economics policies for
Australia

3. Paul Young - Presenter
Bio
• CPA/CGA
• 25 years of experience in Academia, Industry and Financial solutions
• Youtube Channel -
https://www.youtube.com/channel/UCAArky1bAXPSuV2NLtUnyLg

4. Agenda
• Debt to GDP
• Budget Deficits
• Economic Forecast
• GDP Analysis
• Retail Sales
• Income inequality
• Trade
• Tax policies
• Banking Sector

5. Government Debt to GDP
• Out of the G20 nations, the European Union holds
the biggest national debt, with a whopping
US$14.8 trillion (A$16.8 trillion). This isn’t
surprising given the European Union is made up
of 28 member states.
• The European Union also holds the fifth-highest
debt as a proportion of GDP of 87.4 percent,
which means its debt is almost worth the same
value as its total economic output.
• The United States ranks second behind the
European Union, with US$12.0 trillion (A$13.6
trillion) of debt. It holds the eighth-highest debt
as a proportion of GDP, of 71.8 percent.
• Australia ranks well compared with other G20
nations according to the research, placing 13th on
the list of national debt per nation. Australia’s
national debt is US$485.1 billion (A$549.8 billion)
which represents 32.6 percent of the country’s
GDP.
• Saudi Arabia was ranked at the bottom of the list,
with just US$87.7 billion (A$99.5 billion), which
represents 12.2 percent of its GDP.
• The highest debt as a proportion of GDP was
Japan, with 226.1 percent, which means that the
country’s national debt of US$11.3 trillion (A$12.9
trillion) is more than double what it made for the
year. It also ranked third-highest for national debt.
If Japan spent the next two years repaying its debt
with its entire GDP, it would still be in the red.

6. Australia – Deficit/Surplus
• Chris Richardson calculates that the budget
deficit from now to 2018/19 will total $129
billion, $21 billion worse than Treasurer
Scott Morrison forecast in December’s
midyear budget.
• “The budget boom of the past decade
continues to become a budget bust,” Mr
Richardson says in the latest Deloitte Access
Economics budget monitor on Tuesday. He
expects the budget deficit for 2015/16 will
be $41.7 billion, $4.3 billion bigger than
previously forecast.
• For subsequent years:
• 2016/17 — $38.6 billion rather
than $33.7 billion
• 2017/18 — $27.8 billion instead
of $23 billion
• 2018/19 — $21.3 billion, $7.1
billion more than forecast in
December.
• While the recent surge in the iron ore price
would add some $15 billion to the tax take if
it was sustained over the four-year budget
estimates, this merely blunts the impact of
ever slowing wage growth and the renewed
strength of the Australian dollar on revenue.

7. Australia – Income Inequality
• Australians in the top 20 per cent of wealth holders have 70 times the wealth that
people in the bottom 20 per cent have, a report on Australia's widening wealth
inequality says.
• The report from the Australian Council of Social Service on Monday says
Australia's level of income inequality is above the Organisation for Economic Co-
operation and Development average.
• Welfare groups are demanding that authorities strengthen Australia's social
safety net in order to prevent widening inequality from becoming the new norm.
• The top five per cent of households in Australia earned more 15 times as much as
the bottom five per cent of households in 2012, based on a range of data
including Australian Bureau of Statistics figures, the ACOSS report says.
•

8. Global Forecast

9. Australia GDP -
• Australia's economic growth rate
accelerated in the first quarter this
year as strong export volumes and
household spending on services
helped offset lacklustre business
profits and investment.
• The Australian Bureau of Statistics
said on Wednesday gross domestic
product expanded 1.1 per cent in the
first three months of the year,
compared with a revised 0.7 per cent
in the final 2015 quarter.
• The figure was even better than the
hurriedly revised economists'
estimates after a much stronger
contribution from net exports,
revealed on Tuesday, had pushed GDP
forecasts up from 0.6 per cent on
Monday to 0.8 per cent just ahead of
Wednesday's data.

10. Retail Sales / Australia
• An unusual decline in food and liquor sales has caused retail turnover to miss
economist forecasts, with relatively weak 0.2 per cent growth.
• Economists surveyed by Reuters had typically expected retail sales to grow 0.3
per cent in April.
• The Bureau of Statistics data for April show supermarket and grocery stores
had a 0.2 per cent fall in sales, seasonally adjusted, while liquor retailing
dropped 1.4 per cent.
• Specialised food retailers saw a steep 1.1 per cent decline in their sales,
indicating that shoppers were not shifting from supermarkets back to small
stores.
• While people were shunning fresh food and groceries, they flocked to
restaurants and cafes, which saw a 1 per cent jump in sales.
• Clothing retailers have complained that the unseasonably warm autumn
weather has dented sales of winter apparel, such as coats and jumpers.

11. Housing Market / Australia
• "Our house price-to-income ratio now in Australia makes the American housing
bubble in the lead up to 2007 look positively moderate," Jonathan Pain, publisher
of investment newsletter, The Pain Report, told CNBC's "Street Signs."
• The median housing price in Sydney was 12.2 times more than the median annual
household income in the third quarter of 2015, up from 9.8 in all of 2014,
according to data from the most recent Demographia International Housing
Affordability Survey. In Melbourne, the median home price was 9.7 times median
income in 2015's third quarter, up from 8.2 across 2014, the data show.
• "Australian banks are heavily invested in probably one of the most inflated real-
estate markets in the world and we now have an avalanche of residential housing
supply hitting the market," Pain said.
• He said that the Big Four banks had issued more than 80 percent of the country's
residential property mortgages, adding that mortgages as a percentage of banks'
assets were "extraordinary."

12. Australia / Trading Partners
Australia's quarterly trade deficit
narrowed marginally to $20.8 billion,
the fifth worst result on record, while
foreign debt kept growing above $1
trillion.
Data released by the Australian Bureau
of Statistics also showed Australia's net
foreign debt continued to mount, up
another 1 per cent over the quarter to a
record $1.03 trillion.
In volume terms - a key input into the
quarterly economic growth figures - net
exports rose 60 per cent to $4.7 billion,
which the Australian Bureau of Statistics
forecast would add a strong 1.1 per
cent to the March quarter GDP figure to
be released tomorrow.
The surge in export volumes – iron ore,
coal and fuel up 5.8, 4.9 and 11 per cent
respectively – pushed export volumes
to a record high of $96.7 billion.

13. Australia Tax System
• Hong Kong topped the rankings in the 2016 IMD World Competitiveness Yearbook,
followed by Switzerland and the United States, which dropped from first place.
• Australia improved its ranking one notch to 17th out of 61 economies, helped by
improvement in factors such as labour regulations, government decision-making and fuel
prices.
• The country’s most attractive feature continues to be an effective legal environment,
according to a survey of business executives done as part of the ranking.
• High education levels and skilled workforce also rank highly. The most attractive feature
for overall leader Hong Kong — a competitive tax regime — was also ranked the least
attractive feature about Australia.
• Australia also ranks poorly over cost-competitiveness and effective labour relations.
• In the Asia-Pacific region, Australia was outgunned by Hong Kong, Singapore, Taiwan and
even New Zealand in the competitive stakes.

14. Banking Sector – Australia - Health
• Canada’s banks were ranked the world’s soundest by the World Economic
Forum for the eighth year in a row, even as rising housing prices may
present a risk.
• The country’s banking system, which includes Toronto- Dominion Bank,
Royal Bank of Canada and Bank of Nova Scotia among others, ranked No. 1
in the Global Competitiveness Report released by the organization
Wednesday in Geneva. Finland’s system ranked second of 140 countries
surveyed and Australia’s third. The U.S. came in 39th place, compared with
49th a year earlier, according to the report.
• Canadian banks are “considered sound, although exposure to a potentially
overvalued housing market could become a risk,” the organization said in
its report.

15. Sources
• Contact: paul_young_cga@Hotmail.com