TAX REVAMP ON WAY; LEAP IN INSURANCE
Low-income tax relief aimed at living costs
Labor has opened a major assault on cost-of-living pressures, proposing to provide greater relief for low-income earners through legislated tax changes. Prime Minister Anthony Albanese said the so-called stage-three tax changes would be amended to impose a lower tax rate for workers earning up to $45,000, with an accompanying increase in the Medicare levy threshold. While the threshold for the highest tax rate would be lifted from $180,000 to $190,000, higher-income earners would now receive less tax relief under Labor’s package. The Prime Minister cited Treasury advice that the proposed stage three changes would be broadly revenue-neutral and would not add to inflationary pressures. In the absence of Coalition support for the package, Labor will require the support of minor parties in the Senate to amend the stage three tax cuts, first legislated by the Coalition in 2018-19.
Labor facing by-election test in swing seat
Voters in the Victorian federal electorate of Dunkley will go to the polls in a by-election on March 2 to elect a replacement for the late Labor MP Peta Murphy, who died in December. Labor will defend a 6.2 per cent margin from the 2022 poll in the beachside seat south-east of Melbourne, which it won in 2019 after 23 years in Liberal hands. Cost-of-living, education and transport issues are expected to figure prominently in the by-election campaign. Meanwhile, another by-election will be held in the southern Sydney seat of Cook, after former Prime Minister Scott Morrison announced his retirement from politics.
Inflation trending down, insurance trending up
Australia’s domestic inflation is trending down, with the monthly Consumer Price Index indicator recording a 4.3 per cent increase in the 12 months to November 2023. The Australian Bureau of Statistics previously tracked annual inflation increases of 5.6 per cent and 4.9 per cent respectively for September and October 2023. Despite the fall in the CPI rate, electricity and gas still recorded annual double-digit percentage increases, while the cost of insurance rose 16.3 per cent annually to November. The ABS said higher reinsurance and natural disaster costs contributed to rising premiums for house, home contents and motor vehicle insurance.
University starts fall as cost pressures bite
Domestic undergraduate student commencements at Australian universities fell by 8.2 per cent in 2022, according to the Federal Department of Education. A total 267,107 students started their tertiary studies, the lowest number of commencing domestic undergraduates since 2013, and representing a 5.5 per cent fall since 2018. The department attributed the decline to probable cost of living pressures and a strong labour market attracting potential students to jobs. A concurrent reduction in apparent Year 12 retention meant the eligible population of school leavers may have been lower than otherwise expected.
Coal, cereals lead bounce in trade surplus
Australia’s international trade surplus is again trending strongly upwards, increasing by more than $3.7 billion to $11.4 billion, seasonally-adjusted, in November. ABS figures show that increased exports were driven by higher coal and cereals exports, while monthly imports fell almost $3 billion, with a 14 per cent fall in consumption goods imports a sign of potential lower domestic demand. Imports of non-industrial transport equipment (vehicles) fell by almost $1 billion, or 26 per cent, over the month.
Cyber sanction imposed on Russian after Medibank breach
Australia has issued its first cyber sanction against an individual, following the theft of 9.7 million records during the 2022 breach of the Medibank Private network. Defence Minister Richard Marles said Australia had imposed a targeted financial sanction and travel ban on the Russian individual. The sanction provides a criminal offence of up to 10 years’ imprisonment and heavy fines to provide assets to the Russian individual, or to use or deal with his assets, including through cryptocurrency wallets or ransomware payments.