Rudd to offer generous concessions to bank accounts for savers

MUM and dad investors will receive generous concessions to park their savings with banks and building societies as part of sweeping tax reforms.

The Rudd Government is preparing to unveil a new savings scheme offering tax breaks similar to superannuation’s discount rate of 15 per cent, The Daily Telegraph reports.

It will encourage investors to deposit savings with the four major banks and other respected financial institutions.

But investors will have to “lock up” their savings — perhaps for between five and 10 years — to qualify for the special rate.

The new savings deal will be announced as part of the Government’s much-anticipated response to the Henry tax review.

It will be part of a suite of measures aimed at building a new savings culture in Australia.

But it is also hoped it will generate billions of dollars in bank deposits, cutting the need for finance houses to borrow from overseas.

The Government expects it will be popular with voters who currently face punishing tax rates on savings. Some taxpayers can pay up to 50 per cent on interest earned from their bank deposits.

Australia is one of the few countries in the world to tax bank savings at the full rate.

Among key reforms, taxpayers will be able to lodge their annual tax returns with a few clicks of a mouse.

And Australia’s antiquated tax system — containing 125 different taxes — will be streamlined to simplify arrangements.

It is understood the Reserve Bank and other financial authorities have raised concerns about the steady decline in deposits.

Bank CEOs have been lobbying Canberra for changes to taxation on ordinary bank deposits, claiming the superannuation industry gets a huge advantage.

And they have a strong ally in Treasury boss Dr Ken Henry, who has also raised concerns over the punitive rates faced by those who save with banks.

Source  :  www.news.com.au

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Australian skills shortage “a risk to recovery”

Industry leaders in Australia are urging the Australian federal government to overhaul its skilled immigration program to address a looming shortage of workers.

Recent changes by DIAC to the skilled migration visa processing times have meant that many hundreds of applicants for visas have been told that they may have to wait up to 3 years and this is slated to impact on several massive projects announced for Western Australia, including the Gorgon gas development, expansion of the Pluto LNG plant and the development of the Mid-West iron ore region including the massive Gindalbie iron ore mine which will need upwards of 1500 workers during the construction stage.

 The recent Australian Financial Review (afr.com.au) has stated that skills shortages are set to intensify in coming years.

The article calls for the Department of Immigration and Citizenship to urgently look at reviewing Australian visa policies to ensure that these shortages can be filled. More immigrants will be needed to work in Australia in industries such as energy, mining  and IT which, according to the review, face a major skills shortage unless something drastic is done to alleviate it.

Major Australian firms such as infrastructure giant United Group have also released warnings to the government that they will be facing skills shortages within 12 to 18 months.

The firm’s CEO Richard Leupen declared that the shortage has been brought about as a result of the tightening of the business visa rules. He says this has coincided with the company’s reduction in training programmes for staff in response to the recession.

In the IT industry, the need is even more acute. A study, commissioned by Microsoft Australia, has found the IT industry will generate $21 billion for GDP by the end of 2013 but any potential growth could be stifled by the shortage of skilled labour.

Bruce Mills, chief executive of IT consultancy firm 3W, says as more IT work becomes available, such as the National Broadband Network, companies will struggle to grow and obtain new projects if the number of skilled workers remains flat.

“What has occurred is that everything that was done to avoid the global financial crisis has sort of spilled over, and so by the time any of the results were felt any issue that caused the crisis is over, and that is what has happened with the tightening of 457 visas.”

Source  :  www.australiamagazine.co.uk

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Grocery Choice website scrapped

THE Rudd Government has dumped one of its key election promises, the Grocery Choice price monitoring website, after supermarkets failed to provide enough information to make the site reliable.

After a meeting today with major supermarkets, Competition Minister Craig Emerson announced that the measure – an election promise that was aimed at keeping grocery prices low – would not proceed, The Australian reported.

“Upon close examination of the data requirements for reliable price information, I have formed the view that it is not feasible to generate that information in a timely manner, “ Dr Emerson said.                                                                                                                                                                                                                                                   

The scheme had been due to be up and running next week.

The dumping of Grocery Choice comes after the Government last year abandoned FuelWatch after it was defeated in the Senate.

Mr Rudd campaigned heavily prior to the election on easing the cost-of-living pressures on working families and increasing competition in the petrol and grocery sectors.

Both FuelWatch and Grocery Choice were criticised for not putting downward pressure on prices.

Earlier this month it emerged that the consumer advocate Choice would be forced to go it alone on the website as the major supermarket chains continued to drag their feet over supplying price data.

Choice took over the running of the website from the Rudd Government, which launched it after campaigning on easing cost-of-living pressures before the election.

The $13 million site, which originally launched last August, was heavily criticised for displaying information that was too general and outdated to be useful.

Source  :  www.news.com.au

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First Home Owner Grants

A NATIONAL affordable housing organisation has called on the Federal Government to scrap its first-homeowner grant.

The grant, which was raised from $7000 to $14,000 for existing dwellings and from $14,000 to $21,000 for new homes as part of Labour’s $10.4 billion stimulus package last year, is due to expire on June 30.

The National Shelter has called on Treasurer Wayne Swan to axe the scheme when he hands down his second budget tomorrow, saying it inflates housing prices beyond the value of the grant.

“We’d be in favour of getting rid of all of it,” chief executive Adrian Pisarski told ABC Radio today, adding if the scheme was continued, it should be means-tested.

“That actually targets those lower-income families who really struggle to get into the housing market and doesn’t advantage wealthy families who can support their kids into the market at the cost of those lower income families.”

But the Master Builders Association says the enhanced scheme should be kept as it is, minimising the effects of the global financial crisis.

“We put to the government that … the best bang for the taxpayers’ buck would come from keeping the boost for new housing,” chief executive Wilhelm Harnisch said.

“It does generate new activity, it does generate jobs, it also has the multiply effect into retail, manufacturing and other sectors.”
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