Reserve keeps interest rates on hold

The Reserve Bank has delivered some badly needed relief to mortgage holders, deciding today to leave official interest rates on hold.

For the first time since February, the RBA board did not use its monthly meeting to lift rates which now stand at 4.5 per cent.

In a statement, bank governor Glenn Stevens said the issues around sovereign debt in Europe and its impact on financial markets were a major reason behind the move.

He said the impact of these on the wider economy were still to be determined, arguing global growth is still expected to be around trend for the rest of this year.

But Mr Stevens signalled interest rates were likely in the future on the back of the return of the mining boom.

“In Australia, with the high level of the terms of trade expected to add to incomes and demand, output growth over the year ahead is likely to be about trend, even though the effects of earlier expansionary policy measures will be diminishing,” he said.

“Inflation appears likely to be in the upper half of the target zone over the next year.

Consistent with that outlook, and as a result of actions at previous meetings, interest rates to borrowers are around their average levels of the past decade, which is a significant adjustment from the very expansionary settings reached a year ago.”

The decision followed new figures from the Australian Bureau of Statistics which showed retail sales growing 0.6 per cent in April and a 14.8 per cent collapse in dwelling approvals.

However, the retail sales – while stronger than expected – were pushed up by food sales which jumped 1.3 per cent. Once this sector, which accounts for 40 per cent of all sales, is excluded retail was up just 0.1 per cent.

Other ABS figures showed government spending is holding up the economy and will add about 0.8 percentage points to tomorrow’s GDP result. Without that burst, the economy may have actually contracted in the March quarter.

CommSec chief equities economist Craig James said the figures showed the RBA had no option but to leave rates where they are for some time to come.

“Given the latest round of data, there are good reasons for the Reserve Bank to leave rates on hold for the next few months,” he said.

“Not only are retail sales holding at very weak levels, but the housing sector is showing signs of consolidation.”

Treasurer Wayne Swan says the Reserve Bank’s decision to leave the official cash rate unchanged is a “welcome relief”.

“This news will be welcome relief to Australian families and businesses around the country, who are of course doing it tough,” Mr Swan told parliament minutes after the decision was announced.

The national accounts for the March quarter are due for release on Wednesday.

“I have every confidence that with right polices in place, our economy can continue to be one of the best in the world over coming years,” Mr Swan said. Consistent with that outlook, and as a result of actions at previous meetings, interest rates to borrowers are around their average levels of the past decade, which is a significant adjustment from the very expansionary settings reached a year ago.”

“Not only are retail sales holding at very weak levels, but the housing sector is showing signs of consolidation.”

“Source  :  www.thewest.com.au

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Tree man’s protest ends

Thornlie’s tree man Richard Pennicuik has ended his 110 day protest and climbed down from the 20m-high eucalyptus melliodorain on the front verge of his home.

Mr Pennicuik has been living in the tree outside his Hume Road home since early December, including during Monday’s devastating hail storm that swept across Perth and caused more than $200 million damage.

The City of Gosnells wants to remove the tree, claiming it poses a danger.                                                                                                                

Mr Pennicuik claimed he won the moral battle before doing a lap around the tree and heading inside his home to have a shower.

He initially released a four paragraph statement, but re-emerged to speak to reporters, saying he felt great.

“The tree weathered the worst storm to hit Perth ever and it’s in good condition, it has proven itself,” Mr Pennicuik said.

“It is worth it because we have shown the people of Australia they need the constitution, they can’t do without it.

“I think I have (proven my point) I think the tree has.”

City of Gosnells Mayor Olwen Searle today welcomed the Mr Pennicuik’s decision to come down from the tree, but confirmed the council would go ahead with plans to chop it down.

Source  :  www.thewest.com.au

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Perth man contracts swine flu strain resistant to Tamiflu

A Perth man has become the first person in Australia to contract a strain of swine flu which is resistant to the antiviral drug Tamiflu.

WA Health confirmed the 38-year-old man, who has a weaken Australia to contract a strain of swine fled immune system, initially responded to the drug but developed a resistant strain of the virus when his illness relapsed.

There have been 13 cases of Tamiflu-resistant infections reported around the world.

WA’s Chief Health Officer Dr Tarun Weeramanthri said in a statement this was a rare and isolated case and did not pose a risk to the public.

“There is no evidence that the virus has spread to other people – none of the patient’s family or hospital staff caring for him have contracted the virus, and he has not been in contact with the wider community,” he said.

“Experience from overseas shows us that these cases tend to be confined to individual patients and it is not uncommon for it to occur in people who have weakened immune systems.”

Dr Weeramanthri said the man had been treated with an alternative antiviral drug that was active against the resistant virus and was no longer infectious.

However, he remains in a critical condition in intensive care.

“When it becomes available, the human swine flu vaccine will offer the best protection against the virus and I would encourage people to seriously consider getting vaccinated,” he said.

The first people to be offered the vaccine will be pregnant women in their second and third trimester, those with underlying medical conditions including morbid obesity, Aboriginal people, children in special schools and frontline healthcare workers, WA Health said.

Source  :  www.watoday.com.au

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PM Rudd launches Australia’s WCup bids

SYDNEY (AFP) — Prime Minister Kevin Rudd officially launched Australia’s bid to host the football World Cup in 2018 or 2022.

Rudd told an official ceremony at Parliament House in the national capital Canberra that Football Federation Australia (FFA) had the full backing of the government to bid for the showpiece event.

“The sheer odds are tough against Australia, eight other countries, but the reason the government had got behind the bid is that we as a nation can rise behind this great bid,” Rudd said.

The premier said the chance to host a World Cup was a great opportunity for the nation.                               

“The challenges are great, but the prize is much greater,” he said.

“I salute those who have had the courage and the initiative and creativity to bring forth this idea.”

English Premier League stars, national skipper Lucas Neill and goalkeeper Mark Schwarzer, also spoke at the launch, urging Australians to throw their support behind the World Cup bid.

FFA chairman Frank Lowy said it would be an “unparalleled opportunity” for Australia to earn official acceptance as a World Cup host.

“On the world stage, there is no event with the same level of global appeal or audience reach as the FIFA World Cup,” the property billionaire said in a statement.

Lowy said Australia?s “secret weapon” for winning the World Cup bid was the Australian people, and Australia’s desirability as a travel destination.

“People from all over the world want to visit our country and thanks to the performance of the Socceroos at the 2006 FIFA World Cup in Germany, as well as the many thousands of Australian fans who followed them, the rest of the world has a very positive view of us.”

Lowy also pointed to Australia’s record of hosting successful major sports events such as the 1956 and 2000 Olympic Games.

Australia are among nine bidders, along with Belgium-Netherlands, England, Indonesia, Japan, Mexico, Portugal-Spain, Russia and the United States, for the 2018 World Cup.

The same nine bidders are also in the running for the 2022 World Cup, along with Qatar and South Korea.

World football governing body FIFA will announce both the 2018 and 2022 World Cup hosts in December 2010.

Australia have already qualified to play in next year’s World Cup in South Africa.

Source  :  www.google.com

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Swan slams ‘selfish’ CBA rate decision

Treasurer Wayne Swan has taken aim at Australia’s biggest home lender, labelling it selfish for lifting its mortgage and business lending rates. 

Other banks have refused to rule out following the Commonwealth Bank of Australia’s (CBA’s) surprise decision to lift its home and business loan rates by 10 basis points to offset higher funding costs.

The opposition said the government’s huge debt burden was putting pressure on interest rates, while a prominent market economist said it may force the Reserve Bank of Australia (RBA) to cut the official rate again to counter any impact from CBA’s move.

CBA said it took Friday’s decision “reluctantly”, but at a standard variable mortgage rate of 5.74 per cent, up from 5.64 per cent, it was still the lowest on the market.

The rate hike will add $18 a month to repayments on a $300,000 home loan over 25 years.

The bank said it had absorbed as much of its additional funding costs for as long as it could.

“Unfortunately, we have seen the bank’s wholesale funding costs remain high and continue to increase as previous long term funding matures and is replaced with new funding at significantly higher cost,” CBA group executive of retail banking services Ross McEwan said in a statement.

Such reasoning drew no sympathy from the treasurer.

There are ups and downs when it comes to those decisions over time, but there are few decisions I can think of that are more selfish than this one,” Mr Swan told reporters in Brisbane.

“I think Australians, rightly, will be furious with the Commonwealth Bank.”

Prime Minister Kevin Rudd echoed those sentiments during a speech to a business lunch in Brisbane.

“We are all in this together – businesses, workers, government and the Reserve Bank – and today’s decision by the Commonwealth Bank runs counter to this nationwide effort,” Mr Rudd said.

The other three major banks – ANZ, National Australia Bank and Westpac – said their rates were constantly under review.

NAB said it had no current plans to raise its home loan rate but noted “all Australian banks” had been incurring significantly higher funding costs for some time.

Opposition treasury spokesman Joe Hockey said the government was putting pressure on interest rates by running up a huge debt.

“Kevin Rudd and Wayne Swan feigned outrage about this interest rate increase, yet they are directly responsible for it,” Mr Hockey told reporters in Sydney.

“This is the beginning. You will end up with higher interest rates directly as a result of the spending binge of the Rudd government and the massive debt they are accruing.”

Home buyers may be enjoying the lowest mortgage rates in 41 years, but have already missed out on about 30 to 40 basis points of the RBA’s total 425 basis points of official rate cuts, with banks refusing to pass on the cuts in full because of the cost of funding.

For small businesses it has been even worse, being short changed by about 140 basis points.

The CBA’s decision comes in a week that saw massive boosts to both consumer and business confidence, as well as data showing sustained growth in home lending – sucked in by low mortgage rates and a more generous first home owners grant.

April mortgage data showed loan demand has grown for seven straight months to a 14-month high, as well as record demand from first home buyers and the strongest interest from investors in nearly two years.

It also showed that the banks have cornered more than 92 per cent of all loans – a 33-year high.

Westpac chief economist Bill Evans said CBA’s decision could well be countered by another cut by the RBA.

“If it does have an impact, particularly on confidence in the housing market, which has been the most encouraging source of recovery in the Australian economy, it may bring a rate cut back on the table at the Reserve Bank,” Mr Evans told Sky News

Source  :  www.thedaily.com.au

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What is superannuation?

Superannuation is a way of saving for your retirement. Both you and your employer can make contributions that accumulate over time and this money is then invested in shares, government bonds, property, or other appropriate investments.                                 

On retirement, or after disability or death you then receive the money (less charges and taxes) as regular periodic payments (ie, a pension), a lump sum payment, or a combination of both.

Employers must contribute to an employee’s superannuation fund. This is called the Superannuation Guarantee, which came into operation on July 1, 1992.

The amount of the contribution is 9 per cent of an employee’s wages (excluding overtime, leave loading and fringe benefits).

Some employees are left out. The Superannuation Guarantee (Administration) Act says that employers do not have to pay the Superannuation Guarantee in certain circumstances.

Some of the exceptions are:
• employees earning less than $450 per month;
• employees under the age of 18 who work 30 hours per week or less;
• employees over 70 years of age;
• anyone paid to do domestic or private work for 30 hours per week or less.

Can the employer pay more?

An employer can make payments above the compulsory superannuation guarantee as:
• a reward for a worker’s performance;
• a type of co-payment, where the employer’s contribution increases in line with the employees voluntary contribution; or
• a ‘salary-sacrifice’ – this is where the employer makes a contribution that would otherwise be paid as salary.

Note, there are limits to the amount of salary sacrifice that can be made in a financial year.

If you want your employer to pay more, you should get advice from a financial advisor, but keep in mind that employers are limited in the amount that can be claimed as a deduction for superannuation contributions made for a particular employee.

Check with your superannuation fund or the Australian Tax Office to find out what these limits are – they change each year.  www.ato.gov.au

Should I contribute too?

If you have money left over after your weekly expenses, and you want to save for the future, you may want to consider making superannuation contributions as compared to other forms of investment.

Note, there are aged base limits that affect whether or not you can contribute to superannuation – for details, see the Australian Taxation Office web site.

Some of the advantages are:
• generally, you pay less tax on interest from superannuation savings than bank interest;
• with a ‘salary sacrifice’ the superannuation contribution is taken straight out of your wages, so you are not tempted to use it for purposes other than savings.

There are limits to the amount that you can “salary sacrifice”;
• the interest on superannuation savings is ‘compounded’, that is, interest earned by the superannuation fund is added to the total investment, so the interest earns more interest.

The Australian Prudential Regulation Authority estimates that a sum of money ‘compounded’ at 7 per cent a year will double in value in ten years; and
• you may be able to access the benefits of the low income super rebate and low income spouse rebate.
• you may be able to access financial incentives offered by the Government such as the co-contribution scheme. Under this scheme Government will contribute up to $1500 (depending on your income) when you contribute to your fund.

Check the Australian Taxation Office web site for details.

Ultimately, the pros and cons of contributing to superannuation is something you should get advice about.

What are the tax advantages?

The maximum tax rate for your employer’s contribution is 15 per cent.

The income you earn through the fund’s investments is also taxed at a maximum 15 per cent rate.

Salary sacrifice contributions will be taxed at 15 per cent.

Once you reach 60 you can withdraw your superannuation as a lump sum or income stream tax free.

There are also tax advantages if you contribute to your spouse/de facto’s super fund. The set off depends on their income. Check the Tax Office for details.

What laws apply?

The main laws that apply to superannuation are the:
• Superannuation Industry (Supervision) Act and Regulations (regulates most private superannuation funds);
• Superannuation Guarantee (Administration) Act and Regulations (tells employers the minimum contribution they must pay);
• Income Tax Assessment Act,.

The jargon

Accumulation funds – money is invested and the final benefit depends on the total contributions, plus earnings of the fund.

Annuity – like a pension. You receive regular periodic payments for either fixed amount of time or until you die.

Benefit – the money paid to you out of the superannuation fund or held on your behalf within the fund.

Contribution – the money paid into the superannuation fund by either you or your employer.

Defined benefit funds – the final benefit is paid on the basis of a specific formula, so the employer carries the risk if the growth of the fund does not cover the benefit.

Lump sum – money received in a single payment.

Preserved – money that you cannot withdraw from your fund until retirement or certain other events, eg reaching a certain age and leaving employment either temporarily or permanently. This includes money paid by your employer, interest earned on that money or contributions paid by a self-employed person which have been claimed as a tax deduction and any undeducted contributions you make after 1 July, 1999.

Rollover – transferring money from one fund to another.

Unrestricted or non- preserved amount – money that can be paid to you at any time form your superannuation fund

Rights to information

You are entitled to certain information from your superannuation fund. This includes:
• a member statement which shows the amount of your benefit at the start and end of the relevant period, the amount that is preserved and contact details (generally provided annually);
• a fund report which shows the fund’s financial position (generally provided annually);
• notification of changes that affect you, e.g. a change to the superannuation fund’s rules; and
• a statement that shows your benefit, including death benefits when you leave.

Source  :  www.news.com.au

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Two more swine flu cases in WA, Scotch College student ill

NEARLY 100 staff and students at WA’s exclusive Scotch College are being tested for swine flu after an 11-year-old boy fell ill with the virus.

Eleven-year-old Scotch College student, Harry, who returned from Melbourne on June 1, has tested positive for the H1N1 virus.

A 23-year-old woman, who returned from Melbourne on June 3, was also confirmed to have it.

Harry had flown to Melbourne with a youth football team and on returning to Perth went on a school music camp before developing symptoms.

He did not return to school after the camp because he was feeling sick.

“I had a really burning temperature,” Harry said yesterday from home quarantine.

“It was really hot. I was sweating.”

Harry’s mother, Jennifer, said: “It was a really big shock. If there was no talk of swine flu and no Melbourne issue I would have just thought it was the same old cold or flu he has had before.”

Eighty-nine students and 10 staff also on the Scotch College camp are being tested for the virus and anyone with flu-like symptoms is being urged to stay home.

Four teammates suffering “flu symptoms’

It is believed four other boys in Harry’s football team are suffering from flu-like symptoms.

Scotch College acting principal Peter Freitag said there were no immediate plans to close the school down.

“It would be very difficult to close the school,” he said.

“It’s a boarding school, we have 170 boarders.

“We wouldn’t want to close the school unless we have to.

“At this stage we’re not anywhere near that.”

However, Health Department’s communicable disease control director Paul Effler did not rule out temporarily closing the school if students on the music camp tested positive to swine flu and had since been to school.

WA flu tally reaches four

The Health Department confirmed that WA’s swine flu tally had reached four.

“We are contacting the students, parents and teachers who participated in these events with the young boy and the close contacts of the young woman,” Dr Effler said.

“The close contacts of the cases have been asked to remain in home quarantine and have been provided with anti-viral medication as a precaution.

“The school has been very co-operative in helping us reach students, families and staff in a timely manner.”

More than 1000 cases of swine flu have been confirmed in Australia, with the most in the eastern states.

On Thursday the Health Department issued a statement extending its voluntary quarantine policy for children who have recently travelled to areas affected by swine flu, including Victoria.

Dr Effler said there was no need for the public to panic because in most instances the swine-flu virus appeared to cause a relatively mild illness.

“I would encourage people to make sure they cover their nose and mouth if sneezing or coughing, to wash their hands frequently (and) most importantly, stay home if you are sick to limit the spread of the viruses in our community,” he said.

Dr Effler said people should continue to get their annual influenza vaccine, particularly people in vulnerable groups, including those aged over 65 and under five.

While the influenza vaccine won’t protect against the new strain of swine influenza, it will protect against serious illness caused by seasonal influenza.

If you think you have swine flu phone your doctor or call healthdirect Australia on 1800 022 222. For more information on swine flu visit 

Department of Health website  www.health.wa.gov.au

Source  www.news.com.au

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Budget 09: Skilled intake cut by 6900 people

THE federal Government has cut the skilled migration intake by a further 6900 people to help protect local jobs during the economic crisis.

But it will increase the number of people allowed to migrate to Australia for family reunions, the Government said yesterday as part of Budget 2009.

In March, the Government shed 18,500 skilled migration places in response to growing unemployment, which is forecast to hit 8.25 per cent in 2009-10.

The latest cut, the second to be made this year, brings the program down to 108,100 places in 2009-10.

Overall, the Government has slashed previous planning levels by close to 20 per cent.

Immigration Minister Chris Evans said the cuts would not be made to professions on the critical skills shortage list such as IT.

The migration intake in the coming year reflects the economic climate while ensuring employers can gain access to skilled professionals in industries still experiencing skills shortages,” Senator Evans said in a statement. The Government will provide more opportunities for family reunions by increasing the family component of the migration program by 3800 places to a total of 60,300 in 2009-10.

“This boost … will benefit Australians who seek to have their parents, partners or children join them to live here permanently,” Senator Evans said.

Overall, the migration program will total 168,700 for 2009-10.

www.news.com.au

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