Government's Consumer Data Right Scheme Struggling to Gain Traction
As of 3 July 2024, the Australian government's Consumer Data Right (CDR) scheme, designed to simplify bank account switching, is facing significant challenges. A mere 0.3% of bank customers are utilising this expensive program, according to a report commissioned by major lenders.
Key Issues Plaguing the CDR
The Australian Banking Association (ABA) analysis highlights several problems:
- Complexity of the system
- Lack of clear purpose
- High implementation costs for banks
- Limited customer value creation
"Australian banks have invested heavily to secure the success of the consumer data right. Despite the best efforts of government, regulators and industry, this review makes it clear that CDR has not realised its potential," said ABA chief executive Anna Bligh.
Financial Impact and Adoption Rates
Banks report spending $1.5 billion over six years to build the 'open banking' system. However, the return on investment has been minimal. Only 197,000 'active arrangements' for data sharing were recorded at the start of the year, equating to 0.3% of customers.
Future Outlook
Despite the challenges, some users argue that interest in CDR is growing. Damir Cuca, CEO of Basiq, claims his company has helped about 930,000 Australians share data via CDR. The government is under pressure to address issues by improving awareness, fixing data quality, and reducing compliance costs.
As Australia grapples with these challenges, other countries are adopting more voluntary and market-driven approaches to open data frameworks, potentially offering lessons for future improvements to the CDR scheme.
Halving Migration May Not Curb Inflation, Economists Warn
Australia's plan to reduce net migration to 260,000 by June 2025 might not be enough to tame rising inflation, according to leading economists. While the move is expected to ease pressure on rental prices and the labour market, inflation is unlikely to return to the target range for at least another year.
Mixed Views on Migration Cuts
Matthew Peter, chief economist at QIC, notes that while reducing migration will decrease demand, it will also impact the economy's productive capacity. Jo Masters from Barrenjoey points out that even with the cuts, population growth remains above pre-pandemic levels.
"Halving the migration intake will certainly suck significant demand from the economy, but also reduce the economy's productive capacity," said Peter.
Inflation Outlook
A survey of 38 economists predicts underlying inflation will return to the 2-3% target range by June 2025. However, a third of respondents believe it may take longer, raising the possibility of further interest rate hikes by the Reserve Bank of Australia (RBA).
Impact on Housing and Economy
While the migration reduction is expected to soften demand and inflationary pressures, especially in the rental market, experts caution it's not a quick fix. Prashant Newnaha from TD Securities warns that unless migration targets specific sectors like construction, housing inflation may persist.
The bond market currently prices a 30% chance of a rate increase at the RBA's August meeting, with a 54% likelihood by year-end. As cost-of-living measures unwind, inflation could tick up again, presenting ongoing challenges for policymakers.
Federation Asset Management Makes First Offshore Move into Japan
In a strategic move to tap into Japan's trillion-dollar pension market, Australian investment firm Federation Asset Management has acquired a stake in Tokyo-based Astris Advisory. This marks Federation's first international venture, as revealed exclusively to Business Australia News.
Leveraging Local Expertise
The $2 billion Federation, founded by former Macquarie Bank executive Cameron Brownjohn, aims to scale its operations in Japan by utilising Astris' local knowledge and connections. This partnership will help Federation attract new investors and identify investment opportunities in the world's third-largest economy.
"Japan is a fantastic place to do business," said Astris CEO David Shirt. "We hope to leverage Federation's experience as we take the next step in Astris' development."
A Reunion of Macquarie Alumni
The deal reunites Brownjohn with Shirt, both former Macquarie Bank executives. Brownjohn will join Astris' board as a non-executive director, strengthening the partnership between the two firms.
Tapping into Japan's $6.32 Trillion Economy
Federation's investment in Astris comes directly from its own funds, signalling a significant bet on Japan's asset management sector. The move aligns with the growing Japanese interest in Australian investments, as highlighted in the latest Japan-Australia Investment Report.
With this strategic partnership, Federation aims to expand its institutional client base in Japan and uncover new investment opportunities across North Asia, leveraging Astris' team of 30 professionals and their relationships with over 80 institutional investors.
Albanese Government Rescues Network Ten in Regional WA
In a last-minute decision, the Albanese government has saved Network Ten's broadcast signal for 500,000 viewers in regional Western Australia. This rescue comes just days before a joint venture between Seven West Media and WIN Corporation was set to shut off the signal.
Funding Boost Keeps Ten on Air
The government approved a $32.9 million funding increase for the Viewer Access Satellite Television service contract, allowing Western Digital Television to continue broadcasting Ten's popular shows like MasterChef Australia and Gogglebox across regional WA.
"Regional broadcasters want to be able to continue to provide a voice to regional Australia through local news, local advertising opportunities and supporting local community groups and charities," said WIN chief executive Andrew Lancaster.
Regional Media Struggles
This move highlights the ongoing challenges faced by regional media in Australia. With advertisers tightening budgets due to the cost of living crisis, regional broadcasters are under immense pressure to maintain services.
Call for Media Reform
Broadcasters are urging the government to take further action, including:
- Abolishing spectrum fees
- Directly funding non-commercially viable markets
- Relaxing media ownership laws
The Communications Minister's office has acknowledged the need for broader media reform and is working on addressing the structural challenges facing the sector.
This timely intervention ensures that regional Australians continue to have access to free-to-air content, maintaining parity with metropolitan viewers and supporting local communities.
Tax Time 2024: Why Waiting to Lodge Your Return Could Pay Off
As the new financial year kicks off, many Aussies are eager to lodge their tax returns. However, the Australian Taxation Office (ATO) advises caution before rushing to file.
Why Patience is Key
ATO Assistant Commissioner Rob Thomson warns that early lodgements are prone to errors. "People who lodge in early July are twice as likely to make mistakes on their return," he states.
"There's a much higher chance that your return will be missing important information if you lodge in early July," Thomson explains.
Common oversights include forgetting to include bank interest, dividend income, government payments, and private health insurance details.
When to Lodge
The ATO recommends waiting a few weeks to allow for pre-filling of information. Your income statement will be marked as "tax ready" in the ATO's Online Services when it's safe to proceed.
Important Dates and Deadlines
- Self-lodgement deadline: 31 October 2024
- Tax agent deadline: Can be extended up to 15 May 2025
- Late lodgement penalty: $330, increasing by $330 every 28 days (capped at $1,650)
Changes to Note
If your refund seems smaller this year, it could be due to the discontinuation of the low- and middle-income tax offset (LMITO). This change affects over 10 million Australians.
Remember, taking the time to ensure accuracy in your tax return can save you headaches and potential penalties down the track. When in doubt, consult a registered tax agent for professional advice.
Investors Sell as First Home Buyers Enter Melbourne Property Market
In a shifting Australian property landscape, investors are selling up while first home buyers seize opportunities. This trend is particularly evident in Melbourne, where recent data suggests a significant drop in rental bonds.
Young Family's Property Journey
Ceyhun and Danielle Guengoer recently purchased their first home in Melbourne, previously a rental property. Mr Guengoer described the experience as a mix of excitement and financial anxiety.
"You get very dark thoughts, such as 'what happens if I lose my job?' But I am proud. It's a huge thing," he said.
Investors Exiting the Market
Active bond data indicates a decline in rental properties across Victoria, Western Australia, and Queensland. In Victoria alone, rental bonds fell by over 15,600 in the past year.
The Property Investment Professionals of Australia (PIPA) survey supports these findings, with 40% of respondents who sold property in the past year doing so in Queensland and 31% in Victoria.
Factors Driving the Trend
Key reasons for investor sell-offs include:
- Increased or threatened tax hikes
- Changes to tenancy legislation
- Rising interest rates
Impact on First Home Buyers
This shift has created opportunities for first home buyers. CoreLogic data shows that first home buyers now account for 29.4% of borrowing in Victoria, second only to WA and ACT.
Melbourne Property Market Outlook
Despite the national trend of rising prices, Melbourne's median house price sits at $783,205, down 0.6% over three months. This contrasts with Sydney's 1.1% rise to $1,170,152 and Perth's 6.4% increase to $757,399.
As the property market continues to evolve, both investors and first home buyers will need to navigate these changing dynamics carefully.
ASX 200 Set to Rise as US Markets Hit Record Highs
The Australian share market is poised for a positive start on Wednesday, 3 July 2024, with ASX 200 futures up 0.3% to 7722 points. This follows a strong performance on Wall Street, where major indices reached new records.
Key Market Movements
- S&P 500 rose 0.6%
- Nasdaq gained 0.8%
- Dow Jones lifted 0.4%
- US 10-year bond yields fell to 4.43%
- Brent crude near US$86.55 per barrel
- Iron ore futures closed higher at US$110 per tonne
- Gold steady at US$2338.50 an ounce
- Australian dollar trading around US66.68c
Local Focus: Retail Sales Data and APA Pipeline Impairment
Investors will be watching closely for the release of Australian retail sales data. Meanwhile, APA Group has flagged a pipeline impairment following the loss of its sole customer, Qenos, which has entered voluntary administration.
US Federal Reserve Outlook
"We've made real progress on inflation, but we want more confidence that prices are moving sustainably down," - US Federal Reserve Chair Jerome Powell
Powell's cautiously optimistic comments on inflation have contributed to the positive market sentiment, suggesting a potential easing of monetary policy in the future.
As global markets continue their upward trend, Australian investors should keep an eye on local economic data and international developments for potential trading opportunities.
Squadron Energy's LNG Terminal: A Lifeline for Australia's Gas Supply
Andrew Forrest's Company Ready to Fast-Track Port Kembla Project
As Australia faces looming gas shortages, Squadron Energy, owned by mining magnate Andrew Forrest, is poised to offer a solution. The company's LNG import terminal at Port Kembla could be operational as early as winter 2025, a year ahead of schedule, to address the country's energy concerns.
Squadron Energy CEO Rob Wheals stated, "If there was a need to shore up security of supply for winter 2025, federal or state governments would need to act now, as time is running out to have the terminal ready in time."
"The evidence is clear. A significant and increasing shortfall of gas is expected earlier than 2028 with seasonal and peak day swings," said Rick Wilkinson, CEO of EnergyQuest.
The Port Kembla terminal, set to be Australia's first LNG import facility, could supply 500TJ of gas daily – enough to meet all of NSW's peak day needs. This development comes in response to the Australian Energy Market Operator's (AEMO) recent warning about potential gas shortages from 2028.
LNG Imports: A Short-Term Solution for Energy Security
Squadron Energy argues that LNG import terminals are the best short-term solution to stabilise the domestic gas market. Wheals suggests that these facilities could even help lower gas prices by tapping into cheaper global markets during Australia's peak winter demand.
As debates intensify around Australia's energy future, the Port Kembla terminal stands ready to play a crucial role in ensuring the nation's gas supply remains secure and affordable.
Coalition's Supermarket Break-Up Plan: A Misguided Intervention
In a surprising move, the Coalition, led by Peter Dutton, is pushing for a policy that could potentially break up major Australian retailers like Coles, Woolworths, and Bunnings. This proposal, championed by the Nationals, has raised eyebrows across the business community and sparked debate about market intervention.
The Policy and Its Implications
The proposed divestment policy aims to address concerns about market concentration in the retail sector. However, critics argue that it could lead to unintended consequences, including:
- Higher operating costs for consumers
- Reduced long-term investment
- Potential job losses
- Erosion of economies of scale
"Forced divestment could result in the loss of jobs or significant loss of shareholder value," admitted Angus Taylor, the Coalition's finance spokesman.
Expert Opinions and Alternatives
Craig Emerson, a former Labor MP and economist, suggests that tougher financial penalties for code of conduct breaches would be more effective than forced break-ups. Coles CEO Leah Weckert warns that the policy could drive up prices and potentially lead to closures of less profitable regional stores.
The Way Forward
As the debate continues, it's clear that the Coalition needs to reconsider its approach. Instead of market intervention, focusing on policies that encourage business growth, investment, and employment might be a more effective strategy to address concerns about market power and consumer welfare.
