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Australia’s vital statistics

A truly fascinating set of numbers about our great country.  Almost 150 different items covered. 

         

 

Please click on the following link to see all this interesting information.  The areas covered are:

  • Overview
  • ​Markets
  • GDP
  • Labour
  • Prices
  • Money
  • Trade
  • Government
  • Business
  • Consumer
  • Housing
  • Taxes
  • Climate    

 

Access all this data here.

 

tradingeconomics.com

 

Our Advent calendar for 2017

On behalf of all our staff we wish our clients a Merry Christmas, happy New Year and a great holiday period.

Come back each day for an inspirational quote or poem about Christmas, summer and life in general from the likes of Banjo Paterson or Charles Dickens. 

       

 

Open the Advent Calendar

 

 

 

 

 

 

 

What the gig economy may mean for your super

Keith Richards of The Rolling Stones probably wouldn't define the gig economy as a market where buyers and sellers of services and goods are matched or organised through online platforms. This is a definition that the Association of Superannuation Funds of Australia (ASFA) uses in a discussion paper released late last month.

         

 

The Rolling Stones, true veterans of the gig economy, first played together 55 years ago, about three decades before the creation of the web.

In the broadest sense, participants in the gig economy work at a series of jobs or tasks – sometimes called a portfolio of work – rather than as part-time or full-time employees. It doesn't necessarily have anything to do with online markets.

Yet in reality, people who earn their livings from doing a number of tasks instead of being full-time employees are increasingly obtaining their work through the internet.

This particular ASFA discussion paper, Superannuation and the changing nature of work, focuses on the more specific definition of the gig economy as involving online platforms that match and organise mainly freelance work, car transport and food delivery.

ASFA estimates that about 100,000 workers or 0.8 per cent of the workforce use web-based platforms to regularly obtain such work, often as independent contractors. And the gig economy is “set to become more pervasive”, expanding into a wider variety of occupations and industries.

No matter whether we are talking about the gig economy in its narrowest or broadest sense, its burgeoning growth means that you, some members of your family or at least someone you know are increasingly likely to join it.

Even those who have spent long working lives as employees for a single employer are much more likely to ease their way towards retirement by joining the gig economy for at least a few hours a week.

And if you work in the gig economy – whether through on or offline arrangements – the impact on your retirement savings is likely to be similar, depending on individual circumstances such as if you are an independent contractor.

From a retirement-savings perspective, the biggest difference with much of the gig economy is that the superannuation guarantee (SG) contributions are not paid for independent contractors and other self-employed individuals.

Employers are, of course, legally required to pay compulsory super contributions to those classified as their employees, again whether working full or part-time (with certain exceptions including for very low-income earners).

Of course, some members of the gig economy are legally classified as employees (depending upon the arrangements and the nature of the relationships) and should receive compulsory super contributions. As ASFA observes, this can be a “legal grey area” in regards to some workers in the gig economy.

Critically, an employer is not obliged to pay SG contributions for employees earning less than $450 a month. Yet employees in the gig economy might work for a number of bosses in month, earning less than $450 from each.

In turn, the self-employed are not compelled to put money aside for their own retirement. It is hardly surprising that vast majority of the self-employed have little or no super.

In its discussion paper, ASFA raises whether compulsory super should be extended to the self-employed (including independent contractors) and whether the $450-a-month threshold for employee SG contributions should be removed.

While these policy issues are being debated, a pressing issue for the self-employed (whether or not in the gig economy) is to take the initiative and ensure that they are voluntarily saving for their retirement.

 

Written by Robin Bowerman, Head of Market Strategy and Communications at Vanguard.
10 October 2017
vanguardinvestments.com.au

US Fed policy: Normalisation begins

Commentary by Vanguard Global Chief Economist Joe Davis.
Figures cited are in Australian dollars, at September 2017 exchange rates.

         
 
As Vanguard forecast last year, the United States Federal Reserve is entering on “Phase Two” of its path to policy normalisation: the reduction of its balance sheet of about $5.6 trillion in securities (mostly US government bonds) acquired as part of the Fed's economic stimulus efforts during and after the global financial crisis.
 
Our anticipation that 2017 would mark the transition from Phase One (raising the US federal funds rate, an influence on interest rates worldwide) from 0%–0.25% to 1.00%–1.25%) to Phase Two was based on a view that the US labour market would continue to gradually tighten this year and financial conditions improve, even without a strong rebound in inflation. That outlook has been generally on point.
 
Shrinking the Fed's balance sheet
 
Most market observers now anticipate an appropriate, gradual and smooth unwinding of the Fed's balance sheet that is unlikely to give the financial markets pause. I agree with “appropriate” and “gradual.” The third adjective, “smooth,” is what worries me.
 
To be fair, the Fed has taken a number of steps to mitigate market impacts:
  • A transparent forward-guidance strategy.
  • A slow schedule for unwinding – initially by only about $7.5 billion per month of US Treasury notes and $4.9 billion of mortgage-backed securities (MBS). This will eventually rise to about $37.7 billion per month and $24.9 billion per month, respectively, compared with average daily trading volume of almost $625 billion in the Treasury market and almost $250 billion in the MBS market.
  • An intent not to sell securities but simply to decrease the amount it reinvests from maturing securities.
  • A likelihood of settling on an optimal balance-sheet size that is significantly higher than precrisis levels (we expect it to be in the $3.7–$4.4 trillion range, up from about $995 billion).
 
Total assets on the Fed's balance sheet
(Figures in trillions of AUD)
 
Note: Data are from 1 January 2007 through 23 August 2017. Sources: Vanguard and Federal Reserve Bank of St Louis. Figures are at September 2017 currency exchange rates.
 
Phase Two risks
 
To be clear, we believe that the Fed's course of action in beginning to taper its balance sheet is appropriate given the state of the US labour market and the strength in financial conditions. But I believe we should all be prepared for a potential uptick in volatility during this monetary policy phase. No major central bank has yet successfully reversed quantitative easing, or QE (the Bank of Japan's balance sheet is higher today than a decade ago), so we shouldn't take for granted that this will be easy and uneventful.
 
With the balance sheet at an unprecedented size (see chart above), passing this second milestone without materially affecting financial conditions or roiling the markets could well prove a bigger challenge for the Fed than starting to raise rates. Because the Fed's QE programs helped to stimulate asset prices and the search for yield (sometimes clinically referred to as the “portfolio rebalancing effect”), I believe it is reasonable to expect some choppy waters in the months ahead as some of the oxygen is let out of the system.
 
Where we're headed
 
The Fed would clearly like to return to more normal monetary policy conditions and has taken pains to lay out how it expects to get there. Phase Two is part of that plan. Most believe that the well-telegraphed tapering of the balance sheet will be a “nonevent.” Many economists, including those at the Fed, see Phase Three – resuming the course of rate hikes – occurring as early as December 2017.
 
Our view is different. For some time, we have felt that Phase Two would be followed by an “extended pause” in rate hikes, leaving short-term rates near 1.25% through the middle of 2018, if not longer. Whether our long-held view proves correct will depend on a range of factors including the pace of future inflation, how quickly the unemployment rate declines below 4% and how supportive financial conditions are to the economic recovery.
 
Our outlook
 
The Fed is unlikely to raise the federal funds rate as it begins tapering its balance sheet. Nonetheless, Phase Two should still be viewed as a “tightening” in monetary conditions as it will reduce total Fed balance sheet assets following several rounds of QE. In my mind, QE has been a factor in the strong performance of various investments over the past several years, including equities and bonds. Risk appetites, as measured by cash flows, have been strong across the globe, and investors have been rewarded for bearing that market risk.
 
But the combination of fully valued asset prices and low levels of market volatility has generally not been indicative of strong future returns. In a future blog, I will address the question of whether (and by how much) the US equity market has become overvalued.
 
Needless to say, we continue to maintain a guarded market outlook at Vanguard, and we urge investors to stick to their balanced, long-run plan whether or not my worries materialise. Let's hope I am wrong.
 
 
Commentary by Vanguard Global Chief Economist Joe Davis.
Figures cited are in Australian dollars, at September 2017 exchange rates.
26 September 2017

Raft of superannuation measures enter Parliament

The government has introduced a number of bills into Parliament relating to contributions including the removal of an employer loophole with salary sacrifice arrangements.

           

 

Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 2) Bill 2017 entered the House of Representatives today and is aimed at improving choice for members and the integrity of salary sacrifice arrangements.

The bill amends the Superannuation Guarantee (Administration) Act 1992 (SGAA) to ensure that employees under workplace determinations or enterprise agreements have an opportunity to choose the superannuation fund for their compulsory employer contributions.

If passed, the measure will apply to new workplace determinations and enterprise agreements made on or after 1 July 2018.

The bill also removes a loophole from the legislation that allows unscrupulous employers to use their employee’s salary sacrifice contributions to pay their own Superannuation Guarantee (SG) obligations and ensures that SG is paid on a pre-salary sacrifice base.

The government also introduced Superannuation (Excess Non-concessional Contributions Tax) Amendment (National Disability Insurance Scheme Funding) Bill 2017, which increases the superannuation excess non-concessional contributions tax from the current rate of 47 per cent up to 47.5 per cent for the 2019-20 financial year and later financial years.

The third bill that was introduced, the Superannuation (Excess Untaxed Roll-over Amounts Tax) Amendment (National Disability Insurance Scheme Funding) Bill 2017, makes changes to the rate at which excess untaxed roll-over amounts are taxed.

The bill amends the Superannuation (Excess Untaxed Roll-over Amounts Tax) Act 2007 to increase the rate at which excess untaxed roll-over amounts tax is payable on an individual’s excess untaxed roll-over amounts from 47 per cent to 47.5 per cent.

By: Miranda Brownlee
23 OCTOBER 2017
smsfadviser.com

Big concessions looking likely for transfer balance limit: ATO

The ATO has given a strong indication that there will be concessions made in relation to events-based reporting for those SMSFs with balances significantly lower than $1.6 million, after a period of industry consultation “blew out” the ATO's expectations.

         

 

Superannuation director at the ATO Howard Dickinson said it is clear the profession is not entirely on board with either of the models the tax office put forward in its position paper on events based reporting, which you can read more about here.

As a result, in the coming weeks, the ATO is likely to provide further concessions to those SMSF members who are not at high risk of exceeding the transfer balance limit.

“If I give you a hint as to how that concession looks – what we are considering is providing further concessions in relation to those members whose balances are significantly below the 1.6 million cap,” Mr Dickinson said at the SMSF Summit in Adelaide last week.

“However, as you know, your members often have multiple accounts, in multiple different locations. So there are going to be some members where we allow this concession for their SMSF, who may find themselves negatively impacted, because of their balances and other elements of the system,” he said.

“We will not be able to warn them because we will not have access to their information in a timely enough manner to do so, which is the intent for us getting the data accurately and in a timely way. That’ll be an issue for those trustees, and indeed, the professionals who support them,” he said.

This concession is in line with suggestions made by industry associations, including the Institute of Public Accountants, and stakeholders like software providers.

Events-based reporting has touched a nerve in the SMSF industry, with many professionals on the ground sceptical about whether the regime will work in practice.

Aquila Super partner, Chris Levy, previously told SMSF Adviser the government is out of step with how professionals work in practice on this particular item.

“There's this tremendous disconnect between what a couple of, almost academics, within Treasury think about how the superannuation system works or how SMSFs work. What happens in the real world is quite different,” Mr Levy said.

The response from the industry to the position paper was also substantial.

“We issued the position paper and got 170 responses. It blew out the ATO’s processes, we expected to get 10 or 20,” Mr Dickinson said.

By: Katarina Taurian
23 OCTOBER 2017
smsfadviser.com

Self-employed? Don’t miss out on super

There are plenty of benefits from being self-employed including having a typically high degree of independence.

And no doubt many employees would gladly join their ranks – if they could run a profitable and personally-satisfying business.

           

 

Yet being self-employed is obviously not all beer and skittles, as the cliché goes.

From a financial perspective, one of the common downsides is that most of the self-employed have little or no super, according to research over several years by the Association of Superannuation Funds of Australia (ASFA).

This means that millions of the self-employed, working on a full or part-time basis, are missing out in terms of super savings.

In a recent discussion paper*, ASFA quotes tax office statistics showing that owner-managers of unincorporated small businesses (as their main job) accounted for less than 4 per cent of the $122 billion in total super contributions during 2014-15.

This is despite the fact that these owner-managers of small businesses numbered 1.2 million, or 10 per cent of our total employed and self-employed workforce, according to the ABS.

And other ABS figures suggest that millions more individuals are doing some form of independent work.

As Smart Investing discussed earlier in What the gig economy may mean for your super, superannuation guarantee (SG) contributions are not paid for the self-employed or independent contractors. And the self-employed themselves are not obliged to make super contributions.

Employers are, of course, legally required to pay compulsory super contributions to their employees, again whether working full or part-time (with an exception for very low-income earners).

What steps can a self-employed person take to make that they don't miss out on super? Here are a few ideas and things to think about:

  • Consider making tax-deductible contributions that are at least the equivalent of SG contributions you would have received if employed. The SG rate is 9.5 per cent for 2017-18.
  • Ideally, begin making these voluntary contributions as early as possible in your working life so you won't be left behind.
  • Don't overlook that most Australians with life insurance obtain that cover through the default cover of big super funds. This alone can provide a strong incentive for the self-employed to save in super.
  • Question whether you can really rely on the eventual sale of a small business to provide for your retirement. As a past ASFA research paper points out: “For some self-employed individuals, the value of the business might be little more than the market value of a second-hand utility or truck and some tools of trade. For others, it might be the value of an ongoing business worth a million dollars or more.”
  • Consider taking professional advice about making regular contributions within the concessional and non-concessional (after tax) within the contribution caps. (Concessional contributions include personally-deductible contributions by the self-employed.)
  • Know that the previous rule that you must not earn more than 10 per cent of your income from employment to claim deductions for personal contributions has been removed from 2017-18.
  • Understand that employers are not obliged to make SG contributions for employees earning less than $450 a month. This means that employees making up their incomes doing a number of part-time jobs for different employers may fall below the threshold for each.

If you have young adult children working in the gig economy, perhaps in a series of part-time jobs, consider talking to them about the benefits of making voluntary super contributions.

What are you doing to make sure that you or members of your family don't miss out on super?

* Superannuation and the changing nature of work, ASFA, September 2017.

 

Written by Robin Bowerman, Head of Market Strategy and Communications at Vanguard.
10 October 2017 
vanguardinvestments.com.au

Paperwork bungles lead to $38k in payments

An example of the need to keep good records for everything you do.

         

 

Back office and paperwork bungles have seen several workers given $38,000 in unpaid wages and entitlements, as the regulator sounds alarm bells on its monitoring of “the intricacies of our workplace laws.”
The workers were based in the Newcastle and Hunter region of NSW, and were victims of poor compliance practices and checks of their employers.

In one matter, a young labourer in Lake Macquarie was back-paid $25,220 after he was underpaid as a result of being incorrectly classified as an apprentice.

Essentially, it was agreed the labourer would commence an apprenticeship, but the employer failed to properly complete the paperwork and registration process required to enter into a formal training arrangement.

Consequently, the labourer was paid lower rates than he was entitled to, and the employer had not taken the appropriate steps to ensure compliance.

“Employers must be aware that we are prepared to take enforcement action in response to reckless, deliberate or repeated breaches of pay and record keeping laws,” said Fair Work Ombudsman Natalie James.

“We conduct follow-up audits of businesses previously found to be non-compliant to make sure they have changed their ways. Repeat offenders can expect to be subject to serious enforcement action including potential litigation.

“In our experience many businesses are overconfident when it comes to the intricacies of our workplace laws, however we will be taking an increasingly hard line with employers who have significant compliance issues and cannot demonstrate that they made a diligent effort to understand what award or industrial instrument applies to their workplace, what the correct classification for their employees is, and what minimum pay rates apply.”

By: Staff Reporter
04 OCTOBER 2017
accountantsdaily.com.au

Calls to Review ASIC’s Definition of Lapse Insurance

Industry stakeholders are seeking clarity from ASIC over the criteria it is using to determine the incidence of life insurance policy lapses.

         

 

AFA’s GM Policy & Professionalism, Phil Anderson… the AFA is arguing for a more sensible outcome on the definition of a lapse…

Riskinfo understands the Association of Financial Advisers has sought discussions with ASIC on the definition of a lapse, which it appears is presently based on criteria including:

  • Policies lapsing due to non-payment of premiums
  • Policies/cover cancelled at the client’s request
  • Partial or total reductions in cover (e.g. reducing sum insured or reducing a monthly benefit)

Two key areas of concern for the AFA, advisers and advice businesses, centre around:

  1. The extent to which partial reductions in cover to reflect a change in the client’s circumstances should be included in the definition of a lapse
  2. The argument to exclude policy discontinuances where a mature age client cancels due to affordability issues or a change in personal circumstances

AFA GM Policy & Professionalism, Phil Anderson, confirmed to Riskinfo that in a supplementary submission to the PJC Inquiry into Life Insurance last month the Association called for ‘…a standardised definition of lapses that excludes reductions in cover and people who have reached an age where continuation often ceases as a result of affordability issues or a change in personal circumstances (i.e. 60 years of age).’

While the AFA has been arguing for what it refers to as ‘…a more sensible outcome’ on the definition of a lapse’, this topic also emerged at last week’s AFA National Adviser Conference. Speaking with Riskinfo, Robina Financial Solutions GM, Paul Forbes, strongly disagreed with the contention that partial or total reductions in cover should be included in ASIC’s lapse criteria:

“The first two [criteria] make sense,” said Forbes, “…but reductions in sum insured does not – especially with an aging demographic.” He continued, “Somehow ASIC has decided that an adviser who actively reviews their clients, retains their policy with a life company but reduces their cover, either because they can’t afford premium increases or because they have less need for insurance as their estate has grown and kids etc are off their hands, is a lapse.”

Forbes also noted he believes the removal of CPI cover linking on an insurance contract or moving the policy owner from stepped to level premiums could also be included in ASIC’s lapse data.

Riskinfo understands ASIC has recently obtained a comprehensive set of data from the life insurers for each adviser with a lapse rate of greater than 20% for the 2016/17 financial year using this lapse criteria.

By Peter Sobels
October 17, 2017
riskinfo.com.au

Resources on our site to help you, your family and your friends.

Your Financial Planner supplies you with more tools and resources than most others and at no extra cost.  Use them to improve your planning for the future.

       

 

24/7 access to website based tools you, your family (children as well), your friends, colleagues and associates can all benefit from. *

  • Latest News. Our articles are chosen from amongst 30-35 to ensure the best are included in our news updates. The range of topics covered has also been broadened to include insurance, bookkeeping, and health issues.
  • Comprehensive financial tools to help you understand your Personal or family Cash Flow position or simply complete a Budget or work on some Superannuation scenarios.
  • Research your questions at the ATO, ASIC, Centrelink and other relevant sites to better understand what happening in areas such as Superannuation, Employer responsibilities, Awards, Pensions, etc. Then discuss your questions with your Planner. Use eWombat for doing this research, type in keywords or phrases.
  • Your information is private and confidential and should be treated that way. Using Secure File transfer or a vault means your information and plans are encrypted when sent in either direction.
  • Portfolio logins. Utilise the ability to login to your Portfolio 24/7 to see how it is going compared to your Plans.
  • Online forms. More and more forms are now website based versions to save time and effort with printing and posting. By using such resources many Planners can also keep abreast of changes in your circumstances and this will always help them better plan your financial future.
  • ASX Prices and Charts. Many sites will have these resources to allow you to quickly see how the market is going and check any stocks you’d like a price on. All such information is, though, delayed by 20 minutes.
  • A stock ticker that displays 5 minute delayed information for the top 100 Australian stocks by market capitalisation.

* Not all services are on every planner’s website but most are.

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