Posts by Sandra Morris

When is the Best Time of the Year to Buy Property?

As 2017 is ending soon, it is the perfect time to set your financial goals and plans for the next year. This might include buying property. However, what time of the year would be the best to purchase real estate in Australia?

Experts vary on their opinion. Advantage Property Consulting director Frank Valentic said the end of the year marks the “prime buying time”, due to the lead-up to the Christmas holiday.

“At this time of the year, particularly leading up to Christmas, some vendors are getting very keen to be done and dusted … They want to get a deal done this side of Christmas and go off on holidays and not worry about inspections and cleaning the house,” Valentic told news.com.au.

John Cunningham, president at Real Estate Institute NSW, also has similar views. “Many sellers will have already bought their next home and will be under a lot of pressure to sell before the real estate industry shuts down over January,” Cunningham told the Daily Telegraph.

However, the right time to buy also depends on other matters, such as seasons and personal conditions. For example, spring and summer are the best times to inspect coastal houses, while winter and autumn would be better suited for regional villas.

If you need more advice on property buying, consider consulting local real estate agents to find out more information about market trends and best purchasing times.

Rio Tinto Appoints Simon Thompson as New Chairman

Rio Tinto has appointed former investment banker Simon Thompson to be its new chairman starting March 2018.

Serving as a non-executive director in the company’s board since 2014, Thompson will be replacing 63-year-old Jan du Plessis.

“Mr Thompson has over 20 years’ experience working across five continents in the mining and metals industry,” the mining company said in a statement. Thompson has also chaired private equity firm 3i Group and British exploration company Tullow Oil.

Du Plessis also welcomed the changeover. “I am really pleased to be succeeded by Simon, especially given how closely we have worked together since he joined the board some three years ago,” said du Plessis. “I am handing over the baton at a time when the business is in great shape and Rio Tinto has the strongest balance sheet in the sector.”

Thompson said: “I look forward to leading the board as we work with [chief executive Jean-Sebastien Jacques] and his team to ensure that Rio Tinto continues to deliver superior returns for its shareholders by maintaining its capital discipline and ‘value-over-volume’ approach.”

Upon taking over the position, Thompson is expected to deal with increased scrutiny surrounding issues like alleged coverup of losses in Mozambique in 2011 and corruption in the Republic of Guinea.

New Zealand Experience Shows Same-Sex Marriage Could Provide Huge Economic Boost for Australia

Andrew Gorman-Murray, Western Sydney University

Even though it’s still uncertain as to when Australian same-sex couples will be able legally to wed, New Zealand’s example shows how much this could be worth to our economy.

New Zealand has long been a destination for international wedding tourism. This was boosted from August 2013, when New Zealand same-sex couples could also marry. The majority of same-sex weddings between overseas couples conducted in New Zealand have been between Australian couples unable to marry at home.

In 2016, 2,490 heterosexual couples from other countries celebrated marriages or civil unions in New Zealand, comprising 11% of all heterosexual couples’ ceremonies. The proportion of same-sex couples from other countries entering into marriage or civil union in New Zealand has been even higher.

In 2016, 49% of same-sex marriages or civil unions in New Zealand were between overseas couples, and Australians accounted for 58% of these couples. Altogether, Australian couples comprised 29% of same-sex marriages or civil unions celebrated in New Zealand in 2016.

The figures for 2016 are not an outlier: since 2013, Australian couples have made up 25% or more of same-sex weddings celebrated per annum.

All the business of marriage

This phenomenon has both social and economic implications. Trans-Tasman same-sex wedding tourism underlines a real desire for marriage by Australian same-sex couples.

New Zealand wedding operators have been willing and able to absorb this demand. While of course the significance of marriage lies in the couple’s enduring commitment and love, supported by family, friends and community, there is also tangible economic value from the wedding celebration.

The wedding industry is a complex network of small and medium businesses. It includes everything from planners, celebrants to florists, photographers and entertainers. Beyond the ceremony itself, the industry also includes operators of honeymoon destinations.

In 2015, ANZ economists Cherelle Murphy and Mandeep Kaura crunched some numbers on the economic benefits of same-sex marriage in Australia. They used 2011 Census data on the number of same-sex couples in Australia, and we might update their estimate using the more recent 2016 Census figures.

Murphy and Kaura estimated the average spend on a wedding ceremony and reception at A$51,000. The 2016 Census counted 46,800 same-sex couples.

They applied other survey findings from 2010, and further assumed that out of the half of all same-sex couples who will want to marry, half will do so in the year after same-sex marriage is legalised.

The sentiments expressed in the 2010 survey findings may have shifted since then, especially in light of the marriage equality postal survey. But let’s use that proportion for consistency.

We might suppose 11,700 same-sex couples will marry within one year of the legalisation of same-sex marriage, spending on average A$51,000, totalling almost A$597 million dollars in wedding and reception costs.

This does not include honeymoon spending. For those couples choosing to honeymoon within Australia, we can add spending on travel and accommodation.

A 2015 survey by Bride To Be magazine found the average spend on wedding and honeymoon at A$65,482. This figure is clearly biased towards dedicated bridal magazine readers – those who might be willing to save up and fork out more for their perfect wedding and honeymoon.

Arguably many would not be able or willing to spend this amount. Nevertheless, A$65,482 would be equivalent to an annual salary for many, so this is suggestive of how lucrative some segments of the wedding and honeymoon market are.

Apart from what the couple (and their families) spend on the wedding and honeymoon, we might also consider guest spending. Obviously, purchasing wedding gifts contributes to the retail sector.

Out-of-town guests also have to pay for travel, accommodation, food and beverage, and other expenses. Some couples opt for destination weddings, with benefits for tourism operators.

Some operators hope that Australia, like New Zealand, might become a destination for international same-sex wedding tourism, and so provide a boost to the tourism industry.

In addition to this, Murphy and Kaura found other economic benefits of same-sex marriage, such as increased state government revenue from marriage licence fees and ceremonies in state-run births, deaths and marriages registries.

The ConversationWith the debate on same-sex marriage now turning to whether or not businesses will be able to refuse couples based on moral objections, it seems at least the economic case incentive is there for these businesses to say “yes”.

Andrew Gorman-Murray, Professor of Geography, Western Sydney University

This article was originally published on The Conversation. Read the original article.

Trouble in Eden? Apple Stocks Drop

Yes, Apple stock prices have experienced a few ups and downs since the announcement of the upcoming iPhone X with certain details seemingly leaving investors not so confident in what Apple are about to bring to the table, and when. But, according to CBA, Apple stocks usually rise or fall the day of their product announcements then drops just after the launch before gaining traction a few weeks post launch and holding fairly steady from then on. Since the stocks have dropped by 0.90%, they’re still within the predictable ‘OK’ area and seem to be following the pattern so far.

Since most have forgone replacing their devices in anticipation of the upcoming Apple launches so spirits and stocks were at a predictable high withe with the announcement of the new Apple watch but dropped after the announcement of the iPhone 8 and extensive leaks of the iPhone X. Factors such as the questionable new features like the facial recognition and the potential security issues it implies, rumours of production delays for the new OLED screen and the launch delay until the next fiscal year, seem to be major contributors to the stocks’ recent drops.

Nonetheless, Apple is a brand that has built itself into a brand well known for its exclusivity with a very loyal market, often implied whenever you here ‘Apple user vs Android User’. The ‘us and them’ mentality has always been a subtle yet convincing selling point for them and there is no doubt that the queues for the iPhone 8 will still be as long as ever, with crazy campers and maybe a broken screen more.

 

Aussie Wage Inequality Rising – Are We the Next America?

Well this is a somewhat concerning thought; with the growing wage inequality (read: absolute struggle) it looks like we’re on track to developing a similar unhealthy work culture we see form America. ‘What is that culture?’ you may ask? Well in America there is a constant struggle with employers demanding longer hours for lower wages and diminishing job security, meaning that company A will demand that person A work longer hours with no over time pay and maybe time in lieu (but that’s only because the company loses a normal rate of pay instead of increased over time/weekend pay). Person A is reluctant to refuse the unfair offer because they know that all the recent job cuts mean that there are plenty of more desperate people who are willing to take their place despite the unfair agreement.

 

You would have heard about the government reducing the amount of weekend pay that employees in certain sectors get and this could very well be just the beginning. Bill Shorten himself said that the direction that this economy is going is not at all in our favour.

 

So in a climate where the poor struggle more and still get poorer, while the rich get away with less tax and get richer, what are we to do? Can we do anything? Will we soon see the day where hospitality workers are paid $3-$10 an hour and must scrounge to hell and back to get enough tips so that they don’t lose money? I mean… we’re already seeing the rich benefit from the ability to live and work in better areas with better jobs, while the more disadvantaged spend more on travelling to work, get paid less to do their job and are more likely to live in worst conditions and more dangerous neighbourhoods.

Australia’s Housing Crisis to Continue for Another 40 Years, Report Finds

Australia’s housing crisis could last for another 40 years unless changes are made to the market, a report by the Committee for Economic Development of Australia (CEDA) found.

CEDA said housing affordability is unlikely to improve for the foreseeable future, especially in capital cities. “Barring any major economic jolts, demand pressures are likely to continue over the next 40 years and supply constraints will continue,” said CEDA.

The report said the current structure of land release discourages house developers from getting more supply in the market, leading to increasing numbers of Australians retiring without owning a property.

The committee said changes are needed now at all government levels to avoid longer-term consequences. It made eight recommendations to ease the demand, including providing stronger legal protection for tenants, replacing stamp duty with land-based taxation, increasing capital gains tax and relaxing house planning restrictions.

CEDA research and policy committee chairman Rodney Maddock emphasised the latter, saying the government needs to allow more and bigger residential buildings to be built.

“We’ve got a free market on the demand side but all sorts of restrictions on the supply side,” said Maddock.

“Overall, the conclusion must be that our housing system has been designed – inadvertently, of course – to supply new additions at a lesser rate than needed to keep housing prices and affordability within acceptable limits,” said CEDA.

Climate Change Is A Financial Risk, According to A Lawsuit Against the CBA

Anita Foerster, University of Melbourne and Jacqueline Peel, University of Melbourne

The Commonwealth Bank of Australia has been in the headlines lately for all the wrong reasons. Beyond money-laundering allegations and the announcement that CEO Ian Narev will retire early, the CBA is now also being sued in the Australian Federal Court for misleading shareholders over the risks climate change poses to their business interests.

This case is the first in the world to pursue a bank over failing to report climate change risks. However, it’s building on a trend of similar actions against energy companies in the United States and United Kingdom.


Read more: Why badly behaving bankers will never fear jail time


The CBA case was filed on August 8, 2017 by advocacy group Environmental Justice Australia on behalf of two longstanding Commonwealth Bank shareholders. The case argues that climate change creates material financial risks to the bank, its business and customers, and they failed in their duty to disclose those risks to investors.

This represents an important shift. Conventionally, climate change has been treated by reporting companies merely as a matter of corporate social responsibility; now it’s affecting the financial bottom line.

What do banks need to disclose?

When banks invest in projects or lend money to businesses, they have an obligation to investigate and report to shareholders potential problems that may prevent financial success. (Opening a resort in a war zone, for example, is not an attractive proposition.)

However, banks may now have to take into account the risks posed by climate change. Australia’s top four banks are heavily involved in fossil-fuel intensive projects, but as the world moves towards renewable energy those projects may begin to look dubious.


Read more: How companies are getting smart about climate change


As the G20’s Taskforce on Climate-Related Financial Disclosures recently reported, climate risks can be physical (for instance, when extreme weather events affect property or business operations) or transition risks (the effect of new laws and policies designed to mitigate climate change, or market changes as economies transition to renewable and low-emission technology).

For example, restrictions on coal mining may result in these assets being “stranded,” meaning they become liabilities rather than assets on company balance sheets. Similarly, the rise of renewable energy may reduce the life span, and consequently the value, of conventional power generation assets.

Companies who rely on the exploitation of fossil fuels face increasing transition risks. So too do the banks that lend money to, and invest in, these projects. It is these types of risks that are at issue in the case against CBA.

What did the CBA know about climate risk?

The claim filed by the CBA shareholders alleges the bank has contravened two central provisions of the Corporations Act 2001:

  • companies must include a financial report within the annual report which gives a “true and fair” view of its financial position and performance, and
  • companies must include a director’s report that allows shareholders to make an “informed assessment” of the company’s operations, financial position, business strategies and prospects.

The shareholders argue that the CBA knew – or ought to have known – that climate-related risks could seriously disrupt the bank’s performance. Therefore, investors should have been told the CBA’s strategies for managing those risks so they could make an informed decision about their investment.


Read more: We need a Royal Commission into the banks


The claim also zeros in on the lengthy speculation over whether the CBA would finance the controversial Adani Carmichael coal mine in Queensland. (The bank has since ruled out financing the mine.) The shareholders assert that the resulting “controversy and concern” was a major risk to the CBA’s business.

Global litigation trends

While the CBA case represents the first time worldwide that a financial institution has been sued for misleading disclosure of climate risk, the litigation builds on a broader global trend. There have been a number of recent legal actions in the United States, seeking to enforce corporate risk disclosure obligations in relation to climate change:

Energy giant Exxon Mobile is currently under investigation by the Attorneys General of New York and California over the company’s disclosure practices. At the same time, an ongoing shareholder class action alleges that Exxon Mobile failed to disclose internal reports about the risks climate change posed to their oil and gas reserves, and valued those assets artificially high.

Similar pathways are being pursued in the UK, where regulatory complaints have been made about the failure of major oil and gas companies SOCO International and Cairn Energy to disclose climate-related risks, as required by law.

In this context, the CBA case represents a widening of litigation options to include banks, as well as energy companies. It is also the first attempt in Australia to use the courts to clarify how public listed companies should disclose climate risks in their annual reports.

Potential for more litigation

This global trend suggests more companies are likely to face these kinds of lawsuits in the future. Eminent barrister Noel Hutley noted in October 2016 that many prominent Australian companies, including banks that lend to major fossil fuel businesses, are not adequately disclosing climate change risks.

The ConversationHutley predicted that it’s likely only a matter of time before we see a company director sued for failing to perceive or react to a forseeable climate-related risk. The CBA case is the first step towards such litigation.

Anita Foerster, Senior Research Fellow, University of Melbourne and Jacqueline Peel, Professor of Environmental and Climate Law, University of Melbourne

This article was originally published on The Conversation. Read the original article.

Australians Increasingly Under Financial Stress, Report Finds

Concerns over rising costs of necessities, stagnant income growth and prospects of increased loan rates are stressing Australian households, a survey has found.

The latest ME Household Financial Comfort Report, which surveyed 1,500 Australian households, revealed that concerns over budget balancing are increasing, as 51 per cent are found to have no spare cash at the end of each month. Rising costs of groceries, fuel and utilities have been blamed, along with weak salary growth and rising underemployment.

“Australian households are under financial stress,” said ME Bank consulting economist Jeff Oughton to ABC’s AM. “They’re concerned about the rising cost of bills but also there are income woes, interest rates are starting to rise and there’s mortgage and rental stress.”

While the unemployment rate has gone down, underemployment is still strong, with 27 per cent of casual and part-time workers saying they were eager to increase their hours.

Furthermore, 68 per cent of the respondents reported wage fall or stagnation in the past 12 months, and 40 per cent of households in debt are becoming less confident about their ability to repay their mortgage.

RBA’s eventual plan to lift the cash rate is also expected to worsen this burden on Australians “as it will impact monthly cash flows, ability to pay off debts, save and spend”, Oughton said. “It will bite into those young couples with children, single parents and also generation X-ers who are concerned about the impact on their monthly cash flows from rising rates.”

IMF Downgrades US Economy Forecast

The International Monetary Fund has downgraded its growth forecast for the US’ economic growth on concerns over Donald Trump presidency’s ability to make policy changes.

The IMF revised down its US gross domestic product growth predictions from 2.3 per cent to 2.1 per cent, while its global economic forecast remains unchanged at 3.5 per cent growth in 2017 and 3.6 per cent in 2018.

The organization said it downgraded US forecast based on “the assumption that fiscal policy will be less expansionary than previously assumed, given the uncertainty about the timing and nature of US fiscal policy changes”.

President Trump came into office after promising increased infrastructure spending and limited taxes and regulations. However, these policies has remained stalled as the administration focuses on other matters such as healthcare regulation and disagreement within the Republican party.

The IMF also downgraded growth forecast for the UK from 2 per cent to 1.7 per cent, due to “weaker-than-expected activity” for the first three months of 2017 following Brexit.

China’s Economic Growth Beats Expectations

China’s economy has grown faster than expected in the second quarter, thanks to robust exports and strong domestic consumption.

The country’s gross domestic product maintained its 6.9 per cent annual growth rate from the first quarter, according to the data from the National Bureau of Statistics released Monday. It outpaced analysts’ forecast of 6.8 per cent, and helped the country on its track to 6.5 per cent growth target in 2017.

Solid production output and exports along with increasing retail sales helped drive the growth, according to a Reuters calculation.

“Overall, the economy continued to show steady progress in the first half … but international instability and uncertainties are still relatively large, and the domestic long-term buildup of structural imbalances remain,” the Bureau said in a statement.