January 2007

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31 January 2007 - Super changes encourage investors
The Australian
Perpetual Investments believes that the 2006 federal budget changes would prompt a behavioural shift in the attitudes of Australian towards their superannuation, changing them from set and forget investors to active participants. Under 2006 budget changes, a one year special allows investors to contribute up to $1 million in after-tax contributions to superannuation. After mid-2007 the annual threshold will be $150,000 or $450,000 every three years. This has caused a positive effect on the share market with more funds seeking investment opportunities. Gerard Doherty, Perpetual Investments head of retail, said that super contributions do not need to be as much as $1 million to be worthwhile.
 

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31 January 2007 - ASIC seeks to wind up Centro Financial
The West Australian
The Australian Securities and Investments Commission (ASIC) is seeking a court order to have financial planning firm Centro Financial Synergy Group put into liquidation. Centro Financial Synergy Group is based in Subiaco, Western Australia and invested its clients' money in mezzanine schemes operated by property group Westpoint, which collapsed in 2005. Centro Financial stopped trading early last year and ASIC is arguing that it has failed to comply with financial services licensing requirement and should be wound up. The case will be heard in the Federal Court on 28 February 2007.
 

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31 January 2007 - Wage increases put pressure on economy
The Financial Review
Wages are growing at their fastest rate in two years and business cost pressures remain high, according to the National Australia Bank survey of business released yesterday. The Reserve Bank of Australia (RBA) will closely monitor increases in pay given the pressure on wages from skills shortages across the economy. The NAB survey shows that wages increased by 1.6 per cent in the December 2006 quarter, pushing the annual growth rate up to 5 per cent, which is the highest level since early 2005. Economic analysts have warned that the wages figures may reduce the possibility of a rate cut later in the year.
 

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31 January 2007 - NSW economic decline since Olympics
Sydney Morning Herald
New South Wales's share of the national economy has been decreasing since the Sydney Olympics and the decline is probably permanent. In the last financial year NSW contributed just 33.1 per cent of the national economic output, the lowest figure in twenty years. Access Economics has predicted that NSW's share of the national economy will continue to decrease, to about 32.5 per cent in 2010. Several factors have contributed to the decrease, including a decline in population growth, the high cost of housing and a resource boom in other states.
 

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31 January 2007 - First-home buyers decrease in WA
The Financial Review
The West Australian housing industry is concerned about the affordability for first-home buyer and fear that proposed stamp duty reforms could cause the first home buyers to delay entering the market until May. The share of first-home buyers has fallen from about 25 per cent to less than 10 per cent in the last few months. Changes to property tax are expected to be announced in the May state budget.
 

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30 January 2007 - CBA improves online security
Financial Standard
The Commonwealth Bank (CBA) has started sending out free 'security tokens' to 30,000 of its internet customers. The token is a time sensitive device that provides a NetCode, which changes every 30 seconds. The user is required to enter the current code to authorise payments. The tokens will form part of the bank's two-factor authentication program. The next step will be introducing SMS authentication codes for other NetBank customers, which involves customers receiving a one time code to their mobile phone via SMS. Other banks including Bendigo Bank and Suncorp have also given security tokens to their net banking customers to improve their online banking security.
 

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30 January 2007 - ANZ forecasts lower interest rates
The Financial Review
The ANZ Bank has predicted that credit growth will recover earlier than expected, while forecasting that housing lending credit will fall to 11.7 per cent, after three interest rate rises last year. ANZ economists are predicting that the next move in official interest rates will be down. Paul Braddick, ANZ head of financial systems, said, "There will be a cut late this year or early 2008 and that's going to be the spur of a reasonably strong upturn in the housing sector". Mr Braddick said that despite household debt levels tracking at record highs, there was still the possibility of increased consumer borrowing, since a third of households had little or no debt. Bank economists have also revised the outlook for business lending from 11.3 per cent to 13.2 per cent.
 

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30 January 2007 - Westpac markets socially responsible choices
The Age
Westpac is currently running a TV advertising campaign designed to highlight the social responsibility of its lending practices. The advertisement informs viewers that since signing the Equator Principles agreement in 2003, Westpac has committed to being a responsible lender for the sake of future generations. It also shows the link between lending decisions and the negative impact that can occur when the environment and society are put after the economy. Even though Westpac should be commended for raising the issue of socially responsible lending practices there are some drawbacks. Many customers still believe that banks do only what is profitable and that while social responsibility is communicated the words aren't necessarily followed by actions.

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30 January 2007 - NSW recovery still a while away
Sydney Morning Herald
An economic forecaster has predicted that New South Wales's share of the national economy will fall to 32.5 per cent by 2010 from more than 36 per cent in 2001. The January 2007 Economic Access report says that a combination of tax cuts and interest rate increases last year were poison for NSW because mortgages are so big and had delayed the long awaited recovery in the state economy. Access said that NSW will have to wait until next financial year for a sustained recovery.
 

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29 January 2007 - Canberra cartwheels on CPI
infochoice.com.au
From rate rise to rate cut, what a difference a week and the release of the consumer price index (CPI) makes! The December CPI indicates that the build up of inflationary pressures seem to have eased, leading to the probability that the Reserve Bank will be more inclined to leave official interest rates static at their February meeting.

Just as bananas had been blamed for the increase in inflation in mid 2006 they are now being credited with assisting in easing inflationary pressures, does this mean we will see Cafes across Australia reduce or abolish their banana surcharge on smoothies? Aiding bananas in their fight against inflation were fuel costs, medicine prices and other members of the fruit family.

With underlying inflation below the Reserve Bank's target band of 2 - 3 per cent and registering its smallest increase in 3 years over the last quarter of 2006, talk has now turned from rate rises to rate cuts. This will be music to the ears of New South Wales premier Morris Iemma who is facing a 2007 election and needing the economic equivalent of jumper leads to help kick start the NSW economy. Perhaps investor and business confidence will return to NSW now an increase in rates is seen as unlikely in coming months.

Taxpayers may be a little disappointed though with the need to ensure inflation pressures are minimised giving Costello an easy way out of delivering further tax cuts and or tax reform in the May budget - a move that will be supported by Acting Treasurer and Finance Minister Nick Minchin, who warned that the government will continue to ensure budget policy contributes to keeping inflation low.

That is all well and good but 2007 is an election year and nobody elected their co-worker to the social club committee for advocating dry biscuits over Tim Tams for the monthly morning tea!!

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29 January 2007 - ASIC investigates planners
The Financial Review
The Australian Securities and Investments Commission (ASIC) has criticised financial planners for bombarding investors with excessive paperwork and for not disclosing enough information to clients. Jeffrey Lucy, ASIC chairmen, said that the regulator was planning a new assault on the 120 page product disclosure documents being offered by some advisors, as part of a broader campaign to insure that planners provide investors with clear, concise information. ASIC has been monitoring financial planning groups after issues involving conflict of interest arose, and is also investigating the collapse of Westpoint with an increased focus on the involvement of the planners who promoted the scheme.
 

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29 January 2007 - Business outlook worries VECCI
The Age
The Victorian Employers' Chamber of Commerce and Industry (VECCI) has released its latest quarterly survey on business trends and prospects. The survey shows that businesses in Victoria experienced mixed trading conditions and a fall in profitability in the three months to December 2006. Steven Wojtkiw, VECCI economist and industry policy general manager, said, "Businesses believe it won't get any easier over the next 12 months. There is a sense that orders won't be as strong, demand won't be as strong, wage pressures will continue and there's still quite strong competition from overseas for the consumer dollar." 32 per cent of respondents believe that that Australia's economic growth will slow over the next year, and 39 per cent expect that Victoria's economy will weaken. VECCI has warned the Reserve Bank of Australia against rising interest rates when it meets next week.
 

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29 January 2007 - Reverse mortgage providers to increase distribution
The Financial Review
Reverse mortgage providers are signing distribution deals with credit unions in order to target the baby boomer market. Reverse mortgages let home owners sell part of their home to a provider for either a lump sum or an ongoing payment, allowing retirees who own their own homes access to capital. The accrued interest and the loan are payable when the home owner sells or dies. Bluestone Group will soon announce an alliance with Cuscal, a banking service provider, which will market Bluestone's loans to credit unions. The major banks are also entering the sector, with NAB and Westpac both setting up pilot programs via third party lenders in the past six months.
 

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29 January 2007 - Increase in business lending expected
The Australian
The latest lending data is expected to show an improvement in business lending. The commercial lending figures, due for release on Wednesday, are also likely to show that the three interest rate rises last year have made consumers less likely to spend on credit. Richard Gibbs, Macquarie Equities chief economist, said there could be a decline in household borrowings. The figures, with commodity prices and international trade data released on Friday, will be the last set of economic data before the Reserve Bank of Australia (RBA) meets to decide on interest rates. The financial markets believe that the RBA will maintain the cash rate.
 

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25 January 2007 - Food prices predicted to continue rising
The Age
Food prices across Australia are expected to continue rising due to the drought, with analysts warning consumers that there is worse to come in the months ahead as supplies of milk, vegetables, and grains tighten. The consumer price index figures (CPI) released yesterday show food prices rose 0.5 per cent in the December quarter 2006 but in the year to December they rose 8.6 per cent. In the quarter bread rose 1.8 per cent and milk 4.1 per cent. Milk and dairy products are also expected to rise due to irrigation water restrictions, higher feed prices and poor rainfall. But the Australian Bureau of Statistics data was not bad news for everyone. "If you're consuming red meat and red wine around the barbecue this summer, you are probably doing well," Tim Hunt, Rabbobank food retail analysts, said, "Those teetotalling vegetarians are the ones that have been struck."
 

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25 January 2007 - A snapshot of the nation's wealth
The Sydney Morning Herald
Yesterday the Australian Bureau of Statistics released a new "Year Book" publication that gives a snapshot of average Australians. It shows that while Australian's are richer than ever they depend on credit to afford their lifestyles. The top 20 per cent of households owns 59 per cent of the nation's wealth while the poorest 20 per cent owns just 1 per cent. In 2003/04 the average household wealth hit $467,600, after deducting the average household debt of $70,000. Last year Australian's owed $76 billion on credit cards and other personal finance, which was a $2.6 billion increase on the previous year.
 

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25 January 2007 - Rates on hold for now
The Australian
The consumer price index (CPI) figures released yesterday were lower than expected, which means that interest rates would appear to be on hold. Many economic commentators believe that while the Reserve Bank of Australia (RBA) won't increase interest rates when it meets in February, one more rate rise this year might be a possibility. Last year there were three rate rises that increased the cash rate to a six year high of 6.25 per cent.
 

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24 January 2007 - Home prices drop below land tax evaluations
Sydney Morning Herald
Homes in New South Wales are being sold for less than their official land value, with many valuations rising despite falls in the market. David Singer, reform advocate, said that the state government had collected $680 million more in land tax than it had budgeted for during the last four years. "Investment returns will be eroded and tenants will have their rents increased to meet this huge unexpected burden", Mr Singer said.
 

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24 January 2007 - Stamp duty relief for WA
The Financial Review
In Western Australia first-home buyers may get some relief from high stamp duty charges. Yesterday Eric Ripper, State Treasurer, hinted at a rise in the stamp duty threshold for first-home buyers. Real estate agents and building companies have called for Mr Ripper to clarify his comments immediately, fearing that potential buyers may wait until the changes are officially announced in the May budget to make decisions on homes. The first-home buyers stamp duty threshold is expected to rise from $250,000 to $450,000.
 

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24 January 2007 - Planners need more training
Sydney Morning Herald
In Australia the minimum education required to be a financial planner is just three subjects, which can be achieved in as little as two days. This system is sanctioned by the federal government and overseen by the regulator. Of course, most financial advisors have higher qualifications and the Financial Planning Association has a designation for Certified Planners. But consumers are sceptical about the quality of service that financial planners provide. The government is beginning to look at the financial planning industry after scandals, such as Westpoint. There needs to be a high, uniform standard of financial planning advice, to restore consumer confidence.
 

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24 January 2007 - McFarlane sees no reason for rate rise
The Financial Review
John McFarlane, ANZ Bank chief executive, believes there is no compelling case for the Reserve Bank of Australia to lift interest rates next month and that more time is needed to ascertain the state of the nation's economy. A higher than expected increase in the consumer price index figures released today, has some economists predicting a 0.25 per cent interest rate rise in February or March.
 

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24 January 2007 - Sydney vulnerable if rates rise
The Financial Review
A study has warned that mortgagee sales and bankruptcies could surge in Sydney's western suburbs if interest rates increase. The report by University of Newcastle's Centre for Full Employment and Equity has found that high debt levels, falling house prices and job losses have made the western suburbs particularly vulnerable to even a small interest rate rise. Sydney has had a negative price growth for established houses since March 2004, while debt levels have continued to rise.
 

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23 January 2007 - St George stung by reforms
The Financial Review
The merchant services division at St George Bank has been stung by rising competition as a result of the Reserve Bank's payment system reforms. The Reserve Bank reforms cut interchange fees from 0.95 per cent to 0.55 per cent of each transaction. It also cut debit card fees from 40 cents to 15 cents and eftpos fees from 20 cents to 4 or 5 cents. St George's share of the market for facilitating credit and debit card transactions has fallen by almost a third over the past three years. George Beatty, St George's general manager product management group, said that the merchant services division was still an important part of the transaction banking business. Mr Beatty said, "We've got plans to examine and grow into larger category customers and we're always looking for new ways of doing business, which would include stronger alliances with the business bank at St George."
 

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23 January 2007 - Federal government urges states to cut stamp duty
Financial Review
The federal government has urged states to cut "excessive" stamp duties and release new land for development to make housing affordability easier for first-home buyers. Commenting on a report released earlier this week that showed housing affordability was at a 22 year low, Peter Dutton, acting Treasurer, said, "Property taxes, such as stamp duty and land tax, now make up, on average, 32.5 per cent of the total revenue raised by the states from their own imposed taxes. This is up from 22.6 per cent in 2000/01." Mr Dutton has called on the state governments to cut stamp duty on conveyancing and make housing more affordable for first-home buyers.
 

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23 January 2007 - Housing in Australia severely unaffordable
The Age
The latest annual Demographia study has found that housing affordability in Australia is among the worst in the world. The study compares affordability in six developed countries. The Demographia report found that it takes 6.6 years of median annual household income to buy a median priced home in Australia. For housing to be considered affordable it should be below 3 years of annual household income. Housing is considered "severely unaffordable" when median house price passes five times median household incomes. Melbourne, Perth, Sydney and Hobart were among the top 25 most unaffordable cities. The survey found that Australia's housing problems were caused by restrictive land release policies, excessive regulatory and zoning controls, and high housing taxes.
 

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23 January 2007 - Consumers won't pay for net banking
The Australian
The Australian Securities and Investments Commission (ASIC) is reviewing the Electronic Funds Transfer code of conduct. ASIC has revealed that banks will not pass the cost of online fraud to consumers and that reports that banks have lobbied ASIC to make consumers liable for online security breaches are false. ASIC runs the voluntary code which provides consumer protection in telephone, online, ATM, and eftpos transactions. The code is being reviewed to incorporate recent changes in the payment market, particularly regarding internet banking. Consumer liability is also being considered as part of the code's review, including liability in situations of incorrectly keyed account numbers resulting in an incorrect payment or loss incurred through accidentally leaving a card in an ATM.
 

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23 January 2007 - Farmers still making loan repayments
The Daily Telegraph
Executives at the National Australia Bank (NAB) are confident that farmers have managed to keep up their loan repayments during the drought. NAB has been working closely with rural clients to manage loans and had restructured some repayments. Wayne Carlson, NAB's agribusiness general manager, said that even though Australia is experiencing a downturn, there is not a massive trend of bad debts and that 70 per cent of farmers had interest rate protection. NAB is the leading financier to the rural sector with $11 billion in loans and 34,000 customers.
 

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22 January 2007 - All eyes on CPI
infochoice
All eyes remain focused on the release of the consumer price index (CPI) data to be released on January 24, with many economists forecasting inflationary pressures to exceed the Reserve Bank's target of 3 per cent and therefore placing the Reserve Bank under pressure to increase the cash rate for what would be the fourth movement in the last 10 months.

Another one quarter of percentage increase would mean the cash rate has increased by almost 20 per cent in less than a year and the impost on borrwers will have seen the average mortgage monthly repayment increase by $170 per month.

While the Reserve Bank is obviously careful not to be seen as overly aggressive, they are mindful that global economic growth is forecast to be at the highest levels in 30 years and the Australian economy remains underpinned by the global resources demand.

Indeed many in New South Wales would argue that a further rate rise will spell a widespread state recession, and stimulus not restraint is what New South Wales requires.

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22 January 2007 - Drought hurts Victorian businesses
The Financial Review
The Victorian Employers Chamber of Commerce and Industry (VECCI) survey for the December 2006 quarter has found that drought conditions have had a wide impact on Victorian business. Neil Coulson, VECCI chief executive, said that most Victorian businesses have been affected in some way by the drought. "Overall 59 per cent of respondents reported that the current drought has had an impact on their business, comprising 40 per cent reporting a minor impact and 19 per cent reporting a major impact."
 

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22 January 2007 - Consumers to be liable for online fraud
The Daily Telegraph
Banks currently reimburse customers who are electronically robbed by viruses that steal data including passwords and personal details, but that could soon change. The Australian Securities & Investments Commission (ASIC) is considering changes to electronic banking requirements, possibly resulting in consumers being liable for any internet banking fraud. Under ASIC's review into the Electonic Funds Transfer Code of Conduct consumers will be liable for their own losses unless they have "minimum or adequate" security, at the very least, consumers who use internet banking will be forced to spend $60 a year on updating antivirus software.
 

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22 January 2007 - Businesses market socially responsible programs
The Age
This year there are many businesses with corporate social responsibility programs. The drought has become a major focus for businesses, including ANZ, Woolworths and Coles. The ANZ announced recently that it would provide $1 million worth of cash grants for farmers in drought affected areas. Tomorrow all profits, expected to be more than $3 million, from Woolworths and Safeway supermarkets will be given to drought stricken communities. Coles has donated a minimum of $100,000 to the Salvation Army's drought appeal and promised to match the sum donated by its customers. Most big banks are now offering interest-only facilities, fee waivers and loan restructuring to customers affected by the drought. Corporate social responsibility has become a significant factor in the way big business operates during a time of crisis, and the public relations benefits help those in need.
 

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22 January 2007 - Housing affordability hits record low
Financial Review
Housing affordability reached its lowest level in the December 2006 quarter as last year's rate rises start to have an effect. The Housing Industry Association (HIA) report for December 2006 found that housing affordability was at the worst level since the index was started in 1984. And for the first time Perth was less affordable than Sydney. The three interest rate rises last year led to a drop in lending to first-home buyers who were also affected by the median house price in Australian rising by 4 per cent. The HIA report found that the typical first-home mortgage repayment had increased 6.3 per cent to $2,332 in the three months to December 2006. Repayments now make up 30.7 per cent of first home buyer-income.

 

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22 January 2007 - Rates will rise if inflation is too high
Financial Review
The board of the Reserve Bank of Australia (RBA) will meet in early February and may raise interest rates if it decides that inflation is too high. Falling petrol and fruit prices are expected to help moderate the consumer price index (CPI) figure for the December 2006 quarter, due for release on Wednesday. The RBA will look closely at this data as well as taking all other economic aspects into consideration before making its final decision.
 

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19 January 2007 - Inflation figures the rate rise decider
The Australian
Economic analysts in Australia believe that inflation figures, due for release next week, will determine whether the Reserve Bank of Australia will raise interest rates for the fourth time in 12 months when it meets at the beginning of February. Three of the nation's big banks consider the likelihood of a rate rise an even bet, while one thinks an increase is certain. Analysts believe that the inflation trigger point for an interest rate increase of 0.25 per cent will be 0.7 per cent. A Melbourne Institute survey following the August 2006 rate rise found that 18.3 per cent of people found interest rate increases "somewhat stressful" while 10.7 per cent see them as a "huge concern".
 

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19 January 2007 - Men jailed over NSW bank scam
Sydney Morning Herald
Four men who skimmed $1.6 million from the accounts of 600 New South Wales bank customers have received jail sentences ranging between 16 and 22 months. The NSW district court heard that the men were part of a Canadian-Bulgarian syndicate and that they did not organise the scheme but became involved because they had financial problems in Canada. The men were to receive commissions of between 10 and 20 per cent. The scheme involved using fake card slots that were attached to ATM machines and recorded account information, while cameras filmed the account users entering their personal identification numbers (PINs). The information was then placed onto a blank card, and matched with the PINs, allowing the men to withdraw large amounts of money from the accounts. When they are released Svilen Marinov, Assen Dotchev, Christo Sotirov and Gueorgui Dinkov will be deported.
 

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19 January 2007 - Rate rises slow growth of credit card debt
Financial Review
Consumers are using their credit cards less which indicates that recent interest rises are beginning to effect household spending. New data from the Reserve Bank of Australia shows that the growth in credit card debt has slowed, with balances growing at their slowest rate for seven months in November 2006. While the average credit card balance has increased to a new high of $2,868 to be 7.5 per cent higher than a year earlier, the value of credit transactions grew by just 0.4 per cent in November 2006 and the number of cash advances made was 4.3 per cent lower than that recorded in October.
 

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19 January 2007 - Borrowing to buy shares reaches record high
Financial Review
Margin lending has reached a record high as thousands borrow to buy shares, highlighting the move of investors away from the struggling housing sector. Data from the Reserve Bank of Australia released yesterday shows that in the 2006 September quarter the number of people with margin loans increased almost 3 per cent from the previous quarter to 157,000, the highest number on record. In the 12 months to September the number of margin loans issued increased by almost 11 per cent, the biggest annual increase since 2003.
 

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19 January 2007 - Call to cut land tax rate in NSW
Financial Review
The Property Council of New South Wales has called for the state's land tax rate to be reduced from 1.7 per cent to 1.5 per cent over the next four years. Access Economics said a staged reduction would generate a $137 million boost to the state's economy and create more than 580 new jobs. Ken Morrison, NSW Property Council CEO, believes that while the NSW tax design is the best in the country, land revenue tax continues to rise despite the weak residential property market. According to a NSW state Treasury spokesman the government had just reduced the land tax impost by approximately $40 million through the averaging of underlying valuations over three years.
 

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18 January 2007 - ASIC concerned by Macquarie's actions
Financial Review
The Australian Securities & Investments Commission (ASIC) is investigating Macquarie Bank for an alleged conflict of interests. ASIC is concerned that Macquarie was a corporate advisor for Alinta while also supporting a management buyout by then CEO Bob Browning. ASIC says the law requires financial services firms to manage any conflicts of interest. Macquarie insists that Alinta's board was fully informed and had its actions condoned. However on 16 January 2007 Alinta sacked Macquarie as its corporate advisor and has minimised interaction with all executives involved in the buyout still working there.
 

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18 January 2007 - Low doc's lead as arrears rise
Financial Review
The rate of missed payments on residential mortgages is increasing as the effects of higher interest rates begin to be felt, particularly for low doc loans. Arrears for residential-backed securities are now approaching five year highs, according to rating's agency Standard & Poor's, who say that in November the level of missed payments was 2.44 per cent for low documentation loans and 0.93 per cent for full documentation loans. Major banks have warned that bad debts will continue to rise over the next year as interest rates increase.
 

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18 January 2007 - Drop in housing lending predicted
The Age
There will be a slowdown for Australia's banking sector in 2007 according to Fitch Ratings. Australia's top five banks, ANZ, Commonwealth, NAB, St George and Westpac, raised after-tax operating profit 13.4 per cent in 2005/06, but Fitch Ratings predicts that demand for finance will drop as a result of last year's interest rate rises. "It's going to be more difficult for the banks to maintain the growth levels we have seen over recent years." Tim Roche, Finch's associate director, said. "They will find it more difficult to maintain volume growth, particularly in the housing lending side."
 

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18 January 2007 - Big 4 increase fixed rates
The Australian
Australia's major banks have given their strongest indication that they are expecting interest rates to rise, with the big four increasing their fixed rates. The Commonwealth Bank of Australia (CBA) maintains that its fixed rate loans are independent of any immediate decision by the Reserve Bank of Australia and change according to the cash market. The CBA has increased its one and three year fixed rate loans by 11 basis points to 7.35 per cent. Last year both the ANZ and Westpac increased their rates by 16 basis points to 7.35 per cent. Yesterday National Australia Bank increased its one year introductory fixed rate by 9 basis point to 6.74 per cent, but left its three year fixed rate unchanged at 7.18 per cent. Major banks said that last year most of their customers were switching from variable to fixed rates. St George, not one of the major four, has gone against the trend and lowered its three year fixed rate from 7.19 per cent to 6.95 per cent.
 

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18 January 2007 - Figures increase inflation concerns
Financial Review
Economic growth in Australia may be rising, increasing concerns about inflationary pressures, in spite of falling petrol prices and a decline in business borrowing. The Westpac-Melbourne Institute leading index of economic activity in November 2006 was the strongest figure in almost seven years, with a 0.5 per cent increase giving an annualised growth rate of 6 per cent. However, lending data showed that business borrowing and investment has slowed, while the value of commercial lending dropped by 11.8 per cent and personal lending fell by 1.2 per cent. Some economists believe the Reserve Bank will increase interest rates next month, rasing concern in the housing industry.
 

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17 January 2007 - More loans at greater risk
Financial Review
Mortgage lending in Australia is more competitive than ever before, profit margins for lenders are lower, home ownership is more widespread and more Australians in total have owner-occupied housing debt. Non-bank lenders like Bluestone, Aussie Home Loans, Liberty Financial and RAMS have transformed home ownership, and created some of the wealthiest entrepreneurs in the process. Home loans in real terms are cheaper, more flexible and available to more people. Many observers are concerned that lenders have been lenient, providing large loans without adequate security, leaving borrowers unable to repay the loan. Westpac, however, says that the matter has been overstated, and that its worst-case scenario would still only be $200 million on a loan portfolio worth $100 billion.
 

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17 January 2007 - Banks divided over shareholder incentives
Sydney Morning Herald
Shareholder incentive programs are a debatable issue in Australia. Recently ANZ Bank announced that it would be evaluating its shareholder incentives in 2006/07. St George Bank and the Commonwealth Bank of Australia do not offer specific shareholder incentives, instead they highlight dividends, while Westpac, National Australia Bank and Bank of Queensland do offer loyalty programs.
 

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17 January 2007 - New look for Citigroup
The Age
Citigroup may soon become "Citi" with the red umbrella logo replaced with a stylised arc above the name. The new name and look is the result of a 14 month review of the bank's brand and will be presented to the Citigroup board this week. However a spokesperson for Citigroup said that work would continue of the branding effort, and there may still be some changes made. Over the past few years, Citigroup's consumer businesses took on the "Citi" prefix to become CitiBank or CitiMortgage. Now, Charles Prince III, chairman and CEO, wants to unify the company under one global name, but with a different colour arc to maintain a distinct look. Citi's corporate and investment bank will use a black arc, its wealth management division will feature a red arc and its consumer business will have a blue arc.
 

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17 January 2007 - Mortgage broker reform needed
The Age
The mortgage broker sector in Australia is very strong, with brokers issuing 40 per cent of new loans and 30 per cent of refinancing loans. However, the activities of some brokers has continued the call by consumer and industry advocates for national regulation of brokers. Davis Tennant, director of Care Financial Counselling Services, says licensing would get rid of unscrupulous operators, who are interested in commissions and market share rather than customer welfare. Financial advisors are regulated nationally while brokers are covered under state legislation, so reform is needed. New South Wales released a new mortgage broker regulation scheme in late 2006 but it may take 18 months before other states can follow suit.
 

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17 January 2007 - A new year, a new wealth strategy
The Age
A new year often means that people will review their financial status in order to anticipate any problems or benefits ahead. This financial reassessment is useful for people of all ages and a budget is essential to identify expenditure. Any surplus cash can be used for investment while any debts, especially credit card debt which usually has a high interest rate, should be minimised. One wealth strategy is to compound spare cash where regular weekly repayments are made, allowing the money to generate its own value.
 

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16 January 2007 - Retailers compete with banks for cards
Financial Review
Australia's major retails are eager to join a worldwide trend of involvement in the retail financial services sector. The number of customers who use credit cards to pay for their purchases is increasing and retailers want to reduce the amounts they pay in merchant fees. Woolworths has withdrawn its Ezy Banking joint venture with Commonwealth Bank and has a new financial services strategy involving its own electronic payments processing system that will provide it with a platform to launch its own credit card. David Jones is planning to introduce a general purpose credit card while Myer and Harvey Norman have in-house schemes through GE Money.
 

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16 January 2007 - Fear of rate rise causes fixed rate surge
Financial Review
More home buyers are opting for fixed rate home loans as concern mounts as to whether or not the Reverse Bank of Australia will lift interest rates again when it meets in early February. More than 21 per cent of owner-occupiers chose fixed rate loans in November, the highest level in nine years. The number of loans to owner-occupiers for the purchase of new homes fell 1.4 per cent to 2,680 in November, while mortgages for established homes fell 0.6 per cent to 54,100. Stephen Roberts, Grange Securities director of research, said that despite the fall in owner-occupier loans in November, the total number of loans issued for the month remained at a strong 61,000.
 

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16 January 2007 - Fifth rate rise predicted
Sydney Morning Herald
There is an increasing chance of another interest rise this year amid concern over stubborn inflation and wage pressures. Another interest rate rise would be the fifth consecutive rise since the Coalition was re-elected in 2004 and promised to keep rates low. Official inflation figures due next Wednesday are expected to be a major deciding factor as to whether or not rates will rise. Home buyers have reacted to the likelihood of another rate rise by locking in fixed rate mortgages. The Australian Bureau of Statistics has found that 1 in 5 home loans were taken at a fixed rate in November.
 

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16 January 2007 - WA's house prices could fall
The Australian
Western Australia's property prices could fall by as much as 20 per cent as buyers flee the market. The turnover in the market has dropped by 16.1 per cent since its peak in June, based on the number of new homes being approved, with a 4.1 per cent decrease in November. Demand for property in the west is sliding while it is recovering in NSW according to new home lending figures released by the Australian Bureau of Statistics. In NSW the number of new home loans rose 1.1 per cent in November and is now 23 per cent above the low point reached in September 2004. The fall in home lending in other states has been slight when compared with WA, the total number of loans nationally fell 0.6 per cent in November. Rental returns in WA are just 2.8 per cent, the lowest in the country. Rod Cornish, Macquarie Bank property analyst, said that although investment demand would fall in the west, continuing migration to the state would generate demand among owner-occupiers.
 

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15 January 2007 - St George lowers fixed rates
infochoice
St George announced today that it will be reducing 3 and 5 year fixed rate home loans for new loan applications. Steve Blinkhorn, St George head of home loans, said, "There is still some uncertainty about whether or not interest rates will continue to rise... By choosing a fixed rate, borrowers are protected in a rising interest rate environment and are able to budget for the future with confidence." The special rate of 6.95 per cent for fixed rate loans will be available for a limited time only.
 

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15 January 2007 - New scam targets online bank customers
The Weekend Australian
A new program allows crime gangs to target online bank customers by intercepting passwords and security codes. Criminals are able to download the kit from the internet. Security experts say the "man-in-the-middle" kit allows criminals to set up fraudulent internet address that directs users to a genuine bank website while simultaneously intercepting passwords. The kit was discovered by security software company RSA, who warns that it can record personal data entered after a user has logged into the bank's site. Police have advised internet users not to open emails from banks, and to only access bank websites by typing the address or using a reputable search engine.
 

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15 January 2007 - Cards blamed as bankruptcies rise
The Weekend Australian
The latest data from the Insolvency and Trustee Service Australia (ITSA) shows that the number of personal bankruptcies increased by 20 per cent in the three months to December, when compared with the previous December quarter. ITSA reported that most were linked to excessive credit card debt, loss of employment or the breakdown of a relationship. Credit card debt has more than doubled over the past five years to $37.3 billion in October compared with 17 billion in 2001. More than 70 per cent of bankrupts owed less than $50,000 to unsecured creditors.
 

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15 January 2007 - Consumers to pay for internet fraud
Financial Review
The Australian Securities and Investments Commission (ASIC) released a proposal on Friday that would make internet users potentially liable for internet banking losses, unless they have minimum equipment security to protect against fraud. At present consumers are indemnified for most losses incurred through internet banking unless it can be proven that they were negligent with their PIN or other forms of identification. The internet industry said that the proposal would undermine consumer confidence in internet banking. There is an absence of public data on the extent of internet fraud in Australia.
 

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15 January 2007 - ACCC tougher on merger deals
Financial Review
The Australian Competition and Consumer Commission (ACCC) says future corporate mergers must meet strict new rules before approvals are granted. Graeme Samuel, ACCC chairman, warned the business community the letter of the law would be applied to the new merger regime that came into effect in January 2007. The competition regulator's tough stance comes after several incidents last year where companies made undertakings to divest businesses in order to win approvals for mergers but then failed to deliver on their promises.
 

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12 January 2007 - Interest rate pressure increased by jobs surge
Financial Review
A surge in jobs in December has increased pressure on the Reserve Bank of Australia to raise interest rates. In December the unemployment rate was 4.6 per cent. There were 44,600 jobs created in December taking the total of new positions for 2006 to 302,000. The strength of the economy has also been highlighted by other economic indicators released in January 2007. The consumer price index, due for release in two weeks, will play a crucial part in the decision of the Reserve Bank of Australia which will meet early next month.
 

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12 January 2007 - ASX shares soar after takeover talk
Financial Review
Yesterday afternoon a representative of Macquarie Bank reported speculation of a deal involving ASX Ltd which resulted in ASX Ltd shares closing $1.60 higher at $37.45. ASX Ltd has denied the claims, stating that it has no information to support the speculation.
 

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12 January 2007 - CPI to resolve rate debate
Financial Review
When the Reserve Bank of Australia (RBA) meets in February 2007 to determine whether or not to raise interest rates again, it will be faced with apparently conflicting data; strong employment growth yet weak national accounts. The market has currently factored a 40 per cent probability that rates will rise in February. The December quarter consumer price index (CPI) will provide the RBA with crucial data needed to determine the strength of the economy.
 

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12 January 2007 - ETrade expects profit
The Australian
Online brokerage ETrade expects to book a lift in first-half profit due to its purchase of HSBC Stockbroking last year. Yesterday ETrade announced that unaudited accounts for the 6 months to the end of December indicated an increase in first-half earnings before interest, tax, depreciation, amortisation and one off items to be up by at least 75 per cent from the previous first half. "This should translate into an unaudited increase of between 15 and 20 per cent in net profit before tax, after deducting non-recurring costs incurred in the first half," a company spokesman said. ETrade, which is 35 per cent owned by ANZ Bank, gained about 72,000 new customer accounts through the HSBC purchase and the deal raised ETrade accounts to 320,000. Currently ETrade has 350,000 accounts holding more than $19 billion in assets and in December 2006 executed 318,035 trades worth $4 billion.
 

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11 January 2007 - Australia a two-speed economy
The Australian
Australia has become a two-speed economy, with resource driven booms in Western Australia and Queensland outperforming the rest to the country. WA recently revised its economic growth estimate from 5.25 per cent to 5.75 per cent, while Queensland is forecasting growth of 4.75 per cent. New South Wales is forecasting growth of 1.5 per cent, while South Australia is expecting growth of just 1 per cent.
 

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11 January 2007 - Predicted growth for banks
Sydney Morning Herald
UBS Investment Research has predicted that Australia's big banks will continue to grow in 2007. In the 2006 financial year earnings-per-share (EPS) experienced growth of 12.4 per cent. UBS Investment is predicting EPS growth of 11.7 per cent in 2007 and 9.3 per cent in 2008, and expects the strongest growth to be among the big investment banks, Macquarie and Babcock & Brown. However analysts warn clients that recent interest rates could hurt highly-leveraged consumers, particularly in New South Wales.
 

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11 January 2007 - Property trusts target child care market
Financial Review
Property trusts are planning to capitalise on the global boom in child care services. Austock is preparing to launch a trust that will own the freehold of child care centres run by ABC Learning in the US. ABC operates nearly 1,000 centres in two countries and has an alliance with the Australian Education Trust, which owns about 300 centres across Australasia. The Global Education Trust is scheduled to float on the Australian Stock Exchange in the second quarter of 2007.
 

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11 January 2007 - Consumer sentiment boosted by jobs market
Financial Review
Australian consumer sentiment is at its highest level in 18 months despite three interest rate rises last year. The Westpac-Melbourne Institute index of consumer sentiment rose 7.3 per cent in January following a rise of 11.8 per cent in December 2006. The increase is partly due to strong employment growth, higher wages and rising wealth. The Australian Bureau of Statistics figures showed that in the three months to November job vacancies increased by 5.9 per cent, taking the increase for 2006 to 21.4 per cent. The latest consumer confidence figures encouraged Westpac to maintain its forecast that the Reserve Bank will raise interest rates again early this year.
 

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11 January 2007 - Another bank loses sponsorship opportunity
Financial Review
Late last year the Art Gallery of New South Wales informed photographers that the Citigroup Photographic Portrait Prize would not be presented in 2007. The prize was popular with photographers and its sponsor, Citigroup, which provided the $1,500 prize money. However the cancellation is part of a decision to reduce the number of temporary exhibitions at the gallery. More than 300 people have signed a petition urging the gallery to reconsider or allow another gallery to pick up the prize. The National Gallery of Australia cancelled the National Sculpture Prize about 6 months ago, the major sponsor of which was Macquarie Bank.
 

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10 January 2007 - Slow spending growth causes debate
Herald Sun
Three consecutive interest rate rises and higher petrol prices may have forced consumers to limit their big spending habits at restaurants and clothing stores. The latest figures from the Australian Bureau of Statistics show that Australian retail growth in November slowed to its lowest level in six months. Economists are divided as to whether this was due to the Reserve Bank's decision to increase interest rates for the third time in 2006 or whether it was shoppers exercising spending caution before Christmas. Martin Arnold, Commsec equities economist, said consumer growth would remain low over the next few months.
 

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10 January 2007 - Brisbane to outshine Perth
Financial Review
Brisbane will overtake Perth this year, as the fastest growing residential market according to a survey released yesterday by property analyst Michael Matsuik. Mr Matsuik said many respondents believed that it was time to sell in Perth. The survey also reflected a greater interest in south-east Queensland, with inner city Brisbane being regarded as the best choice for buying residential property.
 

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10 January 2007 - HSBC sells home loan portfolio
Financial Review
The Australian arm of HSBC Bank has sold a $2.2 billion portfolio of broker originated loans to mortgage wholesaler FirstMac. The portfolio is almost a third of HSBC Australia's residential lending book, though the bank has rejected claims that it is stepping back from the local lending market. FirstMac's residential book has now increased to $7.3 billion.
 

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10 January 2007 - Sovereign Capital loses licence
Financial Review
The Australian Securities and Investments Commission (ASIC) has stripped Sovereign Capital of its financial services licence after concerns that the company had not operated a $54 million development loan fund honestly or in accordance with the law. The fund is a mortgage lender to developers which about 700 people have invested in. Jennifer O'Donnell, ASIC's executive director of compliance, said that the fund was below a reasonable standard and that ASIC was concerned about disclosure, conflict management, due diligence and fairness between investors.
 

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9 January 2007 - Rents set to soar in Sydney
Sydney Morning Herald
Rents in Sydney are set to rise by as much as 20 per cent this year as investors sell property and move money into superannuation. Rory Robertson, Macquarie Bank economist, says a switch from property to superannuation is under way following Federal Government changes to make super a more attractive investment. He is predicting a surge in the sale of rental properties before June this year. Christine Castle, Real Estate Institute of NSW president said the super changes were a big factor in Sydney's rental shortage and renters should brace themselves for rent rises this year. A third of Australian families live in rental accommodation.
 

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9 January 2007 - CBA buys stake in Indonesian lender
Financial Review
The Commonwealth Bank of Australia (CBA) will buy a majority holding in a small Indonesian lender, Arta Niaga Kencana, paying about $37 million for an 83 per cent stake. Arta Niaga operates 19 branches in Indonesia and employs 349 staff. In 2005 the bank reported a profit of 11.9 billion rupiah. The deal still needs approval from the Indonesian regulator and shareholders. CBA's subsidiary, PT Bank Commonwealth, already operates 21 branches in Indonesia and focuses on expatriates and the mass affluent market.
 

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9 January 2007 - Woolworths to launch credit card
Financial Review
Woolworths is finalising a payment processing system that will cut the cost of transaction sorting. The "switch" system will cut processing costs by allowing Woolworths to sort debit and credit transactions and send them directly to card issuers. It will also create a platform from which Woolworths can launch its own credit card and develop its financial services strategy, which may eventually include personal loans, insurance and mortgages. A Woolworths branded credit card would allow the retailer to join the growing number of non-bank institutions competing for a share of the $33 billion credit card market.
 

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9 January 2007 - Chance of rate rise increases
The Age
The chances of another interest rate rise have increased with latest indications showing a strong Australian economy. The Australian Bureau of Statistics reported that building approval rose by 4.1 per cent in November 2006. Yesterday, the strong economic figures caused the share market to increase its expectation of an interest rate rise by March from 28 per cent to 34 per cent. The Reserve Bank of Australia has raised interest rates 8 times since 2002. Retail figures to be released today and employment figures released on Thursday may also affect the RBA's decision on interest rates.
 

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9 January 2007 - Business pessimism at record high
The Australian
The latest Dun & Bradshaw "Business Expectations Survey" shows that business pessimism is at a record high. Released in January 2007, the study reports that 37 per cent of Australian business executives predict a fall in profits for the first quarter in 2007, and half expect to raise their prices in the same period. 31 per cent of the non-farming industries of retail, wholesale and manufacturing have been affected by drought. 10 per cent of employers expect to reduce staff numbers this year.

 

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9 January 2007 - Apartment building approval down
Financial Review
According to the Australian Bureau of Statistics, approvals to build apartments have fallen to just 3,551 in November 2006, the lowest level since May 2001. Economists believe that the figure is an indication that higher interest rates are deterring investors and predict that it will cause a continued shortage of rental properties and higher rents.
 

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8 January 2007 - Colonial turns to Japanese investments
Financial Review
Colonial First State Global Asset Management has struck an alliance with a Japanese property group and has plans to list a new stock, with investments in Japanese real estate, on the Australian Stock Exchange in 2007. It is thought that Colonial has teamed up with Simplex Investment Management. Simplex, who's total assets under management were about 538.3 billion yen ($A5.83 billion) last year, is planning to increase this to 610 billion yen.
 

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8 January 2007 - Mariner set for expansion
Financial Review
Australian fund manager, Mariner Financial, is raising funds for the expansion of its property investments. Mariner currently manages $800 million in assets, and has plans for a number of new property and infrastructure funds in 2007, focusing on Australian and global property. Mariner is also planning to launch Japanese property trusts on the Australian Stock Exchange. An unlisted company will underwrite new products and financial deposits, while a subsidiary, Mariner Financial, has introduced a new series of floating rate notes to fund Mariner's new activities.
 

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8 January 2007 - Housing recovery depends on RBA
Financial Review
An improvement in the Australian housing sector this year will depend on the whether the Reserve Bank of Australia keeps interest rates on hold. But the recovery could be limited by the declining affordability in states like New South Wales. Harley Dale, Housing Industry Association chief economist, has forecast a modest recovery for the housing sector in 2007. However, he said that a rise in building approvals will depend on Reserve Bank of Australia not rising interest rates and that prospects of a recovery in 2006 were ended by the interest rate rises.
 

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8 January 2007 - Change to credit card security
Financial Review
The financial services industry is aiming to improve processing times and limit fraud by giving credit card customers the choice to use personal identification numbers (PINs) rather than signatures by early 2008. The Australian Merchants Payments Forum group believes that PINs should be mandatory on credit cards to prevent fraud. Visa and Mastercard have backed the move.
 

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8 January 2007 - Perth prices to rise again
Financial Review
Last year real estate prices in Perth rose 40 per cent and they are predicted to rise again in 2007, though agents and property developers say the growth rate will be less than 10 per cent. Nigel Satterley, Satterley Property Group CEO, said that the market was sustainable and estimated that the growth rate for homes would be between 4 and 6 per cent while homes worth $1 million or more could expect growth of 7 to 10 per cent.
 

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5 January 2007 - Banks criticised for "irresponsible lending"
The Australian
The Consumer Credit Legal Centre provides legal advice for low-income earners and was established to deal with cases of "irresponsible lending". Last year the centre took a record 9,000 calls and experience more calls than usual in November and December. Katherine Lane, principal solicitor at the New South Wales centre, says, "There is a huge problem with irresponsible lending in relation to credit card debt". Lane claims that Australian banks are deliberately targeting certain customers and offering them unsolicited limit increases, knowing they could never repay the debt. She also alleges that some sub-prime lenders are to blame for irresponsible lending in the mortgage loan sector.
 

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5 January 2007 - Christmas shopping binge
The Australian
Australian shoppers spent a record $23.7 billion in December last year, 4.2 per cent higher than 2005. The Australian Retailers Association (ARA) had predicted weak Christmas spending due to the Reserve Bank of Australia's interest rate rises, but this was not the case. ARA spokesman Duncan Shaw said, "Consumers have ignored the higher cost of petrol and food during the Christmas season, proving a boon for traditional Christmas retailers".
 

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5 January 2007 - Loan approval rates drop
The Australian
The Australian Finance Group (AFG) says home loan applications fell by 30 per cent in December 2006. Mortgage applications dropped, on a month-by-month basis, by 37 per cent in New South Wales, 33 per cent in Western Australia, 31 per cent in Victoria and 28 per cent in Queensland. According to the AFG concern about recent interest rate rises was reflected by an increase in fixed-rate loans, from 18.9 per cent in December 2005 to 22.5 per cent in December 2006.
 

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5 January 2007 - Credit crisis likely
Herald Sun
Financial counsellors are bracing themselves for the consequences of the 2006 Christmas spending splurge. The latest Reserve Bank of Australia figures show that consumers spent about $16 billion on credit cards in October, with December spending expected to pass $17 billion. The national credit card debt has now reached $37 billion. Financial Counselling senior counsellor, Jill Com, says many families are facing the challenge of Christmas credit card debt, combined with interest rate rises and back to school expenses.
 

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4 January 2007 - Bank satisfaction levels unchanged
The Australian
The latest Roy Morgan Research report, released yesterday, shows that the level of customer satisfaction with the top 4 banks remains relatively unchanged, and is no higher now than it was 10 years ago. Norman Morris, Roy Morgan's head of global finance, questioned whether banks were investing in the right areas, suggesting that banks should focus on their areas of weakness, business owners, the self-employed and high income earners. Of the five major banks ANZ has the highest customer satisfaction while the Commonwealth remains in last place.
 

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4 January 2007 - NAB to trial micro-credit loans
Financial Review
The National Australia Bank is seeking government support to give micro-credit loans of up to $20,000 to people who want to start a small business but have no financial backing. Sharman Stone, Federal Workplace Participation Minister, said the government was keen to support micro-credit schemes, as they allowed people with no assets, savings, or credit history to access capital to establish a small business. To promote the loans the federal government will give financial training to unemployed people who want to start a business. NAB plans to trial the micro-credit loans in Victoria and expects to issue about 100 loans over the next 12 months.
 

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4 January 2007 - Limited housing growth tipped for 2007
The Age
The Real Estate Institute of Australia (REIA) expects the eastern states' housing market to deteriorate further this year due to slowing demand and declining loan affordability. Darwin and Queensland are expected to have the most growth in 2007 while Sydney, Melbourne and Adelaide should expect another quiet year. REIA also expects that Perth, Australia's fastest growing city in 2006, will have limited growth in 2007.
 

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4 January 2007 - Rents will continue to rise
The Age
The latest Real Estate Institute of Australia (REIA) report warns that rents are likely to rise across Australia in 2007, particularly in Sydney, with demand higher than supply in every capital city. Rents increased by about 9.8 per cent in the year to September 2006.
 

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4 January 2007 - Westpac business lending growth drops
Financial Review
The latest monthly banking figures from the Australian Prudential Regulation Authority (APRA) show that Westpac's business loan book dropped by 2.6 per cent in November, after rising more than 6 per cent in October. The overall market grew by 0.8 per cent, with interest rate rises blamed for slow growth. National Australia Bank's business lending grew by 2.3 per cent during November.
 

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February 2007

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28 February 2007 - Competition leads to better rates
The Financial Review
Increased competition has led to better reverse mortgage rates for consumers. The Senior Australian Equity Release Association of Lenders has released new figures on the cost of reverse mortgages. Reverse mortgages now cost about 0.5 to 1 per cent more than traditional mortgages while eighteen months ago reverse mortgage providers charged 1 to 2 per cent more than mainstream lenders.
 

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28 February 2007 - Not so standard variable rate
Sydney Morning Herald
There is speculation about the future of Australia's standard variable rate mortgage loan. The standard variable rate is 8.07 however, at the end of January Infochoice's benchmark variable was 7.53, 0.54 per cent lower than the standard variable. The Infochoice benchmark variable calculates the weighted average mortgage rate based on the rates of more than 100 lenders. Denis Orrock, Infochoice general manager said that anyone paying above 7.50 per cent on a home loan was paying too much. The Reserve Bank of Australia has found that over the past decade the standard variable rate has been gradually losing touch with the reality of mortgage rates.
 

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28 February 2007 - Basic loans more popular
The Age
Basic home loans used to be popular with first home buyers and low income earners but due to improved features they are enjoying a wider popularity. Borrowers have found that a basic home loan will give them a cheap rate and, depending on the product, plenty of features. However, there are some back-end charges to consider. Often basic home loans have deferred establishment fees if the loan is repaid early, which can be as high as $1,495.
 

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28 February 2007 - Decline in share market expected
Sydney Morning Herald
Wall Street shares experienced a dramatic downturn today following steep declines in global markets, with the Dow Jones index closing 416.02 points or 3.29 per cent lower. Big declines are also expected to hit the Australian share market, particularly in resource stocks.
 

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28 February 2007 - Households under financial stress
The Financial Review
The Housing Industry Association (HIA) has warned that as many as half a million Australian families are suffering financial stress due to the rising cost of rent and high mortgages. Ron Silberberg, HIA managing director said that household stress, when more than 30 per cent of the family income goes to the mortgage or rent, put pressure on lower income families. New research shows that even more families will be affected if rents continue to rise. The research comes amid growing concern about housing affordability. The Reserve Bank of Australia is concerned by the level of mortgagee sales in New South Wales and Victoria.
 

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27 February 2007 - St George goes back to basics
Infochoice.com.au
St George has launched a Basic Home Loan with a variable interest rate of 7.44 per cent, an establishment fee of $500 and no monthly fees. Although the Basic Home Loan is a simplified loan product it still features extra repayments, redraw and interest only repayment options. Steve Blinkhorn, head of home loans, said that St George has listened to its customers and is providing them with what they want; a simple, straightforward home loan. A reduced interest rate of 7.39 per cent and an establishment fee of $250 are available for a limited time.
 

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27 February 2007 - Thousands will miss out on First Start scheme
The West Australian
The Western Australian state government's $300 million shared equity scheme has been swamped with registrations from first home buyers desperate to break into the housing market. The First Start scheme received 2,400 registrations of interest since it was launched two weeks ago. But the scheme has the capacity to assist only 1,000 households a year for the next three years. With the First Start scheme home buyers on low to moderate incomes would be able to buy a property in partnership with the government at a lower cost than a full mortgage. The government would have a 30 to 40 per cent stake in the property and provide the home buyer with a low deposit Keystart loan to buy the remaining share. Each year about 17,500 people apply for the first home owners grant.
 

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27 February 2007 - Home units in Sydney not selling
The Daily Telegraph
Home unit sales in New South Wales have more than halved over the past four years, with only 30,184 units sold last year compared to 63,610 in 2002. The Real Estate Institute of NSW's annual Property Focus report also shows that land sales fell by more than 33 per cent across the state last year and the median price of land fell by 4.5 per cent to $320,000. The report shows that the number of house sales increased by 3.5 per cent.
 

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27 February 2007 - Property investors rouse
The Financial Review
A survey released by Wizard Home Loans has found that there has been an increase in interest among property investors. Mark Bouris, chairman, said in the December quarter of 2006 those planning to invest rose 35 per cent, many of them were first time investors.
 

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27 February 2007 - Generation Y doomed to rent
The Financial Review
A survey by the Residential Development Council shows that only 7 per cent of industry experts think that young people will ever own their own home. Only a small minority of industry experts believed that generation Y, those born between 1978 and 1998, would ever have a mortgage. 43 per cent of industry experts believed that generation Y would be unable to leave the family home due to unaffordable house prices, while 30 per cent believed generation Y faced a lifetime as renters. Ross Elliott, Residential Development Council executive director said that only 1 in 14 experts thought generation Y would own their own homes and that was a wake-up call to governments to take action on affordability.
 

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27 February 2007 - E*Trade puts dividends on hold
The Financial Review
E*Trade has suspended paying dividends to shareholders as part of a deal struck with its biggest shareholder ANZ, which has a $268 million takeover offer on the table. The online stockbroking group has reported a $14.19 million net profit for the second half of 2006, up from $8.82 million in the previous corresponding period. Excluding a one-off tax gain, earnings for the half year were 19.7 per cent higher. E*Trade's customer accounts rose by 63 per cent and trading volumes increased from 1.14 million to 2.05 million. E*Trade will send a target statement to shareholders in response to ANZ's takeover offer as early as next month.
 

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26 February 2007 - NAB cuts fees for retirees
Infochoice.com.au
National Australia Bank (NAB) will cut monthly service fees and transaction fees for its retirement account customers from May 1. NAB said the move would encourage customers to move to flat fee transaction accounts as well as assist low-income earners and retirees. NAB said their customer research had found that customers preferred a flat fee based account to fee rebates and are more satisfied when they know how those fees and charges work.
 

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26 February 2007 - Bankruptcies rise in Sydney's west
The Daily Telegraph
The Insolvency and Trustee Service Australia has mapped out bankruptcies in Sydney for the first time, finding that southwest and western suburbs had the highest increase in personal bankruptcies across all ages. In the past financial year southwest bankruptcies rose 27 per cent from 1,165 to 1,486, while in western suburbs they increased 18 per cent from 1,465 to 1,749. People aged under 30 made up 30 per cent of the figures. Paul Leroy, Hall Chadwick insolvency expert said, "Consumer bankruptcies are caused by the easy availability of loans or credit cards."

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26 February 2007 - Challenger takes stake in Homeloans
The West Australian
Challenger Financial Services, directed by James Packer, has agreed to take a 40 per cent stake in Western Australian lending group Homeloans. Shares in Homeloans surged $0.12 to $0.96 last week after the group revealed a deal that would see Challenger inject $44 million through two linked share placements. Challenger will take a placement of 8.3 million shares at $0.80 and then buy another 31.7 million shares at a premium price of $1.20. The second transaction is subject to the approval of Homeloans shareholders at a meeting that is expected to be held in April.
 

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26 February 2007 - Planners won't deal with BT
The Financial Review
Six financial planning firms representing about $6 billion in funds have shown dissatisfaction with BT Financial Group's new program to lower investment management fees. Both groups walked away from the deal amid claims that BT inappropriately used the names of financial planning firms without permission, to entice fund managers to take part in its Wrap Advantage program. Shadforths, The Money Managers, Tynan Mackenzie, Ganon Growden Schonell, Guest McLeod and Heraud Harrison have reportedly been negotiating their own discount fee system with fund managers. Chris Freeman, BT head of wealth and wrap solutions, said Wrap Advantage investors would still receive about $3 million in rebated fees in the first year of the program, with fee cuts averaging about 10 per cent.
 

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26 February 2007 - Big 4 get credit boost
The Financial Review
Major ratings agency Standard & Poor's (S & P) has upgraded the credit rating of Australia's four major banks from AA- to AA, a move which is expected to lower the banks' annual funding costs. S & P said Westpac, ANZ, Commonwealth and NAB showed good asset quality, strong operational efficiency and sound and emerging product diversity. UBS analysts said the decision could boost the banks earnings by as much as 2 per cent.
 

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26 February 2007 - DJs wants to play its cards exactly right
The Financial Review
The David Jones store card portfolio could have a profound impact on the Australian card market. Currently DJs has 800,000 store cards with half in regular use, and runs its program in-house, but it is considering an alliance to offer a co-branded general purpose card. Initially DJs received offers from 11 would-be partners but this was quickly culled to four. "We only have one opportunity to get this right," said CEO Mark McInnes.
 

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23 February 2007 - Rate rise chance remains, election or not
infochoice.com.au
The Reserve Bank (RBA) retains a leaning towards higher interest rates in 2007 rather than lower, that much is clear. That's not to say we will get a rate rise, only that the possibility is certainly there.

This was confirmed by RBA governor Glenn Stevens in testimony to a parliamentary committee this week, along with the assertion that, if the RBA board decided a rate rise was needed around the time of the federal election, it would have no hesitation in delivering one regardless of the political consequences.

Although it would never admit it, over the past decade the RBA has tended to avoid rate moves in the lead up to an election to avoid any perception that monetary policy had been politicised. This has worked in the Howard government's favour with three of the last four elections seeing no rate action for many months in the lead up to polling day. 2001, was the exception with rates falling in preceding months.

These days, however the independence of the RBA appears to have evolved to the point where it feels confident enough to truly act independently and impose monetary policy regardless of the political cycle - even if that means raising rates before an election.

The fact that rate movements nowadays tend to be in smaller increments, 0.25 rather than 0.5 or 1 percentage points, may have something to do with it. Each individual move has a lesser impact, even allowing for higher indebtedness levels.

The latest wage growth figures - for the December quarter - showed an increase of 4 per cent and a level in keeping with the latest RBA thinking that rates may have to rise but there is no need for a hike yet.

The RBA's speed limit for wages growth is 4.5 per cent. Above that it sees an inflation threat and a need for interest rate rises. The latest figures show that wages growth in the mining, construction and utilities sectors is well over that limit, not surprising in the midst of a resources boom. But the rest of the economy is seeing only moderate wage growth of 3.5 to 4 per cent, despite the heavy demand for workers seen in the employment growth figures.

Cutting the figures another way, the private sector saw 3.8 per cent wage growth on average, yet the public sector saw 4.5 per cent (something to do with the flurry of election activity at federal and state levels of late?). But then, the public sector is a fairly small proportion of the economy so no great inflationary threat there.
 

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23 February 2007 - Credit unions merge
The Financial Review
Yesterday Bananacoast Community Credit Union and New England Credit Union announced merger plans to create Australia's largest regional credit union. The combined credit union will hold assets of about $1.6 million and have 40 branches across the regional economies of northern New South Wales and southern Queensland. The credit unions have signed a memorandum of understanding and members will vote on the proposed merger at their annual general meetings later this year.
 

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23 February 2007 - Agencies unite to fight financial crime
The Financial Review
To promote confidence in the integrity of the financial system, the Australian Prudential Regulation Authority (APRA) and the Australian Transaction Reports and Analysis Centre have signed a memorandum of understanding and will exchange information and cooperate in regulation, compliance and enforcement. AUSTRAC is the money-laundering and counter-terrorism regulator and specialist financial intelligence unit.
 

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23 February 2007 - Planners fear change to rules
The Australian
Under government reforms to the disclosure of financial advice, real estate agents, mortgage brokers and accountants could move into selling financial products. Under present rules, a financial advisor providing personal advice must give a detailed statement of that advice, though the rules don't clearly distinguish between a professional giving independent advice and those wanting to sell financial products. As part of its corporate and financial services regulation review, the government is trying to create a new framework. Consumer representatives have baulked at moves to let financial advisors give summary rather than detailed information to new investors investing less than $10,000. The Financial Planning Association responded to the proposals by saying the sector could be split in two; although they would need to be licensed, mortgage brokers, real estate agents and accountants could make sales recommendations for financial products, leaving financial advice to qualified financial advisors.
 

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23 February 2007 - Wages pressure continues to build
The Financial Review
Pay increases in the public sector are helping drive wages growth amid the Reserve Bank of Australia's concerns that higher salaries could create an inflationary risk. Official average weekly earnings figures released yesterday show that while there is no sign of a general wages breakout, pay pressure is continuing to build in the tight labour market. Data from the Australia Bureau of Statistics showed that average ordinary-time earnings increased by 0.7 per cent in the three months to November last year to reach $1,058.80, a 3.2 per cent annual increase. But when taking into account overtime and part-time workers the annual increase in pay was up 4.6 per cent.
 

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23 February 2007 - Super tax increases housing sales
The Financial Review
A surge in the sale of investment properties has been reported by real estate agents, as investors rush to meet the June 30 deadline to make up to $1 million in post-tax contributions to superannuation. A Raine & Horne survey shows that since January there has been a 100 to 200 per cent increase in the number of listings in some agents' offices. "This may suppress property prices temporarily, which is great news for the first home buyer," CEO Angus Raine said.
 

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22 February 2007 - ANZ's E*Trade takeover blocked by Caledonia
The Financial Review
ANZ Banking's planned takeover of E*Trade has been blocked by boutique fund manager Caledonia Investments. ANZ needs 90 per cent acceptance of its $4.05 per share offer which was announced last Friday. However since then, Caledonia has spent $4.2 million to buy over a million extra shares, giving it a 10.46 per cent stake in E*Trade.
 

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22 February 2007 - RBA says election no barrier to rate rise
The Financial Review
The Reserve Bank of Australia (RBA) has announced that it won't hesitate to tighten monetary policy ahead of a federal election, and the next move in interest rates is more likely to be up rather than down. Glenn Stevens, RBA governor, said although there was growing confidence that the inflationary threat was receding it was too early to declare victory and the RBA maintained a tightening bias for monetary policy. Mr Stevens said that labour costs would be crucial to the outlook for inflation and interest rates.
 

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22 February 2007 - ANZ prepared for smooth changeover
The Financial Review
The ANZ has appointed a new group managing director of operations, technology and shared services. David Cartwright will leave his position as chief executive officer of Intelligent Processing Solutions to replace Mike Grime, who will retire in the next few months.
 

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22 February 2007 - Rent subsidies under attack
The Australian
Prime Minister John Howard is considering rent relief to deal with the tightening rental market, but there are calls for the federal government to leave the $2.2 billion rental assistance scheme alone and instead take the heat out of the housing market by scrapping the $7,000 first home buyers scheme. The Opposition says that the rental assistance scheme is in need of reform not just more money poured in. Harry Triguboff, Australia's biggest apartment owner, said landlords would push up rents if rental assistance was increased.
 

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22 February 2007 - Macquarie in Seek
Sydney Morning Herald
Macquarie Bank announced yesterday that it owns a 7.65 per cent stake in online advertising agency Seek. The bank has been building its stake directly and through its subsidiaries since November. Seek's shares rose $0.22 to $7.49.

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21 February 2007 - Net security should be improved
Sydney Morning Herald
The 4 major banks as well as some 'second tier' banks such as HSBC and Bendigo Bank are offering two-factor authentication for their internet banking services however this is sometimes restricted to heavy or business users. Dan Dica of Vasco Data Security says that two-factor authentication using token systems are effective against 'phishing' attempts and should be implemented for all customers.
 

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21 February 2007 - Rental Crisis takes centre stage
AFR
The Federal Government is considering providing assistance to families hurt by sharp increases in rental prices. The national vacancy rate is now below 2 per cent at 1.9 per cent compared to a 25 year average vacancy rate of 2.9 per cent with few signs of easing. Opposition leader Kevin Rudd whilst acknowledging the issue has focused on family budgets and the increased cost of related issues such as child care. The most recent Newspoll has Mr Rudd as the preferred Prime Minister with 47 per cent ahead of Mr Howard with 37 per cent.
 

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21 February 2007 - Westpac changes reporting lines
AFR
Westpac, in a move to further increase market share with the consumer retail banking market, has changed current reporting functions to split business and consumer banking arms. Mike Pratt will now focus on consumer financial services with Peter Hanlon promoted to head up the new business financial services division.
 

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21 February 2007 - Invest4Profit founder wants more for Etrade bid
The Australian
Invest4Profit founder Paul Nojin has called on ANZ to lift their bid for Etrade or he will call an EGM to oppose the transaction. Nojin estimates that Invest4Profit subscribers hold approximately 10 per cent of Etrade shares and number 1000 shareholders. Nojin speculated that he knows "plenty of parties that will pay over $5 a share to buy ANZ's stake" and as such considers the current $4.05 a share bid to undervalue the company.
 

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21 February 2007 - Worsening Drought threatens economic growth
AFR
Economic growth forecasts continue to be clouded by the worsening drought, with summer cropping nearing a 24 year low. The Australian Bureau of Agriculture and Resource Economics expect cotton and rice farmers to be hardest hit following water allocation changes. Treasurer Peter Costello had forecast 3.75 per cent growth next year but this could be cut by as much as 0.75 per cent if the drought continues to show no sign of breaking.

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20 February 2007 - Wages not viewed as threat
The Age
The Reserve Bank of Australia (RBA) will be carefully watching the tight labour market but economists say an expected 1 per cent increase in wages growth will not be significant enough to force the RBA to raise interest rates. The labour price index, which shows the level of wages growth in the December quarter, will be released by the Australian Bureau of Statistics tomorrow. Last week the RBA announced in its statement on monetary policy that it was concerned about the tight labour market, wages and its ability to feed into inflation.
 

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20 February 2007 - ANZ bids for online broker
The Australian
The ANZ is ramping up its wealth management business to take advantage of the booming share market and moved yesterday to take full control of online stockbroker E*Trade. ANZ owns 34.2 per cent of E*Trade and offered $268 million, or $4.05 a share, for the rest of the business. The ANZ's offer increased E*Trade's share price by $0.45 to $4.15.
 

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20 February 2007 - Banks spend big on ads
The Financial Review
Over the past year Australian banks have aggressively increased advertising in an attempt to win over new customers and reinforce brand image. Data from Nielsen shows that total advertising expenditure among the five major banks last year was $165 million, a 33 per cent increase on the previous year. The Commonwealth spent the most, buying $50 million worth of advertising in 2006, while NAB spent $37 million, ANZ spent $32.3 million and St George spent $16.7 million. Westpac was the only one in the top five to dramatically increase its advertising budget in the December quarter, spending $10 million as part of a campaign to reinforce its customer service.
 

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20 February 2007 - CBA changes approach to improve service
The Financial Review
The Commonwealth Bank of Australia (CBA) is adopting a new approach to improve its customer service. Most of CBA's customer complaints are to do with not meeting customer needs quickly and to combat this CBA has introduced a team of specialists to solve problems. The CommWay flying squad consists of 26 permanent employees from a range of backgrounds with training in Lean and Six Sigma principles. CommWay has initiated 150 projects over the past three years, which have halved turnaround time. The bank says customer complaints fell by 40 per cent in the 12 months to June 2006.

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20 February 2007 - Promina expansion stalled by merger
Sydney Morning Herald
Australian insurance company Promina has announced a 7.9 per cent increase in net annual profits for 2006 to a record $545 million. Mike Wilkins, Promina's CEO, said that the company had looked at a number of opportunities overseas but would put its overseas expansion on hold until the outcome of its merger with Suncorp-Metway. Shareholders will vote on the merger on March 20. Promina shares closed $0.02 higher yesterday at $7.50.
 

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19 February 2007 - New confident strategy for Aussie
The Financial Review
Aussie Home Loans has launched a new $15 million marketing campaign. Aussie will have a new logo, new slogan and new ads, this time without founder and managing director John Symond, who has been the public face of Aussie for 15 years. While Symond is no longer seen in the ads he can still be heard, voicing the company's new slogan at the end of the ads, "That's confidence, that's Aussie".
 

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19 February 2007 - House prices fall in WA
The West Australian
House prices have fallen in almost half of Perth's suburbs, with some dropping more than 8 per cent, according the Real Estate Institute of Western Australia's (REIWA) figures for the December quarter. 118 out of 277 suburbs recorded a decrease in house prices, however the suburbs that suffered the biggest losses had enjoyed growth of over 30 per cent during the year. Despite the number of suburbs which recorded falls, the median house price in Perth increased 2.3 per cent for the quarter to $450,000 taking the increase for the year to 34 per cent. "Two per cent growth per quarter is quite normal for Perth," REIWA president Rob Druitt said. "These results show that the Perth property market has finally come in for a soft landing after three years of astonishing growth."
 

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19 February 2007 - Compensation for WA broker victims
The Financial Review
Victims of Western Australia's finance broker scandal have secured a $30 million compensation package from the state government. During the 1990s about 3,600 people, mostly elderly, lost up to $150 million by investing in pooled mortgage schemes promoted by finance brokers.
 

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19 February 2007 - Banks find satisfaction doesn't equal sales
The Financial Review
Australian banks have found that it takes more than customer satisfaction to increase sales, they also need products and services that are tangibly different. The findings from First Manhattan Consulting Group show that satisfied customers are not enough to create sales and furthermore banks cannot build strategies, or even marketing campaigns around customer satisfaction. ANZ Bank has done a lot of work on its branch and service strategy, which has been specifically built around being different and convenient.
 

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19 February 2007 - Sydney rents to increase
Sydney Morning Herald
A report by BIS Shrapnel has found that Sydney's inner city apartment dwellers will be the hardest hit by the worsening rental crisis. The Inner Sydney Apartments 2006 to 2011 report has predicted that rents could rise by as much as 42 per cent over the next five years, or 7.3 per cent a year. Apartment prices are not expected to rise until 2008 or 2009, so inner city renters could decide to buy either in the city or further out.
 

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16 February 2007 - RBA rests easier on inflation and rates
infochoice.com.au
Borrowers can have more confidence that they will avoid further interest rate rises during 2007 following the Reserve Bank's quarterly monetary policy statement this week, but further hikes can't yet be ruled out.

The RBA says that it feels more certain that its tentative forecast of recent months, that inflation would ease and that no more rate rises would be needed, is the more likely course of events in the months ahead.

The latest CPI figures for the December quarter certainly showed some easing in price pressures with underlying inflation settling back within the RBA's 2-3 per cent target band. This is the key indicator for the RBA board and means interest rate rises are off the agenda for the moment.

But 2007 has begun with no real resolution of the confusing economic picture that sees the jobs market booming and unemployment falling to a new three-decade low of 4.5 per cent, yet wages and prices seemingly contained and economic growth at sluggish levels.

The two-speed economy is also muddying the economic waters with the big resource states booming and south-eastern states struggling.

While the never-ending jobs boom goes on, skilled labour shortages and other capacity constraints will continue to threaten inflation, a point the RBA board makes and one which ensures it won't let their hands stray too far from the interest rate lever.

In the home lending market, there are signs that the downturn in lending finance commitments in the second half of 2006 might be turning around. Both the value and number of loan commitments looked better in recent months with the total value of commitments rising 1.9 per cent in December and loan numbers stable after falls in previous months.

It's a different story in personal credit, down 1 per cent in December, and business lending, down 4 per cent - continuing a downward trend since October.
 

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16 February 2007 - AMP extends super probe
The Financial Review
AMP will offer 35,000 financial planning clients a full review after an investigation found five times more clients than originally thought may have received unacceptable advice to switch superannuation funds. In July 2006 the Australian Securities and Investments Commission (ASIC) found that almost half of AMP's advice about switching super funds did not meet disclosure standards. Andrew Mohl, CEO, said that the company had carried out most of the changes required by ASIC, but admitted that identifying affected clients had been difficult.
 

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16 February 2007 - National debt increases
The Financial Review
The latest figures from the Reserve Bank of Australia (RBA) show that at the end of last year total household debt was $962 billion. Credit card debt reached $39 billion at the end of 2006, a 14 per cent increase on the previous year. In the December quarter there were 6016 bankruptcies, an increase of 20 per cent when compared with the same period in 2005. Last year calls from people in financial distress increased by 35 per cent from the year before.
 

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16 February 2007 - Melbourne housing faces desperate situation
The Age
House prices in Melbourne rose by another 8 per cent during 2006, further increasing the affordability barrier preventing first-home buyers from entering the market. The Australian Bureau of Statistics reports that its index of established house prices in the city jumped another 1.5 per cent in the December quarter, adding another $5,000 to the cost of the average home. "The worst affordability in at least a quarter of a century, coupled with low vacancy rates and soaring rents, has the potential to create social upheaval not seen since the Great Depression," said Chris Lamont, the Housing Industry Association's executive director for industry policy and services. "If people cannot afford to buy a home and there is nowhere for them to rent, what is left? It is a desperate situation."
 

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16 February 2007 - Housing a national struggle
The Australian
National house price growth slowed to just 0.9 per cent in the December quarter, resulting in an annual growth of 8.3 per cent. In the December quarter the average house prices rose 3 per cent in Darwin and Brisbane, 1.7 per cent in Perth and Canberra, 1.5 per cent in Melbourne and 2.6 per cent in Adelaide. Sydney was the worst performer where the average house price fell 1 per cent. Jason Anderson, BIS Shrapnel senior analyst said that Sydney would remain a two-tier market, with house prices in the outer western suburbs expected to fall as much as 5 per cent this year, while inner city areas could show slight growth.
 

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15 February 2007 - AIMS renews student sponsorship
infochoice.com.au
AIMS Home Loans has renewed its two-year sponsorship of the Financial Services Institute of Australasia's (FINSIA) top mortgage student. AIMS' sponsorship this year is an award and cash prize given to the top student enrolled in FINSIA's Loan Evaluation and Processing unit which is part of the Diploma of Lending program. Greg Stevens, AIMS general manager for servicing and marketing, said that AIMS is committed to providing incentives to the top performing students who will be the future leaders of the mortgage industry.
 

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15 February 2007 - CBA gets lift from booming share market
The Financial Review
Colonial First State, Commonwealth Bank of Australia's (CBA) wealth management division, strongly contributed to the results announced yesterday. Colonial's net profit for the first half of 2006/07 financial year increased by 27 per cent to $232 million after the All Ordinaries index rose 12.1 per cent. However net fund inflows dropped 30 per cent when compared with the corresponding half. Ralph Norris, Commonwealth's CEO said that higher interest rates had made other banking products, such as term deposits, more attractive. The bank attracted $8.1 billion in net flows in the June half, while Colonial's First Choice investment platform has $31 billion in funds under management.
 

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15 February 2007 - Consumers optimistic about finances
The Financial Review
Consumer sentiment has improved in recent weeks, lifted by the strong labour market and signs that interest rates may be on hold. The Westpac-Melbourne Institute index of consumer sentiment increased by 1.7 per cent in February, its third consecutive rise, the index is now 3.2 per cent higher than 12 months ago. The index reported that due to the improving interest rate outlook consumers were more optimistic, with expectations that finances will improve in the next twelve months increasing by 3.5 per cent, while anticipation of better economic conditions increased by 9.6 per cent.
 

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15 February 2007 - Rising mortgage defaults drive action
The Financial Review
Increasing numbers of mortgage delinquencies have prompted Genworth Financial to contact clients directly and implement workout strategies. Peter Hall, Genworth Financial chairman mortgage insurance, said that his company had sourced systems and processes from the US and created a workout team in the hope that their clients' customers could get through the tough times without having to use insurance. Head of Deacon's financial services group, John Holmes, says that problem mortgages in New South Wales were around 400 a month until the middle of last year but are now at 550 a month. The figures were similar in Melbourne while there was about half that rate in Brisbane and hardly any defaults in Perth.
 

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15 February 2007 - CBA warns on lending risks
The Financial Review
The Commonwealth Bank of Australia (CBA) reported a $2.27 billion profit for the first half of the 2006/07 financial year, an increase of 19 per cent. The profit is mainly due to a rebound in business banking, fewer bad debts and the booming share market lifting its Colonial funds management arm. However, the CBA has warned of a fallout in the credit card market, saying that fierce competition has led to many lenders providing loans to people already under financial pressure.
 

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15 February 2007 - Property Secrets under investigation
The Australian
The New South Wales Department of Fair Trading will investigate a controversial property scheme that capitalises on the property downturn. On behalf on investor clients, Property Secrets buys properties in Sydney's struggling western suburbs that have been repossessed by banks and former housing commission properties. The group then renovates the properties and commissions revaluations that come in well above the investor's outlay and encourages clients to reinvest the difference in more properties. A spokesman for the Fair Trading Minister said yesterday, "On the surface it seems that while it may not be illegal, there are moral questions you have to ask about this."
 

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14 February 2007 - Competition heats up in online trading
The Australian
Online share broking has become more popular with the booming share market, and last year E*Trade's customer accounts increased by 29 per cent. In answer to Commsec's January offer to new customers of $600 worth of free brokerage on the first 12 share trades, E*Trade is offering $550 worth of free brokerage until the middle of the year. In the past year research offerings have also improved. Sparked by intense competition, most online broking websites now contain in-house or independent buy and sell recommendations for investors who pay basic broking rates, so it is not necessary to be a frequent or professional trader to gain access to recommendations. Among the products on offer are wrap accounts, derivatives including contracts for difference, separately managed accounts for small retail investors and margin lending.

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14 February 2007 - Super rules contributing to rental crisis
The Australian
New superannuation rules are negatively affecting the Australian rental market, as property investors flee the housing market to invest in super. Experts say that the super regime, announced in the May budget and made more attractive by allowing large amounts to be invested now, combined with rising interest rates and tax cuts, has contributed to a crisis in rental markets around Australia. Borrowing for negatively geared property investment has dropped 30 per cent since June, while rental vacancy rates around Australia have fallen from a long term average of 2.9 per cent to 1.8 per cent. Official figures released yesterday show a massive 6.9 per cent jump in rent in Sydney last year. Federal Treasurer Peter Costello does not believe that his super reforms have affected property investment.
 

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14 February 2007 - Over 55's optimistic about super savings
The Australian
The latest Citibank Retirement Index survey has found that nearly 70 per cent of retired and semi-retired Australians aged 55 or over are optimistic about their super savings, an increase of 15 per cent compared with November 2006. The number of retirees planning to continue working part-time has dropped 9 per cent to 26 per cent. Almost half of the retirees surveyed said they had little or no knowledge about the Government's May budget changes to superannuation. While 62 per cent of respondents said that they had not sought financial advice and/or had no intention of doing so. 11 per cent of semi-retirees plan to retire before age 60, despite the fact that from July 1 super benefits will be tax free for the over 60's.
 

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14 February 2007 - Inflation fears confirmed by wages growth
The Financial Review
The Reserve Bank of Australia (RBA) is concerned about inflation and is closely monitoring the Australian economy for any signs that inflation in increasing. Two business surveys released yesterday show that the tight labour market and intense competition for skilled labour are driving salaries higher. The National Australia Bank business survey found that income growth accelerated to an annual rate of 5.25 per cent in January, its highest level in seven years. Some economists are predicting that the RBA may be forced to lift interest rates later in the year.
 

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13 February 2007 - Investors back away from property market
The Financial Review
Australian property investors have been discouraged by a fall in rental yields, according to the latest monetary policy statement from the Reserve Bank of Australia (RBA). The RBA said that property prices had increased by 175 per cent in the past 10 years while rents had only increased by 60 per cent, resulting in an approximate doubling in price-rent ratios or a halving in rental yields. Low yields and a limited prospect of further capital gains had meant that investors were reluctant to supply more rental properties. The RBA warned that the rental vacancy crisis would continue for at least another year.
 

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13 February 2007 - Bendigo Bank on target for growth
The Age
Bendigo Bank reported a net profit up nearly 2 per cent to $54.3 million for the second half of last year. The bank says that it is fighting off competition and is on target to increase earnings by 10 per cent this financial year. Bendigo Bank scored the highest in a poll of customer satisfaction, with 87.2 per cent according to research by Roy Morgan last year. Yesterday Bendigo shares closed $0.25 higher at $14.31.
 

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13 February 2007 - WA mortgages could soon be Australia's highest
The West Australian
Home loans in Western Australia could soon be the nation's most expensive. Australian Financial Group (AFG) has reported that the gap between the value of the average mortgage in WA and NSW was $14,000 in January, the smallest gap recorded yet. The data is calculated from AFG's 9 per cent share of the mortgage market. AFG's mortgage index showed the average mortgage size in NSW fell by $24,192 to $351,831 in January while in WA the average mortgage size rose by $11,757 to $337,649. In Queensland the average mortgage size rose by $2,250 to $284,837 in January and by $9,568 to $278,165 in Victoria, while in South Australia it fell by $3,158 to $235,064.
 

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13 February 2007 - Mortgage sales increase
The West Australian
The Australian Finance Group's (AFG) mortgage index showed that overall mortgage sales in January rose 20 per cent, well above the season's average. AFG sold 6,970 mortgages nationally in January totalling $2.101 billion for an average loan size of $301,441 up $1,229 from December last year. 30.8 per cent of the total number of homes sold were to property investors. The index showed that 24.6 per cent of all mortgages sold in January were fixed rate mortgages rather than variable, an indication that there was concern over possible rate rises.
 

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13 February 2007 - A third of businesses hurt by drought
The Age
The D&B National Business Expectations survey has reported that 33 per cent of manufacturing, wholesale and retail companies say the drought is affecting them. The survey found that employment is an issue, with 11 per cent of businesses expecting to cut staff. The survey also showed signs of inflation with 62 per cent of respondents saying that they expect selling prices in the June quarter to be higher that a year earlier. A result that conflicts with the Reserve Bank of Australia's quarterly statement on monetary policy, released yesterday, which predicts lower inflation. Christine Christian, D&B Australasia CEO, said that the opposing views on inflation reflect a big gap in the business world, with large companies enjoying huge profits while small to medium size businesses were under pressure.
 

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13 February 2007 - Mixed sales outlook forecast for businesses
The Age
The latest D&B National Business Expectations survey has found that for the first time in four quarters improved sales were forecast, with 25 per cent of businesses expecting bigger profits. The number of businesses expecting lower profits in the June quarter dropped 6 per cent from the March quarter to 31 per cent. Christine Christian, D&B Australasia CEO, said that the mixed outlook indicated continued uncertainty for Australian businesses. "Business executives must still contend with a number of factors outside of their control - petrol prices, the drought and interest rate hikes," she said, adding that the improvement in sales and profits outlook would give business a much needed boost.
 

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13 February 2007 - RBA may still lift rates this year
The Financial Review
The Reserve Bank of Australia (RBA) released its quarterly statement on monetary policy yesterday, showing that it has lowered its forecast for underlying inflation from 3 per cent to 2.75 per cent by mid 2007. It said the three interest rate rises last year, along with lower petrol prices have helped eased inflationary pressures in the economy. However the RBA remains cautious of the tight labour market and lack of capacity in the economy and has retained its bias for lifting interest rates later in the year.
 

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13 February 2007 - WA's first home buyers get help
The Financial Review
The Western Australian government has announced plans to help first home buyers by taking an equity stake in their houses. Yesterday WA Premier Alan Carpenter announced a $300 million shared-equity program, where the government will take a 30 to 40 per cent stake in a property and then give the home owner a low deposit loan to buy the rest, and the home owner can then buy the government's share of the property as their finances permit. The First Start program is the first of its kind in Australia, and the means tested program will be offered to 3,000 lower income workers for homes worth up to $365,000. First home buyers have been struggling to enter the WA market, with house prices rising 40 per cent last year.
 

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12 February 2007 - ME to increase market share
The Financial Review
Member's Equity Bank plans to increase its customer base over the next decade, after a surge in home lending and deposits helped push it into profit last year. Currently Member's Equity has about 200,000 customers and wants to hit at least 500,000 over the next 10 years. During the year account numbers increased by 18 per cent and its mortgage book rose 20 per cent. Its deposit book grew to $478.4 million from $370.8 million. Member's Equity is expecting a similar growth rate in 2006/07.
 

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12 February 2007 - ANZ gets customers with ATMs
The Australian
ANZ is stepping up its rollout of ATMs, finding that it is a useful way to get new customers. Currently the bank has 2,000 ATMs in Australia and plans to open a new one every day this year. "We have found access to ATMs is one of the top five reasons customers bank with us, so that's really compelling information for us," Jenny Fagg, ANZ's managing director of consumer finance said. The bank is also in the process of a pilot program with Telstra, putting ATMs in public telephone booths. Modelled on multi-functional payphones in Britain, the trial in Melbourne is the first of its kind in Australia. "The beauty of the payphone pilot is that it lets us go into locations we normally can't get into- it provides customers with another option," Ms Fagg said.
 

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12 February 2007 - Survey sees a fall in refinancing
The Australian
Macquarie Mortgages has started to see a fall in refinancing as last year's interest rate rises begin to have an effect. Tim Brown, head of Macquarie Mortgages Australia, said refinancing dropped by 15 per cent in November, when the third interest rate rise in 2006 was announced. The Macquarie Mortgages annual survey, for the 12 months to November 2006, found that over 60 per cent of respondents expected to see high arrears and defaults this year. More than 900 mortgage brokers, financial planners, accountants and others involved in lending were surveyed.
 

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9 February 2007 - RBA holds steady but strong employment data tempts fate
infochoice.com.au
Despite leaving official interest rates unchanged at the February Reserve Bank board meeting, the Reserve Bank of Australia (RBA) inflation police will be on a heightened state of alert with the recent unemployment figures showing joblessness at a 31 year low.
Continued strength within the resource and service sectors will place capacity strains on an already tight labour market. And if this leads to sustained wage pressure, inflation may well shoot through the upper threshold of the RBA target of 2 - 3 per cent.
Whilst many interest rate watchers have now penciled in a relatively stable 2007 with no immediate changes anticipated, many have placed a labour market disclaimer to their predictions for 2007.

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9 February 2007 - Unemployment at 31 year low
The Financial Review
The official job numbers released by the Australian Bureau of Statistics show that the unemployment level was at a 31 year low of 4.5 per cent in January, down from 4.6 per cent in December 2006. In January unemployment fell to a record low of 3 per cent in Western Australia, while in Queensland it was 4 per cent. Unemployment was 5 per cent in New South Wales, 4.9 per cent in Victoria, and 5.7 per cent in both South Australia and Tasmania.
 

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9 February 2007 - Chance of rate rise increases as unemployment drops
The Age
Unemployment is at its lowest point in three years, led by the resource economies of Western Australia and Queensland. With joblessness at a 31 year low there are concerns that the tight labour market could put pressure on wages and inflation. Most economists are predicting that interest rates will stay on hold for the rest on the year, though wage pressure could force inflation beyond its target band of 2 to 3 per cent, in which case the Reserve Bank of Australia would be likely to increase interest rates. JP Morgan chief economist Stephen Walters said, "The increasing tightness of the labour market means that, if anything, the cash rate is more likely to rise than fall."

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9 February 2007 - Non-bank lenders diversify products
The Financial Review
Non-bank lenders are seeking to expand their businesses. Bluestone Group has entered the commercial property market, offering loans to small business owners and professional traders. The venture will be added to Bluestone's low-doc residential loan and reverse mortgage products. Liberty Financial will add asset and commercial loan products to its residential lending products.
 

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8 February 2007 - Rates could stay on hold all year
The Financial Review
Yesterday the Reserve Bank of Australia (RBA) announced that the official cash rate would remain at 6.25 per cent for February, amid signs that inflationary pressures had peaked and the economy is beginning to slow. There is increasing expectations that rates will remain on hold for the rest of 2007 and may even come down.
 

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8 February 2007 - Mortgage stress overlooked by lenders
The Financial Review
Australian lenders are fighting to retain or boost their market share, despite evidence of mortgage stress. The major banks are predicting a rebound in mortgage lending this year as fears of further interest rate rises fade. However, there is increasing debate surrounding low-doc loans. Brian Johnson, JPMorgan analyst, said that banks are obsessed with market share, underwriting standards are falling and there has been a massive increase in loan-to-valuation ratios (LVRs). Alistair Jeffery, Bluestone Mortgages CEO, said that the deteriorating residential market, instead of tightening LVRs, will only intensify competition for business. While Jon Donovan of Gadens, said that the industry was concerned by legal issues surrounding asset-lending, where the lender relies on the value of the security, such as a house, rather than the borrower's ability to pay.
 

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8 February 2007 - St George struggles in weak NSW economy
The Australian
Craig Williams, Citigroup analyst, says that St George Bank could miss its mortgage lending targets in first half of the 2007 financial year because of a weak New South Wales economy. NSW accounts for about 60 per cent of St George's home loan portfolio. The December figures from the Australian Prudential Regulation Authority (APRA) show that the bank's rolling three month average share of net new mortgage lending was around 6 per cent, lower than the market share of total housing lending growth of 10 per cent. Yesterday, shares in St George fell $0.06 to $33.88.
 

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8 February 2007 - David Jones steps up credit card plans
The Financial Review
By yesterday's deadline, David Jones received offers from almost a dozen banks and financial service companies for a role in its general purpose credit card. A short-list is expected in March and by April David Jones will decide whether to develop and operate the card alone or in a partnership, if all goes to plan the card will be launched in the second half of next year. David Jones would benefit from reduced costs and by collecting more fees on customer transactions, higher receivables and interest charges on customer balances. About half of David Jones's existing store card customers are expected to switch to the general purpose card.

 

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7 February 2007 - Banks improve web security
Sydney Morning Herald
More and more banks are now providing online banking customers with an electronic two-factor authentication token to reduce the impact of phishing and online banking fraud. The token is small enough to fit on a key ring and frequently generates a single use password which is valid for 30 seconds. A thief would need the token as well as other log-on details before being able to access a customer's online account. Some of the banks offering the token security system are ANZ, Commonwealth, Bendigo Bank, HSBC and National Australia Bank.
 

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7 February 2007 - Bankwest growing quickly
The Australian
Yesterday Bankwest claimed to be Australia's fastest growing bank, across deposits, credit cards and mortgages in 2006. Bankwest's total deposit balances increased by 27.5 per cent last year, according to the latest data from the Australian Prudential Regulation Authority (APRA), which is well above the average industry growth of 10.5 per cent. Its deposits share now stands at 3.81 per cent, up from 3.3 per cent in 2005. Mortgage lending grew by 27 per cent in 2006, lifting Bankwest's national share from 2.72 per cent to 3.1 per cent. Bankwest's credit card business increased by 55.6 per cent, going beyond the industry average of 11.2 per cent.
 

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7 February 2007 - RBA considers housing loan stress levels
The Financial Review
The Reserve Bank of Australia (RBA) has found that home buyers in parts of Sydney and Melbourne are struggling with increases in loan repayments after three interest rate rises last year and falls in the values of their properties. The RBA is concerned by a significant and growing number of mortgagee sales. Mark Armstrong, Property Planning Australia director, which advises on mortgage finance, said that parts of the Melbourne property market were similar to Sydney's south-west. "What we're seeing is a strong correlation between mortgagee-in-possession sales and people who have been on low-doc loans," Mr Armstrong said. "It's the new estate areas."
 

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7 February 2007 - Interest rates blamed for slow housing recovery
The Financial Review
Three interest rate rises last year have set the national housing recovery back 12 months. Housing Industry Australia (HIA) expects housing starts to fall by 1 per cent or 149,600 in 2006/07, before picking up the following year. Housing activity has been decreasing since a peak of more than 172,200 in 2003/04. The housing market is better in Queensland and Western Australia due to booming state economies.
 

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7 February 2007 - RBA maintains interest rates
The Australian
The Reserve Bank of Australia (RBA) has left interest rates on hold this morning after its first meeting of the year, offering some relief to homebuyers. The base cash rate remains at a six year high of 6.25 per cent after increasing three times in 2006. The RBA does not release explanatory notes when it maintains rates, however it will release its quarterly statement on monetary policy on Monday.
 

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6 February 2007 - Customers raising capital to buy more ATMs
The Australian
Automatic teller machine (ATM) owner, Customers, will undertake a $155.5 million dollars capital raising to finance its purchase of 3,300 machines from ATM Solutions, a subsidiary of Macquarie bank. The transaction will make Customers one of the largest ATM owners in Australia with over 5,000 machines. Of the capital raising about $40 million would be funded by bank debt, the rest would be raised by a $103 million institutional placement and a $12.5 million share purchase plan. Shareholders could apply for up to $5,000 worth of shares at $0.20 a share from the purchase plan scheme. Customers will hold an extraordinary general meeting in March to get shareholder approval for the capital raising.

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6 February 2007 - Phishing inhibits banks communication with customers
The Australian
An online fraud survey has found that phishing scams are undermining customers confidence in electronic messages allegedly from financial institutions, which means that banks are losing the option of communicating with customers via email. And yet, security firm RSA reports in its annual Financial Institution Consumer Online Fraud Survey that as many as 35 per cent of Australian respondents have not heard of phishing. However, 82 per cent of respondents who were aware of phishing were suspicious of all emails purporting to be from banks and were less likely to respond to an email from their bank. The survey found that banks need to improve communication with customers regarding their improvements to online security, as fewer than 40 per cent of respondents were unsure as to whether or not their bank provided additional security measures, such as tokens.
 

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6 February 2007 - RAMS reports profit surge
The Australian
RAMS Home Loans has reported a 39.6 per cent surge in net profit to $29.9 million for the year to June 30 2006. RAMS is believed to be in the final stages of its ownership review. It is understood that RAMS has received a high level of interest from prospective buyers and may be considering a trade sale. A financial document lodged with the Australian Securities and Investments Commission (ASIC) showed that RAMS reached a total net operating income of $83.6 million. Mortgage loans stood at nearly $10 million, while bad and doubtful debt receivables fell from $89,990 to $20,000.
 

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6 February 2007 - Building approvals fall
The West Australian
Building approvals for houses and units in Australia fell 1.9 per cent in December 2006 while in the year to December 2006 building approvals fell 1.5 per cent. Brian Redican, Macquarie Bank senior economist, said that while there were some signs of stabilisation in NSW, the West Australian market might have peaked and may be starting to slow.
 

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5 February 2007 - Perth median house price hits $500,000
The West Australian
The property boom in Western Australia has pushed the typical price of a house in Perth up to a record high of more than $500,000. However the property market has reached its peak, with only a 0.9 per cent increase recorded in the December quarter. There might be pain ahead for homeowners who paid too much for properties at the height of the boom according to the latest Australian Property Monitors (APM) report. APM has warned that a two-speed economy is emerging in Perth, as it had in Sydney and Melbourne. Blue ribbon suburbs would continue to defy the downturn by returning a modest price growth of up to 5 per cent this year, while suburbs in fringe areas would remain stagnant or fall by up to 5 per cent.
 

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5 February 2007 - CBA to continue smartcard trial
The Financial Review
Commonwealth Bank of Australia (CBA) will expand its smartcard service, after completing a six month trial last year. It tested contactless cards in areas of New South Wales and will expand the service to other regions later this year. Smartcards allow payment without signatures or personal identification numbers (PINs). Andy Mitchell from Payments Australia said contactless cards were almost certain to take off in Australia but not in the short term, "The key issues in the Australian market are the costs associated with upgrading merchant infrastructure and issuing contactless cards."
 

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5 February 2007 - RBA expected to maintain rates
The Financial Review
The Reserve Bank of Australia (RBA) is not expected to lift rates when it meets tomorrow morning, although inflationary pressures will weigh on the central bank's deliberations. Domestic demand seems to be easing after three interest rate rises in 2006, and in the latter half of last year credit growth and housing approval slowed. Economists are concerned that if rates are held down for an extended period, housing spending and the housing industry could begin to accelerate which would add pressure to lift rates later in the year. However Tony Pearson, NAB's head of Australian economics believes that interest rates have peaked and the RBA's next move will be to lower them. The RBA will announce its decision on Wednesday morning.
 

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5 February 2007 - Westpac takes housing market lead
Sydney Morning Herald
Westpac has recorded the strongest growth in the home lending market according to the most recent figures from the Australian Prudential Regulation Authority (APRA). Even though the housing loan market is continuing to slow down, Westpac's mortgage lending is increasing. In the three months to December 2006, Westpac expanded mortgage lending by 13 per cent, compared with 11 per cent industry wide and 8 per cent for the other three majors, ANZ, National Australia Bank and Commonwealth Bank.
 

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5 February 2007 - Bluestone expands commercial lending
The Australian
Bluestone Group, the nation's biggest non-bank lender, plans to expand its mortgage operations with the launch of a commercial property lending business, targeting the small to medium business sector. Bluestone Commercial plans to offer loans to the self-employed commercial sector, with loan-to-valuation ratios as high as 85 per cent, a secured loan term of 30 years and fewer reviews. Bluestone Commercial is funded by Barclays Bank.
 

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2 February 2007 - Lending growth stalling, rate rise highly unlikely
infochoice.com.au
With the pace of lending slowing and year on year new home sales down 11 per cent, it is highly unlikely the Reserve Bank will move to change the official cash rate from 6.25 per cent.
What may be worth considering is the impact the greening of Australia's utilities may have on consumer prices. There are already indications that the recent closure of the Australian / PNG gas pipeline project will see the price for natural gas increase in residential markets.
With calls for renewable energy, national water management and other green or environmentally responsible outputs, obviously there will be a cost to be borne, first by the Government (ultimately the taxpayer) and then by consumers through higher prices for essential services.
While the end inflationary impacts will be seen some time away, it is worthwhile considering the financial impact such solutions / schemes may present in the future.

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2 February 2007 - ANZ breaks US trade sanctions
The Financial Review
The ANZ has found that it breached US trade laws. In an independent review of 330,000 trade finance transactions for Australian and international clients over the past five years, the ANZ discovered 42 suspect transactions. It lent money to companies wanting to trade with 12 countries on the US black list and allowed these deals to be done in American dollars. The bank could face fines of up to $US1 million. While the ANZ broke US sanctions, it has not broken Australian law or sanctions imposed by Australia or the United Nations.
 

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2 February 2007 - Record net profit for Adelaide Bank
Sydney Morning Herald
Yesterday Adelaide Bank announced a record net profit of $47.8 million for the half year to the end of December 2006, a 16 per cent rise on the corresponding period. Shares in the bank rose $0.53 yesterday to $13.16. In order to restore market confidence Adelaide Bank has cut its dependence on low-document loans. There is some market speculation that Adelaide Bank could be the subject of a takeover bid, with Westpac being the most likely buyer.
 

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2 February 2007 - ASIC targets stockbrokers
The Financial Review
Insider trading in Australia appears to be increasing. The Australian Securities and Investments Commission (ASIC) is clamping down on stockbrokers it believes may have conducted share trading on the behalf of clients with insider knowledge. ASIC said it could use its financial services licensing provision to place trading bans or suspensions on brokers, which would avoid lengthy legal proceedings. There is speculation that insider trading in Australia has increased because share prices in several companies rose before major transactions were official announced.
 

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2 February 2007 - Banks pay staff to stay
The Financial Review
Financial services firms in Australia are offering employees baby-related incentives, in an attempt to address the issue of work/family balance and to keep staff at work. Over the past two years Count Financial Group had given staff a total of 110,000 free "baby" share options, staff who received 10,000 options for having a child last financial year are currently $7,000 ahead, based on yesterday's share price. Deutsche Bank is trialling a scheme where it gives parents $10,000 a child each year until the child turns three, as well as 14 weeks paid maternity leave. Over the next three months St George Bank will introduce a family friendly package, which includes a baby savings account gift of $200. National Australia Bank will introduce a range of staff incentives on March 1, which will include 6 to 12 weeks paid maternity leave and 2 weeks paid leave for secondary carers. Westpac, ANZ and CBA also offer family friendly incentives for staff.
 

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1 February 2007 - Court rules in favour of shareholders
The Australian
The High Court of Australia has ruled that shareholders have as much right to damages as creditors when a company collapses. The High Court has upheld a decision made by the Federal Court relating to a claim over the collapse of Sons of Gwalia. Sons of Gwalia, a mining company, collapsed in 2004 with debts of $900 million. Shareholder, Luke Margaretic claimed that he had been misled about the finances of the company and should be treated as an unsecured creditor, and the High Court ruled in his favour. Critics have said that the decision may significantly cut returns to creditors in the future, and could raise the cost of corporate borrowing.
 

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1 February 2007 - IMB results lifted by home loans
The financial Review
IMB, Illawarra based building society, announced an 11 per cent increase in half year net profit to $9.5 million, boosted by an increase in home loan approvals. Home loan approvals climbed 11.9 per cent on the same period last year compared to system growth of 11 per cent. Total assets rose 10 per cent to just above $4.4 billion.
 

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1 February 2007 - Westpac wins card competition
The Financial Review
Westpac has overtaken Commonwealth Bank of Australia (CBA) to become the nation's biggest credit card lender. Data released yesterday by the prudential regulator shows that Westpac has a 22.9 per cent share of Australia's credit card market, with a $7 billion plus portfolio and about 2.5 million cards on issue. Westpac has been steadily building its share of the market over the past few years with the introduction of several new products including a branded low rate card and cards offering reward schemes. Westpac also had the strongest mortgage loan growth last year.
 

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1 February 2007 - NAB plans to lift dividends
The Financial Review
The National Australia Bank (NAB) plans to nearly double its share buyback program to $1.5 billion. Michael Chaney, chairman, said yesterday that the bank is no longer interested in "empire building' and that excess funds would be channelled to investors. "Future dividend growth should be more in line with profit growth," Mr Chaney said. It is estimated that NAB has nearly $1 billion on its balance sheet, enhanced by the sale of the Irish operation and its Custom Fleet Business. In November NAB reported a $4.39 billion profit for the 2006 financial year, a 10 per cent increase on the previous year.
 

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1 February 2007 - Rate rise unlikely
The Age
The chance of an interest rate rise next week is even less likely after the release of the latest figures from the Reserve Bank of Australia (RBA). The figures, released yesterday show the slowest pace of lending growth in nearly 18 months. A survey by the Housing Industry Association shows new home sales were also restrained, despite an increase late last year. In December the sales of new homes in Australia were up 9.5 per cent compared with November, but the annual figures show that 2006 was 11 per cent lower than 2005. The RBA will meet on Tuesday and announce its decision on Wednesday morning, economic analysts expect the cash rate to remain at 6.25 per cent.
 

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1 February 2007 - Housing growth slow
The Financial Review
Growth in private borrowing has slowed to its lowest rate in over a year, with households and businesses becoming more reluctant to take on more debt. Figures from the Reserve Bank of Australia (RBA) released yesterday showed that lending for housing grew just 1 per cent in December, keeping the annual growth at 14.5 per cent, while personal credit jumped 1.3 per cent increasing the annual growth to 12.5 per cent. Paul Braddick, ANZ's head of financial systems analysis, said the result was surprisingly robust given the rate rises and the RBA might be concerned that although housing finance growth slowed, credit growth had not.
 

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March 2007

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28 March 2007 - More new homes sold
The Financial Review
A Housing Industry Association (HIA) survey shows that more than 8,100 new homes were sold last month, a 3 per cent rise from January and the highest level in 9 months. HIA executive director for housing and economics Simon Tennent said that the improvement had given rise to cautious optimism in the sector, however it was unlikely to signal an end to the long-term slump in housing construction.
 

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28 March 2007 - Australia's bank fees among highest
The Australian
New research by JP Morgan and Fujitsu Consulting has found that Australian bank fees are among the highest in the world. Their research estimates that each year the average Australian pays $170 more in banking fees compared with customers in Canada and Britain. The latest figures from the Reserve Bank of Australia showed that in 2005 total bank fee income was $9.2 billion and of that $3.66 billion was related to household fees. Over the past 14 months, four of the top banks, Westpac, St George, National Australia Bank and ANZ, have raised their fees.
 

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28 March 2007 - RBA reviews payment system reforms
The Financial Review
The Reserve Bank of Australia (RBA) has begun a review of its recent payment system reforms. Last November the RBA reduced scheme debit card fees from about $0.40 to $0.15 and Eftpos transaction fees from $0.20 to about $0.04. Visa and MasterCard have raised concerns that some schemes are not affected by the reforms. The RBA will publish a discussion paper on its review in June.
 

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28 March 2007 - First home buyers younger and poorer
The Financial Review
The Financial Spotlight report released by Genworth has found that the average age of a first home buyer was 27 years, and many people believe that the repayments of a mortgage were beyond their means. The report surveyed 2,000 adults and found that 29 per cent of non-property owners believed that they would not be able to save for a deposit, and 24 per cent said they would not be able to meet the high mortgage repayments. 70 per cent of potential buyers said they would like to purchase a home within the next 3 years however only 43 per cent thought they would be able to do so. The biggest concern for many was saving a deposit while still meeting other financial commitments.
 

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27 March 2007 - Debt levels not a concern for Reserve Bank
The Australian Financial Review
Despite continuing growth in household and business debt, the Reserve Bank believes both are well placed to absorb any increases in loan servicing costs. The Reserve Bank in its six monthly financial stability review found that despite increases in mortgage defaults the number of defaults is still at historically low levels, whilst corporate gearing does not pose an economic threat. The Reserve Bank acknowledges that some demographic areas are suffering levels of financial stress but "the overall picture remains, at present, quite reassuring".
 

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27 March 2007 - Financial Planners to face Westpoint inquiry
The Australian Financial Review
The Financial Planning association is to investigate planners at 18 dealer groups over alleged faulty advice involving Westpoint. FPA CEO Joanne Bloch said investigations will take a number of years driven by the interest of high-profile law firms such as Slater & Gordon who have launched Class Actions against various dealer groups.
 

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26 March 2007 - Non-Bank Lenders "hiding defaults"
The Australian
The Consumer Law Centre (CLC) is concerned that non-bank lenders are engaging in rolling refinances that keep default rates lower than they actually are and threaten the entire banking sector. The CLC are unconcerned that the experience in the US sub-prime market could be replicated in Australia due to similar market evolution and the absence of regulation, speculating that the Australian non-bank sector is in fact less regulated than their US counterparts.
 

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26 March 2007 - RAMS up for sale
The Australian
Speculation mounts that the RAMS sale process could be completed by June with indicative bids from up to 10 potential buyers due in late April. Potential buyers are believed to include both domestic and offshore financial institutions.
 

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23 March 2007 - Interest rate rise moves closer
infochoice.com.au
Most economic indicators are now aligning in the same direction and pointing to a strong year for the Australian economy. But for home loan borrowers this means the interest rate rise that has been hanging around on the horizon for the past couple of months has moved closer.

Economic growth is up, the job market continues to boom and, after the warning on inflation from the Reserve Bank last week, we should prepare for another 0.25 percentage point rise in interest rates before mid-year. Perhaps even before Easter at the next RBA board meeting on April 4.

Adding to the economic picture this week has been the Westpac-Melbourne Institute leading index of economic activity - pointing to accelerating economic conditions for the rest of 2007. The index rose again in January, although not as much as the month before, and portends economic growth rates well above average this year.

Housing remains the odd sector out, dwelling commencements slipped again in the December quarter, down 0.8 per cent. This continued a sliding trend in the latter half of 2006 as the impact of three interest rates rises was felt in the housing market. New houses and apartments both fell.

The outlook for the housing market hangs in the balance in 2007. The economy in general is motoring along, and there is a stellar job market giving us the lowest unemployment in decades. This would suggest some stimulus to a flat housing market. But just as construction might be expected to be shaking off the impact of last year's rate rises comes the prospect of further interest rate action from the RBA, which, if it eventuates, will continue the drag on construction this year.
 

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23 March 2007 - Private equity loophole in tax system
Sydney Morning Herald
The Australian Government's tax receipts will be affected by the increasing number of private equity deals. Private equity owners pay little or no tax because their deals are financed with debt and geared at about one part equity to four parts debt. The owner's profit is made years later when their assets are sold and it is then that they have to pay capital gains tax. However, most private equity players are foreign corporations that do not have to pay capital gains tax under the current tax system and Australian firms are finding ways to minimise payments.
 

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23 March 2007 - CBA moves into infrastructure
The Financial Review
The Commonwealth Bank of Australia plans to finance major infrastructure acquisitions which its funds arm will repackage and sell to institutional investors. At present the bank's infrastructure investments represent less than $2 billion of its overall portfolio.
 

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23 March 2007 - Banks target uni graduates
The Financial Review
There is intense competition between banks for graduating university students in recruitment campaigns that will begin this month. There has also been an increase in the number of graduates being signed up; banks that might have hired 10 new graduates five years ago now want 50. Banks are eager to raise their profiles in universities by offering teaching services, mentoring and scholarship programs.

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23 March 2007 - Colonial platform sale could raise $200 million
Sydney Morning Herald
Colonial First State, the wealth management arm of the CBA, is planning to sell Avanteos in a deal that could raise more than $200 million. Avanteos is the smaller of Colonial's two major investment platforms. Colonial's CEO Brian Bissaker said that the bank should focus its efforts on the popular First Choice investment business rather than divide valuable resources and energy between the two.
 

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22 March 2007 - Low rent returns hinder investment
The Age
Poor rent yields continue to be an obstacle to financial institutions and superannuation funds investing in residential property. A proposal announced this week intends to attract institutional investment in affordable housing through a range of incentives including government subsidies or tax breaks. The plan is backed by the Housing Industry Association, ACTU and the Australian Council of Social Service, and has been welcomed by the Victorian Government. The plan aims to create 15,000 rental homes and units a year and will look to the federal government to commit $5,000 to $10,000 per house in incentives through cash or tax credits.
 

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22 March 2007 - Growth outlook increases chance of rate rise
The Age
Australia's annual growth rate is expected to be 4.8 per cent for 2007 according to the Westpac-Melbourne Institute Leading Index of Economic Activity. "The improving growth outlook for Australia is likely to be associated with continuing robust consumer spending, a more positive investment environment, stability in the housing construction cycle, and evidence of the much anticipated surge in exports of resources," said Westpac chief economist Bill Evans. The chance of an interest rate rise has now increased after Reserve Bank assistant governor, Malcolm Edey's speech last week suggesting stronger growth in output, demand, and wages could push inflation back to last year's uncomfortably high levels.

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22 March 2007 - DJs card a joint effort
The Australian
David Jones will form an alliance with a major financial institution for the launch of its branded general purpose credit card and is aiming to introduce it sometime around the middle of next year. ANZ, Westpac, Commonwealth, HSBC, Citibank, GE and Amex are in the bidding to provide the card and of these two will make it to the short-list in October. David Jones estimates it will be the largest private card provider in Australia and will seek to convert a significant number of its 400,000 active store card holders into full credit users.
 

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22 March 2007 - Bendigo wants community growth
The Financial Review
The Bank of Queensland has offered a $2.7 billion takeover bid to Bendigo Bank. However, Bendigo Bank's CEO Rob Hunt said there could be several implementation risks in bringing the two businesses together, including the cultural differences. Mr Hunt wants to have a clear management structure to ensure the continued growth of community banks. There has been some speculation that the BoQ could become a takeover target before Bendigo decides whether to accept a merger.
 

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22 March 2007 - Credit unions decline
The Financial Review
The number of credit unions in Australia dropped more than 8 per cent last year as increasing costs and competition forced several organisations to merge. According to figures from the Australian Prudential Regulation Authority (APRA) there were 144 credit unions at the end of December, a loss of 13 unions. Building societies remained stable at 14. Total credit union assets rose 8.1 per cent last year to $37.6 billion.
 

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21 March 2007 - Housing starts at low level
The Age
The housing shortage crisis in Australia is worsening, with another fall in housing starts in the December quarter making 2006 the worst year since 2001. "The twin problems of struggling first-home buyers and very tight rental markets are set to continue, because the barriers to new housing at present are just too high," the Housing Industry Association chief economist, Harley Dale said. The Bureau of Statistics said that starts on new houses rose 1.5 per cent last year but this was overshadowed by a 4 per cent fall in starts on units and a 15 per cent fall in conversions of buildings to housing.

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21 March 2007 - Promina fined for disclosure breach
The Financial Review
The Australian Securities and Investments Commission (ASIC) has fined Promina $100,000 for failing to meet disclosure requirements. ASIC said that Promina did not inform investors quickly enough that it had received a takeover offer from Suncorp. The Promina board paid the fine to avoid a lengthy legal battle but denied any wrongdoing.
 

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21 March 2007 - More bids for Bendigo
The Australian
A $2.4 billion merger proposal launched by the Bank of Queensland (BoQ) has resulted in more interest in Bendigo Bank. The BoQ CEO David Liddy and Bendigo chairman Robert Johanson met yesterday to discuss the deal which would see BoQ exchange $5.50 in cash and 0.748 of its shares for each Bendigo share. However it is understood that Bendigo has been approached by other financial institutions, but it is unclear whether these approaches would lead to competing offers.
 

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21 March 2007 - National housing plan proposed
The Financial Review
A national incentive scheme has been proposed as a way of encouraging private sector investment in more new homes for low and middle income earners. The scheme would entice investors with tax credits, cash payments, stamp duty concessions, bond issues and other benefits. The National Affordable Housing Summit will call for a joint commonwealth-state package for investors, developers and landlords who agree to provide housing below specified rent levels.

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21 March 2007 - Banks may have to confess cost of online fraud
The Financial Review
KPMG has warned that Australian banks could be forced by regulators to publicly disclose losses caused by increased internet banking scams. Currently a lot of internet fraud is classified as bad debt and some banks are pushing for consumers to be responsible for any loss from internet fraud. The Australian Bankers Association has said that it is working with both the Australian Payments Clearing Association and the Reserve Bank of Australia to monitor and prevent online transaction fraud.
 

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20 March 2007 - CBA labelled worst offender
The Australian
The Consumer Credit Legal Centre of NSW has labelled Commonwealth Bank as the worst offender in terms of irresponsible credit card lending, based on the cases it sees. The latest data from the Reserve Bank of Australia (RBA) shows that the nation's personal credit card debt is $35.6 billion.

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20 March 2007 - Police stop credit card scam
The West Australian
Major Fraud Squad detectives have charged a Kiara Liquor store owner with 13 crimes including seven counts of dishonestly obtaining or dealing in personal financial information. Police claim the man secretly captured his customer's credit card information using a video camera and then sold the information to criminals. He will appear in the Perth Magistrate's Court on Wednesday, and investigations into the case are continuing.
 

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20 March 2007 - Spruiker to stand trial
The Australian
Property spruiker Henry Kaye will stand trial in the Melbourne Magistrates Court on one count of dishonestly obtaining a financial advantage for another by deception. Mr Kaye has pleaded not guilty to charges brought by the Australian Securities and Investments Commission (ASIC). ASIC alleges that Mr Kaye mislead St George Bank into supporting an apartment project.
 

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20 March 2007 - Bank of Queensland bids for Bendigo Bank
The Financial Review
The Bank of Queensland has made a $2.4 billion takeover offer for Bendigo Bank. The merged entity would be worth $4.3 billion and would create Australia's biggest regional bank. The Bank of Queensland is offering a mixture of cash and shares that would give share holders 60 per cent of the combined entity. The deal could trigger rival takeover bids for both banks. Bendigo Bank is considering the deal and is in the process of selecting an advisor. The Bank of Queensland does not plan to close any branches of either bank if the offer is successful.
 

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20 March 2007 - E*Trade's profits double
Sydney Morning Herald
E*Trade Australia has issued profit data for the eight months to the end of February. Core earnings before interest, tax, depreciation and amortisation (EBITDA) were $20.53 million; double that of the previous corresponding period. ANZ, which owns a 34 per cent stake in the online broking firm, has launched a takeover bid worth $268 million. The ANZ offer is open until April 18 and is being considered by shareholders.
 

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19 March 2007 - AIMS expands into aggregator market
Infochoice.com.au
AIMS Home Loans is expanding its Third Party Distribution business and has joined two of the nation's largest wholesale mortgage aggregators, Finance and Systems Technology (F.A.S.T.) and National Mortgage Brokers (NmB). F.A.S.T and NmB's nationwide broker networks now have access to AIMS products. "AIMS is committed to widening its coverage of the broker market," Greg Stevens, AIMS general manager for servicing and marketing said. "Our aim is to provide leading edge products that not only meet brokers' needs but ultimately their customers."
 

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19 March 2007 - Queensland plans broking regulation
The Financial Review
Queensland will go ahead with plans to regulate mortgage broking, despite the likely approval by the Ministerial Council of Consumer Affairs of draft national regulations in May. Queensland Fair Trading Minister Margaret Keech said that the state had difficulties persuading the federal government to implement national reforms quickly.
 

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19 March 2007 - Suncorp eyes banking expansion
Sydney Morning Herald
Suncorp-Metway is considering other major acquisitions, even before the integration of Promina is complete after a $7.9 billion merger. John Mulcahy, Suncorp's CEO, said that further expansion was likely to involve banking and wealth management rather than insurance.
 

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19 March 2007 - APRA warns on bad loans
The Financial Review
The Australian Prudential Regulation Authority (APRA) is concerned about the prospect of a rise in loan defaults. APRA chairman John Laker said that there are signs of a change in the credit cycle. There is some evidence that borrowers are getting into difficulties after three interest rate rises last year and Mr Laker has raised concerns that some lenders may have lowered their credit standards too far.
 

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19 March 2007 - Private equity under observation
The Financial Review
Australian banks and the private equity market are being monitored by the Australian Prudential Regulation Authority (APRA). APRA has asked banks to provide details of their exposure to the private equity market as part of a wide-ranging survey on the subject by the Council of Financial Regulators. Other members of the council, the Australian Securities and Investments Commission, the Reserve Bank of Australia and the federal Treasury are also carrying out reviews in an attempt to develop an appropriate regulatory response to the boom in private equity.
 

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19 March 2007 - Rate rise speculation increases
The Financial Review
The latest economic data suggests that another interest rate rise is possible, and may be as soon as April. The wages data and national accounts figures for the December quarter and an increase in the value of housing finance approvals for January have raised speculation that the Reserve Bank of Australia (RBA) will lift interest rates this year. The RBA is most likely to try and avoid changes in the lead up to the federal election in order to keep monetary policy and politics separate, but may lift rates in April or May before the pre-election budget is announced.

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16 March 2007 - Economy points up: Rate rise may follow
infochoice.com.au
While further rate rises are by no means certain this year, the chances of the need for further rate hikes to keep inflation in check can only be said to be growing currently. This is the message you get when reading between the lines of a speech by Reserve Bank (RBA) assistant governor Malcolm Edey on Friday.

Edey emphasised that world economic growth would remain at strong levels in 2007, although he cautioned that it was too early to tell how great the adverse impact on growth would be from the fallout from the Chinese stockmarket correction and the US mortgage market ructions.

As such, Edey says the bank expects growth in Australia to remain strong this year - with the economy butting up against capacity constraints. He said the latest inflation picture "suggests that some of the factors pushing up underlying inflation last year remain in place". This suggests the RBA remains wary of inflation and very much retains its bias towards raising rates rather than cutting them over the next six months or so.

The latest economic data only serves to help colour in Edey's picture. This week's jobs figures showed the employment market continues in strong growth mode with another 22,000 jobs added, mostly full-time. The growth trend has remained very strong over the past year despite the odd monthly blip in the figures.

The latest NAB business survey shows conditions in both the retail and wholesale sectors healthy and confidence rising. Resilient consumer spending, in particular, has boosted profitability and employment numbers, the survey shows.

Even home lending might again be on the up. After being in decline following the interest rate hikes since mid 2006, the January figures show a rise in both the number and value of housing loans during the month. Most of this appears to be driven by the investment property market with investors buying up newly constructed dwellings to supply heavy demand in the rental market.
 

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16 March 2007 - LVRs could protect sub-prime sector
The Australian
Borrowing loan to value ratios (LVRs) could protect the sub-prime market in Australia from the scandals affecting the US market. "The loan structure is different in the US from what it is in Australia," said Denis Orrock, Infochoice general manager. "The US will also lend in the non-conforming areas 105 to 120 per cent. In sub-prime space in Australia, you would be hard pressed to get about 90 per cent." Research by Standard & Poor's shows that out of the main Australian lenders the average maximum lent is 63.37 per cent of the property valuation.
 

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16 March 2007 - Credit card debt decreases
The Australian
In January the total credit card bill of Australians was $38.393 billion, down from $38.989 billion in December.
 

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16 March 2007 - Wage fears over jobs boom
The Financial Review
Tight labour markets may force wages higher, Federal Treasurer Peter Costello warned after employment figures showed more than 20,000 new jobs were created last month. "There will be more pressure on wages, but it is better to have that problem than the problem of mass unemployment," he said. Wages are a key driver of inflation and large increases would put pressure on the Reserve Bank of Australia to lift interest rates.
 

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16 March 2007 - ANZ persists with E*Trade
The Financial Review
ANZ is holding firm on its $4.05 a share takeover bid for E*Trade Australia. Online broker IWL has acquired a 2.5 per cent stake of E*Trade and hopes to hold talks with E*Trade's institutional investors next week to gauge whether it could get enough backing to launch a competing bid. Yesterday E*Trade shares increased $0.12 to close at $4.25.
 

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15 March 2007 - Consumer confidence high leads to surge in borrowing
The Financial Review
Consumer confidence has hit its highest point in almost two years due to the strong labour market and stable interest rates. The Westpac-Melbourne Institute index of consumer confidence for March rose 3.7 per cent to reach 115.5 points. There has also been a surge in borrowing, with personal lending up 6.5 per cent in January. Figures from the Bureau of Statistics show total new lending commitments increased 8.1 per cent in January, propelled by an 11.9 per cent rise in business borrowing. The consumer confidence report found that the proportion of consumers expecting family finances to rise in the next year rose 4.1 per cent this month.
 

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15 March 2007 - Rates hike to cover sub-prime loans
The Australian
Sub-prime home lenders in Australia will respond to increasing risk by increasing interest rates, but are generally considered safe from the fallout in the US. At the end of December Australian sub-prime loans stood at $6.8 billion outstanding, less than 1 per cent of the overall $827 billion lending market. However, the number of loans to people with risky credit histories has nearly doubled in the past 18 months. Liberty is the largest sub-prime lender in Australia with a $2.64 billion lending book, Bluestone is worth $1.39 billion and Mobius is worth $802 million. The current rates on a sub-prime loan fluctuate between 2 and 2.5 per cent above the official cash rate.
 

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15 March 2007 - NAB aiming for carbon neutral future
The Australian
The National Australia Bank is aiming to be carbon neutral by 2010. John Stewart CEO said that the bank would improve energy efficiency and use across its international operations and purchase offset carbon credits where emissions could not be avoided.
 

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15 March 2007 - Bankwest leading the contest for Rams
The West Australian
Bankwest has been picked as a leading contender in the $1 billion sale of RAMS. RAMS would give Bankwest access to a distribution network in the eastern states. However, Bankwest may face tough competition from other banks including Citibank and HSBC.
 

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14 March 2007 - Non-conforming loans safe
The Australian
Australia's low doc home loan industry could be spared the financial instability emerging in the US due to key structural and product differences. US New Century Financial, a sub prime lender financing customers with poor or incomplete credit histories, is suffering severe problems due to slump in housing and is unable to repay its own lenders. However, Moody's Investor Services is not concerned about the health of the non-conforming loans sector in Australia. In Australia the non-conforming segment makes up less than 5 per cent of the nation's home lending book, compared with 15 per cent in the US. Last week low doc provider Bluestone completed its biggest securitisation of loans worth $800 million.

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14 March 2007 - Westpoint investors launch legal action
The Age
Legal action has been launched against Quantum Securities and Masu Financial Management for providing misleading information to investors who lost more than $9.5 million after the Westpoint property group collapsed. Slater & Gordon will launch a class action on behalf of 82 clients against the two financial planning firms in the NSW Supreme Court. The investors are seeking a court order from the companies to refund their investments with interest, costs and compensation for anxiety and stress. Mr Lewis, from Slater & Gordon, said many of the Westpoint schemes were represented as safe and even guaranteed by the financial planners from both companies.
 

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14 March 2007 - Adelaide Bank launches interest free home loan
The Advertiser
Adelaide Bank has launched a new home loan product that lets borrowers buy 20 per cent of a home without having to make interest repayments. However borrowers will have to sacrifice 40 per cent of any appreciation in the value of their home and if the home decreases in value borrowers will have to pay 20 per cent of the capital loss. The new product is patented as Equity Finance Mortgage and is a 25 year loan product with no principal monthly interest required until the loan is repaid by the borrower. Used in conjunction with a traditional home loan the EFM can be repaid by the borrower at any time. Adelaide Bank chief general manager Stephen Small said he expects the introduction of EFMs to significantly improve housing affordibility. "EFMs can also be used by existing home owners to lower their current monthly mortgage repayments by 20 per cent, reducing their ongoing debt servicing costs," Mr Small said.
 

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14 March 2007 - E*Trade shares sale a blow to ANZ
The Financial Review
ANZ's bid for E*Trade Australia suffered another blow yesterday, as the online broker's US namesake sold 2.3 million shares, about one third of its stake, in the market rather than into the ANZ's $268 million bid. The success of ANZ's bid for E*Trade Australia is becoming more and more unlikely.
 

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14 March 2007 - NAB jobs may go
The Financial Review
After a review of back office operations, including lending processing, internet banking and other support services, the National Australia Bank has confirmed that there may be further job losses. Yesterday finance unions expressed concerns that over 400 jobs could be lost. A NAB spokesman, "The review could result in any number of outcomes; it could be automation, it could be offshore or it could be the status quo." Recently NAB signed an agreement to outsource 200 processing jobs to Genpact, an Indian based service provider.
 

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14 March 2007 - Co-ownership plan launched by St George
The Financial Review
St George Bank and Australand have launched a co-ownership home purchase plan in an attempt to make housing more affordable. The plan will be piloted in Sydney. It involves a purchaser and an equity partner, typically a parent or relative, both owning separate title deeds for each 50 per cent stake in the property. The purchaser must live in the house and the equity partner benefits from the investment though capital gain only. After 10 years, or earlier by mutual agreement, the agreement is renegotiated or the property is sold.
 

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13 March 2007 - Regional growth outstrips cities
The Advertiser
A new industry report says that first home buyers are moving into regional areas as housing in capital cities becomes more expensive. The Housing Industry Association said that in Australia's three largest states population growth in regional areas outstripped or equalled growth in capital cities. "Record low housing affordability in many state capitals has forced an increasing number of first-time home buyers to relocate into non-metropolitan areas, which in many cases has caused these people to give up their current jobs in the hope of finding a home to start a family," the association's director of housing and economics, Simon Tennent, said.
 

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13 March 2007 - Darwin has highest population growth
The Advertiser
Figures from the Australian Bureau of statistics show that Darwin, capital of the Northern Territory, had the nation's highest population growth of 2.5 per cent in 2005/06. During the same period Queensland's regional population increased by 2.1 per cent, while Brisbane's population rose 1.6 per cent. Regional Western Australia's population rose 1.9 per cent while Perth had a growth rate of 2 per cent.
 

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13 March 2007 - Property market resurrection
The Financial Review
Investors are returning to the property market amid early signs that activity in the housing sector may be increasing. According to data released by the Australian Bureau of Statistics the value of housing investment loans rose 4.6 per cent in January to $6 billion, to be 6.7 per cent higher than a year ago. The figures raise hopes that tight rental markets may soon ease.
 

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13 March 2007 - First home buyers recovery
The Financial Review
The latest Australian Bureau of Statistics housing finance data shows that in January first home buyers accounted for 17.7 per cent of all housing loans issued. Returning to the level reached in October last year, the figures indicate that first home buyers may be recovering from the effects of the November interest rate rise.
 

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13 March 2007 - NAB introduces micro-loan
The Financial Review
National Australia Bank is piloting a new micro enterprise loan. An unsecured, low interest business loan of between $500 and $200,000 will be available to people who are financially disadvantaged and have few accesses to affordable credit. Eligible applicants will need to develop a business plan and will receive access to financial assistance, business skills training and advice during their first year.
 

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12 March 2007 - European expansion for NAB
The Financial Review
National Australia Bank (NAB) is considering expanding its new UK financial services into Europe, with CEO John Stewart claiming that a move into the European Union would be a "logical step". Last year NAB's UK business achieved an operating profit of $553 million. The integrated financial services centres in the UK were launched two years ago and target wealthy individuals and small to medium sized business owners

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12 March 2007 - Macquarie joins in outsourcing of jobs
The Financial Review
Macquarie Bank will outsource some jobs to India after finalising an agreement with Accenture. Up to 100 jobs in the human resources division will be affected. About one third of Macquarie's 9,000 staff work overseas and the agreement with Accenture is designed to centralise human resource processing for the bank's global operations. Several other Australian banks have outsourced some operations to India, including NAB, St George and Westpac subsidiary BT Financial Group.
 

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12 March 2007 - Sydney's rental market near crisis
The Financial Review Weekend Edition
Real estate agents in Sydney continue to report distressed renters, rent auctions and people moving further away to find affordable accommodation. In February the vacancy rate hit a new low of 1.4 per cent according to figures released by the Real Estate Institute of New South Wales.
 

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12 March 2007 - ANZ's E*Trade bid gets a boost
The Financial Review
ANZ's $268 million friendly takeover bid for E*Trade has received a small boost after E*Trade's former US parent agreed to wave its right to terminate a licence agreement it holds with the online broker, without cause. The ANZ is attempting to gain the 65.8 per cent stake in E*Trade it does not own. US based E*Trade holds about 6 per cent of the Australian brokerage.
 

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9 March 2007 - GDP rise brings rates caution
infochoice.com.au
The Reserve Bank left interest rates on hold for March but the chances that it might act to lift rates at some stage this year rose this week.

The December quarter GDP figures showing that the economy grew a healthy 1 per cent in the last three months of 2006 goes some way to resolving the conflicting set of economic indicators emerging over the past six to nine months.

Low GDP growth figures had been at odds with a booming employment market which saw the country overflowing with new jobs. The Reserve Bank went so far as to say the economy was in better shape than the previous GDP figures suggested and the latest figure only supports that assessment.

Looking forward, RBA assistant governor Malcolm Edey said this week the world economy is motoring along in 2007, courtesy of China and India, with no let up in sight and providing an ongoing boost to growth in Australia.

The RBA's views on where we have been and where we're going only serve to make it more confident about acting with a further interest rate rise this year if it thinks inflationary pressures are getting out of hand again.

So far, this is not the case and an interest rate rise is not likely in the next couple of months. Inflation was receding towards the end of 2006. With the economic growth on the up-tick, however, and no sign of slackening in the resources boom, it may not stay that way.

The January building approvals figures produced the week's sour economic note, confirming that housing construction has sagged in recent months following three interest rate rises last year. Another 1 percentage point fall in total dwelling approvals in January includes a 2.2 per cent fall for houses. This was offset to some degree by a 2.6 per cent rise in the apartments sector as the rental shortage spurs investor activity in real estate.

 

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9 March 2007 - Bad debt on the rise
Sydney Morning Herald
More Australian households are falling behind with their mortgage payments. Moody's Investor Services has found that 30 day delinquencies levels were on the rise in the December quarter. Moody's said the availability of "easy money" and a relaxation of lending rules had led to many Australian households incurring high levels of debt that were out of line with their ability to repay. Non-conforming lenders' delinquency rate is 2.15 per cent for loans 30 days past due, while the banks' rate is 0.78 per cent, according to Moody's data. David Bell, chief executive of the Australian Banker's Association said that if a customer cannot make payments on their loan they should speak to their bank as soon as possible. "Generally, the bank will try to work out a solution, for example a different repayment schedule to accommodate temporary difficulties," Mr Bell said.
 

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9 March 2007 - Reverse mortgage fraud
The Financial Review
The promoters of a collapsed reverse mortgage scheme have been committed to stand trial for fraud. Money for Living collapsed in 2005 leaving dozens of Melbourne retirees without the titles to the homes. Stephen O'Neill and Gary O'Neill will each face four charges of obtaining a financial advantage by deception and four charges of dishonestly using their position as directors of Money for Living. The Australian Securities and Investments Commission (ASIC) allege the pair gained finance for their business by submitting loan applications that failed to disclose the life tenancies attached to the mortgaged properties.
 

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9 March 2007 - Aussie wants compulsory MFAA membership for brokers
The Financial Review
Aussie Home Loans has submitted an application to the competition regulator which would force its mortgage brokers to join an industry association which it claims will raise standards across the sector. Aussie's managing director, John Symond said making membership of the Mortgage & Finance Association of Australia (MFAA) compulsory would bolster Aussie's strict standards of behavior for its staff. The mandatory employment clause is illegal under the Trade Practices Act. The Australian Competition and Consumer Commission (ACCC) is considering the application.
 

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9 March 2007 - IFM to develop residential investment trust
The Australian
Industry Funds Management (IFM) is moving to develop a residential investment trust for affordable housing and is considering part-ownership deals for first time home buyers.
 

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9 March 2007 - Housing affordability in Victoria worsens
The Age
A report shows that housing affordability in Victoria is at its worst level since Paul Keating was treasurer and interest rates were around 17 per cent. Home ownership is being pushed out of the reach of many people due to rising interest rates and higher house prices. A typical Victorian household now commits 34.3 per cent of its gross income to repay a new mortgage, according to the Real Estate Institute of Australia report.
 

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8 March 2007 - New online plan for CBA
The Australian
Commonwealth Bank is planning to boost its presence with a strategy of building online communities. In a decade CBA's share of business lending has fallen from 23 per cent to 13 per cent. The CBA strategy is a mixture of old and new; face-to-face banking, as well as an online presence to create communities with the bank at their centre. The plan is have 200 local business bankers in place by the end of the year, to service CBA's network of 1,000 branches around the country. The local business banking websites will include directories that promote local products and services.
 

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8 March 2007 - WA's rental crisis the worst in 20 years
The West Australian
Perth's rental crisis has intensified with vacancy rates dropping to a record low of 1 per cent. Figures released by the Real Estate Institute of Western Australia (REIWA) for the December quarter show that it is the worst time in more than 20 years to be looking for a place to rent. REIWA president Rob Druitt blamed poor Government planning and high taxes for the lack of rental homes. He said demand for homes had increased through population growth but supply had decreased through a failure to address housing needs and affordability.
 

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8 March 2007 - Homeowners choose to renovate
The Daily Telegraph
As new houses become less affordable homeowners have been spending money on renovations instead. The Housing Industry Association (HIA) said major renovation activity, which covers work carried out by a contractor or licensed builder, rose 6.9 per cent in the December quarter to $953 million. "The high cost of new housing has pushed many households into embarking on major structural renovations of their existing property rather than building a new home," Harley Dale, HIA chief economist said. The amount households paid for revamping their homes in the quarter rose by 9.8 per cent in Victoria, 9 per cent in Western Australia, 4.9 per cent in South Australia, 4.1 per cent in NSW and 3.2 per cent in Tasmania.
 

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8 March 2007 - Economy revived by consumers
The Australian
Growth is accelerating despite the drought, thanks to consumers spending in the December quarter of last year. GDP grew by 1 per cent in the quarter, twice as fast as expected. Commenting yesterday Treasurer Peter Costello said, "... national accounts show an economy which is growing strongly but is suffering very severe effects of drought." The annual rate of GDP is now 2.8 per cent and excluding the farm sector is rising at 3.5 per cent which shows that three years of poor performance has come to an end.
 

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8 March 2007 - CBA set to announce PayPass release
The Australian
The Commonwealth Bank of Australia is expected to announce the national release of its Mastercard contactless card, PayPass, after a six month trial of the system in New South Wales. PayPass cards, which feature wireless chip devices, allow card holders to complete transactions valued at $35 or less by just tapping the cards, which is expected to reduce the amount of time shoppers spend at the counter.
 

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7 March 2007 - RBA leaves rates on hold
Sydney Morning Herald
The Reserve Bank of Australia has made no change to interest rates this morning, leaving the official cash rate at 6.25 per cent. Economists now expect interest rates to stay steady for much of this year. "We're in data watch and wait mode. The odds are we are in for a pretty extended period of steady rates - possibly throughout the whole of 2007." RBC Capital Markets senior economist Su-Lin Ong said.
 

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7 March 2007 - Housing could make a comeback
The Financial Review
Home building approvals fell 0.9 per cent in January, however a turnaround in New South Wales and strong growth in commercial building activity suggest that the construction sector is set for improvement.
 

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7 March 2007 - Westpac to increase private equity lending
The Financial Review
Westpac plans to raise lending to private equity firms. The bank has private equity holdings of about $1.7 billion, which represents less than 0.5 per cent of its total lending book. By comparison National Australia Bank has over $3 billion in private equity, which accounts for less than 3 per cent of total lending.
 

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7 March 2007 - Bankwest launches online trading
The Financial Review
Bankwest has launched an online international trading system. Paul Clarke, CEO for Bankwest business, said that customers wanted fast, reliable online transactional banking services with expanded functionality across trade, payments and other financial transactions.
 

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7 March 2007 - Warnings for banks offering easy credit
The Australian
Banks offering easy credit without proper security checks have been warned that authorities are becoming unwilling to prosecute people who defraud them. In a submission to a federal parliamentary committee examining the future of organised crime, Stephen Pallaras QC, South Australia's Director of Public Prosecutions, stated that police and prosecutors have begun questioning whether to pursue criminals who defraud institutions with poor internal security.
 

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6 March 2007 - Profits and Wages lead economy upward
Australian Financial Review
Recent economic data has revealed profits, wages and sales all grew in the closing months of 2006. Corporate gross operating profits increased 2.5 per cent despite lower returns to miners, an encouraging sign for those concerned over the continued reliance on mining to maintain growth. Economists are forecasting modest economic growth of 0.5 per cent for the December quarter but believe the economy is gaining pace in 2007.
 

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6 March 2007 - Nation warming to nuclear future...
The Australian
The nation's attitude towards Nuclear power appears to be turning with the most recent Newspoll showing 45 per cent support for Nuclear Power up sharply in four months from only 35 per cent support. Opposition to Nuclear power is now at its lowest level at 40 per cent. Not surprisingly most people are opposed to having a nuclear power plant located in their backyard.
 

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6 March 2007 - China embracing clean and green
The Australian
China has announced radical changes to shut its most pollutant factories and industries in a green initiative that will see economic growth for 2007 cut from 10.7 per cent to 8 per cent. Premier Win Jiabo yesterday announced a raft of policies that will see a large percentage of the nations oldest industrial centres shut down whilst placing a ban on the 'wasteful' use of land including the construction of golf courses and free-standing homes. Mr Wen is adamant that future economic growth will depend on environmentally friendly industries.
 

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6 March 2007 - Former RBA Governor takes third corporate gig
The Australian
Former Reserve Bank Governor Ian McFarlane has accepted his third corporate role since retiring six months ago. McFarlane has taken a post as an international advisor to Investment Bank Goldman Sachs whilst he has also recently been appointed to the Boards of Woolworths and ANZ Banking Group.
 

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6 March 2007 - ATO to change legal focus
Australian Financial Review
The Australian Tax Office (ATO) will make changes to its existing litigation strategy to avoid costly and lengthy legal disputes with companies and individuals after criticism was levelled against it by the Federal Court. The Federal Court criticism follows comments from the Inspector-General who considers the ATO approached litigation with a "win at all costs" attitude.
 

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5 March 2007 - ATM still dominant cash device
Australian Financial Review
Research released by MWE Consulting indicates that ATM's hold 93 per cent of cash distribution of debit-card transactions over Eftpos cash out options. This dominance is against the prevailing wisdom of banking strategies evolved in the mid 90's that the use of ATM's would decline. This obviously has not occurred and ATM and Branch use has remained strong, further entrenching the value banks are placing on their points of presence.
 

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5 March 2007 - RAMS looking to beat system 2:1
Australian Financial Review
RAMS Home Loans is looking to its franchise network and broker channel to contribute strongly to a forecast growth in profits, defying any slowdown within the mortgage market. RAMS, who sell loans through branded franchises and mortgage brokers, reports that the size of their loan book has grown 20 per cent in the last 8 months to over $12 Billion. Chief Executive, Greg Kolivos says the company is on target for 30 per cent growth in 2007 beating forecast system growth by over 2:1 (system growth is forecast to be 12 - 14 per cent). ASIC documents show that RAMS reported a $29.9 million profit for the year ending June 30 2006. RAMS is expected to issue an information memorandum in the near future in relation to the sale of the business, with Private Equity players tipped to make their first significant investment in the Australian financial services sector.
 

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2 March 2007 - Rate rise chances firming with growth outlook
infochoice.com.au
A slew of economic data out this week suggests the signs of economic slowdown evident in the second half of last year may be fading in favour of a stronger growth outlook in 2007.

This lends credence to the Reserve Bank's recent assessment that further interest rate rises this year, while not certain by any means, may be in the offing. It's too early to say for sure, especially given concerns about US recession resurfacing this week, but if the economy returns to its stronger growth path recorded up to mid 2006, then we may see another quarter-percentage point rise in rates in the next six months or so.

There won't be any rise coming out of the March RBA meeting on Tuesday but later this year creates interesting scenario, given the looming federal election.

Business investment figures for the December quarter returned to positive - and importantly, not just in the mining sector but across the economy. There was a 1 per cent lift in total capital expenditure after a 5 per cent fall the previous quarter. The investment plans of businesses over the next two years are strong and hint at a return to double digit growth. There was also a turnaround in construction work done during the quarter, rising 4 per cent after falling in the September quarter.

These are perhaps signs that the economy is shrugging off the effects of two mid-year interest rate rises, although there was another in November.

Private sector borrowing was on the up in January, courtesy of bounces in both personal credit and business borrowing. These figures jump around a bit but generally continue to show healthy levels. Housing credit was up too, but marginally.

Retail sales had an unexpectedly strong month in January, rising 0.9 per cent, although the trend identified by the Bureau of Statistics remains flat.

December quarter GDP is out this coming Wednesday, which will tell us where economic growth was going into 2007 and more clues on whether rates stay stable or rise this year.

 

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2 March 2007 - Boost in super
The Financial Review
The government has reported that almost 800,000 superannuation co-contribution payments worth more than $631 million were made to Australian workers between October 1 and December 31 last year. The government contributes $1.50 for every $1 of after-tax contributions that low and middle income earners make to their superannuation, up to a maximum of $1,500.
 

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2 March 2007 - Macquarie in credit
The Financial Review
Macquarie Bank will launch its own credit card. Mickey Perret, executive director of Macquarie's banking and securitisation division, said it expected to have a few hundred thousand Macquarie Bank branded and white labelled cards on issue in the next three years. The launch follows the bank taking a 10 per cent stake in low-rate credit card Virgin Money in November 2005.
 

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2 March 2007 - No relief for renters
The Daily Telegraph
Treasurer Peter Costello has ruled out federal help, such as rental assistance, for tenants struggling to cope with rising rents and a lack of properties. Mr Costello said the solution was to let the market correct itself. The current rental squeeze is the result of five years of reduced building activity caused by an earlier oversupply of housing.
 

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2 March 2007 - Investors reconsider risk after share shock
The Financial Review
The recent turbulence in the share market has prompted investors to reconsider risky investments and consider the odds of a deeper downturn. Investors have dumped high risk investments, such as stocks, high-yield bonds and emergency market assets, and put money into cash and the safe government bonds of developed countries.
 

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2 March 2007 - Record trading levels for ASX
The Financial Review
In February ASX Ltd reported record trading levels. Each day an average 218,000 equity trades were made, 21 per cent higher than the previous best month in January. $6.3 billion was the average daily value traded, 16 per cent higher than the previous record set in November last year.
 

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2 March 2007 - ANZ increases Asian expansion
The Australian
ANZ Bank has increased its Asian expansion; paying $12 million for a 60 per cent stake in Laos based Vientiane Commercial Bank. VCB had total assets of about $69 million at the end of last year, and is the only privately owned commercial bank in Laos.
 

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1 March 2007 - Westpac increases home lending
The Financial Review
Westpac recaptured more market share in mortgage and credit cards in January than its major rivals. New data from the Australian Prudential Regulation Authority shows that it was the only big bank to increase home lending above the industry average in the month. Westpac posted a three month annualised growth of 11.9 per cent compared with an average of 8 per cent for ANZ, Commonwealth and National Australia Bank.
 

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1 March 2007 - PM focuses on economic management
The Financial Review
The government is confident that Australian voters rank the coalition's economic credentials ahead of Labors. Yesterday Treasurer Peter Costello used the falls in the local share market to highlight the need for strong economic management. Kevin Rudd, Opposition Leader, is arguing that the Labor Party is also a strong economic manager and holds the same beliefs as the coalition on running policies designed to keep inflation in check and interest rates down. A federal election will be held late this year.
 

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1 March 2007 - Review raises insider trading questions
The Financial Review
A review of trading activity has found that some company directors are still not disclosing trades in their company shares and are continuing to trade in the weeks before major announcements, raising questions about insider trading. BT Governance Advisory Service reviewed the 2006 trading activity of company directors of the 29 companies that were found to be the worst compliers in an initial study in 2005. The review found no improvement in the number of directors actively trading after books close and before results are announced. There was however, an improvement in the notification of trades by directors. The law requires trading by directors in company shares to be disclosed to the market to avoid the potential for insider trading.
 

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1 March 2007 - Trading websites jammed
The Financial Review
The fall in the Shanghai stock exchange led to a jam at trading websites in Australia. Yesterday, there was a massive amount of traffic on the CommSec and E*Trade websites, causing E*Trade to close down its website for a short time as thousands of users logged in. E*Trade shut down non-essential parts of its website to cope with the extra traffic. Some CommSec clients could not access the website and the site was running slower than usual but it did not crash. The brown-outs emphasis the challenge faced by owners of high demand websites dealing with unprecedented amounts of site traffic.
 

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1 March 2007 - China's fall cost us $34 billion
The Australian
The biggest fall on the Chinese stock market in a decade caused Australian investors to suffer their worst trading day of the year yesterday. The Australian stock market opened down 206 points and stayed in the red for the rest of the day. The drop cost investors $34 billion but only takes the market back to where it was at the beginning of February. Brokers believe that shares will bounce back.

 

 

April 2007

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18 April 2007 - Tighter contracts to protect home owners
The Financial Review
Reverse mortgage providers are changing their contracts to offer better consumer protection after several holes were found in "no negative equity" guarantees. The Senior Australians Equity Release Association of Lenders (SEQUAL) will require members to abide by stricter standards from July, although the details are still being finalised. No negative equity guarantees are designed to ensure that clients' debt never exceeds the value of their property.
 

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18 April 2007 - Choose property and shares
The Australian
The answer to the investment debate over whether to choose property or shares might be to choose both. Listed Australian Property trusts have been the best performing investment class over the past decade, outperforming not just their global peers but also traditional domestic equities. An analysis of the diversified investment classes over the past 10 years by advisory firm Russell found that the property trusts had made a 15.8 per cent gross return. However, some analysts say that property trusts have become expensive, particularly as entities look offshore.
 

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18 April 2007 - Reverse mortgages a good option
The Financial Review
Far from exploiting the elderly, reverse and shared equity mortgages are providing a boon for some property investors. A reverse mortgage is a tax-free, pension-test free payout that doesn't have to be paid back until the home is sold or the owner moves into aged care. However reverse mortgages can be expensive as the interest rates, typically 1 per cent higher than on a normal home loan, are capitalised so that the cost compounds over time.
 

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18 April 2007 - Slow recovery for housing
The Financial Review
A survey of property experts has found that while the housing market may have hit the bottom, buyers and sellers should not expect a quick bounce back. The professionals surveyed believe that the residential markets in Sydney and Melbourne are at the bottom of the cycle with Brisbane not far behind. The Australian Property Institute has warned that prices could fall further in the mortgage belt, particularly if interest rates rose again.
 

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17 April 2007 - Reverse mortgages soar
Sydney Morning Herald
The value of reverse mortgages increased by almost two thirds last year as retirees used home equity to supplement income. Settlements of new loans grew to around $520 million by the end of December, compared with $315 million a year earlier according to a reverse mortgage study co-authored by Trowbridge Deloitte. "The growth coincides with an increase in the number of product providers, providing improved product flexibility and wider distribution channels," said James Hickey, a Trowbridge partner. The study showed the use of mortgage brokers is growing, last year 46 per cent of loans were made through brokers, up from 38 per cent the previous year.
 

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17 April 2007 - ANZ leads indigenous job campaign
The Australian
The ANZ will lead the campaign for mainstream corporate jobs for indigenous people. Tomorrow the ANZ will unveil plans to recruit at least 300 young indigenous trainees by 2009, and to promote 20 indigenous employees on merit to management positions by 2014. The bank aims to have at least 3 per cent of its regional and rural staff from an indigenous background by 2011.
 

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17 April 2007 - ASX to get tough on stockbrokers
The Financial Review
The Australian Securities Exchange (ASX) is planning tough penalties for serious professional misconduct in stockbroking firms and investment banks. The ASX wants to increase the fines that the disciplinary tribunal issues in actions over breaches of its operating rules to as much as $2 million, from a current maximum of $250,000. Chief supervisor officer Eric Mayne said the move would bring the penalty regime into line with stock exchanges in New York and London.
 

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17 April 2007 - APRA kept on a shorter leash
The Financial Review
The federal government will limit the Australian Prudential Regulation Authority's (APRA) ability to directly disqualify insurance or superannuation fund executives. The regulator will have to apply to the Federal Court to disqualify executives. APRA is understood to support the change, despite the higher burden of proof required. The legislation will be introduced into parliament in June.

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17 April 2007 - Property fraudster gets 8 years in jail
The Financial Review
A Melbourne businessman who stole more than $18 million from clients has been jailed for at least eight years. Maurice Antoine Roussety convinced clients to put money into fake property investments and shares to support his failing business empire. Roussety plead guilty to 49 charges related to offences committed between 1997 and 2002, when he was the director and controlling shareholder of three accounting and investment companies.
 

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17 April 2007 - Customers adds ATMs
The Financial Review
ATM operator Customers has acquired ATM Solutions, which increases the number of ATMs Customers operates to 5,000. The acquisition raises the company's total number of transactions a year to about 90 million.
 

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16 April 2007 - Raminator to the rescue
The Daily Telegraph
This year, every six days an ATM has been targeted by ram raiders. There have been a total of 18 ram raids this year, with 50 per cent of those a success for the criminals. Police and the banking industry refuse to disclose how much cash is stolen in the raids but it is widely known that ATM's can hold up to $300,000. There are 26,000 ATM's around Australia. ATM security expert Richard Gould said his company has designed a product called ATM Raminator, a stand which is designed to withstand huge impacts, and could significantly affect the amount of ram raids in Australia.
 

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16 April 2007 - Housing recovery tipped for the east
The Australian
The New South Wales housing market should rebound in the 2007/08 financial year after a predicted fall in the current financial year. BIS Shrapnel has predicted an 8 per cent rise for NSW in the next financial year. However, economists have predicted that in the current financial year the states will experience falls of 9 per cent in NSW, 5 per cent in Victoria, 19 per cent in the Northern Territory, and 3 per cent in Western Australia. The BIS Shrapnel report predicts that nation wide housing starts would fall by 1 per cent this financial year before rising by 2 per cent in 2007/08.
 

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16 April 2007 - Mortgage arrears at 10 year high
The Financial Review
Losses in securitised housing loans are at their highest level in more than a decade and could climb higher as pressure mounts for another rate rise. Standard & Poor's said that arrears on full document loans rose from 1.01 per cent in December to 1.10 per cent. Arrears on low documentation loans increased to 2.33 per cent. The signs of growing stress among home owners could start to affect earnings of major banks as they set aside more funds to cover loan losses.
 

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16 April 2007 - E*Trade shares sell for more than ANZ's offer
The Financial Review
ANZ's prospects of buying E*Trade are diminishing as institutional investors sell their shares on the market for more than the $4.05 offer from ANZ. E*Trade's original US parent, E*Trade Financial Corporation recently sold its 4.1 per cent stake in the company on market and Perpetual Investments sold its stake on market while E*Trade shares were trading around $4.20.
 

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13 April 2007 - Rate rise becoming hard to avoid
infochoice.com.au
Debate continues as to how close the Reserve Bank is to raising interest rates again. Whatever the RBA board thinks now, the release of the next inflation figures late this month holds the key to its May deliberations.

In the meantime, ongoing strong jobs growth continues to underpin the economy with a buoyancy that means inflationary pressures aren't going away. The monthly job figures have been historically notoriously volatile, bouncing around from month to month. But over the last year in particular, very clear trends have emerged. Job numbers are going up and up and unemployment is going down and down.

March saw another 10,000 new jobs added in all with the unemployment rate falling to 4.5 per cent, although this was partly due to a drop in the participation rate. A quarter of a million jobs have been added in the last year.

While employment moves from strength to strength, home borrowing looks like it's turning around to better times. Owner-occupied borrowing continues its upward turn in February. The number of loan commitments, excluding refinancing, increased by 1.5 per cent. The numbers are up more strongly in investment loans as investors eye the rental housing shortage and skyrocketing rents.

Across the loans market, lending for owner occupied housing rose by almost 1 per cent, personal lending rose 0.4 per cent and business lending saw enormous jumps - 15.6 per cent in commercial loans, 24.1 per cent in lease finance.

All in all, it's hard to see that the three interest rate rises last year have had more than a temporary effect on economic activity. With the economy seemingly in for a strong year at a time when inflation is only just in check, it would seem a further rise in interest rates is not far away.

 

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13 April 2007 - Jobs figures increase rate likelihood
The Age
Further evidence of labour market tightness has increased the pressure on the Reserve Bank of Australia to raise interest rates next month. The Australian Bureau of Statistics figures released yesterday show an extra 31,700 fulltime jobs were created in March, while part time employment dropped by 21,200. The figures may increase the likelihood of a rate rise this year due to concerns about the effect that wages pressure will have on inflation. The market is betting on a 60 per cent chance of rates going up next month.

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13 April 2007 - States serious about identity theft
The Financial Review
The states are considering overhauling laws against identity theft, to make it an offence throughout the country to steal someone's identity. Currently only Queensland and South Australia have comprehensive laws dealing with identity theft. The other states only have laws against using another person's identity for the purpose of fraud or impersonating public officers. The Australian Institute of Criminology estimates that identity fraud costs Australia $1.1 billion annually.
 

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13 April 2007 - A rate rise may not disappoint
The Financial Review
John Howard believes that the growth in full time employment in March is evidence of the success of industrial relations reforms. However, economists believe that the figures are a sign of the underlying strength of the economy. Macquarie Bank's Rory Robertson says, "the Reserve Bank's main anxiety remains that the Australian economy is running out of workers and that the ongoing competition for talent is putting upward pressure on wages". But, perhaps the Prime Minister would not be too distressed if the central bank does raise interest rates next month as a rate rise now would reduce the chance of a rate rise after the budget has been announced.
 

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13 April 2007 - BoQ boss to put his case to Bendigo
The Australian
The Bank of Queensland CEO David Liddy will speak to Bendigo Bank executives today regarding the implementation of the proposed $2.7 million merger, and the details of BoQ's future prospects. Today's meeting comes amid speculation of takeover activity in the regional banking sector.
 

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12 April 2007 - Property investment market recovers
Sydney Morning Herald
Data from the Australian Bureau of Statistics shows higher interest rates have not stopped a recovery of the property investment market. The value of loans to property investors has risen for four consecutive months, surging 8.9 per cent in February compared with just 0.9 per cent for homeowners. Analysts believe that investors have been lured by high rents due to the low vacancy rates. However the increase is not expected to resolve the supply and demand issues as investor loans to buy establish properties rose 9.9 per cent while loans for the construction of new properties dropped 2.6 per cent.
 

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12 April 2007 - Inflation must fall or rates will rise
The Australian
The International Monetary Fund (IMF) has warned that interest rates will rise again if the dip in inflation late last year is not sustained. IMF expects that inflation in Australia will remain very close to the Reserve Bank of Australia's target 2-3 per cent band over the next year. Inflation should drop from 3.5 per cent last year to 2.8 per cent this year but increase to 2.9 per cent next year.
 

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12 April 2007 - E*Trade waits for higher offer
The Australian
E*Trade shareholders are hanging onto their shares, amid speculation that ANZ's offer could be increased from the $4.05 bid. The bid has been extended but E*Trade chairman Kerry Roxburgh said yesterday that shareholders were again urged to reject the offer.
 

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12 April 2007 - Bankruptcies rise as credit increases
The Financial Review
Figures released yesterday show that debt agreements, a less formal alternative to bankruptcies, rose 34 per cent over the past nine months and bankruptcies increased 13 per cent, mainly due to over-borrowing. The Insolvency and Trustee Service of Australia said that unemployment accounted for 34 per cent of bankruptcies last year, while excessive use of credit accounted for 26 per cent.
 

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12 April 2007 - Shared equity plan swamped
The Financial Review
The Western Australian Government's $300 million shared equity scheme for first home buyers has been inundated with applications. The First Start program was announced in February this year and planned to assist 3,000 home buyers over three years. In the first two months the program received 3,279 applications. About half of the applications have been processed so far and of those 1,000 don't qualify while 800 will receive the grant. The government also announced that successful applicants will not have to pay stamp duty.
 

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12 April 2007 - Housing task force formed
The Financial Review
The Housing Industry Association (HIA) has formed a task force on housing affordability that will be headed by the Queensland manager of Westminster Homes Jill Lee. It plans to tackle the problem of affordability for first home buyers and investors, which the HIA has labelled the worst housing crisis on record. But spokesman for Australians for Affordable Housing David Imber has questioned whether big developers could represent the views of those struggling to enter the housing market and labelled the HIA's move as blatantly self-serving.
 

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11 April 2007 - IMF warns on private equity
The Australian
The International Monetary Fund (IMF) has warned that the private equity boom could bring down banks if a sharp change in market sentiment occurs while large deals are being completed. The fund said that at the moment private equity deals are being carried out in an environment of global growth, low interest rates, high corporate profits and low volatility. However should any of these factors change, the banks financing the private equity firms could be drawn into financial crisis. Last year the value of mergers and acquisitions globally was $US3,600 billion. The average size of a deal has risen from $US400 million to $US1.2 billion.
 

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11 April 2007 - ANZ sticks to E*Trade deal
Sydney Morning Herald
ANZ has extended its rejected $268 million takeover bid for E*Trade for another three weeks. Yesterday E*Trade shares closed $0.01 lower at $4.14, continuing to drift towards ANZ's offer price of $4.05 a share. It appears less likely that a rival bid will be made by IWL. ANZ is betting that investors will eventually take its money rather than face the large fall in the company's share price, which is expected if the bid lapses. Yesterday ANZ shares jumped $0.42 to $29.97.
 

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11 April 2007 - Economy still strong despite rate rise fears
The Financial Review
The Australian economy is expanding at a decent rate, despite capacity constraints and interest rate uncertainty. A recent survey has shown that although business confidence and conditions eased slightly last month, they remained at high levels. Employment growth, strong trading conditions and solid profitability have suggested an optimistic outlook for the year. The National Australia Bank's monthly survey found that wages were growing at an annual rate of 6.25 per cent, which could add to the case for the need to tighten monetary policy.
 

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11 April 2007 - HotCopper user accused of insider trading
The Financial Review
The Australian Securities and Investments Commission (ASIC) has alleged that a Melbourne retiree relayed market sensitive information through online share trading website HotCopper, after raids on his home computer linked him to the website. Yesterday Peter Robert Woodland appeared in the Melbourne's Magistrates Court and faced 17 charges of insider trading. The charges relate to information about Kanowa Consolidated Gold Mines, now know as Andean Recourses, buying a gold mine in Argentina. After the official announcement the company's shares increased from around $0.43 to $0.91. The hearing continues today.
 

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11 April 2007 - Carbon-neutral home loans
The Age
The mortgage industry is fighting climate change, with direct lender MyRate.com.au announcing a carbon-neutral home loan. MyRate has been certified "NoCO2" by the Carbon Reduction Institute, which provides certification for businesses that want to be carbon neutral, or have already achieved it. "In order for MyRate.com.au to achieve NoCO2 certification, our processes were audited to calculate the full extent of our carbon impact," MyRate general manager Kevin Sherman said. "Emissions were calculated from energy usage, waste, employee transport, as well as the emissions embodied in the computers and phones we use." The Carbon Reduction Institute found that emissions from each MyRate loan amounted to 94 kilograms of carbon dioxide. To offset those emissions MyRate has streamlined its business practices and bought carbon credits in solar energy projects.
 

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10 April 2007 - Banks denied smartcard access
The Financial Review
The Australian Government has stated that banks will not be allowed access to the personal information held on the welfare smartcard. The smartcard will have technical restrictions imposed on the design specifications to stop non-government service providers gaining access to personal information held on the card. Banks had hoped they would be allowed to validate the identity details of customers who volunteered their smartcard through a government controlled electronic document verification service. Banks will be forced to manually record data from the card.
 

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10 April 2007 - CBA tops debt rankings
The Australian
The Commonwealth Bank of Australia (CBA) has leaped to the top of domestic debt rankings by underwriting $5.7 billion of corporate bonds in the first quarter of this year. According to Thomson Financial CBA now has a market share of 19.8 per cent, rising from 9.2 per cent in the previous corresponding quarter. CBA credits the improvement to an investment in additional staff and a greater focus on the business.
 

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10 April 2007 - Merger rumours at Adelaide Bank
The Financial Review
Jaimie McPhee the new managing director at Adelaide Bank has recently restructured his executive team. The changes come amid speculation that the bank will be drawn into the current stint of consolidation in the financial services sector. The Bank of Queensland has recently confirmed that it had previously held preliminary merger discussions with Adelaide Bank and other regional players. Adelaide Bank reported a 4 per cent rise in profit to $43.2 million for the six months to the end of December last year.
 

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10 April 2007 - Videoconferencing improves regional bank services
Sydney Morning Herald
Banks are turning to videoconferencing to improve management and productivity and maintain the sense of a personal presence in regional markets. New England Credit Union (NECU) has installed videoconferencing to allow customers to talk with financial planners more conveniently and avoid having to book months in advance for a face-to-face talk. NECU has 20 branches spread across the north-eastern corner of New South Wales. NECU said that videoconferencing has also allowed them to deliver more staff training, conduct more interviews and offer more specialist services.
 

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5 April 2007 - Rates held steady despite inflation signs
infochoice.com.au
The Reserve Bank chose not to lift interest rates at its April meeting this week. A 0.25 per cent hike must have been a close run thing given its stated concerns about inflation and its previous proactive approach to clamping down on inflationary pressures as soon as they appear.

Perhaps the RBA board is waiting to see 'the whites of the eyes' with the release of the official inflation data for the first quarter of 2007 before deciding whether to respond with another round of rate action.

Tellingly, however, the Melbourne Institute's March inflation gauge this week showed significant price pressures at work in the economy this year. The index rose a sharp 0.5 per cent last month for a measure of the annual rate of inflation at 3.5 per cent. Its underlying measure now stands at 3.3 per cent.

If both those measures are anything close to correct, then inflation stands distinctly above the RBA's 2-3 per cent target band. If reflected in the official figures later this month, an interest rate rise would have to be a dead cert in May.

While the full impact of last year's rate rises are still working through the system, especially November's, it is already apparent that the consumer sector at least has shrugged them off.

Retail sales grew 0.9 per cent seasonally adjusted in February on the back of a strong result in January too. Retail spending growth has been trending upwards over the last year despite hiccups around the time of the three interest rate rises. Sales are likely to be rising from both increases in prices and in the volumes purchased.

Even the poor old residential construction sector showed a solid 10.6 per cent increase in building approvals in February. This was due to huge a jump in apartment approvals, with house approvals falling slightly. Supply beginning to react to the rental housing shortage in some capital cities might explain some of the rise, and if so augurs well for activity this year. But such a big jump in apartment approvals is more likely to reflect volatile monthly figures and is unlikely to be repeated in coming months.
 

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5 April 2007 - WA's boom could last for years
The Australian
Western Australia's booming economy expanded at a rate of 10.5 per cent last year and is showing no real signs of decline. Yesterday the WA Government announced it had committed $841 million to a series of gas and oil explorations in the state's far north. A report by the Chamber of Commerce and Industry shows that business investment increased by 31.8 per cent last year. Figures from the Australian Bureau of Statistics show that WA has a $34.6 billion trade surplus, compared with a deficit for the nation of $12.4 billion.
 

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5 April 2007 - Rate rise expectations growing
The Financial Review
This week the Reserve Bank of Australia decided to leave rates on hold at 6.25 per cent, despite indications that inflationary pressure was building in an economy operating close to capacity. Market economists said the uncertain outlook for the global economy may have weighed on the RBA's deliberations, particularly a possible slowdown in the United State's economy. Financial markets put the likelihood of a rate rise next month at 50 per cent, while the likelihood of a rate rise this year is almost 100 per cent.
 

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5 April 2007 - Roaring start for new car sales
The Financial Review
Annual new car sales are on track to exceed a million vehicles for the first time. Buyers are purchasing large cars, encouraged by robust economic conditions and more stable petrol prices. More than 90,000 new cars were sold in March, an increase of 8.3 per cent over the same month last year.
 

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5 April 2007 - BoQ continues with Bendigo takeover
The Age
The Bank of Queensland (BoQ) has indicated that it will continue with its $2.5 billion takeover bid for Bendigo Bank, despite the risk of litigation from Fincorp investors against Bendigo's trustee division, Sandhurst. BoQ CEO David Liddy said, "Obviously we're aware of it and we will look closely at that in any due diligence that might happen." BoQ announced an interim dividend of 32¢ a share, to be paid on May 10 to shareholders at close of trade on April 24.
 

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May 2007

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31 May 2007 - MasterCard threaten to take bat and ball home
The Australian
MasterCard has warned it may stop issuing credit cards in Australia if the Reserve Bank moves to abolish interchange fees. MasterCard warned that the introduction of a zero interchange fee would see the cost borne by Australian consumers as card issuers look to recoup the income through alternative fee structures and diluted rewards programs.
 

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31 May 2007 - Stamp Duty pushes rents up $20 a year
News.com.au
Liberal think tank the Menzies Research Centre has found that state based stamp duty has contributed to 50 per cent of rental increases since 1999. Across Australia the average increase in Stamp Duty was 184 per cent. The study found that investors had increased rents to assist in recovering the costs of stamp duty, whilst a family looking to move house were likely to save for over half a year to cover the costs of stamp duty.
 

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31 May 2007 - Managed funds now over $1,157 billion
The Age
Australia's managed funds have grown to a record $1,157 billion whilst the superannuation changes of the 2006 budget are yet to have their full impact. Super funds contribute $629 billion whilst some DIY investments would have been missed by the Australian Bureau of Statistics numbers.
 

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31 May 2007 - SME boom as households look for time
Financial Review
Australian SME's are booming as they identify new needs for a changing society. Time-poor double income households are paying for services traditionally done by family members such as repairs, mowing, cleaning, ironing and laundry. These small personal service businesses are easy to open and the personal service sector is growing at 3.8 per cent a year.
 

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31 May 2007 - ASIC to take a fresh approach to Property Securities
The Australian
The Australian Securities and Investment Commission is considering introducing an independent rating system for the debt securities to assist investors in better evaluating risks. The move is in response to multiple collapses of property finance schemes that have lost thousands of Australian investors close to a combined $1 billion in the last two years. ASIC chairman Tony D'Alosio, appearing before a senate committee, made it clear that the organisation has made the property securities sector a clear priority and would stress test the participants within the $8 billion market. D'Alosio also promised to closely monitor the advertising of investment schemes and investigate to ensure the levels of disclosure and risks associated are clearly highlighted to the investor.
 

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30 May 2007 - Another property group goes under
Daily Telegraph
Another property investment group, The Estate Property Group, has been placed under administration and could result in the third major collapse of a property group in recent years. Fears were ignited in some investors when Estate's investment company, Australian Capital Reserves (ACR), refused to pay quarterly dividends earlier this month. The collapse of Estate will affect up to 7,000 investors that face losses of up to $300 million. Administrators McGrath Nicol was appointed to overseas the 26 companies in the group, which own developments in NSW and Victoria and will meet with creditors on Monday.
 

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30 May 2007 - Sotheby's card for the elite
Sydney Morning Herald
Two new premium credit cards, funded by GE Money, will soon hit the world market, with Sotheby's New York launching the World MasterCard and the World Elite MasterCard. With the World Elite card "by invitation only", the cards could be the next international status symbol. The cards offer extravagant rewards that include private flights with Marquis Jets and renting villas in southern France.
 

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30 May 2007 - Offshore data needs protecting
Financial Review
Federal Labour MP Anna Burke has introduced a private member's bill which would require banks to inform customers when information about them was sent overseas. While Ms Burke admits that the bill is unlikely to succeed given that support would be required from the government she is concerned about potential risks with the increased use of offshore centres by Australian banks. "I want people to think about who has access to their data, to that information and what protections there are around that" said Ms Burke. "Who uses that data? Who controls it? Where is it stored?"
 

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30 May 2007 - Future unclear for agribusiness schemes
Financial Review
Tax-effective forestry schemes have been given the go-ahead to proceed indefinitely, but other schemes involved in primary production will change from 1 July 2008. The tax office has decided that investors in agribusiness schemes are "passive" and therefore could no longer claim deductions. A one year transition period was agreed to but investment managers in agribusiness are fighting the decision.
 

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30 May 2007 - Prepaying may be tax effective
Financial Review
With the end of financial year approaching, individuals can take advantage of prepaying their interest payments to reduce this year's tax bill. Investors may claim tax for up to a year's worth of interest prepaid on an investment loan over a rental property, or for margin loans on share portfolios or managed investments. Experts warn however that this strategy may not suit all investors and that it is important to have a year long tax or investment strategy.
 

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30 May 2007 - RBA down on fees
The Australian
Fees charged by banks for credit, debit and Eftpos transactions are under threat as the Reserve Bank considers scrapping them and expanding its powers to include American Express and Diners Club. The RBA has been reforming charges in the card payment system for the past 5 years and in that time has cut credit card charges from 95 cents to 50 cents as well as reducing Eftpos and Visa debit interchange fees.
 

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30 May 2007 - Affordability crisis worsens
Sydney Morning Herald
Housing affordability is not expected to return to acceptable levels until 2022. The average monthly repayment required for a first home buyer in Sydney has increased by $442 in the past year to $3,000. First time borrowers in Perth have it even harder with their average repayments now at $3,009 per month. The definition of "housing stress" is when repayments consume more than 30 per cent of disposable income on mortgage repayments or rent. Currently the average repayments for first-home buyers are taking 38.5 per cent and bankruptcies have risen 12.5 per cent in the nine months to March.
 

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30 May 2007 - Refunds for NAB customers
Financial Review
NAB customers who used overseas ATM terminals between April 2005 and October 2006 may have been incorrectly charged. The bank has refunded a total of $3.98 million to 208,000 customers to correct the error which resulted from transparency requirements when charging the fees not being met. The fees should have been broken down into two components, one charged by the card issuer and the other charged by NAB.
 

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29 May 2007 - ATO chasing outstanding payments
Financial Review 29/05/07
The Australian Tax Office (ATO) has reduced the outstanding tax bill by $130 million in the last 9 months by committing itself to further collection initiatives including calling people after work, implementing new technology and using outside debt collection agencies. The outstanding collectable tax debt currently sits at $10.1 billion to the end of March 2007 and represents just 4.4 per cent of the total tax collections.
 

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29 May 2007 - ANZ expanding Indian presence
Financial Review 29/05/07
ANZ will expand its Indian operation moving to a new 2400 seat facility in Bangalore allowing the bank move further back office roles to India whilst taking advantage of the lower labour costs. The new facility is forecast to open in 2009 and will combine three existing sites into the one facility and allow further room for growth. ANZ currently employs about 1750 full time workers in India and it is believed net staff costs are half as expensive as Australia. ANZ is currently the only Australian bank operating a captive or wholly owned centre in India.
 

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29 May 2007 - CBA promotes internally to fill gap
Australian 29/07/05
CBA has promoted from within to fill the role of Head of Retail Banking Services. Ross McEwan has been appointed to relace Michael Cameron who left the bank to join rival St George. McEwan joined CBA last December like CBA CEO Ralph Norris who has also worked at New Zealand bank ASB.
 

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29 May 2007 - GE expands local operations
Financial Review 29/05/07
General Electric is increasing its local presence outside of finance to include a focus on infrastructure and mining. Since acquiring the Coles Myer credit card portfolio in 1995 GE has quickly built a finance business approximately the size of St George Bank and an operation with assets in excess of $30 billion.
 

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29 May 2007 - Investors could lose up to $330 million as Australian Capital Reserve collapses
Financial Review 29/05/07
Up to 7000 investors are facing the prospect of losing a combined $330 million as another high-risk property lender collapses. McGrath Nicol were yesterday appointed as administrators of 26 different companies making up the Estate Property Group (EPG). McGrath Nicol issued a statement saying that EPG owned 21 separate developments in NSW and Victoria. The company's collapse comes after the Australian Securities and Investments Commission (ASIC) placed a stop order on a prospectus in March, ASIC did not disclose the reasons for the final stop order. Secured creditors include NAB and Capital Finance. If unsecured investors fail to get their money back it will mean in the last year investors will have lost close to $1 billion following the collapse of WestPoint and Fincorp.
 

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28 May 2007 - WA Stamp Duty relief adds fuel to property frenzy
AFR 28/05/07
First home buyers have entered the Perth property market following stamp duty concessions, with property sales increasing since the concessions were announced two weeks ago. The Western Australian state government has abolished stamp duty for first home buyers on houses up to $500,000 with further concessions up to $600,000. In the fortnight since the initiative was announced 120 properties a day (1700 in total) have been cleared from housing stocks.
 

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25 May 2007 - Take advantage of the good times
infochoice.com.au
There is virtually no prospect of a rise in interest rates, or a fall for that matter, before the federal election due in the last quarter of the year.

No significant data has been released since last week's wages figures, which put the icing on the cake as far as evidence of the country's remarkable non-inflationary economic expansion is concerned. Inflation is easing off its highs and wages growth is restrained.

The old economic truism that hamstrung governments and their monetary authorities in the 70s and 80s - that you can't have low unemployment and low inflation at the same time - is dead in the water, at least for now.

For home borrowers it means job security and good economic times with interest rates that are still not high in historical terms - even if they are not as low as they were.

Its an opportunity for the many homebuyers who have borrowed heavily in recent years to pay a bit extra off their mortgage each month while conditions are good. Lighten the load of that mortgage monkey on your back.

There is no guarantee that these rosy economic conditions will stay - forecasts are for inflation to rise again next year and if it does the threat of higher interest rates will return.

Remember, every $1 paid off early saves $2 in interest over the full term of a home loan.

For example, a current borrower with a $275,000 loan who, five years into their loan, increases repayments by just $22 a week will save $27,500 in total interest over the life of the loan. That's a saving equal to 10 per cent of the original loan amount.

Test the savings power of extra repayments for your loan circumstances.

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25 May 2007 - OECD warning on interest rates
AFR 25/05/07
A report from the Organisation of Economic Co-operation and Development (OECD) has warned that interest rates may have to rise in the next 18 months to offset the likely risks of rising inflation. The report considers that the Australian economy is likely to rebound from the drought and grow at an estimated 3.25 per cent over the next 18 months, whilst the OECD considers global economic conditions to be bright and set for a sustained period of economic growth. Tight labour conditions may well be the trigger to force the Reserve Banks hand in raising interest rates as wage growth is likely follow the forecast economic growth in the coming year.
 

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25 May 2007 - Rudd finds IR issues close to home
AFR 25/05/07
Opposition leader Kevin Rudd has admitted his wife made an honest mistake in underpaying workers; the admission follows a concerted attack by Labor on companies found breaching workplace rules. Mr Rudd's wife Therese Rein's company, Work Directions Australia, confirmed reports that a subsidiary company had employed workers on common law contracts that paid them less than the award entitlements. All workers who had been underpaid had been compensated 4 months after Work Directions became aware of the issue in December 2006.
 

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25 May 2007 - Rabobank enters online savings market
AFR 25/05/07
Dutch banking giant Rabobank will launch a web based savings account into the Australian market. Together with the deposit product Rabobank will introduce a new managed funds product and they credit the internet model making it possible for the bank to launch a mass market product to Australian consumers.
 

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25 May 2007 - Mortgage insurers face new competition
AFR 25/05/07
America's oldest mortgage insurance company Mortgage Guaranty Insurance Corp has entered the Australian market place to take on the incumbent providers PMI and Genworth. Mortgage Guaranty was issued their license this week and are confident it will take market share in Australia, particularly within the low-doc vertical which it believes will continue to grow in the Australian market.
 

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24 May 2007 - Jobless rate could fall further
The Australian 24/05/07
The Business Council of Australia (BCA) has suggested the current unemployment rate of 4.4 per cent could fall further if jobs could be created for people marginalised from the workforce. Youth unemployment for those between 15 - 19 currently is a high 14.8 per cent, the indigenous population is running at 16 per cent unemployment whilst the disabled population is experiencing 8.6 per cent unemployment. BCA President Michael Chaney has called on more specific policies to boost employment citing that 25 per cent of Australia's unemployed live in just 5 per cent of its postcodes.
 

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24 May 2007 - Westpac ATM skimmed
AFR 24/05/07
Westpac has been targeted by an international skimming operation, one of its Melbourne based ATMs had been rigged up to steal funds (skimming) from customer accounts. Up to 75 cards are believed to have been accessed with funds sent to a bank account located in Canada. Westpac has cancelled 900 cards that had used the machine and reports that the bank's internal security had detected the operation.
 

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24 May 2007 - Questions over carbon offset schemes
SMH 24/05/07
Research released by the Total Environment Centre (TEC) questions the value of people paying to have trees planted on their behalf to clean up greenhouse gas pollution. The TEC has found that planting trees is the least credible form of offsetting consumer greenhouse gas emissions due to the long time lag between when the pollution occurs and when the tree actually will absorb carbon dioxide. TEC cites concerns that the carbon offsets market is vulnerable to profiteering and lacks credibility whilst noting uncertainties around the science of forestry planning and questionable accounting measures being implemented by companies to calculate emission reductions. Further research released in Europe has found that some offsets would take as long as 100 years to recapture the carbon emitted on a flight.
 

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June 2007

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29 June 2007 - Rates steady but RBA watches closely
infochoice.com.au
Interest rates are all but certain to be left steady for another month when the Reserve Bank board meets on Tuesday to deliberate on rates for July.

Although fears of rising inflation are in the minds of the board members, there is no real chance of a rise in rates until the next quarterly inflation figures are revealed towards the end of the month. Even then, it is unlikely that inflation will have jumped significantly from the moderate levels seen in the first quarter of 2007.

But the inflationary threat later this year or in 2008 remains, underlined by the International Monetary Fund this week, whose chief economist warned that global economic growth is likely to be above 5 per cent in 2007. It's much the same picture in Australia where the economy is motoring along at a very healthy clip. How long this can go on without inflation pressures appearing is the key question, and this is the IMF's major concern currently.

At the first sign of an inflation breakout here, borrowers can rest assured the RBA will move fast to raise interest rates to stifle it.

The RBA's own statistics on borrowing for May show a continuation of recent trends. Housing credit is back growing at levels of 1 per cent or so a month although there seems no signs of a jump to unsustainable levels that would worry the RBA. Consumer credit also continues to lift and will be closely watched for any rising trend above 12 per cent annual growth where it now stands.

Business borrowing continues to run at high levels, now at an annual rate above 17 per cent. This won't be cause for alarm yet either as most of this represents investment in new capacity sorely needed in an economy overstretched by strong growth in demand over the last couple of years.

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29 June 2007 - US Federal Reserve leaves rates unchanged
Sydney Morning Herald
The United States Federal Reserve has left the benchmark US interest rate unchanged at 5.25 per cent for the 8th meeting in a row. The Federal Reserve foresees moderate economic growth in coming quarters but remains on guard against possible inflationary pressures. The concern regarding inflation will mostly hose down any possible discussion surrounding any interest cuts in the near the future.
 

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29 June 2007 - Jobs growth continues
News.com.au
Australian Bureau of Statistics data has revealed there is now one vacant job for every 2.8 unemployed people. The continued strength in the jobs market is keeping economists and employers on the lookout for signs of excessive wage increases, however leading economist from CommSec Craig James can see no evidence of this. "While the job market is healthy, there are still no signs that wage pressures have intensified," Mr. James said, also stating, "The increase in the supply of labour, coming from increased participation locally and migration, has been enough to offset the increased demand for workers." In NSW employers are looking for 51,900 workers an increase of 24.5 per cent in the last year.
 

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29 June 2007 - DIY funds under scrutiny
The Financial Review
The Australian Tax Office (ATO) is set to conduct 6,000 audits on Self Managed Super Funds (SMSF) for this Financial Year, as a recent report by the Australian National Audit Office revealed approximately 25,000 investors of the funds never filed a tax return. Following up on the recent changes to the new "simpler super" tax reforms, the ATO have put these compliance checking measures in place, to ensure that investors of SMSFs are not rorting the system. The current financial year has provided SMSFs with an estimated $4 billion in tax breaks, a reported increase of 76%, where there are currently 340,000 funds valued at $250 billion.
 

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29 June 2007 - Housing stress revealed
The Financial Review
Figures from the latest census have revealed that there are over 775,000 households that live with 'housing stress', defined as having more than 30 per cent of their income committed to housing costs, whether renting or buying. More households in Sydney fall into this category than any other city with just under 27 per cent. In Melbourne and Brisbane this drops to 22 per cent, in Perth 20.7 per cent and Canberra is lowest at 16.6 per cent. The percentages are higher in inner-city areas which BIS Shrapnel says indicates large numbers of low-income apartment renters and less long term residents who already own their home outright.
 

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29 June 2007 - Insider trading action fails
The Financial Review
Citigroup has been cleared of insider trading charges with the judge finding that there was no conflict of interest in trading shares in Patrick Corporation while advising their client Toll Holdings on a takeover of Patrick. The ruling found that Citigroup did not have any fiduciary duties to Toll, that there was no evidence of insider trading and that Chinese Wall arrangements were in place. ASIC, which brought the action, is expected to now have legal bills of up to $10 million to pay costs for both parties.
 

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29 June 2007 - Labor wants inquiry into collapses
The Financial Review
The Federal Labor party has called for an inquiry into the collapse of Westpoint, Fincorp and ACR. Senator Nick Sherry said "It is clear that a full comprehensive inquiry is now necessary in order to identify regulatory weaknesses, recommend change in order to minimise such collapses from occurring in the future." ASIC chairman Tony D'Aloisio defended ASIC's priorities and reiterated that they would be focussing on insider trading and the retail investment market over the next 12 months.
 

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28 June 2007 - Labor to assist housing affordability crisis
News.com.au
Labor have unveiled plans to encourage housing ownership and increase affordability for middle and low-income families. The ALP is considering a range of options to help homebuyers including tax breaks for investors, negative-gearing incentives and shared equity loans to help first homebuyers. Labor housing spokesperson Tanya Plibersek admitted there is no "silver bullet" to solving the housing affordability crisis but considers any measure to encourage investment in the construction of affordable homes for first homebuyers and renters as critical.
 

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28 June 2007 - Stocks down as hedge funds exit
The Australian
The Australian equities market is predicted to feel the effects of the sub-prime mortgage scandal in the United States, as global hedge funds look to offload positions to access liquidity. The ASX 200 was down 2 per cent as domestic and offshore funds looked to cash in after a stellar bull run and book performance returns ahead of June 30.
 

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28 June 2007 - MasterCard threaten over regulation
The Australian
The Reserve Bank of Australia (RBA) has described itself as a "reluctant regulator" of Australia's card payments system. Last month the RBA started a review of the nation's card payments system and is looking into zero interchange fees for credit and debit cards, as well as EFTPOS. MasterCard warned that if the cards market faced further regulation of the interchange fees, then it would be forced to review its investment into the Australian market.

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28 June 2007 - Private equity strikes back on tax claims
The Australian
A likely tightening of the tax environment for private equity players in the United Kingdom and the United States has seen private equity operators in the Australian market move quickly to defend their position and argue that private equity in Australia "is treated no differently to other forms of ownership". Incoming British Prime Minister Gordon Brown has pledged a new approach on private equity tax treatment based on "justice and equity", whilst two bills are currently before Congress in the United States, to close a loophole that allows private equity firms to be taxed at a lower (15 per cent) capital gains rate than if the profits were treated as income.
 

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28 June 2007 - Kinghorn to pass go and collect $650 million from RAMS sale
Sydney Morning Herald
John Kinghorn the founder of RAMS Home loans will pocket $650 million when the business is floated on the stock exchange at the end of July. Kinghorn who founded the company in 1991 will retain 20 per cent ownership of the mortgage lender, which will be valued at a $177 million and will remain the company's largest shareholder. The float will value the company at $885 million and includes existing debt of $136 billion, which exceeds the earlier $1 billion asking price for a trade price. RAMS has a loan book of $13.3 billion and is forecasting net profit of $58.6 million in Financial Year 2007 / 08 on $164 million in revenue.

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28 June 2007 - Tax office looking at super contributions
Sydney Morning Herald
The Australian Tax Office (ATO) expects more than 6000 investors will attempt to avoid capital gains tax by not reporting the proceeds of a property sale. The ATO is carefully making preparations to assess any returns where the taxpayer was contributing large lump sums into superannuation this year. The ATO intends on cross referencing super contribution records provided to them by the Super funds and property sales recorded on land titles registers. The ATO is also zeroing in on CEO's after a study into 777 directors and executives at 160 listed companies found 30 had not filed a tax return, and in some cases it was habitual non-compliance with a total of 83 tax returns missing.
 

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27 June 2007 - Union and St George disagree over morale
The Australian
St George Bank is being pressured by the Finance Sector Union over offshoring of some positions and staff shortages. A staff survey conducted by the FSU revealed that 92 per cent of employees felt that sending jobs offshore had a negative effect on staff morale. St George has said that the survey findings contradict results of their own surveys. They also said that the bank was increasing staff numbers and offering alternative positions to employees displaced by the offshoring. Expectations are for the FSU to also seek a 4.5 per cent pay increase for employees of the bank plus increasing superannuation contributions from 9 per cent to 15 per cent.
 

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27 June 2007 - What if cash flow dries up
Daily Telegraph
While many people might view the increasing surge of the Australian Dollar as the best possible outcome for the economy, it potentially poses a threat on the state of the economy. Currently near US85c, the strength of the Australian Dollar is heavily attributed to the booming economy, where unemployment rates are currently at a low and investment vehicles continue to rise. While we still have sustained inflation levels, much of these pressures lie heavily on the cash flow of overseas markets, and as the Australian Dollar continues to soar, the pricing mechanisms of local investments are driving investors away from Australian markets.

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27 June 2007 - Challenger to step up deal size
Sydney Morning Herald
Australian financial services group Challenger has indicated it will step up transaction sizes to as large as $5 billion, such deal sizes will ultimately see Challenger move investments offshore to compliment the UK gas and electricity firm Inexus, that forms part of Challengers' infrastructure fund. Challenger said yesterday it is unlikely that the group would enter into any exchange of vows with likely suitor Westpac or Babcock and Brown, indicating the only wedding concerning Challenger, which took place last week, was in reference to the wedding of James Packer who owns 20 per cent of Challenger Group.
 

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27 June 2007 - ANZ look to offload Origin
Sydney Morning Herald
ANZ has placed their wholesale mortgage business Origin up for sale, a move that could see a spirited bidding process amongst wholesale competitors. GE Money, Challenger, Macquarie Bank and Adelaide Bank are all considered likely purchasers. Origin currently has a loan portfolio worth approximately $7 billion with 40,000 borrowers through 25 mortgage managers in Australia and 5 in New Zealand. Analysts expect Origin to fetch over $100 million for ANZ.
 

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27 June 2007 - Unfair tax rolled back
The Financial Review
Close to 3 million shareholders will avoid being taxed on paper profits following a government decision to reverse a controversial tax ruling on renounceable rights issues. The fund raising method has been used to raise close to $26 billion in the last 4 years and is seen as an efficient and equitable method for companies to raise capital. The previous tax ruling would have seen shareholders taxed upfront on paper profits rather than taxed on realised gains.
 

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27 June 2007 - GST threshold increases
The Financial Review
The GST registration threshold for small businesses will be lifted from $50,000 to $75,000 from July 1 2007. The move will see a small business avoid GST related paperwork, whilst not-for-profit groups will now avoid GST registration up to $150,000 in turnover.
 

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27 June 2007 - RAMS set to float
The Financial Review
RAMS Home Loans is set to lodge a prospectus after securing underwriting commitments from institutions for the $870 million float. Founder John Kinghorn will sell down his 94 per cent stake to around 20 per cent whilst the companies other shareholder Greg Jones will sell out completely. Advisor UBS has prepared the float after attempts at a trade sale failed to secure the $1 billion asking price. It is believed the float will price RAMS at 15.1 times the 2008 forecast net profit of $58.6 million or $2.50 a share.
 

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26 June 2007 - No TFN means higher tax on super
Sydney Morning Herald
Super fund members only have until July 1 to ensure that their tax file number (TFN) has been recorded on their account to avoid penalties. After the deadline any super accounts that don't have a TFN attached will attract a tax rate of 46.5 per cent instead of 15 per cent on all contributions including superannuation guarantee and salary sacrifice contributions. The higher tax rate will be applied to all contributions after the first $1,000 in a financial year and funds will also be unable to accept after tax contributions. One fund, Asset Super, has said that they have 123,000 members and 50,000 of those have not supplied a TFN.
 

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26 June 2007 - China the new India
Sydney Morning Herald
A report by Deloitte's has predicted that within 10 years India will become less competitive for outsourcing as highly educated and well-trained Chinese take over the work. All the major Australian banks except for Commonwealth have, to varying degrees, taken advantage of outsourcing some jobs to India and one third of the world's financial institutions have back-office processing centres there. Around 200 million Chinese are learning English and banks such as ANZ that have direct ownership of institutions in the region would be well placed to start having IT work performed there.
 

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26 June 2007 - Australians top card use ranking
The Australian
A survey of seven countries by Citibank has found that Australians rank lowest in terms of card ownership with an average of 2.1 cards per person. However we top the table for frequency of use as we reach for our cards an average 5.4 times a week. These figures compare with South Koreans who top the number of card rankings with 3.05 cards per person but place second behind us on the frequency of use count, accessing their cards only 5 times a week. 12 per cent of respondents admitted that they used their card more than 11 times per week and a further 3.5 per cent use their cards more than 20 times per week.
 

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26 June 2007 - IMB to continue as a mutual
The Financial Review
IMB shareholders have rejected a proposed change to the building society's constitution that would have made mergers and acquisitions easier. The changes would have equalised the rights of shareholders and ordinary members in case the mutual organisation was wound up. The IMB chairman, Russell Fredericks, said that while they were disappointed with the result the vote was being regarded as an endorsement of their commitment to mutuality.
 

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26 June 2007 - On the way to a super record
The Australian
Australian super funds have performed strongly in May with international shares surging 2.98 per cent to deliver a 15.41 per cent return for the 11 months of the financial year to date. If financial markets hold this week, the result will beat previous record performances of 2006, 2005 and 2004 (14.2 per cent, 13.1 per cent and 13.2 per cent respectively). The best performing funds, measured by their default balanced investment option, include Catholic Super Fund, which delivered 20.1 per cent return net of fees and tax, Telstra Super Corp Plus (18 per cent) and NGS Super (17.5 per cent).
 

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26 June 2007 - Government fixes tax on rights issues
The Financial Review
The Federal Government is set to overturn a High Court decision and Australian Tax Office ruling, which requires investors who are issued a rights offer to pay tax on unearned income. With end of financial year near approaching, these amendments will provide greater certainty and clarification on tax enquires in relation to sharemarket investments and their tax liabilities. Mr Nooroozi, of the Institute of Chartered Accountants believe that these changes couldn't have happened in a more timely manner, "It's great news that the status quo has been maintained and announcement was made before June 30, because people need to know what their tax position is."
 

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25 June 2007 - Consumer spending drive growth
The Financial Review
A spike in consumer spending has raised Australia's annual rate of economic growth to nearly four per cent. In the last half-year, consumer demand has surged from 2.5 to 4.2 per cent. As the country's most populous state, New South Wales (NSW) contributes greatly to consumer demand. The spending of NSW consumers rose by 4.6 per cent in 2006, which NSW Treasury traces to factors such as lower taxes, wages growth and a drop in inflation. Chris Richardson, of Access Economics, says a drop in commodity prices combined with a softer Australian dollar and a fall in interest rates would catalyse a revival of the NSW economy.
 

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25 June 2007 - Central banks urged to increase rates
The Financial Review
Central banks across the globe have been urged by the Bank for International Settlements (BIS) to consider increasing interest rates to counter rising levels of household debt and inflation pressures. The warning formed part of the BIS's annual report which found that in Australia the growth of credit has been twice as fast as the US or Canada and the result of such fast growth may have a detrimental impact on inflation and monetary policy.
 

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25 June 2007 - Smaller margin lenders make their mark
The Financial Review
Smaller margin lenders are leading the way in the end of financial year rush to push pre paid products out the door, Suncorp and Bank of Queensland have offered prepaid rates 1 per cent below the market as they attempt to build their portfolios' in a market dominated by entrenched participants such as CommSec, Macquarie, Adelaide Bank, St George and Westpac. The Australian margin lending industry has doubled in the last three years, backed by a surging equities market with lending now exceeding $30 billion whilst margin calls have been at historical low levels.
 

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25 June 2007 - ASIC directed to look at banks
The Australian
Consumer complaints to the Joint Parliamentary Committee on Corporations and Financial Services has led to a request to ASIC to investigate eight individual complaints as well as gauge the effectiveness of internal bank dispute resolution procedures. Liberal Senator Grant Chapman has asked ASIC to investigate and let the parliamentary committee know if there is any systemic problem within the banking institutions. Recent media reports have promoted claims that banks have withheld statements from defaulting borrowers, the failure to provide statements to distressed borrowers can make it difficult for the borrower to budget, refinance and submit tax returns.
 

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25 June 2007 - Wages falling whilst profits rise
The Australian
OECD research reveals that almost half of developed nations have driven unemployment below 5 per cent (nine nations now have unemployment below 4 per cent), whilst only 2 OECD nations are experiencing inflation in excess of 3 per cent. Global profits continue to increase and it appears at the expense of increased wages. In the US, profit share has increased to 10.5 per cent of the national income whilst in Japan it has risen to 23.5 per cent.
 

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25 June 2007 - Washington looks to increase taxes for private equity club
Sydney Morning Herald
The Democratic Party has introduced a bill that would more than double the taxes on income earnt from partnerships including private equity managers, venture capitalists and some hedge funds. The legislation proposes to tax the performance income earnt by the partnerships at ordinary income tax rates of 35 per cent instead of the current 15 per cent capital gain rate. Similar debate is currently being held in the United Kingdom.
 

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25 June 2007 - Australian equities expected to fall after Wall Street
Sydney Morning Herald
The Australian Stock Market is expected to open lower today following a tough Friday on Wall Street and the continuing climb of oil prices. US finance sector stocks were lower on concerns that losses on mortgage securities may not be contained whilst a strike in Nigeria (Africa's biggest oil producer) caused concern in oil markets. Local share traders expect the ASX to open 60 - 70 points lower and speculation that the Chinese government may be tightening monetary policy will see resources stocks lower also.
 

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22 June 2007 - Strong economy may herald rate rise
infochoice.com.au
The strong economic performance of recent months, and the potential for inflation and interest rate problems coming over the horizon, are underlined in the latest set of leading indicators for the Australian economy.

The Westpac-Melbourne Institute leading index for April, which points to likely conditions 3 to 9 months ahead, is up 6.7 per cent on a year ago. This reflects the strong March quarter GDP and suggests further growth in productivity and company profits.

So we can expect an economy that is already growing at annualised rate over 4 per cent to continue in a similar vein, with no great relief from the skilled labour shortages and infrastructure constraints already experienced.

Even the one poor performing sector of late, the rural sector, looks like turning around in the coming six months or so following the recent rains in south eastern Australia. Instead of the 0.5 to 0.75 percentage points drag on economic growth, the drought-ravaged farm sector should start to make a positive contribution to GDP.

While there is no great imminent threat of a rise in interest rates, as the second half of 2007 wears on, we may see inflation pressures starting to build again and the chances of at least one 0.25 per cent rate rise occurring late this year or early in 2008.

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22 June 2007 - St George claw back market share
Sydney Morning Herald
St George Bank is seeing improved performance within the home loan market assisted by an improving New South Wales economy. The bank reported that their home loan book had grown 9.8 per cent in the 8 months to the end of May. St George has forecasted between 10 to 12 per cent growth in home loans by the end of its financial year in September. The bank still remains largely dependant on the NSW market for much of its retail banking business and the recovery will assist St George across all verticals.
 

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22 June 2007 - Bendigo says no to Bank of Queensland
Sydney Morning Herald
Bank of Queensland has given up on its aspiration of acquiring Bendigo Bank after having a revised bid rejected. The rejection of an all cash option has led David Liddy, Chief Executive Officer of Bank of Queensland to rule out any further bid for Bendigo.
 

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22 June 2007 - Bank of England warning on debt
Sydney Morning Herald
The Bank of England has warned that the rise in complex debt instruments and lax lending standards represents a significant threat to global financial well being. Governor of the Bank of England Mervyn King issued a caution to corporate debt markets saying that those trading in complex debt products are taking on risks "which we do not understand with any great precision".
 

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22 June 2007 - Buyers queue up for Fincorp
The Australian
The administrators of collapsed property player Fincorp are believed to have short listed two parties to take over the properties of the failed company. It is estimated the sale of properties could deliver a return well in excess of the original estimate of $150 million.
 

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22 June 2007 - Super returns up and up on equities boom
The Financial Review
Superannuation funds will deliver the highest returns of the decade this year, on the back of booming equities market. Balanced super funds are looking at net returns of around 15 per cent for the financial year, according to researcher SuperRatings.
 

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22 June 2007 - Interest payments breach record levels
The Financial Review
Mortgages and credit cards are ensuring that households are spending record amounts of income on interest payments. Interest payments now account for 11.9 per cent of total disposable family income, the highest level in 30 years. Outstanding credit card debt has climbed 8.5 per cent in the past year. Economists believe the debt figures demonstrate household confidence in taking on more debt to fund investments and purchases, with Margin Lending now breaching $30 billion in March fuelled by the booming share market.
 

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21 June 2007 - Business wants involvement on infrastructure planning
The Financial Review
Business is calling for greater involvement with State governments on infrastructure projects and has been spooked by the announcement of close to $50 billion of infrastructure projects in the NSW budget. Business is concerned that the massive scale of the projects will result in delays due to lack of resources and expertise, whilst there is also concern that the program could see inflation rise.
 

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21 June 2007 - NAB look to online strategy
The Financial Review
NAB is expanding its internet direction in an attempt to attract younger customers and self-directed investors. NAB has launched a new business unit Star Direct and Alliances, which will explore and develop online strategies. The launch of Star Direct comes at a time when all of the big four banks are actively assessing their internet activities.
 

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21 June 2007 - States get fat on property tax
The Financial Review
The states and territories have taken $19 billion in land taxes and stamp duties in the last year, the windfall tax take was $2.6 billion higher than the combined budget forecasts with all states budgeting for further increased revenues next year. Federal Treasurer Peter Costello has had a long running dispute with State treasurers over the abolition of some taxes on property sales, saying that the proportion of state budgets made up of property taxes had more than doubled since the financial year 1998/99.
 

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21 June 2007 - Investor rush to beat super deadline
News.com.au
With nine days until the end of financial year, investors are pouring money into superannuation to take advantage of the tax free benefits for contributions up to $1 million. The rush to invest has seen a surprisingly large amount of money invested in Australian equities by superannuation funds, creating support for the market as funds search for opportunities to invest the flood of cash.
 

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21 June 2007 - Westpac Index points to strong growth and higher interest rates
News.com.au
Westpac-Melbourne Institute's Leading Index of Economic Activity, which indicates the likely pace of economic activity 3 to 9 months into the future, rose 1.7 points. This figure projects annualised growth to 6.7 per cent in April, well above its long-term trend of 4.4 per cent. According to Westpac chief economist Bill Evans, the strong growth and rising inflation will see the Reserve Bank of Australia (RBA) move interest rates a minimum of 50 basis points in the first half of 2008.

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21 June 2007 - NSW demands Costello pay $400m tax bill
News.com.au
New South Wales through The Chief Commissioner of Taxation has issued the Commonwealth with a pre-court final demand for a $400 million tax bill that the Federal Government is refusing to pay. The bill is the result of the Federal Government's sale of Sydney Airport to Macquarie Bank, under which the Government issued an indemnity on land tax to the purchaser. A total $160 million of the disputed $400 million tax bill is penalty interest charged for non-payment.
 

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20 June 2007 - Minimum wage to go up again
The Financial Review
The Australian Fair Pay Commission (AFPC) has said that the $27 per week pay rise for low paid workers last December had not harmed the economy. Ian Harper of the AFPC hinted that another rise was likely for workers on the minimum wage when the commission hands down its next decision in a fortnight. However employers want the AFPC to take into account the effect of recent tax cuts and changes to welfare saying that the next increase should be limited to $10.
 

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20 June 2007 - Prime super coming
The Financial Review
Macquarie Bank launched its 'Prime' shares service only a month ago and it is already developing a version for use by self-managed superannuation funds. However superannuation funds cannot use its most important feature, the ability to gear, as super funds cannot borrow. Government changes mean that super funds can now invest in installment warrants so Macquarie is developing a protected version of Prime for use by self-managed funds.
 

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20 June 2007 - Melbourne to take the lead
The Financial Review
Forecasts from Macquarie Real Estate tip that Melbourne prices will out-perform other capitals due to skilled migration and prices that are more affordable than Sydney, Perth or Brisbane. The growth in Melbourne is expected to be moderate though, and mainly limited to inner and middle ring areas. The affordability problems are starting to bite Perth prices with migration slowing meaning a year of flat prices ahead. In areas of Sydney that have been hit with high levels of mortgagee sales there are signs of improvement with unemployment down to 7 or 8 per cent from 10 per cent previously.
 

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20 June 2007 - Focus on the wealthy
The Financial Review
A Brandmanagement research study, conducted on behalf of several financial institutions, has found that despite bank's efforts to target well-off customers, wealthy investors struggle to find the services they want from financial institutions. The survey revealed many wealthy investors experienced issues with service due to staff turnover, lack of skill and poor product and market knowledge. Brandmanagement managing director Andrew Inwood said, "In the past 12 to 18 months, the banks have started to wake up that these people are under-serviced."
 

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20 June 2007 - Westpac looking to see if online broking water is warm
Sydney Morning Herald
Westpac is considering launching an online share broking business under its own name to take on big four rivals CBA and ANZ. The bank has recently launched a new equities division within institutional banking and is considering options how to best compete with the major participants. Westpac currently operate a small online service through its subsidiary company BT Wealth Management, but any move to seriously challenge CommSec (CBA) and E*Trade (ANZ) will require significant investment.
 

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20 June 2007 - Westpac good to go in shanghai
Sydney Morning Herald
Westpac have announced that the Chinese regulatory authorities have given the bank approval to open a branch in Shanghai. The branch is set to open towards the end of 2007, and forms part of Westpac's strategy to increases its presence in China to ensure it can meet the needs of its corporate and business clients.
 

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20 June 2007 - PBL shareholders left without a vote
Sydney Morning Herald
PBL shareholders will not be required to vote on the sale of control of its media assets under a ruling from the Australian Stock Exchange. The ruling has drawn widespread criticism from a number of fund managers and shareholder activists who argue the sale represents a significant change in the operations of PBL.
 

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20 June 2007 - Costa pulls a rabbit out of the hat
News.com.au
NSW State Treasurer Michael Costa appears to have pulled a rabbit out of the hat, turning around a deficit into a surplus of $444 million. Costa may have a fight on his hands though, as $400 million earmarked for the surplus is to come from Federal Treasurer Peter Costello, for duty related proceeds from the sale of Sydney Airport. Costello is challenging the assessment despite making an allowance for it in the Federal Budget.
 

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19 June 2007 - Rio wins race to $100
The Australian
Australian mining giant Rio Tinto has won the race to be the first Australian stock to reach $100 a share in the modern era. Rio beat other contenders including Macquarie Bank and biotech company CSL to the magical figure and closed 1 cent lower at $99.99, whilst Macquarie closed at $90.10. The last company to break the $100 mark was Poseidon which traded as high as $280 on the old Adelaide Stock Exchange in 1968.
 

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19 June 2007 - Australian banks rank poorly on international comparison
The Australian
Australian banks have ranked 13th out of 17 countries in a global survey by management consultants Booz Allen. The survey found that poor services across branches, call centres and online channels have seen a widening of the gap between Australian banks and their global counterparts.
 

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19 June 2007 - NAB set to retain UK operation
The Australian
NAB chief executive John Stewart has ruled out any sale of the banks UK operations saying that the Board of NAB are 'delighted' with the UK operation and the progress it has made. Stewart rejected the opinion that the bank need to get big in the UK or get out, and pointed to 22.6 per cent growth in the period cash earnings as proof the operation has a positive future and is not approaching 'ex-growth'.
 

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19 June 2007 - Macquarie takes major stake in OzForex
The Australian
Macquarie Financial Services has purchased 51 per cent of retail foreign exchange company OzForex. OzForex now transacts over $200 million per month in foreign exchange and boasts an impressive client base that Macquarie believes will be boosted with access to the 670,000 retail financial services customers on the books at Macquarie Financial.
 

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19 June 2007 - Pressure to ease affordability crisis
The Financial Review
While the federal government has ruled out any increase in the first home buyers' grant, Prime Minister John Howard is under increasing pressure from his MPs to do something about the housing affordability problem. A suggestion from Liberal MP Cameron Thompson is to let home buyers partner with an institutional investor such as a superannuation fund which could take a 10 to 20 per cent stake. The issue will be discussed in a party room meeting today.
 

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19 June 2007 - Super funds chase wealthy investors
The Financial Review
Wealthy investors are taking advantage of the one-off opportunity to invest $1 million in super, before the Federal Government's retirement system reforms take effect on July 1. The increasing surge of investors making contributions to their super accounts has prompted superannuation providers to revise their account products and services, in a last minute attempt to gain market share.
 

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18 June 2007 - Fincorp books were in unsatisfactory state
Sydney Morning Herald
KordaMentha, administrators of the failed property investment group Fincorp, have reported that after two months of initial investigative work on Fincorp's failure, there have been several key factors in assessing the company's complex finances. The latest statement confirms that whilst banks are likely to get most of their money back, individual investors face an uncertain future - secured noteholders may receive 30c in the dollar and unsecured noteholders will potentially lose everything. KordaMentha will present a plan in which they believe results in the best possible outcome for Fincorp's investors at next months second creditors meeting.
 

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18 June 2007 - Days numbered for four pillars
The Australian
David Morgan, the current chief of Westpac, says that with the big 4 banks getting their act together on community engagement as well as global consolidation will mean an end to the Four Pillars policy. Dr Morgan has said that while the major Australian banks currently look very large, after further consolidation there will be banks internationally with market capitalisation of $200 billion. He said that the industry had improved corporate responsibility, has no interest in returning to the days of branch closures and now offer fee-free accounts, all meaning that the policy was no longer necessary.
 

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18 June 2007 - Migration feeding economy
The Australian
The number of permanent migrants has increased over the past five years from 75,000 to 140,000 per annum. This has resulted in skilled migrants filling around one third of the 460,000 jobs that were created over the past two years. Research has shown that the services required by each immigrant add one new job to the economy for every new arrival. Last year the Productivity Commission estimated that if skilled immigration increased by 50 per cent then living standards would increase by $383 per person in 20 years, but most of this improvement would go to the migrants themselves.
 

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18 June 2007 - Rise on equity release
Daily Telegraph
Intake for the IMB reverse mortgage has exceeded the building society's expectations since its release at the beginning of this year. "We were forecasting that they would be around 2 per cent of our mortgage writing, but it is now running at about 3.5 per cent, and we expect it to be 5 per cent next financial year," IMB chief executive Wayne Morris said. The average loan size was $60,000, with 75 per cent of loans taken out by those aged between 60 and 75 years old. Most loans were used for travel, renovations and property maintenance.
 

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18 June 2007 - Investor property market to intensify
Daily Telegraph
Experienced investors who have quit the property market to take advantage of superannuation incentives are expected to return to the market, increasing the demand for residential investment property. Wizard Home Loans said the number of Australians planning to buy investment property in the next 12 months jumped by 13 per cent to 878,000 in the March quarter, up from 779,000 in the December quarter and almost double the level 18 months ago.
 

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18 June 2007 - Reform still required to go the distance
Daily Telegraph
Despite the recent super reforms introduced by the government which abolishes tax on super payouts for retirees over 60 from 1 July this year, many people will still miss out on a comfortable retirement. Key industry figures indicate more reform is required to achieve the government's aim of retirees no longer being dependent on the age pension. The Association of Superannuation Funds of Australia (ASFA) said considerable progress has been made in the growth of super balances however some parts of the population were still well behind. ASFA chief executive, Phillipa Smilth said "Further strategies such as extending the super co-contribution scheme are needed to help a greater proportion of people achieve a more adequate retirement income." ASFA estimates super payouts in 2006 to have been about $130,000 for men and $45,000 for women.
 

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18 June 2007 - Fund has to start investing at the top
Sydney Morning Herald
Investing of the $51 billion Future Fund is set to begin at the end of this financial year, irrespective of concerns the fund would be entering at the top of the market. General manager, Paul Costello said that the fund was "on track", even though it was made aware that the timing of the investment was not at its strongest. This among other issues has caused debate amongst unions and the federal Opposition. Mr Costello said he would not be troubled by political comments, stating the success of the fund would be driven through the body's independence, and the government would have no bearing of the day to day decision making.
 

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15 June 2007 - Rate rise on the horizon
infochoice.com.au
A rise in home loan interest rates is not imminent but may not be too far off. That's the bottom line in a warning speech from Reserve Bank governor Glenn Stevens in Brisbane this week.

Like most economic analysts and commentators, Stevens admitted that the RBA is surprised by the ability of the Australian economy to grow strongly in recent years without setting off inflation. Wages have stayed within manageable limits while the latest CPI figures showed inflation settling back nicely after approaching danger levels last year.

But all this comes at a time when the economy is expanding rapidly, a rate of 4 to 5 per cent per annum currently, and Stevens was at pains to say this can't last. "If strong demand growth were to persist, risks on the inflation side will grow", he warned.

The RBA forecasts inflation to pick up next year but Stevens has made it clear it will want to pre-empt any inflation breakout with early action. There is "cause enough to err on the cautious side in setting policy, and to ask whether the current settings are restrictive enough", he said.

But the recent drop in inflation has, says Stevens, given the RBA "a bit of extra time" in which to assess the risks and take any interest rate action. That suggests that borrowers should be spared a rate rise for at least the next month or two and probably longer.

The soonest a rate rise could be expected is in early August after the release of this quarter's CPI result, but inflation signs are more likely to emerge beyond the current quarter putting a greater likelihood of a rate rise in November or early in 2008.

Any rise in official interest rates by the RBA would quickly flow through to variable home and business loan interest rates. Rates almost always rise in 0.25 percentage point increments, which add around $17 a month to repayments for every $100,000 of borrowings.

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15 June 2007 - RBA chief confident of economic conditions
The Financial Review
Glenn Stevens, the governor of the Reserve Bank of Australia (RBA), is confident of economic conditions whilst conceding that inflation is likely to rise in 2008. Stevens hinted that a rate rise in July was unlikely, whilst describing the combination of strong growth, strong employment, lower inflation and moderate wages growth as "a great set of outcomes". Stevens views the threat of inflationary pressures as a medium term concern for the central bank, as continued growth in demand will place further inflationary pressure.
 

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15 June 2007 - Future fund looks to engineer for direction
The Financial Review
The Future Fund has appointed a 36 year old engineer, David Neal, to be the Chief Investment Officer overseeing $50 billion in investment decisions. Mr Neal has described the opportunity as a chance to establish world class investment practises stating the future fund will be focused on investment not trading.
 

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15 June 2007 - We are 20.5 minutes a week better off than 20 years ago
The Financial Review
The average Australian is working less time to pay for essential groceries compared to 20 years ago. The Australian National Retailers Association has released a study showing that people are now working 229.5 minutes to pay for a typical basket of groceries compared with 250 minutes in 1978.
 

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15 June 2007 - RAMS looks to float as bidders decline
The Australian
RAMS Home Loans is believed to be looking towards a float to achieve its desired sale price with just one party likely to submit a final bid today. US private equity group Kohlberg Kravis Roberts is thought to be the last party involved in the bid process and industry sources believe will submit a bid in the region of $950 million. It is believed many potential buyers baulked at the estimated $1 billion asking price. According to ASIC documents filed in February, RAMS reported an increased profit of $29.9 million for the year ending June 30, 2006.
 

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15 June 2007 - Housing stocks worse than expected
Sydney Morning Herald
A shortage of homes and apartments being built in Australia is worse than previous estimates, ensuring a tight rental market will continue. A Westpac report shows that shortage is close to double the previous estimates with Queensland the worst affected state.
 

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14 June 2007 - SME's tax windfall
AFR
Laws relating to tax breaks for small businesses announced in the federal government's May budget were passed in parliament yesterday. The package worth $295 million over four years, provide concessions associated with the GST, the simplified tax system, capital gains tax, fringe benefits tax and PAYE instalments and will be available to any small business with an annual turnover of less than $2 million. Small Business Minister Fred Bailey said "Businesses will not be obliged to adopt any concessions not suited to their requirements."
 

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14 June 2007 - NAB offers more to mortgage brokers
The Financial Review
National Australia Bank has revised its trailing commissions paid to mortgage brokers as part of an effort to boost local mortgage lending growth generated through the channel. Effective from next month, NAB will increase trailing commissions from 5 basis points to 30 basis points during the fourth year of a customer loan and by 10 basis points to 35 basis points during the fifth and each subsequent year, providing greater incentive to brokers whom remain proactive and loyal. A decline in new mortgage broker loan sales in the first half, falling from 16 per cent in the previous corresponding half to 14 per cent, saw NAB report the lowest sales among the major banks. NAB Broker regional manager Matt Lawler said "the bank would not chase market share but would focus on building a sustainable profitable mortgage broker business." A study by Fujitsu Consulting and JPMorgan suggest that mortgage brokers account for almost 50 per cent of all new mortgage sales.
 

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14 June 2007 - No rise in first home buyers grant
The Age
The Federal Treasurer Peter Costello has knocked back calls from within his own party to increase the existing $7,000 grant to first homebuyers to $14,000, arguing that the housing market is in a healthy stage presently and that since 2000 the government has provided $7.3 billion in first home owner grants. Housing industry participants have agreed that any increase in the grant will artificially increase prices, whilst not providing a solution to the supply of housing or tackling the issue of state government taxes and rationing of land releases.
 

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14 June 2007 - Fixed rates on the way up
Daily Telegraph
The sell off in global bond markets will make it hard for local banks to continue to offer low fixed rates on home loans. The Reserve Bank of Australia estimates the average three year fixed rate is currently 7.45 per cent or 0.62 per cent below the quoted bank standard variable rate, but with bond yields rising, the cost of funding for many lenders will increase markedly which will inadvertently increase fixed rates. Westpac analyst David Goodman believes that the trend for fixed rates to be below the standard variable rate, which emerged late in 2003, has the potential to correct itself in coming months. Consumers will be banking on the intense competition within the home loan market to continue, as banks and lenders will scramble for ways to ensure they are price competitive and will likely absorb much of the price increase.
 

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13 June 2007 - Super binge continues
Sydney Morning Herald
With little more than 2 weeks remaining until the super contribution cut off date, Australians are pouring money into superannuation, with up to $80 billion being diverted into superannuation investments. Real estate agents are reporting that home owners are taking out large loans on their properties to reinvest into superannuation whilst Macquarie Bank reported almost $11 billion in identifiable super contributions to its cash management and wrap accounts over the past three months, of which $2.1 billion came from contributions of more than $1 million. As of July 1, investors will be limited to making after tax contributions of $150,000 a year or $450,000 averaged over three years. Transitional rules in place this year have allowed for contributions up to $1 million between 10 May, 2006 and 30 June, 2007.
 

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13 June 2007 - Consumer confidence remains high
The Australian
Consumer confidence continues to remain at high levels according to The Sensis consumer report, that has consumer confidence at record levels citing bright financial prospects, optimism and the state of the Australian economy. The report identifies men being more confident about their financial prospects than women, whilst 73 per cent of Australians are confident for the year ahead.
 

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13 June 2007 - ANZ appoint outsider for CEO
The Financial Review
The long running search for the successor to outgoing ANZ Banking Group CEO John McFarlane is over, with the bank appointing an external overseas candidate to the role. Mr Michael Smith, the current head of HSBC's Asian operations, will take over when McFarlane steps down on 30 September 2007. The appointment has sparked speculation that ANZ will embrace an aggressive Asian expansion strategy where the incoming CEO believes there is considerable opportunity. ANZ surprised many by appointing outside of the banks internal candidates with current retail banking head Brian Hartzer considered the most likely appointment.
 

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13 June 2007 - ATO to chase small business tax debt
The Financial Review
Small businesses tax debts have increased to close to $7 billion raising doubts over the aggressive debt collection tactics employed by the Australian Tax Office (ATO). The ATO plans to increase its efforts to force small businesses to pay their outstanding tax bills by introducing tactics, such as calling business owners after hours at their homes and employing external debt collection agencies. A report by the auditor general's office questions the effectiveness of such tactics.
 

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13 June 2007 - Housing affordability at crisis point
The Financial Review
Federal Government MPs are urging the Prime Minister to investigate and implement new strategies to ease the housing affordability crisis hitting their heartland in the suburbs. Housing affordability is now at record lows and the inability for first home buyers to enter the housing market is shaping up as an election issue. Queensland MP Steven Ciobo has urged the government to double the existing first home owners grant to $14,000 but to introduce a means test and asset price cap to ensure that the scheme is not abused by wealthier home buyers.
 

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12 June 2007 - Struggle street disappearing
The Financial Review
The Australian economy is booming, unemployment is very low and inflation is low. The Australian Labor Party tries to tell Australians that things are not that good, but most Australians know how well off they are. Most Australians are richer than they have ever been. Most families are "struggling" - struggling to buy bigger homes, bigger cars and have better holidays. Fewer Australians are poor and fewer still are living in poverty. If an Australian wants a bigger house or a bigger car, that is not society's problem.
 

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12 June 2007 - RBA cautious about speed of growth
The Australian
With the Australian and global economies continuing to surge ahead economists are concerned that the continued absence of inflationary pressure despite continued growth can not last and it may be only a matter of time before prices are hit hard. If the next series of economic data confirms the vigorous growth picture the Reserve Bank (RBA) may raise rates in a bid to cut inflationary pressures before they appear. Whilst the RBA may be satisfied publicly with the growth story, privately it is believed the bank still holds concern surrounding capacity constraints. Bond markets in Australia and overseas are factoring in a future interest rate increase with US 10 year bonds trading as high as 5.25 per cent - an indication that markets do not see any splutters emerging in the US economy.
 

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12 June 2007 - Victoria holds off further stamp duty exemptions
The Financial Review
The Victorian government has opted not to provide further stamp duty exemptions to first home buyers citing the importance of land supply over tax breaks. Victorian treasurer John Brumby said that Victoria took the decision 4 years ago to offer an additional $5,000 cash bonus to the federal first home owners grant rather than further stamp duty exemptions. Victorian first home buyer activity is currently at its strongest level in 2 years.
 

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12 June 2007 - Floods hit coal profits
The Australian
The June long weekend storms and floods in Newcastle and the Hunter Valley region of New South Wales will have an impact on coal exports. The Hunter Valley Coal Chain Logistics Team estimates that shipping from the port at Newcastle will only recommence after 18 June 2007, meaning that in excess of $100 million in earnings may be lost. Even greater is the problem of disruption to rail freight lines after landslides and flooding. Coal producers are already facing increased demurrage costs, as the large number of vessels waiting to be loaded off Newcastle grows again.
 

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12 June 2007 - First home buyer pressures emerge in Adelaide
Adelaide Advertiser
BankSA managing director Rob Chapman has called on government and business innovation to help solve the problem of home affordability for first home buyers saying "There is no doubt that housing affordability has become more difficult for those entering the market." The Adelaide median house price at $300,000, or six times the national average full time wage, has forced a greater focus on the issue of affordability in South Australia.
 

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8 June 2007 - Rate rise possible late in 2007
infochoice.com.au
The possibility of an interest rate rise this year has returned this week as the rebound in the Australian economy in 2007 takes most by surprise.

A strong rebound in economic growth over the last six months was confirmed in March quarter GDP, up 1.6 per cent. Over the last two quarters, the economy has been growing at an annualised rate above 5 per cent.

No surprise then in another bumper month of job creation in May with a net addition of 40,000 full and part-time jobs. Or in an unemployment rate that continues to find new lows, now just 4.2 per cent.

A couple of months ago it looked like the economy was nicely balanced with strong business investment pushing the economy along amid moderate consumer spending, a weak housing market and even weaker rural sector. It now seems the business, consumer and housing sectors are all producing strong growth.

Both the number and value of housing loan commitments continued their upward trend in April, although it's the purchase of established homes that is leading the way with construction lagging.

The big question for borrowers is, will this lead to renewed pressure on inflation, and in turn interest rates? The economy has proven surprisingly resilient to inflation in recent times but if current conditions continue they will make for a tough test of its anti-inflationary qualities.

The next big test for interest rates will be the next quarterly inflation figures (for three months to June) due out in late July - so no chance of a rate rise before August at the earliest. But even then, it's probably more likely that any inflation problem would not show up until the third quarter, putting any real chance of a rate rise off to November or later. What price an October federal election then?

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8 June 2007 - Average home loan jumps to $318,000
The Financial Review
Leading mortgage broker group AFG said the size of the average home loan jumped to $318,000 in May, an increase of 3.6 per cent. AFG analysis reveals the loan size increase has been led by Queensland and NSW activity. For a loan of $318,000 a 7.5 per cent over 25 years a borrower would be required to pay a minimum monthly repayment of $2350. The Housing Industry Association of Australia believes that households contributing greater than 30 per cent of their annual income to mortgage repayments are experiencing mortgage stress, meaning the average household with a mortgage will now require a combined household income of greater than $94,000 to avoid 'mortgage stress'.
 

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8 June 2007 - European rates up with more to follow
New York Times / NZAP
The European Central Bank (ECB) has raised rates to their highest level in 6 years conceding that the fast paced euro-zone economy had increased the pressures on inflation. The ECB hinted that further increases may be required in the coming months. New Zealand also raised their interest rates in a surprise move taking the central rate to 8 per cent. The United Kingdom like Australia left rates on hold.
 

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8 June 2007 - Wine grape harvest down 25 per cent
Sydney Morning Herald
Australia's wine grape harvest has fallen 25 per cent to the lowest level in a decade but the industry is set to eclipse export volumes. The 2007 vintage has been greatly hampered by drought and severe frosts, however the industry believes the shortfall will benefit them as stockpiles will be reduced, assisting the industry in increasing prices. Exports for the 12 months to May 2007 show Australia exported a total of 798 million litres (up 10 per cent), a combined value of $2.97 billion (up 7 per cent).
 

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8 June 2007 - Former HIH director jailed for two years
Sydney Morning Herald
Former HIH director and chief financial officer Dominic Fodera has been jailed for two years for authorising a prospectus from which there was a material omission. Fodera faced a possible five-year term after being found guilty but received a maximum three year term to be released on a good behaviour bond after two years by NSW Supreme Court Justice Megan Latham.
 

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7 June 2007 - Consumer spending outstrips wages
The Financial Review
Consumer spending grew to $140 billion in the first three months of 2007 outstripping wages earnings by $15 billion. Consumption continues to exceed disposable income and the national household savings ratio has been in the negative for the last six years. Federal Treasurer Peter Costello pointed to strong employment growth, solid wages and increases in wealth as support mechanisms for household consumption. Households earned $125 billion in the March quarter whilst paying $32 billion in taxes, $2.4 billion in interest on consumer debts and $14.4 billion in interest on their homes.
 

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7 June 2007 - New car sales continue to grow
The Financial Review
New vehicle sales grew at 8.5 per cent for the March quarter to $5.6 billion. It appears high petrol prices and environmental concerns have not dented consumer enthusiasm for cars, with operating costs increasing 1.9 per cent in the quarter to be 3.2 per cent higher for the year.
 

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7 June 2007 - Telstra to embrace mobile payments
The Financial Review
Telstra has revealed it plans to launch a mobile phone-based payment service offering users the ability to use their phones for small "touch and go transactions" such as fast food, retail transactions and public transport. Telstra will utilise 'near field communications' (NFC) technology that allows users to transmit secure transaction codes via the phone to pay for goods and services. NFC is becoming the technology of choice for providers through Europe and Asia whilst both Visa and MasterCard appear to have adopted the NFC standard.
 

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7 June 2007 - Banks required to provide greater disclosure under Basel 2
The Financial Review
Australian banks will be required to provide greater detail on their loan exposures under the new Basel 2 regime. Basel 2 will require lenders to disclose greater quantitative details on credit risk and capital adequacy. The new regime will allow banks to change their capital requirements models, essentially allowing the banks the ability to set aside less capital for loans regarded as low risk. Analysts estimate the Big 5 will be able to release more than a combined $7 billion in capital under the Basel 2 requirements, reducing the cost of their capital constraints.
 

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7 June 2007 - ABA backs customers' rights in online fraud
The Australian
The Australian Bankers Association (ABA) has maintained the industry stance that online banking customers should not be held responsible for online fraud. The ABA has adopted a 'no change' stance on liability issues to the existing Electronic Funds Transfer Code (EFT) in its submission to the Australian Securities and Investments Commission. The number of Australian's using electronic banking has increased by 1.2 million to 8.2 million according to a recent Commonwealth Bank survey.
 

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7 June 2007 - Australian economy hits new highs
Sydney Morning Herald
The Australian economy has hit new highs across the board prompting the Federal Treasurer Peter Costello to warn that any move to unwind industrial relations would cause the economy to 'bust', forcing higher inflation and pressuring interest rates. Growth for the March quarter was the highest in three years at 1.6 per cent, unemployment is currently at 32 year lows of 4.4 per cent, the Australian dollar has reached a 17 year high of US 84.39c, and the All Ords index is at all time highs.
 

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7 June 2007 - Loan defaults on the increase
Herald Sun
Australia's leading mortgage insurance companies are reporting higher home default levels following a massive increase in lender mortgage insurance claims. Accounts filed by the two major mortgage insurers with the Australian Securities and Investments Commission (ASIC) showed both were hit by the increase in claims. Mortgage insurance claims are a leading indicator of any changes in credit quality brought about by rising interest rates and falling property prices. "Having had a seven-year period of favourable conditions the decline we're now seeing in home loan affordability has brought our default experience in line with long term trends," said PMI chief executive Ian Graham. The entry into the Australian market of US based Mortgage Guaranty Insurance Corporation will make it difficult for either of the dominant incumbents PMI and Genworth to increase premium pricing.
 

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7 June 2007 - Wizard finds first home buyers ready to go
News.com.au
A recent Wizard Home Loan survey has found the number of Australians expecting to buy their first home in the next year has increased 6 per cent, despite a renewed fall in housing affordability. The survey has found the average household income of first home buyers was now $93,000, up over $20,000 from 12 months ago. Wizard Home Loans reveal the number of potential first home buyers has increased to 523,000 in March from 494,000 in December, with Queensland and Victoria seeing much of the increased activity.
 

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7 June 2007 - Drop in unemployment puts pressure on rates
News.com.au
The national jobless rate fell to its lowest level since November 1974, to 4.2 per cent, putting additional pressure on interest rates. The unemployment figure has followed a stronger than forecast March GDP reading. In an unusual twist, it was the creation of full time roles that delivered the growth in job numbers, with 66,800 new full time jobs filled whilst part-time employment fell by 27,400, a net increase of 39,400. Economists are now forecasting a rate rise as early as August 2007, though the month of November appears most likely, putting an interesting twist on any election date plans the Federal government may have.
 

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7 June 2007 - Howard backs ACCC on petrol pricing
CNNmoney.com
Prime Minister Howard has committed to providing the Australian Competition & Consumer Commission (ACCC) more powers if requested. Graham Samuel, the ACCC Chairman, has warned petrol retailers they risk public shaming and greater regulation if they do not meet their own pricing benchmarks. Samuel has pointedly commented on the time lag between a fall in the benchmark Singapore prices and the Australian retail price. The National Roads & Motorists Association wants the ACCC to have the power to investigate pricing, access company accounting records, force retailers to drop prices and also publicly name and shame offending companies and operators.
 

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6 June 2007 - Foreign debt black hole
Sydney Morning Herald
The Australian current account deficit showed marginal improvement for the quarter ending March this year but the landscape is blotted by a bleak foreign debt picture. Economists were unimpressed that the nation, despite being in the midst of a commodities boom, was unable to peg back the deficit further. JP Morgan economist Mr. Stephen Walters said that the main reason for the large deficit was not trade performance but the growing debt owed to foreign financial institutions and investors.
 

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6 June 2007 - Drought keeps deficit high
The Financial Review
The Australian current account deficit remains in the red due to the effects of the drought and infrastructure bottlenecks. The deficit for the March quarter was $500 million above market expectations at $15.3 billion, with exports rising by 1.4 per cent and imports increasing by 2.2 per cent. Rural exports fell by 5 per cent to $6.2 billion. Treasurer Peter Costello said "One of the reasons why exports were weak for the quarter of March was the drought; we're in the worst drought in 100 years and we're not exporting much in agricultural commodities." The net foreign debt balance for the nation is $532 billion, or 51 per cent of GDP.

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6 June 2007 - ATO warning over use of Trusts
The Financial Review
The ATO has warned that company executives and directors using trusts as a way to reduce their personal tax bills on options acquired under employee share schemes will be targeted by the ATO as part of their crackdown on wealthy individuals.
 

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6 June 2007 - ACR burning $21million a month in cash
Sydney Morning Herald
Australian Capital Reserve was burning through $21 million a month as it attempted to keep the property group alive. The group was faced with increasing cash flow shortfalls as profits could not keep up with required payments to the group's 7,000 lenders. The cash flow shortfall made ACR more dependant on cash-raising projects aimed at supposed investors. The group owes a total of $550 million to investors and banks and has assets with a book value of $624 million, though the valuations of these assets are being questioned.
 

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5 June 2007 - ACR investors warned on valuations
Sydney Morning Herald
The administrator of failed property finance group Australian Capital Reserve (ACR) has cautioned unsecured investors that they had little prospect of recovering all their money despite the company's property assets being valued at a $624 million figure, in excess of outstanding loans. The administrator, Greg Hall of Price Waterhouse Coopers, said that while the property valuations were recent, many of the valuations covered the properties in a fully developed state and only a handful of properties had been completed at this stage.
 

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5 June 2007 - Identity scam lands tax agent five years
The Financial Review
A former tax agent has been jailed for 5 years after creating false identities and documents to claim over $600,000 in tax refunds. Simon Minh Pung is the second unregistered tax agent prosecuted this year. Pung was also known as Andrew Lau and between November 2000 and March 2003 he created false identities and documents, lodging 58 false income tax returns under 17 different identities to obtain false refunds.
 

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5 June 2007 - Fund managers support ASIC takeover changes
The Financial Review
Major fund managers have urged the Australian Securities and Investment Commission (ASIC) to relax a rule that requires a takeover to be launched if an investment in a public company exceeds 20 per cent. Fund managers believe the rule that was introduced close to thirty years ago is out of step with the investment markets of today and the existing superannuation climate. One fund manager did issue cautions saying the change could blur the lines between funds management and private equity investment.
 

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5 June 2007 - Labor to help small super holders
The Financial Review
Labor finance spokesperson Nick Sherry has indicated they will release a policy designed to help retiring baby boomers with small superannuation balances before the election. Labor argues that the federal government's decision to cut exit taxes on super payouts only assists those with more than $130,000, as smaller balances are not subject to the exit tax.
 

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5 June 2007 - Credit card makers can't keep up with demand
The Sheet
A major supplier of credit cards reports that they are having difficulty in keeping up with demand. Manufacturer Leigh Mardon said it is building a new plant in New Zealand; the firm is one of three major suppliers of credit card stock in Australasia.
 

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4 June 2007 - Rental returns best in South Australia and Canberra
Financial Review, 3/06/2007
Apartments in Adelaide and Canberra have returned the best yields in the year to March 30 Australian Property Monitors has found. The typical gross yield in Canberra was 6.19 per cent whilst Adelaide was 5.19 per cent, both outstripping the returns in Sydney or Melbourne.
 

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4 June 2007 - ASIC consider reforms to takeovers
Financial Review
ASIC are considering changes to takeover rules in Australia, with such large sums flowing into superannuation ASIC may allow fund managers to increase their holding in a listed company to greater than 20 per cent without being forced to mount a takeover. ASIC would need to be satisfied that the investment was independently managed and the stake was not purchased to secure management control. Australian superannuation funds now hold in excess of $1 trillion.
 

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4 June 2007 - Banks warned of branch binge
The Financial Review
A leading international financial services consultant has cautioned Australian banks that any branch opening spree would result in a future round of branch contraction. Scott Burgess, the head of Financial Services Practise for Deloitte, has forecast that unless banks improve the sales effectiveness of branches, and ensure they create a destination out of the branch, any new roll out of branches will result in a large scale shut down in the future. ANZ has plans to open a new branch every week this year whilst numbers from the Australian Prudential regulation Authority indicate that 187 branches were opened in 2006 across Australia.
 

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4 June 2007 - ACR Creditors claim they were mislead
The Financial Review
Investors in the failed Australian Capital Reserve are claiming they were mislead into investing as they believed their money was secure and the returns were guaranteed. ACR was placed into voluntary administration owing 7,000 unsecured investors up to $330 million. Creditors of ACR are due to meet today in Sydney, Melbourne and Brisbane, whilst the lawyers such as Slater & Gordon are said to be considering a class action.
 

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4 June 2007 - ASIC admit expert report had given Fincorp clearance
Sydney Morning Herald
ASIC has revealed that they had insisted an independent expert scrutinise Fincorp's loans before the regulator would lift an order blocking Fincorp from raising further funds from 8,000 small investors. The expert's report concluded that the then $200 million in loans made amongst Fincorp subsidiaries could be recovered in full, with this advice ASIC lifted the order and Fincorp raised a further $72 million before going into receivership on March 23 owing $200 million to individual investors and a further $95 million to banks.
 

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1 June 2007 - Interest rates stable as business expands
infochoice.com.au
The Reserve Bank meets on Tuesday for its monthly consideration of interest rates, but there is nothing in recent economic data that would suggest any threat of rate action to borrowers.

Inflation is back under control for now and the latest figures on business investment and private sector borrowing underline the virtuous economic circumstances Australia finds itself in currently - solid economic growth without any inflationary trade-off.

Capital expenditure figures for the March quarter show a rebound in business investment growth after a tail-off in the second half of last year. New capital expenditure rose 9 per cent overall, on the back of a 17 per cent jump in investment in buildings and a 6 per cent rise in plant and machinery.

The Reserve Bank's own data on borrowing in the private sector shows a similar picture with business credit growth in April at a strong 1.7 per cent, pushing the annual rate to almost 17 per cent.

The RBA will like these numbers, an indication that business is investing in greater capacity to keep up with the solid pace of economic expansion. Capacity constraints - shortages and bottlenecks - contributed to inflation over 2005 and 2006 as business struggled to keep up with demand.

Housing credit continues to hover around 1 per cent a month growth, reflecting a flat housing market, and poses no threat to interest rates. Consumer credit grew 0.7 per cent in April, also remaining well contained.

Retail trade was flat during April, growing just 0.1 per cent. But this follows some fairly strong growth in previous months and in trend terms consumer spending remains healthy.
 

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1 June 2007 - Insider trading crackdown
Financial Review
The Australian Securities and Investments Commission is going to get tougher on insider trading as there is a perception that there is more illegal activity going on than is being detected. Tony D'Aloisio, new chairman of ASIC, has said that they will be looking at techniques used by law enforcement in Australia as well as regulators in America and Britain. "These are criminal investigations and you want to make sure your skills, analysis and techniques are right up with what's happening to detect what are very difficult criminal offences" said Mr D'Aloisio.
 

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1 June 2007 - Tax on rights
Financial Review
A tax ruling involving renouncable rights issues has come under fire from a range of business leaders including Charles Goode, the chairman of Australia and New Zealand Banking Group. The ruling means that shareholders will have to pay tax upfront rather then on the capital gains when shares are sold. The chief of Taxpayers Australia, Tony Greco, says "If a shareholder gets a rights issue in the mail, decides not to take it up and the price falls, according to this, they still have derived income."

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1 June 2007 - Investment tools to be investigated
Financial Review
Providers of contracts for difference (CFDs), warrants, derivatives will be subjected to closer scrutiny by the Australian Securities and Investments Commission. The move by ASIC comes after the failure of several property developers, Westpoint, Fincorp and Australian Capital Reserve. The regulator will be looking at investor education, illegal operators and will test debentures within its existing powers.
 

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1 June 2007 - Minimum wage to go backwards
Financial Review
Real wages could be reduced for 1 million Australians as the Australian Fair Pay Commission (AFPC) will consider the reduced tax levels following the recent federal budget as an increase to their level of income. Professor Ian Harper, head of the AFPC, has said that the effect of the tax cuts would definitely be considered when the commission meets again next month and will mean that any rise in the minimum wage level will be lower than inflation. "We aren't the only ones who do that," said Mr Harper. "The government does that too, through the tax and social security system... that will be a consideration, no doubt at all." The position is supported by the federal government.

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1 June 2007 - Bankruptcy on the rise
The Australian
Australians are continuing to struggle with debt with more than 6,500 people filing for bankruptcy in the first three months of 2007, representing an increase of 9 per cent over the same period last year. Personal insolvency has risen more than 12 per cent to 8,000 cases in the same period. Credit checking agency Veda Advantage has released findings that show behavioural patterns of individuals 18 months out from bankruptcy. The study found that bankrupts were more than likely to apply for a personal loan 6 to 12 months prior to bankruptcy, whilst they will register 48 times more defaults than a non-bankrupt person in the six months prior to entering into bankruptcy.
 

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1 June 2007 - Fincorp carcass on menu
The Australian
Up to twenty interested parties have registered with administrators Korda Mentha in buying the $150 million property portfolio previously held by the failed Fincorp group. However, despite the strong sale prospects, Korda Mentha maintain that unsecured investors are still likely to get zero return from any distribution. The first meeting of Australian Capital Reserve creditors will be held in three locations (Sydney, Melbourne and Brisbane) on Monday.
 

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1 June 2007 - Australian economy goes on and on and...
The Age
With no end to the good times in sight for the Australian economy a senior Treasury economist has forecast that the country will experience a further sustained period of substantial growth. A buoyant world economy continues to fuel demand for Australian exports with India reporting its GDP grew at a twenty year high of 9.4 per cent in the March quarter, whilst Germany has reported unemployment in April fell to a 14 year low of 6.4 per cent.
 

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1 June 2007 - Rams bidders down to two
The Age
Is it believed that the two bidders (Babcock & Brown and Carlyle Group) have pulled out of the running in the $1 billion sale of RAMS baulking at the size and price of the transaction. The final two parties remaining in the running are believed to be private equity player Kohlberg Kravis Roberts (KKR) and a venture between Nikko Principal Investment Australia, Pacific Equity Partners and Ironbridge Capital. With the bidders down to two it is thought that RAMS may seek to sell shares as an alternative to a sale. RAMS are forecast to deliver an operating profit of $82.5 million and grow its loan book to $13 billion.
 

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