Canberra on a big budget: how jobseeker stacks up against a federal politician’s perks | Welfare


Welfare organisations, economists and even some business groups were dismayed this week when the government announced a $50-a-fortnight increase to the base rate of the jobseeker payment.

Given the current coronavirus supplement is worth $150, many consider the increase to $620.80 (taking into account scheduled indexation in March) a cut. Certainly the boost falls well short of the policy proposals put forward by social service groups and several experts.

And some have noted the contrast with the daily entitlements enjoyed by the nation’s federal politicians.

Anne Ruston, the social services minister, has heralded the $50 boost as the largest since the 1980s, a fact that reflects the lack of a “real” terms rise since the early 1990s. Ruston, and the prime minister, Scott Morrison, have also continued to argue that the “$40-a-day” figure quoted by welfare groups – soon to be $43-a-day – does not reflect the many “supplementary payments” that are also paid to jobseekers.

‘$43 a day’: what do jobseekers get?

While it’s true that supplementary payments are numerous, arguably they do little to boost the incomes of people on jobseeker, as Guardian Australia has outlined before. Morrison himself confirmed the average value of those additional supplements was $13.03 a fortnight, or $93 cents a day.

Rent assistance, which was paid to about 570,000 of the 1.3 million jobseekers on the books in October, is worth an extra $139 a fortnight, or $10 a day.

It means many single jobseekers will likely get $44 a day, or if they rent in the private market, it’s $54 a day.

So how does this compare to the perks politicians receive? These might be considered the “supplementary payments” that they get on top of a $211,250 base salary. It’s a question Ruston has faced in two separate interviews this week.

The $291-a-day Canberra travel allowance

As the Independent Parliamentary Expenses Authority notes, MPs and senators may claim an “allowance for accommodation, meals and incidental expenses” whenever they stay away from home, such as in Canberra for parliamentary sittings, or other work trips.

Politicians get $291 a day for staying in the nation’s capital, but the rate – which is set by the Remuneration Tribunal – is higher in the other capital cities.

In cases where the commonwealth pays for the accommodation of a minister on a work trip, the MP can still claim up to $188 a night to cover meals and incidental expenses.

Similarly, if an MP stays with a family member or friend on a work trip, they may still claim a “non-commercial” rate of travel allowance – about $130 a day.

This does not include Canberra, where politicians may still claim the full rate, even if they stay with a friend or family, or in an investment property that they, a family member, or a parliamentary colleague, owns.

As some infamous cases have highlighted, politicians may also claim the costs of up to two home telephone services, and can request a private-plated standard vehicle.

Some point out that the entitlements provided to politicians – such as travel and meal allowances – exist in workplaces outside parliament, and that such expenses can otherwise be claimed by other workers as a tax deduction.

Still, jobseekers must cover all their costs on about $54-a-day if they get rent assistance, while a politician staying in Sydney would get $415 a night to cover accomodation, meals and expenses.

It is also worth noting that while the jobseeker payment was 10.8% of a politician’s base salary in 1994, and it will be 7.6% from April with the $50-per-fortnight boost.

What does the government say?

On Tuesday, ABC 7.30 host Leigh Sales asked Ruston: “A politician receives more than $280 per day in travel allowance when they are in Canberra on top of their salary. Why is that fair?”

Ruston declined to engage with the question directly, but emphasised the government was committed to providing access to jobs so “people can have the kind of life outcomes you and I enjoy, Leigh”.

Asked a similar question by Rafael Epstein on ABC Radio Melbourne, Ruston replied: “I’ve always said that living without a job would be extremely difficult.”

Epstein pressed her: “You can get an extra $290 tonight for staying in Canberra, you could stay at a friend’s house and get that money. And someone on jobseeker has to do everything on $50 a day. Do you think that’s fair?”

Ruston replied: “I think the most important thing is for the government to be able to balance out the initiatives that are put in place that are paid for by Australian taxpayers.”

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NSW cannot afford to rush budget repair


State government finances have taken a battering during the pandemic. The cost of responding to the health and economic crisis meant expenses ballooned. At the same time recession ravaged key revenue sources including the GST and payroll tax.

There was no surprise when last year’s NSW budget, delayed until November because of the pandemic, revealed a yawning deficit and surging debt. But it was unfamiliar territory for the Berejiklian government which has made a political virtue of surplus budgeting.

The half yearly review of state finances released on Thursday by Treasurer Dominic Perrottet shows the budget position has improved.

The forecast for this year’s deficit was pared back from $16 billion to $13.3 billion and net state debt is now tipped to grow a little more slowly than expected in November. The output of the NSW economy is on track to recover to pre-COVID levels by 2021-22, about six months sooner than anticipated.

Employment has also surprised on the upside – by last month NSW had recovered around 81 per cent of aggregate jobs lost during the peak of the pandemic. The unemployment rate in NSW, which peaked at a 22-year high of 7.2 per cent last July, is now expected to fall back to 5 per cent by mid-2024.

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Gold Coasters asked to shape City’s budget for 2021-22


Gold Coast locals are being urged to weigh in on their priorities for the city, with community consultation for the City’s 2021-22 budget now open. 

Mayor Tom Tate said ratepayers and residents had the opportunity to shape the City’s spend for the following year. 

“Last year we took a ‘back to basics’ approach to our budget to protect residents and businesses in a pandemic affected year. 

“By remaining fiscally responsible, we ensured our lifestyle on the Gold Coast was preserved while continuing to deliver essential services, invest in local infrastructure and maintain community assets.

“From more shade sails at your local playground, streetscaping to a continued investment into our local road network, we want to know what the City should prioritise in 2021-22.

“I encourage all members of our community to take the time to have their say this year as we were unable to conduct our usual consultation last year due to Covid-19,” he said. 

This year’s budget survey has been emailed to those who have opted into the rates database.

Residents and ratepayers can also visit gchaveyoursay.com.au/citybudget2021-22 to have their say. 

Community consultation runs until 5pm 28 February 2021. 

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A clear-eyed and consistent Budget


The Budget this time presents a clear vision, with which it is aligned. The aim is to restructure government so as to work towards the constitutional goal of equal access to public services and, therefore, to opportunity. The diversion towards planning took attention away from general public services for the average citizen. The preference again is to teach people to fish, rather than giving them fish, while also reducing the cost of fishing.

In order to do this, public expenditure is to be switched towards areas with greater externality, while leaving production proper, except in strategic areas, to the private sector. Apart from changing the composition of spending, another tool to do this is asset monetisation. This is much broader than privatisation, since it releases value locked in poorly utilised and performing assets of which the government has many. Multiple means can be used to achieve best values. Privatisation is only a narrow subset of these. Post Budget debate focussing on the latter misses the broader point. It follows it is not the most profitable public sector banks (PSBs) that need to be sold, but those that need better management. Governance and systems must continue to be strengthened for the remaining.

There is an intelligent leveraging of the global situation that gives time for fiscal consolidation. Spending is increased cautiously to stimulate the Covid-19-battered economy, raising the share of investment in order to develop the supply-side and raise potential growth. The literature finds while spending multipliers are unity or less, they can rise in slumps when monetary policy is supportive, with cumulative investment multipliers reaching four.

In our estimation (https://doi.org/10.1007/s40953-018-0122-y) for India, while the short run impact multiplier is highest for revenue expenditure, the capital expenditure peak multiplier in the second quarter is 1.6-1.9 times larger. The cumulative multiplier is 2.4-6.5 times larger. It is highest under monetary accommodation, which is more likely with spending on investment that reduces inflation over the long-term, since it raises supply as well as demand. Thus monetary-fiscal cooperation becomes more feasible when deficits are used to spend on investment. It follows, after one quarter, even the poor may get more from spending on investment than they would from transfers.

What was the fiscal stimulus?

The dominant view is the government spent too little in Covid-19 times. But a fiscal deficit (FD) of 9.5 per cent of GDP for 2020-21 is not small for a government that borrows at high and possibly variable interest rates. Interest payment is the largest component of expenditure and must be reduced.

The Budget figures allow us to find the sources of the difference between the budget estimate (BE) FD of 3.5 per cent and the realised estimate of 9.5 per cent (6 percentage points). This is explained by a rise in expenditure (in percentage points) of 2.1, a fall in revenue receipts of 2.4 and in capital receipts of 0.9. The balance 0.6 comes from the lower GDP.

How to reconcile this with estimates that the government will only spend 1 per cent more over the BE? How much of the FD constituted a fiscal stimulus?

The greater transparency in the Budget has been widely welcomed. Expenses of public sector enterprises for government work have been brought on to the Budget. While more worldwide indulgence towards FDs is an opportunity to do so, it does show more clearly just how much the government spends to support different sectors. The largest part of this is huge expenses of the Food Corporation of India (FCI), towards food price support, storage and consumer food subsidy. Payment of FCI’s past dues of ₹1.5 trillion comes to 0.8 per cent.

Subtracting this, the additional interest payments of 0.3 per cent and the 0.6 per cent from fall in GDP, gives 4.7 per cent as the fiscal stimulus coming from spending rising despite the fall in revenues. This is much higher than the fiscal impulse of 1.3 per cent calculated as rise in expenditure on BE adjusted for payment to FCI’s past dues.

Moreover, an additional 0.5 per cent (total 2.3) over the BE was spent on capital account, thus improving the quality of expenditure. The timing and spacing of spending was also good.

Subsidies were 3.1 per cent, and even subtracting the 0.8 per cent on account of FCI gives 2.3 per cent mostly on food. Adding health and social welfare takes it to 2.9 per cent. Percentages spent on agriculture including food subsidy (minus FCI past dues) (1.4), fertiliser subsidy (0.7) agricultural development and allied activities (0.7) and rural development (1.1) comes to 3.9, the largest share of an exceptionally high total expenditure of 17.7, much higher than the expenditure on capital of 2.3.

Like others, in my Budget wish list I had wanted more to be spent on the poor since they suffered the most and had higher propensities to consume. But the ratios show that more was spent on them. Countries that had large transfer programme do not have the type of expenditures India has on in kind transfers of various kinds. And given our huge population, having both is fiscally unsustainable. If we want more transfers, and these would be more efficient and reduce price distortions, the in-kind support has to reduce. We have crossed per capita incomes after which the WTO can question our use of price-distorting interventions.

In the BE for next year the share of capital rises to 2.5 from 2.3 per cent of GDP, broad agriculture support remains higher at 3 per cent, and in-kind transfers at still at a reasonable 1.9 per cent, although food will no longer be provided free. So the small tilt towards capital is not at the expense of the poor. Moreover, improvement in public services and infrastructure benefits the poor more since they cannot afford private substitutes for these the way the rich can. Much of the capital expenditure, such as on low cost housing and wellness centres is also labour intensive.

Could redistribution have been attempted — that is, further taxing the rich to finance more transfers to the poor? But this would discourage growth and be inconsistent with the corporate tax cuts and production linked incentives being used to attract global companies and spur labour intensive employment. High growth in the 2000s reduced poverty much more effectively than low growth and high marginal tax ratios had been able to for many years after Independence.

The best way to increase tax ratios in India is to increase the tax base while simplifying taxes and keeping rates low. The Budget continues to leverage new technology towards this.

Fiscal consolidation

Another item on my pre-Budget wish list was to use high growth and low interest rates rather than sharp cuts in the fiscal deficit to achieve fiscal consolidation. I had shown that periods with this combination had been much more successful in the past. The Budget does cut deficits towards consolidation but not sharply and uses better quality of expenditure to encourage growth.

Already the recovery outpaces expectations partly because fiscal stimulus, as well as reform and resilience in the financial sector, and its use to deliver stimulus had been underestimated. The Budget continues the shoring up and use of the financial sector. Barring unforeseen shocks, prospects are encouraging.

The writer is member of the RBI’s MPC. The views are personal

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Wondering how the ACT Budget affects you? Here are five key takeaways


There were few surprises in today’s ACT Budget, one heralded by ACT Chief Minister Andrew Barr as a fiscal plan to stimulate the territory’s COVID-19 recovery.

The economic plan is centred around infrastructure and transport growth, comprising the second stage of light rail, and new bridges, roads suburbs and schools.

But at a hip-pocket level, little will change for the average Canberran in the coming few months.

Here’s what it all means for you:

1. You can keep that money in your wallet… for now

The ACT’s COVID-19 financial assistance measures remain in place.(ABC News: David Sciasci)

For most Canberrans, life will appear unchanged to what we have grown accustomed to over the past few months.

The rates rebate introduced when the city’s streets emptied in the winter of 2020 remains in place.

Previously, rates had continued to rise well above inflation each year, but after a $150 rebate was issued in July, most households would have seen their bill fall.

The Government says now that the “heavy lifting is over”, the average annual increase over the coming five years is expected to be 3.75 per cent — but it is open to extending the relief further, if more COVID-19 cases appear.

COVID-19 also led to a range of financial assistance measures, which the ACT Government has extended until the middle of the year.

They include support for rates, motor vehicle registration, public transport, utilities and tenancy relief.

There will also be no increase in combined water and sewerage bills for ACT households in 2020-21 and, in the coming year, it is expected there will be a 2.56 per cent reduction in electricity bills, with the average annual bill going down by $3.

Finally, the Government’s pledge to introduce free bulky waste will go ahead with its fast-tracked scheme set to roll out this year, starting with the central suburbs.

2. You’ll notice more cranes in the sky

An aerial view of a new suburb with townhouses and apartments.
The Canberra housing market is booming, and supporting infrastructure has followed.(ABC News: Toby Hunt)

The construction and housing boom the ACT has witnessed in recent months is only going to continue.

In outlining its economic forecast after 12 months of social upheaval, the ACT Government pointed to a better outcome than expected due to anticipated strong land sales.

And with that will come a number of major infrastructure projects.

Projects outlined include the new suburb of Whitlam in the Molonglo Valley and a renewed precinct on Lathlain Street at the Belconnen Town Centre.

There’s also funds for a new CIT campus and bus interchange in Woden — costed at $278 million — and for the much-anticipated expansion of the Canberra Hospital.

In Gungahlin, two schools have been slated for development in Kenny and Taylor, while Margaret Hendry Primary School will be expanded.

An artists impression shows a light rail vehicle travelling down the middle of Commonwealth Avenue, cars on either side.
The second stage of Canberra’s light rail project has been split into two parts, the first connecting Civic to Lake Burley Griffin.(Supplied: ACT Government)

John Gorton Drive will be extended, including building a new bridge across the Molonglo River.

Work upgrading the Monaro Highway will continue, while a feasibility study has been announced for improving capacity and safety along Parkes Way.

But the feather in the cap is stage 2A of Canberra’s light rail network, expected to begin construction this year, with $2.1 million invested in extending the light rail network from Alinga Street to Commonwealth Park.

3. The Budget is in the red, but there’s green on every page

A small catchment in Canberra
Climate action and renewable energy are a focus of the ACT Government.(Supplied: ACT Environment and Planning)

In the wake of the 2020 election, this Budget has a strong focus on the environment.

The ACT Greens won six seats in October, more than in any previous election, and secured a number of cabinet positions.

The result is a an economic plan brought about by a Labor-Greens Government committed to renewable energy, even while tackling the challenge of COVID-19.

A five-year program to improve building efficiency and sustainability for social and public housing, lower income owner occupiers, and the lowest performing rental properties is outlined in the Budget, costed at $50 million.

The Government will also put $150 million towards the Sustainable Household Scheme, offering zero-interest loans of up to $15,000 to help households with the upfront costs of investing in rooftop solar panels, battery storage, zero emission vehicles and efficient electric appliances.

Rows and rows of white boxes line underneath windmills.
Funds have been invested to build a Big Battery, much like Hornsdale Power Reserve in South Australia.(ABC News)

Net emissions have already been reduced by 40 per cent in the ACT, and the next steps will be to work towards zero net emissions.

This goal will be in no small way helped along by a $100 million commitment over five years to install the Big Canberra Battery.

$50 million has also been set aside for the Vulnerable Household Energy Support Scheme, which is aimed at encouraging people to shift to zero-emissions vehicles.

The renewable energy approach will also extend to the city’s transport network, with plans to electrify the upcoming Woden Bus Depot, enabling the charging of electric buses, costed at $800,000.

“Our investments today, along with our participation in research and pilot projects, will cement the ACT’s status as a hub for renewables innovation.”

4. COVID-19 and health remain in focus

82-year-old Brian Pinker receives the Oxford University/AstraZeneca COVID-19 vaccine from nurse.
The COVID-19 vaccine program will be jointly funded by the ACT and Commonwealth governments.(AP: Steve Parsons/Pool)

More than 100 Canberrans contracted COVID-19 last year and many more were impacted in less direct ways.

Today’s Budget outlines measures to keep Canberrans healthy by providing more walk-in centres, mental health support, and pathology services.

A new walk-in centre will be trialled in Coombs, and four other centres — slated for south Tuggeranong, west Belconnen, the inner south, and north Gungahlin — have been costed at $2 million.

The ACT Government will also spend $20 million to help roll out the COVID-19 vaccine in Canberra, in addition to the Commonwealth’s investment.

Canberra hospital building
Funds for the Canberra Hospital expansion were outlined in the Budget.(ABC News: Ben Harris)

Meanwhile, the Mental Health Support Package has been extended to June 30, 2021.

Young Canberrans will continue to be targeted in this program, having been identified as among the hardest-hit by the pandemic when it comes to mental health issues.

5. It could all fall apart very easily

The Chief Minister is cautiously optimistic that the territory is in a better fiscal position than expected.

The ACT has the nation’s lowest unemployment rate and forecast economic growth is at an average of 2.7 per cent a year for the next four years.

And the 10,000 jobs that were lost as a result of the pandemic have been gained back.

But continued strong growth hinges on the COVID-19 vaccine program rolling out from February and the country opening back up to international travel from July 2021.

It is also contingent on the territory not falling victim to further outbreaks of coronavirus.

This “downside scenario” is laid out in the Budget papers, which plainly state the city’s reliance on international travellers, particularly university students.

“This would hamper the recovery of the ACT economy, with economic growth and employment becoming sluggish and remaining well below long run growth rates over the entire forecast period,” Mr Barr said.

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Rather than increased taxes, borrowing to fund Budget stimulus, says Nirmala Sitharaman


Finance Minister Nirmala Sitharaman said Friday the Budget FY22 provides for enhanced government capital expenditure, especially in infrastructure, health and agriculture sector. The Budget also seeks private sector participation in a big way and provides space to set up of private DFIs, she said at a post-Budget interaction with top CEOs held by the Confederation of Indian Industry (CII).

Though the government will provide some capital for the proposed Development Financial Institution (DFI), the body will also raise capital from the market. In addition, the DFI Bill will provide legislative space for private DFIs.

Similarly, the asset reconstruction company to manage non-performing assets will be floated as a holding company by the banks themselves, with support from the government, she said.

“Contrary to the expectations of a Covid-19 tax, the Government has chosen to fund the Budget stimulus through higher borrowing, rather than increased taxes,” she said, as per a Finance Ministry statement. The spending push will focus on high multiplier areas like infrastructure which would facilitate private investments in power, roads, ports, airports, apart from healthcare and agriculture.

CII president Uday Kotak said the Budget focus on growth and transparency was on right track. Budget proposals also displayed the government approach of encouraging private enterprise and respecting the markets, he said.

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Budget telco Belong chief vows not to lift prices in battle with rivals


Ms Kotatko said increased competition would not result in a race to the bottom on prices.

“We’ve got a leading edge because we’ve got the quality of the network at a nice price point that many, many Australians can afford, not all but most can afford,” she said. “That’s going to be the new battleground. How do you differentiate beyond gigs and price? It’s the network offering and service offering.

“If anything we want to take what we’ve got today and we want to … embed more data in some of our plans given the market has moved, but actually really build on some of these really neat points of difference around gifting and banking, and sharing the way that you manage your total costs in a month by introducing other products that then extend the range of data devices like wearables or tablets. That’s really the new market need and we’ll design propositions to suit.”

Belong is considered the “growth engine” of Telstra. According to the telco’s 2019-2020 financial results, 154,000 of the 240,000 retail postpaid mobile services were Belong customers. In fixed mobile, Belong was responsible for 79,000 of 80,000 new customers. But with the introduction of Gomo and Felix, finding new customers could become tricky. Ms Kotatko said the telco is exploring several options to try and appease customers including exploring the data-only market in mobile.

Budget brands are typically favoured by young, metropolitan-based customers, but Ms Kotatko said there is now an opportunity to talk to people outside the cities.

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“When you start to look at customers who are looking for an affordable service, they do like that comfort of the Telstra network – there’s a big role for Belong to play there outside of the metro areas and into more regional parts of Australia. We’ve got the right combination of ingredients,” she said.

“It would be new ground for us. Our brand as a city is largely a metro brand, and we serve largely metro markets. Anything we do that moves into some other geographies and more regional geographies would need to be supported by a value proposition with a strong network position – a point of difference to the Telstra brand. We’re working through that at the moment.”

Ms Kotatko’s comments come as Telstra and its rivals ramp up efforts to roll out their 5G networks. A spectrum auction is expected to take place in April. The mmWave spectrum can be used to deliver lightning fast mobile and internet speeds. But Ms Kotatko said there were no plans to create 5G packages for Belong customers.

“There’s a lot of runway left in the 4G network,” she said. “Our Telstra colleagues are doing absolutely great guns on 5G and we’ll let them continue to lead the way for at least the next 12 to 18 months. We’ll always be in dialogue. It’s something that we don’t see a need for yet.”

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Business Live: Shares fall for fifth straight day ahead of budget next week; Tim Cook says Apple’s India biz doubled in December quarter


The Nifty and the Sensex opened the day on a negative note, on road to extending their losing streak to give days.

Join us as we follow the top business news through the day.

12:00 PM

Chad becomes first country to ask for debt overhaul under G20 common framework

Chad has officially requested a debt restructuring, the first country to do so under a new common framework hammered out last year by China and other Group of 20 countries with the help of the Paris Club, the International Monetary Fund (IMF) said on January 27.

An IMF official said official creditors would soon begin discussions on what will be the first test of the new framework and whether China, the world’s biggest official creditor, and private sector creditors would participate as agreed.

The IMF announced Chad’s move in a statement about a new four-year programme worth about $560 million under its Extended Credit and Extended Fund facilities. The deal was agreed by staff, but must still be approved by the IMF’s executive board.

Like several other African countries, Chad is struggling with a high debt burden against a backdrop of the coronavirus crisis and low prices for oil, its major export.

 

11:30 AM

India biz doubled in Dec quarter, feel good about trajectory: Apple CEO Tim Cook

Apple is bouncing back strong.

Reuters reports: “Apple has doubled its business in India in the December quarter on the back of strong performance of its online store, and the tech giant sees a good growth trajectory going ahead, its CEO Tim Cook said.

The Cupertino-based tech giant posted an all-time record revenue of USD 111.4 billion globally for the first quarter ended December 26, 2020, up 21 per cent year-on-year. International sales accounted for 64 per cent of the quarter’s revenue.

“… If you take India as an example, we doubled our business last quarter compared to the year-ago quarter. But our absolute level of business there is still quite low relative to the size of the opportunity,” Cook said during an analyst call.

The company, which competes with players like Samsung and OnePlus in the premium smartphone segment, has been aggressively ramping up its presence in the Indian market.

“India is one of those, where our share is quite low. It did improve from the year-ago quarter. Our business roughly doubled over that period of time. And so, we feel very good about the trajectory. We are doing a number of things in the area. We put the online store there, for example, and last quarter was the first full quarter of the online store,” Cook said.

He added that the online store has received great reaction and has helped the company achieve the strong set of results last quarter.

“We’re also going in there with retail stores in the future. And so, we look for that to be another great initiative and we continue to develop the channel as well,” he said.

Apple plans to set up brick-and-mortar outlets in India in addition to the online store as the iPhone maker looks to further cement its position in one of the world’s largest smartphone markets. In the past, Apple has stated that it is keen on offering online and in-store experiences to Indian users that are at par with its global standards and that it aims to open its maiden retail store in India.

The growth seen by Apple has been noted by research firms like Counterpoint.

According to Counterpoint, Apple captured the sixth spot in terms of shipment in India in the October-December 2020 quarter with 171 per cent year-on-year growth, and 93 per cent growth in 2020 over the previous year. The report said the launch of the iPhone 12, aggressive offers on the iPhone SE 2020 and iPhone 11, and online expansion had driven this growth.

For the first time, the brand crossed 1.5 million shipments in a single quarter, it further noted.

During the analyst call, Apple CFO Luca Maestri said the global December quarter business performance was fueled by “double-digit growth in each product category, which drove all-time revenue records in each of our geographic segments and an all-time high for our installed base of active devices”.”

11:00 AM

Rupee falls 21 paise to 73.13 against US dollar in early trade

The rupee mirrored the fall in stocks.

PTI reports: “The rupee depreciated by 21 paise to 73.13 against the US dollar in opening trade on Thursday tracking muted opening in domestic equities and strengthening American currency.

At the interbank forex market, the domestic unit opened at 73.13 against the US dollar, registering a fall of 21 paise over its previous close.

On Wednesday, the rupee had settled at 72.92 against the American currency.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.12 per cent to 90.75.

“The US Dollar Index has started higher this Thursday morning in Asian trade amid safe haven appeal for the greenback amid weakening risk appetite,” Reliance Securities said in a research note.

Asian currencies were weak against the greenback and could weigh on sentiments, the note added.

Markets will look to cues from US GDP data and a weaker than expected numbers will push more investors towards the US dollar and vice versa, the note said.

The US Federal Reserve has decided to stick to its dovish stance and left key overnight interest rate near zero to maintain monetary support until there is a stronger rebound from the pandemic-triggered recession.

On the domestic equity market front, the 30-share BSE benchmark Sensex was trading 336.05 points lower at 47,073.88 and the broader NSE Nifty was down 95.60 points at 13,871.90.

Foreign institutional investors were net sellers in the capital market as they offloaded shares worth Rs 1,688.22 crore on a net basis on Wednesday, according to exchange data.

Brent crude futures, the global oil benchmark, fell 0.61 per cent to USD 55.47 per barrel.”

10:30 AM

India’s gold demand to rebound in 2021 as economy expands – WGC

India could revive demand for gold as the economy springs back to action.

Reuters reports: “India’s gold consumption is expected to rebound in 2021 after falling to its lowest in 26 years last year as pent-up demand and higher economic growth are seen boosting sales, the World Gold Council (WGC) said on Thursday.

Higher purchases by the world’s second-biggest bullion consumer could support gold prices, which hit a record high last year, although that could increase India’s trade deficit and weigh on the ailing rupee.

Coronavirus led-lockdowns slashed India’s gold demand by 35% in 2020 to 446.4 tonnes, the lowest since 1994, the WGC said in a report published on Thursday.

However, demand is expected to rebound in 2021 to around 2019 levels as economic growth is forecast to rebound helped by falling COVID-19 cases, said Somasundaram PR, the managing director of the WGC’s Indian operations.

India’s economy is seen growing 11.5% in 2021, the International Monetary Fund said on Tuesday.

“As lockdowns eased and normalisation efforts were phased in, imports in the December quarter rose 19% year-on-year, pointing to the positive impact of pent-up demand. This can be expected to continue into 2021,” Somasundaram said.

India’s gold imports of 164.4 tonnes in the December quarter were the highest in six quarters, fuelled by improving demand during the key Hindu festivals of Dussehra and Diwali, the WGC said.

India’s investment demand rose 8% in the December quarter on the year to 48.9 tonnes, its highest in two years, as people boosted purchases of gold coins and bars in expectations that bullion prices would rise further, Somasundaram said.

“We will see a sharp rise in investment demand. Amid low interest rates and higher stock prices, people are looking at gold to diversify their investments,” he added.

In rural areas gold demand in the last few months was robust following surplus monsoon rainfall that yielded a record harvest of summer-sown crops, the WGC said.”

10:00 AM

Shares fall for fifth straight day ahead of budget next week

The fall in stocks continues.

Reuters reports: “Indian shares fell for a fifth straight session on Thursday, dragged lower by bank and information technology stocks, as investors locked in gains ahead of the federal budget next week.

The blue-chip NSE Nifty 50 index was down 0.95% at 13,834.90 by 0507 GMT, after falling as much as 1.2% to its lowest level since Dec. 24. The benchmark S&P BSE Sensex slid 0.94% to 46,965.92.

“The market has been on a downward trend during the last couple of days and that is not surprising because during the last two years, we have seen the fortnight preceding the budget to be a cautious time” said Anand James, chief market strategist at Geojit Financial Services in Kochi.

“This year, we have approached the budget on a high and that is all the more reason for traders to take some money off the table,” James said.

Indian equities had coasted at record highs for multiple sessions this month as investors bet on an economic recovery from the rollout of COVID-19 vaccines as well as a boost from foreign fund inflows.

Axis Bank, which fell to a near one-month low earlier in the session after reporting a slump in quarterly profit, reversed losses to trade 1.6% higher. The Nifty Bank index shed 1.3%.

The Nifty IT index declined 1.5%, weighed down by heavyweights Tata Consultancy Services and Infosys that shed 1% and 1.4%, respectively.

Reliance Industries bounced after three sessions of losses that saw the conglomerate shed over 10%, and rose 0.6% to be the top boost to the Nifty 50 index.

HDFC Bank and Kotak Mahindra Bank were the top drags to the Nifty, falling 3% and 3.1%, each.

Investors now await results from automaker Maruti Suzuki India and InterGlobe Aviation Ltd — the operator of the country’s largest airline IndiGo.”

9:30 AM

High debt burden could hamper India’s ability to provide stimulus: Moody’s

India’s high government debt could limit its ability to give a fiscal stimulus to the economy, Moody’s Investors Service noted in a report on credit conditions in Asia.

Job losses, income shocks and the gaps in health infrastructure pose ‘highly negative risks’ for the country’s growth prospects, Moody’s added. “In India, a high government debt burden will limit the extent of fiscal support, although the government has undertaken a number of measures to improve policy transmission and broader structural reforms,” it pointed out. It warned that the sheer magnitude of the recession would lead to a degree of economic scarring in the more vulnerable Asian economies, which was likely to have persistent effects on potential output.

 

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budget: Budget sops that can send realty, aviation, tourism stocks soaring


NEW DELHI: Finance Minister Nirmala Sitharaman has over the past couple of months announced a slew of measures to revive demand for the Covid-hit sectors. While the focus of the forthcoming Budget is seen shifting from ‘growth’ to ‘repair’ and from ‘survival’ to ‘revival’, a host of Covid-hit sectors such as travel & tourism and real estate, among others, are eyeing budgetary sops.

For the hotel sector, the biggest wish has been to get an infrastructure status, as loans available to the asset-heavy sector attract as high as 15-20 per cent interest rate. The industry has sought that capital expenditure above Rs 25 crore be granted infrastructure status. At present, the status is granted only to hotels incurring capex of Rs 200 crore and above.



“If the hotel industry is granted infrastructure status, it can avail loans at lower interest rates for greenfield projects and will help them get water and electricity at industrial rates. It would be positive for Indian Hotels Company, Chalet Hotels, Lemon Tree Hotels, Jubilant FoodWorks and Speciality Restaurants,” Sharekhan said.

YES Securities said there are expectations that the government may allow business losses to be carried forward for up to 12 years, instead of eight years now, and there could be easing of tax for hotels from 34.94 per cent at present, to help increase cash flows. Hopes are also high of credit-guaranteed loans to the sector.

The tourism industry, as a whole, is asking for deferral of all statutory dues at the state government level such as excise fees, levies, taxes, power and water charges, and also deferral of renewal periods for all permits, licences, bank guarantees and security deposits across the tourism, travel, hospitality and aviation industry by 12 months.

Such a step would be positive for aviation companies SpiceJet and InterGlobe Aviation as well as hotels.

The tourism industry is also seeking to be brought under the ‘concurrent list’ by amending Schedule VII of the Constitution. “It would be ideal for each state to remove certain regulatory and licensing requirements that are currently in place to ease costs and the process of doing business,” said Sharekhan. “Thus, a more defined approach will be adhered to for the tourism sector, which would be driven by the unique needs of each state,” it said.

In the case of real estate, a Rs 2 lakh rebate is available on housing loan interest rates under Section 24 of the IT Act. There are expectations that this could be increased to at least Rs 5 lakh. If that happens, real estate stocks such as DLF, Godrej Properties, Prestige Estates, Brigade Enterprise, Ashiana Housing would be in focus.

It would also be positive for building material players such as Kajaria Ceramics, Century Plyboards, Astral Poly Technik and Supreme Industries, brokerages said.

The real estate sector is also seeking a GST waiver for a limited period. So far, the rate on under-construction properties is 5 per cent (minus the input tax credit benefit) for premium homes worth over Rs 45 lakh. The rate is 1 per cent for affordable homes (less than Rs 45 lakh).

The sector is also seeking a higher deduction under Section 80C up to Rs 1.5 lakh against principal repayment of housing loan, which is currently clubbed with other tax savings

“When it comes to investment in REITs, which have become a favoured route to raise funds for developers with renting-bearing commercial properties, an investment of up to Rs 50,000 should be allowed as a deduction under Section 80C. Also the holding period for REITs to qualify for long-term capital gain should be reduced from 36 months to 12 months, a step which will spur retail investment in value-creating instruments like REITs,” said Krish Raveshia, CEO at Azlo Realty.

Edelweiss said the government may look to support the bounce in the real estate sector by providing an extension to the PMAY-CLSS scheme, which is expiring at end of March 2021, which would also be in line with the government’s vision to provide Housing for All by 2022.

Meanwhile, public health has become very critical of late and further investments in public health infrastructure would be keenly awaited.

The vaccination rollout will be a very large project involving significant government expenditure. The outlay for this mega project and possible funding structure could become critical aspects of the budget, analysts said.



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WA Liberals pick multibillion-dollar budget fight with traditional allies


A report by former Treasury boss John Langoluent in 2018 was scathing of financial mismanagement in RFR, after he found several instances where there had been no business cases for big projects.

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Opposition regional development spokesman Steve Thomas said Labor had “trans-subsidised” 70 per cent of Royalties for Regions back to Perth by using the program to pay for basic regional necessities.

He said the Nationals’ policy to reverse the Labor changes would cost the state coffers $2.8 billion over four years.

“It would be foolish and irresponsible … that we would automatically reverse that $2.8 billion over the next four years,” Dr Thomas said.

“That would be silly and no one should believe we could do that … anything we add in, we have to take something out to counteract that.

“That’s the issue I have with the National Party who are saying, ‘We will demand we get $1 billion a year to spend’.”

The Liberal stance on Royalties for Regions, released on Tuesday, would mean spending changes under Labor could only be reversed when appropriate savings were found as an offset.

Dr Thomas said the opposition and Nationals needed to agree on a new set of rules for the program, otherwise pressure would increase to use it for city projects when the iron ore price returned to the long-term average.

The Liberals stunned the Nationals in 2017 when they pledged to take about $800 million a year out of Royalties for Regions.

Nationals leader Mia Davies has distanced her party from the Liberals and is banking on the latter needing her numbers to be able to form any future government.

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The very creation of Royalties for Regions came out of a tight election in 2008 when the Nationals threatened to form government with Labor if the $1 billion program was not instated.

Ms Davies said restoring the integrity of Royalties for Regions was non-negotiable.

“Reversing the cuts made by Labor and guaranteeing this legislated fund is a priority for government will only happen with the Nationals sitting at the decision-making table,” she said.

The Nationals are not part of a formal opposition with the Liberals and make their own election promises.

Despite Dr Thomas calling for the two parties to come together as a united front for conservative politics, Mr Kirkup said on Tuesday he was not familiar with the National Party’s policies.

Regional Development Minister Alannah MacTiernan has claimed in the past that Labor has spent more on the regions than the previous government.

She said on Tuesday the Nationals and Liberals could not work together nor possibly deliver different sets of priorities and maintain a sound budget.

“[Labor] are the party that has the most regionally based members and we are the only party that can put forward a coherent plan for the regions,” Ms MacTiernan said.

In October, Royalties for Regions under the Barnett government was found to be a more popular model in the bush according to a survey of country local governments by WA’s only regional daily newspaper, The Kalgoorlie Miner.

Seventy-three of the 97 respondents were unsatisfied with the program under Labor, while 72 of those surveyed were satisfied with Royalties for Regions under the previous government.

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