Upwards rate drive on horizon

INTEREST rates appear to be headed north following the Reserve Bank of Australia’s February Statement on Monetary Policy.

Economists claim the statement suggests that the Reserve Bank of Australia will not make any more cuts to the official interest rate in an effort to stimulate the economy.

However, there is no suggestion of any imminent rate rise.

Industry analysts suggest that the combination of a slightly improved global outlook and a weakening in some of the drivers of the Australian economy will keep official rates steady.

Financial markets predict that rates will rise later this year, however market interest rates have already increased in anticipation of an upward move in rates.

Dollar warms

THE Australian dollar also experienced some altitude on the back of the RBA’s Statement on Monetary Policy. The RBA view of a global economic pick-up was more positive than predictions of the past few months. The policy statement also backed up forecasts of a rise in business investment, sufficient to counter any downturn in the housing sector in the second half of this year.

Gold price glitters

GOLD prices have continued to spike, hitting two-year highs, but analysts are arguing about the sustainability of the above-$US300 per ounce figures, while Australian gold producers prefer to retain some hedging. Most agree significant investment and a boost in demand for gold products such as jewellery would be needed to support elevated prices.

Year of the Horse

THERE was a lot of talk this week about the year that will be. The Chinese New Year ushered in the year of the horse, predicted to be a year of commercial vigour, but also by some to be one of political upheaval. Whatever, 2002 marks the 30th anniversary of diplomatic relations between Australia and China. Australian ambassador to China David Irvine reminded a Perth breakfast audience that, despite heady predictions of new trade opportunities to China following its admission to the World Trade Organisation, China already had been a major world force for some time.

China possesses significant defence and nuclear capabilities and, in addition to being a major producer of wheat, corn, rice, coal and steel, is a world leader in the manufacture of electronics and vehicles. Mr Irvine said China’s importance to Australia was due to its geo-strategic position, shared economic and security interests, bilateral trade and investment opportunities.

The Perth Mint celebrated by releasing the 2002 Australian Lunar Year of the Horse gold and silver proof coins.

Tax consolidation

ACCOUNTANTS and business managers alike are eagerly pouring over the draft legislation enshrining Australia’s tax consolidation laws. The new law is said to be aimed at reducing the amount of paperwork companies operating in group structures have to deal with. Instead of each subsidiary of the group being forced to file an individual tax return, the group can file just one on behalf of all of its entities. In theory, this could save some groups money. Some pundits have put the savings as high as $1 billion. However, companies need to think carefully before opting into the new legislation. Once a group has opted into the regime, it is very difficult for it to get out. The new law is due to come into effect on July 1.

Broker move

TERRAIN Australia Ltd’s subsidiary, Terrain Securities Pty Ltd, has signed a heads of agreement to merge with WA stockbroking business of Mortimer and Chua Pty Ltd. Established by Chris Chua and David Mortimer in 1998, M&C has about 30 advisers in offices in Melbourne, Sydney and Perth.

The business is focused on full service retail stockbroking, and recently has undertaken an expansion program under the direction of Craig Smith-Gander, who has joined the company from CIBC World Markets.

The merged business will operate under the Terrain Securities name and will have more than 60 advisers in offices in Melbourne, Sydney and Perth. Michael Tortoni will continue as the Head of Retail Operations for the merged business.

Contract squeeze

SOME Perth engineering companies have reported huge bills in back payroll taxes as the Office of State Revenue cracks down on contractors. Engineering companies, which rely on contractors to remain competitive in their project-based environment, are seen as fair game for the WA Government’s attempt to stop companies avoiding payroll tax by using contractors who are really employees.

However, the engineering companies argue that their contractors are really contractors. They have the right to challenge the Office of State Revenues ruling, but that involves going through the Supreme Court and is an avenue financially out of reach for many firms.

This crackdown on is being carried out under existing legislation.

New Broome

AMIDST continued speculation over the future of Ansett Mark 2, Qantas has flown into Broome this week.

The new daily service running between Perth and Broome has been greeted with enthusiasm by the tourism industry.

Minister for the Kimerley Tom Stephens said the new service into Broome displayed Qantas’s commitment to the region.

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