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Print’s Economic Digest – June 2014
than dependency on welfare.
Reintroducing fuel excise
indexation which has been frozen
since 2001 is another structural
measure, forecast to raise more than
$2.2bn over the forward estimates.
Engineering and construction,
large exporters and superannuation
funds will all benefit from the $11bn
plus new infrastructure package,
aimed at helping sustain economic
growth as the resources boom is
expected to significantly moderate.
Small to medium sized
businesses will receive the 1.5
percentage cut in the company
tax rate from July 2015, and will
not have to pay the government’s
parental leave lev y which will
be levied on larger businesses.
Businesses employing mature aged
job seekers (50 years of age plus) will
be able to access the new Restart
programme which provides a
$10,000 subsidy over two years.
Exporters should also benefit
from the $50m boost announced
to the Export Market Development
Grants. A $50m Manufacturing
Transition Grants Programme aimed
at assisting businesses transition
to competitive industries has also
been announced. Some $155m will
support regions facing the closures
of motor vehicle plants.
The single biggest industry
initiative which sees some $484.2m
allocated over five years is the
Programme, which will suppor t
the commercialisation of ideas,
job creation, and the capability of
small business, the provision of
market and industry information,
and facilitating access to business
management advice and skills.
Income taxes for high income
earners (earning $180,000 or more)
will rise by two percentage points
from this July and apply for three
years. To stop high income earners
using fringe benefits to avoid the
lev y, the fringe benefits ta x rate will
rise from 47 to 49 per cent and apply
from April 2015 until March 2017.
What it means to printing
IN the short term there is not
much joy for the printing industry.
Economic grow th is forecast to
be below trend at a modest 2.5
per cent, which for print means
challenging times. Household
consumption expenditure, a critical
driver of economic activity for print,
is expected to be stronger in the
2014-15 financial year, reaching
a forecast grow th rate of 3.25 per
cent during the 2015-16 financial
year. If businesses respond to this
by expanding their marketing
budgets then printers with multi-
dimensional ser vices may benefit.
With rising unemployment
print will also have access to
skilled workers made redundant
due to ongoing rationalisation and
consolidation. They could apply for
the new Restart subsidy to employ
mature job seekers who have been
unemployed for six months or longer,
with a $10,000 wage subsidy.
Inflation will remain modest at
2.25 per cent in 2014-15, well within
the RBA target range. Wage inflation
is expected to be higher at three per
cent from 2014-15 onwards. If this
materialises, printers will be faced
with rising cost pressures and a
reduced ability to pass on some of
Further pressures will come from
reintroducing fuel excise indexation
which will push up costs through
the supply chain. Businesses
with relatively large vehicle fleets
will be hit harder as fuel excise
indexation takes place twice a year.
Another area of cost increases is
the superannuation guarantee rate
which will no longer be paused at
9.25 per cent but will increase to 9.5
per cent from July and then pause
until June 2018. Under the revised
timeframe, the superannuation
guarantee rate will reach 12 per cent
in the 2022-23 financial year, one
year later than previously intended.
With the government committed
to its agenda of reducing regulation
printers should start benefiting from
reduced compliance costs.
Tax relief for small to medium
printers that have a company
structure is still more than 12
months away while over that period
the internet and e-platforms w ill
continue to erode.
Sizeable cuts to bureaucracy
especially in Canberra is expected
to hit print budgets which in turn
will hurt printers with a reliance on
government work and contracts.
The 2014-15 Budget has also
announced popular programmes
such as Enterprise Connect
will cease from Januar y 2015.
Programmes such as Clean
Technology will also receive
less funding. Printers in regions
impacted by the closure of motor
vehicle manufacturers w ill be able to
apply for some grants.
Committing to new media
platforms, the government has
announced savings of $2.5m over
the for ward estimates by removing
entitlements for Senators and
Members to use private employ ment
agencies and print ads to recruit
personal and electorate employees.
FROM a projected budget deficit
of $29.8bn during 2014-15 to a
modest deficit of $2.8bn in 2017-
18, the strategy represents a rapid
improvement of the bottom line.
Economic grow th is expected to be
below trend at 2.5 per cent and the
unemploy ment rate is forecast to
trend upward to 6.25 per cent. Wage
and price inflation are forecast to
remain modest although the former
is expected to grow at a faster rate.
IRRESPECTIVE of which political
party is in power the task of
repairing the budget bottom line
would have been a prime factor.
Disagreements are not about
whether we need to return to a
surplus, but what types of measures
are necessary, and within what
timeframe. It is a concern that a
budget that has started introducing
some modest structural reforms – to
aid the bottom line in the long run –
is being criticised on the basis that it
is not fair and equitable.
For printers there is not much to
take away from the budget and with
lower economic grow th projections
in the short term the environment
over next 12 months is likely to
remain challenging. One concern
I have about the budget is that it is
universally seen as tough. Those
sentiments may start dampening
consumer confidence and one of
the drivers of economic activity,
household consumption, may
weaken, with serious consequences
for both economic grow th and the
government’s budget strategy.
The reason why I view the budget
measures as modest is both receipts
and payments continue to rise as a
proportion of GDP in the forward
estimate years compared to 2012-13.
This is not the toughest budget you
will ever experience but it does set
the scene for tougher ones in the
future, unless economics gives way
as usual to political considerations.
Mob: 0414 953 271
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