Ahead of the Curve – Major Banks to Extend Olive Branch to Business Community
31 July 2018
As requested by many of our valued clients, First Choice Business Broker is proud to launch our weekly newsletter service “Ahead of the Curve”. In this weekly publication, we focus on what we see as relevant macroeconomic news both internationally and locally, to provide you with our views and insights that will be of value to you in the business community. Our ultimate goal is to keep you posted of the important economic and/or regulatory movements quietly trending in the background, so that you can focus on what you do the best whilst still being up-to-date with the bigger picture.
As the global economy becomes ever more intertwined and people and capital flow more freely, it is imperative for all of us to pay attention to the rapidly changing forces that affect us– technology, regulations, trade etc.
Over the course of last week, we noticed a report by the Parliamentary Budget Office on the trends of taxation in Australia. To summarise the findings of the report for you, the message is simple: The tax base is shrinking in Australia i.e. despite the economy growing at a steady rate, a mixture of politics, policy and how we live our lives have meant that we as a society overall, may not be paying as much in tax as many of us think. For example, since the cars we drive have become more and more fuel efficient (many of which have switched to electric power altogether), fuel excise, a major component of tax revenue for the government, has decreased. Likewise, changing habits have meant that tobacco excise have also fallen steadily, meanwhile our national policy towards free-trade agreements with many of our trading partners has helped to reduce the price of imported goods, but it has also reduced the amount of import excise that is raised. This “big data” picture offers valuable insights to us to gauge the trends happening economy-wide. Certain industries are consolidating and others are decentralising with ramifications across the board. Consumption patterns are slowly but surely changing. The baby bomber generation are retiring as we speak, and millennials see the world radically differently to their parents. The government will act accordingly and the tax regime will evolve steadily.
In another development, the big four banks are offering cash back, discounts and other lucrative incentives to customers in a bid to boost business and shareholder returns as well as fight fierce competition from smaller lenders. National Australia Bank, the nation’s third-largest lender, is the latest to spruce up its mortgage products with a cash-back bonus worth $1250 for new property borrowing of $250,000 or more. It is limited to a single bonus per customer and can be drawn down from a NAB transaction account to coincide with the loan drawdown. Commonwealth Bank of Australia, Australia’s biggest lender, recently launched a $2000 cash-back offer to customers who refinance their home loans from another financial institution. ANZ, the third-largest lender, has a $1200 switching incentive and a $1000 conveyancing rebate for first-time buyers. The ongoing Royal Commission into the banking sector has certainly played a role. As the Commission progresses towards completion in the first half of next year, more problems facing the sector may be uncovered, as reports on poor business banking practices have already emerged. As a result, we are of the view that the banks may be forced to take further customer-friendly actions in the next 12 – 24 months to repair the damage done in past wrongdoings. These may certainly be welcoming moves for the business community, so we will continue to monitor the developments.
Also last week, the Victorian government has committed A$5bn toward a proposed Melbourne Airport rail link, matching the Federal Government’s A$5bn. The commitment is dependent upon the incumbent Labour government being re‑elected in November. Although the project is not expected to be complete, all other things being equal, until the mid‑2020’s, without a doubt the rail link will be one of the most significant railway infrastructure projects in Melbourne in the coming years and will spur demand for a number of industries including logistics, materials, services amongst others. If history is of any guide, the development of the northern and north-eastern suburbs are sure to follow with the growth of the so-called “airport economy”. It will make commuting between those suburbs and the city much more convenient with huge spill-over effects on the area’s demographics and business environment. With that in mind, we will monitor the developments and share with you any insights we see. Early positioning is the key.
There’s always exciting news in Victoria’s business community. For a confidential discussion about your next business transition telephone First Choice Business Brokers on 9899-1888.
By Lee Xie (Senior Project Manager)
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DISCLAIMER – Any financial information within this email has been compiled by First Choice Business Brokers to provide broad general information about business opportunities and the state of the market. First Choice Business Brokers makes no representations or warranties in relation to the financial information in this email. For purchasers looking to buy, we strongly recommend that you carry out your own investigation or consult a qualified accountant before making a purchase.
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