THE NEWS WRAP: All options on table to fix federal budget, including asset sales and lifting GST

All options to repair the federal budget were on the table – including asset sales and raising the goods and services tax – in the Commission of Audit’s report into the structure of government, The Australian reports.

The newspaper says commission chairman Tony Shepherd pressed the case for major surgery to the federal budget by telling a Senate inquiry the nation would remain more vulnerable to a global downturn until it ended its budget deficits and paid back debt.

Shepherd said Australia needed to rebuild its surpluses in the event of more financial crises in the future.

“We had those reserves built, going into the GFC, and we had the capacity to respond and that certainly helped us, there’s no doubt about that,” he said.

Australian economy will suffer long term without car-making industry

The boss of car maker Ford has warned Australia’s economy will suffer in the long term with the loss of the car-making sector, the Herald Sun reports.

Ford and GM Holden have announced plans to quit manufacturing cars in Australia, leaving Toyota under pressure as the last local car maker.

“No country is ever successful in the long term … without a really strong and vibrant manufacturing base,” Ford chief Alan Mulally said.

“It’s the foundation of all economic development. You actually make things that create value. That’s why every country around the world is collaborating with the private sector … to figure out how to create an environment where manufacturing (is viable).”

Australian bank profits challenged: Credit agency

Credit rating agency Fitch Ratings says Australian bank profits may be challenged by a weakening economy and increased competition, The Age reports.

“Profit growth is likely to be modest at best – due to higher impairment charges and net interest margin pressure from strong loan competition, partially offset by moderately higher credit growth and a reduction in funding costs,” Fitch said in a report.

It said the challenges facing Australia’s banks were manageable, with strengthening funding positions offset by a slight deterioration in asset quality.

Markets

The Dow Jones Industrial Average is up 0.67% 16,481.94 points, while the Australian dollar is buying US89.1 cents.