Rudd flags tax cuts in Henry Review: Economy Roundup

Prime Minister Kevin Rudd has flagged the possibility of tax cuts to be included in the Government’s response to the Henry Review, due on Sunday after an 18-month wait.

In a speech to the New South Wales Business Chamber, Rudd said that he will attempt to help small business and working families by reforming the tax system.

“In our response to the Henry Review the Government will make the tax system stronger and fairer,” he said. “Improving the structure of the tax system by replacing inefficient taxes with more efficient ones and streamlining governments and administrations reduces complexity and makes the Australian economy more productive.”

“Australia needs to respond, to remain an attractive place to invest and to do business. That’s the reason the Government’s aspiration is to reduce the level of tax faced by the vast majority of Australians.”

Rudd said that the tax review and the budget will be released over the next two weeks, and that “these events are an opportunity to capitalise on Australia’s success through the global recession”.

“If we make the right decisions we will convert our strong economic position into a new generation of prosperity.”

ANZ has recorded a 20% increase in first-half profit to $2.3 billion for the six months ending 31 March, up from $1.9 billion from the same point a year ago, with operating income also rising 10% to $7.22 billion.

Chief executive Mike Smith said in a statement that while the lender is operating well, there is still caution regarding the effects of the global financial crisis, saying that recovery will “not happen smoothly”.

“Clearly with the magnitude of issues in the US and Europe, we are going to see lower economic growth around the world compared to the decade prior to the financial crisis,” Smith said in a statement to the Australian Securities Exchange.

“Asia will remain the world’s best performing region with annual economic growth of almost 8% (excluding Japan) which highlights the significance of our super regional strategy.”

Smith also said group lending levels for the first half of the year remained flat, with mortgage lending growth offset by low demand from corporate customers.

The independent directors of Westpac Office Trust have recommend unitholders accept a takeover offer from Mirvac Group.

“Having considered a number of alternatives, we believe Mirvac’s offer is attractive and represents a premium to both recent trading prices and NTA (net tangible asset baking),” Westpac Funds management chairman Alan Cameron said in a statement.

Meanwhile, Fortescue Metals Group will pay Zodiac Maritime $US78 million in damages after failing to reach a settlement. The legal spar refers to an incident in 2008 when Fortescue suspended a number of contacts.

“This damages cover the charges foregone when the charter was initially suspended up to the current date, together with an amount to cover future revenues forgone over the full contract term,” Fortescue said in a statement.

“The payment amount for damages is consistent with the guidance provided by Fortescue in its ASX release dated February 24, 2009 when a total potential damages estimate of $US171 million was provided.”

Shares lower despite Wall Street recovery from debt shock

The Australian sharemarket has opened lower today, despite strong leads from Wall Street where investors recovered from the shock of seeing Standard & Poor’s downgrade Greece’s credit rating.

The benchmark S&P/ASX200 index was down 38 points or 0.79% to 4784.6 at 12.00 AEST, while the Australian dollar recovered slightly to US92c.

ANZ shares fell 2.1% to $24.33, as Commonwealth Bank shares also lost 0.9% to $57.19. Westpac lost 1.3% to $26.79 as NAB lost 1.5% to $27.99.

Australia will introduce an increase on the tobacco excise tax by 25% from tomorrow in order to raise $5 billion over the next four years, Prime Minister Kevin Rudd has announced.

In a statement, Rudd said new legislation will also force tobacco companies to use plain packaging from July 1, 2012, and that the changes will result in cutting tobacco consumption by 6% and the number of smokers by 2-3%, representing 87,000 Australians.

Asciano Group has said it has not yet seen a recovery in key markets but its bulk business in coal haulage is performing particularly well.

“We continue to affirm that we are yet to see signs of a sustained underlying recovery, and we will continue to take a cautious view on the remainder of this financial year,” Asciano chief executive Mark Rowsthorn said in a statement.

“The strength in coal volumes reflects our ramp up in the Queensland coal haulage market and sustained growth in customer demand in New South Wales,” Rowsthorn said. “The continuing volatility in the non-bulk businesses is reflected in the marginal growth in both port container volumes and intermodal containerised freight volumes.”

The company announced $79.1 million for the six months to December 31, up from a loss of $93.4 million during the previous corresponding period. Revenue came to $1.44 billion for the six months.

Atlas Iron to raise $63.5 million

Atlas Iron has said it will raise $63.5 million in capital in order to fund an increase in iron ore production and shipments in the second half of 2010.

“The proceeds will enable Atlas to accumulate a significant ore stockpile in the lead-up to the start of exports from the Utah Point port facility in Port Hedland, allowing Atlas to maximise the number of shipments of iron ore in what is anticipated to be a period of very strong iron ore prices,” the company said.

Macarthur Coal has extended the takeover offer prior for Gloucester Coal until May 13. However, it is still unknown whether Gloucester or controlling shareholder Noble Group have held discussions with the company.

In the United States, the Republican Party has backed down in its efforts to block financial reform, with proposed legislation now making its way into the Senate for debate. Formal debate will begin tomorrow, according to Senate leader Harry Reid.

“Senate Republicans have finally agreed to let us begin this debate, which we appreciate, and we hope this foreshadows more cooperation to come,” Reid told reporters. President Barack Obama welcomed the move, telling reporters on Air Force One that he hopes the bill can be passed quickly.

On Wall Street, stocks rallied as investors recovered from yesterday’s Greek debt shock. The Dow Jones Industrial Average gained 53.28 points or 0.48% to 11,045.27, but failed to make up yesterday’s 213-point loss.