House lending falls 5% in January, Henry tax review to be released before May: Economy Roundup

The total value of owner occupied housing commitments, excluding alterations and additions, decreased by a seasonally adjusted 5% in January, according to the latest figures from the Australian Bureau of Statistics.

The total value of personal finance commitments fell by 1.5%, with fixed lending and revolving credit commitments falling by 2.1% and 1.1% respectively.

In commercial finance, the value of total commitments dropped by 1.6%, with revolving credit commitments dropping 6.7% and fixed lending increasing by 0.3%. The total value of lease finance commitments decreased by 10.3%.

Overseas, the Chinese Government has cleared Rio Tinto and the Australian Government of any blame for a collapse of the $19.5 million deal between Chinalco and Rio Tinto last June.

As reported in The Age, a report to the State Council of China has found the deal did not go through because Chinalco did not engage Rio Tinto shareholders or manage their reputation in Australia.

“One important reason for blocking the vertical merger is conflict of interest, that is, when the major customer of Rio Tinto enters the board of directors, it will have certain rights to speak on product pricing which may harm the interests of Rio Tinto’s other shareholders,” it reportedly says.

Meanwhile, the Reserve Bank of Australia has not decided whether to regulate a further reduction in transaction fees charged by credit card companies, according to assistant governor Malcolm Edey.

In a speech to the Cards and Payments Australasia 2010 conference, he said it is not clear yet whether competition will prove enough force to see lower fees without regulation.

“The Reserve Bank is a reluctant regulator,” he said. “We’d prefer to see fees being held down by competition than by direct regulation.”

“We believe there’s been good progress in promoting competition over recent years… But it’s not yet clear whether that will be sufficient.”

The Federal Government has announced it will release the results of the Henry tax review before the 2010-11 budget is delivered on May 11, with some speculation the documents could be released simultaneously.

Treasurer Wayne Swan said yesterday the review would be made public soon, saying “it will be out by the budget”, and that the Government was still considering its reaction in a “very careful and in a very considered way”.

Shares higher after good leads from commodities

Meanwhile, the Australian sharemarket has opened slightly higher today after good leads from overseas commodities and equities markets.

The benchmark S&P/ASX200 index was up 7 points or 0.15% to 4825.4 at 12.00 AEST, while the Australian dollar increased slightly to US91c.

ANZ shares gained 0.3% to $24.34, while Commonwealth Bank shares rose 0.2% to $55.98. NAB gained 0.4% to $27.00 as Westpac rose 0.4% to $27.02.

As reported by the Australian Financial Review, Queensland treasurer Andrew Fraser has said the coal companies interested in lodging a bid together for the state-owned rail system are “involved in a media stunt” to undermine the QR National float.

“While the companies pretend to be working together, they are fiercely undermining each other by sending individual messages and views they don’t want to be a part of an industry consortium,” he said.

Additionally, it is reported Arrow Energy is set to reject a $3.3 billion joint bid from Royal Dutch Shell and PetroChina due to the perceived low value of the offer. The AFR has reported Arrow is now considering whether it can deliver better returns through its own LNG operations.

MLC confident of approval for AXA deal

The chief executive of NAB’s MLC investment company has said he is confident the ACCC will approve of the bank’s bid for AXA Asia Pacific.

“I think the ACCC is going through a very robust process, scoping views and opinions from far and wide,” Steve Tucker told The Australia. “But we don’t believe there are any issues on fundamental competition grounds.”

The ACCC has delayed its decision on the matter twice now in order to gain more information regarding the deal.

Overseas, British Airways cabin crew have announced a seven-day walkout after a deal to stop industrial action was withdrawn. Strikes have been announced for 20-22 and 27-30 March.

The walkouts, due to disputes over pay, job security and working conditions, could be the start of many according to the Unite union. “BA are now stopping their own employees from having a voice on an offer that could have ended this dispute,” general secretary Len McCluskey told Sky News.

It is understood replacement crew have been called in, but a number of flights are still expected to be cancelled.