Jen’s Note, June 2010

As the end of the financial year draws near we have again seen the share market test new lows. This time however we cannot put all the blame on overseas events. This time it is largely the actions of our own government that is causing the falls. The word has gone out to overseas investors to sell Australia. The proposed 40% extra tax on mining companies has made investors fearful that such a gross tax will flow on to other business sectors like the financial sector or technology sectors.

One reason why the interest rates were not increased by the Reserve Bank last week was simply that although they keep banging on about inflation the reality is that there is no inflation and the more likely risk is stagflation. That means that we have poor growth prospects because business is not being supported sufficiently by genuine opportunity that comes from real demand, rather than government stimulus, school building programs and insulation programs.

Such activities give false indications of the true state of the economy and as they cannot be sustained, reality can come as a shock to businesses that based their projections on such programs. All round the world countries that had stimulus programs are closing them down as the governments cannot afford to maintain them.

For those of you who are considering making extra superannuation contributions you should do it soon rather than leave to the last minute. You should also be careful of the contributions caps. If you are not sure do contact us so we can help you make sure you do not exceed your caps and get a nasty tax bill.

June 30 falls on a Wednesday this year so you need to be sure that you have the super contribution to your super fund by Friday the week before. It takes some time for contributions to be processed by the trustees and if they are not completed in time then there is the risk of losing your tax deduction.

The financial world in Australia is expecting an early Federal election, possibly as early as August or September. There is a state election due in Victoria this year as well, so apart from the schools and churches having their fund raising stalls and sausage sizzles at the polling booth, which is a real benefit to those organizations, there is a desperate need to have a clear vision for the economy.

Having our biggest industries in conflict with the government is not doing our economy any good, nor does it do our overseas reputation any good with those who are keen to do business with Australian companies. Many overseas investors are now standing on the sidelines waiting to see which way our economy will go under the proposed resources tax. They are doing this because it affects their pricing on commodities that they would buy. If we are going to be too expensive they will go elsewhere and Aussie jobs will go with them.

June does always seem to be the wet and gloomy month of the year, but wandering around the garden this morning I was cheered to see buds on my daphne plants. Knowing that June 21 is the equinox and that we will start to get a minute a day  more daylight each morning, looking forward to longer days and spring is a most cheery thought .

Our new kitchen has given a whole new aspect to cooking again, so the weekend pot of chicken soup was a great joy. You know the sort of soup; lots of veggies and herbs and lots of chicken, we use about eight skinless thigh pieces and some macaroni. Jewish penicillin we call it; we both had sore throats but two days of good soup and we both feel like brand new.Lina the canine receptionist just loves chicken soup especially if she is having some when we are.

Looking at the weekend papers and all the people who get their pictures in the paper as a regular thing, it was interesting to see the rubbishy tack that they think enhances their lives and it made me think about what I really look forward to having. We like to eat the food of the seasons, so one of the delights I really enjoy is the return of navel oranges in the winter, and new seasons white onions to make sauce for tripe or fish.
Come August and it is the asparagus, cherries in November, home grown tomatoes in summer and fresh pears in autumn. Guess I will never be a fashionista. But looking forward to simple things that are within anyone’s reach is more likely to make people happy than the latest fancy handbag or shoes to fall off and break your ankle.

Our new back verandah is a delight as well; comfy old wicker chairs, hot coffee and the weekend newspapers plus a good cd playing and a snoozy dog at our feet. Beats getting in a plane to fly for several hours to sit on somebodies else’s verandah at great expense to do the same thing.

Builders and tradespeople do add a lot of comfort to life but gosh it is good when they all go home not to come back.

So keep warm, make a few pots of veggie soup, listen to some good music, borrow a few books from the library, put your feet up and relax and think about how lovely spring will be. Now don’t get too down hearted about maybe having to go out to vote in the cold, it will be good for your portfolio.
Best wishes and keep well,

Jen, Rose and Lina the Canine Receptionist

Lina the Canine Receptionist!

Jen’s Note, May 2010

Have just spent a few days away whilst our kitchen is being renovated, it has been very interesting to see just how much angst has been generated in the business sector by a government that is driven by the concept that throwing money at a problem will fix it.

Rather like renovating, as distinct from build from scratch, there is always a problem that was not foreseen. In our case it appears we had been walking on air and lino for some time and the oven door falling off the stove and the dishwasher making odd grinding sounds were valuable warning of our impending fall. The solution of course was to totally replace the floor and subfloor so that all the nice new shiny appliances will not sink slowly into the ground with us following. Fortunately I had a fair idea that things were not well underfoot and so warned the builder of the potential problem.

So it should have been with the school building , insulation projects , alternative power project and many more that now have created more chaos than if some more time had been taken to properly plan just what would work , exactly what it would cost and what the worst and best outcomes could be.

The interest rate rise we had this week will only add to inflation. Most of the price rises in recent times have been from the rising cost of living, with more expensive food, fuel and utilities as well as school fees, medical insurance and cost of tradesmen. Not having built sufficient infrastructure to allow the building of more housing, plus maintaining a very high level of immigration, the situation is not helped by a government spending what it does not have to spend and actively discouraging saving. Add to that the worrisome state of aged care and health care and we can only despair for the future for our young people and the frail aged.

The rising prices for housing are simply because of lack of enough housing to meet the needs of the population. A simple example of supply and demand, it works the same as your fruit and veggie prices, if the banana plantations are knocked out by a storm then bananas become more expensive till the next seasons crop is available.

The federal budget is due and we can expect the usual ham fisted messing about with threats to your savings by claiming to provide more equality for “working families”. So far working families have been dealt some pretty hard blows to their super funds and savings in general. Limiting what people can save towards their retirement makes no sense at all and then to tax success in the resource sector with a Super Profit tax is totally weird. I have been in business for all my adult life and have read many, many annual reports from both public and private companies. Never have I ever seen a super profit that deserved to have an extra 40% tax liability. In fact I have never seen a super profit, just fair profits that are the result of good planning by well run companies with hard working employees.

Now I know I have got a bit off my bike but it grieves me to see that those who have worked hard and done their best to be thrifty and save for their old age by investing in Australian companies should be threatened by ill considered ignorant tax grabs that will push more people onto Centrelink payments than would have ever have been necessary previously.

Australian super funds are a major and valuable part of the investment scene. Every Australian who has a super fund invests in the Australian share market either directly or indirectly. Any tax regime that threatens the profitability of companies’ through reducing their potential to succeed and be totally competitive on the global markets should be considered a threat to working families’ savings and financial security.

One aspect that gave me great delight while I was on a few days holiday was to see how much the recent rains have improved the country side.  Farmers have started to restock and there is the real potential of good growth of fodder. Talking to some of them they are feeling much more sanguine about the future. They just hope our dollar does not get too high and they can enjoy a fair go in the export markets.

We enjoyed a really lovely sight one evening when sitting on the balcony and it was one of the few days that did not pour down with rain.  It was the mob of wallabies grazing the lawn in front of our villa and a young family of toddlers absolutely gob smacked to see the beasts within a couple of metres of where they were standing.

No TV program or computer game can every take the place of sharing space with nature going about its business of daily living.  These little ones were near us next morning when we were out and were full of the wonder of telling about the “wobblies”.  Their parents were very thrilled as well; they had managed to take some lovely photos with their phone of the children looking at the “wobblies”.

Their plan was to make the photo into a Christmas card, great idea. My best experience was to have a large flock of pink and grey galahs visit at breakfast, cheeky birds, at times total pests but they have style and a fine dress sense. Nature does put together wonderful designs, the flock of Eastern Rosellas flashing red and green diving onto the lawn to pick over the grass after the lawnmower man had moved on was fun as well.

My partner Bill has always reckoned that Winter starts on Anzac Day and this time he was right. It has now become quite cold at night so that is the time to dig out your best soup recipes, warm slippers and a good book  and relax and take time to enjoy the pleasures of Winter so that we can look forward to the Spring and the new joys that will bring.

Keep warm and well,

Jen, Rose and Lina the Canine Receptionist

Lina the Canine Receptionist!