Around the grounds commentary indicate that Australia continues to have positive economic growth, but at a slow rate. Growth is expected to be around 2% for 2013/14. Growth could rise to 3.5% for 2014/15.
The problems experienced by the US government, in not being able to negotiate an acceptable government debt limit, has not been solved, and has only been deferred for a few months. The uncertainty caused has been one of the contributing factors to the higher value of the Australian dollar. Inflation has been subdued, and in 2014, most economists are now expecting inflation to be around 3%.
In their Melbourne Cup Day meeting, the Reserve Bank Board has left interest rates the same, with a growing number of economists not expecting any further interest rate drops this year. Some economists are forecasting that interest rates will start to increase by around April 2014.
New data shows retail sales have increased, at least in big businesses, and housing prices have increased, primarily in the capital cities. This type of data could influence the Reserve Bank to increase interest rates in 2014. Now might be the time to consider locking in interest rates, if you are prepared for contractual restrictions that you might not be able to get out of when you wish to do so.
The new Abbott government appears to be concentrating on its audit of all aspects of government operations, and hasn't announced too many decisions at this stage.
The government is committed to the repeal of the Mining Tax and Carbon Tax, but small business will lose some of the tax concessions the previous Labor government had announced, which were linked to the Mining Tax. These benefits include the $6,500 threshold for the small business asset write-off, and the loss carry-back provisions that were legislated for by the Labor government, near the end of its term in office.
The new government obviously has immense problems in managing the deficit, and therefore, is unlikely to be very receptive to small business requests for assistance until the May 2014 budget has been finalised.
Small business operators are becoming more vocal against discrimination by large businesses. If you feel you have been discriminated against, there is a potential remedy, which is to seek redress under the Consumer and Competition Act. If you're experiencing a discrimination problem, we recommend you consult your solicitor or ask us for a referral to a specialist firm.
Overall, there are significant reasons for an expectation of improvement in business conditions, but it is going to take some time to eventuate. If you need support in negotiating the opportunities and pitfalls of the year ahead, please speak with your usual Hanrick Curran Adviser on 07 3218 3900.