Rateseeker Round-up: December Business News

Rateseeker Round-up: December Business News

Australia’s economy is sending mixed signals, and it’s something all of us need to pay attention to. Sure, we’re seeing 0.8% annual growth, but with population growth at 2.3%, per-capita GDP is actually down 1.5%. What does that mean? Essentially, our economy is growing on paper, but for the average Aussie, it might not feel that way. Some industries are struggling, while other sectors, driven by government spending, are keeping things afloat. Perhaps this reliance on public funding isn’t sustainable, and the private sector really needs a boost to thrive.

But there are some silver linings. Inflation is easing, with CPI growth at 2.8%, and while wages are growing at a modest 3.5%, productivity is becoming a challenge. At the same time, job vacancies are still up 45.1% from pre-pandemic levels, showing there’s demand in the labour market even as economic pressures mount. And let’s talk about GST fraud—it’s on the ATO’s radar BIG-time. They’re cracking down on fake invoicing and dodgy tax schemes, so businesses need to be extra vigilant to stay compliant.

Here’s the kicker: with rising costs and slower wage growth, it’s a great time to rethink your financial strategy. Refinancing your home loan could be a game-changer. Imagine locking in a lower rate, freeing up cash flow, or even accessing equity to reinvest.

Why Australia’s economy needs a private sector boost to thrive

It’s clear that Australia’s economy is facing some tough challenges in 2024. On the surface, the numbers from the Australian Bureau of Statistics (ABS) don’t seem to cause alarm – an annualised growth rate of 0.8% doesn’t sound too bad. But if you dig deeper, the picture gets a lot more serious. With the population growing at a rate of 2.3%, it turns out that the economy is actually shrinking when you look at it on a per-person basis – a decline of 1.5% over the past year.

Key Sectors Impacted

According to the Ai Group’s CEO, Innes Willox, much of the private sector is experiencing “recession-like conditions.” Here’s a breakdown:

• Sectors in Decline: Mining, manufacturing, wholesale trade, and accommodation/food services all reported year-on-year output declines.
• Sectors Driving Growth: Education, healthcare, and public administration saw increases, largely fueled by government spending.

Willox points out that relying on government spending to keep the economy afloat isn’t a long-term solution. While it’s helpful in the short term, it highlights bigger problems in the private sector, like sluggish investment and a lack of job creation.

Why does it matter? For businesses and individuals, weak private sector performance could mean:

• Limited job growth in high-productivity industries like manufacturing and mining.
• Increased reliance on public services, which might strain future budgets.
• A slowdown in real wage growth affects disposable incomes.

The ABS data further shows that households are navigating a tight economy, with rising interest rates, inflation pressures, and declining per-capita GDP weighing on financial decisions.

Opportunities in Refinancing

In this challenging environment, refinancing offers a way to strengthen your financial position:

• Lower monthly repayments: Lock in better terms to reduce expenses.
• Access equity: Use built-up home equity to support other investments or cash flow.
• Stabilise costs: Switch to fixed rates to avoid future rate hikes.

Australia’s economic recovery will depend on policies that support private sector growth, innovation, and investment. For individuals, the focus should be on maximising financial resilience, whether through refinancing, strategic investment, or other means of improving cash flow.

Are you looking to get smart and save? At Rateseeker, we can guide you through the refinancing process, helping you find a better loan for your financial goals. Contact us to explore your options and make smarter financial decisions in today’s economy.

Five key facts about the Aussie economy

While Australia’s economy recorded a modest growth of 0.3% in the September quarter of 2024, translating to an annual increase of 0.8%, the latest data from the Australian Bureau of Statistics (ABS) presents a nuanced picture across various sectors.

Key Economic Indicators:

1. Inflation At a 3.5-Year Low:
   • The Consumer Price Index (CPI) rose by 0.2% in September, marking the lowest quarterly increase since June 2020.
   • Annually, inflation decelerated to 2.8%, the lowest rate since March 2021, indicating a potential easing of cost pressures on consumers.
     
2. Wages Are In Growth Mode:
   • The Wage Price Index increased by 0.8% in the September quarter, with an annual rise of 3.5%, the lowest since September 2022.
   • Public sector wages grew by 3.7% annually, surpassing the private sector’s 3.5%, a trend not observed since late 2020.
     
3. Job Vacancies Drop, Though Still High:
   • Despite a 17.1% decline over the year to August, job vacancies remain 45.1% higher than pre-pandemic levels (February 2020), suggesting sustained demand for labour across various industries.
     
4. Households Are Saving More:
   • The household saving ratio increased to 3.2% in the September quarter, up from 2.4% in the previous quarter and 1.5% a year earlier, indicating a cautious approach by consumers amidst economic uncertainties.
     
5. Labour Productivity Falls:
   • GDP per hour worked declined by 0.8% over the year to September, reflecting challenges in productivity, which could have implications for future economic growth and competitiveness.

What It Means For Aussie Businesses

With wages growing more slowly and productivity declining, it’s a good time for businesses and individuals to look closely at their financial strategies. One smart move in this environment is refinancing your existing loans. Locking in better terms can help you manage costs and build financial resilience, especially during uncertain times.

At Rateseeker, we’re here to make that process seamless and tailored to your needs. Curious about how to adapt to these economic shifts? Get in touch with our loan strategists for a tailored solution.

GST fraud prompts the ATO to crack down once again

The Australian Taxation Office (ATO) is ramping up efforts to combat a surge in fraudulent Goods and Services Tax (GST) refund claims, as identified by its Serious Financial Crime Taskforce (SFCT). These schemes, often intricate and involving multiple related entities, aim to deceive the tax system and illicitly obtain substantial refunds.

Common Fraudulent Tactics Uncovered:

1. False Invoicing: Generating fictitious invoices between related entities artificially inflates GST refund claims.
   
2. Misaligned GST Accounting: Deliberately using inconsistent GST accounting methods across associated entities to exploit the system.
   
3. Duplicated GST Credit Claims: Multiple entities claim GST credits for a single high-value transaction, leading to unjustified refunds.
   
4. Non-Existent Transactions: Claiming GST credits for alleged never-occurring purchases, developments, or constructions.
   
5. Dummy Directors: Appointing fictitious directors to conceal the genuine relationships between entities involved in the fraud.

Recent Enforcement Actions:

The ATO’s crackdown has led to significant legal actions against perpetrators of GST fraud:

• Operation Protego: Launched in 2022, this operation targets individuals inventing fake businesses to claim false GST refunds. The ATO has executed search warrants and issued warning letters nationwide, emphasising zero tolerance for such activities.
  
• Case Study: In a notable case, a Wollongong woman was jailed for GST fraud after attempting to defraud the ATO by submitting false BAS statements to claim refunds. This case underscores the serious consequences of engaging in GST fraud.

ATO’s Stance and Capabilities:

The ATO employs advanced data analytics and collaborates with other agencies to detect and prosecute fraudulent activities, ensuring the integrity of Australia’s tax system.

ATO’s Advice to Aussie Businesses

The ATO urges any business involved in illegal invoicing or financial arrangements to make voluntary disclosures rather than await detection. Coming forward proactively can mitigate potential legal repercussions and demonstrate a commitment to compliance.

Protecting Your Business Against GST Fraud

Engaging in or inadvertently becoming part of GST fraud schemes can lead to severe penalties, including hefty fines and imprisonment. Businesses are advised to:

• Maintain Accurate Records: Ensure all transactions are legitimate and adequately documented.
• Conduct Regular Audits: Periodically review financial records to detect and rectify discrepancies.
• Seek Professional Advice: Consult with tax professionals to ensure compliance with GST laws and avoid unintentional breaches.

The ATO’s intensified efforts highlight the importance of compliance with GST regulations. Businesses must remain vigilant and ensure their financial practices adhere to legal standards to avoid severe penalties.

The rise of the “second job” as stats reveal the latest trend

Recent data from the Australian Bureau of Statistics (ABS) shows that more Aussies are juggling multiple jobs. As of September 2024, 6.6% of employed individuals—around 986,400 people—were holding down more than one job. This is just shy of the record high of 6.7% set in June 2023, highlighting how common it’s becoming to take on extra work.

Demographic Insights:

• Gender Differences: Women are more likely to hold multiple jobs, with 7.7% of employed females engaging in more than one job, compared to 5.8% of employed males.
  
• Age Matters: Younger workers, particularly those aged 20-24, exhibit the highest rate of multiple job holding at 8.7%. In contrast, only 5.1% of employed individuals aged 60-64 hold multiple jobs.
  
• Regional vs. Urban: The prevalence of multiple job holding is higher in regional areas (7.4%) compared to capital cities (6.4%).

Factors Driving Multiple Job Holding:

• Economic Necessity: Rising living costs and wage stagnation compel individuals to seek additional income sources. The side-hustle economy and casual employment opportunities have made it easier for workers to find supplementary jobs.
  
• Career Development: In certain professions, such as healthcare, holding multiple jobs allows individuals to gain diverse experience and access various resources. For instance, a healthcare professional might work in both a private practice and a hospital setting to broaden their expertise.
  
• Job Insecurity: Concerns about potential job losses drive workers to secure multiple positions as a financial safety net. This trend has been observed across various income levels, with even high-income earners seeking additional employment to safeguard their financial stability.

What Does This Mean For Workers?

While holding multiple jobs can provide financial benefits, it also poses challenges:

• Work-Life Balance: Juggling multiple roles can increase stress and reduce personal time, potentially impacting mental health.
  
• Tax Considerations: Earning income from multiple sources may complicate tax obligations, requiring careful management to ensure compliance.
  
• Employment Rights: Workers must know their rights across different jobs, including entitlements to leave and protections against unfair treatment.

The growing trend of side hustles says a lot about the current economic and social shifts in Australia. While it’s a great way to ease financial pressures and build new skills, it’s not without challenges. For individuals, it’s important to weigh the pros and cons carefully. At the same time, employers and policymakers must pay attention to this trend, as it raises important questions about worker well-being and how our labour market is evolving.

Looking to boost your business in the new year? At Rateseeker, we can help determine how much you can borrow and find and secure the right commercial loan for your needs. Get in touch with our experienced loan strategists today and start planning your 2025 business upgrades.