The Senate has rejected the Government’s emissions trading scheme, but climate change minister Penny Wong has remained defiant about the Government’s plans.
The Opposition teamed up with the Greens and independent senators to vote down the plans, which were expected to begin on 1 July 2011. The scheme would have seen some of Australia’s biggest polluters purchase carbon permits, in order to reduce the country’s total emissions.
But Wong told the ABC that the Government will remain defiant about its plans, but gave no details as to how it intends to pass the legislation.
“It’s not smart to pretend this won’t leave us isolated from the rest of the world, and it’s not smart to undermine our transition to a low-carbon economy,” she said. “This bill may be going down today, but this is not the end.”
Meanwhile, inflation expectations have risen by 3.5% during August due to higher consumer sentiment and better than expected unemployment data.
The Melbourne Institute Survey of Consumer Inflationary Expectations grew to 3.5% during August, from 3.2% during July. But research fellow Sam Tsiaplias said in a statement the expectations are still below the 4.9% level recorded at the same time last year.
“Given a July unemployment rate below market expectations and rising house prices in the June quarter, it is not surprising that consumer inflationary expectations rose by 0.3 percentage points in August to 3.5%,” Mr Tsiaplias said. ??”Just over 17% of respondents expect inflation to fall within the RBA’s 2-3% target band in the next 12 months, compared to less than 9% in August 2008.”
Shares rise on Wall Street optimism, bad news for BHP
The Australian share market has opened higher today after positive comments about the economy from the US Federal Reserve helped boost stocks on Wall Street.
The benchmark S&P/ASX200 index was up 50.1 points or 1.15% to 4393.2 at 12.10 AEST. The Australian dollar also gained ground to US83c.
Commonwealth Bank shares gained 3.2% to $46.76, while Westpac also gained 2.5% to $23.91. ANZ shares gained 2.4% to $20.07, as NAB jumped 2.2% to $26.43.
Mining giant BHP Billiton recorded a 62% drop in annual profit following a plummet in commodities prices, but the company said demand in Asia and Europe will improve.
The company recorded a 61.7% fall in net profit to $US5.877 billion, while chief executive Marius Kloppers said it is too early to tell the outcome of any activity recovery.
“We expect Chinese demand to more accurately reflect real end-user purchasing in the near-term,” Kloppers said in a statement to the ASX.
“After intensive de-stocking, there is emerging evidence of demand improving in North America, Europe and Japan. It is too early to tell whether this improvement is driven only by a re-stocking or a combination of re-stocking and real demand.”
Coca-Cola Amatil has increased its net profit in the first six months of the year by 10.4%, but expects costs of goods sold per unit to increase by up to 6% in the full year. The company recorded a first-half net profit of $189.9 million, with earnings before interest and tax also increasing by 10% to $339.9 million.
“CCA expects the full year 2009 increase in beverage COGS per unit case to be between 5% and 6% on a constant currency basis and excluding Indonesia,” CCA said in a statement to the ASX.
“The depreciation of the Rupiah against the US dollar and the mix impact of one-way-packs are expected to result in double-digit COGS increases in Indonesia for the full year.”
Managing director Terry Davis said the company has performed well despite harsh conditions, while the company expects high single digit earnings growth before interest and tax over the second half.
US Fed sees economic recovery
Meanwhile in the US, the Federal Reserved released a statement in which it said the economy is beginning to stabilise after a 20-month long recession, and that interest rates will continue to remain near 0% for an extended period of time.
“Information since the Federal Open Market Committee met in June suggests economic activity is levelling out,” the Fed said. “Conditions in financial markets have improved in recent weeks.”
It also announced that it will extend the length, but not the scope, of a program in which the Fed buys long-term government securities.
“To promote a smooth transition in markets as these purchases of Treasury securities are completed, the committee has decided to gradually slow the pace of these transactions and anticipates that the full amount will be purchased by the end of October,” the Fed said in a statement.
The comments provided investors with some optimism, sending the Dow Jones Industrial Average up 120.16 points, or 1.30% to 9,361.61.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
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