Reserve Bank of Australia director Warwick McKibbin has said that government stimulus measures used to boost the economy may be fuelled by political agendas.
“The danger is you add too much to the fiscal deficit … sure, some of it is temporary, but a lot is structural because it is based on ideology,” McKibbin said.
“The only exceptions are infrastructure and similar spending, which raises the return to private activities.
“The most sustainable way of reducing a fiscal deficit is through strong productivity growth in the private sector.”
Meanwhile, the Australian sharemarket has opened lower today, with the lifting of the ban on short-selling and news of a nuclear test in North Korea driving markets down.
But the benchmark S&P/ASX200 index was up 9.5 points or 0.25% to 3747.4 at 12.10 AEST. The Australian dollar also maintained its position at US78 cents.
Commonwealth Bank shares lost 2.2% to $34.02, as AMP declined 2.8% to $4.92 and Woolworths fell 0.7% to $25.54.
Westpac lost 1.4% to $18.42 as it launched a $1 billion offer for three-year non-government guaranteed senior bonds, with pricing to be released later today.
Fisher & Paykel Healthcare announced it expects profit to grow by 25% in 2010 to $AU428 million, also announcing a 76% gain in full year profit.
“Fisher & Paykel Healthcare Corporation announced today that its operating profit for the year ended 31 March 2009 grew 76%, compared to the prior year, to $NZ102.4 million ($81.3 million),” the equipment manufacturer said in a statement to the ASX.
“This year we intend to invest significantly in expanding our sales and distribution operations, with plans to establish distribution and clinical sales support centres in four additional countries, including Japan,” chief executive Michael Daniell said in a statement.
Meanwhile, Australian Competition and Consumer Commission chairman Graeme Samuel said on ABC television that he would be “gravely concerned” about any merger between two of the major banks.
“I’d have to say that if we were looking at any mergers involving one of the big four banks in Australia, we would be looking at it very rigorously indeed,” he said.
“But even if we looked at it carefully indeed … there would be grave concerns about any further significant consolidation that saw the position of the big four banks apropo or relative to the regional banks and the non-bank financial institutions … move any further away.”
Bendigo and Adelaide Bank has said it is indirectly affected by troubled timber group Great Southern with 8200 customers having loans totaling about $615 million.
“These loans are full-recourse to each individual borrower, with an average exposure of $75,000 and are spread across every state and territory of Australia,” Bendigo and Adelaide Bank said in a statement on Tuesday.
“The obligations of the borrower remain unchanged by the announcement by (Great Southern) that it was entering administration.”
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
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