Tax on super earnings over $100K

LABOR will raid Australia's superannuation accounts to plug its revenue hole, with earnings over $100,000 to be taxed under a plan unveiled today.

Treasury estimates around 16,000 Australians will be affected by the measure in 2014-15 which represents 0.4 per cent of Australia's projected 4.1 million retirees in that year.

Superannuation Minister Bill Shorten and Treasurer Wayne Swan this morning revealed Labor would cap the exemption for earnings on superannuation assets supporting income streams at $100,000 with a concessional tax rate of 15 per cent to apply after that. 

Tony Abbott immediately hit out at the planned reforms describing them as “another broken promise” that would result in less money in the pockets of Australians.

The changes would affect individuals with around $2 million of savings in superannuation and will take effect from July 1 next year.

"We want to make it better, we want to make it fairer and we want to make it stronger," Mr Swan said of the superannuation system.

The measures -- which will also hit politicians -- will bring in around $900 million in savings for the federal budget over the forward estimates.

Mr Swan said there was "something wrong" with the system that everyday working Australians weren't getting the best deal from superannuation.

Mr Shorten said "we want to take superannuation above politics".

"We believe the system should be targeted at everyday earning Australians," he said.

Deputy Prime Minister and Treasurer, Wayne Swan and Minister for Financial Services and Superannuation Bill Shorten holding a press conference at Parliament House in Canberra. Picture: Smith Kym

"We all know that concessions can't be open ended.

"Once you've achieved a comfortable level in retirement savings, you probably don't need as much as those who haven't gotten to that point."

He said the changes "were not retrospective".

"Vigilance dictates that we must make these hard changes," Mr Shorten said.

Click on this link for the full announcement details.

People aged 50 and over will also get a boost to the tax free additional contributions they can make from $25,000 to $35,000.

However the measures may not even go to the parliament before the next election.

“We will do what we can in the time available before the next election," Mr Shorten said.

Tony Abbott today said the new measures were“yet another hit on Australian people”.

Share the anguish of columnist Joe Hildebrand, who painstakingly avoided talking about superannuation... until now.

The Opposition Leader said people would ultimately have less money as a result of the flagged changes.

“This is a government that is incompetent and untrustworthy,” Mr Abbott said.

“This is a government which is prepared to tax the people to fund own spending.”

He said if re-elected there was no guarantee Labor would stop at the measures announced.

“If they get three more years they will go further – it wont stop here,” Mr Abbott said, maintaining there would be no adverse, unexpected changes to superannuation under a first term of a Coalition government.

Under current arrangements on superannuation, all earnings on assets supporting income streams are tax free in contrast to earnings in the accumulation phase of superannuation which are taxed at 15 per cent.

As part of other changes today Labor will also establish a special Council of Superannuation Custodians to ensure any future changes to the sector are consistent with the agreed Charter of Superannuation Adequacy and Sustainability.

It will work to simplify the design and administration of the higher concessional contributions cap, reform the treatment of concessional contributions in excess of the annual cap, extend normal deeming rules to superannuation account-based income streams, extend concessional tax treatment to deffered lifetime annuities and further reform the arrangements for lost superannuation.

Asked if the changes would help fund the Gonski education reforms and the National Disability Insurance Scheme Mr Swan said it was one of many savings that would help bring back revenue.

"You do create room in the longer term for policy proposals," Mr Swan said.

"There is no magic wand or one area of savings that will instantly change the fact that revenues have come off dramatically."

Speculation over the government’s planned raid on superannuation hit fever pitch this week.

The reforms were due to be part of next month’s federal budget.

The Association of Superannuation Funds of Australia today welcomed the government’s announcement.

The organisation’s CEO Pauline Vamos said it would help stop the panic in the community and allow people to better plan for their retirement in an environment of stability and certainty.

"We have been calling on the government to put a stop to the hysteria and consider policies which take a long-term approach to the future sustainability of Australia's superannuation system,” Ms Vamos said.

She said there was a lot of complexity in the changes which needed to be considered carefully.

“We will examine these proposed changes in detail to ensure they deliver the best outcomes for the sustainability of the system and a comfortable retirement for all Australians."

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James Hardie trims earnings forecast

BUILDING products group James Hardie has trimmed its earnings forecast for the year, saying conditions in the housing market remain uncertain.

The group today revealed it had made a net operating profit of $US31.5 million ($30.95 million) in the third quarter to December 31, up from a loss of $US4.8 million ($4.72 million) a year earlier.

The results include the company's asbestos-related costs, plus regulatory costs and tax adjustments.

Excluding those costs, operating profit rose to $US28.8 million ($28.29 million) from $US27.7 million ($27.21 million).

Chief executive Louis Gries said that while the US housing market had gained momentum, earnings growth had been constrained by lower sales prices and higher costs.

But, he said, if the US market continued its recovery, earnings were expected to rise.

However, conditions in Australia remained subdued and the group did not expect a substantial pickup soon.

The group downgraded its full year earnings forecast, excluding the asbestos and other costs, to between $US136 million ($133.61 million) and $US141 ($138.53) million.

James Hardie's net operating profit for the nine months to December 31, excluding asbestos and other costs, rose to $US113.1 million from $US109.3 million (to $111.12 million from $107.38 million). Including the costs, net operating profit fell seven per cent to $US123.6 million from $US115 million ($121.43 million from $112.98 million).

Mr Gries said that in anticipation of a market recovery in the US, James Hardie would expand its production capacity. It will spend $US34 million ($33.40 million) reconfiguring and refurbishing a plant in California, which it had closed in 2008 but now intends to reopen in 2014.

The group said that if it does not undertake any sharebuybacks between now and announcing its full year results in May, it planned to lift its dividend payout ratio. The final unfranked dividend for the year is expected to be 35 US cents, down from 38 US cents the previous year.

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Australian shares edge higher on earnings

THE Australian share market has edged higher after a morning of mixed trade driven by earnings results.

At 12.10pm AEDT today, the benchmark S&P/ASX200 index was up 4.1 points, or 0.08 per cent, at 5067.5 points, while the broader All Ordinaries index was up 5.1 points, or 0.1 per cent, to 5088 points.

On the ASX 24, the March share price index futures contract was up four points at 5046 points, with 10,078 contracts traded.

IG Markets market strategist Evan Lucas said the local bourse had seen its fair share of ups and downs in early trade, following weaker European markets overnight and the closure of Wall Street for the President's Day public holiday.

"It's a bit of a yo-yo at the moment," he said. "Earnings season this morning has again dominated a bit of the moves in what's going on."

"We've seen some fairly big ups and big downs on earnings guidance that have either missed or really blown the lights out.

"The market is looking for a reason to maybe take a bit of profit, but every time it happens the dips are snapped up."

Among the biggest movers was engineering firm Monadelphous, whose shares fell $1.70 cents, or 6.1 per cent, to $26.15, despite posting a record half year result of $79.1 million.

Mr Lucas said the negative reaction to Monadelphous' results was surprising but reflected the impact of reduced discretionary spending by big miners on mining services.

Sonic Healthcare also lost ground amid fears its annual earnings will come in at the lower end of its previous forecasts. The pathology and radiology provider's net profit increased by 5.4 per cent to $150.6 million in the half year to December 31. Its shares shed 93 cents, or 6.62 per cent, to $13.12.

Meanwhile, stocks in Southern Cross Media were 11 cents higher, or 8.94 per cent, at $1.34, after reporting a 52 per cent drop in half year net profit to $45.13 million. The rally came after the broadcaster said advertising markets were showing signs of improvement.

Shares in APN News and Media fell by two cents, or 6.67 per cent, to 28 cents following the forced departure of the company's chief executive, chairman and three independent directors.

Transfield Services also dived by 10 cents, or 4.76 per cent, to $2.00 after it warned it would have to make up to $285 million in asset writedowns.

The big four retail banks, as well as Rio Tinto and BHP Billiton, remained relatively flat. National turnover at 12.10pm AEDT was 810 million securities worth $2.18 billion.

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Sonic shares dive amid earnings fears

SONIC Healthcare says it plans to cut costs across its Australian and US operations after warning its full year earnings will come in at the bottom end of earlier forecasts.

The pathology and radiology provider today reported a net profit of $150.6 million in the six months to December 31, up 5.4 per cent from $142.9 million in the previous corresponding period. Revenue rose 3.4 per cent to $1.7 billion, from $1.6 billion.

Last August, Sonic said it expected its full year earnings to rise by between five and 10 per cent in 2012/13 above the $624 million achieved in 2011/12. However, in its update today, the company said fee changes in Germany, fee cuts in the United States and impacts from Superstorm Sandy meant that its full year earnings would come in at the lower end of the guidance range.

The news prompted Sonic's shares to drop $1.125, or 8.01 per cent, to $12.925 at 1.40pm AEDT.

Chief executive Dr Colin Goldschmidt said that while Australia and Europe posted solid revenue growth, earnings from the US fell an unprecedented two per cent amid difficult trading conditions.

"Whilst our result at the moment, for the first time, is somewhat weaker in the US and it has impacted the whole result of Sonic, we certainly do not take a particular negative view about this," Dr Goldschmidt told analysts. "I'm confident that we will get through this in probably one or two reporting periods."

Dr Goldschmidt said Sonic already had launched a major cost reduction program across the US and had more unspecified cuts in the pipeline.

"As far as cost measures go in other countries, we've got a lot that we can still do in the US and a lot we can do in Australia," he said. "I'm not going into fine details of that ... but I can tell you it is quite significant and, depending on conditions, we will adjust our actions."

"We will be doing everything we can to reduce our costs in this low-revenue growth environment and I am confident our earnings will lift as we go forward."

Among the company's best-performers were its imaging and IPN medical centre divisions, where revenue jumped six per cent and 15 per cent, respectively. Kinetic Health, Sonic's occupational health provider and the largest in Australia, posted a 23 per cent rise in revenue, thanks to growing demand from resources companies.

Dr Goldschmidt said Sonic had no immediate plans for new local acquisitions after buying Healthscope (Western Australia) in October 2012, and would instead focus on potential acquisitions in Europe and the US.

"In Australia, I think the opportunities are probably almost done. The market is almost fully consolidated here," he said.

The chief executive would not comment on the possible outcome of a Federal Government review on the impact of industry deregulation on competition and rents due in April.

However, he said, Sonic was in a strong position to compete and win under the current conditions. Sonic lifted its partly-franked interim dividend by one cent to 25 cents a share.

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Sonic shares dive amid earnings fears

SONIC Healthcare says it plans to cut costs across its Australian and US operations after warning its full year earnings will come in at the bottom end of earlier forecasts.

The pathology and radiology provider today reported a net profit of $150.6 million in the six months to December 31, up 5.4 per cent from $142.9 million in the previous corresponding period. Revenue rose 3.4 per cent to $1.7 billion, from $1.6 billion.

Last August, Sonic said it expected its full year earnings to rise by between five and 10 per cent in 2012/13 above the $624 million achieved in 2011/12. However, in its update today, the company said fee changes in Germany, fee cuts in the United States and impacts from Superstorm Sandy meant that its full year earnings would come in at the lower end of the guidance range.

The news prompted Sonic's shares to drop $1.125, or 8.01 per cent, to $12.925 at 1.40pm AEDT.

Chief executive Dr Colin Goldschmidt said that while Australia and Europe posted solid revenue growth, earnings from the US fell an unprecedented two per cent amid difficult trading conditions.

"Whilst our result at the moment, for the first time, is somewhat weaker in the US and it has impacted the whole result of Sonic, we certainly do not take a particular negative view about this," Dr Goldschmidt told analysts. "I'm confident that we will get through this in probably one or two reporting periods."

Dr Goldschmidt said Sonic already had launched a major cost reduction program across the US and had more unspecified cuts in the pipeline.

"As far as cost measures go in other countries, we've got a lot that we can still do in the US and a lot we can do in Australia," he said. "I'm not going into fine details of that ... but I can tell you it is quite significant and, depending on conditions, we will adjust our actions."

"We will be doing everything we can to reduce our costs in this low-revenue growth environment and I am confident our earnings will lift as we go forward."

Among the company's best-performers were its imaging and IPN medical centre divisions, where revenue jumped six per cent and 15 per cent, respectively. Kinetic Health, Sonic's occupational health provider and the largest in Australia, posted a 23 per cent rise in revenue, thanks to growing demand from resources companies.

Dr Goldschmidt said Sonic had no immediate plans for new local acquisitions after buying Healthscope (Western Australia) in October 2012, and would instead focus on potential acquisitions in Europe and the US.

"In Australia, I think the opportunities are probably almost done. The market is almost fully consolidated here," he said.

The chief executive would not comment on the possible outcome of a Federal Government review on the impact of industry deregulation on competition and rents due in April.

However, he said, Sonic was in a strong position to compete and win under the current conditions. Sonic lifted its partly-franked interim dividend by one cent to 25 cents a share.

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