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Thursday, 6 September 2018

Salvo of tax cuts to come

Exports booming

Australia notched another $36 billion month of exports in July 2018, with the total monthly value of goods and services surging a thumping 13.7 higher per cent year-on-year. 

Over the past two years the annual value of exports has ripped some 28 per cent higher from $318 billion to record highs of well over $405 billion, as the resources export boom finally begins to reap serious dividends. 

This in turn helped to rack up another $1.5 billion international trade surplus in July, continuing a string of surpluses that has continued throughout the calendar year to date to the tune of a cumulative $8.2 billion in seasonally adjusted terms. 

The monthly strength was driven by yet another record month for LNG exports at an estimated $3.7 billion. 

In Aussie dollar terms coal prices are now tearing to multi-year highs, so there's plenty more to come where this came from.

Iron ore spot prices also leapt today, logging their biggest gain in a month. 

The value of cereal exports has taken a bit of a hit through the recent drought, delivering a understandable knock to confidence in rural regions, but higher commodity prices and other rural goods exports have helped to offset this weakness.

Meanwhile the lower dollar will give the services recovery a further boost over the months ahead, including from a thriving tourism sector. 

Stand by for tax cuts

With strong GDP and employment growth reflected in falling unemployment, this abundance of revenue offers PM Morrison and Treasurer Frydenberg tremendous ammunition to announce a salvo of personal and small business tax cuts in the lead up to the next Federal election.

Of course, an increase in post-tax incomes is one of the ways in which the household debt to disposable income ratio can be reduced. 

Another part of that equation - rising gross household incomes - still needs work.

As a pro-property Prime Minister it also wouldn't be too surprising if ScoMo has a few tricks up his sleeve with regards to first homebuyer incentives.