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Greenleaf Finance is a privately owned and independent boutique finance broking company,
specialising in mortgages, commercial loans, vehicle and equipment finance and corporate
advisory.
We are highly regarded amongst existing clients and professional referrers, our head office is
located in Subiaco, Western Australia, servicing clients throughout Australia and overseas.

If you are looking for a dedicated lending specialist, you have come to the right place.

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We have a solution for all your financing requirements. Whether you are a First time buyer, a Seasoned Investor or simply looking to get a better deal on your current loan we are here to help.

Whatever step of your financial journey you are on, we will work vigorously to help you achieve your goals.

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Economic governance in a crisis

With the coronavirus crisis slowly coming under control, minds must now turn to the policies needed to get the economy back on track for full-employment growth.

The government and the central bank have come to the rescue of the economy with massive spending supported by the Reserve Bank of Australia’s (RBA) purchases of the government’s debt at near-zero interest rates.

“RBA governor, Philip Lowe, reminded the public in April of the need to reinvigorate the country’s growth and productivity agenda.”

But these supports for the economy come at a cost. Someone must pay the real cost of government services and transfer payments.

In the current low-inflation environment, a continuation of the present combination of fiscal and monetary policies would see that cost fall initially on savers who are inflicted with artificially low interest rates.

Over time, however, the cost would be shared across the wider economy, as low interest rates encouraged governments and business to invest in less productive, low-yielding assets.

It is then to the medium and longer term that we must now shift our focus.

Downside risks

That is why RBA governor, Philip Lowe, reminded the public in April of the need to reinvigorate the country’s growth and productivity agenda.

Lowe was just stating the increasingly obvious. In the US, the Federal Reserve has warned of lasting “medium-term” economic damage and its chairman, Jay Powell, has called on the White House and Congress to mobilise “the great fiscal power of the United States”.

And, while the International Monetary Fund (IMF) has forecast a relatively short, sharp recession in Australia, it warns readers projections for the global economy come with dangerous downside risks.

“Much worse growth outcomes are possible and maybe even likely,” it says.

MitchellCOVID19_chart1.png

Many countries, it goes on to explain, are facing a multi-layered crisis comprising a health shock, domestic economic disruptions, plummeting external demand, capital flow reversals, and a collapse of commodity prices.

The emerging market and developing economies appear to be highly vulnerable. They have limited healthcare capacity, fragile governance and their economies are heavily reliant on skittish foreign portfolio investment and foreign debt.

Even excluding China, these countries account for about 40 per cent of global gross domestic product (GDP) growth. 

MitchellCOVID19_chart2.png

Bad timing

Foreign investors are reported to have withdrawn a whopping $US95 billion from emerging markets since late January.

Since the disaster of the 1997 Asian financial crisis, when big currency depreciations left Asian governments and banks with crippling foreign-currency debts, emerging market economy governments have shifted to borrowing in their own currencies.

But, as the Bank of International Settlements (BIS) now explains, this shift has transferred unhedged currency risks to the foreign lenders whose market behaviour is now impacting on the borrowing costs of the emerging market economies.

The coronavirus crisis has struck at a bad time. The global economy was already struggling with productivity growth slowing, trade tensions rising and elevated debt levels adding to the risks.

Leading research institutions such as the Peterson Institute of International Economics and the Brookings Institution in Washington have been publishing scholarly warnings about the new challenges of prolonged low productivity growth. 

According to the Brookings researchers, the world economy’s potential growth rate has slowed by around half a percentage point following the global financial crisis. The slowdown is widespread and could extend into the next decade, with the potential growth falling another 0.2 percentage points in the coming years.

Economists blame the pre-crisis global slowdown on weaker-than-average rates of capital accumulation, demographic trends and lower productivity growth. At the same time, Australian economists Warwick McKibbin and Adam Triggs have shown weak productivity growth has been linked to poorer fiscal outcomes, weaker export competitiveness, lower wages and higher income inequality.

Scarred economy

With little economic reform to show for the last 25 years, Australia has seen its multi-factor productivity growth collapse from an average 1.4 per cent a year in the 10 years to 2005, to just 0.4 per cent a year over the decade and a half to 2019.

Labour productivity growth, which plays a key role in wages growth, has almost halved from 2.7 per cent to 1.6 per cent a year over the same period.

With the early hopes for a post-crisis economic “snapback” overtaken by the severity of the economic damage in most economies, Australia’s economy almost certainly will suffer what the IMF calls “scarring”. Many good businesses will be wiped out and their workers tipped into prolonged unemployment.

Hence the increasing calls for the Australian government to formulate a plan to reinvigorate productivity growth.

Is economic reform politically feasible when a substantial proportion of the population is traumatised by the destruction of businesses, jobs and savings?

Perhaps not. But what is needed right now is a believable commitment by the federal government to restart the reform process.

The actual productivity gains from reform are likely to take years to materialise. However, a serious commitment to reform would be an instant signal to business that it could invest and rebuild in the expectation of stronger medium- and longer-term growth.

A commitment would also impose a useful discipline on the government itself.

Good policy

The immediate challenge in the face of the recession is to ensure there is no undermining of successful institutional bulwarks or retreating from the reforms inherited from the Hawke, Keating and Howard governments’ period of reform.

Fortunately, both the RBA and the government have drawn important lines in defence of good policy. Lowe has restricted the RBA’s bond buying to the secondary market.

“One of the underlying principles of Australia’s institutional arrangements is the separation of monetary and fiscal policy – that is, the central bank does not finance the government, instead the government finances itself in the market,” Lowe said in April.

“This principle has served the country well and I am confident that the Australian federal, state and territory governments will continue to be able to finance themselves in the market, as they should.”

Now Federal Treasurer Josh Frydenberg has come out against the new wave of protectionist pressure.

“While we must always safeguard our national interest, we must also recognise the great benefits that have accrued to Australia as a trading nation,” he said in a speech to the National Press Club.

“Unleashing the power of dynamic, innovative, and open markets must be central to the recovery, with the private sector leading job creation, not government.”

Of course, there will be a re-evaluation by industry of the risks and benefits of relying on global supply chains and no doubt there will be some expansion of domestic manufacturing. However, the test for whether a manufacturing project is viable in Australia must be its ability to survive without ongoing government assistance.

Proposed reforms

However, in addition to the legacy of 1980s and ‘90s reforms, there is a substantial body of potential reform that would impose relatively little adjustment cost on the hard-pressed public.

These reforms include raising the quality of government infrastructure investment and increasing the choice and quality of human services. Even the industrial relations reform proposed by the Productivity Commission back in 2015, and now urged on the government by the commission’s former chairman, Gary Banks, would be relatively costless.

And while tax reform has acquired a reputation for destroying political careers, the reforms proposed by the former Treasury secretary, Ken Henry, may be surprisingly well received.

Henry warns Australia’s dated tax system will not support the economic recovery and suggests replacing the goods and services tax (GST), payroll tax and stamp duty (all state revenue sources) with a national business cashflow tax.

The pandemic has reminded everyone of the importance of both maintaining well-funded essential government services and eschewing chronic deficit finance.

Governments need to run budget surpluses and reduce debt in the good times so they can come to the rescue of the economy in bad times.

The federal and state governments will emerge from this crisis with a lot of debt. And, while the immediate priority will be to get the economy going again, at some stage governments will have to start to wind back their debt.

The new National Cabinet may be exactly the right vehicle for building a national consensus in favour of reform.

The severity of the coronavirus crisis has created an extraordinary degree of policy plasticity.

With a spirit of compromise and the deft use of the incentives available within the federal-state financial relations, the Morrison government might be able to recruit the premiers as political partners in the bulk of the policies needed to repair the economy.

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Coronavirus crisis sparks call for financial literacy to be taught as a subject in Australian high schools

Young Australians need to be prepared now for the next major financial shock as the coronavirus pandemic reveals some families do not understand the long-lasting impact of the decisions they are making, experts say.

Key points:

  • Young people are running into trouble with their finances as soon as they leave home
  • Research shows a quarter don’t have a basic understanding of personal finances
  • Instagram and social media fuelling a ‘buy now, worry later’ attitude

Financial Basics Foundation Chair Brigid Leishman said hundreds of thousands of Australians have been plunged into financial distress since the COVID-19 outbreak and a lack of personal finance knowledge made them vulnerable to more hardship.

Ms Leishman said personal finance should be a standalone subject in high schools to give young people a formal financial education.

“Financial literacy is a critical life skill,” she said.

“We know from last year’s research that less than one in four young Australians under the age of 25 have a basic level of financial understanding and literacy.Coronavirus update: Follow all the latest news in our daily wrap.

“It’s about knowing how to manage your money, spending, saving, investing, making good decisions.

“We know that some schools currently have it built into the economics or business subjects, but it isn’t standalone and it’s not compulsory.”

The latest Household, Income and Labour Dynamics in Australia (HILDA) survey found young people under the age of 25 are the least financially literate.

The Australian Securities and Investments Commission’s (ASIC) 2017 Financial Capability Survey revealed 35 per cent of all Australians know the exact value of their superannuation.

Financial Basics Foundation Chair Brigid Leishman.
Ms Leishman said while personal finances is taught in schools across a number of subjects, it needs a higher priority.(ABC News: Chris Gillette)

Ms Leishman said many Australians have not been prepared for a major financial shock, and they could be making decisions that have long-term impacts on their finances.

She said hundreds of thousands of people are accessing their superannuation, with research showing that many do not really understand whether that is a good decision for them.

“Making that decision to take $10,000 out of their super this year and next, may have far-reaching consequences in terms of the value of that money,” she said.

“We know that young people are most at risk because they typically have more unstable income and lower levels of income.”

Smart spending habits start in school

Year nine student Callum Ferguson was saving up for his first car but those plans hit a snag after he lost his part-time job at a bakery in Brisbane due to coronavirus.

The 14-year-old worked for about a year at the baker and said personal finance was not really touched on at school.

He said he learnt most of his money management skills from his father — who happens to be a maths teacher.

Grade nine student Callum Ferguson
Callum lost his part-time job recently, but had been saving for a car.(ABC News: Chris Gillette)

“I remember a little bit in grade six, in primary school, but not really much since,” he said.

“When I get paid it just goes straight into my bank account and then I have a key card if I want to get stuff, but I have to get permission first to get it,” he said.

Financial literacy is incorporated into the Australian Curriculum from foundation to Year 10 and is delivered through mathematics, humanities, social science, economics and business.

ASIC said school principals develop their own way to apply and deliver the curriculum within their school.

The Australian Government has developed two programs for educators — MoneySmart and Tax, Super and You — as financial education resources for teachers in the delivery of financial education.

There is also several other programs delivered in Australian schools like the Commonwealth Bank’s Start Smart, Westpac’s Financial First Steps Workshops and an ANZ Bank and government funded Saver Plus program.

The Financial Basics Foundation and Suncorp have also launched free online resource kits for parents to help talk to their children about money.

‘I want, I want, I want’

Callum’s dad, Mitch Ferguson, is a mathematics and business teacher at Balmoral State High School and said technology had exposed young adults to more complex financial decision making earlier in life.

He recently taught his students about AfterPay, which was worryingly popular.

Mitch Ferguson maths and business teacher at Balmoral High School.
Callum’s father, Mitch Ferguson, teaches children at school about personal finance.(ABC News: Chris Gillette)

“That was a way to go, ‘let’s see how this works and the dangers behind it’, and that morphed into talking about credit cards and managing your money,” he said.

“It’s just teaching good habits.

“We want to get a situation where students understand the concept of living within your means and this idea of a champagne lifestyle on a beer budget.

“With what’s happening on Instagram there’s a mentality of ‘I want that and I’ll pay for it later’ — we want to nip that in the bud.”

In a statement, ASIC said consumer and financial literacy was a capability rather than a discrete subject.

It said it continued to work with the Australian Curriculum, Assessment and Reporting Authority to explore ways to elevate financial literacy in the national curriculum.

A new report from the Organisation for Economic Co-operation and Development (OECD) found in 2018, Australian students performed above the OECD average and Australia ranked fifth out of the 20 participating countries.

ASIC said while the results were positive, it was more important than ever that young Australians had the skills to manage money and plan for the future.

It said COVID-19 had exposed some areas it would explore further with schools and universities including young people being inexperienced with making financial decisions under crisis and the link between mental health and financial wellbeing.

Reality hits home at university

Queensland University of Technology Business School accountancy lecturer Dr Chrisann Lee said young people without basic personal finance knowledge start to feel under pressure when they enter university.

“A lot of students don’t have sufficient financial education in schools, and that translates to university years, when they suddenly have all this new financial freedom without the knowledge or skill to navigate it,” she said.

QUT Business School accountancy lecturer Dr Chrisann Lee.
Dr Lee said many students run into trouble with their finances as soon as they leave their family home.(ABC News: Chris Gillette)

“Research I’ve previously done with first year university students is they’re really struggling with money skills, with budgeting, with daily expenses, no savings and they rack up debts from credit cards or school and university loans without really understanding how they will be able to pay it off.”

Ms Lee said money should not be a taboo subject and encouraged parents, schools and universities to take a more active role in educating young Australians.

“It’s really important to have that conversation at home and then extend it with financial education in schools,” she said.

“Right now home schooling is an opportunity to have that conversation.

“At the university, we are looking at an orientation program for money knowledge … rather than just signing up for a social club at orientation, that may go some way to help students navigate the first six months of university.”

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