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David Potts on money: the taxation of voluntary redundancy, and a fond farewell

The last time I was made redundant was a less pleasant affair than this one.

was in deep doo-doo, made no less painful by the fact that I’d been forecasting it only to leap straight into it. That and I had no say in the decision.

Even though I’m always being mistaken for 63, I’m actually 64. The thing is, my 65th birthday is only a few months away and what with my employer offering me more to go away than stay, it was an offer I couldn’t refuse. Some would take it as a backhanded insult but really it was generously timed because if you take voluntary redundancy before you’re 65 the Tax Office feels sorry for you and taxes the payout more lightly.

My editor suggested I explain the ins and outs of the taxation of voluntary redundancies, which I thought might look a big self-indulgent, but then, as you know, that’s never stopped me. I’ll just say the first $9514 plus $4758 for each year of service is tax-free and the rest, up to $185,000 is taxed at 17 per cent. After 65 the lot is taxed – 17 per cent for the first $185,000 then 47 per cent.

Where was I?

Oh yes, my last hurrah. In this business you’re judged by your last story or column so the pressure’s on. That’s why I’m going to cheat and, in the spirit of John Farnham who never stops retiring, nor should he, return in a few days for Sunday’s final fling.

At least I’m leaving you with the shop in better shape than I did last time.

Although it had seemed such an obvious conclusion to draw considering interest rates had been jacked up to 18 per cent, oddly enough I was virtually on my lonesome warning about it. Incredibly, the economists and bureaucrats of the day – this was before they were so ingeniously dubbed econocrats – were fretting that growth and so inflation were out of control and the Reserve Bank was losing the plot which, in one respect, was right. The recession that followed was our worst in almost 30 years and, as it’s turned out, our only one.

Anyway I had quit my rarefied job as economics editor of The n to get my hands dirty as an editor of a brand new throwaway newspaper backed by real estate agents. This was in the wealthy eastern suburbs of Sydney in the middle of a property boom about to crash due to the recession I’d just warned about. Somehow we hung on for three years and although I was eventually out on my arse I had learned a lot about running a small business.

If I may say, this experience at the coalface allowed me subsequently to become the best in the business at tipping interest rates. I swear sometimes I know before the Reserve Bank what it’s going to do.

So, in what could well be famous last words, my tip is that rates will stay this low for years and possibly go lower.

I’ve also learned that the markets are more about psychology than economics. They have a mind of their own especially when you think you’ve pinned them down.

I love reading daily sharemarket reports purporting to rationalise the irrational. Apparently it was some obscure statistic that sets the market running one way or another. Hmm, unless everybody who bought or sold shares that day was asked, I don’t think so. Beside, over the years I’ve seen whole recessions that were subsequently airbrushed, I mean revised, away.

Trust me, give it long enough and the sharemarket always rises, though unfortunately that’s not to say every stock.

Like everything else, financial concepts move in and out of fashion. Outsourcing and downsizing are all the rage now, hence my own departure. It’s a fad.

Over the years I’ve rubbed shoulders with some of the richest people and one thing I’ve learned is that the rich really are different to you and me. One exception I’ll allow is Gerry Harvey, who is endearingly normal.

The rich put work first, are natural networkers, know how to use other people and hate paying tax. Come to think of it maybe they aren’t that different after all.

It was Andrew Clark who hired me and made me a better writer for a gig which was to go for 22 years before they found out about me. My first time around at Fairfax I owe to the late Paddy McGuiness, one of our great intellects, who rescued me from Treasury and honed my economic insights as Max Walsh taught me how to find a news angle.

This is an excuse to thank them but also remind you that to get on you must find yourself a mentor.

Somebody once confided he doesn’t understand most of what I write but he loves reading every word of it. I hope I’m the exception but in my experience supposed experts in finance who can’t explain simply what they’re on about tend not to know themselves. I mean it’s not rocket science.

But even if I only raised a chuckle now and then, I feel blessed.

I’ve met readers in the most unlikely places – from the Ghan in the middle of nowhere to a checkout chick at Coles – and loved it.

See you around.

Email: [email protected]usnet杭州龙凤论坛m,au Twitter: @moneypotts.

Weaker dollar dampens online shopping boom

Amazon fulfilment centre: The boom in digital shopping appears to slowing to a more moderate pace. Photo: Jeff SpicerShoppers will make some $2.8 billion in online purchases over the six weeks before Christmas, according to industry predictions, much of it on smart phones.

Yet despite the spectacular rise of online retail in recent years, the boom in digital shopping appears to slowing to a more moderate pace.

This is partly because the weaker dollar has made overseas internet shopping dearer. But traditional “bricks and mortar” retailers are also fighting back against their online rivals by competing more aggressively.

As a consumer, it can be worth using this fierce competition between physical and online stores to your advantage, as many retailers are willing to match digital shops on price.

National Bank’s index of online sales shows ns spent $17.9 billion on online retail in the last year, but growth is slowing. Spending rose by 5.7 per cent in the past year, a far cry from around 2011, when it was booming by more than 20 per cent a year.

The exchange rate is one reason for the slowdown – the currency has slumped 13 per cent in the last year to about 73 US cents, pushing up the cost of overseas purchases, and the extras, such as shipping charges.

In fact, the share of our online spending that goes overseas is steadily declining, as this week’s graph shows. Overseas online retail is edging up by just 1.3 per cent a year, whereas the local online businesses are enjoying overall sales growth of 7.3 per cent.

But even though the glory days of cheap online imports are probably in the past, the rise of online shopping is still benefiting consumers in other ways.

For one, it has meant there is more choice, and convenience. As well, digital commerce has brought customers the added bonus of more competition, because it’s forcing the traditional retailers to compete more fiercely with their digital rivals.

NAB’s chief economist Alan Oster says more traditional retailers are fighting back against the online invasion by matching the lower prices, and that is another reason why online growth has slowed over the last few years.

For consumers, that means it can be worth checking out the prices of online stores, and then seeing if physical shops will beat or match it.

Officeworks, for instance, says its policy is to beat the offers of online stores just like other businesses, but it will take into account the cost of delivery. Many other “bricks and mortar” stores have a similar approach.

The weaker dollar may have taken some of the value out of overseas online shopping. But even so, the lasting effect of online retailing is likely to be sharper competition – and that’s a win for consumers.

NSW Government moves to tighten cosmetic surgery industry

Krystle Morgan said she was fearful for other young women who were not aware of the risks associated with cosmetic surgery. Photo: Greg TotmanThe NSW Government has moved to tighten regulation of the cosmetic surgery industry after a number of patients were rushed to hospital following breast enlargement surgery.

Several patients have been transferred to hospital following procedures at private cosmetic surgery clinics in the last two years and at least three clinics are being investigated by the Health Care Complaints Commission.

The patients include Wollongong woman Krystle Morgan, whose lung was punctured during a breast enlargement at The Cosmetic Institute in Bondi last year and Amy Rickhuss, who went into cardiac arrest at the same company’s Parramatta clinic in January.

Doctors do not need to have specialised in plastic surgery to perform cosmetic surgery in NSW.  Cosmetic surgery practices only need to be licensed by the Private Health Facilities Act if patients are administered sedation that renders a patient unconscious or use certain types of anaesthetic.

A discussion paper that has been posted to the NSW Health website invites the public, stakeholders and industry for their views on whether a new class of regulation should be developed and how it should be defined.

Health Minister Jillian Skinner said her department was considering if further legislation of the cosmetic industry was required.

“Patient safety is paramount,” Mrs Skinner said.

“The discussion paper will assess whether current licensing requirements for facilities are adequate to protect patients.”

The Medical Board of is also reviewing the billion-dollar industry.

The Cosmetic Institute has declined to comment on individual cases, citing patient confidentiality, but has said its record is overwhelmingly one of safety.

Commercial property: Big deals keep on rolling

Melbourne’s Jam Factory on Chapel Street, bought by Newmark for $165 million. Photo: unknownThe commercial property market is poised for another bumper year as increasing business confidence, the falling n dollar and historically low interest rates drive investors.

Transactions across and all sectors is expected to reach $35 billion in 2015, with local purchasers accounting for half of the investment.

Shopping centres, office towers, development sites and industrial assets have all recorded bumper results during the year.

Colliers International John Marasco said: “It’s been a perfect storm of record low interest rates, the falling dollar and the affordability of Melbourne when you benchmark it against not just Sydney but also Singapore and Shanghai.

“There’s been a real balance of local and offshore groups too.”

Some of the bigger deals have been done just this week. Private equity giant Blackstone is paying  $675 million for half of Southern Cross towers on Bourke and Exhibition streets. Earlier, China Investment Corporation paid $2.45 billion for the Investa Property Trust portfolio on a yield of 4.9 per cent, and Lang Walker is hoping to better that  with the sale of Docklands’ Collins Square project.

In retail, GPT is about to sell the 57,116-square-metre Dandenong Plaza to Armada, and earlier  Challenger sold the Jam Factory to Newmark for $165 million. The Well in Camberwell fetched $72.5million on a 6.06 per cent yield.

JLL head of retail Simon Rooney said competition between domestic and offshore buyers  would continue to be fierce next year.

“The offshore buyers love because it’s very transparent. They’re looking for low-volatile high-quality assets,”  he said. “We’re at a strong point in the cycle. There’s an opportunity for larger owners to sell assets or partial investments to rebalance their portfolios and use the money to refurbish existing assets.”

There’s been plenty of revamps already. QIC increased the size of the Eastland shopping centre in Ringwood by 55 per cent in a $655million expansion that provided space for a host of new retailers, including  Uniqlo.

The Scentre Group’s Knox is having a $450 million 46,000-square-metre revamp that will result in a 188,500-square-metre centre. That  would nudge Chadstone Shopping Centre’s 190,000 square metres if Chadstone was not also  expanding.

A $580 million redevelopment that adds 34,000 square  metres to its floor space will maintains its status as ‘s biggest mall but will add extras such as a hotel and a 10-storey office tower.

The push to  ever-denser retail and residential projects in the suburbs is likely to have an impact on industrial development. Savills national head of research, Tony Crabb, said the growing population would create demand “for more logistics, more storage space and more places for manufacturing”.

Mr Crabb, who is also industrial spokesman for the n Property Institute, said industrial businesses have already been displaced from the inner suburbs and would be pushed out further.

The GIC portfolio, purchased by Ascendas for $1.07 billion during the year, attracted a premium because of the size of its land offering.

“This was a sizeable premium paid for the scale of portfolio – for being able to purchase a rare $1billion-sized land offering.”

Competition from international stores lifts secondary rents in Melbourne CBD

Restaurant Pomodoro Sardo is paying $250,000 a year for 250 square metres at 111 Lonsdale Street, Melbourne. Photo: SuppliedMelbourne CBD landlords are benefiting from a flood of international retailers whose commitment to large stores has pushed up demand and prices for secondary locations.

Prime retail rents in Melbourne’s CBD jumped by almost 10 per cent over the past 12 months, a rise mirrored by secondary rents which also rose sharply by 9.2 per cent, according to CBRE research.

The impact of international retailers was further heightened by low interest rates (driving consumer demand and turnover) and large-scale redevelopment of older city buildings which has invigorated retail locations, updating or adding new stock.

An impending redevelopment by Leighton Property on a site next to the Wesley Church in Lonsdale Street shows the impact.

The redevelopment has prompted long-established Italian eatery Pomodoro Sardo to relocate.

The Sardinian-themed restaurant took 250 square metres at 111 Lonsdale Street opposite its current location for a near-record $250,000 annual rent with no landlord incentive or works, in a deal negotiated by CBRE’s Zelman Ainsworth and Samantha Hunt.

“This pocket of Lonsdale Street has been activated by residential, retail and tourist growth,” Mr Ainsworth said.

The impact of luxury international retailers on premium spots in Collins Street is well documented, but the latest upmarket retailer to claim a place on the strip is Wittner Shoes.

The footwear retailer will relocate from its long-term home in Collins Place to a 90-square-metre shopfront at 30 Collins Street in a deal negotiated by Colliers International’s Ben Tremellen and Cam Taranto.

Mr Tremellen said there had been more than seven offers for the tightly contested space from a range of retailers.

The shoe retailer snared the shop on a five-year lease for rent about $180,000 a year, a rate of $2000 a square metre.

“We are seeing a significant push from premium fashion retailers in recent months. Retail vacancy levels in prime CBD strip locations are the lowest they have been in the past three years,” he said.

Wittner’s new premises will be directly opposite Giorgio Armani and Ermenegildo Zegna in a Monash University-owned building.