The Federal Opposition has released its response to the budget, pledging big spending on education and business regulation to ensure prosperity beyond the mining boom. Not so prosperous is beleaguered WA wine producer Evans & Tate, which has agreed to a major restructure by ANZ. Balanced Equity, the most vocal opponent of APA’s failed bid for Qantas, has built its stake in the airline carrier, while two junior uranium explorers have received some good news about their respective tenements. The US dollar managed to take a small step up yesterday as the Federal Reserve decided to keep interest rates at their present level. Meanwhile, the Dow lost close to 150 points yesterday after the release of weak retail sales data.
Read on for the details…
Rudd makes budget reply - Federal Opposition Leader Kevin Rudd has outlined Labor’s budget reply, focusing on education, business regulation and climate change.
Noting that Australia’s recent prosperity has been largely due the rise of China, the rise of India and the global resources boom, Mr Rudd said productivity growth is declining in Australia, and is set to slump to 0% this year.
The centrepiece of Labor’s budget reply is an AUD$2.5 billion Trades in Schools program, which would see the construction of new Trades Training Centres and upgrade existing facilities and equipment in all of Australia’s 2650 secondary schools over ten years.
Mr Rudd also outlined a number of changes to business regulation, including a proposal to boost the popularity of Australian managed funds in Asia through halving the withholding tax on distributions from Australian managed funds to non-residents from 30% to 15%.
Commenting on climate change and the environment, Mr Rudd also introduced a plan to set up an AUD$250 million national fund to start plugging the leaks in the water pipes towns and cities across Australia.
Balanced Equity builds Qantas stake – Balanced Equity, the managed fund that publicly opposed APA’s bid for Qantas, has built its stake in the airline carrier to 5.3%.
According to the latest holding statement lodged by Qantas with the ASX, the firm – headed by fund manager Andrew Sisson – has spent AUD$111 million in recent days raising its stake.
The move coincides with Qantas releasing its best March traffic statistics ever yesterday. The airline filled 80.7% of seats, compared to 75.1% in March 2006. International passenger loads rose 8.3% to 83.6%.
The figures have sparked optimism that Qantas will exceed its record pre-tax profit of AUD$939 million, forecast two months ago, according to Fairfax newspapers.
ANZ to restructure Evans & Tate - Evans & Tate (ASX:ETX) and ANZ (ASX:ANZ) have executed a binding heads of agreement which will see a major restructure of the ailing West Australian winemaker’s balance sheet.
Under the terms of the agreement, ANZ and a coinvestor, as yet unnamed, will be issued AUD$45 million in Evans & Tate shares. Part of the plan will see ANZ locate the coinvestor, receiving an additional 20 million Evans & Tate shares for doing so.
Once the initial share transaction has been made, Evans & Tate plans to raise an additional AUD$5 million through a share purchase plan, which will be used to further reduce the company’s debt.
Evans & Tate said the restructure plan will reduce its interest-bearing debt to sustainable levels and position the company to execute its strategic and operational plans.
Chairman John Hopkins said “ANZ has reaffirmed that so long as stakeholders are supportive of the restructure plan, it is ANZ’s current intention to support Evans & Tate and to continue to provide financial facilities to enable Evans & Tate to carry on its day-to-day operations”.
Positive uranium exploration results for Olympia, Echelon – Junior uranium companies Olympia Resources (ASX:OLY) and Echelon Resources (ASX:ECH) have received encouraging results from their respective tenements in the Northern Territory and Queensland.
An independent review of Olympia’s Northern Territory tenements is now complete, concluding that “an attractive grass roots potential for uranium exists on the tenements generally, and should be investigated by appropriate exploration.”
Based on the results of the study, Olympia will immediately commence exploration activities in the Harts Range area of the Northern Territory, including a review of data, thorough mapping and geophysical assessment prior to commencing surveying and drilling works.
Meanwhile, Echelon Resources has identified additional uranium tenements in Queensland with the potential for further uranium mineralisation. The two tenements, Andersons South and Mary Kathleen South, are located directly to the south of Summit Resources’ (ASX:SMM) Anderson uranium project, and the historic Mary Kathleen mine.
US dollar climbs as interest rates stay steady - The US dollar made modest gains against several major currencies yesterday after the Federal Reserve decided to keep interest rates on hold at 5.25%.
The euro fell to $1.3526 from $1.3543 on Tuesday, while the dollar rose from ¥119.955 to ¥120.085. The dollar also edged up against the Swiss Franc, the International Herald Tribune reports.
Bloomberg surveyed 101 economists, who unanimously predicted that US interest rates would remain steady.
Until Monday,
Chloe Wilson
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