It’s getting lighter in the mornings and I can drive home without needing my headlights!
Our farming clients are all busy (as are we) getting on with our jobs.
The economy is still flat and hence the unpredicted 0.5% cut in the cash rate. This will flow through to the borrowers in time and again hurt our investor clients.
On the subject of investor clients – the new rental rules are now official. So from 01 April 2019 landlords can no longer offset their rental loss against their other income. We must now carry those losses forward until such time as the rental income can extinguish them. This is a real disincentive to landlords as it will not encourage them to repair or improve their properties and will push up rents. On the flip side – tenants are now liable for the lower of 4 weeks rent or the landlords insurance excess in the event of accidental damage.
I won’t say that we have heard the last bad news from Fonterra as it just seems to keep coming. Miles tells us they are working hard to lift performance and we certainly hope so. This should go without saying. Given the tough times farmers have been facing the cancellation of performance bonuses for management and the pay freeze for the 6,000 odd employees earning over $100,000 is a step in the right direction.
Talk soon, Mark