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Cashed up buyers head to Cronulla to ‘cash in’ after boom

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For years, coastal Cronulla was associated with the race riots of 2005, but times – and property values – have changed.

Prices in the suburb – which is part of the Sutherland Shire, south of Botany Bay – have soared in the past five years. The citywide real estate boom, plus Cronulla’s reputation as the most prestigious of the Shire’s neighbourhoods, have fuelled a 72 per cent rise in the median apartment price and a 58 per cent rise in the median house price, according to Domain Group data.

Culturally, the area is evolving, too. Harrison Cartwright, an events manager at an inner-city media company, grew up in the Shire but moved to the artsy Inner West in his early 20s.

He’s recently returned to Cronulla to live with family and to save money, and he says the change in the suburb is “drastic”.

“I’m finding it’s really stopped being as conservative as it used to be,” Cartwright says. “There’s a lot more to do around here, and more bar and food options especially.”

For decades, most of those who bought in Cronulla came from other parts of the Shire in search of a beach lifestyle or a unit with a water view to retire in. “But recently I’ve noticed people who are looking for value coming from other parts of Sydney,” says says Justin Ressler of Ressler Property.

Ressler says buyers from the Inner West and the Eastern Suburbs are discovering that they can stretch their money further in the Shire, and are happy to settle for slightly longer commute times. At $1,775,000 for houses and $826,000 for units, according to Domain data, Cronulla’s medians are no longer “cheap” – but they are still significantly lower than many other beachfront enclaves in Sydney.

Connectivity to the CBD remains decent, says Cartwright. “I commute to Kings Cross for work everyday and it’s pretty simple – never really more than an hour, either by train or car.”

While house prices dropped over the past six months, Cronulla’s unit median increased 7.3 per cent – a strong result in spite of a high number of sales and recent building boom.

“The majority of Cronulla is still exceptionally strong,” says Brett Cripps of Cripps & Cripps Property. “North Cronulla, in particular, is going gangbusters.”

Cripps reckons the key driver of the Cronulla market in 2017 is an increase in residents from elsewhere in the Shire “cashing in” after the Sydney boom.

“Baby Boomers are selling their McMansions in the west [of the Shire] and then coming to Cronulla,” he says. “They want to purchase a three or four-bedroom unit on the Esplanade or one street back from the Esplanade.”

He adds: “They just want the Cronulla life. I know that’s a cliche, but it’s very true.”

Like many other parts of Sydney, Cronulla is facing mounting congestion issues as the transport network struggles to keep pace with population growth. The addition of new apartment blocks in Cronulla in recent years has doubled travel times by car to other parts of the Shire, according to Cripps.

He says the future of the suburb depends on the local council.

“I just hope, for my kids’ sake, that the council looks at what it’s done [with development approvals] and we get better strategic planning for infrastructure in the future.”

For now, Cartwright is enjoying being back in Cronulla. “It’s nice to leave work and actually feel like you’re capable of switching off, with a complete change of scenery,” he says.

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It looks like another big relationship has gone bust for James Packer

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Now that James Packer’s Crown Resorts has sold its final share of its former jewel, Melco Crown, his former partner Lawrence Ho has wasted no time in distancing himself from the man who made him a billionaire.

“In all these instances, you had casino sales people running around offering credit, talking about collection … it wasn’t discreet,” he told the Financial Times.

“That’s what caught their attention: ‘Like what the hell, you’re deliberately spitting on our faces’,” said Ho.

A spokesman later claimed Ho did not mean to single out Packer and Crown – he also mentioned a South Korean casino operator whose employees were detained in 2015.

But Ho’s message for Beijing was loud and clear: Don’t lump his company – now known as Melco International – with these clumsy foreigners.

As CBD reported recently, Packer made the fateful decision in 2006 to spend $US900 million ($1.2 billion) on a piece of paper, a sub-concession, that would allow him to operate casinos in Macau.

It meant that the freshly minted Asian partnership did not have to rely on Lawrence’s colourful father, Stanley Ho, for a licence to operate a casino in Macau. The PBL/Melco team could build casinos under their own licence.

Ho now controls the licence via Melco International, which is the main source of his $US2.4 billion fortune, according to Forbes.

Crown has staged a complete retreat from Asia, and its global expansion plans, following the arrests in China.

Adding insult to injury, Ho is confident that the sell-down by his former partner is ill-timed. Ho told Bloomberg recently that he is “extremely bullish” on Macau where gambling revenues are now growing again after three consecutive years of declines driven by a corruption crackdown in mainland China.

In April, the Macau gambling market recorded its third consecutive month of double-digit revenue growth.

“Definitely within the next five years, it will grow back to the $US45 billion gaming market,” said Ho.

“And that’s just the gaming alone,because the non-gaming part is significant.”

And while Ho still called Packer a “great friend and partner” earlier this month, he made it clear that the business relationship has been cut completely.

“Despite our positive history with Crown, I made the strategic decision to terminate the joint venture arrangement and allow Melco to pursue Japan alone,” Ho said following the final Crown share sale. Cold pizza

Domino’s Pizza boss Don Meij sells himself as the tech evangelist who will change your pizza experience forever.

Sure there’s the pizza, but that’s not the secret ingredient that ensures the pizza maker has traded at earnings multiples that would make a ASX-listed digital darling, like REA, blush.

There’s the iPhone app, GPS pizza-tracking technology, drones, the technology lab at its Brisbane HQ, and data analytics with Google.

“Having taken strategic steps in its partnership with DBi, a Google Analytics Premium Authorised Reseller, Domino’s has turned its team goal of unified marketing measurement, holistic insights, and efficient actionability into a day-to-day reality,” said the Google press release

But even technology has its limitations.

Domino’s had to admit to the market on Wednesday that its investigation into wage-fraud allegations was taking longer than expected and it now expected the results to be announced as late as December. That would be a six-month delay on its delivery date.

Not to worry. It’s not like Domino’s offered investors the ASX equivalent of its famous 20-minute delivery guarantee.

At least the short sellers are happy.

According to market data they are in a feeding frenzy, accounting for as much as 80 per cent of the company’s share sales on Monday and Tuesday. And why wouldn’t they, the stock has dropped more than $20 since last August. Safe as houses

Award for the most pointless announcement of the day goes to McGrath Ltd’s ASX announcement detailing the performance rights being released to its talented executive team including founder John McGrath.

“The performance rights are subject to certain conditions including the continued employment of the participant with McGrath and performance hurdles set out in the terms of grant including an earnings per share target and relative total shareholder return target,” said the ASX release.

McGrath shares hit a new record low of 57?? on Wednesday, much less than the $2.10 investors paid when it floated just 18 months ago.

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ACCC set to take NBN providers to court over slow broadband

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The consumer watchdog says it is investigating a number of internet providers and expects to drag several to court for dudding their customers with slow broadband speeds.

Australian Competition and Consumer Commission chairman Rod Sims told a Senate estimates hearing that the watchdog was looking into claims of NBN customers paying for speeds of 100 megabits per second but only being able to connect at less than 50Mbps.

“We’ve certainly come across egregious examples that we are investigating to see whether or not there’s been a breach of the [consumer protection] act,” he said on Tuesday night.

They would either be cases of misleading conduct or breaches of consumer guarantees.

“We’ve got a number of investigations under way,” Mr Sims said. “I’d be surprised if we don’t have a couple of cases in court by the end of the year.”

Telstra this month admitted that about 1 per cent, or just over 10,000, of its NBN customers were not getting the speeds they were paying for, which it discovered after reviewing the speeds customers received.

The nation’s largest telecommunications provider said it would be be contacting those customers to move them to cheaper products with lower speeds Telstra could deliver, and would refund some customers.

Mr Sims said the ACCC, which earlier this year published guidelines for NBN providers to follow when making claims about internet speeds, sought to determine whether that response was adequate. It was also investigating other providers.

The watchdog is pushing ahead with plans to monitor consumers NBN speeds. Hardware will be installed in about 4000 homes to find out what connection speeds customers typically get, and how that compares with what providers advertise.

Mr Sims said his commission was seeking access to internal network information from broadband wholesaler NBN Co, which would help verify its own speed monitoring and make it easier to take action against retail providers if their claims do not stack up.

The monitoring scheme would also end the “blame game” over whether unsatisfactory speeds were due to deficiencies in NBN Co’s network or because retail providers did not give customers enough capacity, Mr Sims said.

The tender for the $7 million monitoring scheme closes in late June and the ACCC will then call for volunteers to have their NBN connections monitored.

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Ken Henry backs ‘DIY infrastructure’ by communities

As population growth puts a growing strain on public facilities, former Treasury Secretary Ken Henry says local communities and businesses should play a bigger role in developing infrastructure projects that do not rely on government.
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The National Australia Bank chairman will on Thursday launch a new paper setting out a model for “Customer-led DIY infrastructure,” an attempt to get local communities more involved in infrastructure development.

In a speech in Sydney, Dr Henry will highlight the importance of smaller-scale local infrastructure such as sporting grounds and parks, alongside larger projects such as rail lines or airports.

Dr Henry has previously called for business to play a more active role in backing infrastructure, and NAB’s research has found many Australians are uneasy with rapid population growth, because it is straining services such as health and education, worsening commute times and driving up house prices.

The NAB-sponsored paper he is launching, by John Grill Centre executive director Garry Bowditch, sets out a model that could make infrastructure less dependent on governments.

Under the proposal, local communities could nominate priority projects, and funding would then be arranged through a new market that would tap a range of private and public sources.

Dr Henry said the national discussion on infrastructure did not include a voice from local communities, a potential source of good ideas that would not occur to “those sitting behind government and corporate desks in our capital cities”.

“Australia has a preoccupation with one-off, ‘big ticket’ infrastructure projects; the ones associated with a ‘photo opportunity’ and, many years down the track, the brass plaque, perhaps even a ribbon to cut,” Dr Henry will say.

“Major infrastructure projects have their place, but so do the bits of infrastructure that communities use every day – the ones that support how we connect with each other and that we value because they are part of what make Australia a great place to live.”

Dr Henry gave the example of sporting facilities or green space, among an estimated $47 billion in community infrastructure that is in “poor to very poor” condition.

“We have to support disruptive voices developing compelling business cases for a range of infrastructure projects that will attract investment, improving commercial, social and environmental outcomes for their communities, without relying on government,” he said.

The concept of “Customer-led DIY infrastructure” involves setting up an “ecosystem” to help get more community infrastructure projects completed.

There would be an independent and not-for-profit “hub” to develop ideas, and the creation of a new investment market to provide capital for such projects. Funding sources could include bonds, equity, government loans, donations and public subsidies, the report said.

Dr Henry said there was a clear role for businesses, including NAB, to support such an ecosystem.

“Across Australia, we need to develop mechanisms to attract capital providers who are prepared to back infrastructure projects that represent good value and provide quality outcomes at the local community level,” he said.

This year’s budget included $75 billion in future infrastructure spending, including funding for a second Sydney airport at Badgerys Creek and a new inland rail line connecting Melbourne and Brisbane.

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More households worse off under Coalition’s medicare levy rise

Twice as many households will be worse off under the federal government’s plan to raise the Medicare levy by half a percentage point than under Labor’s alternative, according to new modelling by the ANU’s Centre for Social Research and Methods
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And middle-income earners will do much more of the heavy lifting under the Coalition than under Labor, the research by Associate Professor Ben Phillips finds.

The Turnbull government announced an across-the-board 0.5 per cent hike in the Medicare levy to 2.5 per cent from July 1, 2019, in the federal budget. The increase aims to raise $8.2 billion over two years, with the money to help fund the National Disability Insurance Scheme.

Labor said it would support the 0.5 per cent rise only for people earning more than $87,000 a year. It also plans to re-instate the deficit repair levy for people earning more than $180,000. This alternative approach, it has claimed, would generate an extra $4.5 billion tax revenue over 10 years.

The modelling will likely be seized on by Labor, with Opposition Leader Bill Shorten to argue in a speech to the Committee for Economic Development of Australia on Thursday that falling wage growth, rising under-employment and stagnant living standards underpin the ALP’s policy decision.

Mr Shorten will argue Labor’s support for an across-the-board rise in the levy in 2013 compared to its position now is linked to a shift in economic conditions, and that a person on $200,000 a year would only pay 0.2 per cent more tax under the ALP.

If the Liberal policy were in place from July 1, 2019, according to the ANU modelling, 60 per cent of households would be worse off, 39 per cent would see no change, and just 1 per cent would be better off.

In comparison, if Labor’s policy were implemented from July 1, 2019, 27 per cent of households would be worse off and 73 per cent would see no change in their circumstances.

Over four years Labor’s policy prescription would raise $300 million more tax than the Coalition’s. Over 10 years the modelling suggests Labor would raise an extra $6.8 billion, because of bracket creep. This is more than the Parliamentary Budget Office’s estimate of $4.5 billion.

The top 20 per cent of earners, or top quintile, would pay about an extra $1734 tax per year under Labor. Under the Coalition’s plan they would pay $1105 extra tax.

The Coalition policy would raise $4.03 billion in its first year and leans on middle-income earning households far more.

The second lowest-earning 20 per cent of households, or quintile, would pay on average an extra $57 a year in tax; the middle 20 per cent would pay $288; and in the second-highest earning 20 per cent of households, $572.

Labor’s policy would raise $4.102 billion in its first year. Households in the second quintile would pay $7 a year extra tax; in the middle quintile, $67; and in the second-highest quintile, $253.

The bottom 20 per cent of households, by income, would pay an extra $3 a year in tax under the Coalition, and just 0.03 cents more tax under Labor.

Political debate over the levy has been a key post-budget fault line, with both sides claiming their approach is fairest and the federal government accusing Labor of hypocrisy for backing an across-the-board Medicare levy rise of 0.5 back in 2013, when in government, but opposing it now.

Mr Shorten will argue that Labor’s position – which was strongly objected to in shadow cabinet – is values-based and fairer.

“Labor will support the 0.5 per cent increase in the Medicare levy for the top two tax brackets – Australians earning over $87,000. But we won’t ask millions of people on more modest incomes to pay more tax. And we won’t give millionaires a tax cut, while making everyone else pay for it,” he will say, according to speech notes.

“The decisions taken in this budget would mean from 1 July 2019, an Australian who earns $200,000 – will pay an average tax rate of 34.1 per cent. Under Labor’s plan, the same person on $200,000, would be paying an average tax rate of 34.3 per cent. I find it hard to believe this will herald the end of Western civilisation as we know it.”

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