MWL Financial Group

May 2023

As the days get shorter and temperatures begin to fall, Federal Treasurer Jim Chalmers is working to complete his second Budget, due to be delivered on Tuesday 9 May.

All eyes will be on the Reserve Bank board next week as it meets prior to the Federal Budget to decide whether or not to increase the cash rate. The board decided last month to pause its relentless increase of rates designed to reduce inflation to 2-3%.

The good news is that there are signs inflation is slowing. The latest figures show the annual rate at 7%. The March quarter saw prices rise just 1.4%, the lowest increase in two years, although consumers are still feeling the pressure of rising prices in a number of areas. The most significant contributors to inflation remain fuel and utility prices, medical and hospital expenses, tertiary education and domestic travel costs.

The welcome inflation easing and a rally on Wall Street buoyed local markets a little with the ASX200 ending the month slightly higher.

The unemployment rate remains at a near 50-year low of 3.5%. With consecutive months of strong growth in female employment (up 81,000 over the past two months), the female participation rate increased to a record high of 62.5%.

The Australian dollar held on at just over US66 cents against the US dollar.

Meanwhile iron ore prices have been tumbling as China’s property market falters and there are fears the falls could continue.

Are recessions always bad for business?

Depending who you ask, we could be headed for a recession, writes Nigel Bowen. But what does that mean and will it be bad for your business?

If you’ve done the grocery shopping lately, you’ll know inflation is becoming a serious issue.

When the inflation genie gets out of the bottle, economies can enter a destructive spiral. Prices rise, workers demand wage rises to compensate for higher prices, businesses grant wage rises then increase prices to cover increased labour costs, and the cycle continues. Until the relevant central bank starts jacking up interest rates.

The last real recession Australia experienced in the early 1990s was preceded by 17 percent interest rates, saw the unemployment rate rise into double digits and caused banks, building societies and credit unions to collapse. Even New Zealand’s relatively short and mild 2008-2009 recession saw unemployment double and led to a number of finance companies collapsing.

Schrödinger’s recession

The good news is, firstly, neither Australia nor New Zealand seems to be headed for a particularly severe downturn and, secondly, even serious downturns aren’t necessarily bad news for well-managed businesses.

A panel of reputable economists recently estimated there was only a 20 percent probability that the Reserve Bank of Australia would raise interest rates high enough to cause a recession.

Neither the bosses nor the workers in most developed nations are acting like a downturn is imminent. Most businesses are desperately trying to hire workers rather than making them redundant. For their part, workers have been embracing the Great Resignation, demanding flexible work arrangements and appearing to engage in the kind of widespread industrial action that hasn’t been seen since the 1970s.

Inflation hasn’t been as transient as some predicted. However, there’s a convincing case to be made that it is close to peaking, meaning central banks shouldn’t have to raise interest rates to the point where lots of borrowers start defaulting on their mortgages and business loans.

The dawn of a new era

Saying Australia and New Zealand’s ‘miracle economies’ will probably avoid a severe downturn isn’t the same thing as saying there’s nothing to worry about.

The post-GFC era, which was characterised by low inflation (leaving aside some major asset price bubbles), unprecedentedly low interest rates, and low wage growth, is ending.

At least for the short term, borrowing money will be more difficult and expensive. This will impact everyone from aspiring career-changers who want a loan so they can quit their job and buy a franchise business, to ambitious types in need of capital to grow their small business, to mid-sized businesses that need funding to expand overseas.

Tough times favour sturdy businesses

A rising tide lifts all boats and most businesses do better in times of boom than in times of gloom. (Some businesses – medical clinics, shoe repair shops, debt collection agencies, discount retailers – are either unimpacted by downturns or benefit from them.)

When economies are running hot, they can accommodate weak businesses. Imagine a tourist town with 10 restaurants. Six of those restaurants are run by restaurateurs who know what they are doing. Four are substandard, but attract enough undiscerning tourists to stay afloat.

One day, interest rates rise. Fewer people visit the tourist town and those that do are more careful about spending their money. When they decide to eat out, they first ask hotel staff where they should go.

End result?

The six good restaurants continue to do reasonably well while the other four hit the wall. At this juncture, the six surviving restaurants get to divvy up all the tourists who would have previously gone to the dodgy eateries. In this survival-of-the-fittest scenario, the surviving restaurants may even make more money than they did when the economy was pumping and many more tourists were visiting the town.

The tourist town is a microcosm of what happens when conditions become more challenging. Well-managed businesses offering good-value products or services continue to attract customers while their weaker competitors meet a Darwinian fate.


Prediction: Smart money’s on a slowdown

Economies, especially those of Australia and New Zealand, have long behaved in unexpected ways. So, business owners would be wise to take both economic forecasts and advice from so-called business gurus with a grain of salt.

That noted, it’s worth keeping the following in mind.

When interest rates rise, those repaying a loan typically react by cutting back on discretionary spending. If businesses start reducing headcount, even those who don’t have loans start saving more money in case they get made redundant. Consumers ‘tighten their belts’, meaning they get their hair cut less often, cancel streaming services, postpone the overseas trip they had planned and so on.

With Australian and New Zealand workers having every reason to feel confident about keeping their current job or getting a better-paying one, they haven’t yet significantly cut back their spending. However, if interest rates rise further, businesses reliant on discretionary spending – car yards, interior design businesses, luxury retailers, travel agents – may suffer falls in revenue.

Once businesses dependent on discretionary spending take a hit, lots of other businesses do too. The struggling pub doesn’t order as much beer from big brewing companies and no longer gets the local butcher to supply a meat tray for a Friday night raffle.

Survive now, thrive later

Many of the world’s great companies were started in the middle of an economic downturn. Around the turn of the Millennium the US economy started slowing and what were then called ‘Internet businesses’ were affected so badly that the term ‘ crash’ was coined. Many much-hyped and well-capitalised tech companies hit the wall.

But you may have heard of some of the well-managed ones that weathered the storm and went on to expand exponentially: Amazon (an online bookseller launched in 1995), eBay (an online marketplace also launched in 1995), Netflix (a DVD-rental business launched in 1997) and Google (founded in 1998).

Any business that survives long enough will encounter unfavourable conditions at some point. Weathering economic turbulence may involve rethinking your business plan and necessitate making some painful decisions. But a business that can survive the hard times is usually well placed to thrive during the good ones.


Business preparedness tips: Cashflow & contingencies

There’s nothing any individual business owner can do about wider economic forces. But they always have the option of making the best of the hand they’ve been dealt.

Sensible business owners should consider the following points of order:

Take (further) advantage of cost-reducing, efficiency-promoting technology

The ‘I’ve already got an accounting/office suite/CRM SaaS, so I’m sorted’ mindset might get you by when the cash register is ringing and business loan repayments are modest, but quickly becomes a barrier to competitive advantage when the going gets tough.

When conditions are challenging, you need to investigate whether your SaaS providers have recently added more tools that will allow you to make business processes more efficient, your staff more productive and your tech stack more integrated.

Go the extra mile for customers

Loyal customers are more likely to keep buying what you’re selling through thick and thin, so this should be a primary concern when headed towards leaner times.

Something as simple as reaching out to check in with customers that may have specific challenges right now, or simply to say “Hi!” could make all the difference and show that you really care.

Pivot or diversify

During the lockdowns, even upmarket restaurants that had never previously done takeaway started doing takeaway.

Chances are you can also tweak your business’s offering to make it more relevant to consumers who may soon be more tight-fisted.

As MYOB’s own General Manager of Enterprise, Kim Clarke recently wrote for Kochie’s Business Builders, “building in a level of adptability and a change muscle into your culture — as a mindset and a business capability — is the hallmark of a resilience business that is primed for growth”.

Focus obsessively on finances

Business owners should always do this, but it’s tempting to get complacent when times are easy.

When conditions are challenging, it’s crucial to be across every dollar coming into and going out of your business. And to keep a lid on costs while working hard to growing existing revenue streams and create new ones.

If you need help with your business finances, speak to us today.

Source: MYOB July 2022

Reproduced with the permission of MYOB. This article by <author name> was originally published at

This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.

Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

How to get super ready for EOFY

Superannuation has dominated recent headlines, with proposed changes announced by Treasurer Jim Chalmers. While the details of these changes still need to be released, it’s worthwhile turning our focus to superannuation balances as we approach the end of financial year.

There are lots of different ways to top up your super, but if you want to take advantage of the opportunity to maximise your contributions, it is important not to wait until the last minute.

One of the simplest ways to boost your retirement savings is to contribute a bit extra into your super account from your before-tax income. When you make a voluntary personal contribution, you may even be able to claim it as a tax deduction.

If you have any unused concessional contribution amounts from previous financial years and your super balance is less than $500,000, you can also make a carry-forward contribution. This can be a great way to offset your income if you have higher-than-usual earnings this year.

Another easy way to boost your super is by making tax-effective super contributions through a salary sacrifice arrangement. Now is a good time to discuss this with your boss, because the Australian Taxation Office requires these arrangements to be documented prior to commencement.

Non-concessional super strategies

If you have some spare cash and have reached your concessional contributions limit, received an inheritance, or have additional personal savings you would like to put into super, voluntary non-concessional contributions can be a good solution.

Non-concessional super contributions are payments you put into your super from your savings or from income you have already paid tax on. They are not taxed when they are received by your super fund.

Although you can’t claim a tax deduction for non-concessional contributions because they aren’t taxed when entering your super account, they can be a great way to get money into the lower taxed super system.

Downsizer contributions are another option if you’re aged 55 and over and plan to sell your home. The rules allow you to contribute up to $300,000 ($600,000 for a couple) from your sale proceeds.

And don’t forget you can make a contribution into your low-income spouse’s super account – it could score you a tax offset of up to $540.

Eligible low-income earners also benefit from the government’s super co-contribution rules. The government will pay 50 cents for every dollar you pay into your super up to a maximum of $500.

Your tax bill can benefit

Making extra contributions before the end of the financial year can give your retirement savings a healthy boost, but it can also potentially reduce your tax bill.

Concessional contributions are taxed at only 15 per cent, which for most people is lower than their marginal tax rate. You benefit by paying less tax compared to receiving the money as normal income.

If you earn over $250,000, however, you may be required to pay additional tax under the Division 293 tax rules.

Some voluntary personal contributions may also provide a handy tax deduction, while the investment returns you earn on your super are only taxed at 15 per cent.

Watch your annual contribution limit

Before rushing off to make a contribution, it’s important to check where you stand with your annual caps. These are the limits on how much you can add to your super account each year. If you exceed them, you will pay extra tax.

For concessional contributions, the current annual cap is $27,500 and this applies to everyone.

When it comes to non-concessional contributions, for most people under age 75 the annual limit is $110,000. Your personal cap may be different, particularly if you already have a large amount in super, so it’s a good idea to talk to us before contributing.

There may even be an opportunity to bring-forward up to three years of your non-concessional caps so you can contribute up to $330,000 before 30 June.

If you would like to discuss EOFY super strategies or your eligibility to make contributions, don’t hesitate to give us a call.


A financial safety net through super

Most super funds offer life, total and permanent disability (TPD) and income protection insurance for their members. 

When reviewing your insurance, check if you’re covered through your super fund. Compare it with what’s available outside super to find the right policy for you.

Types of life insurance in super

Super funds typically offer three types of life insurance for their members:

  • life cover — also called death cover. This pays a lump sum or income stream to your beneficiaries when you die or if you have a terminal illness.
  • TPD insurance — pays you a benefit if you become seriously disabled and are unlikely to work again.
  • income protection insurance — also called salary continuance cover. This pays you a regular income for a specified period (this could be for 2 years, 5 years or up to a certain age) if you can’t work due to temporary disability or illness.

Most super funds will automatically provide you with life cover and TPD insurance. Some will also automatically provide income protection insurance. This insurance is for a specified amount and is generally available without medical checks. 

TPD insurance cover in super usually ends at age 65. Life cover usually ends at age 70. Outside of super, cover generally continues as long as you pay the premiums.

Insurance on inactive super accounts

Under the law, super funds will cancel insurance on inactive super accounts that haven’t received contributions for at least 16 months. In addition, super funds may have their own rules that require the cancellation of insurance on super accounts where balances are too low.

Your super fund will contact you if your insurance is about to end.

If you want to keep your insurance, you’ll need to tell your super fund or contribute to that super account.

You may want to keep your insurance if you:

  • don’t have insurance through another super fund or insurer
  • have a particular need for it, for example, you have children or dependents, or work in a high-risk job

Insurance for people under 25 or with low super balances

Insurance will not be provided if you’re a new super fund member aged under 25, or your account balance is under $6000 unless you:

  • contact your fund to request insurance through your super
  • work in a dangerous job and your fund chooses to give you automatic cover – you can cancel this cover if you don’t want it.

If you already have insurance and your balance falls below $6000, you usually won’t lose your insurance as a result.

Superannuation and insurance can be complex. If you need help call your super fund or speak to a financial adviser.

Pros and cons of life insurance through super


  • Cheaper premiums — Premiums are often cheaper as the super fund buys insurance policies in bulk.
  • Easy to pay — insurance premiums are automatically deducted from your super balance.
  • Fewer health checks — Most super funds will accept you for a default level of cover without health checks. This can be useful if you work in a high-risk job or have health conditions that can make it difficult to get insurance outside super. Check the  product discloure statement (PDS) to see the exclusions and treatment of pre-existing conditions.
  • Increased cover — You can usually increase the amount of cover you have above the default level. But you’ll generally have to answer questions about your medical history and do a medical check.
  • Tax-effective payments — Your employer’s super contributions and salary sacrifice contributions are taxed at 15%. This is lower than the marginal tax rate for most people. This can make paying for insurance through super tax-effective.


  • Limited cover — The amount of cover you can get in super is often lower than the cover you can get outside super. Default insurance through super isn’t specific to your circumstance and some eligibility requirements may apply.
  • Cover can end — If you change super funds, your contributions stop or your super account becomes inactive, your cover may end. You could end up with no insurance.
  • Reduces your super balance — Insurance premiums are deducted from your super balance. This reduces your savings for retirement.

Check your insurance before changing super funds. If you have a pre-existing medical condition or are over age 60, you may not be able to get the cover you want.

How to check your insurance through super

To find out what insurance you have in your super you can:

  • call your super fund 
  • access your super account online 
  • check your super fund’s annual statement and the PDS

You’ll be able to see:

  • what type of insurance you have
  • how much cover you have 
  • how much you’re paying in premiums for the cover 

Your super fund’s website will have a PDS that explains who the insurer is, details of the cover available and conditions to make a claim.

If you have more than one super account, you may be paying premiums on multiple insurance policies. This will reduce your retirement savings and you may not be able to claim on multiple policies. Consider whether you need more than one policy or whether you can get enough insurance through one super fund.

When reviewing your insurance in super, see if there are any exclusions or if you’re paying a loading on your premiums. A loading is a percentage increase on the standard premium, charged to higher risk people. For example, if you have a high-risk job, a pre-existing medical condition or you’re classified as a smoker.

If your super fund has incorrectly classified you, contact them to let them know. You could be paying more for your insurance than you need to.

Making a claim on insurance in super

To make a claim for insurance through your super fund, see making a life insurance claim for more information. 

Reproduced with the permission of ASIC’s MoneySmart Team. This article was originally published at

Important note: This provides general information and hasn’t taken your circumstances into account.  It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.  Past performance is not a reliable guide to future returns.

Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

MWL Fairway Group
Level 5/574 St Kilda Road,
Melbourne VIC 3004
(03) 9866 5888

Level 2/1 Spring Street,
Chatswood NSW 2067
(02) 8404 6700