Deakin University CRICOS Provider Code: 00113B

Changes in the Economic Landscapeand what it means for youPresented by

Craig JamesChief EconomistCommSec

22 July 2015

WELCOME ADELAIDE ALUMNI TO OUR SEMINAR

Craig James, Chief Economist, @CommSec, July 2015

The Economy & Superannuation

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Important InformationThis presentation has been prepared without taking account of the

objectives, financial situation or needs of any particular individual.

Before acting on the information in this seminar, you should

consider its appropriateness to your circumstances and, if

necessary, seek appropriate professional advice.

Commonwealth Securities Limited ABN 60 067 254 399

AFSL 238814 (CommSec) is a wholly owned but non-guaranteed

subsidiary of Commonwealth Bank of Australia ABN 48 123 123

124 and a Participant of the ASX Group.

Examples used in this presentation are for illustrative purposes

only.

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Considerations

Global factors Australia – short

term Australia – long

term Inflation Interest rates Longer term Investments

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World economy OK

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World economy over time

In Short Near

“normal” growth

So What? Growth

drivers keep changing

Slower advanced economies

The rise of Asia

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Changing of the guard

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Australia – Current State of Play

In Short Could do

better

So What? Slower

economy, weaker super returns

Inflation to stay low

Rates to stay low

Weaker currency

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Australia – Growth over time

In ShortSlower growth3.5% long-term2.7% recent

average

So What?Temporary/

permanent?Population,produc

tivity important

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Australia Over Time

DECADE AVERAGE ANNUAL RATES

$APopulationUnemploymentProductivityCashWagesInflationEconomic

per USDGrowthrateRateGrowth

ann%%ann%%ann%ann%ann%

1.11522.021.802.503.775.802.504.901960s

1.22071.363.692.806.8512.509.803.301970s

0.87311.497.601.5014.039.408.403.401980s

0.72371.138.802.207.244.102.503.201990s

0.70411.445.401.405.324.902.803.102000s

0.95981.615.601.603.444.102.502.702010s

0.74001.426.000.202.002.301.302.30current

Source: ABS, RBA, CommSec

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Inflation contained

In Short 2-3% target band Average 2.4% since 1996

So What? Rates can stay low Economic cycle – recessions avoided?

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Interest Rates

In Short Cash rate to

stay low

So What? Inflation

important Affects returns Lower ‘normal’

rate?

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Key considerations

Population Participation Productivity Entitlements Taxation Trade

relationships ‘Normal’ global

economy

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Future Challenges

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Future Challenges

Source: Productivity Commission

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Future Challenges

Source: Productivity Commission

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Investments

In Short Long term returns 9%pa

So What? Shares & property International shift? Cash under-performs Economic cycle important

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Looking ahead

Lower returns possible

Less attractive taxation environment

Tighter entitlements

Diversification important

Government inducements for infrastructure?

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Response by Older Aussies

Work longer Spend Kids Inheritance (SKI) Downsize home Sea-change; Tree-change Take out mortgage to supplement

income Reverse mortgage type solutions Higher risk/return investments

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Outlook

FORECASTS

2017-202015-173.25%2.75%Economic Growth2.50%2.50%Underlying inflation5.50%5.75%Unemployment3.25%2.00%Cash rate12%10%Return on shares

US72cUS74cAustralian dollar

Deakin University CRICOS Provider Code: 00113B

QUESTIONS

Presented by

Craig JamesChief EconomistCommSec

22 July 2015