Craig James, Chief Economist, @CommSecSavanth Sebastian, Economist, @CommSec

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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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Roadmap

Budget setting Interest rates & currency Sharemarket & commodities Budget 2016 Major measures Winners & losers Budget perspectives

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Key Global Issues

Oil price slump Inflation/deflationHealth of banksChinese economyUS interest ratesUS politicsGeopolitics

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Global: Can do better…

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United States & China: Issues

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Australia: In good shape

StocktakeWorld-leading growth Jobless rate 2½-year lowRecord car salesRecord dwelling startsRecord tourist arrivalsAbove-normal spending

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Housing: leads the way nationally

StocktakeMore homesApartments dominateSlower populationSofter home pricesWatch vacancies

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Job market

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Prices & Wages

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Consumers

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Business

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Home prices: In context

Average Home Prices% annual average past decade

1.6Hobart3.8Adelaide3.9Brisbane4.0Canberra5.2Perth6.0Sydney 6.7Darwin7.2Melbourne

Source: CoreLogic RP Data, CommSec

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Interest Rates: At record lows

StocktakeSuper-low inflationGlobalisationBut good economyGrow a little fasterLower for longer

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Aussie Dollar: Getting ahead of itself?

StocktakeUS rates to rise…slowlyAussie rate cut?China doubtsCommodity pricesFirmer Aussie economyTourism lifts

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Commodity prices

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Shares: Making profits, paying dividends

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Budget 2016

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Budget 2016

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Budget 2016

Economic AssumptionsAndNext yearThis yearLast year

2017/182016/172015/162014/153.002.502.502.20Economic growth (% change)2.252.001.251.50Inflation (% change to June quarter)2.752.502.252.30Wages (% change, year to June quarter)5.505.505.756.10Unemployment (%, June quarter)

Source: Budget papers, CommSec

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Small business tax cut Small business asset write-off Infrastructure spending Changes to concessional

superannuation Measures to address ‘bracket

creep’ GST on online purchases

$2.9 billion for public hospitals

Youth jobs program Superannuation measures

for mothers Further crackdown on

multi-national companies Funding for Defence,

national security

Major measures

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Winners Small & medium business Wage earners above $80,000 Rural sector Young job seekers Defence

Losers Multinational companies High income workers –

concessional superannuation Smokers Welfare recipients Those buying online goods

Winners & losers

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Revenue perspectives

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Expenses perspectives

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International perspectives

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Debt perspective

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Small business perspectiveBusinesses Operating in Australia

June 2015, % of total (2.1m businesses)36.3Private companies25.9Sole proprietors13.5Partnerships24.2Private trusts

60.6Non-employing27.6Employ 1-4 people

9.3Employ 5-19 people2.4Employ 20-199 people0.2Employ 200+ people

25.5Turnover less than $50,00034.5Turnover $50,000 to $200,00033.4Turnover $200,000 to $2 million

6.6Turnover more than $2 millionSource: ABS, CommSec

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Outlook

FORECASTS20162015

2.75-3.25%3.00%Economic Growth1.75-2.00%2.00%Underlying inflation5.50-6.00%5.80%Unemploymentend 2016mid 2016

1.50-1.75%1.50-1.75%Cash rate5,500-5,7005,200-5,400Sharemarket (All Ords)US73-79cUS72-78cAustralian dollar