The gift that no one wants but everyone is getting this year? Inflation. Higher prices are hitting shoppers hard as 2022 comes to a close
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I am Leon Gettler. My job is to review and monitor the week’s news in business, finance and economics. I bring it all to you, every week.
This is episode number 46 in our series for 2022 and today’s date is Friday December 16.
First, I’ll be talking to Andy Thiss, head of Anaplan ANZ, a planning software company used by leading ANZ enterprises across consumer packaged goods, retail, finance and healthcare to help them better plan for the future. And I’ll be talking to CommSec chief economist Craig James about the market outlook for 2023.
But now, let’s talk to Andy Thiss.
The gift that no one wants but everyone is getting this year? Inflation. Higher prices are hitting shoppers hard as 2022 comes to a close. That’s taking the joy out of gift-giving for a majority of Americans, according to a new survey from the Harris Poll commissioned by Bloomberg News. Inflation surged to a 40 year high this year, while wages struggled to keep up. Americans are cutting back on their holiday spending as a result. About 60% of respondents said they plan to buy fewer gifts and to purchase gifts for fewer people. A similar percentage are cutting back on holiday travel. Meanwhile, more than one-third have decided to skip gift-giving altogether due to the costs. That’s leading Americans to lower their expectations on what they’ll unwrap. Three in 10 say they expect to be disappointed by the gifts they receive this year, with millennials and Gen Z especially pessimistic.
Sam Bankman-Fried, the former chief executive of bankrupt crypto exchange FTX has been arrested in the Bahamas. The Bahamian attorney-general Ryan Pinder said the country’s police force had arrested the disgraced crypto tycoon after receiving “formal notification” from the US that it had filed criminal charges. The US is “likely to request his extradition”, Pinder added in a statement
The White House called attacks by Twitter owner Elon Musk on outgoing top medical adviser Anthony Fauci “disgusting” and “incredibly dangerous.” “These personal attacks that we’ve been seeing are dangerous, on Dr. Fauci and other public health professionals as well. They are disgusting and they are divorced from reality,” White House Press Secretary Karine Jean-Pierre said Monday when asked about Musk’s tweets. “We will continue to call that out and be very clear about that,” added Jean-Pierre, who did not mention Musk by name. Musk in a tweet on Sunday mocked the use of gender pronouns and called for Fauci to be prosecuted. “My pronouns are Prosecute/Fauci,” he wrote. An earlier tweet on Sunday also targeted Fauci with a meme about lockdowns, which aimed to minimize transfer of the virus by closing many in-person businesses and schools early in the pandemic. Musk, who has styled himself as a champion of free speech, has rattled advertisers with his comments on Twitter and moves to change the social media platform’s content moderation policies. On Sunday, Musk was booed for several minutes when he joined comedian Dave Chappelle on stage at a comedy show in San Francisco. Fauci, the director of the National Institute of Allergy and Infectious Diseases, will retire this month after 54 years in government. Fauci became the face of the US response to the Covid-19 pandemic, frequently appearing on television and in the White House press briefing room to give Americans guidance on the virus. Fauci’s support for face masks and lockdowns — along with his willingness to challenge doubts about the efficacy of Covid vaccines drew conservative ire.
The federal government will seek to take permanent control of gas prices when it introduces radical new legislation to parliament on Thursday, a move that industry leaders say would increase the risk of blackouts by killing exploration and cutting supply. The laws would give the government the power to decide the “reasonable price” of gas and go well beyond the emergency $12 a gigajoule price cap announced by Energy and Climate Change Minister Chris Bowen on Friday. Some analysts are warning the move could derail the $18.4 billion takeover bid for Origin Energy. The policy, which has been broadly welcomed by struggling gas buyers, effectively dismantles the gas market by seeking to heavily regulate the prices of all sales on the east coast on an ongoing basis. A rushed consultation of just three days will be followed by an urgent recall of parliament on Thursday to push through the legislation. Analysts likened the bombshell proposal to a near nationalisation of the east coast gas market, with Credit Suisse’s Saul Kavonic saying it represented “a declaration of war on the gas industry” that would spark a major industry campaign against the Labor government on a par with the mining tax advertising campaign a decade ago.
The Albanese government will spend up to half a billion dollars compensating NSW and Queensland coal producers for imposing price caps, as well as $1.5 billion for bill relief to households and businesses. Energy Minister Chris Bowen on Saturday promised the caps on the price of black coal and gas were a “temporary and targeted measure”, to be replaced next year by a code of conduct for the gas market and new powers for the competition watchdog to “intervene” to ensure fair prices. The Commonwealth and states will continue negotiations over the coming days about the details of a rebate on power bills for households and businesses, and how much producers will be compensated for the price caps. Federal parliament was recalled on Thursday to pass the Albanese government’s plan to reduce household and small business energy bills from April next year. The plan involves a deal with the states to cap the price of black coal to $125 per tonne on coal, half the rate of the spot market, and about $12 per gigajoule on gas. The Commonwealth is providing $1.5 billion for customer rebates and Bowen said the states and territories would need to opt in to the rebate scheme and provide matching funding, which “needs to be additional to existing support”.
One of the country’s biggest bulk billing medical centre chains and mental health providers systematically rorted Medicare over a number of years while authorities failed to act on a series of tip-offs and red flags, leaked documents show. The company, Tristar Medical Group, collapsed in May this year, leaving hundreds of patients without access to medical services and owing creditors $23 million. Leaked billing and medical documents show some GPs overstated the length of patient consultations to claim a higher Medicare rebate and billed for some services without adequate patient documentation, which is illegal. Some GPs charged Medicare for up to 18 hours of face-to-face patient consultations a day when the clinic was open for 10 hours. One doctor in Bendigo raked in almost $1 million, with nearly 90% generated from Medicare billing, documents show. Another high-billing medic revealed that on one day, the doctor worked less than six hours, saw 50 patients, with 14 of them involving mental health consultations and long consultations, which require at least 20-minute bookings to meet Medicare requirements. This left 80 minutes to service 36 other clients, equivalent to less than 2.3 minutes a patient. Former Tristar employees and associates who asked not to be named for fear of reprisal said concerns had been flagged with relevant authorities on multiple occasions from November 2018, but all failed to act.
Jim Chalmers says the government will mandate climate risk disclosure reporting for the country’s largest companies next year, warning that a lack of transparency on sustainability measures has created a “handbrake” on the investments needed to move the economy away from fossil fuels. The Treasurer says he has already written to regulators asking them to double down on efforts to combat greenwashing. The government’s first priority will be on disclosures, with Mr Chalmers told the Australian Sustainable Finance Institute forum that Australian businesses needed to make “credible disclosures to remain competitive in global markets”. Treasury will consult on who the new requirements will apply to, and which organisation will enforce the standards. There will be similar requirements for federal entities. Investor groups have been campaigning for the government to make climate-risk related disclosures mandatory to prevent companies using questionable assumptions in claiming green credentials.
Grocery giant Woolworths is preparing to move further down the four-legged, feathered and furred route, homing in on a deal to invest in dog and cat food and pet accessories business PETstock. It is understood Woolworth is in late-stage talks to take a major stake in PETstock and invest alongside the group’s Victorian founders and management team. Sources said PETstock had sounded out a number of potential investors, before focussing on recent efforts with Woolworths. Having got out of pubs and pokies (at least as far as business lines go) and petrol in recent years, pets are emerging as a growth engine for Brad Banducci’s team. The country’s biggest and most valuable grocer has been pushing further down the pets route, trying to capitalise on increased pet ownership and owners’ propensity to spend more on their animals. Woolworths’ pet interests start with petfood and accessories sold in its supermarkets, which makes it one of the biggest players in the sector, and includes its controlling stake in specialist online retailer PetCulture. It also has a pets JV with insurer Hollard Group. Adding PETstock, or a stake, would be another way for the retailer to attack the market. PETstock was founded 20-years ago by brothers David and Shane Young, who owned Ballarat Produce and started PETstock to expand their horizons.
An Australian company will train Ukrainian war veterans in cybersecurity to ward off hackers amid the country’s continuing efforts to defeat Russia. Ukraine’s Ministry of Digital Transformation has signed a memorandum of understanding with Canberra-based Internet 2.0 which will open an office in the country. The deal marks Internet 2.0’s first time working outside of countries within the Five Eyes, an intelligence alliance comprising Australia, Canada, New Zealand, the United Kingdom and the United States. Internet 2.0 co-chief executive Robert Potter said Ukraine was vital to the future of the global cybersecurity landscape.
Australia has significant carbon sequestration potential and the country must embrace the technologies if ambitious climate targets are to be met, the CSIRO has concluded. Australia has pledged to reduce emissions by 43% by 2030 and net zero emissions by 2050, targets which have spurred an acceleration in moving away from fossil fuels. But the country is struggling to build enough renewable energy generation to compensate for the retirement of fossil fuels, stoking fears of blackouts and price rises. Offering a solution, CSIRO said Australia did have significant potential to capture and store emissions. Carbon sequestration is the process of capturing and removing carbon dioxide from the atmosphere. CSIRO said nature-based technologies such as permanent plantings, and plantation and farm forestry had the most immediate prospects because they were low cost and readily available. Still, CSIRO warned the nature-based carbon sequestration techniques would impede farming and rural Australia.
ANZ has conceded it will likely axe branches after a three-year grace period if its $4.9 billion bid for Suncorp’s banking arm clears competition hurdles. Jobs will also be cut at some stage as part of a wider plan to save $260 million a year, ANZ has said in documentation filed with the Australian Competition and Consumer Commission, which will decide on whether to approve the deal. The admissions, indicating how the major bank would save costs, follow ANZ trumpeting commitments to keep branches open for three years and save Suncorp jobs in its statements to keep the public on side. The ACCC on Monday afternoon asked for submissions about the takeover. Melbourne-based ANZ, one of Australia’s big four banks, earlier this year offered $4.9 billion for Brisbane-based Suncorp’s banking arm, a smaller regional lender. Suncorp, a financial conglomerate with a far larger insurance business, has backed the offer. ANZ has also pledged no “net loss” among Suncorp staff or branch numbers in its Queensland heartland for three years after the deal completes, potentially next year. But it has refused to outline what would happen to ANZ branches in the state. Its filing with the ACCC repeats the pledges of not cutting Suncorp’s 49 Queensland branches but then adds: “Subject to ANZ’s integration plans, which are still being developed, following this period, ANZ is likely to conduct some rationalisation of the branch network potentially including duplicative branches”. The bank said a report finds that the “savings due to the removal of duplicative branches amount to increases in productive efficiency and are therefore a public benefit”. The major bank argued use of branches by bank customers has “diminished significantly and this trend will continue because customers increasingly prefer the convenience and efficiency of acquiring and using banking services remotely … and making payments by electronic funds transfer instead of cash”.
Private dealers are exploiting Aboriginal and Torres Strait Islander artists, visiting remote Indigenous communities to buy original works well below market value before marking up prices for wealthy clients in Australia and overseas. A Productivity Commission review has highlighted the predatory practices of so-called “carpetbagging”, where art dealers and other business owners engage in unethical buying up of artworks, denying creators much-needed income and cashing in on Indigenous culture. The commission has completed an 18-month review into the misappropriation of Indigenous visual arts and crafts, finding two in three products in the $80 million-dollar Aboriginal and Torres Strait Islander souvenir market are fake and have no connection to communities. Non‑Indigenous products accounted for up to $54 million of spending, representing more than half of total spending on Aboriginal and Torres Strait Islander souvenirs in 2019‑20. But the report also includes revelations of predatory fine art buyers, including one who tricked noted artist and Anmatyerre woman Barbara Mbitjana Moore into posing with works she did not create. Amid growing international interest in Indigenous art, the National Association for the Visual Arts has acknowledged a small number of dealers have exploited First Nations artists, offering upfront payments in the form of vehicles, accommodation and other goods, or even establishing sweatshops for artists. Some have loaned money to family members of established artists, underwritten by future artworks. Frail and elderly artists have been underpaid for their work, and dealers have forced artists into long-term agreements with private galleries. The commission said Aboriginal and Torres Strait Islander artists received about $41 million from the sales of their artwork in 2019-20, about 30% of the total value of original sales. On average, the price of works by 7300 artists who sold art through an Indigenous art centre in 2019-20 was slightly more than $3200. For artists not working through art centres, the average income was about $6000. The commission concedes there is a lack of comprehensive data on exploitation, with the Copyright Agency telling the review unfair and unethical dealings have reduced in some markets. The commission called for the federal government to introduce rules to require mandatory disclosure of Indigenous-style products not created or licensed by an Aboriginal and Torres Strait Islander, a change likely to reduce fakes in the tourist souvenir market. The report recommended state and national art institutions better engage with Indigenous creators, including providing skills development, career pathways, and culturally safe workplaces.
Robots are coming to take workers’ jobs, but the federal government has tapped a handful of experts in robotics, automation and manufacturing to develop a plan to make sure the obsolete roles are replaced by higher-paying gigs. Industry and Science Minister Ed Husic has appointed a National Robotics Strategy Advisory Committee, which meets virtually for the first time on Tuesday to develop Australia’s strategy for emerging automation technologies. CSIRO chief scientist Bronwyn Fox is chairman of the committee, which is tasked with writing a National Robotics Strategy that will advance the country’s robotics sector while also safeguarding Australians’ wellbeing.
The corporate watchdog has launched civil proceedings against 11 current and former Star Entertainment executives over alleged breaches relating to oversight of anti-money laundering protocols at the company’s casinos. ASIC is suing multiple members of the Star board between 2017 and 2019 in the Federal Court. Former chairman John O’Neill, former chief executive Matt Bekier and directors during that time period – Katie Lahey, Richard Sheppard, Gerard Bradley, Sally Pitkin, Ben Heap and Zlatko Todorcevski are all identified in ASIC’s 164-page statement of claim. Heap is the current chairman of Star. The other former directors named left the company over the past three years. Penalties for the alleged contraventions of section 180 of the Corporations Act will be decided by the Federal Court. Each breach attracts a maximum penalty of $1,050,000. The watchdog alleges the board members “approved” of the relationships their casinos had with criminally linked individuals instead of inquiring whether the group should be dealing with them to address the risk of money laundering. ASIC also alleges the board breached their director obligations by failing to make further enquiries of management when presented with information about the money laundering risks posed to the group.
And that’s it for this week. And this is the last episode of Talking Business for 2022.
For the next few weeks, you can catch me on Facebook, Twitter, Instagram, LinkedIn and YouTube. And if you want leave a comment. For the most exclusive access to leading economists and business leaders from around the world, subscribe to Talking Business on the Apple podcast store or on my website leongettler.com.
Wishing you all a safe, healthy and prosperous Christmas and good times catching up with your loved ones. And looking forward to bringing you Talking Business on 3 February 2023.
