The IMF warns that Australia’s inflation will hold at 3.3% through 2024-2025
Welcome to Talking Business, a podcast produced in Melbourne Australia. The podcast is available on the Acast site, my own website, the Apple Podcast store or wherever you go to get your podcasts. Or you can get it at the Business Acumen website at www.businessacumen.biz or at Banking Day.
For the most exclusive access to leading economists and business leaders from around the world, subscribe to Talking Business from my website leongettler.com.
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 39 in our series for 2024 and today’s date is Friday October 25.
First, I’ll be talking to I’ll be talking to Phil Zammit, Sydney-based VP for APJ, Greater China and India for communications and workstream collaboration company Avaya. We’ll talk about how businesses can improve productivity.
And I’ll be talking to Indeed economist Callam Pickering about the latest jobs figures
But first, let’s talk to Phil Zammit
So what’s happening in the news?
The world’s $100 trillion time bomb is ticking as the International Monetary fund meets finance chiefs in Washington this week. Two weeks ahead of a potentially era-defining US election, ministers and central bankers gathering in the nation’s capital face intensifying calls to get their fiscal houses in order while they still can. The fund, whose annual meeting begin there on Monday, has already pointed to some of the themes it hopes to press home with a barrage of projections and studies on the global economy in coming days. The IMF’s Fiscal Monitor on Wednesday will feature a warning that public debt levels are set to reach $100 trillion this year, driven by China and the US. Managing Director Kristalina Georgieva, in a speech on Thursday, stressed how that mountain of borrowing is weighing on the world. “Our forecasts point to an unforgiving combination of low growth and high debt — a difficult future,” she said. “Governments must work to reduce debt and rebuild buffers for the next shock — which will surely come, and maybe sooner than we expect.” As for the biggest borrowers of all, the glimpse of the IMF’s report already published contains a grim admonishment: your public finances are everyone’s problem. “Elevated debt levels and uncertainty surrounding fiscal policy in systemically important countries, such as China and the United States, can generate significant spillovers in the form of higher borrowing costs and debt-related risks in other economies,” the fund said.
In Australia, the IMF’s meagre 1.2% growth projected for 2024 is expected to pick up to 2.1% in 2025. But it warns that Australia’s inflation outlook is less optimistic, with consumer price growth to hold at 3.3% throughout 2024 and 2025.
Qantas has been ordered to pay $170,000 to three of the 1700 workers who were illegally fired during the pandemic amid a push for the airline to fork out more than $100m in compensation in what is shaping up as the biggest industrial relations loss in Australia’s history. The estimate of the record damages bill is based on Federal Court Justice Michael Lee’s judgment on Monday that the outsourced workers would have remained employed for 12 months if not for Qantas’ unlawful action and they deserved between $30,000 and $100,000 each for the hurt and distress they suffered. The ruling comes three years after Justice Lee found Qantas sacked the workers to prevent them from exercising their workplace right to take industrial action. The airline appealed the case all the way to the High Court, where it was defeated in a unanimous ruling in September last year. Justice Lee’s latest judgment revealed for the first time notes from an internal Qantas meeting where one executive argued the airline would “never have another time like the present” to sack the ground staff, while other advisers warned it was taking an “extraordinary” legal, political and industrial risk. TWU (Transport Workers’ Union) NSW branch assistant secretary Nick McIntosh said on Monday that the $100,000 for non-economic loss was “unprecedented” and the union expected the total compensation bill, which is still to be worked out, to exceed $100 million. The union will push for a similar-sized penalty. “We will be saying to the court given this is the biggest illegal sacking by a country mile in Australian history … that Qantas should now pay in excess of $100 million in penalties,” he said. “This should be worth more than $200 million when all is said and done.” Maurice Blackburn principal Josh Bornstein, who acted for the union, said the court had “comprehensively thrown out” the Qantas argument that it should award no compensation. Qantas Group CEO Vanessa Hudson said: “We sincerely apologise to our former employees who were impacted by this decision and we know that the onus is on Qantas to learn from this.” Qantas directly employed 400 ground workers who earned an average annual salary of $80,000. It contracted a further 1300 labour hire workers who earned an average $55,000 a year. Based on these average figures, the workers’ economic losses total $103 million. A Qantas spokesman said individual compensation amounts would vary based on when or if the sacked worker found another job and how much they were paid in the first place. Justice Lee also set compensation for workers’ non-economic loss, based on three test cases, at an eye-watering $30,000, $40,000 and $100,000 depending on how severely affected they were. That equates to $51 million in non-economic losses if all 1700 workers were awarded the minimum $30,000. Qantas and the TWU will enter talks on the total compensation figure over the coming weeks but the court will determine the amount if there is no agreement. Justice Lee is then expected to rule on the penalties the airline must pay for the breaches. Kingston Reid managing partner Alice de Boos said the $100,000 Justice Lee awarded for hurt and distress was “exceptionally high”, well past the court’s previous record under adverse action laws of about $50,000.
Woolworths and Coles fooled customers into buying everyday groceries by using fake discounts spanning almost every aisle of the supermarket, from tampons and fly spray to pet food and even infant milk formula, which lured shoppers with misleading discounts as high as 39%, new court documents reveal. Items such as pet food, a popular range of Coca Cola, Oreo biscuits and fly spray were offered by the supermarkets on discount when in fact they were still more than 29% more expensive than the “regular price” that had featured on the supermarket shelf for as much as two years before. The true breadth of the alleged conspiracy has been laid bare in fresh court documents that were lodged with the Federal Court by the Australian Competition and Consumer Commission, which paint a picture of fake or illusory discounts across dozens of food and grocery categories at both supermarket giants. Raid night & day mozzi spray was top of the “fake discounts” for Woolworths according to court documents lodged by the ACCC with its discount price actually 39% above the regular price. Lucky Dog pet food had similar “fake” discounts that were in fact 33% above the regular sale price while Coca Cola had discounts 28% above the regular price. Other items such as Oreo biscuits were 29% above the actual cost, with the regulator detailing the journey each supermarket retailer took to pump up shelf prices and then reduce them only slightly in order to tempt the shopper with what they thought were genuine discounts. Both supermarkets, the regulator has alleged, inflated shelf prices and then later offered which were in fact still more expensive than the average selling price in the year or years before – advertising them as real savings when in fact they were not. In meticulous detail the ACCC has provided to the court the unfolding alleged conspiracy perpetrated by both Woolworths and Coles that roped in more than 250 standard food and grocery items that most Australians would put in their baskets. The shopping list of fake discounts covers dozens of categories, such as dairy, pet food, personal care, medicine, coffee, confectionery, snacks, breakfast cereal, pasta, household cleaning and soft drinks,
A senior male manager at Nine Entertainment is the subject of an investigation into an alleged rape reported by a junior female staff member as part of the media company’s independent review. Lawyers at firm Ashurst this month spoke with the woman – who has engaged her own legal team – about an alleged incident that took place after end-of-year celebrations in 2019 near Nine’s then headquarters at Willoughby on Sydney’s north shore. It is claimed the male manager and the woman left the work function together and returned to the woman’s home, where the alleged sexual assault subsequently occurred. The woman initially provided details of the alleged incident as part of consultancy firm Intersection’s review into Nine’s workplace culture. The woman has since provided Ashurst with details of the alleged incident, including her claims of bullying that resulted in her leaving the company in early 2022. The male manager and the younger woman did not work in Nine’s news and current affairs division. It is understood there was another senior female manager present at the time the young woman was being plied with alcohol by the male manager at the work function. At this stage, the matter has not been reported to police. The female employee later signed a deed of release and was given a five-figure payout in 2022; she claims she was managed out of the business by another senior male manager. She did not report the alleged sexual assault to the company at the time of her departure. Nine, which has 5000 employees, has engaged third parties – including lawyers – to investigate some matters that were raised as part of Intersection’s review into the culture at the media company
Billionaire Richard White has now signed at least two nondisclosure agreements with ex-lovers, with the abandonment of his legal fight with Sydney beauty entrepreneur Linda Rogan bringing an end to a three week saga that has cost the WiseTech founder billions. Mr White, who has estimated wealth of almost $15bn, had pursued Ms Rogan for bankruptcy in a matter regarding $91,000. in furniture she had purchased for a secret $13.1m mansion in Sydney’s Vaucluse he had purchased for her to live in. But it was revealed on Tuesday that the legal case between Mr White and Ms Rogan had ended when Ms Rogan filed a notice of discontinuance with the Federal Court. It is understood a settlement between the pair was agreed, potentially worth more than $1m to Ms Rogan, an owner of Laser Clinics franchises in Sydney, Queensland and New Zealand. A nondisclosure agreement was also struck. WiseTech’s chief executive, has faced other allegations from women revolving around him sharing business advice before turning the relationship into a sexual one. Mr White’s stake in WiseTech has fallen about $3.5bn in that time as the technology company’s share price slumped after a series of revelations about its founder and biggest shareholder. Mr White pursued the bankruptcy action after Ms Rogan had successfully sought a garnishee order last year on his Westpac bank account for about $91,000, a sum she alleged she shelled out on luxury furniture for a Vaucluse mansion Mr White secretly purchased for her in September 2022. The billionaire allegedly later locked Ms Rogan out of the house after their affair was discovered by his now wife Zena Nasser. Jenna Riches accused Mr White of offering business advice in exchange for sex, including the billionaire gifting Ms Riches a bunch of flowers containing a sex toy. Ms Riches said her first contact with Mr White was in December last year, after she messaged him on LinkedIn hoping for suggestions on how to expand her private psychology practice. The 38-year-old claimed Mr White suggested she read at least 10 business books, including the Incerto series by Nassim Taleb and shared other entrepreneurial advice on dozens of messages and FaceTime discussions. Mr White bought a house for another woman he was involved with, Marcia Kensell, in 2018 in Sydney’s Lane Cove. A falling-out between Ms Kensell and Mr White led to her taking legal action.
Mineral Resources chairman James McClements has confirmed that the board is investigating revelations that managing director Chris Ellison operated an offshore tax evasion scheme that the group’s billionaire founder described on Sunday as a “serious lapse of judgment”. Mr McClements said the board had engaged outside legal counsel but he denied that Mr Ellison’s actions were improper and said the board “has full confidence in Mr Ellison and his leadership of the MinRes executive team”. Mr Ellison has become one of Australia’s richest people largely through his 11.5% stake in the $9 billion iron ore and lithium miner he established in 1992. The alleged scheme involved a company that Mr Ellison incorporated in the British Virgin Islands in 2003, Far East Equipment Holdings Ltd. Tax Office documents show Far East reported $6.6 million in profits from MinRes payments in the three years after the July 2006 float, which acted as a drag on shareholder earnings. From May 2003 to 2009, MinRes staff bought machinery but paperwork later showed the equipment was purchased by Far East Equipment Holdings Ltd. Far East would sell crushers, ball mills, batching plants and other equipment to MinRes companies for multiples of the original cost, and the West Australian mining company would then use the inflated purchase price to claim depreciation in its tax returns. The windfall profits were shared between Mr Ellison and four other senior executives. Mr McClements described the payments as sales contracts settled before the July 2006 initial public offering. However, Tax Office documents also record changes in the offshore structure well after the IPO date, as well as machinery purchased by Far East using MinRes funds, and additional MinRes payments to other companies in the British Virgin Islands controlled by Mr Ellison. The MinRes chairman characterised the scheme as a private tax issue for Mr Ellison, with no reference to other executives. “As to his private tax matters, Mr Ellison self-reported to the Australian Taxation Office, repaid amounts owed and disclosed these matters to the board. While this does not diminish what happened, Mr Ellison profoundly regrets his errors of judgment.Mr McClements did not state when the board learned of Mr Ellison’s offshore arrangements. However, the settlement required MinRes to repay an estimated $3 million in depreciation claims which it had booked against the inflated prices paid to Far East.
The nation’s peak business group will propose a $10 billion federal plan to build more homes and slash the cost of construction in an ambitious bid to revive a reform template from the 1990s to fix the housing crisis that takes aim at stamp duty and obstructionist local councils. The Business Council of Australia will forecast a boost to housing supply and a jump in economic growth from the plan to offer a financial reward to states and territories if they remove barriers to new housing projects. But the proposal requires the federal government to set up a new fund to offer the financial incentives when Prime Minister Anthony Albanese and his colleagues are focused on $32 billion in other housing measures. The business council claims that it could repeat the gains Australia made from national competition reforms in the 1990s, which were estimated to add tens of billions of dollars to the economy when Canberra and the states agreed on big reforms. In a sign the proposal might find support within the government, Treasurer Jim Chalmers has talked in recent weeks about the need to “revitalise” national competition policy to help Australians with the cost of living. The government has played down the prospect of changing the rules on investment properties by overhauling negative gearing and capital gains tax, but has also signalled more housing policies before the election because of the scale of the crisis. BCA chief executive Bran Black said states and territories were already making headway but would need to do much more if the federal government was to meet its stated target of adding 1.2 million homes over five years.’
And that’s it for this week. And next week, I’ll be talking to Michelle May, principal from Michelle May Buyers Agents. We’ll talk about how to be on the ground with buyers and why there is an emotional connection with property.
And I’ll be talking to Rabobank economist Michael Every about the latest with the Chinese economy and what impact will the US election have on China.
For the most exclusive access to leading economists and business leaders from around the world, subscribe to Talking Business from my website leongettler.com.
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Wishing you all a safe and healthy week, And looking forward to bringing you Talking Business next week.
