This is episode number thirty-three in our series for 2020 and today’s date is Friday, September 18.
First I talk to New Jersey marketing specialist Josh Meah and he’ll talk about the crisis facing many small businesses and give tips for helping your business stay afloat through marketing.
And then I’ll be talking to IFM Investors economist Alex Joiner about how we will manage the recession and how the government should handle the budget.
But now, let’s talk to Josh Meah.
New Zealand has become the first country in the world to make climate risk reporting mandatory for banks, asset managers, and insurers. Under new legislation announced on Tuesday morning, large financial institutions would be required to report annually on governance, risk management, and strategies for mitigating climate change impacts.
The country’s Minister for Climate Change, James Shaw, said the mandatory disclosure requirements, which are based on the Task Force on Climate-Related Disclosure (TCFD) framework, would be the first of their kind in the world. “Australia, Canada, UK, France, Japan, and the European Union are all working towards some form of climate risk reporting for companies, but New Zealand is moving ahead of them by making disclosures about climate risk mandatory across the financial system,” he said.
The requirement will apply to around 200 institutions, including banks and institutional investors with more than $NZ1 billion ($920 million) in assets, and insurers with either $1 billion in assets or annual premium income of more than $NZ250 million. The new regime requires parliamentary approval and would not come into force until 2023,
The chief executive of the world’s largest vaccine manufacturer has warned that not enough Covid-19 vaccines will be available for everyone in the world to be inoculated until the end of 2024 at the earliest. Adar Poonawalla, chief executive of the Serum Institute of India, told the Financial Times that pharmaceutical companies were not increasing production capacity quickly enough to vaccinate the global population in less time. “It’s going to take four to five years until everyone gets the vaccine on this planet,” said Mr. Poonawalla, who estimated that if the Covid-19 shot is a two-dose vaccine — such as measles or rotavirus — the world will need 15bn doses.
The Westpac–AusChamber Actual Composite improved to 42.4 in the September quarter after falling dramatically to 24.0 in the June quarter associated with the initial lock-down in response to COVID. The index remains well below its pre-COVID level of 56 at the end of 2019. With the activity index still sub-50, this suggests conditions are contracting but at a much slower rate. Of note, new orders and output are declining at a slower pace.
Reversing JobSeeker, Youth Allowance, and parenting payment supplements could see the economy lose $31.3 billion and 145,000 full-time jobs over the next two years, analysis by Deloitte Access Economics shows. Commissioned by The Australian Council of Social Service, the analysis is based on the government trimming the Coronavirus Supplement of $550 per fortnight to $250 per fortnight on September 24, and then further removing it completely on December 31. Prime Minister Scott Morrison has promised the payment would not be entirely removed after December, however, he has not yet revealed the level at which the payments will continue.
Prime Minister Scott Morrison has detailed plans to open up new gas reserves and offer to back the construction of a gas-fired power station, as part of his plan to drive a fossil-fuelled economic recovery. In a speech to business and industry in Newcastle, Morrison announced federal government support for a gas plant in the New South Wales Hunter Valley if energy company AGL does not replace its Liddell coal-fired power station.
The headline-grabbing policy announcement today was a threat to the energy industry to commit to delivering 1000MW of new “dispatchable” power generation to replace the aging Liddell Power Station by the summer of 2023–24, or else the federal government will have the Commonwealth-owned Snowy Hydro company build a new gas-fired power plant itself. So once again, the party of the free market decided the market could use a little prod in the direction they’d prefer.
He also announced initial funding of $52.9m to support planning for five new gas fields and pipelines to transport gas to Australian cities. The move comes despite growing scientific evidence around fugitive emissions that indicates the carbon footprint of gas is much larger than previously thought.
The Victorian Government has announced a coronavirus business support package worth about $3 billion, which Premier Daniel Andrews calls the “biggest package of business support” the state has ever seen. The package includes more than $1.1 billion in cash grants for small and medium-sized businesses. The Government will establish a fund offering grants of up to $30,000 to licensed bars, restaurants, pubs, clubs, and hotels. The Victorian economy has been hit hard by the state’s extended lockdown during the second wave, with anticipation there will soon be more Victorians on JobKeeper than the rest of the country combined. Businesses have mounted a campaign for the industry to reopen sooner than the current roadmap out of restrictions allows.
Victoria will transform the city and suburban streets into “pop-up” cafes and restaurants to speed up the hospitality industry’s recovery, as the state announces an additional $190m of support to sole traders. In the lead-up, to summer the premier, Daniel Andrews, said Melbourne’s footpaths, car parks, and public parks would be given over for outdoor seating as part of a $100m investment into the CBD.
The changes will allow venues to seat more people while still complying with COVID-safe restrictions. Of the $100m support package for the Melbourne CBD, $30m will be available for small and medium-sized businesses to purchase outdoor dining equipment, with a maximum of $5,000 per business. Another $30m will support COVID-safe cultural events to attract Melburnians back to the CBD, and another $40m will go towards physical upgrades such as widening footpaths.
Other local government areas will be encouraged to do the same, transforming suburban shopping strips to allow alfresco seating. Hospitality businesses outside the CBD will receive an $87.5m outdoor dining support package, $58m of which can go to purchasing outdoor equipment.
Former prime minister Paul Keating says the ballooning cost of aged care should be met by a HECS-style funding model, where every Australian is extended a loan to pay for their care and the costs are recovered from their estate. The model, which has been cautiously welcomed by peak seniors groups, would reduce the fiscal burden on a younger generation already carrying the costs of the coronavirus pandemic. Each person’s assets would help to maintain them in later life and it would be more difficult for family members to call on that asset.
Chinese investment in Australia dropped by more than 47% between 2018 and 2019, new data released by the Australian National University shows. Chinese investment in Australia peaked at $15.8 billion in 2016, but was just $2.5 billion last year and is expected to drop again in 2020. A single investment – the sale of Bellamy’s baby formula company to Chinese dairy company China Mengniu, made up more than half of the total investment at $1.5 billion.
The $70 billion JobKeeper wage subsidy program has potentially been rorted by thousands of businesses but not one has been penalised despite more than 8000 tip-offs to the tax office and 2200 employees found to be on multiple applications for payments.
JobKeeper began on March 30 and until August 26, more than 15,000 businesses have been removed from the scheme after the Australian Tax Office found them to be ineligible. During the same period, the ATO received 8,000 tips from the public pointing to 6,250 businesses or sole traders who may have been rorting the system.
The ATO has told more than 8,000 businesses they may need to repay JobKeeper money because their paperwork did not adequately demonstrate their eligibility. To get onto JobKeeper, employers and sole traders estimate their turnover has, or will likely, fall by 30% or more (if turnover is under $1 billion).
For bigger firms, a drop of 50% or more is needed. Businesses are expected to provide evidence of revenue declines. The most common JobKeeper tip-offs so far have been allegations that employers are not passing on the full $1500, or businesses are not meeting turnover requirements to get into the program, or fair work issues such as not paying penalty rates, and employee eligibility.
Money has been flowing to more than 3.5 million people via businesses covering about one-third of the pre-pandemic private sector but concerns about where the money is going are growing. Questions have been raised about the use of government support during the pandemic with at least 25 companies in the ASX 300 paying bonuses worth $24 million to executives and millions more in dividends to shareholders after claiming JobKeeper.
Company profits were up by 14.9% in the June quarter, while wages and salaries fell by a record of 2.5%. The ATO warned businesses in June that employers found to have knowingly rorted the system may face fines of up to $126,000, or 10 years in prison. But no-one has been pinged yet.
From homewares and appliances to gardening and sports equipment, retailers are struggling to fill gaps on shelves after underestimating the strength of consumer demand amid ongoing supply chain disruptions. While clothing and footwear retailers such as Myer and David Jones have been discounting heavily to clear excess supplies of officewear and cocktail dresses, retailers such as Kmart, Big W, Bunnings, JB Hi-Fi, and Super Retail Group are missing out on millions of dollars in sales after failing to secure sufficient stock to keep up with booming demand from consumers spending more time at home.
According to the Australian Retailers Association, 90% of its members are experiencing stock or supply chain disruptions due to the coronavirus. According to a report by UBS, like-for-like sales for discretionary retailers rose an unprecedented 29% in July and August after bumper sales between March and June. Sales at JB Hi-Fi and The Good Guys rose more than 40% in July, and Harvey Norman’s Australian franchisee sales were up 38% in July and August.
Super Retail Group’s Rebel chain, has struggled to source weights from anywhere in the world after unprecedented demand from consumers forced to exercise at home. JB Hi-Fi and Harvey Norman have run short of large-screen TVs, while Kmart and Big W have been short of stock such as kitchenware, small appliances, home decor products, and manchester for several months.
Kogan.com has reported its largest increase in active customers in the history of the business through August, with sales and profit also rising substantially. The company reported active customers grew by 152,000 in August to 2.46 million as of August 31. It also reported gross sales were up more than 117% on the previous year while gross profit was up more than 165%.
The country’s most secretive intelligence agency has launched a recruitment push for more digital spies, as Australia counters the growing threat of espionage. For its first 20 years, the government denied its existence, now the Australian Secret Intelligence Service is openly looking for more recruits. Australia’s overseas spy agency wants to find highly skilled digital experts to fill a number of critical roles in the organisation.
The “ASIS is interested” campaign will feature a new television advertisement and focus on finding Australians trained in IT, software development, data science, engineering, cybersecurity and customer service. The TV ad shows an ASIS agent uncovering a system vulnerability in a computer network and then quickly installing a security update to fend off would-be hackers. “If you’re currently working in technology, the Australian Secret Intelligence Service is interested in hiring you,” the ad says.
Macquarie Group has flagged a 35% drop in earnings for the first half and said its overall profitability for the full year is uncertain. The investment bank said on Monday that it expects its first-half result to be down about 35% in the first half the prior year and down about 25% in the second half of the fiscal year 2020.
This would see half-yearly profit fall from $1.275 billion to about $955 million. The bank scrapped its guidance for the first time since the global financial crisis in July ahead of its annual general meeting. The company is scheduled to report its first-half results on November 6.
Rio Tinto chairman Simon Thompson has vowed to continue bringing more jobs to Australia. It comes amid calls for the company to relocate its global headquarters from London to Australia, which currently accounts for 90% of the company’s profits as well as the bulk of its workforce. Rio Tinto CEO Jean-Sébastien Jacques and two top executives resigned last week after the desecration of an Aboriginal site, which saw the destruction of the Juukan Gorge rock shelters against the wishes of its traditional owners. This coincides with Treasurer Josh Frydenberg telling Thompson that the company’s next chief executive should be Australian along with the majority of its directors. The federal Treasurer’s ability to directly enforce conditions on Rio is limited but its board and investors will be aware of the problems that could be created by ignoring his call for an Australian CEO.
And people are turning to comfort food in the lockdowns. The maker of Old El Paso Mexican food products, Latina Fresh pasta, Betty Crocker cake mixes, and Haagen-Dazs ice-cream has had a 15% sales spike in Victoria during the lockdowns over the past few weeks. The Australian arm of US food giant General Mills also says demand for ”comfort food” is staying elevated in other states, with sales up about 4% in Queensland and South Australia where a shift towards more home cooking continues.
Major Australian banks and insurers on Monday published the nation’s first comprehensive climate change reporting framework, pre-empting threats from the prudential regulator APRA to make such disclosure mandatory. Bushfires, tropical cyclones, coastal inundation, heatwaves, and more are included in the new standards, which provide a scientific framework within which to assess the emerging risks that come with the warming atmosphere and oceans.
The guidelines were published by the Climate Measurement Standards Initiative, a collaboration between major banks, insurers, and climate scientists. They flesh out the Task Force for Climate-Related Financial Disclosure (TCFD) guidelines in a way that is specific to Australia’s geography. The initiative was started by National Australia Bank, the Commonwealth Bank of Australia, Westpac, Suncorp, QBE, IAG, the CSIRO, the Bureau of Meteorology, and research universities, but any financial institution can use the guidelines.
Louis Vuitton plans to sell a face shield with its signature LV monogrammed pattern. The French fashion house unveiled the full face shield as part of its 2021 Cruise Collection and it will go on sale late next month for $US961 ($1320). A news release describes it as “an eye-catching headpiece, both stylish and protective”. It will be photochromatic and can transition from clear to dark when it comes into contact with direct sunlight. The shield can also turn into a hat when the visor is flipped up.
And that’s it for this week. And next week, I’ll be talking to Amar Goel, founder, and CEO of Safeter. Safeter is a mobile app-based technology that enables employers to bring their employees back to work safely. It is offering many of its features for free, to help people be safe and get the economy going again. And I’ll be talking to Indeed economist Callam Pickering about the latest unemployment figures.
In the meantime, you can find me on Twitter at talkingbizz, on Facebook, and on LinkedIn. And if you want, leave a comment. Wishing you all a safe and healthy week and looking forward to bringing you Talking Business next week.