Welcome to Talking Business, a podcast produced in Melbourne Australia. The podcast is available on the Acast app, 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.
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 three in our series for 2019 and today’s date is Friday, February 15.
Listen to the full podcast here.
First I talk to Adam Brimo, the co-founder of online social learning platform, OpenLearning. OpenLearning’s unique social and interactive approach to learning has been adopted with great success by leading institutions and government bodies around the world. OpenLearning has had significant international traction thanks to its innovative model of online learning that is focused on student engagement and fostering vibrant learning communities in courses. OpenLearning currently supports over 1,500,000 students across 5,000 courses, with thousands more joining every week.
And then I’ll be talking to economist Jonathan Boymal about what’s happening in Australia’s housing market, and how it’s affecting the economy.
But now, let’s talk to Adam Brimo.
Congressional negotiators said they had reached a deal in principle to fund the government and avoid another shutdown. As always, President Donald Trump will hold the fate of any potential agreement in his hands. President Donald Trump is playing down the threat of a second partial government shutdown as Republicans in Congress clear a path for him to accept a deal on border security funding. Trump is likely to grudgingly sign the legislation and then immediately use his executive authority to fund additional border measures, If passed, the spending plan would keep the government running past a Feb. 15 deadline. It would avoid reopening fresh wounds of the 800,000 federal workers who missed two paychecks during a 35-day partial closure in December and January. The measure’s passage depends on Trump’s support. No details have been released. Talks had stalled on the detention of undocumented migrants and funding for President Donald Trump’s border wall. Hurdles remained, and Trump’s ultimate backing was in doubt after quick opposition emerged from conservatives. But lawmakers on both sides said they were motivated to find agreement by the looming specter of another government shutdown Friday night, three weeks after the last one ended. President Donald Trump has reservations about a tentative government funding deal that needs his support to pass. Still, the president does not think parts of the government will shut down this weekend for the second time since December, he said Tuesday. “I can’t say I’m happy. I can’t say I’m thrilled” with the agreement to prevent a partial closure, Trump said, according to White House pool reporters.
The president did not immediately commit to signing the spending measure if Congress passes it. However, said that “I don’t think you’re going to see another shutdown. The deal includes $1.375 billion for 55 miles of fences along the border, compared with $5.7 billion Trump had sought for more than 200 miles of walls. The deal omits a strict new cap Democrats had sought on immigrants detained within the United States — as opposed to at the border. At the same time, it limits overall levels of detention beds maintained by the U.S. Immigration and Customs Enforcement agency, although GOP aides said ICE would have enough money and flexibility to maintain its current detention levels and add more when needed. To avert a shutdown, the deal needs to be written into final legislation, passed by both the House and Senate, and signed into law by the president. Funding lapsed in December after the president threatened to veto any plan that did not include $5.7 billion to build his proposed border wall — and deterred GOP lawmakers from voting to keep the government open. The previous shutdown, lasting 35 days, was the longest in US history. Hundreds of thousands of workers were furloughed while others in essential services, such as hospital care, air traffic control and law enforcement, worked without pay. The cost to the US economy was estimated at $11bn (£8.5bn).
The Trump administration said the U.S. president still wants to meet China’s Xi Jinping in an effort to end the trade war, a sign of optimism as negotiators from the world’s two-biggest economies start their latest round of talks this week. “He wants to meet with President Xi very soon,” White House adviser Kellyanne Conway said Monday on Fox News. “This president wants a deal. He wants it to be fair to Americans and American workers and American interests.” Uncertainty whether the leaders will meet to finalize an agreement has stoked concerns that negotiations are faltering as the March 1 deadline approaches. If there’s no deal by then, President Donald Trump has threatened to more than double the rate of tariffs on $200 billion in Chinese imports. However, Mr Trump said that he would consider postponing the March deadline for tariffs if the U.S. and China can reach a trade deal soon. Trump softened his stance on the trade battle with China, saying he’s open to letting the deadline slide, but “would prefer not to.” He also said Beijing “very much wants to make a deal,” and he has “a big team” in China trying to reach a resolution. Negotiators from the two countries are meeting this week in Beijing, with U.S. officials pressing China to commit to deeper reforms to a state-driven economic model that they say hurts American companies. Mid-level officials began discussions Monday in preparation for two days of talks starting Thursday involving U.S. Trade Representative Robert Lighthizer, Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He.
The world is entering an age of unprecedented environmental breakdown that could see an economic collapse like the 2008 financial crisis, a thinktank warned on Tuesday. According to a report from the Institute for Public Policy Research (IPPR), climate change is just one of many environmental threats. It said that natural systems were now being destabilized so quickly by human activity that dangerous tipping points would soon be reached. Rising global temperatures would have consequences which threatened major economic, social and political disruption, according to the report – including increasing weather extremes, large-scale migration, conflict, and famine.
Labor has demanded immediate law changes to follow the banking royal commission’s shock findings made public last week and has even called for extra sitting days in parliament. The opposition acknowledges some legislation will require “extra time”, but shadow treasurer Chris Bowen accused the government of putting off action until after the election because it was more concerned with itself. Defence Minister Christopher Pyne, the government leader in the House of Representatives, told ABC’s Insiders on Sunday it would “take time to draft those 40 pieces of legislation and to get them right”. “It will be after the election, yes,” Mr Pyne said. Mr Bowen told reporters: “We have the Leader of the House saying yesterday nothing will happen until after the election — no legislation, no implementation until after the election. “We in the Labor Party are prepared to sit extra time.” Mr Bowen conceded “there are parts of the royal commission that will take, in fairness, extra time”. But said there were some areas which could be dealt with immediately, such as the grandfathering of commissions, and eliminating the hawking of financial products. Treasurer Josh Frydenberg began the government’s official response by announcing the expert panel to review the effectiveness of finance industry monitoring agency the Australian Prudential Regulation Authority (APRA). It will be headed by former competition regulator Graeme Samuel and include former Westpac executive Diane Smith-Gander and former New Zealand Reserve Bank executive Grant Spencer.
The ANZ-Roy Morgan Australian consumer confidence index slumped 3.4% last week to 114.1, leaving it at the lowest level in three months. Sentiment towards current economic conditions fell by 3.2%, its first fall in four weeks, while future economic conditions fell by a slightly larger 3.8%.
But it was a different story for the Westpac-MI index which rose 4.3% to 103.8, recovering after falling to a multi-year low in January. Expectations that the RBA may cut rates again was cited as a catalyst behind the sharp improvement
Loans to housing investors dropped to a seven-year low in December as banks remained cautious and a declining residential market dampened appetite for credit. Lending to households fell 4.4 percent in December 2018, seasonally adjusted, according to the first release of a new Australian Bureau of Statistics (ABS which combines figures of lending to households and businesses. The fall in lending to households in December follows a 2.4 per cent fall in November 2018.
But Australian business conditions rebounded in January, lessening the risk of a pronounced slowdown in hiring and investment in the months ahead. According to the National Australia Bank’s (NAB) monthly business survey, the conditions index rose 4 points to +7, partially recovering having fallen by the most since the GFC in December. NAB is forecasting the next interest rate move will be beyond 2020 but, if the Reserve Bank does alter policy, it is more likely to be a cut as business confidence and conditions “lose momentum”.
Australian digital bank UBank says its “world first” digital home loan application assistant, powered by artificial intelligence (AI), will be available in Australia for the first time in late February. UBank, the NAB’s digital and online consumer arm, says Mia – short for My Interactive Agent – will begin taking customer questions in late February, with the aim of creating a “smarter, simpler home loan application experience”. Created in partnership with FaceMe, a provider of AI-powered ‘digital humans’ for customer service, UBank says Mia represents a leap forward in chatbot technology and gives a digital face to its home loan experience. UBank boasts that Mia is the “ultimate UBank team member with in-depth product knowledge and a cheeky personality – even using fun gifs and animations during her chats”. The bank says customers will speak directly to Mia via their desktop or mobile device to ask her questions about the home loan application – anything from what’s a variable rate to what classifies as an expense. And, UBank says customers will be able to speak to Mia day and night, and she will answer more than 300 of the most common questions customers have about the home loan application journey, “so they will have a smarter, more connected experience”. The bank says the Mia persona was crafted with the customer in mind – “they want to talk to someone smart, empathetic, trustworthy and someone that doesn’t use bank jargon”.
Australia’s largest pastoral company says it has lost thousands of cattle in unprecedented flooding, including almost 30,000 head on one of its Gulf of Carpentaria stations alone. The Australian Agricultural Company (AACo) runs more than half a million cattle across 24 stations and feedlots in Queensland and the Northern Territory to breed and fatten stock for export consumption. In a statement to the Australia Stock Exchange, AACo said its 2,500 square kilometre Wondoola station, 130km south of Normanton, had experiencing its highest flood levels ever, forcing the evacuation of station staff from the property as water rose to the eaves of buildings. The property is located between the Flinders and Saxby Rivers, where breeding cattle usually graze the floodplain grasses that naturally grow after a wet season. Last week, the Flinders River broke both its banks, and its rainfall records, when hundreds of millimetres of rain fell within several days, upstream of the station. AACo managing director, Hugh Killen, said the losses of cows and calves had been extreme.
And the profit reporting season is in full swing. Here are the latest profits. Amcor’s profit after tax (PAT) of $US328.5million was 3.4% higher than last year on a constant currency basis. JB Hi Fi Australia’s largest electronics retailer defied the downturn in the housing market to lift interim net profit by 5.5 per cent to $160.1 million and forecast better-than-expected full-year earnings. The $147 billion Future Fund has delivered a 5.8 per cent return for the 2018 calendar year, a performance that significantly exceeded the strongest performing superannuation funds over the year. Aurizon’s interim net profits fell 19 per cent to $227 million as earnings in both the company’s rail networks and coal haulage businesses declined as it absorbed the impact of a new agreement with its Queensland regulator. House and land developer AV Jennings has blamed political uncertainty, “sensationalist” media coverage of the housing outlook and a “relatively sudden” slowdown in bank lending for a 90 per cent plunge in profits. The developer, which sells house and land lots in NSW, Victoria, Queensland and South Australia, reported profit of $1.42 million for the half year to December 31, down from $15.48 million in the previous corresponding period. Bendigo and Adelaide bank’s after tax statutory profit: came in at $203.2 million, up 0.2 percent. Transurban reported a 56 per cent fall in interim net profit to $145 million.
The interim profit at Australia’s biggest annuities provider, Challenger in the six months ended December 31 collapsed to $6.1 million from $195.4 million in the year-earlier period. Reckon reported a 6 per cent decline in revenue from $80.3 million to $75.4 million for the 12 months to December 31, Macquarie Group has reiterated its profit guidance for another record year after a “satisfactory” December quarter as it confirmed its chief executive has formally been classified a “suspect” by German authorities looking into an alleged tax fraud scandal. At an operational briefing for investors on Tuesday, chief executive Shemara Wikramanayake reaffirmed guidance for a lift in profit of up to 15 per cent, and updated the market on regulatory matters, including the German probe. Last year, the bank made a profit of $2.56 billion, so the guidance suggests it is on track for a profit of up to $2.94 billion for its current financial year, which ends in March. Tabcorp reported an underlying profit of $210.6 million for the six months ended December 31, double last year’s result. CSL reported a 10 per cent rise in net profit of $1.161 million. Charter Hall reported a statutory profit of $42.2 million, down 23.8 per cent from the previous year’s $55.4 million. Beach Energy reported a 199 per cent increase in net profit after tax to $279 million. In the six months ended December 31, Carsales profit dropped 82 per cent to $11.1 million from $60.58 million in the year-earlier period. Virgin reported a jump in statutory profit after tax to $73.8 million in the six months ended December 31. Radio broadcaster and e-sports business HT&E reported a full-year profit of $36.7 million on Wednesday, up 23 per cent. ALE property group reported a net profit after tax of $5.6 million.
And that’s it for this week. And next week, I talk to Ben Kearney, the CEO of the Australian Lottery and Newsagents Association (ALNA), Australia’s national industry body for the newsagent industry. He will talk to us all about the newsagents industry and how it is evolving. And of course, I’ll be bringing you all the week’s news. 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 great week, take care, be good and looking forward to bringing you Talking Business next week.