This is episode number fifteen in our series for 2020 and today’s date is Friday, May 15. 

First I talk to the CTO of Fornetix and Cybersecurity expert, Chuck White over in Frederick, Maryland in the USA on Zoom Bombing and how to protect your remote workforce’s teleconferences from outside hackers.

And then I’ll be talking to IFM Investor’s chief economist Alex Joiner about the dire economic outlook.

But first, let’s talk to Chuck White.

Listen to the full podcast here:

The Federal Treasurer has outlined what he has dubbed a “sobering” economic outlook on a day when he had long hoped to deliver Australia’s first budget surplus in more than a decade. Instead, Treasurer Josh Frydenberg delivered in Parliament an economic update, which experts expect will represent the largest budget deficit in Australian history.

Mr Frydenberg said the underlying cash deficit at the end of March was $22.4 billion, almost $10 billion higher than the Government forecast in December’s mid-year budget update. He said tax receipts were $11.3 billion below December’s expectations. The Treasury expects gross domestic product (GDP) will fall more than 10% in the June quarter, representing the biggest fall on record. The Treasury expects household consumption to be around 16% lower in the June quarter.

It is forecasting business investment and dwelling investment will both be down 18%. Non-mining sectors are likely to face bigger falls in business investment. Mr. Frydenberg warned that if restrictions were reimposed, it would produce a loss of more than $4 billion per week to the economy. If hard-line restrictions were reimposed, it would cost the NSW economy $1.4 billion; the Victoria economy $1 billion; Queensland $800 million, WA $500 million, SA $200 million; Tasmania and the ACT $100 million, and the NT $40 million.

Opposition leader Anthony Albanese has warned against a “snap-back” to the problems of pre-coronavirus Australia, calling for a reshaping of the national economy. Albanese delivered a broad-ranging “vision statement” pushing high-speed rail, decentralised government services to boost regional areas, affordable social housing, and a revitalised manufacturing sector.

Even before coronavirus, wages growth was slowing. The Australian Bureau of Statistics has reported wages growth of just 0.5% in March quarter. Annual growth is at 2.1%, a drop from the March 2019 result of 2.4%

The NAB Business survey found that with non-essential services shut down throughout April, business conditions deteriorated further. This was despite the announcement of JobKeeper on 30 March and the sharp decline in new daily COVID-19 cases during the month.

Confidence did pick up from its record low but is still much weaker than during the GFC. The employment index and labor costs fell significantly, signaling a sharp downturn in demand for labor, corresponding with ANZ Job Ads data. Business conditions fell 12pts to -34 in April, while confidence increased by 20pts to -46, still considerably weaker than during the GFC. All components of business conditions (profitability, trading, and employment) fell further in April as capacity utilisation contracted by a further 3ppt to 72%.

Credit and debit card data show Australians are starting to open their wallets, with their food, alcohol and home furnishing spending now higher than this time last year as COVID-19 restrictions ease. Commonwealth Bank data shows that while overall spending in the week to May 8 is still down 2% It’s on the same week last year, it has bounced from mid-April where spending was down 20% on the same week last year. The smaller states and territories recorded growth compared to a year ago. Spending in Queensland increased, indicating its earlier easing of shutdown measures is working to stimulate the economy

The easing of lockdown restrictions in some states has pushed up retail spending considerably. During the week ending 9 May, total ANZ-observed retail spending was 22% higher than the same week in the previous year. Consistent with people getting out and about, online spending has softened from 20% of total ANZ-observed spending to 15%. ANZ expects spending to spike each time lockdown restrictions ease, but the longer-term trend of retail spending is likely to be weak, reflecting reduced incomes and financial stability for many households.

The coronavirus shutdown has caused a surge in unfair dismissal claims, with new figures showing 65% more cases than the same time last year. Data from the Fair Work Commission revealed a hike in workload thanks to more cases about dismissals, stand-downs and JobKeeper disputes. For the latter, top issues were changes to working hours, stand-downs and eligibility for casuals. More than 1 million Australians have reportedly lost their jobs since social distancing measures were installed

China has suspended meat imports from four Australian abattoirs, fuelling concerns that escalating tensions between the two nations are damaging Australia’s most important trading relationship. The suspension will start on May 12, according to a statement on a customs website.

The four plants make up about 35% of Australian beef exports to China. Australia has stoked tensions with China in recent weeks by calling for an independent probe into the origins of the coronavirus pandemic. Australia is also facing the looming threat of major tariffs on its barley shipments to China. The Australian dollar dropped as much as 0.9% to 64.32 U.S. cents. Australian Agricultural Company, the nation’s largest integrated cattle, and beef producer fell as much as 5.6%, the most in 6 weeks. Elders Ltd., which helps sell and buy livestock across Australia, China, Indonesia and Vietnam, dropped as much as 6.9%, the most since Mar. 23.

While a spokesman for China’s foreign ministry said Tuesday the beef imports were suspended “to secure the health and safety of Chinese consumers,” he also criticized Australia’s pursuit of a probe into the origins of the coronavirus first discovered in China. The spokesman, Zhao Lijian, denied the two issues were connected, telling reporters in Beijing: “I don’t think you should take them as one, or make any erroneous political interpretation.” Chinese customs “found products exported by certain Australian companies violate the inspection and quarantine requirements jointly decided by the competent authorities from both Australia and China,” Zhao added.

And the dairy industry has called a snap meeting with the federal government as fears grow of a third trade strike from Beijing in retaliation for Australia’s pursuit of a global inquiry into the coronavirus.

There has been a massive 98% plunge in the number of arrivals at airports and maritime terminals in the past two months as COVID-19 travel restrictions here and abroad have brought international journeys to a virtual halt, according to a senior Department of Home Affairs official. Department of Home Affairs deputy secretary Cheryl-Anne Moy said there were 1.1 million fewer people than normal passing through the nation’s borders between the beginning of March and May 10, underlining the scale of the damage caused to industries including accommodation, tourism, education, aviation and agriculture caused by the lockdown of the nation’s borders.

Australia’s research workforce will be severely impacted by the coronavirus pandemic and the effects are likely to be felt for an extended period. There are warnings 21,000 full-time research jobs are at risk due to coronavirus The nation’s peak scientists and academics warn it will be worse than the GFC. Universities are ineligible to get the JobKeeper wage subsidy for their workers That’s the conclusion of a Rapid Research Information Forum (RRIF) paper titled “Impact of the Pandemic on Australia’s Research Workforce”.

The paper was sent to the Federal Government’s National COVID-19 Co-ordination Commission, as well as senior ministers Karen Andrews, Greg Hunt, and Dan Tehan last week. The pandemic is expected to disrupt the sector more than the global financial crisis with the “scale of the revenue losses for universities from the COVID-19 pandemic likely to be worse than 2008”, the paper warns. It estimates that 21,000 full-time equivalent jobs in the university sector are at risk during the next six months, with 7,000 estimated to be research-related academic positions. The RRIF is made up of Australia’s leading scientists, researchers and academic institutions. Research work at tertiary institutions is funded by the government, non-government grants, industry, and discretionary income allocated by universities.

Cochlear says the deferral of elective surgeries in key markets led to a 60% year-on-year slump in revenues during April. The cochlear implant supplier says unit sales across developed markets fell 80% in April as surgeries were postponed in the US and western Europe. The company says surgeries in China recommenced in late February and continued to recover throughout April. Surgeries are now running close to pre-virus run rates despite Beijing remaining closed to elective surgeries. Cochlear Services, which represents around 30% of business-as-usual revenue, has also been affected, with April sales down around 30%

Can Australia support a third airline? Regional Express Holdings, or REX, will capitalise on the turmoil from Virgin Australia’s collapse and invest $200 million launching capital city services to compete with Qantas, Jetstar, and Virgin Mark II. In a move that could harm the sale price achieved by Virgin’s administrators, the regional airline operator is working on a business plan that includes leasing 10 narrow-bodied jets as well as employing new pilots, cabin crew and ground staff. Virgin’s administrator, Vaughan Strawbridge, has called for indicative bids for Virgin to be lodged by Friday. Industry sources say the business was worth about $1 billion depending on the amount of secured and unsecured debt.

Online retailer reports that active customers grew by 139,000 to 1.948 million over April due to the stay-at-home economy. It also reported gross sales more than doubled for April, with gross profit up more than 150%.

Westpac will re-assess the need for thousands of highly-paid technology staff to be in its major city offices, after seeing productivity increase among its developers and major projects delivered successfully by home-based teams during COVID-19 restrictions. The bank’s chief information officer, Craig Bright, is part of an executive group planning how it will safely return staff to its offices as lockdown measures relax, but he said recent months had shown many tasks, previously thought to require in-person group collaboration, could be done from home.

Bad news for super funds. According to SuperRatings’ estimates, the median balanced option rose 2.7% in April. Given the extent of the falls in February and March, the return since the start of 2020 is -8.1% while the rolling one-year return is -2.5%.

CSR has reported a 10% fall in profit from continuing operations to $125.3 million as the building materials supplier warned of “uncertain” impacts on key markets in the 2021 financial year.

Australia’s biggest bank, the Commonwealth Bank, has set aside an additional $1.5bn for loans that go bad due to the coronavirus crisis.  CBA also revealed a revealed 23% fall in cash profit over the latest quarter, as efforts to contain the virus and initiatives to keep the economy moving hit home, falling over the quarter to March 31 to $1.3 billion from $1.7 billion at the same time last year as conditions deteriorated at the end of the quarter.

Customers doing more digital banking during COVID-19 say they are highly satisfied with the experience, and one in five reckon they will use branches less – or stop visiting them altogether – when the crisis ends, a survey by Boston Consulting Group has found.

The data could give banks confidence to continue to reduce branch numbers, as it suggests customers recognise that service through digital banking channels can be better than the branch experience. The survey also shows customers are becoming more comfortable applying for new products through banks’ websites and mobile apps. The BCG ‘Rebex pulse’ survey of retail banking customers around the world found that over the past four weeks, 35% of Australian customers have been using their mobile banking app more often.

Of these, 95% have been satisfied with the technology. A quarter of customers are using online banking more often with a 92% satisfaction, while over the COVID-19 period, 36% of customers reduced the use of branches, even though banks have worked hard to keep them open as essential services. BCG found that of the 30% of Australian bank customers who were not using digital banking before the coronavirus struck, one in six have been converted to become first-time digital customers over the past month.

The corporate regulator is carefully scrutinising COVID-19-related disclosures. Australian Securities and Investments Commission commissioner John Price said he supported efforts to protect companies hit by the coronavirus but will not tolerate anyone taking advantage of the crisis. A special team has been set up inside ASIC to monitor “people using very aggressive advertising and pressure selling tactics in this difficult time”. ASX head of compliance Kevin Lewis said the exchange had discovered 50 misleading announcements relating to COVID-19, preventing most of them from being released while forcing the others to be amended or retracted. Among them was Advance Nanotek, whose shares were suspended between March 16 to April 2, after the ASX queried claims it had potentially discovered and patented an oral care product that could inhibit the coronavirus. It returned to the market after retracting all announcements relating to the treatment.

The Federal Court has ordered aged care provider Bupa to pay $6 million in penalties and millions more in refunds for residents who paid thousands of dollars a year for services they never received. The ACCC identified 95 extra services from Bupa across 20 aged care homes, some of which were never provided Some residents paid for golf trips, travel escorts, and air conditioning but never received the service Bupa began its $18.4 million redress scheme in 2018 and has paid out $14.1 million so far\ The ACCC pursued Bupa for misleading and false representations to aged care residents for extra services the regulator said were not provided in full, if at all.

And that’s it for this week. And next week, I’ll be talking to Patrick Coghlan, CEO of CreditorWatch, on new payment data suggesting that SMEs were struggling with cash flow issues long before the coronavirus lockdown measures came into play and were unprepared for the current downturn. And I’ll be talking to Indeed economist Callum Pickering about the latest unemployment and wages figures and what they mean for the economy.

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.