This is episode number twenty-eight in our series for 2020 and today’s date is Friday, August 14.
First I talk to Dean Foley, the founder of Australia’s first Indigenous-focused startup accelerator Barayamal.
And then I’ll be talking to economist Saul Eslake about the state of the Australian economy and what’s needed to get us up and running again.
But now, let’s talk to Dean Foley.
McDonald’s is suing Steve Easterbrook, a former chief executive. The fast-food chain alleges that Mr. Easterbrook lied to the board about sexual affairs he had with three employees and that he approved a stock grant to one of those employees worth hundreds of thousands of dollars.
McDonald’s, which agreed to dismiss Mr. Easterbook in November “without cause”, wants to recover the $40m-odd severance package it awarded him. According to the lawsuit, new evidence shows that in addition to “physical sexual relationships” with three employees in the year before his termination, he was “in the midst” of one when he was fired and he was “knowingly untruthful” with investigators.
Evidence against Easterbrook, McDonald’s said, “consisted of dozens of nude, partially nude, or sexually explicit photographs and videos of various women, including photographs of these company employees, that Easterbrook had sent as attachments to messages from his company email account to his personal email account”.
The company said the emails were sent in late 2018 and early 2019. During the investigation, the company alleges, Easterbrook claimed that the relationship over which he was dismissed consisted only of texting and video calls and he assured the company that he had no other intimate relationships with employees.
The NAB Business survey shows the pandemic is hitting the economy. Business confidence dropped by 14pts to −14 in July, overshadowing the 8pt improvement in conditions. New South Wales and Victoria experienced the sharpest falls in confidence, and confidence declined across all industries.
The survey, taken from July 22-31 when stage four lockdowns were introduced in Melbourne, show confidence declines across all industries. Confidence is now weakest in the retail and construction sectors The sharpest declines in confidence geographically were in NSW and Victoria and a more modest decline in Queensland.
Confidence is now negative in all states except Western Australia and Tasmania. Retail and wholesale trade saw the strongest pick up in conditions as restrictions had eased across the country allowing consumers to return to spending record amounts of government stimulus. But NAB chief economist Alan Oster cautioned that the bounceback in business conditions could just be a reflection of the activity coming off a low base.
Australia’s labour market recovery stagnated throughout June and July, with business payrolls broadly unchanged throughout that period. This partly reflects Victoria’s second-lockdown, which has already led to considerable job losses. Business payrolls are tracking 4.5% below their level in mid-March. Payrolls in Victoria are tracking 6.7% below their level in mid-March well below the national average of -4.5%, having deteriorated by almost 2% since mid-June. With stage four restrictions now in effect, I anticipate further job losses across the state, particularly in vulnerable sectors such as hospitality and retail. Recovery won’t be possible until restrictions are eased.
The ANZ-Roy Morgan weekly consumer confidence index – a pointer to future retail spending – dropped 2.4% to its lowest level since late April. “Not surprisingly, confidence is weakest in Melbourne,” ANZ economist David Plank said. The downturn in confidence is now longer than the six weeks of continuous decline during the first wave in February and March. And the Westpac-Melbourne Institute Index of Consumer Sentiment fell 9.5% to 79.5 in August from 87.9 in July.
Australian wages growth saw wages rise just 0.2% in the June quarter 2020 and 1.8% through the year, according to figures released today by the Australian Bureau of Statistics (ABS). This was the lowest annual growth in wages in the 27-year history of the WPI. The June 2020 quarter was the first full period in which COVID-19 social and business restrictions were captured in the WPI. The June 2020 quarter rise was mainly in the public sector (0.6%). Private sector wage growth eased to 0.1% as businesses adjusted to changes in the Australian economy.
Australia’s biggest private employer group has warned Australia is now a two-speed economy and more jobs will be lost in Victoria’s critical retail sector if the dole is cut back before the critical Christmas trading season. Australian Retailers Association chief executive Paul Zahra has warned more retail jobs will go if there is a reduction in JobSeeker at the end of this year, with the coronavirus supplement worth $550-a-fortnight due to be cut back to $250 in September.
This supplement has effectively doubled the unemployment benefit and is given to 2.2 million people, including those on Youth Allowance. It is not guaranteed beyond December. The proportion of joblessness is also likely to rise above 10% by the end of the year due to the shutdowns in Melbourne to limit the spread of the virus. But the $325 billion sector’s lobby group boss warned reductions in spending on services and goods due to a reduction of government support could hit retail hard.
One in three Australian adults, or 6.3 million people, had received a special government handout by May, and close to half of all adult Tasmanians, a new analysis of household survey data by the Australian Bureau of Statistics shows. Adding to savings and paying household bills were the most commonly cited primary use for the stimulus payments, at 29% and 28% of respondents, respectively, the ABS report said.
The next most common main use of government support was to buy food and non-alcoholic drinks, at 12%. The Morrison government announced a series of emergency income support measures in March and April to help cushion the blow from the coronavirus pandemic and the associated shutdowns.
Among those measures was a $750 household payment, a cash flow boost for small and medium-sized businesses, and the JobKeeper wage subsidy program. Women were more likely to have received payments than men, at 37% versus 27%, the ABS reports showed. Around four in 10 Australians without a qualification beyond secondary schooling said they had received support, against a little over a quarter of those with a higher qualification.
The federal government has raised the prospect of spending more on income support if needed to deal with a second wave of the pandemic as Labor warns cuts to the dole would rip millions of dollars out of the retail sector. Finance Minister Mathias Cormann reaffirmed plans for the JobKeeker wage subsidy to start scaling back from September but left the door open for extensions to the scheme if the pandemic worsens.
Millions of Aussies scrambled to access their super early – but it could end up being a huge financial mistake. Under the Super Early Release Scheme, which was introduced to help Aussies through the coronavirus crisis, eligible Australians were able to grab $10,000 from their super last financial year and a further $10,000 in 2020-21 as a result of the coronavirus crisis.
But the ATO has recently announced a new pilot program which is auditing a select number of Aussies who have cashed out their super to discover who was actually eligible – and who wasn’t. H&R Block director of tax communications Mark Chapman said if a large number were found to have broken the rules, then it was highly likely the ATO would roll out the audit on a much larger scale – increasing the risk of being penalised. The ATO recently confirmed to NCA Newswire that fund members who lodged two applications for early withdrawals without meeting the scheme’s requirements could face separate financial penalties of $12,600 on each respective claim – meaning double-dippers could be stung by a maximum penalty of $25,200.
Finance and industry heavyweights including the big banks and major corporations are urging the federal government to invest in health, education, clean energy, and urban infrastructure to help the economy recover from the coronavirus pandemic.
A letter with 48 signatories was sent to the Prime Minister on Monday calling for “sustainable investments” in policies driving healthcare, affordable housing, public transport, and liveable cities, education, and low-emissions energy generation. The letter was organised by the United Nations affiliate Global Compact Network Australia, which said recovery policies should be consistent with the United Nations Sustainable Development Goals to which the federal government has committed on the international and domestic fronts.
Signatories to the letter to Mr. Morrison include ASFI, which has representatives from NAB and Westpac on its steering committee, plus Optus, SunRice, Nestle Australia, Konica Minolta Australia, IKEA Australia, World Vision, and The Chartered Accountants ANZ.
The ACCC gave an urgent interim authorisation to chicken processors so they can work together to reduce the impact of the COVID-19 pandemic and the Victorian stage four restrictions on the chicken meat industry. The ACCC said it had provided the conditional authorisation to Ingham’s, Turosi, Hazeldene’s Chicken Farm, and the Australian Chicken Meat Federation, which is the over-arching body for the chicken meat industry, to co-operate on a range of measures relating to their factories.
It is aimed at ensuring a sufficient supply of chickens and chicken meat, reducing the extent of any job losses, and managing the impact of stage four COVID-19 restrictions in Victoria on chicken producers and other parts of the supply chain. The authorisation will allow sharing or coordinating the use of processing capacity, essential staff, facilities, and products.
Around 25 professional Australian sports stars have banded together to form a new investment syndicate with the aim of dipping their toes into the start-up investment world and learning more about business along the way.
Those involved in the newly formed Athletic Ventures include NBA player Matthew Dellavedova, Australian cricketers Mitchell Starc and Ed Cowan, and Greater Western Sydney Giants AFL players Matt de Boer and Toby Greene. Athletic Ventures’ first investment – just over $500,000 in digital marketing company Eucalyptus – came following a group Zoom call in May.
Eucalyptus has worked with Koala Mattress, women’s health start-up Kin Fertility, and men’s health online service Pilot.com.au. Coincidentally, Australian cricketer, Steve Smith has made a fortune on paper through an early investment of $100,000 in Koala Mattress in 2015, with his stake valued at $13.7 million earlier this year. Australian NBA star Andrew Bogut is also a reasonably prolific investor in tech start-ups. Mr de Boer, who is now living, training, and playing at the Greater Western Sydney Giants’ AFL hub in Queensland, said the idea behind Athletic Ventures was to bring together athletes who have an interest in early-stage companies.
The tech company Atlassian has informed its employees that they are free to “work from home forever.” The Australian-bred tech company has usurped other tech companies like Google and Facebook who, amid the pandemic, recently declared staff can remain remote through at least the middle of 2021. “We will seek out amazing, diverse talent unbounded by the physical footprint of our offices,” Atlassian said in a blog post, contending that the move makes the company unencumbered by geographic and commuting limitations when seeking to source talent.
The nation’s largest miner, BHP, says Indigenous groups should have a greater say over projects endangering significant sites on their ancestral land following Rio Tinto’s destruction of 46,000-year-old rock shelters in Western Australia.
In a submission to a federal inquiry into the blasting of the Juukan Gorge site by rival Rio, BHP said heritage-protection laws covering mining operations in WA’s iron ore-rich Pilbara were weighted too far in favor of resources companies. BHP said it supported enshrining traditional owner consultation requirements for disturbing land into new state laws, and the introduction of rights for traditional owners to appeal decisions after they are granted.
This shortcoming has been raised as a focal point in the aftermath of the destruction of the Juukan Gorge rock shelters. After archaeological excavations found the site to be more significant than initially thought when the approval to destroy it was first granted, the traditional landowners, the Puutu Kunti Kurrama and Pinikura (PKKP) people, had no legislated right to appeal the decision.
And the profit reporting season is back. And COVID-19 has hammered some profits. Commonwealth Bank has revealed the damage of the coronavirus crisis, announcing an 11.3% drop in full-year cash profit to $7.3 billion as it ramped up provisions against loan losses.
Transurban earnings fell 6.4% to $1.88 billion due to the impact of COVID-19 on daily traffic. Transurban said the numbers of cars using its roads would remain “sensitive” to government restrictions as the tollroad group swung to a $111 million annual net loss after traffic fell due to COVID-19.
Sydney Airport will raise $2 billion in equity to stay liquid through the COVID-19 pandemic after reporting a $51.8 million interim loss.
GPT Group has reported a $519.1 million loss for the first half of the year, with a $711.3 million fall in property valuations weighing heavily on the group.
Seek Group has reported full-year earnings (EBITDA) of $414.9 million, down 9% in 2019, and a net loss of $111.7 million, which compared to a profit of $180.3 million last year.
Downer reported the financial year 2020 net loss of $155.7 million, compared to a profit of $276.3 million a year ago.
Online education group Janison reported a full-year net loss of $2.17 million on sales of $21.8 million.
SCA Property Group’s profit has fallen 22% through the 2020 financial year to $85.5 million, with a COVID-19 earnings impact of $20.5 million and a decrease in property valuations of $87.9 million taking a hit on the company.
Challenger swung to a full-year net loss of $416 million, from a profit of $307.8 million a year ago.
Coronado Global Resources has reported a net loss of $US123.2 million ($172.3 million) in the first half of the year, with earnings slumping more than 90% on the back of lower volumes and lower prices.
Fletcher Building announced a heavy full-year loss of NZ$196 million after bringing forward its results announcement by more than a week, with the bottomline decimated by one-offs of NZ$276 million because of mass redundancies and COVID-19 fall-out.
Dental business aggregator 1300 Smiles reported a net profit down 8% to $7.1 million on sales down 3% to $57.1 million.
NBN Co paid Telstra and Optus a record of $2.414 billion in the 2020 financial year, bringing the company’s total loss for the year before interest and tax to $3.778 billion.
Aurizon said the COVID-19 pandemic has had “no material impact” on the rail group’s operations after delivering a 28% rise in annual net profits to $605 million.
Kogan.com Gross sales grew more than 110% year-on-year, while gross profit grew more than 160% year-on-year lifting adjusted earnings above $10 million.
Adairs reported the financial year 2020 net profit after tax of $35.3 million, a rise of 19% from a year ago.
Reckon delivered a 1.5% increase in first-half profit to $5.3 million as the workflow solutions provider unveiled a merger of its legal group with US startup Zebraworks.
James Hardie Industries has guided to a full-year adjusted net operating profit of between $US330 million and $US390 million after delivering a flat first-quarter result. The building materials provider said fourth-quarter adjusted net operating profit after tax (NOPAT) was $US89.3 million, which was in line with the same time as last year.
Charter Hall Social Infrastructure REIT (CQE) has increased its profit by 25% to $85.9 million in the 2020 financial year.
Magellan Financial Group reported a 25% growth in management fees and a 3% drop in performance fees defying volatile markets to grow funds under management by 26%.
And that’s it for this week. And next week, I’ll be talking to Chris Balasz who runs Australian red meat company Provenir which has been granted a license by the Victorian Food Safety Authority PrimeSafe to operate a vehicle-based abattoir – a first for Victoria. 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.