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 twenty-five in our series for 2019 and today’s date is Friday July 19.
First I talk to Gerry Comninos, CEO of Hydra Light which is revolutionising the portable power industry with its “HydraCell” fuel cell technology, a fuel cell that generates its own power when activated by dipping it in water.
Hydra Light’s products are aimed at reducing the waste associated with single-use batteries and raising awareness of alternative energy solutions. The Company has developed technology that can harness the electrons liberated from a magnesium anode when immersed in water into a useable direct current (DC) power.
The Hydra Light system is a revolutionary technology that creates power using a chemical reaction between metal and water. The HydraCell uses this reaction to efficiently capture electrons released during this process with the water acting as a catalyst to create this reaction once it comes into contact with the HydraCell.
And then I’ll be talking to economist Nicholas Gruen looking at how to make government decision-making and pilot programs making more accountable.
But first, let’s talk to Gerry Comninos.
China released second-quarter figures on Monday showing that its economy slowed to 6.2% — the weakest rate in at least 27 years, as the country’s trade war with the U.S. took its toll. That was in line with analysts polled by Reuters. The second-quarter growth was the country’s slowest pace since the first quarter of 1992, the earliest quarterly data on record, according to Reuters. Clearly, China’s months-long trade dispute with the US is weighing on its economy.
Scott Morrison’s “$800 pension bonus” has been branded a slap in the face for retirees after it emerged only seniors who don’t own a family home have any chance of securing the full amount. The changes to pensioners’ deeming rates used to determine investment income for the asset test was billed as a “pension bonus” worth up to $804 for singles and $1053 for couples.
However, the vast majority of aged pensioners – 75%– will get nothing from the changes to the deeming rate because they don’t have investments in super, shares or bank deposits. Only seniors who do not own a family home will qualify for the maximum amount of $804 or $30 a fortnight. National Seniors advocate Ian Henschke said the outcome was far less than retirees had hoped for and won’t help women who are less likely to have super or invest in the stock market.
“We will campaign on this all the way to the next election,” he warned. It will cost $600 million over the next four years but is substantially less than the cost of reducing the deeming rate to realign it closer with the cash interest rate as it was in the Howard government years. The decision to cut the headline “deeming” rate from 3.25% to 3% falls short of the demands from retiree groups in recent weeks, as the government rules out a more generous change so as to protect the budget surplus.
Wages for certain mining jobs have soared beyond boom-time levels and some workers will enjoy an extended period of premium wages amid a quadruple squeeze on skills. An east coast infrastructure boom, tighter rules on foreign labour and low enrolments in university mining courses have coincided with a resurgence in mining investment, forcing big miners to pay more for engineers, geologists and technicians.
Soaring wages in the mining sector come amid weak wages growth of 2.3% per year in the broader economy. A study of remuneration paid to 35,000 mineworkers by advisory firm BDO Remsmart found at least 12 mining jobs were now commanding higher wages than at the peak of the last resources boom. The list includes senior mine engineers, heavy diesel fitters, senior geologists, electricians, and excavator drivers, while maintenance superintendents were among the best paid, with median total remuneration for the latter job above $200,000 per year including superannuation.
The nation’s banks and superannuation funds will face tough new controls including extraordinary powers to veto top executives after a review of the peak financial regulator slammed its “culture of conformity”. The review, led by former competition regulator Graeme Samuel, urged APRA to take a more forceful and public approach to calling out bad behaviour rather than relying on “behind the scenes” talks with financial giants.
The review found problems with the regulator’s “conformist” culture, detected little understanding of cyber risks or fintechs and called out a failure to stand up for superannuation fund members. The prudential regulator was also skewered for preferring to deal with financial institutions behind-the-scenes. It was urged to punish banks, insurers and super funds more publicly for their failures. The review recommended the immediate launch of multiple CBA-style inquiries.
“The main conclusion of this review is that APRA’s internal culture and regulatory approach need to change,” the report’s executive summary says. The findings clear the way for drastic new laws and a more “assertive” approach to regulating banks, insurance companies, and super funds after a string of scandals which inflicted serious harm on consumers…
AMP has said the $3.3 billion sale of its life insurance arm to a foreign buyer was unlikely to proceed as planned and that it had scrapped its interim dividend. AMP said in a statement on Monday morning that the sale of its wealth protection business to London-based Resolution Life is “unlikely to proceed in its current form” because it is unlikely to get approval from New Zealand’s central bank.
Resolution Life said it had been told the Reserve Bank of New Zealand would not consider the required change of control application unless the company altered its current branch structure to include separate, ringfenced assets “for the benefit of New Zealand policyholders”. It said since the transaction was “unlikely to proceed in its current form”, AMP was now working with Resolution Life to “determine whether there is a solution that addresses policyholder interests, regulatory requirements and provides certainty of execution”.
In more bad news for shareholders, still reeling from potential criminal misconduct revealed in last year’s banking royal commission, AMP said its dividend for the first half of 2019 would not be paid given the uncertainty surrounding the AMP Life sale. AMP said its board would review any revised transaction proposed for the sale of AMP Life to determine if it was in the best interests of policyholders, the company and shareholders.
Australia’s defence industry has a problem: Only one-in-five employees at the country’s largest 20 military firms are female, and only one-in-seven managerial roles are held by women. These findings are from a report by Canberra-based consultancy Rapid Context, which also found that women were leaving the industry at a far higher rate than their male colleagues. Sexism, sexual harassment, and gender bias were listed as some of the reasons for the imbalance
Elders is set to enter the farming’s wholesale battlefield with the acquisition of Australian Independent Rural Retailers. The acquisition gives Elders a major footprint in the wholesale supply of farm products and positions it to compete more strongly with Canadian fertiliser giant Nutrien as it moves to complete a $469 million takeover of Ruralco. The Australian Independent Rural Retailers board said that it had recommended the cash and scrip offer which values it at $187 million.
Australia’s health care system has become increasingly unfair, costly and confusing, according to a new report, which has declared the Federal Government is facing an impending crisis which can only be averted by urgent reform. The report forecasts an ‘exodus’ of young and healthy people from the private health system.
Private HealthCare Australia says insurers are struggling to cope with older, sicker patients The Grattan Institute says the Government needs to consider industry reforms within 18 months. The Grattan Institute report paints a bleak picture of the private health system, saying it has become “riddled with inconsistencies and perverse incentives”. It said if current trends continue, Australia will find itself in a “death spiral”, where young and healthy people abandon private health cover, leaving a larger proportion of unhealthier, older and expensive users. That will keep forcing premiums up, leading to a further exodus of healthy users, and placing insurers under immense pressure to contain costs.
A newly-released Treasury report points the finger at workers for Australia’s persistently low wage growth. Australian workers are increasingly reluctant to change jobs and remain anchored in “unproductive companies,” Treasury claims. Because increased job switching “leads to higher wage growth,” only structural reforms designed to embolden workers to transfer between jobs will make a serious dent on wages and move the dial on innovation, the report asserts. Annual wage growth is currently 2.3%; it was 4% just prior to the 2008 financial crisis.
Two out of five chief executives plan to keep pay rises flat or to rises of 2%, below the already-sluggish rate of wage growth, according to a survey of 250 chief executives. As the Morrison government and Reserve Bank of Australia grapple with how to bolster the subdued 2.3% wage growth rate, the survey finds that 30% of chief executives are also investing in automation to reduce labour costs. The Executive Connection that conducts the survey of 251 chief executives found 37% of chief executives plan to keep wages steady or adopt minimal increases of 0-2%, One-third of CEOs are expecting to pay wage rises of 2-3%. Only 14% said they would increase wages by 4% or more.
The owners of Gold Coast Airport will pay lower interest rates on a $370 million expansion of its terminals if it meets annual carbon reduction targets. In an Australian first for a sustainability-linked loan, a $100 million debt facility from Westpac and Commonwealth Bank to Gold Coast Airport is directly linked to a reduction in its carbon emissions footprint.
It is a further sign of other non-energy industries starting to pull their weight to meet carbon reduction targets. While green bonds have been a growth market for companies who want to boost their environmental credibility in recent years, the development of the sustainability-linked loans – where companies adhere to strict environment targets – is expected to become even more popular and has already grown to $1 billion worldwide.
Queensland Airports Ltd, which owns Gold Coast, Townsville, Mt Isa, and Longreach airports, has signed up to the $100 million sustainability-linked loans as part of the redevelopment of the Gold Coast airport. It will achieve discounted interest rates on the loan if it meets its goal to reduce carbon emissions by 15% over the next three years before the new terminal opens in 2021.
Adani demanded the names of all federal agency scientists reviewing its contentious groundwater plans so it could check if they were “anti-coal” activists, emails obtained under freedom of information show. Emails show Adani gave the federal environment department five days to provide the names of people from the CSIRO and Geoscience Australia involved in the review Adani says it wrote to the department to request “assurance that individuals involved in any review processes were independent” The revelation has alarmed CSIRO staff representatives, who said it indicated Adani had “a deliberate strategy” to pressure scientists by searching for personal information it could use to try to “discredit their work”.
The Queensland government has commenced legal proceedings against Adani Mining over claims it provided false or misleading information in an annual return for its Carmichael Mine. The Department of Environment and Science has started the prosecution proceedings against the Indian mining company under the Environmental Protection Act in relation to information in its 2017/2018 annual return for the mine.
“The annual return requires information about the planned and actual disturbance of land at the mine,” a spokesman for the department said in a statement on Tuesday. “The department alleges that Adani’s annual return contained false and misleading information about the disturbance already undertaken at the mine during the annual return period.” The matter is listed for mention at the Brisbane Magistrates Court on August 16. Adani says the department’s prosecution is over an “administrative error” which was self-reported in September 2018.
And that’s it for this week. And next week, I’ll be talking to Philip Morris Australia Managing Director Tammy Chan looking at how the company has closed the pay gap between male and female employees and embraced gender equality. It’s a model for other businesses.
And I’ll be talking to Indeed economist Callum Pickering, looking at Australia’s latest job market figures.
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. Have a great week, take care, be good and looking forward to bringing you Talking Business next week.