A last minute settlement has been reached in the defamation lawsuit against Fox News, sparing Murdoch a damaging trial. The settlement comes after the case looked quite horrific from Fox News’ standpoint.
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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 12 in our series for 2023 and today’s date is Friday April 21.
First, I’ll be talking to Mark Fazio, the co-CEO of MATE, an independently owned, Sydney based challenger telco provider that is taking on the big players in the industry through great customer service and exceptional value for their customers. And I’ll be talking to Indeed economist Callam Pickering about the latest unemployment figures.
But now, let’s talk to Mark Fazio
So what’s happening in the news?
China will be the top contributor to global growth over the next five years, with its share set to be double that of the US, according to the International Monetary Fund. The nation’s slice of global gross domestic product expansion is expected to represent 22.6% of total world growth through 2028, according to Bloomberg calculations using data the fund released in its World Economic Outlook released last week. India follows at 12.9%, while the US will contribute 11.3%.
Fox settled a defamation lawsuit by Dominion Voting Systems for $US787.5 million ($1.2 billion), averting a high-profile trial putting one of the world’s top media companies in the crosshairs over its coverage of false vote-rigging claims in the 2020 US election, Sparing Rupert Murdoch a damaging trial. The settlement was announced by Fox, Dominion and the judge in the case at the 11th hour, with a 12-person jury selected on Tuesday morning and the case poised to kick off with opening statements on Tuesday afternoon. Dominion had sought $US1.6 billion in damages in the lawsuit filed in 2021. Judge Eric Davis from the Delaware Superior Court had ordered that the Dominion Voting should open its $US1.6 billion ($A2.4 billion) defamation case against Fox News over Fox News broadcasting wild claims that secret algorithms in Dominion’s voting machines overturned the 2020 US presidential election. This was the biggest threat to Murdoch’s Empire since the hacking scandal in 2011. But for Murdoch, it was even worse than the hacking scandal. Unlike the UK hacking scandal, where News executives were blamed, records show Murdoch was directly responsible for Fox News management, at least on paper. On Easter Sunday, after arguing for weeks that Murdoch as chairman of parent company Fox Corp could not be called to testify in the trial, Fox lawyers revealed that since 2019 Rupert was listed in SEC filings as an officer of Fox News, the executive chairman. Although a Fox News lawyer called this an “honorific” post, it puts Murdoch in the hot seat because his disastrous two-day deposition in January makes him the man Dominion most want to question. The case is riveting, with the raw inner workings of Murdoch’s media empire on display. It’s all there in the emails, texts and depositions – Murdoch discussing (or instructing) when Fox News will call the election, what his newspapers should be saying, editing editorials, reassuring Fox Corp directors. In a withering summary motion judgment on March 31, Judge Eric Davis ruled out three of the four defences that Fox is claiming. Fox News cannot say its claims against Dominion were protected as neutral reporting, or fair reporting of a court case, or merely as opinion, Davis ruled. The key issues remaining for the jury are whether Fox’s reporting was made with actual malice, or reckless disregard for the truth. That’s hard to prove in American law. But a sobering line-up of senior US lawyers – News Corp’s The Wall Street Journal alone quoted five of them – say that Dominion has a strong shot at winning. This case is important because it leave News Corp seriously damaged.
Business collapses hit a 3½-year high last month, to jump back above pre-pandemic trends for the first time, as rising interest rates and a cooling economy hurt corporate Australia. Insolvency lawyers say the end of the cheap money era, banks becoming less forgiving of distressed corporate borrowers and the Australian Taxation Office cracking down on company directors for unpaid tax debt are driving more businesses to the wall. The corporate regulator released new insolvency data on Tuesday, showing that 831 companies had administrators appointed last month, compared with an average of 720 for the same month between the 2016-17 and 2018-2019 financial years. Company failures have now risen sharply in construction (1601 administrations), accommodation and food services (808), retail trade (373) and manufacturing (347) so far this financial year.. These four industries combined made up about half the 5689 corporate collapses recorded in the first nine months to March 31, according to an analysis of the Australian Securities and Investments Commission data.
The gas industry is bracing for the threat of a fifth market intervention since December as Treasurer Jim Chalmers warns Australians may not be getting a reasonable return from exports of their natural resources and weighs raising taxes on surging profits. Chalmers said on Monday he had received a report from Treasury on the settings of the $2 billion-a-year Petroleum Resources Rent Tax (PRRT) that applies to offshore oil and gas projects. While the government is yet to finalise its position, Chalmers declared there was an open question over whether the scheme was delivering the revenue that the community expected. The PRRT is levied on offshore oil or gas projects at a rate of 40% of their taxable profit, but this is applied after generous deductions for capital investments, raising questions over the quantum of revenue it raised compared with the billions reaped in profits by gas giants including Woodside, Chevron and Santos. LNG, one of Australia’s most valuable exports, is forecast to hit $91 billion in export earnings this financial year – three times more than in 2020-21 – as Russia’s invasion of Ukraine pushed fossil fuel prices to record highs. The 2022-23 federal budget papers show the PRRT is expected to raise $2.6 billion this financial year, but will thereafter decline steadily over the next four years to about $2 billion by 2025-26. Energy analysts at investment bank Macquarie on Monday told clients they expected PRRT reforms to be announced “around the May budget”.
The National Disability Insurance Scheme has “lost its way” and needs far greater reform than just weeding out crooks to ensure it remains sustainable, the Albanese government concedes. NDIS Minister Bill Shorten, who helped establish the scheme when Labor was last in government, will used a pre-budget speech to the National Press Club to assure those in need that the scheme is “here to stay”– but badly in need of a “reboot”. Mr Shorten spoke of unethical service providers using the disabled as “cash cows” to line their own pockets and damage the reputation of the entire industry. In addition, it is understood that broader structural changes being contemplated include tying funding to achieving results for participants, rather than the volume of services provided, and moving participants to longer-term plans rather than annual plans which rise in cost each year. The NDIS long ago conceded its original forecast maximum annual price tag of about $25 billion and will cost the budget $35.5 billion this financial year. Unchecked, that will reach almost $90 billion a year by 2032. About 585,500 people are NDIS participants, including 10% of boys aged between five and seven. About 6000 people are joining every month. Treasurer Jim Chalmers on debt as the fastest growing demand on the budget.
An overhaul of Australia’s capital gains tax system could improve the budget by $5 billion annually, with leading economists throwing their weight behind a return to indexing investment returns to inflation as part of a broader package of tax reform. Treasurer Jim Chalmers has flagged a “public conversation” about the sustainability of Australia’s current fiscal settings, including $250 billion of annual tax concessions, as the Albanese government tries to plug a $50 billion structural budget deficit. Labor made its first attempt in February, saying it would levy higher taxes on superannuation accounts with more than $3 million, but it has not identified any specific areas for further reform. Australia’s 50% capital gains tax discount for investors was “ripe for reform”, said Grattan Institute chief executive Danielle Wood. One of the main reasons for the discount – but not the only one – is so that investors are not taxed for the component of their capital gain that is due to inflation.
At least 300,000 households may currently be experiencing negative cash flow due to unnecessary rate rises, according to a hard-hitting Deloitte Access Economics report. In its latest Business Outlook report, the independent economics consultancy warned that the Reserve Bank had put Australia’s economy on a knife’s edge. After 10 rate rises since last year, the RBA is tempting fate, and Australia is now facing the weakest rate of economic growth outside of the pandemic since the recession of the early 1990s. With households hurting, dwelling construction in the doldrums and the global environment shaky, Deloitte Access Economics has revised down expectations for Australian economic growth this year and next to just 1.5% and 1.2%, respectively, from 1.7% and 1.6% previously. Deloitte is forecasting the unemployment rate to grow to 4.1% next financial year and 4.6% the year after. Headline inflation is tipped to fall from 7.2% this financial year to 4.2% in 2023-24 and 2.6% the year after.
Australians lost a record $3.1 billion to scams in 2022, as government, law enforcement and the private sector look to improve collaborative efforts to support the community in the fight against scams, according to the latest Targeting Scams reportt from the competition watchdog, the ACCC. The total combined losses of $3 billion-plus reported to ScamWatch, ReportCyber, IDCARE, Australian Financial Crimes Exchange (AFCX) and government agencies, come as the ACCC’s Scamwatch service reports it received 239,237 scam reports last year – a 16.5% drop on the number of reports received in 2021. However financial losses reported to Scamwatch in 2022 totalled more than $569 million, an 80% increase compared to losses reported in the previous year. The Australian Competition and Consumer Commission says that despite fewer reports to Scamwatch, the losses experienced by each victim rose by more than 50% last year, to an average of almost $20,000. This is due, in part, to scammers using new technology to lure and deceive victims.
Business lending is set to go electric at Commonwealth Bank, with the nation’s biggest financier aiming to grow its business bank loan book with the launch of a green offering. CBA will offer business customers cheaper loans for electric vehicles and equipment, charging and storage stations, renewable energy such as wind and solar, and hydrogen powered machinery. It says the loans will finance for electric and hydrogen vehicles at a 1% discount to the standard rate, while other qualifying assets would merit a 0.5% cut to borrowing rates. Vehicle loans will be limited to $250,000. The launch of the green asset financing program comes in the wake of several moves by CBA to offer green lending options. The bank launched a green home loan last year, soon followed by a home improvement loan allowing customers to borrow to fund more energy-efficient residential properties.
The Climate Change Authority has recommended a far-reaching series of initiatives for scaling up and accelerating Australia’s approach to the capture and storage of carbon, known as sequestration. It points to estimates from the Intergovernmental Panel on Climate Change that to achieve a 50% chance of limiting global warming to below 1.5C, about six billion tonnes of CO2 will have to be removed globally per year by 2050, and about 14 billion tonnes per year by 2100. While Australia has existing policies and institutions to incentivise carbon capture, the climate body says new approaches with industry need to be found to ensure enough investment flows to technology and new projects. This could see the federal government’s $10bn green bank and the Australian Renewable Energy Agency being given expanded roles to turbocharge the nation’s carbon storage industry as pressure grows for deeper emissions cuts to hit a net zero goal by 2050. Carbon capture and storage in particular has been put forward as a technology fix to help Australia meet its emissions goals and part of a broader industry drive to hit net zero by 2050. However, big operators like Santos have previously warned Australia is missing an opportunity to create a major carbon capture and storage industry and called on governments to prioritise the technology. The Climate Change Authority has also pushed for changes to give the industry a boost. “Investment in approaches like CCUS (carbon capture, utilisation and storage) with high up-front costs need to be de-risked. Governments should explore risk-sharing approaches – for example, carbon capture and storage hubs – including opportunities to coinvest in subsurface basin analyses for geological sequestration both on- and offshore, and keystone infrastructure for storage and transport,” the report says.
Coal exports through Newcastle had the slowest start to the year since at least 2019 as wet weather and labour shortages hampered production. Figures released by the port – Australia’s largest thermal coal facility – showed 31.8 million mass tonnes was shipped in the first three months of the year, down 10% on the same period last year and 18% lower than the first quarter of 2019. The softer than expected start to the year follows the disclosure from Whitehaven Coal that production at its Maules Creek mine in NSW would be lower than first forecast. Additional export data will be released to investors in the next fortnight as major coal producers release quarterly production figures. Yancoal is due to report on Wednesday, followed by BHP and Whitehaven on Friday. Glencore will report its production numbers the following week. Last week, Whitehaven said ongoing difficulties attracting labour to its Maules Creek mine, a spate of poor weather, and a complicated transition to automated trucks had forced a production downgrade for the year. Whitehaven lowered its production guidance for the 2023 financial year to range between 18 million and 19.3 million tonnes, down from a range of 19 million to 20.4 million tonnes.
Australians have cut back on online shopping as high interest rates and cost of living pressures batter household budgets, new data shows. Australian fintech Airwallex’s first digital economy index shows that turnover at Australian online retailers has fallen by $124 million over the past 12 months, driven by fewer purchases of discretionary products like clothes and fashion products. E-commerce spending fell by 2.5% in the March quarter to be 12.1% lower over the year, the payments platform estimates. The data is based on a representative sample of 1000 Airwallex business customers. The figures are broadly consistent with official trade data from the Australian Bureau of Statistics (ABS), which show that online retail turnover remains below the peaks reached in September 2021, toward the end of the delta lockdowns. The ABS estimates that Australians spent $3.9 billion in February at online retail outlets, compared to $4.3 billion in September 2021. Given both the population and the price of retail products increased since September 2021, the fact that the total value of sales has not grown implies households are buying fewer things.
The federal government is considering forcing streaming giants Netflix, Paramount and Amazon to spend up to 20% of the money they make locally on new Australian programs, but investment in sports or buying local films or programs will not count towards any new quotas. Streamers will be heavily incentivised to create Australian children’s programs and documentaries under a newly formed national cultural policy, which is being used as a way to ensure local stories continue to be produced. The government believes its scheme could deliver between $132 million and $528 million in annual local content investment by 2026, based on predictions from Ampere Analysis that are dependent on the regulatory model it ultimately chooses. A confidential stakeholder consultation paper shows the government is actively considering five ways to make global streaming giants create local programs, including a model that requires streaming services to dedicate 20% of annual gross subscription revenue to Australian drama, documentaries and children’s programs. It is also considering proposals with content obligations of between 5% and 11%, all of which include incentives to encourage production in “at-risk genres”: children’s content and documentaries. However, the models do not count investment in sports and mostly ignore the acquisition of existing local programs or films as ways to meet the requirements of the scheme. Streaming giants have so far operated without regulation in Australia (unlike the commercial free-to-air broadcasters and Foxtel), meaning they are under no obligation to produce or even carry Australian content. While they do invest in local programs and in some cases have spent millions on sports rights deals, they are not required to do so by law. By contrast, the European Union requires 30% of titles in the large streamers’ libraries to be from European countries.
Temu is a bargain lover’s paradise – a cut-price online marketplace offering everything from wireless earbuds to socket wrenches and make-up brushes that aims to unseat Big W and K Mart. It became the most downloaded app in the US, even topping Amazon.com, and now has its sights on launching in Australia, with the aim of disrupting discount retailers. Temu – which stands for Team Up, Price Down – is a subsidiary of Chinese backed PDD Holdings, which is listed on the NASDAQ. PDD also owns China-based Pinduoduo, a social e-commerce platform similar to Groupon. It could become the next big disrupter to an already crowded marketplace and threaten the dominance of discount retailers such as Kmart, Big W and Target – but only if it gains enough scale. Temu has had a big lift in traffic since its March Australian launch, with a six-fold increase in month-on-month hits to its website to about 280,000, according to SimilarWeb. Amazon is getting over 45 million hits a month, while Catch.com gets nearly 8 million. Temu, which did not respond to emails, will need to work at growing traffic, given it is known by few consumers. In Australia, it is offering free shipping on all orders and free returns within 90 days, as it looks to gain an early following. Products are shipped directly from factories or warehouses in China to the consumer. Craig Woolford, MST Marquee’s head of consumer research, said the marketplace will be one to watch, and could present a challenge to the discount department stores as well as Wesfarmer-backed Catch, Woolworths-owned MyDeal and Kogan.
And that’s it for this week. And next week, I’ll be talking to Tammy Kassiou, founder and chair of Philotimo which is an international business operating in Timor-Leste which runs IMS – International Mobility Solutions, a job placement organisatio and ISAT – Industry Safety Assessment and Training, a training organisation. And I’ll be talking to AMP Capital chief economist Shane Oliver.
In the meantime you can catch me on Facebook, Twitter, Instagram, LinkedIn and YouTube. And if you want leave a comment. For the most exclusive access to leading economists and business leaders from around the world, subscribe to Talking Business on the Apple podcast store or on my website leongettler.com.
If you want to contact me, email me at [email protected]. I answer all emails.
Wishing you all a safe and healthy week. And looking forward to bringing you Talking Business next week