Russia is ambling toward a major default on its foreign debt, a grim milestone that it has not seen since the Bolshevik Revolution more than a century ago

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

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 2022 and today’s date is Friday April 22.

First, I’ll be talking to Victoria Matterson, the founder of Australian sustainable fashion and beauty marketplace VictoryMax which has just launched their virtual fitting room in conjunction with technology company Reactive Reality. This free feature enables customers to create a virtual mannequin in their proportions in order to mix and match pieces to find an outfit they love.

And I’ll be talking to Indeed economist Callam Pickering about last week’s unemployment figures.

But now, let’s talk to Victoria Matterson.

Russia is ambling toward a major default on its foreign debt, a grim milestone that it has not seen since the Bolshevik Revolution more than a century ago and one that raises the prospect of years of legal wrangling and a global hunt by bondholders for Russian assets. The looming default is the result of sanctions that have immobilised about half of Russia’s $US640 billion of foreign currency reserves, straining the country’s ability to make bond repayments in the currency in which the debt was issued: US dollars. Girding for a default, Russia has already preemptively dismissed it as an “artificial” result of sanctions imposed by the United States and its allies, and it has threatened to contest such an outcome in court. The coming fight, which would probably pit Russia against big investors from around the world, raises murky questions over who gets to decide if a nation has actually defaulted in the rare case where sanctions have curbed a country’s ability to pay its debts. Russia does not appear likely to take the declaration of a default lightly. If that should occur, it would raise Russia’s cost of borrowing for years to come and effectively lock it out of international capital markets, weighing on an economy that is already expected to contract sharply this year. It would also be a stain on the economic stewardship of President Vladimir Putin that would underscore the costs Russia is incurring from its invasion of Ukraine. At stake for Russia, which has already suffered the abrupt rupture of decades of crucial business ties with the US, Europe and other nations, is one of the underpinnings of economic growth: the ability to smoothly borrow money from outside its borders. Since Russia’s predicament is so unusual, it remains something of an open question who is the ultimate arbiter of a sovereign debt default.

Federal Reserve Bank of St. Louis President James Bullard said the central bank needs to move quickly to raise interest rates to around 3.5% this year with multiple half-point hikes and that it shouldn’t rule out rate increases of 75 basis points. Fed Chair Jerome Powell has said that a 50 basis-point increase is possible at the Fed’s May 3-4 meeting. Comments by colleagues since then have hardened expectations they’ll make that move, as officials extend a hawkish pivot to curb the hottest inflation since 1981.

The International Monetary Fund and World Bank have cut their global growth forecasts because of the war in Ukraine.  The IMF warned that Russia’s invasion could lead to the fragmentation of the world economy into rival blocs. In a half-yearly update, the IMF said prospects had worsened “significantly” in the past three months as it reduced for 2022 from 4.4% to 3.6%. The World Bank cut its forecast for global economic expansion this year on Russia’s invasion of Ukraine and is planning to mobilise a funding package bigger than the COVID-19 response for nations to deal with various resulting and ongoing crises. The Washington-based institution has lowered its estimate for global growth in 2022 to 3.2% from a January prediction of 4.1%

Twitter shares gained after the social media company launched a so-called poison pill defence to thwart an unsolicited bid by Elon Musk to take the company private at $US54.20 a share. A securities filing on Monday (Tuesday AEST) confirmed the defence strategy Twitter outlined last week, which would allow the company to issue new stock that all shareholders except Musk would be able to buy at a discounted price. It imposes a “significant penalty” on any person or entity that would acquire more than 15% of the company without board approval, according to the filing. Musk currently owns just over 9% of Twitter shares. “The board adopted the rights agreement to protect stockholders from coercive or otherwise unfair takeover tactics,” according to the filing. Twitter is using the poison pill defence in order to buy time to come up with a plan that would be in the best interests of its shareholders. The company has also been fielding takeover interest from other parties, including technology-focused private equity firm Thoma Bravo. Meanwhile Musk may try to partner with Oracle, given that its co-founder Larry Ellison is on Tesla’s board and that Oracle has previously shown interest in taking a stake in TikTok, another popular social media company, according to Bloomberg Intelligence analysts. In a tweet on Monday, Musk, who is also chief executive officer of Tesla, said if his Twitter bid succeeds, board members would not be given a salary. Tesla pays its own directors an annual cash retainer of about $US20,000 plus certain additional fees, but they also each receive stock option grants every few years — meaning they stand to make tens of millions of dollars or more with Tesla’s stock price gains.

In Australia, the major parties have made almost $400 million in funding promises and allocations for dozens of local projects in a guerilla grassroots campaign in just the first week on the hustings. Despite heavy criticism of Prime Minister Scott Morrison over pork barrelling, tracking of candidate promises made on social media channels, but not accompanied by official press releases, shows the Coalition and Labor have been unbowed with a series of under-the-radar commitments across 25 seats. Since the election was called on April 10, the government has announced at least $110 million in subterranean promises. Labor has made $130 million in similar commitments but this number swells to $276 million when quickly matched commitments for government announcements are included. These pledges range from as little as $45,000 to repair a local cenotaph in the Tasmanian seat of Lyons – announced by the PM himself – through to $107.5 million from the opposition matching a government commitment to bolster Cairns’ water supply. In one example, Labor attempted to play spoiler and announced it would spend $40 million to upgrade roads in the key marginal seat of Gilmore, hours after Mr Morrison launched his re-election campaign with the same commitment in the electorate.

The Morrison government will double the fines that can be levied against militant construction unions and individuals, drawing a sharp contrast with Labor’s promise to abolish the construction industry watchdog if elected at the May 21 poll. Scott Morrison plans to double the maximum fines courts can impose under Building and Construction Industry Act. The new, maximum fines would be $444,000 for a union and $88,800 for individuals convicted of serious, deliberate and repeated breaches of the law in the construction industry. Such offences would include freedom of association, unlawful picketing, unlawful industrial action and coercion.

Market economists have strengthened their expectations the Reserve Bank will hike its cash rate in June, following the release of board minutes that conceded higher inflation and wages have brought forward the likely timing for a cut. ANZ head of Australian economics David Plank said the case for a rate hike in June rather than May was reinforced by minutes of the bank’s April 5 board meeting. The Reserve Bank says an expected jump in underlying inflation and looming wage pressures have brought forward the likely timing of the first increase in interest rates. In the minutes of the RBA’s April 5 board meeting, published on Tuesday, the central bank said that, “for some time, the Board had been communicating that it wanted to see evidence that inflation is sustainably within the 2 to 3% target range before increasing interest rates”. After its board meeting a fortnight ago, the RBA removed the word “patient” from its statement on the monetary policy decision, marking a key change in the central bank’s forward guidance on its 0.1% cash rate. The March quarter Consumer Price Index will be published on April 27, with CBA economists expecting the headline inflation rate to rise from December’s 3.5% to 4.3%.

Aged care workers across the country have voted to take industrial action over acute staff shortages and continuing low rates of pay, and their union says the mood for strike action prior to the election is “very strong”. The United Workers Union says members at five aged care providers collectively employing 7,000 workers have voted overwhelmingly to take industrial action, with three more ballots due in the next week. Workers at major providers Bluecare and Southern Cross Care have joined Anglicare, Hall and Prior, and Churches of Christ to endorse industrial action, including strikes, ceasing paperwork, speaking to the media and clients’ families, and wearing badges. UWU aged care director Carolyn Smith says the ballot results have weighed clearly in favour of industrial action. Most votes were 90% or above in support of action. One smaller provider voted 100% in favour.

The nation’s major food and grocery manufacturers say they are facing increases in costs of up to 700% since the pandemic began, led by surges in shipping and freight prices, the cost of warehouse space, a sustained shortage of transport pallets and keeping workplaces Covid-safe, and have warned some of that will flow through to the price shoppers pay at the checkout. The cost of implementing Covid safety requirements, sourcing ingredients, the global shortage of wooden pallets used to ship finished goods and skyrocketing freight costs are all playing into food inflation across the supermarket aisle.   It comes at a time when inflation is surging across Australia, and in many countries overseas, as the cost of everyday items that typically fill a shopping basket rises and squeezes household budgets. Australian Food and Grocery Council chief executive Tanya Barden said food and grocery manufacturers were facing rising cost pressures and many had absorbed these their own businesses. However, these costs would eventually have to be passed on.

Uncleared toilet tanks on planes and no worker immediately on hand to pump out the waste. Broken seats, lost luggage, two-hour, three-hour, four-hour delays. These are not the woes of a budget airline, rather this is the situation for customers of Australia’s premier airline Qantas as people flocked back to airports amid a post-COVID travel surge on the Easter weekend. Qantas faced severe criticism from its customers after hundreds of thousands of Australians arrived at airports around the country only to face significant delays, cancelled flights and a type of disorganisation that is usually associated with unforeseen weather or political events – not the Easter holidays. Qantas was even forced to send SMS messages to its pilots in fear they would not be able to staff three international flights. Qantas CEO Alan Joyce defended the delays, saying it was because of staff shortages due to COVID and “customers not being match fit for travel”.

The Labor Party has spent nearly 45% more than the Coalition on advertising on Facebook and Instagram as the opposition seeks to avoid a repeat of the 2019 election, when its defeat was partly blamed on a failure to use digital advertising to speak to voters directly. Labor has accounted for 50.4%, or $278,000, of political ad spend on Facebook and Instagram, compared with the Coalition’s 27.94%, or $156,000, according to data drawn from Meta’s ad library. The library contains data on spending on Meta’s social media platforms Facebook and Instagram, and was analysed by the University of Queensland. Since the budget was handed down on March 29, Labor has on average spent $14,631 a day on advertising on Facebook and Instagram compared with the Coalition’s $8210 a day. Independents are spending an average of $2740 a day on Facebook and Instagram, while the Greens are spending an average of $1123 a day and the United Australia Party is spending $861 on average a day. University of Queensland  political science senior lecturer Glenn Kefford said Labor’s high spend on Facebook and Instagram came out of its internal review into why it lost the 2019 election. This pointed to the party’s digital campaign as lacking, noting it had been used to amplify the content of other aspects of the campaign rather than speaking to voters directly.

News Corp Australia is finalising plans to launch a bookmaking outfit this year in partnership with a consortium linked to gambling entrepreneur Matthew Tripp, and has picked the former boss of BetEasy to serve as its chief executive. Rupert Murdoch’s news and media giant has been working on a local wagering strategy for more than a year, which has involved negotiating with several potential wagering industry joint venture partners. That search has now finished, according to several well-placed sources, who said News Corp had settled on an equity partnership with a group of investors associated with Australian online wagering pioneer Matt Tripp, and the Las Vegas-based online gambling investment fund Tekkorp. The launch of a new bookmaker with the backing of News Corp’s enormous media reach is set to shake up Australia’s wagering industry, which has consolidated in recent years. Major digital players Sportsbet and BetEasy merged in 2019 while the ASX listed incumbent Tabcorp  has continued to lose market share to online rivals. Tripp is one of Australia’s most successful bookmakers, having built Sportsbet into the country’s second largest bookie behind the TAB and then establishing BetEasy in 2014 before selling it to Canadian gambling giant The Stars Group.

Big four consultancy Deloitte is suing one of its directors for allegedly claiming at least $3 million in “sham” work expenses from the firm and clients to fund his lavish lifestyle in “an elaborate and long-running fraudulent scheme”. According to documents filed with the Federal Court, former restructuring director Paul Quill made thousands of fraudulent expense claims from 2016 to 2022 to buy at least 100 artworks and sculptures, designer furniture, luxury clothes and watches, and a hot tub. The case prompted chief executive Adam Powick to write to partners last week, warning them that “integrity [was] one of our core leadership values at Deloitte” and the firm had “zero tolerance” for any conduct breaching this. According to Deloitte’s submissions, Mr Quill claimed work expenses from Deloitte for transactions made on his work credit card, which were in reality personal costs including the purchase of “fine art and luxury goods”. He then allegedly submitted sham invoices to the firm by manipulating genuine invoices from third-party suppliers to look like they were for work-related expenses, backing some up with fake emails claiming to be from a Deloitte partner. Vendors listed in Mr Quill’s 2600 claims worth $3.4 million from March 2016 to February 2022 – of which Deloitte said just $300,000 was legitimate – included art dealers, galleries, Miele and Louis Vuitton. These included a $37,900 payment to Sullivan+Strumpf Fine Art and $26,000 and $34,000 to a Paypal account, which were all claimed as “search and filing fees”. Just this year, Mr Quill was allegedly reimbursed $29,000 paid to a mystery recipient named “S&S”, despite not allocating any expense category to his claim.

ExxonMobil plans to develop a major carbon capture and storage project offshore on Victoria’s Gippsland Basin, the latest push by the oil and gas industry to boost its green credentials.  The US energy giant is undertaking early engineering and design studies for a potential facility that can capture 2 million tonnes a year of carbon dioxide with start up expected in 2025. The scheme would use existing infrastructure to store carbon in the depleted Bream field off the coast of Victoria’s Gippsland Basin where Exxon already owns and operates a string of major oil and gas projects. Exxon said it was in discussions with local industries interested in accessing the hub, known as the South East Australian carbon capture and storage facility. The potential carbon capture hub adds to gradual momentum from industry in backing the technology which has suffered from high costs and problems scaling projects to a sufficient level to make a dent in high emissions from the oil and gas sector.

And that’s it for this week. And next week, I’ll be talking Matt Keon, the CEO of GenieUs, He is building the most complete genomic map of the body to deliver faster and more accurate diagnosis and treatment of Neurodegenerative diseases in weeks, not years and he’s fuelling the next generation of pharmaceutical discovery for neurodegenerative diseases through partnerships with universities in Australia and abroad.

And I’ll be talking to economist Saul Eslake about the big economic issues in the Australian election.

In the meantime you can catch me on Facebook, Twitter Instagram and 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.