Australia’s richest person Gina Rinehart committed “egregious fraud” and then lied about it, a trial over billions of dollars in iron ore riches has been told.
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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 29 in our series for 2023 and today’s date is Friday August 18.
First, I’ll be talking to Rohan Widdison, the managing director of New Laboratories. We’ll be talking about supply chain issues.
And I’ll be talking to AMP Capital chief economist Shane Oliver.
But first, let’s talk to Rohan Widdison.
So what’s happening in the news?
The Russian rouble has fallen to its lowest value in 16 months, falling past 100 per US dollar. The decline comes as pressure grows on the Russian economy, with imports rising faster than exports and military spending growing for the Ukraine war. Russia has been targeted with sanctions by Western countries following its invasion of Ukraine in February 2022. The rouble plummeted after war first broke out,but was bolstered by capital controls and oil and gas exports. It has fluctuated in value since the war,but has lost about a quarter of its value overall against the dollar since Ukraine was invaded. It has fluctuated in value since the war,but has lost about a quarter of its value overall against the dollar since Ukraine was invaded. Earlier on Monday, the rouble was 101.04 per US dollar. The more roubles per dollar means the currency is weakening, as it will take more of it to buy one US dollar, which is typically seen as the most powerful currency in the world.
Some of the world’s biggest companies are turning to artificial intelligence to navigate increasingly complex supply chains as they face the impact of geopolitical tensions and pressure to eliminate links to environmental and human rights abuses. Unilever, Siemens and Maersk are among those using AI to negotiate contracts, find new suppliers, or help identify those connected to issues including the alleged repression of Uyghur Muslims in China’s Xinjiang region. Although AI support in supply chain management has been used for years, the development of so-called generative AI technology has been offering more opportunities to further automate the process. More multinationals have faced the need to keep abreast of their suppliers and customers amid disruptions during the Covid-19 pandemic as well as rising geopolitical tensions.
Workers’ wage growth accelerated at a slightly weaker than expected pace in the June quarter even as employers scrambled to hire staff in a tight labour market. The wage price index for the June quarter rose 0.8% for the three months and 3.6% from a year earlier. Economists had forecast wages would increase 0.9% for the quarter and at an annual clip of 3.7%.
Australians continue to rank poorly in financial literacy, with a new study showing just over a quarter of people struggled to answer a set of fairly simple questions on the basics, such as interest rates, inflation and investment risks and returns. The study by Allianz, a global insurance and asset manager, asked more than 1000 people in Australia and in six other developed countries a total of nine questions to test their understanding of basic financial information. While just over a quarter in the Australian survey had poor financial literacy, almost 60% had average literacy. Less than 20% had high literacy. Consistent with other studies, women were found to have lower financial literacy at 34%, compared to 16% of men scoring poorly. Millennials and Gen Z lag behind Baby Boomers in financial literacy.
Australia’s richest person Gina Rinehart engaged in a “calculated and deliberate fraud” of her own children by transferring away from them the rights to valuable mining tenements in the 1990s, their lawyers claim. The mining magnate breached her fiduciary duty by transferring the ownership of Pilbara tenements from a company that her children would one day control and benefit from into the control of Hancock Prospecting, Christopher Withers, SC, alleged. “We don’t use the word fraud lightly,” Mr Withers said as he outlined John Hancock and Bianca Rinerhart’s case on Monday at the WA Supreme Court. He alleged Mrs Rinehart had removed mining tenements out of a company constructed for the benefit of her children by her father Lang Hancock, into Hancock Prospecting, which she ultimately controlled. When John Hancock sought to question his mother over her dealings, he was met with a “barrage of lies, threats and intimidation”, Mr Withers said. Bianca Rinehart made an unexpected appearance in court on Monday, with her husband, Sasha Serebryakov. The court also heard extraordinary details of Mrs Rinehart’s relationship breakdown with her father through the 1980s after her marriage to Frank Rinehart, who Lang Hancock did not approve of because he denigrated his mining ventures. That rift was further inflamed with Lang Hancock’s marriage to his former house cleaner Rose Porteous, who the court heard Mrs Rinehart attempted to get deported, Mr Withers said. Mrs Rinehart called Mrs Porteous an “Oriental concubine” and repeatedly referred to her a “prostitute”, Mr Withers said. He claimed Mrs Rinehart also flew to the US with her mother’s will in an attempt to prevent Lang Hancock from obtaining probate. “Do you want to give your one-third to a Filipino prostitute?” Mrs Rinehart said in a letter to her father in the mid-1980s, referencing what he should do with his stake in Hancock Prospecting. Lang Hancock threatened his daughter with defamation proceedings if she were to continue to denigrate his wife, the court heard. Among assets that were allegedly moved by Mrs Rinehart from the family company into the control of Hancock Prospecting were mining tenements for land now covered by Hope Downs. The Hope Downs land now lies at the centre of a multi-billion dollar legal despite between the family of Lang Hancock’s business partner Peter Wright, and Mrs Rinehart’s Hancock Prospecting. The descendants of Mr Wright claim they are entitled to an equal share of royalties that have been produced at Hope Downs, a mine that is owned by Hancock Prospecting and Rio Tinto.
Qantas has formally declared its support for an Indigenous Voice to parliament as outgoing airline boss Alan Joyce committed to flying the Uluru Dialogue team around the country to help spread the message to regional and remote areas. Joyce said on Monday that Qantas had a long history of supporting reconciliation and the airline would not exist without the guidance of First Nations people. As well as providing free flights to the Yes campaign, three of the company’s aircraft – a Qantas Boeing 737, a QantasLink Dash 8 Turboprop and a Jetstar Airbus A320 – now feature livery with the official Yes23 logo. Qantas insiders said the airline was always braced for a barrage of criticism whenever it made a political statement, but they did not expect any backlash to its stance on the Voice referendum to have a material effect on its revenue.
Australian home insurance premiums jumped the most in two decades in the past year, driven by weather catastrophes and higher building costs, new research showed. Median home insurance premiums surged 28% to A$1,894 in the year to March 31, according to a report released Monday by the Actuaries Institute. Premiums in the highest-risk properties — such as those in flood or bushfire-prone areas — shot up 50%, it said. The number of “affordability stressed” households — those spending more than one month’s worth of their gross annual income on home insurance – climbed to 1.24 million from 1 million households a year ago, with the overall proportion rising to 12% from 10%. On average, those households spent 8.8 weeks of their income on home insurance. The new data comes as many Australian households are already struggling with elevated inflation, rising borrowing costs or soaring rents. “Half the increase in home insurance premiums relates to building cost inflation, which has spiked during the past two years due to supply chain shortages,” said Sharanjit Paddam, one of the report’s authors. “There’s also been an increase in natural disasters and higher reinsurance costs, driven by the climate change impacts we’re already seeing.” The hardest-hit households are in the flood-prone Northern Rivers region of New South Wales, as well as north Queensland and Western Australia, where cyclone risk is high, the research showed. Extreme weather catastrophes are becoming more common around the globe with climate scientists warning that one-in-a-100-year disasters will occur more frequently unless carbon emissions are reduced dramatically.
Sydney’s affluent northern beaches, leafy inner-west and second CBD, Parramatta, have the highest uptake of electric vehicles in NSW, while in Victoria, the Toorak tractors of the moneyed inner-east are on the out. Residents of Greater Brisbane, the Gold Coast, Sunshine Coast and Moreton Bay are also going electric faster than the rest of the country, although outside the metropolitan regions, Queenslanders are lagging. The number of electric cars on the nation’s roads doubled last year and tripled in some suburbs, as buyers made the carbon-conscious switch, and the trend continued this year as global supply chain pressures eased. One in five light vehicles sold in the ACT in the three months to June 30 was electric, while the rates were 8.7% and 9.7% in NSW and Victoria respectively, according to the Australian Automobile Association. Slightly more than 8% of new cars sold – or about 46,000 – in the first half of 2023 were EVs – a 120% increase on the whole of last year. Illustrating the soaring demand, quarter-on-quarter growth was 21% in NSW (7745 EVs sold over the three months), a huge 117% in Victoria (7875 EVs), and 23% in Queensland (895 EVs). But although demand is heading in the right direction, the overall number of EVs registered remains a minuscule fraction of what will be needed for Australia to hit key emissions-reduction targets in the years ahead. The highest penetration is in Canberra, where about 1% of registered light vehicles are battery EVs and a further 3% are either hybrid or plug-in hybrid, compared to about 96% powered by petrol or diesel.
A Treasury review into secrecy laws that bind the Tax Office will consider the fallout from a $1.6 billion tax fraud scheme executed via TikTok, as federal Labor promises enhanced rules to protect taxpayers. Assistant Treasurer Stephen Jones said the government was deeply concerned at revelations the fake GST claims scheme went viral on the social media platform,, reaching a monetary total that is twice previous reports and represents the biggest tax fraud in Australian history. The fraud was uncovered by the banks, which froze accounts and alerted the Tax Office. The ATO said strict taxpayer secrecy laws limited what it could share about its investigation into the fraud, which was ongoing from 2020. TikTok said it had permanently banned more than 60 accounts and removed hundreds of videos which triggered the fraud and the illegitimate payouts. One Tik Tok video last year by social influencers who promoted the scam, viewers were told, “Everyone else got refunds, it’s OK, it’s just a temporary loan [from the government].” At least 56,000 people participated in the scam, which involves individuals obtaining an Australian Business Number, then using their MyGov account to file fraudulent business activity statements to claim GST refunds which in some cases exceeded $100,000. Mr Jones praised officials involved in Operation Protego, launched to pursue the fraud on April 11 last year. The Australian Federal Police have since conducted a series of raids that have led to more than 100 arrests, including three senior members of the Hells Angels motorcycle gang. There has also been compliance action against 56,000 people, mostly operating under the radar.
And the profit reporting season continues. National Australia Bank raked in $1.9 billion in cash earnings over the June quarter, while reporting a “modest” deterioration in the quality of loans and lower margins from home loan competition. Contact Energy’s profit was down $NZ55 million. SkyCity confirmed that its FY23 normalised earnings remain in line with the guidance provided on May 24 of $NZ300 – $310 million normalised EBITDA. Bendigo & Adelaide lifted cash profits 15.3% to a record $576.9 million. Online vehicle classified advertising group Carsales’ after tax profit jumped 301% to $646 million for the full year ended June 30. Revenue for JB Hi-Fi, Australia’s largest home entertainment retailer, gained 4.3% to $9.63 billion in fiscal 2023. Ansell total sales had slipped by 15% in the 12 months ending June 30 to $US1.66 billion ($2.56 billion), while net profit after tax slipped by 6.6% to $US148.3 million. Aurizon’s annual net profit fell 46% to $276 million. GWA Group reported a statutory net profit of $43.2 million for the year ended June 30, up 22.7% on the prior year. Argo Investments reported a 13.2% decline in full year profit to $271.7 million. Lendlease reported a statutory loss after tax of $232 million for the year ended June 30. GPT Group reported a net loss after tax of $1.1 million for the six months to June 30, with investment property valuation declines of $341.3 million. Gas producer Beach Energy reported a 24% drop in full year profit. Centuria Industrial REIT (CIP) swung to a statutory loss of $77 million over the 12 months to June 30. Charter Hall posted a statutory profit of $37.8 million. Home furnishing e-commerce company Temple & Webster Group has posted a 7.2% decline in full-year sales to $US395.5 million ($A609.5 million) with its bottom-line sinking more than 30% to $US8.3 million, but the group met its profit margin guidance. Automotive parts group GUD Holdings lifted statutory net profit by 252% to $98.6 million in 2022-23, helped along by a large acquisition. Family tracking app Life360 reported a net loss of $US4.4 million ($A6.8 million) for the three months ended June 30 while revenue increased 45% year-on-year to $US70.8 million. Blood products giant CSL has lifted full-year underlying profit 10% to $US2.61 billion ($A4 billion). Treasury Wine Estates reported a 3.3% decline in net profit to $254.5 million for the year ended June 30, compared with $263.2 million a year earlier. Annuities and funds management business Challenger has posted a statutory net profit up 13% to $288 million. Hearing device maker Cochlear tipped its underlying profit figure to rise between $355 million and $375 million. HealthCo Healthcare & Wellness REIT delivered operating earnings or funds from operations (FFO) of 6.9c per unit ($25.5m). Biotech stock Pro Medicus says the company increased its net profit by 36.5% to $60.6 million in financial year 2023. Seek reported a 1% drop in adjusted net profit after tax to $255m for the 2023 financial year and earnings before interest, taxes, depreciation and amortisation (EBITDA) rose 7% to $546.1m, less than what it had guided. Metals recycler and electronics recovery giant Sims has reported a 70% dive in profit to $181.1m. Small mall landlord Region Group reported a statutory net loss after tax of $123.6 million down 125.4% compared with fiscal 2022. Fletcher Building net profit after tax fell to $235 million, compared to $432 million in the previous year. Transurban’s annual net profit has risen five-fold to $92 million after income from toll fares jumped 26% to more than $3 billion. Bapcor’s full-year net profit after tax came in at $106.4 million, down from $125.8 million in 2022. Seven West Media’s net profit was $146.3 million, down from $200.8 million last year, while net debt was $249 million, down from $256 million. Endeavour Group posted a bottom-line net profit of $529 million, up 6.9% from a year ago’s $495 million. ASX-listed landlord and fund manager Dexus has swung to a full-year statutory net loss after tax of $752.7 million, after recording hefty writedowns on its portfolio. Vicinity Centres Group has booked a net profit of $271.5 million for its 2023 financial year, propped up by its portfolio retail sales growing by 8%.. ASX-listed Mirvac forecast operating earnings per security to fall to between 14¢ and 14.3¢ this financial year after reporting a 3% decline for the year to June of 14.7¢ per security. Pact Group tumbled to a $6.6 million loss for 2022-23, after $53 million of write-downs. Computershare full-year revenue jumped 27% to $3.3 billion. Earnings also rose, up 72% o $1.23 billion. Netwealth reported FY23 NPAT of $67 million, up 20% on-year.
And that’s it for this week. And next week, I’ll be talking to Mohan Jesudason, the CEO of X2M Connect about smart community grids. And I’ll be talking to Indeed economist Callam Pickering about the latest jobs and wages figures.
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 leon@leongettler.com. I answer all emails.
Wishing you all a safe and healthy week. And looking forward to bringing you Talking Business next week
