The Reserve Bank and Treasury are considering the feasibility of a central digital currency, under reforms aimed at establishing a regulated onshore cryptocurrency industry
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 45 in our series for 2021 and today’s date is Friday December 10
First, I’ll be talking to Grant Emanuel, global marketing director for the Chamberlain Group, Australia’s leading manufacturer in garage door openers and accessories, embracing change and adopting a nimble approach to the ever-evolving economic landscape. Emanuel has navigated a new world of online-led strategy, virtual office banter and a more adaptive approach to accommodating the needs of individual markets with different economic, social and health circumstances. And I’ll be talking to IFM chief economist Alex Joiner about the outlook for 2022.
But now let’s talk to Grant Emanuel.
The Reserve Bank and Treasury are considering the feasibility of a central digital currency, under reforms aimed at establishing a regulated onshore cryptocurrency industry and driving competition across “buy now, pay later” and digital-wallet payment systems. The burgeoning $US2 trillion crypto assets sector, which more than 2 million Australians have exposure to, will face a new licensing regime to protect retail investors and lift requirements on crypto exchange operators. A key element of the government’s reform package will focus on the merits of a retail Central Bank Digital Currency, following similar considerations by regional partners including Singapore and Malaysia. The CBDC would offer a type of digital currency issued by a central bank and linked to sovereign currency, allowing for conversion between different forms of money. A retail CBDC would provide a digital version of cash that was universally accessible. With the RBA and central banks across the globe actively investigating technologies to support CBDCs, a senior government source said the proposal was akin to an “RBA-backed bitcoin or cryptocurrency”. This follows last week’s collapse of a second cryptocurrency platform in the space of months, with Australia-based myCryptoWallet users no longer able to access their funds. Investor losses at the other failed cryptocurrency outfit, Blockchain Global, have more than doubled to more than $50m. New Australian consumer watchdog figures reveal a 172% increase in cryptocurrency scam losses between January and November this year, totalling $109m. Everything from the way Australians buy goods and services to their investment in cryptocurrencies will be overhauled over the next 12 months in the biggest change to the nation’s payment system since the heyday of the chequebook. Australia’s payment system has undergone sweeping changes in recent years, amid a boom in tap-and-go transactions on smartphones, and buy now, pay later services such as Afterpay. Consumers are turning their backs on traditional payment systems, with the number of personal cheques written falling by 95% over the past two decades while ATM cash withdrawals are down two-thirds since 2011. At the same time, cryptocurrencies such as bitcoin have taken off, albeit as a new form of speculative investment rather than a practical way of making payments. Commonwealth Bank last month become the first local bank to allow its customers to trade cryptocurrencies through its app, which is used by millions of Australians.
While other arts sectors have been struggling, the value of film and television production surged to a record $1.9 billion last financial year as Australia became one of the world’s safest places to shoot during the pandemic. Screen Australia’s annual report on drama production shows that foreign projects were worth $1.04 billion alone. This included the television dramas that started filming here during the year – often with Australians in lead roles: Nine Perfect Strangers for Hulu; Netflix’s Escape from Spiderhead, God’s Favourite Idiot and Pieces of Her; Universal-Matchbox’s La Brea and Young Rock; and Amazon’s The Wilds.
Three foreign movies boosted the total: Marvel’s Thor: Love and Thunder, the Liam Neeson action thriller Blacklight and Ron Howard’s Thai cave rescue drama Thirteen Lives. After production stalled during the first pandemic lockdown, spending on Australian films and so-called official co-productions with other countries more than doubled to $500 million. Leading the way were Baz Luhrmann’s Elvis Presley biopic, George Miller’s fantasy Three Thousand Years of Longing, thriller Gold, comedy Wog Boys Forever, musical dramedy Seriously Red, Tim Winton adaptation Blueback and Port Arthur shooting drama Nitram. While cinemas struggled with shutdowns, production boomed with foreign projects seeking a safe filming location, the creation of COVID-safe shooting guidelines and such industry support measures as the federal government’s Location Incentive program and Temporary Interruption Fund.
The Australian Council of Superannuation Investors has released its inaugural policy on First Nations engagement, which has been developed with advice of the National Native Title Council. The policy has been developed following a research program conducted with the Church of England Pensions Board (CEPB). Last year, ACSI, the CEPB and 64 institutional investors co-signed a letter sent to 78 global mining companies, seeking information on their First Nations engagement. About 46% of mining companies’ reserves lie on land inhabited by First Nations people, but only 38% of ASX 200 companies disclosed information related to their Indigenous engagement practices or their management of the risks around this. Further, the research found a number of companies have adopted standards that only require them to “seek consent” rather than actually obtaining it. Indeed, the International Council on Mining and Metals’ position statement on Indigenous Peoples says companies should “work to obtain the consent of Indigenous communities”, rather than stating consent actually needs to be obtained. ACSI’s policy position is guided by the UN Declaration on the Rights of Indigenous Peoples and contains six key principles: assess risk; align with international standards; develop strong relationships and robust agreements; conduct effective risk management; monitor performance; and disclose. At the heart of the policy is the philosophy of obtaining free, prior and informed consent from First Nations people. This idea might sound obvious, but it actually exposes the way some mining companies have dodged their responsibilities on occasions.
The Reserve Bank of Australia left the interest rate at 0.1% but left the door open for a rate rise in 2022 by dropping any reference to 2023 in its key final par. It is waiting for wages to rise by 3 to 3.5%. It reiterated that it won’t hike until inflation is well within the central bank’s 2-3% target.
Oil Search proxy votes have overwhelmingly backed a $21bn merger with Santos, creating a top 20 listed ASX company and one of the 20 biggest oil and gas companies in the world. Some 95.43% of proxy votes cast were in favour of the merger, Oil Search said in an ASX statement on Tuesday, with just 4.36% opposed. The deal needed the support of 75% of shareholders who cast their vote to get over the line. Santos will own 61.5% of the merged company to Oil Search’s 38.5%.
Construction group Laing O’Rourke is designing a prototype railway station to examine how it can minimise carbon emissions and build infrastructure more efficiently, including using modular components that can be built in factories. Mark Dimmock, Laing O’Rourke’s director for clients and markets, said the construction group, which is upgrading railway stations in NSW to make them easier for people with disabilities to use, had been urged by the state government to use more innovative materials and methods of construction to avoid doing future projects in a “cookie cutter fashion”. Laing O’Rourke is also experimenting with using batteries and solar power for lighting in stations as well as wireless communications so that telecommunications cables don’t have to be laid down, which saves money on materials. It hopes to have the prototype finished by mid-2022 to show the government what kind of stations it could potentially build when it tenders for more rail projects later next year. Georgina North, operations leader for Laing O’Rourke’s technology and innovation group, said the company was using robotics, digital products, data analytics, Internet of Things, 3D printing and advanced manufacturing of materials in projects. Autonomous trucks and excavators that are common in the mining industry are now also starting to be used in construction, she said. But she said there was not enough investment in new technology in Australia, and that it took time for companies developing new robotic technologies to bring them to Australia.
Woolworths is banking on health and beauty products as a growth path, with a surprise $872 million bid for Australian Pharmaceutical Industries, which owns the Priceline pharmacy chain and runs 86 Clear Skincare outlets. It surpassed an offer from Wesfarmers, the owner of Kmart, Target and Bunnings. The duo are now wrestling for control of API.
Wesfarmers-owned department store chain Target is looking to lean on the online and in-store smarts of online shopping giant Amazon as part of a cloud-services led push to increase online sales and revive performance in its lockdown-hit shops. The high-profile retailer has selected Amazon Web Services as its cloud supplier of choice, over rivals such as Microsoft’s Azure, adopting technology it says makes its websites faster, more reliable, more responsive to individual customers and 90% cheaper to run. Target’s general manager of technology, Samantha McIntyre, said the company was hoping to significantly increase the performance of its online stores, which currently provide just 15.1% of overall sales. She said before adopting AWS its systems could not handle the surge in demand during sales and new product launches, and that they could now provide more up-to-date inventory for online shoppers and introduce new online shopping features in a day, rather than the two months it could previously take. AWS is also in use across other Wesfarmers brands Officeworks and Kmart, and its global head of retail, Tom Litchford, said the pandemic had seen a big increase in investment across the sector in digital transformations, which were targeted at creating back-office efficiency to fund online innovation.
Many Australian boards are struggling to prepare their companies or organisations for climate change, with almost half the country’s directors saying they don’t know how to tackle the issue. A first-of-its-kind study by the Australian Institute of Company Directors into how boards are approaching climate change reveals that 77% of directors are concerned about how it will affect their organisation, but often failed to act. The AICD report is based on surveys of 2000 directors at ASX listed companies, smaller businesses, government organisations and not for profits. Almost half of the directors surveyed said their boards should pay more attention to climate but did not know how to do so, while 28% did not think their board had the knowledge or experience to adequately address climate governance issues. Across all directors, only 11% disagreed that their board needed to do more to respond to climate change, but that rose to 22% in the mining sector. One in four directors in the mining sector were “not at all concerned” about climate risk to their company, which compared to one in five across all industries and only 8% in the agriculture, forestry and fishing sector. Directors said the biggest obstacle to acting was the absence of a settled national climate change policy (46%, the most common response) while 38% said their board did not have the time or resources to deal with it. Less than half of directors (46% ) said their board had embedded climate change in their risk management framework, which the report says, “suggests that risk may not be adequately monitored at board level.“
A huge wind farm proposed by Alinta Energy off the coast of Victoria could make the Portland aluminium smelter among the country’s first smelters to be powered fully by green energy. The Spinifex offshore wind project would cost up to $4 billion and create new construction and operational jobs, as well as help secure jobs at the smelter site, Alinta said. News of the 1000-megawatt project, one of several nascent offshore wind ventures around the country, came as its largest steelmaker, BlueScope, signed an accord with Shell that could see the Port Kembla steelworks in NSW supplied with green hydrogen. The pair will investigate the design and construction of a pilot-scale 10MW renewable hydrogen electrolyser to test the use of green hydrogen in the blast furnace at the steelworks. The two proposals illustrate how some of the country’s most carbon-intensive heavy industrial operations are exploring options to cut emissions
Australians are paying more personal income tax as a share of government revenue than any other advanced economy, except for the high-taxing Scandinavian welfare state of Denmark, according to an international report that renews pressure on the Coalition and Labor to reform the tax system. Governments in Australia also raised almost double the amount of revenue from taxes on property compared to other wealthy nations, chiefly due to state-based stamp duty on real estate purchases, the Organisation for Economic Co-operation and Development report said. Personal income tax revenue rose to 42% of total tax collected by federal and state governments in 2019, nearly twice as much as the OECD average of 23.5%. The dependence on personal income tax has gradually grown by almost 5 percentage points since 2000, when the GST was introduced by the Howard government in return for personal income tax cuts.
The International Monetary Fund has piled pressure on Treasurer Josh Frydenberg to pursue serious tax reform, arguing the economy would grow faster and more equitably after the pandemic if the corporate tax rate was cut and tax breaks for debt-fuelled housing were curtailed. The 10% goods and services tax should be increased and/or broadened to cover some items currently exempted, while compensating low-income households with payments, the IMF said in its review of Australia’s economy. The IMF urged state governments to switch away from stamp duties on property purchases and towards annual land tax based on value, to encourage people to move for jobs and to give states a more predictable revenue stream. To improve housing affordability, the IMF said tax reforms to “discourage leveraged housing investment by households could help dampen investor demand in residential real estate” – an implicit endorsement of Labor’s 2019 election policies to curtail the capital gains discount and negative gearing, which Labor has since dumped. Local governments could be offered financial incentives by federal and state governments to streamline planning and zoning approvals to boost the supply of new homes, the IMF said.
The IMF became the second independent international organisation in the past two days to highlight Australia’s over dependence on taxing corporate and personal income, and under-taxation of more efficient tax bases such as consumption and land.
The Finance Sector Union is taking the National Australia Bank to the Federal Court, alleging it has a culture of forcing staff to work “excessive” hours, with complaints to managers falling on deaf ears or prompting retribution. FSU National Secretary Julia Angrisano said the “regular additional unpaid hours amount to another version of wage theft” and had left workers “suffering unbearable levels of stress and anxiety, as well as problems sleeping, and in some cases said they had been left ‘mentally and physically broken’ ” and alleging staff had been bullied into working up to 70 hours a week without being paid. The union claims staff were “expected” to work overtime and feared being fired or performance managed if they spoke up or refused. NAB refuted the claims but acknowledged the additional pressures placed on staff during the COVID-19 pandemic, saying employees could raise concerns either directly to their line managers or via the whistleblowing hotline.
The Australian Taxation Office and AUSTRAC could be handed sweeping new surveillance powers, including the right to bug people’s phones and online communications, as part of an overhaul of telecommunications intercept laws. The federal government could also seek to harmonise the states’ patchwork of laws regarding listening devices, which has complicated regulators’ attempts to prosecute corporate crime. Home Affairs Minister Karen Andrews on Monday released a discussion paper about potential updates to surveillance laws, which have failed to keep pace with advances in telecommunications and rely on “outdated technology assumptions”. Parts of the existing framework date back to the 1960s to cover the privacy of fixed-line phone calls and telegrams, with the government previously owning these networks.
And that’s it for this week. And next week, I’ll be talking to Ben Nowlan, the co-founder and CEO of one of Australia’s largest last mile delivery firms Shaparency, the platform built and funded in a 10-week period during COVID-19 lockdown. Shaparency is an online ecosystem that automates and digitises the process of board meetings and shareholder management. Digital minute taking, reporting, signatures and storage, replace inefficient and costly paper-based administration for board members, while its shareholder portal sets it apart from others offering visibility and engaging shareholders – hence the name “Shaparency” shareholder- transparency. And I’ll be talking to AMP Capital chief economist Shane Oliver about what we can expect form the market and economy in the 2022 post-lockdown period.
In the meantime you can catch me on Facebook, Twitter 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