Higher than expected retail sales cast doubts on whether the Reserve Bank of Australia will cut rates.
Welcome to Talking Business, a podcast produced in Melbourne Australia. The podcast is available on the Acast site, my own website, 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.
For the most exclusive access to leading economists and business leaders from around the world, subscribe to Talking Business from my website leongettler.com.
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 2024 and today’s date is Friday December 6.
First, I’ll be talking to I’ll be talking to Jonathan Walsh, General Manager APAC, Essendex Australia about the dos and don’ts, the benefits and pitfalls and anything at all to do with SMS marketing for businesses. He can talk about the benefits of SMS for retail commerce and its impact on building customer relationships, targeted campaigns, ROI and how it is becoming a forgotten medium but a powerful tool for engaging with premium customers
And I’ll be talking to AMP Capital chief economist Shane Oliver about what market and economic trends we can expect in 2025.
But first let’s talk to Jonathan Walsh.
So what’s happening in the news?
A judge in Delaware has rebuffed Tesla’s attempt to revive a $56bn pay package for Elon Musk – as if he needs it. She says that shareholders’ overwhelming reapproval was not enough to override her previous rejection of the package. Monday’s decision is a stinging rebuke of the world’s most valuable carmaker and chief executive Musk, the richest man in the world who has been riding high since Donald Trump was elected for a second term as US president a month ago. Judge Kathaleen McCormick concluded that Tesla’s unprecedented effort to push the 2018 pay package through a second time, four months after she first voided it, was “creative”. But the board “had no procedural ground for flipping the outcome of an adverse post-trial decision based on evidence they created after trial”, she wrote on Monday. Tesla vowed to appeal against the decision. “This ruling, if not overturned, means that judges and plaintiffs’ lawyers run Delaware companies rather than their rightful owners — the shareholders,” it said. “Absolute corruption,” Musk wrote on X, his social media platform.
Australian housing prices have increased for the 22nd month in a row, but the market appears to be losing steam after its weakest result since the run of consecutive monthly growth began. The home value index compiled by data group CoreLogic showed housing prices rose by a modest 0.1% in November – its weakest Australia-wide result since January 2023. Last month, the national median house price was $812,933. In Sydney, the median house price was $1,196,809. It was $776,949 in Melbourne, $886,540 in Brisbane and $813,716 in Adelaide. November could be the last month of growth in this “cycle”, according to CoreLogic’s research director, Tim Lawless. He said the downturn was gathering speed in Melbourne and Sydney and the market in the mid-sized capitals – which have recently experienced the highest growth – was also slowing down. Rents increased in every capital city in November, with the national rental index rising by 0.2%. CoreLogic considers rental market to be experiencing a “relatively flat run of growth”, even though rents are still rising at more than twice the pre-pandemic decade average of 2%. Overall, the Australia-wide price of rental properties has increased by 5.3% over the past 12 months. A year ago, rents were increasing at the annual rate of 8.1%, according to the CoreLogic report.
Woolworths says two weeks of industrial action has cut $50 million in sales from its supermarket business as the retailer struggles to stock shelves. The shortages at stores spread from Woolworths to a second ASX-listed group, Endeavour, which operates Dan Murphy’s and BWS bottle shops. Having demerged from Woolworths in 2021, some of Endeavour’s stores are still supplied through the supermarket group’s distribution centres. With negotiations between the country’s largest supermarket operator and the United Workers Union dragging on, Woolworths has applied for an urgent order to ensure access to distribution sites in Victoria and NSW. More than 1500 United Workers Union members have been striking since November 21. The union wants Woolworths to scrap new productivity rules that would discipline employees for not working fast enough. Woolworths is using algorithmic management tools to track every move and wanting employees to work harder and faster. This has led to claims of increased risk of serious injury, mental stress and the looming threat of disciplinary action or even loss of employment. The $50 million hit to Woolworths supermarket sales in Australia was not factored into the company’s sales update in October. At the time, Woolworths warned it expected earnings to come in between $1.48 billion and $1.53 billion in the six months to December 31, below the $1.59 billion last year – and well short of the $1.64bn that the market had expected.
Australia’s late-night approval of reforms to the Reserve Bank of Australia (RBA) is poised to reshape its governance structure significantly. The key change involves splitting the RBA board into two entities: a monetary policy board and a governance board, reflecting recommendations from a 2023 independent review. The reform aims to improve the RBA’s decision-making and adaptability to complex economic challenges. The new board will include RBA Governor Michele Bullock, Deputy Governor Andrew Hauser, and Treasury Secretary Steven Kennedy. The remaining six members will be appointed by Treasurer Jim Chalmers, with a focus on individuals with diverse economic expertise. The inclusion of new members raises questions about the board’s stance on monetary policy, with economists predicting a period of market adjustment as the new board’s approach becomes clearer. Bullock may opt to disclose unattributed voting outcomes from meetings and encourage board members to deliver public speeches. These changes aim to align the RBA’s practices more closely with those of major central banks like the U.S. Federal Reserve
Savvy shoppers pouncing on early Black Friday sales have helped deliver higher-than-expected retail sales in October. The solid 0.6% uptick in retail turnover clocked by the Australian Bureau of Statistics in October was higher than the 0.4% consensus forecast and the more subdued 0.1% gain in September. Retail sales were up 3.4% on a year earlier, at $36.7 billion. Income tax cuts, lower petrol and energy prices and evaporating chances of more rate hikes might be further boosting spending in the shops. Consumers had cut back on non-essential spending over the past couple of years because of the strain on household budgets from high inflation and 13 cash rate rises. Viewed alongside rising building approvals, economist Ivan Colhoun said the Reserve Bank of Australia was likely to stay focused on inflationary pressures rather than the risk of an economy slowing too quickly. “Consumer spending, and retail prices, has increased slightly in recent months, possibly helped by the 1 July income tax cuts,” the CreditorWatch consulting chief economist said. “Housing approvals are also strengthening, which means there doesn’t seem to be an urgent need for the RBA to cut interest rates, even though many mortgage holders and small businesses would welcome this.” Strength in the jobs market and other indicators of economic resilience have cast doubt over an early 2025 start and upped the chances of an adjustment in May or later.
More people are struggling to pay their home electricity and gas bills despite government rebates taking some of the edge off rising prices, reigniting tensions between consumer advocates and retailers enjoying soaring profits. The Australian Energy Regulator’s latest assessment of retail markets found household electricity prices rose up to 16% over the 2023-24 financial year while gas prices rose up to 12%, putting extra strain on consumers already hit by cost-of-living increases. Complaints about energy billing to retailers and to an ombudsman jumped in the year, although energy affordability improved for many households thanks to government energy price rebates. The regulator described energy debt and hardship as a “persistent problem”, despite regulatory protections, government rebates and retailers’ customer support schemes. AER board member Jarrod Ball said the proportion of household customers in retailer hardship programs rose to 1.9% from 1.4%, while the average debt levels for those entering such programs jumped. “Many consumers continue to struggle with energy costs, as indicated by the total number of customers in debt and in hardship programs,” Mr Ball said. The findings come after the country’s biggest electricity retailer AGL Energy posted vastly improved profits last financial year,, while arch-rivals Origin Energy and EnergyAustralia also recorded sharp improvements in retailing margins, thanks to higher prices.
A new report by the BCA ranked Victoria as the worst state or territory for doing business, with more onerous regulations acting against growth and investment on a range of measures. SA was rated as the best place to run a business for the second year in a row. SA earned the top spot largely due to a lower level of payroll taxes, property charges and business licensing obligations, the BCA said. The next best jurisdictions for business were Tasmania, the ACT and the Northern Territory. They were followed by NSW, Queensland, Western Australia and Victoria in eighth spot. The BCA’s scorecard looked at planning systems, payroll taxes, property taxes and charges, retail trading hours, workers compensation premiums and licences to do business.
Labor has sought to placate business concerns about the potential exclusion of construction workers from an overhauled skilled visa system, by making it easier for builders and other tradies eligible to migrate to Australia in a bid to ease the housing crisis. The Albanese government is in the midst of creating a three-tier skilled migration system, with separate visa streams for low-paid care workers, highly paid professionals earning more than $135,000, and a “core” stream for workers earning between $70,000 and $135,000 where there is a skills shortage. Home Affairs Minister Tony Burke said Labor’s changes to the skilled occupation list would include adding housing construction trades to the core list. “The government is determined to tackle the skills shortage, especially in the construction sector,” he said. “This is an important step to attract qualified workers to help build more homes.” The new list – set to be released later this week – has been compiled using labour-market analysis and stakeholder consultation undertaken by Jobs and Skills Australia. The list will be used to fill positions where no Australian worker is available. It controversially includes jobs such as yoga instructors and martial arts coaches, among about 450 professions. A builder earning more than $135,000 will still be excluded from Labor’s fast-track, top-tier status, a major concession to trade unions. Business groups including Master Builders and the Australian Chamber of Commerce and Industry have been lobbying the government to speed up construction worker arrivals, warning that as many as 500,000 extra tradies are needed if Labor is to have any chance of delivering on its promise to build 1.2 million new homes around the country by 2029.
The head of Australia’s financial crime watchdog says key overseas allies are welcoming moves to close gaps in anti-money laundering and terror financing rules, conceding criminals have been able to exploit ineffective laws for too long. Days after parliament passed new laws to add real estate agents, lawyers and accountants to the dirty money protection regime, AUSTRAC chief executive Brendan Thomas said he was determined to crack down on more than $60 billion in harm caused by drug trafficking, scams, child exploitation and human trafficking. In a marathon final week of parliament, the Senate on Thursday finalised plans to expand laws requiring certain professionals to understand the source of their client’s wealth and to report suspicious financial matters to authorities. Australia has been lobbied for years by overseas partners, including in the G20 group, to close gaps in domestic laws. Britain and other countries have pushed Australia to act, warning high-end property purchasers were funnelling suspicious funds into Australia. The new obligations for so-called “tranche two” businesses will come into force from July 2026, a timeline Mr Thomas said would enable sufficient consultation and planning to ensure businesses were prepared. “Australia, at the moment, is falling foul of the international standards that the world expects to be in place to combat money laundering. It makes our economy weaker, and it gives our economy a bad reputation in the world’s eyes,” he said. “Money laundering and organised crime is a global business. We suffer the challenge of international criminals who commit crimes in other countries, laundering money and parking value here. [We] want to make sure that the international armour is as strengthened as it possibly can be against money laundering.” On Sunday, Prime Minister Anthony Albanese called on the Coalition to explain why it opposed the changes. Labor has previously accused opponents of the plan of giving assistance to criminal gangs and child abusers. The Coalition did not act on a 2016 report that recommended tougher laws in line with Financial Action Task Force recommendations.
Tesla chairwoman Robyn Denholm will lead the first review of Australia’s research and development landscape in almost 20 years, as the Albanese government seeks a better return on scientific spending to expand the economy. This is because R&D investment as a proportion of Australia’s GDP stands at 1.68%, below the OECD average of 2.73%. Government spending totalled $4.3 billion in 2022-23, according to Australian Bureau of Statistics data. R&D spending by business was growing until 2022, but moves by multinationals to save money after the COVID-19 pandemic led to a collapse. In Australia, the information, communications and technology sector leads R&D spending, with much of output coming from small and medium-sized businesses. Releasing the terms of reference for the government’s year-long review, Industry and Science Minister Ed Husic insisted everything was on the table for possible reforms, due to “an unsustainable disconnect” between innovation and the country’s high economic ambitions. Ms Denholm will work with former Australian National University vice-chancellor Ian Chubb, as well as surgeon and former Australian of the Year Fiona Wood and Victorian start-up expert Kate Cornick. The expert panel will consider how changes to government R&D spending could better maximise the value of existing investment, including in government, universities, philanthropy and private industry. Stronger links between research and industry organisations, the mobility of researchers and better co-ordination by government at all levels are all included in the review’s scope. The terms of reference also ask for an assessment of how R&D is supporting national priorities and how science agencies could better support innovation across the economy.
And that’s it for this week. And that’s it for this week. And next week, I’ll be talking to Gavin Bessarabie, the co-founder of Confidence Club, a subscription-based service that offers customers a discreet and convenient way to purchase essential incontinence products.
And I’ll be talking to Independent economist Saul Eslake about what to expect in the Australian and global economies in 2025.
For the most exclusive access to leading economists and business leaders from around the world, subscribe to Talking Business from my website leongettler.com.
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Looking forward to the next episode of Talking Business.
