Assistant Treasurer Stephen Jones says the government is not done yet with its response to the PwC tax scandal, with more reforms on the horizon to take on the big four audit firms.

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 or at Banking Day.

For the most exclusive access to leading economists and business leaders from around the world, subscribe to Talking Business from my website

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 1 in our series for 2024 and today’s date is Friday February 2.  

First, I’ll be talking to Steph Schatz, who led the launch of the Second Nature Program in Australia and New Zealand. It’s a program that works on WhatsApp, teaming participants up with dieticians and health coaches.

And I’ll be talking to economist Saul Eslake about the outlook for the economy in the year ahead.   

But first, let’s talk to Steph Schatz.

So what’s happening in the news?

Elon Musk’s company, formerly known as Twitter and now called X, is making plans to establish a “Trust and Safety center of excellence” in Austin, Texas. The objective is to strengthen the enforcement of content and safety rules on the platform. X intends to hire 100 full-time content moderators for this new center, with a primary focus on combating child sexual exploitation content. Joe Benarroch, X’s Head of Business Operations, mentioned that the moderators would also address other rule violations, including hate speech and violent posts. The company did not provide a specific timeline for the center’s operational commencement. Elon Musk, who assumed control of X in October 2022, has faced criticism for scaling back the company’s trust and safety operations. He has also revoked certain policies, such as those related to misinformation, in an attempt to emphasize “free speech” on the platform. The announcement coincides with the upcoming appearance of CEO Linda Yaccarino before the Senate Judiciary Committee to discuss child safety online, along with other tech company CEOs like Meta Platforms Inc, Snap Inc, TikTok, and Discord.

In Hong Kong, a court has ordered the debt-ridden property giant Evergrande to undergo liquidation. The decision, delivered by Judge Linda Chan, comes after Evergrande failed to present a restructuring proposal. Evergrande, grappling with over $325 billion in liabilities, has been a symbol of China’s real estate crisis. Its default two years ago had significant repercussions on global financial markets. The court’s ruling is anticipated to have profound effects on China’s financial markets, given that the country’s property sector contributes around a quarter of the world’s second-largest economy.

A recent study conducted by human resources software company Workday reveals that almost two-thirds of Australians express distrust in artificial intelligence (AI). The survey, encompassing nearly 1300 business leaders and 4000 employees across 15 countries, highlights Australian skepticism about the rapid adoption of AI technology. Sixty percent of Australians are concerned about the trustworthiness of AI, the highest level recorded among the surveyed countries. Additionally, 55% of Australian employees emphasize the importance of employers considering the broader workforce’s impact when implementing AI systems. This sentiment aligns with a growing need for tighter rules on AI deployment, with legal battles emerging, such as the New York Times suing Microsoft and ChatGPT maker Open AI for alleged unauthorized use of articles in AI model training.

The Albanese government in Australia released an interim response to the safe and responsible use of AI, opting for a regulatory approach that clarifies and strengthens existing laws rather than introducing new ones. The government aims to balance the need for regulation with fostering AI-driven economic growth, anticipating an injection of $600 billion per year into the national economy by the end of the decade. This strategy mirrors the cautious approach of the United States, which is wary of ceding its competitive advantage to China in the AI sector.

Bankers from Nine Entertainment have engaged major private equity firms to assess their interest in Nine’s controlling stake in Domain, an ASX-listed property sales platform valued at over $2 billion. Nine currently owns 60% of Domain, and discussions with firms like KKR and TPG have explored potential deals related to Domain. The challenge for Nine lies in finding ways to maximize returns on its major investment in Domain, given the platform’s performance has not matched that of its competitor, REA Group, which is 61% owned by News Corporation.

Ken Henry, the architect of Australia’s last major tax reform push, has urged political leaders to revive a national reform agenda. Henry emphasizes that significant change is possible with courage, creativity, and political persistence. While Treasurer Jim Chalmers has indicated a pause in further tax reforms after adjusting the government’s planned stage three tax cuts, Henry argues that reform remains achievable with determination. He points to the success of past reforms, such as the Keating government’s microeconomic reforms and the Howard government’s implementation of the GST.

Former Labor climate change minister Greg Combet has been appointed chairman of the Future Fund by Treasurer Jim Chalmers. Combet, who also served as chairman of the Net Zero Economy Agency, replaces former Liberal Treasurer Peter Costello. The Future Fund, established in 2006 to address unfunded superannuation obligations, manages the nation’s $270 billion sovereign wealth fund. Combet has publicly supported using retirement savings to fund the energy transition, provided a commensurate return on investment.

Experts believe that the federal government’s overhauled stage three tax cuts align better with tax design principles and could relieve pressure on families disproportionately affected by the cost-of-living crisis. CreditorWatch CEO Patrick Coghlan expresses confidence in the revised plan’s positive impacts on business and the economy. However, concerns about potential inflationary impacts remain, and it is acknowledged that the original tax cuts heavily favored higher-income earners. The updated plan aims to benefit middle-income Australians by reducing the lowest and second tax rates, while raising the top tax bracket.

The PwC tax scandal continues to be a concern for the Australian government, with Assistant Treasurer Stephen Jones stating that reforms in response to the scandal are ongoing. Jones emphasizes the need to address issues with the big four audit firms and tackle freelancing taxation accountants engaged in illegal tax minimization. The government’s response to the scandal includes increased penalties for exploiting tax loopholes and empowering regulators. Jones urges PwC to be more transparent by releasing the results of its internal investigation into the scandal.

The National Disability Insurance Scheme (NDIS) in Australia is projected to exceed $125 billion annually by 2034, according to a government actuary’s analysis. This estimate is nearly a third higher than the $95 billion target set in the May budget, indicating that the scheme’s costs may have been underestimated. The NDIS, currently supporting over 610,000 people, is expected to cost $42 billion in the current financial year. The challenge for the government is to control the annual growth of the scheme from 11% to 8% by mid-2026, a task complicated by the increasing number of participants, especially children with developmental challenges.

Supermarket giant Woolworths says its New Zealand grocery and Big W discount businesses are trading softer than anticipated, offset at the group level by a solid result from Australian supermarkets and food distribution. Woolworths will take a $209 million loss on its shareholding in Endeavour Group, the parent of the Dan Murphy’s liquor chain. In a trading update on Monday, Woolworths said its NZ food unit “has continued to be challenging”. After reviewing the segment’s forecasts for the next three years, Woolworths will book a non-cash impairment of $NZ1.6 billion ($1.5 billion) against the current $NZ2.3 billion of goodwill on its balance sheet for the 2024 half-year results. Woolworths’ first-half 2023-24 earnings before interest and tax are expected to be $NZ71 million, 42% below the prior year, including approximately $NZ13 million of costs associated with reinventing the business. BIG W’s first-half EBIT is expected to be materially below 2022-23, but the financial performances of Woolworths’ Australian food arm (including Woolworths supermarkets and WooliesX) and its distribution arm have remained solid. “Woolworths Group’s unaudited EBIT before significant items for the first half of 2024 is expected to be $1.682 billion to $1.699 billion … which represents EBIT growth before significant items in the range of 2.8% to 3.8%,” it said. In 2022-23 it earned $1.637 billion. E&P Capital analysts said the forecast EBIT was “in line with expectations”. However, the broker noted NZ was weaker and the impairment charges that had been taken. The growth in Australian profits comes after Prime Minister Anthony Albanese announced the Australian Competition and Consumer Commission would investigate allegations of price gouging in supermarkets.  Goldman Sachs analyst Lisa Deng said supermarkets would continue to record growth as cost of living pressures force people to cook more.

The nation’s top supermarkets, Woolworths and Coles, could undershoot profit expectations over the next two years as the sector faces an uncertain outlook amid heightened regulatory and political scrutiny that is threatening to place a downward pressure on grocery prices and squeeze profit margins. The political pressure from six grocery price inquiries, including one led by the Australian Competition and Consumer Commission, is likely to add to the noise around high grocery prices, which could in turn force the supermarkets to further cut shelf prices at the cost of profitability. Indeed, 2023 could have seen the peak for supermarket margins. A slowdown in food inflation will also play a part, with cheaper food and grocery prices good for consumers but at the same time giving little space to move to grow profits for the chains. In a fresh report on the sector from investment bank JP Morgan, analyst Bryan Raymond has warned clients of the investment bank that he continues to see downside risks to consensus earnings forecasts, mainly in fiscal 2025, where he has pencilled in earnings per share that is 4.7% and 7.5% below consensus for Woolworths and Coles, respectively. The political firestorm now raging around the supermarkets, fuelled by attacks from politicians over allegations of price gouging, and the focus of a string of public inquiries has placed a spotlight on Woolworths and Coles, the prices they charge and the profit they make. Add in the weight of rising costs such as wages and utility bills, and supermarket profits are under pressure. Mr Raymond has profit margins for both supermarket heavyweights sliding between now and fiscal 2025. “We forecast Woolworths EBIT margins to contract from 6% in fiscal 2023 to 5.9% in 2024 and 5.8% in 2025. Coles is stepping down from 4.8% in fiscal 2023 to 4.6% in fiscal 2024 and 4.5%  in fiscal 2025,” Mr Raymond said  Mr Raymond argues that industry sales growth is set to slow to 3.5% in April 2024 from current levels of 3.8% in November 2023 and maintain the range of 3-3.5% in the outer months as food disinflation (the temporary slowdown in prices) and lack of offsetting mechanisms through pricing is unlikely given the current regulatory scrutiny.  Both supermarkets will report their first-half results next month, with the company’s profit margins and profits to be dissected by investors who are looking to maximise their returns but politicians and members of the Albanese government looking to score political points by attacking the chains.

Australia’s retail sales suffered a sharp decline in December, more than reversing a bump recorded in November from Black Friday as households continue to face cost of living pressures. Data from the Australian Bureau of Statistics, released on Tuesday, shows total retail turnover fell 2.7% in December compared to a 1.7% that markets had expected prior to the release of official data.  November growth was revised down from 2% to 1.6%, which the ABS said revisions to seasonally adjusted data were larger than usual, reflecting improvements in the data as the evolving seasonal pattern becomes clearer. ABS head of retail statistics Ben Dorber said the large fall in retail turnover in December was caused by a fall in discretionary spending as shoppers shifted forward much of their Christmas spending to November because of Black Friday. “This shift in spending from December to November reflects the growing popularity of Black Friday sales and the impact of cost-of-living pressures, with consumers seeking out bargains and taking advantage of discounts in November,” he said. Total monthly turnover was $35.19bn seasonally adjusted in December, compared to $36.15bn in the previous month. Turnover fell in all the non-food industries that had been boosted by Black Friday sales in November. Household goods retailing (-8.5% ) had the largest fall, following the largest rise last month.  The next biggest drops were in department stores (-8.1% ), clothing footwear and personal accessory retailing (-5.7%), and other retailing (-1.1%). For food-related industries, turnover fell in cafes, restaurants and takeaway food services (-1.1%), while food retailing (0.1%) was the only industry to rise.  Retail turnover fell across the country, with large falls in all states and territories, the majority down by more than 2%.

Climate-conscious investors, frustrated at the spray-and-pray approach of traditional ventures, are tipping money into a new $200 million climate-focused fund managed by the team behind the Clean Energy Finance Corporation’s early venture foray. Virescent Ventures has already committed more than $260 million to climate-specific tech start-ups over the last six years, but is now trying to leverage the growing number of family offices and companies scrambling to gain exposure to technologies that might shift the dial on the global energy transition. Unlike broader software-as-a-service start-up valuations, climate tech didn’t soar as high during the period of ultra-low interest rates, and has therefore managed to withstand the recent pull-back in valuations. Virescent Ventures says it has completed 16 follow-on investments totalling around $93 million in the last two years. The new fund – which Virescent hopes will bank $200 million – will extend the strategy of targeting decarbonisation-technologies across transport, electricity, food and agriculture, enabling technologies such as the internet of things and grid management. Green hydrogen, the circular economy and the resources sector are also targets. Virescent Ventures declined to disclose the first fund’s performance, save to say it performed above a 19.5% internal rate of return benchmark released by Cambridge Associates. This benchmark was measured between 2015 and 2021. The investors also refused to say how much of the new $200 million fund had been secured so far. The fund will be managed by three investors. Ms Vaughan cut her teeth as an investor at CHAMP ventures. Her chemical engineering background meant she sifted through deals like underground coal mining Mastermyne play that listed in 2010. Blair Pritchard, a partner at Virescent, built an understanding of alternative assets at Macquarie Bank, where he said he became “completely obsessed” with the climate space. After the GFC, money was tough to find so he focused on making seed investments, including cattle sex selection tech play Engender. Mr Pritchard said there are opportunities for investment in regulatory technology. Managing partner Ben Gust, meanwhile, built a career in healthcare ventures at GBS Venture Partners, which was a management buyout of the Rothschild healthcare venture fund. Throughout the 1990s and 2000s, superannuation money formed the basis of venture funds, and also backed the likes of Blackbird Ventures, AirTree Ventures and Square Peg, but they are not the driving force behind Viriscent.

Beloved Australian frozen desserts brand Sara Lee has been rescued out of administration by former race car driver Klark Quinn and his partner Brooke, the same pair who saved chocolate maker Darrell Lea in 2012. The sale of the business, the sum of which was not disclosed, also ensures the employment of more than 200 staff, whom administrator Vaughan Strawbridge said had rallied behind the business during the process. Australians rushed to supermarkets to buy Sara Lee’s frozen cheesecakes, pies, crumbles and ice-creams last October after higher operating costs, supply chain issues and disrupted operations saw the company collapse and appoint FTI Consulting as administrators to the business. Sara Lee’s Australian operations were established in 1971 and became a household name synonymous with good quality and affordable frozen desserts. Klark and Brooke Quinn emerged as the successful buyers in a competitive sales process involving around 60 domestic and international parties interested in taking on the brand, as well as some $55 million owed to creditors, including employees, unpaid suppliers and secured lenders. “We are a small Aussie family that shared in the tradition of having Sara Lee apple pie and vanilla ice-cream every Sunday night at the dinner table and could not be more proud to put the Aussie made and owned stamp on the Sara Lee brand,” Klark and Brooke Quinn said in a statement. Klark Quinn is a three-time Australian GT champion and the son of Tony Quinn, the founder of VIP Petfoods. Quinn purchased confectioner Darrell Lea in 2012 after its collapse and cut some jobs to save on costs. The former competitive driver was hands-on in returning the Darrell Lea business to profitability and moved to Sydney to be near the production site based in Kogarah. In early 2018, he sold the business for around $200 million. During his time leading the business, Quinn reduced some product lines that “you and I had never heard of” to focus on export markets. The sales process will officially complete in the coming weeks.

And that’s it for this week.

And next week, I’ll be talking to Ron Weinberger, MD and CEO of ASX-listed EMVision, a homegrown medtech company that has developed  portable imaging technology, to revolutionise stroke diagnosis and care for Australian patients.

And I’m talking to AMP Capital chief economist Shane Oliver about the market and economy in 2024.

For the most exclusive access to leading economists and business leaders from around the world, subscribe      to Talking Business from my website

If you like Talking Business, please leave us a review with Apple podcasts. Thank you in advance.

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

If you want to contact me, email me at I answer all emails.

 Wishing you all a safe and healthy week. And looking forward to bringing you Talking Business next week