Talking Business July 23 2021
Consumer confidence recorded its sharpest single fall since the start of the coronavirus pandemic as strict lockdowns were imposed on half of Australia.
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 25 in our series for 2021 and today’s date is Friday July 23.
First, I’ll be talking to tech guru Mick Esber who created the new and innovative app bhapi which rates, classifies, and blocks negative, fake, biased, hate, violent and explicit content on social media using best-in-class technology. It has been designed to deliver easy-to-use tools for users to manage what they send and receive, is completely Ad-free, and does not sell personal data to third parties. And I’ll be talking to Indeed economist Callam Pickering about Australia’s latest jobs figures.
But now, let’s talk to Mick Esber.
The threat of the Delta coronavirus variant this week hit global equity markets handing European bourses their worst sessions of the year. Commodity prices also fell and investors headed for the safe haven of government bonds. It helped to push the yield on the 10-year Treasury note to its lowest level in six months, extending a shift in investor sentiment as fears over runaway inflation have given way to creeping concerns over the durability of US growth, compounded by the spread of the Delta variant. “This is the market’s realisation that we are moving from a clear V-shaped recovery into something a lot more uncertain,” said Mohammed Kazmi, a portfolio manager at Union Bancaire Privée. “The hope was that vaccines would provide us with the endgame. Now investors are looking at the UK and there’s a bit of fear with regards to reopening so aggressively when cases are still so high.” The pullback in stocks, which came after months of steady gains in markets around the world, also reflected concerns that economic growth generated by industries reopening from last year’s shutdowns could peak just as inflation surges in Europe and the US.
Australia has joined the United States and other allies in accusing China of engaging in “malicious cyber activities”, including a massive global hack on the Microsoft Exchange software that compromised tens of thousands of computers earlier this year. The Microsoft Exchange hack was first identified in January and was rapidly attributed to Chinese cyber spies by private sector groups. But it has taken until now for Australia, and like-minded countries, to publicly attribute the cyber attack to Beijing.
With Coronavirus outbreaks plunging more than half of Australia into lockdown, sparking calls for more federal support, the Morrison government is resisting pressure to reinstate JobKeeper wage subsidies with at least 13.5 million people under heavy restrictions across NSW, Victoria and South Australia. Instead, people who lose work in designated hot spots can access weekly payments of between $375 and $600 when lockdowns extend beyond seven days.
Consumer confidence recorded its sharpest single fall since the start of the coronavirus pandemic as strict lockdowns were imposed on millions of Australians following virus outbreaks in Sydney and Melbourne. The latest lockdowns are expected to hit economic growth by $10 billion in the third quarter, with many economists expecting to see nil or negative growth in the three months to September and hits to employment. Consumer spending intentions were softer compared with June last year when people emerged from the first national lockdown, but remained strong compared with the same time in 2019 when conditions were less volatile. Overall consumer confidence fell 5.2%, according to the latest ANZ-Roy Morgan report, as uncertainty about the highly contagious COVID-19 delta strain played on public sentiment. Confidence in current economic conditions dropped 7.9% and spirits about future conditions lowered 4.5%, despite strong jobs data showing unemployment falling to 4.9%in June. Confidence about current financial conditions registered a slight 1.2% uptick following the announcement of government support, while the future appeared more uncertain, with confidence dropping 3.4%.
Workers who have endured the slowest wage growth on record will never make up for the hit to their weekly pay packets caused by the coronavirus pandemic, with the Reserve Bank warning inertia could hold back incomes for years. In some of its bluntest language about wages growth, the RBA used the minutes of its July meeting to argue there were few signs of a lift in incomes beyond the level that has plagued the economy for the past half-decade. Some analysts have argued that with unemployment now at 4.9% and some businesses warning of labour shortages, wages will start to grow much faster in a development that would force the RBA to lift interest rates as early as late next year. But the bank’s minutes show that while there have been some signs of a lift in wages growth, this is only back to where it was before the coronavirus pandemic.
Australian companies are offering their staff half a day off to get vaccinated against COVID-19, meaning workers won’t have to dip into their sick or annual leave to get the jab. Employers are telling their staff they can get half a day off work to get the vaccine. Only about 13% of Australians have been fully vaccinated to date As more than 11 million Australians have been locked down to limit the spread of the highly infectious Delta variant in the country’s two biggest cities, businesses are offering permanent employees two lots of paid leave, to cover time off for both doses of the COVID-19 vaccine. Companies including Domain, Prosper, Zip and Athena Home Loans have joined some of the big banks in vowing they will also give casual employees paid vaccination leave or flexible options to make it easier for them to attend vaccination appointment
Restrictions in Sydney and Melbourne have reversed a rebound in employee mental wellness, which had been tracking towards pre-pandemic levels, according to Converge International. The provider of employee assistance programs said data from counselling sessions with 13,000 Australian employees showed a turnaround in workers’ overall mental health. From the 1200 companies that Converge works with in Australia, employee calls requesting appointments jumped 16% in the week commencing May 31, when Melbourne’s fourth lockdown hit, compared to the prior week. In the week following Sydney’s lockdown announcement in late June, there was a 15% increase in requests. Requests for appointments remained high during the most recent school holiday period, a time when the service typically receives far fewer calls, as people cancelled holidays and continued working. The impact of repeated shifts to remote learning and, at the tertiary level, the job insecurity stemming from the economic impact of the dramatic decline in international students is evident in the data from Converge International. Ongoing stress increased 8%, job or time pressure was up 65.4% year-on-year and work-life balance was also a growing issue, up 81% year-on-year, in the 1182 training and education professionals who presented to Converge International in the second quarter of 2021.
Commonwealth Bank has led a rapid series of moves by Australia’s biggest banks to support customers as strict measures to contain the delta outbreak threaten to derail the economic recovery. Within 24 hours of the dramatic escalation of Sydney’s lockdown, banks had detailed measures including free overdrafts for small businesses, targeted home loan deferrals and had extended a promise not to evict customers from their homes. CBA will email customers in the Fairfield, Liverpool and Canterbury-Bankstown local government areas, along with customers working in the construction and retail sectors, on Monday to brief them on relief available. This will include freezing home loans repayments for two months. Other banks are also willing to defer repayments for affected customers who reach out for help. Other banks are also extending relief. Westpac said from Monday it would offer eligible existing small business customers interest-free, temporary overdrafts up to $15,000, as businesses around the country, including in the retail sectors, worry about the impact of restricted trading hours on cash flow. National Australia Bank and CBA have also offered to run staff vaccination programs in their premises, operated by the same services that deliver regular staff flu jabs. Banks will also ensure that any customers who seek deferrals for the latest lockdowns do not have their credit scores penalised, which could lift the cost of credit in the future. Banks remain confident that if the Melbourne and Sydney lockdowns are short and the virus can be contained, the economy will roar back to life when restrictions are eased.
Australia cannot hit net zero emissions by 2050 without a policy for the transport sector, experts say, and it must be focused on driving people to buy electric vehicles. In the first of a series of industry reports, the Grattan Institute argues strict regulations are needed to phase out petrol cars with emissions standards that tighten to zero by 2035. It says a carbon price is the most economically efficient way to address emissions, but as that has been rejected by both of Australia’s major political parties sector-specific policies are needed to reduce greenhouse gases industry by industry. Grattan’s report says “there are no federal government policies to reduce transport emissions at any significant scale” and it called for tax breaks on electric vehicles and swift rollout of emissions standards because the national fleet “takes more than 20 years to replace” and vehicles sold after that date could be in operation after 2050.
Crown Resorts should be stripped of Victoria’s sole casino licence and should axe executive chairman Helen Coonan and Crown Melbourne CEO Xavier Walsh, counsel assisting the royal commission into the casino giant has argued. Giving his final submission to the Victorian inquiry, counsel assisting Adrian Finanzio, SC, slammed Crown for “grave, systemic breaches of the law” and warned any path to reform would take at least two years. The hardline recommendations cast doubt over whether the investors circling Crown – casino rival The Star and US private equity group Oaktree – will still find the company an attractive target. It also raises questions about the NSW casino regulator’s timeline to open Crown’s Barangaroo site in Sydney this year, with chief watchdog Phillip Crawford unwilling to put a date on its licence approval. Mr Finanzio said that Crown Melbourne was not a suitable licensee when the NSW Bergin inquiry found the James Packer-backed group unfit to open its Barangaroo casino in February, and that it remained unsuitable and would be “for some time”.
Reports of alleged sexual assault have been made by employees and contractors of BHP, FMG, and Newcrest. Rio Tinto says it also has had reports of sexual assault and harassment. The Senate’s Education and Employment Legislation Committee is examining these allegations as part of a broader inquiry as part of the committee’s inquiry into the Sex Discrimination Act (Respect at Work) Amendment Bill 2021. The bill aims to enact legislative changes borne out of Sex Discrimination Commissioner Kate Jenkins’ 2020 Respect at Work report. The report found the rate of sexual harassment in the Australian mining industry was 40%, 11% higher than the average across all industries.
Poorly handled sexual harassment complaints can “degrade and devalue not only the survivors who report it but an entire company’s global workforce and its underlying market value”, according to former AMP Capital director Julia Szlakowski. Ms Szlakowski, who was forced to bring in external lawyers to settle a sexual harassment complaint lodged against her former boss Boe Pahari in 2017 after AMP asked her to continue to work under the former AMP Capital chief executive, has called on companies and investors to “conduct themselves within the moral and ethical norms of their customer base, or rightly risk extinction”. In an address presented to the Australian Council of Superannuation Investors conference on Wednesday, Ms Szlakowski warned the burden and consequences of reporting sexual harassment continue to fall on those who lodged complaints.
Super funds have delivered their second strongest year since compulsory superannuation was introduced, with the median growth fund returning 18% in the 2021 financial year, according to research house Chant West. The only better run was in 1996-97, when the median growth fund – the most popular super investment option – returned 19.4%. But the also popular balanced investment option saw some strong performers, with fellow research house Super Ratings research showing the top 20 performers in the category each returned more than 18% over the same period. According to Chant West, the top performing growth fund was Mine Super, an industry fund for coal mine workers, that returned 22.6% . But the bottom end of the range still performed strongly, Chant West said, with the worst performing fund in the category returning 13%. Super Ratings said the strongest performing balanced fund was the QANTAS Super Gateway Growth Fund, which qualifies as a balanced option due to its more conservative asset allocation. It returned 22%, boosting its average 10 year return to 8.1% . Due to methodology differences, Chant West counted AustralianSuper’s balanced fund as a growth fund while Super Ratings considers it a balanced fund – but both researches agreed it was the strongest overall performer over the past decade, with an average 9.7% return.
JB Hi-Fi expects full-year net profit to soar more than 60% and sales to rise more than 12% despite a weak June quarter, when compared with the 30% plus sales growth in the consumer electronics retailer’s core businesses in the same period last year. Releasing unaudited results for the 12 months ended June 30, JB Hi-Fi said it expected net profit to rise 67.4% to $506.1 million and earnings before interest and tax to climb 53.8% to $743.2 million. Group sales were expected to increase 12.6% to $8.9 billion, with online
sales up 78.1% to $1.1 billion, reaching 11.9% of total sales. JB Hi-Fi and its appliances business, The Good Guys, have been big beneficiaries of a redirection in consumer spending from international and domestic travel, the shift to working from home, and strong retail spending propped up by wage subsidies and record low interest rates.
Afterpay will launch a new banking app for its 3 million-plus Australian users in October, as the payments juggernaut attempts to steal young customers from the major banks by creating a more engaging experience around savings. Afterpay said its own employees will begin testing the new app – to be called Money – from Tuesday, and it has obtained an Australian Financial Services License (AFSL) from ASIC allowing it to distribute deposit products and debit cards and provide general financial product advice. Money will target Millennial and Generation Z female customers, who flocked to Afterpay’s payments app for online shopping at fashion retailers and now will be offered a separate app for budgeting and saving.
A mystery Sydney-based wine collector has splashed out more than $142,000 for a rare bottle of Penfolds Grange, smashing the record price for a single bottle of Australian wine. The bottle of 1951 Grange – part of the first ever vintage of the iconic wine – sold via an online auction on Sunday night, for close to $40,000 more than the previous record price of $103,000 paid in July last year. It was signed by pioneering winemaker by Max Schubert, the creator of Australia’s most iconic wine. The $142,131 sale price, which includes a 16.5 % buyer’s premium and GST, was also much higher than the $120,000 the bottle was expected to sell for when bids opened two weeks ago.
And that’s it for this week. And next week, I’ll be talking to Dr Ted Dunstone MD, founder of Biometix and Bixelab (one of only two labs in the world accredited for international biometric identity standards) and world-renowned biometric and identity expert, talking about what is actually a workable vaccine passport/certificate that will be recognised internationally? And I’ll be talking to economist Saul Eslake about the impact of the lockdowns on the economy.
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