Talking Business July 30 2021

Having escaped a “technical” recession for nearly three decades, Australia is at risk of two in the space of just over a year.


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

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 26 in our series for 2021 and today’s date is Friday July 30.

First, 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.

But now, let’s talk to Dr Ted Dunstone.

Extreme weather is slamming crops across the globe, bringing with it the threat of further food inflation at a time costs are already hovering near the highest in a decade and hunger is on the rise. Brazil’s worst frost in two decades brought a deadly blow to young coffee trees in the world’s biggest grower. Flooding in China’s key pork region inundated farms and raised the threat of animal disease. Scorching heat and drought crushed crops on both sides of the U.S.-Canada border. And in Europe, torrential rains sparked the risk of fungal diseases for grains and stalled tractors in soaked fields.  Coffee’s the biggest recent mover, with prices surging 17% this week week and topping $2 a pound for the first time since 2014. Arabica coffee futures are hitting fresh highs and extending a dramatic rally with more crop-destroying cold temperatures heading to Brazil, the world’s top grower. Prices for the high-end beans favoured by Starbucks and other cafe chains have surged more than 30% in a week, and will eventually top $US3 a pound, according to Judy Ganes, a consultant with decades of experience in the industry. The last time coffee hit $US3 was in 2011. But the recent frost in Brazil is just the latest example of woes that have struck farmers there this year. Brazil’s also experiencing a crippling drought that depleted reservoirs needed for irrigation. The series of misfortunes underscores what scientists have been warning about for years: Climate change and its associated weather volatility will make it increasingly harder to produce enough food for the world, with the poorest nations typically feeling the hardest blow. In some cases, social and political unrest follows. The Food Price Index from the UN’s Food and Agriculture Organization rose for 12 consecutive months through May before easing in June to 124.6 points, still up 34% from a year earlier. The index measures international prices of a basket of food commodities.

Having escaped a “technical” recession for nearly three decades, Australia is at risk of two in the space of just over a year. The technical definition of a recession is two straight quarters of the economy shrinking. The thing that might save Australia, ironically, is that the current September quarter may be so bad that it will be hard for the three months leading up to Christmas to be any worse. Despite this, economists do concede there are scenarios where Australia might fall into recession again this year. The first official confirmation of economic trouble came midway through last week, when the Bureau of Statistics released its June retail sales report.  Retail trade fell by 1.8% in the month — much higher than market expectations of a small fall, with food retailing the only sector to record a rise as people stopped eating out and cooked at home instead. So, is the contraction in the retail sector the canary in the coal mine? EY chief economist Jo Masters believes so, noting it is “very likely that the economy will contract in the September quarter, with strict lockdowns across New South Wales, Victoria and now South Australia.” The Commonwealth Bank’s head of Australian economics Gareth Aird says lockdowns, by their very nature, grind much economic activity to a halt. The vast majority of economists now expect a negative September quarter followed by a rebound in December. A key assumption many are making to arrive at this forecast is that the current lockdowns won’t be significantly extended and there won’t be any further major lockdowns later this year. Chair in epidemiology at Deakin University Catherine Bennett believes that’s a rosy assumption.

The Morrison government is resisting demands to return to the JobKeeper wage subsidy but is examining enhancing the current system of business and income payments, including extending support to welfare recipients. The federal government has already handed out about $350 million in income support to adversely affected NSW workers but the separate system of Commonwealth-state funded cash payments to distressed small and medium businesses, which is administered by the state government, only began this week. With the lockdown of Greater Sydney set to last indefinitely, some business groups and leaders joined calls for a return to JobKeeper. But the Business Council of Australia instead called for the current system of business support payments to be enhanced so that the payments were not capped as a percentage of payroll, and that big business was also eligible for the payments. It also recommended the income support payments be substantially increased. Speaking ahead of a meeting of the Expenditure Review Committee on Monday afternoon, where new options were discussed, Treasurer Josh Frydenberg said the current system of income and business payments effectively replicated JobKeeper. However, Mr Frydenberg said the government could again amend the assistance measures which have already been altered three times in six weeks in response to the challenges posed by the delta variant of coronavirus.

Temple & Webster’s earnings more than doubled in the 12 months ending June as the online retailer reaped the twin benefits of a boom in spending on the home and a shift to e-commerce during the pandemic. Unaudited earnings before interest, tax, depreciation and amortisation rose 141% to $20.5 million as revenue soared 85% to $326.3 million, driven by strong growth in new and repeat customers and average order values. The number of active customers rose 62% to 778,000 and revenue per active customer rose 12%. This is the strong shift towards online shopping and spending on homewares and furniture as consumers cocoon at home. Sales rose 26% in the June quarter 2021, compared with 130% in the June quarter 2020. The solid growth continued into 2022, with revenue in July to date rising 39%.


Indigenous tourism operators say their industry can’t last much longer without travellers from Sydney as the nation’s largest city enters its second month of lockdown. Since the latest lockdown in greater Sydney began, cancellations have been coming in thick and fast. According to a COVID-19 recovery plan for the industry, published last year by Tourism Research Australia, the Indigenous tourism sector was left particularly vulnerable by the international border closure.

That’s because Australians are less likely than overseas visitors to spend money on Indigenous operators. In 2019, 11% of international visitors participated in Indigenous tourism activities compared to just 1% of Australian tourists. In that same year 181,000 domestic visitors took part in Aboriginal tourism activities in NSW, compared to 333,000 international tourists – mainly from Europe and North America. New South Wa   les isn’t the only jurisdiction where businesses are struggling. Operators in the Northern Territory, where the government is aiming to become the country’s leading Indigenous tourism destination by 2030, are also seeing a downturn. In 2019, 67% of international visitors to the NT participated in Aboriginal tourism activities compared to just 16% of Australian tourists.

The global move away from fossil fuels will cost two in three workers their jobs across regions such as the Hunter Valley and central Queensland over the next three decades, according to a report that argues the impact will be even worse without investor support for a fair transition. Leaving workers in those regions – home to the coming federal election’s most critical swing seats – to fend for themselves will result in even worse outcomes, costing as many as 75% of the existing workforce their livelihoods. Either way, the industry’s job exodus is expected to be about three times the 27,500 jobs lost by late 2017 when Ford, Holden and Toyota closed their factories. The findings, in a provocative report based on research by EY Australia for the influential Investor Group on Climate Change, suggests that the move to net zero emissions is both inevitable and throws up huge opportunities for new jobs and economic growth, but only for countries that “get ahead of the curve”. The group’s members are made up of some of Australia’s biggest investors, including AustralianSuper, BlackRock, Pimco and AMP Capital, and currently manage more than $2 trillion in assets. The report, which comes less than 100 days before the much-anticipated United Nations climate summit in Glasgow, urges Australia to lift its climate commitments and develop concrete plans for the transition towards greener energy

Boral chief executive Zlatko Todorcevski has sold off yet another business as the building products group, which is now controlled by billionaire Kerry Stokes’ Seven Group Holding, slims down further. The company announced it had offloaded its Australian timber business, which sells decking and flooring products, to Melbourne-based Pentarch Group, for $64.5 million. Pentarch has different divisions and operates a forestry business that exports about 800,000 tonnes of plantation softwood and hardwood timber annually. Mr Todorcevski said the sale was in line with the strategy of concentrating on the core operations of Boral of cement, concrete, asphalt and quarrying products used in the construction sector.

Federal Labor has dumped its signature housing policy of winding back negative gearing after two election losses while putting itself on a campaign footing by ending its long-time opposition to scheduled tax cuts for high-income earners. Anthony Albanese’s shadow cabinet settled on the position on Monday morning before Labor’s caucus formally endorsed it in a teleconference with virtually no objections. However, it has triggered blowback from within the party’s progressive membership base after more than 18 months of fierce internal debate.

Crown Resorts has paid the Victorian government $61 million in taxes and penalties after evading the state’s gambling tax for nine years. But the total figure Crown may have to pay could be as high as $480 million, counsel assisting the Victorian royal commission said in damning closing submissions last week, which recommended the cancellation of Crown’s licence. Crown disputes this figure but told the market late on Tuesday that the Victorian casino regulator will advise on the final amount owing after the royal commission. Commissioner Raymond Finkelstein, QC, will report on October 15 on whether the James Packer-backed group should be allowed to run the sprawling Southbank casino complex. Crown said in the statement that penalty interest makes up just over a third – $24 million – of the payment Crown made to the Victorian casino regulator for evading the tax since 2012.


AMP has dumped the tarnished business model that made it Australia’s largest provider of financial advice for generations, granting its advisers long-sought ownership of their own clients and freedom to choose investments and technology. The 172-year-old wealth manager has heralded a “new era of financial advice”, hiking licence fees while removing the “handcuffs” stopping them from joining rivals. Under the reformed model, AMP will abandon its longstanding and controversial practice of buying firms from its advisers when they retire, known as the Buyer of Last Resort policy. Cessation of the controversial Buyer of Last Resort or BOLR policy from the end of this year will allow aligned firms to sell their businesses on the open market when they retire instead of being forced to sell to AMP at a discount, he said. BOLR has long been a key plank of AMP’s recruitment pitch and strategy to become Australia’s largest financial adviser – a mantle it held for decades but relinquished in June when rivals IOOF and MLC Wealth merged. But the policy was scorched by the Hayne royal commission for being based on a methodology that favoured advisers who sold higher volumes of AMP’s insurance and investment products under the much-maligned system of “vertical integration”. It will relinquish legal ownership of clients to those advisers, allowing them to more freely move to AMP rivals or apply for their own licence. It will also allow its advisers to use competitor administration and investment technology despite their historical contribution to the company’s flagship North platform.

Commonwealth Bank chief executive Matt Comyn has called for Parliament to regulate Apple’s rapid growth in the payments system and accused the world’s largest company of free-riding on banks’ investment. As governments around the world grapple with how to contain the growing power of the tech giants, Mr Comyn told a parliamentary joint committee on Tuesday that Apple’s iPhones were being used for 80% of smartphone “tap and go” payments, and restrictions on bank access to iPhone chips that communicate with payment terminals were anti-competitive. CBA and Apple are locked in a fight for control of billions of dollars of card payments that are made with mobile phones. Apple has nudged into financial services with Apple Pay, which is used by 9000 global banks, including Australia’s big four, to digitise payments cards. But Apple insists only its “digital wallet” can access the iPhone’s near-field communication (NFC) chip. This means bank app cannot make a tap-and-go directly  which CBA argues limits the functionality of its app for consumers. Banks also have to pay Apple a fee of a few cents for every $100 of transactions as a payment passes through the Apple system, which industry sources suggest could be heading towards $100 million a year. Apple says putting all payments through its wallet is necessary to guarantee security and it is appropriate it receives revenue from banks given its investment to create secure devices. But Mr Comyn said Apple Pay had become an essential service in payments, and its sheer size meant Parliament must pay close attention to the rules the tech giant placed around access to its smartphone infrastructure. Both the Australian Competition and Consumer Commission and Reserve Bank of Australia told the parliamentary joint committee on corporations and financial services that Apple’s restrictions on access to the NFC could create issues for competition law.

Eden Brew, a start-up backed by the CSIRO’s venture capital arm and Norco, Australia’s oldest dairy co-operative with annual revenue of $683 million, has raised $4 million as it accelerates work on producing milk without using any cows. The company says it is about 18 months away from having products on the market and its milk has the same taste, look and sensory feel as normal dairy milk. It has been making the product in conjunction with the CSIRO at a Werribee plant in Victoria and is now stepping up smaller-scale commercial production. Eden Brew chief executive Jim Fader said the product made in the lab has exactly the same characteristics as dairy milk coming from a cow. He said about 15% of the milk market in Australia is made up of non-dairy offerings made from soy, almonds and oats, and the segment is growing fast. Eden Brew is targeting that segment as consumers become increasingly concerned about climate change and the impact on the atmosphere of methane from the millions of cows in dairy herds

And that’s it for this week. And next week, I’ll be talking to Ryll Burgin Doyle, a local Australian Business Growth Strategist and billion-dollar disruptor who has a passion for SME’s. And I’ll be talking to IFM investors economist Alex Joiner about the state of Australia’s 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