Qantas is offering unlimited flights for a year among a pool of prizes for people who’ve had COVID-19 shots
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 18 in our series for 2021 and today’s date is Friday June 4.
First, I’ll be talking to Yannick Ieko, Founder and CEO and Senior Lending Strategist of the SMSF Loan Experts. And we’ll be talking about how people are using their SMSFs to invest in some really interesting and different / quirky investments including accommodation for NDIS services. And I’ll be talking to Rabobank economist Michael Every about the Chinese economy’s recovery.
But now, let’s talk to Yannick Ieko.
The Australian economy expanded in the March quarter, data from the ABS showed. GDP grew by 1.8% on quarterly basis in the first three months of the year, taking annual growth to 1.1%. Economists had been expecting March quarter GDP growth of 1.5%, and annual growth of 0.6%. In the December quarter, GDP climbed 3.1%
The lockdown in Victoria is costing the economy about $100 million a day, according to the federal Treasury. Secretary Steven Kennedy said the cost of lockdowns, while disruptive, was not as high as estimated last year because businesses were adapting their operating models. Treasury’s estimate is for a generic metro-only lockdown in a major city, whereas Victoria’s lockdown is state-wide. Dr Kennedy said the key to minimising the economic damage was to “suppress the virus”
The rampaging housing market is powering through concerns about a resurgent coronavirus outbreak in Melbourne, with home prices rising nationally by 2.2% in May. Housing markets around the country are seeing the benefits of low interest rates and easy credit with May’s rise even stronger than in April when home prices lifted by 1.8%, according to CoreLogic’s national Home Value Index. But the May rise was weaker than the 32-year high recorded in March, when values surged 2.8%, as affordability concerns start to put a brake on some markets. Dwelling values were split with Sydney up 3% in May and Melbourne rising 1.8%. Brisbane was up 2% and Adelaide rose by 1.9%. Perth homes increased in value by 1.1%, while Hobart leapt 3.2% and Darwin was up 2.7%. Canberra rose 1.7%.
Consumer confidence declined 2.5% last week, as a seven-day COVID lockdown was announced in Victoria on May 27. Counterintuitively, confidence was down by more in Sydney and Brisbane than it was in Melbourne. All of the confidence subindices fell. Current financial conditions’ fell by 3%, while ‘future financial conditions’ softened 2.4%. ‘Current economic conditions’ lost 0.5% and ‘future economic conditions’ dropped 4%.
Australian farmers are on track to produce a second consecutive bumper winter grain crop despite the mice plague eating out paddocks just seeded in parts of NSW, according to Rabobank. The agribusiness banking specialist is forecasting an increase in grain planting around Australia driven by favourable seasonal conditions and strong commodity prices it sees lasting well into next year. With summer crops already harvested and much of the winter crop in the ground, the Rabobank forecasts put farmers on track in 2021 to reap about $15 billion from the land. Based on average seasonal conditions from here until harvest, Rabobank is tipping Australia to produce 28.9 million tonnes of wheat, 10 million tonnes of barley and 4.1 million tonnes of canola. It has pencilled in exports of almost 20 million tonnes of wheat, 5.5 million tonnes of barley and 3.1 million tonnes of canola.
Male accounting partners are paid a staggering 60% more on average than women partners, according to Chartered Accountants Australia and New Zealand’s latest member remuneration survey. While pay is equal or higher for women in junior accounting positions, the gender pay gap widens in more senior roles. The gap is the largest for partners in accounting firms where men earn $292,000 on average while women earn $181,000. Female chief financial officers make $53,000 less than the $305,500 their male counterparts take home each year. The gap is more acute at senior levels due to the size of total remuneration packages, which include base salary as well as bonuses, share issues, and equity distribution. The figures are based on a survey of more than 4500 CA ANZ members, working across private accounting firms, large corporations, academia, and the public sector. Nearly seven in 10 women believe a gender pay gap exists, compared to just three in 10 men, according to the survey. For CA members in non-permanent jobs, men were paid two to two-and-a-half times more than women in terms of hourly rates.
Anthony Albanese has warned miners the Morrison government is threatening their exports with its inflammatory rhetoric towards China which, he says, is motivated by domestic political considerations. In a speech delivered to the minerals industry in Canberra on Wednesday, the Labor leader built on comments made two weeks ago by opposition foreign affairs spokeswoman Penny Wong in which she accused the government of encouraging anxiety about war with China for domestic political gain.
Rupert Murdoch’s News Corp Australia is in advanced talks with a consortium backed by high-profile bookmaker Matthew Tripp to launch a new wagering outfit that would reshape both the local industry and the battle for Tabcorp’s betting division. Matt Tripp and ASX-listed company BetMakers have made a bold $4 billion bid to acquire Tabcorp. News Corp is also in talks with US media business Fox Corp, which is also controlled by the Murdoch family, to secure licensing rights to use the FOX Bet brand for the new business. News Corp partnering with the consortium linked to Mr Tripp could also reshape the battle for Australia’s largest bookmaker, Tabcorp’s TAB, after Mr Tripp fronted a $4 billion cash-and-scrip bid by ASX-listed wagering technology outfit BetMakers for the division on Friday morning. If BetMakers’ bid for TAB is successful, Mr Tripp’s involvement in both groups would likely result in it taking over FOX Bet and operating the two brands side-by-side, the source said.
Arnott’s plans to achieve net zero emissions in its operations by 2040 and across the value chain by 2050, and to reduce, reuse or repurpose plastic packaging in Australia and New Zealand by 10%. It intends to make 100% of ANZ packaging reusable, recyclable or compostable by 2025, and sustainably grow and source 100% of its key ingredients by 2035. Arnott’s, which already sources 90% of its key ingredients from Australia, has committed to buying 100% of its wheat flour, dairy, sugar and canola oil from Australia and New Zealand. It will procure other key ingredients such as cocoa liquor and palm oil only through certified, audited or industry-led sustainable programs, and will only work with suppliers who commit to its Responsible Sourcing Supplier Code and are members of ethical trade group SEDEX.
Millennials and women are leading the way in the self-managed superannuation fund sector, the Australian Taxation Office’s (ATO) latest figures show. Self-managed super starts to make sense with a balance of $200,000 or more, says SMSF Association CEO John Maroney. Those under 45 years of age now make up about 45% of all new trustees, the March release of the SMSF Quarterly Statistical Report shows. Furthermore, there are more women in this cohort than men, which was reflected across all age brackets except among baby boomers.
Investing has entered a brave new world with figures over the last year showing nearly $200 billion of new money was poured into specific ESG-labelled products globally and the total global assets in these products hit more than $2 trillion. The level of interest in ESG investing in the last 18 months has grown exponentially, according to BT’s Head of Investment Research and Governance, Marnie McLaren. Demand spiked considerably in the aftermath of the bushfires followed by Covid with a stronger emphasis from investors on “environmental factors, business resilience and supply chain factors”, McLaren says. The recently released Blackrock Investment Stewardship (BIS) Global Quarterly Report outlines how the global investment behemoth builds an understanding of a company’s corporate governance and sustainable business practices. More pertinent is what Blackrock does if companies they’re investing in are not addressing ESG risks and most of the time the BIS team’s course of action is to vote against the re-election of directors. In the most recent report, the BIS voted against 1196 directors at 549 unique companies.
Law firm Slater and Gordon is investigating a possible class action claim against The A2 Milk Company on behalf of investors who bought shares over a nine-month period during which the baby formula maker posted four downgrades, resulting in a 62% share price slump. Based on its investigations to date, Slater and Gordon wrote in an email to investors that shareholders who had purchased stock on both the ASX and NZX between August 19, 2020 and May 7, 2021 may have basis for a claim. It alleges a2 Milk may have engaged in misleading or deceptive conduct in breach of the Corporations Act; and possibly breached continuous disclosure rules pointing to four downgrades: on September 28, 2020; December 18, 2020 and February 25 and May 10 2021. A2 Milk flagged on May 10 a review of its key China business and a blowout of more than $NZ100 million ($A92.9 million) in provisions for old stock. The latest cut to its outlook resulted in a2 Milk expecting full-year sales of $1.2 billion-$1.25 billion and group EBITDA margins of 11-12%. This compared to August 19, 2020 guidance for strong sales growth and EBITDA margins of 30-31%.
Qantas is offering unlimited flights for a year among a pool of prizes for people who’ve had Covid-19 shots, the biggest incentive yet from an Australian business in a bid to accelerate the country’s sluggish vaccination rollout. Giving details about the program on Monday, Chief Executive Officer Alan Joyce said 10 “mega prizes” would give families of four free travel with Qantas and its low-cost unit Jetstar for 12 months. Previously announced rewards for fully vaccinated passengers include air miles, flight vouchers and loyalty program status credits. He urged other companies to take part in a “Team Australia moment” to speed up the nation’s vaccine rollout by rewarding those who have had their jabs. There is growing frustration within the Australian business community about the slow pace of vaccination, with just 4.2m jabs delivered in a population of 25m people. Airlines are lobbying Canberra to bring forward a proposed mid-2022 date for reopening Australia’s borders, a timeframe that is hitting Qantas’ international business. Companies worldwide with the most to gain from a return to normal economic activity are dangling the biggest rewards for vaccinations. United Airlines is also offering frequent fliers the chance to win free flights. After suppressing the virus, Australia is now struggling to overcome vaccine hesitancy.
Business leaders are becoming increasingly vocal over COVID-19 vaccination take-up, with the boss of travel giant Flight Centre calling for vaccines to be made mandatory.Other major employers, such as Westpac and supermarket giant Woolworths, are offering to give staff specific time off to get vaccinated while others are reminding staff they can access company sick leave provisions if necessary. Woolworths, which is one of the nation’s biggest employers, will provide up to four hours of vaccination leave for full-time and part-time staffers. Woolworths has also committed that no casual staffers will lose rostered hours if vaccination appointments cannot be sourced outside of rostered shifts. Alliance, which has contracts with major mining companies and operates numerous flights for Qantas and Virgin Australia, has issued the vaccination policy, stating “all employees will take part in the Alliance Group Immunisation Program”. Alliance is believed to be the first Australian company to mandate the jab. Contractors and their employees will also be required to be vaccinated to conduct work on Alliance Group worksites, the policy states.
JBS Foods suspects Russian criminals are behind a ransomware attack that has crippled its operations in Australia. The cyber attack has shut down operations at the world’s largest meat processor in Australia, Canada and the United States, sending thousands of Australian abattoir workers home. Multinational company JBS, which is also the largest meat processor in Australia, had its global information systems brought down on the weekend. JBS has a network of 47 facilities with abattoirs and feedlots in NSW, Queensland, Victoria and Tasmania. Though unaware of any evidence that the attackers compromised or misused data tied to its customers, suppliers or employees, JBS said that resolving the fallout from the attack “may delay certain transactions with customers or suppliers.” It did not specify how its operations may have been affected.
The corporate watchdog has released its long-awaited advice on activist short sellers in an attempt to weed out ambush tactics used against some listed companies and to urge ASX-listed groups to properly respond to allegations. The new recommendations from the Australian Securities and Investments Commission (ASIC) follow investigations into alleged “short and distort” reports by offshore research houses targeting Australian companies. The corporate watchdog’s new advice is for short sellers and other research groups to release their reports outside of trading hours and not just before the market opens. Short sellers and research houses will have to also fact-check their short theses with a company before releasing the information. This approach will give companies the time to enter a trading halt and prepare a response to the report before any short selling takes place. Short sellers have also been asked to not use emotive language in their reports. The advice was included in an information paper and are not official guidelines or laws. Enforcing Australian advice on offshore groups would likely not be possible. Short selling, which has long existed in financial markets, is the practice of borrowing securities from long-term holders and selling them on the market with the aim of buying them back at a lower price for a profit.
IOOF will take control of National Australia Bank’s MLC Wealth subsidiary at midnight on Tuesday, officially completing the bank’s partial retreat from the troubled wealth management sector since the Hayne royal commission. NAB has completed the sale of the MLC superannuation and funds management business it purchased off Lendlease in 2000 for $4.5 billion. IOOF will pay $1.4 billion for the wealth manager, made up of $1.2 billion in cash proceeds and a $200 million five-year structured subordinated note. The bank will no longer be in the business of superannuation or retail financial planning, but will retain its JBWere private wealth management subsidiary. It sold 80% of its MLC Life Insurance business to Japan’s Nippon Life in 2015.
Ingenia Communities is backing a new loan to help the growing number of single, older women bridge the financing gap they need after a divorce or separation to buy a home in one of the company’s communities. Women over 55 are the fastest-growing cohort of homeless people in Australia. ASX-listed Ingenia is providing $3 million to prospective new customers via fintech start-up Land Lease Home Loans and has also committed seed capital to help the new company subsequently expand as a provider of finance to clients of other land lease companies. The typical loan would be $20,000-$40,000 and the typical customer a single woman in her mid-late 50s or early 60s, who was still working and wanted the companionship of a community but who had insufficient equity in her own home or from her share of a divorce or separation to buy outright, Ingenia chief executive Simon Owen said.
A global shortage in semiconductor chips is causing so much uncertainty that it is being likened to a second COVID-19 by Australian device makers, which are grappling with surging prices and crippling lead time blowouts. The shortage has become so severe that chief executives of hardware companies are being forced to radically alter the design of their products to be made with chips that are easier to source, or to consider putting manufacturing on hold or increasing prices substantially. The most extreme price rise was for the popular STM32 range of chips (used in many electronics products), which have gone from $2.80 to $100 each on the so-called “grey market” of unauthorised resellers, due to their scarcity. These chips are now impossible to buy from trusted manufacturers, while many other chips and components, such as flash memory chips, inertial measurement unit chips, bluetooth modules, microprocessors and Wi-Fi modules, have also had extreme price rises.
A new 900-kilometre transmission link considered crucial to enhancing the flow of cheap renewable energy around the country as coal plants exit is set to receive the go-ahead after TransGrid committed $1.8 billion to the project. TransGrid, which runs the New South Wales electricity network, confirmed a deal with the federal government’s green bank had allowed it to approve its investment in the NSW section of the long-awaited EnergyConnect project joining the NSW and South Australian grids. Projects like EnergyConnect, known as “interconnectors”, form a significant plank of the national strategy to modernise Australia’s massive east-coast electrical grid, allowing favourable wind and solar output in one part of the country to be readily dispatched to others during periods of high demand. The increased availability and supply routes for cheap excess renewable electricity will also help wean Australia off its dependency on fossil fuels as more coal-fired generators retire in coming years.
Nine Entertainment said it has signed agreements with Facebook and Google, following the Commonwealth government’s enacting of the news media bargaining code. The deal with Facebook is for the supply of news video clips and access to digital news articles on Facebook news products, for a term of up to three years with a minimum amount payable over the period. The five-year agreement with Google includes the supply of news content, excluding video, for Google’s News Showcase and other news products. Google will also expand its marketing initiatives across Nine’s platforms. The amount payable is a fixed annual fee with modest growth in the early years. Nine expects growth in publishing division EBITDA in FY22 (over FY21) in the range of $30m to $40m. The forecast takes into account expected net revenue from the Facebook and Google agreements, the impact of the termination of Google’s previous sales agreement on programmatic advertising sales revenue from 1 March 2021, as well as ongoing growth in subscription revenues for Nine’s key mastheads.
And that’s if for this week. And my apologies for the sound quality in the interviews this week, there were issues with Zoom. And next week. I’ll be talking to Frank Restuccia, Founder and Global CEO at Finder. And I’ll be talking to IFM Investors economist Alex Joiner about the outlook for the Australian 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.