Rupert Murdoch locks in his fifth marriage (and his molecular biologist wife her third marriage).
What are the odds?
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 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 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 19 in our series for 2024 and today’s date is Friday June 7
First, I’ll be talking Prakash Ramamurthy, Chief Product Officer at Freshworks and he’ll talk about how Freshworks is helping business sales teams use AI effectively.
And I will talk to Rabobank economist Michael Every about what’s happening with the economy of our biggest trading partner, China.
But first, let’s talk to Prakash Ramamurthy
So what’s happening in the news?
Media mogul Rupert Murdoch has married again, tying the knot for the fifth time at his California vineyard on Saturday. The former Fox and News Corp chairman, 93, married 67-year-old Elena Zhukova after a short engagement. The pair started dating in 2023 and confirmed their plans to wed to the New York Times in March this year. Zhukova, a retired molecular biologist, was introduced to Murdoch by his third wife Wendi Deng. Moscow native Zhukova was previously married to billionaire Alexander Zhukov. This will be her third marriage. Zhukova is the mother of Darrya Zhukova, who was married to Russian oligarch Roman Abramovich, the former owner of English Premier League soccer team Chelsea. The wedding took place at Murdoch’s exclusive Bel Air vineyard and estate Moraga. Murdoch purchased the secluded Los Angeles property in 2013. Murdoch stepped down from the top job at News Corp late last year, handing the reins to his eldest son Lachlan. He continues to be involved in the media empire as a chairman emeritus. Despite stepping back from official duties across his media empire, Murdoch is still seen as its figurehead. Last month, Prince Harry failed in his attempt to bring legal action against Murdoch directly as part of his lawsuit, with other politicians and celebrities, over alleged phone-hacking claims against News Group Newspapers, part of the News Corp empire which publishes The Sun and used to publish the now-defunct News of the World. Lachlan Murdoch, meanwhile, has been contending with flagging viewership and advertising at local Fox stations through the US presidential primary season, though he expressed confidence they would rise through the general election. The wedding comes amid a difficult time for News Corp’s Australian publishing empire, with journalists being informed on Wednesday of a newsroom restructure which is likely to result in more job losses as the company seeks to save up to $65 million. Murdoch is set to visit Australia in July this year to celebrate the 60th anniversary of News Corp masthead The Australian. It will mark his first trip down under since 2018. The Murdoch media empires are controlled through a family trust, meaning the marriage to Zhukova is unlikely to impact the future holdings of both media empires. Upon Murdoch’s death, all votes would be transferred to his four eldest children, Prudence, Lachlan, James and Elisabeth. Murdoch has six children from his first three marriages. It was only in March 2023 that Murdoch was engaged to a different woman, Ann Lesley Smith, before calling off the wedding in April after he reportedly became concerned about Smith’s ultra-conservative and evangelist views.
Australia’s economy is on the verge of crawling to a standstill, with the nation’s March quarter national accounts weaker than expected. GDP slowed to 0.1% on-quarter and 1.1% on-year from respective growth rates of 0.2% and 1.5% in the December quarter. Growth was slightly below consensus of 0.2% and 1.2%. It’s the slowest annual growth rate since the December quarter of 2020. GDP per capita fell for the fifth consecutive quarter, falling 0.4% in March and 1.3% through the year. Excluding population growth, the economy in per capita terms has been flat or in retreat since the start of 2023 as the Reserve Bank’s interest rate increases aimed at curbing inflation has squeezed mortgage-holders and other borrowers. The year-on-year growth pace was the slowest since the December quarter of 2020 when the economy was mired in the Covid pandemic, the ABS said.
The National Disability Insurance Scheme integrity chief says nine out of 10 plan managers surveyed showed signs of fraud and the justice system would be overwhelmed if all the scams carried out on the $44 billion program were prosecuted. In fiery testimony, John Dardo told a Senate committee that internal analysis showed 90% of plan managers that wrangle funding for up to 100 participants (about 900 of 1540 managers in total) portrayed “significant indicators of fraud”. Further, he added, there were dozens of examples where organised crime groups were abusing the system, including encouraging the use of NDIS money to buy drugs and alcohol. Mr Dardo also revealed “pretty extreme” conflicts of interest such as family members paying each other for care. “These are not genuine providers, not people who should be in business, not people who should be allowed near government schemes of any kind,” he told a Senate estimates committee late Monday night. Asked in Parliament on Tuesday if he was allowing drugs to be trafficked under a scheme he designed, Disability minister Bill Shorten accused the Coalition of failing to properly administer the scheme. “I agree that there are issues in terms of fraud in the scheme, but these issues of fraud did not start yesterday,” Mr Shorten said, accusing the Opposition of naivety. The rapid growth of the scheme is one of the strongest headwinds challenging Treasurer Jim Chalmers budget: it is consistently growing at more than 20% a year despite Labor’s efforts to rein in its explosive trajectory. In a significant overhaul of how the program is run, last year’s review recommended phasing out plan managers over five years, signalling the end of a booming sector that emerged to help participants pay invoices and monitor their budgets. But Mr Dardo said more needed to be done, and sooner to rid the scheme of “dodgy” operators – meaning both plan managers and providers of care. “There are weaknesses in the design of the system that need to be addressed. We just cannot prosecute or audit our way out of this,” he said. He added stricter laws to help prevent participants from being defrauded by unscrupulous providers were critical to stopping the abuse of some of society’s most vulnerable. Mr Dardo said a “very significant” number of providers had been found to be selling drugs to participants. Asked which drugs and if it included heroin, cocaine, speed and ice, Mr Dardo said: “You name it, it’s on the list.” Mr Dardo said he had recently spoken to a participant who would meet their provider at an ATM, where “the provider would withdraw cash and provide that cash to the participant for her to source illicit substances”. Fraudulent providers peddling drugs were returning even when they had been exposed, he said. “They’re coming across as a different entity, or they are establishing other providers or are coming back as an unregistered provider. There is a whole series of patterns.
Treasury secretary Steven Kennedy has conceded the department did not anticipate the post-pandemic surge in migration, blaming the “frankly poor” forecasting performance to a failure to anticipate a sharp rise in foreign student numbers. “Did Treasury get the numbers wrong? Yes. Temporary migration recovered from the pandemic much more rapidly than we anticipated,” Dr Kennedy told the Senate. While net arrivals totalled a record 528,400 in the 12 months to June 2023, last year’s federal budget underestimated this figure by 24%, Dr Kennedy told a Senate estimates committee. “That’s frankly poor performance on our behalf,” Dr Kennedy said. “Other countries have faced similar challenges, including New Zealand, where the equivalent forecast was 42% lower than the latest [net overseas migration] estimate, and the United Kingdom, where the forecast was 58% lower.” The record rate of net overseas migration has become a major political issue for the Albanese government, amid community concern over housing affordability and infrastructure pressures. The record migration intake has pushed annual population growth to 2.5%, its highest rate since 1952. But the migration surge is largely a one-off boost caused by international students and temporary workers returning to Australia following the end of pandemic travel restrictions. The migration story is important because it seems to be the only thing that’s stopping Australia falling into recession with negative GDP growth. Oxford Australia’s head of macroeconomic forecasting Sean Langcake said that budgetary pain will be tempered in aggregate because population growth is set to remain quite strong”. “In other words, while individual families are doing it tougher and spending less on goods and services, there are enough new people coming into the economy to ensure growth continues”. “That should translate into annual GDP growth remaining above 1%, Oxford predicted, which would be well below the 2.1% posted over the year to the September quarter”. Opposition Leader Peter Dutton pledged last month to cut the permanent migration program by 25% from 185,000 to 140,000, and to get net overseas migration down to 160,000. However, the specifics of how a Coalition government would achieve this goal are unclear, and experts say it would require aggressive cuts to student and other temporary visa programs. Treasury expects net overseas migration to decline sharply, falling to 260,000 by June 2025 and then its pre-pandemic average of 235,000 in June 2027, after the government introduces limits on foreign student numbers. Dr Kennedy said that when Australia reopened its borders, there was a large catch-up in overseas arrivals in a compressed timeframe, largely driven by a sharp increase in the number of foreign students.
Yoga instructors, martial artists and dog handlers have beaten some construction trades to a spot on the government’s draft priority skills list for migrants, despite the dire need for workers to tackle the nation’s housing crisis. As the government faces a shortfall of 90,000 construction workers to meet its target of 1.2 million homes by the end of the decade, the latest list of occupations that can be fast-tracked into the country includes wellness professionals, while trades including plumbers, bricklayers and cabinetmakers remain under consideration. Parliament is locked in a fierce argument over the role of migration in housing affordability, with a debate over who qualifies for the overseas skills list being fought at the same time as the government strives to drive down the total number of people arriving in Australia while increasing the supply of homes. It follows a stoush between the government and the building sector in December when tradies were left off the streamlined, high-skilled professional visa category amid union calls to ensure Australian jobs were prioritised. BuildSkills Australia, which was commissioned by Labor to help solve Australia’s housing workforce crisis, said in a submission on the core skills list that boosting the proportion of migrant construction workers would rebalance the effect arrivals had on housing demand. “Does the world really need more yoga instructors at this point in time?” BuildSkills head of research Rob Sobyra said. “I’m not diminishing the importance of that as an occupation, or the validity of it. But from the perspective of our economic priorities in this country, our social and economic priorities, it would seem to us that we should really be prioritising basically any skilled trade.” The Albanese government’s Jobs and Skills Australia has released three draft lists for occupations relating to a new core-skills migration stream: those it is confident should be on or off the list, and those requiring more consultation. The new agency has included yogis and martial artists on the roll call of occupations it is confident will make the list, which also includes electricians, carpenters and joiners, and civil engineers. But painters, roof tilers, stonemasons and other tradespeople needed to address the housing crisis have been targeted for consultation.
The Fair Work Commission has warned that stalled productivity and falling profits in the retail and hospitality industries remain barriers to reversing the fall in real wages since the pandemic. The wage panel on Monday increased rates in 121 awards by 3.75% from July 1 to assist 2.6 million minimum award workers with cost-of-living pressures. It could not justify pay rises significantly above inflation after recognising productivity was weak and jobs and hours were falling in industries hit by lower consumer spending. The pay rise, below the upper end of market expectations, affects about 25% of the workforce, from hospitality workers on up to $66,000 a year to pilots on more than $150,000. Employers said the decision means productivity must be a priority for future wage talks, while some economists predicted it would lead to wage growth slowing down faster than expected. Australian Industry Group chief executive Innes Willox said the decision was “moderate” only relative to the ACTU’s 5% claim but still “somewhat on the high side”. “The decision underestimates some of the challenges facing industries doing it tough,” he said. “More positively, it recognises that real wage rises are only sustainable when aligned with productivity increases.” Australian Chamber of Commerce and Industry chief executive Andrew McKellar, who called for a 2% increase, said the decision was “above inflation” and would “test the acceptable limits for businesses”.
Company directors would be asked to disclose their sexuality, age, any Indigenous heritage and disabilities under far-reaching updates to the principles governing ASX companies that some board members, company secretaries and investors warn are misguided. Zip Co chair and leading diversity advocate Diane Smith-Gander said that while Australian boards understood the need for greater diversity, she was concerned it would become a de-facto requirement. “I don’t support the extension of the guidelines to include rules about the personal characteristics of directors,” she said. “I don’t think anyone should be compelled to make disclosures about their personal information, if they don’t want to.” Governance Institute chairman Pauline Vamos said there is a danger that the more prescriptive the principles become, the more they could duplicate, or be at odds with other disclosure regimes, such as climate risk disclosures or gender reporting. Small companies, in particular, could find the regime too onerous and start to consider their listed status, she said. The ASX Corporate Governance Council, which is chaired by the former Ashurst partner Elizabeth Johnstone has received mixed feedback on its proposal to expand reporting on diversity beyond gender, following similar moves in the UK and on the NASDAQ in the US. In its proposed fifth update to corporate governance principles and recommendations, the council has also called for the current gender target of 30% women on boards to be lifted to 40%, and for board skill sets (and skills gaps) to be audited. Companies would need to report against the new principles by July 2025. Under the listing rules, companies are required to disclose when they fail to conform with the principles and give reasons why, under a framework designed to encourage boards to abide by the guidelines – but which does not force them to do so.
Business failures tracking at the highest rate since the aftermath of the global financial crisis combined with mortgage and cost of living pressures are seeing a rapidly rising number of personal insolvencies. And it is expected more Australians will declare bankruptcy in the months ahead as the cost-of-living crisis continues to bite and business failures trigger a ripple effect through the economy. Figures from the Australian Financial Security Authority show there have been 9737 personal insolvencies up to April 30 in this financial year, compared with 7991 during the same period a year ago. The AFSA data showed there were 1046 people who entered a formal personal insolvency, up from 980 in March. Of the new personal insolvencies, 584 were bankruptcies, 447 were debt agreements, 14 were personal insolvency agreements, and one was an insolvent deceased estate. Throughout the period, 248 people who entered a formal personal insolvency were also involved in a business, with that cohort making up 37.2% of all bankruptcies in the month. Figures from the Australian Securities & Investments Commission show there have been 8742 insolvency appointments up to April 30 in this financial year, compared with 6200 during the same period a year ago. The current financial year is shaping up to be the highest rate of external administration and controller appointments since 2011 when 10,757 businesses went under. NSW had the most personal insolvencies in April at 306, just as it did with corporate insolvencies. Queensland was just behind at 275, followed by Victoria at 196. Western Australia and South Australia had 74 and 69 personal insolvencies respectively, while Tasmania, NT and ACT had less than 26.
And that’s it for this week.
And next week, I’ll be talking to Chris McNamara, the CRO of Remote and he’ll talk about how it is strategically advantageous for businesses to consider remote work as part of their acquisition and retention strategy.
And I will talk to AMP Capital chief economist Shane Oliver about Australia’s latest inflation figures.
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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Wishing you all a safe and healthy week, And looking forward to bringing you Talking Business next week
