Talking Business March 19 2021



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 7 in our series for 2021 and today’s date is Friday March 19.

First, I’ll be talking to entertainment entrepreneur and public speaker Darryl Lovegrove about how his business is managing in the pandemic. The key, he says, is resilience. And I’ll be talking to IFM Investors economist Alex Joiner about how the economy is travelling, giving a sharp analysis and realistic perspective to all the latest data.

But now, let’s talk to Darryl Lovegrove.




Supercharged by the need to secure local supplies of fresh vegetables during the pandemic, some vertical farms are now branching out into other high-margin areas such as medical cannabis, health supplements and cosmetics. South Korean startup Farm 8 Co. is among a proliferation of indoor urban growers that saw sales jump during Covid-19. It’s looking to increase sales by almost 50% to 90 billion won ($US79 million) this year, partly by boosting production of medical and cosmetic-based plants such as ginseng, centella asiatica and artemisia campestris. In August, the company joined the country’s first regulation-free zone for medical cannabis, growing and processing hemp. Other vertical farms are also using the technology to meet rising demand for stringent quality control in medical and cosmetic applications, such as Denmark’s International Cosmetics Science Centre, Poland’s Vertigo Farms and California-based MedMen Enterprises. Farm 8 currently grows about 1.2 tons of salad greens per day on less than an acre (0.5 hectare) of land, spread across locations in three cities in South Korea, including in a busy subway station in South Korea’s capital. It’s one of the top local lettuce producers for fast-food chains including Subway Restaurants, Burger King Corp. and KFC Corp. Sales rose 30% last year. That’s the traditional market for vertical farms — guaranteed delivery of quality controlled fresh produce that need to reach the consumer quickly regardless of weather or season. Those advantages were underlined as pandemic supply disruptions and unreliable harvests pushed global food prices to a six-year high in February.

In opening remarks at the Melbourne Business Analytics Conference, RBA Governor Philip Lowe said the economic recovery has been quicker and stronger than expected “but we still have a long way to go”. The unemployment rate is too high and inflation and wage growth are lower than the RBA would like. One piece of the recovery yet to click into gear is business investment, Dr Lowe said.

Reserve Bank of Australia (RBA) minutes for the March rate meeting echo recent remarks by Governor Lowe, suggesting that there will be no rate increases for a considerable time, at least, not until wages reach 3%, and that is not expected until 2024.


Australia’s claim that China breached international trading rules by imposing tariffs on barley last year will be referred to a dispute panel to be established by the World Trade Organisation. Talks between Australia and China over barley tariffs have failed. Beijing imposed tariffs on Australian-grown barley in 2020, claiming farmers had dumped the grain in China for cheaper than it cost to produce. Australia denied any anti-competitive behaviour, and in December referred the tariffs to the World Trade Organisation, which acts as an independent umpire. Trade Minister Dan Tehan said talks between China and Australia had failed and the government would now request a dispute panel be established by the WTO.

Credit rating agency Moody’s warns a growing number of borrowers will struggle to meet their mortgage payments in the coming months, as COVID-19 emergency support schemes come to an end. Despite the huge financial shock caused by the pandemic, mortgage arrears fell during the December half as the economy was shielded by a wave of taxpayer support, including the JobSeeker wage subsidy, and banks allowed customers to defer their payments. But with much of this support set to be withdrawn at the end of this month, a Moody’s report on Monday predicted more borrowers would fall behind on their loans in the first half of this year – a view shared by the major banks. The increase is expected despite the buoyant housing market making it easier for some struggling borrowers to sell their property as a way of clearing their debts. Moody’s said it expected the situation would turn around, and delinquency rates would start to improve again, as the economic recovery gained momentum in late 2021

The value of loans written to heavily indebted property buyers has almost doubled in less than two years, putting pressure on the prudential regulator to intervene in the red-hot Australian property market. Data for the December quarter from the Australian Prudential Regulation Authority showed the value of loans of property buyers with a debt to income ratio of greater than six times has risen by 89% from $11.4 billion in March 2019 to $21.5 billion in December 2020, sparking debate over whether riskier lending is starting to re-emerge. Analysis by UBS economist George Tharenou found the share of new loans that were more than four times the borrower’s income rose from 57.7% to 59.3%, the highest level since the figures started in 2018. Mr Tharenou said loans with an LVR above 80% also rose from 39.9% to 42%, the highest since 2008. Rhizome risk consultant and former APRA credit risk specialist Will Peterson said the data showed an increase in the proportion of heavily indebted borrowing as a percentage of new loans from a two-year low of 14.3% to 16.9%. Also on Tuesday, figures from the Australian Bureau of Statistics showed average capital city house prices rose 3% in the December quarter, with Sydney prices up 3% and Melbourne prices rising 3.4%. The rising number of home buyers up to their ears in debt has occurred as property prices delivered their fastest monthly price growth in 17 years, with national house prices rising 2.1% in February alone. Borrowers with high levels of debt-to-income experience high levels of mortgage stress and are more likely to default. Most of the big four banks will require manual approval from the credit department for loans over seven times debt-to-income. The spike in borrowers with high levels of debt to income over the December quarter – 26.3% year-on-year – sets up the prospect of an even bigger jump in the number in the next quarterly figures with home buyers needing to borrow more to keep up with the price growth.









Employers say a lack of skilled workers has emerged as a major obstacle to businesses ramping up operations and hiring more Australians, and getting access to qualified migrants will be a critical part to the country’s post-COVID recovery. Despite the fast-paced economic rebound over the second half of 2020, the economy remains smaller than it was pre-pandemic, and unemployment higher. More than 1.2 million Australians were on JobSeeker  in January compared with 725,000 on unemployment benefits before the pandemic struck, the Department of Social Services says.

The cessation of the JobKeeper wage subsidy should make state and territory leaders “think twice” before they rush to close their borders in response to a COVID-19 outbreak, Treasurer Josh Frydenberg says. In a speech delivered on Tuesday night to the annual dinner of the Business Council of Australia, Mr Frydenberg said the federal government’s capacity to pick up the tab for the economic ruin caused by the closures can no longer be relied upon. As the health risks abate over the course of this year when the vaccines are rolled out, states need to be more mindful of the economic risks associated with border closures. The $90 billion JobKeeper wage subsidy and the COVID-19 supplement to the JobSeeker unemployment benefit will both cease at the end of March. Leading labour market economist University of Melbourne professor Jeff Borland says up to 250,000 Australians could lose their jobs when the JobKeeper wage subsidy program finishes at the end of this month and that the expiry of the support payments looms as a key “known unknown” and has the potential to derail a powerful post-recession labour market recovery,

The Reserve Bank of Australia expects small business failures to rise as pandemic measures are phased out and access to finance remains tight for the nation’s small to medium enterprise (SME) sector. RBA assistant governor Christopher Kent said the central bank will continue to pay close attention to small businesses’ access to finance, and their prospects more broadly, amid an uncertain economic outlook. He said while a wide range of monetary, fiscal and private-sector measures have provided support for SME’s over the past year – in many cases obviating the need to take out additional debt – SME’s remain reluctant to take out new loans, and continue to face difficulty in accessing finance.

A potential wave of legal claims over hundreds of millions of dollars of building work disrupted by Melbourne’s COVID-19 lockdowns could cripple the sector and damage the state’s economic recovery. The building industry’s peak body, the Master Builders Association, says the issue of liquidated damages– compensation payments for building jobs delivered late – presents a “legal minefield” for everyone in the sector from the multibillion-dollar corporate construction giants to the smallest of subcontractors and suppliers. The building industry was allowed to keep working, with some restrictions, for most of 2020 but was ordered into “pilot-light mode” in August and September, with sites only allowed to have 25% of their workforce on the job. When February’s five-day “circuit-breaker” lockdown was imposed, the industry estimated the shutdown cost more than $450 million in economic activity each day, including $63 million in lost wages. The disruption has delayed completion of large and small projects and although the MBA says it is not aware of any claims for liquidated damages being lodged so far, it fears there could be big trouble on the way for the industry. MBA legal advisers are concerned that government-ordered partial shutdowns of building sites and other construction activity may not be considered an “act of God”, or “force majeure” under many contracts, leaving builders liable to pay out claims over projects disrupted by the pandemic.

Andrew Forrest has doubled down on his ambitions to turn Fortescue Metals Group green with a commitment to being carbon neutral in just nine years that involves the company becoming a major producer of green hydrogen on top of its iron ore operations. Australia’s richest man said on Monday that Fortescue revised target was operational carbon neutrality by 2030, brought forward by 10 years, and well ahead of the 2050 targets set by iron ore mining rivals Rio Tinto and BHP. To achieve the target Fortescue will develop green electricity, green hydrogen and green ammonia projects in Australia through its wholly owned subsidiary Fortescue Future Industries. Dr Forrest said Fortescue remained committed to its iron ore business but predicted it could one day be dwarfed by the company’s green energy operations. But the Morrison government and its Energy Minister, Angus Taylor, won’t back the Forrest power station unless it receives approval from Australia’s independent market operator, which has deemed it too big in its current form. Mr Taylor refused to rule out pushing ahead with plans to spend taxpayer money on a similar plant at Kurri Kurri, even with the Forrest offer on the table and the mining billionaire saying his power station would be built within two years of gaining approval.


A consortium of high-profile companies including Coles and Nestle is planning to build a soft plastics recycling plant where chocolate bar wrappers or chip bags can be broken down and remade into new food-safe wrappings. This Australian first-ever ‘circular’ soft plastics recycling plant is set to be built in Victoria, with the consortium preparing to kickstart the project in the coming months. The technical, economic and environmental benefits of such a plant are being assessed as part of a feasibility study done by the two high-profile retailers in partnership with a bevy of multinationals and local technology companies, including $36 billion Dutch packaging manufacturer LyondellBasell, local biochemical startup Licella, and recycling company iQ Renew.

Collapsed supply chain financier Greensill Capital has swung the axe with all its Australian staff losing their jobs and 500 staff in its UK office expected to be retrenched, bringing a swift end for the lender founded by Bundaberg farmer Lex Greensill and worth $6bn at Christmas.

Mining billionaire Clive Palmer has vowed to spend $100m redeveloping his Coolum Resort on Queensland’s Sunshine Coast after it fell into disrepair soon after he bought it a decade ago. The Palmer Coolum Resort redevelopment will include replicas of the Wonders of the World and famous landmarks including a full-size Trevi Fountain. Around 300 premium studio, two and three bedroom apartments will be refurbished in the luxury upgrade which will also feature seven restaurants and the total renovation of the Village Square at the heart of the resort which was once one of Australia’s premium luxury enterprises. A centrepiece of the revitalised Palmer Coolum Resort will be the Robert Trent Jones Jnr-designed golf course, the former home of 11 Australian PGA Championships. Mr Palmer said the Sunshine Coast has suffered due to the massive downturn in tourism over the past 12 months and will face further economic hardships once the JobKeeper program finishes.



A bitter fight looms at MinterEllison over the exit pay for Annette Kimmitt with partners digging in over the prospect of a multimillion-dollar payout for the former chief executive. Ms Kimmitt and the firm “mutually agree last week that her time at the helm of Ausrtalia’s largest law firm was over, but the final terms have not been decided. Ms Kimmitt was only halfway through a five-year contract, which commenced in September 2018. Her salary is believed to be about $2 million, which would mean she could claim up to $5 million as her full entitlement. That sum would be paid out of the pockets of the firm’s 257 partners, with each having to contribute about $20,000. The board, led by Brisbane-based chairman David O’Brien, acted after a week of internal ructions  and damaging headlines following the public release of emails by Ms Kimmitt to staff  that apologised for the “hurt” they might be feeling upon news that the firm was representing Attorney-General Christian Porter. Mr Porter has been accused of raping a 16 year old girl when he was 17, an allegation he has denied.

Big six law firm Clayton Utz underpaid some graduate lawyers by $15,000 to $30,000 once their crippling workloads were taken into account, as late nights and weekend work dragged their high salaries below what they would be paid under minimum award rates. Clayton Utz paid at least one employee about $30,000 below the minimum rate but that most underpayments were under $5000. The affected staff spanned graduate lawyers, who have largely already been backpaid, and paralegals and legal analysts, for which reviews are still under way.

Crown Resorts, the 13th largest donor to federal politicians, will no longer make political donations. The company, which runs casinos in Melbourne and Perth, donated $184,000 in the previous financial year and $1.78 million in the past decade to federal political candidates with $550,000 of that money going to candidates from Victorian political parties since 2010 and $875,000 to candidates from Western Australia This decision comes after a damning New South Wales inquiry where the gaming giant was found unfit to hold a casino licence at its $2.3 billion Barangaroo tower because it facilitated money laundering through its casinos, disregarded physical risks to staff in China and partnered with junket tour providers linked to criminal Triad gangs.

And that’s it for this week. And next week, I’ll be talking to the founder and director of Sydney based consulting firm Fifth Dimension, Lyndall Spooner about how marketing has changed for companies. And I’ll be talking to Indeed economist Callam Pickering about the latest wages and jobs figures

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.