Research has found that migrants in Australia are driving Ubers and not working in skilled jobs.
This is episode number 18 in our series for 2024 and today’s date is Friday May 31
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.
First, I’ll be talking to Steven McKeon, founder and CEO of MacguyverTech and MacNerd about why governments around the world are moving to control Tik Tok.
And I’ll be talking to economist Craig James about what’s ahead in the market next week.
But first, let’s talk to Steven McKeon
So what’s happening in the news.
Inflation has climbed for a second month to 3.6% in the year to April, from 3.5% in the month before, confounding expectations that consumer price growth would restart its downward trend. The latest report from the Australian Bureau of Statistics is the first since Labor’s budget earlier this month, which announced billions in new cost of living subsidies aimed at assisting struggling households while also lowering the measured rate of inflation. Economists, however, have warned the additional spending on energy rebates could free up Australians to spend more in other areas and add to underlying inflationary pressures.
Lendlease will end its global ambitions. It will end all international property development and sell its overseas construction divisions, marking the biggest shake-up at one of Australia’s largest real estate groups since it sold MLC to the National Australia Bank more than two decades ago. The company will confirm plans to exit or sell more than $4 billion worth of international works, mostly in the United States and United Kingdom, in the next three years, ending its decades-long quest to be a globally significant property builder. Lendlease’s board has signed off on the plans, and presented them to shareholders at a strategy day on Monday. Money raised from any asset sales will be used to pay down debt and return capital to shareholders. The offshore retreat leaves Lendlease’s construction and development activities focused on Australia, where it has historically operated much more profitably, building the likes of Barangaroo in Sydney, Melbourne’s Docklands and the Brisbane Showgrounds. The board is expected to ask Lendlease chief executive Tony Lombardo to oversee the offshore divestments. The first asset sales are pegged for this year. The retreat, expected to take a few years, will start on Monday, when Lendlease marks more than $4 billion of offshore businesses and projects for sale. While the board is tearing up the company’s global ambitions, it wants the reset to stop short of a fire sale or expensive demerger, hence the multi-year time frame. In other words, Lendlease’s board has waved the white flag on its global construction and development strategy, finally agreeing with what investors have told it for years: it’s just too hard.
Australia’s Home Affairs department, which is responsible for immigration and security, is ill-prepared for rising cyber and border risks, is too focused on crisis management and is ridden with high leadership turnover, according to a new audit. The review also identifies a deep divide between the department and its Australian Border Force (ABF) unit, which manages the customs function and raises $22 billion annually – making it the second-largest revenue collector after the Tax Office. “Some staff often do not consider the ABF to be part of the Department of Home Affairs,” the review noted. The Home Affairs department was found to have “relatively weak” collaborative relationships with central offices, such as the prime minister’s department and intelligence agencies, according to the review, led by retired public servant Ian Watt. This had fuelled “a lack of trust” in the department, creating a challenge for its relatively new secretary, Stephanie Foster, and her boss, Home Affairs and Cybersecurity Minister Clare O’Neil. Responding to the review, a stakeholder said Home Affairs was too focused on “crisis management”. The department needed to better plan “for what is coming up over the horizon and what are they going to do about it … instead of looking at crisis management skills,” the participant said.The review found the department “had been led from the centre with a command and control culture, which limited collaboration and collective leadership” since its inception in 2017.
Research has found that migrants are driving Ubers and not working in skilled jobs. Former federal government migration adviser George Tan, who has released new research highlighting the skills mismatch, said employers often demanded Australian work experience and qualifications. Employers sometimes discriminated against foreign qualifications and non-Anglo names, said Mr Tan, who until June 2022 was a member of the federal government’s ministerial advisory council for skilled migration and is now at Adelaide University. Local qualifications or recent work experience is often required in fields such as healthcare, teaching, accounting, security services, taxi driving and trades such as plumbing, painting and electricians. Committee for Economic Development of Australia senior economist Andrew Barker said a failure to formally recognise migrants’ skills and foreign qualifications, English-language ability challenges and, in some cases, discrimination, are key reasons Australia is not making the most of skilled migrants. As a result, migrants who have been in Australia for two to six years earn more than 10% less than otherwise similar Australian-born workers, and it takes 15 years to catch up, CEDA research shows. As a result, Engineers Australia estimates there are 100,000 qualified skilled engineers in this country driving Ubers or doing other work that is not related to engineering. Only 50% of qualified engineers born overseas who are working in Australia are working as engineers, a situation Engineers Australia chief executive Romilly Madew has said is an “emerging national disaster”. Mr Tan’s co-researcher, Andreas Cebulla from Flinders University, said the results were similar in all states and territories and across occupations and industries.
Zurich Insurance is planning to use artificial intelligence tools designed in conjunction with the University of Technology Sydney to help process the mental health side of insurance applications in Australia. The move, which comes after more than six months of work with UTS Rapido, a research and development hub at the university, aims to speed up the processing of insurance applications by people who have disclosed a mental health condition, removing the need for them to visit a doctor for a report on their condition. While Zurich insists that human beings will still be involved in the decision-making process on insurance applications, it says the AI tools, which have been developed from anonymised data from seven years of past applications, will allow much faster processing of the data that people wanting insurance provide on application forms. Zurich Australia’s head of retail Jacqui Lennon said using the AI models could reduce the time taken to process an application from 22 days to less than a day. She said removing the need for the applicant to see a doctor also reduced potential privacy concerns. The process has developed six predictive models that can be used to assess information provided by applicants who disclose a mental health condition when they apply for insurance. The models reveal a number of conditions that are associated with people more likely to have a mental health problem. These include participation in recreational activities (with lack of participation in recreational activities more likely to be associated with mental health issues), ongoing health issues including chronic pain, cancer and heart disease, time spent in hospital or having medical treatment in the past five years, and having parents or siblings with health conditions such as diabetes, cancer, mental health issues and heart disease. While insurance companies can reject applications based on prior health conditions, they can also choose to issue policies with specific exclusions or loadings. Lennon said a human being will oversee the final decision on policies. Herve Harvard, the executive director of engineering and IT solutions at UTS Rapido, who worked on the project for Zurich, said insurance application forms could involve significant amounts of data, including a person’s medical history, family background and personal circumstances. The move comes as the insurance industry is grappling with a rise in mental health claims in Australia. Mental health is the third most common cause for a claim with Zurich, accounting for 20% of claims and resulting in $255m in payments in 2023. For some of its retail life insurance products, mental health has become the No.1 or 2 reason for a claim, making up some 35% of claims.
Business failures are tracking the highest rates since the aftermath of the Global Financial Crisis as deteriorating economic conditions coupled with poor consumer spending and interest rate pressures damage the fortunes of many companies. And insolvency experts predict that company failures are set to keep climbing for the next 18 months, despite a rising population and gross domestic product growth. Figures from the Australian Securities & Investments Commmision, compared poorly 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. Business Reset director and restructuring practitioner Jarvis Archer said the country set to surpass the GFC peak. He said it was facing the start of the insolvency “clean-up” due to the significant financial impact on many businesses. The lion’s share of businesses entering insolvency were construction-related, with 2398 going under since July 1, a 37% increase from the previous period. Retail saw a 39.4% increase in insolvencies to 594 amid thinning margins caused by lower consumer spending and confidence, against a backdrop of higher costs.
Rental inflation is expected to soar to its highest level since the global financial crisis and remain elevated until 2026, adding to cost-of-living pressure for the one-third of Australians who rent. Analysis from investment group Jarden tips rental price growth will accelerate beyond its current 15-year high of 7.8% thanks to a combination of strong migration, low rental vacancy rates and soft dwelling investment. Jarden forecasts rental inflation in Australia will reach 10% through this year – a high not seen since the GFC in 2008 – and then remain at 8% through 2025, and stay high in 2026. The firm’s chief economist, Carlos Cacho, said there was a lag of about 18 months between asking rents and the ABS rental inflation figure, which is an average of all rents. He said growth in advertised rents was running at about 10%, and was forecast to remain at a high 8.5% this year before easing to 4.3% in 2025. “This is likely to maintain upward pressure on inflation and will likely remain a challenge for the RBA as it seeks to bring inflation back to its 2 to 3% target,” he said. Cacho said that even with the 10% increase in the maximum rate of Commonwealth rent assistance announced in the recent federal budget, the underlying pressures on rents from lack of housing supply to the rebound in migration would persist. Rental pressure is not confined to capital cities, separate research has found. CoreLogic figures show 37 of the country’s 50 largest non-capital significant urban areas recorded record rent increases in the year to April. Overall regional rents rose by 6.3% over the year to April, up from 4.9% in the year to January.
Nine Entertainment will launch a review of its television newsroom culture, with the media group’s chief executive, Mike Sneesby, returning early from a holiday to confront a growing crisis over the exit of former news and current affairs boss Darren Wick. In an email to staff, Mr Sneesby said Mr Wick had been investigated as soon as a complaint of inappropriate behaviour had been received. Mr Wick, who ran Nine’s news and current affairs for 13 years, has been accused of drunken and lecherous behaviour by multiple staff in reports published by The Sydney Morning Herald, The Australian and Sky News Australia. He left the company in March, telling staff that “after many long beach walks and even longer conversations, I know in my heart that this is the right time for me to step down”. At the time, Mr Wick said he was not retiring, but was rather “going to take a very long break” after four decades of working as a journalist. “I’m tired and need a rest,” he added. Mr Sneesby wrote: “There have been a series of media reports about multiple complainants. “At this stage we have not directly received any information about those complaints, so I would encourage those individuals, or anyone else with information, to provide it through the process set out below, so it can be independently investigated. We will commission an independent review of the behaviours and concentration of power that has damaged the trust and fairness within our television newsrooms. It will be handled by an external firm and provide findings and advice on how we behave and how we can implement better systems and processes for the future.”
Stan’s publicity chief left the business weeks after it began an investigation into allegations of inappropriate workplace conduct, months before another Nine Entertainment executive exited amid sexual harassment claims. Adrian Foo, Stan’s long-time head of communications, left on May 28 last year after an internal investigation began to probe allegations of bullying and physical contact that made staff uncomfortable. Stan is the streaming platform owned by Nine. Nine has already been under considerable scrutiny over the departure of Darren Wick, the company’s former director of television news. He stepped down in March after an absence from work. The Australian, The Sydney Morning Herald and Sky News have detailed allegations of sexual harassment against Mr Wick from current and former female employees. Mr Foo is known to be close to Nine chief executive Mike Sneesby, who returned early from a holiday to resolve a growing scandal around the circumstances of Mr Wick’s departure. Despite the circumstances surrounding his departure, Mr Foo has been seen at many Nine corporate events since leaving Stan. He is also known to go fishing and on holidays with Mr Sneesby, and first met him when the Nine chief executive ran Stan. The allegations against Mr Foo were made by at least five current and former Stan staff. They allege that they were the victim of, or witnessed, Mr Foo’s bullying. Two say Mr Foo would make them feel uncomfortable by hugging them, touching their knees or holding their shoulders. Several have left the business.
A sexual harassment and workplace scandal has erupted within fashion house Country Road Group, seeing two highly placed executives depart and the global boss flying to Australia to address staff to announce an external investigation into the handling of complaints at the retailer’s Melbourne headquarters. Staff have complained at feeling unsafe, with this confirmed in an email from the fashion retailer’s HR boss, who directly addressed the crisis and mentioned allegations of sexual harassment. The South African owners of Country Road, Woolworths Holdings, have called in external consultants to investigate allegations of inadequate responses to allegations, which include sexual harassment, unwanted touching of female staff, bullying and racism. The chief executive of South Africa’s Woolworths Holdings, Roy Bagattini, flew out to the retailer’s head office in the Melbourne suburb of Burnley in March to hear complaints first hand at what has been described by witnesses as a highly emotional and angry staff meeting. Staff members are angry over not just the alleged treatment, but also the lack of action from Woolworths Holdings, and its failure to listen to complaints and act with haste to address the growing scandal. Later in one staff email, Country Road Group chief people officer Adele Preston conceded there had been some recent experiences “where some team members have felt unsafe at work due to allegations of sexual harassment”. “We are confident this is no longer ongoing however we are disappointed that it has happened,” she wrote to staff earlier this year. It is believed that Mr Bagattini also became emotional in the staff meeting as he was told of the improper behaviour by some executives, with many staff especially aggrieved that they had failed to receive adequate support from the company. Some staff members talked about sexual allegations by one former executive including sexually laced comments, some staff given unwanted kisses and touching, as well as workplace bullying levelled against another executive. Staff at the fashion retailer’s Melbourne headquarters have been offered access to counselling services. The corporate culture at Country Road has hit rock bottom, insiders claim, and it has come at a time when led by Raju Vuppalapati, the former boss of RM Williams, who joined Country Road as CEO in mid-2021 and brought a number of RM Williams executives across with him.
And that’s it for this week. And next week, I’ll be talking to Prakash Ramamurthy, Chief Product Officer at Freshworks about Freshworks developing an AI-powered assistant, Freddy. Using OpenAI’s ChatGPT and underlying large language models, the latest generative AI capabilities of Freddy help a wide range of customer-facing professionals work faster, smarter, and more effectively.
And I will talk to Rabobank economist Michael Every about what’s happening with the economy of our biggest trading partner, China.
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
