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Scott Morrison declares coal will be used for decades to come, dismissing Boris Johnson’s claim that the COP26 climate summit has sounded a death knell on coal.
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 42 in our series for 2021 and today’s date is Friday November 19.
First, I’ll be talking to Jaen Snyman, Empired practice manager for the modern workplace. We’ll examine how the remote working trend has dramatically accelerated over the past 12 months which means organisations increasingly take a Cloud First approach to facilitate daily production. And I’ll be talking to CommSec chief economist Craig James about market trends ahead.
But now, let’s talk to Jaen Snyman.
Australia signed an international request for countries to strengthen 2030 emissions reduction goals by next year but within hours of agreeing to the Glasgow climate pact, the Morrison government, facing a 2022 election, told voters it had no intention of changing its “fixed” target. The Glasgow Climate Pact, signed by Australia, demands countries to “phase down” coal power, and urges nations to strengthen their climate targets by the end of next year. Scott Morrison doesn’t think a global agreement to reduce reliance on coal power is the end for Australia’s industry he believes will continue for decades. This puts the prime minister at odds with his British counterpart, Boris Johnson, who described the agreement at the COP26 climate summit as coal’s “death knell”.
Heavyweight investors are poised to heap further pressure on the nation’s biggest carbon emitters in the wake of a damning report that slams boards of climate-exposed companies for not taking climate risks seriously. The boards of 15 companies, including ASX-listed Adbri, AGL, BHP, Incitec Pivot, Oil Search, Qantas, South32, Woodside and Woolworths still don’t see climate change as a material or existential risk, according to the Investor Group on Climate Change, which represents investors with total funds under management of more than $2 trillion. These companies account for 25% of Australia’s total Scope 1 and Scope 2 emissions, and 40% of reported corporate emissions (also for Scope 1 and 2). The revelations come in the wake of two weeks of talks at the UN climate change summit in Glasgow and promise to dial up the heat on Australia’s most carbon-intensive companies following a last-minute COP26 agreement that saw global leaders sign up to a new climate pact to curb global warming. The Glasgow Climate Pact calls on countries to “phase down” rather than “phase out” coal power, and urges nations to strengthen their climate targets by the end of next year. The word change to “phase down” coal use came after a last-minute intervention from India. As part of its analysis, the IGCC studied five years of company disclosures, including annual reports, board disclosures, investor presentations and each board’s skills matrix, to see what progress had been made since the Paris Agreement at the end of 2015. Of the 15 companies, 14 have net-zero emission targets. Incitec Pivot is the sole outlier. But even with these targets, boards do not appear prepared to lead the transition, according to the IGCC report’s lead researcher, Ian Woods.
Woodside Petroleum has secured a $4.9 billion commitment from a US-based infrastructure giant for its Pluto LNG expansion project, clearing the way for the biggest resources project to be built in the country for almost a decade even as the Glasgow Climate Pact steps up emissions pressures. Global Infrastructure Partners is buying a 49% stake in the $7.6 billion onshore LNG processing unit to be built at Woodside’s Pluto site in Western Australia, which will treat low-carbon gas from the offshore Scarborough field for about 30 years. It will pay the bulk of the cost to build the onshore infrastructure, reducing the financial burden on Woodside, which had made a sell-down of its 100% stake in Pluto-2 a condition for going ahead with the broader $16 billion project, a decision due next month. The deal means GIP is joining Woodside in betting on an extended future for natural gas usage in Asia, despite the pressure evident at COP26 and more broadly to move away from fossil fuels. The Glasgow climate pact commits signatories to phase down coal use and roll back fossil fuel subsidies as part of efforts to limit warming to 1.5 degrees but includes no specific wording on natural gas. Environmental activists immediately promised to halt the project, which Greenpeace described as the most “climate-polluting project ever”.
Oil Search is being sued for bullying the female CFO out a job. The chief executive and chief financial officer of one of Australia’s largest oil and gas companies, Oil Search, bullied and harassed its new financial executive to the point where she was forced to leave her job, an explosive lawsuit against the $9 billion company alleges. Oil Search has been accused of driving Ayten Saridas out of her job, after it failed to provide a safe workplace and undermined her attempts to raise the alarm over “critical and urgent” funding issues that were allegedly hidden from the company’s board, when she was due to take over from chief financial officer Stephen Gardiner this year.
Commonwealth Bank has reported a 20% rise in unaudited first quarter cash profit to $2.2 billion driven by above system growth in the key markets of deposits, home loans and business loans.
Prime Minister Scott Morrison’s warning that interest rates could be higher without the Coalition in power has been hosed down by Reserve Bank of Australia governor Philip Lowe, who is firm the cash rate is likely to remain at the record low 0.1% until 2024. Dr The Reserve Bank governor told a meeting of economists that Australia remains well-placed to weather a “perfect storm” of inflationary pressures triggered by the Covid pandemic without resorting to an early raising of the cash rate, although how the labour market responds remains uncertain, Dr Lowe on Tuesday maintained his view that a recent jump in consumer prices did “not warrant an increase in the cash rate in 2022” as markets have been betting. There would be a case, he said, to lift the cash rate – now at a record low 0.1% – before 2024 as currently flagged by the RBA if the “global inflation shock” turns out to be more persistent than expected. A key unknown is how quickly the labour market will tighten as swathes of the economy recover from lengthy lockdowns. That could determine how rapidly wages rise and whether they feed expectations of further prices increases to come.
Wages growth in the September quarter rose 0.4% over the quarter and 1.7% over the year. Wages rose 0.5% in the private sector and 0.4% in the public sector. Annual wage growth fell to a record low of 1.4% in the depths of the COVID-19 pandemic. The Reserve Bank wants to see annual growth of 3% which it expects will keep inflation sustainably within its target range of 2% to 3%.
Australian businesses have warned the bottlenecks choking global supply chains are unlikely to be resolved soon, amid predictions soaring shipping costs will add to inflation by lifting the price of imports. With global markets fixated on the risk that higher inflation could raise interest rates from record lows, companies including telecommunications giant Optus, explosives maker Orica, and Boost Juice owner Retail Zoo have underlined the severe disruption to supply lines. The supply chain problems, which are leading to widespread shortages and delays in the delivery of goods, come as many companies are also facing wage pressure as they scramble to find staff.
Telstra chief executive Andy Penn says the telecommunications giant’s new joint venture with home-grown data and analytics group Quantium will help accelerate Telstra’s use of artificial intelligence amid a savage war for tech talent. Under the deal Telstra and Quantium will form a jointly owned firm that will initially focus on developing products and services for Telstra’s enterprise customers in sectors such as mining, agribusiness and logistics. The huge data sets travelling across Telstra’s networks will be married with the data and AI capabilities of Quantium, which was started 19 years ago and is now 75% owned by retail giant Woolworths.
Members of Melbourne’s Smorgon and Liberman families have bankrolled a campaign against Premier Daniel Andrews proposed pandemic powers which have sparked public protests ahead of a vote in the Victorian Parliament this week. Ben Krasnostein, a member of the wealthy Smorgon family, has joined other Melbourne blue bloods to bankroll the advertisements, which have appeared or will appear across The Age, The Australian and The Australian Financial Review. Mr Krasnostein has started a change,org petition whose signatories include other high-profile Victorians including Dale Smorgon, Simon Holmes a Court and Ben Rozenes. Thousands turned out in protest against vaccine mandates and the proposed laws over the weekend as Victoria’s daily new COVID-19 cases fell to 905, the first time new cases were under 1000 since September. The proposed laws give the premier authority to declare a pandemic, and the health minister, rather than chief health officer, the role of making health orders. Those found guilty of “intentionally and recklessly” breaching public health orders face two years in jail or a $90,000 fine under the proposed laws. More than 60 QCs have also signed an open letter taking issue with Mr Andrews’ pandemic bill, which they say would allow him to “rule by decree”. Signatories include Jack Rush, QC, former chief crown prosecutor Gavin Silbert, SC, and former IBAC deputy commissioner Andrew Kirkham, QC. The Victorian Bar has called for the Andrews government to take the bill back to the drawing board, warning that the legislation allowed for “grossly insufficient parliamentary supervision”. Mr Krasnostein, managing director of Kilara Capital – a climate-focused venture capital and private equity fund – is not the typical Liberal Andrews critic. He has donated “significant” sums to the Climate 200 fund set up by renewables advocate Mr Holmes a Court to support independent campaigns and hopefuls including Zali Steggall, Julia Banks and Helen Haines. Mr Krasnostein said while he and others are reluctant to speak out publicly because of fear of repercussions, the Public Health and Wellbeing Amendment (Pandemic Management) Bill had compelled him to take a stand. “We are not anti-vaxxers, and we agree we need legislation to govern pandemics, we agree with that, and it’s better to have the power in the hands of ministers rather than unelected bureaucrats, we agree with that too,” Mr Krasnostein said. “But we don’t need clauses which, for example, give the power to have authorised officers enter into homes without a warrant and detain people, and a complete lack of judicial oversight.”
Andrew Forrest’s philanthropic vehicle will invest €5 million ($7.8 million) as a cornerstone investor in a new European impact fund that is focused on what is known as the “blue economy”. Minderoo Foundation is part of a group of four investors to commit €60 million to the €150 million inaugural impact fund of London-based firm Ocean 14 Capital. The firm’s name refers to the 14th goal in the United Nations sustainable development goal framework, which is to “conserve and sustainably use the oceans, seas and marine resources for sustainable development” The chief executive of Minderoo Foundation’s flourishing ocean initiative, Tony Worby, says it was important to Dr Forrest’s foundation that the Ocean 14 fund would go further than traditional ESG investing.
Governments must set a date for banning the sale of cigarettes through retailers including supermarkets, and find new ways of boosting revenue without relying on tobacco excise taxes, leading public health researchers say. It comes as research published in the Medical Journal of Australia (MJA) on Monday found 1,466 respondents (52.8%) to a Victorian Cancer Council survey agreed with phasing out the sale of cigarettes in retail outlets. In a separate MJA piece also published on Monday, associate prof Coral Gartner, an international expert in tobacco control policy with the University of Queensland, and her colleagues wrote it is time for governments to move beyond measures that focus on consumers such as plain-packaging laws and tobacco-harm warnings, and start focusing on supply. The Netherlands has passed laws preventing supermarkets from selling cigarettes from 2024, New Zealand has proposed new measures that include significantly reducing the number of tobacco retail outlets and possibly removing nicotine from cigarettes, while California cities Beverly Hills and Manhattan Beach ended tobacco sales on 1 January this year.
Home ownership has declined more among younger and poorer people than across the population as a whole, an inquiry into housing affordability and supply heard. While Australia’s overall home ownership rate has fallen from about 70% to 66% over the past 20 years, the decline in younger and lower-income was more severe, according to the Australian Bureau of Statistics. In the middle-income quintile, ownership has dropped from 73% to 65%, and in the second-lowest quintile it’s actually dropped from 68% to 61% For those aged 35-44, it’s decreased from 73 % to 61%, and for those aged 25-34, it’s actually decreased from 52% to 37%.
The corporate regulator has accused investment spruiker James Mawhinney, who created the fizzled Mayfair 101 group, of raising funds in breach of court orders. The 37-year-old has been sued in the Federal Court with the Australian Securities and Investments Commission accusing him of contempt. Mr Mawhinney has previously maintained any activities were taken subject to legal advice to ensure he was complying with the law. Comment was being sought from him on Tuesday. The entrepreneur shot to attention in 2019 when Mayfair bought Dunk Island, only to have it repossessed last year. Mayfair had backed ventures from a restaurant-payments app to a mobile laundry service, raising funds through old-school seminars and B-grade celebrities highlighting the venture on Instagram. Mayfair reassured investors, including retirees and fathers saving for their children, that their money was being invested safely and its products were an alternative to banking deposits. But more than $210 million in investor funds are now frozen. Justice Stewart Anderson, in levelling the banning order, said Mr Mawhinney had to be stopped to protect the public from a “great risk of financial loss”. He branded Mr Mawhinney’s conduct in promoting investments tied to his fizzed Mayfair 101 outfit as “reprehensible” and demonstrating a “complete disregard for financial services laws”.
The total value of Australian banknotes has doubled in a decade, and is up 20% since the start of the pandemic as more Australians hoard cash under their mattresses indicating uncertainty about the future. The rise of card payments means there is less cash circulating in the economy. But a banknote surge has been driven by people who want to store their wealth in paper money, rather than put it in a commercial bank, according to the Reserve Bank. In an issues paper on cash distribution, the RBA acknowledged low-interest rates have made hoarding cash relatively more attractive, given current returns on cash in the banks are so low. The reduced use of cash for spending combined with the hoarding dynamics is having a negative impact on the cash in transit (CIT) industry that moves cash around in armoured trucks. This has prompted the RBA to suggest that consolidation, or the formation of an industry utility, might be necessary to ensure cash transport remains commercially viable. Lower demand to move money around comes as more people hide it at home. The value of Australian banknotes in circulation totalled $100 billion last month, double the value in 2010, while the value of banknotes in circulation rose 20% between February 2020 and October 2021. Measured as a ratio to GDP, the value of currency in circulation reached a historic high in the past March quarter at 4.8% , the RBA said in its Review of Banknote Distribution Arrangements. . Since the start of the pandemic, the RBA says, “overall demand for banknotes has been extraordinarily high”.
And that’s it for this week. And next week, I’ll be talking to Jason Eisner, a co-founder of BrandQuest, a strategy, culture and brand management company that builds enduring and valuable brands. 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