Kelly Bayer Rosemarin has stood down as OPTUS CEO. She should get a generous payout. Say about 200 Terabytes of OPTUS mobile data?
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 43 in our series for 2023 and today’s date is Friday November 24.
First, I’ll be talking to David Fairfull, the founder and CEO of Metigy about his company’s AI-powered digital marketing solution for SMEs.
And I’ll be talking to Callam Pickering from Indeed about the latest jobs and wages figures.
But first, let’s talk to David Fairfull.
So what’s happening in the news.
ChatGPT-maker OpenAI has reached an agreement for Sam Altman to return as CEO days after his ouster, capping frenzied discussions about the future of the startup at the center of an artificial intelligence boom. The company also agreed to revamp the board of directors that had dismissed him. OpenAI named Bret Taylor, formerly co-CEO of Salesforce, as chair and also appointed Larry Summers, former U.S. Treasury Secretary, to the board. Altman said in a post on X, “i’m looking forward to returning to Open AI.” After Altman was fired on Friday, the original board had given scant explanation other than his lack of candor and its need to defend OpenAI’s mission to develop AI that benefits humanity. The deal to restore Altman ushers in a potentially new era for the startup – a non-profit – which long juggled concerns among staff about AI’s dangers and its potential for commercialization. Altman’s dramatic turnaround has drawn comparisons in Silicon Valley lore to Steve Jobs, Apple’s CEO who left the computer maker in a 1985 power struggle only to return 12 years later. Altman took back the CEO mantle after four days. His departure had immediately precipitated upheaval at OpenAI, with President Greg Brockman quitting in protest. By Sunday Altman was back at OpenAI’s offices expecting his swift reappointment, when the board surprised again by naming ex-Twitch boss Emmett Shear as interim CEO. In a post on X on Tuesday, Shear said he worked “~72 very intense hours” to bring stability – and ultimately Altman – back to OpenAI. “This was the pathway that maximized safety alongside doing right by all stakeholders involved,” he said. Altman’s master stroke was made possible in part by Microsoft. When he was out of a job, CEO Nadella said Altman could head a new research team alongside Brockman and other colleagues departing from OpenAI. By Monday, nearly all of OpenAI’s over 700-strong staff had threatened to leave and join Microsoft’s effort unless the board stepped down and reinstated Altman, according to a letter reviewed by Reuters. This threat was backed by Microsoft’s vast computing power, the key asset powering OpenAI’s technology along with its staff of computer scientists.
Fresh RBA minutes from its Melbourne Cup Day meeting revealed the central bank had left the door open for further rate hikes should inflation prove persistent. “Members agreed that whether further tightening of monetary policy is required to ensure that inflation returns to target in a reasonable time frame would depend on how the incoming data alter the economic outlook and the evolving assessment of risks,” the minutes read.
Iron-ore billionaire Andrew Forrest’s family office has struck a deal to buy Australian hat maker Akubra Hats Pty Ltd , deepening the Fortescue Metals Group founder’s ownership of local apparel labels. Forrest and his wife Nicola’s investment firm Tattarang Pty Ltd will acquire the manufacturer of cowboy hats from the fifth generation of the Keir family. They didn’t disclose the value of the deal. It’s Tattarang’s second deal for one of the country’s much-loved outback brands after its 2020 acquisition of RM Williams a maker of leather boots that are worn as widely by bankers as farmers. The two companies will remain distinct operations, according to a spokesman for the firm. Established in Hobart in 1876, Akubra employs about 120 staff at a factory based in Kempsey, on Australia’s east coast. Like R.M. Williams, the Akubra brand has assumed an iconic status, shifting from function to fashion over generations. Both have roots in rural workwear but have retained ubiquity even in a now-predominantly urban Australia thanks to the national self-image associated with the bush. Popular among politicians when on the circuit, Akubra is also a longtime supplier of hats for the dress uniforms of the country’s armed forces and past Olympic teams. According to the investment firm, since Tatterang took ownership, R.M. Williams has increased headcount by about 60%, or 500 people, and added two new manufacturing lines at its Adelaide workshop.
Optus chief executive Kelly Bayer Rosmarin has resigned following the mass outage that hit its network on November 8. It was the second reputational disaster on Ms Bayer Rosmarin’s watch after last year’s cyber attack, where her response – like the outage – was widely criticised. Parent company Singtel announced the departure on Monday morning, with chief financial officer Michael Venter becoming interim CEO. News of Ms Bayer Rosmarin’s plans to resign this week followed her appearance at a Senate inquiry into the outage that caused chaos for customers, and calls for expensive compensation. Ms Bayer Rosmarin has held the top job at Optus since April 2020, but oversaw two major disasters. A cyber attack last year led to the personal information of 10,200 customers – including passport, driver’s licence and Medicare numbers – being posted online. Her handling of both crises came in for fierce criticism. “On Friday I had the opportunity to appear before the Senate to expand on the cause of the network outage and how Optus recovered and responded,” Ms Bayer Rosmarin said in a statement. “I was also able to communicate Optus’ commitment to restore trust and continue to serve customers. Having now had time for some personal reflection, I have come to the decision that my resignation is in the best interest of Optus moving forward.”
A global search for the next Optus chief executive has begun after Kelly Bayer Rosemarin resigned with immediate effect, with a successor unlikely to be named for at least six months. Former NSW Premier Gladys Berejiklian is understood to have flagged her interest in taking the top job after the telco recruited her to manage its business customers last year. But Singtel is understood to prefer a more conservative option and a proven telco executive. A more likely scenario would be for Singtel to parachute in one of its own from Singapore, just as it did when it appointed Allan Lew to run Optus, who during his five-year tenure stabilised earnings before handing the reins to Bayer Rosmarin. While Berejiklian was considered a star recruit at Optus, a handicap to her ascendancy at the telco is the Independent Commission Against Corruption’s finding that she engaged in serious corrupt conduct while in office – a finding which she is appealing. Berejiklian also appeared to play politics rather than display corporate leadership during the outage. Andrew Sheridan, Optus’s vice-president regulatory and public affairs, reports to Berejiklian. But she was absent from any public and media appearances until late the next afternoon after the outage. Singtel chief executive Yuen Kuan Moon said Optus’s “priority is about setting on a path of renewal for the benefit of the community and customers”. On this score, appointing Berejiklian could be viewed as regressive. Other contenders for CEO include chief financial officer Michael Venter, who has been appointed interim CEO. But he is viewed more as a bench-warmer than a permanent replacement. Another internal candidate is former Optus business managing director Peter Kaliaropoulos, who has been appointed to the new role of chief operating officer at the telco. Yuen described Kaliaropoulos as a “veteran telecommunications executive”. Since leaving Optus in 2005, Kaliaropoulos has been chief executive of Singapore telco StarHub and has been consulting to businesses in the country since July last year. If Singtel doesn’t appoint from within its own ranks, there are other external candidates in Australia. At bigger rival Telstra there is chief financial officer Michael Ackland and consumer boss Brad Whitcomb. But Ackland is key to Telstra’s T25 strategy and as such chief executive Vicki Brady would be keen to retain him. Whitcomb, meanwhile, only started at Telstra in January after serving eight years at NBN Co. While a quick departure is not unprecedented, he is viewed as unlikely to leave Telstra so soon. Former NBN chief executive Bill Morrow is another prospect to helm Optus. After leaving NBN in late 2018, Morrow has served as chief executive of US multichannel video programming distributor DirectTV – but whether he wants to leave sunny California for stormy Optus is a different matter.
Younger Australians are cutting back on things they need as well as things they want as rising rents and home loan repayments force them to make tougher spending decisions than older people who have more savings, new research shows. CommBank spending data shows Australians on average are slowing their discretionary spending as interest rates and consumer prices rise,, but the 25-29 age group is the only one that is also spending less on items considered essential. Analysts said the cuts to both categories was an unusual manifestation of cost-of-living pressures forcing younger people to change things such as what they eat and how they travel to pay the rent and their mortgages. The average Australian spent a total $2920 a month in the third quarter of 2023, with $1473 going towards essential goods and services and $1447 being discretionary. That reflects a 3.5% increase in essential spending, and a 0.2% uptick in discretionary spending. The figures do not include housing costs. But among 25-29-year-olds, essential spending fell 3.7% to $955, and discretionary slumped 6.2% to $1300. Essential spending by Australians aged 65 and older increased 5.5% to $1518, and discretionary spending rose 7.2% to $1176, for a total of $2695. CommBank head of analytics and innovation Wade Tubman said the 25-29-year-old cohort was the only group to reduce discretionary and essential spending, and signalled members were making “dramatic” decisions to create space in their budgets for higher mortgage and rent costs. Cuts to essential spending could be in the form of opting for the bus rather than driving to work, reducing extras cover on health insurance or shopping at cheaper supermarkets. “When it comes to young people … they’re in a spot where, on average, they’re more likely to be renting or a first home buyer. And both of those groups are seeing high increases in the costs of housing. Rents are up particularly, especially in our metro areas of Sydney and Melbourne,” Mr Tubman said. “When it comes to young people … they’re in a spot where, on average, they’re more likely to be renting or a first home buyer. And both of those groups are seeing high increases in the costs of housing. A separate survey of 1063 Australians by comparison group Finder found one in 10 Millennials and 9% of Generation Z Australians have taken out a credit card in the last 12 months to deal with rising costs.
The South African owners of Country Road Group, whose stores include Country Road, Witchery and Mimco, say the sombre conditions in the retail sector have deteriorated to the point where its fashion chains are suffering a double-digit collapse in sales growth. Country Road Group sales have slumped to a 10.7% decline over the 20 weeks to mid-November, compared to the healthy 12.4% same-store sales growth witnessed over fiscal 2023. Woolworths Holdings, the South African owners of Country Road Group and former owners of department store David Jones said in an update to its local market that their fashion outlets had succumbed to the deteriorating conditions across the Australian retail sector. When Woolworths sold DJs last year to private equity firm Anchorage Capital Partners for around $100m, it kept Country Road Group, which also houses Trenery and Politix. The stable of fashion stores had improved greatly over 2022 and 2023 but now its sales growth has collapsed with a sharp sales decline. The Woolworths Holdings trading update reported that for the first 20 weeks of fiscal 2024, Country Road Group sales declined by 8.1% and 10.7% in comparable stores.
Home Affairs Minister Clare O’Neil is pushing to boost cyber security among 2.5 million small businesses to combat the growing trend of criminal groups exploiting vulnerable supply chains to attack bigger prizes. Small businesses will get access to voluntary cyber health checks and one-on-one assistance during cyberattacks under new funding announced by Ms O’Neil on Monday. The move is aimed at fixing insecurity among the 97% of businesses classified as “small”, most of which do not have the time or resources to properly plan for cybersecurity incidents but will increasingly have to demonstrate a higher degree of maturity to participate in critical supply chains. The plan, which comes into effect next year, comes ahead of the imminent release of the Albanese government’s long-awaited cybersecurity strategy, details of which have been emerging in recent weeks. Just over $7 million has been allocated to establish a voluntary business cyber health-check program, with a free, tailored self-assessment of their cybersecurity maturity. A further $11 million has been allocated in a Small Business Cyber Resilience Service, which will provide assistance to small businesses navigate cyber challenges and walk them through the recovery from an attack. John Macpherson, head of cyber response at global law firm Ashurst, said threat actors regularly targeted smaller players to get to bigger fish. “There are many smaller companies that play critical roles in the financial services, energy and healthcare sectors, and they will increasingly need to demonstrate – hopefully with government support – they can be, themselves, cyber secure,” he said. The corporate watchdog last week released a report revealing small business were cyber immature compared to their larger counterparts. Small business scored, on average, 1.42 out of four for cyber protection, 1.34 for detection, 1.36 for response, and 1.28 for recovery, the Australian Securities and Investment Commission’s 2023 cyber pulse survey found. Worryingly, it found 34% of small businesses did not follow or benchmark against cybersecurity standards; 44% did not perform assessments of third-party vendors; 33% had limited capability for multifactor authentication; and 45% did not scan for vulnerabilities.
Jim Chalmers says Australia must consider reforming its corporate merger rules, and declining competition among bigger and more dominant businesses over recent decades has left citizens paying higher prices for worse products and services. The Treasurer says “right now, Australia needs innovative businesses more than ever to help drive the transition to net zero, to make the most of emerging data and digital innovations, and to seize the opportunities from the growth of the care economy”. The Albanese government on August 23 said a taskforce would take two years to conduct a sweeping review of competition policy settings, including the Australian Competition & Consumer Commission’s request for more powers to stop anti-competitive mergers. The ACCC has proposed that firms above a certain size would have to gain formal approval from the watchdog before pursuing any deals, along with a special “call-in” power to capture smaller mergers that raised specific competition concerns. This would be a sharp break with current rules where firms are not required to notify or get clearance from the ACCC before any takeover is finalised, and which force the regulator to make the case to the Federal Court to unwind deals. Rather than having to prove that a merger was likely to substantially lower competition, the ACCC has recommended that the onus of proof be switched to companies to make the case that their union would not substantially lower competition. The consultation paper outlines three options to reform the merger regime, including the ACCC’s, with the other two options granting varying degrees of extra powers to the regulator. The ACCC in August blocked ANZ’s acquisition of Suncorp and more recently has raseid concerns about Woolworths’ $586 million deal to take a controlling stake in Petstock. The looming shake-up follows similar changes made in recent years in the US, Britain and the EU to beef up regulators’ powers, particularly in the context of the rise of digital giants such as Google and Facebook, which have hoovered up smaller players to cement their dominance.
Australia’s top housing markets will see falls next year as interest rate hikes hit households just as the economy slows, according to forecaster SQM Research. The research house has warned a correction, albeit a modest one, could strike markets along the east coast, with Sydney and Melbourne particularly at risk after their recent strong runs. But the resources-backed capitals of Perth and Brisbane could dodge the fallout, with expectations they will ride the tailwinds of a recovering Chinese economy as it boosts demand for commodities like iron ore, leaving buyers in those markets cashed up. The real pain is expected to come from rises in interest rates, which have been ratcheting up since 2022 and could rise further next year. SQM warned that the consecutive rises were expected to cause a rise in distressed sales next year, with this already being seen in NSW. Overall, Sydney is expected to see a fall in dwelling prices up to 4%. The biggest pain could hit the mortgage belt in Sydney’s middle to outer ring suburbs, where SQM warned that freestanding houses could suffer a larger correction. By contrast, Sydney units are expected to outperform and the inner ring is still expected to have price rises as top end property is soaring on the back of demand from foreign investors. SQM’s annual update, the Housing Boom and Bust Report, has a base case forecast that average national dwelling prices will change in the range from a 1% drop to a 3% rise. SQM said that the correction in prices could also hit Canberra and Hobart. Adelaide and Darwin are expected to remain steady or record a minor rise or dip. But the gateway market of Sydney has already seen a “significant” deterioration in housing affordability. Melbourne is also forecast to have a modest correction with prices tipped to fall by up to 3%. That city’s top end is still expected to rise, and units are also expected to outperform. Canberra is forecast to record the largest falls of all cities with declines of 4 to 8% as government spending slows and more housing is completed.
And that’s it for this week. And next week, I’ll be talking to Tom Cornell, the Head of Assessments (APAC) at HireVue about how Aussies can prepare for The Great Resignation. Tom is a hiring expert with a background in psychometrics and I/O psychology and he will shed light on how the Great Resignation will affect Australian business. And I’ll be talking to RMIT economist Sinclair Davidson about how the infrastructure spending by Federal and state governments are affecting inflation.
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