Prime Minister Albanese just bought a $4.3M ocean front home, when most people can’t afford their rent or mortgage. For a supposed man of the people, he seems to be completely out of touch.
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.
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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 38 in our series for 2024 and today’s date is Friday October 18.
First I’ll be talking to Graham Cooke, the head of consumer research at Finder about the growing uptake of by now, pay later services by Gen Z and Y and the risks,
And I’ll be talking to Craig James, independent economist, formerly chief Economist at CommSec, about what we can expect in the market next week.
But first, let’s talk to Graham Cooke.
So what’s happening the news?
A second catastrophic hurricane in as many weeks has forced the U.S. government to grapple with a harsh reality: Climate calamities are becoming more frequent, deadly and costly in a country already facing massive fiscal challenges. And with climate calamities happening globally, it’s a lesson for other countries. The earliest estimates suggest the latest storm, Hurricane Milton, may have unleashed roughly $50 billion in damage across Florida, destroying countless homes, businesses and critical infrastructure that will need to be repaired or replaced, probably with the help of urgently needed federal aid. But Milton is only the most recent extreme weather event in a nation that experiences on average a billion-dollar climate disaster roughly every three weeks, according to some federal estimates. As these storms, droughts, wildfires and floods strike with greater frequency and intensity, the work to rebuild after them has grown more expensive, too. That has exacerbated the many financial strains on the federal government at a time when the national exceeds debt $35 trillion. “I think the cost of climate [change] is increasingly a threat to our already very fragile fiscal outlook,” said Mark Zandi, chief economist of Moody’s Analytics. Factoring in the prospect that the government must spend “tens of billions or hundreds of billions more each year to help mitigate the fallout of climate events,” he added, “the outlook looks even darker.” “It’s one more reason to be nervous about our fiscal future unless we make some changes,” Zandi said. The nation’s souring fiscal health is the result of many factors, including increased spending, a rapidly aging population and inadequate tax revenue, especially after the tax cuts adopted under Donald Trump’s administration. Generally, budget experts agree that climate change threatens to add to these woes, harming economic output while forcing the government to spend more, and generate less, as it grapples with the consequences of dangerous emissions.
Anthony Albanese’s purchase of a $4.3 million property on the NSW Central Coast has baffled Labor MPs who have questioned the prime minister’s decision to buy a luxury home ahead of an election that will be fought on housing affordability. Property records show the four-bedroom, three-bathroom and three-carport property in Copacabana, billed as “clifftop perfection”, sold in September, giving Albanese a potential post-politics residence in a pocket of the Central Coast popular among Sydney holidaymakers. The “premiere location to enjoy sun, whale watching or spectacular sunsets year-round”, as the property listing reads, is close to the family of Albanese’s fiancee, Jodie Haydon, and shows how he has prospered since growing up in public housing. But it has opened the prime minister to criticism from colleagues that he has misjudged the optics as voters battle high interest rates, rents and property prices. Radio 2GB presenter Ben Fordham, who first reported the purchase, said on air that the property went for $4.3 million. Albanese on Tuesday acknowledged Australians were struggling with the cost of living and said he empathised because of his upbringing in a council flat. “Of course, I am much better off as prime minister, I earn a good income, I understand that,” he said at a press conference in Queensland. “I also know what it is like to struggle. My mum lived in the one public housing [home] that she was born in for all of her 65 years. I know what it is like, which is why I want to help all Australians into a home.” “I can’t think of a greater act of self-sabotage in my life. I am gobsmacked,” one MP said, adding: “If you’re a Labor MP up against a Green at the next election, good luck. “Some people [within Labor] were aware and tried to stop it. My instinct is this is f—ing terrible.” Another MP said Albanese’s decision was personal. “The idea that [Haydon], someone from the Central Coast, wants to live where they grew up, that’s fair enough,” they said. “[But] it’s not a good look. Max Chandler-Mather says the ALP is blocking action on addressing the housing crisis as he commented on Anthony Albanese’s purchase of a $4.3 million home on NSW’s Central Coast. Two more MPs said at the very least, the prime minister should have delayed the purchase until after the election and his wedding to Haydon.
The Australian National University is asking staff to forgo an agreed pay rise – a request the union says will do nothing to stave off a potential 638 job cuts and only reveals the chancellery’s “complete mismanagement and delusion”. The vice chancellor of ANU, Prof Genevieve Bell, sent an email to all university staff on Tuesday which asked them “to consider forgoing the upcoming 2.5% December pay increase under the ANU enterprise agreement [EA]”. Last week the ANU Council gave directions to the chancellery to reduce the university’s recurring cost base by $250m by the end of 2025, including $100m in staff expenditure. The enterprise agreement negotiated was for 18.5% pay increase over the course of 2023-2026, paid in six-monthly increments. Bell’s email states “staff would still receive 16% pay increase over the life of the current enterprise agreement. ” “I know this is a big ask, but…. if we take it collectively, it will prevent some job losses in our community.” The NTEU’s ANU branch president, Millan Pintos-Lopez, said staff did not trust the vice chancellor’s promise that the sacrifice would prevent job losses..
Bain Capital-owned Virgin Australia says earnings have jumped by almost a fifth to $519 million, and that it has recorded a profit for the second year in a row after more than a decade of deficits. The figures released by Virgin showed its revenues increased by 6.8% to $5.4 billion, with 19.2 million passengers during the year. The growth in underlying earnings, released in a statement on Monday, compares with a 17% fall at its larger rival Qantas for the 12 months to June 30. However, Virgin has not released its full accounts and did not report an overall profit figure for the year. Virgin chief executive Jayne Hrdlicka said the jump in earnings showed the success of the airline’s transformation under its private equity owners. Bain acquired Virgin, which had been listed on the ASX, in 2020, after the company collapsed at the start of the COVID-19 pandemic. The financial result comes just weeks after Bain agreed to sell a 25% stake in Virgin to Qatar Airways. That deal requires approval from the Foreign Investment Review Board, but would allow Virgin to restart long-haul international flights, which Ms Hrdlicka paused after being appointed chief executive. She intends to step down this year. As part of the investment from Qatar, Virgin will resume flying long-haul international using the Middle Eastern carrier’s fleet of Boeing 777 aircraft.
Labor is preparing to outlaw debit card surcharges in a broad crackdown on consumer fees as the Albanese government attempts to ease financial pressures on families in the lead up to a federal election next year. The government will outline its plans – and more funding for the competition watchdog to target businesses charging excessive fees – at the same time the Reserve Bank of Australia on Tuesday launches a comprehensive review of payment costs for retailers. “Consumers shouldn’t be punished for using cards or digital payments, and at the same time, small businesses shouldn’t have to pay hefty fees just to get paid themselves,” Treasurer Jim Chalmers said on Monday evening. The ban could be introduced from the start of January 2026, subject to consultation with the RBA, the government said. It will provide $2.1 million in extra funding to the Australian Competition and Consumer Commission to crack down on excessive surcharge fees. The change, if it is implemented, would squeeze many retailers, who have been passing on costs charged by card companies and banks to shoppers. Shoppers are slugged around $1.5 billion annually on debit and credit card surcharges, according to industry estimates. The proposed ban does not extend to credit cards, but would mean consumers tapping their phone to pay cannot be charged a fee, given these typically involve debit cards. The RBA released an issues paper, along with a set of technical explainers, on Tuesday industry views, potentially before Christmas, on the impact of preventing surcharging. The central bank has been ready to move on the practice for most of the year, but had been waiting for the government to pass legislation to provide it with broader powers. With the bill stuck in the parliament, the RBA decided to launch the review regardless. Businesses are currently allowed to pass the charges levied by the payments sector on to the customer via a surcharge. While small businesses have previously raised concerns over a proposed ban on surcharges because they would need to bear that cost, the issue could be resolved via reforms that reduce the fees merchants pay banks, card networks and payment platforms. Bank chiefs broadly support the moves to ban debit surcharging, although any move would incur costs as banks have to revise payment terminal technology and pricing plans for customers.
The corporate regulator has released the Australian insolvency statistics for the period up to 29 September 2024, with the latest statistics indicating there was a 43% increase in total insolvencies in the first three months of the 2024–25 financial year from the same period in the previous financial year. The statistics showed that for the period from 1 July to 29 September, 3,568 companies had entered external administration or had a controller appointed. This was 1073 more companies that entered insolvency than during the September quarter in 2023. While the construction sector still accounted for the highest number of insolvencies at 876 for the first quarter, the rate of growth in insolvencies for this industry has slowed substantially, increasing only 11.6% when compared to the same period last year. Accommodation and food services, on the other hand, have seen a significant increase in the rate of insolvencies, with the sector seeing more than double the number of insolvencies for the latest quarter compared to the September quarter in 2023. The statistics indicated a total of 695 insolvencies in the accommodation and food services sector in the first quarter of 2024–25, an increase of 105% from the same period in 2023. Other services were the sector with the third highest number of businesses entering insolvency at 345, followed by professional, scientific and technical services at 233. While the number of insolvencies in the healthcare and social assistance sector remained relatively low at 102, this was double the number of insolvencies for the same quarter last year.
Pre-retirees think they need a nest egg above $850,000, but the reality is they can live comfortably on much less than that. New research by investment service Generation Life has found nine out of 10 people feel under financial pressure and many believe their financial dreams are out of reach. The new report, Not Tomorrow’s Problem, says most pre-retirees – aged 51 to 65 – pay little attention to their superannuation, leading to a lack of knowledge and fear of the unknown. The average amount they think they need to retire is $856,209, it says, and three-quarters feel unable to achieve a happy retirement. However, finance specialists say many set their sights unnecessarily high and may end up working years longer than they need to because of incorrect expectations. The Association of Superannuation Funds of Australia’s widely recognised ASFA Retirement Standard says a single person needs $595,000 at age 67 for a comfortable retirement delivering $52,085 a year, while a couple needs a combined $690,000 – or $345,000 each – to provide $73,337 annually. Generation Life chief executive Grant Hackett said many people saw the ASFA calculations as minimal living standards rather than comfortable. MBA Financial Strategists director Darren James said the high $850,000 figure could put people off retirement planning. “I think that’s probably basing it on them not getting any Age Pension, whereas obviously a lot of people can,” he said. “Some people get scared, throw their hands up in the air and say it’s all too hard. We’re seeing people able to set up retirement quite well on far less than that.” Mr James said some people mistakenly believed they would need their current pre-tax earnings in retirement, but most retirees paid no tax, had no dependent children and low or no debt.
Australia’s top business and economic groups have piled on political parties for failing to produce a serious economic agenda to fix weak labour productivity and persistent inflation, as industry frustration boils over about six months from a federal election. Industry leaders called for more ambitious economic plans to be rolled out by Labor and the Coalition before an election that is due by May 2025. Top reform priorities include reducing the government’s dependence on income tax and corporate tax to incentivise work and investment, getting the energy transition right, unwinding Labor’s workplace changes and more disciplined budget spending. Reserve Bank of Australia governor Michele Bullock has warned that labour productivity growth is “very weak” and languishing at 2016 levels, making it harder for the economy to cope with wage rises without stoking inflation. Ms Bullock said last month she had no influence over productivity, implying that it was up to government policies and business investment to turn it around. Australian Chamber of Commerce and Industry chief executive Andrew McKellar said a quarter of a century had passed since the last serious tax reform when the 10% goods and services tax was introduced. “We don’t think there is a clear narrative from the major parties that addresses the challenges of weak productivity growth, escalating business costs and the regulatory burden,” he said. “Tax reform has to come back on the agenda to improve competitiveness, by reducing reliance on income taxes and company tax. “Stage three income tax cuts and flying a kite on negative gearing are not serious tax reform.” The ACCI also wants a cap on federal government rising spending, at 25% of GDP, and is lobbying to unwind Labor’s workplace changes on multi-employer bargaining, labour hire and casual workers. Committee for Economic Development of Australia chief executive Melinda Cilento said it was hard to prosecute a strong economic agenda at a time of increasing social division amid the war in the Middle East, but both sides of politics need to focus more on economic issues. “Cost of living and housing remain the main issues on voters’ minds, and all parties should be focused on measures to address them that don’t also stoke inflation,” she said.
.And that’s it for this week. And next week, I’ll be talking to Phil Zammit, Sydney-based VP for APJ, Greater China and India for communications and workstream collaboration company Avaya. We’ll talk about how businesses can improve productivity.
And I’ll be talking to Indeed economist Callam Pickering about the latest jobs 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.
