Talking Business podcast
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 www.businessacumen.biz.
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 forty-six in our series for 2020 and today’s date is Friday December 18.
First, I‘ll be talking to Tammy Sherwood, CEO of Person Centred Care Australia with its app-based Mobile Care Monitoring for the aged and dementia care facilities. And I’ll be talking to AMP Capital chief economist Shane Oliver about the market and his predictions for next year.
But now, let’s talk to Tammy Sherwood
China’s economic recovery from the coronavirus crisis powered ahead in November as crucial indicators of activity rose at their fastest rates this year. Industrial production increased 7% year on year in November, edging up from 6.9% a month earlier, while retail sales rose 5%. Both metrics expanded more than in any other in 2020. China’s economy returned to growth in the second quarter after an historic decline at the start of the year. The recovery has been stoked by the country’s industrial sector and strong export growth at a time when other big economies have foundered. The comeback has allowed China to play a more dominant role in global trade, which also gathered pace last month. Exports rose 21.1% in dollar terms in November, the biggest rise since February 2018, pushing China’s trade surplus to its highest level on record.
Boris Johnson and Ursula von der Leyen have agreed to continue Brexit talks, saying that it was worth going the “extra mile” to see whether a trade deal could still be struck, amid signs of progress on key sticking points. The decision was made during what the two sides described as a useful phone call between the British prime minister and European Commission president, following intensive negotiations in Brussels this weekend. “Despite the fact that deadlines have been missed over and over we think it is responsible at this point to go the extra mile,” Ms von der Leyen and Mr Johnson said in a joint statement. “We have accordingly mandated our negotiators to continue the talks and to see whether an agreement can even at this late stage be reached.” The discussions will continue in Brussels, Ms von der Leyen added in a televised statement, saying it had been a “constructive and useful” call. The decision echoes comments from German chancellor Angela Merkel earlier on Sunday that the two sides “should try everything to achieve a result”. Boris Johnson has been warned that the fate of millions of jobs, Britain’s most deprived regions and the UK’s manufacturing base rely on him reaching an 11th-hour trade deal with the EU, as senior figures from every corner of the economy issued a final plea for a compromise.
Australian coal exports to China have been formally blocked after months of import restrictions that have thrown the $14 billion export industry into turmoil. The decision, taken by China’s National Development and Reform Commission at a meeting with 10 Chinese power plants on Saturday and reported by state media on Monday, means Australian coal will be blocked indefinitely while China ramps up imports from Mongolia, Indonesia and Russia, and expands local production. China’s international state media outlet, The Global Times, reported the commission had given approval to power plants to import coal “without clearance restrictions, except for Australia, in a bid to stabilise coal purchase prices”. The decision aims to reduce the price for state-linked firms as Beijing continues to punish Australia economically for its push for a coronavirus inquiry, and criticism of China’s human rights records and national security legislation.
Australian agribusiness companies doing business with China are worried about significant job losses as a result of the deteriorating export market as relations between Australia and China hit new lows, according to a new survey released on Tuesday by the Australian Chamber of Commerce in Beijing. The survey of Australian agribusinesses operating in China or exporting to China — particularly those in the wine industry — showed a significant fall in business confidence over the past few months in the wake of moves by Chinese officials to restrict the import of Australian products. The survey also showed that more than 40% of the respondents were strongly critical of moves in Australia by the Foreign Investment Review Board (FIRB) to block Chinese companies looking to buy assets in Australia. The downbeat survey follows moves by Chinese officials to impose tariffs of more than 200% on significant players in the once booming Australian wine export market to China. The Australian barley market in China was all but wiped out this year after China imposed tariffs of more than 80% on imports from Australia while several major Australian abattoirs have been blocked from sending beef to China in recent months.
Airports have urged the federal government to start reviewing all COVID-19 vaccines – not just those that will be injected into Australians – so it can let in travellers who want to get on planes to Australia without going into quarantine. While the aviation industry hopes that Australians will be let out and back in without quarantine once a vaccine has been distributed locally, they say it is not yet clear what standards the federal government will set for the vaccinations of foreigners who want to come to Australia.
November was the strongest month for superannuation in 2020 and the 8th consecutive month of positive returns for members. As COVID-19 restrictions ease nation-wide and investors look forward to the approval and distribution of a vaccine, share markets globally have pushed to record highs, delivering windfall gains for super members. According to estimates from leading superannuation research house SuperRatings, the median balanced option returned 4.9% in November as members enjoyed an early Christmas gift that has put them back into the black over the course of a volatile and uncertain year.
Federal treasurer Josh Frydenberg has backed a proposed inquiry chaired by Coalition climate sceptic George Christensen that would interrogate banks refusing to finance coal investments. Christensen, the proposed chair of the parliamentary probe, would question banks such as ANZ that are refusing to finance new coal projects and insisting clients begin to decarbonise. Frydenberg gave his approval for federal resources minister Keith Pitt to request the inquiry through the Standing Committee on Trade and Investment Growth. Global ratings agency Moody’s warned that $4.5 trillion of debt was at very high or high risk because of environmental concerns, with coal mining and coal terminals at greatest risk.
Treasurer Josh Frydenberg is working on an overhaul of the corporate watchdog’s structure, ahead of a shake-up next year that is likely to include fewer full-time commissioners and help businesses understand who is in charge of regulating their activities. A decision on the future of Australian Securities and Investments Commission chairman James Shipton is yet to be made, with an outcome expected in the new year after an investigation is handed to the Treasurer later this month. Mr Shipton stood aside in October for an independent probe into ASIC approving payments of $118,557 for tax advice as part of a relocation package for his move from overseas to take up the top job, and a housing allowance of almost $70,000 paid to deputy chairman Daniel Crennan, who has since resigned. Legally, Mr Frydenberg can’t sack Mr Shipton and the termination power rests with the Governor-General if there is “misbehaviour, or the physical or mental incapacity” to do the job, the ASIC Act notes. The government is awaiting a report from the former inspector-general of intelligence, Vivienne Thom
Energy minister Angus Taylor has unveiled a rescue package for oil refineries, despite the UN calling for an end to fossil fuel support at a global climate summit. The support to start on January 1 will provide a minimum 1 cent payment for each litre of petrol, diesel and jet fuel produced by major oil refineries that continue operations in Australia. The first six months of the production payment is worth $83.5 million, with a long-term market mechanism for the payment to come into effect by July 1 next year. It comes on top of $200 million in grants to build an additional 780 million litres of onshore diesel storage. Taylor said the plan protected fuel security at a time when refineries were struggling with depressed demand in the economic downturn, and would create 1000 new jobs and protect workers in the fuel sector.
Crown Resorts faces a new shareholder class action alleging investors were misled and harmed by the casino giant’s dysfunctional governance which led to possible breaches of anti-money laundering laws. Law firm Maurice Blackburn lodged a claim in the Victorian Supreme Court on Friday accusing Crown of engaging in misleading or deceptive conduct from December 2014 through to October this year by telling investors it had “robust” or effective controls in place to ensure compliance with anti-money laundering (AML) laws. The firm also alleges Crown acted contrary to its shareholders’ interests and – in a novel legal approach – will ask the court to consider ordering Crown to buy back shares from affected investors. Maurice Blackburn is already pursuing Crown through the Federal Court seeking millions of dollars for shareholders who lost money in a $1.3 billion share price crash after 19 Crown employees were arrested for gambling crimes in China in 2016. That case is set to go to trial in 2022.
The competition regulator will not stand in the way of wealth giant IOOF’s ambitious acquisition of the National Australia Bank’s MLC, noting that the combined group would still face “significant competition” from industry super funds.The Australian Competition and Consumer Commission released the findings of its review into the $1.4 billion transaction on Monday, paving the way for IOOF to make good on its claim to become Australia’s largest retail wealth manager and provider of financial advice.
The company leading Australian efforts to secure medical supplies during the coronavirus pandemic booked a massive 650% revenue bump last financial year, according to filings with the corporate regulator. Buoyed by government contracts worth close to $1.3 billion in the 18 months to August 2021, Aspen Medical booked revenue of $562 million in 2019-20, up from $75 million a year earlier. Aspen was the second-largest supplier to the Australian government in 2019-20
Clive Palmer has forked out nearly $1 million for newspaper advertisements attacking corporate watchdog chairman James Shipton over the past two months. According to data collected by media advertising group Nielsen, Mr Palmer has spent $679,598 in November and $240,996 in December so far on newspaper ads – a total of $921,000. Mr Palmer, who has been pursued by the corporate regulator for years over several matters, launched a series of large ads targeting the Australian Securities and Investments Commission chairman after Mr Shipton stepped aside from his role amid an investigation into a now repaid tax advice bill from KPMG worth $118,557.
Deloitte Access Economics is warning of the potential for a rush of collapses in early 2021 in parts of the retail sector as government stimulus measures wind down, with the number of insolvencies now lower than normal despite the COVID-19 disruption. Deloitte Access Economics partner David Rumbens said even though confidence in the economy is accelerating – with extra impetus now COVID-19 vaccination programs in the United States and Britain have started – there could be a ”catch-up” in the numbers of retailers going bust as an artificial safety net gives way.
APRA has announced that it will no longer hold banks to a minimum level of earnings retention, unshackling them from the requirement to keep dividend payout ratios to 50% of profits.
However, the Reserve Bank has warned that banks face fresh risks of business insolvencies and tighter margins from record low interest rates. Just a few hours after the Australian Prudential Regulation Authority gave the green light for higher bank dividend payments next year, dumping the COVID-19 cap on shareholder payouts, the RBA’s head of financial stability, Jonathan Kearns, highlighted that risks to bank profits remained with the largest contraction in global output since the Great Depression,, impairing some households’ and businesses’ ability to repay their loans
The company behind Michel’s Patisserie, Brumby’s Bakery, Donut King and Gloria Jean’s Coffee is getting sued for allegedly ripping off its franchisees. The ACCC is seeking fines and “adverse publicity orders” against the Retail Food Group. Michel’s Patisserie allegedly shifted $22m from its “marketing fund” for ulterior purposes RFG also owns Crust Pizza, Pizza Capers and The Coffee Guy (which are not involved in the case) The Retail Food Group (RFG) is accused of engaging in unconscionable conduct and making false or misleading representations, according to a Federal Court case launched by the Australian Competition and Consumer Commission (ACCC). Australia’s consumer watchdog will argue that RFG broke the law when it sold or licensed 42 loss-making stores to incoming franchisees between 2015 and 2019.
The Australian Consumer and Competition Commission (ACCC) says a $552 million acquisition by Woolworths of privately owned PFD Food Services could give the supermarket giant too much bargaining power and reduce consumer choice. The ACCC is concerned the merger will restrict choice for food manufacturers and lessen competition between independent supermarkets Woolworths has been trying to acquire a 65% stake in PFD, and its 26 distribution centres, since August. PFD is a wholesale food distributor that purchases a wide range of food products from manufacturers and distributes them to businesses such as restaurants, fast food franchises, hotels, and petrol stations. ACCC chair Rod Sims said the watchdog was concerned the proposed acquisition would increase Woolworths’ “already substantial bargaining power in its dealings with food manufacturers”. Woolworths and PFD both acquire food and groceries from suppliers such as frozen food manufacturers, dairy processors and manufacturers of pasta and sauces.
Jetstar has become the first local airline to say its domestic capacity will rise above pre-pandemic levels early next year as it looks to capitalise on a market bereft of an other low-cost option. Jetstar said travel demand to holiday spots bounced back in the lead up to the summer holidays. The airline launched its annual Christmas sale on Tuesday. The Qantas-owned budget carrier will run more than 850 return flights next March – 10% more than it did during the same month in 2019 – and Jetstar chief Gareth Evans flagged it would use Airbus A320 planes usually used on short-haul international routes to cope with the extra frequency.
The return to CBDs will be “sluggish” in 2021, traffic congestion will rise as people continue to shun public transport and waste will keep soaring due to the botched recycling of packaging thrown out after online shopping sprees, a national study on infrastructure after the pandemic has forecast. Infrastructure Australia, the federal agency charged with reviewing the nation’s infrastructure needs, says the country will need to increase its investments in waste recycling as well as technology such as broadband services and rethink its use of office space due to changes in behaviour during the pandemic. In a 189-page report to be released on Wednesday, the agency singles out the boom in online shopping, soaring demand for telehealth services, lower demand for public transport and a shift to online education as trends that will stick around.
And that’s it for this week. And that’s the last episode for Talking Business for 2020. Bringing you Talking Business in this difficult year has been a privilege and I’d like to wish all of you a safe, healthy and happy Christmas and a joyous and prosperous 2021.
In the meantime, you can find me on Twitter at talkingbizz, on Facebook and on 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 year, starting February 5.
