Former ACTU secretary Bill Kelty says the Albanese government is “mired in mediocrity”.
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 34 in our series for 2024 and today’s date is Friday September 20.
First I’ll be talking to I’ll be talking to Cesar Hasselman, author, mentor, coach, consultant, and a founder of AMH Consultancy, that is helping small to medium business owners create success by developing the right culture.
And I’ll be talking to Rabobank economist Michael Every about what to make about what’s happening with the Chinese economy and what it means for Australia.
But first, let’s talk to Cesar Hasselman
So what’s happening the news?
The world economy’s tectonic plates will shift this week when a US easing cycle begins, just as officials from Europe to Asia set policy against a backdrop of brittle markets. A 36-hour monetary rollercoaster will start with the Federal Reserve’s probable decision to cut interest rates on Wednesday, and finish on Friday with the outcome of the Bank of Japan’s first meeting since it raised borrowing costs and helped sow the seeds of a global selloff. Along the way, central banking peers in the Group of 20 and beyond that are poised to adjust their own policy levers include Brazil, where officials may tighten for the first time in 3 1/2 years, and the Bank of England. The UK central bank faces a delicate judgment on the pace of its balance-sheet unwind, and may also signal how ready it is to ease further. The Fed decision will take centre stage, with jittery traders debating whether officials will judge a quarter-point cut to be adequate medicine for an economy showing signs of losing momentum, or whether they’ll opt for a half-point move instead. Clues on the Fed’s future intentions will also be pivotal. But for all the end to suspense that the US announcement will bring, investors are likely to stay on edge at least until the Bank of Japan is done, in a decision that’s bound to be scrutinized for clues on its next hike.
Bill Kelty, one of the architects of Australia’s modern prosperity, argues Labor must dramatically reshape its economic agenda to lift productivity and provide greater fairness and opportunity to the younger generation. “We need a Labor Party in which the big issues are confronted,” he said, describing the Albanese government as instead being “mired in mediocrity”. The trailblazing trade unionist, who played a crucial role in the 80s and 90s bringing business and the labour movement together to agree on contentious economic reforms, says although Labor has delivered some good policies in its first term, it does not have a plan to revitalise a near-stagnant economy. His wishlist includes major tax reform, revised bank lending rules, and an overhaul of Australia’s approach to housing, energy and training among other crucial policy changes. Mr Kelty’s enduring faith in reform dynamism reflects the ethos of the Hawke/Keating governments, which, with help from him as secretary of the Australian Council of Trade Unions, was able to strike a grand bargain between business and unions, including on wages moderation and to pursue a more entrepreneurial, open economy. “Paul Keating is right,” Mr Kelty told a private meeting of a small group of Melbourne business leaders this month. “The government needs a greater dose of imagination. “The Labor Party seems to have lost its way to safely secure three terms of government.” Mr Kelty’s speech to a business lunch attended by former Coalition treasurer Josh Frydenberg, Tabcorp CEO Gill McLachlan and former Westpac director Chris Lynch among others was made on September 6, the day after GDP figures showed Australia growing at its slowest pace since the early 1990s recession.
The Australian Securities and Investments Commission’s Simone Constant is talking about investigations underway into directors and executives at organisations deemed to have neglected their duties to guard against hackers. Constant, a commissioner with ASIC, was willing to puncture the Team Australia balloon and point out that there are still executives and board members paying lip service to the costly and time-consuming demands of ensuring their systems are as safe as possible. And the punishments if these companies end up at the centre of a damaging breach could be steep. While the representative of the corporate regulator declined to name which companies ASIC was investigating, she was more than happy to show off the size of the stick she was wielding. She observed that white-collar crime laws from 2019 included prison terms of up to 15 years for breach of these duties that led to serious harm. It seems unlikely that we will see directors and executives facing jail stretches that long for culpability for hacks, but the message clearly landed heavily with some attendees at a conference she was addressing. ASIC’s message to corporate Australia is that if you get caught out by a cyberattack which causes broader harm, directors will not be able to talk their way out of trouble by saying they thought their techies had it covered. “We don’t want to see the rise of cyber washing. When companies make disclosures, public statements and give assurances about their cyber safety … they need evidence,” Constant said. “If you are on a board you need the curiosity and gumption to make executives prove that they aren’t doing a poor job on cybersecurity. Don’t allow yourself to be told, but insist on being shown.”
Commonwealth Bank of Australia is exploring the possibility of replacing thousands of local call centre staff with a ChatGPT-style platform in an expanded use of artificial intelligence for customers being considered by the country’s largest financial institution. The bank is conducting trials of the platform, called Hey CommBank, by testing the technology on employees of the bank who are also customers. The trial is part of a wide range of experiments under way at CBA, which has become the first Australian company to use a so-called AI factory – a cluster of Nvidia chips that support AI processing – supplied by technology giant Amazon. CBA has long been a tech leader among the major banks and had planned to publicly discuss its intentions on AI use in May. But after a trip to the United States CBA chief executive Matt Comyn put those plans on hold, saying it had made him think bigger than simply focusing on “the very near-term use cases”. Outlining how the bank is considering using Hey Commbank, CBA chief data and analytics officer Andrew McMullan said in the future he expected customers would become “so familiar with using ChatGPT-style services that it becomes the way that they interact with the bank as well, through our digital channels”. “We are trying to understand what the engagement is like, how those agents would interact with customers, and are making sure that we’re very responsible,” Dr McMullan said. “We’re building the safety guardrails that are required to make sure that these agents can be deployed safely to customers en-masse.” One way Hey CommBank could be used, Dr McMullan said, would be to tell customers how much they needed to save to buy a house in a certain postcode, and what prices would be like. They would receive conversational answers based on internal data. All of CBA’s call centre inquiries are now handled by employees in Australia. But the deal with Amazon has already begun to change how the bank operates. Previously, calls were recorded so staff could listen and offer training. Now, AI monitors them. Dr McMullan said a call could now be converted into a transcript in 1.2 seconds, and AI judged the customer’s sentiment and whether they had a good experience. The bank says its customer service teams speak to 50,000 customers a day. The bank employs more than 2400 people in its contact centres, interacting with customers via phone and instant messaging. It is unclear how many of those positions would be under threat with the introduction of AI. Finance Sector Union assistant secretary Nicole McPherson said CBA had failed to consult staff and customers before starting this trial, accusing the bank of mimicking a trend of ending customer service roles. She described CBA’s plans as “disrespectful and tricky”, and said they should be beneath the country’s largest bank.
About two thirds of Australian baby boomers leaving the workforce don’t have enough pension savings to retire comfortably, according to research from the industry’s peak body. Slightly more than 30% of Australians are able to afford a comfortable lifestyle in retirement, the Association of Superannuation Funds of Australia (ASFA) said. The median pension account balance for men aged 60-64 sat at $205,385 as of June 2022 and $153,685 for women the same age, way off the industry’s accepted comfortable retirement standard of A$690,000 for couples and $595,000 for singles. As the nation’s pension pool nears $4 trillion, an estimated 2.5 million Australians are expected to retire in the next decade. The pension industry — known locally as superannuation — was made compulsory for all workers in 1992, with contributions equal to 3% of wages. The amount employers contribute has grown to 11.5% and will rise to 12% next year. However, anxiety around retirement savings persists even as Australia regularly ranks among the world’s top pension systems. Some 40% of Australians say they’ll never have enough money to retire despite the country boasting one of the world’s most envied pensions systems, according to a Natxis Investment Managers survey released last week. “Lots of people are concerned about the comfort and ability of retirees at the moment because of the cost of living rises,” ASFA Chief Executive Officer Mary Delahunty said. “The people retiring now have not had a full benefit for their working life. So they will still require a good level of government help, or help from the rest of us, to be able to retire with dignity.”
Following the planned departure of Nine Entertainment boss Mike Sneesby last week, Nine is now looking at privatising online real estate spin-off Domain which is 60% owned by Nine. It is understood that Nine has been giving considerable attention to the future of Domain, which is the second-largest player in the sector behind REA Group, which is majority owned by News Corp. While REA’s market value is about $27bn, Domain’s is only $1.8bn. Domain shares were about $3.44 four years ago and are now $2.80. They peaked in 2021 at over $5. Nine – a publisher, broadcaster and digital media business – is understood to be weighing a move to privatise Domain with help from private equity. Taking Domain off the listed market could boost performance behind closed doors, without scrutiny. In its latest results for the year to June, Domain reported a 13.1% increase in revenue for the past financial year to $391.1m, while net profit increased by 27.9%, excluding significant items, to $49.4m.
Major banks and retailers are discussing ways to minimise the double handling of notes and coins as they plot a more sustainable cash transport industry by installing sophisticated ATMs that combine deposits and withdrawals, and simplifying routes serviced by transit trucks. Since the June deal to provide Armaguard with a $50 million financial lifeline to see it through to mid-next year, the Australian Banking Association has been co-ordinating weekly meetings to flesh out a long-term model for moving cash around the economy in an era of declining volumes. The plan will streamline delivery routes, including reducing trucking in and out of Armaguard depots by deploying new technologies that keep cash in branches and on shop floors for longer, before recycling it for new users. The Reserve Bank, federal Treasury, Australia Post and large retailers are involved in the talks. They are drilling down on changes to cash services in international markets to determine suitable policies for Australia’s geography and population. Options being discussed include letting banks and businesses shuffle cash directly, without transporting it to a central Armaguard depot. Banks are also exploring rolling out new ATMs that would allow cash to be dispensed from a blended float. Ordinarily, machines keep deposited funds and notes for withdrawal separate, requiring constant replenishing. These are particularly suited to Australia Post branches in regional areas. Smart safes could also be deployed inside big retailers that immediately credit a merchant’s bank with funds on deposit while cash is stored on site. Currently, banks have to move cash to a depot before it can earn interest, complicating the chain of custody. The ABA, RBA and Treasury officials visited Europe in May to study alternative models for cash services. The Australian Competition and Consumer Commission last week provided authorisation for the ABA, Australia Post, retailers, supermarkets and other industry participants to continue collaborating to “ensure there is continuity of cash-in-transit services”. The ABA has agreed to provide regular reports to the ACCC about the talks. In Australia, the use of cash for payments has declined by 10% each year for the past 15 years, to 13% of all transactions in 2022. This has increased the unit cost of moving it around, given fixed costs are high but delivery and pick-up involves volume-based contracts. “Cash payments have fallen from around 70% in 2007 to 13%, but cash pick-ups and drop-offs remain almost unchanged,” said ABA chief of policy Christopher Taylor. “With rising costs and shrinking demand, the current model is rapidly becoming unsustainable. The challenges of declining cash use are not unique to Australia… We need to develop an Australian solution that ensures efficient cash access and cost-effective delivery of cash-in-transit services, especially for regional and remote areas.” Smart ATMs are now widely used in Europe – including by ATM utilities Geldmaat in the Netherlands and Bankomat in Sweden. According to a report by McKinsey for the ABA, cash recycling machines have reduced cash transport volumes in Sweden by 50%, while smart safes in the United States have reduced cash pick-ups between 40 and 60%. The cost to service remote areas is higher because of the distances travelled. In a particular town, larger businesses and banks take excess cash to Armaguard depots. But nearby businesses simply order more cash. It would be more efficient if businesses could transact with each other, without it going through a depot. Banks and retailers are also exploring standardising delivery routes to branches in a suburb or town to service them all on the same day. Similarly, all shops in a central mall would be served on the same day, reducing overlap. The way it is delivered will be standardised too, instead of bespoke tubes or rolled coins. Streamlining the industry may also require changes at the RBA, which only pays interest on money held in a depot. This is incentivising depot trips, rather than keeping cash circulating in the community. The RBA may be asked to reconsider its approach. “Banks and retailers will regularly update the Reserve Bank on proposals to put the distribution of cash on a sustainable footing before emergency funding expires in July 2025,” Mr Taylor said.
Melbourne-based start-up Helfie AI is working on software that will be able to screen for skin cancer and COVID-19 through a smartphone app. Helfie was founded in 2019 by George Tomeski, Matt Jones and Nick Chang. Jones and Chang are no longer with the company, the former going on to found a Blackbird-backed wellness booking venture and the latter joining a cryptocurrency exchange. Tomeski is Helfie’s chief executive. Helfie claims to be able to do some incredible things with its artificial intelligence, including testing for COVID-19 and tuberculosis via users recording a cough on their phones, skin cancer checks with a phone camera scan and STI checks via a chatbot called STIA, which it says is 96% accurate. Its technology, which is being tested and due to be launched in the coming months, focuses on screening diseases rather than diagnosis, referring users to medical professionals. Street Talk understands Royal Mail Health in Britain is among its customers, while Microsoft has added it to its start-ups program which gives the company access to the tech giant’s cloud computing platform. To date, Helfie has largely been backed by family and friends. Its shareholder register also shows investment from CW Retail, a company owned by Chemist Warehouse, which counts billionaire businessmen Jack Gance and Mario Verrocchi as its major backers. Helfie has also attracted some heavy-hitters to its board including Moderna Therapeutics’ founding chief science officer, Tony de Fougerolles, recognised as the pioneer of modified MRNA as a vaccine, and Cheryl Buxton, the former vice chairwoman of pharmaceuticals and R&D at global recruiting giant Korn Ferry. However, it is now gearing up for discussions with local and international investors and hoping to raise more than $US100 million ($A150 million) and up to $300 million, giving it a valuation of about $US1 billion even before its consumer-facing product is on market. Last year, it raised $US33 million at a valuation of $US750 million.
And that’s it for this week. And next week, I’ll be talking to Joel Delmaire, the Chief Product Officer for recruitment software company JobAdder, about how businesses should manage the risks around artificial intelligence and the issues around legislation that will not restrict innovation.
And I will talk to Indeed economist Callam Pickering about the latest unemployment 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
