Cyber criminals are already using generative artificial intelligence to craft more persuasive scams
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 2023 and today’s date is Friday September 22.
First, I’ll be talking to Ivan Curic, Head of Commercial, Developers and Agency, Domain Group
And I’ll be talking to Indeed economist Callam Pickering about the latest jobs figures.
But first, let’s talk to Ivan Curic..
So what’s happening in the news?
The OECD has warned of “persistent” high consumer prices around the world including in Australia, strengthening the case for further interest rate rises despite “visible” effects from previous increases. The Organisation for Economic Co-operation and Development (OECD) released its interim economic outlook on Tuesday, titled Confronting Inflation and Low Growth. It said that although headline inflation is declining steadily “core inflation remains persistent in many economies” and this “would require additional policy tightening”. In Australia, it estimates core inflation of 5.9% in 2023, up 0.4 points from its June estimate, and 3.3% in 2024, up 0.1. The OECD blamed “cost pressures and high margins in some sectors” for core inflation, which measures the change in prices of goods and services, excluding items frequently subject to volatile prices, like food and energy.
Cyber criminals are already using generative artificial intelligence to craft more persuasive scams, but the greater threats the technology poses are still emerging, the country’s inaugural cyber coordinator says. “By 2030 the global cyber threat environment is going to look very different to how it looks today,” Air Marshal Darren Goldie said. “AI and quantum [computing] are coming like a freight train, presenting legislative and security challenges we’ve seen play out around the world.” Should one powerful enough ever be built, a quantum computer could theoretically crack almost all the encryption that has secured financial and other data systems for decades. But while that threat has yet to be realised, artificial intelligence is already changing the nature of cybercrime. Ben Doyle, the chief information officer at defence and transport manufacturer Thales Group, said cybercriminals are already adopting AI tools such as ChatGPT “where they can”. “When you look at spam and phishing and things like that, the writing style is a lot better because they are all using ChatGPT to write the phishing links. “They’re not just doing it in English anymore, they’re also automatically translating it, so a lot more countries are actually seeing an increase in phishing [attacks]. It used to be focussed on English, now they’re doing it in Spanish, Vietnamese, because it’s easier for them to translate, giving them a greater threat capability,” he said. Paul Jevtovic, the chief financial crime risk and group money laundering officer at the National Australia Bank, said even when the victim of a phishing attack suspected they were under attack, cyber criminals were using AI-tools to stay a step ahead of them.
Company directors could be in breach of their duties if their companies fail to adequately deal with cyberattacks, warns Australian Securities and Investment Commission chairman Joe Longo. This could include the directors of high-profile companies such as Medibank, Optus and consumer finance group Latitude, which have been the subject of high-profile and damaging cyber attacks over the past year. “If boards do not give cybersecurity and cyber resilience sufficient priority, this creates a foreseeable risk of harm to the company and thereby exposes the directors to potential enforcement action by ASIC based on the directors not acting with reasonable care and diligence,” Longo said. ASIC’s research has shown there is often a disconnect between a company board’s oversight of cyber risk, management reporting on this topic to their board, as well as the identification and assessment of risks and how controls are implemented. Longo said this disconnect must be addressed if the board wanted to meet its legal obligations. The Office of the Australian Information Commissioner has opened investigations into the cyberattacks on Optus, Medibank and Latitude, which could open the door for ASIC to take legal action. This is on top of potential class action lawsuits over the cyberattacks.
Sentiment among manufacturers has plunged to its lowest level since the global financial crisis as a new survey shows the industry is shedding workers in response to falling consumer demand. A net 35% of manufacturers expect the general business situation to worsen over the next six months, according to the ACCI-Westpac industrial trends survey for the September quarter. The figure was the worst since the GFC as pessimism takes hold across the manufacturing sector. The release of the survey is the latest sign that high interest rates are having a dampening effect on the economy and causing the mood among consumers and businesses to sour. While employment continues to grow nationally, the survey shows a net 5% more manufacturers reduced their headcount than raised their headcount in the three months to September. Meanwhile, new orders were flat for the second quarter in a row as consumer demand softens.
The number of job ads measured by online employment services company Seek fell 1.8% for August, after a slight rise in July, with the nation’s labour market still tight but softening as the weight of a year of interest rate hikes takes its toll on hiring intentions for employers. The volume of job ads has fallen by a fifth for the year to August. At the same time more workers are looking at job ads, as the population increases thanks to migration. It sheds a light on the moderating growth now evident in the economy although some sectors remain strong, such as education and training, while retailers gearing up for the looming Christmas rush helped give a bump to retail and consumer product job ads. The Seek employment report found that job ads were 19.7% higher than August 2019. Applications per job ad increased for the sixth consecutive month, rising 6.5% from the month prior and are now more than double the year prior. However, there were signs within the jobs data of a slowing employment market.
Yellow Brick Road chairman Mark Bouris says the “misunderstood nature” of the mortgage broking business is to blame for investors steering clear of his company, and going private is the only way to fix the problem. Mr Bouris, best known for his work on reality business show Celebrity Apprentice Australia, also defended his remuneration – more than $1 million per year, despite Yellow Brick Road’s market capitalisation of just $19 million – saying he could earn “twice that amount of money” elsewhere. Yellow Brick Road on Monday detailed its reasons for pursuing a delisting from the ASX, and will offer existing investors the chance to buy shares at 5.5¢ if they want to remain invested in the unlisted company. A delisting would cap over a decade on the ASX for Yellow Brick Road, which was floated in 2011 at 40¢ a share via a backdoor listing. It last traded at 5¢. Around 62% of issued Yellow Brick Road capital is held by four shareholders, and this is distorting liquidity and leading to a share price undervalued by as much as 56.7%, the company said in a statement. Mr Bouris said the depressed share price was because there was a lack of understanding of its commission structure and liquidity challenges. While the company has made cash profits, accounting adjustments means it has been writing down its operating profit, he said Mr Bouris said the delisting is the outcome of seven months of planning, and Yellow Brick Road will use the delisting to “be ready” for the future. He declined to comment on what projects are in the pipeline. The delisting proposal will be considered at an extraordinary meeting in late October, with an expected delisting to occur the following month.
The ranks of the “established affluent” in Australia swelled by 45,000 people last year, on the back of strong market returns and property valuations. Investment Trends, a research consultancy, classifies people with more than $1 million excluding the family home and superannuation (but including self-managed superannuation fund assets) as “high net worth”. Those with between $2.5 million and $10 million are the “established affluent”. They are better off than the “emerging affluent” (with between $1 million and $2.5 million) but have not yet reached the heights of the “ultra high net worth” category, which takes in people who have $10 million plus. “Overall, the number of affluent investors increased over the last year to 635,000 investors and they hold $3 trillion in investible assets,” the 2023 Investment Trends/Praemium High Net Worth Investor Report says. “The graduation of 45,000 individuals into the established affluent was a notable change.” Growth in the established affluent category was larger than other categories because people with this level of wealth tend to have heavy exposures to equities and property, which performed well last year.
Almost every person in NSW and Queensland was hit with a natural disaster in the past 12 months, research has revealed, prompting calls for all levels of government to sink more money into safeguarding important infrastructure and consider moving residents to safer areas. Ahead of what is expected to be a dangerous bushfire season, the research by KPMG urban economist Terry Rawnsley shows the number of people affected by natural disasters is growing, with the number of communities directly affected also increasing. Rawnsley found 18.1 million people were affected by flood through 2022, the largest direct impact of any natural disaster, going back to the mid-2010s. Of that number, 7.6 million or 93% of all people in NSW had their daily lives changed in some way by flooding. In Queensland about 97% of residents or 5.3 million were affected, while in Victoria almost 4.6 million. Storms affected 7.6 million people in NSW, 5.3 million in Queensland and just over 4.6 million in Victoria for a national total of almost 18 million, making it the second-largest natural disaster in Rawnsley’s records. About 70% illegallived in a local government area affected by floods or storms. Last year’s heavy rains meant the only jurisdiction with many people hit by bushfire was South Australia, at just 8000. That compares with 8.3 million people affected by fires during 2019. Rawnsley said the numbers showed the growing importance of governments to protect critical infrastructure from the impact of climate change. According to the Insurance Council of Australia, the 2021-22 financial year was the worst in history for natural disaster-related insurance costs, at $7.3 billion. The flooding of south-east Queensland and northern NSW alone cost more than $6 billion. Last financial year the insurance bill from natural disasters dropped sharply to $1.6 billion. The worst single event were the floods of October through to December that caused $736 million in insurance losses across Tasmania, NSW, Victoria and South Australia. The Bureau of Meteorology is yet to declare an El Nino event, which is normally associated with drought conditions. But last week it warned that most of southern and eastern Australia would face “warmer and drier than average conditions” between October and December. It also noted global warming continued to influence the climate. Global sea surface temperatures set records this year, with July and August the hottest and second-hottest months ever. Rawnsley said reducing the exposure and vulnerability of communities to natural disasters had to be considered. This could include redirecting population growth away from high-risk areas through stronger land use planning. Better building codes and the construction of protective infrastructure, such as strengthening bridges, also had to be on the agenda for all governments. Rawnsley said incorporating adaption measures into retro-fitting and infrastructure replacement would also help prevent long-term disruptions to communities.
The Transport Workers Union says Qantas chairman Richard Goyder will have “nowhere to hide” at the upcoming Senate Inquiry into the national carrier, claiming the Qantas board has been in denial about the airline’s decision to sack workers being both illegal and damaging to safety, brand and customers. The chairmen and chief executives of major airlines – including former Qantas boss Alan Joyce – have been called before the inquiry from September 26, but the committee is still negotiating the exact timing and format of their appearances. Qantas chief legal counsel Andrew Finch told the TWU that the board was satisfied the airline’s management, led at the time by Mr Joyce, had appropriately managed the risks when it outsourced nearly 1700 workers after the airline was grounded in 2020 following the outbreak of the pandemic. The union says the board subsequently ignored three further attempts from the TWU to discuss its growing concerns about a sharp deterioration in safety standards – which it linked to the decline in Qantas’ public reputation. Following the High Court decision last Wednesday which found Qantas’ sacking of 1683 ground staff was illegal.
Qantas chairman Richard Goyder faces a fresh battle to keep his job after a leading industry group called for his dismissal over a board decision to engage Boston Consulting Group to rest the airline’s relationship with customers. A letter was sent to Mr Goyder by the Australian Licensed Aircraft Engineers Association on September 13, saying the decision by Qantas’s board to engage the consultant showed directors did not understand the mistakes that had left the airline’s reputation in tatters and led to staff being abused for simply wearing the uniform. The letter – copied to new chief executive Vanessa Hudson – ratchets up pressure on the embattled airline amid a surge in unrest from customers and staff after the company posted bumper profits. Ms Hudson – who ascended to the top job at Qantas two months ahead of schedule, with the sudden departure of Alan Joyce – has promised to restore the airline’s reputation with customers and staff. But in a sign that tensions remain near boiling point, Steve Purvinas, federal secretary of the engineering group, said Qantas’s decision to use BCG to undertake a key review hinted that not much had changed. “Engaging BCG says the board neither hears nor understands the problem. The situation is so bad that Qantas employees are being abused on the street for simply wearing a Qantas uniform. If Qantas is determined to fix problems and deliver consistency, you can not engage BCG or other consultations. The bean counters are the problem,” Mr Purvinas wrote in a letter to the Qantas chairman. “The direction of Qantas must change. If the Qantas board of directors do not understand the problems there must be board room change. If Qantas engages Boston Consulting Group, we call on you to resign your position as Qantas chairman without delay. The revelation of the unrest will fuel pressure on Mr Goyder, who is battling to save his job, and adds to the array of problems facing its newly appointed chief executive. The High Court last week upheld two previous rulings that the airline’s outsourcing of 1700 workers during the Covid pandemic was unlawful, leaving Qantas staring at a $200 m fine and intense pressure for an extensive board clean-out. The ruling came just weeks after the Australian Competition & Consumer Commission (ACCC) launched legal action against Qantas over allegations it sold tickets in 2022 for flights that had already been cancelled. ACCC chair Gina Cass-Gottlieb has said the watchdog is pursuing penalties of more than $250m for the “ghost flights” tickets. Qantas is already facing a class action over flight credits, as well as criminal prosecution in NSW by the state‘s safety regulator for allegedly standing down a health and safety representative during the pandemic. Qantas denies the ACCC allegations and has rejected suggestions it acted illegally when it stood down the health and safety representative. Public anger towards Qantas remains high as travel credits, high airfares and extravagant executive bonuses weigh on sentiment towards the once beloved carrier. In August Qantas posted a record $2.47bn profit, which Mr Joyce defended as in the national interest. Anger towards Qantas is also a political headache for the federal Labor government, which has had to repeatedly defend its decision to reject a request from Qatar for an additional 21 flights into Australia’s major airports, beyond the 28 slots a week it currently operates under existing bilateral air rights. The government has struggled to justify the decision, which Opposition Leader Peter Dutton saying Labor was “running a protection racket” for Qantas. Mr Joyce has admitted lobbying the government against Qatar’s request. He said the international market lacked capacity but allowing Qatar to nearly double the slots would “distort the market”.
The average chief executive pay at some of Australia’s biggest companies is more than $5m, and dozens received double-digit salary increases, according to annual reports and other information released during the recent profit reporting season. Remuneration figures from more than 70 big companies showed most CEOs got pay rises far exceeding inflation rates and the pace at which wages for full-time Australian workers and other employees increased over the 2023 financial year. About 30 CEOs received double-digit percentage pay increases for the year, at a time when interest rates and inflation remained stubbornly high. Twenty-six CEOs received total statutory earnings of more than $5m, comprising base salaries, short and long-term incentives, bonuses and other income. There were five CEOs who had pay packets of more than $10m, while another 19 earned more than $5m.
And that’s it for this week. And next week, I’ll be talking to Jon Pilcher, the CEO of Neuren Pharmaceuticals, the the $1.5bn ASX-listed biotech company. And AMP chief economist Shane Oliver will give his views about the profit reporting season.
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