France wants to punish Australia by delaying trade deal talks




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

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 2021 and today’s date is Friday September 24.

First, I’ll be talking to Dhruv Kohli, Vice President of Growth and Strategy at Geezy Go, Australia’s first digital supermarket. And I’ll be talking to Indeed economist Callam Pickering about the latest unemployment figures.

But now, let’s talk to Dhruv Kholi.


France is seeking to enlist European Union support to delay a planned EU-Australia trade deal, as part of a plan to punish Australia for what it regards as serial deceit and subterfuge by Canberra before it cancelled the contract for 12 attack-class French submarines. The A$90bn (£48bn) submarine contract was the centrepiece of French-Australian cooperation in the Indo-Pacific, but the Australians have instead opted to form a US-UK-Australia pact dubbed Aukus and build eight nuclear-powered submarines likely to be delivered between 2030 and 2040. The EU Commission president, Ursula von der Leyen, weighed into the diplomatic row on Monday, saying France had been treated unacceptably by the US, Australia and the UK and that many questions remained unanswered. EU foreign ministers were due to discuss the crisis on the sidelines of the UN general assembly in New York. The next round of EU-Australia trade talks – the 12th – are due next month, and it remains to be seen how deeply other EU states wish to become embroiled in the fallout from the French loss of a commercial contract. The EU is Australia’s third biggest market.

Iron ore’s price has experienced a staggering fall to $US90 a tonne causing shockwaves in the share market, as experts warn Australia’s economy is in a worse position than any other nation because of its deteriorating relationship with China. It’s the first time the iron ore price has dipped below the $US100 tonne mark in 14 months. Australia’s most valuable export has seen its price haemorrhage more than 60% from a record high in May when it hit close to $US240 a tonne. The collapse in price caused $50 billion to be wiped off the ASX, closing 2.1% and 155.5 points lower on Monday afternoon and hitting a two month low. Mining company stocks were worst hit with Fortescue and Rio Tinto down more than 3% and BHP soaring down by 4.2%.


Stock markets from Hong Kong to New York were hit by a major sell-off on Monday, as a massive Chinese real estate conglomerate called China Evergrande Group faces a potentially devastating debt default.  Evergande is “overleveraged,” a fancy way of saying it holds too much debt. How much? $300 billion worth.  Investors fear a default could destabilize the financial system in China, one of the world’s top economies. Evergrande’s crisis pierces the veil of the Chinese real estate sector and the artificially valued tracts of land and development projects. Experts say that could depress existing home values, which could dampen Chinese consumer spending — a consequence that could reverberate worldwide. Evergrande has its hands in so many other industries in China — wealth management, hospitality, media, natural resources — that some experts worry about a “contagion,” or spill over effect. In other words, if one major economic pillar collapses, will it spread to other markets or regions? Another concern is credit markets. Evergrande has done so much borrowing, and so many lenders are at risk of getting burned, would its potential default have a ripple effect for other borrowers? On both of these questions, experts say, it’s still too soon to tell.


Victoria’s building industry will be shut for two weeks after a day of unprecedented protests at the construction union’s head office, with windows smashed, projectiles thrown at senior officials and riot police closing down a major city street. Some critical infrastructure works, such as hospitals and some ongoing level crossing removal projects, will continue during the shutdown that started from midnight on Monday. The Andrews government formally announced the two-week shutdown late on Monday night, less than three hours before the closure was to begin at 11.59pm. All projects in metropolitan Melbourne, City of Ballarat, City of Greater Geelong, Surf Coast Shire and Mitchell Shire will be shuttered, with limited exempts for workers to attend closed sites to respond emergencies or perform urgent and essential work to protect health and safety. Industrial Relations Minister Tim Pallas said the decision had been driven by multiple outbreaks linked to the industry, as well as “widespread non-compliance” with COVID safety rules. Over the course of Monday, hundreds of protesters rallied outside the CFMEU’s Elizabeth Street office. Some protesters threatened to burn their union tickets and directed abuse at CFMEU Victorian secretary John Setka, who addressed the crowd, but was shouted down and called the “bitch” of Victorian Premier Daniel Andrews. The union, builders and senior Andrews government officials had been locked in meetings on Monday to stop the building sector from grinding to a halt, with the CFMEU threatening to walk off major projects if a compromise couldn’t be reached. The Victorian government claims it had “no choice” but to shut down construction work for two weeks, after a safety inspection blitz revealed 50% non-compliance with COVID-19 rules. The Property Council of Australia estimate the cost at over $1 billion each week and an immense personal cost to the 320,000 Victorian workers and property and construction businesses.



Christian Porter’s resignation from the Industry portfolio has been met with criticism and frustration across the Australian technology sector, which will now be working with its eighth minister in as many years. Several groups are now urging Prime Minister Scott Morrison to replace Mr Porter with a senior minister able to provide an effective voice to cabinet and willing to stay long term in the portfolio. Porter’s resignation was accepted by Mr Morrison, who, shortly before leaving for the US, announced current Energy Minister Angus Taylor will now also be acting Industry Minister. Industry groups have expressed disappointment in another change in minister, while parts of the technology sector have chided the ongoing instability. AirTree cofounder Daniel Petre said for nearly a decade the Industry portfolio had not been treated with the importance it deserved as an economy building tool. Australian Information Industry Association (AIIA) chief executive Ron Gauci said the industry was disappointed that the portfolio had undergone “disruptive changes”. The AIIA was able to hold several meetings with Mr Porter and he was “very receptive” to industry voices, Mr Gauci said. But with him lasting fewer than six months, the digital technology group wants more stability and for Mr Porter’s replacement to be a respected voice in cabinet. Shadow minister for industry and innovation Ed Husic said Mr Porter had been ineffective and uninterested in the portfolio.

About $6.2 billion in JobKeeper wage subsidies were paid to businesses with more than $10 million in turnover that did not experience a minimum 30% fall in turnover in the first six months of the scheme. Analysis shows billions of dollars of the JobKeeper wage subsidy went to businesses with more than $10 million in turnover that did not experience lower revenue in first six months of pandemic To receive the fortnightly $1,500 wage subsidy for each employee for six months to September 2020, firms with less than $1 billion in annual turnover needed to have recorded an actual downturn in March (when compared to the prior year) or tell the Australian Taxation Office (ATO) that their revenue would decline by 30% or more in April or the June quarter. Firms with more than $1 billion in sales required a 50% turnover decline. Labor, independent senator Rex Patrick and the Greens have called for a public register which shows how much firms with more than $10 million turnover received in JobKeeper, a move that the federal government has to date resisted. Analysis of Parliamentary Budget Office (PBO) data by governance advisory firm Ownership Matters, suggests that businesses with more than $10 million in turnover represent about 2% by number of recipients, but may have received up to 20% of the payments made under the scheme.





The pandemic has exacerbated enterprise bargaining’s long-running decline – agreements now cover less than 11% of the private sector workforce and their wages have not budged in nine months. The coverage is the lowest since 2018, when it hit a low of 10.6%, and far below coverage rates of 17% in 2014 and about 25% in 2010.Wage growth in new private sector agreements has also stagnated, staying at 2.6% for the third successive quarter. The latest trends report on agreements from the Attorney-General’s department show more than 9000 current agreements in the private sector cover 1.24 million workers, down from almost 1.4 million the same time last year and they make up 10.9% of the sector’s workforce.



The nation’s leading retailers, from fashion and sporting goods to auto parts and furniture, have called on governments to provide a legal framework for shoppers to declare their vaccine status when walking into stores, as the chains seek more certainty about how to handle the prickly issue as shops reopen.  Companies such as furniture retailer Nick Scali and Super Retail Group, whose retail banners include Rebel Sport, Supercheap Auto and Boating Camping Fishing, have also increased their pool of available casual staff to build a “reserve bench” of employees in case a store is declared a Covid-19 exposure site, forcing staff to isolate themselves for weeks. These are two of the many minefields retailers are now preparing to cross as they prepare for an easing of restrictions in NSW, Victoria and the ACT, allowing them to open their bricks and mortar stores to customers for the first time in months. Top of the list of their concerns is how retail front line workers will determine whether shoppers have received both Covid-19 vaccinations, how to prove their vaccine status and the legalities around even asking for proof in the first place.


Transurban has cemented its dominance of Sydney’s tolled roads by securing full ownership of the city’s newest motorway, WestConnex, in an $11.1 billion deal. The Transurban-led consortium has won the auction to buy a 49% stake in the Sydney WestConnex motorway project, outlaying $11.1 billion for the remaining interest in the asset that it does not already own. The Australian listed group is expected to launch a $4bn-plus equity raising to pay for the acquisition. Other consortium members are the AustralianSuper and the Abu Dhabi Investment Authority. Working for Transurban are Barrenjoey Capital Partners, Morgan Stanley and UBS.When Transurban and its backers purchased a 51% stake in WestConnex in 2018 it paid $9.3bn for the 33km road project. At that time it was split four ways, with Transurban paying $4.1bn for its half share of the 51% WestConnex interest.

A fractious bidding war has broken out for Victorian power grid owner AusNet Services after gas pipeline giant APA Group emerged with a higher $10bn bid pitched as keeping sensitive infrastructure under Australian ownership, but failed to dislodge Canada’s Brookfield from pole position in the takeover battle. APA’s $2.60 a share bid in cash and scrip tops Brookfield’s $2.50 a share cash offer, but the Canadian player already has its nose in front after securing an eight week period of exclusive due diligence.   APA was frustrated AusNet opened its books to Brookfield given it had lobbed its first $2.32 a share buyout tilt on September 1, one day after the Canadian’s maiden offer, and then made AusNet aware on September 16 it would return with a higher bid.  Instead AusNet – a major infrastructure player which owns and operates the Victorian electricity transmission network along with gas and power distribution – sided with Brookfield given it had a firm cash offer on the table. AusNet is still weighing the merits of APA’s higher bid and left the door open for the pair to hold talks after Brookfield’s due diligence process ends. The Canadian bid faces a high bar for Foreign Investment Review Board approval given a tougher national security test

which applies to sensitive energy assets while competition issues could also prove a hurdle for APA given its dominant gas market position.


Kathmandu Group’s underlying net profit more than doubled to $NZ66.3 million in 2021, but the outdoor leisure retailer warned first-half earnings in 2022 would fall due to lockdowns, supply chain delays and higher shipping costs. Bottom line profit for the 12 months ending July rose to $NZ63.1 million, compared with $NZ8.9 million in 2020, which included more than $NZ22 million in one-off costs. Underlying net profit rose 110% to $NZ66.3 million, with strong growth at Rip Curl and hiking boot business Oboz offsetting weaker earnings from the Kathmandu brand.




Mars Wrigley, the family owned confectionery, gum and pet food giant, will invest $30m at its Ballarat factory in central Victoria to advance its local manufacturing capabilities, laying down the infrastructure for future growth including using the facility to ramp up its exports to key markets in Asia.  The investment comes on top of $37m in funding unveiled in 2020 as Mars Wrigley, the multibillion-dollar food business that is ranked among the biggest family owned companies in the US, directs more capital expenditure into its Australian operations. It comes as the business is reacting to new trends running through the confectionery and snacking category triggered by Covid-19 and home lockdowns, including the growing popularity of families gathering around the TV for movie nights and binge watching shows on popular streaming services. Mars Wrigley Australia general manager Andrew Leakey said there were significant opportunities for growth of its Australian business, which raked in sales of more than $1.66bn in calendar 2019 across key brands such as Mars, M&Ms, Maltesers, Milky Way, Hubba Bubba, Eclipse mints, Extra and its bulging petcare portfolio that includes Pedigree, Whiskas and Eukanuba.


ASX-listed superannuation and investment manager Australian Ethical has become a major investor in the CSIRO’s venture capital fund, Main Sequence, saying its $250 million fund gives it a unique chance to get in on the ground floor of world-changing companies. The Main Sequence fund, is the second fund, and the firm has already backed a wide variety of “deep tech” or science-based start-ups that it says demonstrate the potential to solve the world’s biggest problems. It now has $490 million in funds under management, and its best-known investment so far is in plant-based “meat” company v2Food. Other Main Sequence investments include agriculture software company Regrow, healthcare data analytics company Prospection, satellite communications start-up Myriota, cyber security firm Kasada, Gilmour Space, quantum computing company Q-CTRL and light detection and ranging system specialist Baraja, Australian Ethical reported in June that its pool of assets grew by half over the year as investors and superannuants, frustrated by slow progress on climate action by governments, voted with their wallets. It claims its success is built on the principle that money can be used to create a path to a better future, and says it will only invest in ethical companies and institutions that have positive impact on people, the planet and animals.


And that’s it for this week. And next week, I’ll be talking to Alistair Leathwood, chief commercial officer for IRI, a world leading big data analytics business that works with many of the world’s household brands – food and grocery, liquor, petrol and convenience, pharmacy – in Australia.  We will talk about how the health and wellness sector has performed during COVID and how shoppers have responded. And I’ll be talking to economist Sarah Hunter from BIS Oxford Economics.

In the meantime you can catch me on Facebook, Twitter and 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 week