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 twenty-four in our series for 2019 and today’s date is Friday July 12.
First I talk to Dan Ternes, the CTO APJ for Blue Prism, and we’ll be talking about robots taking over your workplace and their impact on industry and society.
And then I’ll be talking to Indeed economist Callum Pickering about the RBA’s decision to cut interest rates to a new record low and what it means for the Australian economy.
But first, let’s talk to Dan Ternes.
The number of Hong Kong citizens looking to move to Australia has risen sharply since proposed extradition laws fuelled growing concerns about the erosion of civil liberties under Chinese rule in the city, migration consultants and property agents say.
Wealthy Hong Kong residents were also looking to move assets to third countries such as Australia as an insurance policy against the introduction of proposed extradition laws, which would allow people accused of financial crimes to be sent to China, they said. Immigration agents said Australia, along with Canada and Taiwan, were the most popular destinations for Hong Kong residents looking to relocate overseas.
All three countries have reportedly experienced a surge in inquiries since unrest over the news triggered mass protests in the former British colony over the past month. Many were also quietly transferring assets out of Hong Kong, concerned about any push by the government could leave them vulnerable to China’s opaque legal system and restrictions on capital outflows.
The U.S. Women’s National Team won the 2019 Women’s World Cup on Sunday with a 2-0 win over the Netherlands. The U.S. has won back-to-back World Cups and won the tournament four times overall. However, there remains a giant pay disparity between the women’s prize money and the men’s.
The members of the U.S. Women’s National Team will make about $US250,000 each in prize money. The U.S. Men’s National Team – which did not qualify for the 2018 World Cup – would make a little over $US1.1 million each if they had won the World Cup. There is also a giant gap between the total prize money in the Women’s World Cup vs. the Men’s. There is $US30 million in prize money for the 2019 Women’s World Cup. The 2018 Men’s World Cup had $US400 million in prize money.
Deutsche Bank is to axe vast swathes of its trading desks in one of the biggest overhauls to an investment bank since the aftermath of the financial crisis, in a restructuring that will see 18,000 jobs go and cost 7.4 billion euros ($A11.9 billion). In London, some staff stayed away from work after being told their passes would stop working at 11:00. The plan represents a major retreat from investment banking by Deutsche Bank, which for years had tried to compete as a major force on Wall Street.
As part of the overhaul, the bank will scrap its global equities business, scale back its investment bank and also cut some of its fixed-income operations, an area traditionally regarded as one of its strengths. The bank will set up a new so-called “bad bank” to wind-down unwanted assets, with a value of 74 billion euros of risk-weighted assets. The depth of the restructuring shows that Deutsche is coming to terms with its failure to keep pace with Wall Street’s big hitters such as JP Morgan Chase & Co and Goldman Sachs. Chief Executive Officer Christian Sewing, who now aims to focus on the bank’s more stable revenue streams, said it was the most fundamental transformation of the bank in decades. “This is a restart,” he said.
Australia’s interest-rate cuts failed to gain traction as households’ worries about the economic outlook sent consumer confidence slumping to a two-year low. The sentiment index fell 4.1% to 96.5 in July, the weakest reading since August 2017, Westpac Banking Corp. said in a statement Wednesday. The biggest decline was in the sub-index tracking expectations for the economy in the next 12 months, which plunged 12.3%.
A flickering increase in business confidence appears to have been extinguished, and corporate Australia continues to lose momentum. Those are the key findings of NAB’s latest business survey, which has found business confidence tumbled back to below average levels in June after a brief bounce in May despite the end of uncertainty over the federal election, and the RBA’s first rate cut. Business conditions picked up marginally, but also remain mired well below trend. Weak forward orders point to an ongoing loss of momentum, although employment conditions picked up in June.
Fewer workers are leaving their jobs and more want to work extra hours, new data says, suggesting key reasons for low wage growth. Figures released by the Australian Bureau of Statistics on Monday showed eight out of 10 workers, or 10 million, had been in their job for 12 months or more in the year ending February 2019, an increase over the decade. Underemployment, or employees who want to work additional hours, had risen over the past decade from 7.6% of the labour force in 2009 to 8.2% in 2019, or 1.1 million. Almost half, or 46%, reported working insufficient hours for a year or longer. The median duration was 39 weeks, up from 26 weeks in 2009. The Reserve Bank has previously highlighted underemployment as a possible reason for low wage growth as it indicates there is still more slack in the labour market.
12% of Australian properties were resold at a loss — compared to what the sellers had paid for them — in the first three months of 2019. It was the highest level of loss-making sales in six years and another sign of weaker property market conditions, according to the latest “Pain and Gain” report by property analysts CoreLogic. This was also a marked increase from 10.5% (in the December 2018 quarter), and 9% (in the March 2018 quarter). “Australia had a total of $486.8 million in realised gross losses from resales over the March quarter, with the highest share of losses nationally seen in Perth (24.8pc) and Sydney (19.9pc),” CoreLogic analyst Camer Kusher wrote in his report.
ANZ Australian Job Ads bounced back in June after falling more than 8% in May. The ‘Holiday-year effect’ in late April and the timing of the election appear to have been responsible for much of the decline in May, and the rebound in June can be seen as an unwinding of that effect. In seasonally adjusted terms, job ads gained 4.6% for the month but fell by 9.1% for the year. In trend terms, job ads fell 1.4% for the month and 11.1% for the year
The big four banks will have longer than expected to raise extra capital to absorb potential losses after the prudential regulator amended its proposed framework for minimising the fallout from failed institutions. The Australian Prudential Regulation Authority on Tuesday said the majors had to lift total capital by three percentage points of risk-weighted assets by 2024, putting away what the regulator estimates will be another $50 billion to minimise the need for taxpayer funds should they collapse. APRA had flagged a four-to-five percentage-point increase in an initial proposal published in November but amended the timeline following submissions from parties including the Customer Owned Banking Association. APRA said its long-term target of a four to five-percentage-point increase remained unchanged.
Australia could be responsible for 13% of the world’s carbon dioxide emissions by 2030, up from 5% today, a new report by Berlin-based think tank Climate Analytics finds. The report, commissioned by the Australian Conservation Foundation, analysed both domestic emissions and, controversially, emissions from Australia’s fossil fuel exports that are burnt in other countries. It put current domestic emissions from energy generation, agriculture, transport, and so on – the figure usually cited – at 1.4%. Emissions from fossil exports came in at 3.6% of total global emissions.
By 2030, the report predicted the figure for fossil fuel exports would almost triple to 10.4%, of which thermal and metallurgical coal exports would make up the vast majority, at 8.1%. The estimates assume global emissions will fall by 45% on 2010 levels, the median point of the Intergovernmental Panel on Climate Change’s estimates of what is necessary if global temperature rises are to remain at or below 1.5 degrees. It also assumes Australia will export all the coal and gas that industry and government estimates project it will. But the report also warned that Australia’s projected coal and gas exports over the next decade were out of step with the Paris Agreement targets and that if countries meet their targets, demand for Australian fossil fuels could plummet, resulting in stranded assets.
Coles has signed a major alliance with tech giant Microsoft which will enable it to use artificial intelligence and other digital systems to overhaul its supply chain, product range, customer engagement, and workforce as the retailer targets $1 billion in savings over four years. The long-term, multimillion-dollar agreement is Coles’ third big alliance since demerging from Wesfarmers last November and will see Microsoft’s Azure cloud platform, Dynamics 365 enterprise resource planning and modern workplace suites underpinning its Smarter Selling program which is aimed at restoring profit growth.
Coles will build an enterprise data platform in Azure, which it said would help it ramp up advanced analytics and AI to improve the performance of stores. The software is intended to help store managers with forecasting and on-shelf availability, as well as enabling them to tailor ranges to suit community preferences, and improve range reviews by better understanding which products are substitutable and which aren’t. Coles will also use AI to make more relevant personalised offers to customers by not only taking into account past purchases but factoring in weather and local community events.
Australian employers who let their staff use ride-sharing services such as Uber, instead of a taxi, could be hit with a hefty tax bill. It comes after the Australian Taxation Office (ATO) announced that cars used for ride sharing services such as Uber are not taxis and are therefore subject to a fringe benefits tax (FBT). A fringe benefit is when an employer provides an employee with a benefit such as paying for a gym membership, giving them tickets to free concerts or letting them use the work car for private reasons.
An FBT is paid by employers on the benefits they provide, according to the ATO. It is separate to income tax and is calculated on the taxable value of the fringe benefit. However, there are certain items that are exempt from an FBT, such as taxi travel by an employee. “Any benefit arising from taxi travel by an employee is an exempt benefit if the travel is a single trip beginning or ending at the employee’s place of work,” according to the ATO. The taxi travel exemption was created in 1995 and meant certain types of taxi travel would not be taxed, according to the ATO. The exemption is limited to a vehicle licensed as a taxi so it doesn’t apply to ride-sharing services, as they are not registered as taxis. This means that an employer actually needs to pay tax on Uber rides that employees have taken from work or to work. So all the innovative employers that have set up Uber for Business could actually be taxed for their progressive transport policies.
Two Gold Coast-based payday lenders charging interest rates as high as 990% will be the first targets of the Australian Securities and Investments Commission’s new product intervention powers. In a new consultation paper released on Tuesday, ASIC proposes intervening in a business model that it claims causes “significant consumer detriment” by charging huge rates of interest on loans of up to $1000, but that is permitted thanks to carve-outs in lending laws. ASIC said two affiliated payday lenders, Cigno and Gold-Silver Standard Finance, were using the model. ASIC said the lenders were targeting consumers in “urgent need of relatively small amounts of money” – as little as $50, which ASIC said indicated “the vulnerability of the target market”.
The regulator said such loans must be repaid within a maximum of 62 days, a term ASIC said increased “the risk of default as repayments are based on the term of the credit rather than being based on the capacity to repay”. ASIC cited one case where a customer of Cigno on the newstart allowance ended up owing $1189 on a $120 loan after she defaulted on the repayments. Under current rules, payday lenders are exempt from the National Credit Code and National Credit Act if they meet certain conditions such as only extending credit for less than 62 days.
This exemption means lenders like Cigno and Gold-Silver Standard Finance can operate without a credit licence and are not answerable to the Australian Financial Complaints Authority. ASIC wants to address this exemption. However, The new powers require ASIC to go through a period of consultation, It must also establish that the practice it is seeking to stamp out is causing “significant consumer detriment”. The consultation period will last until July 30.
And that’s it for this week. And next week, I’ll be talking to Gerry Comninos, CEO of Hydra Light which is revolutionising the portable power industry with its “HydraCell” fuel cell technology, a fuel cell that generates its own power when activated by dipping it in water. Hydra Light’s products are aimed at reducing the waste associated with single-use batteries and raising awareness of alternative energy solutions. The Company has developed technology that can harness the electrons liberated from a magnesium anode when immersed in water into a useable direct current (DC) power. The Hydra Light system is a revolutionary technology that creates power using a chemical reaction between metal and water. The HydraCell uses this reaction to efficiently capture electrons released during this process with the water acting as a catalyst to create this reaction once it comes into contact with the HydraCell.
And I’ll be talking to economist Nicholas Gruen looking at how to make government decision making more accountable.
And of course, I’ll be bringing you all the week’s news. In the meantime, you can find me on Twitter at talkingbizz, on Facebook and on LinkedIn. And if you want, leave a comment. Have a great week, take care, be good and looking forward to bringing you Talking Business next week.