Talking Business

Interview with motor industry specialist Ian Porter on the state of the Australian car industry Interview with economist Nicholas Gruen Leon and Garry discuss issues including: · China unveiling rules aimed at making sure banks keep on hand enough cash and other liquid assets after three credit squeezes hit the nation's financial system last year. · Construction of new homes in the US tumbling 16 per cent · The Bank of Japan surprising market watchers by doubling incentives designed to boost bank lending and extended special loan programs to help buoy economic growth · The OECD saying growth in advanced economies slowed down slightly in 2013 from output in 2012 · The Abbott government’s plan to sign a free trade agreement with China by September has been dealt a blow after Beijing failed to mention it as a priority for the year ahead. · Qantas Airways is likely to receive a debt guarantee from the federal government and the government planning to repeal the Qantas Sale Act that keeps the company Australian controlled. · Slowing motor vehicle sales along with job losses at Alcoa, Sensis and Forbes signalling that Australia’s unemployment rate could overtake America’s.

Ziggy Switkowski outlines how the NBN is shaping. He says it’s on schedule and the costs will be contained. It will hit top speeds. He outlines the schedule of when it should be operational and how the costs will be managed

Interview with Gabby Leibovich, co-founder and director of Catch Of The Day Interview with economist Francis Grey Leon and Garry discuss issues including: · China's official gauge of its manufacturing sector slipping to a five-month low, US manufacturing activity stalling and a rise in consumer prices slowing across the world's largest economies in December, fuelling concerns that too little inflation, rather than too much, could threaten the global economy's fragile recovery. · Australian CEOs expecting another weak year of growth while advertisements fall 0.3 per cent in January to be down around 3 per cent over the prior 6 months, low interest rates and a falling Australian dollar failing to drive expansion in manufacturing activity and building approvals falling more than expected in December. · The David Jones board and particularly its chairman Peter Mason coming under renewed pressure as some shareholders test the level of support for calling an extraordinary general meeting to change the board. Last week David Jones shocked the market with an admission it had received a $3 billion offer to combine with Myer, bringing together the nation’s biggest department store operators. · An analysis of the debate over the Federal Government's decision to refuse $25 million of assistance to SPC Ardmona.

Interview with McAfee Asia-Pacific chief technology officer Sean Duca and economist Steven Koukoulas Leon and Garry discuss issues including: · The gloom from fund managers about emerging markets · The end of the Ben Bernanke era at the US Federal Reserve · Britain's economy growing last year at the fastest rate since before the financial crisis and German business confidence rising · Tips that Chinese investment in commercial property in Australia will grow by at least 30 per cent this year · The Abbott government expanding the work-for-the-dole scheme · Business conditions jumping to a more than two and a half year high with good earnings figures from Boral, GPT, JP Hi Fi and Atlas Iron and plans by Marks & Spencer to expand into Australia and a possible float of Healthscope.

Corporate cartoonist Robert Black - Talking Business 2014 EP02

Matt Cooper, VP International of oDesk - Talking Business 2014 EP01

Interview with motoring industry consultant and commentator Ian Porter Interview with economist Steven Koukoulas Leon and Garry discuss issues including: · The recovery in China with China's industrial output and retail sales rose in November, the latest in a series of signs indicating a recovery in the world's second largest economy. Factory output rose 10% from a year ago and retail sales were up 13.7%. This follows a stronger than expected jump in exports in November. China's economy is picking up pace after its growth rate slowed in first half of the year. Its economy grew 7.8% in the three months to September from a year earlier, up from 7.5% recorded for the previous three months, fuelled in part by a recovery in demand for Chinese exports from key markets such as the US and European Union. · The situation with two Australian icons Holden and Qantas · Holden is pulling out of Australia after hundreds of millions of dollars a year of government support over the past decade and Qantas. Holden, like Qantas, was a victim of the high dollar. In 2002, the Australian dollar averaged 54 US cents. For businesses in the global market, such as car makers, Australia was almost as competitive as South Korea. But by 2012, Australia's dollar had risen 91 per cent, to average $US1.035. In global markets, that made it 91 per cent more expensive to produce goods and services here. It is not the only reason the car industry is in trouble, but it is the main reason. The dollar cut off the one lifeline the industry could have had to try to escape the inevitable consequences of the size of this market. The Button plan of the mid-1980s was predicated on the local manufacturers and their suppliers plugging into the global industry and gaining access to scale through exports. While General Motor and Toyota had some success with exports, the strength of the dollar has essentially shut down that option. The reality of the domestic industry is that it doesn’t have sufficient scale and is uncompetitive on costs with the imports that now dominate sales. It is not the only reason Qantas is in trouble, but it is a big reason. Each time the dollar weakens by 10 per cent, Qantas cost increases by 4 per cent, or $620m per annum. Australia's currency has risen more than that of any other developed country. Australia’s economic culture allowed its currency to escalate so high as to make our producers uncompetitive, and neither the government nor the Reserve Bank did anything about it. And Qantas did the wrong strategy by increasing capacity. · A look at the job losses and the role of Government · Qantas looking at a sale and leaseback of its aircraft as it continues discussions with the federal government over what it sees as an uneven playing field on foreign ownership.

Interview with Andrew Bassat, CEO and co-founder of seek.com.au Interview with RMIT Economics professor Sinclair Davidson Leon and Garry discuss issues including: · China's manufacturing growth in November maintaining strong pace from the previous month to stay at a 19-month high. The purchasing managers' index (PMI) was at 51.4, unchanged from October, according to the National Bureau of Statistics. · New measures that will allow Chinese companies and people with an account in the new zone to directly invest overseas without the need for pre-approvals or a cap on the total amount of money, according to the guidelines published by the People’s Bank of China (PBoC). It is not just residents in the 29-square-kilometre zone who will benefit from the dramatic relaxation of restrictions: non-residents can also set up so-called free-trade accounts. · New share offerings to resume in China as early as next month, ending a ban in place for more than a year, after leaders vowed to give private firms a bigger role in the economy. There are 760 firms lined up for initial public offerings (IPO) in the world's second-largest economy, and about 50 are expected to go to market by the end of January. · The fallout from the Abbott Government’s decision to veto the sale of Graincorp to US giant ADM with Joe Hockey accused of caving in to the concerns of the Nationals, who had threatened to split the Coalition if the $3.4bn takeover was approved. He said on Friday he had taken the decision because there was still insufficient competition in the Australian grain handling industry and in order to maintain public confidence in foreign investment in general. But Tony Abbott said there were also issues concerning ADM itself that had contributed to the decision. · The US State Department expressing dis­appointment over Hockey’s rejection of Archer Daniels Midland’s $3.4 billion bid for GrainCorp. As part of the Free Trade Agreement between Australia and the US, a “side letter” commitment gave the two governments the right to be involved in negotiations over any ­sizeable agricultural investment in either country. · One of the most senior figures of the Howard government and a leading ­figure of the Liberal Party’s conservative wing, Peter Reith, accused Prime Minister Tony Abbott of orchestrating the veto of a $3.4 billion US bid for GrainCorp, which he described as the latest of several botched decisions. He is joined by former Treasurer Peter Costello and former Victorian Premier Jeff Kennett · The decision comes at a time when the economic importance of Australia’s north, which now accounts for 76 per cent of live cattle exports, is set to grow, with its gross value of production from industries like agriculture, mining and tourism forecast to double from 2000 levels to A$35 billion ($32 billion) by 2030. Meeting that goal requires further investment in railways, ports, dams and irrigation in areas where it may not rain for half of the year, and flood at other times. There isn’t sufficient capital in Australia to undertake the sort of investment required

Interview with Doug Sleeter from the Sleeter Group as he talks about the impact of technology on accounting. Interview with economist Nicholas Gruen on public private partnerships Leon and Garry analyse issues including: · The OECD warning that Greece will remain mired in recession in 2014 for a seventh straight year, and is likely to need more financial assistance and the IMF saying that the economic recovery touted by Greece's embattled government is "fragile" and more austerity measures are needed. At the same time, European Parliament President Martin Schulz says he is in favour of providing additional aid to Greece if the debt-wracked country achieves a primary surplus. · But the evidence is suggesting that Spain is on track to post its first current account surplus for any year since 1986, a payoff of the country's export boom and the return of international investors to its slowly-mending economy · Speaking at a conference on productivity and infrastructure, Reserve Bank of Australian Deputy Governor Phillip Lowe is warning that Australians might have to get used to a lower standard of living. He says Australia has enjoyed a period of strong growth off the back of commodity prices, which have fuelled decades of economic expansion. And it could be about to change. · Goldman Sachs releasing a bearish take on the domestic economy over the course of 2014 in a 50-page outlook for 2014 under title Australia The Odd One Out. It forecasts just 2.3% growth as the mining cliff will be steeper than the market and budget forecasts expect. Employment will be more subdued than expected, household incomes more restrained, government spending pared back further and even buoyant housing prices won’t assuage Australian saving patterns. · Bank of Queensland Ltd chairman Roger Davis warning broad-based recovery is still up to 12 months away and challenges in the year ahead include slowing economic growth and "frustratingly high" foreign exchange levels. · All this will mean some unpalatable solutions. · To balance the budget, the Productivity Commission is suggesting raising taxes, lifting the retirement age to 70, and taking a slice of a pensioner's home to pay for Australia's ageing population. · The Grattan Institute proposing to deny Australians access to both superannuation and the age pension until they turn 70. Its report identifies 20 proposals to repair the budget, and finds lifting the pension and super access age the most attractive of the lot. It would save an extra $12 billion a year in today's dollars when the benefits were fully realised - about a fifth of the $60 billion annual shortfall it says the budget faces. It would also boost economic activity by up to 2 per cent. As part of the assault on aged welfare, the institute would also add to the pension means test the value of the family home. · Finance Minister Mathias Cormann saying the federal budget is still in crisis and the magnitude of the problem will be spelled out in the mid-year economic and fiscal outlook (MYEFO) before Christmas.

Interview with Natalie Miller, joint Managing Partner of Cinema Nova and Executive Director of Sharmill Films Interview with economist Stephen Koukoulas on debt levels Leon and Garry discuss issues including: · The OECD warning that growth in advanced economies will pick up speed this year and next, but mostly at a slower pace than forecast as new risks loom, especially from emerging economies. Japan and the eurozone will both do slightly better than expected this year and next as austerity policies retreat, monetary stimulus is maintained and financial conditions improve, the OECD said. But the US economy will grow less quickly than forecast, with the OECD pointing to political dysfunction in Washington and the eventual tapering of monetary stimulus as factors that could hamper recovery. The head of Europe's banking regulator, European Banking Authority (EBA) chief Andrea Enria, saying too many European banks survived the financial crisis. · A war of words between Australia's two biggest carriers over foreign investment breaking out when Qantas called on lawmakers to block what it dubbed a "virtual takeover" of rival Virgin Australia Ltd. Virgin Australia this week launched a share issue to raise 350 million Australian dollars (US$328 million) that could result in its three biggest investors--Air New Zealand Ltd, Singapore Airlines and Abu Dhabi's Etihad Airways--boosting their combined interest in the company to 72% from a current 63%. Richard Branson's Virgin Group will also retain a 10 per cent stake. Foreign investment in Australian airlines that fly internationally is restricted to 49 per cent · Qantas chief executive officer Alan Joyce writing to Prime Minister Tony Abbott, Transport Minister Warren Truss and every state government to express his concern that the move was the "final act" of "predatory" state-owned airlines looking to undercut Qantas, weaken its domestic and international positions and eventually take over its routes · Joyce is worried the cash injection will help Virgin undercut its domestic operations to the point where it will find it difficult to fund its international arm.Consequently, Qantas Chief Executive Alan Joyce has repeatedly called on lawmakers to allow greater foreign ownership of Qantas. · Virgin Australia's decision to tap investors for $350 million will give it the cash it needs to stare down Qantas in the bloody airfare battle that has cost both airlines more than $100 million in the past year. It means Virgin can continue its strategy to move the airline upmarket and snatch market share from Qantas in the lucrative corporate and government passenger sector. The equity raising, which represents a third of Virgin's market capitalisation, will strengthen its balance sheet and improve its liquidity as it faces one of the most fierce price-war environments since 2004 when Qantas launched Jetstar. · Qantas is launching a new loyalty program to launch in March aimed at small and medium businesses - a move it denies is aimed at shoring up the business traveller market as competitor Virgin makes a play for the key sector.

Interview with Bruce Hansen, a lawyer, who in partnership with a policeman has started a company called Anaconda which is tackling the global international roaming SIM card business. Interview with economist Francis Grey on the economics of carbon Leon and Garry discuss issues including: · China's Communist Party concluding a closely watched Plenum meeting and has approved a decision on "comprehensively deepening reforms". The meeting, which brings together all 376 members of the ruling party's Central Committee and takes place amid intense security and secrecy, has traditionally set the economic tone for a new government. . The reforms are expected to include scaling back the power held by state firms, expanding rural land rights, easing residency restrictions for some 260 million migrants, improving social security, accelerating urbanisation, and strengthening the rule of law. Much of the information contained in the early reports was ambitious in tone but skint on detail, with a detailed report on policy measures expected in the next couple of days. Among the key highlights were highly-anticipated comments around more land rights for rural residents, and hukou, or household registration, reform – both the source of major social problems in China. “Land in cities and the countryside, which can be used for construction, will be pooled in one market,” official news agency Xinhua reported. There were also signals toward significant judicial and social reforms and the building of a “fairer society”, including the “legal authority to uphold the constitution” and “improving human rights legal protections”. Among other economic changes included financial and tax reform and improving the relationship between the government and the markets. The detailed policy measures will also be closely scanned for any mention of changes to China’s long-standing one-child policy. Speculation has mounted in the lead-up to the plenum that China will relax the population control measure to allow those who are only-childs themselves to have a second child. Existing rules allow couples who are both only-childs to have a second child. Many of the detailed reform measures are not expected to be announced for one or two years and could take several more years to implement. · The Australian Bureau of Statistics finding that the demand for home loans rose more than expected in September. The data showed the number of home loans granted in September rose a seasonally adjusted 4.4 per cent to 51,928. Bloomberg had expected the number of housing finance commitments to lift by 3.5 per cent in September. Total housing finance by value rose 5.3 per cent in September, seasonally adjusted, to $25.15 billion. The data comes as the Reserve Bank of Australia has held the official cash rate at a fresh record low of 2.5 per cent since its August meeting. · But first home buyers now make up the smallest proportion of the housing market on record. · A new survey has found retailers expecting shoppers to spend about $42.1 billion during the peak Christmas shopping period starting from November 14, 3.3 per cent higher than during the 2012 Christmas period.

Interview with Sam Chandler, CEO and founder of now international software company Nitro, second only to Adobe in the PDF/digital document market. Interview with RMIT economist Jonathan Boymal Leon and Garry discuss issues including: The condition of the US economy with the release of the first estimate of gross domestic product for the third quarter of 2013 later this week. The October employment report is also among the highlights on this week's economic calendar. Economists say it's probably expanded at a 2 per cent annualized rate in the final three months of the year, less than they projected at the start of the budget impasse that resulted in a 16-day government shutdown. And public investment in the US has hit its lowest level since demobilisation after the Second World War because of Republican success in stymieing President Barack Obama's push for more spending on infrastructure, science and education. US Commerce department reporting data that had been delayed by the October 1-16 showing factory orders dipping 0.1 per cent in August, and July's decline was revised up to 2.8 per cent, from the prior estimate of 2.4 per cent. United States home prices rising only slightly in September from August, a sign that prices are levelling off after big gains earlier this year. Real estate provider CoreLogic says home prices increased 0.2 per cent in September from the previous month. That's sharply lower than the 0.9 per cent month-over-month gain in August. Federal Reserve Bank of St. Louis president James Bullard saying the United States central bank may find the evidence it needs to ease back on its bond-buying stimulus efforts by next month's monetary policy meeting. A look at the future of Australia’s auto industry with the car industry publishing a new report which claims the Australian economy would be $21.5 billion smaller if the automotive manufacturing industry died in 2018. The economies of Melbourne and Adelaide would also suffer massive job losses that would take until at least 2025 to recover. Employment losses in Melbourne would equate to some 33,000 jobs in 2018, and around 6600 in Adelaide. Employment levels would not return until around 2027 for Melbourne and 2025 for Adelaide. Australia's GDP would be $7.3 billion smaller (in today's dollars) by 2018. Billions in foreign direct investment would cease, as head offices direct investment to other automotive manufacturing countries, not to other industries in Australia. Additional research showing the cost to the South Australian economy of Holden's potential closure would be $1.24 billion and 13,200 jobs Workers at automaker Holden receiving cash bonuses and annual wage hikes as a result of a delay in determining whether the company will remain in Australia beyond 2016 that will cause an agreed wage freeze pact to lapse. In all, the automaker will pay out nearly $5 million in bonuses and wage hikes. Deputy Prime Minister Warren Truss says it would be tragic for Australia to lose its car manufacturing industry but there has to be a limit on taxpayers' subsidies.

Interview with Paul Rosenberg who founded Party Higher, an events company that specialises in SILENT DISCOS where everyone gets headphones that provide music. Interview with RMIT economist Sinclair Davidson on the Abbott Government’s Commission of Audit Leon and Garry discuss issues including: · The US economy showing signs of losing steam. US manufacturing output barely rose in September and contracts to buy previously owned homes recorded their largest drop in nearly 3-1/2 years, the latest signs the economy's momentum ebbed as the third quarter ended. The data also shows the shutdown has hurt the United States economy. US consumer confidence fell sharply in October. US producer-price index, which measures how much companies pay for everything from footwear to computers, fell 0.1 per cent in September from August and US retail sales fell a seasonally adjusted 0.1 per cent in September from a month earlier · A look at the Abbott government’s new commission of audit which will be the most comprehensive in almost two decades. It will examine everything the government does. It’s more or less open — to target waste and improve cost-effectiveness, seek out duplication between the Commonwealth and the states and identify spending that’s no longer needed. This could become a signature reform of the government of Prime Minister Tony Abbott, who has previously called for a Commonwealth constitutional power to override the states · Concerns about the Audit Commission’s narrow BCA-centric membership. · Finance minister Mathias Cormann leaving the door open to privatising further government assets beyond Medibank Private, should the Coalition's Commission of Audit recommend it. Senator Cormann, who refused to give a hard and fast timetable for a return to budget surplus, said the Abbott government did not have a policy to privatise any Commonwealth assets beyond the sale of Medibank Private "at this stage". But he said the Coalition's Commission of Audit would look across all Commonwealth government assets and "review whether there are other opportunities". · Suggestions that the Government's upcoming Commission of Audit will look at privatising the $23 billion student debt portfolio as a way to ease budget pressure. Education Minister Christopher Pyne says he is keeping an open mind about the idea of selling off the debt the Government is owed under the Higher Education Contribution Scheme. · Proposals for Australia Post to take over the front office operations of Centrelink under a wider plan to consolidate service ­de­livery agencies and secure budgetary savings to be considered by the federal government. Treasurer Joe Hockey’s office has confirmed the proposal would be looked at within the work of the Commission of Audit along with other options for savings on how the government provides welfare and other services. The overhaul, first raised by Mr Hockey earlier this year, coincides with his proposal to hand the responsibility for administering the national disability insurance scheme (NDIS) to Medibank Private in order to avoid establishing a new bureaucracy. · The Australian Council of Trade Unions raising concerns over the federal government's commission of audit’s timeline.

Interview with Andy Sheats, founder and CEO of online health insurance company health.com.au Interview with economist Stephen Koukoulas about the state of the US economy and its impact on Australia. He says the Australian dollar is heading to parity Leon and Garry talk about issues including: · The new iPad Air with upgraded and faster guts with the addition of an A7 chip. Apple claims it's up to eight times faster than the old models and has a 10-hour battery life. a thinner, sleeker and lighter design than the last model. But what impact will that have on the PC market. Analysts predict PC sales will slow sharply · In the first major gauge of the US economy released by the government after the partial shutdown that started Oct. 1 and shuttered agencies that compile the data and coming more than two weeks after it was originally scheduled for Oct. 4, US employers added only 148,000 jobs in September, a sign hiring stumbled heading into Washington's latest round of budget battles. It’s a problem for the Fed because the central bank’s threshold after which it will consider raising interest rates is 6.5 per cent unemployment, it’s now 7.2 per cent. The fear, which gets worse every month is that with each month this continues, is that many people have retired or gone on disability benefits and may never look for a job again. That’s one of the most serious questions about the way the US economy is heading. · Because of the issues in the US, good prices for resources and solid news coming out of China, the Australian dollar continues to rise, now trading above 96 cents and heading towards parity. · This is troubling news indeed for both Australia’s Reserve Bank Governor Glenn Stevens and Treasurer Joe Hockey. Stevens first. The governor said back in September that it would be "helpful" if the Aussie dollar was a bit lower. But since then, the dollar has gained ground, from $US90 cents to $US96 cents. A high Australian dollar is also a problem for our L-plate Treasurer, Joe Hockey. Treasury's latest budget forecasts, released in August, were based on a falling dollar helping to support economic growth. At the time, the dollar had fallen below $US90 cents. According to economist Chris Richardson at Deloitte Access Economics, every 1 per cent fall in the Aussie dollar gives a net saving to the budget of about $400 million a year over the budget's four-year horizon. But it all makes the longer-term budget repair job much harder to achieve. Congress' budget problems look set to dog our own budget for years to come. · A look at winners and losers from the dollar’s rise. Gainers from a strong currency are companies that buy imports and overseas services like The Reject Shop, Harvey Norman and JB Hi-Fi. A higher dollar gives them more buying power, and higher profit margins. But losers will include BHP Billiton, Rio Tinto, Cochlear and CSL.

Interview with Dean Williams, managing director of Williams 3D which provides 3D printing services, also known as additive manufacturing, to Australian business Interview with economist Nicholas Gruen on the ecology of innovation Leon and Garry look at issues including: · US Senate leaders in both parties putting the finishing touches on an agreement to temporarily raise the nation's debt ceiling and fully reopen the government as lawmakers raced to resolve their budget stalemate and calm anxious financial markets. The expected Senate deal avoids a potential US debt default, but it would only set new deadlines for lawmakers to make decisions about the long-term course of fiscal policy. It still has to be passed by Congress before October 17 because the US Treasury says that on that day it will exhaust its emergency borrowing powers and be left with only about $30 billion to pay the nation's bills, enough to last for a week or two but there are promising signs. · Billionaire investor Warren Buffett likening the budget impasse in Congress over raising the government’s debt ceiling to a “political weapon of mass destruction” that should not be used and Fitch Ratings Agency placing the United States' AAA on Rating Watch Negative because of uncertainties, even if there is a breakthrough. This is because the crisis will be a long time ending because it was a long time starting. The crisis did not start 15 days ago. And it won’t be ended by a back-room deal. · Tony Abbott ramping up the pressure on the Labor Party, releasing draft laws to axe the carbon tax with a warning to the Opposition to "repent" of its support for the measure. · Under the draft laws, businesses will still be liable to pay all their carbon liabilities up until June next year, when the impost could be scrapped. The government claims it will save households $550 a year through lower electricity and gas bills. · Labor and the Australian Greens together having the numbers in the Senate to stymie any repeal legislation before a likely more compliant upper house operates from July 2014. But Tony Abbott says that Bill Shorten is enough of a pragmatist to back the coalition's plan to repeal the carbon tax and seems to be backing away from calling a double dissolution if it doesn’t get through this year. · Clive Palmer saying his party’s policy is to not only abolish the carbon tax but to refund those who had paid the tax since its introduction in July last year. That would be in exchange for his party's crucial Senate support in a move that would enable the businessman to escape a $6.2 million disputed charge for emissions. · And while Australia is getting rid of its carbon tax, China is planning to put a price on carbon by the end of the decade.\ · Meanwhile, the Bureau of Meteorology is warning that Australians can expect more intense droughts during El Nino years due to climate change. That will disrupt ecosystems and agriculture.