Talking Business

Garry and Leon talk about the carbon price scheme, with a carbon tax of $23 a tonne getting placed on 500 of Australia’s worst polluters. The scheme hands out over $15 billion in compensation to households to help offset the cost of living impact of the changes. The government will spend $9.2 billion over the first three years of the scheme to safeguard heavy polluting industries like steel and aluminium production. Steelmakers, including Australia's largest steelmakers BlueScope and OneSteel Ltd, will receive 94.5 per cent of free permits and $300 million in extra grants. Still, the latest polls show that 68 per cent say the tax will leave them worse off. The Baillieu government meanwhile warns Victorians to brace for more frequent power outages in summer with the likely closure of the Hazelwood power plant. Former Reserve Bank governor and Treasury head Bernie Fraser will chair a new body advising the government on carbon pricing. Australian stocks fall in response to the announcement. Several prominent analysts express doubt about the government's claims that the carbon tax will cause little harm to growth. But a survey of economists shows most back the carbon tax as good economic policy. Australia's two biggest airlines Qantas and Virgin say they will pass on the full impact of the carbon tax to customers. Various industries say they will be hit hard by the carbon tax but the ones that will make money out of it are banks. The RBA will monitor pay claims and prices rises by business to prepare for the carbon tax and the ACCC will be out to catch carbon tax rorts. Australian miner Macarthur Coal receives a $5 billion takeover bid from US mining giant Peabody Energy and major steel producer ArcelorMittal. The Australian economy is still struggling to gain traction following floods earlier this year, according to a NAB survey. Consumer confidence falls to levels not seen since the global financial crisis in July, according to the Westpac-Melbourne Institute consumer sentiment index. The growing crisis facing the national retail sector forces the Spencer Street Fashion Station in Melbourne into administration, as the shopping centre, owned by Austexx, owes its lenders $540 million. Residential land sales slide to their lowest level in 10 years, people expect property prices to fall according to a NAB survey but another rise in home loans in May suggests the housing market is starting to pick up.

RMIT economist Sinclair Davidson talks about the impact of the carbon tax on the economy.

Garry and Leon talk with Mark Koronczyk, founder and CEO of successful food outlet Lord Of The Fries.

Leon and Garry discuss how interest rates have been left on hold at 4.75% for the eighth straight month. Australians will learn how the proposed carbon tax will hit their back pockets when the federal government unveils its policy on pricing pollution on Sunday. Prime Minister Julia Gillard will promise that seven out of 10 families will face no added financial burden from the carbon tax, the tax will not apply to petrol for individual drivers, it’s likely to be $23 a tonne and Gillard has halved the number of companies needing to pay the tax from 1,000 to about 500. The Australian Competition and Consumer Commission (ACCC) will be given power to respond to complaints about carbon tax-related price increases. The government removes a month-long ban on live cattle exports to Indonesia. Australian residential building approvals data fall 7.9 per cent in May. New housing starts are expected to fall by 13% between 2010 and 2012 according to the Housing Industry Association. The Australian construction industry is expected to remain weak this financial year, after it shrank for the 13th straight month as residential building slumped, according to an industry survey. Retail sales drop 0.6% in May with weak consumer confidence. Retailers should brace for tough trading conditions until Christmas, with no prospect of recovery until 2012, the Australian National Retailers' Association (ANRA) says and a Boston Consulting Group study shows Australians plan to tighten their purse strings over the next 12 months. A private sector survey shows activity in the services sector fell in June and has been contracting 10 of the past 12 months. Australia’s unemployment rate stays at 4.9 per cent for the second month in a row. The Reserve Bank could downgrade its forecasts for the Australian economy by up to 1.5 per cent. Research shows it’s been a weak financial year for public floats. Australia’s trade surplus in May is the widest in seven months. Total beverage retail sales decline for the first time in four years. A survey shows more graduates are leaving full-time education without finding a job. An ad for the pressure group Get Up Australia, which pastiches the advertising of furniture retailer Harvey Norman to attack its environmental credentials, is censored by Commercials Advice. Publisher Pearson Australia enters the online book retailing business after buying the websites of failed booksellers Borders and Angus & Robertson. Network Ten tells its staff it is looking for 60 voluntary redundancies over the next few weeks. Consumer prices are flat in June, and inflation remains within the Reserve Bank's target range. Profit and employment expectations fall into negative territory for the first time in two years. The MasterCard Worldwide Index of Consumer Confidence which depicts consumer confidence in Australia reveals overall optimism has fallen since March 2010. Insurance companies could raise the cost of home and content insurance policies by as much as 50 per cent over the next two to three years.

RMIT economist Alberto Posso talks about labour and trade data.

Professor Ian Ramsay, director of the Centre for Corporate Law and Securities Regulation, is one of the leading experts on corporate law in Australia. He speaks to Garry and Leon about the great significance of the recent court judgment finding guilty eight current and former directors of shopping centre operator, Centro. They were found to have breached their corporate duties by approving documents that failed to properly disclose about $2 billion in liabilities.

Leon and Garry discuss how the Royal Australian Mint has told the Government that the five-cent coin is costly and wants it phased out. The Bank for International Settlements ranks Australian banks as the world’s most profitable but warns that could change. The Reserve Bank plays down risks facing Australian banks from their reliance on overseas funding, saying it could step in if credit markets seize up. Australian home values fall 2.7 per cent in 2011. BIS Shrapnel says property prices won't experience huge losses over the next three years but warns interest rates will rise to 9.5 per cent by 2014. A new study says Australian house prices are unlikely to fall dramatically over the next two years. Total credit provided to Australia’s private sector by financial intermediaries rises just 0.3 percent. Directors around Australia are warned to pay proper attention when approving company accounts, after the corporate regulator wins a landmark courtroom battle against Centro directors. The court decision boosts the chances of an investor class action against Centro. A quarterly business stress report shows that the number of companies entering administration in April was 812, up 10 per cent on the previous year and the highest April number on record. Skilled job vacancies based on news paper ads, decline 2 percent month-on-month and the overall figure is flat. Tobacco giant Philip Morris plans legal action against the federal government over its proposed plain-packaging tobacco legislation. Signs of ructions between Insurance Australia Group and its ally, motoring group NRMA. Massive changes at Telstra with veteran chief financial officer John Stanhope announcing his retirement. The Federal Government begins selling its carbon tax compensation program. Business leaders back the carbon tax but industry plans to campaign against it. As part of the looming carbon tax deal, the government plans to close two of Australia's highest-emitting power stations. A Coalition-led Senate committee recommends the government dump its mining resource rent tax and instead develop a plan to tax the mining industry in accordance with recommendations contained in the Henry Review. From next month, Myer shoppers can pop in for Botox injections as one of the new services being offered in an attempt to revive sagging sales. Car maker Holden has warned that it could be forced to abandon its Australian operations after the Government cut green car assistance programs in this year's budget. Rolling strikes by Qantas engineers starting next week are set to disrupt school holiday plans. Indebted rubbish collector Transpacific Industries has forecast an annual loss of as much as $209 million after slashing the value of its manufacturing division and New Zealand operations. Australia’s small businesses expect to cut their end of financial year spending by an average of 15 per cent, according to a new survey by the Council of Australian Small Business. BHP Billiton Ltd and Rio Tinto Ltd might be on the look-out for more acquisitions.

Garry and Leon talk to RMIT economist Jonathon Boymal about job vacancy statistics.

Leon talks to Pie Face founder Wayne Homschek about his fast food franchise and plans to float it on the stock market.

Leon and Garry talking about Telstra and NBN Co signing the $11 billion NBN agreement. The new ACCC chair, Rod Sims, warns that the NBN is a monopoly. Economists say an interest rate rise may be just six weeks away but the RBA says weak economic data took pressure off it to raise rates. The Melbourne Institute Household Financial Conditions Index plummets 24.3 per cent in June to 25.2, its lowest level in 10 years. The latest Dun & Bradstreet Corporate Health Watch shows that more than 145,000 businesses suffered a risk downgrade in the March quarter 2011. Foster's knocks back the takeover bid lobbed by the world’s second-largest brewer SAB Miller. Analysts say SABMiller's attempt to buy Foster's Group Ltd for $9.5 billion could be only the first of many M&A deals involving Australian companies. The volcanic ash cloud over eastern Australia is costing the tourism sector over $10 million a day. Rio Tinto has increased its grip on Canada’s Ivanhoe Mines at a cost of $US502 million ($A474 million). Contributions to superannuation funds are expected to drop through the three months to June 30, as a result of volatile financial markets, Chinese economic uncertainty, regulatory upheaval and a renewed focus on eliminating household debt. Export earnings from the rural and mineral resources sectors are expected to reach a record of $256 billion in 2011-12. The federal coalition and the Australian Greens have jump-started the public relations campaign over a carbon tax. Australia's local governments have been warned the current mining boom is not big enough to carry the national economy. Retail giants Woolworths Ltd, Myer Holdings Ltd and Westfield Group Ltd have warned that the federal government's industrial relations regime is damaging the economy and could lead to job losses. Woodside Petroleum announces a significant blowout in costs and schedules on its flagship Pluto project. Qantas expects to make a profit of up to $550 million this year, which would be the airline's best since the global financial crisis, despite losing millions from the impact of a string of natural disasters and rising fuel prices. Two giant new solar power plants slated for Moree in western NSW and Chinchilla in Queensland will mark the first time solar power in Australia is deployed on a scale large and reliable enough to rival coal. Rio Tinto Ltd intends to compulsorily acquire the remaining shares in coal miner Riversdale Mining Ltd after Tata Steel sold its 26 per cent stake. Caltex Australia has forecast first-half profit would fall up to 39 per cent, dragged down by high oil prices, a strong Australian dollar and refinery outages. Russia’s central bank has bought $US5 billion ($A4.7 billion) of Australian dollars in a sign of global support for the currency, with the move intended to shift its exposure away from the US dollar. The combined financial liabilities of federal and state governments draws the ire of Future Fund chairman David Murray, who has urged political leaders to take lessons from the European and US sovereign debt crises. Secondary school students will be allowed to work reduced casual weekday hours in the retail sector, under a draft decision by Fair Work Australia (FWA). Chi-X Australia is set to open its stock exchange rivaling the ASX, possibly in November, after the ASX Group, the company that operates the Australian Securities Exchange (ASX), approves an application by Chi-X Australia to use its clearing and settlement service.

RMIT economist Alberto Posso talks about the future of manufacturing in Australia.

Andy Barnes is director of technology at Bryanston School, one of England’s leading public schools, which means it is a private school and one with tuition fees that would make the eyes of most people water. It is superbly equipped but it also works with government schools around it to extend the technology it uses in learning. Andy speaks of the importance of digital technology in today’s education, of the changed role of teachers, and the utility of devices such as iPads.

Garry and Leon talk about signs of recovery in the British economy, the Bank of England close to finally raising interest rates, the prospect of another downgrade of Greece, Prada and the rise of China, a crack down on debt manager companies in the UK and energy prices with the gouging of consumers. In Australia, billions are wiped off the Australian sharemarket because of worries about Greece and the US economy. Over 1,000 people lose their jobs as 140 outlets in the Colorado clothing group close. Federal Small Business Minister Nick Sherry predicts bricks and mortar bookstores will be all but wiped out by online shopping within five years. Angus & Robertson sacks 519 workers and closes 42 stores. Household electricity bills to rise by up to 30 per cent by mid-2013. Business conditions deteriorate in May, as a result of the February floods. Australian consumer confidence falls to a two-year low in June. Inflation fears continue to moderate after spiking during the flood crisis. Sales of new motor vehicles in Australia fall 7.6 per cent in May. The RBA warns that interest rates are still likely to rise to help contain inflation, probably in August. Monday's earthquake in Christchurch, New Zealand, is likely to have caused an additional $US3 billion to $US5 billion in insured losses on top of damage from two previous quakes. Insurance Australia Group says it is “far too early” to assess the cost of the latest earth tremors to hit New Zealand but it’s one of two of Australia's biggest insurance companies lifting premiums as they react to the recent succession of natural disasters and brace for higher costs. The number of homeowners striking financial trouble is rising, providing an early warning that mortgage arrears could hit the profits of the big banks. Domestic cattle producers are concerned that Prime Minister Julia Gillard's decision to ban live cattle exports to Indonesia will flood Australia's beef market and lead to a sharp drop in prices for all beef products. But the breaking of the drought has nearly doubled the annual cash income of northern beef producers. Foreign air hostesses are working for budget airline Jetstar - for half the pay of Australian workers. Private equity group Archer Capital has extended its recent spending spree with a $450 million purchase of the company behind local fast-food chains Red Rooster, Oporto and Chicken Treat. Queensland's budget bottom line will dive more than $2 billion into the red after the state's summer of natural disasters. Hedge funds holding more than $2 billion worth of Centro Properties debt offer to sell their share of Centro debt to Lend Lease. Lend Lease reportedly rejects the debt offer.

RMIT economist Sinclair Davidson analyses the Productivity Commission report on the Gillard Government’s carbon tax and looks at the coal industry.

Tim Lusk heads Meridian Energy Ltd, a state-owned enterprise that is New Zealand’s largest electricity provider and one that derives all of its energy from renewable sources. This is mainly hydro but, increasingly, wind and solar are taking up some of the load. New Zealand currently produces 74 per cent of its energy from renewable sources – hydro, geo-thermal, wind and solar – and plans to increase that percentage to more than 90 per cent by 2025. Meridian is likely to be partially privatized and is already looking at selling its expertise to Australia. It has a wind power plant already operating in South Australia and is about to embark on building Australia’s biggest wind power plant in Victoria, at the Macarthur site, a joint venture with AGL.