Thursday, July 23, 2015

ABC Shops to close as digital disruption hits Aunty

ABC Shops around the country will be phased out and closed as the national broadcaster moves to an online retail model.

Up to 300 staff employed by the ABC's commercial division through ABC Retail were briefed on the decision in a national video hookup last night.

An ABC spokesman said consultation with ABC Shop staff will take place in the coming months and there will be some redundancies from its workforce which comprises a mix of full time, part time, casual and contract staff.

The ABC currently has 50 stores around the country and 78 ABC Centres in other retail outlets as part of its bricks and mortar portfolio.

As part of the new digital strategy, the ABC will now review its lease arrangements with landlords to develop a model to focus on digital sales through ABC Shop Online and other commercial retailers such as David Jones.

The move by the ABC comes as "digital disruption" continues to rock the retail environment as consumers spend their money through subscription services, downloads and purchase goods online.

The accelerating switch to online purchases means the ABC's costs of maintaining its current retail network has become unviable and that it is no longer possible to sustain a its network of stores.

The ABC's managing director Mark Scott this morning began conducting a series of media interviews and briefings with ABC staff to minimise the potential fallout.

The director of ABC Commercial Robert Patterson acknowledged the importance of ABC Shops in the relationship with ABC audiences over the past 35 years.

"This decision has not been taken lightly. However, this strategy will create a more cost effective, nimble and flexible approach to servicing customers," Mr Patterson said.

"The ABC is confident that this new strategy will ensure continued audience engagement. Consumers will still be able to purchase much loved content both online and in stores."

The planned closure of ABC Shop properties comes after the national broadcaster suffered $254 million in funding cuts which saw the loss of more than 400 staff.

The additional job losses will be handled through a consultative process which began with last night's briefings with ABC Shop staff according to the head of ABC Retail Regina Hoekstra.

"The welfare of our staff will be a primary focus over the next few months. We are conscious that the ABC Shop is close to the hearts of our teams and we appreciate their ongoing hard work and dedication," Ms Hoekstra said.

"ABC Shop is a trusted brand with a strong product offer, loyal customers and an engaged, committed team. ABC Retail will continue to adapt to an ever-changing retail climate in order to provide a sustainable retailing experience for customers."

The decision to move away from bricks and mortar comes as the ABC remains embroiled in controversy after the Q&A program allowed convicted criminal, Zaky Mallah, into the live studio audience last month and question a Government frontbencher.

The ABC has admitted that was an "error of judgement" and the show's executive producer Peter McEvoy has been issued a formal warning.

An ABC spokesman said any forecast losses through the ABC Shop network would not be covered by taxpayer funds.

Monday, June 29, 2015

No time left for piecemeal action on climate, new roundtable warns government

An unprecedented alliance of business, union, environmental, investor and welfare groups has been formed to forge what it sees as urgent common ground on climate policy.

The highly unusual coalition - to be branded the Australian Climate Roundtable - comes as developed nations gear up for the Paris Climate Conference in December where leaders will be under pressure to update their strategies for dealing with climate change.

While Australia’s main political parties support the international goal of limiting climate change to less than two degrees above pre-industrial levels, the Roundtable warns the objective will require “deep global reductions”.

The high profile members cover some influential employer and industry lobby groups such as the Australian Industry Group, the Business Council of Australia, the Australian Aluminium Council, the Energy Supply Association and the Investor Group on Climate Change.

They will be joined by groups at opposite end of the political and economic spectrum - the Australian Conservation Foundation (ACF), WWF Australia, the Australian Council of Social Service (ACOSS), the Australian Council of Trade Unions (ACTU) and the Climate Institute.

In a statement, the Roundtable warned that emissions reductions on the necessary scale will require “substantial change “and “present “significant challenges” in Australia and other developed nations.

“We believe Australia should play its fair part in global efforts to avoid the serious economic, social and environmental impacts that unconstrained climate change would have on Australia,” the statement said.

In a warning to the federal government the group said “delayed, unpredictable and piecemeal action will increase the costs and challenges of achieving the goals and maximising the opportunities.

“We also know that policies won’t work if they don’t last and stay on investors’ radars. The foundations of climate policy need broad and durable support, and we all have a role in building it.”

Outlining its goals, the group said the “ideal” climate policy taken to the Paris conference should:

•     be capable of achieving deep reductions in Australia’s net emissions
•     provide confidence that targeted emissions reductions actually occur
•     be based on  the full range of climate risks;
•     be well designed, stable and internationally linked
•     operate at least cost to the domestic economy
•     remain efficient as circumstances change and Australia’s emissions reduction goals evolve

Highlighting the social risks of climate policy and climate change, the Roundtable says climate policy must also:

•     protect the most vulnerable individuals;
•     avoid disproportionate impacts low income households
•     assist communities that are vulnerable to economic shocks or physical risks as a result of climate change or climate policy.

The united agreement from often distant parties on climate policy goals is significant, according to Business Council of Australia chief executive Jennifer Westacott.

“There is now overwhelming common ground on the need for a more certain and meaningful approach to emissions reduction,” Ms Westacott said.

Ai Group chief executive Innes Willox said the principles outlined by the Roundtable will help end the “frustration and disruption” to even changing climate policy.

“The shared recognition that we need to maintain competitiveness while reducing emissions over time is a major advance and a solid platform for future policy stability.”

ACTU president Ged Kearney welcomed the action and said “taking action on climate change, and investing and supporting the local clean energy industry, is vital if Australia is to create and capitalise on the high-skilled innovative clean tech jobs of the future.”

Australian Conservation Foundation chief executive Kelly O’Shanassy described it as  “an unlikely alliance, but we’ve come together because the challenge of tackling global warming is bigger than any of our differences.”

“ Among the things we have in common is a shared goal for Australia to cut its net greenhouse pollution to zero or below.”

The creation of the Roundtable comes after years of debate over climate policy and the government’s repeal of Labor’s controversial carbon tax and emissions trading scheme.

But as preparations are made for the Paris conference, Prime Minister Tony Abbott is under pressure from within the Liberal Party to prevent Australia from signs up to bind emissions targets.

Mr Abbott has been asked by some members to “examine the evidence” on climate change before agreeing to further emissions cuts.

Environment Minister Greg Hunt recently said the government will soon announce its post 2020 target for emissions and that Australia will play “a constructive role” at the Paris conference.

Friday, June 26, 2015

Gov't on collision course with unions over governance crackdown on industry superannuation funds

Superannuation funds face a major shakeup in their corporate governance under controversial reforms announced by the federal government today. 

Under draft legislation to be released, superannuation funds will be required to have an independent chairman and independent directors will need to comprise at least a third of a fund’s board.

While the government’s key target is known to be union-backed industry superannuation funds, the proposed changes will also apply to retail, corporate and public sector funds now worth $2 trillion in retirement nest eggs.

Funds will also be required to detail in their annual reports whether they have a majority of independent directors on an “if not, why not” basis under similar rules that apply to ASX-listed companies.

The government’s pursuit of industry superannuation funds in particular comes amid concerns about a lack of transparency and links between the union movement and the boards controlling the industry superannuation sector.

The draft legislation is also timely for the government as the Royal Commission into Trade Union Governance and Corruption highlights incidents of alleged misconduct and conflicts of interest between trade unions and employers.

Unveiling the proposed changes, the Assistant Treasurer Josh Frydenberg said the federal government was delivering on a commitment to improve the governance of superannuation funds.

“Not only does superannuation represent the hard-earned retirement savings of Australians, it is already the second largest asset held by Australian households,” Mr Frydenberg said.

“Given the size of the superannuation system, and its importance in funding the retirement of Australians, good governance is absolutely critical.

“Independent directors bring additional experience and expertise to boards making a valuable contribution to their decision making.”

The proposed governance shakeup has been cautiously welcomed by Industry Super Australia which represents union backed not-profit superannuation funds.

But ISA’s deputy chief executive Robbie Campo said successful industry funds were being targeted despite current scandals in the wealth management industry.

The superannuation system now comprises more than 120 percent of Australia’s gross domestic product (GDP) and is anticipated to grow to from $2 trillion to $9 trillion by 2040.

The number of Australians over 65 and seeking to access their retirement savings is expected to double by 2054-2055.

The proposed reforms will apply to all superannuation funds regulated by the Australian Prudential Regulation Authority (APRA) with the exception of self managed funds.

The government’s proposal for majority independent directors and an independent chairman mirrors the Labor government Cooper Review commissioned in 2010.

The legislation if passed allows for a three year transition period to allow funds to reconstitute their boards under the new governance rules.

Australia Post in major job cuts as snail mail creates "tipping point" on delivery business

Australia Post has announced major job cuts as the decline in its traditional letter delivery service continues to accelerate.

The ABC reported earlier today that 1,900 voluntary redundancies will be offered over the next three years from metropolitan centres.

The redundancies come as Australia Post confirmed losses in its mail delivery business is approaching $500 million this financial year.

With the volume of ordinary mail expected to plunge by more than ten percent, Australia Post has warned it will report its first company wide financial loss in more than 30 years.

The disruption created by the Internet and other online messaging services has taken losses at Australia Post to more than $1.5 billion over the past five years.

Australia Post managing director Ahmed Fahour admits the decline in the mail delivery service is now critical.

"We have reached the tipping point that we have been warning about where, without reform, the business becomes unsustainable," Mr Fahour said this morning.

"We welcomed the federal government's decision to support reform so we can manage the mail service losses, meet the changing needs of our customers and continue to invest in growing parts of our business such as parcels and trusted services."

In announcing the voluntary redundancies, Mr Fahour confirmed there would be no change to postal deliveries five days a week.

However, earlier this year Mr Fahour flagged the possibility of a two-speed postage service for its loss making letter deliveries business so it can focus on the lucrative opportunities in freight and parcel deliveries.

Mr Fahour said there would be no forced redundancies caused by the overhaul of the letters business and the focus would be on retraining and deployment.

"While reforming our business we have made a number of commitments to protect our employees, our Post Offices and the community," Mr Fahour said.

Under the proposals, Mr Fahour said he would protest Australia Post's national network of more than four thousand post offices.

He said there would be financial support for licensed post offices and community postal agencies which make up 80 percent of the business.

Australia Post says since October 2013, more than four thousand staff have been transitioned into different roles with an emphasis on its fast growing parcels delivery business.

Tuesday, June 9, 2015

Net tightens on foreign investors who breach residential investment laws

Investigations are underway into 195 cases where foreign investment rules on residential real estate may have been breached, the Federal Government says.

The widened probe into foreign real estate investment comes a month after the Federal Government announced plans to crack down on rogue foreign investors amid concerns it was helping to fuel a dangerous property bubble in Sydney and Melbourne.

Listen to my report from this morning's edition of AM where I speak with parliamentary secretary to the Treasurer, Kelly O'Dwyer

While foreign investment laws prohibit foreign investors from purchasing existing residential real estate, they are encouraged to boost the housing supply by investing in new housing developments.

According to a statement from the office of treasurer Joe Hockey, 24 of 195 cases are foreign investors who voluntarily came forward to the Foreign Investment Review Board (FIRB) to say they may have breached investment rules.

The total value of the properties under investigation is not specified but the statement said it included the "prestige market" as well as "real estate in the suburbs of our capital cities".

However, FIRB is currently negotiating a "voluntary divestment" with a British investor who came forward about a $700,000 property purchased in Western Australia.

If that divestment succeeds, it would be the second such case since March.

The Government is also seeking to toughen penalties for investors who make a profit after divesting properties bought illegally by introducing a civil penalty to "capture any capital gain made on divestment of a property".

"Third parties who knowingly assist a foreign investor to breach the rules will also be subject to civil and criminal penalties, including fines of $45,000 for individuals and $225,000 for companies," the statement warned.

"Another 40 cases relate to referrals from the community where members of the public suspect foreign investors may have broken the rules by using complex structures and illegal leasing arrangements to hide foreign ownership."

The Federal Government is warning other investors who may have bent the rules to come forward now while there is a grace period.

From December 1, individual foreign residents who unlawfully bought established residential property face tougher criminal penalties up to $127,500 or three years imprisonment for individuals and up to $637,500 for companies.

"Foreign investors who think they may have broken the rules should come to us before we come to them," the statement said.

"They will still be forced to sell the properties, but will not be referred for criminal prosecution if they voluntarily come forward before 30 November."

The crackdown on foreign investment has strengthened the powers of key bodies with all residential real estate functions transferred from Treasury to the Australian Tax Office (ATO) which can cross reference its own data with FIRB, immigration and Australian Transaction Reports and Analysis Centre (AUSTRAC).

The ATO's data­matching program is known to have identified one foreign investor who was allegedly linked to more than ten properties that included a unit worth $300,000 and a $1.4 million house.

The Government's crusade against unlawful foreign investors has been led by parliamentary secretary to the Treasurer Kelly O'Dwyer who has been a critic of the FIRB's surveillance.

Ms O'Dwyer recently warned foreign buyers using trust structures to get around foreign investment rules were also breaking the law.

"The properties that range in value from the hundreds of thousands to the multi­millions ... we've already seen the Government take action with a $39 million property in Sydney that forced the divestment of that property," she told AM.

"But it's not just for prestige properties, it's also for properties in suburbs that people are living in, where people may have made illegal purchases and where it may be having an impact in property prices."

With the additional funding and additional powers, the ATO has been able to put a tighter net around anyone who might be potentially bending the rules.

"In fact we have already identified breaches where one individual is linked to 10 properties ranging in value from the hundreds of thousands to over $1 million dollars," Ms O'Dwyer said.

"That individual is being properly investigated now by the Foreign Investment Review Board."

Ms O'Dwyer said anyone who voluntarily came forward would be given a longer period to sell.

"If they don't voluntarily come forward, of course the gloves are off," she said.

"Under the existing rules, people have been able to profit from the illegal purchase of property if the value of that property has gone up.

"We have closed that loophole with the new laws that we are bringing into place.

"We're not going to allow people to profit, it creates the wrong incentive for people to do the wrong thing. And that's just not on."

Tuesday, June 2, 2015

Regulators finally use "b" word as Sydney property bubble evidence grows

It is the "B" ­word that few with their hands on the levers of Australia's economy have dared to publicly utter.

Until now.

A fortnight ago Greg Medcraft, the usually reserved chairman of the Australian Securities and Investments Commission (ASIC), went public with warnings about a housing "bubble" in Sydney and to a lesser extent Melbourne.

Mr Medcraft made headlines and raised eyebrows in an interview on the ABC where he became the first regulator to openly warn of a property bubble.

"History has shown that often you don't know you're in a bubble until it's over but you can look at history and look at historical averages and one can draw their own conclusions," Mr Medcraft told The World Today.

At the time, Mr Medcraft's comments about history's habit of repeating itself were criticised, with comments urging him to produce the evidence.

Now the head of Treasury John Fraser has weighed in.

He not only warned of a bubble, but said there was unequivocal evidence that one existed.

Mr Fraser's unexpectedly blunt assessment at Senate Estimates took many observers by surprise.

"When you look at the housing price bubble evidence, it's unequivocally the case in Sydney. Unequivocally," Mr Fraser said.

"Frankly, whatever the data says, just casual observation can tell you it's the case."

Mr Fraser's straight talk on what could be a dangerous bubble gives some long­awaited support ­ indeed credibility ­ to warnings in recent months from top economists, property analysts and highly regarded observers in the business media.

Reserve Bank assistant governor Malcolm Edey remained cautious and did not use the B­word himself.

But he appeared to endorse the warnings of other experts, admitting the situation was at least "risky".

"A lot of people do think it's a bubble, serious people think that, and we agree that this is a situation where the market is strong, it's overheated, it's a risky situation," Dr Edey told Senate estimates.

But now that Mr Fraser has jumped on the "bubble" bandwagon with Mr Medcraft, and Mr Edey is giving currency to the warnings of his equals, the question is whether anyone is listening?

Mr Fraser's words in particular are likely to resound in the Reserve Bank boardroom as board members decide whether the central bank will maintain an easing bias with a view to cutting the cash rate again as the economy continues to soften.

The RBA is now between a rock and a hard place.

Many observers believe a further rate cut will be necessary to stimulate the economy but at the same time, there are fears that would have the unintended consequence of fuelling housing investment in the hot Sydney market.

The RBA is betting that moves by the prudential regulator Australian Prudential Regulation Authority (APRA) will be enough to force banks to taper back their lending to investors, some of whom could be burned when interest rates inevitably rise or values fall in a correction.

But the efforts to rein in lending appear to fly in the face of the evidence, with 86 per cent of properties on the Sydney market sold at the weekend.

And it is a balance, as always, for Prime Minister Tony Abbott, stemming concerns of a "bubble", encouraging investment and not seeking any perception that he is trying to influence the Reserve Bank which is independent to government.

"As someone who, along with the bank, owns the house in Sydney, I do hope that our housing prices are increasing," he told Parliament.

"I want housing to be affordable but nevertheless, I also want house prices to be modestly increasing."

It is a complex maze of challenges for the Government and the RBA.

But one suspects that regardless of the "bubble" warnings ­ even from the likes of Mr Fraser and Mr Medcraft ­ investors will continue to bet blindly that real estate prices will keep rising.