Thursday, May 18, 2017

Competition boss Rod Sims warns big banks on levy - "we are watching"

Australia's five biggest banks have been put on notice that the competition watchdog will use new surveillance powers to ensure they don't pass on the new bank levy to customers or shareholders.

The Australian Competition & Consumer Commission (ACCC) will be able to summon bank chiefs for hearings under oath in addition to accessing internal reports and emails to track whether $6.2 billion dollar levy over four years is being absorbed.

While the regulator doesn't have the power to stop the banks from defying the government's order to pay the levy to help with budget repair, it's sending the a clear message to banks that their every move is being scrutinised.

ACCC chairman Rod Sims has kept an unusually low profile since budget night while forming a surveillance squad to monitor the inner workings of Commonwealth Bank, Westpac, National Australia Bank, ANZ and Macquarie Group.

Mr Sims told the ABC's AM program that watchdog will use its new powers to force greater transparency in banking competition with a particular focus on the new bank levy.

"Of course we don't have power to stop the banks from doing anything but I think the fact that we're looking will have an effect," Mr Sims said.

"But we'll not only get access to reports they do internally we'll have access to emails and other such things. We've got the ability to get them (bank executives) in to have compulsory hearings under oath."

The ACCC's bank squad will comprise about a dozen specialists assessing competition in the finance sector with the option of hiring in external consultants with insider banking experience.

However, Mr Sims confirmed the ACCC would not have the ability to place officials inside banks to turn up the surveillance heat.

Earlier this week, Treasurer Scott Morrison accused banks of using a "voodoo blackbox" to cloud the true cost of banking and how fees to customers are formulated.

But Mr Sims is confident the new powers provided to the ACCC in the budget will be enough to keep major banks honest.

"We have information gathering powers that give us access to their information explaining internally how they're doing what they're doing," Mr Sims told AM.

"That's information they'll have to provide because they have a hierarchy and various layers in the organisation. But that key starting point we have is access to that internal  information."

Mr Sims rejected claims by major banks that the bank levy was a last minute decision made in the days leading up to budget night.

"We had plenty of notice. We were given a look at the potential direction and were able to comment on that. So we had all the notice one could expect," Mr Sims said. 

But in the face of a fightback from the major banks, Rod Sims denies he is feeling the pressure from Scott Morrison to deliver on greater banking transparency.

"We're not in the pressure feeling business. We're pretty relaxed. We're asked to do a job and we'll do that job well."

The five major banks last night received confidential briefings on how the levy will work but were required to sign confidentiality agreements beforehand.

However, banks are expected to continue reporting to the stock exchange in the coming days on how the levy could impact future profits.

Wednesday, May 17, 2017

Ron Walker endorses TPG offer for Fairfax Media - but now media silence from former chairman

Former Fairfax Media chairman Ron Walker has endorsed a $2.76 billion takeover bid for the company by the US private equity group TPG and the Ontario Teachers’ Pension Plan.

In interviews with print journalists, Mr Walker said TPG's revised offer for entire Fairfax business would be a good outcome for shareholders and might protect Fairfax's quality journalism at The Age, Sydney Morning Herald and Australian Financial Review.

However, despite endorsing the TPG offer Mr Walker withdrew from a scheduled interview with the ABC's "AM" program after deciding to make no further comments.

Asked whether he had been pressured by Fairfax Media to remain silent on the TPG offer, Mr Walker told the ABC the decision was “my own call”.

A Fairfax spokesman confirmed the request did not come from Fairfax Media and that “we haven’t spoken to Ron”.

But earlier reacting to Mr Walker’s endorsement of the TPG offer,  the spokesman said "Ron's views are Ron's views".

"It's the best thing for shareholders," Mr Walker told The Australian Financial Review which is published by Fairfax Media.

"After having years of not great returns they have now got the opportunity to join one of the world's best dealmakers and make it a very successful company once again."

The intervention of Mr Walker - who led Fairfax from 2005 to 2009 - is seen as significant given concerns that TPG is a foreign predator only interested in the Domain real estate business and intent on breaking up the rest of once mighty media empire.

Mr Walker, who owns Fairfax shares, also anointed the head of the Domain real estate business Antony Catalano as the new chief executive of a restructured company.

"Antony Catalano has always been destined to be a CEO," Mr Walker told the Australian Financial Review.

The ABC understands the endorsement from the former chairman was not welcomed by Mr Catalano given the sensitive stage of the TPG proposal.

The Fairfax board says it is considering the revised offer from TPG of $1.20 a share for 100 percent of the company rather than the original bid for Domain and the three metropolitan mastheads.

The revised offer from TPG on Sunday improves the original bid of 95 cents a share that did not include Fairfax's regional newspapers, its New Zealand assets, its stake in the Macquarie Radio Network and a 50 percent share in the Stan streaming service.

The Fairfax board says if accepted the TPG bid would require approval from shareholders and the Foreign Investment Review Board (FIRB).

Treasurer Scott Morrison would have to endorse any decision from FIRB given national interest issues that could be raised by the sale and possible breakup of the once mighty Fairfax Media empire.

Fairfax shares closed higher yesterday at $1.19 having reached a six year high in the wake of the TPG proposal.

Follow Peter Ryan on Twitter @peter_f_ryan

Friday, March 17, 2017

Amber Harrison hired big gun Julian Burnside QC as battle with Seven escalates

Amber Harrison has hired prominent barrister Julian Burnside QC as her high profile  battle with Seven West Media moves to a new level.

Mr Burnside has confirmed that Ms Harrison will now counter sue her former employer after Seven escalated legal action over the release of confidential documents relaying to her ill- fated affair with Seven West chief executive Tim Worner.

Mr Burnside told the NSW Supreme Court that the matter needed to be switched to the Federal Court because Ms Harrison's cross claim relates to "substantial issues" under the Fair Work Act.

Justice John Sackur said he was inclined to agree with the switch to the Federal Court because the NSW Supreme Court does not have jurisdiction for Fair Work matters.

"It seems sensible that this should go to the Federal Court," Justice Sackur said.

Counsel for Seven David Thomas said the proposed move to have the case heard in the Federal Court came as a surprise.

However, Mr Thomas told Justice Sackur that his client wanted the Fair Work matter struck out of the cross claim.

Justice Sackur is yet to decide whether to release Ms Harrison's cross claim to journalists covering the case.

"I would normally accommodate the media under relevant legislation," Justice Sackar said.

However, he has asked representatives for Ms Harrison and Seven to reach an agreement on whether the documents should be released.

Amber Harrison - a former executive association at Seven - is under a temporary gag order preventing her from releasing more confidential documents allegedly gathered before leaving the media company.

Ms Harrison left Seven in 2014 after signing a confidentiality agreement that prevented her from speaking publically about Seven or her affair with Mr Worner.

The case is scheduled for a hearing in July but this could change if the matter switches to the Federal Court.

A hearing on Seven's request to strike out Ms Harrison's claim under the Fair Work Act has been set down for April 6.

Friday, March 10, 2017

Mums at home "the greatest untapped potential" says OECD study on Australian labour force

Young women at home looking after children represent "the greatest untapped potential" in Australia's workforce, according to an OECD report out today.

The Organisation for Economic Cooperation and Development also warns the Australian economy will continue to suffer unless mothers are encouraged back to work.

"There are potentially large losses to the economy when women stay at home or work short part-time hours, " the OECD says in its study of employment participation in Australia.

"One of the areas of greatest untapped potential in the Australian labour force is inactive and/or part time working women, especially those with children."

The OECD says tapping the potential of women, especially highly educated stay at home mums, would be a boost to the Australian economy.

The study says economic growth in OECD countries would increase by 20 percent over the next twenty years if female labour participation matched the level of men.

The reality check on the potential of women who chose to stay at home with their children coincides with the decision by Laborfrontbencher Kate Ellis to quit politics to spend more time with her young son.

However, the OECD maintains that paid employment is "important for women's personal well-being and perceptions of their overall quality of life."

According to the study, the employment rate of Australian women aged between 25 and 54 is at 72.5 percent but ranks in the lower third of OECD countries.

The employment rate of single mothers is 50.8 percent, the third lowest in the OECD ranking after Ireland and Turkey.

It also found that 54 women aged between 25 and 34 have university qualifications compared to 43 percent of men.

The OECD found that people with a disability, a mental health condition and disadvantaged youth are badly represented in Australia's labour force.

"These groups face considerable and other multiple barriers to employment," the OECD says.

"Lacking work experience, low education and poor health are the single most important employment barriers."

The OECD has urged a better combination of various government policies to assist overrepresented groups in particular indigenous Australians.

Thursday, March 9, 2017

Insurance in super accounts eroding nest eggs, working group warns

A report out today says some Australians may have too much insurance cover unnecessarily tied up in multiple superannuation accounts.

The Insurance in Superannuation Working Group, which is backed by both industry and retail funds, says an overload of insurance within super risks a "rapid erosion" of some retirement nest eggs.

The working group's chairman Jim Minto told The World Today that while insurance within in super is valuable for some, younger Australians in particular are paying for insurance they don't need or can’t afford.

"It's great that it's there but younger people in society have more than one superannuation account and so you can have life insurance in each account when you don't need that much life insurance," Mr Minto said.

"If you've got too many policies, it will erode the balance too much. It's got to be enough (insurance) but not too much."

Mr Minto, a veteran of the life insurance industry, urges people with multiple superannuation accounts to consolidate polices to avoid over insurance.

But he concedes some Australians might not be aware the insurance cover even exists.

"A lot of people aren't aware but the awareness is increasing and we're seeing more people acting on the insurance and claiming on it," Mr Minto said.

"In some cases if you've got a large mortgage for example it may be good to have more insurance but we want that to be a conscious decision."

The working group today released the first in a series of discussion papers aimed to extending the Life Insurance Code of Practice to superannuation trustees.

As part of the review, the ISWG is seeking submissions on how to balance the need for retirement savings with default benefits such as life insurance and income protection insurance.

"People can have multiple income protections in different super accounts but you can only really claim on one so you're wasting money. We need to fix it," Mr Minto said.

The study comes as young Australians rein in household budgets to save a deposit to enter hot housing markets in Sydney, Melbourne and Brisbane.

The review also comes amid a regulatory crackdown on superannuation and insurance products with evidence of claims being delayed or denied by major banks and insurers.

The working group is backed by prominent lobby groups across the superannuation section including the Financial Services Council, the Association of Superannuation Funds of Australia and Industry Super Australia.